INOCENCIA DELUAO AND FELIPE DELUAO, PLAINTIFFS-APPELLEES, VS. NICANOR CASTEEL AND JUAN DEPRA, DEFENDANTS, NICANOR CASTEEL, DEFENDANT-APPELLANT.

Subject of this Resolution
is the appellee’ motion of Feb­ruary 8, 1969 for reconsideration of our
decision of December 24, 1968.  It poses
several propositions which we will now discuss in seriatim.

I. The appellees initially argue that because the Fisheries Act
(Act 4003) does not contain any prohibition against the trans­fer or
sub-letting of fishponds covered by permits or lease agree­ments, Fisheries
Administrative Order 14, sec. 7, which embo­dies said prohibition, is therefore
a nullity because inconsistent with the Fisheries Act.  They cite sec. 63.

We disagree.

Sec. 63 of Act 4003 provides:

“Permits or leases entitling the holders thereof, for a
certain stated period of time not to exceed twenty years, to enter upon
definite tracts of a public forest land to be devoted exclusively for fishponds
purposes, or to take certain fishery products or to construct fishponds within
tidal, mangrove and other swamps, ponds and stream within public forest lands
or proclaimed timber lands or established forest reserves, may be is­sued or
executed by the Secretary of Agriculture and Natural Resources, subject to the
restric­tions and limitations imposed by the forest laws and regulations, to
such persons, associations or corporations as are qualified to utilize or take
forest products under Act Number
Thirty-six hundred and seventy-four.  x x
x” (Underscoring supplied)

It is clear from the abovequoted section
of the Fisheries Act that only holders of permits or leases issued or
executed by the Sec­retary of Agriculture and Natural Resources (hereinafter
referred to as DANR Secretary)
can “enter upon definite tracts of public forest land to be devoted
exclusively for fishpond purposes, … or to construct fishponds within tidal,
mangrove and other swamps, ponds and streams within public forest lands or
proclaimed timber lands or established forest reserves…” Inferentially,
per­sons who do not have permits or leases properly issued or execu­ted by the
DANR Secretary cannot do any of the acts mentioned in sec. 63.  Certainly, a transferee or sub-lessee of a
fishpond is not a holder of a permit or lease.  He cannot, therefore, lawfully “enter
upon definite tracts of a public forest land to be devoted exclusively for
fishpond purposes, … or to construct fishponds within tidal, mangrove and
other swamps, ponds and streams with­in public forest lands or proclaimed
timber lands or established forest reserves. …” No doubt, the intent of
the legislature is to grant the privilege of constructing, occupying and
operating fish­ponds within public land only to holders of
permits and leases, and to no one else.  Inclusio unius est exclusio alterius.  And in dec­laring null
and void a sub-lease or transfer of the whole or part of a fishpond and/or its
improvements unless previously approved by the Director (Commissioner) of
Fisheries, sec. 37(a) of Fish­eries Administrative Order 14 does no more than
carry into effect the will of the legislature as expressed in the Fisheries
Act.  It is a valid administrative order issued under the authority conferred
by sec. 4 of the Fisheries Act
on the DANR Secretary to “issue instructions, orders, rules and
regulations consistent with this Act, as may be necessary to carry into effect
the provisions there­of.” It is a salutary rule because issued in
fulfillment of the duty of the administrative officials concerned to preserve
and conserve the natural resources of the country by scrutinizing the qualifica­tions
of those who apply for permission to establish and operate fishponds of the
public domain.  It is a necessary
consequence of the executive and administrative powers of the DANR Secretary
with regard to the survey, classification, lease, sale or any other form of
concession or disposition and management of lands of the public domain, and,
more specially, with regard to the grant or withholding of licenses, permits,
leases and contracts over por­tions of the public domain to be utilized as
fishponds.  The prohi­bition thus merely
implements the Fisheries Act and surely can not be considered an act of
legislation.

People v. Santos (63 Phil. 360) cited by the appellees has
no application to the case at bar.  In
that case, the Supreme Court declared null and void an administrative order
issued by the DANR Secretary
prohibiting boats not subject to license from fish­ing within three kilometers
of the shore line of American military and naval reservations without a special
permit from the DANR Secretary upon recommendation of the military and naval
authori­ties, because the Fisheries Act really does not contain such a provision.  Here, sec. 63 of the Fisheries Act, under the
afore-cited well-ensconced principle of “Inclusio unius est exclusio al­terius,
” prohibits persons without permits or leases to operate fishponds of the
public domain, because it allows only holders of permits or leases to
construct, occupy and enjoy such fishponds.

