G.R. No. 173840

Republic of the Philippines

Supreme Court

Baguio City

THIRD DIVISION

SAMAR II ELECTRIC COOPERATIVE, INC. (SAMELCO II) AND ITS BOARD OF DIRECTORS, composed of DEBORAH T. MARCO (Immediate Past President), ATTY. MEDINO L. ACUBA, ENGR. MANUEL C. OREJOLA, ALFONSO F. QUILAPIO, RAUL DE GUZMAN and PONCIANO R. ROSALES (General Manager and Ex Officio Director),

Petitioners,

- versus

ANANIAS D. SELUDO, JR.,

Respondent.

G.R. No. 173840

Present:

VELASCO, J., Chairperson,

PERALTA,

ABAD,

MENDOZA, and

PERLAS-BERNABE, JJ.

Promulgated:

April 25, 2012

x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

Assailed in the present petition for review on certiorari under Rule 45 of the Rules of Court are the Decision[1] and Resolution[2] dated January 26, 2006 and July 12, 2006, respectively, of the Court of Appeals (CA) in CA-G.R. CEB SP No. 01175. The CA Decision dismissed petitioners' petition for certiorari and affirmed the Orders of the Regional Trial Court (RTC) of Calbiga, Samar, Branch 33, dated May 6, 2005 and September 15, 2005, while the CA Resolution denied petitioners' Motion for Reconsideration.

Herein petitioner Samar II Electric Cooperative, Inc. (SAMELCO II) was organized under the provisions of Presidential Decree (P.D.) No. 269, otherwise known as the National Electrification Administration Decree, as amended by P.D. No. 1645. The individual petitioners are members of SAMELCO II's Board of Directors. Respondent was also a member of the SAMELCO II Board of Directors having been elected thereto in 2002 and whose term of office expired in May 2005.

The antecedent facts, as summarized by the CA, are as follows:

As members of the Board of Directors (BOD) of the petitioner Samar II Electric Cooperative, Inc. (SAMELCO II), an electric cooperative providing electric service to all members-consumers in all municipalities within the Second Congressional District of the Province of Samar, individual petitioners passed Resolution No. 5 [Series] of 2005 on January 22, 2005.

The said resolution disallowed the private respondent to attend succeeding meetings of the BOD effective February 2005 until the end of his term as director. The same resolution also disqualified him for one (1) term to run as a candidate for director in the upcoming district elections.

Convinced that his rights as a director of petitioner SAMELCO II had been curtailed by the subject board resolution, private respondent filed an Urgent Petition for Prohibition against petitioner SAMELCO II, impleading individual petitioners as directors thereof, in the Regional Trial Court (RTC) in Calbiga, Samar. The case was docketed as Special Civil Case No. C-2005-1085 and was raffled to Branch 33 of the said court x x x.

In his petition, private respondent prayed for the nullification of Resolution No. 5, [Series] of 2005, contending that it was issued without any legal and factual bases. He likewise prayed that a temporary restraining order (TRO) and/or a writ of preliminary injunction be issued to enjoin the individual petitioners from enforcing the assailed board resolution.

Granting private respondent's prayer for a TRO, the public respondent issued one, effective for seventy-two (72) hours which effectivity was later on extended for another seventeen (17) days.

In their answer to the petition for prohibition, individual petitioners raised the affirmative defense of lack of jurisdiction of the RTC over the subject matter of the case. Individual petitioners assert that, since the matter involved an electric cooperative, SAMELCO II, primary jurisdiction is vested on the National Electrification Administration (NEA).

In her assailed Order dated May 6, 2005, [the RTC judge] sustained the jurisdiction of the court over the petition for prohibition and barred the petitioners and/or their representatives from enforcing Resolution No. 5 [Series] of 2005.

x x x[3]

Petitioners filed a motion for reconsideration, but the same was denied by the RTC in its September 15, 2005 Order.

Petitioners then elevated the case to the CA via a special civil action for certiorari, imputing grave abuse of discretion on the part of the RTC in issuing its assailed Orders.

On January 26, 2006, the CA rendered its Decision dismissing petitioners' petition for certiorari and affirming the assailed Orders of the RTC.

Petitioners filed a motion for reconsideration, but it was denied by the CA in its July 12, 2006 Resolution.

