x x x                   x x x                    x x x"

While I concur in the scholarly and ably-written dissent of Justice Romeo J. Callejo, Sr., I feel compelled to write a separate dissenting opinion to reflect the additional reasons behind my position.

Justices Artemio V. Panganiban and Angelina Sandoval-Gutierrez are of the opinion that the petition can be dismissed on procedural grounds, they contending that the Presidential Commission on Government (PCGG) is precluded from filing a motion to disqualify Atty. Estelito P. Mendoza as counsel in Civil Case Nos. 0096 since the Sandiganbayan (Second Division) had already denied PCGG's motion to disqualify Atty. Mendoza as counsel in Civil Case No. 0005. In short, they are invoking the doctrines of conclusiveness of judgment and law of the case.

I believe Kilosbayan, Incorporated v. Morato^[1] penned by the distinguished Justice Vicente V. Mendoza is instructive.

To recall, Kilosbayan, Incorporated (Kilosbayan, Inc.), et al. filed on January 28, 1994 a petition with this Court challenging the validity of the Contract of Lease between the Philippine Charity Sweepstakes Office (PCSO) and the Philippine Gaming Management Corporation (PGMC) on the ground that the same was made in violation of the charter of the PCSO. This Court in Kilosbayan, Incorporated v. Guingona, Jr.^[2] invalidated the contract.

One of the issues raised before this Court in Kilosbayan, Incorporated v. Guingona, Jr. was the standing of petitioners to maintain the suit. On that score, this Court held through Associate Justice (now Chief Justice) Hilario G. Davide, Jr. that petitioners had standing to sue.

As a result of the decision in Kilosbayan, Incorporated v. Guingona, Jr., PCSO and PGMC entered into negotiations for a new agreement which would conform to the Court's decision.

On January 25, 1995, PCSO and PGMC signed an Equipment Lease Agreement (ELA).

On February 21, 1995, Kilosbayan, Inc, et al. filed a petition against then PCSO Chair Manuel Morato seeking to declare the ELA invalid on the ground that it was substantially the same as the Contract of Lease nullified in Kilosbayan, Incorporated v. Guingona, Jr.

Its ruling in Kilosbayan, Incorporated v. Guingona, Jr. notwithstanding, this Court in Kilosbayan, Incorporated v. Morato ruled that the therein petitioners did not have standing to sue.

It explained that the doctrines of law of the case and conclusiveness of judgment do not pose a barrier to the determination of petitioners' right to maintain the suit:

Petitioners argue that inquiry into their right to bring this suit is barred by the doctrine of "law of the case." We do not think this doctrine is applicable considering the fact that while this case is a sequel to G.R. No. 113375, it is not its continuation: The doctrine applies only when a case is before a court a second time after a ruling by an appellate court. Thus in People v. Pinuila, 103 Phil. 992 999 (1958), it was stated:

"'Law of the case' has been defined as the opinion delivered on a former appeal. More specifically, it means that whatever is once irrevocably established as the controlling legal rule of decision between the same parties in the same case continues to be the law of these case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be facts of the case before the court." (21 C.J.S. 330)

"It may be stated as a rule of general application that, where the evidence on a second or succeeding appeal is substantially the same as that on the first or preceding appeal, all matters, questions, points, or issues adjudicated on the prior appeal are the law of the case on all subsequent appeals and will not be considered or re-adjudicated therein. (5 C.J.S. 1267)

"In accordance with the general rule stated in Section 1821, where after a definite determination, the court has remanded the cause for further action below, it will refuse to examine question other than those arising subsequently to such determination and remand, or other than the propriety of the compliance with its mandate; and if the court below has proceeded in substantial conformity to the directions of the appellate court, its action will not be questioned on a second appeal . . .

"As a general rule a decision on a prior appeal of the same is held to be the law of the case whether that decision is right or wrong, the remedy of the party deeming himself aggrieved to seek a rehearing. (5 C.J.S. 1276-77)

"Questions necessarily involved in the decision on a former appeal will be regarded as the law of the case on a subsequent appeal, although the questions are not expressly treated in the opinion of the court, as the presumption is that all the facts in the case bearing on the point decided have received due consideration whether all or none of them are mentioned in the opinion. (5 C.J.S. 1286-87)"

As this Court explained in another case. "The law of the case, as applied to a former decision of an appellate court, ,merely expresses the practice of the courts in refusing to reopen what has been decided. It differs from res judicata in that the conclusive of the first judgment is not dependent upon its finality. The first judgment is generally, if not universally, not final, It relates entirely to questions of law, and is confined in its questions of law, and is confined in its operation to subsequent proceedings in the same case . . . ." (Municipality of Daet v. Court of Appeals, 93 SCRA 503, 521 (1979))

It follows that since the present case is not the same one litigated by he parties before in G.R. No. 113375, the ruling there cannot in any sense be regarded as "the law of this case." The parties are the same but the cases are not.

