G.R. No.

L-64279 April 30, 1984

ANSELMO L. PESIGAN and MARCELINO L. PESIGAN, petitioners,

vs.
JUDGE DOMINGO MEDINA ANGELES, Regional Trial Court, Caloocan City Branch 129, acting for REGIONAL TRIAL COURT of
Camarines Norte, now presided over by JUDGE NICANOR ORIÑO, Daet Branch 40; DRA. BELLA S. MIRANDA, ARNULFO V.
ZENAROSA, ET AL., respondents.

Quiazon, De Guzman Makalintal and Barot for petitioners.

The Solicitor General for respondents.

AQUINO, J.:ñé+.£ªwph!1

At issue in this case is the enforceability, before publication in the Official Gazette of June 14, 1982, of Presidential Executive Order No.
626-A dated October 25, 1980, providing for the confiscation and forfeiture by the government of carabaos transported from one province
to another.

Anselmo L. Pesigan and Marcelo L. Pesigan, carabao dealers, transported in an Isuzu ten-wheeler truck in the evening of April 2, 1982
twenty-six carabaos and a calf from Sipocot, Camarines Sur with Padre Garcia, Batangas, as the destination.

They were provided with (1) a health certificate from the provincial veterinarian of Camarines Sur, issued under the Revised Administrative
Code and Presidential Decree No. 533, the Anti-Cattle Rustling Law of 1974; (2) a permit to transport large cattle issued under the
authority of the provincial commander; and (3) three certificates of inspection, one from the Constabulary command attesting that the
carabaos were not included in the list of lost, stolen and questionable animals; one from the LIvestock inspector, Bureau of Animal Industry
of Libmanan, Camarines Sur and one from the mayor of Sipocot.

In spite of the permit to transport and the said four certificates, the carabaos, while passing at Basud, Camarines Norte, were confiscated
by Lieutenant Arnulfo V. Zenarosa, the town's police station commander, and by Doctor Bella S. Miranda, provincial veterinarian. The
confiscation was basis on the aforementioned Executive Order No. 626-A which provides "that henceforth, no carabao, regardless of
age, sex, physical condition or purpose and no carabeef shall be transported from one province to another. The carabaos or carabeef
transported in violation of this Executive Order as amended shall be subject to confiscation and forfeiture by the government to be
distributed ... to deserving farmers through dispersal as the Director of Animal Industry may see fit, in the case of carabaos" (78 OG
3144).

Doctor Miranda distributed the carabaos among twenty-five farmers of Basud, and to a farmer from the Vinzons municipal nursery (Annex
1).

The Pesigans filed against Zenarosa and Doctor Miranda an action for replevin for the recovery of the carabaos allegedly valued at
P70,000 and damages of P92,000. The replevin order could not be executed by the sheriff. In his order of April 25, 1983 Judge Domingo
Medina Angeles, who heard the case at Daet and who was later transferred to Caloocan City, dismissed the case for lack of cause of
action.

The Pesigans appealed to this Court under Rule 45 of the Rules of Court and section 25 of the Interim Rules and pursuant to Republic
Act No. 5440, a 1968 law which superseded Rule 42 of the Rules of Court.

We hold that the said executive order should not be enforced against the Pesigans on April 2, 1982 because, as already noted, it is a
penal regulation published more than two months later in the Official Gazette dated June 14, 1982. It became effective only fifteen days
thereafter as provided in article 2 of the Civil Code and section 11 of the Revised Administrative Code.

The word "laws" in article 2 (article 1 of the old Civil Code) includes circulars and regulations which prescribe penalties. Publication is
necessary to apprise the public of the contents of the regulations and make the said penalties binding on the persons affected thereby.
(People vs. Que Po Lay, 94 Phil. 640; Lim Hoa Ting vs. Central Bank of the Phils., 104 Phil. 573; Balbuna vs. Secretary of Education,
110 Phil. 150.)

The Spanish Supreme Court ruled that "bajo la denominacion generica de leyes, se comprenden tambien los reglamentos, Reales
decretos, Instrucciones, Circulares y Reales ordenes dictadas de conformidad con las mismas por el Gobierno en uso de su potestad (1
Manresa, Codigo Civil, 7th Ed., p. 146.)

Thus, in the Que Po Lay case, a person, convicted by the trial court of having violated Central Bank Circular No. 20 and sentenced to six
months' imprisonment and to pay a fine of P1,000, was acquitted by this Court because the circular was published in the Official
Gazette three months after his conviction. He was not bound by the circular.
That ruling applies to a violation of Executive Order No. 626-A because its confiscation and forfeiture provision or sanction makes it a
penal statute. Justice and fairness dictate that the public must be informed of that provision by means of publication in the Gazette before
violators of the executive order can be bound thereby.

The cases of Police Commission vs. Bello, L-29960, January 30, 1971, 37 SCRA 230 and Philippine Blooming Mills vs. Social Security
System, 124 Phil. 499, cited by the respondents, do not involve the enforcement of any penal regulation.

Commonwealth Act No. 638 requires that all Presidential executive orders having general applicability should be published in the Official
Gazette. It provides that "every order or document which shag prescribe a penalty shall be deemed to have general applicability and legal
effect."

Indeed, the practice has always been to publish executive orders in the Gazette. Section 551 of the Revised Administrative Code provides
that even bureau "regulations and orders shall become effective only when approved by the Department Head and published in the
Official Gazette or otherwise publicly promulgated". (See Commissioner of Civil Service vs. Cruz, 122 Phil. 1015.)

In the instant case, the livestock inspector and the provincial veterinarian of Camarines Norte and the head of the Public Affairs Office of
the Ministry of Agriculture were unaware of Executive Order No. 626-A. The Pesigans could not have been expected to be cognizant of
such an executive order.

It results that they have a cause of action for the recovery of the carabaos. The summary confiscation was not in order. The recipients of
the carabaos should return them to the Pesigans. However, they cannot transport the carabaos to Batangas because they are now bound
by the said executive order. Neither can they recover damages. Doctor Miranda and Zenarosa acted in good faith in ordering the forfeiture
and dispersal of the carabaos.

WHEREFORE, the trial court's order of dismissal and the confiscation and dispersal of the carabaos are reversed and set aside.
Respondents Miranda and Zenarosa are ordered to restore the carabaos, with the requisite documents, to the petitioners, who as owners
are entitled to possess the same, with the right to dispose of them in Basud or Sipocot, Camarines Sur. No costs.

SO ORDERED

G.R. No. 110571 March 10, 1994

FIRST LEPANTO CERAMICS, INC., petitioner,

vs.
THE COURT OF APPEALS and MARIWASA MANUFACTURING, INC., respondents.

Castillo, Laman, Tan & Pantaleon for petitioner.

De Borja, Medialdea, Ata, Bello, Guevarra & Serapio for private respondent.

NOCON, J.:

Brought to fore in this petition for certiorari and prohibition with application for preliminary injunction is the novel question of where and in
what manner appeals from decisions of the Board of Investments (BOI) should be filed. A thorough scrutiny of the conflicting provisions
of Batas Pambansa Bilang 129, otherwise known as the "Judiciary Reorganization Act of 1980," Executive Order No. 226, also known as
the Omnibus Investments Code of 1987 and Supreme Court Circular No. 1-91 is, thus, called for.

Briefly, this question of law arose when BOI, in its decision dated December 10, 1992 in BOI Case No. 92-005 granted petitioner First
Lepanto Ceramics, Inc.'s application to amend its BOI certificate of registration by changing the scope of its registered product from
"glazed floor tiles" to "ceramic tiles." Eventually, oppositor Mariwasa filed a motion for reconsideration of the said BOI decision while
oppositor Fil-Hispano Ceramics, Inc. did not move to reconsider the same nor appeal therefrom. Soon rebuffed in its bid for
reconsideration, Mariwasa filed a petition for review with respondent Court of Appeals pursuant to Circular 1-91.

Acting on the petition, respondent court required the BOI and petitioner to comment on Mariwasa's petition and to show cause why no
injunction should issue. On February 17, 1993, respondent court temporarily restrained the BOI from implementing its decision. This
temporary restraining order lapsed by its own terms on March 9, 1993, twenty (20) days after its issuance, without respondent court
issuing any preliminary injunction.

On February 24, 1993, petitioner filed a "Motion to Dismiss Petition and to Lift Restraining Order" on the ground that respondent court
has no appellate jurisdiction over BOI Case No. 92-005, the same being exclusively vested with the Supreme Court pursuant to Article
82 of the Omnibus Investments Code of 1987.
On May 25, 1993, respondent court denied petitioner's motion to dismiss, the dispositive portion of which reads as follows:

WHEREFORE, private respondent's motion to dismiss the petition is hereby DENIED, for lack of merit.

Private respondent is hereby given an inextendible period of ten (10) days from receipt hereof within which to file its
comment to the petition.1

Upon receipt of a copy of the above resolution on June 4, 1993, petitioner decided not to file any motion for reconsideration as the
question involved is essentially legal in nature and immediately filed a petition for certiorariand prohibition before this Court.

Petitioner posits the view that respondent court acted without or in excess of its jurisdiction in issuing the questioned resolution of May
25, 1993, for the following reasons:

I. Respondent court has no jurisdiction to entertain Mariwasa's appeal from the BOI's decision in BOI Case No. 92-005,
which has become final.

II. The appellate jurisdiction conferred by statute upon this Honorable Court cannot be amended or superseded by
Circular No. 1-91.2

Petitioner then concludes that:

III. Mariwasa has lost it right to appeal . . . in this case. 3

Petitioner argues that the Judiciary Reorganization Act of 1980 or Batas Pambansa Bilang 129 and Circular 1-91, "Prescribing the Rules
Governing Appeals to the Court of Appeals from a Final Order or Decision of the Court of Tax Appeals and Quasi-Judicial Agencies"
cannot be the basis of Mariwasa's appeal to respondent court because the procedure for appeal laid down therein runs contrary to Article
82 of E.O. 226, which provides that appeals from decisions or orders of the BOI shall be filed directly with this Court, to wit:

Judicial relief. — All orders or decisions of the Board

(of Investments) in cases involving the provisions of this Code shall immediately be executory. No appeal from the
order or decision of the Board by the party adversely affected shall stay such an order or decision; Provided, that all
appeals shall be filed directly with the Supreme Court within thirty (30) days from receipt of the order or decision.

On the other hand, Mariwasa maintains that whatever "obvious inconsistency" or "irreconcilable repugnancy" there may have been
between B.P. 129 and Article 82 of E.O. 226 on the question of venue for appeal has already been resolved by Circular 1-91 of the
Supreme Court, which was promulgated on February 27, 1991 or four (4) years after E.O. 226 was enacted.

Sections 1, 2 and 3 of Circular 1-91, is herein quoted below:

1. Scope. — These rules shall apply to appeals from final orders or decisions of the Court of Tax Appeals. They shall
also apply to appeals from final orders or decisions of any quasi-judicial agency from which an appeal is now allowed
by statute to the Court of Appeals or the Supreme Court. Among these agencies are the Securities and Exchange
Commission, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents,
Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National
Telecommunications Commission, Secretary of Agrarian Reform and Special Agrarian Courts under RA 6657,
Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board,
Insurance Commission and Philippine Atomic Energy Commission.

2. Cases not covered. — These rules shall not apply to decisions and interlocutory orders of the National Labor
Relations Commission or the Secretary of Labor and Employment under the Labor Code of the Philippines, the Central
Board of Assessment Appeals, and other quasi-judicial agencies from which no appeal to the courts is prescribed or
allowed by statute.

3. Who may appeal and where to appeal. — The appeal of a party affected by a final order, decision, or judgment of
the Court of Tax Appeals or of a quasi-judicial agency shall be taken to the Court of Appeals within the period and in
the manner herein provided, whether the appeal involves questions of fact or of law or mixed questions of fact and law.
From final judgments or decisions of the Court of Appeals, the aggrieved party may appeal by certiorari to the Supreme
Court as provided in Rule 45 of the Rules of Court.

It may be called that Section 9(3) of B.P. 129 vests appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards
of quasi-judicial agencies on the Court of Appeals, to wit:
 (3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, awards of Regional Trial
Courts and
quasi-judicial agencies, instrumentalities, boards or commissions, except those falling within the appellate jurisdiction
of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of subparagraph (1) of the
third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Intermediate Appellate Court shall have the power to try cases and conduct hearings, receive evidence and perform
any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction,
including the power to grant and conduct new trials or further proceedings.

These provisions shall not apply to decisions and interlocutory orders issued under the Labor Code of the Philippines
and by the Central Board of Assessment Appeals.

Clearly evident in the aforequoted provision of B.P. 129 is the laudable objective of providing a uniform procedure of appeal from decisions
of all quasi-judicial agencies for the benefit of the bench and the bar. Equally laudable is the twin objective of B.P. 129 of unclogging the
docket of this Court to enable it to attend to more important tasks, which in the words of Dean Vicente G. Sinco, as quoted in our decision
in Conde v. Intermediate Appellate Court4 is "less concerned with the decisions of cases that begin and end with the transient rights and
obligations of particular individuals but is more intertwined with the direction of national policies, momentous economic and social
problems, the delimitation of governmental authority and its impact upon fundamental rights.

In Development Bank of the Philippines vs. Court of Appeals,5 this Court noted that B.P. 129 did not deal only with "changes in the rules
on procedures" and that not only was the Court of Appeals reorganized, but its jurisdiction and powers were also broadened by Section
9 thereof. Explaining the changes, this Court said:

. . . Its original jurisdiction to issue writs of mandamus, prohibition, certiorari and habeas corpus, which theretofore could
be exercised only in aid of its appellate jurisdiction, was expanded by (1) extending it so as to include the writ of quo
warranto, and also (2) empowering it to issue all said extraordinary writs "whether or not in aid of its appellate
jurisdiction." Its appellate jurisdiction was also extended to cover not only final judgments of Regional Trial Courts, but
also "all final judgments, decisions, resolutions, orders or awards of . . . quasi-judicial agencies, instrumentalities,
boards or commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with
the Constitution, the provisions of this Act, and of sub-paragraph (1) of the third paragraph and subparagraph (4) of the
fourth paragraph of Section 17 of the Judiciary Act of 1948," it being noteworthy in this connection that the text of the
law is broad and comprehensive, and the explicitly stated exceptions have no reference whatever to the Court of Tax
Appeals. Indeed, the intention to expand the original and appellate jurisdiction of the Court of Appeals over quasi-
judicial agencies, instrumentalities, boards, or commissions, is further stressed by the last paragraph of Section 9 which
excludes from its provisions, only the "decisions and interlocutory orders issued under the Labor Code of the Philippines
and by the Central Board of Assessment Appeals."6

However, it cannot be denied that the lawmaking system of the country is far from perfect. During the transitional period after the country
emerged from the Marcos regime, the lawmaking power was lodged on the Executive Department. The obvious lack of deliberation in
the drafting of our laws could perhaps explain the deviation of some of our laws from the goal of uniform procedure which B.P. 129 sought
to promote.

In exempli gratia, Executive Order No. 226 or the Omnibus Investments Code of 1987 provides that all appeals shall be filed directly with
the Supreme Court within thirty (30) days from receipt of the order or decision.

Noteworthy is the fact that presently, the Supreme Court entertains ordinary appeals only from decisions of the Regional Trial Courts in
criminal cases where the penalty imposed is reclusion perpetua or higher. Judgments of regional trial courts may be appealed to the
Supreme Court only by petition for review on certiorari within fifteen (15) days from notice of judgment in accordance with Rule 45 of the
Rules of Court in relation to Section 17 of the Judiciary Act of 1948, as amended, this being the clear intendment of the provision of the
Interim Rules that "(a)ppeals to the Supreme Court shall be taken by petition for certiorari which shall be governed by Rule 45 of the
Rules of Court." Thus, the right of appeal provided in E.O. 226 within thirty (30) days from receipt of the order or decision is clearly not in
consonance with the present procedure before this Court. Only decisions, orders or rulings of a Constitutional Commission (Civil Service
Commission, Commission on Elections or Commission on Audit), may be brought to the Supreme Court on original petitions
for certiorari under Rule 65 by the aggrieved party within thirty (30) days form receipt of a copy thereof. 7

Under this contextual backdrop, this Court, pursuant to its Constitutional power under Section 5(5), Article VIII of the 1987 Constitution to
promulgate rules concerning pleading, practice and procedure in all courts, and by way of implementation of B.P. 129, issued Circular 1-
91 prescribing the rules governing appeals to the Court of Appeals from final orders or decisions of the Court of Tax Appeals and quasi-
judicial agencies to eliminate unnecessary contradictions and confusing rules of procedure.

Contrary to petitioner's contention, although a circular is not strictly a statute or law, it has, however, the force and effect of law according
to settled jurisprudence.8 In Inciong v. de Guia,9 a circular of this Court was treated as law. In adopting the recommendation of the
Investigating Judge to impose a sanction on a judge who violated Circular No. 7 of this Court dated
September 23, 1974, as amended by Circular No. 3 dated April 24, 1975 and Circular No. 20 dated October 4, 1979, requiring raffling of
cases, this Court quoted the ratiocination of the Investigating Judge, brushing aside the contention of respondent judge that assigning
cases instead of raffling is a common practice and holding that respondent could not go against the circular of this Court until it is repealed
or otherwise modified, as "(L)aws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by
disuse, or customs or practice to the contrary." 10

The argument that Article 82 of E.O. 226 cannot be validly repealed by Circular 1-91 because the former grants a substantive right which,
under the Constitution cannot be modified, diminished or increased by this Court in the exercise of its rule-making powers is not entirely
defensible as it seems. Respondent correctly argued that Article 82 of E.O. 226 grants the right of appeal from decisions or final orders
of the BOI and in granting such right, it also provided where and in what manner such appeal can be brought. These latter portions simply
deal with procedural aspects which this Court has the power to regulate by virtue of its constitutional rule-making powers.

The case of Bustos v. Lucero11 distinguished between rights created by a substantive law and those arising from procedural law:

Substantive law creates substantive rights . . . . Substantive rights is a term which includes those rights which one
enjoys under the legal system prior to the disturbance of normal relations (60 C.J., 980). Substantive law is that part of
the law which creates, defines and regulates rights, or which regulates rights and duties which give rise to a cause of
action, as oppossed to adjective or remedial law, which prescribes the method of enforcing rights or obtains a redress
for their invasion.12

Indeed, the question of where and in what manner appeals from decisions of the BOI should be brought pertains only to procedure or the
method of enforcing the substantive right to appeal granted by E.O. 226. In other words, the right to appeal from decisions or final orders
of the BOI under E.O. 226 remains and continues to be respected. Circular 1-91 simply transferred the venue of appeals from decisions
of this agency to respondent Court of Appeals and provided a different period of appeal, i.e., fifteen (15) days from notice. It did not make
an incursion into the substantive right to appeal.

The fact that BOI is not expressly included in the list of quasi-judicial agencies found in the third sentence of Section 1 of Circular 1-91
does not mean that said circular does not apply to appeals from final orders or decision of the BOI. The second sentence of Section 1
thereof expressly states that "(T)hey shall also apply to appeals from final orders or decisions of any quasi-judicial agency from which an
appeal is now allowed by statute to the Court of Appeals or the Supreme Court." E.O. 266 is one such statute. Besides, the enumeration
is preceded by the words "(A)mong these agencies are . . . ," strongly implying that there are other quasi-judicial agencies which are
covered by the Circular but which have not been expressly listed therein. More importantly, BOI does not fall within the purview of the
exclusions listed in Section 2 of the circular. Only the following final decisions and interlocutory orders are expressly excluded from the
circular, namely, those of: (1) the National Labor Relations Commission; (2) the Secretary of Labor and Employment; (3) the Central
Board of Assessment Appeals and (4) other quasi-judicial agencies from which no appeal to the courts is prescribed or allowed by statute.
Since in DBP v. CA13 we upheld the appellate jurisdiction of the Court of Appeals over the Court of Tax Appeals despite the fact that the
same is not among the agencies reorganized by B.P. 129, on the ground that B.P. 129 is broad and comprehensive, there is no reason
why BOI should be excluded from
Circular 1-91, which is but implementary of said law.

Clearly, Circular 1-91 effectively repealed or superseded Article 82 of E.O. 226 insofar as the manner and method of enforcing the right
to appeal from decisions of the BOI are concerned. Appeals from decisions of the BOI, which by statute was previously allowed to be
filed directly with the Supreme Court, should now be brought to the Court of Appeals.

WHEREFORE, in view of the foregoing reasons, the instant petition for certiorari and prohibition with application for temporary restraining
order and preliminary injunction is hereby DISMISSED for lack of merit. The Temporary Restraining Order issued on July 19, 1993 is
hereby LIFTED.

SO ORDERED.

G.R. No. 151908 August 12, 2003

SMART COMMUNICATIONS, INC. (SMART) and PILIPINO TELEPHONE CORPORATION (PILTEL), petitioners,
vs.
NATIONAL TELECOMMUNICATIONS COMMISSION (NTC), respondent.

x---------------------------------------------------------x

G.R. No. 152063 August 12, 2003

GLOBE TELECOM, INC. (GLOBE) and ISLA COMMUNICATIONS CO., INC. (ISLACOM), petitioners,
vs.
COURT OF APPEALS (The Former 6th Division) and the NATIONAL TELECOMMUNICATIONS COMMISSION, respondents.

YNARES-SANTIAGO, J.:
Pursuant to its rule-making and regulatory powers, the National Telecommunications Commission (NTC) issued on June 16, 2000
Memorandum Circular No. 13-6-2000, promulgating rules and regulations on the billing of telecommunications services. Among its
pertinent provisions are the following:

(1) The billing statements shall be received by the subscriber of the telephone service not later than 30 days from the end of
each billing cycle. In case the statement is received beyond this period, the subscriber shall have a specified grace period within
which to pay the bill and the public telecommunications entity (PTEs) shall not be allowed to disconnect the service within the
grace period.

(2) There shall be no charge for calls that are diverted to a voice mailbox, voice prompt, recorded message or similar facility
excluding the customer's own equipment.

(3) PTEs shall verify the identification and address of each purchaser of prepaid SIM cards. Prepaid call cards and SIM cards
shall be valid for at least 2 years from the date of first use. Holders of prepaid SIM cards shall be given 45 days from the date
the prepaid SIM card is fully consumed but not beyond 2 years and 45 days from date of first use to replenish the SIM card,
otherwise the SIM card shall be rendered invalid. The validity of an invalid SIM card, however, shall be installed upon request of
the customer at no additional charge except the presentation of a valid prepaid call card.

(4) Subscribers shall be updated of the remaining value of their cards before the start of every call using the cards.

(5) The unit of billing for the cellular mobile telephone service whether postpaid or prepaid shall be reduced from 1 minute per
pulse to 6 seconds per pulse. The authorized rates per minute shall thus be divided by 10. 1

The Memorandum Circular provided that it shall take effect 15 days after its publication in a newspaper of general circulation and three
certified true copies thereof furnished the UP Law Center. It was published in the newspaper, The Philippine Star, on June 22,
2000.2 Meanwhile, the provisions of the Memorandum Circular pertaining to the sale and use of prepaid cards and the unit of billing for
cellular mobile telephone service took effect 90 days from the effectivity of the Memorandum Circular.

On August 30, 2000, the NTC issued a Memorandum to all cellular mobile telephone service (CMTS) operators which contained measures
to minimize if not totally eliminate the incidence of stealing of cellular phone units. The Memorandum directed CMTS operators to:

a. strictly comply with Section B(1) of MC 13-6-2000 requiring the presentation and verification of the identity and addresses of
prepaid SIM card customers;

b. require all your respective prepaid SIM cards dealers to comply with Section B(1) of MC 13-6-2000;

c. deny acceptance to your respective networks prepaid and/or postpaid customers using stolen cellphone units or cellphone
units registered to somebody other than the applicant when properly informed of all information relative to the stolen cellphone
units;

d. share all necessary information of stolen cellphone units to all other CMTS operators in order to prevent the use of stolen
cellphone units; and

e. require all your existing prepaid SIM card customers to register and present valid identification cards. 3

This was followed by another Memorandum dated October 6, 2000 addressed to all public telecommunications entities, which reads:

This is to remind you that the validity of all prepaid cards sold on 07 October 2000 and beyond shall be valid for at least two (2)
years from date of first use pursuant to MC 13-6-2000.

In addition, all CMTS operators are reminded that all SIM packs used by subscribers of prepaid cards sold on 07 October 2000
and beyond shall be valid for at least two (2) years from date of first use. Also, the billing unit shall be on a six (6) seconds pulse
effective 07 October 2000.

For strict compliance.4

On October 20, 2000, petitioners Isla Communications Co., Inc. and Pilipino Telephone Corporation filed against the National
Telecommunications Commission, Commissioner Joseph A. Santiago, Deputy Commissioner Aurelio M. Umali and Deputy
Commissioner Nestor C. Dacanay, an action for declaration of nullity of NTC Memorandum Circular No. 13-6-2000 (the Billing Circular)
and the NTC Memorandum dated October 6, 2000, with prayer for the issuance of a writ of preliminary injunction and temporary restraining
order. The complaint was docketed as Civil Case No. Q-00-42221 at the Regional Trial Court of Quezon City, Branch 77. 5
Petitioners Islacom and Piltel alleged, inter alia, that the NTC has no jurisdiction to regulate the sale of consumer goods such as the
prepaid call cards since such jurisdiction belongs to the Department of Trade and Industry under the Consumer Act of the Philippines;
that the Billing Circular is oppressive, confiscatory and violative of the constitutional prohibition against deprivation of property without
due process of law; that the Circular will result in the impairment of the viability of the prepaid cellular service by unduly prolonging the
validity and expiration of the prepaid SIM and call cards; and that the requirements of identification of prepaid card buyers and call balance
announcement are unreasonable. Hence, they prayed that the Billing Circular be declared null and void ab initio.

Soon thereafter, petitioners Globe Telecom, Inc and Smart Communications, Inc. filed a joint Motion for Leave to Intervene and to Admit
Complaint-in-Intervention.6 This was granted by the trial court.

On October 27, 2000, the trial court issued a temporary restraining order enjoining the NTC from implementing Memorandum Circular
No. 13-6-2000 and the Memorandum dated October 6, 2000.7

In the meantime, respondent NTC and its co-defendants filed a motion to dismiss the case on the ground of petitioners' failure to exhaust
administrative remedies.

Subsequently, after hearing petitioners' application for preliminary injunction as well as respondent's motion to dismiss, the trial court
issued on November 20, 2000 an Order, the dispositive portion of which reads:

WHEREFORE, premises considered, the defendants' motion to dismiss is hereby denied for lack of merit. The plaintiffs'
application for the issuance of a writ of preliminary injunction is hereby granted. Accordingly, the defendants are hereby enjoined
from implementing NTC Memorandum Circular 13-6-2000 and the NTC Memorandum, dated October 6, 2000, pending the
issuance and finality of the decision in this case. The plaintiffs and intervenors are, however, required to file a bond in the sum
of FIVE HUNDRED THOUSAND PESOS (P500,000.00), Philippine currency.

SO ORDERED.8

Defendants filed a motion for reconsideration, which was denied in an Order dated February 1, 2001.9

Respondent NTC thus filed a special civil action for certiorari and prohibition with the Court of Appeals, which was docketed as CA-G.R.
SP. No. 64274. On October 9, 2001, a decision was rendered, the decretal portion of which reads:

WHEREFORE, premises considered, the instant petition for certiorari and prohibition is GRANTED, in that, the order of the
court a quo denying the petitioner's motion to dismiss as well as the order of the court a quo granting the private respondents'
prayer for a writ of preliminary injunction, and the writ of preliminary injunction issued thereby, are hereby ANNULLED and SET
ASIDE. The private respondents' complaint and complaint-in-intervention below are hereby DISMISSED, without prejudice to
the referral of the private respondents' grievances and disputes on the assailed issuances of the NTC with the said agency.

SO ORDERED.10

Petitioners' motions for reconsideration were denied in a Resolution dated January 10, 2002 for lack of merit. 11

Hence, the instant petition for review filed by Smart and Piltel, which was docketed as G.R. No. 151908, anchored on the following
grounds:

A.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE NATIONAL TELECOMMUNICATIONS
COMMISSION (NTC) AND NOT THE REGULAR COURTS HAS JURISDICTION OVER THE CASE.

B.

THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN HOLDING THAT THE PRIVATE RESPONDENTS
FAILED TO EXHAUST AN AVAILABLE ADMINISTRATIVE REMEDY.

C.

THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BILLING CIRCULAR ISSUED BY THE
RESPONDENT NTC IS UNCONSTITUTIONAL AND CONTRARY TO LAW AND PUBLIC POLICY.

D.
 THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PRIVATE RESPONDENTS FAILED TO SHOW
THEIR CLEAR POSITIVE RIGHT TO WARRANT THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION.12

Likewise, Globe and Islacom filed a petition for review, docketed as G.R. No. 152063, assigning the following errors:

1. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINES OF PRIMARY
JURISDICTION AND EXHAUSTION OF ADMINISTRATIVE REMEDIES DO NOT APPLY SINCE THE INSTANT CASE IS FOR
LEGAL NULLIFICATION (BECAUSE OF LEGAL INFIRMITIES AND VIOLATIONS OF LAW) OF A PURELY ADMINISTRATIVE
REGULATION PROMULGATED BY AN AGENCY IN THE EXERCISE OF ITS RULE MAKING POWERS AND INVOLVES
ONLY QUESTIONS OF LAW.

2. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINE ON EXHAUSTION OF
ADMINISTRATIVE REMEDIES DOES NOT APPLY WHEN THE QUESTIONS RAISED ARE PURELY LEGAL QUESTIONS.

3. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINE OF EXHAUSTION OF
ADMINISTRATIVE REMEDIES DOES NOT APPLY WHERE THE ADMINISTRATIVE ACTION IS COMPLETE AND
EFFECTIVE, WHEN THERE IS NO OTHER REMEDY, AND THE PETITIONER STANDS TO SUFFER GRAVE AND
IRREPARABLE INJURY.

4. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE PETITIONERS IN FACT EXHAUSTED ALL
ADMINISTRATIVE REMEDIES AVAILABLE TO THEM.

5. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED IN ISSUING ITS QUESTIONED RULINGS IN THIS CASE
BECAUSE GLOBE AND ISLA HAVE A CLEAR RIGHT TO AN INJUNCTION.13

The two petitions were consolidated in a Resolution dated February 17, 2003. 14

On March 24, 2003, the petitions were given due course and the parties were required to submit their respective memoranda. 15

We find merit in the petitions.

Administrative agencies possess quasi-legislative or rule-making powers and quasi-judicial or administrative adjudicatory powers. Quasi-
legislative or rule-making power is the power to make rules and regulations which results in delegated legislation that is within the confines
of the granting statute and the doctrine of non-delegability and separability of powers.16

The rules and regulations that administrative agencies promulgate, which are the product of a delegated legislative power to create new
and additional legal provisions that have the effect of law, should be within the scope of the statutory authority granted by the legislature
to the administrative agency. It is required that the regulation be germane to the objects and purposes of the law, and be not in
contradiction to, but in conformity with, the standards prescribed by law. 17 They must conform to and be consistent with the provisions of
the enabling statute in order for such rule or regulation to be valid. Constitutional and statutory provisions control with respect to what
rules and regulations may be promulgated by an administrative body, as well as with respect to what fields are subject to regulation by it.
It may not make rules and regulations which are inconsistent with the provisions of the Constitution or a statute, particularly the statute it
is administering or which created it, or which are in derogation of, or defeat, the purpose of a statute. In case of conflict between a statute
and an administrative order, the former must prevail.18

Not to be confused with the quasi-legislative or rule-making power of an administrative agency is its quasi-judicial or administrative
adjudicatory power. This is the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in
accordance with the standards laid down by the law itself in enforcing and administering the same law. The administrative body exercises
its quasi-judicial power when it performs in a judicial manner an act which is essentially of an executive or administrative nature, where
the power to act in such manner is incidental to or reasonably necessary for the performance of the executive or administrative duty
entrusted to it. In carrying out their quasi-judicial functions, the administrative officers or bodies are required to investigate facts or
ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions from them as basis for their official action and
exercise of discretion in a judicial nature.19

In questioning the validity or constitutionality of a rule or regulation issued by an administrative agency, a party need not exhaust
administrative remedies before going to court. This principle applies only where the act of the administrative agency concerned was
performed pursuant to its quasi-judicial function, and not when the assailed act pertained to its rule-making or quasi-legislative power.
In Association of Philippine Coconut Dessicators v. Philippine Coconut Authority,20 it was held:

The rule of requiring exhaustion of administrative remedies before a party may seek judicial review, so strenuously urged by the Solicitor
General on behalf of respondent, has obviously no application here. The resolution in question was issued by the PCA in the exercise of
its rule- making or legislative power. However, only judicial review of decisions of administrative agencies made in the exercise of their
quasi-judicial function is subject to the exhaustion doctrine.
Even assuming arguendo that the principle of exhaustion of administrative remedies apply in this case, the records reveal that petitioners
sufficiently complied with this requirement. Even during the drafting and deliberation stages leading to the issuance of Memo randum
Circular No. 13-6-2000, petitioners were able to register their protests to the proposed billing guidelines. They submitted their respective
position papers setting forth their objections and submitting proposed schemes for the billing circular. 21 After the same was issued,
petitioners wrote successive letters dated July 3, 200022 and July 5, 2000,23 asking for the suspension and reconsideration of the so-
called Billing Circular. These letters were not acted upon until October 6, 2000, when respondent NTC issued the second assailed
Memorandum implementing certain provisions of the Billing Circular. This was taken by petitioners as a clear denial of the requests
contained in their previous letters, thus prompting them to seek judicial relief.

