SECOND DIVISION
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MANUEL H. NIETO, JR.,
Petitioner, -versus- SECURITIES AND EXCHANGE COMMISSION (SEC), ATTY.
VERNETTE G. UMALI-PACO in her capacity as General Counsel of the SEC and in
her personal capacity, and JOHN/JANE DOES,
Respondents. |
G.R.
No. 175263 Present:
CARPIO, J.,
Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ. Promulgated: March 14, 2012 |
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R E S O L U T I O N
PEREZ, J.:
This petition for review on certiorari seeks the reversal of the Decision[1]
dated 30 October 2006 of the Court of Appeals in CA-G.R. SP. No. 94038, which
annulled the Orders of the Securities and Exchange Commission (SEC) directing
Philcomsat Holdings Corporation (PHC) to convene its annual stockholders
meeting.
The instant case is an offshoot of an intra-corporate
dispute among contending groups, i.e.,
Manuel H. Nieto, Jr. (Nieto) and Africa Groups (headed by Victor Africa), in PHC.
The factual antecedents are as follow:
The voting shares of PHC were 80.5% owned by
Philcomsat, which in turn, was wholly owned by the Philippine Overseas
Telecommunications Corporation (POTC).
The PHC Board of Directors (Board) informed the SEC
that they had decided not to convene the stockholders meeting for 2005 pending
results of the 2004 election, which was then the subject of various court litigations. Jose Ozamiz (Ozamiz), a minority stockholder
of PHC, wrote to SEC and requested the issuance of a cease and desist order
from SEC against the group of Nieto, consisting of directors and officers of
PHC, in order to prevent the latter from allegedly dissipating the corporate
assets; and that a stockholders meeting be convened.
In response to Ozamizs letter, Nieto alleged that
Ozamiz was attempting to pre-empt any judgment in cases pending before the
various courts involving the stockholders of Philcomsat, POTC and PHC.
Another letter was filed by Ozamiz to SEC urging the
latter to order PHC to hold a stockholders meeting to elect a new set of
directors and officers and to form the NOMELEC (A Nominations Committee).
On 26 February 2006, the SEC promulgated an Order in
SEC Case No. 02-06-113, thus:
IN VIEW OF THE
FOREGOING, the Commission hereby resolves to:
1.
Direct
the directors and responsible officers of PHC and the concerned parties to
submit to the Commission, within ten (10) days from receipt of this Order, the
names of their nominees to the NOMELEC to be composed of five (5) members,
namely:
a) One (1) from the Africa group;
b) One (1) from Nieto group;
c) A representative from the minority group,
Mr. Jose Ozamiz, who petitioned the
calling of the annual stockholders meeting of PHC;
d) A representative of the Republic of the
Philippines; and
e) A common neutral party to be chosen by the
other (4) members of the NOMELEC.
2.
Direct
the directors and responsible officers of PHC, within the same period to submit
the preferred date of annual meeting of PHC which should be held not later than
17 April 2006; and
3.
Direct
the directors and responsible officers of PHC to comply with all the
requirements for the conduct of meetings for publicly listed companies
including the posting of notices for two (2) consecutive weeks prior to the
date of meeting in strategic places within the premises of PHC.
SEC issued another Order on 5 April 2006 reiterating
the demand that PHC convene its annual stockholders meeting. The third Order issued on even date denied
Nietos motion for reconsideration of the 26 February 2006 Order.
On 11 April 2006, Nieto filed a petition for certiorari and prohibition to enjoin the
SEC from calling the PHCs annual stockholders meeting.
During the pendency of the petition before the Court
of Appeals or on 1 July 2006, the majority stockholders of PHC entered into a
Memorandum of Understanding (MOU) agreeing to unite and form a common slate for
the Board in POTC, Philcomsat and PHC.
They requested the SEC to set a date for the annual stockholders
meeting. The group of Nieto was a party
to the MOU.
Four (4) days after the execution of the MOU, the
Court of Appeals issued a Temporary Restraining Order (TRO) enjoining SEC from
implementing its orders.
On 7 August 2006, the SEC filed its Comment to the
petition and defended the order calling of the stockholders meeting of PHC as
within its power and jurisdiction to issue.
On 1 September 2006, petitioner filed a Motion to
Withdraw Petition in view of the MOU.
This action notwithstanding, the Court of Appeals proceeded to render a
Decision annulling the assailed orders of the SEC and directing it to cease exercising
its regulatory powers. In other words,
the Court of Appeals granted Nietos petition, viz:
WHEREFORE,
premises considered, petition is hereby GRANTED. The February 26, 2006 and the two (2) April
4, 2006 Orders of the SEC in SEC Case No. 02-06-133 are hereby ANNULLED. The Securities and Exchange Commission is
hereby DIRECTED to stay its hand and cease in the exercise of its regulatory
powers, as in this case, when they interfere with or render moot the exercise
of the adjudicative powers already transferred from the SEC to the regular
courts.[2]
In this petition with prayer for a TRO and preliminary
injunction, petitioner anchors its argument mainly on the view that the Court
of Appeals should have granted the withdrawal of the petition and should not have
proceeded to decide the case. The SEC
agreed with petitioner that the Court of Appeals is duty bound to grant the
withdrawal of the petition.
The core issue is the authority of the SEC to call a
stockholders meeting. The MOU mooted
that issue. It mooted the case before
the Court of Appeals. It mooted likewise
the present petition questioning the authority of the Court of Appeals to
decide the case in spite of petitioners motion to withdraw petition.
