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Philippine Supreme Court Jurisprudence > Year 1970 > January 1970 Decisions > G.R. No. L-27038 January 30,
1970 - PECHUECO SONS COMPANY v. PROVINCIAL BOARD OF ANTIQUE:

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FIRST DIVISION

[G.R. No. L-27038. January 30, 1970.]

IN THE MATTER OF THE PETITION FOR DECLARATORY JUDGMENT ON TITLE TO REAL PROPERTY
(quieting of Title) PECHUECO SONS COMPANY, Petitioner-Appellant, v. PROVINCIAL BOARD OF
ANTIQUE and THE MUNICIPALITY OF SAN JOSE, PROVINCE OF ANTIQUE, respondents-
appellees, PROVINCIAL GOVERNOR OF ANTIQUE, Intervenor-Appellee.

Leopoldo O. Villavert for Petitioner-Appellant.

Assistant Provincial Fiscal Ricardo M. Ilarde for respondents and Intervenor-Appellee.

SYLLABUS

1. POLITICAL LAW; MUNICIPAL CORPORATIONS; APPROVAL BY PROVINCIAL GOVERNOR OF CONTRACTS

DebtKollect Company, Inc.
EXECUTED BY MUNICIPAL COUNCIL, SUPERVISORY NOT PROHIBITORY. — The approval by the provincial
governor of contracts entered into and executed by a municipal council, as required in section 2196 of the
Revised Administrative Code, is part of the system of supervision that the provincial government exercises
over the municipal governments. It is not a prohibition against municipal councils entering into contracts
regarding municipal properties subject of municipal administration or control. It does not deny the power,
right or capacity of municipal councils to enter into such contracts; such power or capacity is recognized.
Only the exercise thereof is subject to supervision by approval or disapproval, i.e., contracts entered in
pursuance of the power would ordinarily be approved if entered into in good faith and for the best
interests of the municipality, they would be denied approval if found illegal or unfavorable to public or
municipal interest. The absence of the approval, therefore, does not per se make the contracts null and
void. (Municipality of Camiling v. Lopez, 99 Phil. 187)

2. ID.; ID.; CONTRACT ENTERED INTO BY MUNICIPAL COUNCIL, VOIDABLE PENDING GOVERNOR’S
ACTION THEREON. — As regards the municipal transactions specified in Section 2196 of the Revised
Administrative Code, the Provincial Governor has two courses of action to take — either to approve or
disapprove the same. And since absence of such approval does not necessarily render the contract
entered into by the municipality null and void, the transaction remains voidable until such time when by
subsequent unfavorable action of the governor, for reasons of public interest, the contract is thereby
invalidated.

