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G.R. No. L-39195 May 16, 1975

THE SAN MIGUEL CORPORATION and FRANCISCO ANDRES, petitioners,

vs.

THE HONORABLE SECRETARY OF LABOR, NATIONAL LABOR

RELATIONS COMMISSION and GREGORIO YANGLAY, JR., respondents. Seguion Reyna, Montecillo and Ongsiako for petitioners.

Zerrudo and Caling Law Office for private respondent.

Porfirio E. Villanueva and Apolinario N. Lomabao, Jr. for respondents Secretary of Labor and The Commission.

AQUINO, J.:ñé+.£ªwph!1

The San Miguel Corporation in this special civil action of certiorari seeks to annul the decision of the old National Labor Relations Commission (NLRC) dated Feb. 27, 1973, ordering the reinstatement (with back wages) of Gregorio Yanglay, Jr. to his position of operator in the crown cork department of its Metal Closure and Lithography Plant located at Cristobal Street, Paco, Manila. On July 9, 1974 the Secretary of Labor affirmed that decision which also absolved the company from the charge of unfair labor practice.

Yanglay worked in the said plant with a daily wage of fourteen pesos from June 9, 1963 to July 19, 1972, when he was dismissed by Franciso Andres, the plant manager. The cause of his dismissal was illegal trafficking in company medicines. (According to the company Yanglay was suspended sixteen times for continuous absences during the period from November 16, 1964 to December 16, 1971).

The record of NLRC Case No. MC-180, "Gregorio Yanglay, Jr. versus The San Miguel Corporation and Francisco Andres", reveals that Yanglay, a thirty-year old married man residing at Cavite City, after leaving the plant at three o'clock in the afternoon of April 22, 1972, was apprehended by Patrolman E. Reyes of the Manila Police Department outside the company compound. Yanglay was carrying a bagful of drugs, such as prothiona tablets, arlidin,

dexopan, rovicon, etc., worth P267, which were turned over to Salvacion Mercurio, the nurse in charge of the company's clinic.

Yanglay, in his written statement taken by Sergeant Francisco Enriquez of the company's security force at around three-forty of that same afternoon, admitted that he was caught in possession of the said drugs which he had bought from his co-workers and which had been given to them free of charge so as to keep them in the "pink of health". Yanglay further admitted:têñ. £îhqwâ£

Opo, hindi ko na po uulitin ang mga bagay na ito, dala po lamang ng pangangailangan kaya ko binibili ito, hindi na po mauulit.

Yanglay was investigated on May 15 and June 23 and 27, 1972 by Beda Gonzalez of the management in the presence of the union counsel, a union vice-president, the shop steward and the plant superintendent.

At the investigation on June 27 Yanglay denied that he was trafficking illegally in drugs of the company. He said that he bought the drugs from his co-workers in the same way that some workers bought the rice rations of their co-workers. He contended that he had not violated any rule of the company. He clarified that some of the medicines were given to him by his co-workers.

On the basis of that investigation, Yanglay was dismissed on July 19, 1972. At the meeting of the union and management panels on September 22, 1972 to thresh out Yanglay's grievance, the union representative contended that there was no company rule against trafficking in drugs, which were no longer owned by the company after having been issued to its workers, and that the sale of the drugs was like the sale of rice rations which sale was allegedly tolerated by the company officials. The union conceded that suspension should be the proper disciplinary action but not dismissal. Yanglay had been in the service of the company for nine years.

The management panel countered that it is evident that Yanglay's dismissal was not due to union activities; that the sale of the drugs was a subversion of the company's efforts to give medical benefits to its workers and that

trafficking in rice rations cannot be cited as a justification because the value of the rice is reflected in the workers' income tax returns.

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On December 4, 1972 Yanglay filed a complaint with the NLRC alleging that there was no evidence to justify his dismissal, that the truth was that he owned the medicines in question and that he was dismissed because of his union activities as a "militant shop steward of the Ilaw at Buklod ng

Manggagawa", the union representing the workers of the corporation (NLRC Case No. MC-180).

