EFREN JAVIER AND PEDRO JAVIER, COMPLAINANTS, VS. JUDGE SALVADOR P. DE GUZMAN, JR., RESPONDENT.

Disbarment proceedings on the ground of “dishonorable
conduct” were instituted on 8
August 1989 before the Committee on Bar Discipline of the
Integrated Bar by complainants Efren Javier (son) and
Pedro Javier (father) against respondent Salvador P. de Guzman, Jr., as a
member of the Bar and as Presiding Judge of the Regional Trial Court, Makati, Metro
Manila.  However, pursuant to Supreme
Court Circular No. 3-89, dated 9
February 1989, requiring that complaints filed in the IBP against
Justices and Judges of the lower Courts be promptly referred to the Supreme
Court for appropriate action, the Complaint was eventually transmitted to this
Court.

After the Comment by Respondent Judge and the Reply by
Complainants were filed, the Court referred the case to Mme. Justice Lorna L.
de la Fuente
of the Court of Appeals for investigation, report and recommendation.

The Report and Recommendation was submitted to the Court on 20 September 1990.

Complainants allege that, on 7 December 1987, Efren Javier,
and his mother, Lolita Javier,
borrowed P200,000.00 from Respondent Judge with interest
orally agreed upon at ten per cent (10%) monthly.  They tendered to the latter UCPB Check No.
BNE 012872, dated 7 January 1988,
in the amount of P220,000.00.  The drawer of the check was actually Donato Belen, a brother-in-law of Efren,
as the Javiers had no personal checking account.  The following day, Respondent required them
to sign a Memorandum of Agreement, which they did.  Two of the conditions imposed were interest
at the rate of twenty per cent (20%) per month, compounded monthly, and should
they fail to pay the loan and its interest upon maturity on 7 January 1988 and the check is
deposited and dishonored, an appropriate charge for violation of Batas Pambansa Blg. 22 may be filed at
Respondent’s option.  When the Javiers defaulted on due date because of business reverses,
partial payments in the total amount of P177,000.00
were made to Respondent between 6
January 1988 and 16 June
1988.  Meanwhile, the check,
which was deposited by Respondent on 14
April 1988, was dishonored by the drawee
bank.

On 8 September 1988, Respondent instituted suit for a “Sum
of Money and Damages with Prayer for the Issuance of a Writ of Preliminary
Attachment” in the Regional Trial Court of Makati,
Metro Manila, against the spouses Pedro and Lolita Javier, and their son, Efren, for the recovery of the “sum of P220,000.00 with 20% interest/penalty a month compounded monthly
from January 7, 1988 until fully paid,” computed at P622,871.67 (Annex B,
Complaint).  Judgment on the pleadings
was rendered on 3 February 1989 ordering the Javiers
to pay Respondent Judge the “sum of P608,871.67
with 20% interest/penalty a month compounded monthly beginning September 8,
1988 until fully paid” and the “sum equal to 10% of the amounts due
and recoverable as reimbursement of attorney’s fees and litigation
expenses” (Order, RTC Rollo, p. 107).  In the meantime, an Order granting execution
pending appeal was issued by the Trial Court on 14 April 1989 (Ibid., pp. 216-217).  The Javiers
appealed to the Court of Appeals where the case still pends.

Still later, Respondent filed in Manila two (2) criminal complaints, the
first, for violation of B.P. Blg. 22 against Efren, who, however, was
acquitted, and the second, for Estafa against Complainants and Lolita Javier, which
complaint was dismissed (Rollo, p. 194).

On 21 March 1989,
Respondent further filed an administrative charge against Complainant father,
Pedro, with the Bureau of Internal Revenue where the latter was employed.  Earlier, an administrative charge against
Pedro had also been filed with the Civil Service Commission on 3 March 1989 accusing Pedro in both
instances, of having committed estafa against him and
his wife, of dishonesty and of conduct unbecoming of a government official.

