Macariola vs. Asuncion

The prohibition under Article 1491(5) of the New Civil Code against judges acquiring property in litigation applies only during the pendency of the case and not after the decision has become final and executory; furthermore, Article 14 of the Spanish Code of Commerce, being a political law, was automatically abrogated upon the change of sovereignty from Spain to the United States and subsequently to the Republic of the Philippines, and thus no longer prohibits judges from engaging in commerce.

The case arose from a partition proceeding (Civil Case No. 3010) involving the estate of Francisco Reyes, where Judge Asuncion rendered a decision on June 8, 1963 adjudicating properties among the heirs. After the decision became final and the project of partition was approved in October and November 1963, certain properties were sold to third parties and subsequently to Judge Asuncion himself in 1965, who later transferred them to a corporation where he served as President. The complainant, an heir who was a defendant in the partition case, filed administrative charges in 1968 alleging that the judge's acquisition of litigated property and business engagements violated statutory prohibitions and ethical canons.

• Civil Case No. 3010 was a complaint for partition filed by Sinforosa R. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes, and Priscilla Reyes against Bernardita R. Macariola concerning properties left by deceased Francisco Reyes.
• On June 8, 1963, respondent Judge Asuncion rendered a decision declaring the respective shares of the parties in the estate and directing the submission of a project of partition within thirty days after the judgment becomes final.
• On October 16, 1963, a project of partition was submitted to the court, signed only by counsel for the parties and not by the parties themselves, which Judge Asuncion approved on October 23, 1963, and amended on November 11, 1963 to authorize the Register of Deeds to issue transfer certificates of title.
• Lot 1184 (specifically one-half thereof with an area of 15,162.5 square meters) was adjudicated to plaintiffs Luz, Anacorita, Ruperto, Adela, and Priscilla Reyes in equal shares, and was subsequently subdivided into Lots 1184-A to 1184-E.
• Lot 1184-E was sold on July 31, 1964 to Dr. Arcadio Galapon, who was issued Transfer Certificate of Title No. 2338.
• On March 6, 1965, Dr. Galapon sold a portion of Lot 1184-E (approximately 1,306 square meters) to Judge Asuncion and his wife Victoria S. Asuncion, which portion was declared by the latter for taxation purposes.
• On August 31, 1966, the Asuncions and Galapons conveyed their respective shares and interest in Lot 1184-E to "The Traders Manufacturing and Fishing Industries, Inc.," a corporation where Judge Asuncion was President and his wife was Secretary, incorporated on January 9, 1967 with stockholders including Dominador Arigpa Tan and his family.
• On January 31, 1967, Judge Asuncion and his wife withdrew from the corporation and sold their respective shares to third parties.
• On November 9 or 11, 1968, complainant instituted Civil Case No. 4234 seeking annulment of the project of partition and subsequent conveyances, which was decided on November 2, 1970 by Judge Jose D. Nepomuceno and appealed to the Court of Appeals on February 22, 1971.

• Respondent violated Article 1491, paragraph 5 of the New Civil Code by purchasing a portion of Lot 1184-E, which was one of the properties involved in Civil Case No. 3010 decided by him.
• Respondent violated Article 14, paragraphs 1 and 5 of the Code of Commerce, Section 3(h) of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act), Section 12 of Rule XVIII of the Civil Service Rules, and Canon 25 of the Canons of Judicial Ethics by associating himself with Traders Manufacturing and Fishing Industries, Inc. as a stockholder and ranking officer while serving as judge.
• Respondent was guilty of coddling an impostor, Dominador Arigpa Tan, who falsely advertised himself as a practicing attorney when his name did not appear in the Roll of Attorneys, and acted in disregard of judicial decorum by closely fraternizing with him.
• Respondent demonstrated culpable defiance of the law and utter disregard for ethics by his conduct.

