EN BANC [G.R. No. L-19547. January 31, 1967.] SERAPIO DAUAN, petitioner-appellee, vs. THE SECRETARY OF AGRICULTURE AND NATURAL RESOURCES AND THE DIRECTOR OF LANDS, respondents-appellees, SIMON ILARDE, ROMUALDO ILARDE, LORD CALANGAN, SANTOS BAYSA and BASILIA TOMAS, respondents-appellants. Asterio T . Saquing for respondents-appellants. Solicitor General for respondents-appellees. Pedro C . Flores for petitioner-appellee. SYLLABUS 1. ADMINISTRATIVE LAW; RULE REGARDING EXHAUSTION OF ADMINISTRATIVE REMEDIES NOT ABSOLUTE. While the rule of exhaustion Of administrative remedies would indeed require an appeal to be taken to the President before resort to the courts can be made (Calo vs. Fuertes, G. R. No. L-16537, June 29, 1962; Rellin vs. Cabigas, 109 Phil. 1128; Gamao vs. Calamba, 109 Phil. 542; Miguel vs. Reyes, 93 Phil., 542; Mari vs. Secretary, 92 Phil., 410), it is equally true that the rule is not without exception. The rule does not apply where the question in dispute is purely a legal one, and nothing of an administrative nature is to be or can be done (Pascual vs. Provincial Board, 106 Phil 466; Kimpo vs. Tabanar, G. R. No. L-16476, Oct. 31, 1961). 2. EVIDENCE; CONCLUSION DRAWN FROM FACTS IS CONCLUSION OF LAW. It is a rule now settled that the conclusion drawn from facts is a conclusion of law which the courts may review (Alfafara vs. Mapa, 95 Phil., 125). 3. HOMESTEAD; CONVEYANCES WITHOUT PREVIOUS APPROVAL OF SECRETARY OF AGRICULTURE AND NATURAL RESOURCES ARE VOID. The conveyances to the appellants, which were admittedly made without the previous approval of the Secretary of Agriculture and Natural Resources, are void and, consequently, that appellants return the possession of the land in question to the appellee upon the return to them of the purchase price they had paid to the appellee (Tinio vs. Frances, 98 Phil., 32; Oliveros vs. Porciongcola, 69 Phil., 305). We do not forget, of course that a transfer of rights without the previous approval of the Secretary of Agriculture and Natural Resources "shall result in the cancellation of the entry and the refusal of the patent" of the appellee but the cancellation is not automatic and as long as the Government has not chosen to act, the rights of appellee must stand. DECISION REGALA, J p: This case involves claims to 14.25 hectares of public land in Bambang, Sto. Domingo, Nueva Vizcaya. The land was originally applied for as homestead by Jose Aquino. Upon his death, Aquino was succeeded by his children who sold their rights to the land to the present appellee, Serapio Dauan. Appellee himself filed an application (H.A. No. 206623) for a homestead of the land on February 14, 1935, but there is considerable dispute as to whether this application was approved by the Director of Lands. This point became a crucial issue between the parties as appellee subsequently sold his rights to various portions of the homestead to the appellants without securing the approval of the Secretary of Agriculture and Natural Resources and both parties took the view that, if appellee's application had been approved, then the transfer of rights to appellants must be approved by the Secretary; otherwise, no such approval was necessary. Thus, it appears that on December 16, 1943, appellee sold his rights to one-half of the land to appellant Simon Ilarde and that on July 24, 1951, he sold his rights to 4 hectares to appellant Lord Calangan and to 3 hectares to appellant Basilia Tomas. On March 28, 1955, Calangan and Tomas in turn sold their rights to some part of the land to Santos Baysa. These sales were all made without the previous approval of the Secretary of Agriculture and Natural Resources. The basis of contention of both parties is the following provision of the Public Land Act (Com. Act No. 141): "Sec. 20. If at any time after the approval of the application and before the patent is issued, the

applicant shall prove to the satisfaction of the Director of Lands that he has complied with all requirements of the law, but can not continue with his homestead, through no fault of his own, and there is a bona fide purchaser for the rights and improvements of the applicant on the land, and that the conveyance is not made for purposes of speculation, then the applicant, with the previous approval of the Secretary of Agriculture and Commerce, may transfer his rights to the land and improvements to any person legally qualified to apply for a homestead, and immediately after such transfer, the purchaser shall file a homestead application to the land so acquired and shall succeed the original homesteader in his rights and obligations beginning with the date of the approval of said application of the purchaser. Any person who his so transferred his rights may again apply for a new homestead. Every transfer made without the previous approval of the Secretary of Agriculture and Commerce shall be null and void and shall result in the cancellation of the entry and the refusal of the patent." 1 The dispute arose when appellee asked the Bureau of Lands to cancel the application for free patents which the appellants filed, covering the portions of the homestead sold to them. Appellee questioned the validity of the sales, claiming that the agreement was that of a loan and that at any rate the supposed sales were void for having been made without the prior approval of the Secretary of Agriculture and Natural Resources. On the other hand, appellants maintained that their agreement with the appellee was that of a sale and, that as the homestead application of appellee himself had not been approved by the Director of Lands, no approval by the Secretary of the subsequent sales to them was necessary. The Director of Lands held the transactions to be sales and sustained their validity on a finding that the homestead application of appellee had not been approved. His decision was subsequently affirmed on appeal by the Secretary of Agriculture and Natural Resources. Said the Secretary: "The records . . . do not reveal that appellant's H.A. No. 206623 has ever been approved, in spite of the fact that it was filed as early as 1935. Over the allegation of the appellant (appellee herein) that his homestead application was approved but the records thereof were lost during the war is the verity that there are no reconstituted records to point to such approval of application nor is there any evidence to show that he has ever attempted to reconstitute the documents relative to the said approval. "xxx xxx xxx "Of course, in all these transfers none ever secured any prior approval of the Director of Lands, required in Section 20 of the Public Land Law, as amended by Republic Act No. 1242, but it should be noted that the said provision of law demands such approval only when transfer of rights is executed after the approval of a homestead application and, in the present case, there is no showing that the homestead application of the appellant, basis of the rights so transferred, had ever been approved at the time the transfers in question were executed." Appellee did not appeal to the President. Instead, he filed this petition for certiorari in the Court of First Instance of Nueva Vizcaya, charging that both Director of Lands and Secretary of Agriculture and Natural Resources gravely abused their discretion in finding that his application had not been approved and, consequently, in ruling that prior approval of the transfers to them was not required. The court granted appellee's petition, stating: "The court has noticed that the past war has caused the disappearance of the prewar records of the homestead in question, but the papers pertinent thereto presented by the petitioner are, in the opinion of this Court, more than sufficient to bring us to a legitimate conclusion that the petitioner is a holder of a perfected homestead entitled to grant from the government, and having said petitioner remained in the possession for a period of more than 23 years, he is entitled to the protection of the law; the sales application of Romualdo Ilarde is null and void with respect to the portion which embraces or includes a portion of the homestead of the petitioner [the court having found no evidence at all that the portion was conveyed to Romualdo Ilarde by the appellees; the free patent applications of the respondent Simon Ilarde, Basilia Tomas and Lord Calangan, having not been previously approved by the Secretary of Agriculture and Natural Resources are null and void, and as respondent Santos Baysa derives his alleged rights from Basilia Tomas and Lord Calangan necessarily his application is also null and void."

Appellants asked for a reconsideration of this decision and, failing to secure one, brought this matter before us on appeal. They contend that the decision of the Director of Lands, which was affirmed by the Secretary of Agriculture and Natural Resources, became final for failure of the appellee to appeal to the President, with the result that this petition for certiorari should not have been entertained. Moreover, it is claimed that the trial court erred in ruling that appellee's application had been approved after it had once been found by the Director and the Secretary that no such approval had been given. While the rule of exhaustion of administrative remedies would indeed require an appeal to be taken to the President before resort to the courts can be made, 2 it is equally true that the rule is not without exception. For instance, the rule does not apply where the question in dispute is purely a legal one, and nothing of an administrative nature is to be or can be done. 3 Here the question was whether from the evidence submitted by the parties it could fairly be concluded that appellee's homestead application had been granted. Were the matter a simple process of ascertaining from the records whether the application had been granted, we would agree with appellants that it is a question of fact. But precisely because the records of the Bureau of Lands had been destroyed during the war that circumstantial evidence had to be introduced and it is a rule now settled that the conclusion drawn from the facts is a conclusion of law which the courts may review. 4 And now to the main question: Is there warrant for the lower court's conclusion that appellee's application for a homestead had been approved? We believe there is: First, it appears that sometime in 1936, a certain Teodocia Escobedo claimed in the Bureau of Lands (Claim No. 103) the land in question and its improvements and contested appellee's application for this purpose. In a decision dated January 28, 1941, dismissing the claim, the Director of Lands made a statement from which it may fairly be inferred that appellee had been allowed to enter the land and that his application had been granted, since under section 13 of the Public Land Act entry is allowed only after the approval of the application. Second, the documents entitled "Transfer of Homestead Rights," whereby appellee transferred his rights to 4 hectares to appellant Calangan and 3 hectares to Basilia Tomas, recite in the first "WHEREAS" that "by virtue of Homestead Application No. 206623 approved on January 28, 1941 in accordance with Chapter IV of Com. Act No. 141, as amended, the Director of Lands allowed SERAPIO DAUAN to enter upon, occupy, cultivate, and reside on the tract of land described as follows . . ." Incidentally, these documents are in the form prescribed by the Bureau of Lands. The date given (January 28, 1941) as date of approval of the application is the date of the decision in Claim No. 103. Third, if appellee's application had not been approved then he obviously had no right to transfer to the appellants, since as already pointed out, under section 13 of the statute, only after the approval of his application can an applicant enter and cultivate the land being applied for. Fourth, appellee had all qualifications prescribed by the statute 5 and the presumption is that in the performance of his duty, the Director granted appellee's application. Indeed, section 13 of the statute commands the Director to approve the application "upon the filing (thereof) . . . if he finds that the application should be approved . . . and authorize the applicant to take possession of the land upon payment of five pesos, Philippine currency, as entry fee." The fact that appellee was in possession of the homestead at the time of the conveyances to the appellants, coupled by the lack of any thing to show that he was not in possession of the requisite qualifications, fairly indicates that his application had been approved by the Director of Lands. These are circumstances strongly favoring the inference that appellee's application had been granted. In disregarding them and in insisting instead on the presentation of the records or reconstituted records to prove the grant of appellee's application, respondent land officials acted in excess of jurisdiction. This is not the first time circumstantial evidence is admitted to prove the grant of official sanction. In Garcia vs. Valera, 88 Phil. 472 (1951), the question was whether the sale of a homestead had been previously approved by the Secretary of Agriculture and Natural Resources. The trial court held that as defendant

