G.R. No. L-21906. December 24, 1968
INOCENCIA DELUAO AND FELIPE DELUAO, PLAINTIFFS-APPELLEES, VS. NICANOR CASTEEL AND JUAN DEPRA, DEFENDANTS, NICANOR CASTEEL, DEFENDANT-APPELLANT.
CASTRO, J.:
This is an appeal from the order of May 2, 1956, the decision of May 4, 1956 and the order of May 21, 1956, all of the Court of First Instance of Davao, in civil case 629.
The basic action is for specific performance, and damages resulting from
an alleged breach of contract.
In 1940 Nicanor Casteel filed a
fishpond application for a big tract of swampy land in the then sitio of Malalag (now the
municipality of Malalag), municipality
of Padada,
Davao. No action was taken thereon by the
authorities concerned. During the Japanese
occupation, he filed another fishpond application for the same area, but
because of the conditions then prevailing, it was not acted upon either. On December
12, 1945 he filed a third fishpond application for the same area,
which, after a survey, was found to contain 178.76 hectares. Upon investigation conducted by a representative
of the Bureau of Forestry, it was discovered that the area applied for was
still needed for firewood production.
Hence, on May 13, 1946
this third application was disapproved.
Despite the said rejection, Casteel did not lose interest. He filed a motion for reconsideration. While this motion was pending resolution, he
was advised by the district forester of Davao City
that no further action would be taken on his motion, unless he filed a new
application for the area concerned. So
he filed on May 27, 1947
his fishpond application 1717.
Meanwhile, several applications were submitted by other persons
for portions of the area covered by Casteel’s application.
On May 20, 1946 Leoncio Aradillos filed his fishpond application 1202 covering 10
hectares of land found inside the area applied for by Casteel; he was later
granted fishpond permit F-289-C covering 9.3 hectares certified as available
for fishpond purposes by the Bureau of Forestry.
Victor D. Carpio filed on August 8, 1946 his fishpond
application 762 over a portion of the land applied for by Casteel. Alejandro Cacam’s
fishpond application 1276, filed on December 26, 1946, was given due course on
December 9, 1947 with the issuance to him of fishpond permit F-539-C to develop
30 hectares of land comprising a portion of the area applied for by Casteel,
upon certification of the Bureau of Forestry that the area was likewise
available for fishpond purposes. On November 17, 1948 Felipe Deluao filed his own fishpond application for the area
covered by Casteel’s application.
Because of the threat poised upon his position by the above
applicants who entered upon and spread themselves within the area, Casteel
realized the urgent necessity of expanding his occupation thereof by
constructing dikes and cultivating marketable fishes, in order to prevent old
and new squatters from usurping the land.
But lacking financial resources at that time, he sought financial aid
from his uncle Felipe Deluao who then extended loans
totaling more or less P27,000 with which to finance the needed improvements on
the fishpond. Hence, a wide productive
fishpond was built.
Moreover, upon learning that portions of the area applied for by
him were already occupied by rival applicants, Casteel immediately filed the
corresponding protests. Consequently,
two administrative cases ensued involving the area in question, to wit: DANR Case 353, entitled “Fp. Ap. No. 661 (now Fp. A. No. 1717), Nicanor
Casteel, applicant-appellant versus Fp. A. No. 763, Victorio D. Carpio,
applicant-appellant”; and DANR Case 353-B, entitled “Fp. A. No. 661 (now Fp. A. No.
1717), Nicanor Casteel, applicant-protestant versus Fp. Permit No. 289-C, Leoncio Aradillos, Fp. Permit No. 539-C,
Alejandro Cacam, Permitees-Respondents.
“
However, despite the finding made in the investigation of the
above administrative cases that Casteel had already introduced improvements on
portions of the area applied for by him in the form of dikes, fishpond gates,
clearings, etc., the Director of Fisheries nevertheless rejected Casteel’s
application on October 25, 1949, required him to remove all the improvements
which he had introduced on the land, and ordered that the land be leased
through public auction. Failing to
secure a favorable resolution of his motion for reconsideration of the
Director’s order, Casteel appealed to the Secretary of Agriculture and Natural
Resources.
In the interregnum, some more incidents occurred. To avoid repetition, they will be taken up in
our discussion of the appellant’s third assignment of error.
