EN BANC

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

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

MALCOLM, J.: chanrobles virtual law library

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

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

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

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

In that case, every investigation to be made would be but a mere comedy and nothing
more.chanroblesvirtuallawlibrary chanrobles virtual law library

After all, the perpetration of the robbery, especially under the circumstances that have surrounded it, does not
surprise us at all.chanroblesvirtuallawlibrary chanrobles virtual law library

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

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

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

The Philippine Senate, in its session of September 9, 1920, adopted a resolution authorizing its committee on elections
and privileges to report as to the action which should be taken with reference to the article published in La Nacion. On
September 15, 1920, the Senate adopted a resolution authorizing the President of the Senate to indorse to the Attorney-
General, for his study and corresponding action, all the papers referring to the case of the newspaper La Nacion and its
editor, Mr. Gregorio Perfecto. As a result, an information was filed in the municipal court of the City of Manila by an
assistant city fiscal, in which the editorial in question was set out and in which it was alleged that the same constituted a
violation of article 256 of the Penal Code. The defendant Gregorio Perfecto was found guilty in the municipal court and
again in the Court of First Instance of Manila.chanroblesvirtuallawlibrary chanrobles virtual law library

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

This antiquated provision was doubtless incorporated into the Penal Code of Spain for the protection of the
Ministers of the Crown and other representatives of the King against free speech and action by Spanish subjects.
A severe punishment was prescribed because it was doubtless considered a much more serious offense to insult
the King's representative than to insult an ordinary individual. This provision, with almost all the other articles of
that Code, was extended to the Philippine Islands when under the dominion of Spain because the King's subject
in the Philippines might defame, abuse or insult the Ministers of the Crown or other representatives of His
Majesty. We now have no Ministers of the Crown or other persons in authority in the Philippines representing the
King of Spain, and said provision, with other articles of the Penal Code, had apparently passed into "innocuous
desuetude," but the Supreme Corut of the Philippine Islands has, by a majority decision, held that said article
256 is the law of the land to-day. . . .chanroblesvirtuallawlibrary chanrobles virtual law library

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

In the decision rendered by the same judge, he concluded with the following language:
 In the United States such publications are usually not punishable as criminal offense, and little importance is
attached to them, because they are generally the result of political controversy and are usually regarded as
more or less colored or exaggerated. Attacks of this character upon a legislative body are not punishable, under
the Libel Law. Although such publications are reprehensible, yet this court feels some aversion to the application
of the provision of law under which this case was filed. Our Penal Code has come to us from the Spanish regime.
Article 256 of that Code prescribes punishment for persons who use insulting language about Ministers of the
Crown or other "authority." The King of Spain doubtless left the need of such protection to his ministers and
others in authority in the Philippines as well as in Spain. Hence, the article referred to was made applicable here.
Notwithstanding the change of sovereignty, our Supreme Court, in a majority decision, has held that this
provision is still in force, and that one who made an insulting remark about the President of the United States
was punishable under it. (U.S. vs. Helbig, supra.) If it applicable in that case, it would appear to be applicable in
this case. Hence, said article 256 must be enforced, without fear or favor, until it shall be repealed or
superseded by other legislation, or until the Supreme Court shall otherwise
determine.chanroblesvirtuallawlibrary chanrobles virtual law library

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

The fifteen errors assigned by the defendant and appellant, reenforced by an extensive brief, and eloquent oral
argument made in his own behalf and by his learned counsel, all reduce themselves to the pertinent and decisive
question which was announced in the beginning of this decision.chanroblesvirtuallawlibrary chanrobles virtual law library

It will be noted in the first place that the trial judge considered himself bound to follow the rule announced in the case of
United States vs. Helbig (R. G. No. 14705, 1 not published). In that case, the accused was charged with having said, "To
hell with the President and his proclamations, or words to that effect," in violation of article 256 of the Penal Code. He
was found guilty in a judgment rendered by the Court of First Instance of Manila and again on appeal to the Supreme
Court, with the writer of the instant decision dissenting on two principal grounds: (1) That the accused was deprived of
the constitutional right of cross-examination, and (2) that article 256 of the Spanish Penal Code is no longer in force.
Subsequently, on a motion of reconsideration, the court, being of the opinion that the Court of First Instance had
committed a prejudicial error in depriving the accused of his right to cross-examine a principal witness, set aside the
judgment affirming the judgment appealed from and ordered the return of the record to the court of origin for the
celebration of a new trial. Whether such a trial was actually had, is not known, but at least, the record in the Helbig case
has never again been elevated to this court.chanroblesvirtuallawlibrary chanrobles virtual law library

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

This is one of those cases on which a variety of opinions all leading to the same result can be had. A majority of the
court are of the opinion that the Philippine Libel Law, Act No. 277, has had the effect of repealing so much of article 256
of the Penal Code as relates to written defamation, abuse, or insult, and that under the information and the facts, the
defendant is neither guilty of a violation of article 256 of the Penal Code, nor of the Libel Law. The view of the Chief
Justice is that the accused should be acquitted for the reason that the facts alleged in the information do not constitute a
violation of article 156 of the Penal Code. Three members of the court believe that article 256 was abrogated completely
by the change from Spanish to American sovereignty over the Philippines and is inconsistent with democratic principles
of government.chanroblesvirtuallawlibrary chanrobles virtual law library

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

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

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

The Libel Law must have had the same result on other provisions of the Penal Code, as for instance article
256.chanroblesvirtuallawlibrary chanrobles virtual law library
The facts here are that the editor of a newspaper published an article, naturally in writing, which may have had the
tendency to impeach the honesty, virtue, or reputation of members of the Philippine Senate, thereby possibly exposing
them to public hatred, contempt, or ridicule, which is exactly libel, as defined by the Libel Law. Sir J. F. Stephen is
authority for the statement that a libel is indictable when defaming a "body of persons definite and small enough for
individual members to be recognized as such, in or by means of anything capable of being a libel." (Digest of Criminal
Law, art. 267.) But in the United States, while it may be proper to prosecute criminally the author of a libel charging a
legislator with corruption, criticisms, no matter how severe, on a legislature, are within the range of the liberty of the
press, unless the intention and effect be seditious. (3 Wharton's Criminal Law, p. 2131.) With these facts and legal
principles in mind, recall that article 256 begins: Any person who, by . . . writing, shall defame, abuse, or insult any
Minister of the Crown or other person in authority," etc.chanroblesvirtuallawlibrary chanrobles virtual law library

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

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

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

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

It cannot admit of doubt that all those provisions of the Spanish Penal Code having to do with such subjects as treason,
lese majeste, religion and worship, rebellion, sedition, and contempts of ministers of the crown, are not longer in force.
Our present task, therefore, is a determination of whether article 256 has met the same fate, or, more specifically
stated, whether it is in the nature of a municipal law or political law, and is consistent with the Constitution and laws of
the United States and the characteristics and institutions of the American Government.chanroblesvirtuallawlibrary
chanrobles virtual law library