Nor is inquiry into petitioners; right to maintain this suit foreclosed by the related doctrine of "conclusiveness of judgment."^[3] According to the doctrine, an issue actually and directly passed upon and determined in a former suit cannot again be drawn in question in any future action between the same parties involving a different of action. (Peñalosa v. Tuason, 22 Phil. 303, 313 (1912); Heirs of Roxas v. Galido, 108. 582 [1960])

It has been held that the rule on conclusiveness of judgment or preclusion of issues or collateral estoppel does not apply to issues of law, at least when substantially unrelated claims are involved. (Montana v. United States, 440 U.S. 147, 162, 59 L. Ed. 2d 210, 222 (1979); BATOR, MELTZER, MISHKIN AND SHAPIRO, THE FEDERAL COURTS AND THE FEDERAL SYSTEM 1058, n. 2 (3rd Ed., 1988)) Following this ruling it was held in Commissioner v. Sunnen, 333 U.S. 591, 92 L. Ed. 898 (1947) that where a taxpayer assigned to his wife interest in a patent in 1928 and in a suit it was determined that the money paid to his wife for the years 1929-1931 under the 1928 assignment was not part of his taxable income, this determination is not preclusive in a second action for collection of taxes on amounts to his wife under another deed of assignment for other years (1937 to 1941). For income tax purposes what is decided with respect to one contract is not conclusive as to any other contract which was not then in issue, however similar or identical it may be. The rule on collateral estoppel it was held, "must be confined to situations where the matter raised in the second suit is identical in all respects with that decided in the first preceding and where the controlling facts and applicable legal rules remain unchanged." (333 U.S. at 599-600, 92 L. Ed. at 907) Consequently, "if the relevant facts in the two cases are separate even though they may be similar or identical, collateral estoppel does not govern the legal issues which occur in the second case. Thus the second proceeding may involve an instrument or transaction identical with but in a form separable form, the one dealt with in the first proceeding. In that situation a court is free in the second proceeding to make an independent examination of the legal matters at issue. . . ." (333 U.S. at 601, 92 L. Ed. at 908)

This exception to the General Rule of the Issue Preclusion is authoritatively formulated in Restatement of the Law 2d, on Judgments, as follows:

§28. Although an issue is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, relitigation of the issue in a subsequent action between the parties is not precluded in the following circumstances:

. . . .

(2) The issue is one of law and (a) the two actions involve claims that are substantially unrelated, or (b) a new determination is warranted in order to take account of an intervening change in the applicable legal context or otherwise to avoid inequitable administration of the laws; . . .

Illustration:

. . . .

2. A brings an action against the municipality of B for tortious injury. The court sustain B's defense of sovereign immunity and dismisses the action. Several years later A brings the second action against B for an unrelated tortious injury occurring after the dismissal. The judgment in the first action is not conclusive on the question whether the defense immunity is available to B. Note: The doctrine of stare decisis may lead the court to refuse to reconsider the question of sovereign immunity. See §29, Comment i.

The question whether the petitioners have standing to question the Equipment or ELA is a legal question. As will presently be shown, the ELA, which the petitioners seek to declare invalid in this proceeding, is essentially different from the 1993 Contract of lease entered into by the PCSO with the PGMC. Hence the determination in the prior case (G.R. No. 113375) that the petitioner had standing to challenge the validity of the 1993 Contract of Lease of the parties does not preclude determination of their standing in the present suit. (Emphasis and underscoring supplied; italics in the original)

The doctrine of law of the case does not, I believe, apply to the present case for this is the first time that the issue to disqualify Atty. Mendoza has been elevated before this Court. It is the decision in this case which will be the law of the case. A reading of Republic v. Sandiganbayan^[4] cited by Justice Sandoval-Gutierrez shows that the issue currently before this Court was not passed upon. Thus, this Court in Republic v. Sandiganbayan stated:

The key issues, in query form, are:

(1) Was the SANDIGANBAYAN's denial of the PCGG's motion to dismiss proper?

(2) Should the SANDIGANBAYAN have disposed first such motion to dismiss rather than resolving it as part of the judgment?

(3) Was the nullification of the sequestration order issued against SIPALAY and of the search and seizure order issued against ALLIED correct?

(4) Were the sequestration and search and seizure orders deemed automatically lifted for failure to bring an action in court against SIPALAY and ALLIED within the constitutionally prescribed period?^[5]

I also believe that the doctrine of conclusiveness of judgment does not apply since in the case at bar, the question of whether the motion to disqualify Atty. Mendoza should be granted is undoubtedly a legal question. Moreover, Civil Case No. 005 and Civil Case No. 0096 involve two different substantially unrelated claims.

