National Electrification Administration vs. Val L. Villanueva

Failure to exhaust administrative remedies by appealing an NEA order to the Office of the President under Section 13, Chapter II of P.D. No. 269 bars resort to court and results in lack of cause of action. An electric cooperative BOD member who becomes Liga President and thereby an ex-officio member of the Sangguniang Bayan is disqualified from the BOD under the NEA Guidelines and Memorandum.

The National Electrification Administration (NEA) is the government agency exercising supervision over electric cooperatives, including the Agusan del Norte Electric Cooperative (ANECO). Under Presidential Decree No. 269, NEA is under the supervision of the Office of the President, and its orders, rules, and regulations are subject to the approval of that Office. NEA has issued the Guidelines in the Conduct of Electric Cooperative District Elections and a Memorandum dated February 13, 1998 governing qualifications of cooperative board members. Val L. Villanueva was an elected member of ANECO's Board of Directors.

Val L. Villanueva was an elected member of the Board of Directors of ANECO for a term of three years, from 2001 to 2003. With the subsequent redistricting of the area he represented, his term was extended until 2006. In 2002, while serving as an ANECO BOD member, he was elected Barangay Chairman of Barangay 12, Municipality of Cabadbaran, Agusan del Norte. Thereafter, he was elected President of what was formerly known as the Association of Barangay Captains, now known as Liga ng mga Barangay, of Cabadbaran. By virtue of his position as Liga President, he sat as an ex-officio member of the Sangguniang Bayan of Cabadbaran.

Subsequently, the General Manager of ANECO sought the opinion of NEA as to whether Villanueva was still qualified to sit as a member of the ANECO BOD. In response, the NEA Director for Co-Op Operations issued an opinion dated December 10, 2002 stating that Villanueva could no longer serve as a member of the ANECO BOD because he was considered automatically resigned from that position when he took his oath of office as Liga President. The opinion cited as authority the Local Government Code of 1991, NEA Memorandum dated February 13, 1998, and the Guidelines in the Conduct of Electric Cooperative District Elections.

In a letter dated January 3, 2003, Villanueva sought the opinion of the Provincial Director of the Department of Interior and Local Government relative to his disqualification as a member of the ANECO BOD. In a letter dated January 7, 2003, the DILG Provincial Director stated that his office could not issue an official opinion because another agency had jurisdiction over the matter. Nonetheless, he expressed the view that Villanueva was not a regular member of the Sangguniang Bayan; he occupied the office only in an ex-officio capacity because he was not duly elected thereto by the registered voters of Cabadbaran, but occupied the position only by reason of his being the president of the Liga.

On January 31, 2003, Villanueva requested review and reconsideration of the disputed opinion of the NEA Director for Co-Op Operations. The request was denied in a letter dated February 17, 2003 by the NEA Chief Operating Officer/Deputy Administrator for Co-Op Development. Aggrieved by the denial, Villanueva filed with the RTC of Cabadbaran, Agusan del Norte, a petition for certiorari with prayer for preliminary injunction against NEA and ANECO. The case was docketed as SP. Civil Case No. 03-03.

• Exhaustion of Administrative Remedies: Petitioner contended that respondent went to court without first exhausting the administrative remedies available to him, making his action premature or not ripe for judicial determination and leaving him without a cause of action.
• Office of the President's Review Power: Petitioner averred that in nullifying the NEA order, the RTC deprived the Office of the President of its power to review the disputed order.
• Scope of Disqualification: Petitioner argued that the provision in the Guidelines in the Conduct of Electric Cooperative District Elections prohibiting persons who hold an elective office in the government or are appointed to an elective position above the level of Barangay Captain from being members of the BOD applies not only to candidates for membership in the BOD but also to incumbent members thereof.
• Invalid TRO: Petitioner asserted that the temporary restraining order issued by the RTC was invalid because it was made effective beyond the 20-day period provided under the Rules of Court.

