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FRIDAY, DECEMBER 12, 2008

Macariola vs. Asuncion, 114 SCRA 77 (1982)EN BANC

[Adm. Case 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.D E C I S I O N

MAKASIAR, J p:

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

Muoz 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 Ondes; 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:

"'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


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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 LotNo. 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 tothis 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


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one-third (1/3) by the first named and two-thirds (2/3) by the second named;

and (11) 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, 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:

'1. The whole of Lots Nos. 1154, 2304 and 4506 shall belong exclusively toBernardita 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 theHonorable Court be approved.

'Tacloban City, October 16, 1963.

(SGD) BONIFACIO RAMO

Atty. for the

Defendant

Tacloban City


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'(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 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 ofpartition 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


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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.' (Exh. 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 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 1 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 Muoz 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 lawto 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


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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 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 [P200,000.00] for

exemplary damages;

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

"(d) the sum of TEN THOUSAND PESOS [P10,000.00] for Attorney's Fees.

"B. IN THE CASE AGAINST THE DEFENDANT MARIQUITA VILLASIN, FOR

HERSELF AND FOR THE HEIRS OF THE DECEASED GERARDO VILLASIN


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"(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.

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 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" [italics 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]).


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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 TCTNo. 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 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 factsthat 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 afterthe 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


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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 fromthe 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 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 this 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);


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"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 well 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 thechoice 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. 386-389, rec.).

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,


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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 nonethelesshave 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. 395-396, rec.). LexLib

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 dischargingthe 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


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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 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 "Comision 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


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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.

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:

xxx xxx xxx

"(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 law 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 hisoffice 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. II [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


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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, asheretofore stated, deemed abrogated automatically upon the transfer of sovereignty from Spain to America,

because it is political in nature.

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 ServiceRules, 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 . . ."


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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 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 prescribestandards, 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 [1965l, Ang-Angco vs. Castillo, 9 SCRA 619 [1963]).


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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

provisions 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 in corporation 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:

"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


17/43

putting up a signboard with his name and the words 'Attorney-at-Law' (Exh. I and I-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

beclouded 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.

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

Barredo, J., I vote with Justice Aquino.

Aquino, J., I vote for respondent's unqualified exoneration.

Concepcion, Jr., J., is on leave.


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EN BANC

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

MANILA PRINCE HOTEL, peti t ioner,vs. GOVERNMENT SERVICEINSURANCE SYSTEM, MANILA HOTEL CORPORATION,COMMITTEE ON PRIVATIZATION and OFFICE OF THEGOVERNMENT CORPORATE COUNSEL, respondents.

D E C I S I O N

BELLOSILLO, J.:

The Filipino First Policyenshrined in the 1987 Constitution, i.e., in the grant ofrights, privileges, and concessions covering the national economy and patrimony, theState shall give preference to qualified Filipinos ,[1]is invoked by petitioner in its bid toacquire 51% of the shares of the Manila Hotel Corporation (MHC) which owns thehistoric Manila Hotel. Opposing, respondents maintain that the provision is not self-executing but requires an implementing legislation for its enforcement. Corollarily, theyask whether the 51% shares form part of the national economy and patrimony coveredby the protective mantle of the Constitution.

The controversy arose when respondent Government Service Insurance System(GSIS), pursuant to the privatization program of the Philippine Government under

Proclamation No. 50 dated 8 December 1986, decided to sell through public bidding30% to 51% of the issued and outstanding shares of respondent MHC. The winningbidder, or the eventual strategic partner, isto provide management expertise and/oran 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 HotelCorporation, a Filipino corporation, which offered to buy 51% of the MHC or 15,300,000shares at P41.58 per share, and Renong Berhad, a Malaysian firm, with ITT-Sheratonas its hotel operator, which bid for the same number of shares at P44.00 per share,or P2.42 more than 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 to the

other Qualified Bidders:
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a. The Highest Bidder must negotiate and execute with the GSIS/MHC the

Management Contract, International Marketing/Reservation System Contract or other

type of contract specified by the Highest Bidder in its strategic plan for the Manila

Hotel x x x x

b. The Highest Bidder must execute the Stock Purchase and Sale Agreement withGSIS x x x x

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 Government Corporate Counsel) are obtained.[3]

Pending the declaration of Renong Berhard as the winning bidder/strategic partnerand the execution of the necessary contracts, petitioner in a letter to respondent GSISdated 28 September 1995 matched the bid price of P44.00 per share tendered byRenong Berhad.[4]In a subsequent letter dated 10 October 1995 petitioner sent amanagers check issued by Philtrust Bank for Thirty-three Million Pesos(P33,000,000.00) as Bid Security to match the bid of the Malaysian Group, Messrs.Renong Berhadx x x x[5]which respondent GSIS refused to accept.

