LA UNION ELECTRIC COOPERATIVE INC. (LUELCO), REPRESENTED BY ITS PRESIDENT AND CHAIRMAN OF THE BOARD MANUEL L. MANGASER, PETITIONER, VS. HONORABLE BRAULIO D. YARANON, PRESIDING J…

In the herein petition for certiorari, prohibition and mandamus,
petitioner seeks to annul the decision dated January 13, 1989 and the order
dated February 10, 1989 of the Regional Trial Court (RTC) of San Fernando, La
Union in Civil Case No. 4182 and to declare Presidential Decree No. 269 as
amended by Presidential Decree No. 1645 unconstitutional.

Civil Case No. 4182 is an action for interpleader
filed by the Far East Bank & Trust Company (FEBTC), La Union branch,
against the La Union Electric Cooperative Inc. (LUELCO) and the National
Electrification Administration (NEA),
to determine the proper signatories to checks relating to withdrawals and
disbursements of LUELCO deposits with the said bank.  It appears that in LUELCO Board Resolution
No. 33-02-88 dated February 20, 1988, the authorized signatories are as follows:

“RESOLVED TO APPROVE, as
it hereby APPROVES, to revert to the amended Board Policy No. 1 allowing
the General Manager to sign checks and/or disbursements to a maximum of P5,000
and that any amount beyond this shall be countersigned by both the President and the
Secretary-Treasurer of the Board and all transactions should be paid in a
single check payment whether it is more or less than P5,000.”^[1]

The said Resolution was
amended by the LUELCO Board under Board Resolution No. 53-03-88 dated March
20, 1988, which
reads:

“That all checks and disbursements made in any amount shall
bear both the signatures of the Acting General Manager and the President of the Board of Directors of LUELCO effective
immediately.”^[2]

However, the NEA in its
letter of April 8, 1988 to the LUELCO Board of Directors amended Board
Resolution No. 33-02-88 in this manner ?

“This refers to your Board Resolution No. 33-02-88 authorizing
the General Manager to sign checks of withdrawals or disbursements to a maximum
of P5,000.00.

“Please be informed that such authorization is approved for
the amount of P3,000.00 only for single disbursement or withdrawal and that any
amount beyond this shall be counter-signed
by either the Coop President or Treasurer.”^[3]

It is alleged in the interpleader that
LUELCO through its President and Chairman of the Board insists that the bank
should follow Board Resolution No. 53-03-88, LUELCO being the owner of the
funds deposited, while on the other hand the NEA through its project supervisor
and acting general manager in the LUELCO alleges that Board Resolution No.
33-02-88 as amended by the NEA should be observed as the NEA has taken over
LUELCO and that Board Resolution No. 53-03-88 was disapproved by said general
manager pursuant to Presidential Decree No. 269, as amended by Presidential
Decree No. 1645, which empowers the NEA to
exercise control and supervision over electric cooperatives and
borrowers.  The bank through the interpleader thus sought the resolution of these
conflicting claims.

LUELCO in its amended answer contended that the power granted to
the NEA pursuant to Presidential Decree No. 1645 is unconstitutional as it
violates the Bill of Rights, that it is an arbritrary
exercise of power, is confiscatory in character and violates due process; and
that it destroys or infringes the autonomous character of the cooperative.  LUELCO also asked for damages because it was
compelled to litigate.

On the other hand
the NEA alleged:

a) that the management of LUELCO as an electric cooperative,
is “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
of the Board;” by virtue of the provisions of Section 24 of Presidential Decree No. 269 as amended;

b) that NEA,
pursuant to Section 10 of the same law, is “empowered to issue orders,
rules and regulations x x x in all matters
affecting said electric cooperatives and
borrowers, or supervised or controlled entities;

c) that NEA is
authorized under Section 5(a) of the said decree, to designate an acting
general manager and/or project supervisor for a cooperative, under certain
circumstances, such as when the interest of the cooperative and the program so
requires, and for such purpose,    “to
prescribe the functions of said Acting
General Manager and/or Project Supervisor, which powers shall not be nullified,
altered or diminished by any policy or resolution of the Board of Directors of the cooperative concerned;”