Justices Panganiban and Sandoval-Gutierrez further opine that the order of the Sandiganbayan in Civil Case No. 0005 denying PCGG's motion to disqualify Atty. Mendoza is not an interlocutory order but a final order, and that as a result, the principle of res judicata applies.

With all due respect, I believe that we cannot characterize the denial of PCGG's motion to disqualify Atty. Mendoza as a final order. Black's Law Dictionary defines interlocutory in the following manner:

Provisional; interim; temporary; not final. 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. An interlocutory order or decree is one which does not finally determine a cause of action but only decides some intervening matter pertaining to the cause, and which requires further steps to be taken in order to enable the court to adjudicate the cause on the merits.^[6] (Emphasis and underscoring supplied)

Justice Oscar M. Herrera, an authority in remedial law, distinguishes between a final judgment and interlocutory order in this wise:

The concept of final judgment, as distinguished from one which has become final or executory as of right (final and executory), is definite and settled. A final judgment or order is one that finally disposes of a case, leaving nothing more to be done by the Court in respect thereto, e.g., an adjudication on the merits which, on the basis of the evidence presented at the trial, declares categorically what the rights and obligations of the parties are and which party is in the right; or a judgment or order that dismisses an action on the ground, for instance, of res judicata or prescription. Once rendered, the task of the Court is ended, as far as deciding the controversy or determining the rights and liabilities of the litigants is concerned. Nothing more remains to be done by the Court except to await the parties' next move (which among others, may consist of the filing of a motion for new trial or reconsideration, or the taking of an appeal) and ultimately, of course, to cause the execution of the judgment once it becomes final, or to use the established and more distinctive term, final and executory. (Investment, Inc. v. Court of Appeals cited in Denso [Phils.], Inc. v. Intermediate Appellate Court, 148 SCRA 280; see also Bank of America NT & SA, G.R. No. 78017, June 8, 1990 186 SCRA 417)

An interlocutory order refers to something between the commencement and end of the suit which decides some point or matter but it is not the final decision of the whole controversy.^[7] (Bitong v. Court of Appeals, G.R. No. 123553, July 13, 1998, 96 SCAD 205) (Emphasis and underscoring supplied)

Justice Florenz D. Regalado is of the same view:

An order is considered interlocutory if it does not dispose of the case but leaves something else to be done by the trial court on the merits of the case. An order is final, for purposes of appeal, if it disposes of the entire case.

Where the order is interlocutory, the movant has to wait for the judgment and then appeal from the judgment, in the course of which appeal he can assign as error the said interlocutory order. The interlocutory order cannot be appealed from separately from the judgment. The general rule is that where the interlocutory order was rendered without or in excess of jurisdiction or with grave abuse of discretion, the remedy is certiorari, prohibition or mandamus depending on the facts of the case.

Where the order appealed from is interlocutory, the appellate court can dismiss the appeal even if no objection thereto was filed by the appellee in either the trial or appellate court.^[8] (Emphasis and underscoring supplied)

Another respected scholar of remedial law, Justice Jose Y. Feria, has formulated this guideline in determining whether an order is final or interlocutory:

The test to ascertain whether or not an order or a judgment is interlocutory or final: Does it leave something to be done in the trial court with respect to the merits of the case? If it does, it is interlocutory; if it does not, it is final. The key test to what is interlocutory is when there is something more to be done on the merits of the case.^[9] (Emphasis and underscoring)

In fact, this same test was used in Tambaoan v. Court of Appeals,^[10] cited by Justice Panganiban to determine whether the trial court's order was interlocutory or final:

In this particular instance, the test to determine whether the order of 06 January 1995 is interlocutory or final would be: Does it leave something else to be done by the trial court on the case? If it does, it is interlocutory, if it does not, it is final. Evidently, the trial court would still have to hear the parties on the merits of the case...

x x x

Indeed, 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." An interlocutory order does not terminate nor does it finally dispose of the is (sic) 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 its merits. (Emphasis and underscoring supplied)

Applying the foregoing test, it is clear that the order denying PCGG's motion to disqualify Atty. Mendoza is interlocutory because it does not finally dispose of the case.

Interestingly enough, the U.S. Supreme Court is in agreement with Justice Callejo's conclusion that the Sandiganbayan's denial of PCGG's motion to disqualify Atty. Mendoza is an interlocutory order. In Firestone Tire & Rubber Company v. Risjord,^[11] the American Court ruled that an order denying motions to disqualify the opposing party's counsel in a civil case are not appealable prior to final judgment in underlying litigation since such an order does not fall within the collateral order exception of Cohen v. Beneficial Industrial Loan Corporation,^[12] which is cited by Justice Sandoval-Gutierrez.

