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EN BANC

G.R. No. L-18463 October 4, 1922

THE PEOPLE OF THE PHILIPPINE ISLANDS, Plaintiff-Appellee , vs. GREGORIO PERFECTOR, Defendant-Appellant .

MALCOLM, J.: chanrobles virtual law library

The important question is here squarely presented of whether article 256 of the Spanish Penal Code, punishing "Anyperson who, by . . . writing, shall defame, abuse, or insult any Minister of the Crown or other person in authority . . .," isstill in force. chanroblesvirtuallawlibrary chanrobles virtual law library

About August 20, 1920, the Secretary of the Philippine Senate, Fernando M. Guerrero, discovered that certaindocuments which constituted the records of testimony given by witnesses in the investigation of oil companies, haddisappeared from his office. Shortly thereafter, the Philippine Senate, having been called into special session by theGovernor-General, the Secretary for the Senate informed that body of the loss of the documents and of the steps takenby him to discover the guilty party. The day following the convening of the Senate, September 7, 1920, the newspaperLa Nacion , edited by Mr. Gregorio Perfecto, published an article reading as follows:

Half a month has elapsed since the discovery, for the first time, of the scandalous robbery of records which werekept and preserved in the iron safe of the Senate, yet up to this time there is not the slightest indication that theauthor or authors of the crime will ever be discovered. chanroblesvirtuallawlibrary chanrobles virtual law library

To find them, it would not, perhaps, be necessary to go out of the Sente itself, and the persons in charge of theinvestigation of the case would not have to display great skill in order to succeed in their undertaking, unlessthey should encounter the insuperable obstacle of offical concealment. chanroblesvirtuallawlibrary chanroblesvirtual law library

In that case, every investigation to be made would be but a mere comedy and nothingmore. chanroblesvirtuallawlibrary chanrobles virtual law library

After all, the perpetration of the robbery, especially under the circumstances that have surrounded it, does notsurprise us at all. chanroblesvirtuallawlibrary chanrobles virtual law library

The execution of the crime was but the natural effect of the environment of the place in which it wascommitted. chanroblesvirtuallawlibrary chanrobles virtual law library

How many of the present Senators can say without remorse in their conscience and with serenity of mind, thatthey do not owe their victory to electoral robbery? How may? chanrobles virtual law library

The author or authors of the robbery of the records from the said iron safe of the Senate have, perhaps, butfollowed the example of certain Senators who secured their election through fraud and robbery.

The Philippine Senate, in its session of September 9, 1920, adopted a resolution authorizing its committee on elections

and privileges to report as to the action which should be taken with reference to the article published in La Nacion . OnSeptember 15, 1920, the Senate adopted a resolution authorizing the President of the Senate to indorse to the Attorney-General, for his study and corresponding action, all the papers referring to the case of the newspaper La Nacion and itseditor, Mr. Gregorio Perfecto. As a result, an information was filed in the municipal court of the City of Manila by anassistant city fiscal, in which the editorial in question was set out and in which it was alleged that the same constituted aviolation of article 256 of the Penal Code. The defendant Gregorio Perfecto was found guilty in the municipal court andagain in the Court of First Instance of Manila. chanroblesvirtuallawlibrary chanrobles virtual law library

During the course of the trial in the Court of First Instance, after the prosecution had rested, the defense moved for thedismissal of the case. On the subject of whether or not article 256 of the Penal Code, under which the information waspresented, is in force, the trial judge, the Honorable George R. Harvey, said:

This antiquated provision was doubtless incorporated into the Penal Code of Spain for the protection of theMinisters of the Crown and other representatives of the King against free speech and action by Spanish subjects.

A severe punishment was prescribed because it was doubtless considered a much more serious offense to insultthe King's representative than to insult an ordinary individual. This provision, with almost all the other articles of that Code, was extended to the Philippine Islands when under the dominion of Spain because the King's subjectin the Philippines might defame, abuse or insult the Ministers of the Crown or other representatives of HisMajesty. We now have no Ministers of the Crown or other persons in authority in the Philippines representing theKing of Spain, and said provision, with other articles of the Penal Code, had apparently passed into "innocuousdesuetude," but the Supreme Corut of the Philippine Islands has, by a majority decision, held that said article256 is the law of the land to-day. . . . chanroblesvirtuallawlibrary chanrobles virtual law library

The Helbig case is a precedent which, by the rule of stare decisis , is binding upon this court until otherwisedetermined by proper authority.

In the decision rendered by the same judge, he concluded with the following language:


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In the United States such publications are usually not punishable as criminal offense, and little importance isattached to them, because they are generally the result of political controversy and are usually regarded asmore or less colored or exaggerated. Attacks of this character upon a legislative body are not punishable, underthe Libel Law. Although such publications are reprehensible, yet this court feels some aversion to the applicationof the provision of law under which this case was filed. Our Penal Code has come to us from the Spanish regime.Article 256 of that Code prescribes punishment for persons who use insulting language about Ministers of theCrown or other "authority." The King of Spain doubtless left the need of such protection to his ministers and

others in authority in the Philippines as well as in Spain. Hence, the article referred to was made applicable here.Notwithstanding the change of sovereignty, our Supreme Court, in a majority decision, has held that thisprovision is still in force, and that one who made an insulting remark about the President of the United Stateswas punishable under it. (U.S. vs. Helbig, supra .) If it applicable in that case, it would appear to be applicable inthis case. Hence, said article 256 must be enforced, without fear or favor, until it shall be repealed orsuperseded by other legislation, or until the Supreme Court shall otherwisedetermine. chanroblesvirtuallawlibrary chanrobles virtual law library

In view of the foregoing considerations, the court finds the defendant guilty as charged in the information andunder article 256 of their Penal Code sentences him to suffer two months and one day of arresto mayor and theaccessory penalties prescribed by law, and to pay the costs of both instances.

The fifteen errors assigned by the defendant and appellant, reenforced by an extensive brief, and eloquent oralargument made in his own behalf and by his learned counsel, all reduce themselves to the pertinent and decisive

question which was announced in the beginning of this decision. chanroblesvirtuallawlibrary chanrobles virtual law library

It will be noted in the first place that the trial judge considered himself bound to follow the rule announced in the case of United States vs. Helbig (R. G. No. 14705, 1 not published). In that case, the accused was charged with having said, "Tohell with the President and his proclamations, or words to that effect," in violation of article 256 of the Penal Code. Hewas found guilty in a judgment rendered by the Court of First Instance of Manila and again on appeal to the SupremeCourt, with the writer of the instant decision dissenting on two principal grounds: (1) That the accused was deprived of the constitutional right of cross-examination, and (2) that article 256 of the Spanish Penal Code is no longer in force.Subsequently, on a motion of reconsideration, the court, being of the opinion that the Court of First Instance hadcommitted a prejudicial error in depriving the accused of his right to cross-examine a principal witness, set aside the

judgment affirming the judgment appealed from and ordered the return of the record to the court of origin for thecelebration of a new trial. Whether such a trial was actually had, is not known, but at least, the record in the Helbig casehas never again been elevated to this court. chanroblesvirtuallawlibrary chanrobles virtual law library

There may perchance exist some doubt as to the authority of the decision in the Helbig case, in view of thecircumstances above described. This much, however, is certain: The facts of the Helbig case and the case before us,which we may term the Perfecto case, are different, for in the first case there was an oral defamation, while in thesecond there is a written defamation. Not only this, but a new point which, under the facts, could not have beenconsidered in the Helbig case, is, in the Perfecto case, urged upon the court. And, finally, as is apparent to all, theappellate court is not restrained, as was the trial court, by strict adherence to a former decision. We much prefer toresolve the question before us unhindered by references to the Helbig decision. chanroblesvirtuallawlibrary chanroblesvirtual law library

This is one of those cases on which a variety of opinions all leading to the same result can be had. A majority of thecourt are of the opinion that the Philippine Libel Law, Act No. 277, has had the effect of repealing so much of article 256of the Penal Code as relates to written defamation, abuse, or insult, and that under the information and the facts, thedefendant is neither guilty of a violation of article 256 of the Penal Code, nor of the Libel Law. The view of the Chief

Justice is that the accused should be acquitted for the reason that the facts alleged in the information do not constitute a

violation of article 156 of the Penal Code. Three members of the court believe that article 256 was abrogated completelyby the change from Spanish to American sovereignty over the Philippines and is inconsistent with democratic principlesof government. chanroblesvirtuallawlibrary chanrobles virtual law library

Without prejudice to the right of any member of the court to explain his position, we will discuss the two main points justmentioned.

1. Effect of the Philippine Libel Law, Act No. 277, on article 256 of the Spanish Penal Code . - The Libel Law, ActNo. 277, was enacted by the Philippine Commission shortly after organization of this legislative body. Section 1defines libel as a "malicious defamation, expressed either in writing, printing, or by signs or pictures, or the like,or public theatrical exhibitions, tending to blacken the memory of one who is dead or to impeach the honesty,virtue, or reputation, or publish the alleged or natural deffects of one who is alive, and thereby expose him topublic hatred, contempt or ridicule." Section 13 provides that "All laws and parts of laws now in force, so far asthe same may be in conflict herewith, are hereby repealed. . . ."

