SALVIO B. FORTUNO AND CAMARINES SUR II ELECTRIC COOPERATIVE (CASURECO II), PETITIONERS, VS. HONORABLE MERICIA B. PALMA, IN HER CAPACITY AS PRESIDING JUDGE OF BRANCH XXI, REGIONA…

The issue posed in this petition for certiorari and
prohibition with prayer for preliminary injunction and temporary restraining
order is whether the Regional Trial Court (RTC) has jurisdiction over quo warranto proceedings involving the qualification for
membership of the Board of Directors
of an electric cooperative.

Petitioner Salvio B. Fortuno and respondent Joel David S. Abante
were candidates for the position of director to represent District V of the Camarines Sur II Electric
Cooperative, Inc. (CASURECO II) at the elections of February 9, 1985.  On
January 30, 1985, Abante
filed with the National
Electrification Administration (NEA)
a petition to disqualify Fortuno as candidate alleging that he is not a resident of the area
coverage of District V as required by the by laws of the corporation.  The NEA directed the CASURECO Board of
Directors to take appropriate action on the petition in accordance with the
By-laws and Election Code.  The Board
indorsed the petition to the District Election Committee (DEC) which is the
body charged with the duty of deciding all election matters, including
protests, querries, referrals, postponement and
nullification.^[1]
In another letter of February 4, 1985
addressed to DEC, Abante likewise sought the
disqualification of Fortuno on the same ground of
non-residence.

The DEC directed Fortuno to submit his
comment thereto within 48 hours which was duly complied with.  After a
hearing on February 8, 1985,
the DEC denied Abante’s petition to disqualify Fortuno finding that he is a resident of the area coverage of District V.

On February 9, 1985,
the election was held as a result
of which Fortuno obtained 1,429 votes while Abante received 637 votes. 
Accordingly, the DEC proclaimed Fortuno as the
duly elected director for District V.

On February 18, 1985,
a quo warranto
petition with prayer for preliminary injunction and temporary restraining order
was filed by Abante in the Regional
Trial Court of
Naga City
docketed as No. RTC-85-607 entitled “Joel David S. Abante
vs. Salvio B. Fortuno, and
CASURECO II”.  On the day of the
hearing of the preliminary injunction the issue of jurisdiction of the trial
court over the case was raised by said defendants.  On March
13, 1985, an order was issued by the trial court upholding its
jurisdiction over the subject matter.  A
motion for reconsideration of said order was filed by defendants but this was
denied in an order of March 16, 1985.

On March 18, 1985, the trial court issued an order resetting the
hearing for preliminary injunction on March 25, 1985 to enable defendants to
elevate the matter to the appellate court and issued the restraining order
enjoining Fortunato from assuming or otherwise
performing the functions of a member of the Board of Directors of CASURECO II
until further orders of the Court and the respondent CASURECO II to observe and
implement the said restraining order.

Hence, the herein petition for certiorari and prohibition
with prayer for preliminary injunction or temporary restraining order filed on
March 18, 1985 with this Court wherein petitioners seek to set aside said
orders of March 16 and 18, both of 1985 of the trial court and that a restraining order be issued against
the trial court taking further action on the case until further orders.

On March 19, 1985, a supplemental
petition was filed by petitioners informing the Court of the restraining order
the respondent court issued on March 18, 1985 which in effect restrains the
continuance in the performance of the duties of Fortuno
as an incumbent member of the Board of Directors
who was elected in 1981 whose term of office will end on March 30, 1985 and
that assuming that he was not a
resident of the area of coverage
he represents he cannot be arbitrarily suspended or removed from office so that
petitioners pray for a restraining order against the enforcement of said order
and for the respondent Judge from taking further proceedings in the case.

On March 25, 1985,
without giving due course to the petition the respondents were required to
comment thereon.

The comment thereon having been filed by the respondents, on October 9, 1985 the Court gave due
course to the petition and required the parties to submit their simultaneous
memoranda.  Only petitioners submitted
their memoranda. The case is now submitted for deliberation.