• Grave Abuse of Discretion / Jurisdiction: Whether the Presiding Judge of the RTC exercised grave abuse of discretion amounting to lack or excess of jurisdiction in deciding the case in an action for certiorari with prayer for preliminary injunction and in nullifying an order issued by an administrative agency without sufficient legal basis.
• Exhaustion of Administrative Remedies / Cause of Action: Whether the case should be dismissed for lack of cause of action on the ground of respondent's failure to exhaust administrative remedies.
• Qualification of ANECO BOD Member: Whether respondent can still continue to be a member of the ANECO BOD after becoming an ex-officio member of the Sangguniang Bayan of Cabadbaran.
• TRO and Preliminary Injunction: Whether the law was correctly applied by the trial court in the issuance of the Temporary Restraining Order and Writ of Preliminary Injunction.

• Grave Abuse of Discretion / Jurisdiction: Yes. The RTC should have dismissed the petition because respondent failed to exhaust administrative remedies; its decision nullifying the NEA order lacked sufficient legal basis.
• Exhaustion of Administrative Remedies / Cause of Action: Yes. Respondent failed to appeal the NEA order to the Office of the President under Section 13, Chapter II of P.D. No. 269; non-observance of the doctrine of exhaustion results in lack of cause of action.
• Qualification of ANECO BOD Member: No. Under Section 7(8), Article II of the NEA Guidelines and the February 13, 1998 NEA Memorandum, respondent became ineligible and disqualified as an ANECO BOD member upon becoming an ex-officio member of the Sangguniang Bayan.
• TRO and Preliminary Injunction: No, as to the TRO. The RTC erred in ruling that the TRO issued on December 2, 2003 was effective until January 5, 2004; under Section 5, Rule 58, a TRO issued by the RTC is limited to 20 days and automatically expires, with no power to extend.

• Grave Abuse of Discretion / Jurisdiction: The RTC entertained Villanueva's certiorari petition despite the availability of an administrative appeal to the Office of the President. Under Section 13, Chapter II of P.D. No. 269, NEA is under the supervision of the Office of the President, and all orders, rules and regulations promulgated by NEA are subject to the approval of that Office. Because the President may review on appeal the orders or acts of NEA, Villanueva's failure to undertake such an appeal barred him from resorting to a judicial suit. The doctrine of exhaustion of administrative remedies requires that recourse through court action cannot prosper until all administrative remedies have first been exhausted. The party with an administrative remedy must initiate the prescribed procedure and pursue it to its appropriate conclusion before seeking judicial intervention, so as to give the administrative agency an opportunity to decide the matter correctly and prevent unnecessary and premature resort to court. Non-observance results in lack of cause of action, a ground for dismissal. Thus, the RTC's decision nullifying the NEA order was without sufficient legal basis.
• Exhaustion of Administrative Remedies / Cause of Action: Villanueva failed to exhaust his administrative remedies when he filed the RTC case without appealing the NEA decision to the Office of the President. This failure resulted in lack of cause of action. The RTC should have dismissed the petition. The availability of review by the President under P.D. No. 269 is the prescribed administrative remedy that must be pursued to conclusion before judicial intervention. Hence, the petition filed with the RTC necessarily failed.
• Qualification of ANECO BOD Member: Section 7(8), Article II of the Guidelines provides that bona fide members who possess the qualifications are eligible to become and/or remain as BOD, including that he/she does not hold elective office in the government nor appointed to an elective position above the level of a Barangay Captain. The NEA Memorandum dated February 13, 1998 states that Book III, Article Three, Section 446 of R.A. 7160 lists the composition of the Sangguniang Bayan, including the President of the Municipal Chapter of the Liga ng mga Barangay; such persons are considered ex-officio members of the Sanggunian under Rule XXIX, Article 211(d) of the Implementing Rules and Regulations of RA 7160. All coop officials and employees who are subsequently elected as President of the Municipal Chapter of the Liga ng mga Barangay, after having won in the barangay elections, shall be considered automatically resigned upon taking oath as Liga President. Salomon vs. National Electrification Administration upheld the disqualification of an elected Barangay Captain who became an ex-officio member of the Sangguniang Panlalawigan representing barangay officials. The disqualification under P.D. No. 269, although pertaining to elective officers except barrio captains and councilors, is equally applicable to an appointed member of the Sangguniang Panlalawigan, which is an elective office. The prohibition refers to a person holding an office, the assumption to which, while generally determined by an election, is not precluded by appointment. The purpose is to prevent incumbents of elective offices from exerting political influence and pressure on the management of the cooperative. A person appointed to an elective office can exercise all powers and prerogatives attached to said office and can wield as much pressure and influence on an electric cooperative as an elected member. Although the position in Salomon differs from that of Villanueva, the rule applies squarely. Consequently, when Villanueva was designated as a member of the Sangguniang Bayan of Cabadbaran, he became ineligible and disqualified as a member of the ANECO BOD.
• TRO and Preliminary Injunction: Under Section 5, Rule 58, a judge may issue a TRO effective only for 20 days from notice to the party or person sought to be enjoined. Within that period, the court must order the party to show cause, determine whether preliminary injunction shall be granted, and issue the corresponding order. If the application for preliminary injunction is denied before expiration, the TRO is automatically vacated. If no action is taken within the 20 days, the TRO automatically expires on the 20th day by sheer force of law; no judicial declaration is necessary, and courts have no discretion to extend it. The rule against non-extendibility of the 20-day limited period is absolute if the TRO is issued by a regional trial court. The RTC committed error when it ruled that the TRO it issued on December 2, 2003 was effective until January 5, 2004, a period beyond 20 days. This did not invalidate the entire TRO; it remained valid and in effect only within the 20-day period, after which it automatically expired.

