Judges and Business Interests: Navigating Ethical Boundaries in the Philippines

The Supreme Court recently reminded the judiciary that owning a private business—even one inherited from a parent and managed by someone else—can violate ethical rules if a judge fails to divest their financial interest. In Intia v. Ferrer (A.M. No. RTJ-24-064, May 13, 2024), the Court fined a retired judge PHP 35,000 for maintaining an insurance agency while in service, even though he never solicited clients and the business was outside his court's jurisdiction.

The Case: A Judge Accused of Multiple Violations

Judge Leo L. Intia filed an administrative complaint against Executive Judge Erwin Virgilio P. Ferrer of the Regional Trial Court, Naga City. The complaint alleged that Judge Ferrer: (1) instigated a lawyer to file cases against Judge Intia; (2) engaged in an insurance business while serving as a judge; and (3) violated Supreme Court circulars on cases involving persons deprived of liberty (PDLs).

Judge Ferrer admitted owning the insurance business, which he inherited from his father. The agency, EVPF Insurance Agency, was based in Daet, Camarines Norte—outside his judicial region—and was managed by a separate individual. He had consistently declared the business in his Statement of Assets, Liabilities, and Net Worth (SALN).

The Ruling: What the Court Decided

The Court dismissed most charges against Judge Ferrer. There was no substantial evidence he instigated anyone against Judge Intia—the lawyer in question executed an affidavit denying any such involvement. The charge of maltreating court visitors was based on hearsay, which is inadmissible under Section 37, Rule 128 of the 2019 Amended Rules on Evidence. And regarding the PDL cases, the Court found that a jail warden's list of pending cases was insufficient to prove undue delay; a judicial audit by the Office of the Court Administrator found no such delay.

However, the Court found Judge Ferrer administratively liable for one thing: failing to divest his interest in the insurance business.

The Prohibition on Insurance Business

Administrative Circular No. 5, dated October 4, 1988, prohibits all officials and employees of the Judiciary from being commissioned as insurance agents or engaging in related activities. The circular exists to ensure that court personnel devote their entire time to government service, maintaining public confidence in the Judiciary.

The Court explained that the prohibition is absolute. Even though Judge Ferrer never solicited clients, did not manage the day-to-day operations, and the business was outside his territorial jurisdiction, his mere ownership of the business constituted a violation. The Court cited Misajon v. Feranil, where a judge was found guilty for engaging in insurance business, and In Re: Anonymous Letter-Complaint against Lopez and Montalvo, which emphasized that court employees must render full-time service to avoid delays in the administration of justice.

Penalty and Mitigating Circumstances

The Court classified the violation as a less serious charge under Section 15(e), Rule 140 of the Rules of Court. While the prescribed penalty ranges from suspension to a fine of PHP 35,000 to PHP 100,000, the Court imposed the minimum fine of PHP 35,000, considering:

• The business was inherited from his father
• He never used his position to solicit clients
• The business was located outside his court's jurisdiction
• He transparently disclosed his interest in public documents and his SALN
• He was not involved in daily operations

Because Judge Ferrer had already retired, the fine was charged against his retirement benefits pursuant to Section 22, Rule 140.

Practical Takeaways

• Judges must divest conflicting interests. Upon appointment, a judge should dispose of any financial interest in a business that could reflect adversely on the court's impartiality or interfere with judicial duties.
• Ownership alone can be a violation. Even if a business is managed by someone else and the judge never solicits clients, mere ownership of a prohibited business may warrant administrative sanction.
• Transparency is not a defense. Declaring a business in the SALN does not cure the violation; the rules require divestment, not disclosure.
• Hearsay cannot support administrative charges. Complaints based on information relayed by others, without personal knowledge or supporting affidavits, will likely fail for lack of substantial evidence.
• A list of pending cases is not proof of delay. To establish undue delay in disposing cases, there must be concrete evidence that the judge failed to act within prescribed periods, not merely that cases have been pending for a long time.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.