G.R. No. L-4958. March 30, 1954

This action was instituted in the Court of First Instance of
Occidental Negros by the plaintiffs, who are owners of certain lands
adjacent to the City of Bacolod which the U. S. Army converted into an
airfield, known as the Bacolod City Airstrip No. 2, to recover from the
defendants the value of the use and occupation of said airfield by them.

The lands in question were occupied by the U. S. Army around the
month of April, 1945. It constructed thereon, with or without the
consent of the owners, permanent improvements in the form of runways
for the landing and taking off of planes, parking places—therefor, and
approaches thereto. It afterwards entered into a contract of lease with
the owners, by virtue of which the United States Government was given
authority to use and occupy the lands in question for the period from
April 1, 1945, to October 15, 1945, at a monthly rental of one-half
centavo per square meter.

In the month of November, 1945, the defendant Far Eastern Air
Transport, Inc. [FEATI], began to use the said airstrip. Formal
authority for its use was extended by the U. S. Army on November 23,
1945 [Exhibit 5], When the FEATI began to use the airstrip, the owner
of the lands occupied by the airstrip objected to the Army authorities
[Exhibit A], and also appealed to the American High Commissioner in the
Philippines [Exhibit A-2], as well as to the manager of the FEATI
[Exhibit A-4], for a clarification of the status of the airstrip, but
nothing was done in this respect. One of the owners later learned that
the U. S. Army continued occupying the airstrip, and while no objection
thereto was made, he, did object to the use of the airstrip by the
Commonwealth Government [Exhibit 6]. As early as April 20, 1946, the
Commonwealth Government, through the Director of the Bureau of
Aeronautics, had offered to lease the lands covered by the airstrip at
one-half centavo per square meter per month [Exhibit 7], and it advised
the plaintiffs that the Commonwealth Government was under the
obligation of furnishing airway facilities and airports to all
transportation companies and that it was willing to deal with the
owners for a lease of their properties at the rate of one-half centavo
per square meter per month [Exhibit 12]. In spite of the absence of any
action on the offer of lease, the Bureau of Aeronautics maintained and
operated the airstrip for the purpose of commercial operations from
April, 1946 and had sufficient funds to pay for the lease of the lands
included in the airfield from March 1, 1946, to December 31, 1946
[Exhibit 14J. The owners, however, expressly Stated to the Bureau of
Aeronautics that while “they are willing to give the fullest
cooperation to the Republic insofar as the use by the Government of
their properties, * * *, they reserve to themselves the right of full
enjoyment of ownership and the fruits thereof, in their particular
dealing with the private air lines engaged in commercial aviation.”
[Exhibit 11].

This status of the occupation of the airstrip appears to be in a
nebulous state, although it can be clearly inferred from the various
documents presented at the trial that even after the termination of the
period of the lease signed by the U. S. Army, which lease was
originally to end in October, 1945, the U. S. Army continued occupying
the airstrip. On April 22, 1947, it was formally transferred from the
Foreign Liquidation Commission to the Surplus Property Commission at
the procurement cost of 1116,760 [t. s. n., pp. 295-296]. The Surplus
Property Commission adopted the policy of retaining the Bacolod
Airstrip No. 2, as the Bureau of Aeronautics had requested it for the
furtherance of civil aviation [Exhibit 1]. In this connection, it may
be well to note that since July 31, 1946, the Bureau of Aeronautics had
advised the defendant Philippine Air Lines that the Bacolod Airstrip
had already been released by the U. S. Army, and that the said Bureau
was assuming the responsibility of paying rentals for said strip
[Exhibit 13]. And on August 29, 1946, it certified that all landing
fields and airports in the Philippines, including that of the City of
Bacolod, are maintained and operated by it and are available to all
aircraft of Philippine registry, free of landing charges, in line with
the policy of the Government to promote civil aviation [Exhibit 14].

The FEATI began using the airstrip in question in November, 1945,
the Philippine Air Lines on July 16, 1946, and the Commercial Air Lines
in January, 1947.

