G.R. No. L-55151 - Aguila vs. Genato

Case Summary (G.R. No. L-55151)

Statutory and By-law Provisions in Dispute

The Court identified the controlling qualification rule in Section 21 of Presidential Decree No. 269, which stated that, notwithstanding other laws or regulations, an officer or employee of the government could be eligible for cooperative membership if qualified, and was not precluded from being elected to or holding any position in a cooperative, “Provided, That elective officers of the government, except barrio captains and councilors, shall be ineligible to become officers and/or directors of any cooperative.” The MOELCI II By-laws echoed this restriction in Section 3, Article IV, declaring that no person was eligible to become or to remain a board member if the person “holds an elective office in the government above the level of a Barangay Captain.”

Election, NEA Directives, and the Claim to Remain

On 4 January 1980, Borje filed his certificate of candidacy for member of the Sangguniang Panglunsod of Ozamiz City in the local elections set for 30 January 1980. On 7 January 1980, the NEA issued Memorandum No. 18, directing that all officials and employees of electric cooperatives who ran for public office, won, and assumed office, should be considered resigned. The memorandum was issued pursuant to authority under PD No. 1645, amending PD No. 269 by empowering NEA to issue orders, rules, and regulations in the exercise of supervision and control over electric cooperatives and related entities.

After Borje’s candidacy, on 11 January 1980, the NEA Deputy Administrator sent a telegram to the acting general manager of MOELCI II stating that if Borje were elected to the Sangguniang Panglunsod, he would be considered resigned as director. Borje then moved for reconsideration and requested to serve the unexpired term under PD No. 269. NEA denied the request on 7 February 1980.

Despite the NEA’s position, on 3 March 1980, Borje won the election, assumed office, and began discharging his functions as an elective local official.

Filing of the Case and Issuance of Restraining Orders

On 3 March 1980, Borje filed in the Court of First Instance of Misamis Occidental, Branch II a petition entitled “Prohibition, Mandamus & Construction of Legal Provisions with Preliminary Injunction and Damages” (Spec. Case No. 0511). He sought a declaration that he was entitled to remain and serve his unexpired term as director of MOELCI II until March 1982. On that same date, the respondent judge issued an ex parte temporary Restraining Order directing petitioners not to enforce the NEA telegraphic instruction of 11 January 1980, which treated Borje as resigned, and instead required petitioners to allow him to retain his board position pending hearing.

Petitioners moved to dismiss and to dissolve the restraining order, alleging lack of cause of action and invoking Section 21 of PD No. 269, Section 3, Article IV of the MOELCI II By-laws, and Section 24 of PD No. 269. The record showed that the trial court’s treatment of the restraining order was not stable: on 24 March 1980, the judge lifted and dissolved the restraining order, but on 25 March 1980, the restraining order was restored.

Petitioners later sought reconsideration and maintained that NEA had authority to issue Memorandum No. 18 and that MOELCI II’s board had authority to implement it under PD No. 269 as amended by PD No. 1645. The petitioners filed their answer on 6 April 1980, reiterating their motions. On 8 May 1980, a vacation judge, Celso Largo, reconsidered and dissolved the restraining order dated 25 March 1980.

Implementation of NEA Circular and the Last Restraining Order

On 10 May 1980, MOELCI II’s board held a special meeting and passed Resolution No. 121, S-80, implementing NEA Memorandum Circular No. 18 and declaring Borje’s position vacant. After a motion for reconsideration, on 6 June 1980, the respondent judge set aside the vacation judge’s 8 May 1980 order, and effectively revived the restraining order. The ground stated by the judge was that, as a “councilor” of Ozamiz City, Borje was exempted by the text of Section 21 of PD No. 269 from the prohibition on elective officials becoming cooperative directors.

By 29 September 1980, petitioners elevated the matter to the Supreme Court through a Certiorari petition challenging the issuance of the restraining order and advancing that the Court of First Instance had no jurisdiction to issue a restraining order and that the respondent judge committed grave abuse of discretion.

Petitioners’ Position in the Supreme Court

Petitioners contended that the restraining order had been improvidently issued. They argued that the lower court committed grave abuse of discretion amounting to lack of jurisdiction by issuing restraining orders that, in effect, allowed Borje to retain a director position contrary to PD No. 269 and the MOELCI II By-laws. They further emphasized that NEA possessed the authority to promulgate Memorandum No. 18 under the supervisory and control powers granted by law as amended by PD No. 1645, and that MOELCI II, in turn, could implement NEA’s directives.

Private Respondent’s Position and the Trial Court’s Rationale

Borje’s position in the trial court was that, notwithstanding Memorandum No. 18, he was entitled to serve the unexpired term of his directorship. The respondent judge’s reasoning for reviving the restraining order on 6 June 1980 relied on the premise that Borje’s local elective status fell within the statutory exception for “councilors.” The judge therefore concluded that Borje was not barred by Section 21 of PD No. 269 from continuing as a director.

Supreme Court’s Findings on Grave Abuse of Discretion and Jurisdiction

The Supreme Court found that the respondent judge acted with grave abuse of discretion that amounted to lack of jurisdiction in issuing the various restraining orders, particularly the one dated 6 June 1980. The Court characterized the restraining order as taking on the nature of a mandatory injunction, because it did not merely preserve the status quo. It commanded that Borje be retained in his position as director of MOELCI II pending hearing.

The Court held that Borje had shown no clear and explicit right to the directorship. It reasoned that Borje’s election to the Sangguniang Panglunsod and his subsequent assumption of office rendered him ineligible to continue as a cooperative director under the express command of PD No. 269, which provided that elective officials are ineligible to become officers and/or directors of cooperatives except barrio captains and councilors. The Court interpreted the phrase “barrio captains and councilors” as requiring that “barrio” modify both “captains” and “councilors.” Accordingly, the statutory exception did not extend to Borje’s case in the manner adopted by the respondent judge.

