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408 Phil. 669
THIRD DIVISION
[ G.R. No. 108338, April 17, 2001 ]
CALIXTO SAÑADO, PETITIONERS, VS. THE COURT OF APPEALS
AND SIMEON G. NEPOMUCENO, RESPONDENTS.
D E C I S I O N
MELO, J.:
This case is one of the
older ones which was raffled to undersigned ponente pursuant to the
Court’s Resolution in A.M. 00-9-03 dated February 27, 2001 and concerns a
petition seeking the reversal of the decision of the Court of Appeals dated
September 11, 1992 and its resolution dated October 15, 1992 denying
reconsideration. The Court of Appeals
modified the decision of Branch 18 of the Regional Trial Court of the Ninth
Judicial Region stationed in Pagadian City which was rendered in favor of
herein petitioner. Disposed thus the
Court of Appeals in its CA-G.R. CV No. 23165 per Justice Montenegro, with
Justices Paras and Ordoñez-Benitez concurring:
WHEREFORE, premises considered, judgment is hereby rendered:
(a) affirming the judgment appealed from with modification as follows:
1. Ordering and sentencing defendant-appellant Simeon G. Nepomuceno to pay the share of plaintiff-appellee in the amount of P168,000.00 covering the period of four (4) years from February 19, 1975 to February 19, 1979, with only eight (8) hectares considered to be productive;
2. Ordering defendant-appellant Simeon G. Nepomuceno to pay reasonable rental of the fishpond area in question from February 20, 1979 to March 20, 1980 in the amount of P25,000.00;
3. Ordering and sentencing defendant-appellant Simeon G. Nepomuceno and defendant Edgar J. Chu, to jointly pay plaintiff-appellee the reasonable rentals of the fishpond area in question at the rate of P25,000.00 per annum from March 21, 1980 to January 2, 1985;
4. Ordering and sentencing defendant-appellant Simeon G. Nepomuceno and defendant Edgar J. Chu, to jointly and severally pay plaintiff-appellee the sum of P100,000.00 as attorney' fees;
5. Ordering and sentencing defendant-appellant Simeon G. Nepomuceno and Edgar J. Chu to pay the costs; and
(b) reversing the decision appealed from insofar as it ordered "defendants jointly to restore possession and control of the fishpond area in question to the plaintiff”.
(pp. 37-38, Rollo.)
The generative facts are
chronicled as follows:
The controversy began on
October 28, 1969 when the defunct Philippine Fisheries Commission issued in
favor of petitioner Sañado Ordinary Fishpond Permit No. F-5810-X covering an
area of fifty hectares situated in Bo. Monching Siay, Zamboanga del Sur. As a
consequence, petitioner on January 6, 1972 executed a deed of quitclaim
involving twenty hectares of the original area of fifty hectares in favor of
his uncle and brother (Decision of the Office of the President, p. 46, Rollo).
On July 16, 1973,
petitioner as First Party and private respondent Nepomuceno as Second Party
executed a contract entitled "Contract of Fishpond Development and
Financing", which pertinently provided:
That the FIRST PARTY is the possessor and holder of a piece of agricultural land with an area of approximately FIFTY (50) HECTARES COVERED BY Ordinary Fishpond Permit No. F-5810-X situated at Monching, Siay, Zamboanga del Sur;
That the SECOND PARTY agreed to undertake full expenses for the development of an area of THIRTY (30) hectares, out of the approximately FIFTY (50) hectares, covered by Ordinary Fishpond Permit No. F-5810-X of the FIRST PARTY and which parcel is described and bounded as follows:
xxx xxx xxx
That the development which shall be undertaken by the SECOND PARTY on the aforesaid area of THIRTY (30) hectares, consists of:
a -- Construction of dumps; gates, buildings and other accessories pertinent to the full development of the fishpond area;
b -- Construction of dikes and the purchase of Bangus Fry for the said fishpond;
That the whole amount invested by the SECOND PARTY for the development of the aforesaid area for fishpond shall first be recovered out of the products of the fishpond area;
That after the full investment of the SECOND PARTY shall have been recovered, the sharing basis with the FIRST PARTY shall immediately commence for a period of Four (4) years and the sharing basis shall be in accordance with the following percentage:
THIRTY FIVE PERCENT (35%) of the Net per harvest - FIRST PARTY;
SIXTY FIVE PERCENT (65%) of the Net per harvest - SECOND PARTY;
That after the expiration of the Four (4) years of sharing basis on the Net harvest, this contract of sharing basis shall be renewed at the option of the second party for a period of another Four (4) years;
(pp. 26-27, Rollo.)