The appellees, however, insist that the prohibition in Fish­eries
Administrative Order 14, sec. 37(a), refers to fishponds co­vered by permits or
leases, and since no permit or lease had as yet been granted to Casteel, the
prohibition does not apply.  Stated
elsewise, their theory is that it was perfectly all right for Casteel to
violate Fisheries Administrative Order 14, for, anyway, he had not yet been
issued a permit or lease.

The appellees advocate a dangerous theory which invites
promiscuous violation of the said administrative order.  For all that a would-be permittee or lessee
would do in order to escape the consequences of an unauthorized sub-lease or
transfer, is to effect such sub-lease or transfer before the issuance of the
lease or permit, and then argue that there is no violation because such
sub-lease or transfer was effected before a permit or lease was issued.  To be sure, this theory espoused by the
appellees would violate the intent of the legislature to grant the privilege of
occu­pying, possessing, developing and enjoying fishponds of the pub­lic domain
only to bona fide holders of permits or lease agree­ments
properly issued or executed by the DANR Secretary.

The appellees assail as
inaccurate the statement in our decision that “after the Secretary of
Agriculture and Natural Re­sources approved the appellant’s application, he
became to all intents and purposes the legal permittee of the area with the cor­responding
right to possess, occupy and enjoy the same,” be­cause the decisions of
the Secretary allegedly did not approve the appellant’s fishpond
application but merely reinstated and gave due course to the same.  This is not correct.  The decisions of the DANR Secretary in DANR
cases 353 and 353-B did not merely re­cognize the occupancy rights of Casteel
(and, necessarily, his rights to possess and enjoy the fishpond), as admitted
by the De­luaos (p. 13, motion for reconsideration), but approved his appli­cation
as well.  Several orders, memoranda,
letters and other of­ficial communications of the DANR Secretary and other
adminis­trative officials of the DANR, found in the records of this case and in
the records of the DANR (of which this Court can take judi­cial notice), attest
to this.

The decisions in cases 353 and 353-E were ordered exe­cuted way
back in August 4, 1955. (rollo, p. 179) Then in a 1st Indorsement dated
July 1, 1961, the DANR ordered the Director of Fisheries to execute the said
decisions, “it appearing from the re­cords of this Office that the same
had long become final and execu­tory and that there is nothing in said records
to show that this Of­fice is a party-litigant in Civil Case No. 629, allegedly
filed by Inocencia Deluao and Felipe Deluao against Nicanor Casteel for
‘Specific Performance, etc.'” (rollo, p. 100) On October 26, 1961
the Director of Fisheries issued a memorandum to the District Fishery Officer,
Davao City, in compliance with the aforemen­tioned 1st Indorsement, instructing
the latter “to take immediate steps to execute the decisions of the
Secretary of Agriculture and Natural Resources both dated September 15, 1950.
… ” (rollo, p. 101) Next came a memorandum dated June 27, 1962 of
the Direc­tor of Fisheries to the Regional Director, Fishery Regional Office
No. VIII, Davao City, stating, “Your attention is again invited to the
memorandum of this Office, dated October 26, 1961, wherein you were instructed
to execute the decisions both dated September 15, 1950, in connection with the
above-entitled cases. … In this connection, you are hereby directed to
execute the aforesaid deci­sions in the presence of the parties concerned,
…” The Director of Fisheries also sent a telegram dated July 21, 1962 to
the Fish­ery Officer, Davao City, enjoining the latter to “EXECUTE DE­CISIONS
BY SECRETARY AS INSTRUCTED PLACE CASTEEL IN POSSESSION AREAS OF ARADILLOS
CARPIO A ND CACAM DE­POSIT REIMBURSEMENT FOR CACAM CLERK OF COURT RIGHT OF
CASTEEL TO AREAS SANCTIONED BY DECISIONS ISSUANCE PERMITS WILL FOLLOW LATER.”
(rollo, p. 102; emphasis sup­plied)

A notice of execution dated September 11, 1962 of the Re­gional
Director of the Fishery Office of Davao City, was sent to the parties in this
case, requiring them “to be present in the pre­mises of the area under Fp.
A. No. 1717 of Nicanor Casteel situated
in Barrio Palili, Padada (formerly covered by the areas un­der F-299-C and
F-539-C of Leoncio A radillos and Alejandro Cacam, respectively, and Fp. A. No.
763 of Victorio D. Carpio), on September 24, 1962 at 10 o’clock in the
morning.  This Office will place Nicanor
Casteel in possession of the area pursuant to the instructions in the telegrams
of the Director of Fisheries, da­ted July 21, 1962, and September 7, 1962, in
connection with the decisions of the Honorable, the Secretary of Agriculture
and Na­tural Resources in DANR Case Nos. 353 and 353-B, both dated September
15, 1950.”

