1

TOPIC: ); legal status of contracts entered into violating section 1491

Macariola vs. Asuncion, A.M. No. 133-J, May 31 1982, 114 SCRA 77

Bernardita Macariola vs. Judge Elias Asuncion of CFI Leyte

A.M. No. 133-J, May 31 1982, 114 SCRA 77

FACTS:

In 1963, Macariola and her step sister (Reyes) had a dispute over their inheritance involving
parcels of land located in Leyte. A trial ensued and Judge Macariola, after determining the
legibility of the parties to inherit rendered a decision in the civil case. Thereafter, the
counsels of the parties submitted a project partition reflecting the preference of the parties.
The project partition was, however, unsigned by Macariola. But her lawyer assured
Asuncion that he is duly authorized by Macariola as counsel. The judge then approved the
project partition. The decision became final in 1963 as well.

Reyes et al sold some of their shares to Arcadio Galapon, who later sold the property to
judge Asuncion in 1965.

On 6 Aug 1968, Macariola filed a complaint against Judge Asuncion with “acts unbecoming
a judge” on the ground that he bought a property (formerly owned by Macariola) which was
involved in a civil case decided by him; this act by Asuncion is averred by Macariola to be
against Art. 1491, par 5 of the Civil Code which provides:

"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 and employees connected with the administration of justice, the property and
rights in litigation or levied upon an execution before the court within whose jurisdiction or
territory they exercise their respective functions; this prohibition includes the act of
acquiring by assignment and shall apply to lawyers, with respect to the property and rights
which may be the object of any litigation in which they may take part by virtue of their
profession".

Also, Macariola said that Asuncion’s act tainted his earlier judgment. Macariola said that
the project partition was unsigned by her and that what was given to her in the partition
were insignificant portions of the parcels of land.

ISSUE:

 Whether or not Judge Asuncion violated said provision.

HELD:

 No. The prohibition only applies if the litigation is under pendency. The judge bought the
property in 1965 – 2 years after his decision became final. Further, Asuncion did not buy
the property directly from any of the parties since the property was directly bought by
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Galapon, who then sold the property to Asuncion. There was no showing that Galapon
acted as a “dummy” of Asuncion.

 Also, Macariola did not show proof that there was a gross inequality in the partition; or that
what she got were insignificant portions of the land.

 The Supreme Court however admonished Judge Asuncion to be more discreet in his
personal transactions.Iluminada Abiertas removes the transaction out of the prohibition
contained in Article 1491(2).

FULL CASE:

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 the Court 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 Muñoz Palma of the Court of Appeals now retired Associate Justice of the Supreme Court,
to whom this case was referred on October 28, 1968 for investigation, thus:

Civil Case No. 3010 of the Court of First Instance of Leyte was a complaint for
partition filed by Sinforosa R. 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 Francisco Reyes, 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 the deceased were defendant Macariola,
she being the only offspring of the first marriage of Francisco Reyes with Felisa
Espiras, and the remaining plaintiffs who were the children of the deceased by his
second marriage with Irene Ondez; c) the properties left by the deceased were all
the conjugal properties of the latter and his first wife, Felisa Espiras, and no
properties were acquired by the deceased during his second marriage; d) if there
was any partition to be made, those conjugal properties should first be partitioned
into two parts, and one part is to be adjudicated solely to defendant it being the
share of the latter's deceased mother, Felisa Espiras, and the other half which is the
share of the deceased Francisco Reyes 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, the dispositive portion of which reads:
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IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court, upon