failed to prove that the sale was approved, the same was void. In reversing the lower court's ruling, the Supreme Court held: "It is significant that appellee's witness did not definitely declare that the sale in question did not carry the requisite approval when it was presented for registration; that the appellant at least testified, and this is uncontradicted, that he took to the office of the register of deeds of Nueva Vizcaya a letter obtained from the Bureau of Lands in connection with his sale; and that the corresponding transfer certificate of title (No. 3313) was issued in the name of appellant by the register of deeds of Nueva Vizcaya in virtue of the sale made by Marcelo Uson. All these, coupled with the fact that the record does not show any constitutional or legal ground for not approving the sale in question and with the legal presumptions that official duty has been regularly performed and the law has been obeyed, fairly lead to the conclusion that the sale from Marcelo Uson to the appellant was made in conformity with Commonwealth Act No. 456 . . ." We hold therefore that the conveyances to the appellants, which were admittedly made without the previous approval of the Secretary of Agriculture and Natural Resources, are void and, consequently, that appellants return the possession of the land in question to the appellee upon the return to them of the purchase price they had paid to the appellee. 6 We do not forget, of course, that a transfer of rights without the previous approval of the Secretary of Agriculture and Natural Resources "shall result in the cancellation of the entry and the refusal of the patent" of the appellee but the cancellation is not automatic and as long as the Government has not chosen to act, the rights of appellee must stand. 7 Wherefore, the decision appealed from is affirmed, without pronouncement as to costs. Concepcion, C . J ., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J. P., Zaldivar, Sanchez and Ruiz Castro, JJ ., concur. Footnotes 1. The power to approve transfer of rights under Section 20 is now given to the Director of Lands. See Rep. Act No. 1242. 2. E.g. Calo vs. Fuertes, G.R. No. L-16537, June 29, 1962. See also Rellin vs. Cabigas, G.R. L15926, Oct. 31, 1960; Gamao vs. Calamba, G.R. L-13349, Sept. 30, 1960; Miguel vs. Reyes, 93 Phil. 542; Mari vs. Secretary, 92 Phil. 410. 3. Pascual vs. Provincial Board, G.R. L-11959, Oct. 31, 1959. Nor does the rule apply to a party who claims the land in dispute as his private property. Kimpo vs. Tabanar, G.R. L-16476, Oct. 31, 1961. 4. Alfafara vs. Mapa, 95 Phil. 125, 133 (1954). 5. Section 12 of the Public Land Act provides: "Any citizen of the Philippines over the age of eighteen years, or the head of a family, who does not own more than twenty-four hectares of land in the Philippines or has not had the benefit of any gratuitous allotment of more than twenty-four hectares of land since the occupation of the Philippines by the United States, may enter a homestead of not exceeding twenty-four hectares of agricultural land of the public domain." 6. Tinio vs. Frances, 98 Phil. 32 (1955); Oliveros vs. Porciongcola, 69 Phil. 305 (1940). 7. See Villacorta vs. Ulanday, 73 Phil. 655 (1942); Eugenio vs. Perdido, 97 Phil. 41 (1955).

EN BANC [G.R. No. L-13115. February 29, 1960.] TRINIDAD DE LOS REYES VDA. DE SANTIAGO, for herself and in behalf of her minor children, MAMERTO, LEONILA and ANDREA, all surnamed SANTIAGO, petitioner, vs. ANGELA S. REYES and WORKMEN'S COMPENSATION COMMISSION, respondents. Carlos E. Santiago for petitioners. Engracio Rafanan for respondent Commission. SYLLABUS 1. WORKMEN'S COMPENSATION; DEATH OF JEEPNEY DRIVER BEYOND REGULAR ROUTE; PRESUMPTION THAT DEATH OCCURRED BY REASON OF AND IN THE COURSE OF EMPLOYMENT. The deceased in the case at bar was the driver of a jeepney operated by respondent. He was last seen operating the said jeepney on a certain day, and the following day his dead body was found in the province of Quezon, obviously a victim of murder. The route of the jeepney driven by the deceased was within Manila and suburbs, and the Workmen's Compensation Commission, in denying the claim for compensation filed by the heirs of the deceased, stated that there was nothing in the record which justified the presumption that the deceased was forcibly taken away, at the point of a gun or a knife, from his regular orbit of employment. Held: Section 69, par. (q), Rule 123 of the Rules of Court, establishes the presumption that "the ordinary course of business has been followed," There is no question that immediately before leaving Manila the deceased was engaged in his employment. The presumption is that he performed his duties legally and in accordance with the rules and regulations, because that was his regular obligation. It was incumbent upon respondent to prove that the deceased voluntarily went out of his route and drove his jeepney towards the province of Quezon. In the absence of evidence to that effect, it must be concluded that the deceased was forced by circumstances beyond his will to go outside his ordinary route. There being a presumption under the provisions of Section 43 of the Workmen's Compensation Act that the deceased died while in the course of his employment, his death must be presumed to have arisen out of said employment. Consequently, his heirs are entitled to receive the compensation provided for by law. DECISION LABRADOR, J p: This is a petition to review the decision of the majority of the members of the Workmen's Compensation Commission, denying a claim for compensation of petitioners for the death of Victorio Santiago, driver of a jeepney operated by the respondent. The said deceased was the driver of an autocalesa belonging to respondent and was last seen operating said autocalesa at 9:00 in the evening of September 26, 1955. In the morning of September 27, 1955, his dead body was found in Tayabas, Quezon obviously a victim of murder by persons who were at large and whose identities were not known. Apparently the driver must have been attacked with blunt instrument or instruments as an examination of his head disclosed that it was heavily fractured, fragmenting it into many pieces, crushing and lacerating the brain. (Stipulation of Facts). Other pertinent facts in the stipulation of facts submitted by the parties are as follows: "That there is a specific instruction given by the respondent to the deceased to follow the route prescribed by the Public Service Commission. In the case of jeep driven by the deceased, its route is within Manila and suburbs; That it has always been the practice of the respondent that, whenever the driver is accepted, specific instruction is given to him to follow faithfully the traffic rules and regulations, especially speeding and overloading, and he is requested also not to operate beyond the route given by the Public Service Commission. In case the driver goes beyond the route prescribed by the Public Service Commission, a fine of P50.00 is imposed which is paid by the respondent. However, in case of the traffic violations especially speeding, it is the driver who pays." (p. 2, Annex "E"). Two of the members of the Commission made the following finding on the question as to whether or

