METRO CEBU HARBOR PILOTS CO., INC., PETITIONER, VS. HON. EUGENIO G. DELA CRUZ (IN HIS CAPACITY AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT, BRANCH 117, PASAY CITY), HON. PEDR…
GARCIA, R.R., J.:
THE FACTS
The instant case stemmed from a Petition[5] for Declaratory Relief filed before the RTC, Branch 117, Pasay City by herein private respondent APL CO. PTE LTD. (APL, for brevity) against petitioner Metro Cebu Harbor Pilots Co., Inc. (MCHPCI, for brevity) and public respondent Cebu Port Authority (CPA, for brevity).
It was alleged therein that in 1992, Republic Act No. 7621 creating the Cebu Port Authority was enacted into law pursuant to the state policy of promoting the establishment and growth of regional port bodies. As a result, all ports in Cebu City which were previously under the jurisdiction of the Philippine Ports Authority (PPA) were transferred to public respondent CPA.
In line with its mandate to manage and operate the activities of all ports within its territorial jurisdiction, public respondent CPA issued on November 24, 1997 Memorandum Circular No. 22-97 prescribing pilotage rates which shall be inclusive of premium or overtime pay, whether pilotage services are rendered during Sundays, holidays and nighttime from 1800H-0600H.
Thereafter, on March 31, 2004, public respondent CPA issued Administrative Order (AO) No. 02, Series of 2004, effectively repealing MC No. 22-97 such that the prescribed fees for pilotage services are now exclusive of overtime pay and premium pay.
Sometime in March 2009, private respondent APL received a demand letter from petitioner MCHPCI for the payment of the amount of P20,934,559.11 representing the latter’s alleged collectible overtime pay plus interest from private respondent APL for the period beginning 1997 until 2004. In its reply, private respondent APL informed petitioner MCHPCI that it cannot adhere to such demand considering that the prescribed pilotage rates under MC No. 22-97 issued on November 24, 1997 are inclusive of overtime and premium pay.
Consequently, private respondent APL filed the instant petition for declaratory relief before the court a quo praying that the pilotage fees which it paid to petitioner MCHPCI from 1997-2004 be considered as inclusive of overtime and nighttime pay pursuant to the provisions of MC No. 22-97.
In its Answer[6], petitioner MCHPCI averred that it is entitled to collect overtime and nighttime pay. As an affirmative defense, it contended that MC No. 22-97 is unconstitutional for being an invalid administrative issuance. The said memorandum circular is an erroneous interpretation of Executive Order No. 1088 and that it served as a class legislation depriving harbor pilots operating in Cebu of overtime and nighttime pay. By way of compulsory counterclaim, petitioner MCHPCI prayed that private respondent APL be ordered to pay the amount of P20,934,559.11 representing petitioner MCHPCI’s collectible overtime pay and nighttime pay covering the period of May 1998 to December 2003 plus legal interest thereon as well as attorney’s fees of p500,000.00 and litigation expenses of P200,000.00.
In a Motion to Dismiss MCHPCI’s Cross-claim[7] filed by public respondent CPA, it was alleged that the validity and constitutionality of MC No. 22-97 can no longer be assailed as it had already been superseded and repealed by Administrative Order No. 02, Series of 2004, and that the same constitutes as a collateral attack on the said memorandum circular. Further, petitioner MCHPCI never challenged the inclusion of overtime and nighttime pay on the pilotage rates prescribed under MC No. 22-97 thereby waiving its rights thereunder. Petitioner MCHPCI likewise failed to exhaust administrative remedies in questioning the same.
In its Reply[8], petitioner MCHPCI asserted that the merits of its defense as to the validity and constitutionality of MC No. 22-97 should be heard since it constitutes one of the key grounds in resisting private respondent APL’s petition for declaratory relief. The said MC No. 22-97 runs counter to jurisprudence upholding harbor pilots’ entitlement to overtime and nighttime pay. In addition, the question of constitutionality of MC No. 22-97 involves a legal issue which is an exception to the doctrine of exhaustion of administrative remedies.
