San Diego vs. Municipality of Naujan Gutierrez David The Municipal Council of Naujan passed Resolution 46 by which it awarded the lease of its municipal waters (Butas River, Naujan Lake) to the highest bidder – bidder – Bartolome Bartolome San Diego The Municipality and San Diego thereafter entered into a contract, wherein they stipulated that for a period of 5 years, San Diego was to be the lessee of such waters. 1948-1952. o “Exclusive Privilege of erecting fish corrals along the Butas River o beginning from its junction with the San Agustin River up to the Naujan Lake itself ” o Annual rental of 26,000, originally. This was reduced by the sanggunian by 20%, upon petition of San Diego. In 1950, three years in, San Diego requested for a 5-year extension of the original lease period. San Diego wanted to extend his lease because Typhoon Wanda w/c o occurred a month prior to his request for extension destroyed most of his corrals The Council adopted another resolution, granting the extenstion for another 5 years once the original period expires in 1952. This approval was conditioned on San Diego’s waiver that he won’t ask for a lower amount of rent. On January 2, 1952, the Municipal Council of Naujan, now composed of a new set of members, adopted a resolution revoking Resolution 222 which granted the extension . Basis: lack of competitive bidding to invite competition and guard o against vaoritism. Request for reconsideration based on non-impairment of contracts o denied. San Diego instituted this proceeding in the court below, seeking to have the revoking resolution declared null and void, and prayed for an order enjoining the defendant municipality from conducting a public bidding for the leasing of the Naujan Fisheries to any person other than the plaintiff during 19531957. In its answer, the Municipality asserted that the Resolution 46, o authorizing the original lease contract, was null and void (reducing the rentals and renewing the lease) for having been passed contrary to law . o The Municipality prayed that its counterclaim for the 20% discount be granted. Trial Court upheld the validity of the lease contract and its extension, declaring the revoking resolution null and void.
Issue #1 – #1 – W/N another public bidding should’ve been done prior to the extension and discount? Yes As per Caltex vs. Delgado - the due execution of a contract after public bidding is a limitation upon the right of the contradicting parties to alter or amend it without another public bidding, for otherwise what would a public bidding be good for if after the execution of a contract after public bidding, the contracting parties may alter or amend the contract or even cancel it, at their will? Public biddings are held for the protection of the public, and to give o 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 o the public will disappear if the parties to a contract executed after public bidding may alter or amend it without another previous public bidding. SC also cited US jurisprudence applying public bidding requirements to amendments of any contract already executed in compliance with the law, where such amendments alter the original in some vital and essential particular. This case – case – PERIOD PERIOD is vital and essential. o Since no public bidding, it’s not in accordance with the law. o Resolution 222 is therefore null and void. Resolution 59, which lowered the prices, is also null and void Issue #2 – #2 – W/N W/N estopped; in pari delicto? No Estoppel cannot be applied against councils to validate contracts which it had no power to make. Otherwise, a municipal corp would be allowed to do indirectly what it cannot do directly. Further, when a contract is violative of public policy, there can be no estoppel This case, the contract violates public policy because public o biddings, which are held for the best protection of the public and to give the public the best possible advantages, is being done away with! Not in pari delicto - although the parties are in pari delicto, yet the court may interfere and grant relief at the suit of one of them, where public policy requires its intervention