The appellees, however,
filed on July 9, 1963 a new pro­test against the execution of the decisions
with the Commissioner of Fisheries, Said protest was dismissed by the Acting
Commis­sioner of Fisheries in a letter to Mrs. Inocencia Deluao dated June 1,
1964, which stated, inter alia:

“This is in connection with your claim as embodied in the
protest filed by you and your hus­band, Felipe Deluao, over the area covered by
Fishpond Application No. 1717 of Nicanor Casteel, located in Malalag, Padada,
Davao.  Please be advised that the
right over the area in question was already adjudicated or awarded to Nicanor
Casteel, in the Order of the Secretary of Agricul­ture and Natural
Resources, dated September 15, 1950 (DANR Cases Nos. 353-E and No. 353), hence,
this matter is a decided and closed case. 
The aforestated Order has long become final and exe­cutory.  In fact,
it has been partially executed. 
Nothing new has been raised in your instant pro­test which appears to be
intended mainly to de­lay the full execution of the order or Decision of the
Secretary.  Your protest therefore, lacks
me­rit or basis.

“It appearing therefore, that there is no­thing worth taking
into consideration in your claim or protest which has not moreover, been
officially docketed for failure to pay the protest fee, as re­quired by the
rules and regulations, your instant protest is hereby DISMISSED; and, the
matter de­finitely considered CLOSED. ” (Underscoring sup­plied)

An appeal from the
foregoing dismissal was taken by the appellees to the DANR Secretary who
dismissed the same in a letter dated September 12, 1967, thus.

“In view of the finality of our decisions in the two
afore-mentioned administrative cases (DANR Cases Nos. 353 and 353-B), execution
of the same had been ordered by this Office as early as August 4, 1955,
notwithstanding the injunction proceeding, because it appears that neither the
Secretary of Agriculture and Natural Resources nor the Director of Fisheries
was a party thereto.  However, due to
several incidental requirements necessary in the implementation of said
decisions, the execution thereof was delayed. 
In another di­rective of this Office to the Director of Fisheries
contained in a 1st Indorsement dated July 5, 1961, this Office reiterated due
execution of the said de­cisions.  The
Director of Fisheries, in turn, re­layed the directive to the Fisheries.  Regional Di­rector in Davao City who gave
notice to Nicanor Casteel and Felipe Deluao to be present in the area in
question on September 24, 1962 and that Casteel would be placed in possession
thereof.

“The due execution of the decisions suf­fered again another
delay because you filed two separate ‘URGENT OMNIBUS PETITION TO DE­CLARE
RESPONDENTS (Nicanor Casteel, Direc­tor of Fisheries and Regional Director
Crispin Mondragon) IN CONTEMPT OF COURT AND TO DIRECT RESPONDENTS TO DESIST
FROM PLAC­ING RESPONDENT NICANOR CA STEEL IN POS­SESSION OF THE LITIGATED
PROPERTY,’ The first was filed before the Court of First Instance of Davao and
the other, before the Court of Ap­peals in Manila.  However, in separate orders of the Court of
Appeals dated October 12, 1962 and of the Court of First Instance of Davao
dated Octo­ber 24, 1962, the ‘Urgent Omnibus Petition, etc.’ were both denied.

“The denial by the Courts of the said ur­gent omnibus
petitions to declare respondents in contempt of court and to direct the
respondents to desist from placing Nicanor Casteel in posses­sion of the
litigated property, could be interpre­ted to mean that there is no legal
impediment, in the execution of the decisions of this Office which had long
become final and executory, and an im­plied approval by the Courts in the
enforcement of said decisions.

“Notwithstanding all these circumstances, however, you again
filed on July 9, 1963, a new protest against the execution of the aforemention­ed
final decisions of this Office of September 15, 1950 before the Commissioner of
Fisheries.  A close study of your protest
shows that there is no new matter raised in said protest which has not been
disposed of in previous resolutions either by this Office or by the Philippine
Fisheries Commis­sion.  This Office is
even inclined to share the opi­nion of the Acting Commissioner of Fisheries
that the protest apparently is a move intended to delay further the due
execution of the final decisions.

