Chapter 3 Cases

1. Makati Stock Exchange, Inc. v. Securities and Exchange Commission, G.R. No. L-23004, [June 30,
1965
Facts:
The Securities and Exchange Commission denied 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 Stock Exchange.
Under the law, no stock exchange may do business in the Philippines unless it is previously
registered with the Commission by filing a statement containing the information described in sec.
17 of the Securities act (Commonwealth Act 83, as amended).
The Commission may permit registration if the section is complied with; if not, it may refuse. Such
rule provides: ". . . nor shall a security already listed in any securities exchange be listed anew in
any other securities exchange . . ."

The objection of Makati Stock Exchange, Inc is that actually only one securities exchange The
Manila Stock Exchange, that has been operating alone for the past 25 years; and all or
presumably all available or worthwhile securities for trading in the market are now listed there. In
effect, the Commission permits the Makati Exchange, Inc., to deal only with other securities. Which
is tantamount to permitting a store to open provided it sells only those goods not sold in other
stores. And if there's only one existing store, 1 the result is a monopoly.
It is not far-fetched 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 Exchange to
operate. So, its "permission" amounted to a "prohibition".
Apparently, the Commission acted "in the public interest". 3 Hence, it is pertinent to inquire
whether the Commission may "in the public interest" prohibit (or make impossible) the
establishment of another stock exchange (besides the Manila Stock Exchange), on the ground that
the operation of two or more exchanges adversely affects the public interest.

Issue/s:
1) Whether or not the commission has the authority to promulgate the rule in question

Held:

1) No. It is fundamental that an administrative officer has only such powers as are expressly
granted to him by the statute, and these necessarily implied in the exercise thereof.

In its brief and its resolution now subject to review, the Commission cites no provision expressly
supporting its rule. Nevertheless, it suggests that the power is "necessary for the execution of the
functions vested in it"; but it makes no explanation, perhaps relying 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 contravening public interest. (Of this, we shall treat later.)

On the legality of its rule, the Commission's argument is that: (a) it was approved by the
Department Head before the War; and (b) it is not in conflict with the provisions of theSecurities
Act. In our opinion, the approval of the Department, 5 by itself, adds no weight in a judicial
litigation; and the test is not whether the Act forbids the Commission from imposing a prohibition;
but whether it empowers the Commission to prohibit. No specific portion of the statute has been
cited to uphold this power. It is not found in sec. 28 (of theSecurities Act), which is entitled "Powers
(of the Commission) with respect to Exchanges and Securities". 6
According to many court precedents, the general power to "regulate" which the Commission has
(Sec. 33) does not imply authority to prohibit. 7
Thus, it has been held that where the licensing statute does not expressly or impliedly authorize the
officer in charge, he may not refuse to grant a license simply on the ground that a sufficient number
of licenses to serve the needs of the public, have already been issued
2. Taule v. Santos, G.R. No. 90336, August 12, 1991
Facts:
Federation of Associations of Barangay Councils (FABC) of Catanduanes, composed of eleven (11)
members, in their capacities as Presidents of the Association of Barangay Councils in their
respective municipalities, convened in Virac, Catanduanes with six members in attendance for the
purpose of holding the election of its officers.
Present were petitioner Ruperto Taule of San Miguel, Allan Aquino of Viga, Vicente 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 Government Operation Officer (PGOO)
Alberto P. Molina, Jr. as Chairman with Provincial Treasurer Luis A. Manlapaz, Jr. and Provincial
Election Supervisor Arnold Soquerata as members. 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. 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 and
Sales.
Thereafter, those who are present were elected Taule President, Aquino VP, Avila Sec, Jacob
Treas, Sales Auditor
On June 19, 1989, respondent Leandro I. Verceles, Governor of Catanduanes, sent a letter to
respondent Luis T. Santos, the Secretary of Local Government, *protesting the election of the
officers of the FABC and seeking its nullification in view of several flagrant irregularities in the
manner it was conducted. In compliance with the order of respondent Secretary, petitioner Ruperto
Taule as President of the ABC, filed his comment on the letter-protest of respondent Governor
denying the alleged irregularities and denouncing said respondent Governor for 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
On August 4, 1989, respondent Secretary issued a resolution nullifying the election of the officers of
the FABC in Catanduanes held on June 18, 1989 and ordering a new 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
Petitioner filed a motion for reconsideration of the resolution of August 4, 1989 but it was denied by
respondent Secretary in his resolution of September 5, 1989. Hence, 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 void.
Issue:
Whether or not the respondent Secretary has jurisdiction to entertain an election protest involving
the election of the officers of the Federation of Association of Barangay Councils