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. "Political" is here used to denominate the laws regulating the relations sustained by the
inhabitants to the sovereign. (American Insurance Co. vs. Canter [1828], 1 Pet., 511; Chicago, Rock Island and Pacific
Railway Co. vs. McGlinn [1885], 114 U.S., 542; Roa vs. Collector of Customs [1912], 23 Phil., 315.) Mr. Justice Field of the
United States Supreme Court stated the obvious when in the course of his opinion in the case of Chicago, Rock Island
and Pacific Railway Co. vs. McGlinn, supra, he said: "As a matter of course, all laws, ordinances and regulations in
conflict with the political character, institutions and Constitution of the new government are at once displaced. Thus,
upon a cession of political jurisdiction and legislative power - and the latter is involved in the former - to the United
States, the laws of the country in support of an established religion or abridging the freedom of the press, or authorizing
cruel and unusual punishments, and he like, would at once cease to be of obligatory force without any declaration to
that effect." To quote again from the United States Supreme Court: "It cannot be admitted that the King of Spain could,
by treaty or otherwise, impart to the United States any of his royal prerogatives; and much less can it be admitted that
they have capacity to receive or power to exercise them. Every nation acquiring territory, by treaty or otherwise, must
hold it subject to the Constitution and laws of its own government, and not according to those of the government ceding
it." (Pollard vs. Hagan [1845], 3 Hos., 210.) chanrobles virtual law library

On American occupation of the Philippines, by instructions of the President to the Military Commander dated May 28,
1898, and by proclamation of the latter, the municipal laws of the conquered territory affecting private rights of person
and property and providing for the punishment of crime were nominally continued in force in so far as they were
compatible with the new order of things. But President McKinley, in his instructions to General Merritt, was careful to
say: "The first effect of the military occupation of the enemy's territory is the severance of the former political relation of
the inhabitants and the establishment of a new political power." From that day to this, the ordinarily it has been taken
for granted that the provisions under consideration were still effective. To paraphrase the language of the United States
Supreme Court in Weems vs. United States ([1910], 217 U. S., 349), there was not and could not be, except as precise
questions were presented, a careful consideration of the codal provisions and a determination of the extent to which
they accorded with or were repugnant to the "'great principles of liberty and law' which had been 'made the basis of our
governmental system.' " But when the question has been squarely raised, the appellate court has been forced on
occasion to hold certain portions of the Spanish codes repugnant t democratic institutions and American constitutional
principles. (U.S. vs. Sweet [1901], 1 Phil., 18; U.S. vs. Balcorta [1913], 25 Phil., 273; U.S. vs. Balcorta [1913], 25 Phil.,
533; Weems vs. U.S., supra.) chanrobles virtual law library

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

In all the forms of government and administrative provisions which they are authorized to prescribe, the
Commission should bear in mind that he government which they are establishing is designed not for our
satisfaction or for the expression of our theoretical views, but for the happiness, peace, and prosperity of the
people of the Philippine Islands, and the measures adopted should be made to conform to their customs, their
habits, and even their prejudices, to the fullest extent consistent with the accomplishment of the indispensable
requisites of just and effective government. At the same time the Commission should bear in mind, and the
people of the Islands should be made plainly to understand, that there are certain great principles of
government which have been made the basis of our governmental system, which we deem essential to the rule
of law and the maintenance of individual freedom, and of which they have, unfortunately, been denied the
experience possessed by us; that there are also certain practical rules of government which we have found to be
essential to the preservation of these great principles of liberty and law, and that these principles and these
rules of government must be established and maintained in their islands for the sake of their liberty and
happiness, however much they may conflict with the customs or laws of procedure with which they are familiar.
It is evident that the most enligthened thought of the Philippine Islands fully appreciates the importance of these
principles and rules, and they will inevitably within a short time command universal assent.

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

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

According to our view, article 256 of the Spanish Penal Code was enacted by the Government of Spain to protect
Spanish officials who were the representatives of the King. With the change of sovereignty, a new government, and a
new theory of government, as set up in the Philippines. It was in no sense a continuation of the old, although merely for
convenience certain of the existing institutions and laws were continued. The demands which the new government
made, and makes, on the individual citizen are likewise different. No longer is there a Minister of the Crown or a person
in authority of such exalted position that the citizen must speak of him only with bated breath. "In the eye of our
Constitution and laws, every man is a sovereign, a ruler and a freeman, and has equal rights with every other man. We
have no rank or station, except that of respectability and intelligence as opposed to indecency and ignorance, and the
door to this rank stands open to every man to freely enter and abide therein, if he is qualified, and whether he is
qualified or not depends upon the life and character and attainments and conduct of each person for himself. Every man
may lawfully do what he will, so long as it is not malum in se or malum prohibitum or does not infringe upon the qually
sacred rights of others." (State vs. Shepherd [1903], 177 Mo., 205; 99 A. S. R., 624.) chanrobles virtual law library

It is true that in England, from which so many of the laws and institutions of the United States are derived, there were
once statutes of scandalum magnatum, under which words which would not be actionable if spoken of an ordinary
subject were made actionable if spoken of a peer of the realm or of any of the great officers of the Crown, without proof
of any special damage. The Crown of England, unfortunately, took a view less tolerant that that of other sovereigns, as
for instance, the Emperors Augustus, Caesar, and Tiberius. These English statutes have, however, long since, become
obsolete, while in the United States, the offense of scandalum magnatum is not known. In the early days of the American
Republic, a sedition law was enacted, making it an offense to libel the Government, the Congress, or the President of the
United States, but the law met with so much popular disapproval, that it was soon repealed. "In this country no
distinction as to persons is recognized, and in practice a person holding a high office is regarded as a target at whom
any person may let fly his poisonous words. High official position, instead of affording immunity from slanderous and
libelous charges, seems rather to be regarded as making his character free plunder for any one who desires to create a
senation by attacking it." (Newell, Slander and Libel, 3d ed., p. 245; Sillars vs. Collier [1890], 151 Mass., 50; 6 L.R.A.,
680.) chanrobles virtual law library

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

From an entirely different point of view, it must be noted that this article punishes contempts against executive officials,
although its terms are broad enough to cover the entire official class. Punishment for contempt of non-judicial officers
has no place in a government based upon American principles. Our official class is not, as in monarchies, an agent of
some authority greater than the people but it is an agent and servant of the people themselves. These officials are only
entitled to respect and obedience when they are acting within the scope of their authority and jurisdiction. The American
system of government is calculated to enforce respect and obedience where such respect and obedience is due, but
never does it place around the individual who happens to occupy an official position by mandate of the people any
official halo, which calls for drastic punishment for contemptuous remarks.chanroblesvirtuallawlibrary chanrobles virtual
law library

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

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

Ostrand and Johns, JJ., concur.

EN BANC

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

BERNARDITA R. MACARIOLA, complainant,

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

MAKASIAR, J:

In a verified complaint dated August 6, 1968 Bernardita R. Macariola charged respondent Judge Elias B. Asuncion of 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:

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, 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 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 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 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, 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 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 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.).

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 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.

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 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.

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 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:

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.

Concepcion Jr., J., is on leave.