On November 25, 1949 Inocencia Deluao (wife of Felipe Deluao)
as party of the first part, and Nicanor Casteel as
party of the second part, executed a contract – denominated a “contract of
service” – the salient provisions of which are as follows:
“That the Party of the First Part in consideration of the
mutual covenants and agreements made herein to the Party of the Second Part,
hereby enter into a contract of service, whereby the Party of the First Part
hires and employs the Party of the Second Part on the following terms and
conditions, to wit:
“That the Party of the First Part will finance as she has
hereby financed the sum of TWENTY SEVEN
THOUSAND PESOS (P27,000.00),
Philippine Currency, to the Party of the Second Part who renders only his
services for the construction and improvements of a fishpond at barrio Malalag, Municipality of Padada,
Province of Davao, Philippines;
“That the Party of the Second Part will be the Manager and
sole buyer of all the produce of the fish that will he produced from said
fishpond;
“That the Party of the First Part will be the administrator of
the same she having financed the construction and improvement of said fishpond;
“That this contract was the result of a verbal agreement
entered into between the Parties sometime in the month of November, 1947, with
all the abovementioned conditions enumerated; x x x“
On the same date the above contract was entered into, Inocencia Deluao executed a
special power of attorney in favor of Jesus Donesa,
extending to the latter the authority “To represent me in the
administration of the fishpond at Malalag,
Municipality of Padada, Province of Davao, Philippines, which has been applied for fishpond
permit by Nicanor Casteel, but rejected by the Bureau
of Fisheries, and to supervise, demand, receive, and collect the value of the
fish that is being periodically realized from it x x x.”
On November 29, 1949
the Director of Fisheries rejected the application filed by Felipe Deluao on November
17, 1948. Unfazed by this
rejection, Deluao reiterated his claim over the same
area in the two administrative cases (DANR Cases 353 and 353-B) and asked for
reinvestigation of the application of Nicanor Casteel
over the subject fishpond. However, by
letter dated March 15, 1950 sent to the Secretary of Commerce and Agriculture
and Natural Resources (now Secretary of Agriculture and Natural Resources), Deluao withdrew his petition for reinvestigation.
On September 15, 1950
the Secretary of Agriculture and Natural Resources issued a decision in DANR
Case 353, the dispositive portion of which reads as
follows:
“In view of all the foregoing considerations, Fp. A. No. 661 (now Fp. A. No.
1717) of Nicanor Casteel should be, as hereby it is,
reinstated and given due course for the area indicated in the sketch drawn at
the back of the last page hereof; and Fp. A. No. 762
of Victorio D. Carpio shall
remain rejected.”
On the same date, the same official issued a decision in DANR
Case 353-B, the dispositive portion stating as
follows:
“WHEREFORE, Fishpond Permit No. F-289-C of Leoncio
Aradillos and Fishpond Permit No. F-539-C of
Alejandro Cacam, should be, as they are hereby
cancelled and revoked; Nicanor Casteel is required to
pay the improvements introduced there on by said permittees
in accordance with the terms and dispositions contained elsewhere in this
decision. x x x“
Sometime in January 1951 Nicanor Casteel forbade Inocencia
Deluao from further administering the fishpond, and
ejected the latter’s representative, (encargado),
Jesus Donesa, from the premises.
Alleging violation of the contract of service (exhibit A) entered
into between Inocencia Deluao
and Nicanor Casteel, Felipe Deluao
and Inocencia Deluao on
April 3, 1951 filed an action in the Court of First instance of Davao for specific performance and damages against Nicanor Casteel and Juan Depra
(who, they alleged, instigated Casteel to violate his contract), praying, inter
alia, (a) that Casteel be ordered to respect
and abide by the terms and conditions of said contract and that Inocencia Deluao be allowed to
continue administering the said fishpond and collecting the proceeds from the
sale of the fishes caught from time to time; and (b) that the defendants be
ordered to pay jointly and severally to plaintiffs the sum of P20,000 in
damages.
On April 18, 1951 the plaintiffs filed an ex parte motion for the issuance of a preliminary
injunction, praying among other things, that during the pendency
of the case and upon their filing the requisite bond as may be fixed by the
court, a preliminary injunction be issued to restrain Casteel from doing the
acts complained of, and that after trial the said injunction be made
permanent. The lower court on April 26, 1951 granted the motion,
and, two days later, it issued a preliminary mandatory injunction addressed to
Casteel, the dispositive portion of which reads as
follows:
“POR EL PRESENTE, queda usted ordenado que, hasta nueva
orden, usted, el demandado y todos sus abogados, agentes,
mandatarios y demas
personas que obren en su ayuda, desista
de impedir a la demandante Inocencia R. Deluao que continue administrando personalmente la pesqueria objeto de esta causa y que la misma continue recibiendo los productos de la venta de los pescados
provenientes de dicha pesqueria, y que, asimismo, se prohibe a dicho demandado Nicanor Casteel a desahuciar mediante fuerza al encargado de los demandantes llamado Jesus Donesa de la pesqueria objeto de la demanda de
autos.”
On May 10, 1951
Casteel filed a motion to dissolve the injunction, alleging among others, that
he was the owner, lawful applicant and occupant of the fishpond in
question. This motion, opposed by the
plaintiffs on June 15, 1951,
was denied by the lower court in its order of June 26, 1961.
The defendants on May
14, 1951 filed their answer with counterclaim, amended on January 8, 1952, denying the material
averments of the plaintiffs’ complaint.
A reply to the defendants’ amended answer was filed by the plaintiffs on
January 31, 1952.
The defendant Juan Depra moved on May 22, 1951 to dismiss the
complaint as to him. On June 4, 1951 the plaintiffs opposed
his motion.
