Camarines Norte Electric Cooperative, Inc. v. Torres
NEW DOCTRINEFacts
1. The Antecedents: The underlying dispute concerns the management of the Camarines Norte Electric Cooperative, Inc. (CANORECO). A faction led by Norberto Ochoa challenged the incumbent Board of Directors, led by Ruben Barrameda, by holding a special meeting and electing themselves as officers, declaring the positions vacant. This led to a legal battle over control of the cooperative's management. 2. Procedural History: The petitioners, representing the incumbent Board of Directors of CANORECO, filed a petition with the Cooperative Development Authority (CDA) challenging the validity of the special meeting and the election of new officers. The CDA, in a resolution dated February 15, 1996, declared the special meeting and the election of the Ochoa faction's officers null and void ab initio, and recognized the incumbency of the petitioners. Despite this ruling and a subsequent cease and desist order from the CDA, the Ochoa faction forcibly took over CANORECO's offices. The petitioners regained control following a writ of execution from the CDA. Subsequently, on December 3, 1996, the President issued Memorandum Order No. 409, constituting an Ad Hoc Committee to take over and manage CANORECO's affairs. 3. The Petition: The petitioners filed an original action for certiorari and prohibition under Rule 65 of the Rules of Court, seeking to annul Memorandum Order No. 409 and prohibit the respondents from acting under it. They argue that the President lacks the constitutional and statutory authority to take over and manage the affairs of a private electric cooperative. They contend that Memorandum Order No. 409 effectively removed them from their positions and violated their right to due process, and that the dispute should have been resolved through the conciliation and mediation mechanisms provided by law for intra-cooperative disputes. The petitioners further assert that the CDA's decision had already become final and executory, and the President could not unilaterally overturn it.
Issue(s)
Whether the President of the Philippines has the power to constitute an ad hoc committee to take over and manage the affairs of an electric cooperative. Whether Memorandum Order No. 409, which created the ad hoc committee, is valid and constitutional. Whether the President has the authority to remove or suspend the board of directors and officers of a cooperative. Whether the President has the power to designate an acting General Manager for a cooperative.
Ruling
The petition is GRANTED. Memorandum Order No. 409 of the President is declared INVALID.
Ratio Decidendi
On the President's Power to Take Over and Manage CANORECO: The Court held that the President has no constitutional or statutory basis to constitute an ad hoc committee to take over and manage the affairs of an electric cooperative. CANORECO, having registered with the CDA under R.A. No. 6938 and R.A. No. 6939, is governed by these laws. Article 38 of R.A. No. 6938 vests the conduct and management of cooperative affairs in its board of directors, and Article 39 outlines the powers of the board. The Memorandum Order effectively removed the board's power to manage CANORECO's affairs and transferred it to the ad hoc committee, which amounts to a suspension or removal of the incumbent directors without legal basis. The Court emphasized that the Cooperative Code mandates that cooperatives are democratic organizations managed by elected or appointed persons agreed upon by the members, and the State's policy is non-interference in their management and operation, except as provided by law. On the Validity of Memorandum Order No. 409: The Court found Memorandum Order No. 409 to be invalid because it lacked constitutional and statutory support. The order violated the principle that cooperatives are democratic organizations governed by their members and ran counter to the policy of non-interference in their management. The Court noted that the dispute that led to the Memorandum Order was an intra-cooperative dispute, which, according to Article 121 of the Cooperative Code, should be settled amicably through conciliation or mediation mechanisms, or in a court of competent jurisdiction. Even if an administrative appeal to the Office of the President were permissible, it could not supplant the CDA's decision, which had already become final and executory. The principle of non quieta movere dictates that terminated proceedings should not be disturbed. On the President's Authority to Remove or Suspend Directors and Officers: The Court ruled that the President has no authority to remove or suspend the board of directors and officers of a private enterprise, including electric cooperatives. Under Article 34 of the Cooperative Code, the general assembly has the exclusive power to elect or appoint directors and remove them for cause. Article 51 further provides for the removal of elective officers, directors, or committee members by a vote of two-thirds of the voting members present in a general assembly meeting, after an opportunity to be heard. Memorandum Order No. 409, by temporarily suspending or removing the incumbent directors and officers, usurped these powers vested in the cooperative's members and general assembly. On the President's Power to Designate an Acting General Manager: The Court held that the President also lacks the power to designate an acting General Manager for CANORECO. The Memorandum Order directed the ad hoc committee to designate an Acting General Manager and considered the lawfully appointed General Manager to be on leave. This encroaches upon the authority of the cooperative's board of directors to appoint officers. Article 43 of the Cooperative Code states that officers are elected or appointed in accordance with the by-laws, and they serve during good behavior and can only be removed for cause after due hearing. The power to appoint a General Manager rests with the cooperative's governing bodies, not the President.
Main Doctrine
The President of the Philippines does not possess the power to constitute an ad hoc committee to take over and manage the affairs of an electric cooperative, as such action lacks constitutional and statutory basis and infringes upon the cooperative's right to self-governance and the exclusive powers vested in its board of directors and general assembly under the Cooperative Code.