In like manner, the doctrine of primary jurisdiction applies only where the administrative agency exercises its quasi-judicial or adjudicatory
function. Thus, in cases involving specialized disputes, the practice has been to refer the same to an administrative agency of special
competence pursuant to the doctrine of primary jurisdiction. The courts will not determine a controversy involving a question which is
within the jurisdiction of the administrative tribunal prior to the resolution of that question by the administrative tribunal, where the question
demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative
tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the premises of the
regulatory statute administered. The objective of the doctrine of primary jurisdiction is to guide a court in determining whether it should
refrain from exercising its jurisdiction until after an administrative agency has determined some question or some aspect of some question
arising in the proceeding before the court. It applies where the claim is originally cognizable in the courts and comes into play whenever
enforcement of the claim requires the resolution of issues which, under a regulatory scheme, has been placed within the special
competence of an administrative body; in such case, the judicial process is suspended pending referral of such issues to the administrative
body for its view.24

However, where what is assailed is the validity or constitutionality of a rule or regulation issued by the administrative agency in the
performance of its quasi-legislative function, the regular courts have jurisdiction to pass upon the same. The determination of whether a
specific rule or set of rules issued by an administrative agency contravenes the law or the constitution is within the jurisdiction of the
regular courts. Indeed, the Constitution vests the power of judicial review or the power to declare a law, treaty, international or executive
agreement, presidential decree, order, instruction, ordinance, or regulation in the courts, including the regional trial courts. 25 This is within
the scope of judicial power, which includes the authority of the courts to determine in an appropriate action the validity of the acts of the
political departments.26 Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are
legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government. 27

In the case at bar, the issuance by the NTC of Memorandum Circular No. 13-6-2000 and its Memorandum dated October 6, 2000 was
pursuant to its quasi-legislative or rule-making power. As such, petitioners were justified in invoking the judicial power of the Regional
Trial Court to assail the constitutionality and validity of the said issuances. In Drilon v. Lim,28 it was held:

We stress at the outset that the lower court had jurisdiction to consider the constitutionality of Section 187, this authority being
embraced in the general definition of the judicial power to determine what are the valid and binding laws by the criterion of their
conformity to the fundamental law. Specifically, B.P. 129 vests in the regional trial courts jurisdiction over all civil cases in which
the subject of the litigation is incapable of pecuniary estimation, even as the accused in a criminal action has the right to question
in his defense the constitutionality of a law he is charged with violating and of the proceedings taken against him, particularly as
they contravene the Bill of Rights. Moreover, Article X, Section 5(2), of the Constitution vests in the Supreme Court appellate
jurisdiction over final judgments and orders of lower courts in all cases in which the constitutionality or validity of any treaty,
international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in
question.29

In their complaint before the Regional Trial Court, petitioners averred that the Circular contravened Civil Code provisions on sales and
violated the constitutional prohibition against the deprivation of property without due process of law. These are within the competence of
the trial judge. Contrary to the finding of the Court of Appeals, the issues raised in the complaint do not entail highly technical matters.
Rather, what is required of the judge who will resolve this issue is a basic familiarity with the workings of the cellular telephone service,
including prepaid SIM and call cards – and this is judicially known to be within the knowledge of a good percentage of our population –
and expertise in fundamental principles of civil law and the Constitution.

Hence, the Regional Trial Court has jurisdiction to hear and decide Civil Case No. Q-00-42221. The Court of Appeals erred in setting
aside the orders of the trial court and in dismissing the case.

WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The decision of the Court of Appeals in CA-G.R. SP
No. 64274 dated October 9, 2001 and its Resolution dated January 10, 2002 are REVERSED and SET ASIDE. The Order dated
November 20, 2000 of the Regional Trial Court of Quezon City, Branch 77, in Civil Case No. Q-00-42221 is REINSTATED. This case is
REMANDED to the court a quo for continuation of the proceedings.

SO ORDERED.

G.R. No. 124360 November 5, 1997

FRANCISCO S. TATAD, petitioner,
vs.
THE SECRETARY OF THE DEPARTMENT OF ENERGY AND THE SECRETARY OF THE DEPARTMENT OF FINANCE, respondents.

G.R. No. 127867 November 5, 1997

EDCEL C. LAGMAN, JOKER P. ARROYO, ENRIQUE GARCIA, WIGBERTO TANADA, FLAG HUMAN RIGHTS FOUNDATION, INC.,
FREEDOM FROM DEBT COALITION (FDC), SANLAKAS, petitioners,
vs.
HON. RUBEN TORRES in his capacity as the Executive Secretary, HON. FRANCISCO VIRAY, in his capacity as the Secretary of
Energy, CALTEX Philippines, Inc., PETRON Corporation and PILIPINAS SHELL Corporation, respondents.

PUNO, J.:

The petitions at bar challenge the constitutionality of Republic Act No. 8180 entitled "An Act Deregulating the Downstream Oil Industry
and For Other Purposes".1 R.A. No. 8180 ends twenty six (26) years of government regulation of the downstream oil industry. Few cases
carry a surpassing importance on the life of every Filipino as these petitions for the upswing and downswing of our economy materially
depend on the oscillation of oil.

First, the facts without the fat. Prior to 1971, there was no government agency regulating the oil industry other than those dealing with
ordinary commodities. Oil companies were free to enter and exit the market without any government interference. There were four (4)
refining companies (Shell, Caltex, Bataan Refining Company and Filoil Refining) and six (6) petroleum marketing companies (Esso, Filoil,
Caltex, Getty, Mobil and Shell), then operating in the country.2

In 1971, the country was driven to its knees by a crippling oil crisis. The government, realizing that petroleum and its products are vital to
national security and that their continued supply at reasonable prices is essential to the general welfare, enacted the Oil Industry
Commission Act.3 It created the Oil Industry Commission (OIC) to regulate the business of importing, exporting, re-exporting, shipping,
transporting, processing, refining, storing, distributing, marketing and selling crude oil, gasoline, kerosene, gas and other refined
petroleum products. The OIC was vested with the power to fix the market prices of petroleum products, to regulate the capacities of
refineries, to license new refineries and to regulate the operations and trade practices of the industry.4

In addition to the creation of the OIC, the government saw the imperious need for a more active role of Filipinos in the oil industry. Until
the early seventies, the downstream oil industry was controlled by multinational companies. All the oil refineries and marketing companies
were owned by foreigners whose economic interests did not always coincide with the interest of the Filipino. Crude oil was transported to
the country by foreign-controlled tankers. Crude processing was done locally by foreign-owned refineries and petroleum products were
marketed through foreign-owned retail outlets. On November 9, 1973, President Ferdinand E. Marcos boldly created the Philippine
National Oil Corporation (PNOC) to break the control by foreigners of our oil industry. 5 PNOC engaged in the business of refining,
marketing, shipping, transporting, and storing petroleum. It acquired ownership of ESSO Philippines and Filoil to serve as its marketing
arm. It bought the controlling shares of Bataan Refining Corporation, the largest refinery in the country. 6 PNOC later put up its own
marketing subsidiary — Petrophil. PNOC operated under the business name PETRON Corporation. For the first time, there was a Filipino
presence in the Philippine oil market.

In 1984, President Marcos through Section 8 of Presidential Decree No. 1956, created the Oil Price Stabilization Fund (OPSF) to cushion
the effects of frequent changes in the price of oil caused by exchange rate adjustments or increase in the world market prices of crude
oil and imported petroleum products. The fund is used (1) to reimburse the oil companies for cost increases in crude oil and imported
petroleum products resulting from exchange rate adjustment and/or increase in world market prices of crude oil, and (2) to reimburse oil
companies for cost underrecovery incurred as a result of the reduction of domestic prices of petroleum products. Under the law, the OPSF
may be sourced from:

1. any increase in the tax collection from ad valorem tax or customs duty imposed on petroleum products subject to tax
under P.D. No. 1956 arising from exchange rate adjustment,

2. any increase in the tax collection as a result of the lifting of tax exemptions of government corporations, as may be
determined by the Minister of Finance in consultation with the Board of Energy,

3. any additional amount to be imposed on petroleum products to augment the resources of the fund through an
appropriate order that may be issued by the Board of Energy requiring payment of persons or companies engaged in
the business of importing, manufacturing and/or marketing petroleum products, or

4. any resulting peso costs differentials in case the actual peso costs paid by oil companies in the importation of crude
oil and petroleum products is less than the peso costs computed using the reference foreign exchange rate as fixed by
the Board of Energy.7
By 1985, only three (3) oil companies were operating in the country — Caltex, Shell and the government-owned PNOC.

In May, 1987, President Corazon C. Aquino signed Executive Order No. 172 creating the Energy Regulatory Boardto regulate the
business of importing, exporting, re-exporting, shipping, transporting, processing, refining, marketing and distributing energy resources
"when warranted and only when public necessity requires." The Board had the following powers and functions:

1. Fix and regulate the prices of petroleum products;

2. Fix and regulate the rate schedule or prices of piped gas to be charged by duly franchised
gas companies which distribute gas by means of underground pipe system;

3. Fix and regulate the rates of pipeline concessionaries under the provisions of R.A. No.
387, as amended . . . ;

4. Regulate the capacities of new refineries or additional capacities of existing refineries

and license refineries that may be organized after the issuance of (E.O. No. 172) under
such terms and conditions as are consistent with the national interest; and

5. Whenever the Board has determined that there is a shortage of any petroleum product,
or when public interest so requires, it may take such steps as it may consider necessary,
including the temporary adjustment of the levels of prices of petroleum products and the
payment to the Oil Price Stabilization Fund . . . by persons or entities engaged in the
petroleum industry of such amounts as may be determined by the Board, which may enable
the importer to recover its cost of importation.8

On December 9, 1992, Congress enacted R.A. No. 7638 which created the Department of Energy to prepare, integrate, coordinate,
supervise and control all plans, programs, projects, and activities of the government in relation to energy exploration, development,
utilization, distribution and conservation.9 The thrust of the Philippine energy program under the law was toward privatization of
government agencies related to energy, deregulation of the power and energy industry and reduction of dependency on oil-fired
plants.10 The law also aimed to encourage free and active participation and investment by the private sector in all energy activities. Section
5(e) of the law states that "at the end of four (4) years from the effectivity of this Act, the Department shall, upon approval of the President,
institute the programs and timetable of deregulation of appropriate energy projects and activities of the energy industry."

Pursuant to the policies enunciated in R.A. No. 7638, the government approved the privatization of Petron Corporation in 1993. On
December 16, 1993, PNOC sold 40% of its equity in Petron Corporation to the Aramco Overseas Company.

In March 1996, Congress took the audacious step of deregulating the downstream oil industry. It enacted R.A. No.8180, entitled the
"Downstream Oil Industry Deregulation Act of 1996." Under the deregulated environment, "any person or entity may import or purchase
any quantity of crude oil and petroleum products from a foreign or domestic source, lease or own and operate refineries and other
downstream oil facilities and market such crude oil or use the same for his own requirement," subject only to monitoring by the Department
of
Energy.11

The deregulation process has two phases: the transition phase and the full deregulation phase. During the transition phase, controls of
the non-pricing aspects of the oil industry were to be lifted. The following were to be accomplished: (1) liberalization of oil importation,
exportation, manufacturing, marketing and distribution, (2) implementation of an automatic pricing mechanism, (3) implementation of an
automatic formula to set margins of dealers and rates of haulers, water transport operators and pipeline concessionaires, and (4)
restructuring of oil taxes. Upon full deregulation, controls on the price of oil and the foreign exchange cover were to be lifted and the
OPSF was to be abolished.

The first phase of deregulation commenced on August 12, 1996.

On February 8, 1997, the President implemented the full deregulation of the Downstream Oil Industry through E.O.No. 372.

The petitions at bar assail the constitutionality of various provisions of R.A No. 8180 and E.O. No. 372.

In G.R. No. 124360, petitioner Francisco S. Tatad seeks the annulment of section 5(b) of R.A. No. 8180. Section 5(b) provides:

b) Any law to the contrary notwithstanding and starting with the effectivity of this Act, tariff duty shall be imposed and collected
on imported crude oil at the rate of three percent (3%) and imported refined petroleum products at the rate of seven percent
(7%), except fuel oil and LPG, the rate for which shall be the same as that for imported crude oil: Provided, That beginning on
January 1, 2004 the tariff rate on imported crude oil and refined petroleum products shall be the same: Provided, further, That
this provision may be amended only by an Act of Congress.
The petition is anchored on three arguments:

First, that the imposition of different tariff rates on imported crude oil and imported refined petroleum products violates the equal protection
clause. Petitioner contends that the 3%-7% tariff differential unduly favors the three existing oil refineries and discriminates against
prospective investors in the downstream oil industry who do not have their own refineries and will have to source refined petroleum
products from abroad.

Second, that the imposition of different tariff rates does not deregulate the downstream oil industry but instead controls the oil industry,
contrary to the avowed policy of the law. Petitioner avers that the tariff differential between imported crude oil and imported refined
petroleum products bars the entry of other players in the oil industry because it effectively protects the interest of oil companies with
existing refineries. Thus, it runs counter to the objective of the law "to foster a truly competitive market."

Third, that the inclusion of the tariff provision in section 5(b) of R.A. No. 8180 violates Section 26(1) Article VI of the Constitution requiring
every law to have only one subject which shall be expressed in its title. Petitioner contends that the imposition of tariff rates in section
5(b) of R.A. No. 8180 is foreign to the subject of the law which is the deregulation of the downstream oil industry.

In G.R. No. 127867, petitioners Edcel C. Lagman, Joker P. Arroyo, Enrique Garcia, Wigberto Tanada, Flag Human Rights Foundation,
Inc., Freedom from Debt Coalition (FDC) and Sanlakas contest the constitutionality of section 15 of R.A. No. 8180 and E.O. No. 392.
Section 15 provides:

Sec. 15. Implementation of Full Deregulation. — Pursuant to Section 5(e) of Republic Act No. 7638, the DOE shall, upon approval
of the President, implement the full deregulation of the downstream oil industry not later than March 1997. As far as practicable,
the DOE shall time the full deregulation when the prices of crude oil and petroleum products in the world market are declining
and when the exchange rate of the peso in relation to the US dollar is stable. Upon the implementation of the full deregulation
as provided herein, the transition phase is deemed terminated and the following laws are deemed repealed:

xxx xxx xxx

E.O. No. 372 states in full, viz.:

WHEREAS, Republic Act No. 7638, otherwise known as the "Department of Energy Act of 1992," provides that, at the end of
four years from its effectivity last December 1992, "the Department (of Energy) shall, upon approval of the President, institute
the programs and time table of deregulation of appropriate energy projects and activities of the energy sector;"

WHEREAS, Section 15 of Republic Act No. 8180, otherwise known as the "Downstream Oil Industry Deregulation Act of 1996,"
provides that "the DOE shall, upon approval of the President, implement full deregulation of the downstream oil industry not later
than March, 1997. As far as practicable, the DOE shall time the full deregulation when the prices of crude oil and petroleum
products in the world market are declining and when the exchange rate of the peso in relation to the US dollar is stable;"

WHEREAS, pursuant to the recommendation of the Department of Energy, there is an imperative need to implement the full
deregulation of the downstream oil industry because of the following recent developments: (i) depletion of the buffer fund on or
about 7 February 1997 pursuant to the Energy Regulatory Board's Order dated 16 January 1997; (ii) the prices of crude oil had
been stable at $21-$23 per barrel since October 1996 while prices of petroleum products in the world market had been stable
since mid-December of last year. Moreover, crude oil prices are beginning to soften for the last few days while prices of some
petroleum products had already declined; and (iii) the exchange rate of the peso in relation to the US dollar has been stable for
the past twelve (12) months, averaging at around P26.20 to one US dollar;

WHEREAS, Executive Order No. 377 dated 31 October 1996 provides for an institutional framework for the administration of
the deregulated industry by defining the functions and responsibilities of various government agencies;

WHEREAS, pursuant to Republic Act No. 8180, the deregulation of the industry will foster a truly competitive market which can
better achieve the social policy objectives of fair prices and adequate, continuous supply of environmentally-clean and high
quality petroleum products;

NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by the powers vested in me by law, do
hereby declare the full deregulation of the downstream oil industry.

In assailing section 15 of R.A. No. 8180 and E.O. No. 392, petitioners offer the following submissions:

First, section 15 of R.A. No. 8180 constitutes an undue delegation of legislative power to the President and the Secretary of Energy
because it does not provide a determinate or determinable standard to guide the Executive Branch in determining when to implement the
full deregulation of the downstream oil industry. Petitioners contend that the law does not define when it is practicable for the Secretary
of Energy to recommend to the President the full deregulation of the downstream oil industry or when the President may consider it
practicable to declare full deregulation. Also, the law does not provide any specific standard to determine when the prices of crude oil in
the world market are considered to be declining nor when the exchange rate of the peso to the US dollar is considered stable.

Second, petitioners aver that E.O. No. 392 implementing the full deregulation of the downstream oil industry is arbitrary and unreasonable
because it was enacted due to the alleged depletion of the OPSF fund — a condition not found in R.A. No. 8180.

Third, section 15 of R.A. No. 8180 and E.O. No. 392 allow the formation of a de facto cartel among the three existing oil companies —
Petron, Caltex and Shell — in violation of the constitutional prohibition against monopolies, combinations in restraint of trade and unfair
competition.

Respondents, on the other hand, fervently defend the constitutionality of R.A. No. 8180 and E.O. No. 392. In addition, respondents
contend that the issues raised by the petitions are not justiciable as they pertain to the wisdom of the law. Respondents further aver that
petitioners have no locus standi as they did not sustain nor will they sustain direct injury as a result of the implementation of R.A. No.
8180.

The petitions were heard by the Court on September 30, 1997. On October 7, 1997, the Court ordered the private respondents oil
companies "to maintain the status quo and to cease and desist from increasing the prices of gasoline and other petroleum fuel products
for a period of thirty (30) days . . . subject to further orders as conditions may warrant."

We shall now resolve the petitions on the merit. The petitions raise procedural and substantive issues bearing on the constitutionality of
R.A. No. 8180 and E.O. No. 392. The procedural issues are: (1) whether or not the petitions raise a justiciable controversy, and (2)
whether or not the petitioners have the standing to assail the validity of the subject law and executive order. The substantive issues are:
(1) whether or not section 5 (b) violates the one title — one subject requirement of the Constitution; (2) whether or not the same section
violates the equal protection clause of the Constitution; (3) whether or not section 15 violates the constitutional prohibition on undue
delegation of power; (4) whether or not E.O. No. 392 is arbitrary and unreasonable; and (5) whether or not R.A. No. 8180 violates the
constitutional prohibition against monopolies, combinations in restraint of trade and unfair competition.

We shall first tackle the procedural issues. Respondents claim that the avalanche of arguments of the petitioners assail the wisdom of
R.A. No. 8180. They aver that deregulation of the downstream oil industry is a policy decision made by Congress and it cannot be
reviewed, much less be reversed by this Court. In constitutional parlance, respondents contend that the petitions failed to raise a justiciable
controversy.

Respondents' joint stance is unnoteworthy. Judicial power includes not only the duty of the courts to settle actual controversies involving
rights which are legally demandable and enforceable, but also the duty to determine whether or not there has been grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government.12 The courts, as
guardians of the Constitution, have the inherent authority to determine whether a statute enacted by the legislature transcends the limit
imposed by the fundamental law. Where a statute violates the Constitution, it is not only the right but the duty of the judiciary to declare
such act as unconstitutional and void.13 We held in the recent case of Tanada v. Angara:14

xxx xxx xxx

In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution, the petition no doubt
raises a justiciable controversy. Where an action of the legislative branch is seriously alleged to have infringed the Constitution,
it becomes not only the right but in fact the duty of the judiciary to settle the dispute. The question thus posed is judicial rather
than political. The duty to adjudicate remains to assure that the supremacy of the Constitution is upheld. Once a controversy as
to the application or interpretation of a constitutional provision is raised before this Court, it becomes a legal issue which the
Court is bound by constitutional mandate to decide.

Even a sideglance at the petitions will reveal that petitioners have raised constitutional issues which deserve the resolution of this Court
in view of their seriousness and their value as precedents. Our statement of facts and definition of issues clearly show that petitioners are
assailing R.A. No. 8180 because its provisions infringe the Constitution and not because the law lacks wisdom. The principle of separation
of power mandates that challenges on the constitutionality of a law should be resolved in our courts of justice while doubts on the wisdom
of a law should be debated in the halls of Congress. Every now and then, a law may be denounced in court both as bereft of wisdom and
constitutionally infirmed. Such denunciation will not deny this Court of its jurisdiction to resolve the constitutionality of the said law while
prudentially refusing to pass on its wisdom.

The effort of respondents to question the locus standi of petitioners must also fall on barren ground. In language too lucid to be
misunderstood, this Court has brightlined its liberal stance on a petitioner's locus standi where the petitioner is able to craft an issue of
transcendental significance to the people.15 In Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan,16 we stressed:

xxx xxx xxx

Objections to taxpayers' suit for lack of sufficient personality, standing or interest are, however, in the main procedural matters.
Considering the importance to the public of the cases at bar, and in keeping with the Court's duty, under the 1987 Constitution,
 to determine whether or not the other branches of government have kept themselves within the limits of the Constitution and the
laws and that they have not abused the discretion given to them, the Court has brushed aside technicalities of procedure and
has taken cognizance of these petitions.

There is not a dot of disagreement between the petitioners and the respondents on the far reaching importance of the validity of RA No.
8180 deregulating our downstream oil industry. Thus, there is no good sense in being hypertechnical on the standing of petitioners for
they pose issues which are significant to our people and which deserve our forthright resolution.

We shall now track down the substantive issues. In G.R. No. 124360 where petitioner is Senator Tatad, it is contended that section 5(b)
of R.A. No. 8180 on tariff differential violates the provision17 of the Constitution requiring every law to have only one subject which should
be expressed in its title. We do not concur with this contention. As a policy, this Court has adopted a liberal construction of the one title
— one subject rule. We have consistently ruled 18 that the title need not mirror, fully index or catalogue all contents and minute details of
a law. A law having a single general subject indicated in the title may contain any number of provisions, no matter how diverse they may
be, so long as they are not inconsistent with or foreign to the general subject, and may be considered in furtherance of such subject by
providing for the method and means of carrying out the general subject. 19 We hold that section 5(b) providing for tariff differential is
germane to the subject of R.A. No. 8180 which is the deregulation of the downstream oil industry. The section is supposed to sway
prospective investors to put up refineries in our country and make them rely less on imported petroleum. 20 We shall, however, return to
the validity of this provision when we examine its blocking effect on new entrants to the oil market.

We shall now slide to the substantive issues in G.R. No. 127867. Petitioners assail section 15 of R.A. No. 8180 which fixes the time frame
for the full deregulation of the downstream oil industry. We restate its pertinent portion for emphasis, viz.:

Sec. 15. Implementation of Full Deregulation — Pursuant to section 5(e) of Republic Act No. 7638, the DOE shall, upon approval
of the President, implement the full deregulation of the downstream oil industry not later than March 1997. As far as practicable,
the DOE shall time the full deregulation when the prices of crude oil and petroleum products in the world market are declining and
when the exchange rate of the peso in relation to the US dollar is stable . . .

Petitioners urge that the phrases "as far as practicable," "decline of crude oil prices in the world market" and "stability of the peso exchange
rate to the US dollar" are ambivalent, unclear and inconcrete in meaning. They submit that they do not provide the "determinate or
determinable standards" which can guide the President in his decision to fully deregulate the downstream oil industry. In addition, they
contend that E.O. No. 392 which advanced the date of full deregulation is void for it illegally considered the depletion of the OPSF fund
as a factor.

The power of Congress to delegate the execution of laws has long been settled by this Court. As early as 1916 in Compania General de
Tabacos de Filipinas vs. The Board of Public Utility Commissioners,21 this Court thru, Mr. Justice Moreland, held that "the true distinction
is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring authority
or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection
can be made." Over the years, as the legal engineering of men's relationship became more difficult, Congress has to rely more on the
practice of delegating the execution of laws to the executive and other administrative agencies. Two tests have been developed to
determine whether the delegation of the power to execute laws does not involve the abdication of the power to make law itself. We
delineated the metes and bounds of these tests in Eastern Shipping Lines, Inc. VS. POEA,22 thus:

There are two accepted tests to determine whether or not there is a valid delegation of legislative power, viz: the completeness
test and the sufficient standard test. Under the first test, the law must be complete in all its terms and conditions when it leaves
the legislative such that when it reaches the delegate the only thing he will have to do is to enforce it. Under the sufficient
standard test, there must be adequate guidelines or limitations in the law to map out the boundaries of the delegate's authority
and prevent the delegation from running riot. Both tests are intended to prevent a total transference of legislative authority to the
delegate, who is not allowed to step into the shoes of the legislature and exercise a power essentially legislative.

The validity of delegating legislative power is now a quiet area in our constitutional landscape. As sagely observed, delegation of legislative
power has become an inevitability in light of the increasing complexity of the task of government. Thus, courts bend as far back as
possible to sustain the constitutionality of laws which are assailed as unduly delegating legislative powers. Citing Hirabayashi v. United
States23 as authority, Mr. Justice Isagani A. Cruz states "that even if the law does not expressly pinpoint the standard, the courts will bend
over backward to locate the same elsewhere in order to spare the statute, if it can, from constitutional infirmity." 24

Given the groove of the Court's rulings, the attempt of petitioners to strike down section 15 on the ground of undue delegation of legislative
power cannot prosper. Section 15 can hurdle both the completeness test and the sufficient standard test. It will be noted that Congress
expressly provided in R.A. No. 8180 that full deregulation will start at the end of March 1997, regardless of the occurrence of any event.
Full deregulation at the end of March 1997 is mandatory and the Executive has no discretion to postpone it for any purported reason.
Thus, the law is complete on the question of the final date of full deregulation. The discretion given to the President is to advance the
date of full deregulation before the end of March 1997. Section 15 lays down the standard to guide the judgment of the President — he
is to time it as far as practicable when the prices of crude oil and petroleum products in the world market are declining and when the
exchange rate of the peso in relation to the US dollar is stable.

Petitioners contend that the words "as far as practicable," "declining" and "stable" should have been defined in R.A. No. 8180 as they do
not set determinate or determinable standards. The stubborn submission deserves scant consideration. The dictionary meanings of these
words are well settled and cannot confuse men of reasonable intelligence. Webster defines "practicable" as meaning possible to practice
or perform, "decline" as meaning to take a downward direction, and "stable" as meaning firmly established.25 The fear of petitioners that
these words will result in the exercise of executive discretion that will run riot is thus groundless. To be sure, the Court has sustained the
validity of similar, if not more general standards in other cases. 26

It ought to follow that the argument that E.O. No. 392 is null and void as it was based on indeterminate standards set by R.A. 8180 must
likewise fail. If that were all to the attack against the validity of E.O. No. 392, the issue need not further detain our discourse. But petitioners
further posit the thesis that the Executive misapplied R.A. No. 8180 when it considered the depletion of the OPSF fund as a factor in fully
deregulating the downstream oil industry in February 1997. A perusal of section 15 of R.A. No. 8180 will readily reveal that it only
enumerated two factors to be considered by the Department of Energy and the Office of the President, viz.: (1) the time when the prices
of crude oil and petroleum products in the world market are declining, and (2) the time when the exchange rate of the peso in relation to
the US dollar is stable. Section 15 did not mention the depletion of the OPSF fund as a factor to be given weight by the Executive before
ordering full deregulation. On the contrary, the debates in Congress will show that some of our legislators wanted to impose as a pre-
condition to deregulation a showing that the OPSF fund must not be in deficit. 27 We therefore hold that the Executive department failed
to follow faithfully the standards set by R.A. No. 8180 when it considered the extraneous factor of depletion of the OPSF fund. The
misappreciation of this extra factor cannot be justified on the ground that the Executive department considered anyway the stability of the
prices of crude oil in the world market and the stability of the exchange rate of the peso to the dollar. By considering another factor to
hasten full deregulation, the Executive department rewrote the standards set forth in R.A. 8180. The Executive is bereft of any right to
alter either by subtraction or addition the standards set in R.A. No. 8180 for it has no power to make laws. To cede to the E xecutive the
power to make law is to invite tyranny, indeed, to transgress the principle of separation of powers. The exercise of delegated power is
given a strict scrutiny by courts for the delegate is a mere agent whose action cannot infringe the terms of agency. In the cases at bar,
the Executive co-mingled the factor of depletion of the OPSF fund with the factors of decline of the price of crude oil in the world market
and the stability of the peso to the US dollar. On the basis of the text of E.O. No. 392, it is impossible to determine the weight given by
the Executive department to the depletion of the OPSF fund. It could well be the principal consideration for the early deregulation. It could
have been accorded an equal significance. Or its importance could be nil. In light of this uncertainty, we rule that the early deregulation
under E.O. No. 392 constitutes a misapplication of R.A. No. 8180.

We now come to grips with the contention that some provisions of R.A. No. 8180 violate section 19 of Article XII of the 1987 Constitution.
These provisions are:

(1) Section 5 (b) which states — "Any law to the contrary notwithstanding and starting with the effectivity of this Act, tariff duty
shall be imposed and collected on imported crude oil at the rate of three percent (3%) and imported refined petroleum products
at the rate of seven percent (7%) except fuel oil and LPG, the rate for which shall be the same as that for imported crude oil.
Provided, that beginning on January 1, 2004 the tariff rate on imported crude oil and refined petroleum products shall be the
same. Provided, further, that this provision may be amended only by an Act of Congress."

(2) Section 6 which states — "To ensure the security and continuity of petroleum crude and products supply, the DOE shall
require the refiners and importers to maintain a minimum inventory equivalent to ten percent (10%) of their respective annual
sales volume or forty (40) days of supply, whichever is lower," and

(3) Section 9 (b) which states — "To ensure fair competition and prevent cartels and monopolies in the downstream oil industry,
the following acts shall be prohibited:

xxx xxx xxx

(b) Predatory pricing which means selling or offering to sell any product at a price unreasonably below the
industry average cost so as to attract customers to the detriment of competitors.

On the other hand, section 19 of Article XII of the Constitution allegedly violated by the aforestated provisions of R.A. No. 8180 mandates:
"The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair
competition shall be allowed."