In an Order[9] dated October 8, 2012, the RTC, Branch 117, Pasay City granted the Motion to Dismiss MCHPCI’s Cross-Claim filed by public respondent CPA. It ratiocinated that in assailing the validity of MC No. 22-97, petitioner MCHPCI must first exhaust available administrative remedies before it can invoke judicial intervention. While there may be exceptions to the doctrine of exhaustion of administrative remedies, none is present in the instant case. The pertinent portions of the Order read:
Called to fore is a Motion to Dismiss (private respondent MCHPCI’s Cross-Claim) dated 18 April 2011, then filed by the Office of the Solicitor General (OSG) and thereafter, adopted by the Office of the Government Corporate Counsel (OGCC), the present counsel for Cebu Port Authority (CPA).
xxx
Private respondent MCHPCI alleged in its Answer, inter alia, by way of special and affirmative defenses, through a cross-claim against CPA that the latter’s Memorandum Circular No. 22097 is invalid and unconstitutional as it was allegedly an incorrect interpretation of E.O. 1088 and other existing jurisprudence.
On 04 April 2011, herein petitioner, by counsel, filed its Reply and Answer to Counterclaim (to the respondent CPA’s Answer). Petitioner admitted that respondent CPA was only impleaded in this case for having issued CPA MC No. 22-97 and said memorandum circular is clear and need not be interpreted by the Court. It further alleged, that CPA has no basis in filing a counterclaim in said petition considering that there was no positive relief being prayed for against it.
The Motion to Dismiss (private respondent Cross-Claim) is hereby granted for being meritorious. Private respondent cannot be allowed to invoke the judicial intervention without first seeking its redress in the administrative sphere if it wishes to question an administrative issuance.
While it may be true that the doctrine of exhaustion of administrative remedies is subject to several exceptions, the Court finds that the subject case does not fall under any of them.
IN THE LIGHT OF THE FOREGOING, as prayed for by public respondent CPA, and taking considerations the comments to the pleadings filed by OSG and subsequently adopted by OGCC, the Court GRANTS the Motion to Dismiss the cross-claim of MCHPCI.
SO ORDERED.[10]
Aggrieved, petitioner MCHPCI filed a Motion for Reconsideration[11] of the above Order.
Meanwhile, when the parties failed to reach an amicable settlement after the petition for declaratory relief was referred to judicial dispute resolution, the case was re-raffled to the RTC, Branch 119, Pasay City. In an Order[12] dated November 19, 2013, the court a quo denied petitioner MCHPCI’s motion for reconsideration for lack of merit. The pertinent portions of the Order are quoted:
Respondent MCHPCI anchored its motion on the ground that the doctrine of primary jurisdiction and exhaustion of administrative remedies are not iron-clad rule, as these are subject to numerous exceptions. Respondent further argued that its imputation of unconstitutionality of the CPA Memorandum Circular subject of this petition is purely legal issue which constitutes one of the valid exceptions to the administrative law doctrines. The respondent’s allegation of unconstitutionality of MC 22-97 should be heard as it constitutes one of the key grounds for resisting the Petition filed by the petitioner. This very issue was the cause of this petition and both parties should be heard respecting their claims and defenses without a strict regard for procedural technicalities and disposing said action on the merits. And respondent MCHPCI’s defense of unconstitutionality should be considered in this case and not be dismissed as a mere cross-claim against Cebu Port Authority.
Respondent Cebu Port Authority (CPA) on the other hand, maintained that said motion should be given scant consideration, as all the allegations and arguments raised in it have all been amply addressed in the Court’s Order of October 8, 2012 and no new issues or arguments raised to warrant reconsideration. Respondent CPA further contend that respondent MCHPCI’s claim of unconstitutionality of CPA MC 22-97 constitutes collateral attack and their failure to question and make a timely demand for overtime pay upon the passage of CPA MC 22-97 constitutes a waiver and abandonment of its right to it.
Having taken both parties’ arguments and there being no cogent reason why this Court divest the previous ruling of October 8, 2012 dismissing respondent MCHPCI’s cross-claim against respondent Cebu Port Authority, the motion should be denied.