• The purchase of Lot 1184-E on March 6, 1965 was made after the decision in Civil Case No. 3010 (June 8, 1963) and the orders approving the project of partition (October 23, 1963 and November 11, 1963) had become final, hence the property was no longer in litigation.
• He purchased the property from Dr. Arcadio Galapon, a third party, and not directly from the parties to the litigation, and there was no evidence that Dr. Galapon acted as a dummy or mediator for him.
• Article 14 of the Code of Commerce was automatically abrogated upon the change of sovereignty and is no longer binding.
• He did not violate RA 3019 because there was no showing that he participated or intervened in his official capacity in the business of the corporation, and no case involving the corporation was filed in his court during his involvement.
• Civil Service Rules do not apply to members of the Judiciary who belong to the unclassified service and are subject only to the disciplinary authority of the Supreme Court.
• He had no knowledge that Dominador Arigpa Tan was an impostor and believed him to be a bona fide attorney.
• He and his wife withdrew from the corporation on January 31, 1967, indicating realization that their interest contravened Canon 25.

• Procedural:
  • Whether the Supreme Court has jurisdiction over the administrative complaint against a judge of the Court of First Instance.
  • Whether the filing of Civil Case No. 4234 for annulment of the project of partition affects the determination of the administrative case.
• Substantive Issues:
  • Whether respondent violated Article 1491(5) of the New Civil Code by purchasing property involved in litigation he decided.
  • Whether respondent violated Article 14 of the Code of Commerce, Section 3(h) of RA 3019, and Section 12 of Rule XVIII of the Civil Service Rules by engaging in business as a stockholder and officer of a corporation while serving as judge.
  • Whether respondent violated the Canons of Judicial Ethics by his conduct.
  • Whether respondent was guilty of coddling an impostor and acting in disregard of judicial decorum.

• Procedural:
  • The Supreme Court has jurisdiction over administrative complaints against judges of inferior courts under Section 7, Article X of the 1973 Constitution and Section 67 of the Judiciary Act of 1948.
  • The subsequent filing of Civil Case No. 4234 on November 9 or 11, 1968 cannot alter the fact that the questioned sale to respondent Judge was consummated on March 6, 1965, long after the finality of the decision and orders in Civil Case No. 3010.
• Substantive:
  • Article 1491(5): No violation committed. The prohibition applies only to sales or assignments of property taking place during the pendency of the litigation. The purchase on March 6, 1965 occurred after the decision (June 8, 1963) and the orders approving the project of partition (October 23, 1963 and November 11, 1963) had become final. The property was no longer subject of litigation at the time of purchase.
  • Business Engagement: No violation of Article 14 of the Code of Commerce because it is a political law automatically abrogated upon change of sovereignty from Spain to the United States and subsequently to the Republic of the Philippines, absent any affirmative act of re-enactment. No violation of Section 3(h) of RA 3019 because there was no showing that respondent participated or intervened in his official capacity in the business of the corporation. No violation of Section 12, Rule XVIII of Civil Service Rules because judges belong to the non-competitive or unclassified service and are not subject to the Civil Service Commission's disciplinary authority.
  • Canons of Judicial Ethics: While no law was violated, respondent's conduct was improper under Canon 3 (appearance of impropriety) and Canon 25 (abstention from business investments that may be involved in litigation). The acquisition of property that was previously in litigation in his court and transfer to a corporation where he was a ranking officer created an appearance of impropriety and suspicion regarding his official actuations.
  • Third and Fourth Causes: Respondent is exonerated. There is no evidence that respondent knew Dominador Arigpa Tan was an impostor, or that their social relations influenced his official actuations.