not the death of Victoriano Santiago arose out of and was occasioned in the court of his employment. "There is nothing in the record which justified the assumption that he was forcibly taken away, at the point of a gun or a knife from his regular orbit of employment. The most that may be conceded, however remote it seems, is the possibility that, to use the referee's own word, "he, the driver, might have been lured," by his assassins to get away from his regular route, only to be robbed of his earnings, the jeep, and, which is the most important, his life. But this only demonstrates the voluntariness of his act of going out to the ordinary way of fulfilling his assigned job. It only adds to the inevitable conclusion that he went with his attackers in disregard not only of the instructions or orders of his employer but also of the rules and regulations of the Public Service Commission, which rules undeniably should be regarded as having the force of law, having been set by authorities for the observance of those to whom they are addressed, this deceased driver not excluded. If there is any material finding that is to be made out in this case, it is that the drivers act in deviating from the route prescribed for his observance constituted a positive factor in bringing about his own demise. His departure from the route where his employment only required him to be, in fact, brought him to an area fraught with extra risks or hazards not foreseeably and ordinary attached to the employment for which he was hired. This Commission finds that the deceased willfully violated public service rules and regulations and the instructions of his employer in undertaking a trip too far beyond the limits of the line in which his jeepney was authorized to operate. And with this as the basis, the correct determination of the second issue can be reached upon consideration of the following precedents: . . .." (pp. 5-6, Annex "E"). Associate Commissioner Nieves Baens del Rosario dissented from the opinion of the majority. She says in part: "In connection with the 'arising out of and in the course of employment' requirement in relation to the presumptions in favor of the employee, Larson makes this comment: 'The burden of proving his cases beyond speculation and conjecture is on the claimant. He is aided in some jurisdiction by presumptions that help to supply the minimum evidence necessary to support an award, and which shift the burden to the defendant when some connection of the injury with the work has been prove.' (p. 232, W/O.S. by Larson, Vol. 2) And in this jurisdiction where such presumptions in favor of the employee are provided in our Workmen's Compensation Act, our Supreme Court in the aforecited Batangas Transportation case ruled: 'Our position is that once it is proved that the employee died in the course of the employment, the legal presumption in the contrary, is that the claim comes within the provisions of the compensation law (Sec. 44). In other words, that accident arose out of the workmen's employment (2-A).' Another presumption created in favor of the employee and which is more specific than the all embracing presumption that the claim comes within the provisions of 'the Act' is that one provided in sub-section 3 of Section 44. It reads: '3. That the injury was not occasioned by the willful intention of the injured employee to bring about the injury or death of himself or of another.' This presumption arises from the natural rule, against suicides and once the presumption is established, the burden of proof shifts to the employer. He is, under the Workmen's Compensation Act, required to present 'substantial evidence' to overcome such presumption. In the case of Travellers Insurance Company vs. Cardillo, 140 F-2d 10 (1943) the court stated: 'The evidence necessary to overcome the presumption then must do more than create doubt or set up non-compensable alternative explanations of the accident. It must be 'evidence such as a reasonable mind must accept as adequate to support a conclusion.' No such evidence was presented by the herein respondent. In explanation of this policy, the Court held in the same Batangas Transportation case: 'It is not unfair; the employer has the means and the facilities to know the cause; and should not be allowed to profit by concealing it. Nay, he should take active steps to ascertain the cause of the murder;

not just continue its operations unmolested.' And in the case of Travellers Insurance Co. cited above the following reason was given: 'The death of the employee usually deprives the dependent of his best witness the employee himself and, especially where the accident is unwitnessed, some latitude should be given the claimant. Hence, presumptions or inference that an unwitnessed death arose out of the employment are allowed in some jurisdictions, where the employer provides no contrary proof, and when last seen deceased was working or had properly recessed.' Here, the respondent employer has not provided any contrary proof, and Santiago when he was last seen doing his regular work of driving . . ." (pp: 14-16, Annex "G"). Section 43 of the Workmen's Compensation Act, as amended by Section 24 of Republic Act 772, establishes the following presumptions: "In any proceeding for the enforcement of the claim for compensation under this Act, it shall be presumed in the absence of substantial evidence to the contrary 1. That the claim comes within the provisions of this Act; 2. That sufficient notice thereof was given; 3. That the injury was not occasioned by the willful intention of the injured employee to bring about the injury or death of himself or of another; 4. That the injury did not result solely from the intoxication of the injured employee while on duty; and 5. That the contents of verified medical and surgical reports introduced in evidence by claimants for compensation are correct." The decision of the majority of the members of the Commission reasons out that the deceased had received specific instructions not to operate beyond the route given by the Public Service Commission (only within the city of Manila), and his act in getting outside of the city was his free and voluntary act, because he disregarded the orders of his employer as well as the rules and regulations of the Public Service Commission. The majority concludes that the deceased willfully violated Public Service Commission rules and regulations and, therefore, death did not arise out of or by reason of his employment. The flaw in the above reasoning of the majority is that it violates the presumption expressly laid down by the following provision of Section 69, par. (q), rule 123, Rules of Court: "The following presumptions are satisfactory if uncontradicted, but may be contradicted and overcome by other evidence: xxx xxx xxx (q) That the ordinary course of business has been followed; xxx xxx xxx There is no question that immediately before leaving Manila the deceased was engaged in his employment. The presumption is that he performed his duties legally and in accordance with the rules and regulations, because that was his regular obligation. Inasmuch as the law established the presumption that the deceased followed the law and regulations, it was incumbent upon respondent to prove that he did otherwise, or that he failed to comply with the regulations. In other words it was incumbent upon the respondent herein to prove that the deceased voluntarily went out of his route and drove his jeepney towards the province of Quezon, not that the deceased voluntarily went to that province thereby going beyond the route provided for the vehicle that he was driving. Petitioners claim that the deceased voluntarily went out of his ordinary route. Petitioners also have the obligation to prove this fact, this being an affirmative allegation. They failed to do so. There being no such evidence submitted by the respondent, i.e., that the going of the deceased to Quezon province was made voluntarily by him, we must conclude, pursuant to the presumption that every person performs his duty or obligation, that he was forced by circumstances beyond his will to go

outside his ordinary route; in other words that while driving in the city he must have been forced to go out and drive to the province of Quezon on the threats of the malefactors guilty of assaulting and killing him against his (deceased) will. In the case of Batangas Transportation Co. vs. Josefina de Rivera, et al., G. R. No. L-7658, prom. May 8, 1956, decided by this Court, in which a driver of a bus, while so driving was suddenly attacked by his assailant who boarded the bus and thereafter stabbed him, the majority of this Court held that the driver died in the course of his employment even if there were indications (not sufficient to prove) that there was personal animosity between the assailant and the victim, which may have caused the assault. In said case the reason for the decision of this Court was that circumstances or indications show that the deceased died while driving the bus, thus that his death must have been due to his employment. The present case is stronger than the above-cited case of Batangas Transportation Co. vs. de Rivera, for while in said previous case there were indications which showed personal animosities which may have been the root cause of the assault, in the case at bar, there are no such indications. On the other hand, there is a presumption that the deceased died while in the course of his employment, and therefore his death must be presumed to have arisen out of said employment. We, therefore, find that the decision of the majority which has been appealed from is not in consonance with the law and the express provision of Section 43 of the Workmen's Compensation Law; and that by reason of such express provision of the law, we must hold that Victoriano Santiago died by reason of and in the course of his employment and consequently his heirs are entitled to receive the compensation provided for by law in such cases. Decision rendered by the court below is hereby set aside, and respondent is hereby ordered to pay the compensation due the heirs under the law. Without costs. So ordered. Pars, C. J. Bengzon, Bautista Angelo, Reyes, J. B. L., Endencia, Barrera and Gutirrez David, JJ., concur.

EN BANC [G.R. No. L-21335. December 17, 1966.] ABOITIZ SHIPPING CORPORATION, petitioner, vs. VIVENCIA ANDO PEPITO, and the Minors, LOLITA, ALBERTO, NELSON, MARYLEN and MARIA, all surnamed PEPITO, represented by their mother, VIVENCIA ANDO PEPITO, respondents. P. B. Uy, Calderon, for petitioner. G. C. Ariesgado for respondents. SYLLABUS 1. WORKMEN'S COMPENSATION COMMISSION; NON-CONTROVERSION OF CLAIM OF COMPENSATION, EFFECT OF; CASE AT BAR, FACT OF DEATH NOT ADMITTED. Non-controversion in workmen's compensation cases, as in the case of pleadings in ordinary civil cases, means admission of fact, not conclusions of law. In the case at bar, the mere failure to controvert the statement in the notice and claim for compensation that "the herein deceased was lost or reported missing" at sea while the vessel was navigating, does not import an admission that the man is actually dead, but that he was just lost or missing. 2. ID.; DEATH COMPENSATION AWARD NULL WITHOUT INQUIRY INTO FACT OF DEATH; EMPLOYERS CONSTITUTIONAL RIGHT TO DUE PROCESS VIOLATED. Where an employer is directed to pay death compensation without inquiry as to the fact and circumstances of death, the employer's right to due process enshrined in Section 1(1) of Article III of the Constitution is violated. Because of this, the compensation award is a nullity. 3. ID.; INVESTIGATION REPORT PRESENTED EX PARTE IS HEARSAY TWICE REMOVED; RULE IN WORKMEN'S COMPENSATION CASE. An investigation report, which was not brought up at any hearing, is of no value as evidence because whatever the investigator said therein would not rise above the level of hearsay twice removed. Besides, under section 7 of the Workmen's Compensation Law, any party in interest shall have the opportunity to examine and rebut all ex parte evidence received by the Commissioner which should be reduced to writing. 4. ID.; EVENT ARISING OUT OF, AND IN THE COURSE OF, EMPLOYMENT. Even though the employee was off-duty when he disappeared on the vessel at sea, the event arose out of, and took place in the course of, employment because the employee had no choice but to be in the vessel. 5. PRESUMPTION OF DEATH AFTER LAPSE OF FOUR YEARS; ART 391 (3), CIVIL CODE, APPLIED; EVIDENCE OF UNKNOWN WHEREABOUTS NECESSARY. The disappearance of the employee, which occurred more than four years ago, falls under par. 3, Art. 391, Civil Code, which presumes the death of a person or all purposes, including the division of estate among his heirs, if he "has been in danger of death under other circumstances and his existence has not been known for four years" or thereafter. DECISION SANCHEZ, J p: Between the night of November 30 and the ear]y morning of December 1, 1961, Demetrio Pepito, a crew member of M/V P. Aboitiz, disappeared therefrom while said vessel was on voyage. On December 26, 1961, petitioner received from respondent Vivencia Ando Pepito a letter dated December 12, 1961, stating "You are hereby notified that one of your employees, Mr. Demetrio Pepito, a crew member of M/V P. Aboitiz, one of your vessels, was reported missing as per record of the Deck Log Book of the M/V P. Aboitiz while said vessel was navigating from Surigao to Tandag. It is our belief that Mr. Pepito is already dead. A diligent search has been made but the same is rendered futile." On January 12, 1962, Vivencia Ando Pepito, for herself and in behalf of her children, the other respondents, filed with Regional Office No. 8, Department of Labor, Cebu City, a notice and claim for compensation, asking for death benefits, and describing the circumstances of the alleged death of Demetrio Pepito on the night of November 30, 1961 in the following manner, viz: "While the vessel

