Philippine Supreme Court Jurisprudence


Philippine Supreme Court Jurisprudence > Year 2005 > April 2005 Decisions > PCGG v. Sandiganbayan : 151809-12 : April 12, 2005 : J. Callejo Sr : En Banc : Dissenting Opinion:




PCGG v. Sandiganbayan : 151809-12 : April 12, 2005 : J. Callejo Sr : En Banc : Dissenting Opinion

PHILIPPINE SUPREME COURT DECISIONS

EN BANC

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

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), Petitioner, v. 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.

DISSENTING OPINION

CALLEJO, SR., J.:

The Code of Professional Responsibility is not designed for Holmes' proverbial 'bad man who wants to know just how many corners he may cut, how close to the line he may play, without running into trouble with the law. Rather, it is drawn for the 'good man as a beacon to assist him in navigating an ethical course through the sometimes murky waters of professional conduct.1 ςrνll

With due respect, I dissent from the majority opinion. I believe that the present case behooves the Court to strictly apply the Code of Professional Responsibility and provide an ethical compass to lawyers who, in the pursuit of the profession, often find themselves in the unchartered sea of conflicting ideas and interests. There is certainly, without exception, no profession in which so many temptations beset the path to swerve from the line of strict integrity; in which so many delicate and difficult questions of duty are continually arising.2 The Code of Professional Responsibility establishes the norms of conduct and ethical standards in the legal profession and the Court must not shirk from its duty to ensure that all lawyers live up to its provisions. Moreover, the Court must not tolerate any departure from the 'straight and narrow path demanded by the ethics of the legal profession and enjoin all lawyers to be like Caesar's wife - to be pure and appear to be so.3

Factual and Procedural Antecedents

On July 17, 1987, pursuant to its mandate under Executive Order No. 14 of then President Corazon C. Aquino, the PCGG, on behalf of the Republic of the Philippines, filed with the Sandiganbayan a complaint for 'reversion, reconveyance, restitution, accounting and damages' against respondents Lucio Tan, Carmen Khao Tan, Florencio T. Santos, Natividad P. Santos, Domingo Chua, Tan Hui Nee, Mariano Tanenglian,5 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 Corporation, Allied Leasing and Finance Corporation, Asia Brewery, Inc., Basic Holdings Corp., Foremost Farms, Inc., Fortune Tobacco Corporation, 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 and Development Corp. (collectively referred to herein as respondents Tan, et al., for brevity), then President Ferdinand E. Marcos and Imelda R. Marcos, Panfilo O. Domingo, Cesar Zalamea, Don Ferry and Gregorio Licaros. The case was docketed as Civil Case No. 0005 of the Sandiganbayan (Second Division). In connection therewith, the PCGG issued several writs of sequestration on properties allegedly acquired by the above-named persons by means of taking advantage of their close relationship and influence with former President Marcos.

Shortly thereafter, respondents Tan, et al. filed with this Court petitions for certiorari, prohibition and injunction seeking to, among others, nullify the writs of sequestration issued by the PCGG. After the filing of the comments thereon, this Court referred the cases to the Sandiganbayan (Fifth Division) for proper disposition, docketed therein as follows:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

A. Civil Case No. 0096 - Lucio Tan, Mariano Tanenglian, Allied Banking Corp., Iris Holding and Development Corp., Virgo Holdings Development Corp. and Jewel Holdings, Inc. v. PCGG, which seeks to nullify the PCGG's Order dated June 19, 1986 sequestering the shares of stock in Allied Banking Corporation held by and/or in the name of respondents Lucio Tan, Mariano Tanenglian, Iris Holding and Development Corp., Virgo Holdings Development Corp. and Jewel Holdings, Inc.;chanroblesvirtuallawlibrary

b. Civil Case No. 0097 - Lucio Tan, Carmen Khao Tan, Florencio T. Santos, Natividad Santos, Florencio N. Santos, Jr., and Foremost Farms, Inc. v. PCGG, which seeks to nullify the PCGG's Order dated August 12, 1986 sequestering the shares of stock in Foremost Farms, Inc. held by and/or in the name of Lucio Tan, Carmen Khao Tan, Florencio T. Santos, Natividad Santos and Florencio N. Santos, Jr.;chanroblesvirtuallawlibrary

c. Civil Case No. 0098 - Lucio Tan, Carmen Khao Tan, Mariano Tanenglian, Florencio T. Santos, Natividad Santos, Florencio N. Santos, Jr., Shareholdings, Inc. and Fortune Tobacco Corp. v. PCGG, which seeks to nullify the PCGG's Order dated July 24, 1986 sequestering the shares of stock in Fortune Tobacco Corp. held by and/or in the name of Lucio Tan, Carmen Khao Tan, Mariano Tanenglian, Florencio T. Santos, Natividad Santos, Florencio N. Santos, Jr., Shareholdings, Inc.; andcralawlibrary

d. Civil Case No. 0099 - Lucio Tan, Carmen Khao Tan, Mariano Tanenglian, Florencio T. Santos, Natividad Santos and Shareholdings, Inc. v. PCGG, which seeks to nullify the PCGG's Order dated July 24, 1986 sequestering the shares of stock in Shareholdings, Inc. held by and/or in the name of Lucio Tan, Carmen Khao Tan, Mariano Tanenglian, Florencio T. Santos and Natividad Santos.

In all these cases, respondents Tan, et al. are represented by their counsel Atty. Estelito P. Mendoza, who served as the Solicitor General from 1972 to 1986 during the administration of former President Marcos.

The PCGG filed with the Sandiganbayan (Fifth Division) a motion to disqualify Atty. Mendoza as counsel for respondents Tan, et al. The PCGG alleged that Atty. Mendoza, as then Solicitor General and counsel to the Central Bank, 'actively intervened in the liquidation of General Bank and Trust Company (GENBANK), which was subsequently acquired by respondents Tan, et al. and became Allied Banking Corporation. As shown above, among the litigated properties are the sequestered shares of stocks in Allied Banking Corp. (Civil Case No. 0096).

The acquisition of GENBANK by respondents Tan, et al. is outlined by the PCGG as follows:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

1. In 1976, General Bank and Trust Company (GENBANK) got into financial difficulties. The Central Bank then extended an emergency loan to GENBANK reaching a total of P310 million. In extending this loan, the Central Bank, however, took control of GENBANK with the execution of an irrevocable proxy by 2/3 of GENBANK's outstanding shares in favor of the Central Bank and the election of seven (7) Central Bank nominees to the 11-member Board of Directors of GENBANK. Subsequently, on March 25, 1977, the Monetary Board of the Central Bank issued a Resolution declaring GENBANK insolvent, forbidding it to do business and placing it under receivership.