An NLRC commissioner sent telegrams dated December 5, 1972, notifying the parties that the case was set for hearing on December 18. On that date Enrique C. Cruz, as mediator-fact finder, conducted a preliminary hearing. He found that an amicable settlement was not possible because the San Miguel Corporation insisted on the dismissal of Yanglay.

The case was scheduled for mediation on January 10, 1973. The record does not show what transpired on that date. On January 12, 1973 the corporation filed a memorandum wherein it contended (1) that Yanglay's case was outside the NLRC's jurisdiction which extends only to disputes and grievances occurring after September 21, 1972; (2) that Yanglay's dismissal was justified and (3) that, if the dismissal was not justified, his remedy was to ask for separation pay under the Termination Pay Law.

Yanglay did not submit any memorandum. On February 21, 1973 the mediator submitted a report wherein he concluded that Yanglay "was dismissed on a shaky ground" because the employer had not shown any violation of any company rule or regulation and that the persons to be penalized should be those who sold or delivered the drugs to Yanglay. Cruz admitted that the San Miguel Corporation "had not committed unfair labor practice". He recommended Yanglay's reinstatement with back wages from July 19,1972 (when he was dismissed) up to the date of his

reinstatement.

The NLRC composed of Amado G. Inciong, Diego P. Atienza and Ricardo C. Castro, in its aforementioned decision adopted the report of Cruz in its entirety.

The San Miguel Corporation moved for the reconsideration of the decision on the ground that it was premature because section 14 of the NLRC's Rules and Regulations requires that the mediator's factfinding report be passed upon by an arbitrator. The motion was treated as an appeal by the Secretary

of Labor. As already stated, he denied it in his resolution dated July 9, 1974. Thereafter, the company, instituted this certiorari proceeding.

Yanglay raised a jurisdictional question which was not brought up by

respondent public officials. He contends that this Court has no jurisdiction to review the decisions of the NLRC and the Secretary of Labor "under the principle of separation of powers" and that judicial review is not provided for in Presidential Decree No. 21.

That contention is a flagrant error. "It is generally understood that as to administrative agencies exercising quasi-judicial or legislative power there is an underlying power in the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by statute" (73 C.J.S. 506, note 56).

"The purpose of judicial review is to keep the administrative agency within its jurisdiction and protect substantial rights of parties affected by its decisions" (73 C.J.S. 507, Sec. 165). It is part of the system of checks and balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications.

Judicial review is proper in case of lack of jurisdiction, grave abuse of discretion, error of law, fraud or collusion (Timbancaya vs. Vicente, 62 O.G. 9424; Macatangay vs. Secretary of Public Works and Communications, 63 O.G. 11236; Ortua vs. Singson Encarnacion, 59 Phil. 440).

"The courts may declare an action or resolution of an administrative authority to be illegal (1) because it violates or fails to comply with some mandatory provision of the law or (2) because it is corrupt, arbitrary or capricious" (Borromeo vs. City of Manila and Rodriguez Lanuza, 62 Phil. 512, 516; Villegas vs. Auditor General, L-21352, November 29, 1966, 18 SCRA 877, 891).

The San Miguel Corporation contends that the NLRC gravely abused its discretion and denied the employer due process of law when it decided the case without giving the employer a chance to submit the case for arbitration, as provided in section 4 of Presidential Decree No. 21 and in section 14 of its Rules and Regulations.

