In the Philippine legal landscape, the concept of public office as a "public trust" is not merely a moral aspiration but a constitutional mandate. To safeguard this trust, the law establishes stringent requirements for identifying and addressing Conflict of Interest (COI).

A conflict of interest arises when a public official’s personal, business, or financial interests interfere—or appear to interfere—with the impartial performance of their official duties.

I. Constitutional and Statutory Basis

The prohibition against conflicts of interest is rooted in several key legal instruments:

The 1987 Constitution: Specifically Article XI, Section 1, which mandates that public officers must act with utmost responsibility, integrity, loyalty, and efficiency.
Republic Act No. 6713: Also known as the Code of Conduct and Ethical Standards for Public Officials and Employees. This is the primary law defining and penalizing COI.
Republic Act No. 3019: The Anti-Graft and Corrupt Practices Act, which penalizes specific acts involving financial interests in government transactions.
The Local Government Code (R.A. 7160): Provides specific prohibitions for local elective and appointive officials.

II. Elements of Conflict of Interest

Under Section 3(i) of R.A. 6713, a conflict of interest is established when the following elements concur:

The Individual is a Public Official or Employee: This includes all elective and appointive officials, permanent or temporary, whether in the career or non-career service, including military and police personnel.
Substantial Pecuniary or Material Interest: The official (or their spouse/unmarried children under 18) possesses a financial or material interest in a primary sense.
Professional Relationship or Involvement: The official is a substantial stockholder, member of the Board of Directors, officer, or owner/intermediary of a person, family, or group.
Potential for Gain/Loss: The official’s business interest might be reasonably expected to be affected—positively or negatively—by the performance of their official functions.

III. Prohibited Acts and Transactions

To establish a violation, the law looks at specific behaviors that manifest a conflict of interest:

1. Financial Interests in Transactions

Public officials are prohibited from having a direct or indirect financial interest in any contract or transaction requiring the approval of their office. This is particularly stringent under Section 3(h) of R.A. 3019.

2. Outside Employment and Other Activities

Officials are generally prohibited from:

Owning or managing a private enterprise regulated by or having substantial business with their office.
Practicing a profession where such practice conflicts with their official duties (e.g., a lawyer-legislator appearing as counsel before a quasi-judicial body of the same government unit).
Recommending any person to any position in a private enterprise which has a regular or pending official transaction with their office.

3. Disclosure of Confidential Information

Using "insider information" obtained through one's office to further private interests or give undue advantage to anyone is a clear manifestation of COI.

4. Post-Employment Restrictions (The "Cooling-Off" Period)

Conflict of interest extends even after leaving office. Former officials are prohibited for a period of one (1) year from practicing their profession or being employed in connection with any matter they acted upon during their tenure.

IV. The Requirement of Divestment

If a conflict of interest exists at the time an official assumes office, the law provides a mechanism for rectification: Divestment.

Requirement: The official must resign from their position in any private business enterprise and/or divest themselves of their shareholdings or interest.
Timeline: Divestment must occur within sixty (60) days from the assumption of office. If the official is the "founder" or "major stockholder," the requirement is absolute to avoid the appearance of influence.

V. Evidentiary Standards and Jurisprudence

In Philippine jurisprudence, the Supreme Court has clarified that to establish COI, it is not always necessary to prove that the public suffered an actual loss. The mere possibility of the official’s private interest influencing their public judgment is often sufficient for administrative liability.

For criminal convictions under the Anti-Graft Law (R.A. 3019), the prosecution must prove "manifest partiality," "evident bad faith," or "gross inexcusable negligence" alongside the existence of the prohibited interest.

VI. Penalties and Sanctions

Failure to address or disclose a conflict of interest can lead to:

Administrative Liability: Suspension, fine, or dismissal from service with forfeiture of benefits and perpetual disqualification from holding public office.
Criminal Liability: Imprisonment (typically 6 to 15 years) under the Anti-Graft and Corrupt Practices Act.
Civil Liability: Restitution of any ill-gotten gains or damages caused to the government.