Peñafrancia Shipping Corporation v. 168 Shipping Lines, Inc.

Decisions of an attached agency such as the MARINA Board in the exercise of its quasi-judicial functions are not subject to review by the department to which it is attached, but must be appealed to the Office of the President before elevation to the courts, the doctrine of qualified political agency not extending to acts of cabinet members sitting on the board in their ex officio capacity.

Petitioners Peñafrancia Shipping Corporation and Santa Clara Shipping Corporation are existing ferry operators serving the Matnog, Sorsogon–Allen, Northern Samar route. Respondent 168 Shipping Lines, Inc. sought to enter the same route by applying for a Certificate of Public Convenience (CPC) before the Maritime Industry Authority (MARINA). MARINA was created under Presidential Decree No. 474 as an agency under the Office of the President, later designated as an attached agency of the Ministry (now Department) of Transportation and Communications under Executive Order No. 546, and granted quasi-judicial functions pertaining to water transportation under Executive Order No. 1011. The Administrative Code of 1987 reiterated MARINA's status as an attached agency of the DOTC. Republic Act No. 9295, the Domestic Shipping Development Act of 2004, governs MARINA's jurisdiction and powers, including the authority to issue CPCs for domestic shipping operations.

On September 28, 2007, respondent 168 Shipping Lines, Inc. filed an application with the MARINA Regional Office V in Legaspi City for the issuance of a Certificate of Public Convenience to operate M/V Star Ferry I, a roll-on-roll-off vessel, on the route Matnog, Sorsogon to Allen, Northern Samar and vice versa. The proposed schedule reflected 90 departures from Matnog and 86 departures from Allen. Petitioners Peñafrancia Shipping Corporation and Santa Clara Shipping Corporation, existing operators serving the same ports, intervened and opposed the application on three grounds: respondent failed to submit a Certificate of Berthing as required under MARINA Memorandum Circular No. 74-B; the proposed schedule was physically impossible for respondent's lone vessel; and there existed an overtonnage on the route warranting MARINA's intervention. Respondent countered that under R.A. No. 9295 and its Implementing Rules and Regulations, a CPC application is not adversarial in character, precluding intervention and opposition, and that no Certificate of Berthing from the Philippine Ports Authority was required.

On December 13, 2007, the MARINA RO V directed respondent to file an amended CPC application with workable sailing frequencies. Instead of complying, respondent submitted a pleading denominated "RE: ADOPTION OF AMENDED SCHEDULE OF TRIPS." The MARINA RO V, in its Decision dated February 1, 2008, denied due course to respondent's application. Respondent's motion for reconsideration was denied. On March 26, 2008, respondent filed a Notice of Appeal before the Office of the MARINA Administrator.

On August 8, 2008, MARINA Administrator Vicente T. Suazo, Jr., joined by Deputy Administrator for Operations Primo V. Rivera, acting by authority of the Board, reversed the MARINA RO V Decision and granted respondent's CPC application. Petitioners sought reconsideration, but their motion was denied through a Resolution signed by MARINA Officer-in-Charge Maria Elena H. Bautista, who was then concurrent Undersecretary for Maritime Transport of the DOTC. Petitioners then appealed to the CA via Rule 43, but the CA dismissed the petition for failure to exhaust administrative remedies, holding that MARINA is an entity within the Executive Department and that its rulings are subject to consecutive review by the DOTC Secretary and the Office of the President. Petitioners' motion for reconsideration was likewise denied.

Meanwhile, on March 22, 2010, petitioners filed a separate moratorium petition before MARINA, praying for a moratorium on the grant of CPCs for the subject routes. Respondent moved to dismiss the present petition on the ground of forum shopping, arguing that the moratorium petition sought to achieve the same objective as the present case. Petitioners countered that the two cases involved different causes of action: a favorable judgment in the present case would retroactively void the CPC already issued, while a granted moratorium would prospectively freeze new applications.

• Proper Remedy Under the IRR: Petitioners argued that the IRR of R.A. No. 9295 provides that a petition for review under Rule 43 is the immediate and direct remedy from adverse rulings of the MARINA, specifically citing paragraph 2, Section 1, Rule XV of the IRR.
• CA as Proper Forum: Petitioners maintained that the proper forum for review of decisions rendered by a quasi-judicial agency is the Court of Appeals.
• Decision by the Board: Petitioners contended that the decision and resolution subject of the Rule 43 petition were acts of the MARINA Board, not merely of the Administrator, and thus the IRR provision on appeals from the Administrator did not apply.
• Exception to Exhaustion of Administrative Remedies: Assuming appeal to the DOTC Secretary and the OP is necessary, petitioners argued the case falls under an exception because such appeal would be a superfluity.
• Doctrine of Qualified Political Agency: Petitioners asserted that the DOTC Secretary, as chairman of the MARINA Board, is the alter ego of the President, making further appeal redundant.
• Impracticality of Appeal to OP: Petitioners argued it would be impractical to file an appeal with the OP because an individual from the OP is also a member of the MARINA Board.
• No Forum Shopping: Petitioners maintained that the moratorium petition and the present case involve different causes of action, as the former seeks prospective relief while the latter seeks retroactive voidance of the CPC.