a preponderance of evidence, finds and so holds, and hereby renders
judgment (1) Declaring the plaintiffs Luz R. Bakunawa, Anacorita
Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes as the 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 illegitimate child 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 spouses
Francisco 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 common partnership; (5) Declaring that 1/2 of
Lot No. 1184 as belonging exclusively to the deceased 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 owner of one-half of each of Lots Nos. 4474, 4475, 4892,
5265, 4803, 4581, 4506; and the remaining 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; the remaining one-half (1/2) of Lot 2304 and the
remaining one-half (1/2) of one-fourth (1/4) of Lot No. 3416 as
belonging to the estate of Francisco Reyes Diaz; (8) Directing the
division or partition of the estate of Francisco Reyes Diaz in such a
manner as to give or grant 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 among the 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 shall
not exceed the equivalent of two-fifth (2/5) of the total share of any or
each of the other plaintiffs and the defendant (Art. 983, New Civil
Code), each of the latter to receive equal shares from the hereditary
estate, (Ramirez vs. Bautista, 14 Phil. 528; Diancin vs. Bishop of 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 manner as the parties may, by
agreement, deemed convenient and equitable to them taking into
consideration the location, kind, quality, nature and value of the
properties involved; (10) Directing the plaintiff Sinforosa R. Bales and
defendant Bernardita R. Macariola to pay 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
[pp 27-29 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 the project of partition was not signed by the
parties themselves but only by the respective counsel of plaintiffs and defendant,
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Judge Asuncion approved it in his Order dated October 23, 1963, which for
convenience is quoted hereunder in full:

The parties, through their respective counsels, presented to this Court

for approval the following project of partition:

COMES NOW, the plaintiffs and the defendant in the above-entitled

case, to this Honorable Court respectfully submit the following Project
of Partition:

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

2. A portion of Lot No. 3416 consisting of 2,373.49 square meters

along the eastern part of 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 part of 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 portions awarded 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 to Priscilla
Reyes.

WHEREFORE, it is respectfully prayed that the Project of Partition

indicated above which is 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 this Court that the Project of
Partition, as above- quoted, had been made after a conference and
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 full authority to sign by themselves the Project of
Partition, the Court, therefore, finding the above-quoted Project of
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Partition to be in accordance with law, hereby approves the same. The

parties, therefore, are directed to execute such papers, documents or
instrument sufficient in form and substance for the vesting of the rights,
interests and participations which were adjudicated to the respective
parties, as outlined in the Project of Partition and the delivery of the
respective properties adjudicated to each one in view of said Project of
Partition, and to perform such other acts as are legal and necessary to
effectuate 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 transfer certificates 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 with an 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, Anacorita Ruperto, Adela,
and Priscilla all surnamed Reyes in equal shares, and when the project of partition
was approved by the trial court the adjudicatees caused Lot 1184 to be subdivided
into five lots denominated as 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-1 and 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 around 1,306 sq. meters to Judge Asuncion and his wife, Victoria S.
Asuncion (Exh. 11), which particular portion was declared by the latter for taxation
purposes (Exh. F).

On August 31, 1966, spouses Asuncion and spouses Galapon conveyed their
respective shares and interest 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
the President 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 four causes of action, to wit: [1] that respondent Judge Asuncion violated Article
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1491, paragraph 5, of the New Civil Code in acquiring by purchase a portion of Lot No. 1184-E
which was one of those properties involved in Civil Case No. 3010 decided 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 the Civil Service Rules, and Canon 25 of the Canons of Judicial Ethics, by associating himself
with the Traders Manufacturing and 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 closely fraternizing with a
certain Dominador Arigpa Tan who openly and publicly advertised himself as a practising attorney
when 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 by herein complainant. In Our resolution of October 28, 1968, We referred this
case to then Justice Cecilia Muñoz Palma of the Court of Appeals, for investigation, report and
recommendation. After hearing, the said Investigating Justice submitted her report dated May 27,
1971 recommending that respondent Judge should be reprimanded or warned in connection with
the first cause of action alleged in the complaint, and for the second cause of action, respondent
should be warned in case of a finding that he is prohibited under the law to engage in business.
On the third and fourth causes of 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 made pursuant to the decision in
Civil Case No. 3010 and the two orders issued by respondent Judge approving the same, as well
as the partition of the estate and the subsequent conveyances with damages. It appears, however,
that some defendants were dropped from the civil case. For one, the case against Dr. Arcadio
Galapon was dismissed because he was no longer a real party in interest when Civil Case No.
4234 was filed, having already conveyed on March 6, 1965 a portion of lot 1184-E to respondent
Judge and on August 31, 1966 the remainder was sold to the Traders Manufacturing and Fishing
Industries, Inc. Similarly, the case against defendant Victoria Asuncion was dismissed on the
ground that she was no longer a real party in interest at the time the aforesaid Civil Case No. 4234
was filed as the portion of Lot 1184 acquired by her and respondent Judge from Dr. Arcadio
Galapon was already sold on August 31, 1966 to the Traders Manufacturing 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 dismissed with the conformity of complainant herein, plaintiff
therein, and her counsel.