On 17 October 1995, perhaps apprehensive that respondent GSIS has disregardedthe tender of the matching bid and that the sale of 51% of the MHC may be hastened byrespondent GSIS and consummated with Renong Berhad, petitioner came to this Courton prohibition and mandamus. On 18 October 1995 the Court issued a temporaryrestraining order enjoining respondents from perfecting and consummating the sale tothe Malaysian firm.

On 10 September 1996 the instant case was accepted by the Court En Bancafter itwas referred to it by the First Division. The case was then set for oral arguments withformer Chief Justice Enrique M. Fernando and Fr. Joaquin G. Bernas, S.J., as amicicuriae.

In the main, petitioner invokes Sec. 10, second par., Art. XII, of the 1987Constitution and submits that the Manila Hotel has been identified with the Filipinonation and has practically become a historical monument which reflects the vibrancy ofPhilippine heritage and culture. It is a proud legacy of an earlier generation of Filipinoswho believed in the nobility and sacredness of independence and its power andcapacity 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
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the shares of the MHC carries with it the ownership of the business of the hotel which isowned by respondent GSIS, a government-owned and controlled corporation, the hotelbusiness of respondent GSIS being a part of the tourism industry is unquestionably apart of the national economy. Thus, any transaction involving 51% of the shares ofstock of the MHC is clearly covered by the term national economy, to which Sec. 10,

second par., Art. XII, 1987 Constitution, applies.[7]

It is also the thesis of petitioner that since Manila Hotel is part of the national

patrimony and its business also unquestionably part of the national economy petitionershould be preferred after it has matched the bid offer of the Malaysian firm. For thebidding rules mandate that if for any reason, the Highest Bidder cannot be awarded theBlock of Shares, GSIS may offer this to the other Qualified Bidders that have validlysubmitted bids provided that these Qualified Bidders are willing to match the highest bidin terms of price per share.[8]

Respondents except. They maintain that: First, Sec. 10, second par., Art. XII, of the1987 Constitution is merely a statement of principle and policy since it is not a self-

executing provision and requires implementing legislation(s) x x x x Thus, for the saidprovision to operate, there must be existing laws to lay down conditions under whichbusiness may be done.[9]

Second, granting that this provision is self-executing, Manila Hotel does not fallunder the term national patrimonywhich only refers to lands of the public domain,waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy,fisheries, forests or timber, wildlife, flora and fauna and all marine wealth in its territorialsea, and exclusive marine zone as cited in the first and second paragraphs of Sec. 2,

Art. XII, 1987 Constitution. According to respondents, while petitioner speaks of theguests who have slept in the hotel and the events that have transpired therein whichmake the hotel historic, these alone do not make the hotel fall under thepatrimonyof

the nation. What is more, the mandate of the Constitution is addressed to the State, notto respondent GSIS which possesses a personality of its own separate and distinct fromthe Philippines as a State.

Third, granting that the Manila Hotel forms part of the national patrimony, theconstitutional provision invoked is still inapplicable since what is being sold is only 51%of the outstanding shares of the corporation, not the hotel building nor the land uponwhich the building stands. Certainly, 51% of the equity of the MHC cannot beconsidered part of the national patrimony. Moreover, if the disposition of the shares ofthe MHC is really contrary to the Constitution, petitioner should have questioned it rightfrom the beginning and not after it had lost in the bidding.

