G.R. No.

L-5963 May 20, 1953 order of June 13, 1951, granted Lastrilla's motion by requiring the sheriff to
retain 17 per cent of the money "for delivery to the assignee, administrator or
THE LEYTE-SAMAR SALES CO., and RAYMUNDO TOMASSI, petitioners, receiver" of the FELCO. And on motion of Lastrilla, the court on August 14,
1951, modified its order of delivery and merely declared that Lastrilla was
Vs. SULPICIO V. CEA, in his capacity as Judge of the Court of First entitled to 17 per cent of the properties sold, saying in part:
Instance of Leyte and OLEGARIO LASTRILLA, respondents.
. . . el Juzgado ha encontrado que no se han respetado los derechos del Sr.
Filomeno Montejo for petitioners. Lastrilla en lo que se refiere a su adquiscicion de las acciones de C. Arnold
Hall (Fred Brown) en la Far Eastern Lumber & Lumber Commercial C.
Sulpicio V. Cea in his own behalf. porque la mismas han sido incluidas en la subasta.

Olegario Lastrilla in his own behalf. Es vedad que las acciones adquiridas por el Sr. Lastilla representan el 17
por ciento del capital de la sociedad "Far Eastern Lumber & Commercial
BENGZON, J.: Co., Inc., et al." pero esto no quiere decir que su vlor no esta sujeto a las
fluctuaciones del negocio donde las invirtio.
Labaled "Certiorari and Prohibition with preliminary Injunction" this petition
prays for the additional writ of mandamus to compel the respondent judge to Se vendieron propiedades de la corporacion "Far Eastern Lumber & Co.
give due course to petitioners' appeal from his order taxing costs. However, Inc.," y de la venta solamente se obtuvo la cantidad de P8,100.
inasmuch as according to the answer, petitioners through their attorney
withdrew their cash appeal bond of P60 after the record on appeal bond of "En su virtud, se declara que el 17 por ciento de las propiedades vendidas
P60 after the record on appeal had been rejected, the matter of mandamus en publica subasta pretenece al Sr. O Lastrilla y este tiene derecho a dicha
may be summarily be dropped without further comment. porcion pero con la obligacion de pagar el 17 por ciento de los gastos for la
conservacion de dichas propriedades por parte del Sheriff; . . . . (Annex K)
From the pleadings it appears that,
It is from this declaration and the subsequent orders to enforce it 1 that the
In civil case No. 193 of the Court of First Instance of Leyte, which is a suit for petitioners seek relief by certiorari, their position being the such orders were
damages by the Leyte-Samar Sales Co. (hereinafter called LESSCO) and null and void for lack of jurisdiction. At their request a writ of preliminary
Raymond Tomassi against the Far Eastern Lumber & Commercial Co. injunction was issued here.
(unregistered commercial partnership hereinafter called FELCO), Arnold
Hall, Fred Brown and Jean Roxas, judgment against defendants jointly and The record is not very clear, but there are indications, and we shall assume
severally for the amount of P31,589.14 plus costs was rendered on October for the moment, that Fred Brown (like Arnold Hall and Jean Roxas) was a
29, 1948. The Court of Appeals confirmed the award in November 1950, partner of the FELCO, was defendant in Civil Case No. 193 as such partner,
minus P2,000 representing attorney's fees mistakenly included. The decision and that the properties sold at auction actually belonged to the FELCO
having become final, the sheriff sold at auction on June 9, 1951 to Robert partnership and the partners. We shall also assume that the sale made to
Dorfe and Pepito Asturias "all the rights, interests, titles and participation" of Lastrilla on September 29, 1949, of all the shares of Fred Brown in the
the defendants in certain buildings and properties described in the FELCO was valid. (Remember that judgment in this case was entered in the
certificate, for a total price of eight thousand and one hundred pesos. But on court of first instance a year before.)
June 4, 1951 Olegario Lastrilla filed in the case a motion, wherein he
claimed to be the owner by purchase on September 29, 1949, of all the The result then, is that on June 9, 1951 when the sale was effected of the
"shares and interests" of defendant Fred Brown in the FELCO, and properties of FELCO to Roberto Dorfe and Pepito Asturias, Lastilla was
requested "under the law of preference of credits" that the sheriff be required already a partner of FELCO.
to retain in his possession so much of the deeds of the auction sale as may
be necessary "to pay his right". Over the plaintiffs' objection the judge in his
Now, does Lastrilla have any proper claim to the proceeds of the sale? If he Because Dorfe and Austrillas might be unwilling to recognized the validity of
was a creditor of the FELCO, perhaps or maybe. But he was no. The partner Lastrilla's purchase, or, if valid, they may want him not to forsake the
of a partnership is not a creditor of such partnership for the amount of his partnership that might have some obligations in connection with the
shares. That is too elementary to need elaboration. partnership properties. And what is more important, if the motion is granted,
when the time for redemptioner seventeen per cent (178%) less than
Lastrilla's theory, and the lower court's seems to be: inasmuch as Lastrilla amount they had paid for the same properties.
had acquired the shares of Brown is September, 1949, i.e., before the
auction sale and he was not a party to the litigation, such shares could not The defendants Arnold Hall and Jean Roxas, eyeing Lastrilla's financial
have been transferred to Dorfe and Austrilla. assets, might also oppose the substitution by Lastrilla of Fred Brown, the
judgment against them being joint and several. They might entertain
Granting arguendo that the auction sale and not included the interest or misgivings about Brown's slipping out of their common predicament through
portion of the FELCO properties corresponding to the shares of Lastrilla in the disposal of his shares.