“IN VIEW OF ALL TEE FOREGOING, and finding the notice of
appeal to be unmeritorious, the same much to our regret, cannot be favorably
entertained and the same is hereby dismissed. 
The Commissioner of Fisheries is directed to imme­diately execute the
decisions of this Office in the aforementioned DANR Cases Nos. 353 and 353-B
upon receipt of this order, it appearing that said decisions had long become
final and executory.  However, in
implementing the said decisions, it is necessary that Nicanor Casteel first be
granted a permit, and once the corresponding permit is granted, to place him in
possession of the area in question.” (rollo, pp. 179-180)

Pursuant to the direction
made to the Commissioner of Fisheries in the above letter-decision, the latter
sent a memo­randum dated May 31, 1968 to the Regional Director, Fisheries Regional
Office No. VIII, Davao City, quoted in part as follows:

“For the early execution of the directive of the Secretary,
you are hereby ordered to pre­pare the sketch plan or plans of the area or
areas with respective location and technical des­cription so that the
necessary permit can be is­sued in favor of Mr. Casteel. This Office will
have to abide with the latest decision of the Sec­retary, hence, your
letter-recommendation of January 3, 1968, will have to be set aside.” (Un­derscoring
supplied)

Again, in a letter dated
September 30, 1967, the appellees moved for reconsideration of the above
dismissal.  This was likewise denied by
the DANR Secretary in his reply to them dated December 16, 1968, holding that:

“In connection with your letter dated Sep­tember 30, 1967
requesting for a reconsideration of a letter-decision of this Office dated
September 12, 1967, and for the withholding of the enforce­ment of the
aforesaid decision, please be informed that we have already considered the
reasons you advanced and we see no cogent reason to modify or reverse our stand
on the matter.

*                           *                       *

“In view of the foregoing, your request for reconsideration
should be, as hereby it is, denied.” (see annex 1-B of appellant’s
answer to appellees’ motion for reconsideration of decision rendered on
December 24, 1968)

The overwhelming thrust of the abovecited orders, memo­randa, and
letter-decisions, is that Casteel’s Fp. A. 1717 had been approved by the
Secretary in DANR cases 353 and 353-B and that the area covered by his
application had been adjudicated and awarded to him.  In fact, the said decisions had already been
part­ly executed because – contrary to the appellees’ allegation – Cas­teel had
already complied with the order in DANR case 353-B that he reimburse to Leoncio
Aradillos and Alejandro Cacam the amount of the improvements introduced by them
in the area they formerly occupied (see annex A of the appellees’ motion
for is­suance of temporary restraining order and petition for contempt, rollo,
pp. 173-180).  And the only reason why
the issuance of a permit to Casteel was delayed was the numerous legal
maneuvers of the appellees which, in the words of both the Acting Commis­sioner
of Fisheries and the DA NR Secretary, were “intended to delay” the
execution of the aforestated decisions. 
The non-issuance of the permit due to the deliberate attempts of the
appellees to fore­stall the same cannot and should not be taken against the
herein appellant, because clear and unmistakable is the intention of the DANR
Secretary to place him in possession of the whole fishpond in question.

Pursuing further their buckshot arguments under the first
proposition, the appellees insist that the decisions in DANR cases 353 and
353-B are not binding on them because they were not par­ties to the cases.  They argue that even if their second motion
for reconsideration dated January 9, 1969 – which they alleged was given due
course – of the letter-decision of the DANR Secretary dated September 12, 1967 were denied, the denial would merely foreclose
the question of whether or not they could still intervene in DANR cases 353 and
353-B after the same have become final, but will not preclude them from
asserting their interest in the fishpond through other means, such as the
filing of an application over the half portion occupied by them or a protest
against the is­suance of a permit to Casteel over the said half.

Nothing could be farther from the truth.  The records of this case and of the cases in
the DANR show the several protests, appeals, motion to intervene and motions
for reconsideration of the appellees – all calculated to prevent the execution
of the deci­sions in DANR cases 353 and 353-B. 
In the face of all these legal maneuvers, all of which had been denied
validity by the Fisheries Commissioner and the DANR Secretary, how can they now
assert that the said decisions do not bind them?  Contrary to their repre­sentations, they are
certainly precluded from filing application over the half portion occupied by
them or a protest against the is­suance of a permit to Casteel over the said
half.  After all, the area involved in
DANR cases 353 and 353-E is the total area of 178.86 hectares, more or less,
covered by Casteel’s Fp. A. 1717.  This
is clear not only from the above discussion, but from appen­dix B of the
appellees’ motion for reconsideration itself which is the certification of the
Fisheries Commissioner stating that:

“The records further show that the area un­der Fp. A. No. 1717
is involved in administrative cases, to wit: DANR CASES 353 and 353-B, enti­tled
‘Nicanor Casteel vs. Victorio D. Carpio’ and ‘Nicanor Casteel vs. Alejandro
Cacam, et al.’, respectively, which has been decided by the Sec­retary of
Agriculture and Natural Resources in a letter dated September 12, 1967, in
favor of Nica­nor Casteel.  x x x”

It is extremely doubtful that their second motion for recon­sideration
allegedly filed on January 9, 1969 was really given due course by the
DANR.  Appendix E cited by them which is
the DANR Legal Department’s reply dated February 4, 1969, merely men­tions the
reference of their motion to the Department’s “Action Committee” for
deliberation and action.  No favorable
action has been taken on it to date.