On July 18, 1973, the
contracting parties executed a handwritten agreement, modifying the earlier
agreement by excluding the area of ten hectares already cultivated and fully
developed by petitioner and providing that "the contract will be renewed
for another four (4) years with another agreement beneficial to both parties."
Simply stated, instead of the renewal being at the option of private
respondent, it shall be renewed on terms acceptable to both petitioner and
private respondent.
Based on the agreement as
modified by the aforestated handwritten agreement, private respondent proceeded
with the development of the fishpond area, excluding the area of ten hectares
already developed by petitioner.
On September 28, 1979,
the Director of Fisheries and Aquatic Resources recommended to the then
Ministry of Natural Resources the conversion of Ordinary Fishpond Permit No.
F-5810-X into a 25-year fishpond loan agreement which covered a reduced area of
26.7450 hectares (p. 165, Rollo). Pursuant to said recommendation, Fishpond Lease Agreement No. 3090 was
issued to petitioner on October 8, 1979.
On March 20, 1980,
private respondent waived his rights, interest, and participation over the
fishpond area in favor of one Edgar J. Chu.
On March 28, 1980,
apparently to oppose the issuance of the 25-year fishpond lease agreement in
favor of petitioner, private respondent informed the Bureau of Fisheries and
Aquatic Resources in writing of his financing/development contract with
petitioner and that the fishpond was almost fully developed at his expense (Ibid.).
Parenthetically, sometime
that year, private respondent submitted to petitioner an accounting of the
income or proceeds of the fishpond as well as his expenditures in the
development thereof (tsn, July 5, 1983, pp. 10-14). This document, marked as Exhibit "D" and dated February
19, 1975, showed earnings of the fishpond in the amount of P98,106.35, expenses
and advances in the sum of P87,405.25, and cash on hand of P10,701.10. The original copy thereof was filed with the
Bureau of Fisheries and Development as evidenced by the stamp of the office
thereon.
On July 17, 1981,
petitioner filed a complaint against private respondent and Edgar J. Chu with
the regional trial court docketed as Civil Case No. 2085 for recovery of
possession and damages, wherein he alleged that on February 19, 1975, private
respondent had already recovered his investment in full; that as of said date,
the total earnings had amounted to P98,106.35 leaving an excess of P10,701.10
to be divided between petitioner and private respondent at 35-65 sharing; that
the 4-year period during which petitioner and private respondent would share
the net harvest commenced on February 19, 1975 and expired on February 18,
1979; that after February 18, 1975, private respondent has not accounted for
the income of the fishpond and has failed and refused, in gross and evident bad
faith despite renewed and repeated demands, to deliver petitioner's share of
the net harvest for four years which totaled P250,000.00 more or less.
Meanwhile, during the
pendency of the aforesaid Civil Case No. 2085 with the trial court, an order
was issued by then Minister of Agriculture and Food Salvador H. Escudero III,
on January 28, 1985 cancelling Fishpond Lease Agreement No. 3090 and
forfeiting the improvements thereon in favor of the government. Later, said order was reconsidered to the
extent that private respondent was given priority to apply for the area and
that his improvements thereon were not considered forfeited in favor of the
government. Petitioner elevated the matter
to the Office of the President but his appeal was dismissed in a decision
rendered on July 31, 1989.
