Topic: Doctrine of Separate Personality
NATIONAL ELECTRIFICATION ADMINISTRATION (NEA), Petitioner, v.
MAGUINDANAO ELECTRIC COOPERATIVE, INC., REPRESENTED BY
MAGUINDANAO ELECTRIC COOPERATIVE-PALMA AREA (MAGELCO-PALMA),
Respondents
COTABATO ELECTRIC COOPERATIVE, INC. (COTELCO), REPRESENTED BY
ALEJANDRO Q. COLLADOS AS GENERAL MANAGER, Petitioner, v. MAGUINDANAO
ELECTRIC COOPERATIVE-PALMA AREA (MAGELCO-PALMA), Respondents.
Facts:
● Maguindanao Electric Cooperative, Inc. (MAGELCO) is a duly organized cooperative
with a franchise to distribute electric light, and power to certain municipalities
○ Its franchise also includes the authority to distribute electricity in six municipalities
in Cotabato, namely Pigcawayan, Alamada, Libungan, Midsayap, Aleosan, and
Pikit (PPALMA Area)
● COTELCO is also a duly organized cooperative with a franchise to distribute electric light,
and power to the province of Cotabato except for the PPALMA Area
● In 2000, COTELCO filed before the NEA an application for the amendment of its franchise
to include the PPALMA Area
○ MAGELCO opposed
○ NEA conducted hearings; granted COTELCO’s application and ordered transfer of
MAGELCO’s assets in PPALMA Area to COTELCO upon payment of just
compensation
● MAGELCO filed before CA a petition for review (1st CA case)
○ While 1st CA case was pending MAGELCO passed Gen Assembly Resolution No.
4 which amended MAGELCO’s bylaws. Resolution:
■ Approved division and separation of MAGELCO into 2 separate and
independent branch units (MAGELCO [main] and MAGELCO-PALMA
[daughter]) *corps will be referred to as MAGELCO MAIN and
MAGELCO PALMA
○ NEA approved resolution subj to recommended modifications and outcome of
pending 1st CA case; required MAGELCO MAIN and PALMA to submit
transition plan; submitted; plan was approved
● Oct 25 2007: MAGELCO MAIN filed before RTC an action for injunction and prohibition
against NEA admin and MAGELCO PALMA
○ Sought annulment of MAGELCO’s division for being contrary to law and asked
RTC to order PALMA to return to MAGELCO MAIN all properties in its
possession
● Dec 1 2007: MAGELCO MAIN and PALMA entered in a MOA which they used as
compromise agreement to put an end to Oct 25 action which the RTC approved.
Compromise agreement:
○ Implementation of separate and independent operation between MAIN and
PALMA
○ Allocation of properties of MAGELCO between MAIN and PALMA in connection
w separate operations.
○ Also states the grant of MAIN to PALMA of the power, authority and jurisdiction
to obtain, acquire and apply for a separate electric franchise over the six
municipalities of Cotabato in whatsoever corporate and/or business name it may
choose.
○ Also provides that MAIN "transfers, waives, alienates and repudiates in favor of
PALMA its existing electric franchise over the above said 6 municipalities in the
Province of Cotabato
● Jan 18 2008: NEA approved MOA and stated that pending PALMA’s acquisition of its
own franchise, MAIN shall designate PALMA as its agent and representative in the
distribution of electricity in the PPALMA Area.
● CA on 1st CA case: NEA had jurisdiction to rule on COTELCO's application and affirmed
the NEA ruling
○ PD 269 recognized that the NEA can properly order a transfer of assets upon
payment of just compensation to make service available throughout the nation but
NEA did not observe the proper proceedings for the exercise of its right of eminent
domain. There is no sufficient basis for requirement to pay for just compensation
to MAGELCO
● April 2008: MAIN issued Board Resolution (BR) no. 40 declaring the cancellation of MOA
and transition plan between MAIN and PALMA. MAIN also issued BR no. 132 stating
that MOA is unenforceable in the absence of writ of execution and that MAIN repudiates
any acts performed by PALMA arising from MOA for lack of auth
● COTELCO issued 2 resolutions concerning PALMA:
○ BR No 98 requesting NEA to revoke MAGELCO’s GA Resolution no. 4 which
amended bylaws of MAGELCO.