d) that pursuant to
its power aforestated, NEA has taken over the direct
control and supervision of LUELCO, and for such purpose designated Eufemio C. Genovia, one of its
own personnel, on February 5, 1988, as Acting General Manager and Project
Supervisor of the LUELCO, with powers and duties among which was to
“exercise full control and supervision over the management and operations
of LUELCO, including functions to review and approve/disapprove all board resolutions and policies and to
sign/countersign all checks, withdrawal slips and other banking
transactions;”

e) that NEA having
taken over the direct control and supervision of LUELCO, through its Acting
General Manager/Project Supervisor, it is the latter, in representation of NEA,
who should be considered to properly represent the cooperative and the
representation in the Petition of the
President and Chairman of the board of the LUELCO as representing LUELCO, is
‘misplaced, false and improper’;

f)  that the said President and Chairman of the
Board of the LUELCO does not have any lawful and material interest in the subject matter of the action;

g) that the LUELCO
board, upon insistence of the President and Chairman of the Board, adopted
Board Resolution No. 53-03-88 for no other purpose than to render ineffective the
powers of the Acting General Manager/Project Supervisor and prevent him from
carrying out his program to rehabilitate the electric cooperative;

h) that Board
Resolution No. 53-03-88 has not been approved by the Acting General Manager/Project
Supervisor of NEA, hence is invalid and of no force and effect; and

i)  that Resolution No. 33-02-88 was approved
with amendment by NEA, and is the valid and controlling resolution which should
govern the transactions between LUELCO and the petitioner bank, instead of
Resolution no. 53-03-88.”

A counterclaim for damages arising from the refusal of petitioner
to honor Board Resolution No. 33-02-88 was filed with the Answer.^[4]

The following facts are
undisputed as found by the court a quo –

“There is no dispute that the funds deposited with the
petitioner, pertain to the La Union Electric Cooperative, Inc., (LUELCO), an
electric cooperative organized and subsisting pursuant to the provisions of Presidential Decree No. 269, as
amended.

It cannot also be disputed that the National Electrification
Administration exercises supervision and control over electric cooperatives organized pursuant to Presidential Decree No. 269, as amended. 
NEA is further granted express authority to designate an acting general
manager and/or project supervisor for any electric cooperative, and for the
purpose, “to prescribe the functions of said officer, which powers shall
not be nullified, altered or diminished by any policy or resolution of the Board
of Directors of the cooperative concerned” (Section 5(a) Presidential
Decree 269 as amended by Presidential Decree No. 1645).

The record indicates that under Board Resolution No. 33-02-88 dated
February 20, 1988, the general manager was
authorized to sign checks
and/or disbursements to a maximum of P5,000 and that any amount beyond the same
shall be countersigned by both the President and the Secretary-Treasurer of the
Board and all transactions should be paid in a single check payment whether it
is more or less than P5,000.00 (Annex
“B”, Petition).

The record further indicates that on March 20, 1988, Board
Resolution No. 53-03-88, was adopted by the LUELCO Board, pursuant to which
“all checks and disbursements made in any amount should bear both the
signatures of the Acting General Manager and the President of the Board of
Directors, LUELCO effective immediately” (Annex “A”, petition).

It is further established by the record that on April 8, 1988, the
NEA, through Luis O. Cerrafon, NEA Director for
Cooperatives Development modified Board Resolution No. 33-02-88, by limiting
the authorization to the amount of
P3,000.00 only for single disbursement or withdrawal and that any amount beyond
the same shall be counter-signed by either the Coop President or
Treasurer (Annex “C”, Petition).

The Petition itself indicates that Board Resolution No. 53-03-88
was disapproved by the NEA through its Acting General Manager/Project
Supervisor in the LUELCO (petition, par. 6).”^[5]

In due course on January
13, 1989 a decision was rendered
by the RTC the dispositive portion of which provides
–

“WHEREFORE, in view of all the foregoing, judgment is hereby
rendered, finding the petitioner bank to be bound by the communication dated
April 8, 1988, of the NEA Director for Cooperatives Development, to the effect
that the General Manager (Acting
General Manager/Project Supervisor) designated by the National
Electrification Administration is
authorized to sign checks of
withdrawals or disbursements only in the amount of P3,000.00 and beyond which
amount the same shall be countersigned by either the President or Treasurer of
the LUELCO.