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The Solicitor General counters that there was no denial of due process because the NLRC and the mediator decided the case on the basis of the investigation which was conducted by a lawyer of the company pursuant to the grievance procedure indicated in the collective bargaining agreement. The Solicitor General made the following cogent and judicious observations to support his contention that the San Miguel Corporation was not denied due process:têñ.£îhqwâ£

1. ... in said grievance procedure, a lengthy recorded investigation was conducted wherein the parties were duly represented by their respective counsel and wherein the petitioner herein was granted every opportunity to present its evidence and cross-examine witnesses in support of its then contemplated and consequent action in the premises; that after the filing of the complaint by the private respondent, a preliminary factfinding was had with both parties present and/or duly represented wherein a preliminary factfinding report was rendered stating that the respondents (petitioners herein) were adamant in their stand regarding complainants dismissal and that the possibility of settlement between the parties was ruled out ...; that thereafter, mediation and further factfinding were held at which hearings petitioners, instead of presenting their evidence, opted to merely file a memorandum while complainant (private respondent herein) elected to submit the records of the proceedings in the grievance stage; that thereafter, a mediation Factfinding Report was rendered on February 21, 1973, on the basis of which a decision was rendered by the respondent NLRC on February 27, 1973.

xxx xxx xxx

3. It is evident from the report of the mediator factfinder that he had considered all the facts and evidence presented by both parties. Likewise indubitably clear is the fact that the parties no longer intended to present further evidence on the matter. Faced therefore with the foregoing circumstances, the NLRC was left without recourse but to exercise its power of arbitration as per section 4 of Presidential Decree No. 21

and after assessing the evidence before it rendered its decision thereunder. So should it be in cases of this nature, since it would have been futile to further prolong the proceedings by again setting the case for hearing when the parties themselves no longer intended to present further evidence. In short, while the action of the NLRC may have been summary, it cannot and does not constitute a denial of due process.

The ultimate issue in this case is not whether the San Miguel Corporation was denied due process because the NLRC did not adhere strictly to the procedure for arbitration. It is undeniable that the company was given a chance to be heard. To refer now this case to an arbitrator would only unduly delay its final disposition.

The real issue is whether, considering the undisputed facts that Yanglay bought from his co-workers drugs worth P267 which were given to them gratis, which they were not supposed to sell and which, after seizure from Yanglay, were returned to the company, his dismissal from employment was justified.

That was the first time he was caught trafficking in company-supplied drugs. He confessed that necessity forced him to buy the drugs. He promised not to do it again. His impression was that, like the rice rations whose sale was tolerated by the company officials, he could engage in the buy-and-sell of the drugs. He argued that his co-workers, who gave or sold to him the drugs, were equally culpable in sabotaging the company's practice of rendering free medical assistance to its employees.

The misconduct of employees or workers in misrepresenting to the company that they needed medicines when in fact their purpose was to sell the same should not be tolerated. For such misrepresentations or deceptions,

appropriate disciplinary action should be taken against them. On the other hand, in view of the high cost of living and the difficulties of supporting a family it is not surprising that members of the wage-earning class would do anything possible to augment their small income.(Compare with People vs. Macbul, 74 Phil. 436).

Taking into account the circumstances of the case, particularly Yanglay's initial attitude of confessing that his error was dictated by necessity and his

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promise not to repeat the same mistake, we are of the opinion that his dismissal was a drastic punishment. He should be reinstated but without back wages because the company acted in good faith in dismissing him (Findlay Millar Timber Company vs. Philippine Land-Air-Sea Labor Union, L-18217 and L-18222, September 29, 1962, 6 SCRA 226). He has been sufficiently penalized by the loss of his wages from July 19, 1972 up to this time.

WHEREFORE, the resolution of the Secretary of Labor and the decision of the defunct National Labor Relations Commission are modified in the sense that Gregorio Yanglay, Jr. should be reinstated without back wages. Costs against the petitioners.

SO ORDERED.

G.R. No. 88259 August 10, 1989

THE BOARD OF MEDICAL EDUCATION and the HON. LOURDES R. QUISUMBING, in her capacity as Secretary of the Department of Education, Culture and Sports and Chairman, Board of Medical Education, petitioners,

vs.

