Case Summary (G.R. No. 74869)
Petitioners
CANORECO (an electric cooperative organized under P.D. No. 269, as amended by P.D. No. 1645) and its incumbent board/officers sought annulment and prohibition against Memorandum Order No. 409, which constituted an Ad Hoc Committee to take over and manage CANORECO pending a general membership meeting, and sought to restrain respondents from implementing the Memorandum Order.
Respondents
Respondents were officials acting under authority of the Office of the President and certain nominees of the Cooperative Development Authority (CDA) and National Electrification Administration (NEA) who composed the Ad Hoc Committee created by Memorandum Order No. 409.
Key Dates and Procedural Milestones
- CANORECO registered provisionally and later as a cooperative with the CDA pursuant to R.A. No. 6938 and R.A. No. 6939.
- May 28, 1995: A faction held a special board meeting declaring vacancies and electing themselves to the board; resolutions followed including recall of the General Manager’s appointment.
- Petitioners filed a Petition for Declaration of Nullity with the CDA (CDA-CO Case No. 95-010).
- February 15, 1996: CDA declared the May 28, 1995 meeting and resolutions null and void ab initio and ordered status quo, recognizing incumbents.
- June 28, 1996: Opposing faction forcibly took possession of CANORECO offices.
- September 26, 1996: Petitioners reassumed control pursuant to CDA writ of execution.
- December 3, 1996: President issued Memorandum Order No. 409 constituting an Ad Hoc Committee to take over and manage CANORECO.
- Petition for certiorari and prohibition under Rule 65 followed; the Supreme Court granted the petition and declared Memorandum Order No. 409 invalid.
Applicable Law
- 1987 Philippine Constitution (governing executive powers and limits thereof).
- P.D. No. 269 (National Electrification Administration Decree), as amended by P.D. No. 1645.
- R.A. No. 6938 (Cooperative Code of the Philippines) and R.A. No. 6939 (creating the Cooperative Development Authority, CDA). Key provisions cited: Articles 34, 38, 39, 43, 51, 98, 121, 122, 128 of R.A. No. 6938; Sections 8 and 17 of R.A. No. 6939.
- Administrative Code of 1987 (Executive Order No. 292), Section 15, Chapter III, Book VII (finality of administrative decisions).
- Constitutional provisions referenced regarding delegation of legislative power (Article VI, Sections 23(2) and 28(2)).
Factual Background
CANORECO had converted and registered as a cooperative under R.A. No. 6938/R.A. No. 6939. Internal conflict arose when a faction held a May 28, 1995 special meeting purporting to declare vacancies and elect new officers, and rescinded an earlier appointment of the General Manager. Petitioners challenged those acts before the CDA. The CDA declared the May 28 meeting and its resolutions null and void ab initio, ordered a status quo with incumbent directors and the previously appointed General Manager, and restrained the opposing faction from representing themselves as officers. Despite the CDA decision, the opposing group forcibly seized CANORECO offices in June 1996; later the CDA’s writ of execution restored control to the petitioners. The President then issued Memorandum Order No. 409 creating an Ad Hoc Committee to take over management pending a general membership meeting.
Administrative Proceedings and CDA Decision
The CDA adjudicated and resolved the intra-cooperative dispute in favor of the petitioners, declaring the May 28, 1995 meeting and subsequent resolutions null and void ab initio, ordering the opposing faction to refrain from acting as officers and signatories, recognizing the incumbency of petitioner directors, and ordering cooperation among board members for the good of CANORECO. The CDA’s cease-and-desist order predated Memorandum Order No. 409 and the CDA decision had become final and executory under the Administrative Code’s rules on finality of administrative decisions.
President’s Memorandum Order No. 409
Memorandum Order No. 409 constituted an Ad Hoc Committee composed of presidential and CDA/NEA nominees to “take over and manage the affairs of CANORECO until such time as a general membership meeting can be called” and to designate an Acting General Manager and a Comptroller. The Memorandum contemplated that the Committee would call a general membership meeting to determine whether to change the board composition and, if warranted, call elections; it further provided that once a new board and General Manager were settled, the Committee would become functus officio.