the same partnership (17%), the resulting situation would be — at most —
that the purchasers Dorfe and Austrias will have to recognized dominion of Lastly, all the defendants would have reasonable motives to object to the
Lastrillas over 17 per cent of the properties awarded to them. 2 So Lastrilla delivery of 17 per cent of the proceeds to Lustrial, because it is so much
acquired no right to demand any part of the money paid by Dorfe and money deducted, and for which the plaintiffs might as another levy on their
Austrias to he sheriff any part of the money paid by Dorfe and Austrias to the other holdings or resources. Supposing of course, there was no fraudulent
sheriff for the benefit of FELCO and Tomassi, the plaintiffs in that case, for collusion among them.
the reason that, as he says, his shares (acquired from Brown) could not
have been and were not auctioned off to Dorfe and Austrias. Now, these varied interest of necessity make Dorfe, Asturias and the
defendants indispensable parties to the motion of Lastrilla — granting it was
Supposing however that Lastrillas shares have been actually (but unlawfully) step allowable under our regulations on execution. Yet these parties were
sold by the sheriff (at the instance of plaintiffs) to Dorfe and Austrias, what is not notified, and obviously took no part in the proceedings on the motion.
his remedy? Section 15, Rule 39 furnishes the answer.
A valid judgment cannot be rendered where there is a want of necessary
Precisely, respondents argue, Lastrilla vindicated his claim by proper action, parties, and a court cannot properly adjudicate matters involved in a suit
i.e., motion in the case. We ruled once that "action" in this section means when necessary and indispensable parties to the proceedings are not before
action as defined in section 1, Rule 2.3 Anyway his remedy is to claim "the it. (49 C.J.S., 67.)
property", not the proceeds of the sale, which the sheriff is directed by
section 14, Rule 39 to deliver unto the judgment creditors. Indispensable parties are those without whom the action cannot be finally
determined. In a case for recovery of real property, the defendant alleged in
In other words, the owner of property wrongfully sold may not voluntarily his answer that he was occupying the property as a tenant of a third person.
come to court, and insist, "I approve the sale, therefore give me the This third person is an indispensable party, for, without him, any judgment
proceeds because I am the owner". The reason is that the sale was made which the plaintiff might obtain against the tenant would have no
for the judgment creditor (who paid for the fees and notices), and not for effectiveness, for it would not be binding upon, and cannot be executed
anybody else. against, the defendant's landlord, against whom the plaintiff has to file
another action if he desires to recover the property effectively. In an action
On this score the respondent judge's action on Lastrilla's motion should be for partition of property, each co-owner is an indispensable party. (Moran,
declared as in excess of jurisdiction, which even amounted to want of Comments, 1952 ed. Vol. I, p. 56.) (Emphasis supplied.)
jurisdiction, which even amounted to want of jurisdiction, considering
specially that Dorfe and Austrias, and the defendants themselves, had Wherefore, the orders of the court recognizing Lastrilla's right and ordering
undoubtedly the right to be heard—but they were not notified.4 payment to him of a part of the proceeds were patently erroneous, because
promulgated in excess or outside of its jurisdiction. For this reason the
Why was it necessary to hear them on the merits of Lastrilla's motion? respondents' argument resting on plaintiffs' failure to appeal from the orders
on time, although ordinarily decisive, carries no persuasive force in this costs of this suit shall be taxed against the latter. The preliminary injunction
instance. heretofore issued is made permanent. So ordered.

For as the former Chief Justice Dr. Moran has summarized in his Paras, C.J., Feria, Pablo, Tuason, Montemayor, Reyes, Jugo, Bautista
Comments, 1952 ed. Vol. II, p. 168 — Angelo and Labrador, JJ., concur.

. . . And in those instances wherein the lower court has acted without
jurisdiction over the subject-matter, or where the order or judgment
complained of is a patent nullity, courts have gone even as far as to
disregard completely the questions of petitioner's fault, the reason being,
undoubtedly, that acts performed with absolute want of jurisdiction over the
subject-matter are void ab initio and cannot be validated by consent, express
or implied, of the parties. Thus, the Supreme Court granted a petition for
certiorari and set aside an order reopening a cadastral case five years after
the judgment rendered therein had become final. In another case, the Court
set aside an order amending a judgment acquired a definitive character. And
still in another case, an order granting a review of a decree of registration
issued more than a year ago had been declared null void. In all these case G.R. No. L-21906 December 24, 1968
the existence of the right to appeal has been recitals was rendered without
any trial or hearing, and the Supreme Court, in granting certiorari, said that
INOCENCIA DELUAO and FELIPE DELUAO plaintiffs-appellees,
the judgment was by its own recitals a patent nullity, which should be set
aside though an appeal was available but was not availed of. . . .
vs.NICANOR CASTEEL and JUAN DEPRA, defendants,
Invoking our ruling in Melocotones vs. Court of First Instance, (57 Phil., 144),
NICANOR CASTEEL, defendant-appellant.