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

EN BANC

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

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

DECISION

BELLOSILLO, J.:

The Filipino First Policy enshrined in the 1987 Constitution, i.e., in the grant of rights, privileges, and concessions
covering the national economy and patrimony, the State shall give preference to qualified Filipinos,[1] is invoked by
petitioner in its bid to acquire 51% of the shares of the Manila Hotel Corporation (MHC) which owns the historic Manila
Hotel. Opposing, respondents maintain that the provision is not self-executing but requires an implementing legislation
for its enforcement. Corollarily, they ask whether the 51% shares form part of the national economy and patrimony
covered by 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 bidding 30% to 51% of the issued and outstanding shares of respondent MHC. The winning bidder, or the eventual
strategic partner, is to provide management expertise and/or an international marketing/reservation system, and
financial support to strengthen the profitability and performance of the Manila Hotel.[2] In a close bidding held on 18
September 1995 only two (2) bidders participated: petitioner Manila Prince Hotel Corporation, a Filipino corporation,
which offered to buy 51% of the MHC or 15,300,000 shares at P41.58 per share, and Renong Berhad, a Malaysian firm,
with ITT-Sheraton as its hotel operator, which bid for the same number of shares at P44.00 per share, or P2.42 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:

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 with GSIS x x x xc

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.

Pending the declaration of Renong Berhard as the winning bidder/strategic partner and the execution of the necessary
contracts, petitioner in a letter to respondent GSIS dated 28 September 1995 matched the bid price of P44.00 per share
tendered by Renong Berhad.[4] In a subsequent letter dated 10 October 1995 petitioner sent a managers 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 Berhad x x x x[5] which respondent GSIS refused to accept. c

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

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

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

It is also the thesis of petitioner that since Manila Hotel is part of the national patrimony and its business also
unquestionably part of the national economy petitioner should be preferred after it has matched the bid offer of the
Malaysian firm. For the bidding rules mandate that if for any reason, the Highest Bidder cannot be awarded the Block of
Shares, GSIS may offer this to the other Qualified Bidders that have validly submitted bids provided that these Qualified
Bidders are willing to match the highest bid in terms of price per share.[8]
Respondents except. They maintain that: First, Sec. 10, second par., Art. XII, of the 1987 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 said provision to operate, there must be existing laws to lay down conditions under which business may
be done.[9]

Second, granting that this provision is self-executing, Manila Hotel does not fall under the term national patrimony which
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 territorial sea, 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 the guests who have slept in the hotel and the events that have transpired therein which
make the hotel historic, these alone do not make the hotel fall under the patrimony of the nation. What is more, the
mandate of the Constitution is addressed to the State, not to respondent GSIS which possesses a personality of its own
separate and distinct from the Philippines as a State.

Third, granting that the Manila Hotel forms part of the national patrimony, the constitutional 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 upon which the building stands. Certainly, 51% of the equity of the MHC cannot be considered part of the
national patrimony. Moreover, if the disposition of the shares of the MHC is really contrary to the Constitution, petitioner
should have questioned it right from 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 which provides that if for any reason, the
Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to the other Qualified Bidders that have
validly submitted bids provided that these Qualified Bidders are willing to match the highest bid in terms of price per
share, is misplaced. Respondents postulate that the privilege of submitting a matching bid has not yet arisen since it
only takes place if for any reason, the Highest Bidder cannot be awarded the Block of Shares. Thus the submission by
petitioner of a matching bid is premature since Renong Berhad could still very well be awarded the block of shares and
the condition giving rise to the exercise of the privilege to submit a matching bid had not yet taken place.

Finally, the prayer for prohibition grounded on grave abuse of discretion should fail since 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 by law. Similarly, the
petition for mandamus should fail as petitioner has no clear legal right to what it demands and respondents do not have
an imperative duty to perform the act required of them by petitioner.

We now resolve. A constitution is a system of fundamental laws for the governance and administration of a nation. It is
supreme, imperious, absolute and unalterable except by the authority from which it emanates. It has been defined as
the fundamental and paramount law of the nation.[10] It prescribes the permanent framework of a system of
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 laws must conform and in accordance with which all private rights must be determined and all public
authority administered.[11] Under the doctrine of constitutional supremacy, if a law or contract violates any norm of the
constitution that law or contract whether promulgated by the legislative or by the executive branch or entered into by
private persons for private purposes is null and void and without any force and effect. Thus, since the Constitution is the
fundamental, paramount and supreme law of the nation, it is deemed written in every statute and contract.

Admittedly, some constitutions are merely declarations of policies and principles. Their provisions command the
legislature to enact laws and carry out the purposes of the framers who merely establish an outline of government
providing for the different departments of the governmental machinery and securing certain fundamental and
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. But a provision which is complete in itself and becomes operative
without the aid of supplementary or enabling legislation, or that which supplies sufficient rule by means of which the
right it grants may be enjoyed or protected, is self-executing. Thus a constitutional provision is self-executing if the
nature and extent of the right conferred and the liability imposed are fixed by the constitution itself, so that they can be
determined by an examination and construction of its terms, and there is no language indicating that the subject is
referred to the legislature for action.

As against constitutions of the past, modern constitutions have been generally drafted upon a different principle and
have often become in effect extensive codes of laws intended to operate directly upon the people in a manner similar to
that of statutory enactments, and the function of constitutional conventions has evolved into one more like that of a
legislative body. Hence, unless it is expressly provided that a legislative act is necessary to enforce a constitutional
mandate, the presumption now is that all provisions of the constitution are self-executing. If the constitutional provisions
are treated as requiring legislation instead of self-executing, the legislature would have the power to ignore and
practically nullify the mandate of the fundamental law.[14] This can be cataclysmic. That is why the prevailing view is,
as it has always been, that -

x x x x in case of doubt, the Constitution should be considered self-executing rather than non-self-executing x x x x
Unless the contrary is clearly intended, the provisions of the Constitution should be considered self-executing, as a
contrary rule would give the legislature discretion to determine when, or whether, they shall be effective. These
provisions would be subordinated to the will of the lawmaking body, which could make them entirely meaningless by
simply refusing to pass the needed implementing statute.[15]

Respondents argue that Sec. 10, second par., Art. XII, of the 1987 Constitution is clearly not self-executing, as they
quote from discussions on the floor of the 1986 Constitutional Commission -
MR. RODRIGO. Madam President, I am asking this question as the Chairman of the Committee on Style. If the wording of
PREFERENCE is given to QUALIFIED FILIPINOS, can it be understood as a preference to qualified Filipinos vis-a-vis
Filipinos who are not qualified. So, why do we not make it clear? To qualified Filipinos as against aliens?

THE PRESIDENT. What is the question of Commissioner Rodrigo? Is it to remove the word QUALIFIED?

MR. RODRIGO. No, no, but say definitely TO QUALIFIED FILIPINOS as against whom? As against aliens or over aliens ?

MR. NOLLEDO. Madam President, I think that is understood. We use the word QUALIFIED because the existing laws or
prospective laws will always lay down conditions under which business may be done. For example, qualifications on
capital, qualifications on the setting up of other financial structures, et cetera (underscoring supplied by respondents).