3. ID.; ID.; NO RIGHT CONFERRED WHERE REGISTRATION OF CONTRACT WAS AFTER DISAPPROVAL BY

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VICTORIO RAMOS
THE PROVINCIAL BOARD. — Considering that the contract between the municipality of San Jose and
appellant was finally registered only on 25 January 1965, or after its disapproval by the Provincial Board,
it is beyond doubt that such registration did not confer any right at all on appellant. By then, the
municipal council was without authority to contract with appellant on the lots subject of exchange.
4. ID.; ID.; ESTOPPEL INAPPLICABLE TO VALIDATE CONTRACT ENTERED INTO BY A MUNICIPAL
CORPORATION. — The fact that the municipality accepted appellant’s payment of real estate tax on Lot
No. 1611 for 1964 and 1965, or that it has expended some amount in reconstituting the title of said Lot
No. 1611, does not work to estop the municipality from maintaining its claim of ownership over the
property. As this Court aptly stated: "The doctrine of estoppel cannot be applied as against a municipal
corporation to validate a contract which it has no power to make, or which it is authorized to make only
under prescribed conditions, within prescribed limitations, or in a prescribed mode or manner, although
the corporation has accepted the benefits thereof and the other party has fully performed his part of the
agreement, or has expended large sums in preparation for performance. A reason frequently assigned for
this rule is that to apply the doctrine of estoppel against a municipality in such case would be to enable it
to do indirectly what it cannot do directly (San Diego v. Municipality of Naujan, L-9920, 29 February
1960).
DECISION
REYES, J.B.L., J.:
Appeal from the decision of the Court of First Instance of Antique (Special Civil Case No. 418) declaring as
invalid a contract of exchange of land entered into by the municipality of San Jose, Antique, and the
Pechueco Sons Company for lack of approval by the Provincial Governor.
Insofar as pertinent to the issue in this proceeding, the facts of the case, as stipulated by the parties, are
as follows:
chanrob1es virtual 1aw library
In a resolution dated 23 July 1963 (No. 64, series of 1963), the Municipal Council of San Jose, Antique
approved the exchange of its Lot No. 1611, with an area of 1,122 square meters and assessed at
P1,120.00, for the lot owned by Pechueco Sons Company 1 to be used as site of an electric plant
projected by the municipality. In another resolution passed on the same day (No. 65), the municipal
mayor was authorized to sign the necessary contract, for and in behalf of the municipality.
On 4 December 1963 the municipal mayor, representing the municipality of San Jose, Antique, and the
representative of Pechueco Sons Company signed the deed, by virtue of which the municipality conveyed
to the latter its Lot No. 1611 by way of exchange for Lot No. 1303 belonging to the company. This deed
was duly presented to the Office of the Register of Deeds for registration on 10 December 1963, but not
definitively recorded until 25 January 1965.
On 11 February 1969 however, the Provincial Board of Antique, by its Resolution No. 122, series of 1964,
disapproved Resolution No. 64 of the Municipal Council of San Jose relative to the exchange of lots, on the
ground that the Pechueco lot, being located in the poblacion, is an unsuitable site for the proposed electric
plant, since the exhaust, noise and hazards accompanying the operation of the plant machinery would be
dangerous to public safety and health. On 18 February 1964, the San Jose Municipal Council passed
another resolution urging reconsideration of the action taken by the Provincial Board. Apparently because
no action by the board seemed to be forthcoming, on 25 January 1965 Pechueco Sons Company instituted
declaratory relief proceedings in the Court of First Instance of Antique (Special Civil Case No. 418) to
secure nullification of Resolution No. 122 of the Provincial Board of Antique, for a declaration of its
ownership of Lot No. 1611, and to restrain therein respondent municipality from asserting the latter’s
supposed right of ownership over the said lot. On the same day, 25 January 1965, the deed of exchange
was finally registered with the Register of Deeds as regards the transfer of Lot No. 1303 of Pechueco Sons
Company to the municipality of San Jose, and, as a consequence, TCT No. N-5169 was issued in the name
of said municipal corporation. Lot No. 1611, however, remained registered in the name of the municipality,
