l\epublir of tbe ~bilippines

(ourt of ~ppea(s
:iffilanila

Second Division

ALBAY ELECTRIC COOPERATIVE, CA-G.R. SP No. 93370

INC.,
Petitioner,
Members:
- versus -
VASQUEZ, JR., Chairman
GUARINA III, and
HON. PEDRO SORIA, RTC, BR. 5, DIMAAMPAO, JJ.
LEGAZPI CITY, NATIONAL
ELECTRIFICATION ADMINIS-
TRATION, NATIONAL POWER Prom u lgated:
CORPORATION, NATIONAL TRANS-
MISSION CORPORATION and ALECO

f4:1
OFFICERS-IN-CHARGE JOSE MISAEL
MORALEDA and NINETIE
BANZUELA,
Respondents.
x - - - - - - - - - - - - - - - - )(

VASQUEZ, JR., J.:

This special civil action for Prohibition and Mandamus,

petitioner Albay Electric Cooperative, Inc., represented by
its President Oliver O. Olaybal, is rooted on the following
relevant facts:

The present Albay Electric Cooperative, Inc. (Aleco, for

brevity) is a consolidation of three district electric
cooperatives in the province, namely, Aleco I, Aleco II, a~

39
CA-G.R. SP No. 93370
Decision
Page 2

Aleco III. After its integration, employees of respondent

National Electrification Administration (NEA) managed Aleco
until Edgardo San Pablo was designated as manager in 1997.
However, in 1999, NEA took over Aleco's franchise operations
and installed a management team composed of Merlin
Rosales, Eleuterio Adonay , Jr., and Danilo Cruz (Annex "A",
Petition, Rollo, p. 29). On May 6 of the same year, Aleco and
the National Power Corporation (NPC) executed contracts for
sale of electricity (CSE) for a ten (10) year period from 1999
until 2008 (Rollo, p. 108). Three years into the contract, Aleco
defaulted on its obligation to pay under the agreement which
amounted to Twenty Seven Million One Hundred Seventy Five
Thousand Nine Hundred Seventy Nine (~27, 175,979.00)
Pesos. In the meantime, on January 3, 2000, respondent NEA
informed the Aleco Board of Directors that the former would
take over the operations of Aleco in accordance with power
and functions of the NEA under Presidential Decree 269. The
Board was, however, reinstated on October 6, 2000, only to
be abolished again on December 14, 2000. Thereafter, on
December 2003, the management team earlier set up in 1999
was recalled as a result of NEA's downsizing and
reengineering program under Executive Order No. 119. On
August 5, 2004, respondent NEA designated Jose Misael
Moraleda as project supervisor for Aleco (Annex ttA", Petition,
Rollo, p. 30).

When Aleco's default of payments continued, NPC sent

a letter dated December 7, 2005 addressed to the former
demanding payment of its account otherwise NPC would be
constrained to cut-off Aleco's power supply. However, before
the disconnection was effected, NPC received a letter from
Rep. Edcel C. Lagman of the 1st District of Albay, requesting
that the disconnection be held in abeyance pending NPC's
approval of a new restructuring proposal to be submitted by
Aleco. NPC acceded to such request. Meanwhile, in an
effort to install a new set of directors, NEA Proje~

40
CA-G.R. SP No. 93370
Decision
Page 3

Supervisor Jose Misael Moraleda scheduled elections on

October, 2005. This was opposed by Aleco through a petition
for Prohibition with Temporary Restraining Order and/or
Preliminary injunction (Annex "A", Petition, Rollo, pp. 28-41)
filed with Branch 5 of the Regional Trial Court of Legazpi
City. Presiding Judge Pedro Soriao granted the petition and
directed Mr. Moraleda to desist from proceeding with the
elections for the members of the Board of Directors (Annex
"B", Petition, Rollo, pp. 42-43). However, Judge Soriao set a
clarificatory hearing on January 30, 2006 (Annex "e", Petition,
Rollo, p. 44) where he allowed the the elections to proceed on
April 8, 2006 (Pet;tjon, Rollo, p. to).