was navigating from Surigao to Tandag, the herein deceased was lost or reported missing as per record of the deck log of the M/V P. Aboitiz". Having received on February 15, 1962 from the chief, labor operations section of said regional office, a letter enclosing the foregoing claim, petitioner, on February 16, 1962, sent to that office the employer's report of accident or sickness, controverting the claim for compensation and alleging that Demetrio Pepito was found missing on December 1, 1961 and giving its own version of the incident as follows: "Pepito disappeared while off duty, and when the vessel was near Bucas Grande Island while the ship was in navigation on a calm sea and good weather. We do not know if he purposely jumped and swam ashore". On March 21, 1962, without hearing, the Regional Administrator issued an award for death benefits to respondents, planted upon the ground that "the right to compensation of the claimant has not been controverted by respondent within the period provided for by law". Motion to reconsider was of no avail. Petitioner sought review from the Workmen's Compensation Commission. In a decision dated March 8, 1963, said Commission affirmed. The reconsideration sought was thwarted in the Commission's en banc resolution of April 5, 1963. We are now called upon to review on certiorari the Commission's decision of March 8, 1963 and its resolution of April 5, 1963. 1. There should be no quarrel as to the fact that petitioner came to know of the disappearance of Demetrio Pepito on December 1, 1961. Petitioner so admits in its report of accident of sickness. And then, on December 26, 1961 petitioner received from respondent Vivencia Ando Pepito a letter informing it of the fact that Demetrio Pepito was reported missing on December 1, 1961, as per record of the deck log book of M/V P. Aboitiz. Decidedly, the purported controversion filed on February 16, 1962 was made beyond the periods set forth in the law and the rules and regulations of the Workmen's Compensation Commission, namely, 14 days from the date of accident or 10 days from knowledge thereof. 1 2. Logically the next problem we face is the scope of the non-controversion which may be clamped upon petitioner. By Section 2 Rule 7 of the Rules of the Workmen's Compensation Commission, "[A]ll the general rules of procedure in the Courts of First Instance shall be suppletory to the Rules of the Workmen's Compensation Commission but the commission shall not be bound by the technical rules of procedure". We go deep into the recitals of the notice and claim for compensation. It simply says that while the vessel was navigating, "the herein deceased was lost or reported missing." This claim was filed on January 12, 1962, or barely 42 days after the event took place. At that time, no presumption existed that Demetrio Pepito was dead. The boat was not lost. This opens up a number of possibilities. Because nothing is certain. Nobody knows what has happened to him. He could have transferred to another vessel or watercraft. He could even have swam to safety. Or he could have died. Or worse, he could have taken his own life. Legal implications such as right to compensation, succession, the legal status of the wife are so important that courts should not so easily be carried to the conclusion that the man is dead. 2 The result is that death cannot be taken as a fact. Non-controversion in compensation cases, as in the case of pleadings in ordinary civil cases, 3 simply means admission of facts, not conclusions of law. As applied to the case before us, the mere failure to controvert the statement that Demetrio Pepito is believed to be "dead" or "'deceased" because he "was lost" or was "reported missing", does not import an admission that the man is actually dead, but that he was just lost or missing. We, therefore, rule that petitioner's non-controversion admits but the fact that Demetrio Pepito was lost or missing, but certainly is not an admission of the actual fact of death. 3. But petitioner was directed to pay compensation without inquiry into the fact and circumstances of death. This trenches upon petitioner's right to due process enshrined in Section 1 (1) of Article III of the Constitution that "[N]o person shall be deprived of life, liberty, or property without due process of

law." The award having been made before petitioner was given an opportunity to be heard on the debatable fact and circumstances of death, that award has no leg to stand on. We nullify that award as a violation of a constitutional prescription. 4. But the Commission would want to downgrade petitioner's cry of denial of due process by a reference to a certain investigation report dated January 12, 1962, made barely 42 days, after the incident by one Anselmo M. Morales, a constabulary sergeant, to the effect that Demetrio Pepito was "on board said boat on her maiden voyage to Tandag, Surigao del Sur; that at about 2:00 o'clock a.m. on December 1, 1961, Francisco Ygot, a watchman on duty, noticed that Demetrio Pepito was not in the crews' sleeping quarters; that when a thorough search of the boat failed to locate the missing crew member, the boat's course was reversed upon instruction of its captain in order to look for him; that because no trace of Demetrio Pepito or his body could be found, the search was abandoned and the boat then proceeded to Tandag; and that no one knew what happened to Demetrio Pepito because he disappeared at midnight on a rough sea (big waves)." 4 This report does not prove death. At best, it confirms a known fact disappearance, with the circumstance that "no one knew what happened to Demetrio Pepito." Besides, said report was not brought up at any hearing. It was but the result of an investigation. Whatever the investigator said would not rise above the level of hearsay twice removed. By Section 7 of the Workmen's Compensation law "[A]ll ex parte evidence received by the Commissioner shall be reduced to writing and any party in interest shall have the opportunity to examine and rebut the same." Petitioner was not afforded an opportunity to as much as examine or contradict this report. It thus results that said report is of no value as evidence. 5. The employer-employee relationship is conceded. The event arose out of, and took place in the course of, employment. It matters not that the disappearance occurred, as alleged by petitioner, while Demetrio Pepito was off-duty. For, that incident happened while the boat was on a sea voyage. He had no choice. He had to be in the vessel. 5 6. From the time the event took place, i.e., from the night of November 30, 1961, to this date, more than 4 years have elapsed. It is because of this that we approach this problem with a practical end in view. By this time, it cannot be gainsaid that the case of the disappearance of Demetrio Pepito could come within the coverage of paragraph 3, Article 391 of the Civil Code, which reads: "ART. 391. The following shall be presumed dead for all purposes, including the division of estate among the heirs: xxx xxx xxx (3) A person who has been in danger of death under other circumstances and his existence has not been known for four years." 6 With the known facts namely, that Demetrio Pepito was lost or missing while the boat was navigating, he could have been in danger of death. But of course, evidence must be taken that his existence has not been known for four years or thereafter. Upon the view we take of this case, we vote to set aside the appealed decision of March 8, 1963 and the resolution of April 5, 1963, and to direct that the record hereof be returned to the Workmen's Compensation Commission with instructions 1. To hold a hearing, with notice to the parties, to determine (a) whether Demetrio Pepito is alive; or (b) whether he should be presumed dead, under the provisions of paragraph 3, Article 391 of the Civil Code; and (c) the circumstances of death if it be found or presumed that he died; and 2. To render judgment accordingly. No costs. So ordered. Concepcion, C. J., Reyes, J. B. L., Barrera, Dizon, Regala, Makalintal, Bengzon, J. P., Zaldivar and Castro, JJ., concur. Footnotes 1. Section 45, Workmen's Compensation Law; Sec. 2, Rule 5, Workmen's Compensation Commission Rules.

2. Article 391, Civil Code; Madrigal Shipping Co., Inc. vs. Del Rosario, et al., L-13130, October 31, 1959, citing Joaquin vs. Navarro, 93 Phil., 257, 265; Victory Shipping Lines vs. Workmen's Compensation Commission, et al., L-9268, November 28, 1959. 3. Tec Bi & Co. vs. Chartered Bank of India, Australia and China 41 Phil., 596, 605-606; Dalandan, et al., vs. Julio, et al., L-19101, February 29, 1964. 4. Emphasis supplied. 5. Martha Lumber Mill, Inc. vs. Lagradante, etc., et al., 99 Phil. 434, 437. 6. Art. 391(3), Civil Code, is now Sec. 5(x), par. 3(3), Rule 131, Rules of Court.