• IRR Provision Void: Respondent countered that the IRR provision on appeal is void and cannot supplant Section 19, Chapter IV, Book VII of the Administrative Code of 1987, which provides that an appeal from a final decision of the agency may be taken to the Department Head unless otherwise provided by law.
• IRR Inapplicable: Respondent argued that the IRR did not provide for the mode of appeal of decisions of the MARINA Board, but only for appeals from orders, rulings, decisions, or resolutions of the MARINA Administrator.
• Review by DOTC Secretary and OP: Respondent contended that the DOTC is an attached agency under the control of the executive department, and that decisions or rulings rendered by the MARINA Board in the exercise of its quasi-judicial functions are subject to review by the DOTC Secretary and the OP.
• MARINA Within Executive Framework: Respondent maintained that MARINA was never taken out of the framework of the executive department.
• Presidential Control: Respondent argued that even assuming MARINA decisions are not reviewable by the DOTC, the Constitution and the Administrative Code of 1987 provide that the President has control of all executive departments, bureaus, and offices.
• No Exception to Exhaustion: Respondent asserted that the case does not fall under any recognized exception to the doctrine of exhaustion of administrative remedies.
• Forum Shopping: Respondent moved to dismiss the petition on the ground that petitioners committed a willful act of forum shopping by filing the moratorium petition.

• Forum Shopping: Whether petitioners committed forum shopping when they filed the moratorium petition before MARINA while the present petition was pending.
• Exhaustion of Administrative Remedies: Whether the decision of the MARINA Board in the exercise of its quasi-judicial function should be appealed first to the DOTC Secretary, and subsequently to the Office of the President, before appeal to the Court of Appeals.

• Forum Shopping: No. The moratorium petition prays for a relief different from that sought in the main case, and any decision thereon will not affect the CPC already issued to respondent and appealed before the CA.
• Exhaustion of Administrative Remedies: Yes, in part. The DOTC Secretary cannot review decisions of the MARINA Board, as MARINA is an attached agency, not one under departmental supervision and control. However, such decisions must be appealed to the Office of the President before recourse to the CA, because the DOTC Secretary and the Executive Secretary sit on the MARINA Board in their ex officio capacity, not as alter egos of the President.

• Forum Shopping: Forum shopping exists when a party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues. The test is whether the elements of litis pendentia are present or whether a final judgment in one case amounts to res judicata in the other, requiring identity of parties, identity of rights asserted and reliefs prayed for, and identity such that any judgment would amount to res judicata. The moratorium petition prays for a prospective stoppage in the grant of new CPCs, not for the cancellation or revocation of the CPC already issued to respondent. Any MARINA decision on the moratorium petition will not affect the CPC already issued and appealed before the CA. The reliefs are distinct, and thus the elements of forum shopping are absent.