II. The appellees next argue that the contract of service,
exh.  A, is not by itself a transfer or
sub-lease but merely an agreement to divide or transfer, and that pursuant to
its intended “ultimate undertaking” of dividing the fishpond into two
equal parts the appellant is under obligation, conformably with the law on obli­gations
and contracts, to execute a formal transfer and to secure official approval for
the same.  They allege that actual
division of the fishpond was predicated on a favorable decision in the then
pending DANR cases 353 and 353-B; that the pendency of the said cases served to
suspend implementation of the agreement to di­vide; and that after the DANR
Secretary ruled in Casteel’s favor, the suspensive condition was fulfilled and
the ultimate undertaking to divide the fishpond became a demandable obligation.

The appellees seem to have failed to grasp the rationale of our
decision.  We discussed at length – in
the said decision and in the resolution of their first proposition above – that
the contract of partnership to divide the fishpond between them after such
award became illegal because it is at war with several prohibitory laws.  As such, it cannot be made subject to any
suspensive condition the fulfillment of which could allegedly make the ultimate
undertak­ing therein a demandable obligation. 
It is an elementary rule in law that a partnership cannot be formed for
an illegal purpose or one contrary to public policy and that where the object
of a part­nership is the prosecution of an illegal business or one which is
contrary to public policy, the partnership is void.  And since the contract is null and void, the
appellant is not bound to execute a formal transfer of one-half of the fishpond
and to secure official approval of the same.

It must be recalled that the appellees have always vehe­mently
insisted that the “contract of service,” exh.  A, created a contract of co-ownership between
the parties over the fishpond in question. 
We however refused to go along with their theory in order not to be
compelled to declare the contract a complete nulli­ty as being violative of the
prohibitory laws, thus precluding the appellees from obtaining any relief.  It is precisely to enable us to grant relief
to the appellees that, in our decision, we assumed that the parties did not
intend to violate the prohibitory laws go­verning the grant and operation of
fishery permits.

We cannot, however, require the appellant to divide the fishpond
in question with the appellees, in violation of the deci­sions of the DANR
Secretary rendered in DANR cases 353 and 353-B way back on September 15, 1950,
because that would violate the principle that purely administrative and
discretionary func­tions may not be interfered with by the courts.  We are loath to impose our judgment on the
DANR Secretary on purely adminis­trative and discretionary functions in a case
where the latter is not even a party.  At
all events, we are persuaded that we have sufficiently protected the interests
of the appellees in our deci­sion.

III. The appellees next contend that assuming that the pro­hibition
by mere administrative regulation against the transfer of fishpond rights
without prior official approval is valid; that the said prohibition was already
operative notwithstanding that no per­mit had as yet been issued to Casteel;
and that the contract of service is already a “transfer” and not a
mere agreement “to di­vide,” the contract of service, even without
prior official approval, is not a nullity because under the rulings of the
Supreme Court and the DANR in analogous cases, the requisite approval may, on
equi­table and/ or other considerations, be obtained even after the trans­fer.

Zamboanga Transportation Co. vs. Public Utility Commis­sion
(50 Phil. 237), cited by the appellees to buttress their stand, is not in
point.  In that case, this Court held
that the approval of the mortgage on the property of the public utility
involved, instead of being prejudicial, is convenient and beneficial to the
public inte­rest.  Thus, considerations
of public interest moved this Court to hold that the approval by the Public
Utility Commission may be given before or after the creation of the lien.  On the other hand, no real considerations of
public interest obtain in this case. 
This is merely a controversy between two parties over a fishpond of the
public domain.  Besides, the
subject-matter of the contract of sale or mortgage in the Zamboanga case
is private property capa­ble of private ownership.  Which explains why this Court held in that
case that “The approval of the Public Utility Commission re­quired by law
before the execution of a mortgage on the property of a public utility or the
sale thereof, has no more effect than an authorization to mortgage or sell and
does not affect the essential formalities of a contract, but its
efficacy.” In other words, as long as the contract to sell or mortgage a
public utility’s proper­ties is executed with all the intrinsic and extrinsic
formalities of a contract, it is valid irrespective of the presence or absence
of the approval by the Public Utility Commission.  Only the efficacy of such a contract
is affected by the presence or absence of the approval of the Public Utility
Commission.  In the case at bar, the
subject-matter is a fishpond which is part of the public domain the ownership
of which cannot be privately acquired. 
Thus, with­out the prior approval of the DANR Secretary, any contract
purporting to sub-lease or transfer the rights to and/or improvements of the
fishpond, is null and void.