wherein we applied the theory of laches to petitioners' 3-years delay in
requesting certiorari, respondents point out that whereas the orders
complained of herein were issued in June 13, 1951 and August 14, 1951 this
special civil action was not filed until August 1952. It should be observed that
the order of June 13 was superseded by that of August 14, 1951. The last CASTRO, J.:
order merely declared "que el 17 por ciento de la propiedades vendidas en
publica subasta pertenece at Sr. Lastrilla y este tiene derecho a dicha This is an appeal from the order of May 2, 1956, the decision of May 4, 1956
porcion." This does not necessarily mean that 17 per cent of the money had and the order of May 21, 1956, all of the Court of First Instance of Davao, in
to be delivered to him. It could mean, as hereinbefore indicated, that the civil case 629. The basic action is for specific performance, and damages
purchasers of the property (Dorfe and Asturias) had to recognize Lastrilla's resulting from an alleged breach of contract.
ownership. It was only on April 16, 1952 (Annex N) that the court issued an
order directing the sheriff "to tun over" to Lastrilla "17 per cent of the total In 1940 Nicanor Casteel filed a fishpond application for a big tract of swampy
proceeds of the auction sale". There is the order that actually prejudiced the land in the then Sitio of Malalag (now the Municipality of Malalag),
petitioners herein, and they fought it until the last order of July 10,. 1952 Municipality of Padada, Davao. No action was taken thereon by the
(Annex Q). Surely a month's delay may not be regarded as laches. authorities concerned. During the Japanese occupation, he filed another
fishpond application for the same area, but because of the conditions then
In view of the foregoing, it is our opinion, and we so hold, that all orders of prevailing, it was not acted upon either. On December 12, 1945 he filed a
the respondents judge requiring delivery of 17 per cent of the proceeds of third fishpond application for the same area, which, after a survey, was
the auction sale to respondent Olegario Lastrilla are null and void; and the 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 protestant versus Fp. Permit No. 289-C, Leoncio Aradillos, Fp. Permit No.
this third application was disapproved. 539-C, Alejandro Cacam, Permittees-Respondents."

Despite the said rejection, Casteel did not lose interest. He filed a motion for However, despite the finding made in the investigation of the above
reconsideration. While this motion was pending resolution, he was advised administrative cases that Casteel had already introduced improvements on
by the district forester of Davao City that no further action would be taken on portions of the area applied for by him in the form of dikes, fishpond gates,
his motion, unless he filed a new application for the area concerned. So he clearings, etc., the Director of Fisheries nevertheless rejected Casteel's
filed on May 27, 1947 his fishpond application 1717. application on October 25, 1949, required him to remove all the
improvements which he had introduced on the land, and ordered that the
Meanwhile, several applications were submitted by other persons for land be leased through public auction. Failing to secure a favorable
portions of the area covered by Casteel's application. resolution of his motion for reconsideration of the Director's order, Casteel
appealed to the Secretary of Agriculture and Natural Resources.
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 In the interregnum, some more incidents occurred. To avoid repetition, they
was later granted fishpond permit F-289-C covering 9.3 hectares certified as will be taken up in our discussion of the appellant's third assignment of error.
available for fishpond purposes by the Bureau of Forestry.
On November 25, 1949 Inocencia Deluao (wife of Felipe Deluao) as party of
Victor D. Carpio filed on August 8, 1946 his fishpond application 762 over a the first part, and Nicanor Casteel as party of the second part, executed a
portion of the land applied for by Casteel. Alejandro Cacam's fishpond contract — denominated a "contract of service" — the salient provisions of
application 1276, filed on December 26, 1946, was given due course on which are as follows:
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 That the Party of the First Part in consideration of the mutual covenants and
Casteel, upon certification of the Bureau of Forestry that the area was agreements made herein to the Party of the Second Part, hereby enter into a
likewise available for fishpond purposes. On November 17, 1948 Felipe contract of service, whereby the Party of the First Part hires and employs the
Deluao filed his own fishpond application for the area covered by Casteel's Party of the Second Part on the following terms and conditions, to wit:
application.
That the Party of the First Part will finance as she has hereby financed the
Because of the threat poised upon his position by the above applicants who sum of TWENTY SEVEN THOUSAND PESOS (P27,000.00), Philippine
entered upon and spread themselves within the area, Casteel realized the Currency, to the Party of the Second Part who renders only his services for
urgent necessity of expanding his occupation thereof by constructing dikes the construction and improvements of a fishpond at Barrio Malalag,
and cultivating marketable fishes, in order to prevent old and new squatters Municipality of Padada, Province of Davao, Philippines;
from usurping the land. But lacking financial resources at that time, he
sought financial aid from his uncle Felipe Deluao who then extended loans That the Party of the Second Part will be the Manager and sole buyer of all
totalling more or less P27,000 with which to finance the needed the produce of the fish that will be produced from said fishpond;
improvements on the fishpond. Hence, a wide productive fishpond was built.
That the Party of the First Part will be the administrator of the same she
Moreover, upon learning that portions of the area applied for by him were having financed the construction and improvement of said fishpond;
already occupied by rival applicants, Casteel immediately filed the
corresponding protests. Consequently, two administrative cases ensued That this contract was the result of a verbal agreement entered into between
involving the area in question, to wit: DANR Case 353, entitled "Fp. Ap. No. the Parties sometime in the month of November, 1947, with all the above-
661 (now Fp. A. No. 1717), Nicanor Casteel, applicant-appellant versus Fp. mentioned conditions enumerated; ...