Feeling harassed, Complainants filed this administrative charge
against Respondent Judge on four counts of “dishonorable conduct,” as
follows:

1.  Respondent had loaned
money to Complainants at usurious interest as can be gleaned from the fact that
after receiving P177,000.00 in installments, he still seeks to recover the
amount of P622,817.67;

2. Respondent took advantage of his position as Regional Trial
Court Judge of Makati, Metro Manila, by filing a collection case against
Complainants and Lolita Javier before the same Court and making false and fraudulent
manifestations that Complainants had failed to pay any amount as of 8 September
1988;

3.  Respondent resorted to
harassment by filing a criminal complaint for violation of B.P. Blg. 22 against Complainant, Efren,
despite knowledge that the latter was not the drawer of the UCPB check; and

4. Respondent failed to reveal the true facts of the case, in
violation of Articles 182 and 183 of the Revised Penal Code penalizing
“False testimony,” when he filed the administrative charges with the
Bureau of Internal Revenue and the Civil Service Commission against Complainant
Pedro notwithstanding knowledge of the fact that Pedro was not involved in the
transaction in question.

In his Comment, Respondent denied that he lent any money to the Javiers alleging that it was his wife who had asked her
first cousin, Mrs. Hedy Laca,
to make available the amount of P200,000.00.  The real lender, therefore, was the
latter.  When the Javiers
failed to repay the loan, they were compelled to pay back the amount to Mrs. Laca.  Respondent,
therefore, became the creditor of the Javiers
“by force of circumstances.”

Respondent also stressed that the rate of interest of twenty per
cent (20%) per month, compounded monthly, was not usurious for the reason that
said rate was designed more as a penalty in order to force the Javiers to pay back the loan as soon as possible.  He contends that under the circumstances, the
filing of several complaints against the Javiers was
the more “civilized thing to do.” And as to the filing of the case in
Makati,
he reasons out that it was upon prior consultation with the Executive Judge.

With regard to the administrative charges, which he had filed
against Complainant Pedro, Respondent maintains that the latter was not really
an innocent party to the whole transaction, but the “prime mover.”

With “dishonorable conduct” defined by the
Investigating Justice and by the parties as conduct not in keeping with any of
the rules embodied in the Code of Professional Responsibility for lawyers and
the Code of Judicial Ethics, Justice de la Fuente
concluded that there were valid grounds to sustain the first three (3) charges,
for the commission of which Respondent Judge was recommended to be reprimanded,
with warning of a severer penalty in case of repetition.  The fourth charge was recommended to be
dismissed (Report, p. 4).

Anent the first charge, that is, whether or not Respondent was,
in fact, the lender and had
charged a usurious rate of interest, the Investigating Justice found that
Respondent’s disclaimer cannot prevail over the Agreement between the parties,
which clearly point to the Respondent as the lender.  He is mentioned in said Agreement as the “Third Party,” the
“First Party” being Lolita Javier, and the “Second Party”
being Efren. 
The UCPB postdated check was also made out in Respondent’s name.  The foregoing refutes Respondent contention
that he became the lender only “by force of circumstances” after the Javiers had failed to repay their indebtedness.  Further, it was Respondent who made
collections on the loan and it was to him that payments were made.  Additionally, it was Respondent who filed the
civil case for collection of the loan as well as the administrative cases
against complainant Pedro.

