Facts:
In
1940 Nicanor Casteel filed a fishpond application for a big tract of swampy
land in the then Sitio 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 but it was again
disapproved since it was discovered that the area applied for was still needed
for firewood production. Meanwhile, several applications were submitted by
other persons for portions of the area covered by Casteel's application,
including Leoncio Aradillos, Victor Carpio, Alejandro Cacam, and Deluao.
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 to finance the
needed improvements on the fishpond. Hence, a wide productive fishpond was
built.
The
Director of Fisheries nevertheless rejected Casteel's application and required
him to remove all the improvements which he had introduced on the land, and
ordered that the land be leased through public auction.
Inocencia
Deluao (wife of Felipe Deluao), and Nicanor executed a contract of service. At
the same time, Inocencia 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...."
Then,
the Director of Fisheries rejected the application filed by Felipe Deluao and
Victorio Carpio while Alejandro Cacam’s permit was cancelled and revoked.
Casteel had been reinstated and given due course for the area and is required
to pay the improvements to Alejandro Cacam.
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 entered into between
Inocencia Deluao and Nicanor Casteel, Felipe and Inocencia filed an action in
the CFI Davao for specific performance and damages against Nicanor Casteel and
Juan Depra (who, they alleged, instigated Casteel to violate his contract).
Plaintiffs
filed an ex parte motion for the issuance of a preliminary injunction which was
granted. Casteel then filed
a motion to dissolve the injunction, alleging among others, that he was the
owner, lawful applicant and occupant of the fishpond in question.
Issues:
Whether
or not the reinstatement of Casteel dissolved the partnership with Deluao.
Held:
Apparently,
the court a quo relied on — 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.
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. 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.
Although
denominated a "contract of service," was actually the memorandum of
their partnership agreement. 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. 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.
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.
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