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- 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 administering the said fishpond and collecting the proceeds from the sale of
at Malalag, Municipality of Padada, Province of Davao, Philippines, which the fishes caught from time to time; and (b) that the defendants be ordered
has been applied for fishpond permit by Nicanor Casteel, but rejected by the to pay jointly and severally to plaintiffs the sum of P20,000 in damages.
Bureau of Fisheries, and to supervise, demand, receive, and collect the
value of the fish that is being periodically realized from it...." 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
On November 29, 1949 the Director of Fisheries rejected the application filed of the case and upon their filling the requisite bond as may be fixed by the
by Felipe Deluao on November 17, 1948. Unfazed by this rejection, Deluao court, a preliminary injunction be issued to restrain Casteel from doing the
reiterated his claim over the same area in the two administrative cases acts complained of, and that after trial the said injunction be made
(DANR Cases 353 and 353-B) and asked for reinvestigation of the permanent. The lower court on April 26, 1951 granted the motion, and, two
application of Nicanor Casteel over the subject fishpond. However, by letter days later, it issued a preliminary mandatory injunction addressed to
dated March 15, 1950 sent to the Secretary of Commerce and Agriculture Casteel, the dispositive portion of which reads as follows:
and Natural Resources (now Secretary of Agriculture and Natural
Resources), Deluao withdrew his petition for reinvestigation. POR EL PRESENTE, queda usted ordenado que, hasta nueva orden, usted,
el demandado y todos usu abogados, agentes, mandatarios y demas
On September 15, 1950 the Secretary of Agriculture and Natural Resources personas que obren en su ayuda, desista de impedir a la demandante
issued a decision in DANR Case 353, the dispositive portion of which reads Inocencia R. Deluao que continue administrando personalmente la
as follows: pesqueria objeto de esta causa y que la misma continue recibiendo los
productos de la venta de los pescados provenientes de dicha pesqueria, y
In view of all the foregoing considerations, Fp. A. No. 661 (now Fp. A. No. que, asimismo, se prohibe a dicho demandado Nicanor Casteel a
1717) of Nicanor Casteel should be, as hereby it is, reinstated and given due desahuciar mediante fuerza al encargado de los demandantes llamado
course for the area indicated in the sketch drawn at the back of the last page Jesus Donesa de la pesqueria objeto de la demanda de autos.
hereof; and Fp. A. No. 762 of Victorio D. Carpio shall remain rejected.
On May 10, 1951 Casteel filed a motion to dissolve the injunction, alleging
On the same date, the same official issued a decision in DANR Case 353-B, among others, that he was the owner, lawful applicant and occupant of the
the dispositive portion stating as follows: 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.
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 The defendants on May 14, 1951 filed their answer with counterclaim,
hereby cancelled and revoked; Nicanor Casteel is required to pay the amended on January 8, 1952, denying the material averments of the
improvements introduced thereon by said permittees in accordance with the plaintiffs' complaint. A reply to the defendants' amended answer was filed by
terms and dispositions contained elsewhere in this decision.... the plaintiffs on January 31, 1952.

Sometime in January 1951 Nicanor Casteel forbade Inocencia Deluao from The defendant Juan Depra moved on May 22, 1951 to dismiss the complaint
further administering the fishpond, and ejected the latter's representative as to him. On June 4, 1951 the plaintiffs opposed his motion.
(encargado), Jesus Donesa, from the premises.
The defendants filed on October 3, 1951 a joint motion to dismiss on the
Alleging violation of the contract of service (exhibit A) entered into between ground that the plaintiffs' complaint failed to state a claim upon which relief
Inocencia Deluao and Nicanor Casteel, Felipe Deluao and Inocencia Deluao may be granted. The motion, opposed by the plaintiffs on October 12, 1951,
on April 3, 1951 filed an action in the Court of First Instance of Davao for was denied for lack of merit by the lower court in its order of October 22,
specific performance and damages against Nicanor Casteel and Juan Depra 1951. The defendants' motion for reconsideration filed on October 31, 1951
(who, they alleged, instigated Casteel to violate his contract), praying inter suffered the same fate when it was likewise denied by the lower court in its
alia, (a) that Casteel be ordered to respect and abide by the terms and order of November 12, 1951.