Hence, the instant petition with the following assigned errors:

(1)

IN ITS INTERPRETATION AND APPLICATION OF THE DOCTRINE OF PRIMARY JURISDICTION, THE HONORABLE COURT OF APPEALS COMMITTED LEGAL ERRORS IN LIMITING THE DOCTRINE TO CERTAIN MATTERS IN CONTROVERSIES INVOLVING SPECIALIZED DISPUTES AND IN UPHOLDING THE JURISDICTION OF THE TRIAL COURT OVER THE URGENT PETITION FOR PROHIBITION FILED BY RESPONDENT SELUDO ON THE GROUND THAT THE ISSUES RAISED THEREIN DO NOT REQUIRE THE TECHNICAL EXPERTISE OF THE NEA

(2)

THE HONORABLE COURT OF APPEALS, IN SUSTAINING THE JURISDICTION OF THE TRIAL COURT, COMMITTED AN ERROR OF LAW BY HOLDING THAT A PERUSAL OF THE LAW CREATING THE NEA DISCLOSES THAT THE NEA WAS NOT GRANTED THE POWER TO HEAR AND DECIDE CASES INVOLVING THE VALIDITY OF BOARD RESOLUTIONS UNSEATING ANY MEMBER OF THE BOARD OF DIRECTORS AND THAT NEITHER WAS IT GRANTED JURISDICTION OVER PETITIONS FOR CERTIORARI, PROHIBITION OR MANDAMUS.

(3)

THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW WHEN IT SUSTAINED THE JURISDICTION OF [THE] TRIAL COURT OVER THE PETITION FOR PROHIBITION DESPITE THE EXISTENCE OF APPEAL OR OTHER PLAIN, SPEEDY AND ADEQUATE REMEDY AVAILABLE TO THEREIN PETITIONER SELUDO.[4]

In their first assigned error, petitioners contend that the CA erred in interpreting the doctrine of primary jurisdiction in a very limited sense. Petitioners aver that in a number of cases, this Court applied the doctrine of primary jurisdiction even in cases where the issues involved do not require the technical expertise of administrative bodies.

Petitioners also argue, in their second assignment of error, that it is wrong for the CA to rule that there is nothing under the law creating the National Electrification Administration (NEA), which grants the said administrative body the power to ascertain the validity of board resolutions unseating any member of the Board of Directors of an electric cooperative. Citing the provisions of P.D. Nos. 269 and 1645, petitioners aver that the NEA is empowered to determine the validity of resolutions passed by electric cooperatives.

In their third assigned error, petitioners assert that respondent is precluded from filing a petition for prohibition considering that, under the applicable laws, it has an adequate remedy in the ordinary course of law.

The Court finds the petition meritorious. As the assigned errors are interrelated, the Court will discuss them jointly.

Section 10, Chapter II of P.D. No. 269, as amended by Section 5 of P.D. No. 1645, provides:

Section 5. Section 10, Chapter II of Presidential Decree No. 269 is hereby amended to read as follows:

Section 10. Enforcement Powers and Remedies. − In the exercise of its power of supervision and control over electric cooperatives and other borrower, supervised or controlled entities, the NEA is empowered to issue orders, rules and regulations and motu proprio or upon petition of third parties, to conduct investigations, referenda and other similar actions in all matters affecting said electric cooperatives and other borrower, or supervised or controlled entities.

If the electric cooperative concerned or other similar entity fails after due notice to comply with NEA orders, rules and regulations and/or decisions, or with any of the terms of the Loan Agreement, the NEA Board of Administrators may avail of any or all of the following remedies:

x x x x.

(e) Take preventive and/or disciplinary measures including suspension and/or removal and replacement of any or all of the members of the Board of Directors, officers or employees of the Cooperative, other borrower institutions or supervised or controlled entities as the NEA Board of Administrators may deem fit and necessary and to take any other remedial measures as the law or the Loan Agreement may provide.

x x x x (Emphasis supplied.)

In addition, Subsection (a), Section 24, Chapter III of P.D. No. 269, as amended by Section 7 of P.D. No. 1645, states:

Section 7. Subsection (a), Section 24, Chapter III of Presidential Decree No. 269 is hereby amended to read as follows:

Section 24. Board of Directors. − (a) The Management of a Cooperative shall be vested in its Board, subject to the supervision and control of NEA which shall have the right to be represented and to participate in all Board meetings and deliberations and to approve all policies and resolutions.

The composition, qualifications, the manner of elections and filling of vacancies, the procedures for holding meetings and other similar provisions shall be defined in the by-laws of the Cooperative subject to NEA policies, rules and regulations.

x x x. (Emphasis supplied.)

A comparison of the original provisions of Sections 10 and 24 of P.D. No. 269 and the amendatory provisions under Sections 5 and 7 of P.D. No. 1645 would readily show that the intention of the framers of the amendatory law is to broaden the powers of the NEA.