2. In the meantime, a public bidding for the sale of GENBANK assets and liabilities was scheduled at 7:00 P.M. on March 28, 1977. Among the conditions for the bidding were: (a) submission by the bidder of a letter of credit issued by a bank acceptable to Central Bank to guaranty payment or as collateral of the Central Bank emergency loan; and (b) a 2-year period to repay the said Central Bank emergency loan. 'On March 29, 1977, the Central Bank, through a Monetary Board Resolution, approved the bid of the group of respondents Lucio Tan and Willy Co. This bid, among other things, offered to pay only P500,000.00 for GENBANK assets estimated at P688,201,301.45; Capital Accounts of P103,984,477.55; Cash of P25,698,473.00; and the takeover of the GENBANK Head Office and branch offices. The required letter of credit was also not attached to the bid. What was attached to the bid was a letter of Panfilo O. Domingo, as PNB President, promising to open an irrevocable letter of credit to secure the advances of the Central Bank in the amount of P310 million. Without this letter of commitment, the Lucio Tan bid would not have been approved. But such letter of commitment was a fraud because it was not meant to be fulfilled. Ferdinand E. Marcos, Gregorio Licaros and Panfilo O. Domingo conspired together in giving the Lucio Tan group undue favors such as the doing away with the required irrevocable letter of credit, the extension of the term of payment from two years to five years, the approval of second mortgage as collateral for the Central Bank advances which was deficient by more than P90 Million, and many other concessions to the great prejudice of the government and of the GENBANK stockholders.

3. GENBANK eventually became the Allied Banking Corporation in April 1977. Respondents Lucio Tan, Willy S. Co and Florencio T. Santos are not only incorporators and directors but they are also the major shareholders of this new bank.6 ςrνll

Atty. Mendoza allegedly 'intervened in the acquisition of GENBANK by respondents Tan, et al. since Atty. Mendoza, in his capacity as the Solicitor General, advised the Central Bank's officials on the procedure to bring about GENBANK's liquidation. Further, he appeared as counsel for the Central Bank in connection with its petition for assistance in the liquidation of GENBANK. He filed the said petition with the Court of First Instance (now Regional Trial Court) of and docketed therein as Special Proceeding No. 107812.7 ςrνll

The PCGG opined that Atty. Mendoza's present appearance as counsel for respondents Tan, et al. in the case involving the sequestered shares of stock in Allied Banking Corp. runs afoul of Rule 6.03 of the Code of Professional Responsibility proscribing former government lawyers from accepting 'engagement or employment in connection with any matter in which he had intervened while in said service.

Acting on the said motion, the Sandiganbayan (Fifth Division) issued the assailed Resolution dated July 11, 2001 stating:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Acting on the PCGG's 'MOTION TO DISQUALIFY ATTY. ESTELITO P. MENDOZA AS COUNSEL FOR PETITIONER dated February 5, 1991 which appears not to have been resolved by then Second Division of this Court, and it appearing that (1) the motion is exactly the same in substance as that motion filed in Civil Case No. 0005 as in fact, Atty. Mendoza in his 'OPPOSITION dated March 5, 1991 manifested that he was just adopting his opposition to the same motion filed by PCGG in Civil Case No. 0005 and (2) in the Court's Order dated March 7, 1991, the herein incident was taken-up jointly with the said same incident in Civil Case No. 0005 (pp. 134-135, Vol. I, Record of Civil Case No. 0096), this Division hereby reiterates and adopts the Resolution dated April 22, 1991 in Civil Case No. 0005 of the Second Division (pp. 1418-1424, Vol. III, Record of Civil Case No. 0005) denying the said motion as its Resolution in the case at bar.8 ςrνll

The PCGG sought the reconsideration thereof but its motion was denied in the assailed Resolution dated December 5, 2001, which reads:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Acting on respondent PCGG's 'MOTION FOR RECONSIDERATION dated August 1, 2001 praying for the reconsideration of the Court's Resolution dated July 12, 2001 denying its motion to disqualify Atty. Estelito P. Mendoza as counsel for petitioners, to which petitioners have filed an 'OPPOSITION TO MOTION FOR RECONSIDERATION DATED AUGUST 1, 2001 dated August 29, 2001, as well as the respondent's 'REPLY (To Opposition to Motion for Reconsideration) dated November 16, 2001, it appearing that the main motion to disqualify Atty. Mendoza as counsel in these cases was exactly the same in substance as that motion to disqualify Atty. Mendoza filed by the PCGG in Civil Case No. 0005 (re: Republic v. Lucio Tan, et al.) and the resolutions of this Court (Second Division) in Civil Case No. 0005 denying the main motion as well as of the motion for reconsideration thereof had become final and executory when PCGG failed to elevate the said resolutions to the Supreme Court, the instant motion is hereby DENIED.9 ςrνll

The Resolution10 dated April 22, 1991 of the Sandiganbayan (Second Division) in Civil Case No. 0005, which was adopted by the Fifth Division in Civil Cases Nos. 0096-0099, denied the similar motion to disqualify Atty. Mendoza as counsel for respondents Tan, et al. holding, in essence, that the PCGG 'has failed to prove that there exists an inconsistency between Atty. Mendoza's former function as Solicitor General and his present employment as counsel of the Lucio Tan group.11 The Sandiganbayan (Second Division) explained, thus:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

... It has been said that the test of inconsistency in cases of the character under consideration is not whether the attorney has ever appeared for the party against whom he proposes to appear, but whether his accepting the new retainer will require him, in forwarding the interests of his new client, to do anything which will injuriously affect his former client in any matter in which he formerly represented against him, and whether he will be called upon, in his new relation, to use against his former client any knowledge or information acquired through their former connection. Nor does the rule imposing disability on the attorney mean that he, having once been employed by a client, shall never thereafter appear in any matter against him but merely forbids the attorney's appearance or acting against the client where the attorney can use, to the detriment of such client, the information and confidences acquired during the existence of their relation as attorney and client (7 C.J.S., Pp. 828-829, cited in Primavera Farms, Inc., et al. v. PCGG, supra). Significantly, PCGG's 'Reply does not controvert Atty. Mendoza's claim that in appearing in the instant case, he does not take a position adverse to that he had taken in behalf of the Central Bank of the Philippines in SP No. 107812. Neither did it challenge Atty. Mendoza's claim that the position he took as Solicitor General in behalf of the Central Bank in 1977 when he filed the said case (SP No. 107812) has been maintained by his successors in office. In fact, even incumbent Central Bank Governor Jose Cuisia had interposed no objection to Atty. Mendoza's appearance as counsel for the Lucio Tan group for as long as he maintains the same position he has taken on behalf of the Central Bank of the Philippines as Solicitor General, which position refers to the various resolutions of the Monetary Board and actions of the Central Bank in regard General Bank and Trust Co. as being regular and in accordance with law (Annex 'A', Rejoinder, Records, Pp. 1404-1405).12 ςrνll

The Sandiganbayan (Second Division) further observed that Atty. Mendoza's appearance as counsel for respondents Tan, et al. was well beyond the one-year prohibited period under Section 7(b) of Republic Act No. 6713 since he ceased to be the Solicitor General in the year 1986. The said provision prohibits a former public official or employee from practicing his profession in connection with any matter before the office he used to be with within one year from his resignation, retirement or separation from public office.