conditions of said contract and that Inocencia Deluao be allowed to continue
After the issues were joined, the case was set for trial. Then came a series On the scheduled date of hearing, that is, on May 2, 1956, the lower court
of postponements. The lower court (Branch I, presided by Judge Enrique A. (Branch I, with Judge Fernandez presiding), when informed about the
Fernandez) finally issued on March 21, 1956 an order in open court, reading defendants' motion for postponement filed on April 26, 1956, issued an order
as follows: . 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
Upon petition of plaintiffs, without any objection on the part of defendants, no appearance on the part of the defendants or their counsel. On the basis
the hearing of this case is hereby transferred to May 2 and 3, 1956 at 8:30 of the plaintiffs' evidence, a decision was rendered on May 4, 1956 the
o'clock in the morning. dispositive portion of which reads as follows:

This case was filed on April 3, 1951 and under any circumstance this Court EN SU VIRTUD, el Juzgado dicta de decision a favor de los demandantes y
will not entertain any other transfer of hearing of this case and if the parties en contra del demandado Nicanor Casteel:
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) (a) Declara permanente el interdicto prohibitorio expedido contra el
demandado;
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 (b) Ordena al demandado entregue la demandante la posesion y
deputy Clerk of Court) of the Court of First Instance of Davao, setting the administracion de la mitad (½) del "fishpond" en cuestion con todas las
hearing of the case for May 2 and 3, 1956 before Judge Amador Gomez of mejoras existentes dentro de la misma;
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 (c) Condena al demandado a pagar a la demandante la suma de P200.00
Judge Gomez) issued an order dated April 27, 1956, quoted as follows: mensualmente en concepto de danos a contar de la fecha de la expiracion
de los 30 dias de la promulgacion de esta decision hasta que entregue la
This is a motion for postponement of the hearing of this case set for May 2 posesion y administracion de la porcion del "fishpond" en conflicto;
and 3, 1956. The motion is filed by the counsel for the defendants and has
the conformity of the counsel for the plaintiffs. (d) Condena al demandado a pagar a la demandante la suma de P2,000.00
valor de los pescado beneficiados, mas los intereses legales de la fecha de
An examination of the records of this case shows that this case was initiated la incoacion de la demanda de autos hasta el completo pago de la
as early as April 1951 and that the same has been under advisement of the obligacion principal;
Honorable Enrique A. Fernandez, Presiding Judge of Branch No. I, since
September 24, 1953, and that various incidents have already been (e) Condena al demandado a pagar a la demandante la suma de P2,000.00,
considered and resolved by Judge Fernandez on various occasions. The por gastos incurridos por aquella durante la pendencia de esta causa;
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 (f) Condena al demandado a pagar a la demandante, en concepto de
postponement of the hearing of this case. honorarios, la suma de P2,000.00;

CONSIDERING ALL THE FOREGOING, the Court believes that the (g) Ordena el sobreseimiento de esta demanda, por insuficiencia de
consideration and termination of any incident referring to this case should be pruebas, en tanto en cuanto se refiere al demandado Juan Depra;
referred back to Branch I, so that the same may be disposed of therein.
(emphasis supplied) (h) Ordena el sobreseimiento de la reconvencion de los demandados por
falta de pruebas;
A copy of the abovequoted order was served on the defendants' counsel on
May 4, 1956. (i) Con las costas contra del demandado, Casteel.
The defendant Casteel filed a petition for relief from the foregoing decision, (3) Whether the lower court erred in ordering the issuance ex parte of a writ
alleging, inter alia, lack of knowledge of the order of the court a quo setting of preliminary injunction against defendant-appellant, and in not dismissing
the case for trial. The petition, however, was denied by the lower court in its appellees' complaint.
order of May 21, 1956, the pertinent portion of which reads as follows:
1. The first and second issues must be resolved against the appellant.
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 The record indisputably shows that in the order given in open court on March
Judge, particularly because his motion asking the transfer of this case was 21, 1956, the lower court set the case for hearing on May 2 and 3, 1956 at
not set for hearing and was not also acted upon. 8:30 o'clock in the morning and empathically stated that, since the case had
been pending since April 3, 1951, it would not entertain any further motion
Atty. Ruiz knows the nature of the order of this Court dated March 21, 1956, for transfer of the scheduled hearing.
which reads as follows:
An order given in open court is presumed received by the parties on the very
Upon petition of the plaintiff without any objection on the part of the date and time of promulgation, 1 and amounts to a legal notification for all
defendants, the hearing of this case is hereby transferred to May 2 and 3, legal purposes.2 The order of March 21, 1956, given in open court, was a
1956, at 8:30 o'clock in the morning. 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
This case was filed on April 3, 1951, and under any circumstance this Court March 21, 1956, duly promulgated by the lower court, thru Judge Fernandez,
will not entertain any other transfer of the hearing of this case, and if the and the notice of hearing signed by a "special deputy clerk of court" setting
parties will not be ready on the day set for hearing, the Court will take the hearing in another branch of the same court, the former's order was the
necessary steps for the final disposition of this case. one legally binding. This is because the incidents of postponements and
adjournments are controlled by the court and not by the clerk of court,
In view of the order above-quoted, the Court will not accede to any transfer pursuant to section 4, Rule 31 (now sec. 3, Rule 22) of the Rules of Court.
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 Much less had the clerk of court the authority to interfere with the order of
motion for transfer. the court or to transfer the cage from one sala to another without authority or
order from the court where the case originated and was being tried. He had
Petition for relief from judgment filed by Atty. Ruiz in behalf of the defendant, neither the duty nor prerogative to re-assign the trial of the case to a different
not well taken, the same is hereby denied. 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.
Dissatisfied with the said ruling, Casteel appealed to the Court of Appeals And this duty devolved upon the clerk of court and not upon the "special
which certified the case to us for final determination on the ground that it deputy clerk of court" who purportedly signed the notice of hearing.
involves only questions of law.
