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Admin Digest - Kilusang Bayan V Dominguez

The Supreme Court ruled the order issued by the Secretary of Agriculture removing the board of directors of KBMBPM was illegal. The order disregarded the established procedures under P.D. No. 175 and KBMBPM's bylaws for removing directors, which require a majority vote of members after the directors have an opportunity to be heard. While the Secretary has authority to supervise and regulate cooperatives, this does not include the power to summarily remove directors without following the proper procedures. The power must be expressly granted or necessarily implied, and neither P.D. No. 175 nor the bylaws imply the Secretary has authority to take such action.

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Alyssa Clarizze Malaluan
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Admin Digest - Kilusang Bayan V Dominguez

The Supreme Court ruled the order issued by the Secretary of Agriculture removing the board of directors of KBMBPM was illegal. The order disregarded the established procedures under P.D. No. 175 and KBMBPM's bylaws for removing directors, which require a majority vote of members after the directors have an opportunity to be heard. While the Secretary has authority to supervise and regulate cooperatives, this does not include the power to summarily remove directors without following the proper procedures. The power must be expressly granted or necessarily implied, and neither P.D. No. 175 nor the bylaws imply the Secretary has authority to take such action.

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Alyssa Clarizze Malaluan
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© © All Rights Reserved
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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.

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.

Facts:
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 Departments 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.

A substantially identical provision, found in Section 17, Article III of


the KBMBPMs 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.

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

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 Secretarys 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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