Before us is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing and seeking to reverse and set aside: a) the decision dated November 23, 1995 of the Court of Appeals reversing the decision of the Regional Trial Court of Pasig, Metro Manila, Branch 159; and b) the resolution dated May 28, 1996 denying reconsideration of said decision.

The generative facts of the case are as follows:

On February 17, 1978, then President Ferdinand Marcos issued Proclamation No. 1716 reserving for Municipal Government Center Site Purposes certain parcels of land of the public domain located in the Municipality of San Juan, Metro Manila.

Considering that the land covered by the above-mentioned proclamation was occupied by squatters, the Municipality of San Juan purchased an 18-hectare land in Taytay, Rizal as resettlement center for the said squatters. Only after resettling these squatters would the municipality be able to develop and construct its municipal government center on the subject land.

After hundreds of squatter families were resettled, the Municipality of San Juan started to develop its government center by constructing the INP Building, which now serves as the PNP Headquarters, the Fire Station Headquarters, and the site to house the two salas of the Municipal Trial Courts and the Office of the Municipal Prosecutors. Also constructed thereon are the Central Post Office Building and the Municipal High School Annex Building.

On October 6, 1987, after Congress had already convened on July 26, 1987, former President Corazon Aquino issued Proclamation No. 164, amending Proclamation No. 1716. Said amendatory proclamation pertinently reads as follows:

PROCLAMATION NO. 164

AMENDING PROCLAMATION NO. 1716, DATED FEBRUARY 17, 1978, WHICH RESERVED FOR MUNICIPAL GOVERNMENT CENTER SITE PURPOSES CERTAIN PARCELS OF LAND OF THE PUBLIC DOMAIN SITUATED IN THE MUNICIPALITY OF SAN JUAN, METROPOLITAN MANILA, ISLAND OF LUZON, BY EXCLUDING FROM ITS OPERATION THE PARCELS OF LAND NOT BEING UTILIZED FOR GOVERNMENT CENTER SITES PURPOSES BUT ACTUALLY OCCUPIED FOR RESIDENTIAL PURPOSES AND DECLARING THE LAND OPEN TO DISPOSITION UNDER THE PROVISIONS OF THE PUBLIC LAND ACT, AS AMENDED.

Upon recommendation of the Secretary of Environment and Natural Resources and by virtue of the powers vested in me by law, I, CORAZON C. AQUINO, President of the Philippines, do hereby amend Proclamation No. 1716, dated February 17, 1978, which established for municipal government center site purposes certain parcels of land mentioned therein situated in the Municipality of San Juan, Metro Manila, by excluding from its operation the parcels of land not being utilized for government center site purposes but actually occupied for residential purposes and declaring the land so excluded, together with other parcels of land not covered by Proclamation No. 1716 but nevertheless occupied for residential purposes, open to disposition under the provisions of the Public Land Act, as amended, subject to future survey, which are hereunder particularly described as follows :

Lot 1 (Port.) Psu-73270

x x x x x x x x x

Lot 4 (Port.) Psd-740

and Psd-810

x x x x x x x x x

Lot 5 (Port.) Psu-73270

x x x x x x x x x

IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of the Republic of the Philippines to be affixed.

Done in the City of Manila, this 6th day of October in the year of Our Lord, nineteen hundred and eighty-seven.

(Sgd.)

CORAZON C. AQUINO

By the President :

(Sgd.)

CATALINO MACARAIG, JR.

Acting Executive Secretary

(Rollo, pp. 148-151.)

On June 1, 1988, the Corazon de Jesus Homeowners Association, Inc., one of herein private respondents, filed with the Regional Trial Court of the National Capital Judicial Region (Pasig, Branch 159) a petition for prohibition with urgent prayer for restraining order against the Municipal Mayor and Engineer of San Juan and the Curator of Pinaglabanan Shrine, to enjoin them from either removing or demolishing the houses of the association members who were claiming that the lots they occupied have been awarded to them by Proclamation No. 164.

On September 14, 1990, the regional trial court dismissed the petition, ruling that the property in question is being utilized by the Municipality of San Juan for government purposes and thus, the condition set forth in Proclamation No. 164 is absent.

The appeal before the Court of Appeals was dismissed in a decision dated July 17, 1991. This decision became final and the said judgment was duly entered on April 8, 1992.

Disregarding the ruling of the court in this final judgment, private respondents hired a private surveyor to make consolidation-subdivision plans of the land in question, submitting the same to respondent Department of Environment and Natural Resources (DENR) in connection with their application for a grant under Proclamation No. 164.

To prevent DENR from issuing any grant to private respondents, petitioner municipality filed a petition for prohibition with prayer for issuance of a temporary restraining order and preliminary injunction against respondent DENR and private respondent Corazon de Jesus Homeowners Association.