The defendants filed on October
3, 1951 a joint motion to dismiss on the ground that the
plaintiffs’ complaint failed to state a claim upon which relief may be
granted. The motion, opposed by the
plaintiffs on October 12, 1951,
was denied for lack of merit by the lower court in its order of October 22, 1951. The defendants’ motion for reconsideration
filed on October 31, 1951
suffered the same fate when it was likewise denied by the lower court in its
order of November 12, 1951.
After the issues were joined, the case was set for trial. Then came a series of postponements. The lower court (Branch I, presided by Judge
Enrique A. Fernandez) finally issued on March
21, 1956 an order in open court, reading as follows:
“Upon petition of plaintiffs, without any objection on the
part of defendants, the hearing of this case is hereby transferred to May 2 and
3, 1956 at 8:30 o’clock in the
morning.
“This case was filed on April
3, 1951 and under any circumstance this Court will not entertain
any other transfer of hearing of this case and if the parties will not be
ready on that day set for hearing, the court will take the necessary steps for
the final determination of this case.” (emphasis supplied)
On April 25, 1956 the defendants’ counsel received a notice of
hearing dated April 21, 1956, issued by the office of the Clerk of Court (thru
the special deputy Clerk of Court) of the Court of First Instance of Davao, setting the hearing of the case for May 2 and 3,
1956 before Judge Amador Gomez of Branch II.
The defendants, thru counsel, on April 26, 1956 filed a motion for postponement. Acting on this motion, the lower court
(Branch II, presided by Judge Gomez) issued an order dated April 27, 1956, quoted as follows:
“This is a motion for postponement of the hearing of this case
set for May 2 and 3, 1956. The motion is
filed by the counsel for the defendants and has the conformity of the counsel
for the plaintiffs.
“An examination of the records of this case shows that this
case was initiated as early as April 1951 and that the same has been under
advisement of the Honorable Enrique A. Fernandez, Presiding Judge of Branch No.
I, since September 24, 1953,
and that various incidents have already been considered and resolved by Judge
Fernandez on various occasions. The
last order issued by Judge Fernandez on this case was issued on March 21, 1956, wherein he
definitely states that the Court will not entertain any further postponement of
the hearing of this case.
“CONSIDERING ALL THE FOREGOING, the Court believes that the
consideration and termination of any incident referring to this case should be
referred back to Branch I, so that the same may be disposed of therein.”
(underlining supplied)
A copy of the abovequoted order was
served on the defendants’ counsel on May
4, 1956.
On the scheduled date of
hearing, that is, on May 2, 1956, the lower court (Branch I, with Judge
Fernandez presiding), when informed about the defendants’ motion for
postponement filed on April 26, 1956, issued an order reiterating its previous
order handed down in open court on March 21, 1956 and directing the plaintiffs
to introduce their evidence ex parte,
there being no appearance on the part of the defendants or their counsel. On the basis of the plaintiffs’ evidence, a
decision was rendered on May 4, 1956 the dispositive
portion of with reads as follows:
“EN SU VIRTUD, el Juzgado dicta de
decision a favor de los demandantes
y en contra del demandado Nicanor Casteel:
“(a) Declara permanents
el interdicto prohibitorio
expedido contra el demandado;
“(b) Ordena al demandado entregue la demandante la posesion y administracion de la mitad (1/2)
del ‘fishpond’ en cuestion con todas
las mejoras existentes dentro de la misma;
“(c) Condena al demandado a pagar a la demandante la suma de P200.00 mensualmente en concepto de daños a contar de la fecha de la expiracion de los 30 dias de la promulgacion de esta decision hasta que entregue
la posesion y administracion
de la porcion del ‘fishpond’ en conflicto;
“(d) Condena al demandado a pagar a la demandante la suma de P2,000.00
valor de los peseado beneficiados mas los intereses legales
de la fecha de la incoacion
de la demanda de autos hasta
el completo pago de la obligacion principal;
“(e) Condena al demandado a pagar a la demandante la suma de P2,000.00,
por gastos incurridos por aquella durante la pendencia de esta causa;
“(f) Condena al demandado a pagar a la demandante, en concepto de honorarios, la suma de P2,000.00;
“(g) Ordena el sobreseimiento de esta demanda, por insuficiencia
de pruebas, en tanto en cuanto se refiere al demandado Juan Depra;
“(h) Ordena el sobreseimiento de la reconvencion
de los demandados por falta de pruebas.
“(i) Con las costas contra del
demandado, Casteel.”
The defendant Casteel filed a petition for relief from the
foregoing decision, alleging, inter alia,
lack of knowledge of the order of the court a quo setting the
case for trial. The petition, however,
was denied by the lower court in its order of May 21, 1956, the pertinent portion of which reads as
follows:
“The duty of Atty. Ruiz, was not to inquire from the Clerk of
Court whether the trial of this case has been transferred or not, but to
inquire from the presiding Judge, particularly because his motion asking the
transfer of this case was not set for hearing and was not also acted upon.