MR. RODRIGO. It is just a matter of style.

MR. NOLLEDO. Yes.[16]

Quite apparently, Sec. 10, second par., of Art XII is couched in such a way as not to make it appear that it is non-self-
executing but simply for purposes of style. But, certainly, the legislature is not precluded from enacting further laws to
enforce the constitutional provision so long as the contemplated statute squares with the Constitution. Minor details may
be left to the legislature without impairing the self-executing nature of constitutional provisions.

In self-executing constitutional provisions, the legislature may still enact legislation to facilitate the exercise of powers
directly granted by the constitution, further the operation of such a provision, prescribe a practice to be used for its
enforcement, provide a convenient remedy for the protection of the rights secured or the determination thereof, or place
reasonable safeguards around the exercise of the right. The mere fact that legislation may supplement and add to or
prescribe a penalty for the violation of a self-executing constitutional provision does not render such a provision
ineffective in the absence of such legislation. The omission from a constitution of any express provision for a remedy for
enforcing a right or liability is not necessarily an indication that it was not intended to be self-executing. The rule is that
a self-executing provision of the constitution does not necessarily exhaust legislative power 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] Subsequent legislation however does not necessarily mean that the subject constitutional provision is 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 section which undoubtedly are not self-executing.[18] The argument is
flawed. If the first and third paragraphs are not self-executing because Congress is still to enact measures to encourage
the formation and operation of enterprises fully owned by Filipinos, as in the first paragraph, and the State still needs
legislation to regulate and exercise authority over foreign investments within its national jurisdiction, as in the third
paragraph, then a fortiori, 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 qualified Filipinos in the grant of rights, privileges and
concessions covering the national economy and patrimony. A constitutional provision may be self-executing in one part
and non-self-executing in another.[19]

Even the cases cited by respondents holding that certain constitutional provisions are merely statements of principles
and policies, which are basically not self-executing and only placed in the Constitution as moral incentives to legislation,
not as judicially enforceable rights - are simply not in point. Basco v. Philippine Amusements and Gaming
Corporation[20] speaks of constitutional provisions on personal dignity,[21] the sanctity 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] refers to constitutional provisions on social justice and human rights[27] and on education.[28]
Lastly, Kilosbayan, Inc. v. Morato[29] cites provisions on the promotion of general 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 of these provisions indeed clearly shows that they are not judicially enforceable constitutional rights but
merely guidelines for legislation. The very terms of the provisions manifest that they are only principles upon which
legislations must be based. Res ipsa loquitur

On the other hand, Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory, 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 the provision does not require any legislation to put it in operation. It is per se judicially enforceable. 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 be preferred.
And when our Constitution declares that a right exists in certain specified circumstances an action may be maintained to
enforce such right notwithstanding the absence of any legislation on the subject; consequently, if there is no statute
especially enacted to enforce such constitutional right, such right enforces itself by its own inherent potency and
puissance, and from which all legislations must take their bearings. Where there is a right there is a remedy. Ubi jus ibi
remedium.

As regards our national patrimony, a member of the 1986 Constitutional Commission[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 term patrimony pertains to heritage.[35] When the Constitution speaks
of national patrimony, it refers not only to the natural 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, it immediately evolved to be truly Filipino. Formerly a concourse for the elite, it has
since then become the venue of various significant events which have shaped Philippine history. It was called the
Cultural Center of the 1930s. It was the site of the festivities during the inauguration of the Philippine Commonwealth.
Dubbed as the Official Guest House of the Philippine Government it plays host to dignitaries and official visitors who are
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 the Japanese Military Administration into a military headquarters. When the
American forces returned to recapture Manila the hotel was selected by the Japanese together with Intramuros as the
two (2) places for their final stand. Thereafter, in the 1950s and 1960s, the hotel became the center of political
activities, playing host to almost every political convention. In 1970 the hotel reopened after a renovation and reaped
numerous international recognitions, an acknowledgment of the Filipino talent and ingenuity. In 1986 the hotel was the
site of a failed coup d etat where an aspirant for vice-president was proclaimed President of the Philippine Republic.

For more than eight (8) decades Manila Hotel has bore mute witness to the triumphs 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 national economy and
patrimony. For sure, 51% of the equity of the MHC comes within the purview 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
management of the hotel. In this instance, 51% of the MHC cannot be disassociated from the hotel and the land on
which the hotel edifice stands. Consequently, we cannot sustain respondents claim that the Filipino First Policy provision
is not applicable since what is being sold is only 51% of the outstanding shares of the corporation, not the Hotel building
nor the land upon which the building stands.[38]

The argument is pure sophistry. The term qualified Filipinos as used in our Constitution also includes corporations at
least 60% of which is owned by Filipinos. 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 Nolledo amendment. And the amendment would consist in
substituting the words QUALIFIED FILIPINOS with the following: CITIZENS OF THE PHILIPPINES OR CORPORATIONS OR
ASSOCIATIONS WHOSE CAPITAL OR CONTROLLING STOCK IS WHOLLY OWNED BY SUCH CITIZENS.

x x x xc

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, do we not give it preference?

MR. DAVIDE. The Nolledo amendment would refer to an individual Filipino. What about 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 the preference should only be 100-percent
Filipino.

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

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

xxxy

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 QUALIFIED FILIPINOS. And the word
Filipinos here, as intended by the proponents, will include not only individual Filipinos but also Filipino-controlled entities
or entities fully-controlled by Filipinos.[40]

The phrase preference to qualified Filipinos was explained thus -

MR. FOZ. Madam President, I would like to request Commissioner Nolledo to please restate his amendment so that I can
ask a question.
MR. NOLLEDO. IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL ECONOMY AND
PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS.

MR. FOZ. In connection with that amendment, if a foreign enterprise is qualified and a Filipino enterprise is also qualified,
will the Filipino enterprise still be given a preference?

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 Policy provision Commissioner Nolledo continues

MR. NOLLEDO. Yes, Madam President. Instead of MUST, it will be SHALL - THE STATE SHALL GIVE PREFERENCE TO
QUALIFIED FILIPINOS. This embodies the so-called Filipino First policy. That means that Filipinos should be given
preference 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 and preferential 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 a qualified Filipino, the latter shall be chosen over the former.