As to the usurious rate of interest, while that issue was
considered by Justice de la Fuente as irrelevant
since the Usury Law is now legally inexistent pursuant to Central Bank Circular
No. 905 and the interest now legally chargeable depends upon the agreement of
lender and borrower (Liam Law v. Olympic Sawmill Co., G. R. No. L-30771, May 28, 1984, 129 SCRA 439), she
found that the interest charged on the loan
was exorbitant.  To quote:

“The Memorandum of Agreement (pls. see fifth whereas clause)
stipulates that for the period from December 7, 1987, when the sum of
P200,000.00 was lent to the Javiers, to December 22,
1987, on which date the loan fell due ‘with extension up to January 7, 1988’ —
or for a period of from 15 to 30 days — the interest shall be ‘at the
rate of Ten Percent (10%) for the period of time’, in other
words, the interest rate is 10% a month. 
This explains why the postdated check required under the Agreement to be
issued by Efren Javier to respondent is for P220,000.00, the additional P20,000.00 being the amount earned
on the sum of P200,000.00 over a period of, at most, 30 days.  Then, as further stipulated in the Agreement (par. 2), if the loan and interest due
thereon shall not have been paid by January 7, 1988, the Javiers
shall pay to respondent ‘a sum equal to Twenty Percent (20%) a month
compounded monthly over the initial principal plus the initial interest on
the total sum of P220,000.00, until the full amount is
paid.’ The result of this stipulation is that despite the fact, established by
the evidence and admitted by respondent, that as of June 16, 1988 the total
payments made by the Javiers on the loan of
P200,000.00 had amounted to P177,000.00 — or only P23,000.00 short of
P200,000.00, the amount originally invested by respondent — he sought to
collect in his suit filed in September 1988 against the Javiers
— the relatively and  staggeringly huge
amount of P622,871.67 (pls. see Motion
for Judgment on the Pleadings, CC No. 88-1872, Annex C to Complaint, p. 12
Record).  The foregoing figures speak for
themselves; they show clearly the exorbitance and shocking harshness of the
imposition in question.

Nor can such unconscionability be excused
on the ground, as respondent
interposes, that the 20% interest compounded monthly is intended not as
interest but as penalty.  However it may
be termed, the fact remains that the said amount is being collected by
respondent as a charge for the use of his money by the Javiers,
and this charge is blatantly out of proportion to the amount of the money which
respondent loaned to the Javiers.”

Our review of the evidence shows that the foregoing conclusions
are warranted.

As to the second charge – that Respondent took advantage of his
position as Makati Regional Trial Court Judge by
filing the collection case against Complainants in said Court – we quote with
approval Justice de la Fuente’s observations thereon:

 ” x x
x The civil case was filed by respondent with the Makati RTC on September 8, 1988; and respondent admits that
he was ‘detailed indefinitely to Branch 142 of the same Court on June 30, 1988
and assumed office thereat on July 5, 1988.’ Instead of filing the suit in Quezon City where the Javiers
reside or in Manila where respondent resides, respondent — taking advantage of
what he calls the waiver of venue stipulation in the Memorandum of Agreement (which states that ‘in case of
litigation, venue shall be any court in Metro Manila, at the option of the
Third Party,’ i.e., the respondent) — chose to file the case in Makati.

“True, considering the abovecited
stipulation, it might be said that respondent was acting in the legal exercise
of the option granted to him in the Agreement. 
Nonetheless, the undersigned submits that in thus acting, respondent had
fallen short of what is expected of him as
a Judge and officer of the court among whose duties it is to see to it
that public confidence in the honor, dignity, integrity and independence of the
judiciary is not eroded, pursuant to Canons 3 and 25 of the Canons of Judicial
Ethics, supra.  It
is reasonably to be expected, considering the peculiar Filipino psyche,
personality and culture — of which a Judge like respondent is presumably aware
— that the public, particularly respondent’s adversary in this case, would
naturally be apprehensive that respondent might exert influence to favor himself, to the detriment of his said adversary.  And so it turned out, this was precisely the
substance of complainant’s second charge. 
Indeed, instead of promoting public confidence in the dignity, honor,
integrity and independence of the Judiciary, as every Judge is urged to do by
the Canons just cited, respondent’s aforesaid behavior produced the opposite
result.”