A monopoly is a privilege or peculiar advantage vested in one or more persons or companies, consisting in the exclusive right or power
to carry on a particular business or trade, manufacture a particular article, or control the sale or the whole supply of a particular commodity.
It is a form of market structure in which one or only a few firms dominate the total sales of a product or service. 28 On the other hand, a
combination in restraint of trade is an agreement or understanding between two or more persons, in the form of a contract, trust, pool,
holding company, or other form of association, for the purpose of unduly restricting competition, monopolizing trade and commerce in a
certain commodity, controlling its, production, distribution and price, or otherwise interfering with freedom of trade without statutory
authority.29 Combination in restraint of trade refers to the means while monopoly refers to the end. 30

Article 186 of the Revised Penal Code and Article 28 of the New Civil Code breathe life to this constitutional policy. Article 186 of the
Revised Penal Code penalizes monopolization and creation of combinations in restraint of
trade, 31 while Article 28 of the New Civil Code makes any person who shall engage in unfair competition liable for damages. 32
Respondents aver that sections 5(b), 6 and 9(b) implement the policies and objectives of R.A. No. 8180. They explain that the 4% tariff
differential is designed to encourage new entrants to invest in refineries. They stress that the inventory requirement is meant to guaranty
continuous domestic supply of petroleum and to discourage fly-by-night operators. They also submit that the prohibition against predatory
pricing is intended to protect prospective entrants. Respondents manifested to the Court that new players have entered the Philippines
after deregulation and have now captured 3% — 5% of the oil market.

The validity of the assailed provisions of R.A. No. 8180 has to be decided in light of the letter and spirit of our Constitution, especially
section 19, Article XII. Beyond doubt, the Constitution committed us to the free enterprise system but it is a system impressed with its
own distinctness. Thus, while the Constitution embraced free enterprise as an economic creed, it did not prohibit per se the operation of
monopolies which can, however, be regulated in the public interest. 33 Thus too, our free enterprise system is not based on a market of
pure and unadulterated competition where the State pursues a strict hands-off policy and follows the let-the-devil devour the hindmost
rule. Combinations in restraint of trade and unfair competitions are absolutely proscribed and the proscription is directed both against the
State as well as the private sector.34 This distinct free enterprise system is dictated by the need to achieve the goals of our national
economy as defined by section 1, Article XII of the Constitution which are: more equitable distribution of opportunities, income and wealth;
a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expan ding
productivity as the key to raising the quality of life for all, especially the underprivileged. It also calls for the State to protect Filipino
enterprises against unfair competition and trade practices.

Section 19, Article XII of our Constitution is anti-trust in history and in spirit. It espouses competition. The desirability of competition is the
reason for the prohibition against restraint of trade, the reason for the interdiction of unfair competition, and the reason for regulation of
unmitigated monopolies. Competition is thus the underlying principle of section 19, Article XII of our Constitution which cannot be violated
by R.A. No. 8180. We subscribe to the observation of Prof. Gellhorn that the objective of anti-trust law is "to assure a competitive economy,
based upon the belief that through competition producers will strive to satisfy consumer wants at the lowest price with the sacrifice of the
fewest resources. Competition among producers allows consumers to bid for goods and services, and thus matches their desires with
society's opportunity costs."35 He adds with appropriateness that there is a reliance upon "the operation of the 'market' system (free
enterprise) to decide what shall be produced, how resources shall be allocated in the production process, and to whom the various
products will be distributed. The market system relies on the consumer to decide what and how much shall be produced, and on
competition, among producers to determine who will manufacture it."

Again, we underline in scarlet that the fundamental principle espoused by section 19, Article XII of the Constitution is competition for it
alone can release the creative forces of the market. But the competition that can unleash these creative forces is competition that is
fighting yet is fair. Ideally, this kind of competition requires the presence of not one, not just a few but several players. A market controlled
by one player (monopoly) or dominated by a handful of players (oligopoly) is hardly the market where honest-to-goodness competition
will prevail. Monopolistic or oligopolistic markets deserve our careful scrutiny and laws which barricade the entry points of new players in
the market should be viewed with suspicion.

Prescinding from these baseline propositions, we shall proceed to examine whether the provisions of R.A. No. 8180 on tariff differential,
inventory reserves, and predatory prices imposed substantial barriers to the entry and exit of new players in our downstream oil industry.
If they do, they have to be struck down for they will necessarily inhibit the formation of a truly competitive market. Contrariwise, if they are
insignificant impediments, they need not be stricken down.

In the cases at bar, it cannot be denied that our downstream oil industry is operated and controlled by an oligopoly, a foreign oligopoly at
that. Petron, Shell and Caltex stand as the only major league players in the oil market. All other players belong to the lilliputian league.
As the dominant players, Petron, Shell and Caltex boast of existing refineries of various capacities. The tariff differential of 4% therefore
works to their immense benefit. Yet, this is only one edge of the tariff differential. The other edge cuts and cuts deep in the heart of their
competitors. It erects a high barrier to the entry of new players. New players that intend to equalize the market power of Petron, Shell and
Caltex by building refineries of their own will have to spend billions of pesos. Those who will not build refineries but compete with them
will suffer the huge disadvantage of increasing their product cost by 4%. They will be competing on an uneven field. The argument that
the 4% tariff differential is desirable because it will induce prospective players to invest in refineries puts the cart before the horse. The
first need is to attract new players and they cannot be attracted by burdening them with heavy disincentives. Without new players
belonging to the league of Petron, Shell and Caltex, competition in our downstream oil industry is an idle dream.

The provision on inventory widens the balance of advantage of Petron, Shell and Caltex against prospective new players. Petron, Shell
and Caltex can easily comply with the inventory requirement of R.A. No. 8180 in view of their existing storage facilities. Prospective
competitors again will find compliance with this requirement difficult as it will entail a prohibitive cost. The construction cost of storage
facilities and the cost of inventory can thus scare prospective players. Their net effect is to further occlude the entry points of new players,
dampen competition and enhance the control of the market by the three (3) existing oil companies.

Finally, we come to the provision on predatory pricing which is defined as ". . . selling or offering to sell any product at a price unreasonably
below the industry average cost so as to attract customers to the detriment of competitors." Respondents contend that this provision
works against Petron, Shell and Caltex and protects new entrants. The ban on predatory pricing cannot be analyzed in isolation. Its
validity is interlocked with the barriers imposed by R.A. No. 8180 on the entry of new players. The inquiry should be to determine whether
predatory pricing on the part of the dominant oil companies is encouraged by the provisions in the law blocking the entry of new players.
Text-writer
Hovenkamp,36 gives the authoritative answer and we quote:
 xxx xxx xxx

The rationale for predatory pricing is the sustaining of losses today that will give a firm monopoly profits in the future. The
monopoly profits will never materialize, however, if the market is flooded with new entrants as soon as the successful predator
attempts to raise its price. Predatory pricing will be profitable only if the market contains significant barriers to new entry.

As aforediscsussed, the 4% tariff differential and the inventory requirement are significant barriers which discourage new players to enter
the market. Considering these significant barriers established by R.A. No. 8180 and the lack of players with the comparable clout of
PETRON, SHELL and CALTEX, the temptation for a dominant player to engage in predatory pricing and succeed is a chilling reality.
Petitioners' charge that this provision on predatory pricing is anti-competitive is not without reason.

Respondents belittle these barriers with the allegation that new players have entered the market since deregulation. A scrutiny of the list
of the alleged new players will, however, reveal that not one belongs to the class and category of PETRON, SHELL and CALTEX. Indeed,
there is no showing that any of these new players intends to install any refinery and effectively compete with these dominant oil companies.
In any event, it cannot be gainsaid that the new players could have been more in number and more impressive in might if the illegal entry
barriers in R.A. No. 8180 were not erected.

We come to the final point. We now resolve the total effect of the untimely deregulation, the imposition of 4% tariff differential on imported
crude oil and refined petroleum products, the requirement of inventory and the prohibition on predatory pricing on the constitutionality of
R.A. No. 8180. The question is whether these offending provisions can be individually struck down without invalidating the entire R.A.
No. 8180. The ruling case law is well stated by author Agpalo,37 viz.:

xxx xxx xxx

The general rule is that where part of a statute is void as repugnant to the Constitution, while another part is valid, the valid
portion, if separable from the invalid, may stand and be enforced. The presence of a separability clause in a statute creates the
presumption that the legislature intended separability, rather than complete nullity of the statute. To justify this result, the valid
portion must be so far independent of the invalid portion that it is fair to presume that the legislature would have enacted it by
itself if it had supposed that it could not constitutionally enact the other. Enough must remain to make a complete, intelligible
and valid statute, which carries out the legislative intent. . . .

The exception to the general rule is that when the parts of a statute are so mutually dependent and connected, as conditions,
considerations, inducements, or compensations for each other, as to warrant a belief that the legislature intended them as a
whole, the nullity of one part will vitiate the rest. In making the parts of the statute dependent, conditional, or connected with one
another, the legislature intended the statute to be carried out as a whole and would not have enacted it if one part is void, in
which case if some parts are unconstitutional, all the other provisions thus dependent, conditional, or connected must fall with
them.

R.A. No. 8180 contains a separability clause. Section 23 provides that "if for any reason, any section or provision of this Act is declared
unconstitutional or invalid, such parts not affected thereby shall remain in full force and effect." This separability clause notwithstanding,
we hold that the offending provisions of R.A. No. 8180 so permeate its essence that the entire law has to be struck down. The provisions
on tariff differential, inventory and predatory pricing are among the principal props of R.A. No. 8180. Congress could not have deregulated
the downstream oil industry without these provisions. Unfortunately, contrary to their intent, these provisions on tariff differential, inventory
and predatory pricing inhibit fair competition, encourage monopolistic power and interfere with the free interaction of market forces. R.A.
No. 8180 needs provisions to vouchsafe free and fair competition. The need for these vouchsafing provisions cannot be
overstated. Before deregulation, PETRON, SHELL and CALTEX had no real competitors but did not have a free run of the market because
government controls both the pricing and non-pricing aspects of the oil industry. After deregulation, PETRON, SHELL and CALTEX
remain unthreatened by real competition yet are no longer subject to control by government with respect to their pricing and non-pricing
decisions. The aftermath of R.A. No. 8180 is a deregulated market where competition can be corrupted and where market forces can be
manipulated by oligopolies.

The fall out effects of the defects of R.A. No. 8180 on our people have not escaped Congress. A lot of our leading legislators have come
out openly with bills seeking the repeal of these odious and offensive provisions in R.A. No. 8180. In the Senate, Senator Freddie
Webb has filed S.B. No. 2133 which is the result of the hearings conducted by the Senate Committee on Energy. The hearings revealed
that (1) there was a need to level the playing field for the new entrants in the downstream oil industry, and (2) there was no law punishing
a person for selling petroleum products at unreasonable prices. Senator Alberto G. Romulo also filed S.B. No. 2209 abolishing the tariff
differential beginning January 1, 1998. He declared that the amendment ". . . would mean that instead of just three (3) big oil companies
there will be other major oil companies to provide more competitive prices for the market and the consuming public." Senator Heherson
T . Alvarez, one of the principal proponents of R.A. No. 8180, also filed S.B. No. 2290 increasing the penalty for violation of its section 9.
It is his opinion as expressed in the explanatory note of the bill that the present oil companies are engaged in cartelization despite
R.A. No. 8180, viz,:

xxx xxx xxx

 Since the downstream oil industry was fully deregulated in February 1997, there have been eight (8) fuel price adjustments
made by the three oil majors, namely: Caltex Philippines, Inc.; Petron Corporation; and Pilipinas Shell Petroleum Corporation.
Very noticeable in the price adjustments made, however, is the uniformity in the pump prices of practically all petroleum products
of the three oil companies. This, despite the fact, that their selling rates should be determined by a combination of any of the
following factors: the prevailing peso-dollar exchange rate at the time payment is made for crude purchases, sources of crude,
and inventory levels of both crude and refined petroleum products. The abovestated factors should have resulted in different,
rather than identical prices.

The fact that the three (3) oil companies' petroleum products are uniformly priced suggests collusion, amounting to cartelization,
among Caltex Philippines, Inc., Petron Corporation and Pilipinas Shell Petroleum Corporation to fix the prices of petroleum
products in violation of paragraph (a), Section 9 of R.A. No. 8180.

To deter this pernicious practice and to assure that present and prospective players in the downstream oil industry conduct their
business with conscience and propriety, cartel-like activities ought to be severely penalized.

Senator Francisco S. Tatad also filed S.B. No. 2307 providing for a uniform tariff rate on imported crude oil and refined petroleum products.
In the explanatory note of the bill, he declared in no uncertain terms that ". . . the present set-up has raised serious public concern over
the way the three oil companies have uniformly adjusted the prices of oil in the country, an indication of a possible existence of a cartel
or a cartel-like situation within the downstream oil industry. This situation is mostly attributed to the foregoing provision on tariff differential,
which has effectively discouraged the entry of new players in the downstream oil industry."

In the House of Representatives, the moves to rehabilitate R.A. No. 8180 are equally feverish. Representative Leopoldo E. San
Buenaventura has filed H.B. No. 9826 removing the tariff differential for imported crude oil and imported refined petroleum products. In
the explanatory note of the bill, Rep. Buenaventura explained:

xxx xxx xxx

As we now experience, this difference in tariff rates between imported crude oil and imported refined petroleum
products, unwittingly provided a built-in-advantage for the three existing oil refineries in the country and eliminating competition
which is a must in a free enterprise economy. Moreover, it created a disincentive for other players to engage even initially in the
importation and distribution of refined petroleum products and ultimately in the putting up of refineries. This tariff differential
virtually created a monopoly of the downstream oil industry by the existing three oil companies as shown by their uniform and
capricious pricing of their products since this law took effect, to the great disadvantage of the consuming public.

Thus, instead of achieving the desired effects of deregulation, that of free enterprise and a level playing field in the downstream
oil industry, R.A. 8180 has created an environment conducive to cartelization, unfavorable, increased, unrealistic prices of
petroleum products in the country by the three existing refineries.

Representative Marcial C. Punzalan, Jr., filed H.B. No. 9981 to prevent collusion among the present oil companies by strengthening the
oversight function of the government, particularly its ability to subject to a review any adjustment in the prices of gasoline and other
petroleum products. In the explanatory note of the bill, Rep. Punzalan, Jr., said:

xxx xxx xxx

To avoid this, the proposed bill seeks to strengthen the oversight function of government, particularly its ability to review the
prices set for gasoline and other petroleum products. It grants the Energy Regulatory Board (ERB) the authority to review prices
of oil and other petroleum products, as may be petitioned by a person, group or any entity, and to subsequently compel any
entity in the industry to submit any and all documents relevant to the imposition of new prices. In cases where the Board
determines that there exist collusion, economic conspiracy, unfair trade practice, profiteering and/or overpricing, it may take any
step necessary to protect the public, including the readjustment of the prices of petroleum products. Further, the Board may also
impose the fine and penalty of imprisonment, as prescribed in Section 9 of R.A. 8180, on any person or entity from the oil industry
who is found guilty of such prohibited acts.

By doing all of the above, the measure will effectively provide Filipino consumers with a venue where their grievances can be
heard and immediately acted upon by government.

Thus, this bill stands to benefit the Filipino consumer by making the price-setting process more transparent and making it easier
to prosecute those who perpetrate such prohibited acts as collusion, overpricing, economic conspiracy and unfair trade.

Representative Sergio A.F . Apostol filed H.B. No. 10039 to remedy an omission in R.A. No. 8180 where there is no agency in government
that determines what is "reasonable" increase in the prices of oil products. Representative Dente O. Tinga, one of the principal
sponsors of R.A. No. 8180, filed H.B. No. 10057 to strengthen its anti-trust provisions. He elucidated in its explanatory note:

xxx xxx xxx

 The definition of predatory pricing, however, needs to be tightened up particularly with respect to the definitive benchmark price
and the specific anti-competitive intent. The definition in the bill at hand which was taken from the Areeda-Turner test in the
United States on predatory pricing resolves the questions. The definition reads, "Predatory pricing means selling or offering to
sell any oil product at a price below the average variable cost for the purpose of destroying competition, eliminating a competitor
or discouraging a competitor from entering the market."

The appropriate actions which may be resorted to under the Rules of Court in conjunction with the oil deregulation law are
adequate. But to stress their availability and dynamism, it is a good move to incorporate all the remedies in the law itself. Thus,
the present bill formalizes the concept of government intervention and private suits to address the problem of antitrust violations.
Specifically, the government may file an action to prevent or restrain any act of cartelization or predatory pricing, and if it has
suffered any loss or damage by reason of the antitrust violation it may recover damages. Likewise, a private person or entity
may sue to prevent or restrain any such violation which will result in damage to his business or property, and if he has already
suffered damage he shall recover treble damages. A class suit may also be allowed.

To make the DOE Secretary more effective in the enforcement of the law, he shall be given additional powers to gather
information and to require reports.

Representative Erasmo B. Damasing filed H.B. No. 7885 and has a more unforgiving view of R.A. No. 8180. He wants it completely
repealed. He explained:

xxx xxx xxx

Contrary to the projections at the time the bill on the Downstream Oil Industry Deregulation was discussed and debated upon in
the plenary session prior to its approval into law, there aren't any new players or investors in the oil industry. Thus, resulting in
practically a cartel or monopoly in the oil industry by the three (3) big oil companies, Caltex, Shell and Petron. So much so, that
with the deregulation now being partially implemented, the said oil companies have succeeded in increasing the prices of most
of their petroleum products with little or no interference at all from the government. In the month of August, there was an increase
of Fifty centavos (50¢) per liter by subsidizing the same with the OPSF, this is only temporary as in March 1997, or a few months
from now, there will be full deregulation (Phase II) whereby the increase in the prices of petroleum products will be fully absorbed
by the consumers since OPSF will already be abolished by then. Certainly, this would make the lives of our people, especially
the unemployed ones, doubly difficult and unbearable.

The much ballyhooed coming in of new players in the oil industry is quite remote considering that these prospective investors
cannot fight the existing and well established oil companies in the country today, namely, Caltex, Shell and Petron. Even if these
new players will come in, they will still have no chance to compete with the said three (3) existing big oil companies considering
that there is an imposition of oil tariff differential of 4% between importation of crude oil by the said oil refineries paying only 3%
tariff rate for the said importation and 7% tariff rate to be paid by businessmen who have no oil refineries in the Philippines but
will import finished petroleum/oil products which is being taxed with 7% tariff rates.

So, if only to help the many who are poor from further suffering as a result of unmitigated increase in oil products due to
deregulation, it is a must that the Downstream Oil Industry Deregulation Act of 1996, or R.A.8180 be repealed completely.

Various resolutions have also been filed in the Senate calling for an immediate and comprehensive review of R.A. No. 8180 to prevent
the downpour of its ill effects on the people. Thus, S. Res. No. 574 was filed by Senator Gloria M. Macapagal entitled Resolution "Directing
the Committee on Energy to Inquire Into The Proper Implementation of the Deregulation of the Downstream Oil Industry and Oil Tax
Restructuring As Mandated Under R.A. Nos. 8180 and 8184, In Order to Make The Necessary Corrections In the Apparent
Misinterpretation Of The Intent And Provision Of The Laws And Curb The Rising Tide Of Disenchantment Among The Filipino Consumers
And Bring About The Real Intentions And Benefits Of The Said Law." Senator Blas P. Ople filed S. Res. No. 664 entitled resolution
"Directing the Committee on Energy To Conduct An Inquiry In Aid Of Legislation To Review The Government's Oil Deregulation Policy In
Light Of The Successive Increases In Transportation, Electricity And Power Rates, As well As Of Food And Other Prime Commodities
And Recommend Appropriate Amendments To Protect The Consuming Public." Senator Ople observed:

xxx xxx xxx

WHEREAS, since the passage of R.A. No. 8180, the Energy Regulatory Board (ERB) has imposed successive increases in oil
prices which has triggered increases in electricity and power rates, transportation fares, as well as in prices of food and other
prime commodities to the detriment of our people, particularly the poor;

WHEREAS, the new players that were expected to compete with the oil cartel-Shell, Caltex and Petron-have not come in;

WHEREAS, it is imperative that a review of the oil deregulation policy be made to consider appropriate amendments to the
existing law such as an extension of the transition phase before full deregulation in order to give the competitive market enough
time to develop;
 WHEREAS, the review can include the advisability of providing some incentives in order to attract the entry of new oil companies
to effect a dynamic competitive market;

WHEREAS, it may also be necessary to defer the setting up of the institutional framework for full deregulation of the oil industry
as mandated under Executive Order No. 377 issued by President Ramos last October 31, 1996 . . .

Senator Alberto G. Romulo filed S. Res. No. 769 entitled resolution "Directing the Committees on Energy and Public Services In Aid Of
Legislation To Assess The Immediate Medium And Long Term Impact of Oil Deregulation On Oil Prices And The Economy." Among the
reasons for the resolution is the finding that "the requirement of a 40-day stock inventory effectively limits the entry of other oil firms in the
market with the consequence that instead of going down oil prices will rise."

Parallel resolutions have been filed in the House of Representatives. Representative Dante O. Tinga filed H. Res. No. 1311 "Directing
The Committee on Energy To Conduct An Inquiry, In Aid of Legislation, Into The Pricing Policies And Decisions Of The Oil Companies
Since The Implementation of Full Deregulation Under the Oil Deregulation Act (R.A. No. 8180) For the Purpose of Determining In the
Context Of The Oversight Functions Of Congress Whether The Conduct Of The Oil Companies, Whether Singly Or Collectively,
Constitutes Cartelization Which Is A Prohibited Act Under R.A. No. 8180, And What Measures Should Be Taken To Help Ensure The
Successful Implementation Of The Law In Accordance With Its Letter And Spirit, Including Recommending Criminal Prosecution Of the
Officers Concerned Of the Oil Companies If Warranted By The Evidence, And For Other Purposes." Representatives Marcial C. Punzalan,
Jr. Dante O. Tinga and Antonio E. Bengzon III filed H.R. No. 894 directing the House Committee on Energy to inquire into the proper
implementation of the deregulation of the downstream oil industry. House Resolution No. 1013 was also filed by Representatives Edcel
C. Lagman, Enrique T . Garcia, Jr. and Joker P.Arroyo urging the President to immediately suspend the implementation of E.O. No. 392.

In recent memory there is no law enacted by the legislature afflicted with so much constitutional deformities as R.A. No. 8180. Yet, R.A.
No. 8180 deals with oil, a commodity whose supply and price affect the ebb and flow of the lifeblood of the nation. Its shortage of supply
or a slight, upward spiral in its price shakes our economic foundation. Studies show that the areas most impacted by the movement of oil
are food manufacture, land transport, trade, electricity and water.38 At a time when our economy is in a dangerous downspin, the
perpetuation of R.A. No. 8180 threatens to multiply the number of our people with bent backs and begging bowls. R.A. No. 8180 with its
anti-competition provisions cannot be allowed by this Court to stand even while Congress is working to remedy its defects.

The Court, however, takes note of the plea of PETRON, SHELL and CALTEX to lift our restraining order to enable them to adjust upward
the price of petroleum and petroleum products in view of the plummeting value of the peso. Their plea, however, will now have to be
addressed to the Energy Regulatory Board as the effect of the declaration of unconstitutionality of R.A. No. 8180 is to revive the former
laws it repealed.39 The length of our return to the regime of regulation depends on Congress which can fasttrack the writing of a new law
on oil deregulation in accord with the Constitution.

With this Decision, some circles will chide the Court for interfering with an economic decision of Congress. Such criticism is charmless
for the Court is annulling R.A. No. 8180 not because it disagrees with deregulation as an economic policy but because as cobbled by
Congress in its present form, the law violates the Constitution. The right call therefor should be for Congress to write a new oil deregulation
law that conforms with the Constitution and not for this Court to shirk its duty of striking down a law that offends the Constitution. Striking
down R.A. No. 8180 may cost losses in quantifiable terms to the oil oligopolists. But the loss in tolerating the tampering of our Constitution
is not quantifiable in pesos and centavos. More worthy of protection than the supra-normal profits of private corporations is the sanctity
of the fundamental principles of the Constitution. Indeed when confronted by a law violating the Constitution, the Court has no option but
to strike it down dead. Lest it is missed, the Constitution is a covenant that grants and guarantees both the political and economic rights
of the people. The Constitution mandates this Court to be the guardian not only of the people's political rights but their economic rights
as well. The protection of the economic rights of the poor and the powerless is of greater importance to them for they are concerned more
with the exoterics of living and less with the esoterics of liberty. Hence, for as long as the Constitution reigns supreme so long will this
Court be vigilant in upholding the economic rights of our people especially from the onslaught of the powerful. Our defense of the people's
economic rights may appear heartless because it cannot be half-hearted.

IN VIEW WHEREOF, the petitions are granted. R.A. No. 8180 is declared unconstitutional and E.O. No. 372 void.

SO ORDERED.

G.R. No. 96681 December 2, 1991

HON. ISIDRO CARIÑO, in his capacity as Secretary of the Department of Education, Culture & Sports, DR. ERLINDA LOLARGA,
in her capacity as Superintendent of City Schools of Manila, petitioners,
vs.
THE COMMISSION ON HUMAN RIGHTS, GRACIANO BUDOY, JULIETA BABARAN, ELSA IBABAO, HELEN LUPO, AMPARO
GONZALES, LUZ DEL CASTILLO, ELSA REYES and APOLINARIO ESBER, respondents.

NARVASA, J.:
The issue raised in the special civil action of certiorari and prohibition at bar, instituted by the Solicitor General, may be formulated as
follows: where the relief sought from the Commission on Human Rights by a party in a case consists of the review and reversal or
modification of a decision or order issued by a court of justice or government agency or official exercising quasi-judicial functions, may
the Commission take cognizance of the case and grant that relief? Stated otherwise, where a particular subject-matter is placed by law
within the jurisdiction of a court or other government agency or official for purposes of trial and adjudgment, may the Commission on
Human Rights take cognizance of the same subject-matter for the same purposes of hearing and adjudication?

The facts narrated in the petition are not denied by the respondents and are hence taken as substantially correct for purposes of ruling
on the legal questions posed in the present action. These facts, 1 together with others involved in related cases recently resolved by this
Court 2 or otherwise undisputed on the record, are hereunder set forth.

1. On September 17, 1990, a Monday and a class day, some 800 public school teachers, among them members of the Manila Public
School Teachers Association (MPSTA) and Alliance of Concerned Teachers (ACT) undertook what they described as "mass concerted
actions" to "dramatize and highlight" their plight resulting from the alleged failure of the public authorities to act upon grievances that had
time and again been brought to the latter's attention. According to them they had decided to undertake said "mass concerted actions"
after the protest rally staged at the DECS premises on September 14, 1990 without disrupting classes as a last call for the government
to negotiate the granting of demands had elicited no response from the Secretary of Education. The "mass actions" consisted in staying
away from their classes, converging at the Liwasang Bonifacio, gathering in peaceable assemblies, etc. Through their representatives,
the teachers participating in the mass actions were served with an order of the Secretary of Education to return to work in 24 hours or
face dismissal, and a memorandum directing the DECS officials concerned to initiate dismissal proceedings against those who did not
comply and to hire their replacements. Those directives notwithstanding, the mass actions continued into the week, with more teachers
joining in the days that followed. 3

Among those who took part in the "concerted mass actions" were the eight (8) private respondents herein, teachers at the Ramon Magsaysay High School, Manila, who had agreed to support the non-
political demands of the MPSTA. 4

2. For failure to heed the return-to-work order, the CHR complainants (private respondents) were administratively charged on the basis of the principal's report and given five (5) days to answer the charges.
They were also preventively suspended for ninety (90) days "pursuant to Section 41 of P.D. 807" and temporarily replaced (unmarked CHR Exhibits, Annexes F, G, H). An investigation committee was
consequently formed to hear the charges in accordance with P.D. 807. 5

3. In the administrative case docketed as Case No. DECS 90-082 in which CHR complainants Graciano Budoy, Jr., Julieta Babaran, Luz del Castillo, Apolinario Esber were, among others, named
respondents, 6
the latter filed separate answers, opted for a formal investigation, and also moved "for suspension of the administrative
proceedings pending resolution by . . (the Supreme) Court of their application for issuance of an injunctive writ/temporary restraining
order." But when their motion for suspension was denied by Order dated November 8, 1990 of the Investigating Committee, which later
also denied their motion for reconsideration orally made at the hearing of November 14, 1990, "the respondents led by their counsel
staged a walkout signifying their intent to boycott the entire proceedings." 7 The case eventually resulted in a Decision of Secretary Cariño
dated December 17, 1990, rendered after evaluation of the evidence as well as the answers, affidavits and documents submitted by the
respondents, decreeing dismissal from the service of Apolinario Esber and the suspension for nine (9) months of Babaran, Budoy and
del Castillo. 8

4. In the meantime, the "MPSTA filed a petition for certiorari before the Regional Trial Court of Manila against petitioner (Cariño), which was dismissed (unmarked CHR Exhibit, Annex I). Later, the MPSTA
went to the Supreme Court (on certiorari, in an attempt to nullify said dismissal, grounded on the) alleged violation of the striking teachers" right to due process and peaceable assembly docketed as G.R.
No. 95445, supra. The ACT also filed a similar petition before the Supreme Court . . . docketed as G.R. No. 95590." 9
Both petitions in this Court were filed in behalf of the
teacher associations, a few named individuals, and "other teacher-members so numerous similarly situated" or "other similarly situated
public school teachers too numerous to be impleaded."

5. In the meantime, too, the respondent teachers submitted sworn statements dated September 27, 1990 to the Commission on Human
Rights to complain that while they were participating in peaceful mass actions, they suddenly learned of their replacements as teachers,
allegedly without notice and consequently for reasons completely unknown to them. 10

6. Their complaints — and those of other teachers also "ordered suspended by the . . . (DECS)," all numbering forty-two (42) — were docketed as "Striking Teachers CHR Case No. 90775." In connection
therewith the Commission scheduled a "dialogue" on October 11, 1990, and sent a subpoena to Secretary Cariño requiring his attendance therein. 11

On the day of the "dialogue," although it said that it was "not certain whether he (Sec. Cariño) received the subpoena which was served at his office, . . . (the) Commission, with the Chairman presiding, and
Commissioners Hesiquio R. Mallilin and Narciso C. Monteiro, proceeded to hear the case;" it heard the complainants' counsel (a) explain that his clients had been "denied due process and suspended
without formal notice, and unjustly, since they did not join the mass leave," and (b) expatiate on the grievances which were "the cause of the mass leave of MPSTA teachers, (and) with which causes they
(CHR complainants) sympathize." 12 13reciting
The Commission thereafter issued an Order these facts and making the following disposition:

To be properly apprised of the real facts of the case and be accordingly guided in its investigation and resolution of the matter,
considering that these forty two teachers are now suspended and deprived of their wages, which they need very badly, Secretary
Isidro Cariño, of the Department of Education, Culture and Sports, Dr. Erlinda Lolarga, school superintendent of Manila and the
Principal of Ramon Magsaysay High School, Manila, are hereby enjoined to appear and enlighten the Commission en banc on
October 19, 1990 at 11:00 A.M. and to bring with them any and all documents relevant to the allegations aforestated herein to
assist the Commission in this matter. Otherwise, the Commission will resolve the complaint on the basis of complainants'
evidence.
 xxx xxx xxx

7. Through the Office of the Solicitor General, Secretary Cariño sought and was granted leave to file a motion to dismiss the case. His
motion to dismiss was submitted on November 14, 1990 alleging as grounds therefor, "that the complaint states no cause of action and
that the CHR has no jurisdiction over the case." 14

8. Pending determination by the Commission of the motion to dismiss, judgments affecting the "striking teachers" were promulgated in two (2) cases, as aforestated, viz.:

a) The Decision dated December l7, 1990 of Education Secretary Cariño in Case No. DECS 90-082, decreeing dismissal from the service of Apolinario Esber and the suspension for nine (9)
months of Babaran, Budoy and del Castillo; 15 and

b) The joint Resolution of this Court dated August 6, 1991 in G.R. Nos. 95445 and 95590 dismissing the petitions "without prejudice to any appeals, if still timely, that the individual petitioners
may take to the Civil Service Commission on the matters complained of," 16 and inter alia "ruling that it was prima facie lawful for petitioner Cariño to issue return-to-work orders, file
administrative charges against recalcitrants, preventively suspend them, and issue decision on those charges." 17

9. In an Order dated December 28, 1990, respondent Commission denied Sec. Cariño's motion to dismiss and required him and Superintendent Lolarga "to submit their counter-affidavits within ten (10)
days . . . (after which) the Commission shall proceed to hear and resolve the case on the merits with or without respondents counter affidavit." 18
It held that the "striking teachers" "were
denied due process of law; . . . they should not have been replaced without a chance to reply to the administrative charges;" there had
been a violation of their civil and political rights which the Commission was empowered to investigate; and while expressing its "utmost
respect to the Supreme Court . . . the facts before . . . (it) are different from those in the case decided by the Supreme Court" (the reference
being unmistakably to this Court's joint Resolution of August 6, 1991 in G.R. Nos. 95445 and 95590, supra).