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

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 take cognizance of the issue of the legality and validity of the Project of
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Partition [Exhibit "B"] and the two Orders [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 exemplary damages;

(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 deceased Gerardo Villasin;

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

C. IN THE CASE AGAINST THE DEFENDANT SINFOROSA R.

BALES, ET AL., WHO WERE PLAINTIFFS IN CIVIL CASE NO. 3010
—

(1) Dismissing the complaint against defendants Sinforosa R. Bales, Adela R.

Herrer, Priscilla R. Solis, Luz R. 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.

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,
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of the New Civil Code in acquiring by purchase a portion of Lot No. 1184-E which was one of
those properties involved in Civil Case No. 3010. 'That Article provides:

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 and employees connected with the administration of justice, the
property and rights in litigation or levied upon an execution before the court within
whose jurisdiction or territory they exercise their respective functions; this prohibition
includes the act of acquiring by assignment and shall apply to lawyers, with respect
to the property and rights which may be the object of any litigation in which they may
take part by 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 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 Civil Case No. 3010 which he rendered on June 8, 1963 was already final
because none of the parties therein filed an appeal within the reglementary period; hence, the lot
in question was no longer subject of the litigation. Moreover, at the time of 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 become final 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 Case No. 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 may be recalled that Lot 1184
or more specifically one-half thereof was adjudicated in equal shares to Priscilla Reyes, Adela
Reyes, Luz Bakunawa, Ruperto Reyes and Anacorita Reyes in the project of partition, and the
same was subdivided into five lots denominated as Lot 1184-A to 1184-E. As aforestated, Lot
1184-E was sold on July 31, 1964 to Dr. Galapon for which 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 to the Traders Manufacturing and Fishing
Industries, Inc., in which respondent was the president and his wife was the secretary, 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 First Instance of Leyte docketed as Civil Case No. 4234, seeking to annul the
project of partition and the two orders approving the 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
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Civil Case No. 3010 and his two questioned orders 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 the aforesaid facts — that the questioned sale to respondent Judge, now Court of
Appeals Justice, was effected and consummated 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 finality of the decision in Civil Case No. 3010 as well as the two orders
approving the project of partition, and not during the pendency 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 Priscilla Reyes, Adela Reyes and Luz R. Bakunawa was only a mere scheme to
conceal the illegal and unethical transfer of said lot to respondent Judge as a consideration for the
approval of the project of partition. In this connection, We agree with the findings of the
Investigating Justice thus:

And so we are now confronted with this all-important question whether or not the
acquisition by respondent 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 Reyeses and the Galapons concerning Lot 1184-E, and he insists that
there is no evidence whatsoever to show that Dr. Galapon had acted, in the
purchase of Lot 1184-E, in mediation for him and his wife. (See p. 14 of
Respondent's Memorandum).

xxx xxx xxx

On this point, I agree with respondent that there is no evidence in the record showing
that Dr. Arcadio Galapon acted as a mere "dummy" of respondent in acquiring Lot
1184-E from the Reyeses. Dr. Galapon appeared to this investigator as a
respectable citizen, credible and sincere, and I believe him when he testified that he
bought Lot 1184-E in good faith and for valuable consideration from the Reyeses
without 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 partition although 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 more particularly 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 he was 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 in evidence, nor did Atty. Ramo appear
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to corroborate the statement of respondent, his affidavit being the only one that was
presented as respondent's Exh. 10, certain actuations of Mrs. Macariola lead this
investigator to believe that she knew the contents of the project of partition, Exh. A,
and that she gave her 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 in which the deceased Francisco Reyes holds a "1/4 share" (Exh.
9-a). On tills certificate of title the Order dated November 11, 1963, (Exh. U)
approving the project of partition was duly entered and registered on November 26,
1963 (Exh. 9-D);