Under § 1291, the courts of appeals are vested with "jurisdiction of appeals from all final decisions of the district courts ... except where a direct review may be had in the Supreme Court." We have consistently interpreted this language as indicating that a party may not take an appeal under this section until there has been "a decision by the District Court that 'ends the litigation on the merits and leaves nothing for the court to do but execute the judgment."' Coopers s & Lybrand v. Livesay, 437 U.S. 463, 467, 98 S.Ct. 2454, 2457, 57 L.Ed.2d 351 (1978), quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945). This rule, that a party must ordinarily raise all claims of error in a single appeal following final judgment on the merits, serves a number of important purposes. It emphasizes the deference that appellate courts owe to the trial judge as the individual initially called upon to decide the many questions of law and fact that occur in the course of a trial. Permitting piecemeal appeals would undermine the independence of the district judge, as well as the special role that individual plays in our judicial system. In addition, the rule is in accordance with the sensible policy of "avoid[ing] the obstruction to just claims that would come from permitting the harassment and cost of a succession of separate appeals from the various rulings to which a litigation may give rise, from its initiation to entry of judgment." Cobbledick v. United States, 309 U.S. 323, 325, 60 S.Ct. 540, 541, 84 L.Ed. 783 (1940). See DiBella v. United States, 369 U.S. 121, 124, 82 S.Ct. 654, 656, 7 L.Ed.2d 614 (1962). The rule also serves the important purpose of promoting efficient judicial administration. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 170, 94 S.Ct. 2140, 2149, 40 L.Ed.2d 732 (1974).

Our decisions have recognized, however, a narrow exception to the requirement that all appeals under § 1291 await final judgment on the merits. In Cohen v. Beneficial Industrial Loan Corp., supra, we held that a "small class" of orders that did not end the main litigation were nevertheless final and appealable pursuant to § 1291. Cohen was a shareholder's derivative action in which the Federal District Court refused to apply a state statute requiring a plaintiff in such a suit to post security for costs. The defendant appealed the ruling without awaiting final judgment on the merits, and the Court of Appeals ordered the trial court to require that costs be posted. We held that the Court of Appeals properly assumed jurisdiction of the appeal pursuant to § 1291 because the District Court's order constituted a final determination of a claim "separable from, and collateral to," the merits of the main proceeding, because it was "too important to be denied review," and because it was "too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated." Id., at 546, 69 S.Ct. at 1225. Cohen did not establish new law; rather, it continued a tradition of giving " 1291 a "practical rather than a technical construction." Ibid. See, e.g., United States v. River Rouge Improvement Co., 269 U.S. 411, 413-414, 46 S.Ct. 144, 70 L.Ed. 339 (1926); Bronson v. LaCrosse & Milwaukee R. Co., 67 U.S. 524-531, 2 Black 524, 530-531, 17 L.Ed. 347 (1863); Forgay v. Conrad, 47 U.S. 201, 203, 6 How. 201, 203, 12 L.Ed.2d 404 (1848); Whiting v. Bank of the United States, 38 U.S. 6, 15, 13 Pet. 6, 15, 10 L.Ed. 33 (1839). We have recently defined this limited class of final "collateral orders" in these terms: "[T]he order must conclusively determine the disputed question, resolve an important issue completely separate from the merits of the action, and be effectively unreviewable on appeal from a final judgment." Coopers & Lybrand v. Livesay, supra, 437 U.S. at 468, 98 S.Ct. at 2457 (footnote omitted). See Abney v. United States, 431 U.S. 651, 658, 97 S.Ct. 2034, 2039, 52 L.Ed.2d 651 (1977).

[1] Because the litigation from which the instant petition arises had not reached final judgment at the time the notice of appeal was filed. [FN11] the order denying petitioner's motion to disqualify respondent is appealable under § 1291 only if it falls within the Cohen doctrine. The Court of Appeals held that it does not, and 5 of the other 10 Circuits have also reached the conclusion that denials of disqualification motions are not immediately appealable "collateral orders." [FN12] We agree with these courts that under Cohen such an order is not subject to appeal prior to resolution of the merits.

FN11. Counsel for respondent represented at oral argument in this Court that the case was, at that time, in the discovery stage. Tr. of Oral Arg. 35-36.

FN12. See n. 10, supra.

An order denying a disqualification motion meets the first part of the "collateral order" test. It "conclusively determine[s] the disputed question," because the only issue is whether challenged counsel will be permitted to continue his representation. In addition, we will assume, although we do not decide, that the disqualification question "resolve [s] an important issue completely separate from the merits of the action," the second part of the test. Nevertheless, petitioner is unable to demonstrate that an order denying disqualification is "effectively unreviewable on appeal from a final judgment" within the meaning of our cases.

