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Republic of the Philippines

SUPREME COURT

EN BANC

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

PRESIDENTIAL COMMISSION ON GOOD GOERNMENT !PCGG",Petitioners,

vs.

SANDIGAN#A$AN !%i&'( Di)isio*", LUCIO C. TAN, CARMEN +AO TAN, %LORENCIO T.

SANTOS, NATIIDAD P. SANTOS, DOMINGO CUA, TAN UI NEE, MARIANO TAN ENG LIAN,

ESTATE O% #ENITO TAN +EE IONG !rprs*' / TARCIANA C. TAN", %LORENCIO N.

SANTOS, R., ARR$ C. TAN, TAN ENG CAN, CUNG POE +EE, MARIANO +OO, MANUEL

+OO, MIGUEL +OO, AIME +OO, ELIA#ET +OO, CELSO RANOLA, 3ILLIAM T.

3ONG, ERNESTO #. LIM, #ENAMIN T. AL#ACITA, 3ILL$ CO, ALLIED #AN+ING CORP.,

ALLIED LEASING AND %INANCE CORPORATION, ASIA #RE3ER$, INC., #ASIC OLDINGS

CORP., %OREMOST %ARMS, INC., %ORTUNE TO#ACCO CORP., GRANDSPAN DEELOPMENTCORP., IMMEL INDUSTRIES, IRIS OLDINGS AND DEELOPMENT CORP., E3EL

OLDINGS, INC., MANU%ACTURING SERICES AND TRADE CORP., MARANA3 OTELS

AND RESORT CORP., NORTERN TO#ACCO REDR$ING PLANT, PROGRESSIE %ARMS,

INC., SAREOLDINGS, INC., SIPALA$ TRADING CORP., IRGO OLDINGS 4

DEELOPMENT CORP., * ATT$. ESTELITO P. MENDOA,Respondents.

D E C I S I O N

PUNO, J.6

This cse isprima impressionesnd it is !ei"hted !ith si"nificnce for it concerns on one hnd, theefforts of the Br to up"rde the ethics of l!#ers in "overn$ent service nd on the other, its effect

on the ri"ht of "overn$ent to recruit co$petent counsel to defend its interests.

In 197, %enerl Bn& nd Trust Co$pn# '%ENBAN() encountered finncil difficulties.

%ENBAN( hd e*tended considerble finncil support to +ilcpitl Develop$ent Corportion

cusin" it to incur dil# overdr!in"s on its current ccount !ith the Centrl Bn&. It !s lter found

b# the Centrl Bn& tht %ENBAN( hd pproved vrious lons to directors, officers, stoc&holders

nd relted interests totlin" P-./ $illion, of !hich 012 !s clssified s doubtful nd P3.030

$illion s uncollectible.As bilout, '( C*'rl #* :'* ;r

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In +ebrur# 176, the EDSA I revolution toppled the 4rcos "overn$ent. One of the first cts of

President Cor;on C. A9uino !s to estblish the Presidentil Co$$ission on %ood %overn$ent

'PC%%) to recover the lle"ed ills o=' s Ci)il Cs No. 0005of the Second Division ofthe Sandiganbayan.6In connection there!ith, the PC%% issued severl >ri's o& s@s'r'io*on

properties lle"edl# c9uired b# the boversfro$ cceptin" >en""e$ent or

e$plo#$ent in connection !ith n# $tter in !hich he hd intervened !hile in sid service.>