A clear proof of such expanded powers is that, unlike P.D. No. 269, P.D. No. 1645 expressly provides for the authority of the NEA to exercise supervision and control over electric cooperatives. In administrative law, supervision means overseeing or the power or authority of an officer to see that subordinate officers perform their duties.[5] If the latter fail or neglect to fulfill them, the former may take such action or step as prescribed by law to make them perform their duties.[6] Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for that of the latter.[7] Section 38 (1), Chapter 7, Book 4 of Executive Order No. 292, otherwise known as the Administrative Code of 1987 provides, thus:

Supervision and control shall include the authority to act directly whenever a specific function is entrusted by law or regulation to a subordinate; direct the performance of duty; restrain the commission of acts; review, approve, reverse or modify acts and decisions of subordinate officials or units; determine priorities in the execution of plans and programs; and prescribe standards, guidelines, plans and programs x x x. (Emphasis supplied.)

The Court, therefore, finds it erroneous on the part of the CA to rule that the doctrine of primary jurisdiction does not apply in the present case. It is true that the RTC has jurisdiction over the petition for prohibition filed by respondent.[8] However, the basic issue in the present case is not whether the RTC has jurisdiction over the petition for prohibition filed by respondent; rather, the issue is who between the RTC and the NEA has primary jurisdiction over the question of the validity of the Board Resolution issued by SAMELCO II. A careful reading of the above-quoted provisions of P.D. No. 1645 clearly show that, pursuant to its power of supervision and control, the NEA is granted the authority to conduct investigations and other similar actions as well as to issue orders, rules and regulations with respect to all matters affecting electric cooperatives. Certainly, the matter as to the validity of the resolution issued by the Board of Directors of SAMELCO II, which practically removed respondent from his position as a member of the Board of Directors and further disqualified him to run as such in the ensuing election, is a matter which affects the said electric cooperative and, thus, comes within the ambit of the powers of the NEA as expressed in Sections 5 and 7 of P.D. No. 1645.

In this regard, the Court agrees with petitioners' argument that to sustain the petition for prohibition filed by respondent with the RTC would constitute an unnecessary intrusion into the NEA's power of supervision and control over electric cooperatives.

Based on the foregoing discussions, the necessary conclusion that can be arrived at is that, while the RTC has jurisdiction over the petition for prohibition filed by respondent, the NEA, in the exercise of its power of supervision and control, has primary jurisdiction to determine the issue of the validity of the subject resolution.

It may not be amiss to reiterate the prevailing rule that the doctrine of primary jurisdiction applies where a claim is originally cognizable in the courts and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, has been placed within the special competence of an administrative agency.[9] In such a case, the court in which the claim is sought to be enforced may suspend the judicial process pending referral of such issues to the administrative body for its view or, if the parties would not be unfairly disadvantaged, dismiss the case without prejudice.[10]

Corollary to the doctrine of primary jurisdiction is the principle of exhaustion of administrative remedies. The Court, in a long line of cases,[11] has held that before a party is allowed to seek the intervention of the courts, it is a pre-condition that he avail himself of all administrative processes afforded him. Hence, if a remedy within the administrative machinery can be resorted to by giving the administrative officer every opportunity to decide on a matter that comes within his jurisdiction, then such remedy must be exhausted first before the courts power of judicial review can be sought.[12] The premature resort to the court is fatal to ones cause of action.[13] Accordingly, absent any finding of waiver or estoppel, the case may be dismissed for lack of cause of action.[14]

The doctrine of exhaustion of administrative remedies is based on practical and legal reasons.[15] The availment of administrative remedy entails lesser expenses and provides for a speedier disposition of controversies.[16] Furthermore, the courts of justice, for reasons of comity and convenience, will shy away from a dispute until the system of administrative redress has been completed and complied with, so as to give the administrative agency concerned every opportunity to correct its error and dispose of the case.[17]

True, the doctrines of primary jurisdiction and exhaustion of administrative remedies are subject to certain exceptions, to wit: (a) where there is estoppel on the part of the party invoking the doctrine; (b) where the challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c) where there is unreasonable delay or official inaction that will irretrievably prejudice the complainant; (d) where the amount involved is relatively so small as to make the rule impractical and oppressive; (e) where the question involved is purely legal and will ultimately have to be decided by the courts of justice; (f) where judicial intervention is urgent; (g) where the application of the doctrine may cause great and irreparable damage; (h) where the controverted acts violate due process; (i) where the issue of non-exhaustion of administrative remedies has been rendered moot; (j) where there is no other plain, speedy and adequate remedy; (k) where strong public interest is involved; and (l) in quo warranto proceedings.[18]

Respondent, however, failed to show that the instant case falls under any of the above-enumerated exceptions. While respondent alleged in his Urgent Petition for Prohibition that the subject resolution was issued with grave abuse of discretion and in violation of his right to due process, mere allegation of arbitrariness will not suffice to vest in the trial court the power that has been specifically granted by law to special government agencies.[19] Moreover, the issues raised in the petition for prohibition, particularly the issue of whether or not there are valid grounds to disallow respondent from attending SAMELCO's Board meetings and to disqualify him from running for re-election as a director of the said Board, are not purely legal questions. Instead, they involve a determination of factual matters which fall within the competence of the NEA to ascertain.