In attempting to show why the challenged order will be effectively unreviewable on final appeal, petitioner alleges that denying immediate review will cause it irreparable harm. It is true that the finality requirement should "be construed so as not to cause crucial collateral claims to be lost and potentially irreparable injuries to be suffered," Mathews v. Eldridge, 424 U.S. 319, 331, n. 11, 96 S.Ct. 893, 901, n. 11, 47 L.Ed.2d 18 (1976). In support of its assertion that it will be irreparably harmed, petitioner hints at "the possibility that the course of the proceedings may be indelibly stamped or shaped with the fruits of a breach of confidence or by acts or omissions prompted by a divided loyalty," Brief for Petitioner 15, and at "the effect of such a tainted proceeding in frustrating public policy," id., at 16. But petitioner fails to supply a single concrete example of the indelible stamp or taint of which it warns. The only ground that petitioner urged in the District Court was that respondent might shape the products-liability plaintiffs' claims for relief in such a way as to increase the burden on petitioner. Our cases, however, require much more before a ruling may be considered "effectively unreviewable" absent immediate appeal

[2] To be appealable as a final collateral order, the challenged order must constitute "a complete, formal and, in the trial court, final rejection," Abney v. United States, supra, 431 U.S. at 659, 97 S.Ct. at 2040, of a claimed right "where denial of immediate review would render impossible any review whatsoever," United States v. Ryan, 402 U.S. 530, 533, 91 S.Ct. 1580, 1582, 29 L.Ed.2d 85 (1971). Thus we have permitted appeals prior to criminal trials when a defendant has claimed that he is about to be subjected to forbidden double jeopardy, Abney v. United States, supra, or a violation of his constitutional right to bail, Stack v. Boyle, 342 U.S. 1, 72 S.Ct. 1, 96 L.Ed. 3 (1951) because those situations, like the posting of security for costs involved in Cohen, "each involved an asserted right the legal and practical value of which would be destroyed if it were not vindicated before trial." United States v. MacDonald, 435 U.S. 850, 860, 98 S.Ct. 1547, 1552, 56 L.Ed.2d 18 (1978). By way of contrast, we have generally denied review of pretrial discovery orders, see, e. g., United States v. Ryan, supra; Cobbledick v. United States, supra. Our rationale has been that in the rare case when appeal after final judgment will not cure an erroneous discovery order, a party may defy the order, permit a contempt citation to be entered against him, and challenge the order on direct appeal of the contempt ruling. See Cobbledick v. United States, supra, at 327, 60 S.Ct. at 542. We have also rejected immediate appealability under § 1291 of claims that "may fairly be assessed" only after trial, United States v. MacDonald, supra, at 860, and those involving "considerations that are 'enmeshed in the factual and legal issues comprising the plaintiff's cause of action.'" Coopers & Lybrand v. Livesay, 437 U.S., at 469, 98 S.Ct., at 2458, quoting Mercantile National Bank v. Langdeau, 371 U.S. 555, 558, 83 S.Ct. 520, 522, 9 L.Ed.2d 523 (1963).

An order refusing to disqualify counsel plainly falls within the large class of orders that are indeed reviewable on appeal after final judgment, and not within the much smaller class of those that are not. The propriety of the district court's denial of a disqualification motion will often be difficult to assess until its impact on the underlying litigation may be evaluated, which is normally only after final judgment. The decision whether to disqualify an attorney ordinarily turns on the peculiar factual situation of the case then at hand, and the order embodying such a decision will rarely, if ever, represent a final rejection of a claim of fundamental right that cannot effectively be reviewed following judgment on the merits. In the case before us, petitioner has made no showing that its opportunity for meaningful review will perish unless immediate appeal is permitted. On the contrary, should the Court of Appeals conclude after the trial has ended that permitting continuing representation was prejudicial error, it would retain its usual authority to vacate the judgment appealed from and order a new trial. That remedy seems plainly adequate should petitioner's concerns of possible injury ultimately prove well founded. As the Second Circuit has recently observed, the potential harm that might be caused by requiring that a party await final judgment before it may appeal even when the denial of its disqualification motion was erroneous does not "diffe[r] in any significant way from the harm resulting from other interlocutory orders that may be erroneous, such as orders requiring discovery over a work-product objection or orders denying motions for recusal of the trial judge." Armstrong v. McAlpin, 625 F.2d 433, 438 (1980), cert. pending, No. 80-431. But interlocutory orders are not appealable "on the mere ground that they may be erroneous." Will v. United States, 389 U.S. 90, 98, n. 6, 88 S.Ct. 269, 275, n. 6, 19 L.Ed.2d 305 (1967). Permitting wholesale appeals on that ground not only would constitute an unjustified waste of scarce judicial resources, but also would transform the limited exception carved out in Cohen into a license for broad disregard of the finality rule imposed by Congress in § 1291. This we decline to do. [FN13]