On April 22, 1991the Second Division of the Sandiganbayanissued resolution *i*

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4endo; did not t&e position dverse to tht t&en on behlf of the Centrl Bn& durin" his ter$

s Solicitor %enerl.It further ruled tht respondent 4endo;:s ppernce s counsel for

respondents Tn, et al. !s be#ond the one

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codes of conduct. The# !ere not detiled or collected in one source but surprisin"l# !ere

co$prehensive for their ti$e. The principl thrust of the stndrds !s directed to!rds the liti"tion

conduct of l!#ers. It underscored the centrl dut# of truth nd firness in liti"tion s superior to

n# obli"tion to the client. The for$ultions of the liti"tion duties !ere t ti$es intricte, includin"

specific pledin" stndrds, n obli"tion to infor$ the court of flsehoods nd dut# to e*plore

settle$ent lterntives. 4ost of the l!#erGs other bsic duties +ield Code,> introduced ne! set of unifor$ stndrds of

conduct for l!#ers. This concise stte$ent of ei"ht sttutor# duties bec$e l! in severl sttes in

the second hlf of the nineteenth centur#. At the s$e ti$e, le"l eductors, such s Dvid ?off$n

nd %eor"e Shrs!ood, nd $n# other l!#ers !ere !or&in" to flesh out the brod outline of

l!#erGs duties. These refor$ers !rote bout le"l ethics in unprecedented detil nd thus brou"ht

ne! level of understndin" to l!#erGs duties. A nu$ber of $iddo no flsehood> oth nd the deceit prohibitions

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bindin" rules of l!. Criticl to the develop$ent of the ne! codes !s the rethe process b# !hich l!#ers nd otherste$porril# enter "overn$ent service fro$ privte life nd then leve it for lr"e fees in privte

prctice, !here the# cn e*ploit infor$tion, contcts, nd influence "rnered in "overn$ent

service.>0These concerns !ere clssified s )rs-i*'rs' =o*&li='snd =o* A)rs-i*'rs' =o*&li='se*ist !here the $tter in !hich the for$er "overn$ent

l!#er represents client in privte prctice is substntill# relted to $tter tht the l!#er delt

!ith !hile e$plo#ed b# the "overn$ent nd the interests of the current nd for$er re dverse.6On

the other hnd, =o*dverse nd >con"ruent1The rtionle for dis9ulifiction

is rooted in concern tht the "overn$ent l!#er:s lr"el# discretionr# ctions !ould be influenced

b# the te$pttion to t&e ction on behlf of the "overn$ent client tht lter could be to the

dvnt"e of prties !ho $i"ht lter beco$e privte prctice clients./3C*o* ?provides,viz.

/6. Retire$ent fro$ udicil position or public e$plo#$ent

A l!#er should not ccept e$plo#$ent s n dvocte in n# $tter upon the $erits of !hich he

hs previousl# cted in udicil cpcit#.

A l>r, ()i*< o*= (l p@/li= o&&i= or ()i*< /* i* '( p@/li= ;plo s(o@l *o', &'r(is r'ir;*', ==p' ;plo;*' i* =o**='io* >i'( * ;''r ( (s i*)s'i

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* pss @po*!ith the !ord i*'r)*.It is, therefore, properl# pplicble to

both )rs-i*'rs' =o*&li='snd =o* spect of Rule 6.3/

The to unloc& Rule 6.3/ lies in co$prehendin" first, the $enin" of ;''rreferred to in the

rule nd, second, the $etes nd bounds of the i*'r)*'io*$de b# the for$er "overn$ent

l!#er on the >$tter.> The A$ericn Br Assocition in its +or$l Opi*io* ?2, defined >$tter> s

n# discrete, isoltble ct s !ell s identifible trnsction or conduct involvin" prticulr

sitution nd specific prt#, * *o' ;rln ct of drftin", enforcin" or interpretin" "overn$entor "enc# procedures, re"ultions or l!s, or briefin" bstrct principles of l!.

%irs'l, it is criticl tht !e pinpoint the ;''r!hich !s the subect of intervention b#

respondent 4endo; !hile he !s the Solicitor %enerl. The PC%% reltes the follo!in" cts of

respondent 4endo; s constitutin" the ;''r!here he intervened s Solicitor %enerl, viz53

The PC%%:s Cse for Att#. 4endo;:s Dis9ulifiction

The PC%% i$putes "rve buse of discretion on the prt of the Sandiganbayan'+ifth Division) in

issuin" the ssiled Resolutions dted =ul# , 33 nd Dece$ber 0, 33 den#in" the $otion to

dis9ulif# Att#. 4endo; s counsel for respondents Tn, et al. The PC%% insists tht Att#.4endo;, s then Solicitor %enerl, ctivel# intervened in the closure of %ENBAN( b# dvisin" the

Centrl Bn& on ho! to proceed !ith the sid bn&:s li9uidtion nd even filin" the petition for its

li9uidtion !ith the C+I of 4nil.