Lastly, the word qualified is also determinable. Petitioner was so considered by respondent GSIS and selected as one of
the qualified bidders. It was pre-qualified by respondent GSIS in accordance with its own guidelines so that the sole
inference here is that petitioner has been found to be possessed of proven management expertise in the hotel industry,
or it has significant equity ownership in another hotel company, or it has an overall management and marketing
proficiency to successfully operate the Manila Hotel.[44]

The penchant to try to whittle away the mandate of the Constitution by arguing that the subject provision is not self-
executory and requires implementing legislation is quite disturbing. The attempt to violate a clear constitutional
provision - by the government itself - is only too distressing. To adopt such a line of reasoning is to renounce the duty to
ensure faithfulness to the Constitution. For, even some of the provisions of the Constitution which evidently need
implementing legislation have juridical life of their own and can be the source of a judicial remedy. We cannot simply
afford the government a defense that arises out of the failure to enact further enabling, implementing or guiding
legislation. In fine, the discourse of Fr. Joaquin G. Bernas, S.J., on constitutional government is apt -

The executive department has a constitutional duty to implement laws, including the Constitution, even before Congress
acts - provided that there are discoverable legal standards for executive action. When the executive acts, it must be
guided by its own understanding of the constitutional command and of applicable laws. The responsibility for reading
and understanding the Constitution and the laws is not the sole prerogative of Congress. If it were, the executive would
have to ask Congress, or perhaps the Court, for an interpretation every time the executive is confronted by a
constitutional command. That is not how constitutional government operates.

Respondents further argue that the constitutional provision is addressed to the State, not to respondent GSIS which by
itself possesses a separate and distinct personality. This argument again is at best specious. It is undisputed that the
sale of 51% of the MHC could only be carried out with the prior approval of the State acting through respondent
Committee on Privatization. As correctly pointed out by Fr. Joaquin G. Bernas, S.J., this fact alone makes the sale of the
assets of respondents GSIS and MHC a state action. In constitutional jurisprudence, the acts of persons distinct from the
government are considered state action covered by the Constitution (1) when the activity it engages in is a public
function; (2) when the government is so significantly involved with the private actor as to make the government
responsible for his action; and, (3) when the government has approved or authorized the action. It is evident that the act
of respondent GSIS in selling 51% of its share in respondent MHC comes under the second and third categories of state
action. Without doubt therefore the transaction, although entered into by respondent GSIS, is in fact a transaction of the
State and therefore subject to the constitutional command.

When the Constitution addresses the State it refers not only to the people but also to the government as elements of the
State. After all, government is composed of three (3) divisions of power - legislative, executive and judicial. Accordingly,
a constitutional mandate directed to the State is correspondingly directed to the three (3) branches of government. It is
undeniable that in this case the subject constitutional injunction is addressed among others to the Executive
Department and respondent GSIS, a government instrumentality deriving its authority from the State.
It should be stressed that while the Malaysian firm offered the higher bid it is not yet the winning bidder. The bidding
rules expressly provide that the highest bidder shall only be declared the winning bidder after it has negotiated and
executed the necessary contracts, and secured the requisite approvals. Since the Filipino First Policy provision of the
Constitution bestows preference on qualified Filipinos the mere tending of the highest bid is not an assurance that the
highest bidder will be declared the winning bidder. Resultantly, respondents are not bound to make the award yet, nor
are they under obligation to enter into one with the highest bidder. For in choosing the awardee respondents are
mandated to abide by the dictates of the 1987 Constitution the provisions of which are presumed to be known to all the
bidders and other interested parties.

Adhering to the doctrine of constitutional supremacy, the subject constitutional provision is, as it should be, impliedly
written in the bidding rules issued by respondent GSIS, lest the bidding rules be nullified for being violative of the
Constitution. It is a basic principle in constitutional law that all laws and contracts must conform with the fundamental
law of the land. Those which violate the Constitution lose their reason for being. Paragraph V. J. 1 of the bidding rules
provides that [i]f for any reason the Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to other
Qualified Bidders that have validly submitted bids provided that these Qualified Bidders are willing to match the highest
bid in terms of price per share.[47] Certainly, the constitutional mandate itself is reason enough not to award the block
of shares immediately to the foreign bidder notwithstanding its submission of a higher, or even the highest, bid. In fact,
we cannot conceive of a stronger reason than the constitutional injunction itself.

In the instant case, where a foreign firm submits the highest bid in a public bidding concerning the grant of rights,
privileges and concessions covering the national economy and patrimony, thereby exceeding the bid of a Filipino, there
is no question that the Filipino will have to be allowed to match the bid of the foreign entity. And if the Filipino matches
the bid of a foreign firm the award should go to the Filipino. It must be so if we are to give life and meaning to the
Filipino First Policy provision of the 1987 Constitution. For, while this may neither be expressly stated nor contemplated
in the bidding rules, the constitutional fiat is omnipresent to be simply disregarded. To ignore it would be to sanction a
perilous skirting of the basic law

This Court does not discount the apprehension that this policy may discourage foreign investors. But the Constitution
and laws of the Philippines are understood to be always open to public scrutiny. These are given factors which investors
must consider when venturing into business in a foreign jurisdiction. Any person therefore desiring to do business in the
Philippines or with any of its agencies or instrumentalities is presumed to know his rights and obligations under the
Constitution and the laws of the forum.

The argument of respondents that petitioner is now estopped from questioning the sale to Renong Berhad since
petitioner was well aware from the beginning that a foreigner could participate in the bidding is meritless. Undoubtedly,
Filipinos and foreigners alike were invited to the bidding. But foreigners may be awarded the sale only if no Filipino
qualifies, or if the qualified Filipino fails to match the highest bid tendered by the foreign entity. In the case before us,
while petitioner was already preferred at the inception of the bidding because of the constitutional mandate, petitioner
had not yet matched the bid offered by Renong Berhad. Thus it did not have the right or personality then to compel
respondent GSIS to accept its earlier bid. Rightly, only after it had matched the bid of the foreign firm and the apparent
disregard by respondent GSIS of petitioners matching bid did the latter have a cause of action.

Besides, there is no time frame for invoking the constitutional safeguard unless perhaps the award has been finally
made. To insist on selling the Manila Hotel to foreigners when there is a Filipino group willing to match the bid of the
foreign group is to insist that government be treated as any other ordinary market player, and bound by its mistakes or
gross errors of judgment, regardless of the consequences to the Filipino people. The miscomprehension of the
Constitution is regrettable. Thus we would rather remedy the indiscretion while there is still an opportunity to do so than
let the government develops the habit of forgetting that the Constitution lays down the basic conditions and parameters
for its actions.

Since petitioner has already matched the bid price tendered by Renong Berhad pursuant to the bidding rules,
respondent GSIS is left with no alternative but to award to petitioner the block of shares of MHC and to execute the
necessary agreements and documents to effect the sale in accordance not only with the bidding guidelines and
procedures but with the Constitution as well. The refusal of respondent GSIS to execute the corresponding documents
with petitioner as provided in the bidding rules after the latter has matched the bid of the Malaysian firm clearly
constitutes grave abuse of discretion. c

The Filipino First Policy is a product of Philippine nationalism. It is embodied in the 1987 Constitution not merely to be
used as a guideline for future legislation but primarily to be enforced; so must it be enforced. This Court as the ultimate
guardian of the Constitution will never shun, under any reasonable circumstance, the duty of upholding the majesty of
the Constitution which it is tasked to defend. It is worth emphasizing that it is not the intention of this Court to impede
and diminish, much less undermine, the influx of foreign investments. Far from it, the Court encourages and welcomes
more business opportunities but avowedly sanctions the preference for Filipinos whenever such preference is ordained
by the Constitution. The position of the Court on this matter could have not been more appropriately articulated by Chief
Justice Narvasa -

As scrupulously as it has tried to observe that it is not its function to substitute its judgment for that of the legislature or
the executive about the wisdom and feasibility of legislation economic in nature, the Supreme Court has not been
spared criticism for decisions perceived as obstacles to economic progress and development x x x x in connection with a
temporary injunction issued by the Courts First Division against the sale of the Manila Hotel to a Malaysian Firm and its
partner, certain statements were published in a major daily to the effect that that injunction again demonstrates that the
Philippine legal system can be a major obstacle to doing business here.