Fourth, the reliance by petitioner on par. V., subpar. J. 1., of the bidding rules whichprovides that if for any reason, the Highest Bidder cannot be awarded the Block ofShares, GSIS may offer this to the other Qualified Bidders that have validly submittedbids provided that these Qualified Bidders are willing to match the highest bid in termsof price per share, is misplaced. Respondents postulate that the privilege of submittinga matching bid has not yet arisen since it only takes place if for any reason, the HighestBidder cannot be awarded the Block of Shares . Thus the submission by petitioner of amatching bid is premature since Renong Berhad could still very well be awarded the
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block of shares and the condition giving rise to the exercise of the privilege to submit amatching bid had not yet taken place.

Finally, the prayer for prohibition grounded on grave abuse of discretion should failsince respondent GSIS did not exercise its discretion in a capricious, whimsical manner,and if ever it did abuse its discretion it was not so patent and gross as to amount to an

evasion of a positive duty or a virtual refusal to perform a duty enjoined bylaw. Similarly, the petition for mandamus should fail as petitioner has no clear legalright to what it demands and respondents do not have an imperative duty to perform theact required of them by petitioner.

We now resolve. A constitution is a system of fundamental laws for the governanceand administration of a nation. It is supreme, imperious, absolute and unalterableexcept by the authority from which it emanates. It has been defined as the fundamentaland paramount law of the nation.[10]It prescribes the permanent framework of a systemof government, assigns to the different departments their respective powers and duties,and establishes certain fixed principles on which government is founded. The

fundamental conception in other words is that it is a supreme law to which all other lawsmust conform and in accordance with which all private rights must be determined andall public authority administered.[11]Under the doctrine of constitutional supremacy, if alaw or contract violates any norm of the constitution that law or contract whetherpromulgated by the legislative or by the executive branch or entered into by privatepersons for private purposes is null and void and without any force andeffect. Thus, since the Constitution is the fundamental, paramount and supreme law ofthe nation, it is deemed written in every statute and contract.

Admittedly, some constitutions are merely declarations of policies andprinciples. Their provisions command the legislature to enact laws and carry out thepurposes of the framers who merely establish an outline of government providing for the

different departments of the governmental machinery and securing certain fundamentaland inalienable rights of citizens.[12]A provision which lays down a general principle,such as those found in Art. II of the 1987 Constitution, is usually not self-executing. Buta provision which is complete in itself and becomes operative without the aid ofsupplementary or enabling legislation, or that which supplies sufficient rule by means ofwhich the right it grants may be enjoyed or protected, is self-executing. Thus aconstitutional provision is self-executing if the nature and extent of the right conferredand the liability imposed are fixed by the constitution itself, so that they can bedetermined by an examination and construction of its terms, and there is no languageindicating that the subject is referred to the legislature for action. [13]

As against constitutions of the past, modern constitutions have been generallydrafted upon a different principle and have often become in effect extensive codes oflaws intended to operate directly upon the people in a manner similar to that of statutoryenactments, and the function of constitutional conventions has evolved into one morelike that of a legislative body. Hence, unless it is expressly provided that a legislativeact is necessary to enforce a constitutional mandate, the presumption now is that allprovisions of the constitution are self-executing. If the constitutional provisions aretreated as requiring legislation instead of self-executing, the legislature would have the
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provision ineffective in the absence of such legislation. The omission from aconstitution of any express provision for a remedy for enforcing a right or liability is notnecessarily an indication that it was not intended to be self-executing. The rule is that aself-executing provision of the constitution does not necessarily exhaust legislativepower on the subject, but any legislation must be in harmony with the constitution,

further the exercise of constitutional right and make it more available.[17]

Subsequentlegislation however does not necessarily mean that the subject constitutional provisionis not, by itself, fully enforceable.

Respondents also argue that the non-self-executing nature of Sec. 10, second par.,of Art. XII is implied from the tenor of the first and third paragraphs of the same sectionwhich undoubtedly are not self-executing.[18]The argument is flawed. If the first and thirdparagraphs are not self-executing because Congress is still to enact measures toencourage the formation and operation of enterprises fully owned by Filipinos, as in thefirst paragraph, and the State still needs legislation to regulate and exercise authorityover foreign investments within its national jurisdiction, as in the third paragraph, then afortiori, by the same logic, the second paragraph can only be self-executing as it does

not by its language require any legislation in order to give preference to qualifiedFilipinos in the grant of rights, privileges and concessions covering the nationaleconomy and patrimony. A constitutional provision may be self-executing in one partand non-self-executing in another.[19]

Even the cases cited by respondents holding that certain constitutional provisionsare merely statements of principles and policies, which are basically not self-executingand only placed in the Constitution as moral incentives to legislation, not as judiciallyenforceable rights - are simply not in point. Basco v. Philippine Amusements andGaming Corporation[20]speaks of constitutional provisions on personal dignity,[21]thesanctity of family life,[22]the vital role of the youth in nation-building,[23]the promotion of

social justice,

[24]

and the values of education.

