G.R. No. 129175 ; November 19, 2001
RUBEN N. BARRAMEDA, ELVIS L. ESPIRITU, MERARDO G. ENERO, JR., MARCELITO B. ABBAS and REYNALDO V. ABUNDO, petitioners, vs. ROMEO ATIENZA, EDGARDO DASCO, BERNARDO DIEZMO, JESUS FERNANDEZ, MILAGROS ESTRELLADO, ARTEMIO INDIAS, RAUL CARRANCEJA, MARY ANN ASOR and ANTONIO OBIAS, respondents.

FACTS

Camarines Norte Electric Cooperative (CANORECO) was organized under P.D. No. 269 and later registered with the Cooperative Development Authority (CDA) under R.A. No. 6938 . Due to CANORECO’s default on a substantial loan from the National Electrification Administration (NEA), NEA exercised its contractual and statutory rights to protect state funds by designating an acting general manager. A subsequent board election in 1995 was declared void ab initio by the CDA for lack of quorum, leading to a leadership impasse. To resolve the conflict, President Fidel V. Ramos issued Memorandum Order No. 409, creating an ad hoc committee to temporarily manage CANORECO. This committee called a special general membership assembly in 1997, where the members voted to replace the board of directors and elected a new set, the herein respondents.

ISSUE

The key issue is whether or not petitioners are the rightful directors of Camarines Norte Electric Cooperative (CANORECO) as against respondents, who were elected in a general assembly of members called by a presidential ad hoc committee.

RULING

The Supreme Court ruled in favor of the respondents, upholding the validity of their election. The Court found that the President, through Memorandum Order No. 409, acted within his administrative supervision and control over both the NEA and the CDA to constitute the ad hoc committee. This was a valid exercise of executive power to resolve a disruptive deadlock that threatened public service. The committee’s act of calling a general assembly to elect a new board was a proper measure to restore normalcy. The election itself was conducted pursuant to the cooperative’s by-laws and the Cooperative Code ( R.A. No. 6938 ), which vests in the general assembly the ultimate power to elect and remove directors. The petitioners’ claim of rightful directorship, stemming from the CDA’s earlier order recognizing their incumbency, was superseded by this subsequent valid election conducted under the authority of the President’s lawful directive. The respondents were thus the legitimate directors, to hold office until their successors are duly elected.