“Atty. Ruiz knows the nature of the order of this Court dated March 21, 1956, which reads as
follows:
‘Upon petition of the plaintiff without any objection on the part
of the defendants, the hearing of this case is hereby transferred to May 2 and
3, 1956, at 8:30 o’clock in the morning.
‘This case was filed on April 3, 1951, and under any circumstance
this Court will not entertain any other transfer of the hearing of this case,
and if the parties will not be ready on the day set for hearing, the Court will
take necessary steps for the final disposition of this case.’
“In view of the order above-quoted, the Court will not accede
to any transfer of this case and the duty of Atty. Ruiz is no other than to be
present in the Sala of this Court and to call the
attention of the same to the existence of his motion for transfer.
“Petition for relief from judgment filed by Atty. Ruiz in
behalf of the defendant, not well taken, the same is hereby denied.”
Dissatisfied with the
said ruling, Casteel appealed to the Court of Appeals which certified the case
to us for final determination on the ground that it involves only questions of
law.
Casteel raises the following issues:
“(1) Whether the lower
court committed gross abuse of discretion when it ordered reception of
the appellees‘ evidence in the absence of the
appellant at the trial on May 2, 1956, thus depriving the appellant of his day
in court and of his property without due process of law;
“(2) Whether the lower court committed grave abuse of
discretion when it denied the verified petition for relief from judgment filed
by the appellant on May 11, 1956 in accordance wit Rule 38, Rules of Court; and
“(3) Whether the lower court erred in ordering the issuance ex
parte of a writ of preliminary injunction against
defendant-appellant, and in not dismissing appellees‘
complaint.”
1. The first and second issues must be resolved against the
appellant.
The record indisputably shows that in the order given in open
court on March 21, 1956, the lower court set the case for hearing on May 2 and
3, 1956 at 8:30 o’clock in the morning and emphatically stated that, since the
case had been pending since April 3, 1951, it would not entertain any further
motion for transfer of the scheduled hearing.
An order given in open court is presumed received by the parties
on the very date and time of promulgations,[1]
and amounts to a legal notification for all legal purposes.[2]
The order of March 21, 1956,
given in open court, was a valid notice to the parties, and the notice of
hearing dated April 21, 1956,
or one month thereafter, was a superfluity.
Moreover, as between the order of March 21, 1956, duly promulgated by
the lower court, thru Judge Fernandez, and the notice of hearing signed by a
“special deputy clerk of court” setting the hearing in another branch
of the same court, the former’s order was the one
legally binding. This is because the
incidents of postponements and adjournments are controlled by the court and not
by the clerk of court, pursuant to section 4, Rule 31 (now sec. 3, Rule 22) of
the Rules of Court.
Much less had the clerk
of court the authority to interfere with
the order of the court or to transfer the case from one sala
to another without authority or order from the court where the case originated
and was being tried. He had neither the
duty nor prerogative to re-assign the trial of the case to a different branch
of the same court. His duty as such
clerk of court, in so far as the incident in question was concerned, was simply to prepare the trial
calendar. And this duty devolved upon
the clerk of court and not upon the “special deputy clerk of court”
who purportedly signed the notice of hearing.
It is of no moment that the motion for postponement had the
conformity of the appellees‘ counsel. The postponement of hearings does not depend
upon agreement of the parties, but upon the court’s discretion.[3]
The record further discloses that Casteel was represented by a
total of 12 lawyers, none of whom had ever withdrawn as counsel. Notice to Atty. Ruiz of the order dated March
21, 1956 intransferably setting the case for hearing
for May 2 and 3, 1956, was sufficient notice to all the appellant’s eleven
other counsel of record. This is a
well-settled rule in our jurisdiction.[4]
It was the duty of Atty. Ruiz, or of the other lawyers of record,
not excluding the appellant himself, to appear before Judge Fernandez on the
scheduled dates of hearing. Parties and
their lawyers have no right to presume that their motions for postponement will
be granted.[5]
For indeed, the appellant and his 12 lawyers cannot pretend ignorance of the
recorded fact that since September 24, 1953 until the trial held on May 2,
1956, the case was under the advisement of Judge Fernandez who presided over
Branch I. There was, therefore, no
necessity to “re-assign” the same to Branch II because Judge
Fernandez had exclusive control of said case, unless he was legally inhibited
to try the case – and he was not.
There is truth in the appellant’s contention that it is the duty
of the clerk of court – not of the Court – to prepare the trial
calendar. But the assignment or
reassignment of cases already pending in one sala to
another sala, and the setting of the date of trial
after the trial calendar has been prepared, fall within the exclusive control
of the presiding judge.
The appellant does not deny the appellees‘
claim that on May 2 and 3, 1956, the office of the clerk of court of the Court
of First Instance of Davao was located directly below
Branch I. If the appellant and his
counsel had exercised due diligence, there was no impediment to their going
upstairs to the second storey of the Court of First Instance building in Davao on May 2, 1956 and checking if the case was scheduled
for hearing in the said sala. The appellant after all admits that on May 2, 1956 his counsel went to the
office of the clerk of court.
The appellant’s statement that parties as a matter of right are
entitled to notice of trial, is correct.