[25]

Tolentino v. Secretary of Finance

[26]

refersto constitutional provisions on social justice and human rights [27]and oneducation.[28]Lastly, Kilosbayan, Inc. v. Morato [29]cites provisions on the promotion ofgeneral welfare,[30]the sanctity of family life,[31]the vital role of the youth in nation-building[32]and the promotion of total human liberation and development.[33]A reading ofthese provisions indeed clearly shows that they are not judicially enforceableconstitutional rights but merely guidelines for legislation. The very terms of theprovisions manifest that they are only principles upon which legislations must bebased. Res ipsa loquitur.

On the other hand, Sec. 10, second par., Art. XII of the 1987 Constitution is amandatory, positive command which is complete in itself and which needs no further

guidelines or implementing laws or rules for its enforcement. From its very words theprovision does not require any legislation to put it in operation. It isper se judiciallyenforceable. When our Constitution mandates that [i]n the grant of rights, privileges,and concessions covering national economy and patrimony, the State shall give

preference to qualified Filipinos, it means just that - qualified Filipinos shall bepreferred. And when our Constitution declares that a right exists in certain specifiedcircumstances an action may be maintained to enforce such right notwithstanding theabsence of any legislation on the subject; consequently, if there is no statute especially
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enacted to enforce such constitutional right, such right enforces itself by its own inherentpotency and puissance, and from which all legislations must take their bearings. Wherethere is a right there is a remedy. Ubi jus ibi remedium.

As regards ournational patrimony, a member of the 1986 ConstitutionalCommission [34]explains -

The patrimony of the Nation that should be conserved and developed refers

not only to our rich natural resources but also to the cultural heritage of our

race. It also refers to our intelligence in arts, sciences and letters. Therefore,

we should develop not only our lands, forests, mines and other natural

resources but also the mental ability or faculty of our people.

We agree. In its plain and ordinary meaning, the termpatrimonypertains toheritage.[35]When the Constitution speaks ofnational patrimony, it refers not only to thenatural resources of the Philippines, as the Constitution could have very well used the

term natural resources, but also to the cultural heritage of the Filipinos.Manila Hotel has become a landmark - a living testimonial of Philippine

heritage. While it was restrictively an American hotel when it first opened in 1912, itimmediately evolved to be truly Filipino. Formerly a concourse for the elite, it has sincethen become the venue of various significant events which have shaped Philippinehistory. It was called the Cultural Center of the 1930s. It was the site of the festivitiesduring the inauguration of the Philippine Commonwealth. Dubbed as the Official GuestHouse of the Philippine Governmentit plays host to dignitaries and official visitors whoare accorded the traditional Philippine hospitality.[36]

The history of the hotel has been chronicled in the book The Manila Hotel: The

Heart and Memory of a City.[37]

During World War II the hotel was converted by theJapanese Military Administration into a military headquarters. When the Americanforces returned to recapture Manila the hotel was selected by the Japanese togetherwith Intramuros as the two (2) places for their final stand. Thereafter, in the 1950s and1960s, the hotel became the center of political activities, playing host to almost everypolitical convention. In 1970 the hotel reopened after a renovation and reapednumerous international recognitions, an acknowledgment of the Filipino talent andingenuity. In 1986 the hotel was the site of a failedcoup d etatwhere an aspirant forvice-president was proclaimed President of the Philippine Republic.