• Exhaustion of Administrative Remedies: Petitioners relied on paragraph 2, Section 1, Rule XV of the IRR of R.A. No. 9295, which provides that the order, ruling, decision, or resolution of the MARINA Administrator may be appealed to the MARINA Board or through a petition for judicial review with the CA or Supreme Court. However, this provision applies only to appeals from the MARINA Administrator's decisions; it does not provide a procedure for appealing decisions of the MARINA Board itself. Moreover, R.A. No. 9295 does not provide any procedure for appeal before the courts, and implementing rules cannot go beyond the terms of the law they implement. While Rule 43 governs appeals from quasi-judicial agencies to the CA, the aggrieved party must still exhaust administrative remedies prior to judicial recourse. Under the Administrative Code of 1987, Section 19, Chapter IV, Book VII provides that an appeal from a final decision of an agency may be taken to the Department head unless otherwise provided by law, and Section 25 provides for judicial review after administrative remedies are exhausted. The critical question is whether the DOTC Secretary, as department head, can review decisions of the MARINA Board. Under Section 38, Chapter VII, Book IV of the Administrative Code, there are three kinds of administrative relationships: supervision and control, administrative supervision, and attachment. Supervision and control is the most stringent, giving the department power to review subordinate agency decisions. Administrative supervision expressly withholds the power to review quasi-judicial decisions. As to attachment—the relationship between DOTC and MARINA—the law is silent on review power, but Section 38(3) indicates the legislature did not intend attached agency decisions to be subject to departmental review, as the lateral relationship is limited to policy and program coordination. Section 39, Chapter VIII, Book IV expressly states that the chapter on supervision and control shall not apply to chartered institutions attached to the department. Reading Sections 38 and 39 together, the decision of an attached agency like MARINA in the exercise of its quasi-judicial function is not subject to review by the department. Thus, petitioners are correct that the DOTC Secretary cannot review MARINA Board decisions. However, this does not mean MARINA decisions are not appealable to the OP. Under Administrative Order No. 18, a decision or order issued by a department or agency need not be appealed to the OP only when a special law provides a different mode of appeal. R.A. No. 9295 does not provide an appeal procedure, so the assailed MARINA decision should have been appealed to the OP. The doctrine of qualified political agency does not apply because the DOTC Secretary and the Executive Secretary are ex officio members of the MARINA Board by virtue of Section 7 of PD 474, as amended—they sit on the Board by reason of their office, not by direct presidential appointment. Following Manalang-Demigillo vs. TIDCORP, their actions as Board members were made not as alter egos of the President but as Board members constituted by law. An appeal to the OP is therefore still warranted. Only after an adverse OP decision may a petition for review under Rule 43 be filed with the CA. Petitioners' failure to exhaust this remedy rendered their CA petition properly dismissed.

• Doctrine of Exhaustion of Administrative Remedies — Requires that an administrative decision first be appealed to the administrative superiors up to the highest level before it may be elevated to a court of justice for review. The underlying principle rests on the presumption that the administrative agency, if afforded a complete chance to pass upon the matter, will decide correctly. The doctrine is flexible and may be disregarded in certain recognized exceptional circumstances, but none of those exceptions applied here. The Court applied the doctrine to require appeal to the OP before judicial recourse to the CA, even though the DOTC Secretary could not review MARINA Board decisions.

• Doctrine of Qualified Political Agency — Heads of executive departments are alter egos of the President, and their actions in the performance of official duties are deemed the acts of the President unless disapproved by the President. The doctrine was adopted out of practical necessity, as the President cannot personally perform all executive functions. However, the doctrine does not extend to acts of department heads in their capacity as ex officio members of boards or agencies. The Court held that because the DOTC Secretary and the Executive Secretary sit on the MARINA Board by virtue of law (Section 7, PD 474) and not by direct presidential appointment, their actions as Board members are not acts of the President's alter egos, and appeal to the OP remains necessary.

• Administrative Relationship of Attachment — Under Section 38(3), Chapter VII, Book IV of the Administrative Code of 1987, attachment refers to a lateral relationship between a department and the attached agency for purposes of policy and program coordination only. An attached agency has a larger measure of independence than one under supervision and control or administrative supervision. Under Section 39, the chapter on supervision and control does not apply to chartered institutions attached to a department. The Court applied this doctrine to hold that the DOTC Secretary cannot review MARINA Board decisions, as MARINA is merely an attached agency.

• Forum Shopping — Exists when a party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues. The test is whether the elements of litis pendentia are present or whether a final judgment in one case amounts to res judicata in the other. The Court found no forum shopping because the moratorium petition sought prospective relief distinct from the retroactive relief sought in the main case.

• "Reading Section 39 together with Section 38, the decision of an attached agency such as the MARINA in the exercise of its quasi-judicial function is not subject to review by the department." — This passage articulates the ratio decidendi on the DOTC Secretary's lack of power to review MARINA Board decisions, grounded in the distinction between attachment and supervision and control under the Administrative Code.

• "But the doctrine of qualified political agency does not apply to the actions of heads of executive departments in the performance of their duties as ex officio members of the various agencies or entities under the executive department." — This defines the limitation on the doctrine of qualified political agency, establishing that cabinet members acting as ex officio board members are not acting as presidential alter egos.

• "However, this is not to say, however, that decisions of the MARINA are not proper subjects of appeal to the OP." — This passage marks the Court's pivotal distinction: while the DOTC Secretary cannot review MARINA Board decisions, the Office of the President can and must be resorted to before judicial review.

• "Rules and regulations issued to implement a law cannot go beyond its terms and provisions." — This principle limits the authority of implementing rules to the scope of the statute they implement, applied here to reject the IRR of R.A. No. 9295 as a basis for direct judicial appeal.

• Beja vs. Court of Appeals, G.R. No. 97149, March 31, 1992, 207 SCRA 689 — Followed. Distinguished an attached agency from one under departmental supervision and control or administrative supervision, holding that an attached agency has a larger measure of independence and that the Administrative Code's chapter on supervision and control does not apply to chartered institutions attached to a department.

