PCGG Vs Sandiganbayan

[G.R. Nos. 151809-12.
April 12, 2005]
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), petitioner,

vs. SANDIGANBAYAN (Fifth Division), LUCIO C. TAN, CARMEN KHAO
TAN, FLORENCIO T. SANTOS, NATIVIDAD P. SANTOS, DOMINGO CHUA,
TAN HUI NEE, MARIANO TAN ENG LIAN, ESTATE OF BENITO TAN KEE
HIONG (represented by TARCIANA C. TAN), FLORENCIO N. SANTOS, JR.,
HARRY C. TAN, TAN ENG CHAN, CHUNG POE KEE, MARIANO KHOO,
MANUEL KHOO, MIGUEL KHOO, JAIME KHOO, ELIZABETH KHOO, CELSO
RANOLA, WILLIAM T. WONG, ERNESTO B. LIM, BENJAMIN T. ALBACITA,
WILLY CO, ALLIED BANKING CORP., ALLIED LEASING AND FINANCE
CORPORATION, ASIA BREWERY, INC., BASIC HOLDINGS CORP.,
FOREMOST FARMS, INC., FORTUNE TOBACCO CORP., GRANDSPAN
DEVELOPMENT CORP., HIMMEL INDUSTRIES, IRIS HOLDINGS AND
DEVELOPMENT CORP., JEWEL HOLDINGS, INC., MANUFACTURING
SERVICES AND TRADE CORP., MARANAW HOTELS AND RESORT CORP.,
NORTHERN TOBACCO REDRYING PLANT, PROGRESSIVE FARMS, INC.,
SHAREHOLDINGS, INC., SIPALAY TRADING CORP., VIRGO HOLDINGS &
DEVELOPMENT CORP., and ATTY. ESTELITO P. MENDOZA, respondents.
PUNO, J.:
FACTS:
In 1976, General Bank and Trust Company (GENBANK) encountered
financial difficulties. As bailout, the Central Bank extended emergency loans
to it which reached P310 million. GENBANK failed to recover and was
declared insolvent, unable to resume business. Central Bank ordered its
liquidation. At the public bidding of GENBANK's assets, Lucio Tan group
submitted the winning bid. Subsequently, former Solicitor General
Estelito P. Mendoza filed a petition with the Court of First Instance praying
for the assistance and supervision of the court in GENBANK's liquidation as
mandated by Sec. 29 of Republic Act No. 265.
In 1986, PCGG was established to recover the alleged ill-gotten wealth
of former Pres. Marcos, his family and his cronies. Pursuant to this mandate,
PCGG filed with the Sandiganbayan a complaint against respondents Lucio
Tan.
PCGG issued several writs of sequestration on properties allegedly

acquired by the respondents. Respondents Tan filed petitions for certiorari,
prohibition and injuction to nullify among others the writs of sequestration. In
these cases, respondents Tan were represented by former Solicitor General
Estelito P. Mendoza who has then resumed his private practice of law.
In 1991, PCGG filed motions to disqualify respondent Mendoza as
counsel for respondents, invoking 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 said service.
ISSUE:
Whether or not former Solicitor General Mendoza should be disqualified.
HELD:
No. The Court discussed the meaning of "matter" to which Rule 6.03
pertained to. It 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.
Mendoza merely gave advice on the procedure to liquidate GENBANK and
this is not the "matter" contemplated by Rule 6.03. It was an act of enforcing
or interpreting government or agency procedures which do not fall within the
scope of the term "matter" and cannot disqualify. Mendoza had nothing to do
with the decision of the Central Bank to liquidate GENBANK. He did not
participate in the sale of GENBANK to Allied Bank. The matter where he
got
himself
involved was
in
informing
Central
Bank
on
the procedure provided by law to liquidate GENBANK thru the courts and in
filing the necessary petition in Sp. Proc. No. 107812 in the then Court of First
Instance. Code 6.03 of the Code of Professional Responsibility cannot apply
to respondent Mendoza because his alleged intervention while a
Solicitor General in Sp. Proc. No. 107812 is an intervention on a
matter different from the matter involved in Civil Case No. 0096 (to
nullify the writs of sequestration).
The meaning of "intervention." It only includes an act of a person who
has the power to influence the subject proceedings. The intervention cannot
be insubstantiated and insignificant. Again, the petition filed by Mendoza
merely sought the assistance of the court in the liquidation of GENBANK. The
principal role of the court in this type of proceedings is to assist the central
Bank in determining claims of creditors against the GENBANK. In such a
proceeding, the participation of the Office of the Solicitor General is not that
of the usual court litigator protecting the interest of government.
Balancing Policy Considerations
Rule 6.03 of our Code of Professional Responsibility represents a
commendable effort on the part of the IBP to upgrade the ethics of lawyers in
the government service.
Thus, the rule was not interpreted to cause a chilling effect on
government recruitment of able legal talent.
In interpreting Rule 6.03, the Court also cast a harsh eye on its use as
a litigation tactic to harass opposing counsel as well as deprive his
client of competent legal representation.
It cannot be doubted that granting a disqualification motion causes
the client to lose not only the law firm of choice, but probably an individual
lawyer in whom the client has confidence. The effects of this prejudice to the
right to choose an effective counsel cannot be overstated for it can result in
denial of due process.
The Court has to consider also the possible adverse effect of a
truncated reading of the rule on the official independence of
lawyers in the government service.
The position of Solicitor General should be endowed with a
great degree of independence.
The mischief sought to be remedied by Rule 6.03 of the Code of
Professional
Responsibility
is
the possible
appearance
of
impropriety and loss of public confidence in the government.
The Court should apply Rule 6.03 in all its strictness for it correctly
disfavors lawyers who switch sides.
The act of respondent Mendoza in informing the Central Bank on the
procedure how to liquidate GENBANK is a different matter from the subject
matter of Civil Case No. 0005 which is about the sequestration of the shares
of respondents Tan, et al., in Allied Bank. Consequently, the danger that
confidential official information might be divulged is nil, if not inexistent. To
be sure, there areno inconsistent sides to be bothered about in the
case at bar. For there is no question that in lawyering for respondents

Tan, et al., respondent Mendoza is not working against the interest of Central
Bank. On the contrary, he is indirectly defending the validity of the action of
Central Bank in liquidating GENBANK and selling it later to Allied Bank. Their
interests coincide instead of colliding. It is for this reason that Central
Bank offered no objection to the lawyering of respondent Mendoza in Civil
Case No. 0005 in defense of respondents Tan, et al. There is no switching
of sides for no two sides are involved.

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[G.R. Nos. 151809-12.

April 12, 2005]

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), petitioner,

PCGG issued several writs of sequestration on properties allegedly

case at bar. For there is no question that in lawyering for respondents

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