That parts of laws in force in 1901 when the Libel Law took effect, were in conflict therewith, and that the Libel Lawabrogated certain portion of the Spanish Penal Code, cannot be gainsaid. Title X of Book II of the Penal Code, coveringthe subjects of calumny and insults, must have been particularly affected by the Libel Law. Indeed, in the early case of Pardo de Tavera vs. Garcia Valdez ([1902], 1. Phil., 468), the Supreme Court spoke of the Libel Law as " reforming thepreexisting Spanish law on the subject of calumnia and injuria ." Recently, specific attention was given to the effect of the Libel Law on the provisions of the Penal Code, dealing with calumny and insults, and it was found that thoseprovisions of the Penal Code on the subject of calumny and insults in which the elements of writing an publicity entered,were abrogated by the Libel Law. (People vs. Castro [1922], p. 842, ante .) chanrobles virtual law library

The Libel Law must have had the same result on other provisions of the Penal Code, as for instance article256. chanroblesvirtuallawlibrary chanrobles virtual law library


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The facts here are that the editor of a newspaper published an article, naturally in writing, which may have had thetendency to impeach the honesty, virtue, or reputation of members of the Philippine Senate, thereby possibly exposingthem to public hatred, contempt, or ridicule, which is exactly libel, as defined by the Libel Law. Sir J. F. Stephen isauthority for the statement that a libel is indictable when defaming a "body of persons definite and small enough forindividual members to be recognized as such, in or by means of anything capable of being a libel." (Digest of CriminalLaw, art. 267.) But in the United States, while it may be proper to prosecute criminally the author of a libel charging alegislator with corruption, criticisms, no matter how severe, on a legislature, are within the range of the liberty of the

press, unless the intention and effect be seditious. (3 Wharton's Criminal Law, p. 2131.) With these facts and legalprinciples in mind, recall that article 256 begins: Any person who, by . . . writing , shall defame, abuse, or insult anyMinister of the Crown or other person in authority," etc. chanroblesvirtuallawlibrary chanrobles virtual law library

The Libel Law is a complete and comprehensive law on the subject of libel. The well-known rule of statutory constructionis, that where the later statute clearly covers the old subject-matter of antecedent acts, and it plainly appears to havebeen the purpose of the legislature to give expression in it to the whole law on the subject, previous laws are held to berepealed by necessary implication. (1 Lewis' Sutherland Statutory Construction, p. 465.) For identical reasons, it isevident that Act No. 277 had the effect so much of this article as punishes defamation, abuse, or insults bywriting. chanroblesvirtuallawlibrary chanrobles virtual law library

Act No. 292 of the Philippine Commission, the Treason and Sedition Law, may also have affected article 256, but as tothis point, it is not necessary to make a pronouncement.

2. Effect of the change from Spanish to Amercian sevoreignty over the Philippine son article 256 of the SpanishPenal Code . - Appellant's main proposition in the lower court and again energetically pressed in the appellatecourt was that article 256 of the Spanish Penal Code is not now in force because abrogated by the change fromSpanish to American sovereignty over the Philippines and because inconsistent with democratic principles of government. This view was indirectly favored by the trial judge, and, as before stated, is the opinion of threemembers of this court.

Article 256 is found in Chapter V of title III of Book II of the Spanish Penal Code. Title I of Book II punishes the crimes of treason, crimes that endanger the peace or independence of the state, crimes against international law, and the crimeof piracy. Title II of the same book punishes the crimes of lese majeste , crimes against the Cortes and its members andagainst the council of ministers, crimes against the form of government, and crimes committed on the occasion of theexercise of rights guaranteed by the fundamental laws of the state, including crime against religion and worship. Title IIIof the same Book, in which article 256 is found, punishes the crimes of rebellion, sedition, assaults upon persons inauthority, and their agents, and contempts, insults, injurias , and threats against persons in authority, and insults,injurias , and threats against their agents and other public officers, the last being the title to Chapter V. The first twoarticles in Chapter V define and punish the offense of contempt committed by any one who shall be word or deeddefame, abuse, insult, or threathen a minister of the crown, or any person in authority. The with an article condemningchallenges to fight duels intervening, comes article 256, now being weighed in the balance. It reads as follows: "Anyperson who, by word, deed, or writing, shall defame, abuse, or insult any Minister of the Crown or other person inauthority , while engaged in the performance of official duties, or by reason of such performance, provided that theoffensive minister or person, or the offensive writing be not addressed to him, shall suffer the penalty of arresto mayor ,"- that is, the defamation, abuse, or insult of any Minister of the Crown of the Monarchy of Spain (for there could not be aMinister of the Crown in the United States of America), or other person in authority in the Monarchy of Spain .chanroblesvirtuallawlibrary chanrobles virtual law library

It cannot admit of doubt that all those provisions of the Spanish Penal Code having to do with such subjects as treason,lese majeste , religion and worship, rebellion, sedition, and contempts of ministers of the crown, are not longer in force.Our present task, therefore, is a determination of whether article 256 has met the same fate, or, more specifically

stated, whether it is in the nature of a municipal law or political law, and is consistent with the Constitution and laws of the United States and the characteristics and institutions of the American Government. chanroblesvirtuallawlibrarychanrobles virtual law library

It is a general principle of the public law that on acquisition of territory the previous political relations of the cededregion are totally abrogated. "Political" is here used to denominate the laws regulating the relations sustained by theinhabitants to the sovereign. (American Insurance Co. vs. Canter [1828], 1 Pet., 511; Chicago, Rock Island and PacificRailway Co. vs. McGlinn [1885], 114 U.S., 542; Roa vs. Collector of Customs [1912], 23 Phil., 315.) Mr. Justice Field of theUnited States Supreme Court stated the obvious when in the course of his opinion in the case of Chicago, Rock Islandand Pacific Railway Co. vs. McGlinn, supra, he said: "As a matter of course, all laws, ordinances and regulations inconflict with the political character, institutions and Constitution of the new government are at once displaced. Thus,upon a cession of political jurisdiction and legislative power - and the latter is involved in the former - to the UnitedStates, the laws of the country in support of an established religion or abridging the freedom of the press , or authorizingcruel and unusual punishments, and he like, would at once cease to be of obligatory force without any declaration to

that effect." To quote again from the United States Supreme Court: " It cannot be admitted that the King of Spain could,by treaty or otherwise, impart to the United States any of his royal prerogatives ; and much less can it be admitted thatthey have capacity to receive or power to exercise them. Every nation acquiring territory, by treaty or otherwise, musthold it subject to the Constitution and laws of its own government, and not according to those of the government cedingit." (Pollard vs. Hagan [1845], 3 Hos., 210.) chanrobles virtual law library

On American occupation of the Philippines, by instructions of the President to the Military Commander dated May 28,1898, and by proclamation of the latter, the municipal laws of the conquered territory affecting private rights of personand property and providing for the punishment of crime were nominally continued in force in so far as they werecompatible with the new order of things. But President McKinley, in his instructions to General Merritt, was careful tosay: "The first effect of the military occupation of the enemy's territory is the severance of the former political relation of the inhabitants and the establishment of a new political power." From that day to this, the ordinarily it has been takenfor granted that the provisions under consideration were still effective. To paraphrase the language of the United States


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Supreme Court in Weems vs. United States ([1910], 217 U. S., 349), there was not and could not be, except as precisequestions were presented, a careful consideration of the codal provisions and a determination of the extent to whichthey accorded with or were repugnant to the " 'great principles of liberty and law' which had been 'made the basis of our governmental system . ' " But when the question has been squarely raised, the appellate court has been forced onoccasion to hold certain portions of the Spanish codes repugnant t democratic institutions and American constitutionalprinciples. (U.S. vs. Sweet [1901], 1 Phil., 18; U.S. vs. Balcorta [1913], 25 Phil., 273; U.S. vs. Balcorta [1913], 25 Phil.,533; Weems vs. U.S., supra .) chanrobles virtual law library

The nature of the government which has been set up in the Philippines under American sovereignty was outlined byPresident McKinley in that Magna Charta of Philippine liberty, his instructions to the Commission, of April 7, 1900. In part,the President said:

In all the forms of government and administrative provisions which they are authorized to prescribe, theCommission should bear in mind that he government which they are establishing is designed not for oursatisfaction or for the expression of our theoretical views, but for the happiness, peace, and prosperity of thepeople of the Philippine Islands, and the measures adopted should be made to conform to their customs, theirhabits, and even their prejudices, to the fullest extent consistent with the accomplishment of the indispensablerequisites of just and effective government. At the same time the Commission should bear in mind, and the

people of the Islands should be made plainly to understand, that there are certain great principles of government which have been made the basis of our governmental system, which we deem essential to the ruleof law and the maintenance of individual freedom, and of which they have, unfortunately, been denied the

experience possessed by us; that there are also certain practical rules of government which we have found to beessential to the preservation of these great principles of liberty and law, and that these principles and theserules of government must be established and maintained in their islands for the sake of their liberty and happiness , however much they may conflict with the customs or laws of procedure with which they are familiar.It is evident that the most enligthened thought of the Philippine Islands fully appreciates the importance of theseprinciples and rules, and they will inevitably within a short time command universal assent.

