G.R. No. 154475 . September 30, 2005.
Republic of the Philippines, represented by the Secretary of Agriculture and/or Cesar M. Drilon, Jr., vs. Eno Fishpond Corporation, Cabral Fishpond Industry Corporation and Editha A. Cabral.

FACTS

The Bureau of Fisheries and Aquatic Resources (BFAR) leased two fishponds to Cabral Fishpond Industry Corporation under Fishpond Lease Agreements (FLAs). The corporation was majority-owned by the late Marcelino Cabral, whose shares were inherited by his wife, respondent Editha Cabral. In 1998, Cabral Corporation, through its President Marjorie Galsim (Editha’s daughter), assigned its leasehold rights over the FLAs to Eno Fishpond Corporation, controlled by another daughter, Maceja Ong Oh. Eno subsequently applied with BFAR for the transfer of the FLAs to its name. Editha filed a protest against this application, claiming the assignment was done without her knowledge and consent, but she did not disclose she had earlier assigned her corporate shares to Paterno Belarmino. The DA Undersecretary denied Eno’s application, ruling the assignment was a ploy by Editha’s daughters to deprive her of her shareholdings, rendering her shares valueless. Belarmino later intervened, asserting his rights as assignee of Editha’s shares.

ISSUE

Whether the Undersecretary of Agriculture committed grave abuse of discretion in denying the application for transfer of the Fishpond Lease Agreements based on intra-corporate disputes rather than the applicable administrative regulations.

RULING

Yes. The Supreme Court affirmed the Court of Appeals’ decision setting aside the Undersecretary’s orders. The legal logic is anchored on the principle that an administrative agency must exercise its powers within the confines of its delegated authority and the relevant regulations. The transfer of an FLA is governed by Fisheries Administrative Order (FAO) No. 60, which provides specific grounds for approval or disapproval, primarily focusing on public interest and the qualifications of the transferee. The Undersecretary’s denial was predicated on the perceived dilution of Editha Cabral’s (and later Belarmino’s) share value and an intra-family corporate quarrel, which are matters outside the scope of FAO No. 60. These are essentially intra-corporate disputes over share ownership and the validity of corporate assignments, which fall under the jurisdiction of regular courts. By venturing into these issues and basing his decision thereon, the Undersecretary exceeded his adjudicatory authority under the fisheries regulations. His orders were thus tainted with grave abuse of discretion for being grounded on considerations not contemplated by the law he was tasked to administer. The proper course was to resolve the application based solely on the administrative criteria and remit the corporate disputes to the appropriate judicial forum.