Admin Judicial Review Cases

8/9/2019 Admin Judicial Review Cases

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[G.R. No. L-63558. May 19, 1987.]

SPOUSES JOSE ABEJO AND AURORA ABEJO, TELECTRONIC SYSTEMS,INC., petitioners , vs. HON. RAFAEL DE LA CRUZ, JUDGE OF THE REGIONAL TRIALCOURT (NATIONAL CAPITAL JUDICIAL REGION, BRANCH CLX-PASIG), SPOUSES AGAPITO BRAGA AND VIRGINIA BRAGA, VIRGILIO BRAGA AND NORBERTOBRAGA, respondents .

[G.R. Nos. L-68450-51. May 19, 1987.]

POCKET BELL PHILIPPINES, INC., AGAPITO T. BRAGA, VIRGILIO T. BRAGA,NORBERTO BRAGA, and VIRGINIA BRAGA, petitioners ,vs. THE HONORABLESECURITIES AND EXCHANGE COMMISSION, TELECTRONIC SYSTEMS, INC., JOSE ABEJO, JOSE LUIS SANTIAGO, SIMEON A. MIRAVITE, SR., ANDRES T. VELARDE AND L. QUIDATO BANDOLINO, respondents .

D E C I S I O N

TEEHANKEE, C.J p:

These two cases, jointly heard, are jointly herein decided. They involve the question of who, between theRegional Trial Court and the Securities and Exchange Commission (SEC), has original and exclusive

jurisdiction over the dispute between the principal stockholders of the corporation Pocket Bell Philippines,Inc. (Pocket Bell), a "tone and voice paging corporation," namely, the spouses Jose Abejo and Aurora Abejo(hereinafter referred to as the Abejos) and the purchaser, Telectronic Systems, Inc. (hereinafter referred toas Telectronics) of their 133,000 minority shareholdings (for P5 million) and of 63,000 shares registered in the

name of Virginia Braga and covered by five stock certificates endorsed in blank by her (for P1,674,450.00),and the spouses Agapito Braga and Virginia Braga (hereinafter referred to as the Bragas), erstwhile majoritystockholders. With the said purchases, Telectronics would become the majority stockholder, holding 56% ofthe outstanding stock and voting power of the corporation Pocket Bell.

With the said purchases in 1982, Telectronics requested the corporate secretary of the corporation, NorbertoBraga, to register and transfer to its name, and those of its nominees the total 196,000 Pocket Bell shares inthe corporation's transfer book, cancel the surrendered certificates of stock and issue the corresponding newcertificates of stock in its name and those of its nominees.

Norberto Braga, the corporate secretary and son of the Bragas, refused to register the aforesaid transfer of

shares in the corporate books, asserting that the Bragas claim pre-emptive rights over the 133,000 Abejoshares and that Virginia Braga never transferred her 63,000 shares to Telectronics but had lost the five stockcertificates representing those shares.

This triggered off the series of intertwined actions between the protagonists, all centered on the question of jurisdiction over the dispute, which were to culminate in the filing of the two cases at bar.

The Bragas assert that the regular civil court has original and exclusive jurisdiction as against the Securitiesand Exchange Commission, while the Abejos claim the contrary. A summary of the actions resorted to by theparties follows:


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A. ABEJOS' ACTIONS IN SEC

1.The Abejos and Telectronics and the latter's nominees, as new majority shareholders, filed SEC Cases Nos.02379 and 02395 against the Bragas on December 17, 1982 and February 14, 1983, respectively.

2.In SEC Case No. 02379, they prayed for mandamus from the SEC ordering Norberto Braga, as corporatesecretary of Pocket Bell to register in their names the transfer and sale of the aforesaid 196,000 Pocket Bell

shares (of the Abejos 1 and Virginia Braga 2 , cancel the surrendered certificates as duly endorsed and toissue new certificates in their names.

3.In SEC Case No. 02395, they prayed for injunction and a temporary restraining order that the SEC enjointhe Bragas from disbursing or disposing funds and assets of Pocket Bell and from performing such other actspertaining to the functions of corporate officers.

4.Pocket Bell's corporate secretary, Norberto Braga, filed a Motion to Dismiss the mandamus case (SEC CaseNo. 02379) contending that the SEC has no jurisdiction over the nature of the action since it does not involvean intracorporate controversy between stockholders, the principal petitioners therein, Telectronics, not beinga stockholder of record of Pocket Bell.

5.On January 8, 1983, SEC Hearing Officer Joaquin Garaygay denied the motion. On January 14, 1983, thecorporate secretary filed a Motion for Reconsideration. On March 21, 1983, SEC Hearing Officer JoaquinGaraygay issued an order granting Braga's motion for reconsideration and dismissed SEC Case No. 02379.

6.On February 11, 1983, the Bragas filed their Motion to Dismiss the injunction case, SEC Case No. 02395. On April 8, 1985, the SEC Director, Eugenio Reyes, acting upon the Abejos' ex-parte motion, created a three-mancommittee composed of Atty. Emmanuel Sison as Chairman and Attys. Alfredo Oca and Joaquin Garaygay asmembers, to hear and decide the two SEC cases (Nos. 02379 and 02395).

7.On April 13, 1983, the SEC three-man committee issued an order reconsidering the aforesaid order ofMarch 21, 1983 of the SEC Hearing Officer Garaygay (dismissing the mandamus petition SEC Case No. 02379)

and directing corporate secretary Norberto Braga to file his answer to the petitioner therein.

B.BRAGAS' ACTION IN SEC

8.On December 12, 1983, the Bragas filed a petition for certiorari, prohibition and mandamus with the SEC enbanc, SEC Case No. EB #049, seeking the dismissal of SEC Cases Nos. 02379 and 02395 for lack of

jurisdiction of the Commission and the setting aside of the various orders issued by the SEC three-mancommittee in the course of the proceedings in the two SEC cases.

9.On May 15, 1984, the SEC en banc issued an order dismissing the Bragas' petition in SEC Case No. EB #049for lack of merit and at the same time ordering the SEC Hearing Committee to continue with the hearings of

the Abejos and Telectronics SEC Cases Nos. 02379 and 02395, ruling that the "issue is not the ownership ofshares but rather the non-performance by the Corporate Secretary of the ministerial duty of recordingtransfers of shares of stock of the corporation of which he is secretary."

10.On May 15, 1984 the Bragas filed a motion for reconsideration but the SEC en banc denied the same on August 9, 1984.

C.BRAGAS' ACTION IN CFI (NOW RTC)

11.On November 25, 1982, following the corporate secretary's refusal to register the transfer of the shares inquestion, the Bragas filed a complaint against the Abejos and Telectronics in the Court of First Instance of

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Pasig, Branch 21 (now the Regional Trial Court, Branch 160) docketed as Civil Case No. 48746 for: (a)rescission and annulment of the sale of the shares of stock in Pocket Bell made by the Abejos in favor ofTelectronics on the ground that it violated the Bragas' alleged pre-emptive right over the Abejos'shareholdings and an alleged perfected contract with the Abejos to sell the same shares in their (Bragas)favor, (1st cause of action ); plus damages for bad faith; and (b) declaration of nullity of any transfer,assignment or endorsement of Virginia Bragas' stock certificates for 63,000 shares in Pocket Bell toTelectronics for want of consent and consideration, alleging that said stock certificates, which were intended

as security for a loan application and were thus endorsed by her in blank, had been lost (2nd cause ofaction ).

12.On January 4, 1983, the Abejos filed a Motion to Dismiss the complaint on the ground that it is the SECthat is vested under PD 902-A with original and exclusive jurisdiction to hear and decide cases involving,among others, controversies "between and among stockholders" and that the Bragas' suit is such acontroversy as the issues involved therein are the stockholders" alleged pre-emptive rights, the validity of thetransfer and endorsement of certificates of stock, the election of corporate officers and the management andcontrol of the corporation's operations. The dismissal motion was granted by Presiding Judge G. Pineda onJanuary 14, 1983.

13.On January 24, 1983, the Bragas filed a motion for reconsideration. The Abejos opposed. Meanwhile,respondent Judge Rafael de la Cruz was appointed presiding judge of the court (renamed Regional TrialCourt) in place of Judge G. Pineda.

14.On February 14, 1983, respondent Judge de la Cruz issued an order rescinding the January 14, 1983 orderand reviving the temporary restraining order previously issued on December 23, 1982 restraining Telectronics'agents or representatives from enforcing their resolution constituting themselves as the new set of officers ofPocket Bell and from assuming control of the corporation and discharging their functions.

15.On March 2, 1983, the Abejos filed a motion for reconsideration, which motion was duly opposed by theBragas. On March 11, 1983, respondent Judge denied the motion for reconsideration.

D. ABEJOS' PETITION AT BAR

16.On March 26, 1983, the Abejos, alleging that the acts of respondent Judge in refusing to dismiss thecomplaint despite clear lack of jurisdiction over the action and in refusing to reconsider his erroneous positionwere performed without jurisdiction and with grave abuse of discretion, filed their herein Petition forCertiorari and Prohibition with Preliminary Injunction. They prayed that the challenged orders of respondentJudge dated February 14, 1983 and March 11, 1983 be set aside for lack of jurisdiction and that he beordered to permanently desist from further proceedings in Civil Case No. 48746. Respondent judge desistedfrom further proceedings in the case, dispensing with the need of issuing any restraining order.

E.BRAGAS' PETITION AT BAR

17.On August 29, 1984, the Bragas, alleging in turn that the SEC has no jurisdiction over SEC Cases Nos.02379 and 02395 and that it acted arbitrarily, whimsically and capriciously in dismissing their petition (in SECCase No. EB #049) for dismissal of the said cases, filed their herein Petition for Certiorari and Prohibition withPreliminary Injunction or TRO. The petitioner seeks the reversal and/or setting aside of the SEC Order datedMay 15, 1984 dismissing their petition in said SEC Case No. EB #049 and sustaining its jurisdiction over SECCases Nos. 02379 and 02395, filed by the Abejos. On September 24, 1984, this Court issued a temporaryrestraining order to maintain the status quo and restrained the SEC and/or any of its officers or hearingcommittees from further proceeding with the hearings in SEC Cases Nos. 02379 and 02395 and fromenforcing any and all orders and or resolutions issued in connection with the said cases.


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The cases, having been given due course, were jointly heard by the Court on March 27, 1985 and the partiesthereafter filed on April 16, 1985 their respective memoranda in amplification of oral argument on the pointsof law that were crystallized during the hearing.

The Court rules that the SEC has original and exclusive jurisdiction over the dispute between the principal

stockholders of the corporation Pocket Bell, namely, the Abejos and Telectronics, the purchasers of the 56%majority stock (supra, at page 2) on the one hand, and the Bragas, erstwhile majority stockholders, on theother, and that the SEC, through its en banc Resolution of May 15, 1984 correctly ruled in dismissing theBragas' petition questioning its jurisdiction, that "the issue is not the ownership of shares but rather the non-performance by the Corporate Secretary of the ministerial duty of recording transfers of shares of stock of theCorporation of which he is secretary."

1.The SEC ruling upholding its primary and exclusive jurisdiction over the dispute is correctly premised on,and fully supported by, the applicable provisions of P.D. No. 902-A which reorganized the SEC with additionalpowers "in line with the government's policy of encouraging investments, both domestic and foreign, andmore active public participation in the affairs of private corporations and enterprises through which desirableactivities may be pursued for the promotion of economic development; and, to promote a wider and moremeaningful equitable distribution of wealth," and accordingly provided that:

"SEC. 3.The Commission shall have absolute jurisdiction, supervision and control over all corporations,partnerships or associations, who are the grantees of primary franchise and/or a license or permitissued by the government to operate in the Philippines; . . .

"SEC. 5.In addition to the regulatory and adjudicative functions of the Securities and ExchangeCommission over corporations, partnerships and other forms of associations registered with it asexpressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction tohear and decide cases involving:

a)Devices or schemes employed by or any acts, of the board of directors, businessassociations, its officers or partners, amounting to fraud and misrepresentation which may bedetrimental to the interest of the public and/or of the stockholder, partners, members ofassociations or organizations registered with the Commission.

b)Controversies arising out of intracorporate or partnership relations, between andamong stockholders, members, or associates; between any and/or all of them and thecorporation, partnership or association of which they are stockholders, members or associates,respectively; and between such corporation, partnership or association and the state insofaras it concerns their individual franchise or right to exist as such entity;

c)Controversies in the election or appointments of directors, trustees, officers ormanagers of such corporations, partnerships or associations." 3

Section 6 further grants the SEC "in order to effectively exercise such jurisdiction," the power, inter alia, "toissue preliminary or permanent injunctions, whetherprohibitory or mandatory, in all cases in which it has

jurisdiction, and in which cases the pertinent provisions of the Rules of Court shall apply."

2.Basically and indubitably, the dispute at bar, as held by the SEC, is an intracorporate dispute that has arisenbetween and among the principal stockholders of the corporation Pocket Bell due to the refusal of thecorporate secretary, backed up by his parents as erstwhile majority shareholders, to perform his "ministerialduty" to record the transfers of the corporation's controlling (56%) shares of stock, covered by duly endorsedcertificates of stock, in favor of Telectronics as the purchaser thereof. Mandamus in the SEC to compel thecorporate secretary to register the transfers and issue new certificates in favor of Telectronics and its

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nominees was properly resorted to under Rule XXI, Section 1 of the SEC's New Rules of Procedure, 4 whichprovides for the filing of such petitions with the SEC. Section 3 of said Rules further authorizes the SEC to"issue orders expediting the proceedings . . . and also [to] grant a preliminary injunction for the preservationof the rights of the parties pending such proceedings."

The claims of the Bragas, which they assert in their complaint in the Regional Trial Court, praying forrescission and annulment of the sale made by the Abejos in favor of Telectronics on the ground that they had

an alleged perfected pre-emptive right over the Abejos' shares as well as for annulment of sale toTelectronics of Virginia Braga's shares covered by street certificates duly endorsed by her in blank, may in noway deprive the SEC of its primary and exclusive jurisdiction to grant or not the writ of mandamus orderingthe registration of the shares so transferred. The Bragas' contention that the question of ordering therecording of the transfers ultimately hinges on the question of ownership or right thereto over the sharesnotwithstanding, the jurisdiction over the dispute is clearly vested in the SEC.

3.The very complaint of the Bragas for annulment of the sales and transfers as filed by them in the regularcourt questions the validity of the transfer and endorsement of the certificates of stock, claiming alleged pre-emptive rights in the case of the Abejos' shares and alleged loss of the certificates and lack of consent andconsideration in the case of Virginia Braga's shares. Such dispute clearly involves controversies "between andamong stockholders," as to the Abejos' right to sell and dispose of their shares to Telectronics, the validity ofthe latter's acquisition of Virginia Braga's shares, who between the Bragas and the Abejos' transferee shouldbe recognized as the controlling shareholders of the corporation, with the right to elect the corporate officersand the management and control of its operations. Such a dispute and case clearly fall within the original andexclusive jurisdiction of the SEC to decide, under Section 5 of P.D. 902-A, above-quoted. The restrainingorder issued by the Regional Trial Court restraining Telectronics agents and representatives from enforcingtheir resolution constituting themselves as the new set of officers of Pocket Bell and from assuming control ofthe corporation and discharging their functions patently encroached upon the SEC's exclusive jurisdiction oversuch specialized corporate controversies calling for its special competence. As stressed by the SolicitorGeneral on behalf of the SEC, the Court has held that "Nowhere does the law [PD 902-A] empower any Courtof First Instance [now Regional Trial Court] to interfere with the orders of the Commission," 5 andconsequently "any ruling by the trial court on the issue of ownership of the shares of stock is not binding on

the Commission" 6 for want of jurisdiction.

4.The dispute therefore clearly falls within the general classification of cases within the SEC's original andexclusive jurisdiction to hear and decide, under the aforequoted governing section 5 of the law. Insofar as theBragas and their corporate secretary's refusal on behalf of the corporation Pocket Bell to record the transferof the 56% majority shares to Telectronics may be deemed a device or scheme amounting to fraud andmisrepresentation employed by them to keep themselves in control of the corporation to the detriment ofTelectronics (as buyer and substantial investor in the corporate stock) and the Abejos (as substantialstockholders-sellers), the case falls under paragraph (a). The dispute is likewise an intra-corporatecontroversy between and among the majority and minority stockholders as to the transfer and disposition ofthe controlling shares of the corporation, falling under paragraph (b). As stressed by the Court in DMRCEnterprises v. Este del Sol Mountain Reserve, Inc., 7 "Considering the announced policy of PD 902-A, theexpanded jurisdiction of the respondent Securities and Exchange Commission under said decree extendsexclusively to matters arising from contracts involving investments in private corporations, partnerships andassociations." The dispute also concerns the fundamental issue of whether the Bragas or Telectronics havethe right to elect the corporate directors and officers and manage its business and operations, which fallsunder paragraph (c).

5.Most of the cases that have come to this Court involve those under paragraph (b), i e. whether thecontroversy is an intra-corporate one, arising "between and among stockholders" or "between any or all ofthem and the corporation." The parties have focused their arguments on this question. The Bragas'contention in his field must likewise fail. In Philex Mining Corp. v. Reyes, 8 the Court spelled out that "an

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intra-corporate controversy is one which arises between a stockholder and the corporation. There is nodistinction, qualification, nor any exemption whatsoever. The provision is broad and covers all kinds ofcontroversies between stockholders and corporations. The issue of whether or not a corporation is bound toreplace a stockholder's lost certificate of stock is a matter purely between a stockholder and the corporation.It is a typical intra-corporate dispute. The question of damages raised is merely incidental to that main issue."The Court rejected the stockholders' theory of excluding his complaint (for replacement of a lost stock[dividend] certificate which he claimed to have never received) from the classification of intra-corporate

controversies as one that "does not square with the intent of the law, which is to segregate from the general jurisdiction of regular Courts controversies involving corporations and their stockholders and to bring them tothe SEC for exclusive resolution, in much the same way that labor disputes are now brought to the Ministry ofLabor and Employment (MOLE) and the National Labor Relations Commission (NLRC), and not to the Courts."

(a)The Bragas contend that Telectronics, as buyer-transferee of the 56% majority shares is not aregistered stockholder, because they, through their son the corporate secretary, appear to haverefused to perform "the ministerial duty of recording transfers of shares of stock of the corporation ofwhich he is the secretary," and that the dispute is therefore, not an intracorporate one. Thiscontention begs the question which must properly be resolved by the SEC, but which they would

prevent by their own act, through their son, of blocking the due recording of the transfer and cannotbe sanctioned. It can be seen from their very complaint in the regular courts that they with their twosons constituting the plaintiffs are all stockholders while the defendants are the Abejos who are alsostockholders whose sale of the shares to Telectronics they would annul.

(b)There can be no question that the dispute between the Abejos and the Bragas as to the sale andtransfer of the former's shares to Telectronics for P5 million is an intracorporate one under section 5(b), prescinding from the applicability of section 5 (a) and (c), (supra, par. 4) It is the SEC which mustresolve the Bragas' claim in their own complaint in the court case filed by them of an alleged pre-emptive right to buy the Abejos' shares by virtue of "on-going negotiations," which they may submitas their defense to the mandamus petition to register the sale of the shares to Telectronics. Butasserting such pre-emptive rights and asking that the same be enforced is a far cry from the Bragas'

claim that "the case relates to questions of ownership" over the shares in question. 9 (Not to mention,as pointed out by the Abejos, that the corporation is not a close corporation, and no restriction overthe free transferability of the shares appears in the Articles of Incorporation, as well as in the by-

laws 10 and the certificates of stock themselves, as required by law for the enforcement of suchrestriction. See Go Soc & Sons, etc. v. IAC, G.R. No. 72342, Resolution of February 19, 1987.)

(c)The dispute between the Bragas and Telectronics as to the sale and transfer for P1,674,450.00 of Virginia Braga's 63.000 shares covered by Street certificates duly endorsed in blank by her is withinthe special competence and jurisdiction of the SEC, dealing as it does with the free transferability of

corporate shares, particularly street certificates, 11 as guaranteed by the Corporation Code and itsproclaimed policy of encouraging foreign and domestic investments in Philippine private corporationsand more active public participation therein for the promotion of economic development. Here again, Virginia Braga's claim of loss of her street certificates or theft thereof (denounced by Telectronics as

"perjurious" 12 ) must be pleaded by her as a defense against Telectronics' petition for mandamus andrecognition now as the controlling stockholder of the corporation in the light of the joint affidavit ofGeneral Cerefino S. Carreon of the National Telecommunications Commission and private respondentJose Luis Santiago of Telectronics narrating the facts and circumstances of how the former sold anddelivered to Telectronics on behalf of his compadres, the Bragas, Virginia Braga's street certificates for63,000 shares equivalent to 18% of the corporation's outstanding stock and received the cash price

thereof. 13 But as to the sale and transfer of the Abejos' shares, the Bragas cannot oust the SEC of itsoriginal and exclusive jurisdiction to hear and decide the case, by blocking through the corporatesecretary, their son, the due recording of the transfer and sale of the shares in question and claimingthat Telectronics is not a stockholder of the corporation — which is the very issue that the SEC iscalled upon to resolve. As the SEC maintains, "There is no requirement that a stockholder of acorporation must be a registered one in order that the Securities and Exchange Commission may take

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cognizance of a suit seeking to enforce his rights as such stockholder." 14 This is because the SEC byexpress mandate has "absolute jurisdiction, supervision and control over all corporations" and is calledupon to enforce the provisions of the Corporation Code, among which is the stock purchaser's right tosecure the corresponding certificate in his name under the provisions of Section 63 of the Code.Needless to say, any problem encountered in securing the certificates of stock representing theinvestment made by the buyer must be expeditiously dealt with through administrative mandamusproceedings with the SEC, rather than through the usual tedious regular court procedure.Furthermore, as stated in the SEC order of April 13, 1983, notice given to the corporation of the sale

of the shares and presentation of the certificates for transfer is equivalent to registration: "Whetherthe refusal of the (corporation) to effect the same is valid or not is still subject to the outcome of thehearing on the merits of the case." 15

6.In the fifties, the Court taking cognizance of the move to vest jurisdiction in administrative commissions andboards the power to resolve specialized disputes in the field of labor (as in corporations, public transportationand public utilities) ruled that Congress in requiring the Industrial Court's intervention in the resolution oflabor-management controversies likely to cause strikes or lockouts meant such jurisdiction to be exclusive,although it did not so expressly state in the law. The Court held that under the "sense-making andexpeditious doctrine of primary jurisdiction ..the courts cannot or will not determine a controversy involving aquestion which is within the jurisdiction of an administrative tribunal, where the question demands theexercise of sound administrative discretion requiring the special knowledge, experience, and services of theadministrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling isessential to comply with the purposes of the regulatory statute administered ." 16

In this era of clogged court dockets, the need for specialized administrative boards or commissions with thespecial knowledge, experience and capability to hear and determine promptly disputes on technical matters oressentially factual matters, subject to judicial review in case of grave abuse of discretion, has become wellnigh indispensable. Thus, in 1984, the Court noted that "between the power lodged in an administrative bodyand a court, the unmistakable trend has been to refer it to the former. 'Increasingly, this Court has beencommitted to the view that unless the law speaks clearly and unequivocably, the choice should fall on [anadministrative agency.]'" 17 The Court in the earlier case of Ebon vs. De Guzman , 18 noted that the lawmakingauthority, in restoring to the labor arbiters and the NLRC their jurisdiction to award all kinds of damages in

labor cases, as against the previous P.D. amendment splitting their jurisdiction with the regular courts,"evidently, . . . had second thoughts about depriving the Labor Arbiters and the NLRC of the jurisdiction toaward damages in labor cases because that setup would mean duplicity of suits, splitting the cause of actionand possible conflicting findings and conclusions by two tribunals on one and the same claim."

7.Thus, the Corporation Code (B.P. No. 178) enacted on May 1, 1980 specifically vests the SEC with the Rulemaking power in the discharge of its task of implementing the provisions of the Code and particularly chargesit with the duty of preventing fraud and abuses on the part of controlling stockholders, directors and officers,as follows:

"SEC. 143.Rule-making power of the Securities and Exchange Commission. — The Securities andExchange Commission shall have the power and authority to implement the provisions of this Code,and to promulgate rules and regulations reasonably necessary to enable it to perform its dutieshereunder, particularly in the prevention of fraud and abuses on the part of the controllingstockholders, members, directors, trustees or officers." (Emphasis supplied)

The dispute between the contending parties for control of the corporation manifestly falls within the primaryand exclusive jurisdiction of the SEC in whom the law has reserved such jurisdiction as an administrativeagency of special competence to deal promptly and expeditiously therewith.

As the Court stressed in Union Glass & Container Corp. v. SEC, 19 "This grant of jurisdiction [in Section 5]must be viewed in the light of the nature and functions of the SEC under the law. Section 3 of PD No. 902-Aconfers upon the latter 'absolute jurisdiction, supervision, and control over all corporations, partnerships or

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associations, who are grantees of primary franchise and/or license or permit issued by the government tooperate in the Philippines . . ..' The principal function of the SEC is the supervision and control overcorporations, partnerships and associations with the end in view that investment in these entities may beencouraged and protected, and their activities pursued for the promotion of economic development.

"It is in aid of this office that the adjudicative power of the SEC must be exercised. Thus the lawexplicitly specified and delimited its jurisdiction to matters intrinsically connected with the regulation ofcorporations, partnerships and associations and those dealing with the internal affairs of suchcorporations, partnerships or associations.

"Otherwise stated, in order that the SEC can take cognizance of a case, the controversy must pertainto any of the following relationships: [a] between the corporation, partnership or association and thepublic; [b] between the corporation, partnership or association and its stockholders, partners,members, or officers; [c] between the corporation, partnership or association and the state in so faras its franchise, permit or license to operate is concerned; and [d] among the stockholders, partnersor associates themselves." 20

Parenthetically, the cited case of Union Glass illustrates by way of contrast what disputes do not fall withinthe special jurisdiction of the SEC. In this case, the SEC had properly assumed jurisdiction over the dissentingstockholders' complaint against the corporation Pioneer Glass questioning its dacion en pago of its glass plantand all its assets in favor of the DBP which was clearly an intra-corporate controversy dealing with its internalaffairs. But the Court held that the SEC had no jurisdiction over petitioner Union Glass Corp., impleaded asthird party purchaser of the plant from DBP in the action to annul the dacion en pago. The Court held thatsuch action for recovery of the glass plant could be brought by the dissenting stockholder to the regularcourts only if and when the SEC rendered final judgment annulling the dacion en pago and furthermoresubject to Union Glass' defenses as a third party buyer in good faith. Similarly, in the DMRC case, thereinpetitioner's complaint for collection of the amounts due to it as payment of rentals for the lease of its heavyequipment in the form mainly of cash and part in shares of stock of the debtor-defendant corporation washeld to be not covered by the SEC's exclusive jurisdiction over intracorporate disputes, since "to pass upon a

money claim under a lease contract would be beyond the competence of the Securities and ExchangeCommission and to separate the claim for money from the claim for shares of stock would be splitting a singlecause of action resulting in a multiplicity of suits." 21 Such an action for collection of a debt does not involveenforcement of rights and obligations under the Corporation Code nor the internal or intracorporate affairs ofthe debtor corporation. But in all disputes affecting and dealing with the interests of the corporation and itsstockholders, following the trend and clear legislative intent of entrusting all disputes of a specialized natureto administrative agencies possessing the requisite competence, special knowledge, experience and servicesand facilities to expeditiously resolve them and determine the essential facts including technical and intricatematters, as in labor and public utilities rates disputes, the SEC has been given "the original and exclusive

jurisdiction to hear and decide" them (under Section 5 of P.D. 902-A) "in addition to [its] regulatory andadjudicative functions" (under Section 3, vesting in it "absolute jurisdiction, supervision and control over allcorporations" and the Ruler-making power granted it in Section 143 of the Corporation Code, supra ). Asstressed by the Court in thePhilex case, supra, "(T)here is no distinction, qualification, nor any exemptionwhatsoever. The provision is broad and covers all kinds of controversies between stockholders andcorporations."

It only remains now to deal with the Order dated April 15, 1983 (Annex H, Petition) 22 of the SEC's three-member Hearing Committee granting Telectronics' motion for creation of a receivership or managementcommittee with the ample powers therein enumerated for the preservation pendente lite of the corporation'sassets and in discharge of its "power and duty to preserve the rights of the parties, the stockholders, thepublic availing of the corporation's services and the rights of creditors," as well as 'for reasons of equity and

justice .. (and) to prevent possible paralization of corporate business." The said Order has not been

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implemented notwithstanding its having been upheld per the SEC en banc's Order of May 15, 1984 (Annex"V", Petition) dismissing for lack of merit the petition for certiorari, prohibition and mandamus with prayer forrestraining order or injunction filed by the Bragas seeking the disbandment of the Hearing Committee and thesetting aside of its Orders, and its Resolution of August 9, 1984, denying reconsideration (Annex "X",Petition), due to the Bragas' filing of the petition at bar.

Prescinding from the great concern of damage and prejudice expressed by Telectronics due to the Bragas

having remained in control of the corporation and having allegedly committed acts of gross mismanagementand misapplication of funds, the Court finds that under the facts and circumstances of record, it is but fairand just that the SEC's order creating a receivership committee be implemented forthwith, in accordance withits terms, as follows:

"The three-man receivership committee shall be composed of a representative from the commission,in the person of the Director, Examiners and Appraisers Department or his designated representative,and a representative from the petitioners and a representative of the respondent.

"The petitioners and respondent are therefore directed to submit to the Commission the name of theirdesignated representative within three (3) days from receipt of this order. The Commission shallappoint the other representatives if either or both parties fail to comply with the requirement within

the stated time."

ACCORDINGLY, judgment is hereby rendered:

(a)Granting the petition in G.R. No. 63558, annulling the challenged Orders of respondent Judge datedFebruary 14, 1983 and March 11, 1983 (Annexes "L" and "P" of the Abejos' petition) and prohibitingrespondent Judge from further proceeding in Civil Case No. 48746 filed in his Court other than todismiss the same for lack or jurisdiction over the subject-matter;

(b)Dismissing the petition in G.R. Nos. 68450-51 and lifting the temporary restraining order issued onSeptember 24, 1984, effective immediately upon promulgation hereof;

(c)Directing the SEC through its Hearing Committee to proceed immediately with hearing andresolving the pending mandamus petition for recording in the corporate books the transfer toTelectronics and its nominees of the majority (56%) shares of stock of the corporation Pocket Bellpertaining to the Abejos and Virginia Braga and all related issues, taking into consideration, withoutneed of resubmittal to it, the pleadings, annexes and exhibits filed by the contending parties in thecases at bar; and

(d)Likewise directing the SEC through its Hearing Committee to proceed immediately with theimplementation of its receivership or management committee Order of April 15, 1983 in SEC Case No.2379 and for the purpose, the contending parties are ordered to submit to said Hearing Committeethe name of their designated representatives in the receivership/management committee within three(3) days from receipt of this decision, on pain of forfeiture of such right in case of failure to complyherewith, as provided in the said Order; and ordering the Bragas to perform only caretaker acts in thecorporation pending the organization of such receivership/management committee and assumption ofits functions.

This decision shall be immediately executory upon its promulgation.

SO ORDERED.

Yap, Narvasa, Melencio-Herrera, Cruz, Feliciano, Gancayco and Sarmiento, JJ., concur.


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[G.R. No. 137266. December 5, 2001.]

ANTONIO M. BERNARDO, ERNESTO A. DOMINGO, JR. and JESUS C.CRUZ, petitioners , vs . BENJAMIN S. ABALOS, SR., BENJAMIN "BENHUR" D. ABALOS,JR., DR. EDEN C. DIAZ, ROMEO F. ZAPANTA, ARCADIO S. DE VERA and THECOMMISSION ON ELECTIONS,respondents .

Romulo C. Felizmeña for petitioners.

Jaime C. Paz for B. Abalos, Sr. & B. Abalos, Jr.

Alberto Agra for other private respondents.

SYNOPSIS

Petitioners filed with the Commission on Elections (COMELEC) a criminal complaint against respondents forvote buying in violation of Section 261, paragraphs (a), (b) and (j) of the Omnibus Election Code (OEC), inrelation to Section 28 of Republic Act No. 6646 and Section 68 of the OEC. However, the said complaint wasdismissed by the COMELEC En Banc for insufficiency of evidence to establish a prima facie case. Petitioners,without first submitting a motion for reconsideration, filed the instant petition for certiorari with this Court.

The petition must fail. Petitioners did not exhaust all the remedies available to them at the COMELEC level.Specifically, they did not seek a reconsideration of the assailed COMELEC En Banc Resolution as required bySection 1, Rule 13 of the COMELEC Rules of Procedure. Petitioners' failure to file the required motion forreconsideration utterly disregarded the COMELEC Rules intended "to achieve an orderly, just, expeditious andinexpensive determination and disposition of every action and proceeding brought before the Commission."

Moreover, petitioners' complaint expressly stated that no supporting affidavits were submitted by the

complaining witnesses to sustain their charge of vote buying. Suffice it to state that the absence of suchsupporting affidavits showed the frailty of petitioners' complaint. Indeed, it was vulnerable to dismissal.

SYLLABUS

1.POLITICAL LAW; ELECTION LAW; 1993 COMELEC RULES OF PROCEDURE; MOTION FORRECONSIDERATION FOR THE COMELEC EN BANC RESOLUTION IN ELECTION OFFENSE CASES ISMANDATORY; NOT COMPLIED IN CASE AT BAR. — Petitioners did not exhaust all the remedies available tothem at the COMELEC level. Specifically, they did not seek a reconsideration of the assailed COMELEC EnBanc Resolution as required by Section 1, Rule 13 of the 1993 COMELEC Rules of Procedure[.] . . . It is not

disputed that petitioners' complaint before the COMELEC involves an election offense. But in this petition,they conveniently kept silent why they directly elevated to this Court the questioned Resolution without firstfiling a motion for reconsideration with the COMELEC En Banc . It was only after the respondents had filedtheir comment on the petition and called this Court's attention to petitioners' failure to comply with Section 1of Rule 13 that they, in their Consolidated Reply, advanced the excuse that they "deemed it best not seek anyfurther dilatory 'motion for reconsideration'. . . , even if allowed by Sec. 1 (d) of COMELEC Rule 13."Petitioners' failure to file the required motion for reconsideration utterly disregarded the COMELEC Rulesintended "to achieve an orderly, just, expeditious and inexpensive determination and disposition of everyaction and proceeding brought before the Commission."


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2.ID.; ID.; ID.; ID.; PURPOSE. — Contrary to petitioners' statement that a resort to a motion forreconsideration is "dilatory," it bears stressing that the purpose of the said motion is to give the COMELEC anopportunity to correct the error imputed to it. If the error is immediately corrected by way of a motion forreconsideration, then it is the most expeditious and inexpensive recourse. But if the COMELEC refuses tocorrect a patently erroneous act, then it commits a grave abuse of discretion justifying a recourse by theaggrieved party to a petition for certiorari .

3.ID.; ID.; REPUBLIC ACT NO. 6646; PROSECUTION OF VOTE-BUYING AND VOTE SELLING; ABSENCE OFSUPPORTING AFFIDAVITS SHOWS THE FRAILTY OF PETITIONER'S COMPLAINT. — Petitioners' complaintexpressly states that no supporting affidavits were submitted by the complaining witnesses to sustain theircharge of vote buying. Suffice it to state that the absence of such supporting affidavits shows the frailty ofpetitioners' complaint. Indeed, it is vulnerable to dismissal.HCDAcE

4.REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI ; PREMATURELY FILED FOR FAILURE TO COMPLYWITH REQUIRED MOTION FOR RECONSIDERATION. — A petition for certiorari under Rule 65 of the 1997Rules of Civil Procedure, as amended, can only be resorted to if "there is no appeal, or any plain, speedy ,and adequate remedy in the ordinary course of law ." Having failed to file the required motion forreconsideration of the challenged Resolution, petitioners' instant petition is certainly premature. Significantly,they have not raised any plausible reason for their direct recourse to this Court.

D E C I S I O N

SANDOVAL-GUTIERREZ, J p:

This is a petition for certiorari 1 seeking the nullification of Resolution No. 98-3208 of the Commission onElections (COMELEC) En Banc promulgated on December 1, 1998 dismissing the complaint for vote buyingfiled by petitioners against respondents.

On April 21, 1998, petitioners Antonio M. Bernardo, Ernesto A. Domingo, Jr. and Jesus C. Cruz filed with theCOMELEC a criminal complaint against respondents Benjamin S. Abalos, Sr., Benjamin C. Abalos, Jr., Dr. EdenC. Diaz, Romeo Zapanta and Arcadio de Vera for vote buying in violation of Section 261, paragraphs (a), (b)and (j) of the Omnibus Election Code (OEC), in relation to Section 28 of Republic Act 6646 and Section 68 ofthe OEC. The complaint, docketed as E.O. Case No. 98-110, 2 alleged that:

1.On April 14, 1998 (Tuesday), respondent Mandaluyong City Mayor Benjamin S. Abalos, Sr., and hisson respondent Benjamin "Benhur" C. Abalos, Jr., candidate for City Mayor of the same city inthe May 11, 1998 elections, conspiring with respondents Dr. Eden C. Diaz, Schools DivisionSuperintendent, Romeo F. Zapanta, Assistant Schools Division Superintendent, and Arcadio de Vera, President, Mandaluyong Federation of Public School Teachers, sponsored, arranged and

conducted an all-expense-free transportation, food and drinks affair for the Mandaluyong Citypublic school teachers, registered voters of said city, at the Tayabas Bay Beach Resort,Sariaya, Quezon Province.

2.Among the identified public school teachers present, brought in around twelve (12) buses,were Corazon Mayoya, Principal of Highway Hills Elementary School, her Assistant Principaland Mr. Dante del Remigio; Mrs. Diaz, Principal of Mandaluyong City High School and Mr. Alvia; Mrs. Parillo, Andres Bonifacio Elementary School; Mrs. Gregoria Ignacio, Principal ofDoña Pilar Gonzaga Elementary School and Mrs. Bolantes; Mrs. Diaz, Principal, Nueve deFebrero Elementary School; Ms. Magsalin, Principal of Mandaluyong Science High School andMrs. Rita Bondayril; Mrs. De Vera, Fabella Elementary School; Ms. Anselmo, Principal of IsaacLopez Elementary School and Mrs. Fayton; Mrs. Sylvia Liwanag, District Supervisor, District II,

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Mrs. Nalaonan, Principal of Amado T. Reyes Elementary School; Mrs. Teresita Vicencio,Mandaluyong City Elementary School; Officers of the Mandaluyong Federation of Public SchoolTeachers namely: Mrs. Erlinda llagan, Treasurer; Ms. Nancy de Leon, Auditor; Ms. FortunataGondran, PRO; Mr. Nenito Pumariga, Business Manager; Mr. Jose Guerrero, Sgt.-at-arms; andBoard Members Ms. Virginia Carillo, Ms. Wilma Fernandez, Mr. Arturo Morales and Mr. Teddy Angeles.

3.During the whole-day affair, the background music loudly and repeatedly played over the sound

system was the political jingle advertisement of Mandaluyong City candidate for Mayor,Benjamin "Benhur" Abalos, Jr., sang to the tune of the song 'SHA LALA LALA'.

4.Some of the participants wore T-shirts with the name of candidate "Benhur" Abalos, Jr.," printed inover-sized colored letters.

5.Mayor Benjamin Abalos, Sr. delivered a speech wherein he offered and promised the MandaluyongCity public school teachers and employees a "hazard" pay of P1,000.00, and increasing theirallowances from P1,500.00 to P2,000.00 for food, or with a total of P3,000.00 which they willget by the end of the month.

6.The offers and promises to said public school teachers, who are members of the Board of Election

Inspectors of Mandaluyong City and registered voters thereat, were made a few weeks beforethe election to induce or unduly influence the said teachers and the public in general (theother guests) to vote for the candidacy of Benjamin "Benhur" Abalos, Jr..

7.The offers and promises of Mayor Abalos, Sr., and the enthusiastic acceptance of said monetaryincrease of allowances by the public school teachers and employees of Mandaluyong City, is aviolation of Section 261 pars. (a), (b) and (j) of the Omnibus Election Code against vote-buying and vote-selling. 3

The Director 4 of the Law Department of the COMELEC conducted a preliminary investigation. All the privaterespondents filed separate counter-affidavits 5 with prayer to dismiss the complaint.

On November 26, 1998, the Director of the Law Department submitted his findings to the COMELEC EnBanc recommending that the complaint be dismissed for insufficiency of evidence.

On December 1, 1998, the COMELEC En Banc issued the assailed Resolution No. 98-3208 6 dismissing thecomplaint "for insufficiency of evidence to establish prima facie case ,"

"Considering that this complaint, being criminal in nature, must have all its allegations supported bydirect, strong, convincing and indubitable evidence; and that the submitted evidence of thecomplainant are mere self-serving statements and uncorroborated audio and visual recordings and aphotograph; and considering further that the evidence of the respondents have more probative valueand believable than the evidence of said complainants; and that the burden of proof lies with thecomplainants and not with the respondents." 7

On February 09, 1999, petitioners, without first submitting a motion for reconsideration, filed the instantpetition with this Court.

They alleged therein that the COMELEC En Banc , in issuing Resolution No. 98-3208 dated December 1, 1998,acted "with apparent grave abuse of discretion ." 8

The petition must fail.

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Petitioners did not exhaust all the remedies available to them at the COMELEC level. Specifically, they did notseek a reconsideration of the assailed COMELEC En Banc Resolution as required by Section 1, Rule 13 of the1993 COMELEC Rules of Procedure, thus:

"SECTION 1.What Pleadings are not Allowed. — The following pleadings are not allowed: DACTSH

xxx xxx xxx

d)motion for reconsideration of an en banc ruling, resolution, order or decision except inelection offense cases ;

. . . ." (Italics ours)

It is not disputed that petitioners' complaint before the COMELEC involves an election offense. But in thispetition, they conveniently kept silent why they directly elevated to this Court the questioned Resolutionwithout first filing a motion for reconsideration with the COMELEC En Banc . It was only after the respondentshad filed their comment on the petition and called this Court's attention to petitioners' failure to comply withSection 1 of Rule 13 that they, in their Consolidated Reply, advanced the excuse that they "deemed it bestnot seek any further dilatory 'motion for reconsideration'. . . , even if allowed by Sec. 1 (d) of COMELEC Rule

13." 9

Petitioners' failure to file the required motion for reconsideration utterly disregarded the COMELEC Rulesintended "to achieve an orderly, just, expeditious andinexpensive determination and disposition of everyaction and proceeding brought before the Commission." 10

Contrary to petitioners' statement that a resort to a motion for reconsideration is "dilatory," it bears stressingthat the purpose of the said motion is to give the COMELEC an opportunity to correct the error imputed toit. 11 If the error is immediately corrected by way of a motion for reconsideration, then it is the mostexpeditious and inexpensive recourse. But if the COMELEC refuses to correct a patently erroneous act, then itcommits a grave abuse of discretion justifying a recourse by the aggrieved party to a petition for certiorari .

A petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended, can only be resortedto if "there is no appeal, or any plain, speedy , andadequate remedy in the ordinary course of law .'' 12 Havingfailed to file the required motion for reconsideration of the challenged Resolution, petitioners' instant petitionis certainly premature. 13 Significantly, they have not raised any plausible reason for their direct recourse tothis Court.

In its assailed Resolution, the COMELEC cited a valid reason for dismissing petitioners' complaint againstprivate respondents for vote buying. The COMELEC found that the evidence of the respondents have "moreprobative value and believable than the evidence of the complainants;" and that the evidence submitted bypetitioners are "mere self-serving statements and uncorroborated audio and visual recording and aphotograph."

Moreover, Section 28 of Republic Act 6646 provides:

"SEC. 28.Prosecution of Vote-buying and Vote-selling . — The representation of a complaint forviolations of paragraph (a) or (b) of Section 261 of Batas Pambansa Blg. 881 supported by affidavitsof complaining witnesses attesting to the offer or promise by or of the voter's acceptance of money orother consideration from the relatives, leaders or sympathizers of candidate, shall be sufficient basisfor an investigation to be immediately conducted by the Commission, directly or through its dulyauthorized legal officers, under Section 68 or Section 265 of said Batas Pambansa Blg. 881 .

. . . ." (Italics ours)

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Petitioners' complaint expressly states that no supporting affidavits were submitted by the complainingwitnesses 14 to sustain their charge of vote buying. Suffice it to state that the absence of such supportingaffidavits shows the frailty of petitioners' complaint. Indeed, it is vulnerable to dismissal.

WHEREFORE, the instant petition is DISMISSED. DIcSHE

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Pardo, Buena,Ynares-Santiago, De Leon, Jr. and Carpio, JJ., concur.

[G.R. No. 88550. April 18, 1990.]

INDUSTRIAL ENTERPRISES, INC., petitioner , vs. THE HON. COURT OF APPEALS,MARINDUQUE MINING & INDUSTRIAL CORPORATION, THE HON. GERONIMO VELASCO, in his capacity as Minister of Energy AND PHILIPPINE NATIONAL

BANK ,respondents .

Manuel M. Antonio and Dante Cortez for petitioner.

Pelaez, Adriano & Gregorio for respondent MMIC.

The Chief Legal Counsel for respondent PNB.

SYLLABUS

1.ADMINISTRATIVE LAW; BUREAU OF ENERGY DEVELOPMENT (P.D. No. 1206); POWERS AND FUNCTIONS. — For the Bureau of Energy Development, (BED), as the successor to the Energy Development Board(abolished by Sec. 11, P.D. No. 1206, dated 6 October 1977) is tasked with the function of establishing acomprehensive and integrated national program for the exploration, exploitation, and development andextraction of fossil fuels, such as the country's coal resources; adopting a coal development program;regulating all activities relative thereto; and undertaking by itself or through service contracts suchexploitation and development, all in the interest of an effective and coordinated development of extractedresources. P.D. No. 1206 further provides that the powers and functions of the defunct Energy DevelopmentBoard relative to the implementation of P.D. No. 972 on coal exploration and development have beentransferred to the BED, provided that coal operating contracts including the transfer or assignment of interestin said contracts, shall require the approval of the Secretary (Minister) of Energy (Sec. 12, P.D. No. 1206).

2.ID.; DOCTRINE OF PRIMARY JURISDICTION; CONSTRUED. — In recent years, it has been the jurisprudential trend to apply the doctrine of primary jurisdiction in many cases involving matters thatdemand the special competence of administrative agencies. It may occur that the Court has jurisdiction totake cognizance of a particular case, which means that the matter involved is also judicial in character.However, if the case is such that its determination requires the expertise, specialized skills and knowledge ofthe proper administrative bodies because technical matters or intricate questions of facts are involved, thenrelief must first be obtained in an administrative proceeding before a remedy will be supplied by the courtseven though the matter is within the proper jurisdiction of a court. This is the doctrine of primary jurisdiction.It applies "where a claim is originally cognizable in the courts, and comes into play whenever enforcement ofthe claim requires the resolution of issues which, under a regulatory scheme, have been placed within the

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special competence of an administrative body; in such case the judicial process is suspended pending referralof such issues to the administrative body for its view " (United States v. Western Pacific Railroad Co., 352 U.S.59, emphasis supplied).

3.ID.; ID.; APPLICABLE IN CASE AT BAR. — The doctrine of primary jurisdiction finds application in this casesince the question of what coal areas should be exploited and developed and which entity should be grantedcoal operating contracts over said areas involves a technical determination by the BED as the administrative

agency in possession of the specialized expertise to act on the matter. The Trial Court does not have thecompetence to decide matters concerning activities relative to the exploration, exploitation, development andextraction of mineral resources like coal. These issues preclude an initial judicial determination. It behoovesthe courts to stand aside even when apparently they have statutory power to proceed in recognition of theprimary jurisdiction of an administrative agency.

4.ID.; ID.; PURPOSE. — The application of the doctrine of primary jurisdiction, however, does not call for thedismissal of the case below. It need only be suspended until after the matters within the competence of theBED are threshed out and determined. Thereby, the principal purpose behind the doctrine of primary

jurisdiction is salutarily served. "Uniformity and consistency in the regulation of business entrusted to anadministrative agency are secured, and the limited function of review by the judiciary are more rationallyexercised, by preliminary resort, for ascertaining and interpreting the circumstances underlying legal issues,to agencies that are better equipped than courts by specialization, by insight gained through experience, andby more flexible procedure" (Far East Conference v. United States, 342 U.S. 570).

D E C I S I O N

MELENCIO-HERRERA, J p:

This petition seeks the review and reversal of the Decision of respondent Court of Appeals in CA-G.R. CV No.

12660, 1 which ruled adversely against petitioner herein.LibLex

Petitioner Industrial Enterprises Inc. (IEI) was granted a coal operating contract by the Government throughthe Bureau of Energy Development (BED) for the exploration of two coal blocks in Eastern Samar.Subsequently, IEI also applied with the then Ministry of Energy for another coal operating contract for theexploration of three additional coal blocks which, together with the original two blocks, comprised the so-called "Giporlos Area."

IEI was later on advised that in line with the objective of rationalizing the country's over-all coal supply-demand balance . . . the logical coal operator in the area should be the Marinduque Mining and Industrialcorporation (MMIC), which was already developing the coal deposit in another area (Bagacay Area) and thatthe Bagacay and Giporlos Areas should be awarded to MMIC (Rollo, p. 37). Thus, Agreement whereby IEI

assigned and transferred to MMIC all its rights and interests in the two coal blocks which are the subject ofIEI's coal operating contract.

Subsequently, however, IEI filed an action for rescission of the Memorandum of Agreement with damagesagainst MMIC and the then Minister of Energy Geronimo Velasco before the Regional Trial Court of Makati,Branch 150, 2 alleging that MMIC took possession of the subject coal blocks even before the Memorandum of

Agreement was finalized and approved by the BED; that MMIC discontinued work thereon; that MMIC failedto apply for a coal operating contract for the adjacent coal blocks; and that MMIC failed and refused to paythe reimbursements agreed upon and to assume IEI's loan obligation as provided in the Memorandum of

Agreement (Rollo, p. 38). IEI also prayed that the Energy Minister be ordered to approve the return of thecoal operating contract from MMIC to petitioner, with a written confirmation that said contract is valid and

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effective, and, in due course, to convert said contract from an exploration agreement to adevelopment/production or exploitation contract in IEI's favor.

Respondent, Philippine National Bank (PNB), was later impleaded as co-defendant in an Amended Complaintwhen the latter with the Development Bank of the Philippines effected extra-judicial foreclosures on certainmortgages, particularly the Mortgage Trust Agreement, dated 13 July 1981, constituted in its favor by MMICafter the latter defaulted in its obligation totalling around P22 million as of 15 July 1984. The Court of Appeals

eventually dismissed the case against the PNB (Resolution, 21 September 1989). llcd

Strangely enough, Mr. Jesus S. Cabarrus is the President of both IEI and MMIC.

In a summary judgment, the Trial Court ordered the rescission of the Memorandum of Agreement, declaredthe continued efficacy of the coal operating contract in favor of IEI; ordered the reversion of the two coalblocks covered by the coal operating contract; ordered BED to issue its written affirmation of the coaloperating contract and to expeditiously cause the conversion thereof from exploration to development infavor of IEI; directed BED to give due course to IEI's application for a coal operating contract; directed BEDto give due course to IEI's application for three more coal blocks; and ordered the payment of damages andrehabilitation expenses (Rollo, pp. 9-10).

In reversing the Trial Court, the Court of Appeals held that the rendition of the summary judgment was notproper since there were genuine issues in controversy between the parties, and more importantly, that theTrial Court had no jurisdiction over the action considering that, under Presidential Decree No. 1206, it is theBED that has the power to decide controversies relative to the exploration, exploitation and development ofcoal blocks (Rollo, pp. 43-44).

Hence, this petition, to which we resolved to give due course and to decide.

Incidentally, the records disclose that during the pendency of the appeal before the Appellate Court, the suitagainst the then Minister of Energy was dismissed and that, in the meantime, IEI had applied with the BEDfor the development of certain coal blocks.

The decisive issue in this case is whether or not the civil court has jurisdiction to hear and decide the suit forrescission of the Memorandum of Agreement concerning a coal operating contract over coal blocks. Acorollary question is whether or not respondent Court of Appeals erred in holding that it is the Bureau ofEnergy Development (BED) which has jurisdiction over said action and not the civil court.

While the action filed by IEI sought the rescission of what appears to be an ordinary civil contract cognizableby a civil court, the fact is that the Memorandum of Agreement sought to be rescinded is derived from a coal-operating contract and is inextricably tied up with the right to develop coal-bearing lands and thedetermination of whether or not the reversion of the coal operating contract over the subject coal blocks toIEI would be in line with the integrated national program for coal-development and with the objective of

rationalizing the country's over-all coal-supply-demand balance, IEI's cause of action was not merely therescission of a contract but the reversion or return to it of the operation of the coal blocks. Thus it was that inits Decision ordering the rescission of the Agreement, the Trial Court, inter alia, declared the continuedefficacy of the coal-operating contract in IEI's favor and directed the BED to give due course to IEI'sapplication for three (3) more coal blocks. These are matters properly falling within the domain of the BED. llcd

For the BED, as the successor to the Energy Development Board (abolished by Sec. 11, P.D. No. 1206, dated6 October 1977) is tasked with the function of establishing a comprehensive and integrated national programfor the exploration, exploitation, and development and extraction of fossil fuels, such as the country's coalresources; adopting a coal development program; regulating all activities relative thereto; and undertaking by


17/106

itself or through service contracts such exploitation and development, all in the interest of an effective andcoordinated development of extracted resources.

Thus, the pertinent sections of P.D. No. 1206 provide:

"Sec. 6.Bureau of Energy Development . There is created in the Department a Bureau of EnergyDevelopment, hereinafter referred to in this Section as the Bureau, which shall have the following

powers and functions, among others:

"a.Administer a national program for the encouragement, guidance, and whenevernecessary, regulation of such business activity relative to theexploration, exploitation, development,and extraction of fossil fuels such as petroleum, coal , . . .

"The decisions, orders, resolutions or actions of the Bureau may be appealed to the Secretary whosedecisions are final and executory unless appealed to the President. (Emphasis supplied.)

That law further provides that the powers and functions of the defunct Energy Development Board relative tothe implementation of P.D. No. 972 on coal exploration and development have been transferred to the BED,provided that coal operating contracts including the transfer or assignment of interest in said contracts, shall

require the approval of the Secretary (Minister) of Energy (Sec. 12, P.D. No. 1206).

"Sec. 12.. . . the powers and functions transferred to the Bureau of Energy Development are:

xxx xxx xxx

"ii.The following powers and functions of the Energy Development Board under PD No. 910 . . .

"(1)Undertake by itself or through other arrangements, such as service contracts, the activeexploration, exploitation, development, and extraction of energy resources . . .

(2)Regulate all activities relative to the exploration, exploitation, development, and extraction of fossil

and nuclear fuels . . . (P.D. No. 1206) (Emphasis supplied.)

P.D. No. 972 also provides:

"Sec. 8.Each coal operating contract herein authorized shall . . . be executed by the EnergyDevelopment Board.

Considering the foregoing statutory provisions, the jurisdiction of the BED, in the first instance, to pass uponany question involving the Memorandum of Agreement between IEI and MMIC, revolving as its does around acoal operating contract, should be sustained. Cdpr

In recent years, it has been the jurisprudential trend to apply the doctrine of primary jurisdiction in manycases involving matters that demand the special competence of administrative agencies. It may occur that theCourt has jurisdiction to take cognizance of a particular case, which means that the matter involved is also

judicial in character. However, if the case is such that its determination requires the expertise, specializedskills and knowledge of the proper administrative bodies because technical matters or intricate questions offacts are involved, then relief must first be obtained in an administrative proceeding before a remedy will besupplied by the courts even though the matter is within the proper jurisdiction of a court. This is the doctrineof primary jurisdiction. It applies "where a claim is originally cognizable in the courts, and comes into playwhenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, havebeen placed within the special competence of an administrative body; in such case the judicial process is


18/106

suspended pending referral of such issues to the administrative body for its view " (United States v. WesternPacific Railroad Co., 352 U.S. 59, emphasis supplied).

Clearly, the doctrine of primary jurisdiction finds application in this case since the question of what coal areasshould be exploited and developed and which entity should be granted coal operating contracts over saidareas involves a technical determination by the BED as the administrative agency in possession of thespecialized expertise to act on the matter. The Trial Court does not have the competence to decide matters

concerning activities relative to the exploration, exploitation, development and extraction of mineral resourceslike coal. These issues preclude an initial judicial determination. It behooves the courts to stand aside evenwhen apparently they have statutory power to proceed in recognition of the primary jurisdiction of anadministrative agency. LLjur

"One thrust of the multiplication of administrative agencies is that the interpretation of contracts andthe determination of private rights thereunder is no longer a uniquely judicial function, exercisableonly by our regular courts" (Antipolo Realty Corp. vs. National Housing Authority, 153 SCRA 399, at407).

The application of the doctrine of primary jurisdiction, however, does not call for the dismissal of the casebelow. It need only be suspended until after the matters within the competence of the BED are threshed out

and determined. Thereby, the principal purpose behind the doctrine of primary jurisdiction is salutarily served

"Uniformity and consistency in the regulation of business entrusted to an administrative agency aresecured, and the limited function of review by the judiciary are more rationally exercised, bypreliminary resort, for ascertaining and interpreting the circumstances underlying legal issues, toagencies that are better equipped than courts by specialization, by insight gained through experience,and by more flexible procedure" (Far East Conference v. United States, 342 U.S. 570).

With the foregoing conclusion arrived at, the question as to the propriety of the summary judgment renderedby the Trial Court becomes unnecessary to resolve.

WHEREFORE, the Court Resolved to DENY the petition. No costs.

SO ORDERED.

Paras, Padilla, Sarmiento and Regalado, JJ ., concur.

[G.R. No. 87146. December 11, 1991.]

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner , vs. HON. CIVILSERVICE COMMISSION AND MARIA ASUNCION SALAZAR , respondents .

Tanjuatco, Oreta, Tanjuatco, Berenguer and Sanvicente for private respondent.

D E C I S I O N

MEDIALDEA, J p:


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This petition for certiorari assails Resolution No. 89-031 dated January 17, 1989, of the Civil ServiceCommission (CSC) denying the appeal of the Government Service Insurance System (GSIS) from the order ofthe Merit Systems Protection Board dated September 2, 1988.

As far as the service record of private respondent Salazar filed with the CSC — National Capital Region (NCR)revealed, she was employed by GSIS as a casual laborer on September 23, 1968. She became a permanentemployee in the same office on February 28, 1974 with a designation of stenographer. Thereafter, she was

promoted to Confidential Technical Assistant Aide also under permanent status on December 9, 1975 (p.37, Rollo ).

Salazar's GSIS Service Record however, revealed that also on December 9, 1975, she was appointed to theposition of Confidential Executive Assistant in the office of then GSIS President and General Manager Roman

A. Cruz, Jr. on a permanent status. On August 13, 1982, she was promoted to Technical Assistant III, (p. 58,Rollo), the position she held when on May 16, 1986, her services were terminated by the newly appointedPresident and General Manager of the GSIS for the reason that her position was co-terminous with the termof the appointing authority, Roman A. Cruz, Jr.

Salazar filed a petition for reconsideration with the GSIS Board of Trustees, but reconsideration was denied.Thereafter, she filed a petition for reconsideration of the denial with the Review Committee created underExecutive Order No. 17. The said Review Committee referred the petition both to the Merit SystemsPromotion Board and the Civil Service Commission, stating t

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