Issues Presented
The petitioners advanced principal claims that: (1) the President lacks power to take over or order the take-over and management of a cooperative; (2) the Memorandum’s takeover was unlawful even if consumers were on the Committee; (3) relegation of petitioners to advisory status amounted to removal from office without authority and without due process; and (4) the President lacked authority to designate an Acting General Manager and to treat the incumbent General Manager as on leave.
Legal Analysis — Registration under R.A. No. 6938/R.A. No. 6939 and Board Powers
The Court found that, having registered with the CDA pursuant to R.A. No. 6938 and R.A. No. 6939, CANORECO fell squarely under the Cooperative Code’s coverage. Under that Code: (a) the management and conduct of cooperative affairs are vested in the board of directors (Art. 38); (b) the board directs, supervises and manages the cooperative and may exercise all powers not reserved to the general assembly (Art. 39); (c) officers serve during good behavior and may not be removed except for cause after due hearing (Art. 43); (d) the general assembly has exclusive, non-delegable power to elect or appoint and remove board members, with removal for elective officers requiring a two-thirds vote in a general assembly and an opportunity to be heard (Arts. 34 and 51). Article 98 further makes clear that internal affairs of public service cooperatives are governed by the Cooperative Code. These statutory provisions establish that internal management and officer removal processes are governed by the Code and by cooperative by-laws, not by unilateral executive action.
Legal Analysis — Finality of CDA Decision and Limits of Presidential Supervision
The Court emphasized that the CDA’s resolution in favor of the petitioners was final and executory under the Administrative Code (decisions become final fifteen days after receipt unless an administrative appeal or judicial review is timely filed). The Office of the President, even as the supervisory authority over the CDA, may not override or suppl
...continue readingCase Syllabus (G.R. No. 74869)
Procedural Posture and Relief Sought
- Original action for certiorari and prohibition under Rule 65 of the Rules of Court.
- Petitioners sought:
- Annulment and setting aside of Memorandum Order No. 409 of the Office of the President dated 3 December 1996, which constituted an Ad Hoc Committee to take over and manage CANORECO until a general membership meeting could be called and normalcy restored.
- Prohibition against respondents from performing acts or continuing proceedings pursuant to the Memorandum Order.
- Petition included an Urgent Motion for Issuance of a Temporary Restraining Order filed 3 January 1997 and later manifesting actual takeover on 8 January 1997.
- Office of the Solicitor General failed timely to file a comment despite extensions; the Court deemed filing waived and declared the case submitted; belated filings by OSG were noted without action and a motion for reconsideration denied.
Parties
- Petitioners:
- Camarines Norte Electric Cooperative, Inc. (CANORECO)
- Ruben N. Barrameda
- Elvis L. Espiritu
- Merardo G. Enero, Jr.
- Marcelito B. Abas
- Reynaldo V. Abundo
- Respondents:
- Hon. Ruben D. Torres (in his capacity as Executive Secretary)
- Rex Tantiongco
- Honesto De Jesus
- Andres Ibasco
- Teodulo M. Mea
- Vicente Lukban
Central Legal Question
- Whether the Office of the President validly constituted an ad hoc committee to take over and manage the affairs of an electric cooperative (CANORECO).
Relevant Legal Framework and Statutory Provisions Cited
- P.D. No. 269 (National Electrification Administration Decree), as amended by P.D. No. 1645 — origin of NEA powers over electric cooperatives.
- R.A. No. 6938 (Cooperative Code of the Philippines) and R.A. No. 6939 (creation of the Cooperative Development Authority, CDA) — enacted 10 March 1990.
- Article 122 of the Cooperative Code — electric cooperatives covered by the Code.
- Article 128 of the Cooperative Code and Section 17 of R.A. No. 6939 — electric cooperatives created under P.D. 269 to qualify and register with the CDA within three years; thereafter Sections 3 and 5 of P.D. 1645 no longer applicable.
- Sections of P.D. No. 269 as amended:
- Section 3 (amending Section 5(a), Ch. II of P.D. 269) — authorized NEA Administrator to designate Acting General Manager/Project Supervisor subject to confirmation by Board Administrators and prescribe functions.
- Section 5 (amending Section 10, Ch. II of P.D. 269) — enforcement powers and remedies, including issuance of orders, conduct of investigations, referenda in exercise of NEA supervision and control.