SECOND DIVISION [G.R. No. 39919. January 30, 1934.] FORTUNATO ORTUA, petitioner-appellant, vs. VICENTE SINGSON ENCARNACION, Secretary of Agriculture and Commerce, ET AL., respondents-appellees. Villafuerte, Tible & Valer for appellant. Solicitor-General Hilado for appellees. SYLLABUS 1. PHILIPPINE LAND LAW; DECISION OF DIRECTOR OF LANDS APPROVED BY THE SECRETARY OF AGRICULTURE AND COMMERCE, AUTHORITATIVENESS. The Director of Lands has been made by law a quasi-judicial officer. As such officer he makes findings of fact, even passes upon questions of mixed fact and law, and considers and decides the qualifications of applicants for the purchase of public lands. The decisions of the Director of Lands on the construction of the Public Land Law are entitled to great respect by the courts. 2. ID.; ID.; ON QUESTION OF FACT. A decision rendered by the Director of Lands and approved by the Secretary of Agriculture and Commerce, upon a question of fact is conclusive and not subject to be reviewed by the courts, in the absence of a showing that such decision was rendered in consequence of fraud, imposition, or mistake, other than error of judgment in estimating the value or effect of evidence, regardless of whatever or not it is consistent with the preponderance of the evidence, so long as there is some evidence upon which the finding in question could be made. 3. ID.; ID.; ON QUESTION OF LAW. The decision of the Director of Lands approved by the Secretary of Agriculture and Commerce on a question of law, is in no sense conclusive upon the courts, but is subject to review. Any action of the Director of Lands which is based upon a misconstruction of the law can be corrected by the courts. 4. ID.; ID.; QUALIFICATIONS OF APPLICATIONS TO PURCHASE PUBLIC AGRICULTURAL LANDS; CITIZENSHIP. One condition for the purchase of a tract of public agricultural land provided by the Public Land Law, Act No. 2874, in its sections 23 and 88, is that the purchaser shall be a citizen of lawful age of the Philippine Islands or of the United States. One, O, born in the Philippines, of a Filipina mother and a Chinese father, educated in China, who returned to the Philippines when he was twenty-one years of age, is presumptively a Philippine citizen; has not by his own acts expressly or impliedly repudiated his Philippine citizenship and chosen Chinese citizenship, but has always considered himself to be a Filipino and has elected to remain as a Philippine citizen, Held: That a clear error of law resulted in not considering O a Philippine citizen and so qualified under the Public and Law to purchase public agricultural lands. DECISION MALCOLM, J p: In this case the petitioner and appellant seeks the issuance of a writ of mandamus directed against the Secretary of Agriculture and Commerce and the Director of Lands, for the purpose of compelling them to give due course to his sale's application for a tract of public land. The demurrers interposed to the complaint by the respondents and appellees were sustained in the trial court, and on the failure of the petitioner further to amend his complaint, the action was dismissed, without costs. The principal facts admitted by the pleadings may be stated as follows: In January, 1920, the petitioner Fortunato Ortua filed an application with the Bureau of Lands for the purchase of a tract of public land situated in the municipality of San Jose, Province of Camarines Sur. Following an investigation conducted by the Bureau of Lands, Ortua's application was rejected, allowing him, however, to file a sale or lease application for the portion of the land classified to be suitable for commercial purposes, within a period of sixty days from the date of the decision and upon payment of P3,000 for accrued rents. Two motions for reconsideration of the decision were filed and denied. On appeal to the then Secretary of Agriculture and Natural Resources (Agriculture and Commerce), the decision was affirmed, except that the sum of P3,000 was reduced to P400.

It should be explained that one condition for the purchase of a tract of public agricultural land, provided by the Public Land Law, Act No. 2874, in its sections 23 and 88, is that the purchaser shall be a citizen of lawful age of the Philippine Islands or of the United States. Fortunato Ortua in his application stated that he was a Filipino citizen, but the Director of Lands held that on the contrary, Ortua was a Chinese citizen. On this question, the Director of Lands found established the following facts: Fortunato Ortua was born in 1885 in Lagonoy, Camarines Sur, Philippine Islands, being the natural son of Irene Demesa, a Filipina, and Joaquin Ortua, a Chinese. In 1896 Fortunato was sent to China to study. While he was in China his father and mother were legally married. Fortunato returned to the Philippines in 1906, that is, when he was twenty-one years of age. It was conceded by the Director of Lands that presumptively Fortunato Ortua was a Philippine citizen, but certain acts of Ortua were pointed to as demonstrating that he had forfeited his Philippine citizenship. Thus it was stated that Ortua voluntarily applied for a landing certificate of residence which was issued by the Insular Collector of Customs and which is only given to Chinese persons. Also, when Ortua applied for the registration of a boat, and it was denied by the Insular Collector of Customs on the ground that the appellant was a Chinese citizen, Ortua submitted to the ruling. The Director of Lands performs his functions pursuant to the provisions of the Public Land Law. In accordance with this law, the Secretary of Agriculture and Commerce is made the executive officer charged with carrying out the provisions of the Public Land Law, and he performs this duty through the Director of Lands (sec. 3). Subject to the control of the executive head, the Director of Lands is by law vested with direct executive control over land matters, "and his decisions as to questions of fact shall be conclusive when approved by the Secretary of Agriculture and Commerce." (Sec. 4.) The foregoing analysis of the pertinent provisions of the Public Land Law will show why in the opening paragraphs of this decision, we accepted the decision of the Director of Lands on questions of facts as conclusive. We would even go farther and would hold that the Director of Lands has been made by law a quasi-judicial officer. As such officer he makes findings of fact, even passes upon questions of mixed fact and law, and considers and decides the qualifications of applicants for the purchase of public lands. A discretion is lodged by law in the Director of Lands which should not be interfered with. The decisions of the Director of Lands on the construction of the Public Land Law are entitled to great respect by the courts. Accordingly, to paraphrase the authorities and decisions coming principally from the United States Supreme Court, we deduce the rule on the subject to be, that a decision rendered by the Director of Lands and approved by the Secretary of Agriculture and Commerce, upon a question of fact is conclusive and not subject to be reviewed by the courts, in the absence of a showing that such decision was rendered in consequence of fraud, imposition, or mistake, other than error of judgment in estimating the value or effect of evidence, regardless of whether or not it is consistent with the preponderance of the evidence, so long as there is some evidence upon which the finding in question could be made. (Vargas and Maalac, The Philippine Land Registration Law, pp. 738-740; Julian vs. Apostol [1928], 52 Phil., 422; 50 C. J., 1089 et seq.; Johnson vs. Riddle [1916], 240 U. S., 467.) There is, however, another side to the case. It certainly was not intended by the legislative body to remove from the jurisdiction of courts all right to review decisions of the Bureau of Lands, for to do so would be to attempt something which could not be done legally. Giving force to all possible intendments regarding the facts as found by the Director of Lands, yet so much of the decision of the Director of Lands as relates to a question of law is in no sense conclusive upon the courts, but is subject to review. In other words, any action of the Director of Lands which is based upon a misconstruction of the law can be corrected by the courts. (Shepley vs. Cowan [1876], 91 U. S., 330; Moore vs. Robbins [1878], 96 U. S., 530; Marquez vs. Frisbie [1879], 101 U. S., 473; Black vs. Jackson [1900], 177 U. S., 349; Johnson vs. Riddle, supra.) Having adjusted this fundamental matter, it is now for the court to determine if the question of law arising from the undisputed evidence was correctly decided by the Director of Lands. This question is,

if the petitioner Fortunato Ortua should be considered to be a Philippine citizen or a Chinese citizen. More correctly stated, Fortunato Ortua had a sort of a dual citizenship, and had it within his power either to elect to become a Philippine citizen or a Chinese citizen. Predicated on these assumptions, we doubt very much if it could be found that Ortua has by his own acts repudiated his Philippine citizenship and chosen Chinese citizenship. The Director of Lands gave too much prominence, we think, to two minor facts, susceptible of explanation. When Ortua returned from China at the age of twenty-one, it was the most natural thing in the world for him to land as a Chinese, for this would facilitate entry and obviate complications. Again, when Ortua applied for the registration of a boat, there may have been any number of reasons why he did not care to appeal from the decision of the Insular Collector of Customs. On the other hand, some consideration should be given to the intention of the petitioner, and he vigorously insists that it is his desire to be considered a Philippine citizen. He has taken a Filipino name. He has gone into business and has improved the property here in question to a great extent. There has been no implied renunciation of citizenship, because the petitioner has been domiciled in these Islands except for a short period during his infancy when he temporarily sojourned in China for study. On the contrary, he states that he has always considered himself to be a Filipino, and that he has elected to remain as a Philippine citizen. Therefore, on the facts found by the Director of Lands, we hold that clear error of law resulted in not considering petitioner a Philippine citizen and so qualified under the Public Land Law to purchase public agricultural lands. Sustaining the assigned errors, the order of the trial court will be set aside, and the record will be remanded to the court of origin for further proceedings in accordance with law. No pronouncement as to costs in this instance. Villa-Real, Hull, Imperial, and Goddard, JJ., concur.