The third charge concerns Respondent’s alleged act of harassment
in continuing with the criminal prosecution of complainant, Efren,
for violation of Batas Pambansa Blg.
22 despite his having been informed that Efren was
not the owner and drawer of the check, and, therefore, is not the proper person
to be charged.  On this score, the
Investigating Justice found, and with which we agree:

“x x x Even
discounting the weight of complainant’s said evidence, it bears emphasis that
while the case was still under investigation before the Fiscal’s
Office, respondent had, as he himself admits, already been informed that it was
not Efren Javier who had signed the postdated
check.  Thus, it was, under the aforecited Canons, respondent’s bounden duty — as a Judge
whose personal behavior should at all times, even in his everyday life, be
beyond reproach so as to promote public confidence in the dignity, honor,
integrity and independence of the judiciary (Canon 3, s­upra), who should endeavor always to prevent the erosion of such
public confidence ‘by irresponsible or improper conduct’ — to disregard his
personal animosity towards the Javiers and to see to
the forthright dismissal of the case.  He
failed to comply with this duty when he instead saw to the continuation of the
prosecution of the case until it reached the Regional Trial Court and up to its
termination thereat (with the acquittal of Efren).”

The fourth charge – that of having filed with the BIR and the
Civil Service Commission administrative charges against Complainant Pedro,
notwithstanding Respondent’s knowledge of the fact that Pedro had no
participation whatsoever in the loan transaction in question – was found by
Justice de la Fuente to be unsubstantiated.  We find no reason to differ.

“x x x It is true that it appears
from the Memorandum of Agreement that Pedro Javier is not a party nor a signatory thereof; nonetheless, it
also appears that his wife Lolita Javier is that ‘First Party,’ and his son Efren Javier is the ‘Second Party’ thereof.  There was reason for respondent to believe
that Pedro Javier was not an ‘innocent’ party and had in reality a
‘behind-the-scenes’ participation in the transaction.  For as respondent believably relates it,
Pedro Javier ‘was the prime mover who, on December 5, 1987 invited respondent and Mrs. De Guzman
for dinner and wanted the respondent to join in the venture.’ Besides, in view of the closeness of ‘the Filipino
family ties which usually extend to financial matters, similarly, while it was
respondent himself who had been expressly named the ‘Third Party’ in the loan agreement, it was respondent’s
wife who, although not at all mentioned as a party to the same Agreement, took
it upon herself to locate the funds with which to finance the loan given to the
Javiers.  And
considering that respondent had the feeling, groundless or not, that the Javiers had, so to speak, put one over on the de Guzmans when the former did not pay to respondent the
amount which he wished to collect on the loan, respondent naturally felt
aggrieved or wronged by Pedro Javier, and this he undoubtedly thought could be
righted by the filing of the administrative
charges against him (Pedro Javier). 
As the undersigned sees it, this — and not malice or desire to harass
— is the motivation for respondent’s filing of said charges.”

Except for the act
complained of in the last charge, Respondent Judge’s actuations, indeed, show
reproachable and improper conduct.  He
denied that he was the lender when, in fact, he was, as concluded by Justice de
la Fuente.

While he had every right to protect his investment, and while the
contract of loan entered into between him and the Javiers
was legal per se.  Respondent
rendered it unconscionable by imposing a penalty of twenty per cent (20%)
interest per month compounded monthly. 
It strikes us, too, that Respondent was
equivocal as to the repayments that were made to him by the Javiers.  In his
Verified Complaint before the Trial Court, he averred failure to repay
(Annex B, Complaint).  However, in the
computation attached to his Motion for Judgment on the Pleadings (Annex C,
ibid.), he made mention of “alleged payments being accepted by (him) at face
value” and included them in the determination of the balance due.

Respondent also brought suit to collect the staggering sum of
P622,871.67 despite payments by the debtors of
approximately P177,000.00 of the original P200,000.00 loan.  Although not illegal under the terms of the
Memorandum of Agreement, as in fact, the Trial Court had ruled in Respondent’s
favor, it does not necessary follow that it was moral and fair.  Respondent is not a hard-boiled and callous
businessman.  He is a Judge.