HON. DANIEL P. ALFONSO, Presiding Judge of the Regional Trial Court, Branch 74, Fourth Judicial Region, Antipolo, Rizal, and the PHILIPPINE MUSLIM-CHRISTIAN COLLEGE OF MEDICINE FOUNDATION,

INC., respondents.

Carpio, Villaraza & Cruz for private respondent. Anatolio S. Tuazon, Jr. for intervenors.

NARVASA, J.:

Petitioners, the Board of Medical Education, the government agency which supervises and regulates the country's medical colleges, and Secretary Lourdes R. Quisumbing of the Department of Education, Culture and Sports, as Chairperson of the Board, pray for a writ of certiorari to nullify and set aside the order issued by respondent Judge Daniel P. Alfonso, Regional Trial

Court, Antipolo, Rizal, in Civil Case No. 1385 restraining the enforcement of petitioner Quisumbing's order of closure of the respondent Philippine Muslim-Christian College of Medicine Foundation, Inc. (hereafter simply the

College).lâwphî1.ñèt

The, College, a private educational institution, was founded in 1981 for the avowed purpose of producing physicians who will "emancipate Muslim citizens from age-old attitudes on health." The, unstable peace and order situation in Mindanao led to the establishment of the College in Antipolo, Rizal, which granted it a temporary permit to operate in the municipality, instead of in Zamboanga City where the school was first proposed to be located. It has since adopted Antipolo as its permanent site and changed its name to the Rizal College of Medicine.

In 1985, the Department of Education, Culture and Sports (DECS) and the Board of Medical Education (BME) authorized the Commission on Medical Education to conduct a study of all medical schools in the Philippines. The, report of the Commission showed that the College fell very much short of the minimum standards set for medical schools. 1 The, team of inspectors, composed of Doctors Florentino Herrera, Jr., Elena Ines Cuyegkeng, Horacio Estrada, Jose V. Silao, Jr. and Andres L. Reyes, recommended the closure of the school 2 upon the following findings, to wit:

(a) the College was not fulfilling the purpose for which it had been created because of its inappropriate location and the absence in its curriculum of subjects relating to Muslim culture and welfare;

(b) its lack of university affiliation hindered its students from obtaining a "balanced humanistic and scientific" education; (c) it did not have its philosophy base hospital for the training of its students in the major clinical disciplines, as required by the DECS;

(d) more than 60% of the college faculty did not teach in the College full-time, resulting in shortened and irregular class hours, subject overloading, and in general, poor quality teaching.

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The, school disputed these findings as biased and discriminatory. At its request, the Board of Medical Education, in May, 1987, sent another team of doctors 3 for a re-evaluation of the College. After inspection, the team confirmed the previous findings and recommended the phase-out of the school. 4

The, first two reports were verified on June 23, 1987 by a third team of inspectors. 5 A year thereafter, the College failed another test what was in effect the fourth evaluation of its fitness to continue as a medical school conducted on March 4 and 5, 1988 by a team from the Board of Medical Education determining the eligibility of medical schools for government recognition. The, College was adjudged "inadequate" in all aspects of the survey, to wit, college, curriculum, facilities, teaching hospital, and

studentry. 6 The, inspectors, Doctors Nilo Rosas, Macario Tan and Elena Ines Cuyegkeng, accordingly recommended denial of government; recognition. Accordingly, the Board of Medical Education recommended to the DECS the closure of the College, effective the end of the school year 1988-1989. The, College however succeeded in having the Board form yet another team to review the previous findings. Doctors Elena Ines Cuyegkeng, Alberto

Romualdez, Artemio Ordinaria Joven Cuanang and Nilo L. Rosas conducted their inspection on June 18, 1988. Their findings: although there had been a "major effort to improve the physical plant for classroom instructions and the library, serious deficiencies remain(ed) in the areas of clinical facilities and library operations;" "faculty continue(d) to be quite inadequate with no prospects for satisfactory growth and development;" "student profile ... (was) below par from the point of view of credentials (NMAT and transfer records) as well as level knowledge and preparedness at various stages of medical education," and "the most serious deficiency ... (was) the almost total lack of serious development efforts in academic medicine — i.e., seeming lack of philosophy of teaching, no serious effort to study curricula, almost non-existent innovative approaches." Again, the recommendation was to close the College with provisions for the dispersal of its students to other medical schools. 7