But he was properly accorded this right. He was notified in open court on March 21, 1956 that the case was
definitely and intransferably set for hearing on May
2 and 3, 1956 before Branch I. He cannot
argue that, pursuant to the doctrine in Siochi
vs. Tirona,[6]
his counsel was entitled to a timely notice of the denial of his motion for
postponement. In the cited case the
motion for postponement was the first one filed by the defendant; in the case
at bar, there had already been a series of postponements. Unlike the case at bar, the Siochi case was not intransferably
set for hearing. Finally, whereas the
cited case did not pend for a long time, the case at
bar was only finally and intransferably set for
hearing on March 21, 1956 – after almost five years had elapsed from the filing
of the complaint on April 3, 1951.
The pretension of the
appellant and his 12 counsel of record that they lacked ample time to prepare
for trial is unacceptable because between March 21, 1956 and May 2, 1956, they had one month and ten days to do
so. In effect, the appellant had waived
his right to appear at the trial and therefore he cannot be heard to complain
that he has been deprived of his property without due process of law.[7] Verily, the constitutional requirements of due process have been fulfilled in this
case: the lower court is a competent
court; it lawfully acquired jurisdiction over the person of the defendant
(appellant) and the subject matter of the action; the defendant (appellant) was
given an opportunity to be heard; and judgment was rendered upon lawful
hearing.[8]
2. Finally, the appellant contends that the lower court incurred
in error in ordering the issuance ex parte
of a writ of preliminary injunction against him, and in not dismissing the appellee’s complaint.
We find this contention meritorious.
Apparently, the court a
quo relied on exhibit A – the so-called “contract of service” – and the appellees‘
contention that it created a contract
of co-ownership and partnership between Inocencia Deluao and the appellant over the fishpond in question.
Too well-settled to
require any citation of authority is the rule that everyone is conclusively
presumed to know the law. It must be
assumed, conformably to such rule, that the parties entered into the
so-called “contract of service” cognizant of the mandatory and
prohibitory laws governing the filing of applications for fishpond
permits. And since they were aware of
the said laws, it must likewise be assumed – in fairness to the parties – that
they did not intend to violate them.
This view must perforce negate the appellees‘
allegation that exhibit A created a contract of co-ownership between the
parties over the disputed fishpond. Were
we to admit the establishment of a co-ownership violative
of the prohibitory laws which will
hereafter be discussed, we shall be compelled to declare altogether the nullity
of the contract. This would certainly
not serve the cause of equity and justice, considering that rights and
obligations have already arisen between the parties. We shall therefore construe the contract as
one of partnership, divided into two parts – namely, a contract of partnership,
to exploit the fishpond pending its award to either Felipe Deluao
or Nicanor Casteel, and a contract of partnership to
divide the fishpond between them after such award. The first is valid, the second illegal.
It is well to note that
when the appellee Inocencia
Deluao and the appellant entered into the so-called
“contract of service” on November 25, 1949, there were two pending applications over
the fishpond. One was Casteel’s which
was appealed by him to the Secretary of Agriculture and Natural Resources after
it was disallowed by the Director of Fisheries on October 25, 1949. The
other was Felipe Deluao’s application over the same
area which was likewise rejected by the Director of Fisheries on November
29, 1949, refiled by Deluao and later on
withdrawn by him by letter dated March 15, 1950 to the Secretary of Agriculture and Natural
Resources. Clearly, although the
fishpond was then in the possession of Casteel, neither he nor Felipe Deluao was the holder of a fishpond permit over the
area. But be that as it may, they were
not however precluded from exploiting the fishpond pending resolution of
Casteel’s appeal or the approval of Deluao’s
application over the same area – whichever event happened first. No law, rule or regulation prohibited them
from doing so. Thus, rather than let the
fishpond remain idle, they cultivated it.
The evidence
preponderates in favor of the view that the initial intention of the parties
was not to form a co-ownership
but to establish a partnership – Inocencia Deluao as capitalist partner and Casteel as industrial
partner – the ultimate undertaking of which was to divide into two equal
parts such portion of the fishpond as might have been developed by the amount
extended by the plaintiffs-appellees, with the
further provision that Casteel should reimburse the expenses incurred by the appellees over one-half of the fishpond that would pertain
to him. This can be gleaned, among others, from the letter of Casteel to Felipe Deluao on November 15, 1949, which states, inter alia:
“* * * [W]ith respect to your
allowing me to use your money, same will redound to your benefit because you
are the ones interested in half of
the work we have done so far,
besides I did not insist on our being partners in my fishpond permit, but it
was you ‘Tatay‘ Eping the
one who wanted that we be partners and it so happened that we became partners
because I am poor, but in the midst of my poverty it never occurred to me
to be unfair to you. Therefore so
that each of us may be secured, let us have a document prepared to
the effect that we are partners in the fishpond that we caused to be
made here in Balasino, but it does not mean
that you will treat me as one of your ‘Bantay‘
(caretaker) on wage basis but not earning wages at all, while the truth
is that we are partners. In the
event that you are not amenable to my proposition and consider me as ‘Bantay” (caretaker) instead, do not blame me if I
withdraw all my cases and be left without even a little and you likewise.”