Finally, the Court agrees with petitioners' contention that the availability of an administrative remedy via a complaint filed before the NEA precludes respondent from filing a petition for prohibition before the court. It is settled that one of the requisites for a writ of prohibition to issue is that there is no plain, speedy and adequate remedy in the ordinary course of law.[20] In order that prohibition will lie, the petitioner must first exhaust all administrative remedies.[21] Thus, respondent's failure to file a complaint before the NEA prevents him from filing a petition for prohibition before the RTC.

WHEREFORE, the instant petition is GRANTED. The questioned Decision and Resolution of the Court of Appeals dated January 26, 2006 and July 12, 2006, respectively, as well as the Orders of the Regional Trial Court of Calbiga, Samar, Branch 33, dated May 6, 2005 and September 15, 2005, are REVERSED and SET ASIDE. A new judgment is entered DISMISSING the Urgent Petition for Prohibition (Special Civil Action No. C-2005-1085) filed by respondent Ananias D. Seludo, Jr.

SO ORDERED.

DIOSDADO M. PERALTA

Associate Justice

[1] Penned by Associate Justice Isaias P. Dicdican, with Associate Justices Ramon M. Bato, Jr. and Apolinario D. Bruselas, Jr.., concurring; rollo, pp. 50-55.

[2] Penned by Associate Justice Isaias P. Dicdican, Jr., with Associate Justices Apolinario D. Bruselas, Jr. and Marlene Gonzales-Sison, concurring, id. at 56-57.

[5] Social Justice Society (SJS) v. Atienza, Jr., G.R. No. 156052, February 13, 2008, 545 SCRA 92, 152; Veterans Federation of the Philippines v. Reyes, G.R. No. 155027, February 28, 2006, 483 SCRA 526, 564; Mondano v. Silvosa, 97 Phil. 143, 147-148 (1955).

[8] Section 21(1) of Batas Pambansa Blg. 129 provides that the RTC shall exercise original jurisdiction in the issuance, among others, of a writ of prohibition.

[9] Rosito Bagunu v. Spouses Francisco Aggabao and Rosenda Acerit, G.R. No. 186487, August 15, 2011; Phil Pharmawealth, Inc. v. Pfizer, Inc. and Pfizer (Phil.) Inc., G.R. No. 167715, November 17, 2010, 635 SCRA 140, 153; Euro-Med Laboratories Phil., Inc. v. The Province of Batangas, G.R. No. 148106, July 17, 2006, 495 SCRA 301, 305.

[11] City Engineer of Baguio v. Baniqued, G.R. No. 150270, November 26, 2008, 571 SCRA 617, 627-628; Buston-Arendain v. Gil, G.R. No. 172585, June 26, 2008, 555 SCRA 561, 572; Province of Zamboanga del Norte v. Court of Appeals, G.R. No. 109853, October 11, 2000, 342 SCRA 549, 557.

[15] Public Hearing Committee of the Laguna Lake Development Authority v. SM Prime Holdings, Inc., G.R. No. 170599, September 22, 2010, 631 SCRA 73, 79; Montanez v. Provincial Agrarian Reform Adjudicator (PARAD), G.R. No. 183142, September 17, 2009, 600 SCRA 217, 230.

[17] Public Hearing Committee of the Laguna Lake Development Authority v. SM Prime Holdings, Inc., supra, at 79-80; Montanez v. Provincial Agrarian Reform Adjudicator (PARAD), supra, at 230-231.

[18] Vigilar v. Aquino, G.R. No. 180388, January 18, 2011, 639 SCRA 772, 777, citing Republic of the Philippines v. Lacap, G.R. No. 158253, March 2, 2007, 517 SCRA 255, 265-266.

[19] Province of Zamboanga del Norte v. Court of Appeals, supra note 10, at 559.

[20] Hon. Eduardo Ermita, in his official capacity as The Executive Secretary v. Hon. Jenny Lind R. Aldecoa-Delorino, Presiding Judge, Branch 137, Regional Trial Court, Makati City, Association of Petrochemical Manufacturers of the Philippines, representing JG Summit Petrochemical Corporation, et al., G.R. No. 177130, June 7, 2011; Yusay v. Court of Appeals, G.R. No. 156684, April 6, 2011, 647 SCRA 269, 283-284; Ongsuco v. Malones, G.R. No. 182065, October 27, 2009, 604 SCRA 499, 515.

[21] Regalado, Remedial Law Compendium, Vol. I, Sixth Revised Edition, p. 712, citing Cebedo, et. al. v. Director of Lands, et al., 111 Phil. 1049, 1053 (1961).