For more than eight (8) decades Manila Hotel has bore mute witness to thetriumphs and failures, loves and frustrations of the Filipinos; its existence is impressed

with public interest; its own historicity associated with our struggle for sovereignty,independence and nationhood. Verily, Manila Hotel has become part of our nationaleconomy and patrimony. For sure, 51% of the equity of the MHC comes within thepurview of the constitutional shelter for it comprises the majority and controlling stock,so that anyone who acquires or owns the 51% will have actual control and managementof the hotel. In this instance, 51% of the MHC cannot be disassociated from the hoteland the land on which the hotel edifice stands. Consequently, we cannot sustainrespondents claim that theFilipino First Policyprovision is not applicable since what is
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being sold is only 51% of the outstanding shares of the corporation, not the Hotelbuilding nor the land upon which the building stands.[38]

The argument is pure sophistry. The term qualified Filipinos as used in ourConstitution also includes corporations at least 60% of which is owned byFilipinos. This is very clear from the proceedings of the 1986 Constitutional

Commission -

THE PRESIDENT. Commissioner Davide is recognized.

MR. DAVIDE. I would like to introduce an amendment to the Nolledoamendment. And the amendment would consist in substituting the wordsQUALIFIED FILIPINOS with the following: CITIZENS OF THE PHILIPPINES ORCORPORATIONS OR ASSOCIATIONS WHOSE CAPITAL OR CONTROLLINGSTOCK IS WHOLLY OWNED BY SUCH CITIZENS.

x x x x

MR. MONSOD. Madam President, apparently the proponent is agreeable, but we

have to raise a question. Suppose it is a corporation that is 80-percent Filipino, dowe not give it preference?

MR. DAVIDE. The Nolledo amendment would refer to an individual Filipino. Whatabout a corporation wholly owned by Filipino citizens?

MR. MONSOD. At least 60 percent, Madam President.

MR. DAVIDE. Is that the intention?

MR. MONSOD. Yes, because, in fact, we would be limiting it if we say that thepreference should only be 100-percent Filipino.

MR. DAVIDE. I want to get that meaning clear because QUALIFIED FILIPINOS mayrefer only to individuals and not to juridical personalities or entities.

MR. MONSOD. We agree, Madam President.[39]

x x x x

MR. RODRIGO. Before we vote, may I request that the amendment be read again.

MR. NOLLEDO. The amendment will read: IN THE GRANT OF RIGHTS,PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL ECONOMY

AND PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIEDFILIPINOS.And the word Filipinos here, as intended by the proponents, willinclude not only individual Filipinos but also Filipino-controlled entities or entitiesfully-controlled by Filipinos.[40]

The phrasepreference to qualified Filipinos was explained thus -

MR. FOZ. Madam President, I would like to request Commissioner Nolledo to pleaserestate his amendment so that I can ask a question.

MR. NOLLEDO. IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONSCOVERING THE NATIONAL ECONOMY AND PATRIMONY, THE STATE SHALLGIVE PREFERENCE TO QUALIFIED FILIPINOS.
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MR. FOZ. In connection with that amendment, if a foreign enterprise is qualified and aFilipino enterprise is also qualified, will the Filipino enterprise still be given apreference?

MR. NOLLEDO. Obviously.

MR. FOZ. If the foreigner is more qualified in some aspects than the Filipino

enterprise, will the Filipino still be preferred?

MR. NOLLEDO. The answer is yes.

MR. FOZ. Thank you.[41]

Expounding further on the Filipino First Policyprovision Commissioner Nolledocontinues

MR. NOLLEDO. Yes, Madam President. Instead of MUST, it will be SHALL - THESTATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS. This embodiesthe so-called Filipino First policy. That means that Filipinos should be givenpreference in the grant of concessions, privileges and rights covering the national

patrimony.[42]

The exchange of views in the sessions of the Constitutional Commission regarding

the subject provision was still further clarified by Commissioner Nolledo[43]-

Paragraph 2 of Section 10 explicitly mandates the Pro-Filipino bias in all economic

concerns. It is better known as the FILIPINO FIRST Policy x x x x This provision

was never found in previous Constitutions x x x x

The term qualified Filipinos simply means that preference shall be given to those

citizens who can make a viable contribution to the common good, because of credible

competence and efficiency. It certainly does NOT mandate the pampering andpreferential treatment to Filipino citizens or organizations that are incompetent or

inefficient, since such an indiscriminate preference would be counterproductive and

inimical to the common good.

In the granting of economic rights, privileges, and concessions, when a choice has to

be made between a qualified foreigner and

prelims cases coverage

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