As earlier stated, the April 22, 1991 Resolution of the Sandiganbayan (Second Division) was adopted by the Fifth Division in the resolutions now being assailed by the PCGG. Hence, the recourse to this Court by the PCGG.

Procedural Issues

The following procedural issues are raised by respondents Tan, et al.: (1) whether the assailed Sandiganbayan (Fifth Division) Resolutions dated July 11, 2001 and December 5, 2001 are final and executory; hence, the PCGG should have filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court and not the instant Petition for Certiorari under Rule 65 thereof; and (2) whether the instant petition is already barred by the Sandiganbayan (Second Division) Resolution dated April 22, 1991 under the doctrine of res judicata.

In contending that the PCGG availed itself of the wrong remedy in filing the instant Petition for Certiorari, respondents Tan, et al. rely on Section 1, Rule 45 of the Rules of Court which reads:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Section 1. Filing of petition with Supreme Court. - A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified Petition for Review on Certiorari . The petition shall raise only questions of law which must be distinctly set forth.

Section 7 of Presidential Decree No. 1606, as amended by Section 3 of Rep. Act No. 7975, likewise, states:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Sec. 7. Form, Finality and Enforcement of Decisions. -

Decisions and final orders of the Sandiganbayan shall be appealable to the Supreme Court.

I am not persuaded by the arguments proffered by respondents Tan, et al. The above-mentioned rules do not preclude the resort to this Court by way of a Petition for Certiorari under Rule 65 of the Rules of Court of orders or resolutions of the Sandiganbayan. The special civil action of certiorari may be availed of where there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law.13 ςrνll

In this case, the remedy of appeal is not available to the PCGG because the denial of its motion to disqualify Atty. Mendoza as counsel for respondents Tan, et al. is an interlocutory order; hence, not appealable. The word 'interlocutory refers to 'something intervening between the commencement and the end of a suit which decides some point or matter, but is not a final decision of the whole controversy.14 An interlocutory order does not terminate nor does it finally dispose of the case; it does not end the task of the court in adjudicating the parties' contentions and determining their rights and liabilities as against each other but leaves something yet to be done by the court before the case is finally decided on the merits.15 ςrνll

Accordingly, this Court, in not a few cases, had taken cognizance of petitions for certiorari of resolutions of the Sandiganbayan which were in the nature of interlocutory orders. For example, in Serapio v. Sandiganbayan ,16 we took cognizance of, albeit dismissed, the Petition for Certiorari which assailed the resolutions of the Sandiganbayan denying the petition for bail, motion for a reinvestigation and motion to quash filed by accused Edward Serapio. Also, in San Miguel Corporation v. Sandiganbayan ,17 we took cognizance of, albeit dismissed, the petitions for certiorari of several resolutions of the Sandiganbayan involving the sequestered shares of stock in the San Miguel Corp.

To my mind, the PCGG properly filed the instant Petition for Certiorari under Rule 65 to assail the resolutions of the Sandiganbayan (Fifth Division) denying its motion to disqualify Atty. Mendoza as counsel for respondents Tan, et al. in Civil Cases Nos. 0096-0099.

With respect to the second procedural issue raised by respondents Tan, et al., i.e., the instant petition is already barred by the Sandiganbayan (Second Division) Resolution dated April 22, 1991 in Civil Case No. 0005 under the doctrine of res judicata, I submit that the doctrine of res judicata finds no application in this case.

Section 47, Rule 39 of the Revised Rules of Court reads in part:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Sec. 47. Effect of judgments or final orders. - The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:

(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors-in-interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; andcralawlibrary

(c) In any other litigation between the same parties or their successors-in-interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto.

The doctrine of res judicata comprehends two distinct concepts (1) bar by former judgment and (2) conclusiveness of judgment.18 Paragraph (b) embodies the doctrine of res judicata or res adjudicata or bar by prior judgment, while paragraph (c) estoppel by judgment or conclusiveness of judgment.19 In Macahilig v. Heirs of Grace M. Magalit ,20 Justice Artemio Panganiban explained that the term 'final in the phrase judgments or final orders in the above section has two accepted interpretations. In the first sense, it is an order that one can no longer appeal because the period to do so has expired, or because the order has been affirmed by the highest possible tribunal involved.21 The second sense connotes that it is an order that leaves nothing else to be done, as distinguished from one that is interlocutory.22 The phrase refers to a final determination as opposed to a judgment or an order that settles only some incidental, subsidiary or collateral matter arising in an action; for example, an order postponing a trial, denying a motion to dismiss or allowing intervention. Orders that give rise to res judicata or conclusiveness of judgment apply only to those falling under the second category.23 ςrνll

For res judicata to serve as an absolute bar to a subsequent action, the following elements must concur: (1) there is a final judgment or order; (2) the court rendering it has jurisdiction over the subject matter and the parties; (3) the judgment is one on the merits; and (4) there is, between the two cases, identity of parties, subject matter and cause of action.24 When there is no identity of causes of action, but only an identity of issues, there exists res judicata in the concept of conclusiveness of judgment.25 ςrνll

In any case, whether as a bar by prior judgment or in the concept of conclusiveness of judgment, the doctrine of res judicata applies only when there is a judgment or final order which, as earlier discussed, leaves nothing else to be done. As explained by Justice Panganiban, a judgment or an order on the merits is one rendered after a determination of which party is upheld, as distinguished from an order rendered upon some preliminary or formal or merely technical point.26 To reiterate, the said judgment or order is not interlocutory and does not settle only some incidental, subsidiary or collateral matter arising in an action.

The Resolution dated April 22, 1991 of the Sandiganbayan (Second Division) in Civil Case No. 0005 denying the PCGG's similar motion to disqualify Atty. Mendoza as counsel for respondents Tan, et al. therein was evidently an interlocutory order as it did not terminate or finally dispose of the said case. It merely settled an incidental or collateral matter arising therein. As such, it cannot operate to bar the filing of another motion to disqualify Atty. Mendoza in the other cases because, strictly speaking, the doctrine of res judicata, whether to serve as a bar by prior judgment or in the concept of conclusiveness of judgment, does not apply to decisions or orders adjudicating interlocutory motions.27

Substantive Issue

The substantive issue in this case is whether the present engagement of Atty. Mendoza as counsel for respondents Tan, et al. in Civil Cases Nos. 0096-0099 violates the interdiction embodied in Rule 6.03 of the Code of Professional Responsibility.

Canon 6 of our Code of Professional Responsibility reads:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

CANON 6 - THESE CANONS SHALL APPLY TO LAWYERS IN GOVERNMENT SERVICE IN THE DISCHARGE OF THEIR OFFICIAL DUTIES.

Rule 6.01 - The primary duty of a lawyer in public prosecution is not to convict but to see that justice is done. The suppression of facts or the concealment of witnesses capable of establishing the innocence of the accused is highly reprehensible and is cause for disciplinary action.

Rule 6.02 - A lawyer in government service shall not use his public position to promote or advance his private interests, nor allow the latter to interfere with his public duties.