(underscoring supplied)[9]
Pursuant to the foregoing
suggestion of the appellant that a document be drawn evidencing their
partnership, the appellee Inocencia
Deluao and the appellant executed exhibit A which, although
denominated a “contract of service,” was actually the memorandum
of their partnership agreement. That it
was not a contract of the services of the appellant, was admitted by the appellees themselves in their letter[10] to Casteel dated December 19, 1949 wherein
they stated that they did not employ him in his (Casteel’s) claim but because
he used their money in developing and improving the fishpond, his right must he
divided between them. Of course,
although exhibit A did not specify any wage or share appertaining to the
appellant as industrial partner, he was so entitled – this being one of the
conditions he specified for the execution of the document of partnership.[11]
Further exchanges of letters between the parties reveal the
continuing intent to divide the fishpond.
In a letter[12]
dated March 24, 1950, the
appellant suggested that they divide the fishpond and the remaining capital,
and offered to pay the Deluaos a yearly installment
of P3,000 – presumably as reimbursement for the expenses of the appellees for the development and improvement of the
one-half that would pertain to the appellant. Two days later, the appellee
Felipe Deluao replied,[13]
expressing his concurrence in the appellant’s suggestion and advising the
latter to ask for a reconsideration of the order of the Director of Fisheries
disapproving his (appellant’s) application, so that if a favorable decision was
secured, then they would divide the area.
Apparently relying on the
partnership agreement, the appellee Felipe Deluao saw
no further need to maintain his petition for the reinvestigation of Casteel’s
application. Thus by letter[14]
dated March 15, 1950 addressed to the Secretary of Agriculture and Natural
Resources, he withdrew his petition on the alleged ground that he was no longer
interested in the area, but stated however that he wanted his interest to be
protected and his capital to be reimbursed by the highest bidder.
The arrangement under the so-called “contract of
service” continued until the decisions both dated September 15, 1950 were issued by the Secretary
of Agriculture and Natural Resources in DANR Cases 353 and 353-B. This development, by itself, brought about
the dissolution of the partnership.
Moreover, subsequent events likewise reveal the intent of both parties
to terminate the partnership because each refused to share the fishpond with
the other.
Art. 1830(3) of the Civil Code enumerates, as one of the causes
for the dissolution of a partnership, “. . . any event which makes it
unlawful for the business of the partnership to be carried on or for the
members to carry it on in partnership.” The approval of the appellant’s
fishpond application by the decisions in DANR Cases 353 and 353-B brought to
the fore several provisions of law which made the continuation of the
partnership unlawful and therefore caused its ipso facto
dissolution.
Act 4003, known as the
Fisheries Act, prohibits the holder of a fishpond permit (the permittee) from transferring or subletting the fishpond
granted to him, without the previous consent or approval of the Secretary of
Agriculture and Natural Resources.[15] To the same effect is Condition No. 3
of the fishpond permit which states that “The permittee
shall not transfer or sublet all or any area herein granted or any rights
acquired therein without the previous consent and approval of this
Office.” Parenthetically, we must observe that in DANR Case 353-B, the
permit granted to one of the parties therein, Leoncio
Aradillos,
was cancelled not solely for the reason that his permit covered a portion of
the area included in the appellant’s prior fishpond application, but also because,
upon investigation, it was ascertained thru the admission of Aradillos himself that due to lack of capital, he allowed
one Lino Estepa to develop
with the latter’s capital the area covered by his fishpond permit F-289-C with
the understanding that he (Aradillos) would be given
a share in the produce thereof.[16]
Sec. 40 of Commonwealth
Act 141, otherwise known as the Public Land Act, likewise provides that
“The lessee shall not assign, encumber, or sublet his rights
without the consent of the Secretary of Agriculture and Commerce, and the violation
of this condition shall avoid the contract; Provided, That assignment,
encumbrance, or subletting for purposes of speculation shall not be permitted
in any case: Provided, further,
That nothing contained in this section shall be understood or construed to
permit the assignment, encumbrance, or subletting of lands leased under this
Act, or under any previous Act, to persons, corporations, or associations
which under this Act, are not authorized to lease public lands.”
Finally, section 37 of
Administrative Order No. 14 of the Secretary of Agriculture and Natural
Resources issued in August 1937, prohibits a transfer or sublease unless first
approved by the Director of Lands and under such terms and conditions as he
may prescribe. Thus, it states:
“When a transfer or sub-lease of area and improvement may
be allowed. – If the permittee or lessee had,
unless otherwise specifically provided, held the permit or lease and actually operated
and made improvements on the area for at least one year, he/she may request
permission to sub-lease or transfer the
area and improvements under certain conditions.
