The Municipality of Hagonoy v. Teofilo Evangelista

Summary

The Municipality of Hagonoy sued Teofilo Evangelista to enforce a 20% penal clause in fishpond lease contracts after granting him a payment extension. The Supreme Court affirmed dismissal of the complaint, ruling that the lease contracts were void for failing to comply with statutory requirements. The leases lacked the mandatory approval of the Provincial Governor under section 2196 of the Revised Administrative Code, and exceeded the five-year maximum term permitted for municipal fishpond leases under sections 2323 and 2319. Since the principal contracts were void, the penal clauses were also void under Civil Code article 1155. The case establishes that municipalities must strictly comply with administrative law requirements when entering property lease contracts, and void contracts cannot be ratified through subsequent conduct.