Rule 6.03 - A lawyer shall not, after leaving government service, accept engagement or employment in connection with any matter in which he had intervened while in said service.

A good number of the Canons in our present Code of Professional Responsibility were adopted from the Canons of Professional Ethics of the American Bar Association (ABA).28 Rule 6.03, in particular, is a restatement of Canon 36 of the Canons of Professional Ethics which provided:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

36. RETIREMENT FROM JUDICIAL POSITION OR PUBLIC EMPLOYMENT.

A lawyer should not accept employment as an advocate in any matter upon the merits of which he has previously acted in a judicial capacity.

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.29 Rule 6.03 makes this restriction specifically applicable to lawyers who once held public office. A plain reading of the rule 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 said service.

In the United States, an area of concern involving ethical considerations applicable to former government lawyers is called the 'revolving door - the process by which lawyers temporarily enter government service from private life then leave it for large fees in private practice, where they can exploit information, contacts, and influence garnered in government service.30 To address this, the disqualification of a former government lawyer who has entered private practice may be sought based either on 'adverse-interest conflict or 'congruent-interest representation conflict.

In the 'adverse-interest conflict, a former government lawyer is enjoined from representing a client in private practice if the matter is substantially related to a matter that the lawyer dealt with while employed by the government and if the interests of the current and former clients are adverse.31 It must be observed that the 'adverse-interest conflict applies to all lawyers in that they are generally disqualified from accepting employment in a subsequent representation if the interests of the former client and the present client are adverse and the matters involved are the same or substantially related.32 On the other hand, in 'congruent-interest representation conflict, the disqualification does not really involve a conflict at all, because it prohibits the lawyer from representing a private practice client even if the interests of the former government client and the new client are entirely parallel.33 The 'congruent-interest representation conflict, unlike the 'adverse-interest conflict, is unique to former government lawyers.

I believe that Atty. Mendoza's present engagement as counsel for respondents Tan, et al. in Civil Case No. 0096, which involves the sequestered shares of stocks in Allied Banking Corp., violates the ethical precept embodied in Rule 6.03 of our Code of Professional Responsibility, which is akin to the doctrine of 'congruent-interest representation conflict.

Contrary to the majority opinion, the subject

matter in Civil Case No. 0096 is connected with

or related to a 'matter, i.e. the liquidation

of GENBANK, in which Atty. Mendoza had

intervened as the Solicitor General

The qualifying words or phrases that define the prohibition in Rule 6.03 are (1) 'any matter and (2) 'he had intervened thereon while he was in the government service.34 ςrνll

The United States' ABA Formal Opinion No. 324 recognized that it is difficult to formulate a precise definition of 'matter as used in their Disciplinary Rule (DR), nonetheless, it suggested that the term 'contemplates a discrete and isolatable transaction or set of transaction between identifiable parties.35 ςrνll

There is no dispute that Atty. Mendoza, as the Solicitor General, advised the Central Bank on the procedure to bring about the liquidation of GENBANK. It is, likewise, admitted by respondents Tan, et al. that Atty. Mendoza filed with the then CFI of, the petition for assistance in the liquidation of GENBANK (Special Proceeding No. 107812).36 GENBANK was subsequently acquired by respondents Tan, et al. and became Allied Banking Corp., whose shares of stocks have been sequestered by the PCGG and presently subject of Civil Case No. 0096.

The majority opinion downplays the role of Atty. Mendoza by stating that he 'merely advised the Central Bank on the legal procedure to liquidate GENBANK which procedure is 'given in black and white in R.A. No. 265, section 29. This procedural advice, according to the majority opinion, 'is not the matter contemplated by Rule 6.03 of the Code of Professional Responsibility.

On the contrary, the acts of Atty. Mendoza may be rightfully considered as falling within the contemplation of the term 'matter within the meaning of Rule 6.03. Specifically, Atty. Mendoza's giving counsel to the Central Bank on the procedure to go about GENBANK's liquidation and the filing of the petition therefor in Special Proceedings No. 107812 did not merely involve the drafting, enforcing or interpreting government or agency procedures, regulations or laws, or briefing abstract principles of law.37 These acts were discrete, isolatable as well as identifiable transactions or conduct involving a particular situation and specific party, i.e., the procedure for the liquidation of GENBANK. Consequently, the same can be properly considered 'matter within the contemplation of Rule 6.03.

Moreover, contrary to the contention of respondents Tan, et al., the interdiction in Rule 6.03 does not only apply if precisely the same legal issues are involved in each representation.38 The Comments of the Integrated Bar of the Philippines (IBP) that drafted our Code of Professional Responsibility explained that the restriction covers 'engagement or employment, which means that he cannot accept any work or employment from anyone that will involve or relate to the matter in which he intervened as a public official.39 The sequestration of the shares of stock in Allied Banking Corp. in the names of respondents Tan, et al., which is subject of Civil Case No. 0096, necessarily involves or relates to their acquisition of GENBANK upon its liquidation, in which Atty. Mendoza had intervened as the Solicitor General.

It should be emphasized that Atty. Mendoza's participation in GENBANK's liquidation is sufficient to place his present engagement as counsel for respondents Tan, et al. in Civil Case No. 0096 within the ambit of Rule 6.03. His role was significant and substantial. The Memorandum dated March 29, 1977 prepared by certain key officials40 of the Central Bank, is revealing:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Immediately after said meeting, we had a conference with the Solicitor General and he advised that the following procedure should be taken:

1. Management should submit a memorandum to the Monetary Board reporting that studies and evaluation had been made since the last examination of the bank as of August 31, 1976 and it is believed that the bank can not be reorganized or placed in a condition so that it may be permitted to resume business with safety to its depositors and creditors and the general public.

2. If the said report is confirmed by the Monetary Board, it shall order the liquidation of the bank and indicate the manner of its liquidation and approve a liquidation plan.

3. The Central Bank shall inform the principal stockholders of Genbank of the foregoing decision to liquidate the bank and the liquidation plan approved by the Monetary Board.

4. The Solicitor General shall then file a petition in the Court of First Instance reciting the proceedings which had been taken and praying the assistance of the Court in the liquidation of Genbank.41 ςrνll

The Minutes No. 13 dated March 29, 1977 of the Monetary Board likewise shows that Atty. Mendoza was furnished copies of pertinent documents relating to GENBANK in order to aid him in filing with the court the petition for assistance in the bank's liquidation. The pertinent portion of the said minutes reads:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

The Board decided as follows:

E. To authorize Management to furnish the Solicitor General with a copy of the subject memorandum of the Director, Department of Commercial and Savings Bank dated March 29, 1977, together with copies of:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

1. Memorandum of the Deputy Governor, Supervision and Examination Sector, to the Monetary Board, dated March 25, 1977, containing a report on the current situation of Genbank;chanroblesvirtuallawlibrary

2. Aide Memoire on the Antecedent Facts Re: General Bank and Trust Co., dated March 23, 1977;chanroblesvirtuallawlibrary

3. Memorandum of the Director, Department of Commercial and Savings Bank, to the Monetary Board, dated March 24, 1977, submitting, pursuant to Section 29 of R.A. No. 265, as amended by P.D. No. 1007, a report on the state of insolvency of Genbank, together with its attachments; andcralawlibrary

4. Such other documents as may be necessary or needed by the Solicitor General.

for his use in filing a petition in the Court of First Instance praying the assistance of the Court in the liquidation of Genbank.42 ςrνll

By advising the Central Bank on the procedure to bring about the liquidation of GENBANK and, more significantly, by filing the petition for assistance in its liquidation, Atty. Mendoza had clearly intervened in the liquidation of GENBANK and its subsequent acquisition by respondents Tan, et al.