The courts have naturally taken the same view. Mr. Justice Elliott, speaking for our Supreme Court, in the case of UnitedStates vs. Bull ([1910], 15 Phil., 7), said: "The President and Congress framed the government on the model with whichAmerican are familiar, and which has proven best adapted for the advancement of the public interests and theprotection of individual rights and privileges." chanrobles virtual law library

Therefore, it has come with somewhat of a shock to hear the statement made that the happiness, peace, and prosperityof the people of the Philippine Islands and their customs, habits, and prejudices, to follow the language of PresidentMcKinley, demand obeisance to authority, and royal protection for that authority. chanroblesvirtuallawlibrary chanroblesvirtual law library

According to our view, article 256 of the Spanish Penal Code was enacted by the Government of Spain to protectSpanish officials who were the representatives of the King. With the change of sovereignty, a new government, and anew theory of government, as set up in the Philippines. It was in no sense a continuation of the old, although merely forconvenience certain of the existing institutions and laws were continued. The demands which the new governmentmade, and makes, on the individual citizen are likewise different. No longer is there a Minister of the Crown or a personin authority of such exalted position that the citizen must speak of him only with bated breath. " In the eye of our Constitution and laws, every man is a sovereign, a ruler and a freeman, and has equal rights with every other man . Wehave no rank or station, except that of respectability and intelligence as opposed to indecency and ignorance, and thedoor to this rank stands open to every man to freely enter and abide therein, if he is qualified, and whether he isqualified or not depends upon the life and character and attainments and conduct of each person for himself. Every manmay lawfully do what he will, so long as it is not malum in se or malum prohibitum or does not infringe upon the qually

sacred rights of others." (State vs. Shepherd [1903], 177 Mo., 205; 99 A. S. R., 624.) chanrobles virtual law library

It is true that in England, from which so many of the laws and institutions of the United States are derived, there wereonce statutes of scandalum magnatum , under which words which would not be actionable if spoken of an ordinarysubject were made actionable if spoken of a peer of the realm or of any of the great officers of the Crown, without proof of any special damage. The Crown of England, unfortunately, took a view less tolerant that that of other sovereigns, asfor instance, the Emperors Augustus, Caesar, and Tiberius. These English statutes have, however, long since, becomeobsolete, while in the United States, the offense of scandalum magnatum is not known. In the early days of the AmericanRepublic, a sedition law was enacted, making it an offense to libel the Government, the Congress, or the President of theUnited States, but the law met with so much popular disapproval, that it was soon repealed. " In this country nodistinction as to persons is recognized , and in practice a person holding a high office is regarded as a target at whomany person may let fly his poisonous words. High official position, instead of affording immunity from slanderous andlibelous charges, seems rather to be regarded as making his character free plunder for any one who desires to create asenation by attacking it." (Newell, Slander and Libel, 3d ed., p. 245; Sillars vs. Collier [1890], 151 Mass., 50; 6 L.R.A.,

680.) chanrobles virtual law library

Article 256 of the Penal Code is contrary to the genius and fundamental principles of the American character and systemof government. The gulf which separates this article from the spirit which inspires all penal legislation of Americanorigin, is as wide as that which separates a monarchy from a democratic Republic like that of the United States. Thisarticle was crowded out by implication as soon as the United States established its authority in the Philippine Islands.Penalties out of all proportion to the gravity of the offense, grounded in a distorted monarchical conception of the natureof political authority, as opposed to the American conception of the protection of the interests of the public, have beenobliterated by the present system of government in the Islands. chanroblesvirtuallawlibrary chanrobles virtual law library

From an entirely different point of view, it must be noted that this article punishes contempts against executive officials,although its terms are broad enough to cover the entire official class. Punishment for contempt of non-judicial officershas no place in a government based upon American principles. Our official class is not, as in monarchies, an agent of


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some authority greater than the people but it is an agent and servant of the people themselves. These officials are onlyentitled to respect and obedience when they are acting within the scope of their authority and jurisdiction. The Americansystem of government is calculated to enforce respect and obedience where such respect and obedience is due, butnever does it place around the individual who happens to occupy an official position by mandate of the people anyofficial halo, which calls for drastic punishment for contemptuous remarks. chanroblesvirtuallawlibrary chanrobles virtuallaw library

The crime of lese majeste disappeared in the Philippines with the ratification of the Treaty of Paris. Ministers of theCrown have no place under the American flag. chanroblesvirtuallawlibrary chanrobles virtual law library

To summarize, the result is, that all the members of the court are of the opinion, although for different reasons, that the judgment should be reversed and the defendant and appellant acquitted, with costs de officio . Soordered. chanroblesvirtuallawlibrary chanrobles virtual law library

Ostrand and Johns, JJ., concur.

EN BANC

A.M. No. 133-J May 31, 1982

BERNARDITA R. MACARIOLA, complainant ,vs.

HONORABLE ELIAS B. ASUNCION, Judge of the Court of First Instance of Leyte, respondent.

MAKASIAR, J:

In a verified complaint dated August 6, 1968 Bernardita R. Macariola charged respondent Judge Elias B. Asuncion of theCourt of First Instance of Leyte, now Associate Justice of the Court of Appeals, with "acts unbecoming a judge."

The factual setting of the case is stated in the report dated May 27, 1971 of then Associate Justice Cecilia Muoz Palmaof the Court of Appeals now retired Associate Justice of the Supreme Court, to whom this case was referred on October28, 1968 for investigation, thus:

Civil Case No. 3010 of the Court of First Instance of Leyte was a complaint for partition filed by SinforosaR. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes, and Priscilla Reyes, plaintiffs,against Bernardita R. Macariola, defendant, concerning the properties left by the deceased FranciscoReyes, the common father of the plaintiff and defendant.

In her defenses to the complaint for partition, Mrs. Macariola alleged among other things that; a) plaintiff Sinforosa R. Bales was not a daughter of the deceased Francisco Reyes; b) the only legal heirs of thedeceased were defendant Macariola, she being the only offspring of the first marriage of Francisco Reyeswith Felisa Espiras, and the remaining plaintiffs who were the children of the deceased by his secondmarriage with Irene Ondez; c) the properties left by the deceased were all the conjugal properties of thelatter and his first wife, Felisa Espiras, and no properties were acquired by the deceased during hissecond marriage; d) if there was any partition to be made, those conjugal properties should first bepartitioned into two parts, and one part is to be adjudicated solely to defendant it being the share of thelatter's deceased mother, Felisa Espiras, and the other half which is the share of the deceased FranciscoReyes was to be divided equally among his children by his two marriages.

On June 8, 1963, a decision was rendered by respondent Judge Asuncion in Civil Case 3010, thedispositive portion of which reads:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court, upon a preponderance of evidence, finds and so holds, and hereby renders judgment (1) Declaring the plaintiffsLuz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes asthe only children legitimated by the subsequent marriage of Francisco Reyes Diaz to

Irene Ondez; (2) Declaring the plaintiff Sinforosa R. Bales to have been an illegitimatechild of Francisco Reyes Diaz; (3) Declaring Lots Nos. 4474, 4475, 4892, 5265, 4803,4581, 4506 and 1/4 of Lot 1145 as belonging to the conjugal partnership of the spousesFrancisco Reyes Diaz and Felisa Espiras; (4) Declaring Lot No. 2304 and 1/4 of Lot No.3416 as belonging to the spouses Francisco Reyes Diaz and Irene Ondez in commonpartnership; (5) Declaring that 1/2 of Lot No. 1184 as belonging exclusively to thedeceased Francisco Reyes Diaz; (6) Declaring the defendant Bernardita R. Macariola,being the only legal and forced heir of her mother Felisa Espiras, as the exclusive ownerof one-half of each of Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506; and theremaining one-half (1/2) of each of said Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581,4506 and one-half (1/2) of one-fourth (1/4) of Lot No. 1154 as belonging to the estate of Francisco Reyes Diaz; (7) Declaring Irene Ondez to be the exclusive owner of one-half (1/2) of Lot No. 2304 and one-half (1/2) of one-fourth (1/4) of Lot No. 3416; theremaining one-half (1/2) of Lot 2304 and the remaining one-half (1/2) of one-fourth (1/4)


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of Lot No. 3416 as belonging to the estate of Francisco Reyes Diaz; (8) Directing thedivision or partition of the estate of Francisco Reyes Diaz in such a manner as to give orgrant to Irene Ondez, as surviving widow of Francisco Reyes Diaz, a hereditary share of.one-twelfth (1/12) of the whole estate of Francisco Reyes Diaz (Art. 996 in relation to Art.892, par 2, New Civil Code), and the remaining portion of the estate to be divided amongthe plaintiffs Sinforosa R. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes,Adela Reyes, Priscilla Reyes and defendant Bernardita R. Macariola, in such a way that

the extent of the total share of plaintiff Sinforosa R. Bales in the hereditary estate shallnot exceed the equivalent of two-fifth (2/5) of the total share of any or each of the otherplaintiffs and the defendant (Art. 983, New Civil Code), each of the latter to receive equalshares from the hereditary estate, (Ramirez vs. Bautista, 14 Phil. 528; Diancin vs. Bishopof Jaro, O.G. [3rd Ed.] p. 33); (9) Directing the parties, within thirty days after this

judgment shall have become final to submit to this court, for approval a project of partition of the hereditary estate in the proportion above indicated, and in such manneras the parties may, by agreement, deemed convenient and equitable to them taking intoconsideration the location, kind, quality, nature and value of the properties involved;(10) Directing the plaintiff Sinforosa R. Bales and defendant Bernardita R. Macariola topay the costs of this suit, in the proportion of one-third (1/3) by the first named and two-thirds (2/3) by the second named; and (I 1) Dismissing all other claims of the parties [pp27-29 of Exh. C].

