Title
La Union Electric Cooperative, Inc. vs. Yaranon
Case
G.R. No. 87001
Decision Date
Dec 4, 1989
LUELCO challenged NEA's authority over its management and bank transactions, alleging constitutional violations. The Supreme Court upheld NEA's statutory powers, ruling LUELCO lacked standing and failed to prove direct injury.
checks
withdrawals
disbursements
A

Case Digest (G.R. No. 216021)

Facts:

  • Parties and nature of the case
    • LA UNION ELECTRIC COOPERATIVE INC. (LUELCO), represented by its president and chairman of the board Manuel L. Mangaser, filed a petition for certiorari, prohibition, and mandamus.
    • The respondents were Honorable Braulio D. Yaranon, presiding judge of RTC-Branch 30, San Fernando, La Union, and the National Electrification Administration (NEA).
    • Far East Bank & Trust Co. (La Union Branch) (FEBTC) was impleaded as interpleader.
    • The petition sought to annul the RTC decision dated January 13, 1989 and the RTC order dated February 10, 1989 in Civil Case No. 4182.
    • The petition also sought a declaration that Presidential Decree No. 269, as amended by Presidential Decree No. 1645, was unconstitutional.
  • Civil Case No. 4182 and the interpleader issue
    • Civil Case No. 4182 was an action for interpleader filed by FEBTC against LUELCO and NEA.
    • The interpleader sought determination of the proper signatories to checks relating to withdrawals and disbursements of LUELCO deposits with FEBTC.
  • LUELCO board resolutions on check signatories
    • LUELCO Board Resolution No. 33-02-88 dated February 20, 1988 authorized signatories as follows:
      • LUELCO approved the reversal to an amended Board Policy allowing the General Manager to sign checks and/or disbursements to a maximum of P5,000.
      • Any amount beyond P5,000 required countersignature by both the President and the Secretary-Treasurer of the Board.
      • Transactions were to be paid in a single check payment whether the amount was more or less than P5,000.
    • LUELCO Board Resolution No. 53-03-88 dated March 20, 1988 amended Board Resolution No. 33-02-88 and provided that:
      • All checks and disbursements, in any amount, must bear both the signatures of the Acting General Manager and the President of the Board of Directors of LUELCO, effective immediately.
  • NEA modification letter affecting check signatories
    • On April 8, 1988, NEA issued a letter to LUELCO modifying Board Resolution No. 33-02-88.
    • The modification limited the authorization to P3,000 only for a single disbursement or withdrawal, and provided that any amount beyond P3,000 required countersignature by either the Coop President or the Treasurer.
    • LUELCO alleged that NEA, through its Acting General Manager/Project Supervisor, disapproved Board Resolution No. 53-03-88.
    • The petition stated that Board Resolution No. 53-03-88 was disapproved by NEA through its Acting General Manager/Project Supervisor.
  • Conflicting claims prompting interpleader
    • LUELCO’s position was that the bank should follow Board Resolution No. 53-03-88, asserting LUELCO as owner of the funds deposited.
    • NEA’s position was that NEA had taken over control and supervision of LUELCO, and that Board Resolution No. 33-02-88, as amended by NEA, should be observed.
    • NEA also asserted that Board Resolution No. 53-03-88 was disapproved under the authority of Presidential Decree No. 269, as amended by Presidential Decree No. 1645.
  • LUELCO’s amended answer and constitutional challenge
    • LUELCO contended that the power granted to NEA under P.D. 1645 was unconstitutional.
    • LUELCO argued that the grant violated the Bill of Rights.
    • LUELCO alleged the exercise of power was arbitrary and confiscatory, and that it violated due process.
    • LUELCO argued it destroyed or infringed the autonomous character of the cooperative.
    • LUELCO asked for damages because it was compelled to litigate.
  • NEA’s answer, asserted statutory bases, and alleged takeover of supervision
    • NEA alleged that management of LUELCO, as an electric cooperative, was vested in its Board, subject to NEA supervision and control, by virtue of Section 24 of P.D. 269, as amended.
    • NEA claimed it was empowered under Section 10 of the same law to issue orders, rules, and regulations affecting electric cooperatives and borrowers, or supervised or controlled entities.
    • NEA asserted authority under Section 5(a) of P.D. 269, as amended, to designate an acting general manager and/or project supervisor for a cooperative under certain circumstances.
    • NEA claimed the designated officer’s functions could not be nullified, altered, or diminished by any policy or resolution of the cooperative’s board of directors.
    • NEA alleged that, pursuant to its powers, it took direct control and supervision of LUELCO and designated Eufemio C. Genovia, NEA personnel, on February 5, 1988 as Acting General Manager and Project Supervisor of LUELCO.
    • NEA alleged Genovia had powers and duties including:
      • Exercising full control and supervision over the management and operations of LUELCO.
      • Reviewing and approving/disapproving all board resolutions and policies.
      • Signing/countersigning all checks, withdrawal slips, and other banking transactions.
    • NEA argued that Genovia, representing NEA, should properly represent LUELCO in the petition, and that representation by LUELCO’s president and chairman was misplaced, false, and improper.
    • NEA claimed LUELCO’s president and chairman had no lawful and material interest in the subject matter.
    • NEA alleged that LUELCO’s adoption of Board Resolution No. 53-03-88 was for the purpose of rendering ineffective Genovia’s powers and preventing the execution of Genovia’s rehabilitation program.
    • NEA asserted Board Resolution No. 53-03-88 had not been approved by Genovia and was invalid.
    • NEA argued Board Resolution No. 33-02-88, as approved with amendment by NEA, was the controlling resolution governing transactions between LUELCO and FEBTC.
    • NEA filed a counterclaim for damages arising from petitioner’s refusal to honor Board Resolution No. 33-02-88.
  • RTC findings on undisputed facts
    • The RTC found it undisputed that the funds deposited with FEBTC pertained to LUELCO, an electric cooperative organized and subsisting under P.D. 269, as amended.
    • The RTC found it undisputed that NEA exercised supervision and control over such electric cooperatives.
    • The RTC found that NEA had express authority to designate an acting general manager and/or project supervisor, and that the designated officer’s powers could not be nullified, altered, or diminished by board policies or resolutions, citing Section 5(a) of P.D. 269, as amended by P.D. 1645.
    • The RTC found that Board Resolution No. 33-02-88 authorized the general manager to sign checks/disbursements up to P5,000, and for amounts beyond that to require countersignature by the President and Secretary-Treasurer.
    • The RTC found that Board Resolution No. 53-03-88 required checks/disbursements in any amount to bear both the signatures of the Acting General Manager and the President of LUELCO, effective immediately.
    • The RTC found that on April 8, 1988, NEA modified Board Resolution No. 33-02-88 by limiting authorization to P3,000 for single withdrawals/disbursements, with amounts beyond requiring countersignature by either the coop president or treasurer.
    • The RTC found that Board Resolution No. 53-03-88 was disapproved by NEA through its Acting General Manager/Project Supervisor.
  • RTC dispositive ruling and denial of reconsideration
    • On January 13, 1989, the RTC ruled that FEBTC was bound by the NEA communication dated April 8, 1988, which authorized the general manager to sign withdrawals/disbursements only up to P3,000, and required countersignature for amounts beyond P3,000 by either the president or treasurer of LUELCO...(Subscriber-Only)

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