EN BANC [G.R. No. L-7042. May 28, 1954.] CLOTILDE MEJIA VDA. DE ALFAFARA, petitioner-appellant, vs. PLACIDO MAPA, in his capacity as Secretary of Agriculture and Natural Resources, BENITA COMPANA, ET AL., respondents-appellees. Mariano M. Florido for appellant. Abundio A. Aldemita for appellees Benito Campana, et al. Assistant Solicitor General Guillermo E. Torres and Solicitor Jaime de los Angeles for appellee Placido Mapa. SYLLABUS 1. PUBLIC LAND LAW; DISPOSITION OF PUBLIC LANDS; DIRECTOR OF LANDS CAN NOT DISPOSE LAND WITHIN THE FOREST ZONE. Where the land covered by the homestead application of petitioner was still within the forest zone or under the jurisdiction of the Bureau of Forestry, the Director of Lands had no jurisdiction to dispose of said land under the provisions of the Public Land Law and the petitioner acquired no right to the land. 2. ID.; ID.; EFFECT OF CONTRACT OF LANDLORD AND TENANT EXECUTED IN GOOD FAITH. Even if the permit granted to petitioner's deceased husband by the Bureau of Forestry to possess the land and work it out for his benefit was against the law and as such could have not legal effect, yet where he had acted thereon in good faith honestly believing that his possession of the land was legal, and had entered into a contractual relation of landlord and tenant with the respondents in good faith, the contract had produced as a necessary consequence the relation of landlord and tenant; therefore, his widow should be given the preference to apply for the land for homestead purposes. 3. ID.; DECISION RENDERED BY DIRECTOR OF LANDS AND APPROVED BY THE SECRETARY OF AGRICULTURE AND NATURAL RESOURCES, CONCLUSIVE; EXCEPTIONS. The doctrine that "a decision rendered by the Director of Lands and approved by the Secretary of Agriculture and Natural Resources, upon a question of fact is conclusive and not subject to be reviewed by the courts, in the absence of a showing that such decision was rendered in consequences of fraud, impositions, or mistake, other than error of judgment in estimating the value or effect of evidence" does not apply to a decision of the Director of Lands which has been revoked by the Secretary of Agriculture and Natural Resources. Even of there is unanimity in the decision, still the doctrine would not apply if the conclusions drawn by the Secretary from the facts found are erroneous or not warranted by law. DECISION BAUTISTA ANGELO, J p: This is a petition for certiorari filed in the Court of First Instance of Cebu in which petitioner seeks to nullify a decision rendered by the Secretary of Agriculture and Natural Resources in D.A.N.R. Case No. 224 concerning lot No. 741 of the Carcar cadastre on the ground that he acted in excess of his jurisdiction or with grave abuse of discretion. It appears that petitioner and respondents filed separately with the Bureau of Lands an application claiming as homestead lot No. 741 of the Carcar cadastre. After an investigation conducted in accordance with the rules and regulations of said bureau, a decision was rendered in favor of petitioner thereby giving course to her application and overruling the application and protests of respondents. In due course, respondents appealed to the Secretary of Agriculture and Natural Resources, who reversed the decision of the Director of Lands. And her motion for reconsideration having been denied, petitioner interposed the present petition for certiorari. Respondents in their answer allege that, under section 3 of the Public Land Law, the Secretary of Agriculture and Natural Resources is the executive officer charged with the duty to carry out the provisions of said law relative to the administration and disposition of the lands of the public domain in the Philippines; that the decision which is now disputed by petitioner was rendered after a formal

investigation conducted in accordance with the rules and regulations of the Department of Agriculture and Natural Resources and on the basis of the evidence adduced therein and, therefore, said Secretary has not abused his discretion in rendering it; and that the decision of the Secretary of Agriculture and Natural Resources on the matter is conclusive and not subject to review by the courts, in the absence of a showing that it was rendered in consequence of fraud, imposition, or mistake other than an error of judgment in estimating the value or effect of the evidence presented, citing in support of this contention the case of Ortua vs. Singson Encarnacion, 59 Phil., 440. The lower court, after the reception of the evidence, upheld the contention of respondents, and dismissed the petition, whereupon petitioner took the case on appeal to the Court of Appeals. The case, however, was certified to this court on the ground that the appeal involves purely questions of law. The facts of this case as found by the Director of Lands are: By virtue of an application filed by Maximo Alfafara, the Bureau of Forestry granted him a permit on February 1, 1923, by virtue of which he was authorized to construct and maintain a fishpond within lot No. 741 of the Carcar cadastre. Said permittee constructed fishpond dikes along the side of the land facing General Luna street and running parallel to the river. Said dikes were destroyed by the flood which occurred in the same year. In 1926, the permittee abandoned the idea of converting the land into a fishpond and, instead, he decided to convert it into a ricefield. To this effect, the permittee entered into an agreement with respondents whereby the latter would convert the land into a ricefield on condition that they would take for themselves the harvests for the first three years and thereafter the crop would be divided share and share alike between the permittee and the respondents. In 1930, the permittee ceded his rights and interests in the land to his son, Catalino Alfafara, who continued improving the same by constructing more rice paddies and planting nipa palms along its border. Having converted the land into a ricefield, Catalino Alfafara filed a homestead application therefor in his name while at the same time continuing the same arrangement with respondents as share croppers. Upon the death of Catalino Alfafara in 1945, the respondents, after the harvest in 1946, began asserting their own right over the land and refused to give the share corresponding to Catalino Alfafara to his widow, the herein petitioner. The claim of respondents that they improved the land in their own right and not with permission of petitioner's predecessors-in- interest, was not given credence by the Bureau of Lands, for its agents found, not only from the evidence presented, but also from their ocular inspection, that the land has been under the rightful possession of Maximo Alfafara since 1923, and that respondents were only able to work thereon upon his permission on a share basis. By virtue of these findings of the Director of Lands, the homestead application of petitioner was given due course. On appeal however to the Secretary of Agriculture and Natural Resources, this official reversed the decision of the Director of Lands invoking the ruling long observed by his department in connection with disposition of public lands which are formerly within the forest zone or under the jurisdiction of the Bureau of Forestry. He held that neither petitioner nor any of her predecessors-in- interest had acquired any right under the homestead application filed by each inasmuch as the land covered by them was still within the forest zone when applied for and that, for that reason, the Director of Lands had no jurisdiction to dispose of said land under the provisions of the Public Land Law. He likewise held that, inasmuch as the Alfafaras have not established any right to the land at the time they entered into the contract with respondents to work on the land on a share basis, the relation of landlord and cropper between them did not legally exist and as such did not produce any legal effect. Consequently, he held the Alfafaras cannot be considered as landlords of respondents, and between an actual occupant of an agricultural land which is released from the forest zone and certified as disposable under the Public Land Law, and an applicant whose application expired prior to its certification, the actual occupant is given preferential right thereto over the appellant. The ruling above adverted to read as follows: "It is the rule in this jurisdiction which has been followed consistently in the disposition of forest land which have been declared agricultural lands that occupation of a forest land prior to the certification of

the Director of Forestry that the same is released from the forest zone and is disposable under the provisions of the Public Land Law does not confer upon the occupant thereof the right of reference thereto under the said law. In the same manner, this office does not give and does not recognize any right of preference in favor of homestead applicants whose applications were filed prior to the certification that the land covered thereby has already been released from the forest zone and is disposable under the provisions of the Public Land Law. In other words, prior to the certification by the Bureau of Forestry that a parcel of forest land is already released from the forest zone and is disposable under the provisions of the Public Land Law, this Department does not recognize any right of preference in favor of either the actual occupant thereof or any homestead applicant therefor. The reason for this is that any permit or license issued by the Bureau of Forestry for a parcel of forest land can not bind the Bureau of Lands to recognize any right in favor of the permittee under the provisions of the Public Land Law; and any homestead application filed prior to the certification by the Director of Forestry is ineffective and subject to rejection. From the time, however, that a parcel of forest land is released from the forest zone and certified as disposable under the provisions of the Public Land Law, the occupation of the actual occupant becomes effective and is recognized by the Public Land Law under section 95 thereof. Also the homestead application filed prior to the certification by the Director of Forestry will become effective from the date of the certification, if the same had not been rejected prior to such certification. But, between the actual occupant of a parcel of agricultural land and an applicant therefor whose application was filed prior to its certification as such by the Director of Forestry, this office always recognizes the preferential right thereto of the actual occupant thereof. In a long line of decisions in appealed cases, this office always maintains that agricultural lands already and actually occupied and cultivated cannot be applied for under the homestead law except by the actual occupant thereof." (Vicente Ruiz et al., vs. H. A. (New), Mariano Ba. Mancao, Isabela, City of Zamboanga, decision dated April 13, 1949 and order dated July 22, 1949.) The question now to be determined is: Has the Secretary of Agriculture and Natural Resources abused his discretion in reversing the decision of the Director of Lands? At the outset, it should be stated that the findings of fact made by the Director of Lands had been substantially upheld by the Secretary of Agriculture and Natural Resources. They only differ on the conclusions derived therefrom and on the effect upon them of the law regarding the disposition of public lands which formerly were within the forest zone or under the jurisdiction of the Bureau of Forestry. Thus, the first question decided by the Secretary of Agriculture and Natural Resources is: Has petitioner or any of her predecessors- in-interest acquired any right to the land under the provisions of the Public Land Law? And the Secretary, following the ruling above stated, answered in the negative. His reasoning follows: "Neither Clotilde Mejia Vda. de Alfafara nor any of her predecessors-in-interest could acquire any right under the homestead application filed by each of them inasmuch as the land covered thereby was still within the forest zone and that for that reason, the Director of Lands had no jurisdiction to dispose of said land under the provisions of the Public Land Law." To this we agree, for it appears that the land was released from the forest zone only on August 10, 1949, and the permit granted to Maximo Alfafara to possess the land for purposes of homestead was in 1923. And with regard to Catalino Alfafara, his son, his application was filed only in 1930. The second question decided by the Secretary is: What is the legal effect of the contractual relation of landlord and tenant existing between the Alfafaras and the respondents? The answer of the Secretary is: "Considering that none of the Alfafaras has established any right whatsoever to the land in question at the time the contractual relation began, this office is of the opinion and so holds that the relation of landlord and cropper could not and did not produce any legal effect because the supposed landlords, the Alfafaras, have no title or right to the land in question under the provisions of the Public Land Law. In other words, this office cannot see how any of the Alfafaras could be considered landlord of the claimants on the land in question when none of them has any right over said land under the Public Land