The decision in civil case 3010 became final for lack of an appeal, and on October 16, 1963, a project of partition was submitted to Judge Asuncion which is marked Exh. A. Notwithstanding the fact that theproject of partition was not signed by the parties themselves but only by the respective counsel of plaintiffs and defendant, Judge Asuncion approved it in his Order dated October 23, 1963, which forconvenience is quoted hereunder in full:

The parties, through their respective counsels, presented to this Court for approval thefollowing project of partition:

COMES NOW, the plaintiffs and the defendant in the above-entitled case, to thisHonorable Court respectfully submit the following Project of Partition:

l. The whole of Lots Nos. 1154, 2304 and 4506 shall belong exclusively to BernarditaReyes Macariola;

2. A portion of Lot No. 3416 consisting of 2,373.49 square meters along the eastern partof the lot shall be awarded likewise to Bernardita R. Macariola;

3. Lots Nos. 4803, 4892 and 5265 shall be awarded to Sinforosa Reyes Bales;

4. A portion of Lot No. 3416 consisting of 1,834.55 square meters along the western partof the lot shall likewise be awarded to Sinforosa Reyes-Bales;

5. Lots Nos. 4474 and 4475 shall be divided equally among Luz Reyes Bakunawa,Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes in equal shares;

6. Lot No. 1184 and the remaining portion of Lot No. 3416 after taking the portionsawarded under item (2) and (4) above shall be awarded to Luz Reyes Bakunawa,Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes in equal shares,provided, however that the remaining portion of Lot No. 3416 shall belong exclusively toPriscilla Reyes.

WHEREFORE, it is respectfully prayed that the Project of Partition indicated above whichis made in accordance with the decision of the Honorable Court be approved.

Tacloban City, October 16, 1963.

(SGD) BONIFACIO RAMO Atty. for the Defendant Tacloban City

(SGD) ZOTICO A. TOLETE Atty. for the Plaintiff Tacloban City

While the Court thought it more desirable for all the parties to have signed this Project of Partition, nevertheless, upon assurance of both counsels of the respective parties to thisCourt that the Project of Partition, as above- quoted, had been made after a conferenceand agreement of the plaintiffs and the defendant approving the above Project of Partition, and that both lawyers had represented to the Court that they are given fullauthority to sign by themselves the Project of Partition, the Court, therefore, finding theabove-quoted Project of Partition to be in accordance with law, hereby approves thesame. The parties, therefore, are directed to execute such papers, documents orinstrument sufficient in form and substance for the vesting of the rights, interests andparticipations which were adjudicated to the respective parties, as outlined in the Projectof Partition and the delivery of the respective properties adjudicated to each one in view


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of said Project of Partition, and to perform such other acts as are legal and necessary toeffectuate the said Project of Partition.

SO ORDERED.

Given in Tacloban City, this 23rd day of October, 1963.

(SGD) ELIAS B. ASUNCION Judge

EXH. B.

The above Order of October 23, 1963, was amended on November 11, 1963, only for the purpose of giving authority to the Register of Deeds of the Province of Leyte to issue the corresponding transfercertificates of title to the respective adjudicatees in conformity with the project of partition (see Exh. U).

One of the properties mentioned in the project of partition was Lot 1184 or rather one-half thereof withan area of 15,162.5 sq. meters. This lot, which according to the decision was the exclusive property of the deceased Francisco Reyes, was adjudicated in said project of partition to the plaintiffs Luz, AnacoritaRuperto, Adela, and Priscilla all surnamed Reyes in equal shares, and when the project of partition wasapproved by the trial court the adjudicatees caused Lot 1184 to be subdivided into five lots denominatedas Lot 1184-A to 1184-E inclusive (Exh. V).

Lot 1184-D was conveyed to Enriqueta D. Anota, a stenographer in Judge Asuncion's court (Exhs. F, F-1and V-1), while Lot 1184-E which had an area of 2,172.5556 sq. meters was sold on July 31, 1964 to Dr.Arcadio Galapon (Exh. 2) who was issued transfer certificate of title No. 2338 of the Register of Deeds of the city of Tacloban (Exh. 12).

On March 6, 1965, Dr. Arcadio Galapon and his wife Sold a portion of Lot 1184-E with an area of around1,306 sq. meters to Judge Asuncion and his wife, Victoria S. Asuncion (Exh. 11), which particular portionwas declared by the latter for taxation purposes (Exh. F).

On August 31, 1966, spouses Asuncion and spouses Galapon conveyed their respective shares andinterest in Lot 1184-E to "The Traders Manufacturing and Fishing Industries Inc." (Exit 15 & 16). At the

time of said sale the stockholders of the corporation were Dominador Arigpa Tan, Humilia Jalandoni Tan, Jaime Arigpa Tan, Judge Asuncion, and the latter's wife, Victoria S. Asuncion, with Judge Asuncion as thePresident and Mrs. Asuncion as the secretary (Exhs. E-4 to E-7). The Articles of Incorporation of "The

Traders Manufacturing and Fishing Industries, Inc." which we shall henceforth refer to as "TRADERS"were registered with the Securities and Exchange Commission only on January 9, 1967 (Exh. E) [pp. 378-385, rec.].

Complainant Bernardita R. Macariola filed on August 9, 1968 the instant complaint dated August 6, 1968 alleging fourcauses of action, to wit: [1] that respondent Judge Asuncion violated Article 1491, paragraph 5, of the New Civil Code inacquiring by purchase a portion of Lot No. 1184-E which was one of those properties involved in Civil Case No. 3010decided by him; [2] that he likewise violated Article 14, paragraphs I and 5 of the Code of Commerce, Section 3,paragraph H, of R.A. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, Section 12, Rule XVIII of theCivil Service Rules, and Canon 25 of the Canons of Judicial Ethics, by associating himself with the Traders Manufacturingand Fishing Industries, Inc., as a stockholder and a ranking officer while he was a judge of the Court of First Instance of Leyte; [3] that respondent was guilty of coddling an impostor and acted in disregard of judicial decorum by closelyfraternizing with a certain Dominador Arigpa Tan who openly and publicly advertised himself as a practising attorneywhen in truth and in fact his name does not appear in the Rolls of Attorneys and is not a member of the Philippine Bar;and [4] that there was a culpable defiance of the law and utter disregard for ethics by respondent Judge (pp. 1-7, rec.).

Respondent Judge Asuncion filed on September 24, 1968 his answer to which a reply was filed on October 16, 1968 byherein complainant. In Our resolution of October 28, 1968, We referred this case to then Justice Cecilia Muoz Palma of the Court of Appeals, for investigation, report and recommendation. After hearing, the said Investigating Justicesubmitted her report dated May 27, 1971 recommending that respondent Judge should be reprimanded or warned inconnection with the first cause of action alleged in the complaint, and for the second cause of action, respondent shouldbe warned in case of a finding that he is prohibited under the law to engage in business. On the third and fourth causesof action, Justice Palma recommended that respondent Judge be exonerated.

The records also reveal that on or about November 9 or 11, 1968 (pp. 481, 477, rec.), complainant herein instituted an

action before the Court of First Instance of Leyte, entitled " Bernardita R. Macariola, plaintiff, versus Sinforosa R. Bales, et al ., defendants," which was docketed as Civil Case No. 4235, seeking the annulment of the project of partition madepursuant to the decision in Civil Case No. 3010 and the two orders issued by respondent Judge approving the same, aswell as the partition of the estate and the subsequent conveyances with damages. It appears, however, that somedefendants were dropped from the civil case. For one, the case against Dr. Arcadio Galapon was dismissed because hewas no longer a real party in interest when Civil Case No. 4234 was filed, having already conveyed on March 6, 1965 aportion of lot 1184-E to respondent Judge and on August 31, 1966 the remainder was sold to the Traders Manufacturingand Fishing Industries, Inc. Similarly, the case against defendant Victoria Asuncion was dismissed on the ground that shewas no longer a real party in interest at the time the aforesaid Civil Case No. 4234 was filed as the portion of Lot 1184acquired by her and respondent Judge from Dr. Arcadio Galapon was already sold on August 31, 1966 to the TradersManufacturing and Fishing industries, Inc. Likewise, the cases against defendants Serafin P. Ramento, Catalina Cabus,Ben Barraza Go, Jesus Perez, Traders Manufacturing and Fishing Industries, Inc., Alfredo R. Celestial and Pilar P. Celestial,Leopoldo Petilla and Remedios Petilla, Salvador Anota and Enriqueta Anota and Atty. Zotico A. Tolete were dismissedwith the conformity of complainant herein, plaintiff therein, and her counsel.


