San Buenaventura vs. Municipality of San Jose

Under Section 69 of Act No. 4003, as amended, a municipal council may lease the privilege to take or catch “bangus” fry only to the highest bidder after a competitive public bidding; an extension of the lease period or a new grant made without such prior bidding is void. The requirement of public bidding is an essential safeguard to invite competition and to prevent favoritism, fraud, and corruption, and it cannot be dispensed with even if the period granted does not exceed five years and would otherwise be within the council’s authority without provincial board approval.

On 7 August 1959, the Municipal Council of San Jose, Camarines Sur, held a public bidding for the exclusive privilege to catch “bangus” fry in fishery zones A, B, and C. Maximino Abragan was the highest bidder and was awarded the lease for a period ending on 31 December 1959. Before the lease expired, the council, without a new bidding, extended the term to 30 June 1960. Abragan later assigned his rights to Stanly Peña, and the council approved the assignment and simultaneously granted Peña a new five-year lease commencing 1 July 1960, again without public bidding. Vicente San Buenaventura, a resident who wished to bid for the same fishery zones, filed a petition for declaratory relief to nullify the resolutions on the ground that they violated the legal requirement of competitive public bidding.

• Nature of the Action: The case originated as a petition for declaratory relief filed by Vicente San Buenaventura, a resident of San Jose, Camarines Sur, who sought to nullify three resolutions of the municipal council concerning the lease of fishery zones A, B, and C for catching “bangus” fry. Petitioner claimed a personal interest in acquiring the lease rights through public bidding and alleged that the resolutions were passed without competitive bidding.
• The Original Award (7 August 1959): The Municipal Council of San Jose conducted a public bidding for the privilege to catch “bangus” fry in fishery zones A, B, and C. Respondent Maximino Abragan was declared the highest bidder with an offer of ₱550.00. The lease was awarded to him for a fixed term that was set to expire on 31 December 1959. Abragan immediately commenced exercising his rights as lessee.
• Extension by Resolution No. 75: On 17 November 1959, acting upon a letter from Abragan dated 10 September 1959, the municipal council passed Resolution No. 75 extending the lease for six months, or until 30 June 1960. The resolution itself recited that the lease was “due Dec. 31, 1959” and was being prolonged. No public bidding was held before granting this extension.
• Assignment and Council Approval (Resolution No. 79): Abragan, having been elected municipal vice‑mayor in the November 1959 elections, assigned his lease rights under the extended term to respondent Stanly Peña for a consideration of ₱550.00 on 15 December 1959. On the same day, the municipal council passed Resolution No. 79 approving the assignment.
• Five–Year Lease to Peña (Resolution No. 80): Also on 15 December 1959, the municipal council approved Resolution No. 80 granting Stanly Peña a lease over the same fishery zones for a period of five years, commencing 1 July 1960, at an annual rental of ₱550.00 payable within the first twenty days of July each year. The resolution described Peña as the “present occupant” of the zones and expressed the council’s desire to bolster municipal revenue, but no public bidding preceded the grant. Peña had merely applied for the lease; he had not been a bidder in the 7 August 1959 bidding.
• Provincial Board Approval: On 28 December 1959, the Provincial Board of Camarines Sur approved Resolutions Nos. 79 and 80 by its Resolution No. 1262.
• Petitioner’s Interest and Asserted Prejudice: Vicente San Buenaventura was a resident of the municipality interested in bidding for fishery zones A, B, and C. He alleged that the extensions and the new five‑year lease were made without public bidding, thereby depriving him and the public of the opportunity to compete, and he sought a declaration of nullity in court.

• Illegality of Resolution No. 75: Petitioner contended that the extension of the lease to Abragan for six months was illegal because it was granted without first calling for a public bidding, in violation of the law requiring that fishery privileges be let to the highest bidder.
• Illegality of Resolution No. 79: Petitioner maintained that the approval of the assignment was null and void because it was grounded on an illegally extended lease that had not been subjected to public bidding.
• Illegality of Resolution No. 80: Petitioner argued that the five‑year extension to Stanly Peña was granted “without public bidding” and “without prior authority from the Provincial Board as required by law,” specifically invoking Sections 2323 and 2319 of the Revised Administrative Code of 1917.