Law." With this conclusion we disagree. Even in the supposition that the permit granted to Maximo Alfafara by the Bureau of Forestry to possess the land and work it out for his benefit be against the law and as such can have no legal effect, the fact however is that Maximo Alfafara has acted thereon in good faith honestly believing that his possession of the land was legal and was given to him under and by virtue of the authority of the law. Likewise, it cannot be reasonably disputed that when Maximo Alfafara entered into a contract with the respondents for the conversion of the land into a ricefield with the understanding that the respondents, as a reward for their service, would get for themselves all the harvest for the first three years, and thereafter the harvests would be divided between them and Maximo Alfafara share and share alike both Alfafara and respondents have acted in good faith in the honest belief that what they were doing was legal and in pursuance of the permit granted to Alfafara under the authority of the law. Having entered into that contractual relation in good faith no other conclusion can be drawn than that such contract has produced as a necessary consequence the relation of landlord and tenant so much so that the respondents worked the land only on the basis of such understanding. And this relation continued not only when Maximo Alfafara assigned his right under the permit to his son Catalino, but also when the latter died and his widow, the herein petitioner, took over and continued possessing the land as successor-in-interest of her husband. And it was only in 1946, after the death of Catalino Alfafara, that respondents got wise and taking advantage of the helplessness of his widow, coveted the land and decided to assert their own right over it by filing their own application for homestead with the Bureau of Lands. Such a conduct cannot be regarded as one done in good faith and, in our opinion, cannot serve as basis for a grant of public land under the ruling invoked by the Secretary of Agriculture and Natural Resources. The possession therefore of the land by respondents should be considered as that of a tenant and in this sense that possession cannot benefit them but their landlord, the widow, in contemplation of the rule. As such, the widow should be given the preference to apply for the land for homestead purposes. We are not unmindful of the doctrine laid down in the case of Ortua vs. Singson Encarnacion, 59 Phil., 440, to the effect that "a decision rendered by the Director of Lands and approved by the Secretary of Agriculture and Natural Resources, upon a question of fact is conclusive and not subject to be reviewed by the courts, in the absence of a showing that such decision was rendered in consequence of fraud, imposition or mistake, other than error of judgment in estimating the value or effect of evidence." But we hold that this doctrine does not apply here because we are not concerned with a decision of the Director of Lands which was approved by the Secretary of Agriculture and Natural Resources, but one which has been revoked. The philosophy behind this ruling is that if the decision of the Director of Lands on a question of fact is concurred in by the Secretary of Agriculture and Natural Resources, it becomes conclusive upon the courts upon the theory that the subject has been thoroughly weighed and discussed and it must be given faith and credit, but not so when there is a disagreement. 1 And even if there is unanimity in the decision, still we believe that the doctrine would not apply if the conclusions drawn by the Secretary from the facts found are erroneous or not warranted by law. These conclusions can still be the subject of judicial review. These are questions of law that are reserved to the courts to determine, as can be inferred from the following ruling laid down in the same case of Ortua: "There is, however, another side to the case. It certainly was not intended by the legislative body to remove from the jurisdiction of courts all right to review decisions of the Bureau of Lands, for to do so would be to attempt something which could not be done legally. Giving force to all possible intendments regarding the facts as found by the Director of Lands, yet so much of the decision of the Director of Lands as relates to a question of law is in no sense conclusive upon the courts, but is subject to review. In other words, any action of the Director of Lands which is based upon a misconstruction of the law can be corrected by the courts." (Shirley vs. Cowan [1876], 91 U. S., 330; Moore vs. Robins [1878], 96 U. S., 530; Marquez vs. Frisbie [1879], 101 U. S., 473; Black vs. Jackson [1900], 177 U. S., 349; Johnson vs. Riddle, supra.)

Wherefore, the decision appealed from is reversed. The court sets aside the decision of the Secretary of Agriculture and Natural Resources dated September 15, 1949 as well as his order dated January 3, 1950, reaffirming said decision. The court revives the decision of the Director of Lands dated March 18, 1948 and orders that it be given due course. No pronouncement as to costs. Bengzon, Montemayor, Jugo, Labrador and Concepcion, JJ., concur. Separate Opinions PARAS, C.J., dissenting: It is true that Maximo Alfafara was granted on February 1, 1923, a permit to construct and maintain a fishpond within lot No. 741 of the Carcar cadastre, but it nevertheless appears that said permit was cancelled in 1926 after said fishpond was destroyed by a typhoon. In said year, Maximo Alfafara induced the respondents Benita Compana, et al., to convert the former fishpond into a riceland, the agreement being that the crops for the first three years would be for said respondents and that thereafter the crops would be divided equally between the former and the latter. According to the findings of the Secretary of Agriculture and Natural Resources, not contradicted in any way by those of the Director of Lands, Maximo Alfafara and his successors-in-interest never worked on the land or spent anything for the improvements thereon. The question that arises is, after the land was declared available for homestead purposes by certification of the Director of Forestry in 1949, or long after the permit of Alfafara had been cancelled, whether the Alfafaras should be preferred to those who actually worked on the land. After the cancellation of his permit, Maximo Alfafara ceased to have any right or authority to continue holding the land. Yet, he was given for several years one half of the crops harvested by the respondents who took over the land in good faith and could already occupy it in their own right. It may fairly be considered that the original holder had impliedly parted with his rights, if any, for valuable consideration. It is plainly unjust, under the circumstances, to deprive the respondents of their priority to the portions of the land actually held by them as homesteads. It appears, however, that there were occupants of the portions of the lot who did not apply for homesteads with the result that said portions may be awarded to the Alfafaras if they are still entitled under the law. I vote for the affirmance of the appealed decision. Pablo, J., concurs. Footnotes 1. This doctrine is based on section 4 of the Public Land Law. It provides that the decisions of the Director of Lands "as to questions of fact shall be conclusive when approved by the Secretary of Agriculture and Natural Resources)."

EN BANC [G.R. No. 44291. August 15, 1936.] THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellant, vs. AUGUSTO A. SANTOS, defendant-appellee. Solicitor-General Hilado for appellant. Arsenio Santos for appellee. SYLLABUS 1. FISHING IN ZONE PROHIBITED BY A REGULATION OF THE SECRETARY OF AGRICULTURE AND COMMERCE; EXCESS OF REGULATORY POWERS CONFERRED BY ACT NO. 4003 AND EXERCISE OF LEGISLATIVE POWER. The condition clause of section 28 of Administrative Order No. 2, issued by the Secretary of Agriculture and Commerce, is null and void and without effect, as constituting an excess of the regulatory power conferred upon him by section 4 of Act No. 4003 and an exercise of a legislative power which has not been and cannot be delegated to him. DECISION VILLA-REAL, J p: This case is before us by virtue of an appeal taken by the prosecuting attorney from the order of the Court of First Instance of Cavite which reads as follows: "ORDER "When this case was called for trial for the arraignment, counsel for the accused appeared stating that in view of the ruling laid down by this court in criminal case No. 6785 of this court, holding that the penalty applicable is under section 83 of Act No. 4003 which falls within the original jurisdiction of the justice of the peace court, he requests that the case be remanded to the justice of the peace court of Cavite which conducted the preliminary investigation, so that the latter may try it, being within its original jurisdiction. "We agree that it falls within the jurisdiction of the corresponding justice of the peace court, but it being alleged in the information that the infraction was committed within the waters of the Island of Corregidor, the competent justice of the peace court is that of Corregidor, not Cavite. "Wherefore, we decree the dismissal of this case, cancelling the bond filed by the accused, with costs de oficio, without prejudice to the filing by the prosecuting attorney of a new information in the justice of the peace court of Corregidor, if he so deems convenient. It is so ordered." In support of his appeal the appellant assigns as the sole alleged error committed by the court a quo its having dismissed the case on the ground that it does not fall within its original jurisdiction. On June 18, 1930, the provincial fiscal of Cavite filed against the accused-appellee August A. Santos an information which reads as follows: "The undersigned Provincial Fiscal accuses Augusto A. Santos of violation of section 28 of Fish and Game Administrative Order No. 2 and penalized by section 29 thereof committed as follows: "That on or about April 29, 1935, within 1,500 yards north of Cavalry Point, Corregidor Island, Province of Cavite, P. I., the said accused Augusto A. Santos, the registered owner of two fishing motor boats Malabon II and Malabon III, did then and there willfully, unlawfully and criminally have his said boats, manned and operated by his fishermen, fish, loiter and anchor without permission from the Secretary of Agriculture and Commerce within three (3) kilometers from the shore line of the Island of Corregidor over which the naval and military authorities of the United States exercise jurisdiction. "Contrary to law. "Cavite, Cavite, June 18, 1935." Section 28 of Administrative Order No. 2 relative to fish and game, issued by the Secretary of Agriculture and Commerce, provides as follows: "28. Prohibited fishing areas. No boats licensed in accordance with the provisions of Act No. 4003 and this order to catch, collect, gather, take, or remove fish and other sea products from