On June 19, 1989, the
trial court rendered its decision in Civil Case No. 2085, the dispositive
portion of which reads as follows:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered in favor of the plaintiff and against the defendants:
1. Ordering defendants jointly to restore possession and control of the fishpond area in question to the plaintiff;
2. Declaring the Waiver of All Rights, Interests and Participations Over a Fishpond Area (Part) (Exhibit "E") executed by defendant Nepomuceno in favor of defendant Edgar Chu as null and void;
3. Ordering defendant Simeon Nepomuceno to pay the share of plaintiff in the amount of P168,000.00 covering the period of four years from February 19, 1975 to February 19, 1979, with only eight (8) hectares considered to be productive;
4. Ordering defendants to jointly pay plaintiff the rentals of the fishpond area in question at the reasonable rate of P25,000.00 per annum reckoned from February 19, 1979 up to the time the same fishpond area shall have been duly restored to the possession of the plaintiff;
5. Ordering defendants jointly and severally pay plaintiff the sum of P100,000.00 as attorney's fees; and
6. To pay the costs.
IT IS SO ORDERED.;
(pp. 24-25, Rollo.)
Private respondent and
Edgar J. Chu both appealed the trial court's decision. However, for failure to file brief, Chu's
appeal was dismissed.
For his part, private
respondent maintained that: (a) the trial court erred in ruling that private
respondent has fully recovered his financial investment in the fishpond area in
question as of February 19, 1975 (hence the sharing of the net harvest should
not commence on said date); (b) the trial court erred in ruling that private respondent
cannot waive his right to finance the development of the fishpond area; and (c)
the trial court committed grave error and injustice in not dismissing
petitioner's complaint and in ordering respondent to pay petitioner the amounts
of P168,000.00 as petitioner's share covering the period beginning February 19,
1975 to February 19, 1979, P25,000.00 per annum constituting reasonable rentals
from February 19, 1979 up to the time the fishpond area shall have been
restored to petitioner, as well as P100,000.00 as attorney's fees.
As mentioned earlier, the
Court of Appeals affirmed the trial court's decision as regards petitioner's
share in the produce from February 19, 1975 to February 19, 1979 (P168,000.00),
the reasonable rental of the fishpond area (P25,000.00 per annum) from February
20, 1979 to March 20, 1980 and from March 21, 1980 to January 2, 1986, as well
as attorney's fees (P100,000.00), and costs.
The petition before us
hinges on the argument that the Court of Appeals entertained evidence and/or other
matters not duly covered or taken up in the trial of Civil Case No. 2085. Petitioner posits that the appellate court
committed grave abuse of discretion in doing so and in applying said matters in
its disposition of the case. Verily,
petitioner's grumble and protest is confined to that portion of the June 19,
1989 decision of the Court of Appeals directing "defendants jointly to
restore possession and control of the fishpond area to the plaintiff."
Petitioner points out
that the July 31, 1989 decision rendered by the Office of the President through
Deputy Executive Secretary Magdangal B. Elma is a new matter which should not
have been treated by the appellate court with legal force and effect because
"it was merely incidental to the propriety or impropriety of the issuance
of a writ of preliminary mandatory injunction respecting the earlier Writ of
Execution granted by the trial court in favor of Calixto Sañado" (p. 19,
Rollo).
In this light, petitioner
mentions that on December 11, 1990, during the pendency of the appeal of Civil
Case No. 2085, he filed with the appellate court a motion for execution pending
appeal, stating that the appeal of Edgar J. Chu (who was said to be the actual
possessor of the area) had been dismissed. The appellate court denied the same. On May 21, 1991, petitioner filed
another motion for issuance of writ of execution, claiming that the Sheriff’s
Return of Service dated June 6, 1991 stated that "the restoration to
and/or placement of plaintiff Sañado thereof on said fishpond area in
controversy x x x, are hereby considered complied with." Thereafter,
private respondent filed a petition for relief from judgment and or execution
which resulted in an order dated June 7, 1991 restoring possession of the
fishpond area to him. Petitioner then
proceeds to mention that on June 11, 1991, private respondent filed with the
appellate court an "Ex-Parte Urgent Motion for Issuance of Writ of
Preliminary Mandatory Injunction", alleging that the trial court has not
yet issued the corresponding writ of preliminary mandatory injunction to
restore private respondent to the possession of the subject fishpond area. Petitioner stresses that it was at this
particular stage of the proceedings that the subject July 31, 1989 Malacañang
decision was initially mentioned by private respondent who thereby argued that
the trial court failed to consider that prior to the issuance of the writ of
execution, the restoration of the subject fishpond to herein petitioner would
in effect destroy the essence of said Malacañang decision which affirmed the
cancellation of the Fishpond Lease Agreement No. 3050. In consequence thereof, the appellate court
issued a resolution dated June 14, 1991 ordering that anyone who had anything
to do with the enforcement of the writ of execution issued by the trial court
was restrained temporarily from enforcing said writ, such that private
respondent, who was acknowledged to be in possession of the subject property
consisting of five ponds at the time of the issuance of the aforesaid writs;
should remain in the possession thereof until further notice by the court. Later, the trial court itself ordered the
immediate restoration of possession of the subject fishpond area to herein
private respondent. An exchange of
pleadings followed where, as an attachment to his comment, private respondent
presented a photostat copy of the subject July 31,1989 decision of the Office
of the President.