“(a) Transfer subject to approval. – A sublease or
transfer shall only be valid when first approved by the Director under such
terms and conditions as may be prescribed, otherwise it shall be null and
void. A transfer not previously approved
or reported shall be considered sufficient cause for the cancellation of the
permit or lease and forfeiture of the bond and for granting the area to a
qualified applicant or bidder, as provided in subsection (r) of Sec. 33 of this
Order.”
Since the partnership had for its object the division into two
equal parts of the fishpond between the appellees and
the appellant after it shall have been awarded to the latter, and therefore
it envisaged the unauthorized transfer of one-half thereof to parties other
than the applicant Casteel, it was dissolved by the approval of his application
and the award to him of the fishpond.
The approval was an event which made it unlawful for the business of the
partnership to be carried on or for the members to carry it on in partnership.
The appellees, however, argue that in
approving the appellant’s application, the Secretary of Agriculture and Natural
Resources likewise recognized and/or confirmed their property right to one-half
of the fishpond by virtue of the contract of service, exhibit A. But the untenability
of this argument would readily surface if one were to consider that the
Secretary of Agriculture and Natural Resources did not do so for the simple
reason that he does not possess the authority to violate the aforementioned
prohibitory laws nor to exempt anyone from their operation.
However, assuming in gratis argumenti that the approval of Casteel‘s
application, coupled with the foregoing prohibitory laws, was not enough to
cause the dissolution ipso facto of their partnership, succeeding
events reveal the intent of both parties to terminate the partnership by
refusing to share the fishpond with the other.
On December 27, 1950
Casteel wrote[17]
the appellee Inocencia Deluao, expressing his desire to divide the fishpond so
that he could administer his own share,
such division to be subject to the approval of the Secretary of Agriculture and
Natural Resources. By letter dated December
29, 1950,[18] the appellee
Felipe Deluao demurred to Casteel’s proposition
because there were allegedly no appropriate grounds to support the same and,
moreover, the conflict over the fishpond had not been finally resolved.
The appellant wrote on January
4, 1951 a last letter[19]
to the appellee Felipe Deluao
wherein the former expressed his determination to administer the fishpond
himself because the decision of the Government was in his favor and the only
reason why administration had been granted to the Deluas
was because he was indebted to them. In
the same letter, the appellant forbade Felipe Deluao
from sending the couple’s encargado, Jesus Donesa, to the fishpond.
In reply thereto, Felipe Deluao wrote a letter[20]
dated January 5, 1951 in which he reiterated his refusal to grant the
administration of the fishpond to the appellant, stating as a ground his belief
“that only the competent agencies of the government are in a better position
to render any equitable arrangement relative to the present case; hence, any
action we may privately take may not meet the procedure of legal order.”
Inasmuch as the erstwhile partners articulated in the aforecited letters their respective resolutions not to
share the fishpond with each other – in direct violation of the undertaking for
which they have established their partnership – each must be deemed to have
expressly withdrawn from the partnership, thereby causing its dissolution
pursuant to art. 1830(2) of the Civil Code which provides, inter alia, that dissolution is caused “by the
express will of any partner at any time.”
In this jurisdiction, the Secretary of Agriculture and Natural
Resources possesses executive and administrative powers with regard to the
survey, classification, lease, sale or any other form of concession or
disposition and management of the lands of the public domain, and, more
specifically, with regard to the grant or withholding of licenses, permits,
leases and contracts over portions of the public domain to be utilized as
fishponds.[21]
Thus, we held in Pajo, et al. vs. Ago, et
al. (L-15414, June 30, 1960), and reiterated in Ganitanao
vs. Secretar of Agriculture and Natural Resources, et al. (L-21167, March 31, 1966), that
“* * * [T]he powers granted to the Secretary
of Agriculture and Commerce (Natural Resources) by law regarding the
disposition of public lands such as granting of licenses, permits, leases, and
contracts, or approving, rejecting, reinstating, or cancelling
applications, or deciding conflicting applications, are all executive and
administrative in nature. It is a
well-recognized principle that purely administrative and discretionary
functions may not be interfered with by the courts (Coloso
v. Board of Accountancy, G.R. No. L-5750, April 20, 1953). In
general, courts have no supervising power over the proceedings and actions of
the administrative departments of the government. This is generally true with respect to acts
involving the exercise of judgment or discretion, and findings of fact. (54 Am. Jur.
558-559) Findings of fact by an administrative board or official, following a
hearing, are binding upon the courts and will not be disturbed except where
the board or official has gone beyond his statutory authority, exercised
unconstitutional powers or clearly acted arbitrarily and without regard to his
duty or with grave abuse of discretion.
* * *” (emphasis supplied)
In the case at bar, the Secretary of Agriculture and Natural
Resources gave due course to the appellant’s fishpond application 1717 and
awarded to him the possession of the area in question. In view of the finality of the Secretary’s
decision in DANR Cases 353 and 353-B, and considering the absence of any proof
that the said official exceeded his statutory authority, exercised
unconstitutional powers, or acted with arbitrariness and in disregard of his
duty, or with grave abuse of discretion, we can do no less than respect and
maintain unfettered his official acts in the premises. It is a salutary rule that the judicial
department should not dictate to the executive department what to do with regard
to the administration and disposition of the public domain which the law has
entrusted to its care and administration.