Let it be stated for the record once again that while it is no business of the Court to intervene in contracts of the kind
referred to or set itself up as the judge of whether they are viable or attainable, it is its bounden duty to make sure that
they do not violate the Constitution or the laws, or are not adopted or implemented with grave abuse of discretion
amounting to lack or excess of jurisdiction. It will never shirk that duty, no matter how buffeted by winds of unfair and ill-
informed criticism.[48]
Privatization of a business asset for purposes of enhancing its business viability and preventing further losses, regardless
of the character of the asset, should not take precedence over non-material values. A commercial, nay even a
budgetary, objective should not be pursued at the expense of national pride and dignity. For the Constitution enshrines
higher and nobler non-material values. Indeed, the Court will always defer to the Constitution in the proper governance
of a free society; after all, there is nothing so sacrosanct in any economic policy as to draw itself beyond judicial review
when the Constitution is involved.[49]

Nationalism is inherent in the very concept of the Philippines being a democratic and republican state, with sovereignty
residing in the Filipino people and from whom all government authority emanates. In nationalism, the happiness and
welfare of the people must be the goal. The nation-state can have no higher purpose. Any interpretation of any
constitutional provision must adhere to such basic concept. Protection of foreign investments, while laudible, is merely a
policy. It cannot override the demands of nationalism.[50]
The Manila Hotel or, for that matter, 51% of the MHC, is not just any commodity to be sold to the highest bidder solely
for the sake of privatization. We are not talking about an ordinary piece of property in a commercial district. We are
talking about a historic relic that has hosted many of the most important events in the short history of the Philippines as
a nation. We are talking about a hotel where heads of states would prefer to be housed as a strong manifestation of
their desire to cloak the dignity of the highest state function to their official visits to the Philippines. Thus the Manila
Hotel has played and continues to play a significant role as an authentic repository of twentieth century Philippine
history and culture. In this sense, it has become truly a reflection of the Filipino soul - a place with a history of grandeur;
a most historical setting that has played a part in the shaping of a country.[51] c

This Court cannot extract rhyme nor reason from the determined efforts of respondents to sell the historical landmark -
this Grand Old Dame of hotels in Asia - to a total stranger. For, indeed, the conveyance of this epic exponent of the
Filipino psyche to alien hands cannot be less than mephistophelian for it is, in whatever manner viewed, a veritable
alienation of a nations soul for some pieces of foreign silver. And so we ask: What advantage, which cannot be equally
drawn from a qualified Filipino, can be gained by the Filipinos if Manila Hotel - and all that it stands for - is sold to a non-
Filipino? How much of national pride will vanish if the nations cultural heritage is entrusted to a foreign entity? On the
other hand, how much dignity will be preserved and realized if the national patrimony is safekept in the hands of a
qualified, zealous and well-meaning Filipino? This is the plain and simple meaning of the Filipino First Policy provision of
the Philippine Constitution. And this Court, heeding the clarion call of the Constitution and accepting the duty of being
the elderly watchman of the nation, will continue to respect and protect the sanctity of the Constitution.

WHEREFORE, respondents GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON
PRIVATIZATION and OFFICE OF THE GOVERNMENT CORPORATE COUNSEL are directed to CEASE and DESIST from selling
51% of the shares of the Manila Hotel Corporation to RENONG BERHAD, and to ACCEPT the matching bid of petitioner
MANILA PRINCE HOTEL CORPORATION to purchase the subject 51% of the shares of the Manila Hotel Corporation at
P44.00 per share and thereafter to execute the necessary agreements and documents to effect the sale, to issue the
necessary clearances and to do such other acts and deeds as may be necessary for the purpose.

SO ORDERED.chanroblesvirtuallawlibrary

Regalado, Davide, Jr., Romero, Kapunan, Francisco, and Hermosisima, Jr., JJ, concur.
chanroblesvirtuallawlibrary

Narvasa, C.J., (Chairman), and Melo, J., joins J. Puno in his dissent.chanroblesvirtuallawlibrary

Padilla, J., see concurring opinion. chanroblesvirtuallawlibrary

Vitug, J., see separate concurring opinion chanroblesvirtuallawlibrary

Mendoza, J., see concurring opinion chanroblesvirtuallawlibrary

Torres, J., with separate opinion chanroblesvirtuallawlibrary

Puno, J., see dissent. chanroblesvirtuallawlibrary

Panganiban J., with separate dissenting opinion.

 PROCLAMATION NO. 3
PROVIDING FOR A PROVISIONAL CONSTITUTION DECLARING A NATIONAL POLICY TO IMPLEMENT THE
REFORMS MANDATED BY THE PEOPLE, PROTECTING THEIR BASIC RIGHTS, ADOPTING A PROVISIONAL
CONSTITUTION, AND PROVIDING FOR AN ORDERLY TRANSITION TO A GOVERNMENT UNDER A NEW
CONSTITUTION.

WHEREAS, the new government was installed through a direct exercise of the power of the Filipino people assisted by
units of the New Armed Forces of the Philippines;

WHEREAS, the heroic action of the people was done in defiance of the provisions of the 1973 Constitution, as amended;

WHEREAS, the direct mandate of the people as manifested by their extraordinary action demands the complete
reorganization of the government, restoration of democracy, protection of basic rights, rebuilding of confidence in the
entire governmental system, eradication of graft and corruption, restoration of peace and order, maintenance of the
supremacy of civilian authority over the military, and the transition to a government under a New Constitution in the
shortest time possible;

WHEREAS, during the period of transition to a New Constitution it must be guaranteed that the government will respect
basic human rights and fundamental freedoms;

WHEREFORE, I, CORAZON C. AQUINO, President of the Philippines, by virtue of the powers vested in me by the sovereign
mandate of the people, do hereby promulgate the following Provisional Constitution:

PROVISIONAL CONSTITUTION OF THE REPUBLIC OF THE PHILIPPINES

Article I
Adoption of Certain Provisions of the 1973 Constitution, as amended
SECTION 1. The provisions of ARTICLE I (National Territory), ARTICLE III (Citizenship), ARTICLE IV (Bill of Rights), ARTICLE
V (Duties and Obligations of Citizens), and ARTICLE VI (Suffrage) of the 1973 Constitution, as amended, remain in force
and effect and are hereby adopted in toto as part of this Provisional Constitution.