As proof thereof, the PC%% cites the 4e$orndu$ dted 4rch 1, 1-- prepred b# certin &e#

officils of the Centrl Bn&, n$el#, then Senior Deput# %overnor A$do R. Brins, then Deput#

%overnor =i$e C. 8#, then Deput# %overnor nd %enerl Counsel %briel C. Sin"son, then

Specil Assistnt to the %overnor Crlot P. len;uel, then Asistnt to the %overnor Arnulfo B.

Aurellno nd then Director of Deprt$ent of Co$$ercil nd Svin"s Bn& Antonio T. Cstro, =r.,

!here the# verred tht on 4rch 7, 1--, the# hd conference !ith the Solicitor %enerl 'Att#.

4endo;), !ho dvised the$ on ho! to proceed !ith the li9uidtion of %ENBAN(. The pertinentportion of the sid $e$orndu$ sttes

I$$editel# fter sid $eetin", !e hd conference !ith the Solicitor %enerl nd he dvised tht

the follo!in" procedure should be t&en

. 4n"e$ent should sub$it $e$orndu$ to the 4onetr# Bord reportin" tht studies nd

evlution hd been $de since the lst e*$intion of the bn& s of Au"ust /, 1-6 nd it is

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believed tht the bn& cn not be reor"ni;ed or plced in condition so tht it $# be per$itted to

resu$e business !ith sfet# to its depositors nd creditors nd the "enerl public.

. If the sid report is confir$ed b# the 4onetr# Bord, it shll order the li9uidtion of the bn& nd

indicte the $nner of its li9uidtion nd pprove li9uidtion pln.

/. The Centrl Bn& shll infor$ the principl stoc&holders of %enbn& of the fore"oin" decision to

li9uidte the bn& nd the li9uidtion pln pproved b# the 4onetr# Bord.

5. The Solicitor %enerl shll then file petition in the Court of +irst Instnce recitin" the

proceedin"s !hich hd been t&en nd pr#in" the ssistnce of the Court in the li9uidtion of

%enbn&.

The PC%% further cites the 4inutes No. / dted 4rch 1, 1-- of the 4onetr# Bord !here it

!s sho!n tht Att#. 4endo; !s furnished copies of pertinent docu$ents reltin" to %ENBAN( in

order to id hi$ in filin" !ith the court the petition for ssistnce in the bn&:s li9uidtion. The

pertinent portion of the sid $inutes reds

The Bord decided s follo!s

. . .

E. To uthori;e 4n"e$ent to furnish the Solicitor %enerl !ith cop# of the subect $e$orndu$

of the Director, Deprt$ent of Co$$ercil nd Svin"s Bn& dted 4rch 1, 1--, to"ether !ith

copies of

. 4e$orndu$ of the Deput# %overnor, Supervision nd E*$intion Sector, to the 4onetr#

Bord, dted 4rch 0, 1--, continin" report on the current sitution of %enbn&F

2. Aide Memoireon the Antecedent +cts Re %enerl Bn& nd Trust Co., dted 4rch /, 1--F

/. 4e$orndu$ of the Director, Deprt$ent of Co$$ercil nd Svin"s Bn&, to the 4onetr#

Bord, dted 4rch 5, 1--, sub$ittin", pursunt to Section 1 of R.A. No. 60, s $ended b#

P.D. No. 33-, repot on the stte of insolvenc# of %enbn&, to"ether !ith its ttch$entsF nd

