PCGG VS SANDIGANBAYAN 2005

General Bank and Trust Company was declared insolvent by the Central Bank and subjected it to
liquidation. A public bidding followed, which was bought by the highest bidder, Lucio Tan. Thereafter,
the government, represented by then Solicitor General, Estelito Mendoza, filed a petition with the trial
court praying for the assistance and supervision of the cour
Special Proceeding No. 107812.After the end of the Marcos administration, and the election of Corazon
Aquino as president, Presidential Commission on Good Governance (PCGG) was formed to recover the
alleged ill-gotten wealth of the Marcos family and his cronies. One of the first civil cases filed by the
PCGG in the Sandiganbayan was a complaint for reversion, reconveyance, restitution, accounting and
damages against respondents Tan et al. and the then First Couple, Ferdinand and Imelda Marcos
together with several others.
By the time Civil Cases Nos. 0005 and 0096-0099 were filed, Estelito Mendoza has returned to his
private life together into the private practice of law. He was engaged as counsel for respondents Tan, et
al. and thereafter filed petitions for certiorari, prohibition and injunction to annul the writs of
sequestration issued by the PCGG. This led to the filing of several motions by the PCGG to disqualify
Mendoza from the cases he was representing for the respondents, alleging that as former Solicitor
General, he actively intervened in the liquidation proceedings of GENBANK (currently Allied Bank) that
was acquired by the same group of Tan et al. The allegation of the government in its motions stresses
that as former Solicitor General, and acting as counsel for Central Bank, he advised the Central Banks
officials on how to go about with the procedure of the liquidation. In doing so, PCGG says that he
violated Rule 6.03 of the Code of Professional Responsibility, prohibiting former government lawyers
from accepting engagement or employment in connection with any matter in which he had
intervened while in said service. The Sandinbayan, through a resolution, denied the motion to disqualify
which led to the filing of a petition for certiorari and prohibition before the Supreme Court.
Issues:
W
the definitions contemplated by the Code of Professional Responsibility And,

are the same as

Whether or not Estelito Mendoza violated Rule 6.03 of the Code of Professional Responsibility in
his engagement with the civil cases involving Tan, et al.
Held:
The issues were resolved both in the negative.
The Court resolved the case by going through the history of the adoption of the Code of the Professional
Conduct from the American System and stating the rationale behind Rule 6.03. The evil sought to be
prevented is that a government lawyers actions be influenced by the temptation to take action on
behalf of the government client that latter could be to the advantage of parties who might later become
private practice clients. In the adoption of the said rule from Canon 36 paragraph 2 of the American Bar

Associations Canons of Professional Ethics, the Integrated Bar of the Philippines replaced the phrase
investigated and passed upon with the word intervened.
This led to the explanation behind the phrasing of the canon in the AmericanLegal System where
members of the ABA addressed the issues of revolving door, adverse-interest, conflicts, and congruent-

ABA further defined the following terms:

Revolving Door:
the process by which lawyers and others temporarily enter the government service from private life
then leave it for large fees in private practice, where they can exploit information, contacts and
influence gathered while in government service.
Adverse-interest conflicts:
exists when a former government lawyer represents a client in private practice in which the matter is
substantially related to a matter that the lawyer dealt with while employed by the government and the
interests of the current and former are adverse
Congruent-interest conflicts:
where former government lawyers are prohibited from representing a client in private practice even if
the interests of the former government client and new client are entirely parallel.
It was through the definitions that the Court ruled that Mendozas case does not involve an Adverseinterest conflict because he has not shown any adverse interest when he acted as Solicitor General in
the Special Proceeding case and as counsel for the Civil cases pending before the Sandiganbayan. As to
the violation of Rule 6.03 of the Code of Professional Responsibility, the Court shed light through the
definitions of
Matter and intervention:
based on the Formal Opinion 342 of the American Bar Association.
Matter is any discrete, isolatable act as well as identifiable transaction or conduct involving a particular
situation and specific party and not merely an act of drafting, enforcing, or interpreting government or
agency procedures, regulations or laws, or briefing abstract principles of law.
Intervention was classified in two definitions. The first includes the participation in a proceeding even if
the intervention is irrelevant or has no effect or little influence as implied from the definition
of intervene which is to occur, fall, or come in between points of time or events.
While the second includes an act of a person who has the power to influence the subject proceeding
which is rooted from the definition of intervene to come in or between by way of hindrance or
modification and that interference which may affect the interests of others. The Court said that it is

Solicitor General in the liquidation case, advising

the Central Bank on how to proceed
of Professional Responsibility. The ABA Formal Opinion No. 342 stressed that the matter which will not
disqualify a lawyer would be the mere drafting, enforcing, or interpreting government or agency
procedures, regulations or laws, or briefing abstract principles of law. The matter where Mendoza got
himself involved with was in acting as counsel for the Central Bank; he informed them of the proper
procedure provided by law to liquidate GENBANK through the filing of the necessary petition in the RTC
of Manila. Mendoza is not privy to the decision of the Central Bank to liquidate GENBANK nor was he
involved in the sale of GENBANK to presently Allied Bank. Furthermore, the matter of liquidation
involved in the Special Proceeding case is entirely different from the matter of sequestration involved in
the Civil Cases. Moreover, Rule 6.03 of the Code of Professional Responsibility cannot apply to Mendoza
because his alleged intervention as Solicitor General is an intervention on a matter different from the
sequestration of stocks as ill-gotten wealth in the Civil Case. The Court opines that the second
interpretation of intervention is more fitting to the intention of the law based on its historical
background.
There can be no intervention when a government lawyer acts only in drafting, enforcing, or interpreting
government or agency procedures, regulations or laws. It has to be that the lawyer Participated
personally and substantially in a matter related to his office. To this, the PCGG failed to substantiate that
Mendoza played a significant and substantial intervention in the Special Proceeding case. Acting as
Solicitor General, he had to sign the petition as an initiatory pleading for the Central Bank. The
assistance extended to the Central Bank by Mendoza was only that of an agent of the government more
than a court litigator acting in behalf of the government. It is still the Central Bank that has the sole
authority and jurisdiction to promulgate the rules and regulations in the liquidation of insolvent banks.
For these reasons, the Court denied the petitions of the PCGG in disqualifying Estelito Mendoza as
counsel for respondents Tan, et al.