FN13. Although there may be situations in which a party will be irreparably damaged if forced to wait until final resolution of the underlying litigation before securing review of an order denying its motion to disqualify opposing counsel, it is not necessary, in order to resolve those situations, to create a general rule permitting the appeal of all such orders. In the proper circumstances, the moving party may seek sanctions short of disqualification, such as a protective order limiting counsel's ability to disclose or to act on purportedly confidential information. If additional facts in support of the motion develop in the course of the litigation, the moving party might ask the trial court to reconsider its decision. Ultimately, if dissatisfied with the result in the District Court and absolutely determined that it will be harmed irreparably, a party may seek to have the question certified for interlocutory appellate review pursuant to 28 U.S.C. § 1292(b), see n. 7, supra, and, in the exceptional circumstances for which it was designed, a writ of mandamus from the court of appeals might be available. See In re Continental Investment Corp., supra, 637 F.2d, at 7; Community Broadcasting of Boston, Inc. v. FCC, 178 U.S.App.D.C., at 262, 546 F.2d, at 1028. See generally Comment, The Appealability of Orders Denying Motions for Disqualification of Counsel in the Federal Courts, 45 U.Chi.L.Rev. 450, 468-480 (1978). We need not be concerned with the availability of such extraordinary procedures in the case before us, because petitioner has made no colorable claim that the harm it might suffer if forced to await the final outcome of the litigation before appealing the denial of its disqualification motion is any greater than the harm suffered by any litigant forced to wait until the termination of the trial before challenging interlocutory orders it considers erroneous.

III

[3][4][5] We hold that a district court's order denying a motion to disqualify counsel is not appealable under § 1291 prior to final judgment in the underlying litigation. [FN14]

FN14. The United States in its brief amicus curiae, has challenged petitioner's standing to attack the order permitting respondent to continue his representation of the plaintiffs. In light of our conclusion that the Eighth Circuit was without jurisdiction to hear petitioner's appeal, we have no occasion to address the standing issue.^[13] (Emphasis and underscoring supplied; italics in the original)

The ruling in Firestone was subsequently reiterated in Flanagan v. United States^[14] and Richardson-Merrell, Inc. v. Koller.^[15]

Justice Panganiban further suggests that the prohibition in Rule 6.03 of the Code of Professional Responsibility is not perpetual but merely lasts for five years primarily relying on the Civil Code provisions on prescription and the doctrine that the right to practice law is a property right protected by the Constitution.

I do not agree with this framework of analysis. Carried to its logical conclusion, Justice Panganiban's proposal would mean that after five years from the termination of the attorney-client relationship, all lawyers would be able to represent an interest in conflict with that of the former client and that they would no longer be bound by the rule on privileged communication.

It bears emphasis that the law is not trade nor a craft but a profession, a noble profession at that.

The practice of law is a profession, a form of public trust, the performance of which is entrusted only to those who are qualified and who possess good moral character. If the respect of the people in the honor and integrity of the legal profession is to be retained, both lawyers and laymen must recognize and realize that the legal profession is a profession and not a trade, and that the basic ideal of that profession is to render public service and secure justice for those who seek its aid. It is not a business, using bargain counter methods to reap large profits for those who conduct it. From the professional standpoint, it is expressive of three ideals - organization, learning and public service. The gaining of a livelihood is not a professional but a secondary consideration. The professional spirit - the spirit of public service - constantly curbs the urge of that instinct.

The law as a profession proceeds from the basic premise that membership in the bar is a privilege burdened with conditions and carries with it the responsibility to live up to its exacting standards and honored traditions. A person enrolled in its ranks is called upon to aid in the performance of one of the basic purposes of the state - the administration of justice. That the practice of law is a profession explains why lawyers repute and of eminence welcome their designation as counsel de oficio, as an opportunity to manifest fidelity to the concept that law is a profession.

The law must be thought of as ignoring commercial standards of success. The lawyer's conduct is to be measured not by the standards of trade and counting house but by those of his profession. The Code of Professional Responsibility, particularly the ethical rule against advertising or solicitation of professional employment, rests on the fundamental postulate that the practice of law is a profession.

In the matter of fixing his fees, an attorney should never forget that "the profession is a branch of the administration of justice and not a mere money-making trade" and that his standing as a member of the bar "is not enhanced by quibbling relative to just fees, equivalent to the bargaining between a prospective purchaser and a merchant in the market before a sale is made." Law advocacy is not capital that yields profits. The returns are simple rewards for a job done or service rendered. It is a calling that, unlike mercantile pursuits which enjoy a greater deal of freedom from government interference, is impressed with public interest, for which it is subject to State regulation. However, while the practice of law is a profession and an attorney is primarily an officer of the court, he is as much entitled to protection from the against any attempt by his client to escape payment of his just fees, as the client against exaction by his counsel of excessive fees.

To summarize, the primary characteristics which distinguish the legal profession from business are: (a) "a duty of public service, of which emolument is a by-product, and in which one may attain the highest eminence without making much money;" (b) "a relation as officer of the court to the administration of justice involving thorough sincerity, integrity, and reliability;" (c) "a relation to client in the highest degree fiduciary;" and (d) "a relation to colleagues at the bar characterized by candor, fairness, and unwillingness to resort to current business methods of advertising and encroachment on their practice, or dealing directly with their clients.

