Terrado v. Court of Appeals
REITERATIONFacts
The Antecedents: The underlying dispute concerns the administration and disposition of the Mangabul Fisheries in Bayambang, Pangasinan. Municipal Ordinance No. 8, series of 1974, established the Bayambang Fishery and Hunting Park and Municipal Watershed, designating private respondent Geruncio Lacuesta as Manager-Administrator for a 25-year term, renewable for another 25 years. Lacuesta was to pay the municipality 10% of the annual gross income, not less than P200,000.00, and post a P200,000.00 bond. This ordinance was later disapproved by the Secretary of Agriculture and Natural Resources due to the lack of competitive public bidding, a requirement under Act No. 4003. Procedural History: Following the disapproval of the ordinance and Lacuesta's withdrawal of his appeal, the municipality proceeded with a public bidding for the fisheries. Petitioners herein, including spouses Lydia Terrado and Martin Rosario, were among the winning bidders. Lacuesta filed a petition for prohibition and mandamus, leading to a restraining order that initially prevented the execution of leases with the winning bidders. This initiated a complex series of legal challenges, including petitions for certiorari and prohibition filed by various parties in the Court of First Instance and the Court of Appeals. These proceedings involved multiple judges and appellate panels, with conflicting rulings on the validity of restraining orders, injunctions, and contempt citations. The case saw numerous petitions and counter-petitions concerning the possession of the fisheries, the validity of the municipal ordinance, and the actions of the lower courts and officials. The Petition: The consolidated petitions before the Supreme Court, G.R. No. L-58794 and G.R. No. L-64489, seek to annul an Alias Writ of Execution and Possession issued on November 6, 1981, and an Order and Writ dated October 8, 1982. These orders, issued by the trial court and upheld by the Court of Appeals in various consolidated cases, aimed to restore possession of the Mangabul Fisheries to Geruncio Lacuesta under the disputed Municipal Ordinance No. 8. The petitioners argue that the ordinance and the contract with Lacuesta are void ab initio because they were enacted without the required public bidding and for a period exceeding statutory limits. They also highlight the death of respondent Lacuesta as a factor extinguishing the agency relationship and thus the contract.
Issue(s)
Whether Municipal Ordinance No. 8, series of 1974, of the Municipality of Bayambang, Pangasinan, and the contract of management and administration executed pursuant thereto, are valid. Whether the disapproval of Municipal Ordinance No. 8 by the Secretary of Agriculture and Natural Resources rendered the ordinance and contract null and void. Whether the grant of exclusive fishery privileges without public bidding is contrary to law. Whether the period granted for the management of the fisheries exceeded the statutory limit. Whether the death of respondent Geruncio Lacuesta extinguished the agency relationship and the contract. Whether the orders issued by the lower courts and the Court of Appeals, particularly those concerning contempt, injunctions, and writs of execution, were issued with or without jurisdiction and with grave abuse of discretion.
Ruling
The Supreme Court declared Municipal Ordinance No. 8, series of 1974, of the Municipality of Bayambang, Pangasinan, and the contract of management and administration between the Municipality and Geruncio Lacuesta as null and void ab initio. Consequently, the Alias Writ of Execution and Possession dated November 6, 1981, and the Order and Writ dated October 8, 1982, which sought to place Lacuesta in possession, were also nullified and set aside. The petition for prohibition filed by Lacuesta to enjoin the Municipal Council from leasing the fisheries upon public bidding was dismissed.
Ratio Decidendi
On the Validity of Municipal Ordinance No. 8 and the Contract: The Court held that Municipal Ordinance No. 8 was null and void ab initio. The primary reason was that it granted exclusive fishery privileges to respondent Lacuesta without the benefit of competitive public bidding, which is a mandatory requirement under Sections 4, 29, and 30 of Act No. 4003, as amended by Presidential Decree No. 704. The law explicitly requires that such privileges be granted to the highest qualified bidder. Furthermore, the ordinance granted the exclusive privilege for a period of twenty-five (25) years, renewable for another twenty-five (25) years, which far exceeds the statutory limit of five (5) years for municipal fishery leases. The Court emphasized that acts executed against the provisions of mandatory or prohibitory laws are void. Consequently, the contract of management and administration executed between the Municipality and Lacuesta, based on this illegal ordinance, was also null and void. On the Disapproval by the Secretary of Agriculture and Natural Resources: The Court reiterated that under Section 4 of Act No. 4003, all municipal ordinances and resolutions affecting fishing and fisheries must be submitted to the Secretary for approval and shall have full force and effect only upon his approval. The disapproval of Ordinance No. 8 by the Secretary of Agriculture and Natural Resources was a clear indication of its illegitimacy. The Court clarified that even if the Secretary failed to act within the 30-day period prescribed, this did not validate an illegal ordinance. The purpose of the 30-day period was merely to expedite action, not to legitimize unlawful legislation. Therefore, the disapproval was a critical factor in determining the invalidity of the ordinance. On the Requirement of Public Bidding: The Court underscored the importance of public bidding in the award of fishery privileges. Citing jurisprudence, it explained that competitive bidding is essential to guard against favoritism, fraud, and corruption. The Revised Administrative Code, as modified by Act No. 4003, mandates that exclusive fishery privileges shall be let to the highest bidder. The ordinance's failure to comply with this requirement rendered it illegal. The Court explicitly stated that the Municipality cannot delegate the use or disposal of fisheries or charge fees without adhering to the prescribed legal procedures, including public bidding. On the Statutory Period for Fishery Leases: The Court found that the twenty-five (25) year period, renewable for another twenty-five (25) years, granted to Lacuesta under the ordinance was in direct contravention of Section 67 and 69 of Act No. 4003, as amended. These provisions limit municipal fishery leases to a maximum of five (5) years. The Court cited previous rulings that established the strict adherence to these periods and the necessity of provincial or secretarial approval for leases exceeding certain durations. The extended period granted in the ordinance was therefore illegal. On the Extinguishment of Agency by Death: The Court noted the death of respondent Geruncio Lacuesta. It explained that the contract of management and administration was essentially one of agency. Under Article 1919 of the New Civil Code, agency is extinguished by the death of the agent. The rights and obligations arising from such a contract are generally not transmittable to the heirs. This fact further rendered the contract unenforceable and mooted further proceedings related to Lacuesta's personal involvement. On the Lower Courts' Orders and Grave Abuse of Discretion: The Court brushed aside the procedural aspects and focused on the intrinsic merits of the case, particularly the validity of the ordinance. It found that the various orders issued by the lower courts and the Court of Appeals, especially those that attempted to enforce the void ordinance and contract or punish parties for actions related to them, were either issued without legal basis or with grave abuse of discretion. For instance, the order restoring possession to Lacuesta after his relief from the case was deemed irregular. The Court emphasized the need for full obedience to its own resolutions and warned against the arbitrary actions of subordinate courts.
Main Doctrine
A municipal ordinance granting exclusive fishery privileges without public bidding, and which has been disapproved by the Secretary of Agriculture and Natural Resources, is null and void ab initio. Consequently, any contract executed pursuant thereto is also null and void. The death of the agent also extinguishes the agency relationship.