2) Exh. 7 — Certified copy of a deed of absolute sale executed by Bernardita Reyes

Macariola on October 22, 1963, conveying to Dr. Hector Decena the one-fourth
share of the late Francisco Reyes-Diaz in Lot 1154. In this deed of sale the vendee
stated that she was the absolute owner of said one-fourth share, the same having
been adjudicated to her as her share in the estate of her father Francisco Reyes
Diaz 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 dated October 16, 1963, which was approved by respondent on October
23, 1963, followed by an amending Order on November 11, 1963, Lot 1154 or rather
1/4 thereof was adjudicated to Mrs. Macariola. It is this 1/4 share in Lot 1154 which
complainant sold to Dr. Decena on October 22, 1963, several days after the
preparation of the project of partition.

Counsel for complainant stresses the view, however, that the latter sold her one-
fourth share in Lot 1154 by virtue of the decision in Civil Case 3010 and not because
of the project of partition, Exh. A. Such contention is absurd because from the
decision, Exh. C, it is clear that one-half of one- fourth of Lot 1154 belonged 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 the one-fourth of Lot 1154 to the herein complainant (see
Exhs. C-3 & C-4). Complainant became the owner of 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 this point to state that Mrs. Macariola admitted during the
cross-examination that she went to Tacloban City in connection with the sale of Lot
1154 to Dr. Decena (tsn p. 92, November 28, 1968) from which we can deduce that
she could not have been kept ignorant of the proceedings in civil case 3010 relative
to the project of partition.

Complainant also assails the project of partition because according to her the
properties adjudicated to her were insignificant lots and the least valuable.
Complainant, however, did not present any direct and positive evidence to prove the
alleged gross inequalities in the choice and distribution of the real properties when
she could have easily done so by presenting evidence on the area, location, kind,
the assessed and market value of said properties. Without such evidence there is
nothing in the record to show that there were inequalities in the distribution of the
properties of complainant's father (pp. 386389, rec.).
 11

Finally, while it is. true that respondent Judge did not violate paragraph 5, Article 1491 of the New
Civil Code in acquiring by purchase a portion of Lot 1184-E which was in litigation in his court, it
was, however, improper for him to have acquired the same. He should be reminded of Canon 3 of
the Canons of Judicial Ethics which requires that: "A judge's official conduct should be free from
the appearance of impropriety, and his personal behavior, not only upon the bench and in the
performance of judicial duties, but also in his everyday life, should be beyond reproach." And as
aptly observed by the Investigating Justice: "... it was unwise and indiscreet on the part of
respondent to have purchased or acquired a portion of a piece of property that was or had been in
litigation in his court and caused it to be transferred to a corporation of which he and his wife were
ranking officers at the time of such transfer. One who occupies an exalted position 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 doubt and mistrust in the uprightness of his administration of justice. In this
particular case of respondent, he cannot deny that the 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 from a 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 his acquisition was related in one way or another to his official
actuations in civil case 3010. The conduct of respondent gave cause for the litigants in civil case
3010, the lawyers practising in his court, and the public in general to doubt the honesty 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 Article provides that:

Article 14 — The following cannot engage in commerce, either in person or by proxy,

nor can they hold any office or have any direct, administrative, or financial
intervention in commercial or industrial companies 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 active service. This provision shall not be applicable to mayors,
municipal judges, and municipal prosecuting attorneys nor to those who by chance
are temporarily discharging the functions of judge or prosecuting attorney.

xxx xxx xxx

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

It is Our considered view that although the aforestated provision is incorporated in the Code of
Commerce which is part of the commercial laws of the Philippines, it, however, partakes of the
nature of a political law as it regulates the relationship 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 the governmental 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
 12

political law embraces constitutional law, law of public corporations, 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 public
officers 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 the Philippines 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 is change of sovereignty, the political laws of the
former sovereign, whether compatible or not with those of the new sovereign, 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 a conquest 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., July 10, 1899).

