G.R. No. 157285 - Woodridge School, Inc. vs. ARB Construction Co., Inc.

Case Digest (G.R. No. 157285)
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Facts:

Background of the Cooperative and Governing Laws

CANORECO is an electric cooperative organized under Presidential Decree No. 269 (as amended by P.D. No. 1645).
The cooperative operates under the regulatory framework of Republic Act (R.A.) No. 6938 (Cooperative Code of the Philippines) and R.A. No. 6939 (which created the Cooperative Development Authority – CDA).
Article 122 of the Cooperative Code covers electric cooperatives; Articles 128 of the Code and Section 17 of R.A. No. 6939 provide for the qualification and registration period with the CDA after which PD provisions no longer apply.

Registration and Organizational Developments

CANORECO registered with the CDA pursuant to R.A. No. 6938 and R.A. No. 6939.
On 8 March 1993, the CDA issued a Certificate of Provisional Registration with a two-year validity, later extended until 4 May 1997.
On 10 July 1996, CANORECO filed approved amendments converting itself from a non-stock to a stock cooperative, and the CDA subsequently issued a Certificate of Registration confirming its status as a full-fledged cooperative.

Board Meetings, Officer Appointments, and Intra-Cooperative Dispute

On 11 March 1995, the CANORECO Board approved the appointment of Reynaldo V. Abundo as permanent General Manager through Resolution No. 22.
On 28 May 1995, a special meeting of the Board was held by a faction led by certain directors (Obias, Ochoa, Pascua, and others) who declared key positions vacant and subsequently elected new officers:

Norberto Ochoa as President
Antonio Obias as Vice-President
Felicito Ilan as Secretary
Luis Pascua as Treasurer

The new set of resolutions (Resolutions Nos. 27, 28, 29, and 30) effectively recalled previous appointments and altered the management structure by designating an Officer-in-Charge (Mr. Oscar Acobera) in place of the General Manager.
Petitioners challenged these board resolutions and the election of officers by filing a petition with the CDA, which, by its resolution on 15 February 1996, declared the May 28, 1995, meeting, resolutions, and the new election of officers null and void ab initio.
In spite of the CDA ruling, on 28 June 1996, the group of respondents forcibly took possession of CANORECO’s offices, followed by the petitioners' temporary reassumption of control on 26 September 1996 pursuant to a writ of execution.

Presidential Intervention and the Issuance of Memorandum Order No. 409

On 3 December 1996, the President of the Philippines issued Memorandum Order No. 409, which constituted an Ad Hoc Committee to temporarily take over and manage the affairs of CANORECO.
The Memorandum Order provided that:

The committee's mandate was to restore normalcy until a general membership meeting could decide on serious issues affecting the cooperative.
It empowered the committee to designate an Acting General Manager (with the existing General Manager being deemed on leave but still entitled to salaries) and a Comptroller for handling financial affairs.
The committee was also given the authority to eventually call for elections for the Board of Directors.

Petitioners contended that the President lacked the authority to take over the management of a private cooperative, that such intervention led to an unlawful removal or suspension of duly elected board members and officers, and that it violated the cooperative’s democratic procedures and the right to due process.

Procedural and Administrative Developments Leading to the Case

The petitioners filed their original action for certiorari and prohibition on 11 December 1996, challenging both the validity of Memorandum Order No. 409 and its consequences on the management of CANORECO.
Subsequent motions including an urgent motion for a Temporary Restraining Order were filed, with respondents notifying that the Ad Hoc Committee had taken over as of 8 January 1997.
Despite extensions for comments from the Office of the Solicitor General (OSG), the case proceeded to decision after administrative filings were deemed waived or merely noted by the Court.

Issues:

Authority of the President to Intervene

Does the President possess explicit or implied authority to constitute an ad hoc committee for taking over and managing the internal affairs of an electric cooperative such as CANORECO?
Is the exercise of such power consistent with the delegation provided by law, especially given that the cooperative had already registered with the CDA under R.A. No. 6938 and R.A. No. 6939?

Legality of the Removal and Suspension of Elected Officers

Was the removal (or suspension) of the petitioners from their positions as members of the Board of Directors, as effected by Memorandum Order No. 409, lawful?
Does such removal violate principles of due process and the democratic provisions enshrined in the Cooperative Code, including the exclusive powers of the general assembly for electing and removing board members?

Validity of the Presidential Memorandum Order

Can Memorandum Order No. 409 be justified under the existing legal frameworks governing cooperatives and the delegation of police power by the Executive?
Does the order constitute an unlawful exercise of power that interferes with the final and executory decision rendered by the CDA regarding the intra-cooperative dispute?

Ruling:

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Ratio:

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Doctrine:

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Case Digest (G.R. No. 157285)
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