G.R. No. L-22782 August 29, 1975
IGNACIO GONE, ET AL., plaintiffs-appellants, vs. THE DISTRICT ENGINEER, EVARISTO VERDEN, ET AL., defendants-appellees.

FACTS

The plaintiffs-appellants, numerous residents of Barrio Banday, Malitbog, Southern Leyte, filed a complaint seeking to nullify a contract entered into by their Barrio Captain, Eutiquio Vecina, with the District Engineer for the alteration and completion of the existing Banday Public Stage. Their original complaint, filed on October 10, 1963, alleged the contract was void under Republic Act No. 2370 (The Barrio Charter) for lack of ratification by the barrio assembly or authorization from the Barrio Council. The defendants-appellees moved to dismiss, arguing the complaint stated no cause of action because the governing law was the newer Republic Act No. 3590 (The Revised Barrio Charter), which took effect on June 22, 1963. Under this new law, the barrio council’s authorization sufficed. The lower court granted the motion to dismiss, finding the contract was duly authorized by Barrio Council Resolution No. 60.
The plaintiffs then moved to amend their complaint, shifting their objection to the alleged absence of consent from the Municipal Mayor and the Provincial Governor, which they argued was required under Section 13(o) of R.A. No. 3590 for contracts conveying real property or interests therein. The lower court denied the motion to amend and affirmed the dismissal. It ruled that the contract for the stage’s completion did not convey any real property interest requiring such higher approval. Furthermore, the court noted the plaintiffs failed to exhaust administrative remedies, as they did not first seek the Provincial Governor’s consent, which, if denied, would have achieved their goal without litigation.

ISSUE

Whether the lower court correctly dismissed the complaint for failure to state a cause of action.

RULING

Yes, the Supreme Court affirmed the dismissal. The legal logic rests on two primary grounds. First, the applicable law was the Revised Barrio Charter ( R.A. No. 3590 ), not the old one. Under Section 14(b) of this law, the barrio captain was empowered to enter into contracts upon authorization of the barrio council. The Barrio Council of Banday passed Resolution No. 60 authorizing the Barrio Captain to contract for the stage’s completion, making the contract valid. The plaintiffs’ new theory that the contract needed the consent of the Municipal Mayor and Provincial Governor under Section 13(o) was incorrect, as that provision applies only to contracts conveying real property or creating liens thereon. A contract for construction work does not constitute such a conveyance.
Second, the Court upheld the application of the doctrine of exhaustion of administrative remedies. Even assuming, for argument’s sake, that the Provincial Governor’s approval was necessary, the plaintiffs did not allege that they sought such approval. Their failure to pursue this available administrative recourse before resorting to the courts was a fatal defect, as a cause of action would only arise if the Governor disapproved the contract and the defendants proceeded nonetheless. The lower court did not err in refusing the amendment and dismissing the complaint, as the plaintiffs failed to demonstrate a legal right that was violated. The action taken by the barrio officials had the full sanction of the governing statute.