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On November 2, 1970, Judge Jose D. Nepomuceno of the Court of First Instance of Leyte, who was directed andauthorized on June 2, 1969 by the then Secretary (now Minister) of Justice and now Minister of National Defense JuanPonce Enrile to hear and decide Civil Case No. 4234, rendered a decision, the dispositive portion of which reads asfollows:

A. IN THE CASE AGAINST JUDGE ELIAS B. ASUNCION

(1) declaring that only Branch IV of the Court of First Instance of Leyte has jurisdiction to takecognizance of the issue of the legality and validity of the Project of Partition [Exhibit "B"] and the twoOrders [Exhibits "C" and "C- 3"] approving the partition;

(2) dismissing the complaint against Judge Elias B. Asuncion;

(3) adjudging the plaintiff, Mrs. Bernardita R. Macariola to pay defendant Judge Elias B. Asuncion,

(a) the sum of FOUR HUNDRED THOUSAND PESOS [P400,000.00] for moral damages;

(b) the sum of TWO HUNDRED THOUSAND PESOS [P200,000.001 for exemplarydamages;

(c) the sum of FIFTY THOUSAND PESOS [P50,000.00] for nominal damages; and

(d) he sum of TEN THOUSAND PESOS [PI0,000.00] for Attorney's Fees.

B. IN THE CASE AGAINST THE DEFENDANT MARIQUITA VILLASIN, FOR HERSELF AND FOR THE HEIRS OF THE DECEASED GERARDO VILLASIN

(1) Dismissing the complaint against the defendants Mariquita Villasin and the heirs of the deceasedGerardo Villasin;

(2) Directing the plaintiff to pay the defendants Mariquita Villasin and the heirs of Gerardo Villasin thecost of the suit.

C. IN THE CASE AGAINST THE DEFENDANT SINFOROSA R. BALES, ET AL., WHO WEREPLAINTIFFS IN CIVIL CASE NO. 3010

(1) Dismissing the complaint against defendants Sinforosa R. Bales, Adela R. Herrer, Priscilla R. Solis, LuzR. Bakunawa, Anacorita R. Eng and Ruperto O. Reyes.

D. IN THE CASE AGAINST DEFENDANT BONIFACIO RAMO

(1) Dismissing the complaint against Bonifacio Ramo;

(2) Directing the plaintiff to pay the defendant Bonifacio Ramo the cost of the suit.

SO ORDERED [pp. 531-533, rec.]

It is further disclosed by the record that the aforesaid decision was elevated to the Court of Appeals upon perfection of the appeal on February 22, 1971.

I

WE find that there is no merit in the contention of complainant Bernardita R. Macariola, under her first cause of action,that respondent Judge Elias B. Asuncion violated Article 1491, paragraph 5, of the New Civil Code in acquiring bypurchase a portion of Lot No. 1184-E which was one of those properties involved in Civil Case No. 3010. 'That Articleprovides:

Article 1491. The following persons cannot acquire by purchase, even at a public or judicial action, either

in person or through the mediation of another:

xxx xxx xxx

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers andemployees connected with the administration of justice, the property and rights in litigation or leviedupon an execution before the court within whose jurisdiction or territory they exercise their respectivefunctions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, withrespect to the property and rights which may be the object of any litigation in which they may take partby virtue of their profession [emphasis supplied].

The prohibition in the aforesaid Article applies only to the sale or assignment of the property which is the subject of litigation to the persons disqualified therein. WE have already ruled that "... for the prohibition to operate, the sale or


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assignment of the property must take place during the pendency of the litigation involving the property" (The Director of Lands vs. Ababa et al., 88 SCRA 513, 519 [1979], Rosario vda. de Laig vs. Court of Appeals, 86 SCRA 641, 646 [1978]).

In the case at bar, when the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E, the decision in CivilCase No. 3010 which he rendered on June 8, 1963 was already final because none of the parties therein filed an appealwithin the reglementary period; hence, the lot in question was no longer subject of the litigation. Moreover, at the timeof the sale on March 6, 1965, respondent's order dated October 23, 1963 and the amended order dated November 11,1963 approving the October 16, 1963 project of partition made pursuant to the June 8, 1963 decision, had long becomefinal for there was no appeal from said orders.

Furthermore, respondent Judge did not buy the lot in question on March 6, 1965 directly from the plaintiffs in Civil CaseNo. 3010 but from Dr. Arcadio Galapon who earlier purchased on July 31, 1964 Lot 1184-E from three of the plaintiffs,namely, Priscilla Reyes, Adela Reyes, and Luz R. Bakunawa after the finality of the decision in Civil Case No. 3010. It maybe recalled that Lot 1184 or more specifically one-half thereof was adjudicated in equal shares to Priscilla Reyes, AdelaReyes, Luz Bakunawa, Ruperto Reyes and Anacorita Reyes in the project of partition, and the same was subdivided intofive lots denominated as Lot 1184-A to 1184-E. As aforestated, Lot 1184-E was sold on July 31, 1964 to Dr. Galapon forwhich he was issued TCT No. 2338 by the Register of Deeds of Tacloban City, and on March 6, 1965 he sold a portion of said lot to respondent Judge and his wife who declared the same for taxation purposes only. The subsequent sale on

August 31, 1966 by spouses Asuncion and spouses Galapon of their respective shares and interest in said Lot 1184-E tothe Traders Manufacturing and Fishing Industries, Inc., in which respondent was the president and his wife was thesecretary, took place long after the finality of the decision in Civil Case No. 3010 and of the subsequent two aforesaid

orders therein approving the project of partition.

While it appears that complainant herein filed on or about November 9 or 11, 1968 an action before the Court of FirstInstance of Leyte docketed as Civil Case No. 4234, seeking to annul the project of partition and the two orders approvingthe same, as well as the partition of the estate and the subsequent conveyances, the same, however, is of no moment.

The fact remains that respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E from Dr. Arcadio Galapon;hence, after the finality of the decision which he rendered on June 8, 1963 in Civil Case No. 3010 and his two questionedorders dated October 23, 1963 and November 11, 1963. Therefore, the property was no longer subject of litigation.

The subsequent filing on November 9, or 11, 1968 of Civil Case No. 4234 can no longer alter, change or affect theaforesaid facts that the questioned sale to respondent Judge, now Court of Appeals Justice, was effected andconsummated long after the finality of the aforesaid decision or orders.

Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken place over one year after the finalityof the decision in Civil Case No. 3010 as well as the two orders approving the project of partition, and not during thependency of the litigation, there was no violation of paragraph 5, Article 1491 of the New Civil Code.

It is also argued by complainant herein that the sale on July 31, 1964 of Lot 1184-E to Dr. Arcadio Galapon by PriscillaReyes, Adela Reyes and Luz R. Bakunawa was only a mere scheme to conceal the illegal and unethical transfer of saidlot to respondent Judge as a consideration for the approval of the project of partition. In this connection, We agree withthe findings of the Investigating Justice thus:

And so we are now confronted with this all-important question whether or not the acquisition byrespondent of a portion of Lot 1184-E and the subsequent transfer of the whole lot to "TRADERS" of which respondent was the President and his wife the Secretary, was intimately related to the Order of respondent approving the project of partition, Exh. A.

Respondent vehemently denies any interest or participation in the transactions between the Reyesesand the Galapons concerning Lot 1184-E, and he insists that there is no evidence whatsoever to showthat Dr. Galapon had acted, in the purchase of Lot 1184-E, in mediation for him and his wife. (See p. 14of Respondent's Memorandum).

xxx xxx xxx

On this point, I agree with respondent that there is no evidence in the record showing that Dr. ArcadioGalapon acted as a mere "dummy" of respondent in acquiring Lot 1184-E from the Reyeses. Dr. Galaponappeared to this investigator as a respectable citizen, credible and sincere, and I believe him when hetestified that he bought Lot 1184-E in good faith and for valuable consideration from the Reyeseswithout any intervention of, or previous understanding with Judge Asuncion (pp. 391- 394, rec.).

On the contention of complainant herein that respondent Judge acted illegally in approving the project of partitionalthough it was not signed by the parties, We quote with approval the findings of the Investigating Justice, as follows:

1. I agree with complainant that respondent should have required the signature of the parties moreparticularly that of Mrs. Macariola on the project of partition submitted to him for approval; however,whatever error was committed by respondent in that respect was done in good faith as according to

Judge Asuncion he was assured by Atty. Bonifacio Ramo, the counsel of record of Mrs. Macariola, That hewas authorized by his client to submit said project of partition, (See Exh. B and tsn p. 24, January 20,1969). While it is true that such written authority if there was any, was not presented by respondent inevidence, nor did Atty. Ramo appear to corroborate the statement of respondent, his affidavit being theonly one that was presented as respondent's Exh. 10, certain actuations of Mrs. Macariola lead this


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investigator to believe that she knew the contents of the project of partition, Exh. A, and that she gaveher conformity thereto. I refer to the following documents:

1) Exh. 9 Certified true copy of OCT No. 19520 covering Lot 1154 of the Tacloban Cadastral Survey inwhich the deceased Francisco Reyes holds a "1/4 share" (Exh. 9-a). On tills certificate of title the Orderdated November 11, 1963, (Exh. U) approving the project of partition was duly entered and registeredon November 26, 1963 (Exh. 9-D);

2) Exh. 7 Certified copy of a deed of absolute sale executed by Bernardita Reyes Macariola onOctober 22, 1963 , conveying to Dr. Hector Decena the one-fourth share of the late Francisco Reyes-Diazin Lot 1154. In this deed of sale the vendee stated that she was the absolute owner of said one-fourthshare, the same having been adjudicated to her as her share in the estate of her father Francisco ReyesDiaz as per decision of the Court of First Instance of Leyte under case No. 3010 (Exh. 7-A). The deed of sale was duly registered and annotated at the back of OCT 19520 on December 3, 1963 (see Exh. 9-e).

