G.R. No. 252063 - Mandaue City College vs. Commission on Higher Education

Case Summary (G.R. No. 252063)

Procedural History and Judicial Proceedings

Dr. Canete’s group filed in the Regional Trial Court (RTC), Branch 216, Quezon City a petition for nullification of the Closure Order and the Notice to the Public. The RTC issued a Temporary Restraining Order (TRO) on June 6, 2012 enjoining CHED from enforcing the December 3, 2010 closure order, anchored on circumstances involving the Professional Regulation Commission (PRC) refusal to allow MCC-Canete graduates to take teacher licensure examinations and the scheduling of another exam. The TRO was followed by a writ of preliminary injunction on June 29, 2012.

On April 25, 2016, the RTC dismissed the petition for lack of merit. The Court of Appeals (CA) affirmed the RTC on March 11, 2019, and later denied reconsideration in a resolution dated January 28, 2020. MCC then brought the matter to the Supreme Court via a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the CA decision and resolution.

Factual Background: Two MCCs and Conflicting Administrations

After MCC’s establishment under the MCC Ordinance, its initial operation under Dr. Canete began for school year 2006-2007. Alleged irregularities in MCC’s administration prompted the MCC Board to issue Twin Resolutions on June 18, 2007: Board Resolution No. 10-2007, directing Dr. Canete to cease and desist from exercising further functions as MCC President until further notice; and Board Resolution No. 12-2007, appointing Dr. Susana Cabahug (Dr. Cabahug) as caretaker to perform the president’s duties until further notice.

Despite these resolutions, Dr. Canete continued to operate MCC at a campus located at Eversely Childs Sanitarium, Jagobiao, Mandaue City (referred to in the record as MCC-Canete). Separately, the school under Dr. Cabahug operated at Don Andres Soriano Avenue, Mandaue City (referred to as MCC-Cabahug).

The MCC Ordinance was amended by Mandaue City Ordinance No. 10-2005-419 dated October 24, 2007 and later by Mandaue City Ordinance No. 122010-568 dated October 7, 2010. CHED then investigated the controversy relating to the two operating entities. In a CHED report dated May 15, 2009, CHED found that both schools lacked legal mandate to offer higher education programs and recommended their closure. Accordingly, on September 24, 2009, CHED directed both schools to cease and desist from offering higher education programs and encouraged them to apply for authority to operate in compliance with CHED policies, standards, and guidelines.

Only MCC-Cabahug complied with the requirements; CHED subsequently granted authority to operate four higher education programs to that entity. MCC-Canete failed to comply and rectify deficiencies found in its programs, prompting CHED to issue a Closure Order on December 3, 2010. After the closure order, the City Council of Mandaue enacted City Resolution No. 12-604-2010, directing the City Legal Office to take legal action to prevent anyone from using MCC’s name without authority. Nevertheless, MCC-Canete continued operating. On July 4, 2011, CHED Chairperson Patricia B. Licuanan issued a Notice to the Public stating that MCC-Canete lacked legal personality to operate as a local college and that the degrees offered were considered spurious and illegal and would not be recognized by CHED.

The RTC’s Disposition

In its April 25, 2016 decision, the RTC dismissed the petition for nullification. It rejected the contention that CHED’s closure power was merely recommendatory and beyond CHED’s jurisdiction. The RTC adopted CHED’s interpretation as more consistent with the legislative intent behind RA 7722, emphasizing that the statute aims to protect and promote the right of citizens to quality education. The RTC reasoned that limiting CHED’s authority to recommendations would permit educational institutions to offer degree programs without adequate regulation and safeguards for educational quality. The RTC also considered evidence that MCC-Canete was not the institution recognized under the MCC framework.

The CA’s Affirmance: “Rogue School” and Lack of Proper Authority

The CA denied MCC’s appeal and affirmed the RTC. The CA emphasized that MCC was organized under the MCC Ordinance as a city college governed by the MCC Board, with disciplinary powers over erring officials. The CA held that when the MCC Board directed Dr. Canete to cease and desist from operating under the name of MCC, but he continued to operate in defiance of the Board’s Twin Resolutions, his operation became that of a “rogue school” lacking authority from the MCC Board.

The CA further relied on Mandaue City’s enactments and related findings, including Mandaue City Resolution No. 12-604-2010 and a Civil Service Commission (CSC) decision denying Dr. Canete’s claim for payment of salaries, as corroborating evidence that MCC-Canete lacked juridical and legal personality. Without recognition by the city government, the CA viewed MCC-Canete as legally nonexistent, and thus outside the scope of any claimed “automatic recognition” under Section 27 of BP 232.

The CA also rejected the invocation of BP 232, Section 27 as a basis for continued operation without CHED authorization. It held that MCC-Canete could not apply for authority to operate under that framework because it was not incorporated as a non-stock educational corporation in accordance with the Corporation Code. It concluded that CHED did not err in ordering closure.