It can be gleaned from the pleadings and from the communications
coursed between the parties that the plaintiffs herein seek to make the
defendants directly responsible to them for the use of the airstrip,
irrespective of and notwithstanding the fact that the U. S. Army, and
subsequently the Bureau of Aeronautics of the Commonwealth Government,
actually occupied, maintained, and operated the airways for the benefit
of commercial aviation.

In the answer of the FEATI, it is alleged as special defense that
the Bacolod Airstrip has become an airport and landing field open and
available to all commercial aircraft by virtue of the provisions of law
and in accordance with the regulations issued by the Bureau of
Aeronautics. On the other hand, in its answer to the complaint, the
Philippine Air Lines alleged as special defense that the airstrip is
maintained by the Government of the Republic of the Philippines, under
the control and administration of the Director of the Bureau of
Aeronautics, and that the responsibility for the payment of rentals to
the owners rested on the Bureau of Aeronautics. Three of the issues
that were tried in the court (below are, as stated in the decision, as
follows:

1. Whether the defendant companies had legal authority to use
   the properties in question on the alleged authority of the Commanding
   General of the United States Air Force in the Pacific, without the
   consent of the owners;

2. Whether the Bureau of
   Aeronautics may exempt the defendant companies, for the use of the
   airstrip in question, from paying compensation to the plaintiffs on the
   ground that the said Bureau had the obligation under the law of
   providing grounding facilities to the planes of the defendant
   companies, and that it is the responsibility of that Bureau to make
   such payment;

3. Whether the defendants are directly responsible to the plaintiffs for the use and enjoyment of their properties.

On the first issue the lower court held that the defendants did not
properly derive the authority to use the airstrip in question from the
United States Army of Liberation. On the second it held that the
obligations of the Bureau of Aeronautics to provide landing fields for
companies engaged in commercial aviation refers only to airstrip
legally acquired by the government and that since the Bureau of
Aeronautics recognized the plaintiffs as entitled to rentals, it is
estopped from alleging that it can dispose of these properties without
the consent of the owners. As to the third it held that as the acts of
the defendants are not justified in law, they are directly responsible
to the plaintiffs for the value of the use and enjoyment of the
properties in question.

One of the assignments of error made in this appeal is that the
trial court erred in not ordering the inclusion of the Philippine
Government [or the Bureau of Aeronautics as an indispensable party in
the final determination of the issues raised by the defendants. It will
be noted that if this assignment of error is to be sustained, judgment
must be reversed, and it would be unnecessary for us to consider all
the other assignments of error raised in the appeal. ‘

The tendency or effect of the evidence submitted by the defendants,
which is not disputed by plaintiffs, is that they have the
authorization of the Bureau of Aeronautics to use the air field in
question [Exhibits 5, 7, 9, 10, 13, 14]. As a matter of fact, the
judgment of the court a quo on the second issue contains a
finding that the Bureau of Aeronautics recognized that the plaintiffs
are entitled to rentals and is estopped from alleging that it can
dispose of these properties without the consent of the owners thereof,
which holding reveals the indivisibility of the relationship between
the defendants and the Bureau of Aeronautics, as the former had been
authorized to use the airfield and the latter had given said authority
under the express obligation of making with the plaintiffs the
necessary arrangements for the use of the land in question as an
airfield, and the resulting need of including the Bureau of Aeronautics
as a party defendant in order to determine in a just and equitable
manner the final responsibility of defendants for the use by them of
the airfield.