It is to invalidate and set aside this Order of December 28, 1990 that the Solicitor General, in behalf of petitioner Cariño, has commenced
the present action of certiorari and prohibition.

The Commission on Human Rights has made clear its position that it does not feel bound by this Court's joint Resolution in G.R. Nos.
95445 and 95590, supra. It has also made plain its intention "to hear and resolve the case (i.e., Striking Teachers HRC Case No. 90-775)
on the merits." It intends, in other words, to try and decide or hear and determine, i.e., exercise jurisdiction over the following general
issues:

1) whether or not the striking teachers were denied due process, and just cause exists for the imposition of administrative disciplinary
sanctions on them by their superiors; and

2) whether or not the grievances which were "the cause of the mass leave of MPSTA teachers, (and) with which causes they (CHR
complainants) sympathize," justify their mass action or strike.

The Commission evidently intends to itself adjudicate, that is to say, determine with character of finality and definiteness, the same issues
which have been passed upon and decided by the Secretary of Education, Culture & Sports, subject to appeal to the Civil Service
Commission, this Court having in fact, as aforementioned, declared that the teachers affected may take appeals to the Civil Service
Commission on said matters, if still timely.

The threshold question is whether or not the Commission on Human Rights has the power under the Constitution to do so; whether or
not, like a court of justice, 19 or even a quasi-judicial agency, 20 it has jurisdiction or adjudicatory powers over, or the power to try and
decide, or hear and determine, certain specific type of cases, like alleged human rights violations involving civil or political rights.

The Court declares the Commission on Human Rights to have no such power; and that it was not meant by the fundamental law to be
another court or quasi-judicial agency in this country, or duplicate much less take over the functions of the latter.

The most that may be conceded to the Commission in the way of adjudicative power is that it may investigate, i.e., receive evidence and
make findings of fact as regards claimed human rights violations involving civil and political rights. But fact finding is not adjudication, and
cannot be likened to the judicial function of a court of justice, or even a quasi-judicial agency or official. The function of receiving evidence
and ascertaining therefrom the facts of a controversy is not a judicial function, properly speaking. To be considered such, the faculty of
receiving evidence and making factual conclusions in a controversy must be accompanied by the authority of applying the law to those
factual conclusions to the end that the controversy may be decided or determined authoritatively, finally and definitively, subject to such
appeals or modes of review as may be provided by law. 21 This function, to repeat, the Commission does not have. 22

The proposition is made clear by the constitutional provisions specifying the powers of the Commission on Human Rights.
The Commission was created by the 1987 Constitution as an independent office. 23
Upon its constitution, it succeeded and superseded the Presidential Committee
on Human Rights existing at the time of the effectivity of the Constitution. 24 Its powers and functions are the following 25

(1) Investigate, on its own or on complaint by any party, all forms of human rights violations involving civil and political rights;

(2) Adopt its operational guidelines and rules of procedure, and cite for contempt for violations thereof in accordance with the Rules of Court;

(3) Provide appropriate legal measures for the protection of human rights of all persons within the Philippines, as well as Filipinos residing abroad, and provide for preventive measures and
legal aid services to the underprivileged whose human rights have been violated or need protection;

(4) Exercise visitorial powers over jails, prisons, or detention facilities;

(5) Establish a continuing program of research, education, and information to enhance respect for the primacy of human rights;

(6) Recommend to the Congress effective measures to promote human rights and to provide for compensation to victims of violations of human rights, or their families;

(7) Monitor the Philippine Government's compliance with international treaty obligations on human rights;

(8) Grant immunity from prosecution to any person whose testimony or whose possession of documents or other evidence is necessary or convenient to determine the truth in any investigation
conducted by it or under its authority;

(9) Request the assistance of any department, bureau, office, or agency in the performance of its functions;

(10) Appoint its officers and employees in accordance with law; and

(11) Perform such other duties and functions as may be provided by law.

As should at once be observed, only the first of the enumerated powers and functions bears any resemblance to adjudication or adjudgment. The Constitution clearl y and categorically grants to the
Commission the power to investigate all forms of human rights violations involving civil and political rights. It can exercise that power on its own initiative or on complaint of any person. It may exercise that
power pursuant to such rules of procedure as it may adopt and, in cases of violations of said rules, cite for contempt in accordance with the Rules of Court. In the course of any investigation conducted by it
or under its authority, it may grant immunity from prosecution to any person whose testimony or whose possession of documents or other evidence is necessary or convenient to determine the truth. It may
also request the assistance of any department, bureau, office, or agency in the performance of its functions, in the conduct of its investigation or in extending such remedy as may be required by its
findings. 26

But it cannot try and decide cases (or hear and determine causes) as courts of justice, or even quasi-judicial bodies do. To investigate is not to adjudicate or adjudge. Whether in the popular or the technical
sense, these terms have well understood and quite distinct meanings.

"Investigate," commonly understood, means to examine, explore, inquire or delve or probe into, research on, study. The dictionary definition of "investigate" is "to observe or study closely: inquire into
systematically. "to search or inquire into: . . . to subject to an official probe . . .: to conduct an official inquiry." 27
The purpose of investigation, of course, is to discover, to find
out, to learn, obtain information. Nowhere included or intimated is the notion of settling, deciding or resolving a controversy involved in
the facts inquired into by application of the law to the facts established by the inquiry.

The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient inquiry or observation. To trace or track;
to search into; to examine and inquire into with care and accuracy; to find out by careful inquisition; examination; the taking of evidence;
a legal inquiry;" 28 "to inquire; to make an investigation," "investigation" being in turn describe as "(a)n administrative function, the exercise
of which ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; . . . an inquiry, judicial or otherwise, for the discovery and
collection of facts concerning a certain matter or matters." 29

"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide, determine, resolve, rule on, settle. The dictionary defines the term as "to settle finally (the rights and duties of
the parties to a court case) on the merits of issues raised: . . . to pass judgment on: settle judicially: . . . act as judge." 30
And "adjudge" means "to decide or rule upon as a judge
or with judicial or quasi-judicial powers: . . . to award or grant judicially in a case of controversy . . . ." 31
In the legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine finally. Synonymous with adjudge in its strictest sense;" and "adjudge" means: "To pass on judicially, to
decide, settle or decree, or to sentence or condemn. . . . Implies a judicial determination of a fact, and the entry of a judgment." 32

Hence it is that the Commission on Human Rights, having merely the power "to investigate," cannot and should not "try and resolve on the merits" (adjudicate) the matters involved in Striking Teachers HRC
Case No. 90-775, as it has announced it means to do; and it cannot do so even if there be a claim that in the administrative disciplinary proceedings against the teachers in question, initiated and conducted
by the DECS, their human rights, or civil or political rights had been transgressed. More particularly, the Commission has no power to "resolve on the merits" the question of (a) whether or not the mass
concerted actions engaged in by the teachers constitute and are prohibited or otherwise restricted by law; (b) whether or not the act of carrying on and taking part in those actions, and the failure of the
teachers to discontinue those actions, and return to their classes despite the order to this effect by the Secretary of Education, constitute infractions of relevant rules and regulations warranting administrative
disciplinary sanctions, or are justified by the grievances complained of by them; and (c) what where the particular acts done by each individual teacher and what sanctions, if any, may properly be imposed
for said acts or omissions.

These are matters undoubtedly and clearly within the original jurisdiction of the Secretary of Education, being within the scope of the disciplinary powers granted to him under the Civil Service Law, and also,
within the appellate jurisdiction of the Civil Service Commission.

Indeed, the Secretary of Education has, as above narrated, already taken cognizance of the issues and resolved them, 33
and it appears that appeals have been seasonably
taken by the aggrieved parties to the Civil Service Commission; and even this Court itself has had occasion to pass upon said issues. 34

Now, it is quite obvious that whether or not the conclusions reached by the Secretary of Education in disciplinary cases are correct and are adequately based on substantial evidence; whether or not the
proceedings themselves are void or defective in not having accorded the respondents due process; and whether or not the Secretary of Education had in truth committed "human rights violations involving
civil and political rights," are matters which may be passed upon and determined through a motion for reconsideration addressed to the Secretary Education himself, and in the event of an adverse verdict,
may be reviewed by the Civil Service Commission and eventually the Supreme Court.

The Commission on Human Rights simply has no place in this scheme of things. It has no business intruding into the jurisdiction and functions of the Education Secretary or the Civil Service Commission.
It has no business going over the same ground traversed by the latter and making its own judgment on the questions involved. This would accord success to what may wel l have been the complaining
teachers' strategy to abort, frustrate or negate the judgment of the Education Secretary in the administrative cases against them which they anticipated would be adverse to them.

This cannot be done. It will not be permitted to be done.

In any event, the investigation by the Commission on Human Rights would serve no useful purpose. If its investigation should result in conclusi ons contrary to those reached by Secretary Cariño, it would
have no power anyway to reverse the Secretary's conclusions. Reversal thereof can only by done by the Civil Service Commission and lastly by this Court. The only thing the Commission can do, if it
concludes that Secretary Cariño was in error, is to refer the matter to the appropriate Government agency or tribunal for assistance; that would be the Civil Service Commission. 35 It cannot arrogate
unto itself the appellate jurisdiction of the Civil Service Commission.

WHEREFORE, the petition is granted; the Order of December 29, 1990 is ANNULLED and SET ASIDE, and the respondent Commission
on Human Rights and the Chairman and Members thereof are prohibited "to hear and resolve the case (i.e., Striking Teachers HRC Case
No. 90-775) on the merits."

SO ORDERED.

[G.R. No. 126625. September 23, 1997]

KANLAON CONSTRUCTION ENTERPRISES CO., INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, 5TH
DIVISION, and BENJAMIN RELUYA, JR., EDGARDO GENAYAS, ERNESTO CANETE, PROTACIO ROSALES, NESTOR BENOYA,
RODOLFO GONGOB, DARIO BINOYA, BENJAMIN BASMAYOR, ABELARDO SACURA, FLORENCIO SACURA, ISABELO MIRA,
NEMESIO LACAR, JOSEPH CABIGKIS, RODRIGO CILLON, VIRGILIO QUIZON, GUARINO EVANGELISTA, ALEJANDRO GATA,
BENEDICTO CALAGO, NILO GATA, DIONISIO PERMACIO, JUANITO SALUD, ADOR RIMPO, FELIPE ORAEZ, JULIETO TEJADA,
TEOTIMO LACIO, ONOFRE QUIZON, RUDY ALVAREZ, CRESENCIO FLORES, ALFREDO PERMACIO, CRESENCIO ALVIAR,
HERNANI SURILA, DIOSDADO SOLON, CENON ALBURO, ZACARIAS ORTIZ, EUSEBIO BUSTILLO, GREGORIO BAGO, JERRY
VARGAS, EDUARDO BUENO, PASCUAL HUDAYA, ROGELIO NIETES, and REYNALDO NIETES, respondents.

DECISION

PUNO, J.:
In this petition for certiorari, petitioner Kanlaon Construction Enterprises Co., Inc. seeks to annul the decision of respondent National
Labor Relations Commission, Fifth Division and remand the cases to the Arbitration Branch for a retrial on the merits.

Petitioner is a domestic corporation engaged in the construction business nationwide with principal office at No. 11 Yakan St., La Vista
Subdivision, Quezon City. In 1988, petitioner was contracted by the National Steel Corporation to construct residential houses for its plant
employees in Steeltown, Sta. Elena, Iligan City. Private respondents were hired by petitioner as laborers in the project and worked under
the supervision of Engineers Paulino Estacio and Mario Dulatre. In 1989, the project neared its completion and petitioner started
terminating the services of private respondents and its other employees.

In 1990, private respondents filed separate complaints against petitioner before Sub-Regional Arbitration Branch XII, Iligan
City. Numbering forty-one (41) in all, they claimed that petitioner paid them wages below the minimum and sought payment of their salary
differentials and thirteenth-month pay. Engineers Estacio and Dulatre were named co-respondents.

Some of the cases were assigned to Labor Arbiter Guardson A. Siao while the others were assigned to Labor Arbiter Nicodemus G.
Palangan. Summonses and notices of preliminary conference were issued and served on the two engineers and petitioner through
Engineer Estacio. The preliminary conferences before the labor arbiters were attended by Engineers Estacio and Dulatre and private
respondents. At the conference of June 11, 1990 before Arbiter Siao, Engineer Estacio admitted petitioner's liability to private respondents
and agreed to pay their wage differentials and thirteenth-month pay on June 19, 1990. As a result of this agreement, Engineer Estacio
allegedly waived petitioner's right to file its position paper. [1] Private respondents declared that they, too, were dispensing with their
position papers and were adopting their complaints as their position paper. [2]

On June 19, 1990, Engineer Estacio appeared but requested for another week to settle the claims. Labor Arbiter Siao denied this request.
On June 21, 1990, Arbiter Siao issued an order granting the complaint and directing petitioner to pay private respondents' claims. Arbiter
Siao held:

"x x x.

"Considering the length of time that has elapsed since these cases were filed, and what the complainants might think as to how this
branch operates and/or conducts itsproceedings as they are now restless, this Arbiter has no other alternative or recourse but to order
the respondent to pay the claims of the complainants, subject of course to the computation of the Fiscal Examiner II of this Branch
pursuant to the oral manifestation of respondent. The Supreme Court ruled: 'Contracts though orally made are binding on the parties.'
(Lao Sok v. Sabaysabay, 138 SCRA 134).

"Similarly, this Branch would present in passing that 'a court cannot decide a case without facts either admitted or agreed upon by the
parties or proved by evidence.' (Yu Chin Piao v. Lim Tuaco, 33 Phil. 92; Benedicto v. Yulo, 26 Phil. 160),

"WHEREFORE, premises considered, the respondent is hereby ordered to pay the individual claims of the above-named complainants
representing their wage differentials within ten (10) days from receipt of this Order.

"The Fiscal Examiner II of this Branch is likewise hereby ordered to compute the individual claims of the herein complainants.

"SO ORDERED." [3]

On June 29, 1990, Arbiter Palangan issued a similar order, thus:

"When the above-entitled cases were called for hearing on June 19, 1990 at 10:00 a.m. respondent thru their representative manifested
that they were willing to pay the claims of the complainants and promised to pay the same on June 28, 1990 at 10:30 a.m.

"However, when these cases were called purposely to materialize the promise of the respondent, the latter failed to appear without any
valid reason.

"Considering therefore that the respondent has already admitted the claims of the complainants, we believe that the issues raised herein
have become moot and academic.

"WHEREFORE, premises considered, the above-entitled cases are hereby ordered Closed and Terminated, however, the respondent is
hereby ordered to pay the complainants their differential pay and 13th-month pay within a period of ten (10) days from receipt hereof
based on the employment record on file with the respondent.

"SO ORDERED." [4]

Petitioner appealed to respondent National Labor Relations Commission. It alleged that it was denied due process and that Engineers
Estacio and Dulatre had no authority to represent and bind petitioner. Petitioner's appeal was filed by one Atty. Arthur Abundiente.
In a decision dated April 27, 1992, respondent Commission affirmed the orders of the Arbiters.

Petitioner interposed this petition alleging that the decision of respondent Commission was rendered without jurisdiction and in grave
abuse of discretion.Petitioner claims that:

"I

"THE QUESTIONED DECISION RENDERED BY THE HONORABLE COMMISSION IS A NULLITY, IT HAVING BEEN ISSUED
WITHOUT JURISDICTION;

II

"PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION IN ARBITRARILY,
CAPRICIOUSLY AND WHIMSICALLY MAKING THE FOLLOWING CONCLUSIONS BASED NOT ON FACTS AND EVIDENCE BUT ON
SPECULATION, SURMISE AND CONJECTURE:

A. Petitioner was deprived of the constitutional right to due process of law when it was adjudged by the NLRC liable without trial on the
merits and without its knowledge;

B. The NLRC erroneously, patently and unreasonably interpreted the principle that the NLRC and its Arbitration Branch are not strictly
bound by the rules of evidence;

C. There is no legal nor actual basis in the NLRC's ruling that petitioner is already in estoppel to disclaim the authority of its alleged
representatives.

D. The NLRC committed manifest error in relying merely on private respondents unsubstantiated complaints to hold petitioner liable for
damages." [5]

In brief, petitioner alleges that the decisions of the labor arbiters and respondent Commission are void for the following reasons: (1) there
was no valid service of summons; (2) Engineers Estacio and Dulatre and Atty. Abundiente had no authority to appear and represent
petitioner at the hearings before the arbiters and on appeal to respondent Commission; (3) the decisions of the arbiters and respondent
Commission are based on unsubstantiated and self-serving evidence and were rendered in violation of petitioner's right to due process.

Service of summons in cases filed before the labor arbiters is governed by Sections 4 and 5 of Rule IV of the New Rules of Procedure of
the NLRC. They provide:

"Section 4. Service of Notices and Resolutions.-- (a) Notices or summons and copies of orders, resolutions or decisions shall be served
on the parties to the case personally by the bailiff or duly authorized public officer within three (3) days from receipt thereof or by registered
mail; Provided that where a party is represented by counsel or authorized representative, service shall be made on such counsel or
authorized representative; provided further that in cases of decision and final awards, copies thereof shall be served on both the parties
and their counsel; provided finally, that in case where the parties are so numerous, service shall be made on counsel and upon such
number of complainants as may be practicable, which shall be considered substantial compliance with Article 224 (a) of the Labor Code,
as amended.

"x x x.

"Section 5. Proof and completeness of service.-- The return is prima facie proof of the facts indicated therein. Service by registered mail
is complete upon receipt by the addressee or his agent. x x x."

Under the NLRC Rules of Procedure, summons on the respondent shall be served personally or by registered mail on the party himself. If
the party is represented by counsel or any other authorized representative or agent, summons shall be served on such person.

It has been established that petitioner is a private domestic corporation with principal address in Quezon City. The complaints against
petitioner were filed in Iligan City and summonses therefore served on Engineer Estacio in Iligan City. The question now is whether
Engineer Estacio was an agent and authorizedrepresentative of petitioner.

To determine the scope or meaning of the term "authorized representative" or "agent" of parties on whom summons may be served, the
provisions of the Revised Rules of Court may be resorted to. [6]

Under the Revised Rules of Court, [7] service upon a private domestic corporation or partnership must be made upon its officers, such as
the president, manager, secretary, cashier, agent, or any of its directors. These persons are deemed so integrated with the corporation
that they know their responsibilities and immediately discern what to do with any legal papers served on them. [8]
In the case at bar, Engineer Estacio, assisted by Engineer Dulatre, managed and supervised the construction project. [9] According to the
Solicitor General and private respondents, Engineer Estacio attended to the project in Iligan City and supervised the work of the
employees thereat. As manager, he had sufficient responsibility and discretion to realize the importance of the legal papers served on
him and to relay the same to the president or other responsible officer of petitioner. Summons for petitioner was therefore validly served
on him.

Engineer Estacio's appearance before the labor arbiters and his promise to settle the claims of private respondents is another matter.

The general rule is that only lawyers are allowed to appear before the labor arbiter and respondent Commission in cases before them. The
Labor Code and the New Rules of Procedure of the NLRC, nonetheless, lists three (3) exceptions to the rule, viz:

"Section 6. Appearances.-- x x x.

"A non-lawyer may appear before the Commission or any Labor Arbiter only if:

"(a) he represents himself as party to the case;

"(b) he represents the organization or its members, provided that he shall be made to present written proof that he is properly authorized;
or

"(c) he is a duly-accredited member of any legal aid office duly recognized by the Department of Justice or the Integrated Bar of the
Philippines in cases referred thereto by the latter. x x x." [10]

A non-lawyer may appear before the labor arbiters and the NLRC only if: (a) he represents himself as a party to the case; (b) he represents
an organization or its members, with written authorization from them; or (c) he is a duly accredited member of any legal aid office duly
recognized by the Department of Justice or the Integrated Bar of the Philippines in cases referred to by the latter. [11]

Engineers Estacio and Dulatre were not lawyers. Neither were they duly-accredited members of a legal aid office. Their appearance
before the labor arbiters in their capacity as parties to the cases was authorized under the first exception to the rule. However, their
appearance on behalf of petitioner required written proof of authorization. It was incumbent upon the arbiters to ascertain this authority
especially since both engineers were named co-respondents in the cases before the arbiters. Absent this authority, whatever statements
and declarations Engineer Estacio made before the arbiters could not bind petitioner.

The appearance of Atty. Arthur Abundiente in the cases appealed to respondent Commission did not cure Engineer Estacio's
representation. Atty. Abundiente, in the first place, had no authority to appear before the respondent Commission. The appellants' brief
he filed was verified by him, not by petitioner. [12] Moreover, respondent Commission did not delve into the merits of Atty. Abundiente's
appeal and determine whether Engineer Estacio was duly authorized to make such promise. It dismissed the appeal on the ground that
notices were served on petitioner and that the latter was estopped from denying its promise to pay.

Nevertheless, even assuming that Engineer Estacio and Atty. Abundiente were authorized to appear as representatives of petitioner, they
could bind the latter only in procedural matters before the arbiters and respondent Commission. Petitioner's liability arose from Engineer
Estacio's alleged promise to pay. A promise to pay amounts to an offer to compromise and requires a special power of attorney or the
express consent of petitioner. The authority to compromise cannot be lightly presumed and should be duly established by
evidence. [13] This is explicit from Section 7 of Rule III of the NLRC Rules of Procedure, viz:

"Section 7. Authority to bind party.-- Attorneys and other representatives of parties shall have authority to bind their clients in all matters
of procedure; but they cannot, without a special power of attorney or express consent, enter into a compromise agreement with the
opposing party in full or partial discharge of a client's claim."

The promise to pay allegedly made by Engineer Estacio was made at the preliminary conference and constituted an offer to settle the
case amicably. The promise to pay could not be presumed to be a single unilateral act, contrary to the claim of the Solicitor General. [14] A
defendant's promise to pay and settle the plaintiff's claims ordinarily requires a reciprocal obligation from the plaintiff to withdraw the
complaint and discharge the defendant from liability. [15] In effect, the offer to pay was an offer to compromise the cases.

In civil cases, an offer to compromise is not an admission of any liability, and is not admissible in evidence against the offeror. [16] If this
rule were otherwise, no attempt to settle litigation could safely be made. [17] Settlement of disputes by way of compromise is an accepted
and desirable practice in courts of law and administrative tribunals. [18] In fact, the Labor Code mandates the labor arbiter to exert all
efforts to enable the parties to arrive at an amicable settlement of the dispute within his jurisdiction on or before the first hearing. [19]

Clearly, respondent Commission gravely abused its discretion in affirming the decisions of the labor arbiters which were not only based
on unauthorized representations, but were also made in violation of petitioner's right to due process.

Section 3 of Rule V of the NLRC Rules of Procedure provides:

"Section 3. Submission of Position Papers/Memorandum.-- Should the parties fail to agree upon an amicable settlement, in whole or in
part, during the conferences, the Labor Arbiter shall issue an order stating therein the matters taken up and agreed upon during the
conferences and directing the parties to simultaneously file their respective verified position papers.

"x x x."

After petitioner's alleged representative failed to pay the workers' claims as promised, Labor Arbiters Siao and Palangan did not order
the parties to file their respective position papers. The arbiters forthwith rendered a decision on the merits without at least requiring private
respondents to substantiate their complaints.The parties may have earlier waived their right to file position papers but petitioner's waiver
was made by Engineer Estacio on the premise that petitioner shall have paid and settled the claims of private respondents at the
scheduled conference. Since petitioner reneged on its "promise," there was a failure to settle the case amicably. This should have
prompted the arbiters to order the parties to file their position papers.

Article 221 of the Labor Code mandates that in cases before labor arbiters and respondent Commission, they "shall use every and all
reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure,
all in the interest of due process." The rule that respondent Commission and the Labor Arbiters are not bound by technical rules of
evidence and procedure should not be interpreted so as to dispense with the fundamental and essential right of due process. [20] And this
right is satisfied, at the very least, ' when the parties are given the opportunity to submit position papers. [21] Labor Arbiters Siao and
Palangan erred in dispensing with this requirement.

Indeed, the labor arbiters and the NLRC must not, at the expense of due process, be the first to arbitrarily disregard specific provisions
of the Rules which are precisely intended to assist the parties in obtaining the just, expeditious and inexpensive settlement of labor
disputes. [22]

IN VIEW WHEREOF, the petition for certiorari is granted. The decision of the National Labor Relations Commission, Fifth Division, is
annulled and set aside and the case is remanded to the Regional Arbitration Branch, Iligan City for further proceedings.

SO ORDERED.

G.R. Nos. 106425 & 106431-32 July 21, 1995

SECURITIES AND EXCHANGE COMMISSION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, CUALOPING SECURITIES CORPORATION AND FIDELITY STOCK TRANSFERS,
INC., respondents.

VITUG, J.:

The Securities and Exchange Commission ("SEC") has both regulatory and adjudicative functions.

Under its regulatory responsibilities, the SEC may pass upon applications for, or may suspend or revoke (after due notice and hearing),
certificates of registration of corporations, partnerships and associations (excluding cooperatives, homeowners' associations, and labor
unions); compel legal and regulatory compliances; conduct inspections; and impose fines or other penalties for violations of the Revised
Securities Act, as well as implementing rules and directives of the SEC, such as may be warranted.

Relative to its adjudicative authority, the SEC has original and exclusive jurisdiction to hear and decide controversies and cases involving
—

a. Intra-corporate and partnership relations between or among the corporation, officers and stockholders and partners,
including their elections or appointments;

b. State and corporate affairs in relation to the legal existence of corporations, partnerships and associations or to their
franchises; and

c. Investors and corporate affairs, particularly in respect of devices and schemes, such as fraudulent practices,
employed by directors, officers, business associates, and/or other stockholders, partners, or members of registered
firms; as well as

d. Petitions for suspension of payments filed by corporations, partnerships or associations possessing sufficient
property to cover all their debts but which foresee the impossibility of meeting them when they respectively fall due, or
 possessing insufficient assets to cover their liabilities and said entities are upon petition or motu proprio, placed under
the management of a Rehabilitation Receiver or Management Committee.

The petition before this Court relates to the exercise by the SEC of its powers in a case involving a stockbroker (CUALOPING) and a
stock transfer agency (FIDELITY).

For the factual backdrop, we adopt the findings of the Court of Appeals; we quote:

Cualoping Securities Corporation (CUALOPING for brevity) is a stockbroker, Fidelity Stock Transfer, Inc. (FIDELITY
for brevity), on the other hand, is the stock transfer agent of Philex Mining Corporation (PHILEX for brevity).

On or about the first half of 1988, certificates of stock of PHILEX representing one million four hundred [thousand]
(1,400,000) shares were stolen from the premises of FIDELITY. These stock certificates consisting of stock dividends
of certain PHILEX shareholders had been returned to FIDELITY for lack of forwarding addresses of the shareholders
concerned.

Later, the stolen stock certificates ended in the hands of a certain Agustin Lopez, a messenger of New World Security
Inc., an entirely different stock brokerage firm. In the first half of 1989, Agustin Lopez brought the stolen stock certificates
to CUALOPING for trading and sale with the stock exchange. When the said stocks were brought to CUALOPING, all
of the said stock certificates bore the "apparent" indorsement (signature) in blank of the owners (the stockholders to
whom the stocks were issued by PHILEX) thereof. At the side of these indorsements (signatures), the words "Signature
Verified" apparently of FIDELITY were stamped on each and every certificate. Further, on the words "Signature
Verified" showed the usual initials of the officers of FIDELITY.

Upon receipt of the said certificates from Agustin Lopez, CUALOPING stamped each and every certificate with the
words "Indorsement Guaranteed," and thereafter traded the same with the stock exchange.

After the stock exchange awarded and confirmed the sale of the stocks represented by said certificates to different
buyers, the same were delivered to FIDELITY for the cancellation of the stocks certificates and for issuance of new
certificates in the name of the new buyers. Agustin Lopez on the other hand was paid by CUALOPING with several
checks for Four Hundred Thousand (P400,000.00) Pesos for the value of the stocks.

After acquiring knowledge of the pilferage, FIDELITY conducted an investigation with assistance of the National Bureau
of Investigation (NBI) and found that two of its employees were involved and signed the certificates.

After two (2) months from receipt of said stock certificates, FIDELITY rejected the issuance of new certificates in favor
of the buyers for reasons that the signatures of the owners of the certificates were allegedly forged and thus the
cancellation and new issuance thereof cannot be effected. 1

On 11 August 1988, FIDELITY sought an opinion on the matter from SEC, which, on 06 October 1988, summoned FIDELITY and
CUALOPING to a conference. In this meeting, the parties stipulated, among other things, thusly:

1. That the normal procedure followed by Fidelity Stock Transfers, Inc. as transfer agent is that before stamping
compares the signatures on the certificates with the specimen signature on file with it.

2. That there is an endorsement guaranty stamp made by Cualoping Securities Corporation.

3 That the checks of Cualoping Securities Corporation were made out payable to Agustin Lopez on the dates specified
therein.2

On 26 October 1988, the Brokers and Exchange Department ("BED") of the SEC disposed of the matter in this manner:

WHEREFORE, Fidelity Stock Transfers, Inc., is hereby ordered to replace all the subject shares and to cause the
transfer thereof in the names of the buyers within ten days from actual receipt hereof.

Cualoping Securities, INC., for having violated Section 29 a(3) of the Revised Securities Act is hereby ordered to pay
a fine of P50,000.00 within five (5) days from actual receipt hereof.

Henceforth, all brokers are required to make out checks in payment of shares transacted only in the name of the
registered owners thereof.3

From the above resolution, as well as that which denied a motion for reconsideration, both CUALOPING and FIDELITY appealed to the
Commission En Banc.
On 14 December 1989, the Commission rendered its decision and concluded:

WHEREFORE, premises considered, the Commission en banc finding both Cualoping Securities Corporation and
Fidelity Stock Transfers, Inc. equally negligent in the performance of their duties hereby orders them to (1) jointly
replace the subject shares and for Fidelity to cause the transfer thereof in the names of the buyers and (2) to pay a fine
of P50,000,00 each for hav[ing] violated Section 29 (a) of the Revised Securities Act. 4

The decision was appealed to the Court of Appeals (CA-G.R. SP No. 19585; CA-G.R. SP No. 19659; and CA-G.R. SP No. 19660). In a
consolidated decision, dated 22 July 1992, the appellate court reversed the SEC and set aside SEC's order "without prejudice to the right
of persons injured to file the proper action for damages."

The Commission has brought the case to this Court in the instant petition for review on certiorari, contending that the appellate court
erred in setting aside the decision of the SEC which had (a) ordered the replacement of the certificates of stock of Philex and (b) imposed
fines on both FIDELITY and CUALOPING.

There is partial merit in the petition.

The first aspect of the SEC decision appealed to the Court of Appeals, i.e., that portion which orders the two stock transfer agencies to
"jointly replace the subject shares and for FIDELITY to cause the transfer thereof in the names of the buyers" clearly calls for an exercise
of SEC's adjudicative jurisdiction. This case, it might be recalled, has started only on the basis of a request by FIDELITY for an opinion
from the SEC. The stockholders who have been deprived of their certificates of stock or the persons to whom the forged certificates have
ultimately been transferred by the supposed indorsee thereof are yet to initiate, if minded, an appropriate adversarial action. Neither have
they been made parties to the proceedings now at bench. A justiciable controversy such as can occasion an exercise of SEC's exclusive
jurisdiction would require an assertion of a right by a proper party against another who, in turn, contests it.5 It is one instituted by and
against parties having interest in the subject matter appropriate for judicial determination predicated on a given state of facts. That
controversy must be raised by the party entitled to maintain the action. He is the person to whom the right to seek judicial redress or relief
belongs which can be enforced against the party correspondingly charged with having been responsible for, or to have given rise to, the
cause of action. A person or entity tasked with the power to adjudicate stands neutral and impartial and acts on the basis of the admissible
representations of the contending parties.