These characteristics make the law a noble profession, and the privilege to practice it is bestowed only upon individuals who are competent intellectually, academically and morally. Its basic ideal is to render service and to secure justice for those who seek its aid. If it has to remain a noble and honorable profession and attain its ideal, those enrolled in its ranks should not only master its tenets and principles but should also, by their lives, accord continuing fidelity to them. And because they are the vanguards of the law and the legal systems, lawyers must at all times conduct themselves in their professional and private dealings with honesty and integrity in a manner beyond reproach.^[16]

Moreover, the relation of attorney and client is, however, one of trust and confidence of the highest order. It is highly fiduciary in nature and demands utmost fidelity and good faith.

... A lawyer becomes familiar with all the facts connected with his client's case. He learns from his client the weak points of the action as well as the strong ones. Such knowledge must be considered sacred and guarded with care. No opportunity must be given him to take advantage of the client's secrets.

The rule is a rigid one designed not alone to prevent the dishonest practitioner from fraudulent conduct but as well to preclude the honest practitioner from putting himself in a position where he may be required to choose between conflicting duties, and to protect him from unfounded suspicion of professional misconduct. The question is not necessarily one of right of the parties but of adhere to proper professional standards. An attorney should not only keep inviolate his client's confidence but should likewise avoid the appearance of treachery and double-dealing.^[17] (Emphasis and underscoring supplied; citations omitted)

Thus, in Nakpil v. Valdes,^[18] this Court through Justice Reynato S. Puno held that the test to determine whether there is a conflict of interest in the representation is probability, not certainty of conflict.^[19]

Justice Panganiban justifies his theory on the ground that in 5 years time, the lawyer will develop a mild case of amnesia such that "in all probability, the lapse of the said period would also naturally obscure to a reasonable extent a lawyer's memory of details of a specific case despite active participation in the proceedings therein." He thus cites his own personal experience as a member of this Court:

Modesty aside, in my nearly ten (10) years in this Court, I have disposed of about a thousand cases in full-length ponencias and countless cases by way of unsigned minute or extended Resolutions. This does not include the thousands of other cases, assigned to other members of the Court, in which I actively took part during their deliberations. In all honesty, I must admit that I cannot with certainty recall the details of the facts and issues in each of these cases, especially in their earlier ones.

While it is true that over time memory does fade, the ravages of time have been mitigated with the invention of the paper and pen and its modern offspring - the computer. It is not uncommon for lawyers to resort to note taking in the course of handling legal matters.

The proposition that "a profession, trade or calling is a property right within the meaning of our constitutional guarantees" is not unqualified. In JMM Promotion and Management, Inc. v. Court of Appeals^[20] which Justice Panganiban relies on, this Court held:

A profession, trade or calling is a property within the meaning of our constitutional guarantees. One cannot be deprived of the right to work and the right to make a living because these rights are property rights, the arbitrary and unwarranted deprivation of which normally constitutes an actionable wrong.

Nevertheless, no right is absolute, and the proper regulation of a profession, calling, business or trade has always been upheld as a legitimate subject of a valid exercise of the police power by the state particularly when their conduct affects either the execution of legitimate governmental functions, the preservation of the State, the public health and welfare and public morals. According to the maxim, sic utere tuo ut alienum non laedas, it must of course be within the legitimate range of legislative action to define the mode and manner in which every one may so use his own property so as not to pose injury to himself or others.

In any case, where the liberty curtailed affects at most the rights of property, the permissible scope of regulatory measures is certainly much wider. (Emphasis and underscoring supplied; italics in the original; citations omitted)

Under the foregoing, the perpetual application of Rule 6.03 is clearly a valid and proper regulation.

In his ponencia, Justice Reynato S. Puno labels as insignificant the role of then Solicitor General in the liquidation of General Bank and Trust Company (GENBANK), saying that "it is indubitable from the facts that Atty. Mendoza had no iota of participation in the decision of the Central Bank to liquidate GENBANK" and that his only involvement was "advising the Central Bank on how to proceed with the said bank's liquidation and even filing the petition for its liquidation with the CFI of Manila." Justice Puno observes that "the procedure of liquidation is simple and is given in black and white in Republic Act No. 265, section 29."

Atty. Mendoza's lack of participation in the decision of the Central Bank to liquidate GENBANK is to me not material. What is material is his role in facilitating the liquidation of GENBANK through his legal expertise. In advising the Central Bank, Atty. Mendoza did not just mechanically point to section 29 of Republic 265. As then Solicitor General, and as a lawyer known for his keen legal acumen, Atty. Mendoza synthesized facts, which by reason of his position he was privy to, and law with a view to successfully liquidate the bank.