While municipal laws of the newly acquired territory not in conflict with the, laws of
the new sovereign continue 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 in conflict with the
constitution or institutions of the new sovereign, may be continued in force if the
conqueror shall so declare by affirmative act of the commander-in-chief during the
war, or by Congress in 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 the inhabitants with each other undergo any change.
Their relations with their former sovereign are dissolved, and new
relations are created between them and the government which has
acquired their territory. The same act which transfers their country,
transfers the allegiance of those who remain in it; and the law which
may be denominated political, is necessarily changed, although that
which regulates the intercourse and general conduct of individuals,
remains in force, until altered by the newly- 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 public law 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.
 13

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 already penalized by existing law, the following shall constitute corrupt
practices of any public officer and are hereby declared to be unlawful:

x x x           x x x          x x x

(h) Directly or indirectly having financial or pecuniary interest in any

business, contract or transaction in connection with which he
intervenes or takes part in his official capacity, or in which he is
prohibited by the Constitution or by any Iaw from having any interest.

Respondent Judge cannot be held liable under the aforestated paragraph because there is no
showing that respondent participated or intervened in his official capacity in the business or
transactions of the Traders Manufacturing and Fishing Industries, Inc. In the case at bar, the
business of the corporation in which respondent participated has obviously no relation or
connection with his judicial office. The business of said corporation is not that kind where
respondent intervenes or takes part in his capacity as Judge of the Court of First Instance. As was
held in one case involving the application of Article 216 of the Revised Penal Code which has a
similar prohibition on public officers against directly or indirectly becoming interested in any
contract or business in which it is his official duty to intervene, "(I)t is not enough to be a public
official to be subject to this crime; it is necessary that by reason of his office, he has to intervene in
said contracts or transactions; and, hence, the official who intervenes in contracts or transactions
which have no relation to his 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 business operations by reason of respondent's financial involvement in it, or that
the corporation benefited in one way or another in any case filed by or against it in court. It is
undisputed that there was no case filed in the different branches of the Court 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 herein sought 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 when respondent 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 and 1973 Constitutions of the Philippines, nor is there an existing law expressly
prohibiting members of the Judiciary from engaging 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 contain any prohibition to that effect. As a matter of fact, under Section 77 of said
law, municipal judges may engage in teaching or other vocation not involving the practice of law
after office hours but with the permission of the district judge concerned.

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

Moreover, the prohibition in paragraph 5, Article 1491 of the New Civil Code against the purchase
by judges of a property 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 as well 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 1959 prohibits an officer or employee in the civil service from engaging 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, the same,
however, may not fall within the purview of paragraph h, Section 3 of the Anti-Graft and Corrupt
Practices Act because the last portion of said paragraph speaks of a prohibition by
the Constitution or law on any public officer from having any interest in any business and not by a
mere administrative rule or regulation. Thus, a violation of the aforesaid rule by any officer or
employee in the civil service, that is, engaging in private business without a 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, We hold that the Civil Service Act of 1959 (R.A. No. 2260) and the Civil
Service Rules promulgated thereunder, particularly Section 12 of Rule XVIII, do not apply to the
members of the Judiciary. Under said Section 12: "No officer or employee shall 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, and upon 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
defines the 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 existing Civil Service Law and rules or of reasonable office regulations, or in the
interest of the service, remove any subordinate officer or employee from the service, demote him
in rank, suspend him for not more than one year without pay or fine him in an amount not
exceeding six months' salary." Thus, a violation of Section 12 of Rule XVIII is a ground for
disciplinary action against civil service officers and employees.

However, judges cannot be considered as subordinate civil service officers or employees subject
to the disciplinary authority of the Commissioner of Civil Service; for, certainly, the Commissioner
is not the head of the Judicial Department to which they belong. The Revised Administrative Code
(Section 89) and the Civil Service Law itself state that the Chief Justice is the department head of
the Supreme Court (Sec. 20, R.A. No. 2260) [1959]); and under the 1973 Constitution, 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 judges because to recognize the same as applicable to them, would be adding
 15

another ground for the discipline of judges and, as aforestated, Section 67 of the Judiciary Act
recognizes only two grounds for their removal, namely, serious misconduct and inefficiency.

