Sañado v. Court of Appeals
REITERATIONFacts
The Antecedents: The underlying dispute originated from a fishpond development and financing contract executed on July 16, 1973, between petitioner Calixto Sañado and respondent Simeon G. Nepomuceno. Sañado, holder of a fishpond permit for fifty hectares, agreed to allow Nepomuceno to develop thirty hectares at Nepomuceno's full expense. The contract stipulated that Nepomuceno would first recover his investment from the fishpond's produce, after which a 35%-65% sharing of net harvest between Sañado and Nepomuceno, respectively, would commence for four years. A subsequent handwritten agreement modified the renewal clause, requiring mutual agreement for renewal. Procedural History: Petitioner Sañado filed a complaint for recovery of possession and damages against Nepomuceno and Edgar J. Chu on July 17, 1981, with the Regional Trial Court (RTC). The RTC ruled in favor of Sañado, ordering the restoration of possession, declaring Nepomuceno's waiver of rights void, and awarding Sañado P168,000.00 for his share of the produce, P25,000.00 per annum for rentals, and P100,000.00 in attorney's fees. Nepomuceno appealed to the Court of Appeals (CA), while Chu's appeal was dismissed. The CA modified the RTC decision, affirming most monetary awards but reversing the order for restoration of possession. The CA's decision was later denied reconsideration. The Petition: Petitioner Sañado seeks reversal of the Court of Appeals' decision, arguing that the appellate court considered evidence and matters not presented during the trial, specifically a July 31, 1989 decision from the Office of the President (OP) that cancelled Sañado's Fishpond Lease Agreement No. 3090. Sañado contends that this OP decision, rendered after the RTC decision but before it became final, was a supervening event that the CA improperly considered. The petition argues that the CA committed grave abuse of discretion by giving legal force to this decision, which Sañado claims was merely incidental to an injunction proceeding and should not have affected the possessory action decided by the RTC.
Issue(s)
Whether the Court of Appeals committed grave abuse of discretion in considering the July 31, 1989 decision of the Office of the President. Whether the July 31, 1989 decision of the Office of the President, which cancelled petitioner's Fishpond Lease Agreement No. 3090, constitutes a supervening event that affects the possessory action filed by the petitioner. Whether the Court of Appeals erred in reversing the trial court's order for the restoration of possession of the fishpond area to the petitioner.
Ruling
The petition is denied for lack of merit. The September 11, 1992 decision of the Court of Appeals is affirmed.
Ratio Decidendi
On whether the Court of Appeals committed grave abuse of discretion in considering the July 31, 1989 decision of the Office of the President: The Supreme Court held that the July 31, 1989 decision of the Office of the President is an official act and an exercise of quasi-judicial power, falling under matters of which courts must take judicial notice. The Court emphasized that the executive department's function is to enforce the law, including Presidential Decree No. 704 concerning fisheries. The policy of courts is not to interfere with actions of the executive branch on administrative matters unless there is a clear showing of capricious or whimsical exercise of judgment or grave abuse of discretion, which was absent here. The Court noted that the OP decision was rendered while the RTC decision was pending appeal, making it a supervening event that could not be disregarded. The petitioner was aware of the pending administrative case as he was the one who filed the appeal to the Office of the President, thus its presentation to the appellate court caused no undue surprise. On whether the July 31, 1989 decision of the Office of the President constitutes a supervening event: The Court affirmed that the OP decision is a substantial supervening event that drastically changed the circumstances of the parties. The OP decision upheld the cancellation of petitioner's Fishpond Lease Agreement No. 3090 due to violations of its terms, such as unauthorized subleasing and failure to meet development requirements. The Court reasoned that to award possession to the petitioner would be futile and would disregard the OP decision, rendering it without effect. The cancellation of the license necessarily eliminated petitioner's right to possess the fishpond area, as the new licensee would enjoy this right. The Court also pointed out that the May 14, 1985 order giving Nepomuceno priority to apply for the area remained unchallenged. On whether the Court of Appeals erred in reversing the trial court's order for the restoration of possession: The Supreme Court found that the Court of Appeals correctly held that the issue of possession was rendered moot and academic by the cancellation of the Fishpond Lease Agreement No. 3090. Since the lease agreement was cancelled, possession of the fishpond area could not be returned to the petitioner, even if the waiver of rights was declared null and void. The Court reiterated that the right to possess the fishpond area is necessarily included in the decision regarding the lease agreement. Awarding possession to the petitioner, whose license was cancelled by the executive department and sustained by the Office of the President, would run counter to the enforcement of the OP decision. The Court also noted that the trial court's decision had not yet attained finality when the OP decision was rendered, allowing for the consideration of supervening events.
Main Doctrine
The cancellation of a fishpond lease agreement by the Office of the President, based on violations of its terms and fisheries rules, constitutes a supervening event that drastically changes the circumstances of the parties and must be considered by the appellate court, even if it affects the outcome of a pending possessory action, as possession is necessarily included in the right to the lease.