the owner’s title thereto not having been as yet reconstituted.
While the case was pending in court, the Provincial Board passed Resolution No. 57, dated 2 February
1965, conditionally approving the contract of exchange between, the municipality of San Jose and the
Pechueco Sons Company, provided the Pechueco lot should be acceptable to the Rural Electrification
Administration, the Secretary of Finance and the Executive Secretary as site of the proposed electric plant.
Apparently, the condition thus imposed was not met by the parties, for on 16 February 1965 the Provincial
Board approved another resolution passed by the municipal council of San Jose, this time requesting the
Provincial Governor to donate to the municipality a 10,000-square meter piece of land to be used as site
of the electric plant to be constructed.
In a letter dated 12 October 1965, the Provincial Governor formally informed the municipal council of San
Jose of the disapproval of the deed of exchange entered into by the municipality with Pechueco Sons
Company. On 13 October 1965, the said Governor entered appearance as intervenor in the declaratory
relief proceeding, which intervention was allowed by the court on 24 November 1965.
On 30 August 1966, on the basis of the stipulation of facts by the parties, the court rendered judgment in
favor of the respondents, as stated at the beginning of this opinion. Hence, this appeal interposed by
petitioner Pechueco Sons Company.
Upon the aforestated facts, the issue clearly revolves around the effect of the disapproval by the Provincial
Board of Antique of the contract of exchange of land between the municipality and herein appellant
authorized by Resolution No. 64, series of 1965, of the municipal council of San Jose.
In this connection, Section 2196 of the Revised Administrative Code provides: jgc:chanrobles.com.ph
"SECTION 2196. Execution of deeds. — When the government of a municipality is party to a deed or an
instrument which conveys real property or any interest therein or which creates a lien upon the same,
such deed or instrument shall be executed on behalf of the municipal government boy the mayor, upon
resolution of the council, with the approval of the provincial governor." cralaw virtua1aw library
Taking the above-quoted provision in the light of Article 1356 of the Civil Code, 2 the question that must
first be determined concerns the nature of that requisite approval: is the approval of the contract by the
governor a statutory formal requirement for its validity?
Espousing the negative view, appellant Company refers to our ruling in the case of Municipality of
Camiling v. Lopez (99 Phil. 187) in support of its allegation that the gubernatorial approval mentioned in
Section 2196 of the Revised Administrative Code does not constitute an essential element for the validity
of the conveyance of realty by the municipality; that the lack of such imprimatur would not nullify an
otherwise valid and perfected contractual agreement. Indeed, this Court, explaining the nature of this
power in that cited case, said: jgc:chanrobles.com.ph
". . . The approval by the provincial governor of contracts entered into and executed by a municipal
council, as required in section 2196 of the Revised Administrative Code, is part of the system of
supervision that the provincial government exercises over the municipal governments. It is not a
 G.R. No. L-22216 January 30, 1970 - IN RE:
BENJAMIN ANG v. REPUBLIC OF THE PHIL.
G.R. No. L-22295 January 30, 1970 - PEOPLE OF
THE PHIL. v. PRUDENCIO MADARANG
G.R. No. L-23435 January 30, 1970 - CESARIO
ABESAMIS v. SALVADOR C. REYES
G.R. No. L-23533 January 30, 1970 - LEONARDO T.
JOSON v. SECRETARY OF AGRICULTURE AND
NATURAL RESOURCES
G.R. No. L-23600 January 30, 1970 - CASTOR
AGUILAR v. ERNESTO TAN
G.R. No. L-23671 January 30, 1970 - BENJAMIN
LOPEZ v. GREGORIA DE LOS REYES
G.R. No. L-24137 January 30, 1970 - REPUBLIC OF
THE PHIL. v. PEDRO C. HERNAEZ
G.R. No. L-24814 January 30, 1970 - ROCACIANO
ARMENTIA v. FRANCISCO TOBIAS
G.R. No. L-24981 January 30, 1970 - MARTIN V.
DELGRA, JR. v. ALFREDO I. GONZALES
G.R. No. L-25174 January 30, 1970 - PEOPLE OF
THE PHIL. v. DIONISIO SIBAYAN
G.R. No. L-25519 January 30, 1970 - REPUBLIC OF
THE PHIL. v. IGMEDIO YAP
G.R. No. L-25920 January 30, 1970 - CCC
INSURANCE CORPORATION v. COURT OF APPEALS
G.R. No. L-26167 January 30, 1970 - HEIRS OF B. A.
CRUMB v. COURT OF APPEALS
G.R. No. L-26316 January 30, 1970 - ANTERO
CANONIGO v. HILARIO RAMIRO
G.R. No. L-26417 January 30, 1970 - VALENTIN A.
FERNANDO v. CONRADO M. VASQUEZ