Equally inapplicable to the case at bar is Evangelista vs. Montaño,
et al. (93 Phil. 275).  The
subject-matter in that case is a homestead which is capable of private
ownership, while in­volved here is a fishpond of the public domain incapable of
private ownership.  The provision of law
involved in that case is sec.  118 of the Public Land Act (C.A. 141) which
explicitly provides that the approval of the DANR Secretary to any alienation,
transfer or conveyance of a homestead shall not be denied except on
constitutional and legal grounds.  There
was no allegation in the said case that “there were, constitutional or
legal impediments to the sales, and no pretense that if the sales had been
submitted to the Secretary concerned they would have been disapproved. ”
Thus, there this Court held that “approval was a ministerial duty, to be
had as a matter of course and demandable if refused.” In this case, sec.
37 of Fisheries.  Administrative Order 14
very clearly provides that without the approval of the DANR Secretary any
sublease or transfer is null and void. 
It does not state that approval may be withheld only on constitutional
and legal grounds, so that in the absence of said grounds, approval of the
sub-lease or trans­fer becomes ministerial. 
In Evangelista this Court applied art. 1461 of the Civil Code of
1889, which provided that the vendor was bound to deliver and warrant the
subject-matter of the sale, in relation to
art. 1474 thereof, which held the vendor responsible to the vendee for
the legal and peaceful possession of the subject-matter, of the sale.  It construed
the foregoing provisions as contemplating the obligation to deliver clear title, including the
securing of the approval of the sales by the DANR, Secretary, and held that by force of this obligation, the
plaintiff in that case, who stepped into the shoes of his grantor,
cannot use the lack of approval to nullify the sales because a seller will not
be allowed to take advantage of his omission
or wrong.  Thus, under the maxim, “Equity
regards that as done which should have been done,” this Court viewed the
sales as though the obligations imposed upon the parties had been met, and
treated the purchasers as the owners of the subject-matter of the sales,
notwithstanding the defects of the conveyances or of their execution.  Certainly, the factual situation in the case
at bar does not warrant application of the above-quoted maxim.  Here, a transfer by Casteel to Deluao of
one-half of the fishpond in question without the prior approval of the
DANR Secretary is legally objectionable, and no justifying reason exists for us
to view the requirement of prior approval as merely direc­tory.

     The appellees cite sec. 33, sub-sec. (4) of Fisheries
Administrative Order 14, which states,

          “If a permittee
transfers his/her right to any area or land improvements he introduced thereon,
the transferee may secure a permit by filing the pro­per application and paying
the necessary fee, rental and bond deposit. 
The rental may be as
provided in sections 16 and 20 hereof,”

and
argue that the said administrative order evinces in its other provisions an
intention not to give the prohibition in sec. 
37 an absolute and inflexible effect, because no reference is made to
the prohibition in section 37 as qualificatory. 
This is typical of the appellees’ clutching-at-straws reasoning.  There is obviously no need to mention the
prohibition in section 37 as qualificatory be­cause the prefatory sentence of
sec. 33 provides that “Every permit or lease shall be governed by the
provisions of this Administrative Order,” among which is sec. 37 thereof.  Besides, if the appellees should see any
conflict between sec. 33, subsection (r)(4) and sec. 37(a) – although there is
clearly none to be found -then, following the rules of statutory construction,
sec. 37(a), the latter provision, should prevail.

The appellees’ argument
that the prohibition itself is self-emasculating because while stipulating in
its first sentence that any unapproved transfer or sub-lease shall be null and
void, it states in the second sentence that “a transfer not previously ap­proved
or reported shall be considered sufficient cause for the cancellation of
the permit….,” thereby implying that a mere “report” of the
transfer, even without approval thereof, may suf­fice to preserve existing
rights of the parties – is now rendered academic by Revised Fisheries
Administrative Order 60, effec­tive June 29, 1960, which repealed Fisheries
Administrative Or­der 14 and its amendments. 
Thus, sec. 32 of Fisheries Adminis­trative Order No. 60 provides that:

“A transfer or sub-lease of the rights to, and/or improvements
in, the area covered by per­mit or lease may be allowed, subject to the follow­ing
conditions:

*                    *                       *

“(d) That any transfer or sub-lease without the previous
approval of the Secretary shall be con­sidered null and void and
deemed sufficient cause for the cancellation of the permit or lease, and the
forfeiture of the improvements and the bond depo­sited in connection therewith,
in favor of the Government. “

Note
that there is no mention whatsoever of the word report and that it is
the DANR Secretary’s approval
which must be secured.  A mere report,
therefore, of the transfer is not sufficient. 
In fact, although the Bureau of Fisheries was fully informed of the contract
of partnership between the parties to divide the fishpond, still, the said
Bureau did not grant the reliefs prayed for by the appellees in their numerous
protests, motions for reconsideration and appeals.  The numerous reports made by the
appellees to the Bureau of Fisheries were therefore disregarded.

Finally, the appellees cite the case of Amado Lacuesta vs.
Roberto Doromal, etc. (DANR case 3270) in which the DANR Secretary has
allegedly interpreted the prohibition found in sec. 37(a) of Fisheries
Administrative Order 14 as not absolute so that the approval required may yet
legally be obtained even after the transfer of a permit.

It would not serve the cause of interdepartmental cour­tesy were
we to review or comment on the decision of the DANR Secretary in the said
case.  But even at that, the factual
situation in Lacuesta shows that there was sufficient justification for
the DANR Secretary to divide the fishpond between the parties, which does not
obtain in this case.

In Lacuesta the verbal agreement to divide the fishpond
was entered into even before the fishpond application was filed.  The parties there helped each other in
securing the approval of the application. 
The DANR Secretary found
for a fact that the ap­pellee in the said case would not have succeeded in
securing the approval of his fishpond application, coupled with the issuance of
the permit, were it not for the indispensable aid both material and
otherwise extended by the appellant spouses. 
Thus, the appellant spouses paid the filing fee for the application, the
bond pre­miums and the surveying fees.  They
asked the assistance of their congressman who facilitated the release of the
permit.  They paid the rentals for the
fishpond for several years.  In fact, the
per­mit was even cancelled – although later reinstated – because of the
appellee’s failure to pay rentals.  In
the face of the foregoing facts, the DANR Secretary could not simply ignore the
equitable rights of the appellants over one-half of the fishpond in question.

In this case, Casteel was the original occupant and appli­cant
since before the last World War.  He
wanted to preclude subsequent applicants from entering and spreading themselves
within the area applied for by him, by expanding his occupation thereof by the
construction of dikes and the cultivation of marketable fish­es.  Thus, he borrowed money from the Deluaos to
finance needed improvements for the fishpond, and was compelled by force of
this circumstance to enter into the contract of partnership to di­vide the
fishpond after the award (see letter dated November 15, 1949 of Casteel to
Felipe Delauo quoted inter alia on page 4 of our Decision).  This, however, was all that the appellee
spouses did.  The appellant single
handedly opposed rival applicants who occupied portions of the fishpond area,
and relentlessly pursued his claim to the said area up to the Office of the
DANR Secretary, until it was finally
awarded to him.  There is here neither
allegation nor proof that, without the financial aid given by the
Deluaos in the amount of P27,000, the area would not have been awarded or adjudicated
to Casteel.  This explains, perhaps, why
the DANR Secretary did not find it equitable to award one-half of the fishpond
to the appellee spouses despite their many appeals and mo­tions for
reconsideration.

IV. The appellees submit as their fourth proposition that there
being no prohibition against joint applicants for a fishpond permit, the fact
that Casteel and Deluao agreed to acquire the fishpond in question in the name
of Casteel alone resulted in a trust by operation of law (citing art. 1452,
Civil Code) in favor of the appellees as regards their one-half interest.