5. Such other docu$ents s $# be necessr# or needed b# the Solicitor %enerl for his use in then

C+I 'o pro=!ith the sid bn&:s

li9uidtion nd even filin" the petition for its li9uidtion !ith the C+I of 4nil.> In fine, the Court

should resolve !hether his ct of dvisin" the Centrl Bn& on the l

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SEC. 1. Proceedings upon insolvency. J @henever, upon e*$intion b# the hed of the

pproprite supervisin" or e*$inin" deprt$ent or his e*$iners or "ents into the condition of

n# bn& or non

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d$"es !hich the petitioner or plintiff $# suffer b# the refusl or the dissolution of the inunction.

The provisions of Rule 07 of the Ne! Rules of Court insofr s the# re pplicble nd not

inconsistent !ith the provisions of this Section shll "overn the issunce nd dissolution of the

restrinin" order or inunction conte$plted in this Section.

Insolvenc#, under this Act, shll be understood to $en the inbilit# of bn& or non(r (

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T(irl, !e no! slide to the $etes nd bounds of the i*'r)*'io*conte$plted b# Rule 6.3/.

>Intervene> $ens, vi;.

to enter or pper s n irrelevnt or e*trneous feture or circu$stnce . . . to occur, fll, or

co$e in bet!een points of ti$e or events . . . / to co$e in or bet!een b# !# of hindrnce or

$odifiction INTERPOSE . . . 5 to occur or lie bet!een t!o thin"s 'Pris, !here the s$e cit# l#on both sides of n intervenin" river . . .)5

On the other hnd, >intervention> is defined s

the ct or fct of intervenin" INTERPOSITIONF interference tht $# ffect the interests of

others.5

There re, therefore, '>opossible interprettions of the !ord >intervene.> Hnder the &irs'

i*'rpr''io*, >intervene> includes prticiption in proceedin" even if the intervention is irrelevnt

or hs no effect or little influence.5/Hnder the s=o* i*'rpr''io*, >intervene> onl# includes n

ct of person !ho hs the po!er to influence the subect proceedin"s.55

@e hold tht this second$enin" is $ore pproprite to "ive to the !ord >intervention> under Rule 6.3/ of the Code of

Professionl Responsibilit# in li"ht of its histor#. The evils sou"ht to be re$edied b# the Rule do not

e*ist !here the "overn$ent l!#er does n ct !hich cn be considered s innocuous such s >* *

* drftin", enforcin" or interpretin" "overn$ent or "enc# procedures, re"ultions or l!s, or

briefin" bstrct principles of l!.>

In fine, the intervention =**o' / i*s@/s'*'il * i*si

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II

Blncin" Polic# Considertions

To be sure, Rule 6.3/ of our Code of Professionl Responsibilit# represents co$$endble effort

on the prt of the IBP to up"rde the ethics of l!#ers in the "overn$ent service. As forestressed,it is t&e57Even the Hnited Sttes

Supre$e Court found no 9urrel !ith the Court of Appels: description of dis9ulifiction $otions s

> dn"erous "$e.>51In the cse t br, the *> '';p'to dis9ulif# respondent 4endo; is

difficult to divine. The dis9ulifiction of respondent 4endo; hs lon" been iss@. It !s

resuscitted fter the lpse of $n# #ers nd onl# fter PC%% hs lost $n# le"l incidents in the

hnds of respondent 4endo;. +or fct, the rec#cled $otion for dis9ulifiction in the cse t br

!s filed ;or '(* &o@r rsfter the filin" of the petitions for certiorari, prohibition nd inunction

!ith the Supre$e Court !hich !ere subse9uentl# re$nded to the Sandiganbayan nd doc&eted

s Civil Cse Nos. 3316

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T( Co@r' (s 'o =o*sir lso '( possi/l )rs &&=' o& 'r@*=' ri*< o& '( r@l

o* '( o&&i=il i*p**= o& l>rs i* '( >i'( s!itchin" sides> crries the dn"er tht for$er