It is of no moment that the motion for postponement had the conformity of
Casteel raises the following issues: the appellees' counsel. The postponement of hearings does not depend
upon agreement of the parties, but upon the court's discretion.3
(1) Whether the lower court committed gross abuse of discretion when it
ordered reception of the appellees' evidence in the absence of the appellant The record further discloses that Casteel was represented by a total of 12
at the trial on May 2, 1956, thus depriving the appellant of his day in court lawyers, none of whom had ever withdrawn as counsel. Notice to Atty. Ruiz
and of his property without due process of law; 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
(2) Whether the lower court committed grave abuse of discretion when it other counsel of record. This is a well-settled rule in our jurisdiction.4
denied the verified petition for relief from judgment filed by the appellant on
May 11, 1956 in accordance with Rule 38, Rules of Court; and
It was the duty of Atty. Ruiz, or of the other lawyers of record, not excluding cannot be heard to complain that he has been deprived of his property
the appellant himself, to appear before Judge Fernandez on the scheduled without due process of law.7 Verily, the constitutional requirements of due
dates of hearing Parties and their lawyers have no right to presume that their process have been fulfilled in this case: the lower court is a competent court;
motions for postponement will be granted.5 For indeed, the appellant and his it lawfully acquired jurisdiction over the person of the defendant (appellant)
12 lawyers cannot pretend ignorance of the recorded fact that since and the subject matter of the action; the defendant (appellant) was given an
September 24, 1953 until the trial held on May 2, 1956, the case was under opportunity to be heard; and judgment was rendered upon lawful hearing.8
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 2. Finally, the appellant contends that the lower court incurred an error in
Fernandez had exclusive control of said case, unless he was legally ordering the issuance ex parte of a writ of preliminary injunction against him,
inhibited to try the case — and he was not. and in not dismissing the appellee's complaint. We find this contention
meritorious.
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 Apparently, the court a quo relied on exhibit A — the so-called "contract of
or reassignment of cases already pending in one sala to another sala, and service" — and the appellees' contention that it created a contract of co-
the setting of the date of trial after the trial calendar has been prepared, fall ownership and partnership between Inocencia Deluao and the appellant
within the exclusive control of the presiding judge. over the fishpond in question.

The appellant does not deny the appellees' claim that on May 2 and 3, 1956, Too well-settled to require any citation of authority is the rule that everyone
the office of the clerk of court of the Court of First Instance of Davao was is conclusively presumed to know the law. It must be assumed, conformably
located directly below Branch I. If the appellant and his counsel had to such rule, that the parties entered into the so-called "contract of service"
exercised due diligence, there was no impediment to their going upstairs to cognizant of the mandatory and prohibitory laws governing the filing of
the second storey of the Court of First Instance building in Davao on May 2, applications for fishpond permits. And since they were aware of the said
1956 and checking if the case was scheduled for hearing in the said sala. laws, it must likewise be assumed — in fairness to the parties — that they
The appellant after all admits that on May 2, 1956 his counsel went to the did not intend to violate them. This view must perforce negate the appellees'
office of the clerk of court. 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
The appellant's statement that parties as a matter of right are entitled to co-ownership violative of the prohibitory laws which will hereafter be
notice of trial, is correct. But he was properly accorded this right. He was discussed, we shall be compelled to declare altogether the nullity of the
notified in open court on March 21, 1956 that the case was definitely and contract. This would certainly not serve the cause of equity and justice,
intransferably set for hearing on May 2 and 3, 1956 before Branch I. He considering that rights and obligations have already arisen between the
cannot argue that, pursuant to the doctrine in Siochi vs. Tirona,6 his counsel parties. We shall therefore construe the contract as one of partnership,
was entitled to a timely notice of the denial of his motion for postponement. divided into two parts — namely, a contract of partnership to exploit the
In the cited case the motion for postponement was the first one filed by the fishpond pending its award to either Felipe Deluao or Nicanor Casteel, and a
defendant; in the case at bar, there had already been a series of contract of partnership to divide the fishpond between them after such
postponements. Unlike the case at bar, the Siochi case was not award. The first is valid, the second illegal.
intransferably set for hearing. Finally, whereas the cited case did not spend
for a long time, the case at bar was only finally and intransferably set for It is well to note that when the appellee Inocencia Deluao and the appellant
hearing on March 21, 1956 — after almost five years had elapsed from the entered into the so-called "contract of service" on November 25, 1949, there
filing of the complaint on April 3, 1951. were two pending applications over the fishpond. One was Casteel's which
was appealed by him to the Secretary of Agriculture and Natural Resources
The pretension of the appellant and his 12 counsel of record that they lacked after it was disallowed by the Director of Fisheries on October 25, 1949. The
ample time to prepare for trial is unacceptable because between March 21, other was Felipe Deluao's application over the same area which was
1956 and May 2, 1956, they had one month and ten days to do so. In effect, likewise rejected by the Director of Fisheries on November 29, 1949, refiled
the appellant had waived his right to appear at the trial and therefore he 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 wherein they stated that they did not employ him in his (Casteel's) claim but
fishpond was then in the possession of Casteel, neither he nor, Felipe because he used their money in developing and improving the fishpond, his
Deluao was the holder of a fishpond permit over the area. But be that as it right must be divided between them. Of course, although exhibit A did not
may, they were not however precluded from exploiting the fishpond pending specify any wage or share appertaining to the appellant as industrial partner,
resolution of Casteel's appeal or the approval of Deluao's application over he was so entitled — this being one of the conditions he specified for the
the same area — whichever event happened first. No law, rule or regulation execution of the document of partnership.11
prohibited them from doing so. Thus, rather than let the fishpond remain idle
they cultivated it. 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
The evidence preponderates in favor of the view that the initial intention of suggested that they divide the fishpond and the remaining capital, and
the parties was not to form a co-ownership but to establish a partnership — offered to pay the Deluaos a yearly installment of P3,000 — presumably as
Inocencia Deluao as capitalist partner and Casteel as industrial partner — reimbursement for the expenses of the appellees for the development and
the ultimate undertaking of which was to divide into two equal parts such improvement of the one-half that would pertain to the appellant. Two days
portion of the fishpond as might have been developed by the amount later, the appellee Felipe Deluao replied, 13expressing his concurrence in the
extended by the plaintiffs-appellees, with the further provision that Casteel appellant's suggestion and advising the latter to ask for a reconsideration of
should reimburse the expenses incurred by the appellees over one-half of the order of the Director of Fisheries disapproving his (appellant's)
the fishpond that would pertain to him. This can be gleaned, among others, application, so that if a favorable decision was secured, then they would
from the letter of Casteel to Felipe Deluao on November 15, 1949, which divide the area.