On CHED’s regulatory power, the CA ruled that since CHED is an independent and separate administrative agency created to regulate higher education institutions, courts cannot substitute their judgment for CHED’s supervisory determinations on whether institutions meet standards.

Finally, the CA held that MCC-Canete lacked legal and juridical personality under the circumstances, and thus could not sue as a real party-in-interest under Rules of Court, Rule 3 provisions invoked by the parties.

Positions of the Parties in the Supreme Court

MCC argued that Dr. Canete was not engaged as a College Administrator but as MCC President. It asserted that the Revised MCC Ordinance recognized MCC under Dr. Canete’s administration. It also questioned the authority of CHED’s Executive Director to issue the closure order and invoked BP 232, Section 27 to claim exemption for government-operated schools, contending that CHED’s powers under RA 7722 were recommendatory in nature, particularly as to closure.

MCC additionally challenged the factual basis of CHED’s investigation, alleging that the investigation could not have occurred within the claimed timeframe after the creation of MCC-Cabahug and that CHED did not furnish the investigation report despite requests. It also argued that Dr. Cabahug’s appointment was violative of CHED Memorandum Order No. 32, Series of 2006, which allegedly required that local college administration be vested in a “President.”

CHED, through the Office of the Solicitor General (OSG), prayed for dismissal. It argued that CHED’s determinations as to compliance with standards and authority to regulate and supervise higher education institutions were entitled to respect and that courts should not substitute their judgment absent compelling reasons. CHED maintained that it acted within its statutory mandate under RA 7722 and echoed the CA’s view that MCC-Canete lacked juridical personality and could not sue.

Issues for Resolution

The Supreme Court framed the core issues as whether the CA erred: first, in affirming CHED’s authority to issue the school Closure Order; and second, in upholding the Closure Order and the Notice to the Public issued by CHED against MCC-Canete.

Legal Basis and Reasoning of the Supreme Court

The Supreme Court held that CHED’s creation and statutory mandate under RA 7722 placed jurisdiction over both public and private institutions of higher education, including degree-granting programs in post-secondary education, under CHED regulation.

The Court relied on Section 8 of RA 7722, which enumerates CHED’s powers and functions. These include setting minimum standards for programs and institutions and monitoring and evaluating performance, with sanctions that may include program termination and school closure. The Court also cited Article 13(e) of the Implementing Rules and Regulations of RA 7722, which likewise defined CHED’s functions to include imposing sanctions such as program termination and school closure. The Court further invoked Section 16 of RA 7722, recognizing that CHED must have the authority necessary to carry out its powers and functions and attain the statute’s objectives, which would include issuing closure orders against errant higher educational institutions. From these provisions, the Court concluded that CHED was well within its power to issue the Closure Order against MCC-Canete.

On whether the CA erred in upholding CHED’s Closure Order and Notice to the Public, the Court examined the circumstances surrounding MCC’s establishment and operation, including Dr. Canete’s appointment and the effect of the MCC Board’s Twin Resolutions.

The Court revisited the MCC Ordinance’s structure. It described MCC as established by ordinance as a corporation, governed by an MCC Board of Trustees with the City Mayor as chair and the president as vice-chair, among others, and with authority to remove officials and employees for cause after proper notice and hearing pursuant to civil service laws.

The Court agreed with the lower courts that although MCC started operations for school year 2006-2007 under Dr. Canete’s administration, the Twin Resolutions of June 18, 2007 effectively appointed Dr. Cabahug in his stead and directed Dr. Canete to cease and desist from further functioning as MCC President. The Court rejected the claim that the Revised MCC Ordinance mooted those cease and desist actions. In particular, it addressed Section 14 of the Revised MCC Ordinance, which ratified lawful acts executed pursuant to the original MCC Ordinance. The Cour

Case Syllabus (G.R. No. 252063)

Mandaue City College (MCC), represented by Dr. Paulus Mariae L. Canete, filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court to assail the Court of Appeals (CA) Decision dated March 11, 2019 and its Resolution dated January 28, 2020 in CA-G.R. CV No. 108771.
The CA affirmed the Regional Trial Court (RTC), Branch 216, Quezon City Decision dated April 25, 2016 which dismissed MCC-Canete’s petition seeking nullification of CHED’s Closure Order and Notice to the Public.
The case arose from CHED’s action against MCC operating under the administration of Dr. Canete, after CHED found that the school had no legal mandate to offer higher education programs and failed to comply with CHED requirements.

Parties and Procedural Posture

Petitioner was Mandaue City College, represented by Dr. Paulus Mariae L. Canete.
Respondent was the Commission on Higher Education (CHED).
The RTC issued a Temporary Restraining Order (TRO) on June 6, 2012 and later a writ of preliminary injunction on June 29, 2012 to enjoin CHED from enforcing the closure order, to prevent grave or irreparable injury to MCC-Canete and its graduates regarding scheduled teacher licensure examinations.
After trial, the RTC dismissed the petition for nullification for lack of merit.
The CA denied MCC-Canete’s appeal for lack of merit and later denied reconsideration, prompting the present petition before the Court.