In the case at bench, the proper parties that can bring the controversy and can cause an exercise by the SEC of its original and exclusive
jurisdiction would be all or any of those who are adversely affected by the transfer of the pilfered certificates of stock. Any peremptory
judgment by the SEC, without such proceedings having first been initiated, would be precipitate. We thus see nothing erroneous in the
decision of the Court of Appeals, albeit not for the reason given by it, to set aside the SEC's adjudication "without prejudice" to the right
of persons injured to file the necessary proceedings for appropriate relief.

The other issue, i.e., the question on the legal propriety of the imposition by the SEC of a P50,000 fine on each of FIDELITY and
CUALOPING, is an entirely different matter. This time, it is the regulatory power of the SEC which is involved. When, on appeal to the
Court of Appeals, the latter set aside the fines imposed by the SEC, the latter, in its instant petition, can no longer be deemed just a
nominal party but a real party in interest sufficient to pursue an appeal to this Court.

The Revised Securities Act (Batas Pambansa Blg. 178) is designed, in main, to protect public investors from fraudulent schemes by
regulating the sale and disposition of securities, creating, for this purpose, a Securities and Exchange Commission to ensure proper
compliance with the law. Here, the SEC has aptly invoked the provisions of Section 29, in relation to Section 46, of the Revised Securities
Act. This law provides:

Sec. 29. Fraudulent transactions. — (a) It shall be unlawful for any person, directly or indirectly, in connection with the
purchase or sale of any securities —

xxx xxx xxx

(3) To engage in any act, transaction practice, or course of business which operates or would operate as a fraud or
deceit upon any person.

Sec. 46. Administrative sanctions. — If, after proper notice and hearing, the Commission finds that there is a violation
of this Act, its rules, or its orders or that any registrant has, in a registration statement and its supporting papers and
other reports required by law or rules to be filed with the Commission, made any untrue statement of a material fact, or
omitted to state any material fact required to be stated therein or necessary to make the statements therein not
misleading, or refused to permit any unlawful examination into its affairs, it shall, in its discretion, impose any or all of
the following sanctions:

(a) Suspension, or revocation of its certificate of registration and permit to offer securities;
 (b) A fine of no less than two hundred (P200.00) pesos nor more than fifty thousand (P50,000.00) pesos plus not more
than five hundred (P500.00) pesos for each day of continuing violation. (Emphasis supplied.)

There is, to our mind, no question that both FIDELITY and CUALOPING have been guilty of negligence in the conduct of their affairs
involving the questioned certificates of stock. To constitute, however, a violation of the Revised Securities Act that can warrant an
imposition of a fine under Section 29(3), in relation to Section 46 of the Act, fraud or deceit, not mere negligence, on the part of the
offender must be established. Fraud here is akin to bad faith which implies a conscious and intentional design to do a wrongful act for a
dishonest purpose or moral obliquity; it is unlike that of the negative idea of negligence in that fraud or bad faith contemplates a state of
mind affirmatively operating with furtive objectives. Given the factual circumstances found by the appellate court, neither FIDELITY nor
CUALOPING, albeit indeed remiss in the observance of due diligence, can be held liable under the above provisions of the Revised
Securities Act. We do not imply, however, that the negligence committed by private respondents would not at all be actionable; upon the
other hand, as we have earlier intimated, such an action belongs not to the SEC but to those whose rights have been injured.

Our attention is called by the Solicitor General on the violation by FIDELITY of SEC-BED Memorandum Circular No. 9, series of 1987,
which reads:

To expedite the release of Certificates of Securities to the buyers, the Commission reiterates the following rules in
delivery of stock certificates:

1. Deadlines for Delivery of Documents — All requirements must be complied with the certificates of stock, as well as
necessary documents required for the transfer of shares shall be delivered within the following periods:

xxx xxx xxx

d. From transfer agent back to clearing house and/or broker — not longer than ten (10) days from receipt of documents
provided there is a "good delivery," where there is no "good delivery," the certificate and the accompanying documents
shall be returned to the clearing house or broker not later than two (2) days after receipt thereof, except when defects
can be readily remedied, in which case the clearing house or the broker shall instead be notified of the requirements
within the same period. The notice to the clearing house or broker shall indicate that the Securities and Exchange
Commission has been notified of such defective delivery.6

FIDELITY is candid enough to admit that it has truly failed to promptly notify CUALOPING and the clearing house of the pilferage of the
certificates of stock (pp. 225, 239-240, Rollo). FIDELITY strongly asserts, however, that it has been fined by the SEC not by virtue of
Memorandum Circular No. 9 but for a violation of Section 29(a)(3) of the Revised Securities Act, and that the memorandum circular is
only now being raised for the first time in the instant petition.

In Insular Life Assurance Co., Ltd., Employees Association-NATU vs. Insular Life Assurance Co., Ltd.,7 this Court has ruled that when
issues are not specifically raised but they bear relevance and close relation to those properly raised, a court has the authority to include
all such issues in passing upon and resolving the controversy. In Bank of America, NT & SA vs. Court of Appeals, 228 SCRA 357, we
have said that "the rule that only issues or theories raised in the initial proceedings may be taken up by a party thereto on appeal should
only refer to independent, not concomitant matters, to support or oppose the cause of action or defense." In this case at bench, particularly,
it is not a new issue that is being raised but a memorandum-circular having the force and effect of law that has been cited to support a
position that relates to the very subject matter of the controversy. On this point, accordingly, we must rule in favor of petitioner SEC.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED except the portion thereof which sets aside the imposition by the
Securities and Exchange Commission of a fine on FIDELITY which is hereby REINSTATED. No costs.

SO ORDERED.

[G.R. No. 110379. November 28, 1997]

HON. ARMAND FABELLA, in his capacity as SECRETARY OF THE DEPARTMENT OF EDUCATION, CULTURE AND SPORTS;
DR. NILO ROSAS, in his capacity as REGIONAL DIRECTOR, DECS-NCR; DR. BIENVENIDO ICASIANO, in his capacity as the
SUPERINTENDENT OF THE QUEZON CITY SCHOOLS and DIVISION; ALMA BELLA O. BAUTISTA, AURORA C. VALENZUELA
and TERESITA V. DIMAGMALIW, petitioners, vs. THE COURT OF APPEALS, ROSARITO A. SEPTIMO, ERLINDA B. DE LEON,
CLARISSA T. DIMAANO, WILFREDO N. BACANI, MARINA R. VIVAR, VICTORIA S. UBALDO, JENNIE L. DOGWE, NORMA L.
RONGCALES, EDITA C. SEPTIMO, TERESITA E. EVANGELISTA, CATALINA R. FRAGANTE, REBECCA D. BAGDOG,
MARILYNNA C. KU, MARISSA M. SAMSON, HENEDINA B.CARILLO, NICASIO C. BRAVO, RUTH F. LACANILAO, MIRASOL C.
BALIGOD, FELISA S. VILLACRUEL, MA. VIOLETA ELIZABETH Y. HERNANDEZ, ANTONIO C. OCAMPO, ADRIANO S. VALENCIA
and ELEUTERIO S. VARGAS, respondents.

DECISION

PANGANIBAN, J.:
Due process of law requires notice and hearing. Hearing, on the other hand, presupposes a competent and impartial tribunal. The right
to be heard and, ultimately, the right to due process of law lose meaning in the absence of an independent, competent and impartial
tribunal.

Statement of the Case

This principium is explained by this Court as it resolves this petition for review on certiorari assailing the May 21, 1993 Decision [1] of the
Court of Appeals[2] in CA-G.R. SP No. 29107 which affirmed the trial courts decision, [3] as follows:

WHEREFORE, the decision appealed from is AFFIRMED and the appeal is DISMISSED.

The Hon. Armand Fabella is hereby ORDERED substituted as respondent-appellant in place of former Secretary Isidro Cario and
henceforth this fact should be reflected in the title of this case.

SO ORDERED.[4]

The Antecedent Facts

The facts, as found by Respondent Court, are as follows:

On September 17, 1990, then DECS Secretary Cario issued a return-to-work order to all public school teachers who had participated in
talk-outs and strikes on various dates during the period September 26, 1990 to October 18, 1990. The mass action had been staged to
demand payment of 13th month differentials, clothing allowances and passage of a debt-cap bill in Congress, among other things.

On October 18, 1990, Secretary Cario filed administrative cases against herein petitioner-appellees, who are teachers of the Mandaluyong
High School. The charge sheets required petitioner-appellees to explain in writing why they should not be punished for having taken part
in the mass action in violation of civil service laws and regulations, to wit:

1. grave misconduct;

2. gross neglect of duty;

3. gross violation of Civil Service Law and rules on reasonable office regulations;

4. refusal to perform official duty;

5. conduct prejudicial to the best interest of the service;

6. absence without leave (AWOL)

At the same time, Secretary Cario ordered petitioner-appellee to be placed under preventive suspension.

The charges were subsequently amended by DECS-NCR Regional Director Nilo Rosas on November 7, 1990 to include the specific
dates when petitioner-appellees allegedly took part in the strike.

Administrative hearings started on December 20, 1990. Petitioner-appellees counsel objected to the procedure adopted by the committee
and demanded that he be furnished a copy of the guidelines adopted by the committee for the investigation and imposition of penalties. As
he received no response from the committee, counsel walked out. Later, however, counsel, was able to obtain a copy of the guidelines.

On April 10, 1991, the teachers filed a an injunctive suit (Civil Case No. 60675) with the Regional Trial Court in Quezon City, charging
the committee appointed by Secretary Cario with fraud and deceit and praying that it be stopped from further investigating them and from
rendering any decision in the administrative case. However, the trial court denied them a restraining order.

They then amended their complaint and made it one for certiorari and mandamus. They alleged that the investigating committee was
acting with grave abuse of discretion because its guidelines for investigation place the burden of proof on them by requiring them to prove
their innocence instead of requiring Secretary Cario and his staff to adduce evidence to prove the charges against the teachers.

On May 30, 1991, petitioner-appellee Adriano S. Valencia of the Ramon Magsaysay High School filed a motion to intervene, alleging that
he was in the same situation as petitioners since he had likewise been charged and preventively suspended by respondent-appellant
Cario for the same grounds as the other petitioner-appellees and made to shoulder the burden of proving his innocence under the
committees guidelines. The trial court granted his motion on June 3, 1991 and allowed him to intervene.
On June 11, 1991, the Solicitor General answered the petitioner for certiorari and mandamus in behalf of respondent DECS Secretary. In
the main he contended that, in accordance with the doctrine of primary resort, the trial court should not interfere in the administrative
proceedings.

The Solicitor General also asked the trial court to reconsider its order of June 3, 1991, allowing petitioner-appellee Adriano S. Valencia
to intervene in the case.

Meanwhile, the DECS investigating committee rendered a decision on August 6, 1991, finding the petitioner-appellees guilty, as charged
and ordering their immediate dismissal.

On August 15, 1991, the trial court dismissed the petition for certiorari and mandamus for lack of merit. Petitioner-appellees moved for a
reconsideration, but their motion was denied on September 11, 1991.

The teachers then filed a petition for certiorari with the Supreme Court which, on February 18, 1992, issued a resolution en banc declaring
void the trial courts order of dismissal and reinstating petitioner-appellees action, even as it ordered the latters reinstatement pending
decision of their case.

Accordingly, on March 25, 1992, the trial court set the case for hearing. June 8, 1992, it issued a pre-trial order which reads:

As prayed for by Solicitor Bernard Hernandez, let this case be set for pre-trial conference on June 17, 1992 at 1:30 p.m., so as to expedite
the proceedings hereof. In which case, DECS Secretary Isidro Cario, as the principal respondent, is hereby ordered to PERSONALLY
APPEAR before this Court on said date and time, with a warning that should he fail to show up on said date, the Court will declare him
as IN DEFAULT. Stated otherwise, for the said Pre-Trial Conference, the Court will not recognize any representative of his.

By agreement of the parties, the trial conference was reset on June 26, 1992. However, Secretary Cario failed to appear in court on the
date set. It was explained that he had to attend a conference in Maragondon, Cavite. Instead, he was represented by Atty. Reno Capinpin,
while the other respondents were represented by Atty. Jocelyn Pili. But the court just the same declared them as in default. The Solicitor
General moved for a reconsideration, reiterating that Cario could not personally come on June 26, 1992 because of prior commitment in
Cavite. It was pointed out that Cario was represented by Atty. Reno Capinpin, while the other respondents were represented by Atty.
Jocelyn Pili, both of the DECS-NCR and that both had special powers of attorney. But the Solicitor Generals motion for reconsideration
was denied by the trial court. In its order of July 15, 1992, the court stated:

The Motion For Reconsideration dated July 3, 1992 filed by the respondents thru counsel, is hereby DENIED for lack of merit. It appears
too obvious that respondents simply did not want to comply with the lawful orders of the Court.

The respondents having lost their standing in Court, the Manifestation and Motion, dated July 3, 1992 filed by the Office of the Solicitor
General is hereby DENIED due course.

SO ORDERED.

On July 3, 1992, the Solicitor General informed the trial court that Cario had ceased to be DECS Secretary and asked for his
substitution. But the court failed to act on his motion.

The hearing of the case was thereafter conducted ex parte with only the teachers allowed to present their evidence.

On August 10, 1992, the trial court rendered a decision, in which it stated:

The Court is in full accord with petitioners contention that Rep. Act No. 4670 otherwise known as the Magna Carta for Public School
Teachers is the primary law that governs the conduct of investigation in administrative cases filed against public school teachers, with
Pres. Decree No. 807 as its supplemental law. Respondents erred in believing and contending that Rep. Act. No. 4670 has already been
superseded by the applicable provisions of Pres. Decree No. 807 and Exec. Order No. 292. Under the Rules of Statutory Construction,
a special law, Rep. Act. No. 4670 in the case at bar, is not regarded as having been replaced by a general law, Pres. Decree No. 807,
unless the intent to repeal or alter the same is manifest. A perusal of Pres. Decree No. 807 reveals no such intention exists, hence, Rep.
Act No. 4670 stands. In the event that there is conflict between a special and a general law, the former shall prevail since it evidences
the legislators intent more clearly than that of the general statute and must be taken as an exception to the General Act. The provision of
Rep. Act No. 4670 therefore prevails over Pres. Decree No. 807 in the composition and selection of the members of the investigating
committee.Consequently, the committee tasked to investigate the charges filed against petitioners was illegally constituted, their
composition and appointment being violative of Sec. 9 of Rep. Act. No. 4670 hence all acts done by said body possess no legal color
whatsoever.

Anent petitioners claim that their dismissal was effected without any formal investigation, the Court, after consideration of the
circumstances surrounding the case, finds such claim meritorious. Although it cannot be gain said that respondents have a cause of
action against the petitioner, the same is not sufficient reason to detract from the necessity of basic fair play. The manner of dismissal of
the teachers is tainted with illegality. It is a dismissal without due process. While there was a semblance of investigation conducted by
the respondents their intention to dismiss petitioners was already manifest when it adopted a procedure provided for by law, by shifting
the burden of proof to the petitioners, knowing fully well that the teachers would boycott the proceedings thereby giving them cause to
render judgment ex-parte.

The DISMISSAL therefore of the teachers is not justified, it being arbitrary and violative of the teachers right to due process. Due process
must be observed in dismissing the teachers because it affects not only their position but also their means of livelihood.

WHEREFORE, premises considered, the present petition is hereby GRANTED and all the questioned orders/decisions of the respondents
are hereby declared NULL and VOID and are hereby SET ASIDE.

The reinstatement of all the petitioners to their former positions without loss of seniority and promotional rights is hereby ORDERED.

The payment, if any, of all the petitioners back salaries, allowances, bonuses, and other benefits and emoluments which may have
accrued to them during the entire period of their preventive suspension and/or dismissal from the service is hereby likewise ORDERED.

SO ORDERED.[5]

From this adverse decision of the trial court, former DECS Secretary Isidro Cario filed an appeal with the Court of Appeals raising the
following grounds:

I. The trial court seriously erred in declaring appellants as in default.

II. The trial court seriously erred in not ordering the proper substitution of parties.

III. The trial court seriously erred in holding that R.A. No. 4670, otherwise known as Magna Carta for Public School Teachers, should
govern the conduct of the investigations conducted.

IV. The trial court seriously erred in ruling that the dismissal of the teachers are without due process. [6]

As mentioned earlier, the Court of Appeals affirmed the RTC decision, holding in the main that private respondents were denied due
process in the administrative proceedings instituted against them.

Hence, this petition for review.[7]

The Issues

Before us, petitioners raise the following issues:

Whether or not Respondent Court of Appeals committed grave abuse of discretion in holding in effect that private respondents were
denied due process of law.

II

Whether or not Respondent Court of Appeals seriously erred and committed grave abuse of discretion in applying strictly the provision of
R.A. No. 4670 in the composition of the investigating committee.

III

Whether or not Respondent Court of Appeals committed grave abuse of discretion in dismissing the appeal and in affirming the trial courts
decision.[8]

These issues, all closely related, boil down to a single question: whether private respondents were denied due process of law.

The Courts Ruling

The petition is bereft of merit. We agree with the Court of Appeals that private respondents were denied due process of law.

Denial of Due Process

At the outset, we must stress that we are tasked only to determine whether or not due process of law was observed in the administrative
proceedings against herein private respondents. We note the Solicitor Generals extensive disquisition that government employees do
not have the right to strike.[9] On this point, the Court, in the case of Bangalisan vs. Court of Appeals,[10] has recently pronounced, through
Mr. Justice Florenz D. Regalado:

It is the settled rule in this jurisdiction that employees in the public service may not engage in strikes. While the Constitution recognizes
the right of government employees to organize, they are prohibited from staging strikes, demonstrations mass leaves, walk-outs and
other forms of mass action which will result in temporary stoppage or disruption of public services. The right of government employees to
organize is limited only to the formation of unions or associations, without including the right to strike.

More recently, in Jacinto vs. Court of Appeals,[11] the Court explained the schoolteachers right to peaceful assembly vis-a-vis their right
to mass protest:

Moreover, the petitioners here, except Merlinda Jacinto, were not penalized for the exercise of their right to assemble peacefully and to
petition the government for a redress of grievances. Rather, the Civil Service Commission found them guilty of conduct prejudicial to the
best interest of the service for having absented themselves without proper authority, from their schools during regular school days, in
order to participate in the mass protest, their absence ineluctably resulting in the non-holding of classes and in the deprivation of students
of education, for which they were responsible. Had petitioners availed themselves of their free time -- recess, after classes, weekends or
holidays -- to dramatize their grievances and to dialogue with the proper authorities within the bounds of law, no one -- not the DECS, the
CSC or even this Court -- could have held them liable for the valid exercise of their constitutionally guaranteed rights. As it was, the
temporary stoppage of classes resulting from their activity necessarily disrupted public services, the very evil sought to be forestalled by
the prohibition against strikes by government workers. Their act by its nature was enjoined by the Civil Service law, rules and regulations,
for which they must, therefore, be made answerable.[12]

In the present case, however, the issue is not whether the private respondents engaged in any prohibited activity which may warrant the
imposition of disciplinary sanctions against them as a result of administrative proceedings. As already observed, the resolution of this
case revolves around the question of due process of law, not on the right of government workers to strike. The issue is not whether private
respondents may be punished for engaging in a prohibited action but whether, in the course of the investigation of the alleged proscribed
activity, their right to due process has been violated. In short, before they can be investigated and meted out any penalty, due process
must first be observed.

In administrative proceedings, due process has been recognized to include the following: (1) the right to actual or constructive notice of
the institution of proceedings which may affect a respondents legal rights; (2) a real opportunity to be heard personally or with the
assistance of counsel, to present witnesses and evidence in ones favor, and to defend ones rights; (3) a tribunal vested with competent
jurisdiction and so constituted as to afford a person charged administratively a reasonable guarantee of honesty as well as
impartiality; and (4) a finding by said tribunal which is supported by substantial evidence submitted for consideration during the hearing
or contained in the records or made known to the parties affected.[13]

The legislature enacted a special law, RA 4670 known as the Magna Carta for Public School Teachers, which specifically covers
administrative proceedings involving public schoolteachers. Section 9 of said law expressly provides that the committee to hear public
schoolteachers administrative cases should be composed of the school superintendent of the division as chairman, a representative of
the local or any existing provincial or national teachers organization and a supervisor of the division. The pertinent provisions of RA 4670
read:

Sec. 8. Safeguards in Disciplinary Procedure. Every teacher shall enjoy equitable safeguards at each stage of any disciplinary procedure
and shall have:

a. the right to be informed, in writing, of the charges;

b. the right to full access to the evidence in the case;

c. the right to defend himself and to be defended by a representative of his choice and/or by his organization, adequate time being given
to the teacher for the preparation of his defense; and

c. the right to appeal to clearly designated authorities. No publicity shall be given to any disciplinary action being taken against a teacher
during the pendency of his case.

Sec. 9. Administrative Charges. Administrative charges against a teacher shall be heard initially by a committee composed of the
corresponding School Superintendent of the Division or a duly authorized representative who would at least have the rank of a division
supervisor, where the teacher belongs, as chairman, a representative of the local or, in its absence, any existing provincial or national
teachers organization and a supervisor of the Division, the last two to be designated by the Director of Public Schools. The committee
shall submit its findings, and recommendations to the Director of Public Schools within thirty days from the termination of the hearings:
Provided, however, That where the school superintendent is the complainant or an interested party, all the members of the committee
shall be appointed by the Secretary of Education.
The foregoing provisions implement the Declaration of Policy of the statute; that is, to promote the terms of employment and career
prospects of schoolteachers.

In the present case, the various committees formed by DECS to hear the administrative charges against private respondents did not
include a representative of the local or, in its absence, any existing provincial or national teachers organization as required by Section 9
of RA 4670. Accordingly, these committees were deemed to have no competent jurisdiction. Thus, all proceedings undertaken by them
were necessarily void. They could not provide any basis for the suspension or dismissal of private respondents. The inclusion of a
representative of a teachers organization in these committees was indispensable to ensure an impartial tribunal. It was this requirement
that would have given substance and meaning to the right to be heard. Indeed, in any proceeding, the essence of procedural due process
is embodied in the basic requirement of notice and a real opportunity to be heard.[14]

Petitioners argue that the DECS complied with Section 9 of RA 4670, because all the teachers who were members of the various
committees are members of either the Quezon City Secondary Teachers Federation or the Quezon City Elementary Teachers
Federation[15] and are deemed to be the representatives of a teachers organization as required by Section 9 of RA 4670.

We disagree. Mere membership of said teachers in their respective teachers organizations does not ipso facto make them authorized
representatives of such organizations as contemplated by Section 9 of RA 4670. Under this section, the teachers organization possesses
the right to indicate its choice of representative to be included by the DECS in the investigating committee. Such right to designate cannot
be usurped by the secretary of education or the director of public schools or their underlings. In the instant case, there is no dispute that
none of the teachers appointed by the DECS as members of its investigating committee was ever designated or authorized by a teachers
organization as its representative in said committee.

Contrary to petitioners asseverations,[16] RA 4670 is applicable to this case. It has not been expressly repealed by the general law PD
807, which was enacted later, nor has it been shown to be inconsistent with the latter. It is a fundamental rule of statutory construction
that repeals by implication are not favored. An implied repeal will not be allowed unless it is convincingly and unambiguously demonstrated
that the two laws are so clearly repugnant and patently inconsistent that they cannot co-exist. This is based on the rationale that the will
of the legislature cannot be overturned by the judicial function of construction and interpretation. Courts cannot take the place of Congress
in repealing statutes. Their function is to try to harmonize, as much as possible, seeming conflicts in the laws and resolve doubts in favor
of their validity and co-existence.[17] Thus, a subsequent general law does not repeal a prior special law, unless the intent to repeal or
alter is manifest, although the terms of the general law are broad enough to include the cases embraced in the special law. [18]

The aforementioned Section 9 of RA 4670, therefore, reflects the legislative intent to impose a standard and a separate set of procedural
requirements in connection with administrative proceedings involving public schoolteachers. Clearly, private respondents right to due
process of law requires compliance with these requirements laid down by RA 4670. Verba legis non est recedendum.

Hence, Respondent Court of Appeals, through Mr. Justice Vicente V. Mendoza who is now a member of this Court, perceptively and
correctly stated:

Respondent-appellants argue that the Magna Carta has been superseded by the Civil Service Decree (P.D. No. 807) and that pursuant
to the latter law the head of a department, like the DECS secretary, or a regional director, like the respondent-appellant Nilo Rosas, can
file administrative charges against a subordinate, investigate him and take disciplinary action against him if warranted by his
findings. Respondent-appellants cite in support of their argument the following provisions of the Civil Service Decree (P.D. No. 807):

Sec. 37. Disciplinary Jurisdiction. --

xxx xxx xxx

b) The heads of departments, agencies and instrumentalities xxx shall have jurisdiction to investigate and decide matters involving
disciplinary action against officers and employees under their jurisdiction xxx .

Sec. 38,. Procedure in Administrative Cases Against Non-Presidential Appointees. -

a) Administrative Proceedings may be commenced against a subordinate officer or the employee by the head of department or officer of
equivalent rank, or head of local government, or chiefs of agencies, or regional directors, or upon sworn, written complaint of any other
persons.

There is really no repugnance between the Civil Service Decree and the Magna Carta for Public School Teachers. Although the Civil
Service Decree gives the head of department or the regional director jurisdiction to investigate and decide disciplinary matters, the fact
is that such power is exercised through committees. In cases involving public school teachers, the Magna Carta provides that the
committee be constituted as follows:

Sec. 9. Administrative Charges. - Administrative charges against a teacher shall be heard initially by a committee composed of the
corresponding School Superintendent of the Division or a duly authorized representative who would at least have the rank of a division
supervisor, where the teacher belongs, as chairman, a representative of the local or, in its absence, any existing provincial or national
teachers organization and a supervisor of the Division, the last two to be designated by the Director of Public Schools. The committee
shall submit its findings, and recommendations to the Director of Public Schools within thirty days from the termination of the hearings:
Provided, however, that where the school superintendent is the complainant or an interested party, all the members of the committee
shall be appointed by the Secretary of Education.

Indeed, in the case at bar, neither the DECS [s]ecretary nor the DECS-NCR regional director personally conducted the investigation but
entrusted it to a committee composed of a division supervisor, secondary and elementary school teachers, and consultants. But there
was no representative of a teachers organization. This is a serious flaw in the composition of the committee because the provision for the
representation of a teachers organization is intended by law for the protection of the rights of teachers facing administrative charges.

There is thus nothing in the Magna Carta that is in any way inconsistent with the Civil Service Decree insofar as procedures for
investigation is concerned. To the contrary, the Civil Service Decree, [S]ec. 38(b) affirms the Magna Carta by providing that the respondent
in an administrative case may ask for a formal investigation, which was what the teachers did in this case by questioning the absence of
a representative of a teachers organization in the investigating committee.

The administrative committee considered the teachers to have waived their right to a hearing after the latters counsel walked out of the
preliminary hearing. The committee should not have made such a ruling because the walk out was staged in protest against the
procedures of the committee and its refusal to give the teachers counsel a copy of the guidelines. The committee concluded its
investigation and ordered the dismissal of the teachers without giving the teachers the right to full access of the evidence against them
and the opportunity to defend themselves. Its predisposition to find petitioner-appellees guilty of the charges was in fact noted by the
Supreme Court when in its resolution in G.R. No. 101943 (Rosario Septimo v. Judge Martin Villarama, Jr.) it stated:

The facts and issues in this case are similar to the facts and issues in Hon. Isidro Cario, et al. v. Hon. Carlos C. Ofilada, et al. G.R. No.
100206, August 22, 1961.

As in the Cario v. Ofilada case, the officials of the Department of Culture and Education are predisposed to summarily hold the petitioners
guilty of the charges against them. In fact, in this case Secretary Cario, without awaiting formal administrative procedures and on the
basis of reports and implied admissions found the petitioners guilty as charged and dismissed them from the service in separate decisions
dated May 16, 1991 and August 6, 1991. The teachers went to court. The Court dismissed the case.[19]

Furthermore, this Court sees no valid reason to disregard the factual findings and conclusions of the Court of Appeals. It is not our function
to assess and evaluate all over again the evidence, testimonial and documentary, adduced by the parties particularly where, such as
here, the findings of both the trial court and the appellate court coincide.[20]

It is as clear as day to us that the Court of Appeals committed no reversible error in affirming the trial courts decision setting aside the
questioned orders of petitioners; and ordering the unqualified reinstatement of private respondents and the payment to them of salaries,
allowances, bonuses and other benefits that accrued to their benefit during the entire duration of their suspension or dismissal.[21] Because
the administrative proceedings involved in this case are void, no delinquency or misconduct may be imputed to private
respondents. Moreover, the suspension or dismissal meted on them is baseless. Private respondents should, as a consequence, be
reinstated[22] and awarded all monetary benefits that may have accrued to them during the period of their unjustified suspension or
dismissal.[23] This Court will never countenance a denial of the fundamental right to due process, which is a cornerstone of our legal
system.

WHEREFORE, premises considered, the petition is hereby DENIED for its utter failure to show any reversible error on the part of the
Court of Appeals. The assailed Decision is thus AFFIRMED.

SO ORDERED.

[G.R. No. 95694. October 9, 1997]

VICENTE VILLLAFLOR, substituted by his heirs, petitioner, vs. COURT OF APPEALS and NASIPIT LUMBER CO.,
INC., respondents.

DECISION

PANGANIBAN ,J.:

In this rather factually complicated case, the Court reiterates the binding force and effect of findings of specialized administrative agencies
as well as those of trial courts when affirmed by the Court of Appeals; rejects petitioners theory of simulation of contracts; and passes
upon the qualifications of private respondent corporation to acquire disposable public agricultural lands prior to the effectivity of the 1973
Constitution.

The Case
Before us is a petition for review on certiorari seeking the reversal of the Decision[1] of the Court of Appeals, dated September 27, 1990,
in C.A. G.R. CV No. 09062, affirming the dismissal by the trial court of Petitioner Vicente Villaflors complaint against Private Respondent
Nasipit Lumber Co., Inc. The disposition of both the trial and the appellate courts are quoted in the statement of facts below.

The Facts

The facts of this case, as narrated in detail by Respondent Court of Appeals, are as follows: [2]

The evidence, testimonial and documentary, presented during the trial show that on January 16, 1940, Cirilo Piencenaves, in a Deed of
Absolute Sale (exh. A), sold to [petitioner], a parcel of agricultural land containing an area of 50 hectares,[3] more or less, and particularly
described and bounded as follows:

A certain parcel of agricultural land planted to abaca with visible concrete monuments marking the boundaries and bounded on the
NORTH by Public Land now Private Deeds on the East by Serafin Villaflor, on the SOUTH by Public Land; and on the West by land
claimed by H. Patete, containing an area of 60 hectares more or less, now under Tax Dec. 29451 in the (sic) of said Vicente Villaflor, the
whole parcel of which this particular parcel is only a part, is assessed at P22,550.00 under the above said Tax Dec. Number.

This deed states:

That the above described land was sold to the said VICENTE VILLAFLOR, xxx on June 22, 1937, but no formal document was then
executed, and since then until the present time, the said Vicente Villaflor has been in possession and occupation of (the same); (and)

That the above described property was before the sale, of my exclusive property having inherited from my long dead parents and my
ownership to it and that of my [sic] lasted for more than fifty (50) years, possessing and occupying same peacefully, publicly and
continuously without interruption for that length of time.

Also on January 16, 1940, Claudio Otero, in a Deed of Absolute Sale (exh. C) sold to Villaflor a parcel of agricultural land, containing an
area of 24 hectares, more or less, and particularly described and bounded as follows:

A certain land planted to corn with visible concrete measurements marking the boundaries and bounded on the North by Public Land and
Tungao Creek; on the East by Agusan River; on the South by Serafin Villaflor and Cirilo Piencenaves; and on the West by land of Fermin
Bacobo containing an area of 24 hectares more or less, under Tax Declaration No. 29451 in the name already of Vicente Villaflor, the
whole parcel of which this particular land is only a part, is assessed at P22,550.00 under the above said Tax Declaration No. 29451.

