Facts:

The case involves the Municipality of Hagonoy as the plaintiff and appellant, and Teofilo Evangelista as the defendant and appellee. The events leading to the case began with a complaint filed by the Municipality of Hagonoy to enforce a penal clause in four contracts of lease concerning fishponds owned by the municipality. These leases were originally granted to Jose Evangelista, who was the highest bidder, for a duration of ten years from July 1, 1925, to June 30, 1935. The leases were subsequently transferred to Josefa Evangelista on February 1, 1926, and October 26, 1927. However, neither the original leases nor the transfers were submitted for approval to the Provincial Governor, which is a requirement under Section 2196 of the Revised Administrative Code. Josefa Evangelista passed away on May 14, 1934, and her rights were inherited by Teofilo Evangelista. On June 30, 1934, Teofilo submitted a petition to the Municipal Council of Hagonoy requesting an extension for the pa...

Facts:

1. Lease Agreements and Transfers

   • The Municipality of Hagonoy leased four fishponds to Jose Evangelista for ten years (July 1, 1925, to June 30, 1935).
   • The leases included a penal clause requiring a 20% surcharge for nonfulfillment of terms.
   • Jose Evangelista transferred the leases to Josefa Evangelista on February 1, 1926, and October 26, 1927.
   • Neither the original leases nor the transfers were submitted to or approved by the Provincial Governor.

2. Death of Josefa Evangelista and Succession

   • Josefa Evangelista died on May 14, 1934, and was succeeded by Teofilo Evangelista.
   • On June 30, 1934, Teofilo requested an extension for rent payment without surcharge until September 1, 1934.

3. Municipal Council Resolution

   • The Municipal Council of Hagonoy, through Resolution No. 81 (July 15, 1934), granted Teofilo’s request, allowing payment in two installments: P5,000 by July 30, 1934, and P4,861.25 by August 20, 1934.
   • The resolution was approved by the Provincial Board of Bulacan on August 31, 1934.
   • Teofilo paid the full amount within the specified periods.

4. Trial Court Decision

   • The trial court dismissed the Municipality’s complaint, ruling that both parties acted in good faith under the erroneous belief that the Municipal Council had the authority to grant the extension.
   • The court held that the Municipality should not benefit from its mistake after Teofilo complied with the resolution.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Void Contracts

   • Contracts executed in violation of the law are void. The leases violated Section 2196 of the Revised Administrative Code, which requires Provincial Governor approval for municipal contracts involving real property.
   • The leases also violated Sections 2323 and 2319, which limit municipal leases to a maximum of five years.

2. Accessory Obligations

   • Under Article 1155 of the Civil Code, the nullity of the principal obligation (the leases) carries with it the nullity of the accessory obligation (the penal clause).

3. Estoppel

   • Estoppel does not apply to void contracts. Since the leases were void ab initio, they could not be ratified or confirmed by the parties’ conduct.

4. Judicial Non-Intervention

   • The courts will not enforce void contracts or their stipulations, as doing so would contravene the law and public policy.

Conclusion:

The Supreme Court affirmed the dismissal of the complaint, leaving the parties as they were, with no enforcement of the penal clause or any other stipulation in the void leases.