A careful consideration of the circumstances surrounding the use of
the airfield by the defendants clearly reveals that any responsibility
that they may have for their use of the airfield can not be
distinguished or dissociated from that of the Bureau of Aeronautics. In
the first place, the U. S. Army gave the defendants the authority to
use the airfield. After the turn-over of the airfield to the Philippine
Government was made, the Bureau of Aeronautics occupied the airfield,
maintained and operated it, and, pursuant to the policy that the
Philippine Government had adopted of furnishing airport facilities in
the interest of commercial aviation [Commonwealth Act No. 168, section
6 (c)], it assured the defendants that it would itself obtain the lease
of the land from the owners. Certainly, no separate or distinct
responsibility for the use of the airstrip on the part of the
defendants may arise independently of that of the Bureau of
Aeronautics, not only because the latter and the defendants jointly
occupied the airstrip, but mainly because the said Bureau permitted and
encouraged the defendants to use the airstrip, assuring them that It
had the necessary funds to pay for the use and occupation of the lands.
The defendants can not be held liable without making the Bureau of
Aeronautics partly or wholly responsible for said liability. The
decision appealed from itself discloses the necessity of a finding as
to the Bureau of Aeronautics also. It declares that the Bureau of
Aeronautics is estopped from alleging that it can dispose of the
properties without the consent of the plaintiffs, as it recognizes that
the latter are entitled to rentals. The Bureau of Aeronautics has so
much interest in the controversy, and its responsibility for the relief
sought so bound up with that the defendants, that its presence as a
party to the action is an absolute necessity, without which the lower
court should not have proceeded. [170 Fed. 2d series, p. 654 ]
Furthermore, it has been held that it is enough that the absence of a
party may leave the controversy in such a situation that the final
determination may be inconsistent with equity and good conscience.
[Davis vs. Henry, C. C. A. Ky., 266 F. 261, 265, 21 W & P 173;
State of Washington vs. United States, et al., 87 F. [2] 421, 427-428.]
To hold the defendants liable without determining the corresponding
liability of the Bureau of Aeronautics, which permitted and encouraged
the defendants to use the airstrip, would be clearly inequitous.

It would be noted that the provisions of the code procedure on
parties were taken from the rules of equity and not from the rule of
common law, and, therefore, a great amount of latitude is allowed in
the inclusion of the parties to a case. The evident aim and intent of
the rules regarding the joinder of indispensable and necessary parties
is the complete determination of all possible issues, not only between
parties themselves but also as regards to other persons who may be
affected by the judgment. Pursuant to this intent, we hold that the
Bureau of Aeronautics is an indispensable party in so far as the
determination of the liability of the defendants for the use of the
airstrip is concerned.

In Mallow, et al, vs. Hinde, 6 Law Ed. 599, the complaint charges
one Taylor of conspiracy with Hinde, but neither Taylor, from whom
Hinde obtained his title or right to the land in litigation, nor the
other parties from whom the plaintiffs in turn, derived their right,
were made parties. The Supreme Court of the United States held:

In this case, the complainants have no rights
separable from, and independent of, the rights of persons not made
parties. The rights of those not before the court lie at the very
foundation of the claim or right by the plaintiffs, and a final
decision cannot be made between the parties litigant without directly
affecting and prejudicing the rights of others not made parties.

In Garcia vs. Reyes, et al., 17 Phil. 127, the plaintiff seeks to
annul the transfer of a house that belonged to the defendant’s father,
and which was sold at public auction by the sheriff to the plaintiff.
The complaint alleges that prior to the sale by the sheriff, the
deceased father of the defendant transferred his said house to Messrs.
Chicote, Miranda & Sierra, a law firm, and this, in turn,
transferred the same to Rafael Sierra, one of the members of said firm,
who afterwards made a gift of the house to the minor defendants. It was
held that all the persons who intervened in the transfers from the
original owner to the defendants in the case are parties necessary to
the suit, because the transfers and donation are asked to be declared
Hull and void.

The principle involved has been briefly stated as follows:

Where the result of the suit is dependent upon the
validity of the right or title of an absent person, as suit for an
injunction against one who is acting under the charter of another, or a
suit between lessees of different persons for the same property, the
absent party is indispensable, [Moore’s Federal Practice, Vol. 2, p.
2151, citing Northern Indiana Rr. Co. vs. Michigan Cent. Rr. Co. [1853]
15 How. 233, 14 Law Ed. 674; McConnell vs. Dennis [C. C. A. 8th, 1907]
153 Fed. 547; South Penn Oil Co. vs. Miller [C. C. A. 4th, 1909] 175
729.]

In view of the foregoing considerations, the judgment is hereby set aside and the case ordered remanded to the court a quo,
with the instruction that the Bureau of Aeronautics be made a party
defendant, and that thereafter the action proceed in accordance with
the rules.

Paras, C. J., Pablo, Bengzon, Padilla, Montemayor, Reyes, Jugo, Bautista, Angelo, Concepcion, and Diokno, JJ., concur.