The main thrust of the
petition is that the respondent court has no jurisdiction over the case citing
Section 24 of P.D. 269 as amended, which vests in the National Electrification
Administration (NEA) the power of supervision and control over all electric
cooperatives as follows:

“‘Section 24.  Board of Directors.  (a)
The Management of a Cooperative shall be vested in its Board, subject to the
supervision and control of NEA which shall have the right to
be represented and to participate in all Board meetings and deliberations and to approve all policies and resolutions.

‘The   composition,
qualifications, the manner of elections and filling of vacancies, the
procedures for holding meetings and
other similar provisions shall be defined in the By-laws of the Cooperative
subject to NEA policies, rules and regulations…’ “^[2]

Thus petitioners argue that:

“Pursuant to the authority granted it by law, the NEA
promulgated a standard Electric Cooperative Election Code which the CASURECO II
Board of Directors adopted under its Board Resolution No. 108, s. 1982, as
amended by Board Resolution No. 84-141 (Exh. 2).  This Election Cooperative Election Code
provides for the creation of a District Election Committee (DEC) which shall,
among other things, ‘decide on all election matters including protests,
queries, referrals, postponement and nullification’
(par. f, Sec. 26, Electric Cooperative Election Code), ‘act as Board of
Canvassers’ (Sec. 26-g, ibid), and ‘proclaim the winning candidate’
(Sec. 50, ibid).  It is likewise
vested with the ‘sole jurisdiction’ over all protests relating to the election
of the members of the Board of Directors, although its decision is appealable to the NEA (Secs. 51,
52, ibid).

As already adverted to above, respondent Abante
filed two formal complaints questioning the residence qualification of
petitioner Fortuno. 
These two complaints were duly heard and resolved by the DEC in its
Resolution No. 04 dated 8 February 1985 (Exh. 4).  Abante did not appeal
from this Resolution which upheld the residence qualification of Fortuno.

In other words, the District Election Committee which is vested
with authority to decide questions of this nature has already ruled that
petitioner Fortuno possesses the necessary residence
qualification, a decision which has long become final, no appeal having been taken therefrom.  The question, therefore, of Fortuno’s alleged non-residence within the area coverage of
District V had finally been resolved by the duly constituted and authorized
administrative body in accordance with the internal rules and regulations of
both CASURECO II and the National Electric Administration.

Moreover, we earnestly underline the fact that immediately after
the elections on the afternoon of February
9, 1985, the DEC proclaimed Fortuno as
the duly elected Director for District V. 
No protest against petitioner’s proclamation was filed with the DEC,
which has the sole jurisdiction to entertain the same, within the
reglementary 72-hour period provided for in Section
51 of the Electric Cooperative Election Code. 
Therefore, said proclamation may no longer be questioned.

These facts assume greater significance when it is remembered that
private respondent Abante himself, in his Certificate of Candidacy (Exh.
3), expressly agreed to abide by the Electric Cooperative Election Code,
thereby placing himself squarely within
the jurisdiction of the provisions thereof.

We respectfully submit, therefore, that inasmuch as the power to
determine and decide the residence qualification of petitioner Fortuno is vested in, and falls within the peculiar
function and competence of the NEA, acting through its duly created District
Election Committee, that the decision rendered by the latter had already become
final, said resolution may no longer be questioned elsewhere.  The respondent Court thus is without
jurisdiction and authority to review and reverse the aforesaid decision of the
District Election Committee.”^[3]

In support of petitioners’ theory the cases of Lions Clubs
International vs. Judge Amores^[4]
and of Bataan Electric
Cooperative vs. Judge Pedro T. Santiago are cited..^[5]

In the questioned order
of March 13, 1985
of the respondent court it made the following disquisition:

“The pleadings and motions filed by counsels disclose the
following:  1) Petitioner Joel David S. Abante and respondent Salvio S. Fortuno were the only candidates in the election for
District Director, District V, CASURECO II, Inc.  for the towns of Canaman,
Magarao and Bombon held on February 9, 1985.  2) Few days before the election, or on January 30, 1985 Abante
in a petition to the National Electrification Administration (NEA) sought the disqualification of respondent Salvio Fortuno on the ground that
the latter was
not a
resident within the area coverage of District V, CASURECO II.  The NEA endorsed the petition to the District
Election Committee which in resolution No. 04 dated February 8, 1985 denied Abante’s
petition.  3) A petition for Mandamus
with preliminary injunction to disqualify Fortuno on
grounds of non-residence and to enjoin the CASURECO II from proceeding with the
election scheduled on February 9, 1985
was filed before the RTC, which was docketed as Civil Case No. RTC’ 85-599.  After due hearing the Court denied the prayer
for postponement of the election and
dismissed the petition.  4) The DEC proclaimed
Fortuno elected having garnered 1,429 votes as against Abante’s votes of 637. 
No protest was filed by Abante within the
72-hour reglementary period as allegedly provided for
in Section 51 of the Electric Cooperative Election Code.