- Article 38, Article 39, Article 43, Article 34, Article 51, Article 98, Article 121 of R.A. No. 6938 — provisions on composition, powers, officers, removal, internal affairs, settlement of disputes, and regulation of public service cooperatives.
- Section 8 of R.A. No. 6939 — CDA mediation and conciliation; issuance of certificate of non-resolution if mediation fails within three months.
- Section 15, Ch. III, Book VII of the Administrative Code of 1987 (E.O. No. 292) — administrative agency decisions become final and executory 15 days after receipt unless appeal/judicial review perfected.
- Constitutional provisions referenced regarding delegation of legislative power: Sections 23(2) and 28(2) of Article VI.
Factual Background — Organization, Registration, and Governance of CANORECO
- CANORECO organized under P.D. No. 269 (NEA Decree), as amended by P.D. No. 1645.
- CANORECO registered with the Cooperative Development Authority (CDA) pursuant to R.A. No. 6938 and R.A. No. 6939.
- 8 March 1993: CDA issued Certificate of Provisional Registration (T-003-93) effective for two years.
- 1 March 1995: CDA extended provisional registration until 4 May 1997.
- 10 July 1996: CANORECO filed amendments to Articles of Cooperation converting from non-stock to stock cooperative; CDA issued a Certificate of Registration of amendments certifying CANORECO as a full-fledged cooperative under R.A. 6938.
- Board composition (as of relevant period) and action:
- 11 March 1995: Board approved Resolution No. 22 appointing Reynaldo V. Abundo as permanent General Manager. Board members included petitioners Ruben N. Barrameda (President), Elvis L. Espiritu (Vice President), Merardo G. Enero, Jr. (Secretary), Marcelito B. Abas (Treasurer), and others.
- 28 May 1995: Special Board meeting attended by Antonio Obias, Norberto Ochoa, Luis Pascua, and Felicito Ilan; President Barrameda, Vice-President Espiritu, and Treasurer Abas absent. Meeting minutes reflect:
- Temporary chairman Obias indicated responsibility of Board to meet and elect new officers after annual meeting; absent directors refused to appear.
- Those present declared all board positions vacant and held secret-ballot elections among present directors; declared themselves elected as President (Norberto Ochoa), Vice President (Antonio Obias), Secretary (Felicito Ilan), Treasurer (Luis Pascua).
- Resolutions adopted that day included:
- Resolution No. 27, c.s. — confirmed election of new officers.
- Resolution No. 28, c.s. — recalled Resolution No. 22 appointing Abundo as permanent GM (citing violation of R.A. 6713), declared GM position vacant, designated Oscar Acobera as Officer-in-Charge.
- Resolution No. 29, c.s. — restricted officers authorized to transfer funds and authorized OIC to issue checks up to P3,000 without countersignature.
- Resolution No. 30, c.s. — hired Atty. Juanito Subia as retainer-lawyer.
CDA Proceedings and Decision
- Petitioners filed with CDA a Petition for Declaration of Nullity of Board Resolutions and Election of Officers with Prayer for Injunction/TRO — docketed as CDA-CO Case No. 95-010.
- CDA Resolution of 15 February 1996:
- Declared the 28 May 1995 Board meeting and all resolutions issued on that occasion NULL AND VOID AB INITIO.
- Declared the elections of Ochoa, Obias, Ilan, and Pascua null and void ab initio.
- Ordered those respondents to refrain from representing themselves as officers and from acting as authorized signatories to CANORECO bank accounts.
- Ordered Felicito Ilan to refrain from exercising Board duties until election protest resolved with finality.
- Recognized incumbency of petitioner Merardo Enero, Jr. as Director.
- Ordered a status quo regarding the position of General Manager (Abundo), ruling the recall of his appointment void and designation of Acodera as OIC ineffective.
- Ordered the rival factions to work together as Board for common good and maintain cooperation.
Subsequent Acts and Enforcement Attempts
- 28 June 1996: Group led by Norberto Ochoa, with active participation of some NEA officials, forcibly took possession of CANORECO offices and assumed duties despite CDA resolution.
- 14 August 1996: CDA issued Cease and Desist Order ordering Ochoa, Obias, Pascua, Ilan and followers to cease and desis