In connection with the abovementioned documents it is to be noted that in the project of partition datedOctober 16, 1963, which was approved by respondent on October 23, 1963, followed by an amendingOrder on November 11, 1963, Lot 1154 or rather 1/4 thereof was adjudicated to Mrs. Macariola. It is this1/4 share in Lot 1154 which complainant sold to Dr. Decena on October 22, 1963, several days after thepreparation of the project of partition.

Counsel for complainant stresses the view, however, that the latter sold her one-fourth share in Lot 1154by virtue of the decision in Civil Case 3010 and not because of the project of partition, Exh. A. Suchcontention is absurd because from the decision, Exh. C, it is clear that one-half of one- fourth of Lot 1154belonged to the estate of Francisco Reyes Diaz while the other half of said one-fourth was the share of complainant's mother, Felisa Espiras; in other words, the decision did not adjudicate the whole of theone-fourth of Lot 1154 to the herein complainant (see Exhs. C-3 & C-4). Complainant became the ownerof the entire one-fourth of Lot 1154 only by means of the project of partition, Exh. A. Therefore, if Mrs.Macariola sold Lot 1154 on October 22, 1963, it was for no other reason than that she was wen aware of the distribution of the properties of her deceased father as per Exhs. A and B. It is also significant at thispoint to state that Mrs. Macariola admitted during the cross-examination that she went to Tacloban Cityin connection with the sale of Lot 1154 to Dr. Decena (tsn p. 92, November 28, 1968) from which we candeduce that she could not have been kept ignorant of the proceedings in civil case 3010 relative to theproject of partition.

Complainant also assails the project of partition because according to her the properties adjudicated toher were insignificant lots and the least valuable. Complainant, however, did not present any direct andpositive evidence to prove the alleged gross inequalities in the choice and distribution of the realproperties when she could have easily done so by presenting evidence on the area, location, kind, theassessed and market value of said properties. Without such evidence there is nothing in the record toshow that there were inequalities in the distribution of the properties of complainant's father (pp.386389, rec.).

Finally, while it is. true that respondent Judge did not violate paragraph 5, Article 1491 of the New Civil Code in acquiringby purchase a portion of Lot 1184-E which was in litigation in his court, it was, however, improper for him to haveacquired the same. He should be reminded of Canon 3 of the Canons of Judicial Ethics which requires that: "A judge'sofficial conduct should be free from the appearance of impropriety, and his personal behavior, not only upon the benchand in the performance of judicial duties, but also in his everyday life, should be beyond reproach." And as aptlyobserved by the Investigating Justice: "... it was unwise and indiscreet on the part of respondent to have purchased oracquired a portion of a piece of property that was or had been in litigation in his court and caused it to be transferred toa corporation of which he and his wife were ranking officers at the time of such transfer. One who occupies an exaltedposition in the judiciary has the duty and responsibility of maintaining the faith and trust of the citizenry in the courts of

justice, so that not only must he be truly honest and just, but his actuations must be such as not give cause for doubtand mistrust in the uprightness of his administration of justice. In this particular case of respondent, he cannot deny thatthe transactions over Lot 1184-E are damaging and render his actuations open to suspicion and distrust. Even if respondent honestly believed that Lot 1184-E was no longer in litigation in his court and that he was purchasing it froma third person and not from the parties to the litigation, he should nonetheless have refrained from buying it for himself and transferring it to a corporation in which he and his wife were financially involved, to avoid possible suspicion that hisacquisition was related in one way or another to his official actuations in civil case 3010. The conduct of respondentgave cause for the litigants in civil case 3010, the lawyers practising in his court, and the public in general to doubt thehonesty and fairness of his actuations and the integrity of our courts of justice" (pp. 395396, rec.).

II

With respect to the second cause of action, the complainant alleged that respondent Judge violated paragraphs 1 and 5,Article 14 of the Code of Commerce when he associated himself with the Traders Manufacturing and Fishing Industries,Inc. as a stockholder and a ranking officer, said corporation having been organized to engage in business. Said Articleprovides that:

Article 14 The following cannot engage in commerce, either in person or by proxy, nor can they holdany office or have any direct, administrative, or financial intervention in commercial or industrialcompanies within the limits of the districts, provinces, or towns in which they discharge their duties:

1. Justices of the Supreme Court, judges and officials of the department of public prosecution in activeservice. This provision shall not be applicable to mayors, municipal judges, and municipal prosecuting


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attorneys nor to those who by chance are temporarily discharging the functions of judge or prosecutingattorney.

xxx xxx xxx

5. Those who by virtue of laws or special provisions may not engage in commerce in a determinateterritory.

It is Our considered view that although the aforestated provision is incorporated in the Code of Commerce which is partof the commercial laws of the Philippines, it, however, partakes of the nature of a political law as it regulates therelationship between the government and certain public officers and employees, like justices and judges.

Political Law has been defined as that branch of public law which deals with the organization and operation of thegovernmental organs of the State and define the relations of the state with the inhabitants of its territory (People vs.Perfecto, 43 Phil. 887, 897 [1922]). It may be recalled that political law embraces constitutional law, law of publiccorporations, administrative law including the law on public officers and elections. Specifically, Article 14 of the Code of Commerce partakes more of the nature of an administrative law because it regulates the conduct of certain publicofficers and employees with respect to engaging in business: hence, political in essence.

It is significant to note that the present Code of Commerce is the Spanish Code of Commerce of 1885, with some

modifications made by the "Commission de Codificacion de las Provincias de Ultramar," which was extended to thePhilippines by the Royal Decree of August 6, 1888, and took effect as law in this jurisdiction on December 1, 1888.

Upon the transfer of sovereignty from Spain to the United States and later on from the United States to the Republic of the Philippines, Article 14 of this Code of Commerce must be deemed to have been abrogated because where there ischange of sovereignty, the political laws of the former sovereign, whether compatible or not with those of the newsovereign, are automatically abrogated, unless they are expressly re-enacted by affirmative act of the new sovereign.

Thus, We held in Roa vs. Collector of Customs (23 Phil. 315, 330, 311 [1912]) that:

By well-settled public law, upon the cession of territory by one nation to another, either following aconquest or otherwise, ... those laws which are political in their nature and pertain to the prerogatives of the former government immediately cease upon the transfer of sovereignty. (Opinion, Atty. Gen., July10, 1899).

While municipal laws of the newly acquired territory not in conflict with the, laws of the new sovereigncontinue in force without the express assent or affirmative act of the conqueror, the political laws do not.(Halleck's Int. Law, chap. 34, par. 14). However, such political laws of the prior sovereignty as are not inconflict with the constitution or institutions of the new sovereign, may be continued in force if theconqueror shall so declare by affirmative act of the commander-in-chief during the war, or by Congressin time of peace. (Ely's Administrator vs. United States, 171 U.S. 220, 43 L. Ed. 142). In the case of American and Ocean Ins. Cos. vs. 356 Bales of Cotton (1 Pet. [26 U.S.] 511, 542, 7 L. Ed. 242), Chief

Justice Marshall said:

On such transfer (by cession) of territory, it has never been held that the relations of theinhabitants with each other undergo any change. Their relations with their formersovereign are dissolved, and new relations are created between them and thegovernment which has acquired their territory. The same act which transfers theircountry, transfers the allegiance of those who remain in it; and the law which may bedenominated political, is necessarily changed, although that which regulates theintercourse and general conduct of individuals, remains in force, until altered by thenewly- created power of the State.

Likewise, in People vs. Perfecto (43 Phil. 887, 897 [1922]), this Court stated that: "It is a general principle of the publiclaw that on acquisition of territory the previous political relations of the ceded region are totally abrogated. "

There appears no enabling or affirmative act that continued the effectivity of the aforestated provision of the Code of Commerce after the change of sovereignty from Spain to the United States and then to the Republic of the Philippines.Consequently, Article 14 of the Code of Commerce has no legal and binding effect and cannot apply to the respondent,then Judge of the Court of First Instance, now Associate Justice of the Court of Appeals.

It is also argued by complainant herein that respondent Judge violated paragraph H, Section 3 of Republic Act No. 3019,otherwise known as the Anti-Graft and Corrupt Practices Act, which provides that:

Sec. 3. Corrupt practices of public officers. In addition to acts or omissions of public officers alreadypenalized by existing law, the following shall constitute corrupt practices of any public officer and arehereby declared to be unlawful:

xxx xxx xxx

(h) Directly or indirectly having financial or pecuniary interest in any business, contractor transaction in connection with which he intervenes or takes part in his official


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capacity, or in which he is prohibited by the Constitution or by any Iaw from having anyinterest.