I disagree with the ponencia's holding that Atty. Mendoza could not be considered as having intervened as it describes the participation of Atty. Mendoza by stating that he 'had no iota of participation in the decision of the Central Bank to liquidate GENBANK.

That the decision to declare GENBANK insolvent was made wholly by the Central Bank, without the participation of Atty. Mendoza, is not in question. Rather, it was his participation in the proceedings taken subsequent to such declaration, i.e., his giving advise to the Central Bank on how to proceed with GENBANK's liquidation and his filing of the petition in Special Proceeding No. 107812 pursuant to Section 2943 of Rep. Act No. 265, that constitutes 'intervention as to place him within the contemplation of Rule 6.03. To intervene means'

1: to enter or appear as an irrelevant or extraneous feature or circumstance; 2: to occur, fall or come between points of time or events; 3: to come in or between by way of hindrance or modification: INTERPOSE; 4: to occur or lie between two things '44 ςrνll

Further, 'intervention is defined as'

1: the act or fact of intervening: INTERPOSITION;

2: interference that may affect the interests of others '45 ςrνll

With the foregoing definitions, it is not difficult to see that by giving counsel to the Central Bank on how to proceed with GENBANK's liquidation and filing the necessary petition therefor with the court, Atty. Mendoza 'had intervened, 'had come in, or 'had interfered, in the liquidation of GENBANK and the subsequent acquisition by respondents Tan, et al. of the said banking institution. Moreover, his acts clearly affected the interests of GENBANK as well as its stockholders.

Contrary to the majority opinion, Rule 6.03 applies

even if Atty. Mendoza did not 'switch sides' or did not

take inconsistent sides. Rule 6.03 applies even if

no conflict of interest exists between Atty. Mendoza's

former government client (Central Bank) and

his present private practice clients (respondents Tan, et al.)

As earlier intimated, Rule 6.03 is a restatement of Canon 36 of the ABA's Canons of Professional Ethics, now superseded by the ABA's Code of Professional Responsibility. In lieu of the old Canon 36, Canon 9 of the ABA's Code of Professional Responsibility mandates that:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

A lawyer should avoid even the appearance of professional impropriety.

Providing specificity to this general caveat, Disciplinary Rule (DR) 9101(B) commands, thus:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

A lawyer shall not accept private employment in a matter in which he had substantial responsibility while he was a public employee.

The purpose of the interdiction, as stated in the ABA Committee on Professional Ethics, Opinion No. 37, is [to avoid] the manifest possibility that ' [a former Government lawyer's] action as a public legal official might be influenced (or open to the charge that it had been influenced) by the hope of later being employed privately to uphold or upset what he had done.46 ςrνll

The old Canon 36, as well as the present Canon 9 and DR9-101(B), rest on the policy consideration that an attorney must seek to avoid even the appearance of evil.47 ςrνll

Being undoubtedly of American origin, the interpretation adopted by the American courts and the ABA has persuasive effect on the interpretation of Rule 6.03.48 Accordingly, I find the case of General Motors Corporation v. City of New York,49 where the pertinent ethical precepts were applied by the United States Court of Appeals (2nd Circuit), particularly instructive. The said US court disqualified the privately retained counsel of the City of New York in the antitrust case it filed against the General Motors Corp. because the said counsel, a former lawyer of the US Department of Justice, had not only participated in the latter's case against General Motors Corp. but signed the complaint in that action.

George D. Reycraft, the counsel whose disqualification was sought in that case, served as a trial attorney assigned at the General Litigation Services of the Antitrust Division of the US Department of Justice from 1952 to 1962. Sometime in 1954, he participated in the investigation of the alleged monopolization by General Motors Corp. of the city and intercity bus business. The investigation culminated with the filing of the antitrust complaint against General Motors Corp. in 1956. Reycraft signed the said complaint but alleged that after 1958 through the time that he left the Department of Justice in 1962, he no longer had any participation in that case.

In disqualifying Reycraft, the US Court gave short shrift to the argument that Reycraft 'has not changed sides' - i.e. 'there is nothing antithetical in the postures of the two governments in question, stating that, per Opinion No. 37 of the ABA Commission on Professional Ethics, the ethical precepts of Canon 9 and DR9-101(B) apply irrespective of the side chosen in private practice. The said court believed that it 'is as it should be for there lurks great potential for lucrative returns in following into private practice the course already charted with the aid of governmental resources.50 ςrνll

The US Court stressed that Reycraft not only participated in the investigation, but he signed the complaint in that action and admittedly had 'substantial responsibility in its investigatory and preparatory stages. It thus concluded that 'where the overlap of issues is so plain and the involvement while in Government employ is so direct, the appearance of impropriety must be avoided through disqualification.51 ςrνll

The General Motors case is illustrative of the 'congruent-interest representation conflict doctrine. It bears stressing that this doctrine applies uniquely to former government lawyers and has been distinguished from the normal rule applicable for non-government lawyers in this wise'

To illustrate the normal rule for non-government lawyers, imagine that the lawyer has represented passenger A and has recovered substantial damages in a suit against a driver. No conflict of interest principle or rule restricts the lawyer from later representing passenger B against the driver with respect to exactly the same accident. B may obtain the benefits of the lawyer's help regardless of the fact that the lawyer might be able to employ to B's advantage information and strategies developed in the representation of A. The critical element is that the interest of A and B do not conflict.

The analysis does not change if we move from an area that is entirely private into one that is arguably more connected with the public interest. Suppose a lawyer in private practice represents Small Soap Company in its suit for damages under the federal antitrust laws against Giant Soap Company. The lawyer would not be disqualified from representing Medium Soap Company against Giant Soap in a succeeding suit for damages based on precisely the same conspiracy. The congruence of interests between Small Soap and Medium Soap would almost certainly mean that the lawyer could represent both clients. In the absence of a conflict - an opposing interest between the two clients ' the existence of a substantial relationship between the matters involved in both cases is irrelevant.

