PCGG V SANDIGANBAYAN

FACTS

In 1976 the General Bank and Trust Company (GENBANK) encountered financial
difficulties. GENBANK had extended considerable financial support to Filcapital
Development Corporation causing it to incur daily overdrawings on its
current account with Central Bank. Despite the mega loans GENBANK failed to recover
from its financial woes. The Central Bank issued a resolution declaring GENBANK
insolvent and unable to resume business with safety to its depositors, creditors and the
general public, and ordering its liquidation. A public bidding of GENBANK’s assets was
held where Lucio Tan group submitted the winning bid. Solicitor General Estelito
Mendoza filed a petition with the CFI praying for the assistance and supervision of the
court in GENBANK’s liquidation as mandated by RA 265. After EDSA Revolution I Pres
Aquino established the PCGG to recover the alleged ill-gotten wealth of former Pres
Marcos, his family and cronies. Pursuant to this mandate, the PCGG filed with the
Sandiganbayan a complaint for reversion, reconveyance, restitution against respondents
Lucio Tan, at.al. PCGG issued several writs of sequestration on properties allegedly
acquired by them by taking advantage of their close relationship and influence with
former Pres. Marcos. The abovementioned respondents Tan, et. al are represented as
their counsel, former Solicitor General Mendoza. PCGG filed motions to disqualify
respondent Mendoza as counsel for respondents Tan et. al. with Sandiganbayan. It was
alleged that Mendoza as then Sol Gen and counsel to Central Bank actively intervened in
the liquidation of GENBANK which was subsequently acquired by respondents Tan et.
al., which subsequently became Allied Banking Corporation. The motions to disqualify
invoked Rule 6.03 of the Code of Professional Responsibility which prohibits former
government lawyers from accepting “engagement” or employment in connection with
any matter in which he had intervened while in the said service. The Sandiganbayan
issued a resolution denyting PCGG’s motion to disqualify respondent Mendoza. It failed
to prove the existence of an inconsistency between respondent Mendoza’s former
function as SolGen and his present employment as counsel of the Lucio Tan
group. PCGGs recourse to this court assailing the Resolutions of the Sandiganbayan.

ISSUE

Whether Rule 6.03 of the Code of Professional Responsibility applies to respondent

Mendoza. The prohibition states: “A lawyer shall not, after leaving government service,
accept engagement or employment in connection with any matter in which he had
intervened while in the said service.”

HELD

The case at bar does not involve the “adverse interest” aspect of Rule 6.03. Respondent
Mendoza, it is conceded, has no adverse interest problem when he acted as SOlGen and
later as counsel of respondents et.al. before the Sandiganbayan. However there is still
the issue of whether there exists a “congruent-interest conflict” sufficient to disqualify
respondent Mendoza from representing respondents et. al. The key is unlocking the
meaning of “matter” and the metes and bounds of “intervention” that he made on the
matter. Beyond doubt that the “matter” or the act of respondent Mendoza as SolGen
involved in the case at bar is “advising the Central Bank, on how to proceed with the said
bank’s liquidation and even filing the petition for its liquidation in CFI of Manila. The
Court held that the advice given by respondent Mendoza on the procedure to liquidate
GENBANK is not the “matter” contemplated by Rule 6.03 of the Code of Professional
Responsibility. ABA Formal Opinion No. 342 is clear in stressing that “drafting,
enforcing or interpreting government or agency procedures, regulations and laws, or
briefing abstract principles of law are acts which do not fall within the scope of the term
“matter” and cannot disqualify. Respondent Mendoza had nothing to do with the
decision of the Central Bank to liquidate GENBANK. He also did not participate in the
sale of GENBANK to Allied Bank. The legality of the liquidation of GENBANK is not an
issue in the sequestration cases. Indeed, the jurisdiction of the PCGG does not include
the dissolution and liquidation of banks. Thus, the Code 6.03 of the Code of Professional
Responsibility cannot apply to respondent Mendoza because his alleged intervention
while SolGen is an intervention on a matter different from the matter involved in the
Civil case of sequestration. In the metes and boundsof the “intervention”. The applicable
meaning as the term is used in the Code of Professional Ethics is that it is an act of a
person who has the power to influence the subject proceedings. The evil sought to be
remedied by the Code do not exist where the government lawyer does not act which can
be considered as innocuous such as “ drafting, enforcing, or interpreting government or
agency procedures, regulations or laws or briefing abstract principles of law.” The court
rules that the intervention of Mendoza is not significant and substantial. He merely
petitions that the court gives assistance in the liquidation of GENBANK. The role of
court is not strictly as a court of justice but as an agent to assist the Central Bank in
determining the claims of creditors. In such a proceeding the role of the SolGen is not
that of the usual court litigator protecting the interest of government.
Petition assailing the Resolution of the Sandiganbayan is denied.
Relevant Dissenting Opinion of Justice Callejo:
Rule 6.03 is a restatement of Canon 36 of the Canons of Professional Ethics: “ A lawyer,
having once held public office or having been in the public employ, should not after his
retirement accept employment in connection with any matter which he has investigated
or passed upon while in such office or employ.”
Indeed, the restriction against a public official from using his public position as a vehicle
to promote or advance his private interests extends beyond his tenure on certain
matters in which he intervened as a public official. Rule 6.03 makes this restriction
specifically applicable to lawyers who once held public office.” A plain reading shows
that the interdiction 1. applies to a lawyer who once served in the government and 2.
relates to his accepting “engagement or employment” in connection with any matter in
which he had intervened while in the service.
PCGG v SANDIGANBAYAN