• Abrogation of Political Laws Upon Change of Sovereignty — Political laws of the former sovereign are automatically abrogated upon transfer of sovereignty to a new sovereign, unless expressly re-enacted by affirmative act of the new sovereign. Municipal laws not in conflict with the new sovereign's laws continue in force, but political laws do not. This doctrine was applied to hold that Article 14 of the Code of Commerce (Spanish law) was abrogated upon Philippine independence.
• Pendency of Litigation under Article 1491(5) — The prohibition against judges acquiring property in litigation applies only during the pendency of the litigation. Once the decision becomes final and executory, and the property is no longer subject of litigation, the disqualification ceases.
• Separation of the Judiciary from Civil Service — Members of the Judiciary belong to the non-competitive or unclassified service and are not subject to the disciplinary authority of the Civil Service Commissioner. The grounds and procedure for discipline of judges are specifically provided in the Judiciary Act and the Constitution.
• Appearance of Impropriety (Canon 3) — A judge's official conduct should be free from the appearance of impropriety, and his personal behavior should be beyond reproach. Even if an act is not strictly illegal, it may be improper if it gives cause for doubt and mistrust in the uprightness of the administration of justice.

• "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.'" — On the interpretation of Article 1491(5) of the New Civil Code.
• "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." — On the status of the Code of Commerce.
• "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." — Citing Canon 3 of the Canons of Judicial Ethics.
• "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." — On the ethical standards required of judges.

• Director of Lands v. Ababa (88 SCRA 513) — Cited for the principle that Article 1491(5) applies only during the pendency of litigation.
• Rosario vda. de Laig v. Court of Appeals (86 SCRA 641) — Cited for the same principle regarding the timing of the prohibition in Article 1491.
• Roa v. Collector of Customs (23 Phil. 315) — Cited for the doctrine that political laws are automatically abrogated upon change of sovereignty.
• People v. Perfecto (43 Phil. 887) — Cited for the definition of political law and the principle of automatic abrogation upon transfer of sovereignty.
• American and Ocean Ins. Cos. v. 356 Bales of Cotton (1 Pet. [26 U.S.] 511) — Cited for Chief Justice Marshall's statement on the effect of cession on political and municipal laws.
• Villaluz v. Zaldivar (15 SCRA 710) — Cited for the principle that only permanent officers in the classified service come under the Civil Service Commission's jurisdiction.
• Ang-Angco v. Castillo (9 SCRA 619) — Cited for the same principle regarding Civil Service jurisdiction.
• People v. Meneses (C.A. 40 O.G. 11th Supp. 134) — Cited for the interpretation that RA 3019 requires intervention in official capacity.

• Article 1491(5), New Civil Code — Prohibits justices, judges, and other officers connected with the administration of justice from acquiring property and rights in litigation before the court within whose jurisdiction they exercise their functions; held to apply only during pendency of litigation.
• Article 14(1) and (5), Code of Commerce — Prohibited justices and judges from engaging in commerce; held abrogated as a political law upon change of sovereignty.
• Section 3(h), Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) — Prohibits public officers from having financial interest in any business where they intervene in their official capacity; held inapplicable where judge did not intervene in his official capacity.
• Section 12, Rule XVIII, Civil Service Rules (under R.A. No. 2260) — Prohibits officers or employees from engaging in private business without written permission; held inapplicable to judges who belong to the unclassified service.
• Section 67, Republic Act No. 296 (Judiciary Act of 1948) — Prescribes the grounds (serious misconduct and inefficiency) and procedure for removal of judges by the President upon recommendation of the Supreme Court.
• Section 16(i), Republic Act No. 2260 (Civil Service Act of 1959) — Grants the Commissioner of Civil Service jurisdiction over permanent officers and employees in the competitive service; held not applicable to judges.
• Canon 3, Canons of Judicial Ethics — Requires a judge's conduct to be free from the appearance of impropriety; cited to admonish respondent for purchasing property previously in litigation in his court.
• Canon 25, Canons of Judicial Ethics — Requires judges to abstain from personal investments in enterprises apt to be involved in litigation in their court; cited regarding respondent's business involvement.
• Article X, Sections 5, 6, and 7, 1973 Constitution — Provisions on the Judicial Department granting the Supreme Court exclusive authority to discipline judges of inferior courts.

• Justice Aquino — Voted for respondent's unqualified exoneration, disagreeing with the majority's decision to issue a reminder and finding no basis for any disciplinary action.
• Justice Barredo — Concurred with Justice Aquino in voting for unqualified exoneration, dissenting from the majority's imposition of a reminder.