• Characterization of the Resolutions: Respondents contended that Resolution No. 75 merely fixed the term of the original lease award to a period not exceeding one year, and that Resolution No. 79 simply confirmed the assignment of lease rights. Resolution No. 80 was portrayed as a legitimate extension of the lease already granted under Resolution No. 75 to a five‑year period.
• Validity Based on Provincial Approval and Council Authority: Respondents argued that Resolutions Nos. 79 and 80 were duly approved by the Provincial Board of Camarines Sur, and that the municipal council acted within its powers in adopting all three resolutions.

• Applicable Law and Power to Extend the Lease: Whether the municipal council had authority, under the governing law, to extend the lease of fishery zones to Maximino Abragan for six months without conducting a new public bidding.
• Validity of the Five‑Year Lease to Peña: Whether the grant of a five‑year lease to Stanly Peña under Resolution No. 80, without prior competitive public bidding, was valid.
• Procedural Compliance — Notice to the Provincial Fiscal: Whether the petition for declaratory relief should be dismissed for the petitioner’s failure to notify the Provincial Fiscal as required by Section 5, Rule 66 of the Rules of Court.

• Applicable Law and Power to Extend the Lease: The governing law was not the Revised Administrative Code invoked by the trial court but Sections 67 and 69 of Act No. 4003 (Fisheries Act), as amended by Commonwealth Acts Nos. 115 and 471, which modified the earlier provisions. Under Section 69, the privilege to catch “bangus” fry must be let to the highest bidder for a period not exceeding five years (without need of provincial board approval), but the lease must be based on a public bidding where the bid specifies the period. The original award to Abragan was for a period expiring 31 December 1959, as confirmed by the very wording of Resolution No. 75. The extension granted by that resolution was tantamount to a new lease for a period within five years, which required a prior competitive bidding. Because no bidding was held, Resolution No. 75 was null and void. Consequently, Resolution No. 79, which approved the assignment of rights under that void extension, was also without legal effect.
• Validity of the Five‑Year Lease to Peña: Resolution No. 80, which granted a five‑year lease to Stanly Peña without any public bidding, directly contravened Section 69 of Act No. 4003 as amended. Although a municipality may lease fishery privileges for up to five years without prior provincial board approval, the lease must always be awarded to the highest bidder after a competitive bidding. The record showed that Peña simply applied for the lease; he was not a bidder in the August 1959 bidding and no new bidding was conducted. The resolution was therefore void. The ruling was reinforced by Bartolome San Diego vs. Municipality of Naujan, where an extension of a fishery lease without public bidding was struck down for violating the requirement of competitive bidding designed to prevent favoritism and corruption. The Court reiterated that amendments altering a vital and essential particular such as the period of the lease require a new public bidding.
• Procedural Compliance — Notice to the Provincial Fiscal: The failure to notify the Provincial Fiscal under Section 5, Rule 66 of the Rules of Court (now Section 4, Rule 64) was not a ground to dismiss the petition. The requirement is not jurisdictional; its purpose is merely to give the fiscal an opportunity to participate in the deliberation on the validity of a municipal ordinance. Where the resolutions are patently illegal and the matter has been properly passed upon by a competent court, the notice may be dispensed with. Furthermore, the issue was raised for the first time on appeal and could not be entertained at that late stage.

