THE MUNICIPALITY OF LEMERY, PLAINTIFF AND APPELLEE, VS. ANDRES MENDOZA AND SIMEON BLAS, DEFENDANTS AND APPELLANTS.

This
action was instituted in the Court of First Instance of Batangas by the
municipality of Lemery for the purpose of recovering jointly and
severally of the defendants, Andres Mendoza, as principal, and of
Simeon Blas and Mariano Napa, as sureties, the sum of P22,999.99, plus
a further penal sum of P4,599.99, with costs. Upon hearing the cause
the trial judge gave judgment for the plaintiff in the amounts stated,
with costs, and the defendants Mendoza and Blas appealed.

It
appears that on September 1,1920, the municipal council of Lemery,
Batangas, adopted a resolution, No. 53, authorizing the letting of the
privilege of fishing for bangus in the sea waters within the
limits of the municipality for the period of two years, extending from
January 1, 1921, to December 31, 1922, inclusive. As the resolution
contemplated the letting of this privilege for a longer period than one
year it was necessary to obtain the previous approval of the provincial
board, in conformity with section 2319 in relation with section 2323 of
the Administrative Code; and on October 1, 1920, said provincial board
adopted its resolution, No. 740, of the following tenor:

“On motion by member Muñoz,

“The provincial board unanimously approved the resolution No. 53,
current series, of the municipal council of Lemery, authorizing the
sale on public auction of bangus fishery privilege, said privilege to take effect from January 1, to December 31, 1921, inclusive.”

The circumstance that the resolution of the provincial board, in
describing the contents of the lease, as embodied in resolution No. 53
of the municipal council of Lemery, used the date “1921,” as the terminal, instead of “1922,”
seems to have passed unnoticed; and the municipal authorities of
Lemery, considering resolution No. 53 as approved, proceeded to make
public announcement, inviting the submission of bids for the lease of
the fishery for the period of two years. When the bids were opened nine
offers were found forthcoming. Of these eight were in amounts around
P8,000 per year, while the other, the one submitted by Andres Mendoza,
was in the amount of P22,999.99 per year. As this bid was by far the
most advantageous to the municipality, it was of course accepted.

A formal contract was therefore executed by Zacarias Marasigan, as
municipal president, and Andres Mendoza, by which the privilege of
fishing for bangus in all the salt waters of the municipality
was let to the said Mendoza for the period of two years beginning with
January 1, 1921, and ending with December 31, 1922, for the sum of
P22,999.99 for each year. This contract (Exhibit D) is dated November
11, 1920.

It appears that in a provincial circular No, 153,
series of 1917, of the Executive Bureau, it is declared that in letting
the privilege of fishery the municipal council shall require the
successful bidder to supply a bond in a sum double the amount of his
liability under his contract, to be executed by two or more persons
possessing real property assessed at not less than the amount stated in
the bond. Accordingly on December 7, 1920, Mendoza undertook in writing
to supply to the municipal president “a bond of P46,000 in favor of the
municipality of Lemery” in conformity with the requirement of the
above-mentioned circular; and on December 4, 1920, a document was
executed by Simeon Blas and Mariano Napa, as bondsmen (Exhibit E). This
document is of the following tenor:

“Whereas,
Andres Mendoza, resident of the municipality of Lemery, Province of
Batangas, Philippine Islands, has leased the privilege of fishing for bangus
in the seas comprised in the jurisdictional limits of the municipality
of Lemery, Batangas, by virtue of an auction held November 10, 1920,
for the value of P23,000, Philippine currency, for the term of two
years from the first day of January, 1921, to the 31st of December,
1922;

“Whereas, one of the conditions of the bid approved
by the municipal council is (for the bidder) to give bond for double
the amount for which said privilege was let, to answer for compliance
with the terms of the bid;

“Whereas, said privilege has been awarded for the sum of P23,000, Philippine currency,

“Now,
therefore, we, Simeon Blas, resident of the municipality of Malabon,
Rizal, and Mariano Napa, resident of the municipality of Lemery,
Batangas, and property owners, do hereby obligate ourselves jointly and
severally for the payment, to the municipality of Lemery, Batangas, of
the sum of P46,000, Philippine currency, in case Andres Mendoza, as
grantee of the aforesaid privilege, shall fail to comply with the
conditions of the bid, of which we are informed; and we agree moreover
not to recede from this undertaking before the expiration of the period
of the lease.

