WEEK 3 ADMIN

1. MAKATI STOCK EXCHANGE vs. SEC It is not farfetched to assert as petitioner does 2 that for all practical purposes, the
Commission's order or resolution would make it impossible for the Makati Stock
G.R. No. L-23004 June 30, 1965 Exchange to operate. So, its "permission" amounted to a "prohibition."

MAKATI STOCK EXCHANGE, INC., petitioner, Apparently, the Commission acted "in the public interest." 3 Hence, it is pertinent to
vs. inquire whether the Commission may "in the public interest" prohibit (or make
SECURITIES AND EXCHANGE COMMISSION and MANILA STOCK EXCHANGE, impossible) the establishment of another stock exchange (besides the Manila Stock
respondents. Exchange), on the ground that the operation of two or more exchanges adversely
affects the public interest.
Hermenegildo B. Reyes for petitioner.
Office of the Solicitor General for respondent Securities and Exchange Commission. At first glance, the answer should be in the negative, because the law itself
Norberto J. Quisumbing and Emma Quisumbing-Fernando for respondent Manila Stock contemplated, and, therefore, tacitly permitted or tolerated at least, the operation of two
Exchange. or more exchanges.

BENGZON, C.J.: Wherever two or more exchanges exist, the Commission, by order, shall require and
enforce uniformity of trading regulations in and/or between said exchanges. [Emphasis
This is a review of the resolution of the Securities and Exchange Commission which Ours] (Sec. 28b-13, Securities Act.)
would deny the Makati Stock Exchange, Inc., permission to operate a stock exchange
unless it agreed not to list for trading on its board, securities already listed in the Manila In fact, as admitted by respondents, there were five stock exchanges in Manila, before
Stock Exchange. the Pacific War (p. 10, brief), when the Securities Act was approved or amended.
(Respondent Commission even admits that dual listing was practiced then.) So if the
Objecting to the requirement, Makati Stock Exchange, Inc. contends that the existence of more than one exchange were contrary to public interest, it is strange that
Commission has no power to impose it and that, anyway, it is illegal, discriminatory and the Congress having from time to time enacted legislation amending the Securities Act,
unjust. 4 has not barred multiplicity of exchanges.

Under the law, no stock exchange may do business in the Philippines unless it is Forgetting for the moment the monopolistic aspect of the Commission's resolution, let
previously registered with the Commission by filing a statement containing the us examine the authority of the Commission to promulgate and implement the rule in
information described in Sec. 17 of the Securities Act (Commonwealth Act 83, as question.
amended).
It is fundamental that an administrative officer has only such powers as are expressly
It is assumed that the Commission may permit registration if the section is complied granted to him by the statute, and those necessarily implied in the exercise thereof.
with; if not, it may refuse. And there is now no question that the section has been
complied with, or would be complied with, except that the Makati Stock Exchange, upon In its brief and its resolution now subject to review, the Commission cites no provision
challenging this particular requirement of the Commission (rule against double listing) expressly supporting its rule. Nevertheless, it suggests that the power is "necessary for
may be deemed to have shown inability or refusal to abide by its rules, and thereby to the execution of the functions vested in it"; but it makes no explanation, perhaps relying
have given ground for denying registration. [Sec. 17 (a) (1) and (d)]. on the reasons advanced in support of its position that trading of the same securities in
two or more stock exchanges, fails to give protection to the investors, besides
Such rule provides: "... nor shall a security already listed in any securities exchange be contravening public interest. (Of this, we shall treat later) .
listed anew in any other securities exchange ... ."
On the legality of its rule, the Commission's argument is that: (a) it was approved by
The objection of Makati Stock Exchange, Inc., to this rule is understandable. There is the Department Head before the War; and (b) it is not in conflict with the provisions
actually only one securities exchange The Manila Stock Exchange that has been of the Securities Act. In our opinion, the approval of the Department, 5 by itself, adds
operating alone for the past 25 years; and all or presumably all available or no weight in a judicial litigation; and the test is not whether the Act forbids the
worthwhile securities for trading in the market are now listed there. In effect, the Commission from imposing a prohibition, but whether it empowers the Commission to
Commission permits the Makati Stock Exchange, Inc., to deal only with other securities. prohibit. No specific portion of the statute has been cited to uphold this power. It is not
Which is tantamount to permitting a store to open provided it sells only those goods not found in sec. 28 (of the Securities Act), which is entitled "Powers (of the Commission)
sold in other stores. And if there's only one existing store, 1 the result is a monopoly. with Respect to Exchanges and Securities." 6
WEEK 3 ADMIN

According to many court precedents, the general power to "regulate" which the one sale, will tend to fix the price for the succeeding, sales, and he has no chance to
Commission has (Sec. 33) does not imply authority to prohibit." 7 get a lower price except at another stock exchange. Therefore, the arrangement
desired by the Commission may, at most, be beneficial to sellers of stock not to
The Manila Stock Exchange, obviously the beneficiary of the disputed rule, contends buyers although what applies to buyers should obtain equally as to sellers (looking
that the power may be inferred from the express power of the Commission to suspend for higher prices). Besides, there is the brokerage fee which must be considered. Not
trading in a security, under said sec. 28 which reads partly: to mention the personality of the broker.