Respondent Judge cannot be held liable under the aforestated paragraph because there is no showing that respondentparticipated or intervened in his official capacity in the business or transactions of the Traders Manufacturing andFishing Industries, Inc. In the case at bar, the business of the corporation in which respondent participated has obviouslyno relation or connection with his judicial office. The business of said corporation is not that kind where respondentintervenes or takes part in his capacity as Judge of the Court of First Instance. As was held in one case involving theapplication of Article 216 of the Revised Penal Code which has a similar prohibition on public officers against directly orindirectly becoming interested in any contract or business in which it is his official duty to intervene, "(I)t is not enoughto be a public official to be subject to this crime; it is necessary that by reason of his office, he has to intervene in saidcontracts or transactions; and, hence, the official who intervenes in contracts or transactions which have no relation tohis office cannot commit this crime.' (People vs. Meneses, C.A. 40 O.G. 11th Supp. 134, cited by Justice Ramon C.Aquino; Revised Penal Code, p. 1174, Vol. 11 [1976]).

It does not appear also from the records that the aforesaid corporation gained any undue advantage in its businessoperations by reason of respondent's financial involvement in it, or that the corporation benefited in one way or anotherin any case filed by or against it in court. It is undisputed that there was no case filed in the different branches of theCourt of First Instance of Leyte in which the corporation was either party plaintiff or defendant except Civil Case No.4234 entitled " Bernardita R. Macariola, plaintiff, versus Sinforosa O. Bales, et al.," wherein the complainant hereinsought to recover Lot 1184-E from the aforesaid corporation. It must be noted, however, that Civil Case No. 4234 was

filed only on November 9 or 11, 1968 and decided on November 2, 1970 by CFI Judge Jose D. Nepomuceno whenrespondent Judge was no longer connected with the corporation, having disposed of his interest therein on January 31,1967.

Furthermore, respondent is not liable under the same paragraph because there is no provision in both the 1935 and1973 Constitutions of the Philippines, nor is there an existing law expressly prohibiting members of the Judiciary fromengaging or having interest in any lawful business.

It may be pointed out that Republic Act No. 296, as amended, also known as the Judiciary Act of 1948, does not containany prohibition to that effect. As a matter of fact, under Section 77 of said law, municipal judges may engage in teachingor other vocation not involving the practice of law after office hours but with the permission of the district judgeconcerned.

Likewise, Article 14 of the Code of Commerce which prohibits judges from engaging in commerce is, as heretoforestated, deemed abrogated automatically upon the transfer of sovereignty from Spain to America, because it is politicalin nature.

Moreover, the prohibition in paragraph 5, Article 1491 of the New Civil Code against the purchase by judges of aproperty in litigation before the court within whose jurisdiction they perform their duties, cannot apply to respondent

Judge because the sale of the lot in question to him took place after the finality of his decision in Civil Case No. 3010 aswell as his two orders approving the project of partition; hence, the property was no longer subject of litigation.

In addition, although Section 12, Rule XVIII of the Civil Service Rules made pursuant to the Civil Service Act of 1959prohibits an officer or employee in the civil service from engaging in any private business, vocation, or profession or beconnected with any commercial, credit, agricultural or industrial undertaking without a written permission from the headof department, the same, however, may not fall within the purview of paragraph h, Section 3 of the Anti-Graft andCorrupt Practices Act because the last portion of said paragraph speaks of a prohibition by the Constitution or law on anypublic officer from having any interest in any business and not by a mere administrative rule or regulation. Thus, aviolation of the aforesaid rule by any officer or employee in the civil service, that is, engaging in private business withouta written permission from the Department Head may not constitute graft and corrupt practice as defined by law.

On the contention of complainant that respondent Judge violated Section 12, Rule XVIII of the Civil Service Rules, Wehold that the Civil Service Act of 1959 (R.A. No. 2260) and the Civil Service Rules promulgated thereunder, particularlySection 12 of Rule XVIII, do not apply to the members of the Judiciary. Under said Section 12: "No officer or employeeshall engage directly in any private business, vocation, or profession or be connected with any commercial, credit,agricultural or industrial undertaking without a written permission from the Head of Department ..."

It must be emphasized at the outset that respondent, being a member of the Judiciary, is covered by Republic Act No.296, as amended, otherwise known as the Judiciary Act of 1948 and by Section 7, Article X, 1973 Constitution.

Under Section 67 of said law, the power to remove or dismiss judges was then vested in the President of the Philippines,

not in the Commissioner of Civil Service, and only on two grounds, namely, serious misconduct and inefficiency, andupon the recommendation of the Supreme Court, which alone is authorized, upon its own motion, or upon information of the Secretary (now Minister) of Justice to conduct the corresponding investigation. Clearly, the aforesaid section definesthe grounds and prescribes the special procedure for the discipline of judges.

And under Sections 5, 6 and 7, Article X of the 1973 Constitution, only the Supreme Court can discipline judges of inferior courts as well as other personnel of the Judiciary.

It is true that under Section 33 of the Civil Service Act of 1959: "The Commissioner may, for ... violation of the existingCivil Service Law and rules or of reasonable office regulations, or in the interest of the service, remove any subordinateofficer or employee from the service, demote him in rank, suspend him for not more than one year without pay or finehim in an amount not exceeding six months' salary." Thus, a violation of Section 12 of Rule XVIII is a ground fordisciplinary action against civil service officers and employees.


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However, judges cannot be considered as subordinate civil service officers or employees subject to the disciplinaryauthority of the Commissioner of Civil Service; for, certainly, the Commissioner is not the head of the JudicialDepartment to which they belong. The Revised Administrative Code (Section 89) and the Civil Service Law itself statethat the Chief Justice is the department head of the Supreme Court (Sec. 20, R.A. No. 2260) [1959]); and under the 1973Constitution, the Judiciary is the only other or second branch of the government (Sec. 1, Art. X, 1973 Constitution).Besides, a violation of Section 12, Rule XVIII cannot be considered as a ground for disciplinary action against judgesbecause to recognize the same as applicable to them, would be adding another ground for the discipline of judges and,

as aforestated, Section 67 of the Judiciary Act recognizes only two grounds for their removal, namely, seriousmisconduct and inefficiency.

Moreover, under Section 16(i) of the Civil Service Act of 1959, it is the Commissioner of Civil Service who has originaland exclusive jurisdiction "(T)o decide, within one hundred twenty days, after submission to it, all administrative casesagainst permanent officers and employees in the competitive service , and, except as provided by law, to have finalauthority to pass upon their removal, separation, and suspension and upon all matters relating to the conduct,discipline, and efficiency of such officers and employees; and prescribe standards, guidelines and regulations governingthe administration of discipline" (emphasis supplied). There is no question that a judge belong to the non-competitive orunclassified service of the government as a Presidential appointee and is therefore not covered by the aforesaidprovision. WE have already ruled that "... in interpreting Section 16(i) of Republic Act No. 2260, we emphasized that onlypermanent officers and employees who belong to the classified service come under the exclusive jurisdiction of theCommissioner of Civil Service" (Villaluz vs. Zaldivar, 15 SCRA 710,713 [1965], Ang-Angco vs. Castillo, 9 SCRA 619[1963]).

Although the actuation of respondent Judge in engaging in private business by joining the Traders Manufacturing andFishing Industries, Inc. as a stockholder and a ranking officer, is not violative of the provissions of Article 14 of the Codeof Commerce and Section 3(h) of the Anti-Graft and Corrupt Practices Act as well as Section 12, Rule XVIII of the CivilService Rules promulgated pursuant to the Civil Service Act of 1959, the impropriety of the same is clearlyunquestionable because Canon 25 of the Canons of Judicial Ethics expressly declares that:

A judge should abstain from making personal investments in enterprises which are apt to be involved inlitigation in his court; and, after his accession to the bench, he should not retain such investmentspreviously made, longer than a period sufficient to enable him to dispose of them without serious loss. Itis desirable that he should, so far as reasonably possible, refrain from all relations which would normallytend to arouse the suspicion that such relations warp or bias his judgment, or prevent his impartialattitude of mind in the administration of his judicial duties. ...

WE are not, however, unmindful of the fact that respondent Judge and his wife had withdrawn on January 31, 1967 fromthe aforesaid corporation and sold their respective shares to third parties, and it appears also that the aforesaidcorporation did not in anyway benefit in any case filed by or against it in court as there was no case filed in the differentbranches of the Court of First Instance of Leyte from the time of the drafting of the Articles of Incorporation of thecorporation on March 12, 1966, up to its incorporation on January 9, 1967, and the eventual withdrawal of respondent on

January 31, 1967 from said corporation. Such disposal or sale by respondent and his wife of their shares in thecorporation only 22 days after the incorporation of the corporation, indicates that respondent realized that early thattheir interest in the corporation contravenes the aforesaid Canon 25. Respondent Judge and his wife therefore deservethe commendation for their immediate withdrawal from the firm after its incorporation and before it became involved inany court litigation

III

With respect to the third and fourth causes of action, complainant alleged that respondent was guilty of coddling animpostor and acted in disregard of judicial decorum, and that there was culpable defiance of the law and utter disregardfor ethics. WE agree, however, with the recommendation of the Investigating Justice that respondent Judge beexonerated because the aforesaid causes of action are groundless, and WE quote the pertinent portion of her reportwhich reads as follows:

The basis for complainant's third cause of action is the claim that respondent associated and closelyfraternized with Dominador Arigpa Tan who openly and publicly advertised himself as a practisingattorney (see Exhs. I, I-1 and J) when in truth and in fact said Dominador Arigpa Tan does not appear inthe Roll of Attorneys and is not a member of the Philippine Bar as certified to in Exh. K.