G.R. No. L-26439 January 30, 1970 - VETERANS
SECURITY FREE WORKERS UNION (FFW) v.
GAUDENCIO CLORIBEL
G.R. No. L-26447 January 30, 1970 - NORTHERN
PHILIPPINES TOBACCO CORPORATION v.
MUNICIPALITY OF AGOO
G.R. No. L-26533 January 30, 1970 - FIREMAN’S
FUND INSURANCE COMPANY v. UNITED STATES
LINES COMPANY
G.R. No. 26865-66 January 30, 1970 - LUZON
SURETY CO., INC. v. LEOVEGILDA BESON, ET., AL.
G.R. No. L-27038 January 30, 1970 - PECHUECO
SONS COMPANY v. PROVINCIAL BOARD OF ANTIQUE
G.R. No. L-27365 January 30, 1970 - FELIX L. LAZO
v. REPUBLIC SURETY & INSURANCE CO., INC.
G.R. No. L-28163 January 30, 1970 - PEOPLE OF
THE PHIL. v. TEOFILO GANDE
G.R. No. L-28356 January 30, 1970 - PEOPLE OF
THE PHIL. v. MARCIANO CORPIN
G.R. No. L-28593 January 30, 1970 - JUAN YSASI v.
JOSE F. FERNANDEZ
G.R. No. L-29058 January 30, 1970 - PEOPLE OF
THE PHIL. v. TOMAS LACANDAZO
G.R. No. L-29573 January 30, 1970 - DEL PILAR
TRANSIT, INC. v. PUBLIC SERVICE COMMISSION
G.R. No. L-30091 January 30, 1970 - LEONILA S.
DEL ROSARIO v. ABELARDO SUBIDO
G.R. No. L-31435 January 30, 1970 - AMALIA B.
CELESTE v. PEOPLE OF THE PHIL.
prohibition against municipal councils entering into contracts regarding municipal properties subject of
municipal administration or control. It does not deny the power, right or capacity of municipal councils to
enter into such contracts; such power or capacity is recognized. Only the exercise thereof is subject to
supervision by approval or disapproval, i.e., contracts entered in pursuance of the power would ordinarily
be approved if entered into in good faith and for the best interests of the municipality, they would be
denied approval if found illegal or unfavorable to public or municipal interest. The absence of the approval,
therefore, does not per se make the contracts null and void." cralaw virtua1aw library
In other words, as regards the municipal transactions specified in Section 2196 of the Revised
Administrative Code, the Provincial Governor has two courses of action to take — either to approve or
disapprove the same. And since absence of such approval does not necessarily render the contract
entered into by the municipality null and void, the transaction remains voidable until such time when by
subsequent unfavorable action of the governor, for reasons of public interest, 3 the contract is thereby
invalidated.
Undisputably, the resolution of the municipal council authorizing the transaction involved herein was
disapproved by the Provincial Board on 11 February 1964 on the ground of unsuitability of the selected lot
as site of the electric plant to be erected. In short, the disapproval of the resolution by the Provincial
Board was for reasons of public interest, health and safety. It is claimed for appellant company, however,
that such disapproval is ultra vires and did not prevent its acquisition of the ownership of the
municipality’s Lot No. 1611, for the Provincial Board can declare a resolution of the municipal council
invalid only on one ground — lack of authority of said body to pass the same. 4 In the present case, it is
added, there is no question that the resolution authorizing the exchange of lots is within the competence
of the municipal council of San Jose to enact.
This contention of appellant cannot be sustained. A reading of the invoked cases reveals that the
limitation placed upon disapproval power of the provincial boards to review and pass upon the legality of
municipal proceedings was conferred by Section 2233 of the Revised Administrative Code in general
terms. The last paragraph of said section provides as follows:
jgc:chanrobles.com.ph
"If the board should in any case find that any resolution, ordinance, or order, as aforesaid, is beyond the
powers conferred upon the council or mayor making the same, it shall declare such resolution, ordinance,
or order invalid entering its action upon the minutes and advising the proper municipal authorities thereof.
The effect of such action shall be to annul the resolution, ordinance, or order in question, subject to action
by the Secretary of the Interior (now Executive Secretary) as hereinafter provided." cralaw virtua1aw library
Not only is the provision in question couched in general terms, but were such power not limited to ultra
vires municipal action, the result would be that the provincial board would be running the affairs of the
municipalities under its supervision. By contrast, Section 2196 of the Revised Administrative Code
(heretofore quoted) express speaks of the execution of deeds of conveyance of real property and is