The elected board of CASURECO II will assume their position for a
term of 3 years on March 30, 1985.  Abante, convinced
that Fortuno is disqualified because of non-residence
in the area, filed this present Special Civil Action for Quo Warranto.  Respondent
Fortuno in raising the issue of jurisdiction contends
that judicial intervention is not proper; that petitioner failed to exhaust
administrative remedies; that this Court has no jurisdiction over the nature of
subject matter of the action; that it is the DEC who is vested with the ‘sole
jurisdiction over all protests of directors, although its decision is appealable to the NEA’. 
It is claimed that Courts may not intervene in the purely internal
affairs of the cooperative and in this regard, respondent cited the case of the
Lions Club International vs. Judge Amores, et al.
(121, SCRA 628) where the Supreme Court opined that:  ‘in accordance with the general rules as to
the judicial interference, the decision of an unincorporated association on the
question of an election to office is a matter peculiarly and exclusively to be
determined by the association and, in the absence of fraud, is final and
binding on the courts’.  But in the same
case the Supreme Court also said ‘The general rule on non-interference in the
internal affairs of associations is, however, subject to exceptions, but the
power of review is extremely
limited.  Accordingly, the courts have
and will exercise power to interfere in the internal affairs of associations
where law and justice so require, and the proceedings of the
association are subject to judicial review where there is fraud, oppression or
bad faith, or where the action complained of is capricious, arbitrary,
or unjustly discriminatory (underlining supplied, p. 628, Vol. 121, SCRA).  Paragraph 4 of the verified petition, last
sentence thereof, alleges ‘that the DEC with wanton disregard of the elementary
rules of fair play – – due process – – arbitrarily denied petitioners complaint
for the disqualification of respondent Fortuno.’ This
Court finds that hearing of the petition for preliminary injunction would not
constitute undue interference in the internal affairs of the CASURECO II.

Respondent CASURECO II in support of its objection to the grant of
preliminary injunction has cited the case of Silon
vs. Vera (64, Philippine 868) to wit:

‘In quo warranto proceedings instituted for
the sole purpose of questioning the legality of the election of the directors
of a corporation
x x x preliminary
injunction does not lie to prevent said directors and officers from discharging
their offices and to restore the former directors, and the issuance thereof
constitute an excess of
jurisdiction and abuse of discretion.’

The Court has read the case and found that
the facts of the case has no parallel to the case at bar.  The doctrine laid down in said case cannot
apply even by analogy to the present case. 
The ‘Reply to the objection’ filed by petitioner’s counsel has clearly
pointed out the striking difference between the two cases and the
inapplicability of said case to the case at bar.

The rule regarding exhaustion of administrative remedies is not
absolute except when there is an express legal provision requiring such
administrative step as a condition precedent to taking action in court.  This specially in point taking the fact
raised by the respondent that the position is not a public office which would
be strictly subject to the hierarchy of higher administrative offices.  Failure to exhaust administrative remedies
may possibly affect the cause of action but not the jurisdiction of the Court.  Another factor, in this particular case, is
that the petitioner, has no other immediate and adequate remedy than to go to
court in view of the forthcoming assumption of office of the new Board of
Directors which would not afford sufficient time to raise the matter to the
higher NEA authorities in Manila.

It is to be noted that this case does not involve the validity of
the election proceedings, or the number of votes cast but, simply the question
of whether the respondent is qualified or not under the residence requirement
of the position for which he was a candidate. 
It is therefore a justiciable
controversy.”

We agree.