This deed states:

That the above described land was sold to the said VICENTE VILLAFLOR, xxx on June 22, 1937, but no sound document was then
executed, however since then and until the present time, the said Vicente Villaflor has been in open and continuous possession and
occupation of said land; (and)

That the above described land was before the sale, my own exclusive property, being inherited from my deceased parents, and my
ownership to it and that of my predecessors lasted more than fifty (50) years, possessing and occupying the same, peacefully, openly
and continuously without interruption for that length of time.

Likewise on January 16, 1940, Hermogenes Patete, in a Deed of Absolute Sale (exh. D), sold to Villaflor, a parcel of agricultural land,
containing an area of 20 hectares, more or less, and particularly described and bounded as follows:

A certain parcel of agricultural land planted to abaca and corn with visible concrete monuments marking the boundaries and bounded on
the North by Public Land area-private Road; on the East by land claimed by Cirilo Piencenaves; on the South by Public Land containing
an area of 20 hectares more or less, now under Tax Declaration No. 29451 in the name of Vicente Villaflor the whole parcel of which this
particular parcel, is assessed at P22,550.00 for purposes of taxation under the above said Tax Declaration No. 29451.

This deed states:

xxx (O)n June 22, 1937 but the formal document was then executed, and since then until the present time, the said VICENTE VILLAFLOR
has been in continuous and open possession and occupation of the same; (and)

That the above described property was before the sale, my own and exclusive property, being inherited from my deceased parents and
my ownership to it and that of my predecessors lasted more than fifty (50) years, possessing and occupying same, peacefully, openly
and continuously without interruption for that length of time.

On February 15, 1940, Fermin Bocobo, in a Deed of Absolute Sale (exh. B), sold to Villaflor, a parcel of agricultural land, containing an
area of 18 hectares, more or less, and particularly described and bounded as follows:
A certain parcel of agricultural land planted with abaca with visible part marking the corners and bounded on the North by the corners
and bounded on the North by Public Land; on the East by Cirilo Piencenaves; on the South by Hermogenes Patete and West by Public
Land, containing an area of 18 hectares more or less now under Tax Declaration No. 29451 in the name of Vicente Villaflor. The whole
parcel of which this particular parcel is only a part is assessed as P22,550.00 for purposes of taxation under the above said Tax
Declaration Number (Deed of Absolute Sale executed by Fermin Bocobo date Feb. 15, 1940). This document was annotated in Registry
of Deeds on February 16, 1940).

This deed states:

That the above described property was before the sale of my own exclusive property, being inherited from my deceased parents, and my
ownership to it and that of my predecessors lasted more than fifty (50) years, possessing and occupying the same peacefully, openly and
continuously without interruption for that length of time.

On November 8, 1946, Villaflor, in a Lease Agreement (exh. Q), [4] leased to Nasipit Lumber Co., Inc. a parcel of land, containing an area
of two (2) hectares, together with all the improvements existing thereon, for a period of five (5) years from June 1, 1946 at a rental
of P200.00 per annum to cover the annual rental of house and building sites for thirty three (33) houses or buildings. This agreement also
provides:[5]

3. During the term of this lease, the Lessee is authorized and empowered to build and construct additional houses in addition to the 33
houses or buildings mentioned in the next preceding paragraph, provided however, that for every additional house or building constructed
the Lessee shall pay unto the Lessor an amount of fifty centavos (50) per month for every house or building. The Lessee is empowered
and authorized by the Lessor to sublot (sic) the premises hereby leased or assign the same or any portion of the land herebyleased to
any person, firm and corporation; (and)

4. The Lessee is hereby authorized to make any construction and/or improvement on the premises hereby leased as he may deem
necessary and proper thereon, provided however, that any and all such improvements shall become the property of the Lessor upon the
termination of this lease without obligation on the part of the latter to reimburse the Lessee for expenses incurred in the construction of
the same.

Villaflor claimed having discovered that after the execution of the lease agreement, that Nasipit Lumber in bad faith x x x surreptitiously
grabbed and occupied a big portion of plaintiffs property x x x; that after a confrontation with the corporates (sic) field manager, the latter,
in a letter dated December 3, 1973 (exh. R),[6] stated recalling having made some sort of agreement for the occupancy (of the property
at Acacia, San Mateo), but I no longer recall the details and I had forgotten whether or not we did occupy your land. But if, as you say,
we did occupy it, then (he is ) sure that the company is obligated to pay the rental.

On July 7, 1948, in an Agreement to Sell (exh. 2), Villaflor conveyed to Nasipit Lumber, two (2) parcels of land xxx described as follows: [7]

PARCEL ONE

Bounded on the North by Public Land and Tungao Creek; on the East by Agusan River and Serafin Villaflor; on the South by Public Land,
on the West by Public Land.Improvements thereon consist of abaca, fruit trees, coconuts and thirty houses of mixed materials belonging
to the Nasipit Lumber Company. Divided into Lot Nos. 5412, 5413, 5488, 5490, 5491, 5492, 5850, 5849, 5860, 5855, 5851, 5854, 5855,
5859, 5858, 5857, 5853, and 5852. Boundaries of this parcel of land are marked by concrete monuments of the Bureau of
Lands. Containing an area of 112,000 hectares. Assessed at P17,160.00 according to Tax Declaration No. V-315 dated April 14, 1946.

PARCEL TWO

Bounded on the North by Pagudasan Creek; on the East by Agusan River; on the South by Tungao Creek; on the West by Public
Land. Containing an area of 48,000 hectares more or less. Divided into Lot Nos. 5411, 5410, 5409, and 5399. Improvements 100 coconut
trees, productive, and 300 cacao trees. Boundaries of said land are marked by concrete monuments of the Bureau pf (sic)
Lands. Assessed value -- P6,290.00 according to Tax No. 317, April 14, 1946.

This Agreement to Sell provides:

3. That beginning today, the Party of the Second Part shall continue to occupy the property not anymore in concept of lessee but as
prospective owners, it being the sense of the parties hereto that the Party of the Second Part shall not in any manner be under any
obligation to make any compensation to the Party of the First Part, for the use, and occupation of the property herein before described in
such concept of prospective owner, and it likewise being the sense of the parties hereto to terminate as they do hereby terminate, effective
on the date of this present instrument, the Contract of Lease, otherwise known as Doc. No. 420, Page No. 36, Book No. II, Series of 1946
of Notary Public Gabriel R. Banaag, of the Province of Agusan.

4. That the Party of the Second Part has bound as it does hereby bind itself, its executors and administrators, to pay unto the party of the
First Part the sum of Five Thousand Pesos (P5,000.00), Philippine Currency, upon presentation by the latter to the former of satisfactory
evidence that:
(a) The Bureau of Lands will not have any objection to the obtainment by the Party of the First Part of a Certificate of Torrens Title in his
favor, either thru ordinary land registration proceedings or thru administrative means procedure.

(b) That there is no other private claimant to the properties hereinbefore described.

5. That the Party of the First Part has bound as he does hereby bind to undertake immediately after the execution of these presents to
secure and obtain, or cause to be secured and obtained, a Certificate of Torrens Title in his favor over the properties described on Page
(One) hereof, and after obtainment of such Certificate of Torrens Title, the said Party of the First Part shall execute a (D)eed of Absolute
Sale unto and in favor of the Party of the Second Part, its executors, administrators and assigns, it being the sense of the parties that the
Party of the Second Part upon delivery to it of such deed of absolute sale, shall pay unto the Party of the First Part in cash, the sum of
Twelve Thousand (P12,000.00) Pesos in Philippine Currency, provided, however, that the Party of the First Part, shall be reimbursed by
the Party of the Second Part with one half of the expenses incurred by the Party of the First Part for survey and attorneys fees; and other
incidental expenses not exceeding P300.00.

On December 2, 1948, Villaflor filed Sales Application No. V-807[8] (exh. 1) with the Bureau of Lands, Manila, to purchase under the
provisions of Chapter V, XI or IX of Commonwealth Act. No. 141 (The Public Lands Act), as amended, the tract of public lands x x x and
described as follows: North by Public Land; East by Agusan River and Serafin Villaflor; South by Public Land and West by public land
(Lot Nos. 5379, 5489, 5412, 5490, 5491, 5492, 5849, 5850, 5851, 5413, 5488, 5489, 5852, 5853, 5854, 5855, 5856, 5857, 5858, 5859
and 5860 x x x containing an area of 140 hectares xxx. Paragraph 6 of the Application, states: I understand that this application conveys
no right to occupy the land prior to its approval, and I recognized (sic) that the land covered by the same is of public domain and any and
all rights I may have with respect thereto by virtue of continuous occupation and cultivation are hereby relinquished to the
Government.[9] (exh. 1-D)

On December 7, 1948, Villaflor and Nasipit Lumber executed an Agreement (exh 3). [10] This contract provides:

1. That the First Party is the possessor since 1930 of two (2) parcels of land situated in sitio Tungao, Barrio of San Mateo, Municipality of
Butuan, Province of Agusan;

2. That the first parcel of land abovementioned and described in Plan PLS-97 filed in the office of the Bureau of Lands is made up of Lots
Nos. 5412, 5413, 5488, 5490, 5491, 5492, 5849, 5850, 5851, 5852, 5853, 5854, 5855, 5856, 5857, 5858, 5859 and 5860 and the second
parcel of land is made of Lots Nos. 5399, 5409, 5410 and 5411;

3. That on July 7, 1948, a contract of Agreement to Sell was executed between the contracting parties herein, covering the said two
parcels of land, copy of said Agreement to Sell is hereto attached marked as Annex A and made an integral part of this document. The
parties hereto agree that the said Agreement to Sell be maintained in full force and effect with all its terms and conditions of this present
agreement and in no way be considered as modified.

4. That paragraph 4 of the Contract of Agreement to Sell, marked as annex, A stipulates as follows:

Par. 4. That the Party of the Second Part has bound as it does hereby bind itself, its executors and administrators, to pay unto the Party
of the First Part of the sum of FIVE THOUSAND PESOS (P5,000.00) Philippine Currency, upon presentation by the latter to the former
of satisfactory evidence that:

a) The Bureau of Lands will have any objection to the obtainment by Party of the First Part of a favor, either thru ordinary land registration
proceedings or thru administrative means and procedure.

b) That there is no other private claimant to the properties hereinabove described.

That the First Party has on December 2, 1948, submitted to the Bureau of Lands, a Sales Application for the twenty-two (22) lots
comprising the two abovementioned parcels of land, the said Sales Application was registered in the said Bureau under No. V-807;

6. That in reply to the request made by the First Party to the Bureau of Lands, in connection with the Sales Application No. V-807, the
latter informed the former that action on his request will be expedited, as per letter of the Chief, Public Land Division, dated December 2,
1948, copy of which is hereto attached marked as annex B and made an integral part of this agreement:

7. That for and in consideration of the premises above stated and the amount of TWENTY FOUR THOUSAND (P24,000.00) PESOS that
the Second Party shall pay to the First Party, by these presents, the First Party hereby sells, transfers and conveys unto the Second
Party, its successors and assigns, his right, interest and participation under an(d) by virtue of the Sales Application No. V-807, which he
has or may have in the lots mentioned in said Sales Application No. V-807;

8. That the amount of TWENTY FOUR THOUSAND (P24,000.00) PESOS, shall be paid by the Second Party to the First Party, as follows:
a) The amount of SEVEN THOUSAND (P7,000.00) PESOS, has already been paid by the Second Party to the First Party upon the
execution of the Agreement to Sell, on July 7, 1948;

b) The amount of FIVE THOUSAND (P5,000.00) PESOS shall be paid upon the signing of this present agreement; and

c) The balance of TWELVE THOUSAND (P12,000.00) PESOS, shall be paid upon the execution by the First Party of the Absolute Deed
of Sale of the two parcels of land in question in favor of the Second Party, and upon delivery to the Second Party of the Certificate of
Ownership of the said two parcels of land.

9. It is specially understood that the mortgage constituted by the First Party in favor of the Second Party, as stated in the said contract of
Agreement to Sell dated July 7, 1948, shall cover not only the amount of SEVEN THOUSAND (P7,000.00) PESOS as specified in said
document, but shall also cover the amount of FIVE THOUSAND (P5,000.00) PESOS to be paid as stipulated in paragraph 8, sub-
paragraph (b) of this present agreement, if the First Party should fail to comply with the obligations as provided for in paragraphs 2, 4,
and 5 of the Agreement to Sell;

10. It is further agreed that the First Party obligates himself to sign, execute and deliver to and in favor of the Second Party, its successors
and assigns, at anytime upon demand by the Second Party such other instruments as may be necessary in order to give full effect to this
present agreement;

In the Report dated December 31, 1949 by the public land inspector, District Land Office, Bureau of Lands, in Butuan, the report contains
an Indorsement of the aforesaid District Land Officer recommending rejection of the Sales Application of Villaflor for having leased the
property to another even before he had acquired transmissible rights thereto.

In a letter of Villaflor dated January 23, 1950, addressed to the Bureau of Lands, he informed the Bureau Director that he was already
occupying the property when the Bureaus Agusan River Valley Subdivision Project was inaugurated, that the property was formerly
claimed as private properties (sic), and that therefore, the property was segregated or excluded from disposition because of the claim of
private ownership. In a letter of Nasipit Lumber dated February 22, 1950 (exh. X) [11] addressed to the Director of Lands, the corporation
informed the Bureau that it recognized Villaflor as the real owner, claimant and occupant of the land; that since June 1946, Villaflor leased
two (2) hectares inside the land to the company; that it has no other interest on the land; and that the Sales Application of Villaflor should
be given favorable consideration.

xxx xxx xxx

On July 24, 1950, the scheduled date of auction of the property covered by the Sales Application, Nasipit Lumber offered the highest bid
of P41.00 per hectare, but since an applicant under CA 141, is allowed to equal the bid of the highest bidder, Villaflor tendered an equal
bid, deposited the equivalent of 10% of the bid price and then paid the assessment in full.

xxx xxx xxx

On August 16, 1950, Villaflor executed a document, denominated as a Deed of Relinquishment of Rights (exh. N), [12] pertinent portion of
which reads:

5. That in view of my present business in Manila, and my change in residence from Butuan, Agusan to the City of Manila, I cannot,
therefore, develope (sic) or cultivate the land applied for as projected before;

6. That the Nasipit Lumber Company, Inc., a corporation duly organized xxx is very much interested in acquiring the land covered by the
aforecited application xxx;

7. That I believe the said company is qualified to acquire public land, and has the means to develop (sic) the above-mentioned land;

xxx xxx xxx

WHEREFORE, and in consideration of the amount of FIVE THOUSAND PESOS (P5,000.00) to be reimbursed to me by the
aforementioned Nasipit Lumber Company, Inc., after its receipt of the order of award, the said amount representing part of the purchase
price of the land aforesaid, the value of the improvements I introduced thereon, and the expenses incurred in the publication of the Notice
of Sale, I, the applicant, Vicente J. Villaflor, hereby voluntarily renounce and relinquish whatever rights to, and interests I have in the land
covered by my above-mentioned application in favor of the Nasipit Lumber Company, Inc.

Also on August 16, 1950, Nasipit Lumber filed a Sales Application over the two (2) parcels of land, covering an area of 140 hectares,
more or less. This application was also numbered V-807 (exh. Y).

On August 17, 1950 the Director of Lands issued an Order of Award [13] in favor of Nasipit Lumber Company, Inc., pertinent portion of which
reads:
4. That at the auction sale of the land held on July 24, 1950 the highest bid received was that of Nasipit Lumber Company, In c. which
offered P41.00 per hectare or P5,740.00 for the whole tract, which bid was equaled by applicant Vicente J. Villaflor, who deposited the
amount of P574.00 under Official Receipt No. B-1373826 dated July 24, 1950 which is equivalent to 10% of the bid. Subsequently, the
said xxx Villaflor paid the amount of P5,160.00 in full payment of the purchase price of the above-mentioned land and for some reasons
stated in an instrument of relinquishment dated August 16, 1950, he (Vicente J. Villaflor) relinquished his rights to and interest in the said
land in favor of the Nasipit Lumber Company, Inc. who filed the corresponding application therefore.

In view of the foregoing, and it appearing that the proceedings had xxx were in accordance with law and in [sic] existing regulations, the
land covered thereby is hereby awarded to Nasipit Lumber Company, Inc. at P41.00 per hectare or P5,740.00 for the whole tract.

This application should be entered in the record of this Office as Sales Entry No. V-407.

It is Villaflors claim that he only learned of the Order of Award on January 16, 1974, or after his arrival to the Philippines, coming from
Indonesia, where he stayed for more than ten (10) years; that he went to Butuan City in the latter part of 1973 upon the call of his brother
Serafin Villaflor, who was then sick and learned that Nasipit Lumber (had) failed and refused to pay the agreed rentals, although his
brother was able to collect during the early years; and that Serafin died three days after his (Vicentes) arrival, and so no accounting of
the rentals could be made; that on November 27, 1973, Villaflor wrote a letter to Mr. G.E.C. Mears of Nasipit Lumber, reminding him of
their verbal agreement in 1955 xxx that Mr. Mears in a Reply dated December 3, 1973, appears to have referred the matter to Mr. Noriega,
the corporate general manager, but the new set of corporate officers refused to recognize (Villaflors) claim, for Mr. Florencio Tamesis,
the general manager of Nasipit Lumber, in a letter dated February 19, 1974, denied Villaflors itemized claim dated January 5, 1974 (exh.
V) to be without valid and legal basis. In that 5th January, 1974 letter, Villaflor claimed the total amount of P427,000.00 x x x.

In a formal protest dated January 31, 1974[14] which Villaflor filed with the Bureau of Lands, he protested the Sales Application of Nasipit
Lumber, claiming that the company has not paid him P5,000.00 as provided in the Deed of Relinquishment of Rights dated August 16,
1950.

xxx xxx xxx

x x x (T)hat in a Decision dated August 8, 1977 (exh. 8), the Director of Lands found that the payment of the amount of P5,000.00 in the
Deed xxx and the consideration in the Agreement to Sell were duly proven, and ordered the dismissal of Villaflors protest and gave due
course to the Sales Application of Nasipit Lumber. Pertinent portion of the Decision penned by Director of Lands, Ramon Casanova, in
the Matter of SP No. V-807 (C-V-407) xxx reads:

xxx xxx xxx

During the proceedings, Villaflor presented another claim entirely different from his previous claim -- this time, for recovery of rentals in
arrears arising from a supposed contract of lease by Villaflor as lessor in favor of Nasipit as lessee, and indemnity for damages supposedly
caused improvements on his other property xxx in the staggering amount of Seventeen Million (P17,000,000.00) Pesos. Earlier, he had
also demanded from NASIPIT xxx (P427,000.00) xxx also as indemnity for damages to improvements supposedly caused by NASIPIT
on his other real property as well as for reimbursement of realty taxes allegedly paid by him thereon.

xxx xxx xxx

It would seem that xxx Villaflor has sought to inject so many collaterals, if not extraneous claims, into this case. It is the considered opinion
of this Office that any claim not within the sphere or scope of its adjudicatory authority as an administrative as well as quasi-judicial body
or any issue which seeks to delve into the merits of incidents clearly outside of the administrative competence of this Office to decide
may not be entertained.

There is no merit in the contention of Villaflor that owing to Nasipits failure to pay the amount of xxx (P5,000.00) xxx (assuming that
Nasipit had failed) the deed of relinquishment became null and void for lack of consideration. xxxx.

xxx xxx xxx

x x x The records clearly show, however, that since the execution of the deed of relinquishment xxx Villaflor has always considered and
recognized NASIPIT as having the juridical personality to acquire public lands for agricultural purposes. xxxx.

xxx xxx xxx

Even this Office had not failed to recognize the juridical personality of NASIPIT to apply for the purchase of public lands xxx when it
awarded to it the land so relinquished by Villaflor (Order of Award dated August 17, 1950) and accepted its application therefor. At any
rate, the question whether an applicant is qualified to apply for the acquisition of public lands is a matter between the applicant and this
Office to decide and which a third party like Villaflor has no personality to question beyond merely calling the attention of this Office
thereto.
xxx xxx xxx

Villaflor offered no evidence to support his claim of non-payment beyond his own self-serving assertions and expressions that he had not
been paid said amount. As protestant in this case, he has the affirmative of the issue. He is obliged to prove his allegations, otherwise
his action will fail. For, it is a well settled principle () that if plaintiff upon whom rests the burden of proving his cause of action fails to show
in a satisfactory manner the facts upon which he bases his claim, the defendant is under no obligation to prove his exceptions or special
defenses (Belen vs. Belen, 13 Phil. 202; Mendoza vs. Fulgencio, 8 Phil. 243).

xxx xxx xxx

Consequently, Villaflors claim that he had not been paid must perforce fail.

On the other hand, there are strong and compelling reasons to presume that Villaflor had already been paid the amount of Five Thousand
(P5,000.00) Pesos.

First, xxx What is surprising, however, is not so much his claims consisting of gigantic amounts as his having forgotten to adduce evidence
to prove his claim of non-payment of the Five Thousand (P5,000.00) Pesos during the investigation proceedings when he had all the time
and opportunity to do so. xxx The fact that he did not adduce or even attempt to adduce evidence in support thereof shows either that he
had no evidence to offer xxx that NASIPIT had already paid him in fact. What is worse is that Villaflor did not even bother to command
payment, orally or in writing, of the Five Thousand (P5,000.00) Pesos which was supposed to be due him since August 17, 1950, the
date when the order of award was issued to Nasipit, and when his cause of action to recover payment had accrued. The fact that he only
made a command (sic) for payment on January 31, 1974, when he filed his protest or twenty-four (24) years later is immediately nugatory
of his claim for non-payment.

But Villaflor maintains that he had no knowledge or notice that the order of award had already been issued to NASIPIT as he had gone
to Indonesia and he had been absent from the Philippines during all those twenty-four (24) years. This of course taxes credulity. xxx.

Second, it should be understood that the condition that NASIPIT should reimburse Villaflor the amount of Five Thousand (P5,000.00)
Pesos upon its receipt of the order of award was fulfilled as said award was issued to NASIPIT on August 17, 1950. The said deed of
relinquishment was prepared and notarized in Manila with Villaflor and NASIPIT signing the instrument also in Manila on August 16, 1950
(p.77, (sic)). The following day or barely a day after that, or on August 17, 1950, the order of award was issued by this Office to
NASIPIT also in Manila. Now, considering that Villaflor is presumed to be more assiduous in following up with the Bureau of Lands the
expeditious issuance of the order of award as the payment of the Five Thousand (P5,000.00) Pesos (consideration) would depend on
the issuance of said order to award NASIPIT, would it not be reasonable to believe that Villaflor was at hand when the award was issued
to NASIPIT on August 17, 1950, or barely a day which (sic) he executed the deed of relinquishment on August 16, 1950, in Manila? xxx.

Third, on the other hand, NASIPIT has in his possession a sort of order upon itself -- (the deed of relinquishment wherein he (sic) obligated
itself to reimburse or pay Villaflor the xxx consideration of the relinquishment upon its receipt of the order of award) for the payment of
the aforesaid amount the moment the order of award is issued to it. It is reasonable to presume that NASIPIT has paid the Five Thousand
(P5,000.00) Pesos to Villaflor.

A person in possession of an order on himself for the payment of money, or the delivery of anything, has paid the money or delivered the
thing accordingly. (Section 5(k) B-131-Revised Rules of Court.

It should be noted that NASIPIT did not produce direct evidence as proof of its payment of the Five Thousand (P5,000.00) Pesos to
Villaflor. Nasipits explanation on this point is found satisfactory.

x x x (I)t was virtually impossible for NASIPIT, after the lapse of the intervening 24 years, to be able to cope up with all the records
necessary to show that the consideration for the deed of relinquishment had been fully paid. To expect NASIPIT to keep intact all records
pertinent to the transaction for the whole quarter of a century would be to require what even the law does not. Indeed, even the applicable
law itself (Sec. 337, National Internal Revenue Code) requires that all records of corporations be preserved for only a maximum of five
years.

NASIPIT may well have added that at any rate while there are transactions where the proper evidence is impossible or extremely difficult
to produce after the lapse of time xxx the law creates presumptions of regularity in favor of such transactions (20 Am. Jur. 232) so that
when the basic fact is established in an action the existence of the presumed fact must be assumed by force of law. (Rule 13, Uniform
Rules of Evidence; 9 Wigmore, Sec. 2491).

Anent Villaflors claim that the 140-hectare land relinquished and awarded to NASIPIT is his private property, little (need) be said. xxxx
The tracks of land referred to therein are not identical to the lands awarded to NASIPIT. Even in the assumption that the lands mentioned
in the deeds of transfer are the same as the 140-hectare area awarded to NASIPIT, their purchase by Villaflor (or) the latters occupation
of the same did not change the character of the land from that of public land to a private property. The provision of the law is specific that
public lands can only be acquired in the manner provided for therein and not otherwise (Sec. 11, C.A. No. 141, as amended). The records
show that Villaflor had applied for the purchase of the lands in question with this Office (Sales Application No. V-807) on December 2,
1948. xxxx There is a condition in the sales application signed by Villaflor to the effect that he recognizes that the land covered by the
same is of public domain and any and all rights he may have with respect thereto by virtue of continuous occupation and cultivation are
relinquished to the Government (paragraph 6, Sales Application No. V-807 xxx) of which Villaflor is very much aware. It also appears that
Villaflor had paid for the publication fees appurtenant to the sale of the land. He participated in the public auction where he was declared
the successful bidder. He had fully paid the purchase prive (sic) thereof (sic). It would be a (sic) height of absurdity for Villaflor to be
buying that which is owned by him if his claim of private ownership thereof is to be believed. The most that can be said is that his
possession was merely that of a sales applicant to when it had not been awarded because he relinquished his interest therein in favor of
NASIPIT who (sic) filed a sales application therefor.

xxx xxx xxx

x x x During the investigation proceedings, Villaflor presented as his Exhibit (sic) (which NASIPIT adopted as its own exhibit and had it
marked in evidence as Exhibit 1) a duly notarized agreement to Sell dated July 7, 1948, by virtue of which Villaflor undertook to sell to
Nasipit the tracts of land mentioned therein, for a consideration of Twenty-Four Thousand (P24,000.00) Pesos. Said tracts of land have
been verified to be identical to the parcels of land formerly applied for by Villaflor and which the latter had relinquished in favor of NASIPIT
under a deed of relinquishment executed by him on August 16, 1950. In another document executed on December 7, 1948 xxx Villaflor
as FIRST PARTY and NASIPIT as SECOND PARTY confirmed the Agreement to Sell of July 7, 1948, which was maintained in full force
and effect with all its terms and conditions x x x (Exh. 38-A); and that for and in consideration of xxx TWENTY FOUR THOUSAND
(P24,000.00) PESOS that the Second Party shall pay to the First Party xxx the First Party hereby sells, transfers and conveys unto the
Second Party xxx his right interest and participation under and by virtue of the Sales Application No. V-807 and, in its paragraph 8, it
made stipulations as to when part of the said consideration xxx was paid and when the balance was to be paid, to wit:

a) the amount of SEVEN THOUSAND xxx PESOS has already been paid by the Second Party to the First Party upon the execution of
the Agreement to Sell, on July 17, 1948;

b) the amount of FIVE THOUSAND xxx PESOS shall be paid upon the signing of this present agreement; and

c) the amount of TWELVE THOUSAND xxx PESOS, shall be paid upon the execution by the First Party of the Absolute Sale of the Two
parcels of land in question in favor of the Second Party of the Certificate of Ownership of the said two parcels of land. (Exh. 38-B).
(Emphasis ours)

It is thus clear from this subsequent document marked Exhibit 38 ANALCO that of the consideration of the Agreement to Sell dated July7,
1948, involving the 140-hectare area relinquished by Villaflor in favor of NASIPIT, in the amount of Twenty-Four Thousand (P24,000.00)
Pesos:

(1) the amount of Seven Thousand (P7,000.00) Pesos was already paid upon the execution of the Agreement to Sell on July 7, 1948,
receipt of which incidentally was admitted by Villaflor in the document of December 7, 1948;

(2) the amount of Five Thousand (P5,000.00) Pesos was paid when said document was signed by Vicente J. Villaflor as the First Party
and Nasipit thru its President, as the Second Party, on December 7, 1948; and

(3) the balance of Twelve Thousand (P12,000.00) Pesos to be paid upon the execution by the First Party of the Absolute Deed of Sale
of the two parcels of land in favor of the Second Party, and upon delivery to the Second Party of the Certificate of Ownership of the said
two parcels of land.

Villaflor contends that NASIPIT could not have paid Villaflor the balance of Twelve Thousand (P12,000.00) Pesos x x x consideration in
the Agreement to Sell will only be paid to applicant-assignor (referring to Villaflor) upon obtaining a Torrens Title in his favor over the 140-
hectare of land applied for and upon execution by him of a Deed of Absolute Sale in favor of Nasipit Lumber Company, Inc. x x x. Inasmuch
as applicant-assignor was not able to obtain a Torrens Title over the land in question he could not execute an absolute Deed of (sic)
Nasipit Lumber Co., Inc. Hence, the Agreement to Sell was not carried out and no Twelve Thousand (P12,000.00) Pesos was overpaid
either to the applicant-assignor, much less to Howard J. Nell Company. (See MEMORANDUM FOR THE APPLICANT-ASSIGNOR, dated
January 5, 1977). xxx.

xxx Villaflor did not adduce evidence in support of his claim that he had not been paid the xxx (P12,000.00) xxx consideration of the
Agreement to Sell dated July 7, 1948 (Exh. 38 NALCO) beyond his mere uncorroborated assertions. On the other hand, there is strong
evidence to show that said Twelve Thousand (P12,000.00) Pesos had been paid by (private respondent) to Edward J. Nell Company by
virtue of the Deed of Assignment of Credit executed by Villaflor (Exh. 41 NALCO) for the credit of the latter.

Atty. Gabriel Banaag, resident counsel of NASIPIT who is in a position to know the facts, testified for NASIPIT. He described that it was
he who notarized the Agreement to Sell (Exh. F); that he knew about the execution of the document of December 7, 1948 (Exh. 38)
confirming the said Agreement to Sell having been previously consulted thereon by Jose Fernandez, who signed said document on behalf
of NASIPIT xxx that subsequently, in January 1949, Villaflor executed a Deed of Assignment of credit in favor of Edward J. Nell Company
(Exh. 41 NALCO) whereby Villaflor ceded to the latter his receivable for NASIPIT corresponding to the remaining balance in the amount
of Twelve Thousand xxx Pesos of the total consideration xxx stipulated in both the Agreement to Sell (Exh. F) and the document dated
December 7, 1948 (Exh. 39); xxx. He further testified that the said assignment of credit was communicated to (private respondent) under
cover letter dated January 24, 1949 (Exh. 41-A) and not long thereafter, by virtue of the said assignment of credit, (private respondent)
paid the balance of Twelve Thousand xxx due to Villaflor to Edward J. Nell Company xxx. Atty. Banaags aforesaid testimony stand
unrebutted; hence, must be given full weight and credit. xxx Villaflor and his counsel were present when Atty. Banaags foregoing testimony
was given. Yet, Villaflor did not demur, nor did he rebut the same, despite having been accorded full opportunity to do so.

xxx xxx xxx

Having found that both the Five Thousand xxx consideration of the deed of Relinquishment xxx and that the remaining balance of xxx
(P12,000.00) to complete the Twenty-Four Thousand (P24,000.00) Pesos consideration of both the Agreement to Sell dated July 7, 1948,
and the document, dated December 7, 1948, executed by the former in favor of the latter, have been paid Villaflor the issue on prescription
and laches becomes academic and needs no further discussion.

But more than all the questions thus far raised and resolved is the question whether a sales patent can be issued to NASIPIT for the 140-
hectare area awarded to it in the light of Section 11, Article XIV of the new Constitution which provides in its pertinent portion to wit:

x x x No private corporation or association may hold alienable land of the public domain except by lease not to exceed one thousand
hectares in area xxx.