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 (Canons of Judicial Ethics, Canon 3, which was applicable at
the time of the transaction in 1987; emphasis supplied).  This was reiterated in the Code of Judicial
Conduct, Canon 2 and Rule 2.01 which provides that a Judge should so
behave at all times as to promote public confidence in the
integrity and impartiality of the Judiciary.

This is premised on the truism that a Judge’s official life
cannot simply be detached or separated from his personal existence and that
upon a Judge’s attributes depend the public perception of the Judiciary.  Thus:

“Public confidence in the Judiciary is eroded by irresponsible
or improper conduct of judges.  A judge
must avoid all impropriety and the appearance thereof.  Being the subject of constant public scrutiny,
a judge should freely and willingly accept restrictions on conduct that might
be viewed as burdensome by the ordinary citizen.

A judge should personify judicial integrity and exemplify honest
public service.  The personal behavior of
a judge, both in the performance of official duties and in private life should
be above suspicion.” (Commentaries on Canon 2.01).

So exacting are  the
standards of judicial deportment that a Judge is even enjoined from making
investments in any enterprise that is likely to be involved in litigation.

“A judge shall
refrain from financial and business dealings that tend to reflect adversely on
the court’s impartiality, interfere with the proper performance of judicial
activities, or increase involvement with lawyers or persons likely to come
before the Court.  A judge should so manage investments
and other financial interests as to minimize the number of cases giving grounds
for disqualification” (Code of Judicial Conduct, Rule 5.02).

The rationale for the rule applies with equal vigor in this case.

While Respondent Judge may have had reasons of convenience for
filing his collection suit in Makati
where he sits as one of the Trial Judges, a sense of propriety should have
impelled him to desist.  In the eyes of
the public, it arouses suspicion, rightly or wrongly, that advantage is being
taken of one’s position and that a Judge’s adversary is sure to get a raw
deal.  As it turned out, Respondent
Judge, in his official stationery, upbraided the Sheriff who enforced the Writ
of Preliminary Attachment for not having taken into custody all the items he
had levied upon and “asked” him to do so “within forty eight hours” (Exhibit J,
Complaint, p. 44).  In this regard,
Respondent had exposed the Bench to possible charges of exertion of undue
pressure and influence.

The continued prosecution of the criminal charge for violation of
Batas Pambansa Blg. 22
against Complainant Efren, despite subsequent
knowledge that the latter was not the drawer of the check but his
brother-in-law, although Efren had filled out the
check himself, again exhibits reproachable conduct.  Respondent could have moved for the dismissal
of the case, considering his professional responsibility not to encourage, for
any motive or interest, any suit or proceeding (Rule 1.03, Code of Professional
Responsibility).

His explanation that the making and the issuance of a check
without sufficient funds constitute separate offenses so that he could proceed
even against Efren, exhibits “splitting of
hairs” and a misuse of Court processes in order to promote one’s own
interests.  As it was, the criminal
charge was dismissed.

All told traces of
animosity and harassment on the part of Respondent Judge are all too evident,
in sharp contrast to what a Judge should be – the embodiment of what is
judicious, proper and fair.

WHEREFORE, finding Respondent Judge Salvador P.
de Guzman, Jr. guilty on three (3) counts of irresponsible, improper and
dishonorable conduct in disregard of the Code of Judicial Ethics, he is hereby
SEVERELY CENSURED, with a stern warning that a repetition of the said acts or
similar acts in the future shall
receive graver sanctions.

Let this Decision be spread upon the personal records of
Respondent Judge.

SO ORDERED.

Fernan, C.J., Narvasa,
Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Gancayco, Padilla, Bidin, Sarmiento, Grino-Aquino, Medialdea, and Regalado, JJ., concur.

Feliciano, J., on leave.