Facts:

 1976: General Bank & Trust Company (Genbank) encountered financial difficulties.
Central Bank extended loans to Genbank in the hope of rehabilitating it (P310M).
Nonetheless, Genbank failed to recover.
 1977: Genbank was declared insolvent. A public bidding of Genbank’s assets was held
with the Lucio Tan Group winning the bid. Solicitor General Mendoza, representing the
government, intervened with the liquidation of Genbank.
 1986: after EDSA I, Cory established the PCGG to recover the ill-gotten wealth of
Marcos, his family and cronies.
 1987: PCGG filed a case against Lucio Tan and certain other people (basta marami sila).
In relation to this case, PCGG issued several writs of sequestration on properties
allegedly acquired by the respondents by taking advantage of their close relationship
and influence with Marcos. Sandiganbayan heard the case.
 Estelito Mendoza (Solicitor General during the time of Marcos) represented the
respondents.
 1991: PCGG filed a motion to disqualify Mendoza, because of his participation in the
liquidation of Genbank. Genbank (now Allied Bank) is one of the properties that PCGG
is seeking to be sequestered from the Lucion Tan group. PCGG invoked Rule 6.03 of the
Code of Professional Responsibility.
 Sandiganbayan denied PCGG’s motion. According to the Sandiganbayan, Mendoza did
not take an adverse position to that taken on behalf of the Central Bank. And Mendoza’s
appearance as counsel was beyond the 1 year prohibitory period since he retired in 1986.

Issue:

 W/N Rule 6.03 of the Code of Professional Responsibility apllies to Estelito Mendoza

Held:

 No, it does not apply to Mendoza. Sandiganbayan decision is affirmed.

 The matter (see 3rd note), or the act of Mendoza as Solicitor General is advising the
Central Bank on how to proceed with the liquidation of Genbank. This is not the
“matter” contemplated by Rule 6.03 of the Code of Professional Responsibility.
 The matter involved in the liquidation of Genbank is entirely different from the matter
involved in the PCGG case against the Lucio Tan group.
 The intervention contemplated in Rule 6.03 should be substantial and important. The
role of Mendoza in the liquidation of Genbank is considered insubstantial.
 SC is even questioning why PCGG took such a long time to revive the motion to
disqualify Mendoza. Apparently, PCGG already lost a lot of cases against Mendoza.
Kyle’s interpretation: PCGG getting desperate
  Something to think about: SC is somehow of the opinion that Rule 6.03 will make it
harder for the government to get good lawyers in the future to work for them because of
the prohibition of accepting cases in the future that were related to one’s work as a
government counsel.

Concurring Opinions:

 Panganiban & Carpio: the congruent interest prong of Rule 6.03 should have a
prescriptive period
 Tinga: Rule 6.03 cannot apply retroactively to Mendoza (when he was Solicitor General,
no Rule 6.03 yet)
 Bottom line, they are all questioning the unfairness of the rule if applied without any
prescriptive period and if applied retroactively

Notes:

 Adverse-interest conflicts – where the matter in which the former government lawyer
represents a client in private practice is substantially related to a matter that the lawyer
dealt with while employed with the government and the interests of the current and
former are adverse
 Congruent-interest conflicts – the use of the word “conflict” is a misnomer, it does not
involve conflicts at all, as it prohibits lawyers from representing a private person even if
the interests of the former government client and the new client are entirely parallel
 Matter – any discrete, isolatable act as well as indentifiable transaction or conduct
involving a particular situation and specific party
 Intervention – interference that may affect the interests of others