“We also state under oath that we are solvent
to the said amount of P46,000, Philippine currency, over and above our
debts and other obligations.

“In testimony whereof we hereunto set our hands in Malabon, Province of Rizal, this 4th day of December, 1920.”

As might have been expected from the disparity between Mendoza’s bid
and those of his competitors, the privilege which was the subject of
the lease was unprofitable to the lessee, and before the first year of
the lease had expired he and his sureties were anxious to be rid of the
contract. Mendoza apparently thought that he saw a way out in the
circumstance that in the resolution No. 740 of the provincial board,
approving resolution No. 53 of the municipal council of Lemery, the
lease was described as ending December 31, 1921. Mendoza
therefore communicated to the municipal council his desire to abandon
the lease, on the ground that authority for making the lease for two
years had been lacking. Simeon Blas, one of the sureties, also
addressed a letter to the council informing it that he would no longer
be bound by his contract of suretyship. The municipal council rejected
these proposals and announced its intention to insist on the fulfilment
of the contract for the full period of two years. But attention having
been called to the fact that the period of one year was apparently
prescribed in provincial resolution No. 740, the municipal president
addressed a letter on the subject to the provincial board; and an
examination of the record was made with the result that the provincial
board came to the conclusion that the date 1921, had been written by clerical error in resolution No. 740 instead of the date 1922. A resolution was therefore adopted by the provincial board declaring that the date December 31, 1921,
had been inserted in resolution No. 740 by clerical error, and in order
to rectify this error the secretary was instructed to make a correction
of resolution No. 740 by changing the date 1921 to 1922.

It should be stated that the terms of the lease were fully complied
with by Mendoza for the year 1921, and the sum of P28,000 was paid by
him in satisfaction of the lease for that year. The privilege, however,
covered by the lease was abandoned by the lessee for the year 1922, and
it is for the stipulated rental of P22,999.99, with penalty and costs,
that the present action was instituted.

In behalf of the
defendant-appellants certain contentions are made which are common to
the defense of both the principal and the sureties, but the sureties
have one ground of defense with which the principal is not connected.
We shall therefore first discuss the defenses common to all the
appellants.

It is first suggested that the contract is not
binding for the reason that the subject of the lease comprises all salt
waters within the limits of the municipality; and attention is directed
to the first paragraph of section 2321 of the Administrative Code where
authority is given to the municipal council to grant the exclusive
privilege of fishery “within any definite portion, or area, of the
municipal waters.” The contention of the appellants on this point is
manifestly not well founded. Where the subject of the lease is
described as comprising all of the salt waters pertaining to the
municipality, this defines the extent of the lease with precision, and
that is all that is necessary to make the lease valid so far as
description is concerned. It was not intended by section 2321 to
prohibit the municipal council from letting all waters suitable for
fishing in its limits in a single lease.

In the second place
it is insisted that the lease is invalid as to all excess over the
period of one year for the reason that the provincial board approved
the lease for one year only. We are unable to agree with this
contention. We are of the opinion that by its resolution No. 740 the
provincial board approved resolution No. 53 of the municipal council of
Lemery, which provided for a two-year lease. It is true that in stating
the tenor of the lease it is described “as taking effect from January
1, to December 31, 1921, inclusive.” The use of the date 1921
in this connection was evidently an error, which has misled nobody, and
cannot affect the validity of the lease for two years. In this
connection it is well to remember that the provincial board does not
legislate directly for the municipalities; nor does it have the power
of amending their resolutions. Its function is to approve or
disapprove; and there could not have been any intention on the part of
the provincial board to amend the resolution of the council by
substituting the date 1921 for 1922. Besides, the
approval of the provincial board is not necessary for a lease for one
year, and if the intention of the provincial board had been to cancel
the resolution of the municipal council to let the fishery for only one
year, the proper procedure would have been to disapprove resolution No.
53, as involving a lease for a longer period than was advisable. We do
not overlook the point that the law requires the previous approval of
the provincial board when the lease is to be made for more than one
year, and if the error in resolution No. 740 had been vital, the
curative resolution adopted later would probably had been without
effect. But we consider the situation to be that the provincial board
in substance approved resolution No. 53, and the error as to the date
did not in our opinion affect the validity of the lease.