SECTION 2. The provisions of ARTICLE II (Declaration of Principles and State Policies), ARTICLE VII (The President),
ARTICLE X (The Judiciary), ARTICLE XI (Local Government), ARTICLE XII (The Constitutional Commissions), ARTICLE XIII
(Accountability of Public Officers), ARTICLE XIV (The National Economy and Patrimony of the Nation), ARTICLE XV
(General Provisions) of the 1973 Constitution, as amended, are hereby adopted as part of this Provisional Constitution,
insofar as they are not inconsistent with the provisions of this Proclamation.

SECTION 3. ARTICLE VIII (The Batasang Pambansa), ARTICLE IX (The Prime Minister and the Cabinet), ARTICLE XVI
(Amendments), ARTICLE XVII (Transitory Provisions) and all amendments thereto are deemed superseded by this
Proclamation.

Article II
The President, the Vice-president, and the Cabinet
SECTION 1. Until a legislature is elected and convened under a new Constitution, the President shall continue to exercise
legislative power.

The President shall give priority to measures to achieve the mandate of the people to:
(a) Completely reorganize the government and eradicate unjust and oppressive structures, and all iniquitous vestiges of
the previous regime;
(b) Make effective the guarantees of civil, political, human, social, economic and cultural rights and freedoms of the
Filipino people, and provide remedies against violations thereof;
(c) Rehabilitate the economy and promote the nationalist aspirations of the people;
(d) Recover ill-gotten properties amassed by the leaders and supporters of the previous regime and protect the interest
of the people through orders of sequestration or freezing of assets of accounts;
(e) Eradicate graft and corruption in government and punish those guilty thereof; and,
(f) Restore peace and order, settle the problem of insurgency, and pursue national reconciliation based on justice.

SECTION 2. The President shall be assisted by a Cabinet which shall be composed of Ministers with or without portfolio
who shall be appointed by the President. They shall be accountable to and hold office at the pleasure of the President.

SECTION 3. The President shall have control of and exercise general supervision over all local governments.

SECTION 4. In case of permanent vacancy arising from death, incapacity or resignation of the President, the Vice-
President shall become President.

In case of death, permanent incapacity, or resignation of the Vice-President, the Cabinet shall choose from among
themselves the Minister with portfolio who shall act as President.

SECTION 5. The Vice-President may be appointed Member of the Cabinet and may perform such other functions as may
be assigned to him by the President.

SECTION 6. The President, the Vice-President, and the Members of the Cabinet shall be subject to the disabilities
provided for in Section 8, Article VII, and in Sections 6 and 7, Article IX, respectively, of the 1973 Constitution, as
amended.

Article III
Government Reorganization
SECTION 1. In the reorganization of the government, priority shall be given to measures to promote economy, efficiency,
and the eradication of graft and corruption.

SECTION 2. All elective and appointive officials and employees under the 1973 Constitution shall continue in office until
otherwise provided by proclamation or executive order or upon the designation or appointment and qualification of their
successors, if such is made within a period of one year from February 25, 1986.

SECTION 3. Any public officer or employee separated from the service as a result of the reorganization effected under
this Proclamation shall, if entitled under the laws then in force, receive the retirement and other benefits accruing
thereunder.

SECTION 4. The records, equipment, buildings, facilities and other properties of all government offices shall be carefully
preserved. In case any office or body is abolished or reorganized pursuant to this Proclamation, its funds and properties
shall be transferred to the office or body to which its powers, functions, and responsibilities substantially pertain.

Article IV
Existing laws, Treaties, and Contracts
SECTION 1. All existing laws, decrees, executive orders, proclamations, letters of instruction, implementing rules and
regulations, and other executive issuances not inconsistent with this Proclamation shall remain operative until amended,
modified, or repealed by the President or the regular legislative body to be established under a New Constitution.

SECTION 2. The President may review all contracts, concessions, permits, or other forms of privileges for the exploration,
development, exploitation, or utilization of natural resources entered into, granted, issued, or acquired before the date
of this Proclamation and when the national interest requires, amend, modify, or revoke them.

Article V
Adoption of a New Constitution
SECTION 1. Within sixty (60) days from date of this Proclamation, a Commission shall be appointed by the President to
draft a New Constitution. The Commission shall be composed of not less than thirty (30) nor more than fifty (50) natural
born citizens of the Philippines, of recognized probity, known for their independence, nationalism and patriotism. They
shall be chosen by the President after consultation with various sectors of society.

SECTION 2. The Commission shall complete its work within as short a period as may be consistent with the need both to
hasten the return of normal constitutional government and to draft a document truly reflective of the ideals and
aspirations of the Filipino people.

SECTION 3. The Commission shall conduct public hearings to ensure that the people will have adequate participation in
the formulation of the New Constitution.

SECTION 4. The plenary sessions of the Commission shall be public and fully recorded.

SECTION 5. The New Constitution shall be presented by the Commission to the President who shall fix the date for the
holding of a plebiscite. It shall become valid and effective upon ratification by a majority of the votes cast in such
plebiscite which shall be held within a period of sixty (60) days following its submission to the President.

Article VI
Holding of Elections
SECTION 1. National elections shall be held as may be provided by the New Constitution.

SECTION 2. Local elections shall be held on a date to be determined by the President which shall not be earlier than the
date of the plebiscite for the ratification of the New Constitution.
Article VII
Effective Date
SECTION 1. This Proclamation shall take effect upon its promulgation by the President.

SECTION 2. Pursuant to the letter and spirit of this Proclamation, a consolidated official text of the Provisional
Constitution shall be promulgated by the President and published in English and Pilipino in the Official Gazette and in
newspapers of general circulation to insure widespread dissemination.

Done in the City of Manila, this 25th day of March, in the year of Our Lord, Nineteen Hundred and eighty six.

CORAZON C. AQUINO

By the President:
JOKER P. ARROYO
Executive Secretary

EN BANC

G.R. No. 78059 August 31, 1987

ALFREDO M. DE LEON, ANGEL S. SALAMAT, MARIO C. STA. ANA, JOSE C. TOLENTINO, ROGELIO J. DE LA ROSA
and JOSE M. RESURRECCION, Petitioners, vs. HON. BENJAMIN B. ESGUERRA, in his capacity as OIC Governor of
the Province of Rizal, HON. ROMEO C. DE LEON, in his capacity as OIC Mayor of the Municipality of Taytay,
Rizal, FLORENTINO G. MAGNO, REMIGIO M. TIGAS, RICARDO Z. LACANIENTA, TEODORO V. MEDINA,
ROSENDO S. PAZ, and TERESITA L. TOLENTINO, Respondents.