Under Section 1, Rule 66 of the Rules of Court a quo warranto proceeding maybe instituted to determine
the right to the use or exercise of a franchise or office and to oust the
holder from its enjoyment, if his claim is not well-founded, or if he has
forfeited his right to enjoy the privilege.^[6] Where the dispute is on the eligibility to
perform the duties by the person sought to be ousted or disqualified a quo
warranto is the proper action.^[7]

Under Section 6, Rule 66
of the Rules of Court it is provided:

“SEC. 6.  When an
individual may commence such an action. 
– A person claiming to be
entitled to a public office or position usurped or unlawfully held or exercised
by another may bring an action therefor in his own
name.”

In this connection this Court held that an office in a private
corporation is an office of public character in such a sense and to such an extent as to render the remedy available to a person having an interest
which is injuriously affected.^[8] The action may also be brought by a public
utility whose rights are invaded by another.^[9]

The Supreme Court has concurrent jurisdiction over quo warranto proceedings with the Regional Trial Court in the
province in which the defendant or one of the defendants reside, or when
defendant is a corporation, in the province in which it is domiciled or has a place of business; but when the
Solicitor General of the Philippines commences the action, it may be brought in
a Court of First Instance in the City of Manila or the Supreme Court.^[10]

From the foregoing provision of the rules and rulings of this
Court, the conclusion is inescapable that the quo warranto
proceeding filed in the RTC of Naga City questioning
the qualification of petitioner Fortuno is within the
jurisdiction of said Court.  Nowhere in
the law can We find any provision that
excepts the electric cooperatives from its coverage.

True it is that the NEA has supervision and control over the
directors of CASURECO II and that under its election code respondent Abante has the remedy of appeal to the NEA within 72 hours
which he did not avail of.  Be that as it
may, it does not deprive said respondent of the right to avail of the right to
file the quo warranto suit when it is shown that the
DEC committed a grave abuse of discretion or otherwise acted without
jurisdiction or in excess of its jurisdiction in the resolution of the
qualification of Fortuno.^[11]

The ruling of this Court in Lions Club International
that the “courts will not interfere with the internal affairs of an
unincorporated association” cannot apply to the present case as CASURECO
II is clearly a duly organized private
corporation in the Philippines. 
Nevertheless, in said case this Court held that its proceedings (Lions
Clubs International) are nevertheless subject to judicial review “where
law and justice so requires, and x x x” where there is fraud, oppression, bad faith, or
where the action complained of is capricious, arbitrary or unjust
discriminatory^[12] In the present case, Abante
alleged in the quo warranto petition that the DEC “arbitrarily
denied petitioner’s complaint for disqualification of respondent Fortuno” warranting the intervention of the courts.^[13]

By the same token the case of Bataan
Electric Cooperative is predicated on different environmental
facts.  In said case, what is questioned
is the qualification of the voters who voted for the member of the board of
directors and not of the one voted for and further the elections sought to be
prevented had already been held, so that the petition was considered moot and
academic.^[14]

WHEREFORE, the petition is DISMISSED without pronouncement
as to costs.

SO ORDERED.

Teehankee, C.J., Narvasa,
Cruz, and Paras,
JJ., concur.

^[1] Section 26(f) CASURECO Election Code.

^[2] Pages 100-101, Rollo.

^[3] Pages 101-102, Rollo.

^[4] 121 SCRA 621, 628-629 (1983).

^[5] Resolution in G.R. No. 57058, promulgated Feb. 25, 1985.

^[6] State vs. Columbus, etc. Elec. Co., 104 O.G. St. 120, 135, N.E.
297, cited in Comments on the Rules of Court, Moran, Volume 3, 1980 Edition, p.
218.

^[7]
Cesar vs. Garrido, 53 Phil. 97, 103; Remata vs. Javier, 36 Phil. 483.

^[8] Cui vs. Cui, 60
Phil. 37.

^[9] Ammen Transportation Co. vs. Golingco,
43 Phil. 280, 285.

^[10]
Section 8, Rule 66, Rules of Court.

^[11]
Cui vs. Cui, supra; Section 6, Rule 66, Rules of Court; Section
2, Rule 65, supra; Lions Clubs International vs. Judge Amores, supra.

^[12] Lions Club International vs. Judge Amores, supra.

^[13] See Order of Trial Court of March 13, 1985, supra.

^[14] Bataan Electric Cooperative vs. Judge Pedro
Santiago, supra.