Held:

No. It is a well-settled principle of administrative law that unless expressly empowered,

administrative agencies are bereft of quasi-judicial powers. The jurisdiction of administrative
authorities is dependent entirely upon the provisions of the statutes reposing power in them; they
cannot confer it upon themselves. Such jurisdiction is essential to give validity to their
determinations. There is neither a statutory nor constitutional provision expressly or even by
necessary implication conferring upon the Secretary of Local Government the power to assume
jurisdiction over an election protest involving officers of the katipunan ng mga barangay.
Presidential power over local governments is limited by the Constitution to the exercise of general
supervision 22 "to ensure that local affairs are administered according to law." 23 The general
supervision is exercised by the President through the Secretary of Local Government. 24
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 neglects to fulfill them the
former may take such action or step as prescribed by law to make them perform their duties.
Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside
what a subordinate officer had done in the performance of his duties and to substitute the
judgment of the former for that of the latter. The fundamental law permits the Chief Executive to
wield no more authority 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 local governments so long as the same or its officers act within the scope of their
authority. 25 Supervisory power, when contrasted with control, is the power of mere oversight over
an inferior body; it does not include any restraining authority over such body. 26
Construing the constitutional limitation on the power of general supervision of the President over
local governments, We hold that respondent Secretary has no authority to pass upon the
validity or regularity of the election of the officers of the katipunan. To allow respondent
Secretary to do so will give him more power than the law or the 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 strengthening the barangay as the basic component
of local governments so that the ultimate goal of fullest autonomy may be achieved.
His order that the new elections to be conducted be presided by the Regional Director is a clear and
direct 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 governments. To
deny the Secretary of Local Government the power to review the regularity of the elections of
officers of the katipunan would be to enhance the avowed state policy of promoting the autonomy
of local governments.
Moreover, although the Department is given the power to prescribe rules, regulations and other
issuances, the Administrative Code limits its authority to merely "monitoring compliance" by local
government units of such issuances. 30 To monitor means "to watch, observe or check." 31 This is
compatible with the power of supervision of the Secretary over local governments which as earlier
discussed is limited to checking whether the local government unit concerned or the officers thereof
perform their duties 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 to how
these issuances should be enforced. Since the respondent Secretary exercises only supervision and
not control over local governments, it is truly doubtful if he could enforce compliance with the DLG
Circular. 32 Any doubt therefore as to the power of the Secretary to interfere with local affairs
should be resolved in favor of the greater autonomy of the local government.
3. Solid Homes, Inc. v. Payawal, G.R. No. 84811, [August 29, 1989]
Facts: Teresita Payawal, petitioner filed a complaint against Solid Homes, Inc. before the Regional
Trial Court of Quezon City. She alleged that the defendant contracted to sell to her a subdivision lot
in Marikina on June 9, 1975, for the agreed price of P28,080.00, and that by September 10, 1981,
she had already paid the defendant the total amount of P38,949.87 in monthly installments and
interests. Solid Homes subsequently executed a deed of sale 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 property in bad faith to a financing company. The plaintiff asked for
delivery of the title to the lot or, alternatively, the return of all the amounts paid by her plus
interest. She also claimed moral and exemplary damages, attorney's fees and the costs of the suit.
Solid Homes moved to dismiss the complaint on the ground that the court had no jurisdiction, this
being vested in the National Housing Authority under PD No. 957. Motion was denied. The
defendant repleaded, citing Section 3 of the said decree providing that "the National Housing
Authority shall have exclusive jurisdiction to regulate the real estate trade and business in
accordance with the provisions of this Decree." After trial, judgment was rendered in favor of the
plaintiff and the defendant was ordered to deliver to her the title to the land or, failing this, to
refund to her the sum of P38,949.87 plus interest from 1975 and until the full amount was paid. She
was also awarded P5,000.00 moral damages, P5,000.00 exemplary damages, P10,000.00 attorney's
fees, and the costs of the suit. Solid Homes appealed but the decision was affirmed by the
respondent court, which also berated the appellant for its obvious efforts to evade a legitimate
obligation, including its dilatory tactics during the trial.
Hence, this petition.
Issue:
1) Interpretation of powers of the administrative bodies
Held:

2) Statutes conferring powers on their administrative agencies must be liberally construed to

enable them to discharge their assigned duties in accordance with the legislative purpose. 8
Following this policy in Antipolo Realty Corporation v. National Housing Authority, 9 the Court
sustained the competence of the respondent administrative body, in the exercise of the exclusive
jurisdiction vested in it by PD No. 957 and PD No. 1344, to determine the rights of the parties under
a contract cto sell a subdivision lot