(#4 ZOSA) G.R. No.
. 43486, September 30, 1936 section 2233 of the Administrative Code by accepting Marasigans offer
PETITIONER: Municipality of Gasan
RESPONDENT: Miguel Marasigan, Angel Sevilla & Gonzalo Luna
TOPIC: Nature and extent of guaranty. Relevant issues are only 1 & 3. I
included the rest of the case just in case atty asks for details.
DOCTRINE:
The fishing privilege contract entered into by the plaintiff and the
appellant M. M. on December 11, 1930, not only was not consummated but
was cancelled. This being so, neither the appellant M. M. nor his sureties or
the other appellants were bound to comply with the terms of their respective
contracts of fishing privilege and suretyship. This is so, particularly with
respect to the sureties-appellants, because suretyship cannot exist without a
valid obligation (art. 1824 of the Civil Code), the obligation arising from a
cancelled contract not being a valid obligation."
FACTS:
The Municipality of Gasan put up at auction the privilege of gathering
whitefish spawn in its jurisdictional waters from January 1-December 31,
1931. Graciano Napa and Miguel Marasigan appeared at the auction. Napa
proposed to accept the privilege by offering P5, 000 while Marasigan
proposed only P4, 200.
On Dec 9, 1930, Marasigan deposited P420 (10% of his bid) to the
municipal treasurer.
The Municipality, through Resolution No. 161, rejected Napas bid
and accepted Marasigans, at P4,200 payable quarterly at the rate of P1,050
a quarter. To secure his compliance with the terms of the contract, on Dec
11, 1930, Marasigan filed the bond, subscribed by Angel Sevilla and Gonzalo
Luna who bound themselves to pay the Municipality if Marasigan fails to
deposit P1,050 quarterly. Sevilla and Gonzalo became sureties, in short.
On Dec 16, 1930, the president of the Municipality notified Marasigan
that the contract granting the privilege was suspended and that he should
consider it ineffective in the meantime in view of the fact that the question
whether he or Napa was the highest bidder still remained undecided by the
provincial board of Marinduque and by the Executive Board.
Napas bid was rejected because he has not attached his certificate
that he is not behind in the payment of any tax bill. He forwarded his protest
to the provincial board, alleging that the Municipality violated the provision of
instead of Napas, who is actually the highest bidder.
Through the decisions of the Provincial Board of Marinduque and the
Executive Board, the Municipality decided to award the privilege to Napa,
giving him until Jan 14, 1931 to deposit P500 (10% of his bid) to comply with
the conditions of the public auction, warning him that if he failed to do so, the
contract with Marasigan will automatically take effect. However, Napa not
only failed to pay the Municipality but he formally declared, through his duly
authorized representative, that he yielded the privilege to Marasigan or to
any other person selected by the municipal authorities.
On Jan 15, 1931, the president of the Municipality sent a letter to
Marasigan telling him that his contract with the Municipality became effective
immediately on Jan 14, 1931 until Dec 31, 1931; that he is requested to
appear before the Municipal Council on Jan 16 with the contract and bond
executed in Marasigans favor for ratification; that he was required to pay
P1,050 as per tax corresponding to the first quarter of 1931.
On June 29, 1931, Marasigan delivered P840 to the municipal
treasurer, making the total amount he delivered to the municipal treasurer
P1,260. (No stated reason what for. P420 + P840 = P1,260.)
On July 20, 1931, Marasigan paid P16.20 to the municipal treasurer
as revenue tax on the sales of whitefish spawn amounting to P1,080 for
months April, May, and June 1931; and on Aug 22, 1931, he presented his
sales book to the municipal treasurer of Gasan, from which appears that he
sold whitefish spawn amounting to P85 in July and none in Aug and Sept
1931.
The Municipality alleges now that Marasigan failed to pay P3,780
which is to form part of the license fees for the privilege granted him in
gathering whitefish spawn. The trial court ruled against the defendants,
sentencing them to pay jointly said amount, with legal interest until fully paid.
Defendants appealed and assigned the issues below as errors.
ISSUES:
1. W/N the trial court erred in holding that the contract and bond in
question are valid and enforceable. Trial court erred.
2. W/N the trial court erred in holding that the contract is a de facto contract
with regard to Marasigan. Did not err.
3. W/N the trial court erred in not absolving Sevilla and Luna. Erred.
1
 enjoyed at the rate of P4,200 a year or P1,400 for one and one-third of a
4. W/N the trial court erred in holding Marasigan had taken advantage of the quarter. But since he already gave the treasurer worth P1,260, he is only
privilege. Did not err. liable to the Municipality for P140.

5. W/N the trial court erred in not ordering the Municipality to return to
Marasigan the P1,260 which he deposited to the Municipality. Erred.
DECISION:
1. and 3. The contract and bond in question, was, not only not
consummated, but was cancelled, evidenced by the Municipal president
requiring Marasigan to appear before the municipal council to present his
formerly prepared contract and bond to be ratified. It ceased to be valid from
the time it was cancelled and so, neither Marasigan nor his sureties were
bound to comply with the terms of the contract and suretyship. Suretyship
cannot exist without a valid obligation.
In view of the foregoing considerations, this court absolves the
defendants-appellants Angel R. Sevilla and Gonzalo L. Luna from the
complaint and orders the defendant-appellant Miguel Marasigan to pay
the sum of P140 to the plaintiff municipality.
It is considered unnecessary to expressly mention appellant Miguel
Marasigan's counterclaim because, as may be seen, he is credited in this
judgment with the sum of P1,260 which is all that he claims therein, without
special pronouncement as to costs. So ordered.

The contract they entered exclusively appeared that it should begin

on Jan. 1, 1931, not on Jan 14, and ends on Dec 31. The sureties intervened
in no other contract which Marasigan might have entered on or after Jan 14,
1931. Guaranty must be expressed and cannot be extended beyond its
specified limits. Therefore, after eliminating the obligation for which the
sureties desired to answer with their bond, the bond necessarily ceased.

2. and 4. Marasigan was saying he also entered into a contract with the
Municipality of Boac, not with Gasan, to gather whitefish spawn thus, what he
paid to the treasurer of Gasan must be refunded.
At least from April to July of 1931, practically enjoyed the privilege of
gathering whitefish spawn in the waters of the Municipality under the contract
he executed which was later cancelled by virtue of Graciano Napas protest.
If this were not true, he would not have paid the treasurer of Gasan nor
presented his sales book.
There was no evidence as to his alleged contract with the
municipality of Boac. The truth is that there was a tacit contract between
Marasigan and the Municipality of Gasan from April to July 1931 (one and
one-third quarter. Althought it was without surety, it was a binding because it
has all the essential requisites of a valid contract.

5. Marasigan really deposited P420 on account of his cancelled original

contract and the said deposit has not as yet been returned to him. He is
entitled to be credited with the sum.

In summary, Marasigan owes the Municipality for the proceeds of

one and one-third quarter, for the privilege of gathering whitefish spawn he