G.R. No.

128448 February 1, 2001

SPOUSES ALEJANDRO MlRASOL and LILIA E. MIRASOL, petitioners,

vs.
THE COURT OF APPEALS, PHILIPPINE NATIONAL and PHILIPPINE EXCHANGE CO.,
INC., respondent.
Facts:
The Mirasols are proprietors and cultivators of sugar plantations. Between 1973 and
1975, the Philippine National Bank (PNB) provided financial backing for the Mirasols' sugar
production enterprise through a crop loan financing arrangement. To secure this financing, the
Mirasols entered into Credit Agreements, executed a Chattel Mortgage on Standing Crops, and
established a Real Estate Mortgage in favor of PNB. The Chattel Mortgage granted PNB the
authority to market and sell their sugar, with the proceeds intended for settling their obligations
to the bank.
In the same period, President Marcos issued PD 579 in November 1974, granting the Philippine
Exchange Co., Inc. (PHILEX) the authority to buy sugar allotted for export. PNB was also
sanctioned to fund PHILEX's purchases. The decree stipulated that any profits gained by
PHILEX were to be remitted to the government.
The Mirasols believed that the profits from these transactions were more than sufficient
to cover their debts, prompting them to request an account of the funds from PNB, which went
unanswered. Despite this, the Mirasols continued to obtain additional loans from PNB and
withdraw funds from their accounts, even more than their available balances. PNB urged the
Mirasols to settle their overdue accounts. Consequently, the Mirasols transferred real estate
properties to PNB as dacion en pago (payment in kind), yet an outstanding balance remained.
Subsequently, PNB initiated non-judicial foreclosure proceedings on the mortgaged properties,
still holding a deficiency claim.
The Mirasols persistently sought an explanation of the proceeds from PNB, asserting that
these funds could potentially offset their outstanding liabilities if properly evaluated. However,
PNB remained resolute in its position, citing that according to P.D. No. 579, there was no
requirement for an accounting since all earnings from the export sales of sugar were designated
for the National Government.
On August 9, 1979, the Mirasols instituted legal action against PNB, seeking an account
of funds, specific performance, and damages.
Issue:
1. Whether or not the Trial Court has jurisdiction to declare a statute unconstitutional
without notice to the Solicitor General where the parties have agreed to submit such issue
for the resolution of the Trial Court.
2. The constitutionality and/or legality of Presidential Decrees numbered 338, 579, and
1192
3. Whether or not said PD is subject to judicial review.
Ruling:
Regional Trial Courts have the authority to decide if a law or order follows the Constitution. The
Constitution gives the power to review and decide about laws, agreements, and orders not only to
the highest court but also to the Regional Trial Courts.
The reason for giving a notice to the Solicitor General, as stated in Rule 64, Section 3, is
so that they can decide if they need to be part of a case challenging a law or agreement's validity.
Not giving this notice would be like not letting the Solicitor General participate in the case. It's
important to understand that the notice rule isn't only for specific types of cases.
The rule clearly says this notice is needed in "any action," not just certain types.
Whenever someone challenges the validity of a law, treaty, decree, order, or proclamation, the
Solicitor General must be informed.
 The petitioners argue that a certain law (P.D. No. 579) and its rules break the rule of
fairness and the rule against taking private property without paying fairly. They ask the highest
court to review this.
For the highest court to review, a few things must be true: First, there must be a real case
that needs reviewing. Second, the issue being looked at must be ready for a decision. Third, the
person challenging the law must have a good reason to do so. Fourth, the question of whether the
law is constitutional should have been brought up as soon as possible. Lastly, the main point of
the case must be about whether the law follows the Constitution