MELENCIO-HERRERA, J.: An original action for Prohibition instituted by petitioners seeking to enjoin respondents from
replacing them from their respective positions as Barangay Captain and Barangay Councilmen of Barangay Dolores,
Municipality of Taytay, Province of Rizal.chanroblesvirtuallawlibrary chanrobles virtual law library

As required by the Court, respondents submitted their Comment on the Petition, and petitioner's their Reply to
respondents' Comment.chanroblesvirtuallawlibrary chanrobles virtual law library

In the Barangay elections held on May 17, 1982, petitioner Alfredo M. De Leon was elected Barangay Captain and the
other petitioners Angel S. Salamat, Mario C. Sta. Ana, Jose C. Tolentino, Rogelio J. de la Rosa and Jose M. Resurreccion,
as Barangay Councilmen of Barangay Dolores, Taytay, Rizal under Batas Pambansa Blg. 222, otherwise known as the
Barangay Election Act of 1982.chanroblesvirtuallawlibrary chanrobles virtual law library

On February 9, 1987, petitioner Alfredo M, de Leon received a Memorandum antedated December 1, 1986 but signed by
respondent OIC Governor Benjamin Esguerra on February 8, 1987 designating respondent Florentino G. Magno as
Barangay Captain of Barangay Dolores, Taytay, Rizal. The designation made by the OIC Governor was "by authority of
the Minister of Local Government." chanrobles virtual law library

Also on February 8, 1987, respondent OIC Governor signed a Memorandum, antedated December 1, 1986 designating
respondents Remigio M. Tigas, Ricardo Z. Lacanienta Teodoro V. Medina, Roberto S. Paz and Teresita L. Tolentino as
members of the Barangay Council of the same Barangay and Municipality.chanroblesvirtuallawlibrary chanrobles virtual
law library

That the Memoranda had been antedated is evidenced by the Affidavit of respondent OIC Governor, the pertinent
portions of which read:

xxx xxx xxx chanrobles virtual law library

That I am the OIC Governor of Rizal having been appointed as such on March 20, 1986; chanrobles
virtual law library

That as being OIC Governor of the Province of Rizal and in the performance of my duties thereof, I
among others, have signed as I did sign the unnumbered memorandum ordering the replacement of all
the barangay officials of all the barangay(s) in the Municipality of Taytay, Rizal; chanrobles virtual law
library
 That the above cited memorandum dated December 1, 1986 was signed by me personally on February
8,1987; chanrobles virtual law library

That said memorandum was further deciminated (sic) to all concerned the following day, February 9.
1987.chanroblesvirtuallawlibrary chanrobles virtual law library

FURTHER AFFIANT SAYETH NONE.chanroblesvirtuallawlibrary chanrobles virtual law library

Pasig, Metro Manila, March 23, 1987.

Before us now, petitioners pray that the subject Memoranda of February 8, 1987 be declared null and void and that
respondents be prohibited from taking over their positions of Barangay Captain and Barangay Councilmen, respectively.
Petitioners maintain that pursuant to Section 3 of the Barangay Election Act of 1982 (BP Blg. 222), their terms of office
"shall be six (6) years which shall commence on June 7, 1982 and shall continue until their successors shall have elected
and shall have qualified," or up to June 7, 1988. It is also their position that with the ratification of the 1987 Constitution,
respondent OIC Governor no longer has the authority to replace them and to designate their
successors.chanroblesvirtuallawlibrary chanrobles virtual law library

On the other hand, respondents rely on Section 2, Article III of the Provisional Constitution, promulgated on March 25,
1986, which provided:

SECTION 2. All elective and appointive officials and employees under the 1973 Constitution shall
continue in office until otherwise provided by proclamation or executive order or upon the designation or
appointment and qualification of their successors, if such appointment is made within a period of one
year from February 25,1986.

By reason of the foregoing provision, respondents contend that the terms of office of elective and appointive officials
were abolished and that petitioners continued in office by virtue of the aforequoted provision and not because their term
of six years had not yet expired; and that the provision in the Barangay Election Act fixing the term of office of Barangay
officials to six (6) years must be deemed to have been repealed for being inconsistent with the aforequoted provision of
the Provisional Constitution.chanroblesvirtuallawlibrary chanrobles virtual law library

Examining the said provision, there should be no question that petitioners, as elective officials under the 1973
Constitution, may continue in office but should vacate their positions upon the occurrence of any of the events
mentioned. 1 chanrobles virtual law library

Since the promulgation of the Provisional Constitution, there has been no proclamation or executive order terminating
the term of elective Barangay officials. Thus, the issue for resolution is whether or not the designation of respondents to
replace petitioners was validly made during the one-year period which ended on February 25,
1987.chanroblesvirtuallawlibrary chanrobles virtual law library

Considering the candid Affidavit of respondent OIC Governor, we hold that February 8, 1977, should be considered as
the effective date of replacement and not December 1,1986 to which it was ante dated, in keeping with the dictates of
justice.chanroblesvirtuallawlibrary chanrobles virtual law library

But while February 8, 1987 is ostensibly still within the one-year deadline, the aforequoted provision in the Provisional
Constitution must be deemed to have been overtaken by Section 27, Article XVIII of the 1987 Constitution reading.

SECTION 27. This Constitution shall take effect immediately upon its ratification by a majority of the
votes cast in a plebiscite held for the purpose and shall supersede all previous Constitutions.

The 1987 Constitution was ratified in a plebiscite on February 2, 1987. By that date, therefore, the Provisional
Constitution must be deemed to have been superseded. Having become inoperative, respondent OIC Governor could no
longer rely on Section 2, Article III, thereof to designate respondents to the elective positions occupied by
petitioners.chanroblesvirtuallawlibrary chanrobles virtual law library

Petitioners must now be held to have acquired security of tenure specially considering that the Barangay Election Act of
1982 declares it "a policy of the State to guarantee and promote the autonomy of the barangays to ensure their fullest
development as self-reliant communities. 2 Similarly, the 1987 Constitution ensures the autonomy of local governments
and of political subdivisions of which the barangays form a part, 3 and limits the President's power to "general
supervision" over local governments. 4 Relevantly, Section 8, Article X of the same 1987 Constitution further provides in
part:

Sec. 8. The term of office of elective local officials, except barangay officials, which shall be determined
by law, shall be three years ...

Until the term of office of barangay officials has been determined by law, therefore, the term of office of six (6) years
provided for in the Barangay Election Act of 1982 5 should still govern.chanroblesvirtuallawlibrary chanrobles virtual law
library

Contrary to the stand of respondents, we find nothing inconsistent between the term of six (6) years for elective
Barangay officials and the 1987 Constitution, and the same should, therefore, be considered as still operative, pursuant
to Section 3, Article XVIII of the 1987 Constitution, reading:
 Sec. 3. All existing laws, decrees, executive orders, proclamations letters of instructions, and other
executive issuances not inconsistent, with this Constitution shall remain operative until amended,
repealed or revoked.

WHEREFORE, (1) The Memoranda issued by respondent OIC Governor on February 8, 1987 designating respondents as
the Barangay Captain and Barangay Councilmen, respectively, of Barangay Dolores, Taytay, Rizal, are both declared to
be of no legal force and effect; and (2) the Writ of Prohibition is granted enjoining respondents perpetually from
proceeding with the ouster/take-over of petitioners' positions subject of this Petition. Without
costs.chanroblesvirtuallawlibrary chanrobles virtual law library

SO ORDERED.

Yap, Fernan, Narvasa, Gutierrez, Jr., Paras, Feliciano, Gancayco, Padilla, Bidin and Cortes, JJ., concur.

chanrobles virtual law library