• Doctrine of Exhaustion of Administrative Remedies — Under this doctrine, recourse through court action cannot prosper until after all administrative remedies have first been exhausted. If a remedy is available within the administrative machinery, it must be resorted to before recourse to courts. The party with an administrative remedy must not only initiate the prescribed administrative procedure to obtain relief but also pursue it to its appropriate conclusion before seeking judicial intervention, in order to give the administrative agency an opportunity to decide the matter correctly and to prevent unnecessary and premature resort to court. Non-observance results in lack of cause of action, a ground for dismissal. In this case, respondent should have appealed the NEA order to the Office of the President under Section 13, Chapter II of P.D. No. 269; his failure to do so barred his RTC petition.
• Qualification of Electric Cooperative Board Members — Section 7(8), Article II of the NEA Guidelines provides that bona fide members are eligible to become and/or remain as members of the Board of Directors if they do not hold elective office in the government nor are appointed to an elective position above the level of a Barangay Captain. The NEA Memorandum dated February 13, 1998 states that the Liga President is an ex-officio member of the Sanggunian and that cooperative officials or employees elected as Liga President are considered automatically resigned upon taking their oath. Salomon vs. National Electrification Administration held that the disqualification applies to an appointed member of an elective office, such as the Sangguniang Panlalawigan, because the purpose is to prevent incumbents of elective offices from exerting political influence and pressure on cooperative management. The rule applied to respondent, who became an ex-officio member of the Sangguniang Bayan as Liga President.
• 20-Day Limit on Temporary Restraining Orders — Under Section 5, Rule 58 of the Rules of Court, a temporary restraining order issued by a regional trial court is effective only for 20 days from notice to the party or person sought to be enjoined. If no action is taken on the application for preliminary injunction within that period, the TRO automatically expires on the 20th day by operation of law; no judicial declaration is necessary, and the court has no discretion to extend it. The rule against non-extendibility is absolute if the TRO is issued by a regional trial court. The RTC's TRO, made effective until January 5, 2004 despite issuance on December 2, 2003, exceeded the 20-day period; it remained valid only within the 20 days and then expired.

• "Considering that the President has the power to review on appeal the orders or acts of petitioner NEA, the failure of respondent to undertake such an appeal bars him from resorting to a judicial suit." — This passage states the ratio for dismissing the RTC petition: the Office of the President had appellate authority over NEA, and Villanueva's failure to invoke it precluded judicial recourse.
• "The non-observance of the doctrine of exhaustion of administrative remedies results in lack of cause of action, which is one of the grounds in the Rules of Court justifying the dismissal of the complaint." — This excerpt defines the consequence of failing to exhaust administrative remedies and supplies the procedural basis for dismissing Villanueva's petition.
• "The purpose of the disqualification is to prevent incumbents of elective offices from exerting political influence and pressure on the management of the affairs of the cooperative." — This passage articulates the policy behind the disqualification of cooperative board members who hold or occupy elective offices, which the Court applied to Villanueva as Liga President and ex-officio Sangguniang Bayan member.
• "The rule against the non-extendibility of the twenty (20)-day limited period of effectivity of a temporary restraining order is absolute if issued by a regional trial court." — This excerpt states the controlling rule on the 20-day lifetime of a TRO issued by the RTC, which the Court applied to invalidate the extended effectivity of the TRO.