The Secretary of Justice had previous occasion to rule on this point in his opinion No. 140, s. 1974. Said the Honorable Justice Secretary:

On the second question, (referring to the questions when may a public land be considered to have been acquired by purchase before the
effectivity of the new Constitution posed by the Director of Lands in his query on the effect on pending applications for the issuance of
sales patent in the light of Section 11, Art. XIV of the New Constitution aforecited), you refer to this Offices Opinion No. 64 series of 1973
in which I stated:

On the other hand, with respect to sales applications ready for issuance of sales patent, it is my opinion that where the applicant had,
before the Constitution took effect, fully complied with all this obligations under the Public Land Act in order to entitle him to a Sales
patent, there would be no legal or equitable justification for refusing to issue or release the sales patent.

With respect to the point as to when the Sales applicant has complied with all the terms and conditions which would entitle him to a sales
patent, the herein above Secretary of Justice went on:

That as to when the applicant has complied with all the terms and conditions which would entitle him to a patent is a questioned (sic) fact
which your office would be in the best position to determine. However, relating this to the procedure for the processing of applications
mentioned above, I think that as the applicant has fulfilled the construction/cultivation requirements and has fully paid the purchase price,
he should be deemed to have acquired by purchase the particular tract of land and (sic) the area (sic) in the provision in question of the
new constitution would not apply.

From the decision of the Director of Lands, Villaflor filed a Motion for Reconsideration which was considered as an Appeal M.N.R. Case
4341, to the Ministry of Natural Resources.

On June 6, 1979, the Minister of Natural Resources rendered a Decision (exh. 9),[15] dismissing the appeal and affirming the decision of
the Director of Lands, pertinent portions of which reads:

After a careful study of the records and the arguments of the parties, we believe that the appeal is not well taken.

Firstly, the area in dispute is not the private property of appellant.

The evidence adduced by appellant to establish his claim of ownership over the subject area consists of deeds of absolute sale executed
in his favor on January 16, and February 15, 1940, by four (4) different persons, namely, Cirilo Piencenaves, Fermin Balobo, Claudio
Otero and Hermogenes Patete.

However, an examination of the technical descriptions of the tracts of land subject of the deeds of sale will disclose that said parcels are
not identical to, and do not tally with, the area in controversy.

It is a basic assumption of our policy that lands of whatever classification belong to the state. Unless alienated in accordance with law, it
retains its rights over the same as dominus, (Santiago vs. de los Santos, L-20241, November 22, 1974, 61 SCRA 152).

For, it is well-settled that no public land can be acquired by private persons without any grant, express or implied from the government. It
is indispensable then that there be showing of title from the state or any other mode of acquisition recognized by law. (Lee Hong Hok, et
al. vs. David, et al., L-30389, December 27, 1972, 48 SCRA 379.)
It is well-settled that all lands remain part of the public domain unless severed therefrom by state grant or unless alienated in accordance
with law.

We, therefore, believe that the aforesaid deeds of sale do not constitute clear and convincing evidence to establish that the contested
area is of private ownership. Hence, the property must be held to be public domain.

There being no evidence whatever that the property in question was ever acquired by the applicants or their ancestors either by
composition title from the Spanish Government or by possessory information title or by any other means for the acquisition of public lands,
the property must be held to be public domain. (Lee Hong Hok, et al., vs. David , et al., L-30389 December 27, 1972, 48 SCRA 378-379
citing Heirs of Datu Pendatun vs. Director of Lands; see also Director of Lands vs. Reyes, L-27594, November 28, 1975, 68 SCRA 177).

Be that as it may, appellant, by filing a sales application over the controverted land, acknowledged unequivocably [sic] that the same is
not his private property.

As such sales applicant, appellant manifestly acknowledged that he does not own the land and that the same is a public land u nder the
administration of the Bureau of Lands, to which the application was submitted, xxx All of its acts prior thereof, including its real estate tax
declarations, characterized its possessions of the land as that of a sales applicant and consequently, as one who expects to buy it, but
has not as yet done so, and is not, therefore, its owner. (Palawan Agricultural and Industrial Co., Inc. vs. Director of Lands, L-25914,
March 21, 1972, 44 SCRA 20, 21).

Secondly, appellants alleged failure to pay the consideration stipulated in the deed of relinquishment neither converts said deed into one
without a cause or consideration nor ipso facto rescinds the same. Appellant, though, has the right to demand payment with legal interest
for the delay or to demand rescission.

xxx xxx xxx

However, appellants cause of action, either for specific performance or rescission of contract, with damages, lies within the jurisdiction of
civil courts, not with administrative bodies.

xxx xxx xxx

Lastly, appellee has acquired a vested right to the subject area and, therefore, is deemed not affected by the new constitutional provision
that no private corporation may hold alienable land of the public domain except by lease.

xxx xxx xxx

Implementing the aforesaid Opinion No. 64 of the Secretary of Justice, the then Secretary of Agriculture and Natural Resources issued a
memorandum, dated February 18, 1974, which pertinently reads as follows:

In the implementation of the foregoing opinion, sales application of private individuals covering areas in excess of 24 hectares and those
of corporations, associations, or partnership which fall under any of the following categories shall be given due course and issued patents,
to wit:

1. Sales application for fishponds and for agricultural purposes (SFA, SA and IGPSA) wherein prior to January 17, 1973;

a. the land covered thereby was awarded;

b. cultivation requirements of law were complied with as shown by investigation reports submitted prior to January 17, 1973;

c. land was surveyed and survey returns already submitted to the Director of Lands for verification and approval; and

d. purchase price was fully paid.

From the records, it is evident that the aforestated requisites have been complied with by appellee long before January 17, 1973, the
effectivity of the New Constitution. To restate, the disputed area was awarded to appellee on August 17, 1950, the purchase price was
fully paid on July 26, 1951, the cultivation requirements were complied with as per investigation report dated December 31, 1949, and
the land was surveyed under Pls-97.

On July 6, 1978, petitioner filed a complaint[16] in the trial court for Declaration of Nullity of Contract (Deed of Relinquishment of Rights),
Recovery of Possession (of two parcels of land subject of the contract), and Damages at about the same time that he appealed the
decision of the Minister of Natural Resources to the Office of the President.
On January 28, 1983, petitioner died. The trial court ordered his widow, Lourdes D. Villaflor, to be substituted as petitioner. After trial in
due course, the then Court of First Instance of Agusan del Norte and Butuan City, Branch III, [17] dismissed the complaint on the grounds
that: (1) petitioner admitted the due execution and genuineness of the contract and was estopped from proving its nullity, (2) the verbal
lease agreements were unenforceable under Article 1403 (2)(e) of the Civil Code, and (3) his causes of action were barred by extinctive
prescription and/or laches. It ruled that there was prescription and/or laches because the alleged verbal lease ended in 1966, but the
action was filed only on January 6, 1978. The six-year period within which to file an action on an oral contract per Article 1145 (1) of the
Civil Code expired in 1972. The decretal portion[18] of the trial courts decision reads:

WHEREFORE, the foregoing premises duly considered, judgment is hereby rendered in favor of the defendant and against the
plaintiff. Consequently, this case is hereby ordered DISMISSED. The defendant is hereby declared the lawful actual physical possessor-
occupant and having a better right of possession over the two (2) parcels of land in litigation described in par. 1.2 of the complaint as
Parcel I and Parcel II, containing a total area of One Hundred Sixty (160) hectares, and was then the subject of the Sales Application No.
V-807 of the plaintiff (Exhibits 1, 1-A, 1-B, pp. 421 to 421-A, Record), and now of the Sales Application No. 807, Entry No. V-407 of the
defendant Nasipit Lumber Company (Exhibit Y, pp. 357-358, Record). The Agreements to Sell Real Rights, Exhibits 2 to 2-C, 3 to 3-B,
and the Deed of Relinquishment of Rights, Exhibits N to N-1, over the two parcels of land in litigation are hereby declared binding between
the plaintiff and the defendant, their successors and assigns.

Double the costs against the plaintiff.

The heirs of petitioner appealed to Respondent Court of Appeals[19] which, however, rendered judgment against petitioner via the assailed
Decision dated September 27, 1990 finding petitioners prayers -- (1) for the declaration of nullity of the deed of relinquishment, (2) for the
eviction of private respondent from the property and (3) for the declaration of petitioners heirs as owners to be without basis. The decretal
portion[20] of the assailed 49-page, single-spaced Decision curtly reads:

WHEREFORE, the Decision appealed from, is hereby AFFIRMED, with costs against plaintiff-appellants.

Not satisfied, petitioners heirs filed the instant 57-page petition for review dated December 7, 1990. In a Resolution dated June 23, 1991,
the Court denied this petition for being late. On reconsideration -- upon plea of counsel that petitioners were poor and that a full decision
on the merits should be rendered -- the Court reinstated the petition and required comment from private respondent. Eventually, the
petition was granted due course and the parties thus filed their respective memoranda.

The Issues

Petitioner, through his heirs, attributes the following errors to the Court of Appeals:

I. Are the findings of the Court of Appeals conclusive and binding upon the Supreme Court?

II. Are the findings of the Court of Appeals fortified by the similar findings made by the Director of Lands and the Minister of Natural
Resources (as well as by the Office of the President)?

III. Was there forum shopping?

IV. Are the findings of facts of the Court of Appeals and the trial court supported by the evidence and the law?

V. Are the findings of the Court of Appeals supported by the very terms of the contracts which were under consideration by the said court?

VI. Did the Court of Appeals, in construing the subject contracts, consider the contemporaneous and subsequent act of the parties
pursuant to article 1371 of the Civil Code?

VII. Did the Court of Appeals consider the fact and the unrefuted claim of Villaflor that he never knew of the award in favor of Nasipit?

VIII. Did the Court of Appeals correctly apply the rules on evidence in its findings that Villaflor was paid the P5,000.00 consideration
because Villaflor did not adduce any proof that he was not paid?

IX. Is the Court of Appeals conclusion that the contract is not simulated or fictitious simply because it is genuine and duly executed by
the parties, supported by logic or the law?

X. May the prestations in a contract agreeing to transfer certain rights constitute estoppel when this very contract is the subject of an
action for annulment on the ground that it is fictitious?

XI. Is the Court of Appeals conclusion that the lease agreement between Villaflor is verbal and therefore, unenforceable supported by the
evidence and the law?
After a review of the various submissions of the parties, particularly those of petitioner, this Court believes and holds that the issues can
be condensed into three as follows:

(1) Did the Court of Appeals err in adopting or relying on the factual findings of the Bureau of Lands, especially those affirmed by the
Minister (now Secretary) of Natural Resources and the trial court?

(2) Did the Court of Appeals err in upholding the validity of the contracts to sell and the deed of relinquishment? Otherwise stated, did the
Court of Appeals err in finding the deed of relinquishment of rights and the contracts to sell valid, and not simulated or fictitious?

(3) Is the private respondent qualified to acquire title over the disputed property?

The Courts Ruling

The petition is bereft of merit. It basically questions the sufficiency of the evidence relied upon by the Court of Appeals, alleging that public
respondents factual findings were based on speculations, surmises and conjectures. Petitioner insists that a review of those findings is
in order because they were allegedly (1) rooted, not on specific evidence, but on conclusions and inferences of the Director of Lands
which were, in turn, based on misapprehension of the applicable law on simulated contracts; (2) arrived at whimsically -- totally ignoring
the substantial and admitted fact that petitioner was not notified of the award in favor of private respondent; and (3) grounded on errors
and misapprehensions, particularly those relating to the identity of the disputed area.

First Issue: Primary Jurisdiction of the Director of Lands and Finality of Factual Findings of the Court of Appeals

Underlying the rulings of the trial and appellate courts is the doctrine of primary jurisdiction; i.e., courts cannot and will not resolve a
controversy involving a question which is within the jurisdiction of an administrative tribunal, especially where the question demands the
exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to
determine technical and intricate matters of fact.[21]

In recent years, it has been the jurisprudential trend to apply this doctrine to cases involving matters that demand the special competence
of administrative agencies even if the question involved is also judicial in character. It applies where a claim is originally cognizable in the
courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have
been placed within the special competence of an administrative body; in such case, the judicial process is suspended pending referral of
such issues to the administrative body for its view.[22]

In cases where the doctrine of primary jurisdiction is clearly applicable, the court cannot arrogate unto itself the authority to resolve a
controversy, the jurisdiction over which is initially lodged with an administrative body of special competence.[23] In Machete vs. Court of
Appeals, the Court upheld the primary jurisdiction of the Department of Agrarian Reform Adjudicatory Board (DARAB) in an agrarian
dispute over the payment of back rentals under a leasehold contract. [24] In Concerned Officials of the Metropolitan Waterworks and
Sewerage System vs. Vasquez,[25] the Court recognized that the MWSS was in the best position to evaluate and to decide which bid for
a waterworks project was compatible with its development plan.

The rationale underlying the doctrine of primary jurisdiction finds application in this case, since the questions on the identity of the land in
dispute and the factual qualification of private respondent as an awardee of a sales application require a technical determination by the
Bureau of Lands as the administrative agency with the expertise to determine such matters. Because these issues preclude prior judicial
determination, it behooves the courts to stand aside even when they apparently have statutory power to proceed, in recognition of the
primary jurisdiction of the administrative agency. [26]

One thrust of the multiplication of administrative agencies is that the interpretation of contracts and the determination of private rights
thereunder is no longer a uniquely judicial function, exercisable only by our regular courts [27]

Petitioner initiated his action with a protest before the Bureau of Lands and followed it through in the Ministry of Natural Resources and
thereafter in the Office of the President. Consistent with the doctrine of primary jurisdiction, the trial and the appellate courts had reason
to rely on the findings of these specialized administrative bodies.

The primary jurisdiction of the director of lands and the minister of natural resources over the issues regarding the identity of the disputed
land and the qualification of an awardee of a sales patent is established by Sections 3 and 4 of Commonwealth Act No. 141, also known
as the Public Land Act:

Section 3. The Secretary of Agriculture and Commerce (now Secretary of Natural Resources) shall be the executive officer charged with
carrying out the provisions of this Act through the Director of Lands, who shall act under his immediate control.

Section 4. Subject to said control, the Director of Lands shall have direct executive control of the survey, classification, lease, sale or any
other form of concession or disposition and management of the lands of the public domain, and his decision as to questions of fact shall
be conclusive when approved by the Secretary of Agriculture and Commerce.
Thus, the Director of Lands, in his decision, said: [28]

x x x It is merely whether or not Villaflor has been paid the Five Thousand (P5,000.00) Pesos stipulated consideration of the deed of
relinquishment made by him without touching on the nature of the deed of relinquishment. The administration and disposition of public
lands is primarily vested in the Director of Lands and ultimately with the Secretary of Agriculture and Natural Resources (now Secretary
of Natural Resources), and to this end--

Our Supreme Court has recognized that the Director of Lands is a quasi-judicial officer who passes on issues of mixed facts and law
(Ortua vs. Bingson Encarnacion, 59 Phil 440).Sections 3 and 4 of the Public Land Law thus mean that the Secretary of Agriculture and
Natural Resources shall be the final arbiter on questions of fact in public land conflicts (Heirs of Varela vs. Aquino, 71 Phil 69; Julian vs.
Apostol, 52 Phil 442).

The ruling of this Office in its order dated September 10, 1975, is worth reiterating, thus:

x x x it is our opinion that in the exercise of his power of executive control, administrative disposition and allegation of public land, the
Director of Lands should entertain the protest of Villaflor and conduct formal investigation xxx to determine the following points: (a) whether
or not the Nasipit Lumber Company, Inc. paid or reimbursed to Villaflor the consideration of the rights in the amount of P5,000.00 and
what evidence the company has to prove payment, the relinquishment of rights being part of the administrative process in the disposition
of the land in question xxx.

xxxx Besides, the authority of the Director of Lands to pass upon and determine questions considered inherent in or essential to the
efficient exercise of his powers like the incident at issue, i.e. , whether Villaflor had been paid or not, is conceded by law.

Reliance by the trial and the appellate courts on the factual findings of the Director of Lands and the Minister of Natural Resources is not
misplaced. By reason of the special knowledge and expertise of said administrative agencies over matters falling under their jurisdiction,
they are in a better position to pass judgment thereon; thus, their findings of fact in that regard are generally accorded great respect, if
not finality,[29] by the courts.[30] The findings of fact of an administrative agency must be respected as long as they are supported by
substantial evidence, even if such evidence might not be overwhelming or even preponderant. It is not the task of an appellate court to
weigh once more the evidence submitted before the administrative body and to substitute its own judgment for that of the administrative
agency in respect of sufficiency of evidence.[31]

However, the rule that factual findings of an administrative agency are accorded respect and even finality by courts admits of
exceptions. This is true also in assessing factual findings of lower courts.[32] It is incumbent on the petitioner to show that the resolution
of the factual issues by the administrative agency and/or by the trial court falls under any of the exceptions. Otherwise, this Court will not
disturb such findings.[33]

We mention and quote extensively from the rulings of the Bureau of Lands and the Minister of Natural Resources because the points,
questions and issues raised by petitioner before the trial court, the appellate court and now before this Court are basically the same as
those brought up before the aforesaid specialized administrative agencies. As held by the Court of Appeals:[34]

We find that the contentious points raised by appellant in this action, are substantially the same matters he raised in BL Claim No. 873
(N). In both actions, he claimed private ownership over the land in question, assailed the validity and effectiveness of the Deed of
Relinquishment of Rights he executed in August 16, 1950, that he had not been paid the P5,000.00 consideration, the value of the
improvements he introduced on the land and other expenses incurred by him.

In this instance, both the principle of primary jurisdiction of administrative agencies and the doctrine of finality of factual findings of the
trial courts, particularly when affirmed by the Court of Appeals as in this case, militate against petitioners cause. Indeed, petitioner has
not given us sufficient reason to deviate from them.

Land in Dispute Is Public Land

Petitioner argues that even if the technical description in the deeds of sale and those in the sales application were not identical, the area
in dispute remains his private property. He alleges that the deeds did not contain any technical description, as they were executed prior
to the survey conducted by the Bureau of Lands; thus, the properties sold were merely described by reference to natural boundaries. His
private ownership thereof was also allegedly attested to by private respondents former field manager in the latters February 22, 1950
letter, which contained an admission that the land leased by private respondent was covered by the sales application.

This contention is specious. The lack of technical description did not prove that the finding of the Director of Lands lacked substantial
evidence. Here, the issue is not so much whether the subject land is identical with the property purchased by petitioner. The issue, rather,
is whether the land covered by the sales application is private or public land. In his sales application, petitioner expressly admitted that
said property was public land. This is formidable evidence as it amounts to an admission against interest.

In the exercise of his primary jurisdiction over the issue, Director of Lands Casanova ruled that the land was public:[35]
x x x Even (o)n the assumption that the lands mentioned in the deeds of transfer are the same as the 140-hectare area awarded to
Nasipit, their purchase by Villaflor (or) the latters occupation of the same did not change the character of the land from that of public land
to a private property. The provision of the law is specific that public lands can only be acquired in the manner provided for therein and not
otherwise (Sec. 11, C.A. No. 141, as amended). The records show that Villaflor had applied for the purchase of lands in question with
this Office (Sales Application No. V-807) on December 2, 1948. xxx There is a condition in the sales application xxx to the effect that he
recognizes that the land covered by the same is of public domain and any and all rights he may have with respect thereto by virtue of
continuous occupation and cultivation are relinquished to the Government (paragraph 6, Sales Application No. V-807 of Vicente J. Villaflor,
p. 21, carpeta) of which Villaflor is very much aware. It also appears that Villaflor had paid for the publication fees appurtenant to the sale
of the land. He participated in the public auction where he was declared the successful bidder. He had fully paid the purchase prive (sic)
thereor (sic). It would be a (sic) height of absurdity for Villaflor to be buying that which is owned by him if his claim of private ownership
thereof is to be believed. xxx.

This finding was affirmed by the Minister of Natural Resources: [36]

Firstly, the area in dispute is not the private property of appellant (herein petitioner).

The evidence adduced by (petitioner) to establish his claim of ownership over the subject area consists of deeds of absolute sale executed
in his favor xxx.

However, an examination of the technical descriptions of the tracts of land subject of the deeds of sale will disclose that said parcels are
not identical to, and do not tally with, the area in controversy.

It is a basic assumption of our policy that lands of whatever classification belong to the state. Unless alienated in accordance with law, it
retains its rights over the same as dominus. (Santiago vs. de los Santos, L-20241, November 22, 1974, 61 SCRA 152).

For it is well-settled that no public land can be acquired by private persons without any grant, express or implied from the government. It
is indispensable then that there be showing of title from the state or any other mode of acquisition recognized by law. (Lee Hong Hok, et
al. vs. David, et al., L-30389, December 27, 1972, 48 SCRA 379).

xxx xxx xxx xxx

We, therefore, believe that the aforesaid deeds of sale do not constitute clear and convincing evidence to establish that the contested
area is of private ownership. Hence, the property must be held to be public domain.

There being no evidence whatever that the property in question was ever acquired by the applicants or their ancestors either by
composition title from the Spanish Government or by possessory information title or by any other means for the acquisition of public lands,
the property must be held to be public domain.

Be that as it may, [petitioner], by filing a sales application over the controverted land, acknowledged unequivocably [sic] that the same is
not his private property.

As such sales applicant manifestly acknowledged that he does not own the land and that the same is a public land under the administration
of the Bureau of Lands, to which the application was submitted, xxx All of its acts prior thereof, including its real estate tax declarations,
characterized its possessions of the land as that of a sales applicant. And consequently, as one who expects to buy it, but has not as yet
done so, and is not, therefore, its owner.(Palawan Agricultural and Industrial Co., Inc. vs. Director of Lands, L-25914, March 21, 1972, 44
SCRA 15).

Clearly, this issue falls under the primary jurisdiction of the Director of Lands because its resolution requires survey, classification, xxx
disposition and management of the lands of the public domain. It follows that his rulings deserve great respect. As petitioner failed to
show that this factual finding of the Director of Lands was unsupported by substantial evidence, it assumes finality. Thus, both the trial
and the appellate courts correctly relied on such finding. [37] We can do no less.

Second Issue: No Simulation of Contracts Proven

Petitioner insists that contrary to Article 1371 [38] of the Civil Code, Respondent Court erroneously ignored the contemporaneous and
subsequent acts of the parties; hence, it failed to ascertain their true intentions. However, the rule on the interpretation of contracts that
was alluded to by petitioner is used in affirming, not negating, their validity. Thus, Article 1373, [39] which is a conjunct of Article 1371,
provides that, if the instrument is susceptible of two or more interpretations, the interpretation which will make it valid and effectual should
be adopted. In this light, it is not difficult to understand that the legal basis urged by petitioner does not support his allegation that the
contracts to sell and the deed of relinquishment are simulated and fictitious. Properly understood, such rules on interpretation even negate
petitioners thesis.

But let us indulge the petitioner awhile and determine whether the cited contemporaneous and subsequent acts of the parties support his
allegation of simulation. Petitioner asserts that the relinquishment of rights and the agreements to sell were simulated because, first, the
language and terms of said contracts negated private respondents acquisition of ownership of the land in issue; and second,
contemporaneous and subsequent communications between him and private respondent allegedly showed that the latter admitted that
petitioner owned and occupied the two parcels; i.e., that private respondent was not applying for said parcels but was interested only in
the two hectares it had leased, and that private respondent supported petitioners application for a patent.

Petitioner explains that the Agreement to Sell dated December 7, 1948 did not and could not transfer ownership because paragraph 8
(c) thereof stipulates that the balance of twelve thousand pesos (P12,000.00) shall be paid upon the execution by the First Party
[petitioner] of the Absolute Deed of Sale of the two parcels of land in question in favor of the Second Party, and upon delivery to the
Second Party [private respondent] of the Certificate of Ownership of the said two parcels of land. The mortgage provisions in paragraphs
6 and 7 of the agreement state that the P7,000.00 and P5,000.00 were earnest money or a loan with antichresis by the free occupancy
and use given to Nasipit of the 140 hectares of land not anymore as a lessee. If the agreement to sell transferred ownership to Nasipit,
then why was it necessary to require petitioner, in a second agreement, to mortgage his property in the event of nonfulfillment of the
prestations in the first agreement?

True, the agreement to sell did not absolutely transfer ownership of the land to private respondent. This fact, however, does not show
that the agreement was simulated. Petitioners delivery of the Certificate of Ownership and execution of the deed of absolute sale were
suspensive conditions, which gave rise to a corresponding obligation on the part of the private respondent, i.e., the payment of the last
installment of the consideration mentioned in the December 7, 1948 Agreement. Such conditions did not affect the perfection of the
contract or prove simulation. Neither did the mortgage.

Simulation occurs when an apparent contract is a declaration of a fictitious will, deliberately made by agreement of the parties, in order
to produce, for the purpose of deception, the appearance of a juridical act which does not exist or is different from that which was really
executed.[40] Such an intention is not apparent in the agreements. The intent to sell, on the other hand, is as clear as daylight.

Petitioner alleges further that the deed of relinquishment of right did not give full effect to the two agreements to sell, because the
preliminary clauses of the deed allegedly served only to give private respondent an interest in the property as a future owner thereof and
to enable respondent to follow up petitioners sales application.

We disagree. Such an intention is not indicated in the deed. On the contrary, a real and factual sale is evident in paragraph 6 thereof,
which states: That the Nasipit Lumber Co., Inc., xxx is very much interested in acquiring the land covered by the aforecited application to
be used for purposes of mechanized farming and the penultimate paragraph stating: xxx VICENTE J. VILLAFLOR, hereby voluntarily
renounce and relinquish whatever rights to, and interests I have in the land covered by my above-mentioned application in favor of the
Nasipit Lumber Co., Inc.

We also hold that no simulation is shown either in the letter, dated December 3, 1973, of the former field manager of private respondent,
George Mear. A pertinent portion of the letter reads:

(a)s regards your property at Acacia, San Mateo, I recall that we made some sort of agreement for the occupancy, but I no longer recall
the details and I had forgotten whether or not we actually did occupy your land. But if, as you say, we did occupy it, then I am sure that
the Company is obligated to pay a rental.

The letter did not contain any express admission that private respondent was still leasing the land from petitioner as of that date. According
to Mear, he could no longer recall the details of his agreement with petitioner. This cannot be read as evidence of the simulation of either
the deed of relinquishment or the agreements to sell. It is evidence merely of an honest lack of recollection.

Petitioner also alleges that he continued to pay realty taxes on the land even after the execution of said contracts. This is immaterial
because payment of realty taxes does not necessarily prove ownership, much less simulation of said contracts. [41]

Nonpayment of the Consideration

Did Not Prove Simulation

Petitioner insists that nonpayment of the consideration in the contracts proves their simulation. We disagree. Nonpayment, at most, gives
him only the right to sue for collection. Generally, in a contract of sale, payment of the price is a resolutory condition and the remedy of
the seller is to exact fulfillment or, in case of a substantial breach, to rescind the contract under Article 1191 of the Civil Code.[42] However,
failure to pay is not even a breach, but merely an event which prevents the vendors obligation to convey title from acquiring binding
force.[43]

Petitioner also argues that Respondent Court violated evidentiary rules in upholding the ruling of the Director of Lands that petitioner did
not present evidence to show private respondents failure to pay him. We disagree. Prior to the amendment of the rules on evidence on
March 14, 1989, Section 1, Rule 131, states that each party must prove his or her own affirmative allegations. [44] Thus, the burden of
proof in any cause rested upon the party who, as determined by the pleadings or the nature of the case, asserts the affirmative of an
issue and remains there until the termination of the action.[45] Although nonpayment is a negative fact which need not be proved, the party
seeking payment is still required to prove the existence of the debt and the fact that it is already due.[46]
Petitioner showed the existence of the obligation with the presentation of the contracts, but did not present any evidence that he demanded
payment from private respondent. The demand letters dated January 2 and 5, 1974 (Exhs. J and U), adduced in evidence by petitioner,
were for the payment of back rentals, damages to improvements and reimbursement of acquisition costs and realty taxes, not payment
arising from the contract to sell.

Thus, we cannot fault Respondent Court for adopting the finding of the Director of Lands that petitioner offered no evidence to support
his claim of nonpayment beyond his own self-serving assertions, as he did not even demand payment, orally or in writing, of the five
thousand (P5,000.00) pesos which was supposed to be due him since August 17, 1950, the date when the order of award was issued to
Nasipit, and when his cause of action to recover payment had accrued. Nonpayment of the consideration in the contracts to sell or the
deed of relinquishment was raised for the first time in the protest filed with the Bureau of Lands on January 31, 1974. But this protest
letter was not the demand letter required by law.

Petitioner alleges that the assignment of credit and the letter of the former field manager of private respondent are contemporaneous and
subsequent acts revealing the nonpayment of the consideration. He maintains that the P12,000.00 credit assigned pertains to
the P5,000.00 and P7,000.00 initial payments in the December 7, 1948 Agreement, because the balance of P12,000.00 was not yet due
and accruing. This is consistent, he argues, with the representation that private respondent was not interested in filing a sales application
over the land in issue and that Nasipit was instead supporting petitioners application thereto inMears letter to the Director of Lands dated
February 22, 1950 (Exh. X).[47]

This argument is too strained to be acceptable. The assignment of credit did not establish the nondelivery of these initial payments of the
total consideration.First, the assignment of credit happened on January 19, 1949, or a month after the signing of the December 7, 1948
Agreement and almost six months after the July 7, 1948 Agreement to Sell. Second, it does not overcome the recitation in the Agreement
of December 7, 1948: xxx a) The amount of SEVEN THOUSAND (P7,000.00) PESOS has already been paid by the Second Party to the
First Party upon the execution of the Agreement to Sell, on July 7, 1948; b) The amount of FIVE THOUSAND (P5,000.00) PESOS shall
be paid upon the signing of this present agreement; xxx.

Aside from these facts, the Director of Lands found evidence of greater weight showing that payment was actually made: [48]

x x x (T)here is strong evidence to show that said xxx (P12,000.00) had been paid by NASIPIT to Edward J. Nell Company by virtue of
the Deed of Assignment of Credit executed by Villaflor (Exh. 41 NALCO) for the credit of the latter.

Atty. Gabriel Banaag, resident counsel of NASIPIT xxx declared that it was he who notarized the Agreement to Sell (Exh. F); xxxx that
subsequently, in January 1949, Villaflor executed a Deed of Assignment of credit in favor of Edward J. Nell Company (Exh. 41 NALCO)
whereby Villaflor ceded to the latter his receivable for NASIPIT corresponding to the remaining balance in the amount of xxx (P12,000.00)
xxx of the total consideration xxxx; He further testified that the said assignment xxx was communicated to NASIPIT under cover letter
dated January 24, 1949 (Exh. 41-A) and not long thereafter, by virtue of the said assignment of credit, NASIPIT paid the balance xxx to
Edward J. Nell Company (p. 58, bid). Atty. Banaags aforesaid testimony stand unrebutted; hence, must be given full weight and credit.

xxx xxx xxx.

The Director of Lands also found that there had been payment of the consideration in the relinquishment of rights: [49]

On the other hand, there are strong and compelling reasons to presume that Villaflor had already been paid the amount of Five Thousand
(P5,000.00) Pesos.

First, x x x What is surprising, however, is not so much his claims consisting of gigantic amounts as his having forgotten to adduce
evidence to prove his claim of non-payment of the Five Thousand (P5,000.00) Pesos during the investigation proceedings when he had
all the time and opportunity to do so. xxxx The fact that he did not adduce or even attempt to adduce evidence in support thereof shows
either that he had no evidence to offer of that NASIPIT had already paid him in fact. What is worse is that Villaflor did not even bother to
command payment, orally or in writing, of the Five Thousand (P5,000.00) Pesos which was supposed to be due him since August 17,
1950, the date when the order of award was issued to Nasipit, and when his cause of action to recover payment had accrued. The fact
that he only made a command for payment on January 31, 1974, when he filed his protest or twenty-four (24) years later is immediately
nugatory of his claim for non-payment.