states, inter alia:
Apparently relying on the partnership agreement, the appellee Felipe Deluao
... [W]ith respect to your allowing me to use your money, same will redound saw no further need to maintain his petition for the reinvestigation of
to your benefit because you are the ones interested in half of the work we Casteel's application. Thus by letter14 dated March 15, 1950 addressed to
have done so far, besides I did not insist on our being partners in my 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
fishpond permit, but it was you "Tatay" Eping the one who wanted that we
stated however that he wanted his interest to be protected and his capital to
be partners and it so happened that we became partners because I am poor, be reimbursed by the highest bidder.
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 The arrangement under the so-called "contract of service" continued until the
prepared to the effect that we are partners in the fishpond that we caused to decisions both dated September 15, 1950 were issued by the Secretary of
be made here in Balasinon, but it does not mean that you will treat me as Agriculture and Natural Resources in DANR Cases 353 and 353-B. This
one of your "Bantay" (caretaker) on wage basis but not earning wages at all, development, by itself, brought about the dissolution of the partnership.
Moreover, subsequent events likewise reveal the intent of both parties to
while the truth is that we are partners. In the event that you are not
terminate the partnership because each refused to share the fishpond with
amenable to my proposition and consider me as "Bantay" (caretaker) the other.
instead, do not blame me if I withdraw all my cases and be left without even
a little and you likewise. Art. 1830(3) of the Civil Code enumerates, as one of the causes for the
(emphasis supplied)9 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
Pursuant to the foregoing suggestion of the appellant that a document be in partnership." The approval of the appellant's fishpond application by the
drawn evidencing their partnership, the appellee Inocencia Deluao and the decisions in DANR Cases 353 and 353-B brought to the fore several
appellant executed exhibit A which, although denominated a "contract of provisions of law which made the continuation of the partnership unlawful
service," was actually the memorandum of their partnership agreement. That and therefore caused its ipso facto dissolution.
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
Act 4003, known as the Fisheries Act, prohibits the holder of a fishpond cancellation of the permit or lease and forfeiture of the bond and for granting
permit (the permittee) from transferring or subletting the fishpond granted to the area to a qualified applicant or bidder, as provided in subsection (r) of
him, without the previous consent or approval of the Secretary of Agriculture Sec. 33 of this Order.
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 Since the partnership had for its object the division into two equal parts of
all or any area herein granted or any rights acquired therein without the the fishpond between the appellees and the appellant after it shall have
previous consent and approval of this Office." Parenthetically, we must been awarded to the latter, and therefore it envisaged the unauthorized
observe that in DANR Case 353-B, the permit granted to one of the parties transfer of one-half thereof to parties other than the applicant Casteel, it was
therein, Leoncio Aradillos, was cancelled not solely for the reason that his dissolved by the approval of his application and the award to him of the
permit covered a portion of the area included in the appellant's prior fishpond fishpond. The approval was an event which made it unlawful for the
application, but also because, upon investigation, it was ascertained thru the business of the partnership to be carried on or for the members to carry it on
admission of Aradillos himself that due to lack of capital, he allowed one Lino in partnership.
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 The appellees, however, argue that in approving the appellant's application,
share in the produce thereof.16 the Secretary of Agriculture and Natural Resources likewise recognized
and/or confirmed their property right to one-half of the fishpond by virtue of
Sec. 40 of Commonwealth Act 141, otherwise known as the Public Land Act, the contract of service, exhibit A. But the untenability of this argument would
likewise provides that 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
The lessee shall not assign, encumber, or sublet his rights without the possess the authority to violate the aforementioned prohibitory laws nor to
consent of the Secretary of Agriculture and Commerce, and the violation of exempt anyone from their operation.
this condition shall avoid the contract; Provided, That assignment,
encumbrance, or subletting for purposes of speculation shall not be However, assuming in gratia argumenti that the approval of Casteel's
permitted in any case: Provided, further, That nothing contained in this application, coupled with the foregoing prohibitory laws, was not enough to
section shall be understood or construed to permit the assignment, cause the dissolution ipso facto of their partnership, succeeding events
encumbrance, or subletting of lands leased under this Act, or under any reveal the intent of both parties to terminate the partnership by refusing to
previous Act, to persons, corporations, or associations which under this Act, share the fishpond with the other.
are not authorized to lease public lands.