A trust is the
right, enforceable in equity, to the benefi­cial enjoyment of property the
legal title to which is in another (Ulmer v. Fulton, 97 ALR 1170, 129 Ohio St
323, 195 NE 557).  However, since we held as illegal the
second part of the contract of partnership between the parties to divide the
fishpond between them after the award, a fortiori, no rights or
obligations could have arisen therefrom. 
Inescapably, no trust could have resulted because trust is founded on
equity and can never result from an act violative of the law.  Art. 1452 of the Civil Code does not sup­port
the appellees’ stand because it contemplates an agreement between two or more
persons to purchase property – capable of private ownership – the legal title
of which is to be taken in the name of one of them for the benefit of all in
the case at bar, the parties did not agree to purchase the fishpond, and even
if they did, such is prohibited by law, a fishpond of the public domain not
being susceptible of private ownership. 
The foregoing is also one reason why Gauiran vs. Sahagun (93
Phil. 227) is inapplicable to the case at bar. 
The subject-matter in the said case is a home­stead which, unlike a
fishpond of the public domain the title to which remains in the Government, is capable of being
privately owned.  It is also noteworthy
that in the said case, the Bureau of Lands was not apprised of the joint
tenancy between the parties and of their agreement to divide the homestead
between them, lead­ing this Court to state the possibility of nullification of
said agree­ment if the Director of Lands finds out that material facts set out
in the application were not true, such as the statement in the ap­plication
that it “is made for the exclusive benefit of the applicant and not,
either directly or indirectly, for the benefit of any other person or persons,
corporations, associations or partnerships.” In the case at bar, despite
the presumed knowledge acquired by DANR administrative officials of the
partnership to divide the fish­pond between the parties, due largely to the
reports made by the Deluaos the latter’s numerous appeals, motion for intervention
and motions for reconsideration of the DANR Secretary’s deci­sions in DANR cases 353 and 353-B, were all
disregarded and denied.

V. The appellees insist that the parties’ intention “to di­vide”
the fishpond remained unchanged; that the change in inten­tion referred solely
to joint administration before the actual divi­sion of the fishpond; and that
what can be held as having been dis­solved by the “will” of the
parties is merely the partnership to exploit the fishpond pending the award but
not the partnership to divide the fishpond after such award.  In support of their argument, they cite
Casteel’s letters of December 27, 1950 and January 4, 1951 which allegedly
merely signified the latter’s desire to put an end to the joint administration,
but to which the Deluaos demurred. 

Even admitting arguendo
that Casteel’s desire to terminate the contract of partnership – as allegedly
expressed in his afore-cited letters – is equivocal in that it contemplated the
termination merely of the joint administration over the fishpond, the resolu­tion
of the Deluaos to terminate the same partnership is unequivo­cal.  Thus, in his letter of December 29, 1950 to
Casteel, Felipe Deluao expressed his disagreement to the division (not joint
admi­nistration) of the fishpond, because he stated inter alia
that:

“As regards your proposition to divide the fishpond into
two among ourselves, I believe it does not find any appropriate grounds by
now.  x x x

“Be informed that the conflicts over the fishpond at
Balasinon which you proposed to divide, has not as yet been finally
extinguished by the competent agency of the government which shall have the
last say on the matter.  Pending the
final resolution of the case over said area, your proposition is out of
order.” (Underscoring supplied)

It
must be observed that, despite the decisions of the DANR Sec­retary in DANR
cases 353 and 353-B awarding the area to Cas­teel, and despite the latter’s
proposal that they divide the fishpond between them, the Deluaos unequivocally
expressed in their aforequoted letter their decision not to share the fishpond
with Casteel.  This produced the
dissolution of the entire contract of partnership (to jointly administer and to
divide the fishpond after the award) between the parties, not to mention its
automatic dissolution for being contrary to law.

VI. Since we have shown in the immediately preceding dis­cussion
that – even if we consider Casteel’s decision to terminate the contract of
partnership to divide the fishpond as equivocal -the determination of the
Deluaos to terminate said partnership is unequivocal, then the appellees’ sixth
proposition that Casteel is liable to the Deluaos for one-half of the fishpond
or the actual va­lue thereof, does not merit any consideration.  The appellees, af­ter all, also caused the
dissolution of the partnership.

Parenthetically, the appellees’ statement that the benefi­cial
right over the fishpond in question is the “specific partner­ship
property” contemplated by art. 1811 of the Civil Code, is in­correct.  A reading of the said provision will show
that what is meant is tangible property, such as a car, truck or a piece of
land, but not an intangible thing such as the beneficial right to a
fishpond.  If what the appellees have in
mind is the fishpond itself, they are grossly in error.  A fishpond of the public domain can never be
considered a specific partnership property because only its use and enjoyment –
never its title or ownership – is granted to specific private persons.

VII. The appellees’ final proposition that only by giving effect
to the confirmed intention of the parties may the cause of equity and justice
be served, is sufficiently answered by our dis­cussion and resolution of their
first six propositions.  However, in answer to the focal issue they present, we
must state that since the contract of service, exh.  A, is contrary to law and therefore null and
void, it is not and can never be considered as the law bet­ween the parties.

ACCORDINGLY, the appellees’ February 8, 1969 motion for
reconsideration is denied.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez,
Fernando and Capistrano, JJ., concur.

Reyes, J., on official leave.

Teehankee and Barredo,
JJ., did not take part.