• Salomon vs. National Electrification Administration, 251 Phil. 459 (1989) — Controlling precedent on disqualification of electric cooperative board members; the Court applied its ruling that the prohibition covers appointed members of elective offices, such as the Sangguniang Panlalawigan, to disqualify respondent as ANECO BOD member.
• National Electrification Administration vs. Judge Mendoza, 223 Phil. 215, 219 (1985) — Cited to support the rule that the President has the power to review on appeal the orders or acts of NEA.
• Teotico vs. Baer, G.R. No. 147464, June 8, 2006, 490 SCRA 279, 285 — Cited for the doctrine of exhaustion of administrative remedies and the rule that non-observance results in lack of cause of action.
• Montanez vs. Provincial Agrarian Reform Adjudicator, G.R. No. 183142, September 17, 2009 — Cited for the requirement that a party must initiate and pursue the prescribed administrative procedure to its conclusion before seeking judicial intervention.
• Mendoza vs. Judge Ubiadas, 462 Phil. 633, 647 (2003) — Cited for the automatic expiration of a TRO when no action is taken on the application for preliminary injunction within the 20-day period.
• Bacolod City Water District vs. Hon. Labayen, 487 Phil. 335, 348 (2004) — Cited for the rule that the non-extendibility of the 20-day TRO period is absolute if the TRO is issued by a regional trial court.

• Section 13, Chapter II, Presidential Decree No. 269 (National Electrification Administration Decree) — Provides that NEA shall be under the supervision of the Office of the President of the Philippines, and all orders, rules and regulations promulgated by NEA shall be subject to the approval of the Office of the President. Applied to hold that the President could review the NEA order on appeal and that respondent's failure to appeal barred his judicial suit.
• Section 7(8), Article II, Guidelines in the Conduct of Electric Cooperative District Elections (June 23, 1993) — Provides that bona fide members who possess the qualifications are eligible to become and/or remain as members of the Board of Directors, including that the person does not hold elective office in the government nor is appointed to an elective position above the level of a Barangay Captain. Applied to disqualify respondent from the ANECO BOD.
• NEA Memorandum dated February 13, 1998 — States that the President of the Municipal Chapter of the Liga ng mga Barangay is an ex-officio member of the Sanggunian and that all cooperative officials and employees who are subsequently elected as Liga President are considered automatically resigned upon taking their oath. Applied to treat respondent as resigned and disqualified from the ANECO BOD.
• Book III, Article Three, Section 446, Republic Act No. 7160 (Local Government Code of 1991) — Lists the composition of the Sangguniang Bayan, including the President of the Municipal Chapter of the Liga ng mga Barangay. Cited in the NEA Memorandum to establish that the Liga President is an ex-officio member of the Sanggunian.
• Rule XXIX, Article 211(d), Implementing Rules and Regulations of Republic Act No. 7160 — Provides for ex-officio membership in the Sanggunian. Cited in the NEA Memorandum to support the classification of the Liga President as an ex-officio member.
• Section 5, Rule 58, Rules of Court — Provides that a temporary restraining order may be issued ex parte effective only for 20 days from notice to the party or person sought to be enjoined; within that period the court must determine whether to grant preliminary injunction. Applied to hold that the RTC's TRO beyond the 20-day period was erroneous and automatically expired.
• Section 21, P.D. No. 269, as amended — Mentioned in Salomon vs. National Electrification Administration as the source of the disqualification of elective officers, except barrio captains and councilors, from serving as cooperative directors. Applied by extension to an appointed member of an elective office.

Renato C. Corona (Chairperson), Presbitero J. Velasco, Jr., Antonio Eduardo B. Nachura, and Jose Catral Mendoza.