IN THE MATTER OF THE PETITION FOR DECLARATORY JUDGMENT ON TITLE TO REAL PROPERTY (QUIETING OF TITLE) PECHUECO SONS COMPANY, PETITIONER-APPELLANT, VS. PROVINCIAL BOARD OF ANTIQUE…

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:

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 1964, 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, TOT 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:

“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 by the mayor, upon resolution of the council, with the approval of
the provincial governor.”

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 vs.
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. In – deed, this Court, explaining the nature of this power in that
cited case, said:

“. . . . . 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.”

In other words, as regard 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 as 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:

“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 In – tenor (now Executive
Secretary) as hereinafter provided.”

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
devised Administrative Code (heretofore quoted) expressly 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. vs. Bayview Theater Co., 96 Phil. 139, and cases cited therein;
Cassion vs. 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:

“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
vs. Municipality of Naujan, L-9920, 29 February 1960,
cited in Favis vs. Municipality of Sabañgan, L-26522, 27 February 1969, 27 SCRA 92; see also
City of Manila vs. Tarlac Development Corporation,
L-24557, L -2 44 69 6 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 of firmed, with costs against the appellant.

Concepcion, C.J., Dizon,
Makalintal, Zaldivar,
Sanchez, Castro, Fernando, Teehankee, and Barredo, JJ., concur.

^[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.”

^[3]
Municipality of Camiling vs. Lopez, supra.

^[4]
Manantan vs. Municipality
of Luna, 82 Phil. 848; Gabriel vs.
Provincial Board, 50 Phil. 686.

^[5]
Annex “A”, page 44, CFI record.