Setting aside the factual
ramifications of the instant case, we find that the only issue thereof refers
to the legal effect and evidentiary weight of the July 19, 1989 decision
rendered by the Office of the President in relation to Civil Case No. 2085 and
CA-G.R. CV No. 23165.
Let us first examine the
premise and basis of the aforesaid July 31, 1989 decision of the Office of the
President. A perusal thereof reveals
that it resolved the appeal filed by petitioner and the Samahang Kabuhayan ng
Barangay Monching from the order of the then Minister of Agriculture and Food,
dated January 28, 1985 which cancelled the Fishpond Lease Agreement No. 3090
issued to petitioner and forfeited in favor of the government the improvements
thereof, including the bond, and ruled that the area with the improvements
shall be disposed of in accordance with Presidential Decree No.704 (Revising
and Consolidating All Laws and Decrees Affecting Fishing and Fisheries) to any
qualified applicant pursuant to applicable rules and regulations thereon. Said cancellation was premised on the following
factors: (1) violation by petitioner of the terms of the fishpond lease
agreement and of Fisheries Administrative Order (FAO) 125 (s. 1979) when he
transferred/subleased his leasehold rights without government approval; and (2)
failure of petitioner to comply with the development requirements.
In the subject July 31,
1989 decision, the Office of the President, through then Deputy Executive
Secretary Magdangal B. Elma, upholding the January 28, 1985 Escudero Order,
dismissed petitioner's appeal and affirmed the cancellation of the subject Fishpond
Lease Agreement No. 3090 on the following grounds: (1) Section 5(k) of
Fisheries Administrative Order (FAO) No. 125 prohibits the awardee of a
fishpond lease agreement from transferring or subletting the fishpond granted
to him without the previous consent or approval of the ministry concerned, and
similarly, the lessee shall not sublet or enter into a sub-lease contract over
the area or portion covered by the fishpond lease agreement; (2) the
Sañado-Nepomuceno contract is not the only instance when petitioner
transferred/subleased his rights over the fishpond area without approval of the
appropriate ministry head since on January 6, 1972, he transferred 20 hectares
of the original 50-hectare fishpond area to his brother and uncle, and on
September 12, 1982, he transferred his rights over the 26.7450 area to the
Samahang Kabuhayan ng Barangay Monching Association which later assigned its
leasehold rights in favor of the Development Bank of the Philippines in
consideration of the amount of P653,153.46; and (3) petitioner's failure to
develop forty percent of the area within three years and to completely develop
the remaining portions within five years, both to commence from the date of the
issuance of the lease agreement in accordance with the terms and conditions of
the lease agreement (out of the whole area occupied by petitioner, only four
hectares more or less, corresponding to 60% to 70% was developed). The
appellate court thus held that all these violations are recognized grounds for
the termination and cancellation of a fishpond lease agreement under Section 9
of the FAO No. 125, series of 1979. As
a last note, the subject decision stated that it mainly deals with the validity
of the cancellation by the Ministry of Agriculture and Food of petitioner's
Fishpond Lease Agreement No. 3090 for violation of the terms thereof and/or
fisheries rules, and that a decision in Civil Case No. 2085 which is a
possessory action has hardly any bearing in the resolution of the aforestated
appeal.
True, the subject July
31, 1989 decision was rendered a few days after the trial court handed down its
decision ordering herein petitioner to be restored to the possession of the
subject fishpond area. However, such fact is of no moment considering that said
decision of the trial court did not attain finality and was seasonably
appealed. In other words, the July 31,
1989 decision was rendered while Civil Case No. 2085 was pending appeal. It is thus proper to consider the same a
supervening event the existence of which cannot just be disregarded by the
appellate court.