"overn$ent e$plo#ee $#=o;pro;is =o*&i*'il o&&i=il i*'io*in the process. But this

concern does not cst shdo! in the cse t br. As fore

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It is lso ur"ed tht the Court should consider tht Rule 6.3/ is intended to void =o*&li=' o&

lol'is, i.e., tht "overn$ent e$plo#ee $i"ht be subect to conflict of lo#lties !hile still in

"overn$ent service.6The e*$ple "iven b# the proponents of this r"u$ent is tht l!#er !ho

plns to !or& for the co$pn# tht he or she is currentl# chr"ed !ith prosecutin" $i"ht be te$pted

to prosecute less vi"orousl#.6In the cutionr# !ords of the Assocition of the Br Co$$ittee in

163 >The "retest public ris&s risin" fro$ post e$plo#$ent conduct $# !ell occur @ri*probbl# e*cessive.>65?e opines >* * *

it is hrd to i$"ine tht privte fir$ !ould feel secure hidin" so$eone !ho hd ust been dislo#l

to his or her lst client J the "overn$ent. Intervie!s !ith l!#ers consistentl# confir$ tht l! fir$s

!nt the Lbest: "overn$ent l!#ers J the ones !ho !ere hrdest to bet J not the lest 9ulified or

lest vi"orous dvoctes.>60But "in, '(is pr'i=@lr =o*=r* is *o* &='or i* '( =s ' /r.

There is no chr"e "inst respondent 4endo; tht he dvised Centrl Bn& on ho! to li9uidte

%ENBAN( !ith n e#e in lter defendin" respondents Tn, et al. of Allied Bn&. Indeed, he

continues defendin" both the interests of Centrl Bn& nd respondents Tn, et al. in the bove

cses.

8i&e!ise, the Court is nud"ed to consider the need to curtil !ht is perceived s the :=ssi)

i*&l@*= o& r o&&i=ils or '(ir =lo@'.>66Prof. 4or"n "in !rns "inst e*tendin" this

concern too fr. ?e e*plins the rtionle for his !rnin", viz >4uch of !ht ppers to be n

e$plo#ee:s influence $# ctull# be the po!er or uthorit# of his or her position, po!er tht

evportes 9uic&l# upon deprture fro$ "overn$ent * * *.>6-4ore, he contends tht the concern

cn be ;*i** * * The ide tht, present

officils $&e si"nificnt decisions bsed on friendship rther thn on the $erit s#s $ore bout the

present officils thn bout their for$er co

federl officils tht does not see$ ustified or intended, nd it i"nores the possibilit# tht the officils

!ill tend to disfvor their friends in order to void even the ppernce of fvoritis$.>67

III

The 9uestion of firness

4r. =ustices Pn"nibn nd Crpio re of the vie!, $on" others, tht the con"ruent interest pron"

of Rule 6.3/ of the Code of Professionl Responsibilit# should be subect to prescriptive period.

4r. =ustice Tin" opines tht the rule cnnot ppl# retroctivel# to respondent 4endo;. Obviousl#,

nd ri"htl# so, the# re dis9uieted b# the fct tht ') !hen respondent 4endo; !s the Solicitor

%enerl, Rule 6.3/ hs not #et dopted b# the IBP nd pproved b# this Court, nd ') the bid to

dis9ulif# respondent 4endo; !s $de fter the lpse of ti$e !hose len"th cnnot, b# n#

stndrd, 9ulif# s resonble. At botto$, the point the# $&e reltes to the unfirness of the rule ifpplied !ithout n# prescriptive period nd retroctivel#, t tht. Their concern is le"iti$te nd

deserves to be initill# ddressed b# the IBP nd our Co$$ittee on Revision of the Rules of Court.

IN IE3 3EREO%, the petition ssilin" the resolutions dted =ul# , 33 nd Dece$ber 0,

33 of the +ifth Division of the Sandiganbayanin Civil Cse Nos. 3316

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SO ORDERED.