Key Factual Allegations

MCC was established as a community college through Mandaue City Ordinance No. 10-2005-324A dated September 27, 2005, with a primary purpose to provide technical and professional training and short-term vocational courses.
Dr. Canete entered into a one-year contract of services with MCC as College Administrator from January 1, 2006 to December 31, 2006.
Reports of irregularities prompted the MCC Board to issue two Twin Resolutions on June 18, 2007: one directing Dr. Canete to cease and desist from exercising further functions as MCC President, and another appointing Dr. Susana Cabahug as Caretaker to perform the duties of the President.
Despite the Twin Resolutions, Dr. Canete continued operating MCC in a campus located at Eversely Childs Sanitarium, Jagobiao, Mandaue City, referred to as MCC-Canete.
While Dr. Cabahug administered a different campus at Don Andres Soriano Avenue, Mandaue City, referred to as MCC-Cabahug, CHED investigated the controversy and found that both schools had no legal mandate to offer higher education programs.
In a Report dated May 15, 2009, CHED recommended closure, leading to cease and desist orders dated September 24, 2009 directing both MCCs to cease offering higher education programs and to apply for authority to operate consistent with CHED policies.
CHED granted authority to operate four higher education programs only to MCC-Cabahug after compliance, while MCC-Canete failed to comply and was issued a Closure Order dated December 3, 2010.
The City Council of Mandaue passed City Resolution No. 12-604-2010 directing the City Legal Office to take legal action to prevent anyone from using the name of MCC without authority.
CHED then issued a Notice to the Public dated July 4, 2011 stating that MCC-Canete had no legal personality to operate a local college, that its degrees were spurious and illegal, and that they would not be recognized by CHED.
MCC-Canete continued operating despite CHED’s Closure Order, which led to litigation seeking nullification of the closure and public notice.

Petitioner’s Core Arguments

MCC-Canete argued that recognition of educational programs at all levels in public and private schools was covered by Batas Pambansa Bilang (BP) 232 and that accreditation under BP 232 was voluntary, not compulsory.
MCC-Canete maintained that CHED had no authority to impose sanctions and had no jurisdiction to order closure.
MCC-Canete relied on Section 8(e) of Republic Act No. 7722 (RA 7722) to claim that CHED’s powers for closure were merely recommendatory.
MCC-Canete invoked Section 16 of CHED Memorandum Order No. 32, Series of 2006, asserting that existing local higher educational institutions had eight years from its effectivity to comply, making the December 3, 2010 Closure Order premature because the compliance period allegedly extended until 2014.
MCC-Canete claimed it had achieved 90% compliance with CHED requirements based on the CHED Regional Quality Assurance Team’s evaluation.
MCC-Canete alleged due process violations because CHED supposedly refused to finish inspection despite repeated appeals.
MCC-Canete challenged CHED’s issuance of the Closure Order by questioning the authority of CHED’s Executive Director and by arguing that any investigation could not have been conducted within 42 days from the creation of MCC-Cabahug.
MCC-Canete complained that it was not furnished with a copy of the investigation report despite requests.
MCC-Canete contested the appointment of Dr. Cabahug by asserting that it violated CHED Memorandum Order No. 32, Series of 2006, which required that administration of a local college be vested in a “President.”
On the Revised MCC Ordinance, MCC-Canete argued that the appointment of Dr. Cabahug was mooted because Mandaue City Ordinance No. 10-2005-419 and later Mandaue City Ordinance No. 122010-568 allegedly recognized MCC under Dr. Canete’s administration.
MCC-Canete invoked Section 27 of BP 232 to contend that a government-operated school established by the ordinance was deemed granted recognition of educational programs and/or operations simultaneously with establishment.

Respondent’s Core Arguments

CHED argued that it issued the Closure Order pursuant to RA 7722 and that RA 7722 transferred jurisdiction over tertiary institutions from DECS (now Department of Education) to CHED.
CHED contended that its regulatory authority covers both public and private higher educational institutions and degree-granting programs.
CHED asserted that its power to close programs or schools was not merely recommendatory and that limiting it to recommendations would produce an absurd outcome where institutions could offer degree programs without effective government regulation.
CHED maintained that MCC-Canete was not the educational institution created by the Mandaue City ordinances.
CHED argued that Mandaue City never recognized or funded MCC-Canete’s operation and cited that CHED-related issues had required separate litigation by Dr. Canete’s group to obtain city funding and payment of salaries, without success.
CHED emphasized that the city recognized and subsidized only the MCC then headed by Dr. Teresita Inot (and later associated with the authorized operation), while the administration linked to MCC-Canete lacked authority.
CHED, th