But Villaflor maintains that he had no knowledge or notice that the order of award had already been issued to NASIPIT as he had gone
to Indonesia and he had been absent from the Philippines during all those twenty-four (24) years. This of course taxes credulity.xxxx

x x x It is more in keeping with the ordinary course of things that he should have acquired information as to what was transpiring in his
affairs in Manila x x x.

Second, it should be understood that the condition that NASIPIT should reimburse Villaflor the amount of Five Thousand (P5,000.00)
Pesos upon its receipt of the order of award was fulfilled as said award was issued to NASIPIT on August 17, 1950. The said deed of
relinquishment was prepared and notarized in Manila with Villaflor and NASIPIT signing the instrument also in Manila. Now, considering
that Villaflor is presumed to be more assiduous in following up with the Bureau of Lands the expeditious issuance of the order of award
as the (consideration) would depend on the issuance of said order to award NASIPIT, would it not be reasonable to believe that Villaflor
was at hand when the award was issued to NASIPIT on August 17, 1950, or barely a day which he executed the deed of relinquishment
on August 16, 1950, in Manila? xxxx.

Third, on the other hand, NASIPIT has in his possession a sort of order upon itself -- (the deed of relinquishment wherein he(sic) obligated
itself to reimburse or pay Villaflor the xxx consideration of the relinquishment upon its receipt of the order of award) for the payment of
the aforesaid amount the moment the order of award is issued to it. It is reasonable to presume that NASIPIT has paid the (consideration)
to Villaflor.

xxx xxx xxx

x x x (I)t was virtually impossible for NASIPIT, after the lapse of the intervening 24 years, to be able to cope up with all the records
necessary to show that the consideration for the deed of relinquishment had been fully paid. To expect NASIPIT to keep intact all records
pertinent to the transaction for the whole quarter of a century would be to require what even the law does not. Indeed, even the applicable
law itself (Sec. 337, National Internal Revenue Code) requires that all records of corporations be preserved for only a maximum of five
years.

NASIPIT may well have added that at any rate while there are transactions where the proper evidence is impossible or extremely difficult
to produce after the lapse of time xxx the law creates presumptions of regularity in favor of such transactions (20 Am. Jur. 232) so that
when the basic fact is established in an action the existence of the presumed fact must be assumed by force of law. (Rule 13, Uniform
Rules of Evidence; 9 Wigmore, Sec. 2491).

The Court also notes that Mears letter of February 22, 1950 was sent six months prior to the execution of the deed of relinquishment of
right. At the time of its writing, private respondent had not perfected its ownership of the land to be able to qualify as a sales
applicant. Besides, although he was a party to the July 7, 1948 Agreement to Sell, Mear was not a signatory to the Deed of Relinquishment
or to the December 7, 1948 Agreement to Sell. Thus, he cannot be expected to know the existence of and the amendments to the later
contracts. These circumstances explain the mistaken representations, not misrepresentations, in said letter.

Lack of Notice of the Award

Petitioner insists that private respondent suppressed evidence, pointing to his not having been notified of the Order of Award dated August
17, 1950.[50] At the bottom of page 2 of the order, petitioner was not listed as one of the parties who were to be furnished a copy by
Director of Lands Jose P. Dans. Petitioner also posits that Public Land Inspector Sulpicio A. Taeza irregularly received the copies for both
private respondent and the city treasurer of Butuan City. The lack of notice for petitioner can be easily explained. Plainly, petitioner was
not entitled to said notice of award from the Director of Lands, because by then, he had already relinquished his rights to the disputed
land in favor of private respondent. In the heading of the order, he was referred to as sales applicant-assignor. In paragraph number 4,
the order stated that, on August 16, 1950, he relinquished his rights to the land subject of the award to private respondent. From such
date, the sales application was considered to be a matter between the Bureau of Lands and private respondent only. Considering these
facts, the failure to give petitioner a copy of the notice of the award cannot be considered as suppression of evidence. [51] Furthermore,
this order was in fact available to petitioner and had been referred to by him since January 31, 1974 when he filed his protest with the
Bureau of Lands.[52]

Third Issue: Private Respondent Qualified

for an Award of Public Land

Petitioner asserts that private respondent was legally disqualified from acquiring the parcels of land in question because it was not
authorized by its charter to acquire disposable public agricultural lands under Sections 121, 122 and 123 of the Public Land Act, prior to
its amendment by P.D. No. 763. We disagree. The requirements for a sales application under the Public Land Act are: (1) the possession
of the qualifications required by said Act (under Section 29) and (2) the lack of the disqualifications mentioned therein (under Sections
121, 122, and 123). However, the transfer of ownership via the two agreements dated July 7 and December 7, 1948 and the
relinquishment of rights, being private contracts, were binding only between petitioner and private respondent. The Public Land Act finds
no relevance because the disputed land was covered by said Act only after the issuance of the order of award in favor of private
respondent. Thus, the possession of any disqualification by private respondent under said Act is immaterial to the private contracts
between the parties thereto. (We are not, however, suggesting a departure from the rule that laws are deemed written in
contracts.) Consideration of said provisions of the Act will further show their inapplicability to these contracts. Section 121 of the Act
pertains to acquisitions of public land by a corporation from a grantee, but petitioner never became a grantee of the disputed land. On
the other hand, private respondent itself was the direct grantee. Sections 122 and 123 disqualify corporations, which are not authorized
by their charter, from acquiring public land; the records do not show that private respondent was not so authorized under its charter.

Also, the determination by the Director of Lands and the Minister of Natural Resources of the qualification of private respondent to become
an awardee or grantee under the Act is persuasive on Respondent Court. In Espinosa vs. Makalintal,[53] the Court ruled that, by law, the
powers of the Secretary of Agriculture and Natural Resources regarding the disposition of public lands -- including the approval, rejection,
and reinstatement of applications are of executive and administrative nature. (Such powers, however, do not include the judicial power
to decide controversies arising from disagreements in civil or contractual relations between the litigants.) Consequently, the determination
of whether private respondent is qualified to become an awardee of public land under C.A. 141 by sales application is included therein.

All told, the only disqualification that can be imputed to private respondent is the prohibition in the 1973 Constitution against the holding
of alienable lands of the public domain by corporations. [54] However, this Court earlier settled the matter, ruling that said constitutional
prohibition had no retroactive effect and could not prevail over a vested right to the land. In Ayog vs. Cusi, Jr.,[55] this Court declared:

We hold that the said constitutional prohibition has no retroactive application to the sales application of Bian Development Co., Inc.
because it had already acquired a vested right to the land applied for at the time the 1973 Constitution took effect.

That vested right has to be respected. It could not be abrogated by the new Constitution. Section 2, Article XIII of the 1935 Constitution
allows private corporations to purchase public agricultural lands not exceeding one thousand and twenty-four hectares. Petitioners
prohibition action is barred by the doctrine of vested rights in constitutional law.

A right is vested when the right to enjoyment has become the property of some particular person or persons as a present interest. (16
C.J.S. 1173). It is the privilege to enjoy property legally vested, to enforce contracts, and enjoy the rights of property conferred by existing
law (12 C.J. 955, Note 46, No. 6) or some right or interest in property which has become fixed and established and is no longer open to
doubt or controversy (Downs vs. Blount, 170 Fed. 15, 20, cited in Balboa vs. Farrales, 51 Phil. 498, 502).

The due process clause prohibits the annihilation of vested rights. A state may not impair vested rights by legislative enactment, by the
enactment or by the subsequent repeal of a municipal ordinance, or by a change in the constitution of the State, except in a legitimate
exercise of the police power (16 C.J.S. 1177-78).

It has been observed that, generally, the term vested right expresses the concept of present fixed interest, which in right reason and
natural justice should be protected against arbitrary State action, or an innately just an imperative right which an enlightened free society,
sensitive to inherent and irrefragable individual rights, cannot deny (16 C.J.S. 1174, Note 71, No. 5, citing Pennsylvania Greyhound Lines,
Inc. vs. Rosenthal, 192 Atl. 2nd 587).

Secretary of Justice Abad Santos in his 1973 opinion ruled that where the applicant, before the Constitution took effect, had fully complied
with all his obligations under the Public Land Act in order to entitle him to a sales patent, there would seem to be no legal or equitable
justification for refusing to issue or release the sales patent (p. 254, Rollo).

In Opinion No. 140, series of 1974, he held that as soon as the applicant had fulfilled the construction or cultivation requirements and has
fully paid the purchase price, he should be deemed to have acquired by purchase the particular tract of land and to him the area limitation
in the new Constitution would not apply.

In Opinion No. 185, series of 1976, Secretary Abad Santos held that where the cultivation requirements were fulfilled before the new
Constitution took effect but the full payment of the price was completed after January 17, 1973, the applicant was, nevertheless, entitled
to a sales patent (p. 256, Rollo).

Such a contemporaneous construction of the constitutional prohibition by a high executive official carries great weight and should be
accorded much respect. It is a correct interpretation of section 11 of Article XIV.

In the instant case, it is incontestable that prior to the effectivity of the 1973 Constitution the right of the corporation to purchase the land
in question had become fixed and established and was no longer open to doubt or controversy.

Its compliance with the requirements of the Public Land Law for the issuance of a patent had the effect of segregating the said land from
the public domain. The corporations right to obtain a patent for that land is protected by law. It cannot be deprived of that right without
due process (Director of Lands vs. CA, 123 Phil. 919).

The Minister of Natural Resources ruled, and we agree, that private respondent was similarly qualified to become an awardee of the
disputed land because its rights to it vested prior to the effectivity of the 1973 Constitution: [56]

Lastly, appellee has acquired a vested right to the subject area and, therefore, is deemed not affected by the new constitutional provision
that no private corporation may hold alienable land of the public domain except by lease.

It may be recalled that the Secretary of Justice in his Opinion No. 64, series of 1973, had declared, to wit:

On the other hand, with respect to sales application ready for issuance of sales patent, it is my opinion that where the applicant had,
before, the constitution took effect, fully complied with all his obligations under the Public Land act in order to entitle him to sales patent,
there would seem to be not legal or equitable justification for refusing to issue or release the sales patent.
Implementing the aforesaid Opinion No. 64 xxx, the then Secretary of Agriculture and Natural Resources issued a memorandum, dated
February 18, 1974, which pertinently reads as follows:

In the implementation of the foregoing opinion, sales application of private individuals covering areas in excess of 24 hectares and those
of corporations, associations, or partnership which fall under any of the following categories shall be given due course and issued patents,
to wit:

Sales application for fishponds and for agricultural purposes (SFA, SA and IGPSA) wherein prior to January 17, 1973,

a. the land covered thereby was awarded;

b. cultivation requirements of law were complied with as shown by investigation reports submitted prior to January 17, 1973;

c. land was surveyed and survey returns already submitted to the Director of Lands for verification and approval; and

d. purchase price was fully paid.

From the records, it is evident that the aforestated requisites have been complied with by appellee long before January 17, 1973, the
effectivity of the New Constitution. To restate, the disputed area was awarded to appellee on August 17, 1950, the purchase price was
fully paid on July 26, 1951, the cultivation requirements were complied with as per investigation report dated December 31, 1949, and
the land was surveyed under Pls-97.

The same finding was earlier made by the Director of Lands:[57]

It is further contended by Villaflor that Nasipit has no juridical personality to apply for the purchase of public lands for agricultural
purposes. The records clearly show, however, that since the execution of the deed of relinquishment of August 16, 1950, in favor of
Nasipit, Villaflor has always considered and recognized Nasipit as having the juridical personality to acquire public lands for agricultural
purposes. In the deed of relinquishment xxx, it is stated:

6. That the Nasipit Lumber Co., Inc., a corporation duly organized in accordance with the laws of the Philippines, x x x.

Even this Office had not failed to recognize the juridical personality of Nasipit to apply for the purchase of public lands xxx when it awarded
to it the land so relinquished by Villaflor (Order of Award dated August 17, 1950) and accepted its application therefor. At any rate, the
question whether an applicant is qualified to apply for the acquisition of public lands is a matter between the applicant and this Office to
decide and which a third party like Villaflor has no personality to question beyond merely calling the attention of this Office thereto.

Needless to say, we also agree that the November 8, 1946 Lease Agreement between petitioner and private respondent had been
terminated by the agreements to sell and the relinquishment of rights. By the time the verbal leases were allegedly made in 1951 and
1955,[58] the disputed land had already been acquired and awarded to private respondent. In any event, petitioners cause of action on
these alleged lease agreements prescribed long before he filed Civil Case No. 2072-III, as correctly found by the trial and appellate
courts.[59] Thus, it is no longer important, in this case, to pass upon the issue of whether or not amendments to a lease contract can be
proven by parol evidence. The same holds true as regards the issue of forum-shopping.

All in all, petitioner has not provided us sufficient reason to disturb the cogent findings of the Director of Lands, the Minister of Natural
Resources, the trial court and the Court of Appeals.

WHEREFORE, the petition is hereby DISMISSED.

SO ORDERED.

G.R. No. 93540 December 13, 1999

FULGENCIO S. FACTORAN, JR., Secretary, Department of Environment and Natural Resources, VICENTE A. ROBLES and
NESTOR GAPUZAN, petitioners,
vs.
COURT OF APPEALS (Third Division), Hon. BENIGNO T. DAYAW, as, Judge, Regional Trial Court of Quezon City, Branch 80,
JESUS SY and LILY FRANCISCO UY, respondents.

DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision and Resolution of the Court of Appeals dated March 30, 1990 and May 18,
1990, respectively, dismissing petitioners' charge that Honorable Benigno T. Dayaw, Presiding Judge of Branch 80 of the Regional Trial
Court (RTC) of Quezon City, committed grave abuse of discretion in ordering them to deliver to private respondents the six-wheeler truck
and its cargo, some 4,000 board feet of narra lumber which were confiscated by the Department of Environment and Natural Resources
(DENR) and forfeited in favor of the government. 1

The antecedent facts:

On August 9, 1988, two (2) police officers of the Marikina Police Station, Sub-Station III, intercepted a six-wheeler truck, with Plate No.
NJT-881, carrying 4,000 board feet of narra lumber as it was cruising along the Marcos Highway. They apprehended the truck driver,
private respondent Jesus Sy, and brought the truck and its cargo to the Personnel Investigation Committee/Special Actions and
Investigation Division (PIC/SAID) of the DENR Office in Quezon City. There, petitioner Atty. Vecente Robies of the PIC/SAID investigated
them, and discovered the following discrepancies in the documentaion of the narra lumber: 2

a. What were declared in the documents (Certificate of Timber Origin, Auxiliary Invoices and various Certifications)
were narra flitches, while the cargo of the truck consisted of narra lumber;

b. As appearing in the documents, the Plate Numbers of the truck supposed to carry the forest products bear the
numbers BAX-404, PEC-492 OR NSN-267, while the Plate Number of the truck apprehended is NVT-881;

c. Considering that the cargo is lumber, the transport should have been accompanied by a Certificate of Lumber Origin,
scale sheet of said lumber and not by a Certificate of Timber Origin, which merely covers only transport of logs and
flitches;

d. The log Sale Purchase Agreement presented is between DSM Golden Cup International as the seller and Bonamy
Enterprises as the buyer/consignee and not with Lily Francisco Lumber and Hardware. 3

which are in violation of Bureau of Forestry Development (BFD) Circular No. 10. The said BFD Circular requires possession or
transportation of lumber to be supported by the following documents: (1) Certificate of Lumber Origin (CLO) which shall be issued only
be the District Forester, or in his absence, the Assistant District Forester; (2) Sales Invoice; (3) Delivery Receipt; and (4) Tally
Sheets. 4 Such omission is punishable under Sec. 68 of Presidential Decree (P.D.) No. 705 otherwise known as the Revised Forestry
Code. 5 Thus, petitioner Atty. Robles issued a temporary seizure order and seizure receipt for the narra lumber and the six-wheeler truck. 6

On January 20, 1989, petitioner Fulgencio S. Factoran, then Secretary of Environment and Natural Resources (hereinafter referred to as
petitioner Secretary) issued an order for the confiscation of the narra lumber and the six- wheeler truck. 7

Private respondents neither asked for reconsideration of nor appealed, the said order to the Office of the President. Consequently, the
confiscated narra lumber and six-wheeler truck were forfeited in favor of the government. They were subsequently advertised to be sold
at public auction on March 20, 1989. 8

On March 17, 1989, private respondents filed a complaint with prayer for the issuance of writs of replevin and preliminary injunction and/or
temporary restraining order for the recovery of the confiscated lumber and six-wheeler truck, and to enjoin the planned auction sale of
the subject narra lumber, respectively. 9 Said complaint was docketed as Civil Case No. Q-89-2045 and raffled to Branch 80 of the RTC
of Quezon City.

On the same day, the trial court issued an Order directing petitioners to desist from proceeding with the planned auction sale and setting
the hearing for the issuance of the writ of preliminary injunction on March 27, 1989. 10

On March 20, 1989, the scheduled date of the auction sale, private respondents filed an Ex-Parte Motion for Release and Return of
Goods and Documents (Replevin) supported by an Affidavit for Issuance of Writ of Replevin and Preliminary Injunction and a Replevin
Bond in the amount of P180,000.00. 11 The trial court granted the writ of replevin on the same day and directed the petitioners "to deliver
the . . . [n]arra lumber, original documents and truck with plate no. NJT 881 to the custody of the plaintiffs and/or their representative . . .
.12

On March 22, 1989, the trial court issued a writ of seizure. However, petitioners refused to comply therewith. 13David G. Brodett, Sheriff
of Branch 80 of the RTC of Quezon City (hereinafter referred to as the Sheriff) reported that petitioners prevented him from removing the
subject properties from the DENR Compound and transferring them to the Mobil Unit Compound of the Quezon City Police Force. To
avoid any unwarranted confrontation between them, he just agreed to a constructive possession of the properties in question. 14

In the afternoon of the same day, petitioners filed a Manifestation stating their intention to file a counterbond under Rule 60 of the Rules
of Court to stay the execution of the writ of seizure and to post a cash bond in the amount of P180,000.00. But the trial court did not oblige
petitioners for they failed to serve a copy of the Manifestation on private respondents. Petitioners then immediately made the required
service and tendered the cash counterbond in the amount of P180,000.00, but it was refused, petitioners' Manifestation having already
been set for hearing on March 30, 1989. 15
 16
On March 27, 1989, petitioners made another attempt to post a counterbond which was, however, denied for the same reason.

17
On the same day, private respondents filed a motion to declare petitioners in contempt for disobeying the writ of seizure. The trial court
gave petitioners twenty-four (24) hours to answer the motion. Hearing thereon was scheduled on March 30, 1989.

However, on March 29, 1989, petitioners filed with the Court of Appeals a Petition for Certiorari, Prohibition and/or Mandamus to annul
the Orders of the trial court dated March 20, 1989 and March 27, 1989. 18

On March 30, 1989, the Court of Appeals granted petitioners temporary relief in the form of a temporary restraining order (TRO).

On September 11, 1989, the Court of Appeals converted the TRO into a writ of preliminary injunction upon filing by petitioners of a bond
in the amount of P180,000.00. 19

However, on March 30, 1990, the Court of Appeals lifted the writ of preliminary injunction and dismissed the petition. It declared that as
the complaint for replevin filed by private respondents complied with the requirements of an affidavit and bond under Secs. 1 and 2 of
Rule 60 of the Revised Rules of court, issuance of the writ of replevin was mandatory. 20

As for the contempt charges against petitioners, the Court of Appeals believed the same were sufficiently based on a written charge by
private respondents and the report submitted by the Sheriff. 21

On April 25, 1990, petitioners filed a motion for reconsideration of the foregoing decision. However, that motion was denied by the Court
of Appeals in its Resolution dated May 18, 1990. 22

Hence this petition.

On the one hand, petitioners contend, thus:

23
(1) Confiscated lumber cannot be subject of replevin.

(2) Petitioners not compelled to criminally prosecute private respondents but may opt only to
confiscate lumber. 24

(3) Private respondent charged criminally in court. 25 and

(4) Writ of Replevin issued in contravention of PD #605. 26

On the other hand, private respondents argue that:

(1) The respondent Judge had jurisdiction to take cognizance of the complaint for recovery of
personal property and, therefore, had jurisdiction to issue the necessary orders in connection
therewith. 27

(2) The issuance of the order for the delivery of personal property upon application, affidavit and filing
of replevin bond by the plaintiff is mandatory and not discretionary, hence, no abuse of discretion can
be committed by the trial court in the issuance thereof. 28

(3) The Order of March 20, 1989 was in accordance with Section 4, Rule 60 of the Rules of Court
and is, therefore, valid. 29

(4) The private respondents have not been proven to have violated Section 68 of the Revised
Forestry Code. 30

(5) The petitioners do not have the authority to keep private respondents' property for an indefinite
period, more so, to dispose of the same without notice and hearing or without due process. 31

(6) Contrary to the allegation of petitioners, no formal investigation was conducted by the PIC with
respect to the subject lumber in this
case. 32

(7) The alleged Order dated January 20, 1989 of the petitioner Secretary Fulgencio Factoran, Jr. of
the DENR is not valid and does not make the issuance of the order of replevin illegal. 33 and
 34
(8) The subject properties were not in custody of the law and may be replevied.

At the outset we observe that herein respondents never appealed the confiscation order of petitioner Secretary to the Office of the
President as provided for in Sec. 8 of P.D. No. 705 which reads:

All actions and decisions of the Director are subject to review, motu propio or upon appeal of any person aggrieved
thereby, by the Department Head whose decision shall be final and executory after the lapse of thirty (30) days from
receipt by the aggrieved party of said decision unless appealed to the President . . . . The decision of the Department
Head may not be reviewed by the courts except through a special civil action for certiorari and prohibition.

The doctrine of exhaustion of administrative remedies is basic. Courts, for reasons of law, comity and convenience, should not
entertain suits unless the available administrative remedies have first been resorted to and the proper authorities have been
given an appropriate opportunity to act and correct their alleged errors, if any, committed in the administrative forum. 35 As to
the application of this doctrine in cases involving violations of P.D. No. 705, our ruling in Paat v. Court of Appeals, is apropos:

Moreover, it is important to point out that the enforcement of forestry laws, rules and regulations and the protection,
development and management of forest lands fall within the primary and special responsibilities of the Department of
Environment and Natural Resources. By the very nature of its function, the DENR should be given a free hand
unperturbed by judicial intrusion to determine a controversy which is well within its jurisdiction. The assumption by the
trial court, therefore, of the replevin suit filed by the private respondents constitutes an encroachment into the domain
of the administrative agency's prerogative. The doctrine of primary jurisdiction does not warrant a court to arrogate unto
itself the authority to resolve a controversy the jurisdiction over which is initially lodged with an administrative body of
special competence. In Felipe Ismael, Jr. and Co. vs. Deputy Executive Secretary, which was reiterated in the recent
case of Concerned Officials of MWSS vs. Vasquez, this Court held:

Thus, while the administration grapples with the complex and multifarious problems caused by
unbridled exploitation of these resources, the judiciary will stand clear. A long line of cases establish
the basic rule that the courts will not interfere in matters which are addressed to the sound discretion
of government agencies entrusted with the regulation of activities coming under the special technical
knowledge and training of such agencies. 36

However, petitioners did not file a motion to dismiss based on the ground of non-exhaustion of administrative remedies. Thus, it is deemed
waived. 37

Nonetheless, the petition is impressed with merit.

First. A writ of replevin does not just issue as a matter of course upon the applicant's filing of a bond and affidavit, as the Court of Appeals
has wrongly put it. The mere filing of an affidavit, sans allegations therein that satisfy the requirements of Sec. 2, Rule 60 of the Revised
Rules of Court, cannot justify the issuance of a writ of replevin. Said provision reads:

Affidavit and bond. — Upon applying for such order the plaintiff must show by his own affidavit or that of some other
person who personally knows the facts:

(a) That the plaintiff is the owner of the property claimed, particularly describing it, or entitled to the possession thereof;

(b) That the property is wrongfully detained by the defendant, alleging the cause of detention thereof to his best
knowledge, information, and belief;

(c) That it has not been taken for a tax assessment or fine pursuant to law, or seized under an execution, or an
attachment against the property of the plaintiff, or, if so seized, that it is exempt from such seizure; and

(d) The actual value of the property.

xxx xxx xxx

Wrongful detention by the defendant of the properties sought in an action for replevin must be satisfactorily established. If only a
mechanistic averment thereof is offered, the writ should not be issued.

In the case at bar, the subject narra lumber and six-wheeler truck were confiscated by petitioner Secretary pursuant to Section 68-A of
P.D. No. 705, as amended by Executive Order (E.O.) No. 277, to wit:

Sec. 68-A. Administrative Authority of the Department Head or His Duly Authorized Representative to Order
Confiscation. — In all cases of violations of this Code or other forest laws, rules and regulations, the Department Head
 or his duly authorized representative, may order the confiscation of any forest products illegally
cut, gathered, removed, or possessed or abandoned, and all conveyances used either by land, water, or air in the
commission of the offense and to dispose of the same in accordance with pertinent laws, regulations or policies on the
matter. 38

As the petitioner Secretary's administrative authority to confiscate is clearly provided by law, the taking of the subject properties
is not wrongful and does not warrant the issuance of a writ of replevin prayed for by private respondents.

Second. Issuance of the confiscation order by petitioner Secretary was a valid exercise of his power under Sec. 68-A of P.D. No. 705. By
virtue of said order, the narra lumber and six-wheeler truck of private respondents were held in custodia legis and hence, beyond the
reach of replevin.

Property lawfully taken by virtue of legal process is deemed to be in custodia legis. 39 When a thing is in official custody of a judicial or
executive officer in pursuance of his execution of a legal writ, replevin will not lie to recover it. 40 Otherwise, there would be interference
with the possession before the function of law had been performed as to the process under which the property was taken. 41 So basic is
this doctrine that it found inclusion in the 1997 amendments introduced to the Rules of Civil Procedure. Thus, Sec. 2(c), Rule 60 of the
1997 Rules of Civil Procedure provides that:

Affidavit and bond. — Upon applying for such order the plaintiff must show by his own affidavit or that of some other
person who personally knows the facts:

xxx xxx xxx

(c) That the property has not been distrained or taken for a tax assessment or fine pursuant to law, or seized under a
writ of execution, or preliminary attachment or otherwise placed under custodia legis, or if so seized, that it is exempt
from such seizure or custody; . . .

xxx xxx xxx. 42

Third. Petitioner Secretary's authority to confiscate forest products under Sec. 68-A of P.D. No. 705 is distinct from and independent of
the confiscation of forest products in a criminal action provided for in Section 68 of P.D. No. 705. Thus, in Paat, we held that:

. . . precisely because of the need to make forestry laws "more responsive to present situations and realities" and in
view of the "urgency to conserve the remaining resources of the country," that the government opted to add Section
68-A. This amendatory provision is an administrative remedy totally separate and distinct from criminal proceedings. .
. . . The preamble of EO 277 that added Section 68-A to PD 705- is most revealing:

WHEREAS, there is an urgency to conserve the remaining forest resources of the country for the
benefit and welfare of the present and future generations of Filipinos;

WHEREAS, our forest resources may be effectively conserved and protected through the vigilant
enforcement and implementation of our forestry laws, rules and regulations;

WHEREAS, the implementation of our forestry laws suffers from technical difficulties, due to certain
inadequacies in the Penal provisions of the Revised Forestry Code of the Philippines; and

WHEREAS, to overcome this [sic] difficulties, there is a need to penalize certain acts more responsive
to present situations and realities;

It is interesting to note that Section 68-A is a new provision authorizing the DENR to confiscate, not only "conveyances"
but forest products as well. On the other hand, confiscation of forest products by the "court" in a criminal action has
long been provided for in Section 68. If as private respondents insist, the power of confiscation cannot be exercised
except only through the court under Section 68, then Section 68-A would have no purpose at all. Simply put, Section
68-A would not have provided any solution to the problem perceived in EO 277, . . . . 43

Sec. 68-A was added precisely to supplant the inadequacies and supplement criminal enforcement of forestry laws.

Fourth. Sec. 80 of P.D. No. 705 which requires delivery of the seized forest products within six (6) hours from the time of the seizure to
the appropriate official designated by law to conduct preliminary investigations applies only to criminal prosecutions provided for in Sec.
68, and not to administrative confiscation provided for in Section 68-A.

Sec. 80 of P.D. No. 705 provides:

 Sec. 80. Arrest; Institution of criminal actions. — A forest officer or employee of the Bureau shall arrest even without a
warrant any person who has committed or is committing in his presence any of the offenses defined in this Chapter.
He shall also seize and confiscate, in favor of the Government, the tools and equipment used in committing the offense,
and the forest products cut, gathered or taken by the offender in the process of committing the offense. The arresting
officer or employee shall thereafter deliver within six (6) hours from the time of arrest and seizure, the offender and the
confiscated forest products, tools and equipment to, and file the proper complaint with, the appropriate official
designated by law to conduct preliminary investigations and file informations in court.

xxx xxx xxx

The title of Sec. 80 — "Arrest; Institution of Criminal Actions" — bespeaks this intendment of the law. The fact, too, that Secs.
68 and 80 were co-existing prior to the introduction of Sec. 68-A, proves that Sec. 80 applies to the criminal prosecutions subject
of Sec. 68 and not to the administrative confiscation subject of Sec. 68-A. Sec. 68-A, therefore, should not be interpreted in
relation to Sec. 80 as to require that criminal charges be filed with and seized forest products be immediately delivered to, the
fiscal in case of administrative confiscation, for this renders nugatory the purpose sought to be achieved thereby. Statutes should
always be construed in the light of the object to be achieved and the evil or mischief to be suppressed, and they should be given
such interpretation as will advance the object, suppress the mischief, and secure the benefits intended. 44

Fifth. Nothing in the records supports private respondents' allegation that their right to due process was violated as no investigation was
conducted prior to the confiscation of their properties.

On the contrary, by private respondents' own admission, private respondent Sy who drove the six-wheeler truck was properly investigated
by petitioner Atty. Robles at the PIC/SAID Office of the DENR. Thereafter, private respondent Sy and his witnesses were given full
opportunity to explain the deficiencies in the documents. 45 Private respondents categorically stated that they made a "continuous and
almost daily follow-up and plea . . . with the PIC for the return of the truck and lumber . . . ." 46 Finally in a letter dated December 30, 1989,
private respondent Lily Francisco Uy requested petitioner Secretary for "immediate resolution and release of the impounded narra sawn
lumber." 47

Undoubtedly, private respondents were afforded an opportunity to be heard before the order of confiscation was issued. There was no
formal or trial type hearing but the same is not, in all instances, essential in administrative proceedings. It is settled that due process is
satisfied when the parties are afforded fair and reasonable opportunity to explain their side of the controversy or an opportunity to move
for a reconsideration of the action or ruling complained of. 48

Moreover, respondents claim that the order of confiscation was antedated and not the product of the investigation supposedly conducted
by the PIC of the DENR. However, they proffer no proof to support that allegation. On the other hand, there is the legal presumption that
official duty has been regularly performed. The presumption of regularity in the performance of official duties is even particularly strong
with respect to administrative agencies like the DENR which are vested with quasi-judicial powers in enforcing the laws affecting their
respective fields of activity, the proper regulation of which requires of them such technical mastery of all relevant conditions obtaining in
the nation. 49

Finally. The writ of seizure and the writ of replevin were issued by the trial court in grave abuse of its discretion. Thus, disobedience
thereto cannot constitute indirect contempt of court which presupposes that the court order thereby violated was valid and legal. Without
a lawful order having been issued, no contempt of court could be committed. 50

WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of Appeals dated March 30, 1990 and its Resolution
dated May 18, 1990 in CA-G.R. SP No. 17194 are hereby SET ASIDE and REVERSED. Respondent Presiding Judge Benigno T. Dayaw,
of the Regional Trial Court of Quezon City, is PERMANENTLY ENJOINED from enforcing the Orders dated March 20, 1989 and March
22, 1989 in Civil Case No. Q-89-2045, or if said orders have already been enforced, the said respondent Judge is directed to render
judgment of forfeiture on the replevin bond filed by private respondents. Finally, the said respondent Judge is PERMANENTLY ENJOINED
from further acting on the Motion for Contempt filed by private respondents against the petitioners.

Costs against private respondents.

SO ORDERED.