○ Resolution 99: requesting NEA to dissolve PALMA and order PALMA’s
depository banks to allow COTELCO to withdraw fr its bank accounts to defray
PALMA’s operational, incidental, and necessary expenses and order that all future
funds and payment collected by or in possession of PALMA be deposited to
COTELCO
● Sep 8 2008: PALMA filed an action in RTC for the declaration of the existence and validity
of MAGELCO’s electric franchise; invalidity of COTELCO’s franchise
● MAIN and COTELCO pursued mediation proceedings for proper distribution of assets in
the PPALMA area
● Oct 1 2008: MAIN and COTELCO entered into Interim MOA where MAIN waived in
favor of COTELCO all of its rights and interests over the assets in PPALMA area in
exchange for COTELCO's undertaking to pay MAIN a certain sum of money and to assume
some of the latter's obligations to generation companies and the National Grid Corporation
of the Philippines
○ COTELCO took over MAIN’s assets in PPALMA area
● PALMA filed several cases: certiorari and prohibition with application for status quo ante
order, TRO and for the issuance of a writ of habeas data before CA challenging that letter
directives issued by NEA; forcible entry against COTELCO, ex parte motion for issuance
of writ of execution in the injunction case MAIN earlier filed; RTC GRANTED THESE
● COTELCO filed a special civil action for certiorari before the CA challenging these orders
Issue: W/N PALMA has capacity to sue
Held:
NO
● Columbia Pictures Inc vs. CA:
○ A litigant lacks the personality to sue when he or she is not the real party in interest.
In this situation, the initiatory pleading may be dismissed through a motion to
dismiss on the ground of failure to state a cause of action.
○ The lack of the legal capacity to sue refers to a litigant's "general disability to sue,
such as on account of minority, insanity, incompetence, lack of juridical personality
or any other general disqualifications of a party
● When an entity has no separate juridical personality, it has no legal capacity to sue. Rule 3
sec 1 provides that only natural or juridical persons or entities authorized by law may be
parties in a civil action. Art 44 of CC enumerates the entities that are considered as juridical
persons:
○ The State and its political subdivisions;
○ Other corporations, institutions and entities for public interest or purpose, created
by law; their personality begins as soon as they have been constituted according to
law;
○ Corporations, partnerships and associations for private interest or purpose to which
the law grants a juridical personality separate and distinct from that of each
shareholder, partner or member.
● IN THIS CASE, MAGELCO-PALMA was created as a branch within a cooperative. It
never existed as a juridical person. Hence, in accordance with the established rules and
jurisprudence, MAGELCO-PALMA does not have the legal capacity to institute the
special civil action for certiorari before the CA. Therefore, The CA erred in granting due
course to the petition.
● The decision of MAIN to amend its by-laws to create a new branch was never intended to
give rise to a new cooperative. Legally, this was not feasible as PD 269 provides for the
methods by which a cooperative is duly organized. MAIN merely reorganized its own
structure to improve its services. The fact that PALMA never existed as an independent
cooperative is apparent not only from a reading of PD 269 but also from the language of
the amendment in the by-laws which states that branch unit and main unit shall jointly coexist under one and the same franchise.
*note: IM SO SORRY IM CONFUSED AS TO WHY IT WAS PALMA WHO INSTITUTED
SPECIAL CIVIL ACTION FOR CERTIORARI WHEN ITS COTELCO WHO FILED IT :(( BUT
SC SAID THAT PALMA FILED THAT DAW IDK NA :(((((( Im assuming na lang na its the
petition for certiorari filed by PALMA w CA re: the letter directives.
^ yup i think tama na PALMA instituted yung appeal to the CA hehe like i think it’s rly referring
to the 2nd to the last bullet sa facts :)