Ultimately, Justice Puno advocates for a liberal interpretation of Rule 6.03 since a strict interpretation would cause "a chilling effect on government recruitment of able legal talent."

With all due respect, I cannot subscribe to this position which is grounded on the premise that this is "the only card that the government may play to recruit lawyers." Effectively, this is likely to result in the compromising of ethical standards which this Court must never allow. While it is desirable to recruit competent lawyers into government service, this does not justify the disturbance of our mores.

The canons and rules of the Code of Professional Responsibility must be strictly construed. Admittedly the salary for serving in government often pales in comparison to that of the private sector. I submit, however, that while financial considerations are important, they are not the sole factor affecting recruitment of lawyers to the government sector. I would like to think that serving in government is its own reward. One needs only to look at all of us members of this Court to know that money is not everything. All of us have, at one point in our legal careers, been tempted by the promise of financial success that private practice usually brings. But in the end, we decided to take the road less traveled and serve in government. And I would like to believe that each and everyone of us has made a difference. There is more to this mortal coil than the pursuit of material wealth. As Winston Churchill puts it: "What is the use of living if it be not to strive for noble causes and make this muddled world a better place for those who will live in it after we are gone?"

ACCORDINGLY, concurring in the dissenting opinion of Justice Romeo J. Callejo, Sr., I vote to grant the petition insofar as Civil Case No. 0096 is concerned, thus granting the motion to disqualify Atty. Estelito P. Mendoza in the said case.

---

^[1] 246 SCRA 540 (1995).

^[2] 232 SCRA 110 (1994).

^[3] The doctrine of "conclusiveness of judgment" is also called "collateral estoppel" or "preclusion of issues," as distinguished from "preclusion of claims" or res judicata. In the Rules of Court, the first (conclusiveness of judgment, collateral estoppel or preclusion of issues) is governed by Rule 39, §49 (c) while the second (res judicata or preclusion of claims) is found in Rule 39, §49 (b).

^[4] 255 SCRA 438 (1996).

^[5] Id. at 448-449.

^[6] BLACK'S LAW DICTIONARY 815 [1991], 6^th ed.

^[7] II O. HERRERA, REMEDIAL LAW 528 (2000).

^[8] I F. REGALADO, REMEDIAL LAW COMPENDIUM 492 (1997), 6^th ed.

^[9] 2 J. FERIA & M. NOCHE, CIVIL PROCEDURE ANNOTATED 152 (2000).

^[10] 365 SCRA 359 (2001).

^[11] 449 U.S. 368 (1981).

^[12] 337 U.S. 541 (1949).

^[13] 449 U.S. 368, 373-380 (1981).

^[14] 465 U.S. 259 (1984).

^[15] 472 U.S. 424 (1985).

^[16] R. AGPALO, COMMENTS ON THE CODE OF PROFESSIONAL RESPONSIBILITY AND THE CODE OF JUDICIAL CONDUCT 3-5 (2004).

^[17] Id. at 165.

^[18] 286 SCRA 758 (1998).

^[19] Id. at 773.

^[20] 260 SCRA 319 (1996).

---

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]

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. 1^[4] 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:

1. 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.;
   
   
2. 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.;
   
   
3. 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.; and
   
   
4. 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:

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. 
   
3. 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.
4. 
   
5. 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]
   

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 Manila and docketed therein as Special Proceeding No. 107812.^[7]

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:

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]

The PCGG sought the reconsideration thereof but its motion was denied in the assailed Resolution dated December 5, 2001, which reads:

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 vs. 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]

The Resolution^[10] 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:

... 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. vs. 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]

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:

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:

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]

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]

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:

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; and

(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]

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]

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:

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:

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]

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]

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 Manila, 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 officials^[40] of the Central Bank, is revealing:

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. 
   
3. 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.
4. 
   
5. 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.
6. 
   
7. 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]
   

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:

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:

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;
2. 
   
3. Aide Memoire on the Antecedent Facts Re: General Bank and Trust Co., dated March 23, 1977;
4. 
   
5. 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; and
6. 
   
7. 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]

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 29^[43] 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]

Further, "intervention" is defined as -

1: the act or fact of intervening: INTERPOSITION; 2: interference that may affect the interests of others ...^[45]

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:

A lawyer should avoid even the appearance of professional impropriety.

Providing specificity to this general caveat, Disciplinary Rule (DR) 9-101(B) commands, thus:

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]

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]

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]

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]

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?

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]

The rationale for the "congruent-interest representation conflict" doctrine has been explained, thus:

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]

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]

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:

[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 justice...^[59]

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] known as the Esso Export Case, thus:

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]

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 Ethics^[65] was considered more to the point:

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]

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.

---

^[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:

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:

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 Bañas, 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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SEPARATE OPINION

TINGA, J.: