Friday, April 19, 2013

Kilusang Bayan sa Paglilingkod ng mga Magtitinda ng Bagong Pamilihang Bayan ng Muntinlupa, Inc. v. Dominguez

Kilusang Bayan sa Paglilingkod ng mga Magtitinda ng Bagong Pamilihang Bayan ng Muntinlupa, Inc. v. Dominguez
G.R. No. 85439 January 13, 1992
Davide, Jr., J.


                Petitioners questopn the validity of the order of then Secretary of Agriculture Hon. Carlos G. Dominguez which ordered: (1) the take-over by the Department of Agriculture of the management of the petitioner Kilusang Bayan sa Paglilingkod Ng Mga Magtitinda ng Bagong Pamilihang Bayan ng Muntilupa, Inc. (KBMBPM) pursuant to the Department’s regulatory and supervisory powers under Section 8 of P.D. No. 175, as amended, and Section 4 of Executive Order No. 13, (2) the creation of a Management Committee which shall assume the management of KBMBPM upon receipt of the order, (3) the disbandment of the Board of Directors, and (4) the turn over of all assets, properties and records of the KBMBPM the Management Committee.

                The exordium of said Order unerringly indicates that its basis is the alleged petition of the general membership of the KBMBPM requesting the Department for assistance in the removal of the members of the Board of Directors who were not elected by the general membership” of the cooperative and that the ongoing financial and management audit of the Department of Agriculture auditors shows that the management of the KBMBPM is not operating that cooperative in accordance with P.D. 175, LOI 23, the Circulars issued by DA/BACOD and the provisions and by-laws of KBMBPM. It is also professed therein that the Order was issued by the Department “in the exercise of its regulatory and supervisory powers under Section 8 of P.D. 175, as amended, and Section 4 of Executive Order No. 113.


                whether or not the Order issued by the Secretary of Agriculture is illegal


                Regulation 34 of Letter of Implementation No. 23 (implementing P.D. No. 175) provides the procedure for the removal of directors or officers of cooperatives, thus:

An elected officer, director or committee member may be removed by a vote of majority of the members entitled to vote at an annual or special general assembly. The person involved shall have an opportunity to be heard.

A substantially identical provision, found in Section 17, Article III of the KBMBPM’s by-laws, reads:

Sec. 17. Removal of Directors and Committee Members. — Any elected director or committee member may be removed from office for cause by a majority vote of the members in good standing present at the annual or special general assembly called for the purpose after having been given the opportunity to be heard at the assembly.

Under the same article are found the requirements for the holding of both the annual general assembly and a special general assembly.

Indubitably then, there is an established procedure for the removal of directors and officers of cooperatives. It is likewise manifest that the right to due process is respected by the express provision on the opportunity to be heard. But even without said provision, petitioners cannot be deprived of that right.

The procedure was not followed in this case. Respondent Secretary of Agriculture arrogated unto himself the power of the members of the KBMBPM who are authorized to vote to remove the petitioning directors and officers. He cannot take refuge under Section 8 of P.D. No. 175 which grants him authority to supervise and regulate all cooperatives. This section does not give him that right.

An administrative officer has only such powers as are expressly granted to him and those necessarily implied in the exercise thereof. These powers should not be extended by implication beyond what may to necessary for their just and reasonable execution.

Supervision and control include only the authority to: (a) act directly whenever a specific function is entrusted by law or regulation to a subordinate; (b) direct the performance of duty; restrain the commission of acts; (c) review, approve, reverse or modify acts and decisions of subordinate officials or units; (d) determine priorities in the execution of plans and programs; and (e) prescribe standards, guidelines, plans and programs. Specifically, administrative supervision is limited to the authority of the department or its equivalent to: (1) generally oversee the operations of such agencies and insure that they are managed effectively, efficiently and economically but without interference with day-to-day activities; (2) require the submission of reports and cause the conduct of management audit, performance evaluation and inspection to determine compliance with policies, standards and guidelines of the department; (3) take such action as may be necessary for the proper performance of official functions, including rectification of violations, abuses and other forms of mal-administration; (4) review and pass upon budget proposals of such agencies but may not increase or add to them.

The power to summarily disband the board of directors may not be inferred from any of the foregoing as both P.D. No. 175 and the by-laws of the KBMBPM explicitly mandate the manner by which directors and officers are to be removed. The Secretary should have known better than to disregard these procedures and rely on a mere petition by the general membership of the KBMBPM and an on-going audit by Department of Agriculture auditors in exercising a power which he does not have, expressly or impliedly. We cannot concede to the proposition of the Office of the Solicitor General that the Secretary’s power under paragraph (d), Section 8 of P.D. No. 175 above quoted to suspend the operation or cancel the registration of any cooperative includes the “milder authority of suspending officers and calling for the election of new officers.” Firstly, neither suspension nor cancellation includes the take-over and ouster of incumbent directors and officers, otherwise the law itself would have expressly so stated. Secondly, even granting that the law intended such as postulated, there is the requirement of a hearing. None was conducted.

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