In her letter of June 23, 1988, Secretary Quisumbing informed the Chairman of the College's Board of Trustees, Mr. Victor Sumulong, of the decision of the Board of Medical Education to close the College. Mr. Sumulong instead proposed a gradual phase-out starting the school year 1989-1990 in order not to dislocate the students and staff and to minimize financial loss. 8 The,

Board subsequently allowed the College to continue its operations but only until May, 1989, after which it was to be closed, this decision being "final and unappealable." The, College was, however, assured of assistance in the relocation of its students and in its rehabilitation as an institution for health-related and paramedical courses. 9

The, College appealed the decision to the Office of the President, imputing grave abuse of discretion to the Secretary. 10 On February 16, 1989,

Executive Secretary Catalino Macaraig, Jr., finding "no reason to disturb" the contested decision, affirmed it. 11

On March 2, 1989, the College went to court. It filed Civil Case No. 1385 in the court of respondent Judge Daniel P. Alfonso against Secretary

Quisumbing in her capacity as Secretary of Education, Culture and Sports, questioning the decision as illegal, oppressive, arbitrary and discriminatory and applied for a writ of preliminary injunction to restrain its implementation. The, writ issued as prayed for by order of the respondent Judge dated May 10, 1989. 12 His Honor ruled that the inspection of June 18, 1988 was the principal basis of the closure order, and on such basis sustained the claim of the College that the inspection was done in an "arbitrary and haphazard manner" by a team of inspectors who had already prejudged the school. Judge Alfonso held that there was no evidence supporting the findings in the report of June 18, 1988, and declared that his philosophy ocular inspection of the College disclosed that the deficiencies mentioned in the report were non-existent, and that on the contrary, the laboratory and library areas were "big enough," and in the operations of the proposed base hospital were going on smoothly at the time of the ocular inspection."

The, school thereupon promptly advertised in major newspaper dailies for enrollees in all levels of the medical college and in its pre-board review classes. 13

Hence the present petition, assailing the order of injunction dated May 10, 1989 as having been issued with grave abuse of discretion, and praying for a restraining order against its enforcement as well as for the dismissal of the action instituted in the court a quo. The, Court on June 1, 1989 ordered the respondent College to desist from advertising and admitting students, and the respondent judge to refrain from enforcing his injunction order.

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The, College in its Comment would justify its entitlement to the questioned injunction on the ground that the closure order against which it was directed was issued without factual basis and in violation of the right of the College to due process of law, and that it violates MECS Order No. 5 (Series of 1986) to the effect that the penalty of closure cannot be imposed earlier than three (3) years from the last evaluation, which in this instance was made, on June 18, 1988.

Resort to the Courts to obtain a reversal of the determination by the Secretary of Education, Culture and Sports that the College is unfit to continue its operations is in this case clearly unavailing. There is, to begin with, no law authorizing an appeal from decisions or orders of the Secretary of Education, Culture and Sports to this Court or any other Court. It is not the function of this Court or any other Court to review the decisions and orders of the Secretary on the issue of whether or not an educational institution meets the norms and standards required for permission to operate and to continue operating as such. On this question, no Court has the power or prerogative to substitute its opinion for that of the Secretary. Indeed, it is obviously not expected that any Court would have the competence to do so.

The, only authority reposed in the Courts in the matter is the determination of whether or not the Secretary of Education, Culture and Sports has acted within the scope of powers granted him by law and the Constitution. As long as it appears that he has done so, any decision rendered by him should not and will not be subject to review and reversal by any court.