unmistakably limited to that class of transactions. It is a familiar rule of statutory construction that
specific provisions control general ones (Butuan Sawmill, Inc. v. Bayview Theater Co., 96 Phil. 139, and
cases cited therein; Cassion v. Banco Nacional Filipino, 89 Phil. 560), and hence, Section 2196 of the
Administrative Code must be deemed an exception to the general rule of Section 2233. Wherefore, the
pronouncement made in the Manantan and Gabriel cases, construing the latter provision, cannot be
invoked nor applied to action taken by the provincial Governor under Section 2196 of the Administrative
Code, that requires approval by the Governor of conveyances of municipal real estate without limiting or
specifying the reasons for his refusal to concur therein.
It is true that the disapproval of the contract of exchange was effected in this case by the Provincial Board
and not by the Governor. But any objection on this ground would be untenable. In the first place, the
Governor herself was part of the Provincial Board and actually participated in the passage of the resolution
of disapproval. The said Board resolution, disapproving the exchange of lots and showing that the
Governor took part therein, constitutes already the disapproval of the contract by the latter, there being
no provision requiring said official to embody his unfavorable action in a particular instrument. Were the
action favorable, there would be need for affixing the Governor’s assent in the deed of conveyance.
Secondly, there is no gainsaying the fact that the municipal council of San Jose and the private parties
concerned, including herein appellant, were duly informed and furnished with copies of the resolution of
disapproval by the Provincial Board 5 and, as of 11 February 1964, they were already fully apprised of the
stand of the provincial government.
Considering that the contract between the municipality of San Jose and appellant was finally registered
only on 25 January 1965, or after its disapproval by the Provincial Board, it is beyond doubt that such
registration did not confer any right at all on appellant. By then, the municipal council was without
authority to contract with appellant on the lots subject of exchange. Likewise, the fact that the
municipality accepted appellant’s payment of real estate tax on Lot No. 1611 for 1964 and 1965, or that it
has expended some amount in reconstituting the title of said Lot No. 1611, does not work to estop the
municipality from maintaining its claim of ownership over the property. As this Court aptly stated: jgc:chanrobles.com.ph
"The doctrine of estoppel cannot be applied as against a municipal corporation to validate a contract which
it has no power to make, or which it is authorized to make only under prescribed conditions, within
prescribed limitations, or in a prescribed mode or manner, although the corporation has accepted the
benefits thereof and the other party has fully performed his part of the agreement, or has expended large
sums in preparation for performance. A reason frequently assigned for this rule is that to apply the
doctrine of estoppel against a municipality in such case would be to enable it to do indirectly what it
cannot do directly. . ." (San Diego v. Municipality of Naujan, L-9920, 29 February 1960, cited in Favis v.
Municipality of Sabañgan, L-26522, 27 February 1969, 27 SCRA 92, see also City of Manila v. Tarlac
Development Corporation, L-24557, L-24469 & L-24481, 31 July 1968, 24 SCRA 466).
WHEREFORE, finding no error in the judgment of the lower court, in so far as it declares the exchange of
lots invalid, the same is hereby affirmed with costs against the Appellant.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Teehankee and Barredo, JJ.,
concur.
Endnotes:
1. Lot No. 1303, Cadastral Survey of San Jose, with an area of 3,627 square meters, more
or less, and assessed at P240.00.
2. ART. 1356. Contracts shall be obligatory, in whatever form they may have been entered
into, provided all the essential requisites for their validity are present. However, when the
law requires that a contract be in some form in order that it may be valid or enforceable, or
that a contract be proved in a certain way, that requirement is absolute and indispensable." cralaw
virtua1aw library
3. Municipality of Camiling v. Lopez, supra. v. Provincial Board, 50 Phil. 686.
4. Manantan v. Municipality of Luna, 82 Phil. 848; Gabriel.
 5. Annex "A", page 44, CFI record.

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