Philippine waters shall be allowed to fish, loiter, or anchor within 3 kilometers of the sore line of islands and reservations over which jurisdiction is exercised by naval or military authorities of the United States, particularly Corregidor, Pulo Caballo, La Monja, El Fraile, and Carabao, and all other islands and detached rocks lying between Mariveles Reservation on the north side of the entrance to Manila Bay and Calumpan Point Reservation on the south side of said entrance: Provided, That boats not subject to license under Act No. 4003 and this order may fish within the areas mentioned above only upon receiving written permission therefor, which permission may be granted by the Secretary of Agriculture and Commerce upon recommendation of the military or naval authorities concerned. "A violation of this paragraph may be proceeded against under section 45 of the Federal Penal Code." The above quoted provisions of Administrative Order No. 2 were issued by the then Secretary of Agriculture and Natural Resources, now Secretary of Agriculture and Commerce, by virtue of the authority vested in him by section 4 of Act No. 4003 which reads as follows: "SEC. 4. Instructions, orders, rules and regulations. The Secretary of Agriculture and Natural Resources shall from time to time issue such instructions, orders, rules and regulations consistent with this Act, as may be necessary and proper to carry into effect the provisions thereof and for the conduct of proceedings arising under such provisions." The herein accused and appellee Augusto A. Santos is charged with having ordered his fishermen to manage and operate the motor launches Malabon II and Malabon III registered in his name and to fish, loiter and anchor within three kilometers of the shore line of the Island of Corregidor over which jurisdiction is exercised by naval and military authorities of the United States, without permission from the Secretary of Agriculture and Commerce. These acts constitute a violation of the conditional clause of section 28 above quoted, which reads as follows: "Provided, That boats not subject to license under Act No. 4003 and this order may fish within the areas mentioned above (within 3 kilometers of the shore line of islands and reservations over which jurisdiction is exercised by naval and military authorities of the United States, particularly Corregidor) only upon receiving written permission therefor, which permission may be granted by the Secretary of Agriculture and Commerce upon recommendation of the military or naval authorities concerned." (Within parenthesis ours.) Act No. 4003 contains no similar provision prohibiting boats not subject to license from fishing within three kilometers of the shore line of islands and reservations over which jurisdiction is exercised by naval and military authorities of the United States, without permission from the Secretary of Agriculture and Commerce upon recommendation of the military and naval authorities concerned. Inasmuch as the only authority granted to the Secretary of Agriculture and Commerce, by section 4 of Act No. 4003, is to issue from time to time such instructions, orders, rules and regulations consistent with said Act, as may be necessary and proper to carry into effect the provisions thereof and for the conduct of proceedings arising under such provisions; and inasmuch as said Act No. 4003, as stated, contains no provisions similar to those contained in the above quoted conditional clause of section 28 of Administrative Order No. 2, the conditional clause in question supplies a defect of the law, extending it. This is equivalent to legislating on the matter, a power which has not been and cannot be delegated to him, it being exclusively reserved to the then Philippine Legislature by the Jones Law, and now to the National Assembly by the Constitution of the Philippines. Such act constitutes not only an excess of the regulatory power conferred upon the Secretary of Agriculture and Commerce, but also an exercise of a legislative power which he does not have, and therefore said conditional clause is null and void and without effect (12 Corpus Juris, 845; Rubi vs. Provincial Board of Mindoro, 39 Phil., 660; U. S. vs. Ang Tang Ho, 43 Phil., 1; U. S. vs. Barrias, 11 Phil., 327). For the foregoing considerations, we are of the opinion and so hold that the conditional clause of section 28 of Administrative Order No. 2, issued by the Secretary of Agriculture and Commerce, is null and void and without effect, as constituting an excess of the regulatory power conferred upon him by

section 4 of Act No. 4003 and an exercise of a legislative power which has not been and cannot be delegated to him. Wherefore, inasmuch as the facts with the commission of which Augusto A. Santos is charged do not constitute a crime or a violation of some criminal law within the jurisdiction of the civil courts, the information filed against him is dismissed, with the costs de oficio. So ordered. Avancea, C.J., Abad Santos, Imperial, Diaz, Recto and Laurel, JJ., concur.

EN BANC [G.R. No. L-8987. May 23, 1957.] JAPANESE WAR NOTES CLAIMANTS ASSOCIATION OF THE PHILIPPINES, INC., petitioner, vs. SECURITIES AND EXCHANGE COMMISSION, respondent. Felix B. Mintu for petitioner. Solicitor General Ambrosio Padilla and Solicitor Jorge R. Coquia for respondent. SYLLABUS 1. PRIVATE CORPORATIONS; JAPANESE WAR NOTES CLAIMANTS ASSOCIATION; EXERCISE OF POWERS NOT GRANTED IN THE ARTICLES OF INCORPORATION, EFFECT OF. Although the articles of incorporation give petitioner the privilege to work for the redemption of the Japanese war notes of its members alone, it can not offer its services to the public for a valuable consideration, because there is nothing definite and tangible about the redemption of the war notes and its success is speculative. Thus, when petitioner engaged in the business of registering war notes for deposit upon payment of fees, and of accepting and collecting fees for reparation claims for civilian casualties and other injuries, it acted beyond the powers embodied in its articles of incorporation. DECISION LABRADOR, J p: On August 25, 1954 the Securities and Exchange Commissioner issued an order requiring petitioner herein and its President, Mr. Alfredo Abcede, to show cause why it should not be proceeded against for making misrepresentations to the public about the need of registering and depositing Japanese war notes, with a view to their probable redemption as contemplated in Senate Bill No. 163 and in Senate Concurrent Resolution No. 14, for otherwise they would be valueless. At the investigation that was conducted in connection with the above order, the petitioner tried to show that there were no misrepresentations made by them in their publications and that the mistake made by them (that President Magsaysay would soon make representations to the United States Government to have the war notes redeemed) was made in good faith as it was later retracted and rectified. They also stated that they longed and hoped that the war notes would be redeemed; that they are sincere and honest in their activities; and that they are entitled to their beliefs. After the investigation, in which it was disclosed that the petitioner claimed the right to continue in the above-mentioned activities, the Commissioner found that according to its articles the petitioner has the privilege to work for the redemption of the war notes of its members alone, but that it can not offer its services to the public for a valuable consideration, because there is nothing definite and tangible about the redemption of the war notes and its success is speculative; that any authority given to offer services can easily degenerate into a racket; that under its articles of incorporation the petitioner is a civic and non-stock corporation and should not engage in business for profit; that it has received war notes for deposit, upon payment of fees, without authority in its articles to do so; that it had previously been ordered to desist from collecting fees for those registering the war notes, but notwithstanding this prohibition it has done so in the guise of service fees. Hence the Commissioner ordered: "(1) That the Association, and all/any of its officers, directors, employees, representatives, or agents stop immediately the registration of Japanese War Notes, receiving the same for deposit, and charging fees therefor. It is not, however, prohibited from admitting members, with the corresponding rights and obligations as such. "(2) That the Association and all/any of its officers, directors, employees, representatives, or agents, desist forthwith from accepting and collecting fees for reparation claims for civilian casualties and other injuries, as it is not authorized so to do under its articles of incorporation." (Order of the Securities and Exchange Commission dated February 28, 1955.) The case at bar is for a review of the above order. It is contended that the Commissioner erred (1) in finding that petitioner made misrepresentations to the public so as to induce holders of war notes to register them with petitioner, (2) in ordering the petitioner to stop the registration of Japanese war

notes, receiving same for deposit and charging fees therefore, and (3) in ordering petitioner to desist from accepting and collecting fees for reparation claims for civilian casualties and injuries. We are not permitted to examine the correctness of the first contention as above set forth as the same involves questions of fact; only questions of law may be raised in this case for review (section 2, Rule 43 of the Rules of Court). In support of the second contention it is claimed that the order was beside the issue investigated. While it may be true that the issue which started the investigation has been the misrepresentations made to the public by the petitioner herein, the order is based on the findings of fact made in the course of the investigation and the prohibition stated in the order aims at the eradication of the source of the evil of misrepresentation that was the subject of the investigation. It can not be said, therefore, that the resultant order is not germane or related to the subject-matter of the investigation. It is also argued that the registration of war notes and the collection of fees therefor is not prohibited by the corporation law and the authority of the petitioner to engage therein is implied from its articles of incorporation, the purposes of which are: "(1) To consecrate and sanctify in a strong and militant organization in the furtherance of the financial conditions of its members toward the attainment of their claims; "(2) To take a position which is only secondary and complimentary to that of our constituted government in campaigning for the welfare of our people, especial