The counterclaim and crossclaim are
dismissed.

No pronouncement will be made as to costs.”^[6]

Not satisfied therewith,
LUELCO filed a motion for reconsideration of the decision which, however, was
denied by the trial court for lack of merit in an order dated February
10, 1989.^[7]

Hence the herein petition
wherein petitioner raises the following issues:

“I.  Is
P.D. 269, as amended by P.D. 1645 violative of
the 1987 Philippine Constitution when it authorized NEA to potentially cripple
the management of LUELCO by its duly elected Board of Directors and President
Manuel Mañgaser by insisting in a letter dated April
8, 1988 of Luis O. Cerrafon, Director for Cooperative
Development, that every withdrawal of LUELCO deposits with Far East Bank (La
Union Branch) in the amount of P3,000.00 by respondent Eufemio
Genovia alone is authorized to the exclusion of LUELCO’s President and not jointly with the LUELCO’s President as stated in LUELCO’s Board Resolution No. 53-03-88 dated March 20,
1988, amending the questioned Board
Resolution dated February 20, 1988?

II.   Does LUELCO through its Board of Directors,
Chairman and President Manuel L. Mañgaser have the
legal personality to resist the takeover of LUELCO and its bank deposits by
respondent Eufemio Genovia
as an indispensable step in a concerted
plan of said Genovia upon orders of NEA
Administration to destroy the very existence of a viable electric cooperative as LUELCO under the pretext of the
assertion of powers not granted by the Philippine Constitution?

III.  
Is the respondent court (RTC-San Fernando, La Union, Branch XXX)
unjustified in conveniently rejecting the constitutional objection to the
continued existence of an oppressive and utterly void law as P.D. 269, as amended by P.D. 1645, on its mere
pronouncement that LUELCO through its Chairman and President Manuel L. Mañgaser has no legal standing to raise constitutional
issues involving the said law in question?

IV.  In tearing away LUELCO’s
resistance to respondent Eufemio Genovia’s
dictatorial take-over by means of LUELCO’s own bank
deposits and trust funds, does P.D. 269, as amended by P.D. 1645, have
constitutional imprimatur to obliterate
the autonomous character of cooperatives declared to be free of any imposition
of any condition that might affect or infringe their autonomy in all government
loan assistance extended to them either through original loans or relending program?”^[8]

The petition is devoid of
merit.  The Court reproduces with
approval the disquisition of the trial court on the constitutionality of
Presidential Decree No. 269, as amended by Presidential Decree No. 1645, to wit
-?

“The rule is well-settled that the party raising a
constitutional question “x x x
must be able to show direct injury to or invasion of his constitutional rights arising from the operation or
enforcement of the questioned act.  x x x” (People vs. Vera, 65
Phil. 56.  Massachusetts
v. Mellon, 262 U.S.
477; cited in Jose P. Laurel on the
Constitution, by J. Enrique M. Fernando, p. 11).

LUELCO itself admits that what has been taken over by the NEA, is
the management of the cooperative. 
Indeed there is nothing in the record to establish a conclusion that the designation by the NEA of a project
supervisor and acting general manager for the LUELCO, for purposes of
management of the electric cooperative, has resulted in the takeover by the
NEA, of the business, properties, and assets of the cooperative itself.

Takeover of management by the NEA is in effect a change of
management.  It cannot however be equated
with a takeover of the business, property, and assets of the electric
cooperative, by the NEA.  The ruling made
by the NEA Director for Cooperatives Development, dated April 8, 1988, which
authorizes the General Manager to sign checks or withdrawals or disbursements
only in the amount of P3,000.00, and beyond which amount the same shall be
countersigned by either the President or Treasurer of the LUELCO (Annex
“C”, Petition), indicates that the LUELCO funds deposited with the
petitioner bank, remain as funds of the LUELCO and have not been converted into
funds of the NEA.