Hence, this petition for Mandamus, Prohibition and

Cancellation of Unauthorized Loans transaction seeking:
(a) to prevent National Power Corporation and National
Transmission Corporation from disconnecting power supply to
Albay Electric Cooperative, Inc.; (b) to order National
Power Corporation and National Transmission Corporation to
deal directly with Albay Electric Cooperative, Inc. affecting
their power supply and delivery contracts with the
petitioner, and not with National Electrification
Administration nor with the provincial government of Albay;
(c) to reinstate the board of directors of Albay Electric
Cooperative, Inc. consisting of the members thereof as of the
abolition of the Board on December 14, 2000; if not to order
National Electrification Administration to reinstate the same
Board unconditionally; (d) to order National Electrification
Administration and/or its Board of Administrators, to act on
Aleco's proposal to raise interest-free rehabilitation funds
through stock issuance and risk-capital infusion totaling ~800
million pesos, to enable the petitioner to determine all
after-steps it has to perform according to law; (e) to direct
the management of Albay Electric Cooperative, Inc. to
subordinate themselves to their employer and not to the
National Electrification Administration or the Provinci~

41
CA-G.R. SP No. 93370
Decision
Page 4

Government of Albay; (f) to prohibit Judge Pedro Soriao

and/or Branch 5 of the Regional Trial Court, Legazpi City,
from conducting further proceedings in SR-16 entitled "Albay
Electric Cooperative, Inc. et. al., vs. Jose Misael Moraleda",
to instill corporate governance in Aleca's corporate structure,
in obedience to the existing mandate of the Aleca general
assembly banning the holding of elections as long as Aleco is
under NEA hostile management takeover, for the protection
of the interest of Aleca; and (g) to delegate to Branch 5 of
the Regional Trial Court, Legazpi City, the reception of
evidence (Rollo, pp. 20-23).

The petition is bereft of merit.

Indisputable is that at the time Mr. Oliver Olayval filed

the present petition, it was unaccompanied by any proof that
he was authorized to sign the verification and non-forum
shopping certification therein on behalf of the Albay Electric
Cooperative, Inc. Verily, in the absence of any board
resolution from the board of directors of the corporation to
act for and in its behalf, the present action must necessary
fail. For sure, a corporation has no power except those
expressly conferred on it by the Corporation Code and those
that are implied or incidental to its existence. A corporation
exercises said powers through its board of directors and/or
its duly authorized officers and agents. Deeply entrenched is
that a power of a corporation to sue and be sued in any court
is lodged with the board of directors that exercises its
corporate powers (Premium Marble Resources, Inc. vs.
Court of Appeals, 264 SCRA 11 [1996J as cited in Shipside
Incorporated vs. Court of Appeals, 352 SCRA 334 [2001J).
Too, physical acts of the corporation, like the signing of
documents, can be performed only by natural persons duly
authorized for the purpose by corporate by-laws or by a
specific act of the board of directors (Underscodng, Ours; Ibid).
In main, the signature of Mr. Olaybal as President with t~

42
CA-G.R. SP No. 93370
Decision
Page 5

bare allegation that he is authorized to sign the certification

against forum-shopping is inadequate without the
corresponding Board Resolution and is dismissible for not
being initiated by the real party-in-interest.

Consequently, the petition not having been brought in

the name of the real party-in-interest, the petition must be
dismissed for failure to state a cause of action. The 1997
Rules of Civil Procedure (Rules of Court) requires that every
action must be prosecuted or defended in the name of the
real party-in-interest, i.e., the party who stands to be
benefited or injured by the judgment in the suit, or the party
entitled to the avails of the suit (Sec. 2, Rule 3, Rules of
Court). A case is dismissible for lack of personality to sue
upon proof that the plaintiff is not the real party-in-
interest, hence grounded on failure to state a cause of action
(Tamondong vs. Court of Appeals, 444 SCRA 509 [2004]
cited in Manila International Airport Authority vs. Rivera
Village Lessee Homeowners Association, Incorporated 471
SCRA 358 [2005]). The party bringing suit has the burden of
proving sufficiency of the representative character that he
claims. If a complaint is filed by one who claims to represent
a party as plaintiff but who in fact is not authorized to do so,
such complaint is not deemed filed and the court does not
acquire jurisdiction over the complaint. It must be stressed
that an unauthorized complaint does not produce any legal
effect (Aron vs. Realon, 450 SCRA 372 [2005] as cited in
Ibid). Lastly, where the real party in interest is a body
corporate, neither the administrator of the agency or a
project manager could sign the certificate against forum-
shopping without being duly authorized by a resolution of the
board of the corporation (Eslaban, Jr. vs. Vda. De Onorio,
360 SCRA 230 [2001]).

Be that as it may, granting ex argumentii that Mr.

Olayval was authorized by a Board Resolution to bring t~

43
CA-G.R. SP No. 93370
Decision
Page 6

present suit, the petition for a writ of mandamuswill still

fail.

Section 3, Rule65 of the Rulesof Court provides--

"Sec. 3. Petition for mandamus.-- When any

tribunal, corporation, board or officer or person
unlawfully neglects the performance of an act which
the law specifically enjoins as a duty resulting from an
office, trust, or station, or unlawfully excludes another
from the use and enjoyment of a right or office to which
such other is entitled, and there is no other plain,
speedy and adequate remedy in the ordinary course of
law, the person aggrieved thereby may file a verified
petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered
commanding the respondent, immediately or at some
other time to be specified by the court, to do the act
required to be done to protect the rights of the
petitioner, and to pay the damages sustained by the
petitioner by reason of the wrongful acts of the
respondent. "

Mandamus lies to compel the performance, when

refused, of a ministerial duty, but not to compel the
performance of a discretionary duty (Go vs. Court of
Appeals, 252 SCRA 564 [1996]). Mandamuswill not issue to
control or review the exercise of discretion of a public
officer where the law imposes upon said public officer the
right and duty to exercise his judgment in reference to any
matter in which he is required to act. It is his judgment that
is to be exercised and not that of the court (Knecht vs.
Desierto, 291 SCRA 292 [1998] as cited in Paloma vs.
Mora, 470 SCRA 711 [2005]).

In the instant case, all the functions which Mr. Olayval

would like respondent NEA to perform, such as compelling
NEA to reinstate the Aleca Board of Directors and to act 2:!2-

44
CA-G.R. SP No. 93370
Decision
Page 7

Aleco Capital Build Proposal, are purely discretionary in

nature, as provided in Subsection (e) Section 10 of PO269, as
amended by Section 5 of PD 1645, thus:

"Take preventive and/or disciplinary measures

including suspension and/or removal and replacement
of any or all of the members of the Board of Directors,
officers or employees of the Cooperative, other
borrower institutions or supervised or controlled entities
as the NEA Board of Administrators may deem fit and
necessary and to take any other remedial measures as
the law or the Loan Agreement may provide."

The same is true with Mr. Olayval's desire for NEA to

act on the alleged capital build up proposal which are also
clearly discretionary in nature as distinctly provided for in
Section 10, Chapter II of PD 269, as amended by Section 5,
PO1645, thus:

"Enforcement Powers and Remedies. In the

exercise of its power of supervision and control over
electric cooperatives and other borrower, supervised or
controlled entities, the NEA is empowered to issue
orders, rules and regulations and motu-propio or upon
petition of third parties, to conduct investigations,
referenda and other similar actions in all matter
affecting said electric cooperatives and other
borrowers, or supervised or controlled entities.

xxx xxx xxx

No cooperative shall borrow money from any

source, without the Board of Administrator's prior
approval; Provided, that the NEA Board of
Administrators, may, by appropriate rule or regulation,
grant general permission to Cooperative to secure short
term loans not requiring the encumbrance of their real
properties or of a substantial portion of their properties
or assets." (Underlining, Our~

45
CA-G.R. SP No. 93370
Decision
Page 8

Correspondingly, this Court believes that alleged

representative Mr. Olaybal should have exhausted all
remedies with the NEA first before seeking succor from the
courts. The reliefs sought are well provided for in Section 47
of PD269, thus:

"The NEAis empowered to conduct such hearings

and investigations and to issue such orders as are
necessary for it to implement the provisions of this
Chapter, and in connection therewith, without necessity
of previous hearing, to require any public service entity
or the officials thereof to furnish to it such information
and data, including statements of accounts, schedules
of rates fees and charges, contracts, and service rules
and regulations, articles of incorporation, by laws, audit
reports and other internal records, documents, policies
and procedures, as will enable NEA to be sufficiently
informed in exercising its powers and authorities;
PROVIDED,That no order shall issue finally determining
and substantially affecting any right of any person
subject to the NEA'sjurisdiction without first affording
such person and any other interested person
opportunity for hearing as a party in the hearing
proceeding. "

Settled is that before a party may seek the intervention

of the courts, he should first avail of all the means afforded
him by administrative processes (Zabat vs. Court of
Appeals, 338 SCRA 551 [2000] as cited in Associated
Communications and Wireless Services, Ltd. vs. Dumlao,
392 SCRA 269 [2002]). This rule on exhaustion of
administrative remedies was explained thus:

"The underlying principle of the rule on

exhaustion of administrative remedies rests on the
presumption that the administrative agency, if
afforded a complete chance to pass upon the matter,
will decide the same correctly. There are both legal and
practical reasons for the principle. The administrati~

4G
CA-G.R. SP No. 93370
Decision
Page 9

process is intended to provide less expensive and more

speedy solution to disputes. Where the enabling statute
indicates a procedure for administrative review and
provides a system of administrative appeal or
reconsideration, the courts-for reasons of law, comity
and convenience-will not entertain a case unless the
available administrative remedies have been resorted to
and the appropriate authorities have been given an
opportunity to act and correct errors committed in the
administrative forum (Union Bank of the Philippines v.
Court of Appeals, 290 SeRA 198 [1998])". (as cited in
Associated Communications and Wireless Services,
Ltd. vs. Dumlao, supra)

This is but proper inasmuch as the special civil actions

of prohibition and mandamus are extraordinary remedies
that a party can resort only in cases of extreme necessity
where the ordinary forms of procedure are powerless to
afford relief and where there is no other clear, adequate and
speedier remedy (Ibid). In this, Section 47 of PD 269 should
have been the adequate, speedier and less expensive remedy
to secure the reliefs sought. It is basic that a party's failure
to exhaust administrative remedies is fatal, especially
where the case involves not just issues of law but of
administrative discretion. The available administrative
procedures must be pursued until a definite and final
determination is held (Social Security System Employees
Association vs. Bathan-Velasco, 313 SeRA 250 [1999] as
cited in Ibid).

A petition for a writ of prohibition against respondents

is likewise unavailing. In order for a writ of prohibition to be
issued, the following requisites under Section 3 of Rule 65 of
the 1997 Rules of Civil Procedure must be present: (1) the
impugned act must be that of a tribunal, corporation, board,
officer or person, whether exercising judicial, quasi-judicial
or ministerial functions; and (2) there is no appeal, or a~
CA-G.R. SP No. 93370
Decision
Page 10

other plain, speedy and adequate remedy in the ordinary

course of law (Rivera vs. Espiritu, 374 SeRA 351 [2002]).
Here, the petition prays for the cancellation of purported
unauthorized loans with the allegation of NEA's alleged
mismanagement. Nonetheless, it failed to show that
respondents have acted without or in excess of their
jurisdiction, or with grave abuse of discretion amounting to
lack or excess of jurisdiction in the exercise of their mandate
over electrification matters, such as, the appointment of a
project supervisor who will temporarily manage Aleca.
Moreover, there is no proof to show the existence of
unauthorized loans that Aleca has obtained from NEA. The
same is true with the allegations that the losses of Aleca
were due to NEArs mismanagement.

In the case of the NPC, there is no evidence or ground

to support petitioner's prayer to prohibit NPC from dealing
with NEA, its manager and the Provincial Governor of Albay.
NPCs transaction with Aleco consists of presenting power
bills for electricity consumed and collection notices for
payments of said power bills. These bills have always been
addressed to Aleco thru its project manager, Mr. Jose Misael
Moraleda. NPC is, therefore, entitled to presume the
regularity and validity of NEA's taking over of the operation
of Aleca. The acts assailed involve an intra-corporate dispute
between Mr. Olaybal and the Aleco Board of Directors on the
one hand, and the current officers of the corporation on the
other, and thus do not affect Aleco's obligation to the NPC
under Contracts for the Sale of Electricity (CSE). Just like
with NEA, NPC had every right to rely on the regularity of
NEA's performance of its functions in invoking its power of
control and supervision on electric cooperatives under PO
269, particularly under Section 5(e) thereof.

By and large, a petition for prohibition cannot be an

occasion for introducing unproved factual allegations. Me~

48
CA-G. R. SP No. 93370
Decision
Page 11

allegations are not evidence. A petition for prohibition is a

petition the sole purpose of which is to prevent an
encroachment, excess, usurpation or assumption of
jurisdiction on the part of an inferior court or tribunal
(Longino V5. General, 451 SeRA 423 [2005J). The above
elements are clearly not existing in the present petition,
such that the application for the issuance of the writ should
be denied.

IN VIEW OF ALL THE FOREGOING,the instant petition is

ordered DISMISSED.No costs.

SOORDERED.

WE CONCUR:

Pursuant to Article VIII, Section 13 of the Constitution,

it is hereby certified that the conclusions in the above
decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court.