What is the nature of the
July 31, 1989 Malacañang decision and what is its effect on the resolution of
Civil Case No. 2085? The action of an
administrative agency in granting or denying, or in suspending or revoking, a
license, permit, franchise, or certificate of public convenience and necessity
is administrative or quasi-judicial. The act is not purely administrative but quasi-judicial or adjudicatory
since it is dependent upon the ascertainment of facts by the administrative
agency, upon which a decision is to be made and rights and liabilities
determined (De Leon, Administrative Law: Text and Cases, 1993 ed., pp. 143-144). As such, the July 31, 1989 decision of the Office of the
President is explicitly an official act of and an exercise of quasi-judicial
power by the Executive Department headed by the highest officer of the
land. It thus squarely falls under
matters relative to the executive department which courts are mandatorily
tasked to take judicial notice of under Section 1, Rule 129 of the Rules of
Court. Judicial notice must be taken of
the organization of the Executive Department, its principal officers, elected
or appointed, such as the President, his powers and duties (Francisco, Evidence
[Rules 128-134], 1996 ed., p. 24, citing Canal Zone vs. Mena, 2 Canal
Zone 170).
The rendition of the
subject July 31, 1989 Malacañang decision is premised on the essential function
of the executive department - which is to enforce the law. In this instance, what is being enforced is
Presidential Decree No. 704 which consolidated and revised all laws and decrees
affecting fishing and fisheries. Such
enforcement must be true to the policy behind such laws which is "to
accelerate and promote the integrated development of the fishery industry and
to keep the fishery resources of the country in optimum productive condition
through proper conservation and protection" (Section 2, P.D. No. 704).
Further, the issue of
whether or not petitioner is still entitled to possession of the subject
fishpond area is underpinned by an ascertainment of facts. And such task
belongs to the administrative body which has jurisdiction over the matter - the
Ministry of Agriculture and Food. The
policy of the courts as regards such factual findings is not to interfere with
actions of the executive branch on administrative matters addressed to the
sound discretion of government agencies. This policy is specially applicable in the grant of licenses, permits,
and leases, or the approval, rejection, or revocation of applications therefor (Manuel
vs. Villena, 37 SCRA 745 [1971]). Such respect is based on the time-honored doctrine of separation of
powers and on the fact that these bodies are considered co-equal and coordinate
rank as courts. The only exception is
when there is a clear showing of capricious and whimsical exercise of judgment
or grave abuse of discretion, which we find absent in the case at bar.
The reasons given by the
Office of the President in dismissing petitioner's appeal are quite clear. Transferring or subletting the fishpond
granted to a licensee without the consent or approval of the administrative
body concerned, as well as the failure to develop the area required by the
fisheries rules, are definitely solid and logical grounds for the cancellation
of one's license. Withal, if petitioner
disagrees with the decision of the Office of the President, he should have
elevated the matter by petition for review before the Court of Appeals for the
latter's exercise of judicial review. Nowhere in the record do we find such action on petitioner's part.
Understandably, to
restore petitioner to the possession of the fishpond area is to totally
disregard the July 31, 1989 decision of the Office of the President which can
hardly be described as an unrelated matter, considering its patent implications
in the result of both Civil Case No. 2085 and CA-G.R. CV No. 23165. For how could the appellate court award
possession to the very same party whose license has been cancelled by the executive
or administrative officer tasked to exercise licensing power as regards the
development of fishpond areas, and which cancellation has been sustained by the
Office of the President? Petitioner
must remember the essence of the grant of a license. It is not a vested right given by the government but a privilege
with corresponding obligations and is subject to governmental regulation. Hence, to allow petitioner to possess the
subject area is to run counter to the execution and enforcement of the July 31,
1989 decision which would easily lose its “teeth” or force if petitioner were
restored in possession. In addition, as
pointed out in the July 31, 1989 decision, petitioner is not assailing the May
14, 1985 order of Minister Escudero which gave private respondent priority in
applying for the subject area and which considered respondent's improvements
thereon as not forfeited in favor of the government. In this regard, the July 31, 1989 decision stated:
The Escudero Order of May 14, 1985 stands unchallenged. As such, the herein appeal of Sañado, et al., from the Escudero Order of January 25, 1985 remains the only obstacle, on the administrative level, to the said May 14, 1985 Order being considered in force and effect.