The foregoing considerations lead to no other conclusion than that
the LUELCO has not established by competent and sufficient proof that the
questioned decree as amended, has caused direct injury to or invasion of its
constitutional rights arising from the operation thereof.  Consequently the attempt to question the
validity of PD 269 as amended, must fail.

It should be noted further that under the 1986 (sic) Constitution,
cooperatives and similar collective organizations shall have the right to own, establish, and operate
economic enterprises, subject to the duty of the State x x
x to intervene when the common good so demands.  (Sec. 6, Article XII, 1986 [sic]
Constitution).  LUELCO admits, and the
Court will take judicial notice, of the fact that the State has issued huge
amounts of public funds to support electric cooperatives in line with the
national policy objective of total electrification of the Philippines
on an area coverage basis.  It is
evident, considering the requirements of public interest in safeguarding public
funds, that the law-making authority deemed it wise that “when the
interest of the cooperative and the program so requires”, the National
Electrification Administration (NEA),
is empowered to designate an acting general manager and/or project supervisor for
an electric cooperative, with powers
and duties which include control and supervision over the management and
operations of LUELCO, including functions to review and approve/disapprove
all board resolutions and policies and to sign/countersign all checks, withdrawal slips and other banking
transactions x x x (Secs. 5(a), 24, etc., P.D. 269, as amended).

There is thus reasonable
basis for the exercise of control and supervision by the NEA over all
electric cooperatives including the defendant LUELCO.  At any rate, courts ‘x x x do not pass upon questions of
wisdom, justice or expediency of legislation x x x’ (Angara
v. Electoral Commission, 63 Phil. 139, 158-159).”^[9]

Moreover, the reason
courts will as much as possible avoid the decision of a constitutional question can be traced to the
doctrine of separation of powers which enjoins on each department a proper respect for the acts of the other
departments.  In line with this policy,
courts indulge the presumption of constitutionality and go by the maxim that
“to doubt is to sustain.” The theory is that, as the joint act of the
legislative and executive authorities, a law is supposed to have been carefully
studied and determined to be constitutional
before it was finally
enacted.  Hence, as long as there is some other basis that can be used by the courts for its
decision, the constitutionality of the challenged law will not be touched upon
and the case will be decided on other available grounds.^[10]

As found by the court
a quo it is not seriously
disputed that the NEA had taken over the control and supervision of the LUELCO
by installing one of its personnel as acting general manager/project supervisor
of the LUELCO.  It is within the power of
control and supervision of the NEA over the LUELCO as an electric cooperative
organized and existing pursuant to Presidential Decree 269 as amended by
Presidential Decree 1645 particularly Section 5(a) thereof.  In view of the circumstances which, in the
interest of the cooperative and the program of electrification whereby said
Acting General Manager effectively took over the actual supervision and control
of the management and operation of the LUELCO on February 8, 1988, it was
deemed necessary that the matter of disposal of funds deposited with the FEBTC
should be guided by the NEA ruling of April 8, 1988 authorizing the general manager to sign checks of withdrawals
and disbursement only in the amount of P3,000.00 and beyond which amount the
same shall be countersigned by either the President or Treasurer of the LUELCO.

The trial court correctly
found that the parties appear to have acted in utmost good faith in filing
their respective pleadings in the case and consequently the matter of damages was
not passed upon.

The Court finds no need to dispose of the other isssues in this petition in the light of the foregoing
discussion.

WHEREFORE, the petition is DISMISSED for lack of merit,
with costs against petitioner.

SO ORDERED.

Narvasa, (Chairman), Cruz, Griño-Aquino, and Medialdea, JJ., concur.

^[1]
Annex F to Petition; Page 120, Rollo.

^[2]
Ibid at page 121.

^[3]
Supra, Page 121, Rollo.

^[4]
Ibid, pages 122-124, Rollo.

^[5]
Pages 124-125, Rollo.

^[6]
Page 126, Rollo.

^[7]
Annex I to Petition; page 136, Rollo.

^[8]
Pages 31 to 33, Rollo.

^[9]
Annex I to Petition, pages 136-138, Rollo.

^[10]
Isagani A. Cruz, Philippine Political Law, 1989 ed.,
page 232.