WHEREFORE, the respondent MCHPCI’s motion for reconsideration is hereby denied for lack of merit.
xxx
SO ORDERED.
Aggrieved, petitioner MCHPCI filed the instant Petition for Certiorari, raising the lone ground[13] for its allowance, to wit:
PUBLIC RESPONDENTS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN GRANTING PRIVATE RESPONDENT CPA’S MOTION TO DISMISS CROSS-CLAIM THEREBY DENYING PETITIONER MCHPCI OF ITS DEFENSE OF THE UNCONSTITUTIONALITY OF CPA MEMORANDUM CIRCULAR NO. 22-97.
THE ISSUE
The pivotal issue for resolution is whether or not the court a quo committed grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing petitioner MCHPCI’s cross-claim against private respondent CPA.
THE COURT’S RULING
The petition is impressed with merit.
We agree.
Nevertheless, the principle of exhaustion of administrative remedies admits of certain exceptions and the same is disregarded: (1) when there is a violation of due process; (2) when the issue involved is purely a legal question; (3) when the administrative action is patently illegal and amounts to lack or excess of jurisdiction; (4) when there is estoppel on the part of the administrative agency concerned; (5) when there is irreparable injury; (6) when the respondent is a department secretary whose acts, as an alter ego of the President, bears the implied and assumed approval of the latter; (7) when to require exhaustion of administrative remedies would be unreasonable; (8) when it would amount to a nullification of a claim; (9) when the subject matter is a private land in land case proceedings; (10) when the rule does not provide a plain, speedy and adequate remedy; (11) when there are circumstances indicating the urgency of judicial intervention; and unreasonable delay would greatly prejudice the complainant; (12) when no administrative review is provided by law; (13) where the rule of qualified political agency applies; and (14) when the issue of non-exhaustion of administrative remedies has been rendered moot.[15]
Verily, this Court holds that the principle of exhaustion of administrative remedies finds no application in the instant case.
Records show that private respondent APL filed the instant petition for declaratory relief praying that the pilotage fees it paid to petitioner MCHPCI from 1997 to 2004 be considered as inclusive of overtime and nighttime pay in accordance with the provisions of MC No. 22-97.[16] Private respondent APL contends that the said MC No. 22-97 prescribing for pilotage fees inclusive of overtime and nighttime pay is constitutional and a valid administrative issuance, hence, it is not liable to any overtime and nighttime pay to petitioner MCHPCI.
On the other hand, petitioner MCHPCI hinges its demand for overtime and nighttime pay on the alleged unconstitutionality of MC No. 22-97 based on subsequent jurisprudential pronouncements wherein the Supreme Court had declared that harbor pilots are entitled to overtime and nighttime pay.
Gleaned from the foregoing contentions of the parties, it cannot be gainsaid that the controversy at hand essentially involves the constitutionality of MC No. 22-97, a legal issue which should be resolved by the court a quo. Considering further that the issuance of MC No. 22-97 by public respondent CPA was pursuant to its quasi-legislative or rule-making power, prior resort to administrative remedies is not necessary in challenging its validity.
In Smart Communications, Inc., et al. vs. NTC[17], the Supreme Court held that the principle of exhaustion of administrative remedies has no application in questioning the validity or constitutionality of a rule or regulation issued by an administrative agency in the exercise of its rule-making power. The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law or the constitution is within the jurisdiction of the regular courts. We quote:
In questioning the validity or constitutionality of a rule or regulation issued by an administrative agency, a party need not exhaust administrative remedies before going to court. This principle applies only where the act of the administrative agency concerned was performed pursuant to its quasi-judicial function, and not when the assailed act pertained to its rule-making or quasi-legislative power. In Association of Philippine Coconut Desiccators v. Philippine Coconut Authority, it was held:
The rule of requiring exhaustion of administrative remedies before a party may seek judicial review, so strenuously urged by the Solicitor General on behalf of respondent, has obviously no application here. The resolution in question was issued by the PCA in the exercise of its rule-making or legislative power.
xxx
However, where what is assailed is the validity or constitutionality of a rule or regulation issued by the administrative agency in the performance of its quasi-legislative function, the regular courts have jurisdiction to pass upon the same. The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law or the constitution is within the jurisdiction of the regular courts.