Of course, if it should be made, to appear to the Court that those powers were in a case exercised so whimsically, capriciously, oppressively, despotically or arbitrarily as to call for peremptory correction — or stated otherwise, that the Secretary had acted with grave abuse of discretion, or had unlawfully neglected the performance of an act which the law specifically enjoins as a duty, or excluded another from the use or enjoyment of a right or office to which such other is entitled — it becomes the Court's duty to rectify such action through the extraordinary remedies of certiorari, prohibition, or mandamus, whichever may properly apply. Yet even in these extreme instances, where a Court finds that there has been abuse of powers by the Secretary and consequently nullifies and/or forbids such an abuse of power, or compliance whatever is needful to keep its exercise within bounds, the Court, absent any compelling reason to do otherwise, should still leave to the Secretary the ultimate determination of the issue of the satisfy action or

fulfillment by an educational institution of the standards set down for its legitimate operation, as to which it should not ordinarily substitute its over judgment for that of said office.

In any case, the recorded facts quite clearly fail to support the College's claim of grave abuse of discretion containing the order of closure, and on the contrary convincingly show the challenged decision to be correct. From 1985, no less than five (5) surveys were conducted of respondent institution to determine its compliance with the minimum standards established for a medical college. The, first survey, that undertaken by the Commission on Medical Education, disclosed such various and significant deficiencies in the school as to constrain the inspectors to recommend its closure. Four (4) other surveys were thereafter made by as many different committees or teams, at the school's instance or otherwise, all of which basically confirmed the results of that first survey. Moreover, the findings of all five (5) surveys were affirmed by the Office of the President. Indeed, the petitioner, through the Chairman of its Board of Trustees, to all intents and purposes accepted the validity of the findings of those five (5) survey groups when it proposed, in 1988, a gradual phase-out of the school starting in 1989. The, respondent College knew that the recommendation for its closure was made, as early as 1986, that recommendation was reiterated and reaffirmed four (4) times thereafter until it was finally approved and acted upon by the Secretary, whose action was confirmed by the Office of the President. Said respondent was given notice in June 1988, that in consequence of all these, the time for its definite closure had been unalterably set at May, 1989, a notice which was accompanied by assurances of assistance in the relocation of its students before June, 1989 and in its rehabilitation as a school for other courses. After having resorted to the whole range of administrative remedies available to it, without success, it sought to obtain from the respondent Court the relief it could not obtain from those sources, and what can only be described as a deliberate attempt to frustrate and obstruct implementation of the decision for its closure as of June, 1989 openly solicited, by newspaper advertisements or otherwise, enrollment of new and old students.

Given these facts, and it being a matter of law that the Secretary of

Education, Culture and Sports exercises the power to enjoin compliance with the requirements laid down for medical schools and to mete out sanctions where he finds that violations thereof have been committed, it was a grave abuse of discretion for the respondent judge to issue the questioned injunction and thereby thwart official action, in the premises correctly taken,

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allowing the College to operate without the requisite government permit. A single ocular inspection, done after the College had been pre-warned thereof, did not, in the circumstances, warrant only the findings of more qualified inspectors about the true state of the College, its faculty, facilities, operations, etc. The, members of the evaluating team came from the different sectors in the fields of education and medicine, 14 and their judgment in this particular area is certainly better than that of the respondent Judge whose sole and only visit to the school could hardly have given him much more to go on than a brief look at the physical plant and facilities and into the conduct of the classes and other school activities. Respondent Judge gravely abused his discretion in substituting his judgment for theirs. It is well-settled doctrine that courts of justice should not generally interfere with purely administrative and discretionary functions; that courts have no supervisory power over the proceedings and actions of the administrative departments of the