Now, suppose the lawyer has filed suit in behalf of the government against Giant Soap Company to force divestiture of an acquired company on a theory that, because of the acquisition, Giant Soap has monopolized an industry in conflict with antitrust laws. May the lawyer, after leaving government service and while in private practice, represent Medium Soap Company against Giant Soap in a suit for damages based on the same antitrust conspiracy? Does the absence of opposing interests between Medium Soap and the lawyer's former government client similarly mean that there should be no disqualification?chanroblesvirtualawlibrary

At this point, the rules for the former government lawyer diverge sharply from the normal former-client conflict rules: the lawyer is disqualified from representing the successive client in private practice, despite the fact that the interests of the client and the lawyer's former government client are apparently aligned. All that is required for disqualification is the relationship between the former and the succeeding representations.52 ςrνll

The rationale for the 'congruent-interest representation conflict doctrine has been explained, thus:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

The rationale for disqualification is rooted in a concern with the impact that any other rule would have upon the decisions and actions taken by the government lawyer during the course of the earlier representation of the government. Both courts and commentators have expressed the fear that permitting a lawyer to take action in behalf of a government client that later could be to the advantage of private practice client would present grave dangers that a government lawyer's largely discretionary actions would be wrongly influenced by the temptation to secure private practice employment or to favor parties who might later become private practice clients'

The fear that government lawyers will misuse government power in that way is not idle. Lawyers who represent the government often exercise enormous discretion unchecked by an actual client who oversees the lawyer's work. For that reason a special rule is needed to remove the incentive for government lawyers to take discretionary decisions with an eye cast toward advantages in future, nongovernmental employment. The broad disqualification accomplishes that and, particularly under rubrics that do not invariably require disqualification of the entire firm with which the former government lawyer practices, does it without unnecessarily discouraging lawyers from entering temporary public service.53 ςrνll

The foregoing disquisition applies to the case of Atty. Mendoza. Indeed, a textual reading of Rule 6.03 of our Code of Professional Responsibility reveals that no conflict of interests or adverse interests is required for the interdiction to apply. If it were so, or if conflict of interests were an element, then the general conflict of interests rule (Rule 15.03)54 would apply. Rather, the interdiction in Rule 6.03 broadly covers 'engagement or employment in connection with any matter in which he had intervened while in the said service. To reiterate, the drafters of our Code of Professional Responsibility had construed this to mean that a lawyer 'cannot accept any work or employment from anyone that will involve or relate to the matter in which he intervened as a public official, except on behalf of the body or authority which he served during his public employment.55 ςrνll

In Civil Case No. 0096, Atty. Mendoza is certainly not representing the Central Bank but respondents Tan, et al. Granting arguendo that the interests of his present private practice clients (respondents Tan, et al.) and former government client (Central Bank) are apparently aligned, the interdiction in Rule 6.03 applies.

Rule 6.03 purposely does not contain an explicit

temporal limitation because cases have to be

resolved based on their peculiar circumstances

Unless the Code itself provides, the Court cannot set a prescriptive period for any of the provisions therein. That Rule 6.03, in particular, contains no explicit temporal limitation is deliberate. It recognizes that while passage of time is a factor to consider in determining its applicability, the peculiarities of each case have to be considered. For example, in Control Data Corp. v. International Business Mach. Corp.,56 the US District Court of Minnesota held that the lawyer who, 15 years earlier, while an employee of the Department of Justice had been in charge of negotiations in antitrust case against a corporation, was not disqualified from acting as counsel for the plaintiffs suing such corporation. On the other hand, the lawyer whose conduct was the subject of the ABA Opinion No. 37, earlier cited, was himself 10 years removed from the matter over which he had substantial responsibility while in public employ at the time he accepted the private engagement relating to the same matter.57 Clearly, it is the degree of involvement or participation in the matter while in government service, not the passage of time, which is the crucial element in Rule 6.03.

The Code of Professional Responsibility is a codification of legal ethics, that 'body of principles by which the conduct of members of the legal profession is controlled. More specifically and practically considered, legal ethics may be defined as that branch of moral science which treats of the duties which the attorney-at-law owes to his clients, to the courts, to the bar, and to the public.58 In this connection, the Court has consistently characterized disciplinary proceedings, including disqualification cases, against lawyers as sui generis, neither purely civil nor purely criminal, thus:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

[D]isciplinary proceedings against lawyers are sui generis. Neither purely civil nor pure criminal, they do not involve a trial of an action or a suit, but are rather investigations by the Court into the conduct of one of its officers. Not being intended to inflict punishment, [they are] in no sense a criminal prosecution. Accordingly, there is neither a plaintiff nor a prosecutor therein. [They] may be initiated by the Court motu propio. Public interest is [their] primary objective, and the real question for determination is whether or not the attorney is still a fit person be allowed the privileges as such. Hence, in the exercise of its disciplinary powers, the Court merely calls upon a member of the Bar to account for his actuations as an officer of the Court with the end view of preserving the purity of the legal profession and the proper and honest administration of justice59 ςrνll

For this reason, the civil law concept of prescription of actions finds no application in disqualification cases against lawyers.

In this case, while the liquidation of GENBANK took place in 1977, the period that had lapsed is not sufficient to consider it far removed from the present engagement of Atty. Mendoza as counsel for respondents Tan, et al. in Civil Case No. 0096. In fact, the validity of the said liquidation is still pending with the Court.60 The validity of the sequestration of the shares in Allied Banking Corp., which is the subject matter of Civil Case No. 0096, is necessarily intertwined with Special Proceeding No. 107812 involving the liquidation of GENBANK and the acquisition thereof by respondents Tan, et al. The issues presented in the two proceedings are so overlapping and the involvement of Atty. Mendoza while in government employ is so plain, direct and substantial, his disqualification as counsel for respondents Tan, et al. in Civil Case No. 0095 is warranted under Rule 6.03.

Contrary to the majority opinion, the peculiar
circumstances of this case justify the strict application
of Rule 6.03

The ponencia cautions against the strict application of Rule 6.03 because it would have a 'chilling effect on the right of government to recruit competent counsel to defend its interests. This concern is similar to that raised by the City of New York in the General Motors case where it argued that if Reycraft was disqualified, the US court would 'chill the ardor for Government service by rendering worthless the experience gained in Government employ.61 It appeared that the City of New York relied on the pronouncement in the earlier case of United States v. Standard Oil Co,62 knownasthe Esso Export Case, thus:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

If the government service will tend to sterilize an attorney in too large an area of law for too long a time, or will prevent him from engaging in the practice of a technical specialty which he has devoted years in acquiring, and if that sterilization will spread to the firm which he becomes associated, the sacrifice of entering government service will be too great for most men to make.63 ςrνll

Addressing this argument in General Motors, the same US court, through Justice Irving F. Kaufman, also the ponente of the Esso Export Case, distinguished the two cases. It noted that the said court denied the motion to disqualify the former government lawyer in Esso Export Case because the lawyer therein 'never investigated or passed upon the subject matter of the pending case - never rendered or had any specific duty to render any legal advice in relation to the regulations involved in the litigation.64 Hence, the accommodation between maintaining high ethical standards for former Government employees, on the one hand, and encouraging entry into Government service, on the other, was struck under far different circumstances of the Esso Export Case.