And if in its opinion, the public interest so requires, summarily to suspend trading in any (b) Protection of investors. At any rate, supposing the arrangement contemplated is
registered security on any securities exchange ... . (Sec. 28[3], Securities Act.) beneficial to investors (as the Commission says), it is to be doubted whether it is
"necessary" for their "protection" within the purview of the Securities Act. As the
However, the Commission has not acted nor claimed to have acted in pursuance purpose of the Act is to give adequate and effective protection to the investing public
of such authority, for the simple reason that suspension under it may only be for ten against fraudulent representations, or false promises and the imposition of worthless
days. Indeed, this section, if applicable, precisely argues against the position of the ventures, 9 it is hard to see how the proposed concentration of the market has a
Commission because the "suspension," if it is, and as applied to Makati Stock necessary bearing to the prevention of deceptive devices or unlawful practices. For it
Exchange, continues for an indefinite period, if not forever; whereas this Section 28 is not mere semantics to declare that acts for the protection of investors are necessarily
authorizes suspension for ten days only. Besides, the suspension of trading in the beneficial to them; but not everything beneficial to them is necessary for their protection.
security should not be on one exchange only, but on all exchanges; bearing in mind
that suspension should be ordered "for the protection of investors" (first par., sec. 28) And yet, the Commission realizes that if there were two or more exchanges "the same
in all exchanges, naturally, and if "the public interest so requires" [sec. 28(3)]. security may sell for more in one exchange and sell for less in the other. Variance in
price of the same security would be the rule ... ." Needless to add, the brokerage rates
This brings up the Commission's principal conclusions underlying its determination viz.: will also differ.
(a) that the establishment of another exchange in the environs of Manila would be
inimical to the public interest; and (b) that double or multiple listing of securities should This, precisely, strengthens the objection to the Commission's ruling. Such difference
be prohibited for the "protection of the investors." in prices and rates gives the buyer of shares alternative options, with the opportunity to
invest at lower expense; and the seller, to dispose at higher prices. Consequently, for
(a) Public Interest Having already adverted to this aspect of the matter, and the the investors' benefit (protection is not the word), quality of listing 10 should be
emerging monopoly of the Manila Stock Exchange, we may, at this juncture, emphasize permitted, nay, encouraged, and other exchanges allowed to operate. The
that by restricting free competition in the marketing of stocks, and depriving the public circumstance that some people "made a lot of money due to the difference in prices of
of the advantages thereof the Commission all but permits what the law punishes as securities traded in the stock exchanges of Manila before the war" as the Commission
monopolies as "crimes against public interest." 8 noted, furnishes no sufficient reason to let one exchange corner the market. If there
was undue manipulation or unfair advantage in exchange trading the Commission
"A stock exchange is essentially monopolistic," the Commission states in its resolution should have other means to correct the specific abuses.
(p. 14-a, Appendix, Brief for Petitioner). This reveals the basic foundation of the
Commission's process of reasoning. And yet, a few pages afterwards, it recalls the Granted that, as the Commission observes, "what the country needs is not another"
benefits to be derived "from the existence of two or more exchanges," and the market for securities already listed on the Manila Stock Exchange, but "one that would
desirability of "a healthy and fair competition in the securities market," even as it focus its attention and energies on the listing of new securities and thus effectively help
expresses the belief that "a fair field of competition among stock exchanges should be in raising capital sorely needed by our ... unlisted industries and enterprises."
encouraged only to resolve, paradoxically enough, that Manila Stock Exchange shall,
in effect, continue to be the only stock exchange in Manila or in the Philippines. Nonetheless, we discover no legal authority for it to shore up (and stifle) free enterprise
and individual liberty along channels leading to that economic desideratum. 11
"Double listing of a security," explains the Commission, "divides the sellers and the
buyers, thus destroying the essence of a stock exchange as a two-way auction market The Legislature has specified the conditions under which a stock exchange may legally
for the securities, where all the buyers and sellers in one geographical area converge obtain a permit (sec. 17, Securities Act); it is not for the Commission to impose others.
in one defined place, and the bidders compete with each other to purchase the security If the existence of two competing exchanges jeopardizes public interest which is
at the lowest possible price and those seeking to sell it compete with each other to get doubtful let the Congress speak. 12 Undoubtedly, the opinion and recommendation
the highest price therefor. In this sense, a stock exchange is essentially monopolistic." of the Commission will be given weight by the Legislature, in judging whether or not to
restrict individual enterprise and business opportunities. But until otherwise directed by
Inconclusive premises, for sure. For it is debatable whether the buyer of stock may get law, the operation of exchanges should not be so regulated as practically to create a
the lowest price where all the sellers assemble in only one place. The price there, in
WEEK 3 ADMIN

monopoly by preventing the establishment of other stock exchanges and thereby And when the Makati Stock Exchange finally found that it could not successfully operate
contravening: with the condition attached, it took the issue by the horns, and expressing its desire for
registration and license, it requested that the condition (against double listing) be
(a) the organizers' (Makati's) Constitutional right to equality before the law; dispensed with. The order of the Commission denying, such request is dated May 7,
1964, and is now under, review.
(b) their guaranteed civil liberty to pursue any lawful employment or trade; and
Indeed, there can be no valid objection to the discussion of this issue of double listing
(c) the investor's right to choose where to buy or to sell, and his privilege to select the now, 16 because even if the Makati Stock Exchange, Inc. may be held to have accepted
brokers in his employment. 13 the permission to operate with the condition against double listing (for having failed to
appeal the order of May 27, 1963), still it was not precluded from afterwards contesting
And no extended elucidation is needed to conclude that for a licensing officer to deny 17 the validity of such condition or rule:
license solely on the basis of what he believes is best for the economy of the country
may amount to regimentation or, in this instance, the exercise of undelegated legislative (1) An agreement (which shall not be construed as a waiver of any constitutional right
powers and discretion. or any right to contest the validity of any rule or regulation) to comply and to enforce so
far as is within its powers, compliance by its members, with the provisions of this Act,
Thus, it has been held that where the licensing statute does not expressly or impliedly and any amendment thereto, and any rule or regulation made or to be made
authorize the officer in charge, he may not refuse to grant a license simply on the thereunder. (See. 17-a-1, Securities Act [Emphasis Ours].)
ground that a sufficient number of licenses to serve the needs of the public have already
been issued. (53 C.J.S. p. 636.) Surely, this petition for review has suitably been coursed. And making reasonable
allowances for the presumption of regularity and validity of administrative action, we
Concerning res judicata. Calling attention to the Commission's order of May 27, feel constrained to reach the conclusion that the respondent Commission possesses
1963, which Makati Stock did not appeal, the Manila Stock Exchange pleads the no power to impose the condition of the rule, which, additionally, results in
doctrine of res judicata. 14 (The order now reviewed is dated May 7, 1964.) discrimination and violation of constitutional rights.

It appears that when Makati Stock Exchange, Inc. presented its articles of incorporation ACCORDINGLY, the license of the petition to operate a stock exchange is approved
to the Commission, the latter, after making some inquiries, issued on May 27, 1963, an without such condition. Costs shall be paid by the Manila Stock Exchange. So ordered.
order reading as follows.
Bautista Angelo, Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala, Makalintal,
Let the certificate of incorporation of the MAKATI STOCK EXCHANGE be issued, and Bengzon, J.P., and Zaldivar, JJ., concur.
if the organizers thereof are willing to abide by the foregoing conditions, they may file Barrera, J., is on leave.
the proper application for the registration and licensing of the said Exchange.

In that order, the Commission advanced the opinion that "it would permit the
establishment and operation of the proposed Makati Stock Exchange, provided ... it
shall not list for trading on its board, securities already listed in the Manila Stock
Exchange ... ."

Admittedly, Makati Stock Exchange, Inc. has not appealed from that order of May 27,
1963. Now, Manila Stock insists on res judicata.

Why should Makati have appealed? It got the certificate of incorporation which it
wanted. The condition or proviso mentioned would only apply if and when it
subsequently filed the application for registration as stock exchange. It had not yet
applied. It was not the time to question the condition; 15 Makati was still exploring the
convenience of soliciting the permit to operate subject to that condition. And it could
have logically thought that, since the condition did not affect its articles of incorporation,
it should not appeal the order (of May 27, 1963) which after all, granted the certificate
of incorporation (corporate existence) it wanted at that time.
WEEK 3 ADMIN

2. TAULE vs. SANTOS
Auditor Leo Sales 1
G.R. No. 90336 August 12, 1991
On June 19, 1989, respondent Leandro I. Verceles, Governor of Catanduanes, sent a
RUPERTO TAULE, petitioner, letter to respondent Luis T. Santos, the Secretary of Local Government,* protesting the
vs. election of the officers of the FABC and seeking its nullification in view of several
SECRETARY LUIS T. SANTOS and GOVERNOR LEANDRO VERCELES, flagrant irregularities in the manner it was conducted. 2
respondents.
In compliance with the order of respondent Secretary, petitioner Ruperto Taule as
Balgos & Perez and Bugaring, Tugonon & Associates Law Offices for petitioner. President of the FABC, filed his comment on the letter-protest of respondent Governor
denying the alleged irregularities and denouncing said respondent Governor for
Juan G. Atencia for private respondent. meddling or intervening in the election of FABC officers which is a purely non-partisan
affair and at the same time requesting for his appointment as a member of the
Sangguniang Panlalawigan of the province being the duly elected President of the
FABC in Catanduanes. 3
GANCAYCO, J.:p
On August 4, 1989, respondent Secretary issued a resolution nullifying the election of
The extent of authority of the Secretary of Local Government over the katipunan ng the officers of the FABC in Catanduanes held on June 18, 1989 and ordering a new
mga barangay or the barangay councils is brought to the fore in this case. one to be conducted as early as possible to be presided by the Regional Director of
Region V of the Department of Local Government. 4
On June 18,1989, the Federation of Associations of Barangay Councils (FABC) of
Catanduanes, composed of eleven (11) members, in their capacities as Presidents of Petitioner filed a motion for reconsideration of the resolution of August 4, 1989 but it
the Association of Barangay Councils in their respective municipalities, convened in was denied by respondent Secretary in his resolution of September 5, 1989. 5
Virac, Catanduanes with six members in attendance for the purpose of holding the
election of its officers. In the petition for certiorari before Us, petitioner seeks the reversal of the resolutions of
respondent Secretary dated August 4, 1989 and September 5, 1989 for being null and
Present were petitioner Ruperto Taule of San Miguel, Allan Aquino of Viga, Vicente void.
Avila of Virac, Fidel Jacob of Panganiban, Leo Sales of Caramoran and Manuel Torres
of Baras. The Board of Election Supervisors/Consultants was composed of Provincial Petitioner raises the following issues:
Government Operation Officer (PGOO) Alberto P. Molina, Jr. as Chairman with
Provincial Treasurer Luis A. Manlapaz, Jr. and Provincial Election Supervisor Arnold 1) Whether or not the respondent Secretary has jurisdiction to entertain an
Soquerata as members. election protest involving the election of the officers of the Federation of Association of
Barangay Councils;
When the group decided to hold the election despite the absence of five (5) of its
members, the Provincial Treasurer and the Provincial Election Supervisor walked out. 2) Whether or not the respondent Governor has the legal personality to file an
election protest;
The election nevertheless proceeded with PGOO Alberto P. Molina, Jr. as presiding
officer. Chosen as members of the Board of Directors were Taule, Aquino, Avila, Jacob 3) Assuming that the respondent Secretary has jurisdiction over the election
and Sales. protest, whether or not he committed grave abuse of discretion amounting to lack of
jurisdiction in nullifying the election;
Thereafter, the following were elected officers of the FABC:
The Katipunan ng mga Barangay is the organization of all sangguniang barangays in
President Ruperto Taule the following levels: in municipalities to be known as katipunang bayan; in cities,
katipunang panlungsod; in provinces, katipunang panlalawigan; in regions, katipunang
Vice-President Allan Aquino pampook; and on the national level, katipunan ng mga barangay. 6

Secretary Vicente Avila The Local Government Code provides for the manner in which the katipunan ng mga
barangay at all levels shall be organized:
Treasurer Fidel Jacob
WEEK 3 ADMIN

Sec. 110. Organization. (1) The katipunan at all levels shall be organized in the sworn petition contesting the election of a barangay officer shall be filed with the proper
following manner: Municipal or Metropolitan Trial Court by any candidate who has duly filed a certificate
of candidacy and has been voted for the same office within 10 days after the
(a) The katipunan in each level shall elect a board of directors and a set of proclamation of the results. A voter may also contest the election of any barangay
officers. The president of each level shall represent the katipunan concerned in the next officer on the ground of ineligibility or of disloyalty to the Republic of the Philippines by
higher level of organization. filing a sworn petition for quo warranto with the Metropolitan or Municipal Trial Court
within 10 days after the proclamation of the results of the election. 11 Only appeals
(b) The katipunan ng mga barangay shall be composed of the katipunang from decisions of inferior courts on election matters as aforestated may be decided by
pampook, which shall in turn be composed of the presidents of the katipunang the COMELEC.
panlalawigan and the katipunang panlungsod. The presidents of the katipunang bayan
in each province shall constitute the katipunang panlalawigan. The katipunang The Court agrees with the Solicitor General that the jurisdiction of the COMELEC is
panlungsod and the katipunang bayan shall be composed of the punong barangays of over popular elections, the elected officials of which are determined through the will of
cities and municipalities, respectively. the electorate. An election is the embodiment of the popular will, the expression of the
sovereign power of the people. 12 It involves the choice or selection of candidates to
xxx xxx xxx public office by popular vote. 13 Specifically, the term "election," in the context of the
Constitution, may refer to the conduct of the polls, including the listing of voters, the
The respondent Secretary, acting in accordance with the provision of the Local holding of the electoral campaign, and the casting and counting of the votes 14 which
Government Code empowering him to "promulgate in detail the implementing circulars do not characterize the election of officers in the Katipunan ng mga barangay. "Election
and the rules and regulations to carry out the various administrative actions required contests" would refer to adversary proceedings by which matters involving the title or
for the initial implementation of this Code in such a manner as will ensure the least claim of title to an elective office, made before or after proclamation of the winner, is
disruption of on-going programs and projects 7 issued Department of Local settled whether or not the contestant is claiming the office in dispute 15 and in the case
Government Circular No. 89-09 on April 7, 1989, 8 to provide the guidelines for the of elections of barangay officials, it is restricted to proceedings after the proclamation
conduct of the elections of officers of the Katipunan ng mga Barangay at the municipal, of the winners as no pre-proclamation controversies are allowed. 16
city, provincial, regional and national levels.
The jurisdiction of the COMELEC does not cover protests over the organizational set-
It is now the contention of petitioner that neither the constitution nor the law grants up of the katipunan ng mga barangay composed of popularly elected punong
jurisdiction upon the respondent Secretary over election contests involving the election barangays as prescribed by law whose officers are voted upon by their respective
of officers of the FABC, the katipunan ng mga barangay at the provincial level. It is members. The COMELEC exercises only appellate jurisdiction over election contests
petitioner's theory that under Article IX, C, Section 2 of the 1987 Constitution, it is the involving elective barangay officials decided by the Metropolitan or Municipal Trial
Commission on Elections which has jurisdiction over all contests involving elective Courts which likewise have limited jurisdiction. The authority of the COMELEC over the
barangay officials. katipunan ng mga barangay is limited by law to supervision of the election of the
representative of the katipunan concerned to the sanggunian in a particular level
On the other hand, it is the opinion of the respondent Secretary that any violation of the conducted by their own respective organization. 17
guidelines as set forth in said circular would be a ground for filing a protest and would
vest upon the Department jurisdiction to resolve any protest that may be filed in relation However, the Secretary of Local Government is not vested with jurisdiction to entertain
thereto. any protest involving the election of officers of the FABC.

Under Article IX, C, Section 2(2) of the 1987 Constitution, the Commission on Elections There is no question that he is vested with the power to promulgate rules and
shall exercise "exclusive original jurisdiction over all contests relating to the elections, regulations as set forth in Section 222 of the Local Government Code.
returns, and qualifications of all elective regional, provincial, and city officials, and
appellate jurisdiction over all contests involving elective municipal officials decided by Likewise, under Book IV, Title XII, Chapter 1, See. 3(2) of the Administrative Code of
trial courts of general jurisdiction, or involving elective barangay officials decided by trial 1987, ** the respondent Secretary has the power to "establish and prescribe rules,
courts of limited jurisdiction." The 1987 Constitution expanded the jurisdiction of the regulations and other issuances and implementing laws on the general supervision of
COMELEC by granting it appellate jurisdiction over all contests involving elective local government units and on the promotion of local autonomy and monitor compliance
municipal officials decided by trial courts of general jurisdiction or elective barangay thereof by said units."
officials decided by trial courts of limited jurisdiction. 9
Also, the respondent Secretary's rule making power is provided in See. 7, Chapter II,
The jurisdiction of the COMELEC over contests involving elective barangay officials is Book IV of the Administrative Code, to wit:
limited to appellate jurisdiction from decisions of the trial courts. Under the law, 10 the
WEEK 3 ADMIN

(3) Promulgate rules and regulations necessary to carry out department elections to be conducted be presided by the Regional Director is a clear and direct
objectives, policies, functions, plans, programs and projects; interference by the Department with the political affairs of the barangays which is not
permitted by the limitation of presidential power to general supervision over local
Thus, DLG Circular No. 89-09 was issued by respondent Secretary in pursuance of his governments. 27
rule-making power conferred by law and which now has the force and effect of law. 18
Indeed, it is the policy of the state to ensure the autonomy of local governments. 28
Now the question that arises is whether or not a violation of said circular vests This state policy is echoed in the Local Government Code wherein it is declared that
jurisdiction upon the respondent Secretary, as claimed by him, to hear a protest filed in "the State shall guarantee and promote the autonomy of local government units to
relation thereto and consequently declare an election null and void. ensure their fullest development as self-reliant communities and make them more
effective partners in the pursuit of national development and social progress." 29 To
It is a well-settled principle of administrative law that unless expressly empowered, deny the Secretary of Local Government the power to review the regularity of the
administrative agencies are bereft of quasi- judicial powers. 19 The jurisdiction of elections of officers of the katipunan would be to enhance the avowed state policy of
administrative authorities is dependent entirely upon the provisions of the statutes promoting the autonomy of local governments.
reposing power in them; they cannot confer it upon themselves. 20 Such jurisdiction is
essential to give validity to their determinations. 21 Moreover, although the Department is given the power to prescribe rules, regulations
and other issuances, the Administrative Code limits its authority to merely "monitoring
There is neither a statutory nor constitutional provision expressly or even by necessary compliance" by local government units of such issuances. 30 To monitor means "to
implication conferring upon the Secretary of Local Government the power to assume watch, observe or check. 31 This is compatible with the power of supervision of the
jurisdiction over an election protect involving officers of the katipunan ng mga barangay. Secretary over local governments which as earlier discussed is limited to checking
An understanding of the extent of authority of the Secretary over local governments is whether the local government unit concerned or the officers thereof perform their duties
therefore necessary if We are to resolve the issue at hand. as provided by statutory enactments. Even the Local Government Code which grants
the Secretary power to issue implementing circulars, rules and regulations is silent as
Presidential power over local governments is limited by the Constitution to the exercise to how these issuances should be enforced. Since the respondent Secretary exercises
of general supervision 22 "to ensure that local affairs are administered according to only supervision and not control over local governments, it is truly doubtful if he could
law." 23 The general supervision is exercised by the President through the Secretary enforce compliance with the DLG Circular. 32 Any doubt therefore as to the power of
of Local Government. 24 the Secretary to interfere with local affairs should be resolved in favor of the greater
autonomy of the local government.
In administrative law, supervision means overseeing or the power or authority of an
officer to see that the subordinate officers perform their duties. If the latter fails or Thus, the Court holds that in assuming jurisdiction over the election protest filed by
neglects to fulfill them the former may take such action or step as prescribed by law to respondent Governor and declaring the election of the officers of the FABC on June
make them perform their duties. Control, on the other hand, means the power of an 18, 1989 as null and void, the respondent Secretary acted in excess of his jurisdiction.
officer to alter or modify or nullify or set aside what a subordinate officer had done in The respondent Secretary not having the jurisdiction to hear an election protest
the performance of his duties and to substitute the judgment of the former for that of involving officers of the FABC, the recourse of the parties is to the ordinary courts. The
the latter. The fundamental law permits the Chief Executive to wield no more authority Regional Trial Courts have the exclusive original jurisdiction to hear the protest. 33
than that of checking whether said local government or the officers thereof perform their
duties as provided by statutory enactments. Hence, the President cannot interfere with The provision in DLG Circular No. 89-15 amending DLG Circular No. 89-09 which
local governments so long as the same or its officers act within the scope of their states that "whenever the guidelines are not substantially complied with, the election
authority. 25 Supervisory power, when contrasted with control, is the power of mere shall be declared null and void by the Department of Local Government and an election
oversight over an inferior body; it does not include any restraining authority over such shall conduct and being invoked by the Solicitor General cannot be applied. DLG
body. 26 Circular No. 89-15 was issued on July 3, 1989 after the June 18, 1989 elections of the
FABC officers and it is the rule in statutory construction that laws, including circulars
Construing the constitutional limitation on the power of general supervision of the and regulations 34 cannot be applied retrospectively. 35 Moreover, such provision is
President over local governments, We hold that respondent Secretary has no authority null and void for having been issued in excess of the respondent Secretary's
to pass upon the validity or regularity of the election of the officers of the katipunan. To jurisdiction, inasmuch as an administrative authority cannot confer jurisdiction upon
allow respondent Secretary to do so will give him more power than the law or the itself.
Constitution grants. It will in effect give him control over local government officials for it
will permit him to interfere in a purely democratic and non-partisan activity aimed at As regards the second issue raised by petitioner, the Court finds that respondent
strengthening the barangay as the basic component of local governments so that the Governor has the personality to file the protest. Under Section 205 of the Local
ultimate goal of fullest autonomy may be achieved. In fact, his order that the new Government Code, the membership of the sangguniang panlalawigan consists of the
WEEK 3 ADMIN

governor, the vice-governor, elective members of the said sanggunian and the The Court therefore finds that the election of officers of the FABC held on June 18,
presidents of the katipunang panlalawigan and the kabataang barangay provincial 1989 is null and void for failure to comply with the provisions of DLG Circular No. 89-
federation. The governor acts as the presiding officer of the sangguniang panlalawigan. 09.
36
Meanwhile, pending resolution of this petition, petitioner filed a supplemental petition
As presiding officer of the sagguniang panlalawigan, the respondent governor has an alleging that public respondent Local Government Secretary, in his memorandum dated
interest in the election of the officers of the FABC since its elected president becomes June 7, 1990, designated Augusto Antonio as temporary representative of the
a member of the assembly. If the president of the FABC assumes his presidency under Federation to the sangguniang panlalawigan of Catanduanes. 41 By virtue of this
questionable circumstances and is allowed to sit in the sangguniang panlalawigan the memorandum, respondent governor swore into said office Augusto Antonio on June
official actions of the sanggunian may be vulnerable to attacks as to their validity or 14, 1990. 42
legality. Hence, respondent governor is a proper party to question the regularity of the
elections of the officers of the FABC. The Solicitor General filed his comment on the supplemental petition 43 as required by
the resolution of the Court dated September 13,1990.
As to the third issue raised by petitioner, the Court has already ruled that the respondent
Secretary has no jurisdiction to hear the protest and nullify the elections. In his comment, the Solicitor General dismissed the supervening event alleged by
petitioner as something immaterial to the petition. He argues that Antonio's appointment
Nevertheless, the Court holds that the issue of the validity of the elections should now was merely temporary "until such time that the provincial FABC president in that
be resolved in order to prevent any unnecessary delay that may result from the province has been elected, appointed and qualified." 44 He stresses that Antonio's
commencement of an appropriate action by the parties. appointment was only a remedial measure designed to cope with the problems brought
about by the absence of a representative of the FABC to the "sanggunian ang
The elections were declared null and void primarily for failure to comply with Section panlalawigan."
2.4 of DLG Circular No. 89-09 which provides that "the incumbent FABC President or
the Vice-President shall preside over the reorganizational meeting, there being a Sec. 205 (2) of the Local Government Code (B.P. Blg. 337) provides-
quorum." The rule specifically provides that it is the incumbent FABC President or Vice-
President who shall preside over the meeting. The word "shall" should be taken in its (2) The sangguniang panlalawigan shall be composed of the governor, the vice-
ordinary signification, i.e., it must be imperative or mandatory and not merely governor, elective members of the said sanggunian and the presidents of the
permissive, 37 as the rule is explicit and requires no other interpretation. If it had been katipunang panlalawigan and the kabataang barangay provincial federation who shall
intended that any other official should preside, the rules would have provided so, as it be appointed by the President of the Philippines. (Emphasis supplied.)
did in the elections at the town and city levels 38 as well as the regional level.. 39
Batas Pambansa Blg. 51, under Sec. 2 likewise states:
It is admitted that neither the incumbent FABC President nor the Vice-President
presided over the meeting and elections but Alberto P. Molina, Jr., the Chairman of the xxx xxx xxx
Board of Election Supervisors/Consultants. Thus, there was a clear violation of the
aforesaid mandatory provision. On this ground, the elections should be nullified. The sangguniang panlalawigan of each province shall be composed of the governor as
chairman and presiding officer, the vice-governor as presiding officer pro tempore, the
Under Sec. 2.3.2.7 of the same circular it is provided that a Board of Election elective sangguniang panlalawigan members, and the appointive members consisting
Supervisors/Consultants shall be constituted to oversee and/or witness the canvassing of the president of the provincial association of barangay councils, and the president of
of votes and proclamation of winners. The rules confine the role of the Board of Election the provincial federation of the kabataang barangay. (Emphasis supplied.)
Supervisors/Consultants to merely overseeing and witnessing the conduct of elections.
This is consistent with the provision in the Local Government Code limiting the authority In Ignacio vs. Banate Jr. 45 the Court, interpreting similarly worded provisions of Batas
of the COMELEC to the supervision of the election. 40 Pambansa Blg. 337 and Batas Pambansa Blg. 51 on the composition of the
sangguniang panlungsod, 46 declared as null and void the appointment of private
In case at bar, PGOO Molina, the Chairman of the Board, presided over the elections. respondent Leoncio Banate Jr. as member of the Sangguniang Panlungsod of the City
There was direct participation by the Chairman of the Board in the elections contrary to of Roxas representing the katipunang panlungsod ng mga barangay for he lacked the
what is dictated by the rules. Worse, there was no Board of Election Supervisors to elegibility and qualification required by law, not being a barangay captain and for not
oversee the elections in view of the walk out staged by its two other members, the having been elected president of the association of barangay councils. The Court held
Provincial COMELEC Supervisor and the Provincial Treasurer. The objective of that an unqualified person cannot be appointed a member of the sanggunian, even in
keeping the election free and honest was therefore compromised. an acting capacity. In Reyes vs. Ferrer, 47 the appointment of Nemesio L. Rasgo Jr.
as representative of the youth sector to the sangguniang panlungsod of Davao City was
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declared invalid since he was never the president of the kabataang barangay city
federation as required by Sec. 173, Batas Pambansa Blg. 337.

In the present controversy involving the sangguniang panlalawigan, the law is likewise
explicit. To be appointed by the President of the Philippines to sit in the sangguniang
panlalawigan is the president of the katipunang panlalawigan. The appointee must
meet the qualifications set by law. 48 The appointing power is bound by law to comply
with the requirements as to the basic qualifications of the appointee to the sangguniang
panlalawigan. The President of the Philippines or his alter ego, the Secretary of Local
Government, has no authority to appoint anyone who does not meet the minimum
qualification to be the president of the federation of barangay councils.

Augusto Antonio is not the president of the federation. He is a member of the federation
but he was not even present during the elections despite notice. The argument that
Antonio was appointed as a remedial measure in the exigency of the service cannot be
sustained. Since Antonio does not meet the basic qualification of being president of the
federation, his appointment to the sangguniang panlalawigan is not justified
notwithstanding that such appointment is merely in a temporary capacity. If the intention
of the respondent Secretary was to protect the interest of the federation in the
sanggunian, he should have appointed the incumbent FABC President in a hold-over
capacity. For even under the guidelines, the term of office of officers of the katipunan
at all levels shall be from the date of their election until their successors shall have been
duly elected and qualified, without prejudice to the terms of their appointments as
members of the sanggunian to which they may be correspondingly appointed. 49 Since
the election is still under protest such that no successor of the incumbent has as yet
qualified, the respondent Secretary has no choice but to have the incumbent FABC
President sit as member of the sanggunian. He could even have appointed petitioner
since he was elected the president of the federation but not Antonio. The appointment
of Antonio, allegedly the protege of respondent Governor, gives credence to petitioner's
charge of political interference by respondent Governor in the organization. This should
not be allowed. The barangays should be insulated from any partisan activity or political
intervention if only to give true meaning to local autonomy.

WHEREFORE, the petition is GRANTED in that the resolution of respondent Secretary

The election of the officials of the ABC Federation held on June 18, 1989 is hereby
annulled. A new election of officers of the federation is hereby ordered to be conducted
immediately in accordance with the governing rules and regulations.

The Supplemental petition is hereby GRANTED. The appointment of Augusto Antonio

No costs.

SO ORDERED.
WEEK 3 ADMIN

3. SOLID HOMES v. PAYAWAL In holding that the trial court had jurisdiction, the respondent court referred to Section
41 of PD No. 957 itself providing that:
G.R. No. 84811 August 29, 1989
SEC. 41. Other remedies.-The rights and remedies provided in this Decree
SOLID HOMES, INC., petitioner, shall be in addition to any and all other rights and remedies that may be available under
vs. existing laws.
TERESITA PAYAWAL and COURT OF APPEALS, respondents.
and declared that "its clear and unambiguous tenor undermine(d) the (petitioner's)
pretension that the court a quo was bereft of jurisdiction." The decision also dismissed
the contrary opinion of the Secretary of Justice as impinging on the authority of the
CRUZ, J.: courts of justice. While we are disturbed by the findings of fact of the trial court and the
respondent court on the dubious conduct of the petitioner, we nevertheless must
We are asked to reverse a decision of the Court of Appeals sustaining the jurisdiction sustain it on the jurisdictional issue.
of the Regional Trial Court of Quezon City over a complaint filed by a buyer, the herein
private respondent, against the petitioner, for delivery of title to a subdivision lot. The The applicable law is PD No. 957, as amended by PD No. 1344, entitled "Empowering
position of the petitioner, the defendant in that action, is that the decision of the trial the National Housing Authority to Issue Writs of Execution in the Enforcement of Its
court is null and void ab initio because the case should have been heard and decided Decisions Under Presidential Decree No. 957." Section 1 of the latter decree provides
by what is now called the Housing and Land Use Regulatory Board. as follows:

The complaint was filed on August 31, 1982, by Teresita Payawal against Solid Homes, SECTION 1. In the exercise of its function to regulate the real estate trade and business
Inc. before the Regional Trial Court of Quezon City and docketed as Civil Case No. Q- and in addition to its powers provided for in Presidential Decree No. 957, the National
36119. The plaintiff alleged that the defendant contracted to sell to her a subdivision lot Housing Authority shall have exclusive jurisdiction to hear and decide cases of the
in Marikina on June 9, 1975, for the agreed price of P 28,080.00, and that by September following nature:
10, 1981, she had already paid the defendant the total amount of P 38,949.87 in
monthly installments and interests. Solid Homes subsequently executed a deed of sale A. Unsound real estate business practices;
over the land but failed to deliver the corresponding certificate of title despite her
repeated demands because, as it appeared later, the defendant had mortgaged the B. Claims involving refund and any other claims filed by subdivision lot or
property in bad faith to a financing company. The plaintiff asked for delivery of the title condominium unit buyer against the project owner, developer, dealer, broker or
to the lot or, alternatively, the return of all the amounts paid by her plus interest. She salesman; and
also claimed moral and exemplary damages, attorney's fees and the costs of the suit.
C. Cases involving specific performance of contractuala statutory obligations
Solid Homes moved to dismiss the complaint on the ground that the court had no filed by buyers of subdivision lot or condominium unit against the owner, developer,
jurisdiction, this being vested in the National Housing Authority under PD No. 957. The dealer, broker or salesman. (Emphasis supplied.)
motion was denied. The defendant repleaded the objection in its answer, citing Section
3 of the said decree providing that "the National Housing Authority shall have exclusive The language of this section, especially the italicized portions, leaves no room for doubt
jurisdiction to regulate the real estate trade and business in accordance with the that "exclusive jurisdiction" over the case between the petitioner and the private
provisions of this Decree." After trial, judgment was rendered in favor of the plaintiff and respondent is vested not in the Regional Trial Court but in the National Housing
the defendant was ordered to deliver to her the title to the land or, failing this, to refund Authority. 3
to her the sum of P 38,949.87 plus interest from 1975 and until the full amount was
paid. She was also awarded P 5,000.00 moral damages, P 5,000.00 exemplary The private respondent contends that the applicable law is BP No. 129, which confers
damages, P 10,000.00 attorney's fees, and the costs of the suit. 1 on regional trial courts jurisdiction to hear and decide cases mentioned in its Section
19, reading in part as follows:
Solid Homes appealed but the decision was affirmed by the respondent court, 2 which
also berated the appellant for its obvious efforts to evade a legitimate obligation, SEC. 19. Jurisdiction in civil cases.-Regional Trial Courts shall exercise exclusive
including its dilatory tactics during the trial. The petitioner was also reproved for its "gall" original jurisdiction:
in collecting the further amount of P 1,238.47 from the plaintiff purportedly for realty
taxes and registration expenses despite its inability to deliver the title to the land. (1) In all civil actions in which the subject of the litigation is incapable of pecuniary
estimation;
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(2) In all civil actions which involve the title to, or possession of, real property, or
any interest therein, except actions for forcible entry into and unlawful detainer of lands Such claim for damages which the subdivision/condominium buyer may have against
or buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts, the owner, developer, dealer or salesman, being a necessary consequence of an
Municipal Trial Courts, and Municipal Circuit Trial Courts; adjudication of liability for non-performance of contractual or statutory obligation, may
be deemed necessarily included in the phrase "claims involving refund and any other
xxx xxx xxx claims" used in the aforequoted subparagraph C of Section 1 of PD No. 1344. The
phrase "any other claims" is, we believe, sufficiently broad to include any and all claims
which are incidental to or a necessary consequence of the claims/cases specifically
included in the grant of jurisdiction to the National Housing Authority under the subject
(8) In all other cases in which the demand, exclusive of interest and cost or the provisions.
value of the property in controversy, amounts to more than twenty thousand pesos (P
20,000.00). The same may be said with respect to claims for attorney's fees which are recoverable
either by agreement of the parties or pursuant to Art. 2208 of the Civil Code (1) when
It stresses, additionally, that BP No. 129 should control as the later enactment, having exemplary damages are awarded and (2) where the defendant acted in gross and
been promulgated in 1981, after PD No. 957 was issued in 1975 and PD No. 1344 in evident bad faith in refusing to satisfy the plaintiff 's plainly valid, just and demandable
1978. claim.

This construction must yield to the familiar canon that in case of conflict between a xxx xxx xxx
general law and a special law, the latter must prevail regardless of the dates of their
enactment. Thus, it has been held that- Besides, a strict construction of the subject provisions of PD No. 1344 which would
deny the HSRC the authority to adjudicate claims for damages and for damages and
The fact that one law is special and the other general creates a presumption that the for attorney's fees would result in multiplicity of suits in that the subdivision
special act is to be considered as remaining an exception of the general act, one as a condominium buyer who wins a case in the HSRC and who is thereby deemed entitled
general law of the land and the other as the law of the particular case. 4 to claim damages and attorney's fees would be forced to litigate in the regular courts
for the purpose, a situation which is obviously not in the contemplation of the law.
xxx xxx xxx (Emphasis supplied.) 7

The circumstance that the special law is passed before or after the general act does As a result of the growing complexity of the modern society, it has become necessary
not change the principle. Where the special law is later, it will be regarded as an to create more and more administrative bodies to help in the regulation of its ramified
exception to, or a qualification of, the prior general act; and where the general act is activities. Specialized in the particular fields assigned to them, they can deal with the
later, the special statute will be construed as remaining an exception to its terms, unless problems thereof with more expertise and dispatch than can be expected from the
repealed expressly or by necessary implication. 5 legislature or the courts of justice. This is the reason for the increasing vesture of quasi-
legislative and quasi-judicial powers in what is now not unreasonably called the fourth
It is obvious that the general law in this case is BP No. 129 and PD No. 1344 the special department of the government.
law.
Statutes conferring powers on their administrative agencies must be liberally construed
The argument that the trial court could also assume jurisdiction because of Section 41 to enable them to discharge their assigned duties in accordance with the legislative
of PD No. 957, earlier quoted, is also unacceptable. We do not read that provision as purpose. 8 Following this policy in Antipolo Realty Corporation v. National Housing
vesting concurrent jurisdiction on the Regional Trial Court and the Board over the Authority, 9 the Court sustained the competence of the respondent administrative body,
complaint mentioned in PD No. 1344 if only because grants of power are not to be in the exercise of the exclusive jurisdiction vested in it by PD No. 957 and PD No. 1344,
lightly inferred or merely implied. The only purpose of this section, as we see it, is to to determine the rights of the parties under a contract to sell a subdivision lot.
reserve. to the aggrieved party such other remedies as may be provided by existing
law, like a prosecution for the act complained of under the Revised Penal Code. 6 It remains to state that, contrary to the contention of the petitioner, the case of Tropical
Homes v. National Housing Authority 10 is not in point. We upheld in that case the
On the competence of the Board to award damages, we find that this is part of the constitutionality of the procedure for appeal provided for in PD No. 1344, but we did not
exclusive power conferred upon it by PD No. 1344 to hear and decide "claims involving rule there that the National Housing Authority and not the Regional Trial Court had
refund and any other claims filed by subdivision lot or condominium unit buyers against exclusive jurisdiction over the cases enumerated in Section I of the said decree. That
the project owner, developer, dealer, broker or salesman." It was therefore erroneous is what we are doing now.
for the respondent to brush aside the well-taken opinion of the Secretary of Justice that-
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It is settled that any decision rendered without jurisdiction is a total nullity and may be
struck down at any time, even on appeal before this Court. 11 The only exception is
where the party raising the issue is barred by estoppel, 12 which does not appear in
the case before us. On the contrary, the issue was raised as early as in the motion to
dismiss filed in the trial court by the petitioner, which continued to plead it in its answer
and, later, on appeal to the respondent court. We have no choice, therefore,
notwithstanding the delay this decision will entail, to nullify the proceedings in the trial
court for lack of jurisdiction.

WHEREFORE, the challenged decision of the respondent court is REVERSED and the
decision of the Regional Trial Court of Quezon City in Civil Case No. Q-36119 is SET
ASIDE, without prejudice to the filing of the appropriate complaint before the Housing
and Land Use Regulatory Board. No costs.

SO ORDERED.