SARMIENTO, YLOURAH P.

INSURANCE Tuesday 6:00-10:00pm

Terrado, et al. vs. CA

G.R. no. L-58794
August 24, 1984

FACTS:

Pursuant to Act No. 4041 of the Philippine Legislature approved January 21, 1983,
the Fisheries situated in the locality known as Mangabul, Bayambang, Pangasinan,
and falling within Plan No. Ipd Ninety-two of the Bureau of Lands and recently
declared by the courts as public land was reserved and the usufruct thereof ceded to
the municipality of Bayambang, Province of Pangasinan, to be used or disposed of in
accordance with the general municipal law relative to the letting of fisheries in
municipal waters: Provided, That the timber and other forest products therein shall
be placed under the administration and control of the forest service; Provided
further, that the cession shall not be interpreted as limiting the power of the
Secretary of Agriculture and Natural Resources to prescribe rules and regulations for
the protection of game birds, mammals or fish within the area ceded to the
municipality of Bayambang. (Section 1, Act 4041. This Act was declared enforced by
Proclamation No. 545 (1933).

In 1974, the municipality of Bayambang enacted Ordinance No. 8, establishing the

Bayambang Fishery and Hunting Park and Municipal Water Shed. Also in the said
ordinance, the municipality appointed and constituted private respondent Lacuesta
as Manager-Administrator of the watershed for a period of 25 years, renewable for
another 25 years. This is under the condition that said respondent shall pay the
municipality the sum equivalent to 10% of the annual gross income that may be
derived from the forest products, wild game, and fish.

Such ordinance was approved by the Provincial Board of Pangasinan but was
disapproved by the Secretary of Agriculture and Natural Resources as it “grants
fishery privileges to respondent Lacuesta without the benefit of competitive public
hearing in contravention to law.” The municipality then informed Lacuesta of the
disapproval of the ordinance and directed him to refrain and desist from acting as
Manager-Administrator.

However, Lacuesta refused and insisted on retaining possession of the fisheries.

Despite such refusal, the municipality of Bayambang passed another resolution
resolving to advertise for public bidding the said fishery area. Among the winning
bidders are herein petitioners.
There was a long line of petitions/motions filed in the RTC, CA, and SC filed by both
parties. The judge of said court sided with Lacuesta. As such, despite the fact that
Lacuesta died, she still ordered the restoration of the possession of all fisheries and
areas covered by the contract to Lacuesta and his party.

ISSUE:
Whether or not the Management-Administration contract still stands
even if Lacuesta already died. (NO)

RULING:

We have noted earlier the death of Lacuesta in Our Resolution of July 2, 1984. His
death is an irreversible fact that throws an entirely new bearing on the legal
controversy at hand. For essentially, the contract of management and administration
between the Municipality and Lacuesta is one of agency whereby a person binds
himself to render some service or to do something in representation or on behalf of
another, with the consent or authority of the latter. (Article 1868, New Civil Code).
Here in the case at bar, Lacuesta bound himself as Manager-Administrator of the
Bayambang Fishing & Hunting Park and Municipal Watershed to render service or
perform duties and responsibilities in representation or on behalf of the
Municipality of Bayambang, with the consent or authority of the latter pursuant to
Ordinance No. 8. Under Article 1919, New Civil Code, agency is extinguished by the
death of the agent. His rights and obligations arising from the contract are not
transmittable to his heirs. (Art. 1311, New Civil Code).

The Management-Administration contract entered by Lacuesta and the municipality

was void as it lacked a vital procedural aspect (public bidding) necessary for the
validity of the contract. Moreover, the Supreme Court held that the municipality had
no power to grant exclusive privileges of fishing for more than 5 years.