Moreover, it is noted that private respondent APL’s main purpose in filing a petition for declaratory relief is to have its rights and obligations determined under the provisions of MC No. 22-97. In fact, private respondent APL’s main contention is that it is not obliged to pay overtime and premium pay during the period of the validity and existence of MC No. 22-97. The validity and constitutionality of MC No. 22-97 is therefore central in resolving the petition for declaratory relief. It is for this reason that petitioner MCHPCI should be allowed to be heard on its defense of invalidity or unconstitutionality of MC No. 22-97. The court a quo thus committed grave abuse of discretion in granting the Motion to Dismiss MCHPCI’s Cross-Claim which effectively deprived petitioner MCHPCI of its defense against the petition for declaratory relief filed by private respondent APL.
It bears stressing that the ends of justice would be better served if substantial issues would be squarely addressed. Courts must see to it that a party litigant is given the fullest opportunity to establish the merits of his action or defense rather than for him to be deprived of life, honor or property on mere technicalities.[18]
It is well to stress that a writ of certiorari is intended to redress grave abuse of discretion or lack of jurisdiction on the part of the court a quo. We find that petitioner MCHPCI has sufficiently alleged and shown that court a quo committed grave abuse of discretion in the issuance of the assailed orders, and the grant of certiorari is thus proper under the premises.
WHEREFORE, premises considered, the instant petition for certiorari is hereby GRANTED. The assailed Order[19] dated October 8, 2012 of the Regional Trial Court, Branch 117, Pasay City and the Order[20] dated November 19, 2013 of the Regional Trial Court, Branch 119, Pasay City are hereby ANNULLED and SET ASIDE. Accordingly, the Motion to Dismiss (MCHPCI’s Cross-Claim) filed by public respondent Cebu Port Authority is DENIED.
SO ORDERED.
Salazar-Fernando, R.A. (Chairperson), and Bueser, D.Q., JJ., concur.
[1] Rollo, pp. 6-28.
[2] Rollo, pp. 29-30.
[3] Rollo, pp. 31-32.
[4] Rollo, pp. 213-226.
[5] Rollo, pp. 35-46.
[6] Rollo, pp. 47-60.
[7] Rollo, pp. 61-73.
[8] REPLY TO CEBU PORT AUTHORITY’S (CPA) COMENT TO THE OSG’S MOTION TO DISMISS CROSS-CLAIM WITH EX-PARTE MOTION TO ORDER CPA TO SERVE MCHPCI’S COUNSEL WITH COPIES OF THEIR PLEADINGS/PAPERS, Rollo, pp. 79-87.
[9] Rollo, pp. 29-30.
[10] Rollo, pp. 29-30.
[11] Rollo, pp. 88-95.
[12] Rollo, pp. 31-32.
[13] Rollo, p. 12.
[14] Province of Zamboanga del Norte vs. Court of Appeals and Zamboanga del Norte Electric Cooperative, G.R. No. 109853, October 11, 2000.
[15] Republic of the Philippines vs. Carlito Lacap, G.R. No. 158253, March 2, 2007.
[16] The pertinent portions of the Petition for Declaratory Relief reads:
WHEREFORE, premises considered, it is respectfully prayed of this Honorable Court that a decision be rendered declaring that the pilotage fees paid for by petitioner to the respondent for the period starting November 24, 1997 to May 12, 2004 as inclusive of overtime and premium pay pursuant to the provisions of CPA Memorandum Circular 22-97.
[17] G.R. No. 151908, August 12, 2003.
[18] Heirs of Agapito Olarte, et al. vs. Office of the President, et al. G.R. No. 165821, June 21, 2005.
[19] Rollo, pp. 29-30.
[20] Rollo, pp. 31-32.