The regional trial court sustained petitioner municipality, enjoining the DENR from disposing and awarding the parcels of land covered by Proclamation No. 164.

The Court of Appeals reversed, hence, the present recourse.

Cutting through the other issues, it would appear that ultimately, the central question and bone of contention in the petition before us boils down to the correct interpretation of Proclamation No. 164 in relation to Proclamation No. 1716.

Petitioner municipality assails the decision of the Court of Appeals by hammering on the issue of res judicata in view of the fact that an earlier judgment, which had become final and executory, had already settled the respective rights of the parties under Proclamation No. 164. This notwithstanding, petitioner reiterates the reasons why the court had previously ruled in favor of petitioner's rights over the subject property against the claims of private respondents.

We find good legal basis to sustain petitioner's position on the issue of res judicata insofar as the particular area covered by Proclamation No. 164, which was the subject matter of the earlier case, is concerned.

The basic elements of res judicata are: (a) the former judgment must be final; (b) the court which rendered it had jurisdiction over the subject matter and the parties; (c) it must be a judgment on the merits; and (d) there must be between the first and second actions identity of parties, subject matter, and cause of action (Mangoma vs. Court of Appeals, 241 SCRA 21 [1995]).

The existence of the first three elements can not be disputed. As to identity of parties, we have ruled that only substantial identity is required and not absolute identity of parties (Suarez vs. Municipality of Naujan, 18 SCRA 682 [1966]). The addition of public respondent DENR in the second case will thus be of no moment. Likewise, there is identity of cause of action since the right of the municipality over the subject property, the corresponding obligation of private respondents to respect such right and the resulting violation of said right all remain to be the same in both the first and the second actions despite the fact that in the first action, private respondents were the plaintiff while in the second action, they were the respondents.

The last requisite is identity of subject matter. Res judicata only extends to such portion of land covered by Proclamation No. 164 which the court ruled may not be automatically segregated from the land covered by Proclamation No. 1716. It does not include those portions which are outside the coverage of Proclamation No. 1716.

Withal, reversal of the decision of the Court of Appeals would be justified upon the above premise and our discussion may properly end here. However, there exists a more basic reason for setting aside the appealed decision and this has reference to a fundamental and gross error in the issuance of Proclamation No. 164 on October 16, 1987 by then President Aquino.

Proclamation No. 1716 was issued by the late President Ferdinand E. Marcos on February 17, 1978 in the due exercise of legislative power vested upon him by Amendment No. 6 introduced in 1976. Being a valid act of legislation, said Proclamation may only be amended by an equally valid act of legislation. Proclamation No. 164 is obviously not a valid act of legislation. After the so-called bloodless revolution of February 1986, President Corazon Aquino took the reigns of power under a revolutionary government. On March 24, 1986, she issued her historic Proclamation No. 3, promulgating the Provisional Constitution, or more popularly referred to as the Freedom Constitution. Under Article II, Section 1 of the Freedom Constitution, the President shall continue to exercise legislative power until a legislature is elected and convened under a new constitution. Then came the ratification of the draft constitution, to be known later as the 1987 Constitution. When Congress was convened on July 26, 1987, President Aquino lost this legislative power under the Freedom Constitution. Proclamation No. 164, amending Proclamation No. 1716 was issued on October 6, 1987 when legislative power was already solely on Congress.

Although quite lamentably, this matter has escaped the attention of petitioner as well as the courts before which this case has already passed through, this Court cannot help noticing this basic flaw in the issuance of Proclamation No. 164. Because this unauthorized act by the then president constitutes a direct derogation of the most basic principle in the separation of powers between the three branches of government enshrined in our Constitution, we cannot simply close our eyes and rely upon the principle of the presumption of validity of a law.

There is a long standing principle that every statute is presumed to be valid (Salas vs. Jarencio, 46 SCRA 734 [1970]; Peralta vs. Comelec, 82 SCRA 30 [1978]). However, this rests upon the premise that the statute was duly enacted by legislature. This presumption cannot apply when there is clear usurpation of legislative power by the executive branch. For this Court to allow such disregard of the most basic of all constitutional principles by reason of the doctrine of presumption of validity of a law would be to turn its back to its sacred duty to uphold and defend the Constitution. Thus, also, it is in the discharge of this task that we take this exception from the Court's usual practice of not entertaining constitutional questions unless they are specifically raised, insisted upon, and adequately argued.

We, therefore, hold that the issuance of Proclamation No. 164 was an invalid exercise of legislative power. Consequently, said Proclamation is hereby declared NULL and VOID.

WHEREFORE, the appealed decision of the Court of Appeals is hereby SET ASIDE. Public respondent Department of Environment and Natural Resources is hereby permanently ENJOINED from enforcing Proclamation No. 164.

SO ORDERED.

Narvasa, C.J. (Chairman), Romero, Francisco and Panganiban, JJ., concur.