In General Motors, the admonition voiced by Justice Kaufman in his article The Former Government Attorney and the Canons of Professional Ethics65 was considered more to the point:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

If there was a likelihood that information pertaining to the pending matter reached the attorney, although he did not 'investigate or 'pass upon it, ', there would undoubtedly be an appearance of evil if he were not disqualified.66 ςrνll

Thus, it was concluded that the Esso Export Case unquestionably presented a case for the cautious application of the 'appearance-of-evil doctrine because the former Government lawyer's connection with the matter at issue was the tenuous one of mere employment in the same Government agency.

In contrast, in General Motors, Reycraft, not only participated in the investigatory and preparatory stages, but also signed the complaint in the action. Thus, according to the US court, where the overlap of issues is so plain, and the involvement while in Government employ so direct, the resulting appearance of impropriety must be avoided through disqualification.

From the foregoing disquisition, it can be gleaned that disqualification cases involving former government lawyers will have to be resolved on the basis of peculiar circumstances attending each case. A balance between the two seemingly conflicting policy considerations of maintaining high ethical standards for former Government employees, on the one hand, and encouraging entry into Government service, on the other, must be struck based on, inter alia, the relationship between the former and the succeeding representations of the former government lawyer. Likewise, as already discussed, the degree of his involvement in the matter while in Government employ is a crucial element in determining if his present representation is within the purview of Rule 6.03.

In this case, not unlike in General Motors, the involvement of Atty. Mendoza in the liquidation of GENBANK while he was the Solicitor General is so direct that the appearance of impropriety must be avoided through disqualification.

Conclusion

Let me just clarify that the record is free from any intimation that Atty. Mendoza was improperly influenced while in government service or that he is guilty of any impropriety in agreeing to represent respondents Tan, et al. However, I am constrained to vote for his disqualification in Civil Case No. 0096 in order to avoid any appearance of impropriety lest it taint both the public and private segments of the legal profession.

ACCORDINGLY, I vote to PARTIALLY GRANT the petition. The Motion to Disqualify Atty. Estelito P. Mendoza is GRANTED insofar as Civil Case No. 0096 is concerned.

Endnotes:


1 General Motors Corp. v. City of New York, 501 F.2d 639 (1974).

2 Foreword of Chief Justice Manuel V. Moran in Malcolm, Legal and Judicial Ethics.

3 Abragan v. Rodriguez, 380 SCRA 93 (2001).

4 EO No. 1, promulgated on February 29, 1986, created the PCGG which was primarily tasked to recover all ill-gotten wealth of former President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates.

5 Mariano Tan Eng Lian in some pleadings.

6 Memorandum of the PCGG, pp. 7-9.

7 The case is now pending with this Court docketed as G.R. No. 152551.

8 Rollo, p. 42.

9 Id. at 43.

10 Penned by Associate Justice Romeo M. Escareal (retired), with Associate Justices Jose S. Balajadia and Nathanael M. Grospe, concurring; Id. at 57.

11 Rollo, p. 61.

12 Id. at 61-62.

13 People v. Sandiganbayan, 408 SCRA 672 (2003).

14 Tambaoan v. Court of Appeals, 365 SCRA 359 (2001); Halili v. Court of Industrial Relations, 22 SCRA 785 (1968) citing BOUVIER'S LAW DICTIONARY, 3rd Revision, Vol. I, p. 1651.

15 Ibid.

16 396 SCRA 443 (2003).

17 340 SCRA 289 (2000).

18 Sta. Lucia Realty and Development, Inc. v. Cabrigas, 358 SCRA 715 (2000).

19 FERIA, II CIVIL PROCEDURE ANNOTATED, 2001 ed., p. 123.

20 344 SCRA 838 (2000).

21 Ibid.

22 Id.

23 Id.

24 Id.

25 Sta. Lucia Realty and Development, Inc. v. Cabrigas, supra.

26 Macahilig v. Heirs of Grace M. Magalit, supra.

27 Id.

28 The ABA first adopted the Canons of Professional Ethics on August 27, 1908. Canons 1 to 32 thereof were adopted by the Philippine Bar Association (PBA) in 1917. In 1946, the PBA again adopted as its own Canons 33 to 47 of the ABA's Canons of Professional Ethics. The ABA's Canons of Professional Ethics were superseded by the Code of Professional Responsibility on January 1, 1970. In 1980, the Integrated Bar of the Philippines (IBP) adopted a proposed Code of Professional Responsibility, which it later submitted to the Supreme Court for approval. On June 21, 1988, the Supreme Court promulgated the present Code of Professional Responsibility. (AGPALO, infra.)

29 AGPALO, COMMENTS ON THE CODE OF PROFESSIONAL RESPONSIBILITY AND JUDICIAL CONDUCT, 2001 ed., p. 52.

30 WOLFRAM, MODERN LEGAL ETHICS (1986), p. 456.

31 Ibid.

32 This prohibition is restated in Rule 15.03 of our Code of Professional Responsibility, thus:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

A lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts.

33 WOLFRAM, supra.

34 AGPALO, supra.

35 WOLFRAM, supra.

36 MEMORANDUM for Respondents Tan, et al., p. 56; Rollo, p. 446.

37 According to the ABA Formal Opinion No. 342, these acts do not fall within the scope of the term 'matter and do not disqualify a lawyer under DR 9-101(B) from subsequent private employment involving the same regulations, procedures or points of law. WOLFRAM, supra.

38 In United States v. Trafficante (328 F.2d 117 [1964]), the United States Court of Appeals (Fifth Circuit) held that, under Canon 36, the attorney who was formerly employed in the office of the Regional Counsel of the Internal Revenue Service and who handled the tax claims against Trafficante which resulted in stipulated settlement in the tax court was disqualified from representing the latter in subsequent suits for foreclosure of liens for balance due on those income taxes and for other federal taxes. The court therein rejected the lawyer's claim that disqualification should be ordered only if precisely the same issues were involved in each representation.

39 AGPALO, supra.

40 Then Senior Deputy Governor Amado R. Brinas, then Deputy Governor Jaime C. Laya, then Deputy Governor and General Counsel Gabriel C. Singson, then Special Assistant to the Governor Carlota P. Valenzuela, then Assistant to the Governor Arnulfo B. Aurellano and then Director of the Department of Commercial and Savings Bank Antonio T. Castro, Jr.

41 RoIllo, p. 109.

42 Id. at 113. (Emphasis supplied.)

43 The provision reads in part:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

SEC. 29. Proceedings upon insolvency. - Whenever, upon examination by the head of the appropriate supervising or examining department or his examiners or agents into the condition of any bank or non-bank financial intermediary performing quasi-banking functions, it shall be disclosed that the condition of the same is one of insolvency, or that its continuance in business would involve probable loss to its depositors or creditors, it shall be the duty of the department head concerned forthwith, in writing, to inform the Monetary Board of the facts, and the Board may, upon finding the statements of the department head to be true, forbid the institution to do business in the Philippines and shall designate an official of the Central Bank or a person of recognized competence in banking or finance, as receiver to immediately take charge of its assets and liabilities, as expeditiously as possible collect and gather all the assets and administer the same for the benefit of its creditors, exercising all the powers necessary for these purposes including, but not limited to, bringing suits and foreclosing mortgages in the name of the bank or non-bank financial intermediary performing quasi-banking functions.

