PCGG vs SDB digest

CHAN, LUIGINE CHRISTI C.

June 19, 2014

PROBLEM AREAS IN LEGAL ETHICS Case Digest PCGG vs Sandiganbayan, et al G.R. Nos. 151809-12. April 12, 2005 Facts: On February 1991, Former Solicitor General Estelito Mendoz, who has currently resumed the private practice of law, was sought to be disqualified from representing the Lucio Tan group, in the 1987 case involving General Bank and Trust Company (GENBANK) as one of those properties subject to a writ of sequestration by PCGG being alleged to be ill –gotten wealth acquired during the Marcos Regime. It was averred by the PCGG that there exists an adverse interest on Mendoza since he was the one who filed a petition praying for assistance and supervision of the court in the liquidation of GENBANK when he was still a Solicitor General, which bank was subsequently owned by the Lucio Tan group when it submitted the winning bid. PCGG invokes Rule 6.03of 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.” Sandiganbayan rejects PCGG’s motion by arguing that CGG failed to prove the existence of an inconsistency between respondent Mendoza’s former function as Solicitor General and his present employment as counsel of the Lucio Tan group and that Mendoza’s appearance as counsel for respondents Tan, et al. was beyond the one-year prohibited period under Section 7(b) of Republic Act No. 6713 since he ceased to be Solicitor General in the year 1986. Issue: WON Rule 6.03 of the Code of Professional Responsibility applies to respondent Mendoza Ruling: No, Rule 6.03 of the CPR is inapplicable in the case. 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. The motion for disqualification should be dismissed for the following reasons: 1) After discussing the history of the present Code of Professional Responsibility which revealed that the word “intervene” is applicable to both adverse interest conflicts and congruent interest conflicts, it has been found that neither of these conflicts exists in the liquidation case and the sequestration case. 2) The legality of the liquidation of GENBANK is not an issue in the sequestration cases. The “matter” where he got himself involved was in informing Central Bank on the procedure provided by law to liquidate GENBANK through the courts and in filing the necessary petition in the then Court of First Instance. The subject “matter” of the special proceeding, therefore, is not the same nor is related to but is different from the subject “matter” in the civil case. The civil case involves the sequestration of the stocks owned by respondents Tan, et al., in Allied Bank on the alleged ground that they are ill-gotten. The case does not involve the liquidation of GENBANK. Nor does it involve the sale of GENBANK to Allied Bank.

Whether the shares of stock of the reorganized Allied Bank are ill-gotten is far removed from the issue of the dissolution and liquidation of GENBANK. GENBANK was liquidated by the Central Bank due, among others, to the alleged banking malpractices of its owners and officers. 3) Mendoza’s intervention in the liquidation of Genbank is not substantial and significant to warrant disqualification. The petition in the special proceedings is an initiatory pleading, hence, it has to be signed by respondent Mendoza as the then sitting Solicitor General. For another, the record is arid as to the actual participation of respondent Mendoza in the subsequent proceedings. Moreover, the petition filed merely seeks 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. It is worthy to note that in construing the words of such rule in this case, the Court balanced the two policy considerations of having a chilling effect on government recruitment of able legal talent and the

use of former government employment as a litigation tactic to harass opposing counsel.