Title II.

Code of Professional Responsibility

Nature of the Code of Professional Responsibility

Presidential Commission on Good Government vs. Sandiganbayan

[G.R. Nos. 151809-12. April 12, 2005.]

Facts: 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 court in GENBANK’s liquidation docketed as
Special Proceeding No. 107812.

After the end of the Marcos administration, and the election of Corazon Aquino as president, Presidential
Commision 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 Bank’s 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 Sandiganbayan, 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:

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.

Ruling: The Court ruled 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 lawyer’s 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 Association’s 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 American Legal System where
members of the ABA addressed the issues of “revolving door”, “adverse-interest conflicts”, and
“congruent-interest conflicts”.

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 Mendoza’s case does not involve an adverse-
interest 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 beyond doubt that “matter” or the act of Mendoza as Solicitor General in the
liquidation case, advising the Central Bank on how to proceed with it, is not the “matter” contemplated by
Rule 6.03 of the Code 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.

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 bounds of 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.