government; involving the exercise of judgment and findings of facts, because by reason of their special knowledge and expertise over matters falling under their jurisdiction, the latter are in a better position to pass judgment on such matters andn their findings of facts in that regard are generally accorded respect, if not finality, by the courts. 15 There are, to be sure, exceptions to this general rule but none of them obtains in this case. The, claim of denial of due process likewise holds no water, as the record clearly shows that the College was given every opportunity to so improve itself as to come up to requirements, but remained sadly sub-standard after the inspections conducted by the evaluating teams. It had, in fact, admitted its failure to have up to the desired standards when it proposed its gradual phase-out in its letter dated June 27, 1988 to Secretary Quisumbing. It was also precisely because of its complaints of bias and prejudice that the Board of Medical Education dispatched new teams to survey and re-evaluate its performance. It had even gone all the way up to the Office of the President to seek a reversal of the order of closure. There is thus no reason for it to complain of a lack of opportunity to be heard and to explain its side as well as to seek reconsideration of the ruling complained of.

There is also no merit in respondent College's argument that the closure violated NMCS ORDER No. 5, Series of 1986, because it was sought to be effected before the lapse of the three-year period therein snowed, which in this case is sought to be counted from June 18, 1988, or the date of the last evaluation. The, provision referred to reads:

The following sanction shall be applied against any medical school, for failure to comply with the specific requirements of the essentials, viz.:

x x x

c. Withdrawal or cancellation of the school's government; authority to operate, for failure to fully comply with the prescribed requirements after three (3) years from the last evaluation conducted on the school.

It must at once be obvious from a reading of the provision, paragraph c, that the situation therein contemplated — where a school is found to have failed to "fully comply with the prescribed requirements," i.e., has not complied with some requirements and has failed to do so within three (3) years from the last evaluation is quite distinct from that obtaining in the case at bar — where respondent school was found to have deficiencies so serious as to warrant its immediate closure. Said paragraph c should not be construed to prohibit absolutely the withdrawal or cancellation of government; authority to operate until after three (3) years from the last evaluation conducted on the school; or, stated otherwise, it does not unexceptionally prescribe a three-year waiting period before authority to operate may be withdrawn. Rather, it should be read as giving the Secretary of Education the discretion, depending on the seriousness of the discovered deficiencies, to afford an educational institution which has failed to comply with some requirement or other, time not exceeding three (3) years to correct the deficiencies before applying the sanction of withdrawal or cancellation of the government; authority to operate. The, circumstances in the case at bar are far from nominal and, to repeat, are different from those obviously envisioned by the paragraph in question. There had never been a recommendation that the College be granted an opportunity to comply with certain requirements. From the outset, the proposal had been that it be forthwith closed, its discovered deficiencies as a medical college being of so serious a character as to be irremediable. The, other four (4) surveys were conducted, not to determine if in the course of time the petitioner school had already fully complied with all the prescribed requisites, but rather, whether or not the original

recommendation for its closure was correct and should be sustained. And, as already mentioned, the subsequent surveys, over a period of more than three (3) years, served but to confirm the validity of that initial proposal for its closure. Under these circumstances, therefore, even if it be assumed that the

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provision, paragraph c, applied to petitioner school, it must be held that there has been substantial compliance therewith.

Having thus disposed of the issues raised by the facts of the case, the Court sees no useful purpose to be served by remanding the case to the Trial Court for further proceedings. The, only acceptable reason for such a remand would be so that the Trial Court may determine whether or not the petitioners' first have acted within the scope of their powers or grossly abused them, a matter that this Court has already passed upon here. Such a remand cannot be justified on the theory that the Trial Court will make its philosophy

independent determination of whether or not respondent medical institution has complied with the minimum standards laid down for its continued operation, since, as here ruled, it has not that power.

WHEREFORE, premises considered, the petition is hereby granted and the temporary restraining order issued by the Court is made, permanent. The, questioned writ of preliminary injunction dated May 10, 1989 is set aside and respondent Judge is ordered to dismiss Civil Case No. 1385.

SO ORDERED.

G.R. No. 95694 October 9, 1997

VICENTE VILLAFLOR, substituted by his heirs, petitioner, vs.