Moreover, under Section 16(i) of the Civil Service Act of 1959, it is the Commissioner of Civil
Service who has original and exclusive jurisdiction "(T)o decide, within one hundred twenty days,
after submission to it, all administrative cases against permanent officers and employees in the
competitive service, and, except as provided by law, to have final authority 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
governing the administration of discipline" (emphasis supplied). There is no question that a judge
belong to the non-competitive or unclassified service of the government as a Presidential
appointee and is therefore not covered by the aforesaid provision. WE have already ruled that "...
in interpreting Section 16(i) of Republic Act No. 2260, we emphasized that only permanent officers
and employees who belong to the classified service come under the exclusive jurisdiction of the
Commissioner 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 and Fishing Industries, Inc. as a stockholder and a ranking officer, is not violative of
the provissions of Article 14 of the Code of Commerce and Section 3(h) of the Anti-Graft and
Corrupt Practices Act as well as Section 12, Rule XVIII of the Civil Service Rules promulgated
pursuant to the Civil Service Act of 1959, the impropriety of the same is clearly unquestionable
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 in litigation in his court; and, after his accession to the bench, he
should not retain such investments previously made, longer than a period sufficient
to enable him to dispose of them without serious loss. It is desirable that he should,
so far as reasonably possible, refrain from all relations which would normally tend to
arouse the suspicion that such relations warp or bias his judgment, or prevent his
impartial attitude 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 from the aforesaid corporation and sold their respective shares to third parties,
and it appears also that the aforesaid corporation did not in anyway benefit in any case filed by or
against it in court as there was no case filed in the different branches of the Court of First Instance
of Leyte from the time of the drafting of the Articles of Incorporation of the corporation 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 the corporation only 22 days after the incorporation of the corporation, indicates that
respondent realized that early that their interest in the corporation contravenes the aforesaid
Canon 25. Respondent Judge and his wife therefore deserve the commendation for their
immediate withdrawal from the firm after its incorporation and before it became involved in any
court litigation

III

With respect to the third and fourth causes of action, complainant alleged that respondent was
guilty of coddling an impostor and acted in disregard of judicial decorum, and that there was
culpable defiance of the law and utter disregard for ethics. WE agree, however, with the
recommendation of the Investigating Justice that respondent Judge be exonerated because the
aforesaid causes of action are groundless, and WE quote the pertinent portion of her report which
reads as follows:
 16

The basis for complainant's third cause of action is the claim that respondent
associated and closely fraternized with Dominador Arigpa Tan who openly and
publicly advertised himself as a practising attorney (see Exhs. I, I-1 and J) when in
truth and in fact said Dominador Arigpa Tan does not appear in the 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 the time he believed that the latter was a bona fide member of the bar.
I see no reason for disbelieving this assertion of respondent. It has been shown by
complainant that Dominador Arigpa Tan represented himself publicly as an attorney-
at-law to the extent of putting up a signboard with his name and the words "Attorney-
at Law" (Exh. I and 1- 1) to indicate his office, and it was but natural for respondent
and any person for that matter to have accepted that statement on its face value.
"Now with respect to the allegation of complainant that respondent is guilty of
fraternizing with Dominador Arigpa Tan to the extent of permitting his wife to be a
godmother of Mr. Tan's child at baptism (Exh. M & M-1), that fact even if true did not
render respondent guilty of violating any canon of judicial ethics as long as his
friendly relations with Dominador A. Tan and family did not influence his official
actuations as a judge where said persons were concerned. There is no tangible
convincing proof that herein respondent gave any 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 from maintaining close friendly relations with practising attorneys and
litigants in his court so as to avoid 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
relations be 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 in acquiring by purchase a parcel of land which was in litigation in his court
and in engaging in business by joining a private corporation during his incumbency as judge of the
Court of First Instance of Leyte, he should be reminded to be more discreet in his private and
business activities, because his conduct as a member of the Judiciary must not only be
characterized with propriety but must always be above suspicion.

WHEREFORE, THE RESPONDENT ASSOCIATE JUSTICE OF THE COURT OF APPEALS IS

HEREBY REMINDED TO BE MORE DISCREET IN HIS PRIVATE AND BUSINESS ACTIVITIES.

SO ORDERED.

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