The "respondent denies knowing that Dominador Arigpa Tan was an "impostor" and claims that all thetime he believed that the latter was a bona fide member of the bar. I see no reason for disbelieving thisassertion of respondent. It has been shown by complainant that Dominador Arigpa Tan representedhimself publicly as an attorney-at-law to the extent of putting up a signboard with his name and thewords "Attorney-at Law" (Exh. I and 1- 1) to indicate his office, and it was but natural for respondent andany person for that matter to have accepted that statement on its face value. "Now with respect to theallegation of complainant that respondent is guilty of fraternizing with Dominador Arigpa Tan to theextent of permitting his wife to be a godmother of Mr. Tan's child at baptism (Exh. M & M-1), that facteven if true did not render respondent guilty of violating any canon of judicial ethics as long as hisfriendly relations with Dominador A. Tan and family did not influence his official actuations as a judgewhere said persons were concerned. There is no tangible convincing proof that herein respondent gaveany undue privileges in his court to Dominador Arigpa Tan or that the latter benefitted in his practice of law from his personal relations with respondent, or that he used his influence, if he had any, on the

Judges of the other branches of the Court to favor said Dominador Tan.

Of course it is highly desirable for a member of the judiciary to refrain as much as possible frommaintaining close friendly relations with practising attorneys and litigants in his court so as to avoid


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suspicion 'that his social or business relations or friendship constitute an element in determining his judicial course" (par. 30, Canons of Judicial Ethics), but if a Judge does have social relations, that in itself would not constitute a ground for disciplinary action unless it be clearly shown that his social relationsbe clouded his official actuations with bias and partiality in favor of his friends (pp. 403-405, rec.).

In conclusion, while respondent Judge Asuncion, now Associate Justice of the Court of Appeals, did not violate any law inacquiring by purchase a parcel of land which was in litigation in his court and in engaging in business by joining a privatecorporation during his incumbency as judge of the Court of First Instance of Leyte, he should be reminded to be morediscreet in his private and business activities, because his conduct as a member of the Judiciary must not only becharacterized with propriety but must always be above suspicion.

WHEREFORE, THE RESPONDENT ASSOCIATE JUSTICE OF THE COURT OF APPEALS IS HEREBY REMINDED TO BE MOREDISCREET IN HIS PRIVATE AND BUSINESS ACTIVITIES.

SO ORDERED.

Teehankee, Guerrero, De Castro, Melencio-Herrera, Plana, Vasquez, Relova and Gutierrez, JJ., concur.

Concepcion Jr., J., is on leave.

Fernando, C.J., Abad Santos and Esolin JJ., took no part.

EN BANC

[G.R. No. 122156. February 3, 1997]

MANILA PRINCE HOTEL , Petitioner, vs . GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTELCORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF THE GOVERNMENT CORPORATE COUNSEL ,

Respondents .

D E C I S I O N

BELLOSILLO, J.:

The Filipino First Policy enshrined in the 1987 Constitution, i.e ., in the grant of rights, privileges, and concessionscovering the national economy and patrimony, the State shall give preference to qualified Filipinos ,[1] is invoked bypetitioner in its bid to acquire 51% of the shares of the Manila Hotel Corporation (MHC) which owns the historic ManilaHotel. Opposing, respondents maintain that the provision is not self-executing but requires an implementing legislation
http://www.chanrobles.com/scdecisions/jurisprudence1997/feb1997/122156.php#_edn1http://www.chanrobles.com/scdecisions/jurisprudence1997/feb1997/122156.php#_edn1


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for its enforcement. Corollarily, they ask whether the 51% shares form part of the national economy and patrimonycovered by the protective mantle of the Constitution.

The controversy arose when respondent Government Service Insurance System (GSIS), pursuant to the privatizationprogram of the Philippine Government under Proclamation No. 50 dated 8 December 1986, decided to sell throughpublic bidding 30% to 51% of the issued and outstanding shares of respondent MHC. The winning bidder, or the eventualstrategic partner, is to provide management expertise and/or an international marketing/reservation system, and financial support to strengthen the profitability and performance of the Manila Hotel .[2] In a close bidding held on 18September 1995 only two (2) bidders participated: petitioner Manila Prince Hotel Corporation, a Filipino corporation,which offered to buy 51% of the MHC or 15,300,000 shares at P41.58 per share, and Renong Berhad, a Malaysian firm,with ITT-Sheraton as its hotel operator, which bid for the same number of shares at P44.00 per share, or P2.42 morethan the bid of petitioner.

Pertinent provisions of the bidding rules prepared by respondent GSIS state -

I. EXECUTION OF THE NECESSARY CONTRACTS WITH GSIS/MHC -

1. The Highest Bidder must comply with the conditions set forth below by October 23, 1995 (reset to November 3, 1995)or the Highest Bidder will lose the right to purchase the Block of Shares and GSIS will instead offer the Block of Shares tothe other Qualified Bidders:

a. The Highest Bidder must negotiate and execute with the GSIS/MHC the Management Contract, InternationalMarketing/Reservation System Contract or other type of contract specified by the Highest Bidder in its strategic plan forthe Manila Hotel x x x x

b. The Highest Bidder must execute the Stock Purchase and Sale Agreement with GSIS x x x x c

K. DECLARATION OF THE WINNING BIDDER/STRATEGIC PARTNER -

The Highest Bidder will be declared the Winning Bidder/Strategic Partner after the following conditions are met:

a. Execution of the necessary contracts with GSIS/MHC not later than October 23, 1995 (reset to November 3, 1995);and

b. Requisite approvals from the GSIS/MHC and COP (Committee on Privatization)/ OGCC (Office of the GovernmentCorporate Counsel) are obtained.

Pending the declaration of Renong Berhard as the winning bidder/strategic partner and the execution of the necessarycontracts, petitioner in a letter to respondent GSIS dated 28 September 1995 matched the bid price of P44.00 per sharetendered by Renong Berhad .[4] In a subsequent letter dated 10 October 1995 petitioner sent a managers check issuedby Philtrust Bank for Thirty-three Million Pesos (P33,000,000.00) as Bid Security to match the bid of the MalaysianGroup, Messrs. Renong Berhad x x x x [5] which respondent GSIS refused to accept. c

On 17 October 1995, perhaps apprehensive that respondent GSIS has disregarded the tender of the matching bid andthat the sale of 51% of the MHC may be hastened by respondent GSIS and consummated with Renong Berhad, petitionercame to this Court on prohibition and mandamus. On 18 October 1995 the Court issued a temporary restraining orderenjoining respondents from perfecting and consummating the sale to the Malaysian firm.

On 10 September 1996 the instant case was accepted by the Court En Banc after it was referred to it by the FirstDivision. The case was then set for oral arguments with former Chief Justice Enrique M. Fernando and Fr. Joaquin G.Bernas, S.J., as amici curiae

In the main, petitioner invokes Sec. 10, second par., Art. XII, of the 1987 Constitution and submits that the Manila Hotelhas been identified with the Filipino nation and has practically become a historical monument which reflects thevibrancy of Philippine heritage and culture. It is a proud legacy of an earlier generation of Filipinos who believed in thenobility and sacredness of independence and its power and capacity to release the full potential of the Filipino people.To all intents and purposes, it has become a part of the national patrimony. [6] Petitioner also argues that since 51% of the shares of the MHC carries with it the ownership of the business of the hotel which is owned by respondent GSIS, agovernment-owned and controlled corporation, the hotel business of respondent GSIS being a part of the tourism

industry is unquestionably a part of the national economy. Thus, any transaction involving 51% of the shares of stock of the MHC is clearly covered by the term national economy, to which Sec. 10, second par., Art. XII, 1987 Constitution,applies.

It is also the thesis of petitioner that since Manila Hotel is part of the national patrimony and its business alsounquestionably part of the national economy petitioner should be preferred after it has matched the bid offer of theMalaysian firm. For the bidding rules mandate that if for any reason, the Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to the other Qualified Bidders that have validly submitted bids provided that these Qualified Bidders are willing to match the highest bid in terms of price per share .[8]
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Respondents except. They maintain that: First , Sec. 10, second par., Art. XII, of the 1987 Constitution is merely astatement of principle and policy since it is not a self-executing provision and requires implementing legislation(s) x x x

x Thus, for the said provision to operate, there must be existing laws to lay down conditions under which business may be done. [9]

Second , granting that this provision is self-executing, Manila Hotel does not fall under the term national patrimony whichonly refers to lands of the public domain, waters, minerals, coa

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