COURT OF APPEALS and NASIPIT LUMBER CO., INC., respondents.

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

petitioner's 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 CA. G.R CV No. 09062, affirming the dismissal by the trial court of Petitioner Vicente Villaflor's 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, . . . 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)

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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, . . . 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 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:

. . . (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

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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 hereby leased 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 . . . surreptitiously grabbed and occupied a big portion of plaintiff's property . . ."; that after a confrontation with the corporate's (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 . . . 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,

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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 attorney's fees; and other incidental expenses not exceeding P300.00. On December 2, 1948, Villaflor filed Sales Application No.

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the provisions of Chapter V, XI or IX of Commonwealth Act. No. 141 (The Public Lands Act), as amended, the tract of public lands . . . 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 . . . containing an area of 140 hectares . . . ." 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 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.

5. 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:

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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) 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 Bureau's 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.

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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 . . . is very much interested in acquiring the land covered by the aforecited application . . . ;

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, Inc. 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 . . . 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 . . . 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 Villaflor's claim that he only learned of the Order of Award on January 16, 1974, or after his arrival to the Philippines, coming from

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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 (Vicente's) 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 . . . 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 (Villaflor's) claim, for Mr. Florencio Tamesis, the general manager of Nasipit Lumber, in a letter dated February 19, 1974, denied Villaflor's itemized claim dated January 5, 1974 (exh. V) to be without valid and legal basis. In the 5th January, 1974 letter, Villaflor claimed the total amount of P427,000.00 . . . .

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

. . . (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 . . . and the consideration in the Agreement to Sell were duly proven, and ordered the dismissal of Villaflor's 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) . . . 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 . . . in the staggering amount of Seventeen Million (P17,000,000.00) Pesos. Earlier, he had also demanded from NASIPIT . . .

(P427,000.00) . . . 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 . . . 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 Nasipit's failure to pay the amount of . . . (P5,000.00) . . . (assuming that Nasipit had failed) the deed of relinquishment became null and void for lack of consideration. . . . .

xxx xxx xxx

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

xxx xxx xxx

Even this Office had not failed to recognize the juridical personality of NASIPIT to apply for the

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purchase of public lands . . . 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, Villaflor's 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, . . . 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. . . . 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 . . . 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. . . . .

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)

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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 an August 17, 1950, or barely a day which (sic) he executed the deed of relinquishment on August 16, 1950, in Manila? . . . .

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 . . . 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. Nasipit's explanation on this point is found satisfactory.

. . . (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 . . . 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 Villaflor's claim that the 140-hectare land relinquished and awarded to NASIPIT is his private property, little (need) be said. . . 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 latter's 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. . . 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

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Government (paragraph 6, Sales Application No. V-807 . . .) 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

. . . 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 . . . 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 . . ." (Exh. "38-A"); and that "for and in consideration of . . . TWENTY FOUR THOUSAND (P24,000.00) PESOS that the Second Party shall pay to the First Party . . . the First Party hereby sells, transfers and conveys unto the Second Party . . . 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 . . . was paid and when the balance was to be paid, to wit:

a) the amount of SEVEN THOUSAND . . . 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 . . . PESOS shall be paid upon the signing of this present agreement; and

c) the amount of TWELVE

THOUSAND . . . 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 July 7, 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;

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(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 . . . 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. . . 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). . . .

. . . Villaflor did not adduce evidence in support of his claim that he had not been paid the . . . (P12,000.00) . . . 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 . . . 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 . . . Pesos of the total consideration . . . stipulated in both the "Agreement to Sell" (Exh. "F") and the document dated December 7, 1948 (Exh. "39");

. . . . 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 . . . due to Villaflor to Edward J. Nell Company . . . . Atty. Banaag's aforesaid testimony stand unrebutted; hence, must be given full weight and credit. . . . Villaflor and his counsel were present when Atty. Banaag's foregoing testimony was 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 . . . consideration of the deed of Relinquishment . . . and

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