Lastly, it is contended that the lease was invalid as lacking the
approval of the department head. In this connection reliance is placed
upon section 2319 of the Administrative Code where it is said that
leases for a period of greater duration than one year shall be let upon
the previous approval of the provincial board, under such conditions as
shall be prescribed by the department head. It is supposed that the
last expression, “under such conditions as shall be prescribed by the
department head,” requires the submission to him of each particular
lease in order that he may make the conditions which shall be embodied
in it. This is a mistake. The words quoted were merely intended to
authorize the department head to make general regulations for the
governance of the municipal authorities in making the lease.

We now come to consider the defense interposed for the sureties arising
from the form in which the contract of suretyship is expressed, and
particular attention is directed to the words of the first paragraph
where it is stated that the principal, Andres Mendoza, had leased the
privilege of fishery in question “for the value of P23,000 for the term
of two years, to count from the first day of January, 1921, to the
thirty-first of December, 1922.” These words are relied upon as showing
that the principal liability, the subject of the contract of
suretyship, was limited to P23,000. This contention is, in our opinion,
well founded. It is true that in the obligating clause farther down the
sureties declared themselves bound in the sum of P46,000; but this was
because the bond was required to be made in double the amount of the
principal liability. The language is quite clear to the effect that the
rent to be paid for the privilege of fishery was P23,000 for the full
term of two years.

But it is insisted for the plaintiff that
the contract is to be read as if the rental had been expressed to be at
the rate of P23,000 per annum for a period of two years. We
are of the opinion that the words “per annum” cannot be inserted by
judicial construction; and no attempt has been made to obtain a
judicial reformation of the contract.

As we have previously
stated Mendoza has paid to the municipality the full sum of P28,000. In
our opinion this discharged the sureties from all further liability.
The circumstance that the sum of P23,000 which Mendoza paid may have
been applied by the municipality to Mendoza’s indebtedness for the
first year of the lease is without significance as against the
sureties, since the sureties were not parties to the contract of lease
(Exhibit D) and are liable only upon the contract of suretyship
(Exhibit E), which calls for the payment of only P23,000 by the
principal. It is a just rule of jurisprudence, recognized in article
1827 of the Civil Code, that the obligation of a surety must be express
and cannot be extended by implication beyond its specified limits.

We do not overlook the fact that the obligating clause in Exhibit E
binds the sureties in the amount of P46,000, but, as in all bonds, that
obligation was intended as an assurance of the performance of the
principal obligation and when the principal obligation was discharged,
the larger obligation expressed in the contract of suretyship ceased to
have any vitality.

From what has been said it results that
while no error was committed by the trial judge in giving judgment
against the principal, the sureties should have been absolved.

The judgment appealed from will therefore be affirmed as against Andres
Mendoza and reversed as against Simeon Blas, who will be absolved from
the complaint, without costs. So ordered.

Johnson, Ostrand, Johns, and Villa-Real, JJ., concur.

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DISSENTING

AVANCEÑA, C. J., with whom concur MALCOLM, VILLAMOR and ROMUALDEZ, JJ.:

I
do not agree. In my opinion the judgment appealed from must also be
affirmed as to the surety Simeon Blas. As stated in the opinion of the
majority, the contract between the plaintiff and the defendant Andres
Mendoza was for two years at the rate of P22,999.99 per year. The
surety Simeon Blas, in securing the fulfilment of the conditions of the
contract by Andres Mendoza, knew that this contract was for two years,
as clearly stated in the bond which he signed, and besides he also knew
that the obligation of the principal obligor, Andres Mendoza, was to
pay P22,999.99 per year, for in the bond itself this surety states
being aware of the conditions of the contract. Consequently the
obligation of the surety Andres Mendoza, according to the terms of the
bond, is to answer for the performance of the contract on the part of
the principal obligor Andres Mendoza during the whole two-year period
fixed by the contract. It is true that through error, perhaps, it was
stated in the bond that he was liable only to the amount of P46,000,
the amount of the obligation of Mendoza for one year, because it was
required that the bond be for double the value of the obligation of the
principal obligor. Blas might, perhaps, take advantage of this error to
limit his liability to the amount of the obligation of the principal
debtor for one year, if the case were concerned with this obligation
for two years. He cannot, however, take advantage of this mistake in
the instant case which involves only non-payment for one year which,
after all, is one of the two years during which he secured the
fulfilment of the contract by the principal debtor Andres Mendoza.