On December 27, 1950 Casteel wrote17 the appellee Inocencia Deluao,
Finally, section 37 of Administrative Order No. 14 of the Secretary of expressing his desire to divide the fishpond so that he could administer his
Agriculture and Natural Resources issued in August 1937, prohibits a own share, such division to be subject to the approval of the Secretary of
transfer or sublease unless first approved by the Director of Lands and Agriculture and Natural Resources. By letter dated December 29, 1950,18 the
under such terms and conditions as he may prescribe. Thus, it states: appellee Felipe Deluao demurred to Casteel's proposition because there
were allegedly no appropriate grounds to support the same and, moreover,
When a transfer or sub-lease of area and improvement may be allowed. — If the conflict over the fishpond had not been finally resolved.
the permittee or lessee had, unless otherwise specifically provided, held the
permit or lease and actually operated and made improvements on the area The appellant wrote on January 4, 1951 a last letter19 to the appellee Felipe
for at least one year, he/she may request permission to sub-lease or transfer Deluao wherein the former expressed his determination to administer the
the area and improvements under certain conditions. fishpond himself because the decision of the Government was in his favor
and the only reason why administration had been granted to the Deluaos
(a) Transfer subject to approval. — A sub-lease or transfer shall only be was because he was indebted to them. In the same letter, the appellant
valid when first approved by the Director under such terms and conditions as forbade Felipe Deluao from sending the couple's encargado, Jesus Donesa,
may be prescribed, otherwise it shall be null and void. A transfer not to the fishpond. In reply thereto, Felipe Deluao wrote a letter 20 dated January
previously approved or reported shall be considered sufficient cause for the 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 Secretary's decision in DANR Cases 353 and 353-B, and considering the
competent agencies of the government are in a better position to render any absence of any proof that the said official exceeded his statutory authority,
equitable arrangement relative to the present case; hence, any action we exercised unconstitutional powers, or acted with arbitrariness and in
may privately take may not meet the procedure of legal order." 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
Inasmuch as the erstwhile partners articulated in the aforecited letters their salutary rule that the judicial department should not dictate to the executive
respective resolutions not to share the fishpond with each other — in direct department what to do with regard to the administration and disposition of
violation of the undertaking for which they have established their partnership the public domain which the law has entrusted to its care and administration.
— each must be deemed to have expressly withdrawn from the partnership, Indeed, courts cannot superimpose their discretion on that of the land
thereby causing its dissolution pursuant to art. 1830(2) of the Civil Code department and compel the latter to do an act which involves the exercise of
which provides, inter alia, that dissolution is caused "by the express will of judgment and discretion.22
any partner at any time."
Therefore, with the view that we take of this case, and even assuming that
In this jurisdiction, the Secretary of Agriculture and Natural Resources the injunction was properly issued because present all the requisite grounds
possesses executive and administrative powers with regard to the survey, for its issuance, its continuation, and, worse, its declaration as permanent,
classification, lease, sale or any other form of concession or disposition and was improper in the face of the knowledge later acquired by the lower court
management of the lands of the public domain, and, more specifically, with that it was the appellant's application over the fishpond which was given due
regard to the grant or withholding of licenses, permits, leases and contracts course. After the Secretary of Agriculture and Natural Resources approved
over portions of the public domain to be utilized as fishponds. 21, Thus, we the appellant's application, he became to all intents and purposes the legal
held in Pajo, et al. vs. Ago, et al. (L-15414, June 30, 1960), and reiterated in permittee of the area with the corresponding right to possess, occupy and
Ganitano vs. Secretary of Agriculture and Natural Resources, et al. enjoy the same. Consequently, the lower court erred in issuing the
preliminary mandatory injunction. We cannot overemphasize that an
(L-21167, March 31, 1966), that injunction should not be granted to take property out of the possession and
control of one party and place it in the hands of another whose title has not
... [T]he powers granted to the Secretary of Agriculture and Commerce been clearly established by law.23
(Natural Resources) by law regarding the disposition of public lands such as
granting of licenses, permits, leases, and contracts, or approving, rejecting, However, pursuant to our holding that there was a partnership between the
reinstating, or cancelling applications, or deciding conflicting applications, parties for the exploitation of the fishpond before it was awarded to Casteel,
are all executive and administrative in nature. It is a well-recognized this case should be remanded to the lower court for the reception of
principle that purely administrative and discretionary functions may not be evidence relative to an accounting from November 25, 1949 to September
interfered with by the courts (Coloso v. Board of Accountancy, G.R. No. L- 15, 1950, in order for the court to determine (a) the profits realized by the
5750, April 20, 1953). In general, courts have no supervising power over the partnership, (b) the share (in the profits) of Casteel as industrial partner, (e)
proceedings and action of the administrative departments of the the share (in the profits) of Deluao as capitalist partner, and (d) whether the
government. This is generally true with respect to acts involving the exercise amounts totalling about P27,000 advanced by Deluao to Casteel for the
of judgment or discretion, and findings of fact. (54 Am. Jur. 558-559) development and improvement of the fishpond have already been liquidated.
Findings of fact by an administrative board or official, following a hearing, are Besides, since the appellee Inocencia Deluao continued in possession and
binding upon the courts and will not be disturbed except where the board or enjoyment of the fishpond even after it was awarded to Casteel, she did so
official has gone beyond his statutory authority, exercised unconstitutional no longer in the concept of a capitalist partner but merely as creditor of the
powers or clearly acted arbitrarily and without regard to his duty or with appellant, and therefore, she must likewise submit in the lower court an
grave abuse of discretion... (emphasis supplied) 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
In the case at bar, the Secretary of Agriculture and Natural Resources gave the possession and enjoyment of the same. In the event that the appellee
due course to the appellant's fishpond application 1717 and awarded to him Deluao has received more than her lawful credit of P27,000 (or whatever
the possession of the area in question. In view of the finality of the 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,