Indeed, courts cannot superimpose their discretion on that of the land
department and compel the latter to do an act which involves the exercise or
judgment and discretion.[22]
Therefore, with the view that we take of this case, and even
assuming that the injunction was properly issued because present all the
requisite grounds for its issuance, its continuation, and, worse, its
declaration as permanent, was improper in the face of the knowledge later
acquired by the lower court that it was the appellant’s application over the
fishpond which was given due course.
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.
Consequently, the lower court erred in issuing the preliminary mandatory
injunction. We cannot overemphasize that
an injunction should not be granted to take property out of the possession and
control of one party and place it in the hand of another whose title has not
been clearly established by law.[23]
However, pursuant to our holding that there was a partnership
between the parties for the exploitation of the fishpond before it was awarded
to Casteel, this case should be remanded to the lower court for the reception
of evidence relative to an accounting from November 25, 1949 to September 15,
1950, in order for the court to determine (a) the profits realized by the
partnership, (b) the share (in the profits) of Casteel as industrial partner,
(c) the share (in the profits) of Deluao as
capitalist partner, and (d) whether the amounts totaling about P27,000 advanced
by Deluao to Casteel for the development and
improvement of the fishpond have already been liquidated. Besides, since the appellee
Inocencia Deluao continued
in possession and enjoyment of the fishpond even after it was awarded to
Casteel, she did so no longer in the concept of a capitalist partner but merely
as creditor of the appellant, and therefore, she must likewise submit in the
lower court an accounting of the proceeds of the sales of all the fishes
harvested from the fishpond from September 16, 1950 until Casteel shall have
been finally given the possession and enjoyment of the same. In the event that the appellee
Deluao has received more than her lawful credit of
P27,000 (or whatever amounts have been advanced to Casteel), plus 6% interest
thereon per annum, then she should reimburse the excess to the appellant.
ACCORDINGLY, the judgment of the lower court is set
aside. Another judgment is hereby
rendered: (1) dissolving the injunction
issued against the appellant, (2) placing the latter back in possession of the
fishpond in litigation, and (3) remanding this case to the court of origin for
the reception of evidence relative to the accounting that the parties must
perforce render in the premises, at the termination of which the court shall
render judgment accordingly. The
appellant’s counterclaim is dismissed.
No pronouncement as to costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Fernando, and
Capistrano, JJ., concur.
[1] Landicho vs. Tan, 87 Phil. 601.
[2] Venturina vs. Court of First Instance of Nueva Ecija, et al., 75 Phil.
804.
[3]
Philippine Air Lines, Inc. vs. Ceniza, et al.,
93 Phil. 1011.
[4]
Ortega, et al. vs. Pacho, 98 Phil. 618.
[5]
Bautista vs. Municipal Council of Mandaluyong,
et al., 98 Phil. 409; Fenis, et al. vs.
Cordero, et al., 98 Phil. 335; Parina vs. Cobangcobang, et al., L-8398, March 21, 1956.
[6]
99 Phil. 462.
[7] Siojo vs. Tecson,
88 Phil. 531; Sandejas vs. Robles, 81 Phil.
421; Pajarillo vs. Manahan, 99 Phil. 1000.
[8] Banco Español vs. Palanca, 37 Phil. 921.
[9] Quoted in full in the Record on Appeal, pp.
444-445.
[10] Quoted in full in the Record on Appeal, pp.
168-169.
[11] See
Casteel’s letter to the Deluaos dated November 15, 1949, supra.
[12]
Quoted in full in the Record on Appeal, pp. 445-446.
[13] Quoted in full in the Record on Appeal, pp.
169-170.
[14] Quoted in full in the Record on Appeal, pp.
170-171.
[15] Memorandum Order No. 4, January
24, 1933, Department
of Agriculture and Commerce.
[16] See the full text of the decision in the
Record on Appeal, pp. 27-34.
[17] Quoted in full in the Record on Appeal, pp.
457-458.
[18] Quoted in full in the Record on Appeal, pp.
458-459.
[19] Quoted in full in the Record on Appeal, pp.
459-460.
[20] Quoted in full in the Record on Appeal, pp.
460-461.
[21] See Sec. 3 and 4 of C.A. 141, the Public Land Act; and Sec. 3 and 4 of Public Act 4003,
the Fisheries Act.
[22]
Gonzales vs. Director of Lands, 43 Phil. 227.
[23] Devesa vs. Arbes, 13 Phil.
273; Palafox vs. Madamba,
19 Phil. 444; Evangelista vs. Pedreños, 27
Phil. 648; Gilchrist vs. Cuddy, 29 Phil. 542; Asombra
vs. Dorado & Gesmundo, 36 Phil. 883; Golding vs. Balatbat, 36
Phil. 942; Lacassagne vs. Chapuis,
144 U.S. 119, 12 Sup. Ct. 659, 36
L. Ed. 368; Roy vs. Moore, 85 Conn.
159, 82 Atl. 233.