DOCTRINE OF SEPARATE PERSONALITY

7) National Electrification Admission (NEA) v. Maguindanao Electric Cooperative, G.R. No.

192595-96, April 11, 2018

FACTS:
MAGELCO is a duly organized cooperative with a franchise to distribute electric light, and power
to the municipalities of Sultan and six other municipalities of Cotabato known as the PPALMA
Area. COTELCO is also a duly organized cooperative with a franchise to distribute light and
power to Cotabato except the PPALMA Area. COTELCO filed before the National Electrification
Admission (NEA) an application to amend its franchise to include the PPALMA Area.
MAGELCO opposed the application at the time. Eventually, the NEA granted the application
and ordered the transfer of MAGELCO’s assets in the PPALMA Area to COTELCO. MAGELCO
amended its by-laws and formed two separate and independent branch units: the MAGELCO
Main and the MEGLACO-PALMA (for the PPALMA Area).
Not too long thereafter, MAGELCO Main filed an injunction and prohibition before the
RTC, seeking the annulment of MAGELCO-PALMA. However, MAGELCO Main and
MAGELCO-PALMA entered into a compromise agreement to put an end to the earlier action.
The agreement included the allocation of the properties of MAGELCO between MAGELCO
Main and MAGELCO-PALMA. The RTC approved the compromise agreement.
Subsequently, MAGELCO Main issued a resolution declaring the cancellation of the
earlier agreement. COTELCO also issued two resolutions requesting NEA, among others, TO
dissolve MAGELCO-PALMA. NEA found merit in the resolutions passed by MAGELCO Main
and COTELCO and ordered, among others, to declare the PPALMA Area under the coverage of
COTELCO and not MAGELCO Main or MAGELCO-PALMA, subject to the mediation
proceedings between MAGELCO and COTELCO as to disposition of assets. MAGELCO Main
waived in favor of COTELCO all of its rights and interests over the assets in the PPALMA Area
in exchange for COTELCO’s undertaking to pay the former a sum of money and to assume
some its obligations.
Thus, MAGELCO-PALMA filed a petition for certiorari and prohibition, TRO and/or writ of
preliminary injunction.

ISSUE:
Whether or not ownership over the assets in the PPALMA Area was properly transferred to
MAGELCO-PALMA from MAGELCO Main.

HELD:
No. PD 269 provides for the specific process by which a cooperative is duly formed, and it is
definitely not allowed to create a cooperative from an existing one by mere amendment of its
own by-laws. MAGELCO-PALMA never existed as an independent cooperative, hence, it did
not acquire a separate legal personality from its parent cooperative, MAGELCO Main.
Therefore, no ownership of the assets of the PPALMA Area were transferred to MAGELCO-
PALMA. Ownership of such assets remains with MAGELCO Main. The parent cooperative
cannot transfer ownership to its unit within the same cooperative.