(p. 50, Rollo.)
Accordingly, the Court of
Appeals correctly held --
. . . The issue (on waiver of rights and interests and participation by respondent) is rendered moot and academic by the order of then MAF Minister Salvador H. Escudero III cancelling Fishpond Lease Agreement No. 3090 of plaintiff-appellee which was affirmed on appeal by the Office of the President. The lease agreement having been cancelled, possession of the fishpond area covered by the lease agreement cannot be returned to plaintiff-appellee even if the waiver of rights, interests, and participation is held null and void . . .
(p. 31, Rollo.)
In addition, petitioner
considers the July 31, 1989 decision a foreign matter which was not raised in
the court below and hence should not have been treated by the Court of Appeals
with legal force and effect. To
reiterate, petitioner also notes that the decision of the Office of the
President is dated July 31, 1989, whereas the decision of Civil Case No. 2085
was rendered June 19, 1989. Further, petitioner argues that the subject decision
of the Office of the President was merely incidental to the propriety or
impropriety of the issuance of a writ of preliminary mandatory injunction to
restore private respondent to the possession of the fishpond area after a writ
of execution was issued by the trial court in favor of petitioner.
Rules of fair play,
justice, and due process dictate that parties cannot raise for the first time
on appeal issues which they could have raised but never did during the trial
(Reburiano vs. Court of Appeals, 301 SCRA 342 [1999]). Significantly, private respondent could have
not been expected to present the July 31, 1989 decision during the trial
because it was obviously not yet extant during that time. But one thing is for sure, petitioner knew
that there was a pending administrative case (O.P. Case No. 2958) on the
subject fishpond area. He knew about
the appeal since he was precisely the one who filed it, challenging the January
28, 1985 order of then Minister Escudero which cancelled Fishpond Lease
Agreement No. 3090. Hence, the
presentation of the July 31, 1989 decision before the appellate court had
caused no undue surprise upon petitioner who, we repeat, was the one who filed
the appeal.
Verily, the trial court's
decision of July 19, 1989 did not attain finality. It was appealed within the reglementary period. If the court could modify or alter a
judgment even after the same has become executory whenever circumstances
transpire rendering its decision unjust and inequitable, as where certain facts
and circumstances justifying or requiring such modification or alteration
transpired after the judgment has become final and executory (David vs.
Court of Appeals, 316 SCRA 710 [1999]) and when it becomes imperative in
the higher interest of justice or when supervening events warrant it (People
vs. Gallo, 315 SCRA 461 [1999]), what more if the judgment has not yet
attained finality?
It is thus plain in the
case at bar that the July 31, 1989 decision of the Office of the President is a
substantial supervening event which drastically changed the circumstances of
the parties to the subject fishpond lease agreement. For to award possession to petitioner is futile since he has lost
the fishpond license. In point is our
ruling in Baluyot vs. Guiao (315 SCRA 396 [1997]) where we held that
judgment is not confined to what appears on the face of the decision, but also
covers those necessarily included therein or necessary thereto. For example, where the ownership of a parcel
of land is decreed in the judgment, the delivery of the possession of the land
should be considered included in the decision, it appearing that the defeated
party’s claim to the possession thereof is based on his claim of
ownership. By analogy, the July 31, 1989
decision, is not confined to the validity of the cancellation by the Ministry
of Agriculture and Food of petitioner’s Fishpond Lease Agreement No. 3090 for
violation of the terms thereof and/or the fisheries rules. The right to possess the subject fishpond
area is necessarily included in the decision. The cancellation or revocation of
petitioner’s license necessarily eliminated his right to possess the same since
the new licensee would then be the one to enjoy this right.
WHEREFORE, the instant petition is hereby DENIED for
lack of merit. The September 11, 1992
decision of the Court of Appeals in CA-G.R. CV No. 23165 is hereby AFFIRMED.
SO ORDERED.