• Mandatory Public Bidding for Fishery Lease Grants — Under Section 69 of Act No. 4003 as amended, the exclusive privilege of catching “bangus” fry or other fishery rights in municipal waters must be let to the highest bidder in a competitive public bidding. This requirement applies not only to original grants but also to extensions, renewals, assignments, and any amendment that alters a vital and essential term of the lease, such as the period. The purpose is to “invite competition and to guard against favoritism, fraud and corruption in the letting of fishery privileges.” A lease or extension granted in the absence of a public bidding is null and void as contrary to law and public policy.
• Supersession of the Revised Administrative Code by the Fisheries Act — Sections 67 and 69 of Act No. 4003, as amended, have modified and superseded the related provisions of Sections 2321, 2323, and 2319 of the Revised Administrative Code of 1917 with respect to the grant of fishery privileges. Under Act No. 4003, a municipal council may lease fishery privileges for a period not exceeding five years without previous approval of the provincial board, but the lease must be based on a competitive public bidding. For longer periods, the prior approval of higher authorities is required, yet in all cases the public bidding requirement remains indispensable.
• Notice to Provincial Fiscal in Municipal Ordinance Cases Is Not Jurisdictional — The requirement under Rule 66, Section 5 (now Rule 64, Section 4) of the Rules of Court that the provincial fiscal be notified in an action involving the validity of a municipal ordinance is directory, not jurisdictional. Non‑compliance does not warrant dismissal where the ordinance is patently illegal and a competent court has already adjudicated its validity.

• “The requirement of competitive bidding is for the purpose of inviting competition and to guard against favoritism, fraud and corruption in the letting of fishery privileges.” (quoting Bartolome San Diego vs. Municipality of Naujan)
• “Public biddings are held for the protection of the public, and to give the public the best possible advantages by means of open competition between the bidders. … it is obvious that such protection and best possible advantages to the public will disappear if the parties to a contract executed after public bidding may alter or amend it without another previous public bidding.” (quoting Caltex (Phil.), Inc. vs. Delgado Bros.)
• “In the lease of fishery privileges for a period not exceeding five years the previous approval of the Provincial Board is not necessary. … In all cases the lease must be based on a competitive public bidding.”

• Bartolome San Diego vs. Municipality of Naujan, Oriental Mindoro, G.R. No. L-9920, February 29, 1960 — Followed and applied. The Court held that an extension of a fishery lease for another five years granted without competitive public bidding was illegal and void. The period of the lease is a vital and essential particular, and any amendment extending it requires a new public bidding.
• Caltex (Phil.), Inc. vs. Delgado Bros., et al., G.R. No. L-5439, December 29, 1954 — Cited for the doctrine that an amendment to a contract executed after public bidding cannot be made without another public bidding, as the public protection inherent in the bidding process would otherwise be defeated.

• Section 69, Act No. 4003 (Fisheries Act), as amended by Commonwealth Acts Nos. 115 and 471 — Prescribes that the grant of fishery privileges to a private party shall be let to the highest bidder for a period not exceeding five years (without provincial board approval), or up to ten years with such approval, or up to twenty years with the approval of the Secretary of Agriculture and Natural Resources. Applied to invalidate the extension and the five‑year lease, both made without public bidding.
• Section 67, Act No. 4003, as amended — Confers upon municipal councils the authority to grant the exclusive privilege of taking or catching “bangus” fry within municipal waters. Read in conjunction with Section 69 to require public bidding.
• Section 2323, Revised Administrative Code of 1917 — Required that fishery privileges be let to the highest bidder. The Court recognized that this provision, though invoked below, had been modified by Act No. 4003 but its bidding requirement remained consistent.
• Section 2319, Revised Administrative Code of 1917 — Governed the letting of municipal ferry, market, or slaughterhouse to the highest bidder; partially cited but superseded in the fishery context by Act No. 4003.
• Section 5, Rule 66, Rules of Court (now Section 4, Rule 64, Revised Rules of Court) — Required notification of the provincial fiscal in actions involving the validity of a municipal ordinance. Held to be non‑jurisdictional and dispensable under the circumstances.

Justices Bautista Angelo, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala, Makalintal, and Bengzon, J.P., concurred. Chief Justice Bengzon and Justice Concepcion took no part.