• Manalang-Demigillo vs. Trade and Investment Development Corporation of the Philippines, G.R. No. 168613, March 5, 2013, 692 SCRA 359 — Followed. Held that the doctrine of qualified political agency cannot be extended to acts of a board of directors despite some members being cabinet secretaries, because they sat on the board ex officio by virtue of law, not by direct presidential appointment. Applied directly to the MARINA Board's composition.

• Civil Liberties Union vs. Executive Secretary, G.R. No. 83896, February 22, 1991, 194 SCRA 317 — Cited for the definition of "ex officio" as authority derived from official character merely, annexed to the official position, not expressly conferred upon the individual.

• Phillips Seafood (Philippines) Corporation vs. Board of Investments, G.R. No. 175787, February 4, 2009, 578 SCRA 113 — Followed. Recognized that under Administrative Order No. 18, an appeal to the OP need not be taken when a special law provides a different mode of appeal; since R.A. No. 9295 provides no appeal procedure, appeal to the OP was required.

• Carpio vs. Executive Secretary, G.R. No. 96409, February 14, 1992, 206 SCRA 290 — Cited for the definition of the President's power of control over the executive branch as the power to alter, modify, nullify, or set aside what a subordinate officer had done and substitute the judgment of the former with that of the latter.

• China Banking Corporation vs. Members of the Board of Trustees, Home Development Mutual Fund, G.R. No. 131787, May 19, 1999, 307 SCRA 443 — Cited for the principle that rules and regulations implementing a law cannot go beyond the law's terms and provisions.

• Estrada vs. Court of Appeals, G.R. No. 137862, November 11, 2004, 442 SCRA 117 — Cited for the enumeration of recognized exceptions to the doctrine of exhaustion of administrative remedies, none of which were found applicable in this case.

• Section 19, Chapter IV, Book VII, Administrative Code of 1987 — Provides that unless otherwise provided by law or executive order, an appeal from a final decision of an agency may be taken to the Department head. The Court examined this provision in the context of whether the DOTC Secretary could review MARINA Board decisions.

• Sections 20–25, Chapter IV, Book VII, Administrative Code of 1987 — Govern the perfection, effect, action on appeal, finality, and judicial review of administrative appeals. Section 25 provides that agency decisions are subject to judicial review and that the petition for review must be perfected within fifteen days from receipt of the final administrative decision.

• Section 38, Chapter VII, Book IV, Administrative Code of 1987 — Defines three kinds of administrative relationships: supervision and control, administrative supervision, and attachment. The Court relied on this provision to determine that MARINA, as an attached agency, is not subject to departmental review of its quasi-judicial decisions.

• Section 39, Chapter VIII, Book IV, Administrative Code of 1987 — States that the chapter on supervision and control shall not apply to chartered institutions or government-owned or controlled corporations attached to the department. Read with Section 38, this confirmed that the DOTC Secretary cannot review MARINA Board decisions.

• Section 23, Chapter 6, Title XV, Book IV, Administrative Code of 1987 — Lists MARINA among the agencies attached to the DOTC, establishing MARINA's administrative relationship as one of attachment.

• Section 10, R.A. No. 9295 (Domestic Shipping Development Act of 2004) — Grants MARINA the power to issue certificates of public convenience authorizing the operation of vessels in domestic shipping. The Court noted that this law does not provide any procedure for appeal before the courts.

• Section 7, Presidential Decree No. 474, as amended — Provides the composition of the MARINA Board, including the Secretary of Public Works, Transportation and Communications and the Executive Secretary as members. The Court used this provision to establish that these officials sit on the Board ex officio by virtue of law, not by presidential appointment.

• Rule XV, Section 1, IRR of R.A. No. 9295 — Provides the procedure for appeals from decisions involving CPCs, including appeals from the MARINA Administrator to the MARINA Board or to the CA/Supreme Court. The Court held this provision applies only to the MARINA Administrator's decisions, not to the MARINA Board's, and cannot serve as basis for direct judicial appeal.

• Section 9, Batas Pambansa Blg. 129 — Authorizes the CA to exercise jurisdiction over decisions or final orders of quasi-judicial agencies, providing the statutory basis for Rule 43 appeals.

• Administrative Order No. 18 (1987) — Prescribes rules governing appeals to the Office of the President, stating that unless otherwise governed by special laws, an appeal to the OP shall be taken within thirty days from receipt of the decision appealed from. The Court applied this to require appeal to the OP since R.A. No. 9295 provides no alternative appeal procedure.

Velasco, Jr. (Chairperson), Peralta, Perez, and Reyes, JJ., concurred.