The Court also gave weight to the MOELCI II By-laws, which explicitly restricted the board membership eligibility of persons holding elective offices above the level of a Barangay Captain, and thus reinforced the conclusion that Borje could not remain a board member given the level of his elective office.

Rejection of the Argument on Term of Office and “Continuing Eligibility”

Borje’s argument, as framed in the proceedings, was that Section 21 of PD No. 269 did not prohibit cooperative directors from continuing to hold the board position after qualification that existed prior to election, and that, under Section 24 of PD No. 269, he was entitled to hold office for the term for which he was elected until a successor was elected and qualified. The Court rejected this. It held that eligibility must be understood as continuing in character and must exist at the commencement of the term and during the incumbency itself. Qualification at the start of the directorship was not enough to justify continued occupancy if the director later ceased to meet the statutory or by-law qualifications.

Thus, even assuming Borje was qualifie

Case Syllabus (G.R. No. L-55151)

The case arose from a Certiorari petition with a prayer for a Writ of Preliminary Injunction, assailing the issuance of several Restraining Orders by the respondent trial judge.
The core controversy concerned whether the trial judge committed grave abuse of discretion amounting to lack of jurisdiction when he issued a restraining order that effectively allowed Dominador B. Borje to continue as a director of Misamis Occidental Electric Cooperative, Inc., II (MOELCI II).
The Supreme Court ultimately annulled and set aside the restraining order dated 6 June 1980 and dismissed the underlying special civil action.

Parties and Procedural Posture

Petitioners were David Aguila, Edita Bueno, Evelito Elento, Resurrection Inting, Antonio Lim, and Wilfredo Cabardo.
Petitioners Aguila and Bueno were identified as the Deputy Administrator and Director for Cooperative Development, respectively, of the National Electrification Administration (NEA).
Petitioner Elento was identified as the Acting General Manager of MOELCI II, while petitioners Inting, Lim, and Cabardo were identified as members of MOELCI II’s Board of Directors.
The respondents were Hon. Melecio A. Genato and Dominador B. Borje.
Respondent Judge Genato was the presiding judge of the Court of First Instance of Misamis Occidental, Branch II in Special Case No. 0511.
Respondent Borje was the private respondent who had been elected as director of MOELCI II and later won an elective position in Ozamiz City.
After the trial judge issued an order maintaining Borje in his directorship, petitioners filed the present Certiorari petition on 29 September 1980, alleging grave abuse of discretion in issuing the restraining order.
The Supreme Court required the respondents to submit an answer, enjoined further enforcement of the order of the court below on 10 October 1980, and later gave due course on 2 February 1981.

Key Factual Allegations

Borje was elected as director of MOELCI II to hold office for three years starting March 25, 1979.
Section 21 of Presidential Decree No. 269 (second paragraph) provided an ineligibility rule for elective government officials to become officers or directors of a cooperative, except for barrio captains and councilors.
MOELCI II By-laws, specifically Section 3, Article IV, also stated that no person may become or remain a board member if he holds an elective office in the government above the level of a Barangay Captain.
On 4 January 1980, Borje filed his certificate of candidacy for member of the Sangguniang Panglungsod of Ozamiz City in the 30 January 1980 local elections.
The NEA issued Memorandum No. 18 on 7 January 1980, stating that officials and employees of electric cooperatives who run for public office, win, and assume office, shall be considered resigned.
The NEA Memorandum was issued pursuant to authority granted under PD No. 1645, which amended PD No. 269.
On 11 January 1980, an NEA deputy administrator sent a telegram to MOELCI II’s acting general manager, stating that if Borje were elected to the Sangguniang Bayan (as an elective local official), he would be considered resigned as director.
After Borje was elected, he assumed office on 3 March 1980 and began discharging the functions of the local elective position.
On 3 March 1980, respondent judge issued an ex parte temporary Restraining Order commanding petitioners not to enforce the NEA telegram’s instruction and instead to allow Borje to retain his board position pending hearing.
Petitioners moved to dismiss and dissolve the restraining order, invoking Section 21 of PD No. 269, Section 3, Article IV of the by-laws, and Section 24 of PD No. 269.
Respondent judge lifted and then restored the restraining order on 24 March 1980 and 25 March 1980, respectively.
On 8 May 1980, a vacation judge Celso Largo reconsidered respondent judge’s order and dissolved the restraining order.
On 10 May 1980, MOELCI II’s board passed Resolution No. 121, S-80, implementing the NEA memorandum circular and declaring Borje’s position as director vacant.
On 6 June 1980, respondent judge set aside the vacation judge’s order and in effect revived the restraining order, reasoning that as a “councilor”, Borje was exempt under Section 21 of PD No. 269.

Statutory and By-laws Provisions

Presidential Decree No. 269 governed the eligibility of government officers and employees to become officers or directors in cooperatives.
Section 21 of PD No. 269 stated that elective officers of the government, except barrio captains and councilors, were ineligible to become officers and/or directors of any cooperative.
Presidential Decree No. 1645 amended PD No. 269 and empowered the NEA to issue orders, rules, and regulations in the exercise of its power of supervision and control over electric cooperatives.
NEA Memorandum No. 18 required that cooperative officials and employees who run for public office, win, and assume office be considered resigned.
MOELCI II By-laws, Section 3, Article IV, provided that a person could not become or remain a board member if he holds an elective office above the level of a Barangay Captain.
Section 24 of PD No. 269 provided that by-laws should prescribe, among others, the manner of h