G.R. No. L-4709 August 29, 1952
IGNACIO CRUZ, ET AL., petitioners,

vs.
DEMETRIO B. ENCARNACION, ETC., ET AL., respondents.

FACTS

The case involves the Arinda fishery, a 171-hectare property granted in 1656 for the common use of the inhabitants of Taytay, Rizal. A Board of Trustees administers it. In Civil Case No. 1119 before the Court of First Instance of Rizal, Felix Sanvictores and six others sued Vicente Javier and six others, claiming they were the duly elected trustees and sought to oust the defendants. The court appointed Gervasio Bunyi as receiver (depositario) of the fishery. The receiver filed a motion to require Ignacio Cruz, Delfin Calderon, Eugenio de la Paz, Lucio Atanacio, Felipe Galvez, and Melecio Cruz to explain why they should not be ejected from the portions they occupied. The occupants opposed, claiming they were lessees under contracts with the Board, had introduced improvements, and could not be deprived without due process. The judge suggested a settlement. On November 25, 1950, the occupants (except Melecio Cruz, who withdrew) and the receiver submitted an “Amicable Settlement” to the court for approval, whereby the occupants agreed to pay P1,600 for the lease of 23 fishery positions by December 15, 1950, and to vacate by April 30, 1951, and moved for the dismissal of the receiver’s earlier motion. The court record does not show that this agreement was approved or that the dismissal motion was acted upon. Later, the receiver moved to compel the occupants to pay the P1,600, alleging non-compliance. The occupants opposed, arguing the agreement was not perfected or approved by the court. On March 27, 1951, the judge issued an order directing Ignacio Cruz, et al. (except Melecio Cruz) to deposit the P1,600 in their proper proportions within 24 hours, under threat of immediate arrest and imprisonment until compliance, deeming their conduct a challenge to judicial authority. The motion for reconsideration was denied. Ignacio Cruz, et al. filed a petition for prohibition with the Supreme Court, assailing the order as illegal and unconstitutional, and obtained a preliminary writ of injunction. Meanwhile, the lower court decided Civil Case No. 1119 on September 29, 1951, in favor of Sanvictores, et al., declaring them the legitimate trustees, ordering the defendants to deliver funds and render an accounting, and nullifying the defendants’ acts. This decision was executed on December 10, 1951.

ISSUE

Whether the lower court’s order of March 27, 1951, threatening to imprison the petitioners for failing to pay P1,600 pursuant to an unapproved “Amicable Settlement,” is legal and constitutional.

RULING

No. The Supreme Court held that the “Amicable Settlement” was not perfected because it was submitted to the court for approval but the court never acted upon or approved it. Under Rule 61, Section 7, a receiver acts subject to the control of the court and cannot independently perfect contracts without the court’s express authorization or approval. The court’s theory that the mere submission of the agreement without opposition implied its automatic approval and binding effect was baseless. The receiver was obligated to submit the proposed agreement for court approval, with notice to the litigating parties who could advise the court on its propriety. Since the agreement was not perfected, its fulfillment was not yet demandable. Therefore, the lower court’s order threatening to imprison the petitioners for non-payment within 24 hours was illegal and arbitrary. However, since Civil Case No. 1119 had already been definitively decided and executed, making the writ of prohibition permanent would be a mere academic resolution. The petition was dismissed, without pronouncement as to costs.