If the Monetary Board shall determine and confirm within the said period that the bank or non-bank financial intermediary performing quasi-banking functions is insolvent or cannot resume business with safety to its depositors, creditors and the general public, it shall, if the public interest requires, orders its liquidation, indicate the manner of its liquidation and approve a liquidation plan. The Central Bank shall, by the Solicitor General, file a petition in the Court of First Instance reciting the proceedings which have been taken and praying the assistance of the court in the liquidation of such institution. The court shall have jurisdiction in the same proceedings to adjudicate disputed claims against the bank or non-bank financial intermediary performing quasi-banking functions and enforce individual liabilities of the stockholders and do all that is necessary to preserve the assets of such institution and to implement the liquidation plan approved by the Monetary Board. The Monetary Board shall designate an official of the Central Bank, or a person of recognized competence in banking or finance, as liquidator who shall take over the functions of the receiver previously appointed by the Monetary Board under this Section. The liquidator shall, with all convenient speed, convert the assets of the banking institution or non-bank financial intermediary performing quasi-banking functions to money or sell, assign or otherwise dispose of the same to creditors and other parties for the purpose of paying the debts of such institution and he may, in the name of the bank or non-bank financial intermediary performing quasi-banking functions, institute such actions as may be necessary in the appropriate court to collect and recover accounts and assets of such institution.

The provisions of any law to the contrary notwithstanding, the actions of the Monetary Board under this Section and the second paragraph of Section 34 of this Act shall be final and executory, and can be set aside by the court only if there is convincing proof that the action is plainly arbitrary and made in bad faith. No restraining order or injunction shall be issued by the court enjoining the Central Bank from implementing its actions under this Section and the second paragraph of Section 34 of this Act, unless there is convincing proof that the action of the Monetary Board is plainly arbitrary and made in bad faith and the petitioner or plaintiff files with the clerk or judge of the court in which the action is pending a bond executed in favor of the Central Bank, in an amount to be fixed by the court. The restraining order or injunction shall be refused or, if granted, shall be dissolved upon filing by the Central Bank of a bond, which shall be in the form of cash or Central Bank cashier(s) check, in an amount twice the amount of the bond of the petitioner or plaintiff conditioned that it will pay the damages which the petitioner or plaintiff may suffer by the refusal or the dissolution of the injunction. The provisions of Rule 58 of the New Rules of Court insofar as they are applicable and not inconsistent with the provisions of this Section shall govern the issuance and dissolution of the restraining order or injunction contemplated in this Section.

Insolvency, under this Act, shall be understood to mean the inability of a bank or non-bank financial intermediary performing quasi-banking functions to pay its liabilities as they fall due in the usual and ordinary course of business: Provided, however, That this shall not include the inability to pay of an otherwise non-insolvent bank or non-bank financial intermediary performing quasi-banking functions caused by extraordinary demands induced by financial panic commonly evidenced by a run on the bank or non-bank financial intermediary performing quasi-banking functions in the banking or financial community.

The appointment of a conservator under Section 28-A of this Act or the appointment of a receiver under this Section shall be vested exclusively with the Monetary Board, the provision of any law, general or special, to the contrary notwithstanding. (As amended by PD Nos. 72, 1007, 1771 & PD No. 1827, Jan. 16, 1981)

44 WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY (1993), p. 1183.

45 Ibid.

46 General Motors Corp. v. City of New York, supra.

47 Kaufman, The Former Government Attorney and the Canons of Professional Ethics, 70 Harv.L.Rev. 657 (1957).

48 See Baas, Jr. v. Court of Appeals, 325 SCRA 259 (2000).

49 Supra.

50 Id. at 650.

51 Id. at 652.

52 WOLFRAM, supra.

53 Ibid.

54 See note 32.

55 See note 39.

56 318 F.Supp. 145 (D.Minn.1970).

57 General Motors Corp. v. City of New York, supra.

58 MALCOLM, LEGAL AND JUDICIAL ETHICS ADAPTED FOR THE REPUBLIC OF THE PHILIPPINES (1949 ed.), p. 8.

59 Heck v. Santos, 423 SCRA 329 (2004) citing In Re Almacen, 31 SCRA 562 (1970).

60 See note 7.

61 General Motors Corp. v. City of New York, supra at 651.

62 136 F.Supp. 345 (S.D.N.Y.1955).

63 Quoted in General Motors Corp. v. City of New York, supra at 651.

64 Id.

65 See note 42.

66 General Motors Corp. v. City of New York, supra.




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April-2005 Jurisprudence                 

  • G.R. No. 101487 - RAUL H. SESBREÑO v. HON. COURT OF APPEALS, ET AL.

  • PNOC v. CA: 109976 : April 26, 2005 : J. Carpio : En Banc : Dissenting Opinion

  • PNOC v. CA: 109976 : April 26, 2005 : J. Tinga : En Banc : Separate Opinion

  • G.R. No. 118127 - CITY OF MANILA, ET AL. v. HON. PERFECTO A.S. LAGUIO, JR., ET AL.

  • G.R. No. 109976 - PHILIPPINE NATIONAL OIL COMPANY v. THE HON. COURT OF APPEALS, ET AL.

  • G.R. No. 122904 - ADORACION E. CRUZ, ET AL. v. THE HONORABLE COURT OF APPEALS, ET AL.

  • G.R. No. 128354 - HOME BANKERS SAVINGS & TRUST CO. v. THE HONORABLE COURT OF APPEALS, ET AL.

  • G.R. No. 128392 - CESAR MATEO, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 129472 - Marcelo Lasoy, et al. v. Hon. Monina A. Zenarosa, et al.

  • G.R. No. 130230 - METROPOLITAN MANILA DEVELOPMENT AUTHORITY v. DANTE O. GARIN

  • G.R. No. 132209 - CARLOS C. BUENDIA v. CITY OF ILIGAN

  • G.R. No. 133709 - CONSTANTE SICCUAN v. PEOPLE OF THE PHILIPPINES

  • G.R. No. 133638 - PERPETUA VDA. DE APE v. THE HONORABLE COURT OF APPEALS, ET AL.

  • G.R. No. 134155 - ANGELITO UY v. PABLEO S. BALOJA

  • G.R. No. 134509 - VENANCIO R. NAVA v. NATIONAL BUREAU OF INVESTIGATION

  • G.R. No. 136062 - TRIFILO MONTEBON v. ATTY. CORAZON TANGLAO-DACANAY, ET AL.

  • G.R. No. 139018 - ESTHERLITA CRUZ-AGANA v. HON. JUDGE AURORA SANTIAGO-LAGMAN, ET AL.

  • G.R. No. 139325 - PRISCILLA C. MIJARES, ET AL. v. HON. SANTIAGO JAVIER RANADA, ET AL.

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