By the explicit terms of the MOU, the parties to the
MOU which include Pablo L. Lobregat, representing the Nieto Family and Victor
V. Africa, representing the Africa Family, have decided to end their dispute.[3]
Thus, the contending parties agreed on
the following terms and conditions:
1. The parties warrant that they represent
and/or have secured authority to represent the interests of the private
stockholder-families and their successors and assigns in POTC, and shall do all
acts that may be necessary to enable them to continue representing such
interests;
2. The parties have agreed in principle to
unite and form a common slate for the Boards of Directors in POTC, Philcomsat
and PHC. The names of the persons to be
in the said common slate shall be indicated in the Stockholders Agreement that
the parties shall hereafter execute;
3. The parties have agreed that each of the
six stockholder-families shall be appoint[ed] a representative who[m] the
parties shall cause to be elected as director of Philcomsat and PHC; while five
of such representatives shall be elected as directors of POTC, the sixth to be
elected immediately after the number of POTC directors as stated in the
Articles of Incorporation has been increased to nine (9);
4. The parties have agreed that, with the
execution of this Memorandum of Understanding where the six
stockholder-families are represented, they shall hereafter be called the
Owners Group and henceforth no reference to the Nieto Group or the Africa
Group shall be made;
5. The parties have agreed that Ambassador
Manuel H. Nieto, Jr., as one of the two (2) remaining living incorporators of
POTC, will assume the position of Chairman Emeritus of POTC, Philcomsat and
PHC.
6. The parties have agreed that they shall
not, individually or collectively, publish or cause to be published any press
release against any party to this Memorandum of Understanding, nor against any
of the stockholders the parties herein represent. The parties have likewise agreed that they
shall not do nor cause to be done any act that will undermine the discussions
of the parties, this Memorandum of Understanding or the Stockholders Agreement
or attack any of the parties hereto or any of the stockholders they represent.
7. The parties have agreed that, upon
execution of the Stockholders Agreement, all cases pending between the parties
or the stockholders they represent shall, insofar as practicable, be dropped
and/or withdrawn.
8. The
parties have agreed that this Memorandum of Understanding as well as the
discussions between them shall lead to a Stockholders Agreement between them
which shall include, among others, the matters herein described, the calling of
stockholders meetings of POTC, Philcomsat and PHC and the reorganization of
the Boards of Directors of the said corporations.[4] [Emphasis Supplied]
The main point of Nietos petition before the Court of
Appeals was to oppose the calling of the annual stockholders meeting. By signing the MOU, Nieto agreed to the
convening of the annual stockholders meeting.
As a consequence of the MOU, Nieto no longer had any actual relief
forthcoming from the case he filed with the Court of Appeals.
The basic questions subject of the MOU and that of the
case before the Court of Appeals, overlap.
The parties, specifically Nieto, effectively removed the issues from the courts. While the courts can go ahead and render a
decision, as did the Court of Appeals, Nieto has divested himself of interest
therein and as to him, mooted the case. Nieto
could not stop the Court of Appeals from proceeding until rendition of judgment,
and he cannot now question such judgment.
At any rate, whichever way the Court of Appeals
decides the case would not have any effect on Nieto. The nullification of the SECs decision to
call for a stockholders meeting is a decision on the SECs authority to call
for a meeting. It was not about, and would
not result into, a prohibition against an agreement by the parties to, in fact
and of their own accord, call for a stockholders meeting.
A case becomes moot and academic when there is no more
actual controversy between the parties or no useful purpose can be served in
passing upon the merits of the case.[5]
In such cases, there is no actual
substantial relief to which petitioner would be entitled to and which would be
negated by the dismissal of the petition.[6]
Parenthetically, almost a
year from the filing of the parties respective Memorandum, Roberto L. Abad
(Abad), claiming to be an independent director of PHC, filed an urgent motion
for leave to intervene. Abad asserts
that to allow Mr. Nieto to seek the reversal of a Decision that is proper and
in conformity with law and jurisprudence would adversely affect herein
movant-intervenors rights and interests as PHC director and stockholder.[7]
Abads motion for leave to intervene, as an
independent director of PHC, was intended to sustain the Decision of the Court
of Appeals in nullifying the SEC orders calling for stockholders meeting. Abad is apparently opposed to the holding of
the stockholders meeting and the decision that favors his position may be
reversed by this Court. Abads position
as an independent director contradicts that of Nieto and the parties to the
MOU, who all had agreed to call for a stockholders meeting.
The rendering of the
instant petition as moot also forecloses any interest on the part of Abad to
intervene.
WHEREFORE, this petition is hereby DISMISSED FOR BEING MOOT AND ACADEMIC.
SO ORDERED.
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JOSE PORTUGAL PEREZAssociate
Justice |
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
ARTURO D. BRION MARIA LOURDES P. A. SERENO
Associate
Justice Associate Justice
BIENVENIDO L.
REYES
Associate
Justice
A T T E S T A T I O N
I attest that the conclusions in the
above Resolution had been reached in consultation before the case was assigned
to the writer of the opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairpersons Attestation, it is hereby
certified that the conclusions in the above Resolution had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.
RENATO C. CORONA
Chief Justice
[1] Penned by Associate Justice Vicente
Q. Roxas, with Associate Justices Edgardo P. Cruz and Ramon M. Bato, Jr.,
concurring. Rollo, pp. 48-64.
[2] Id. at 64.
[3] The other parties to the MOU are Erlinda I. Bildner, Honorio A. Poblador III, Katrina C. Ponce-Enrile, and Francisca Benedicto-Paulino. Id. at 65-67.
[4] Id. at 66-67.
[5] Office of the Ombudsman v. Andutan, Jr., G.R. No. 164679, 27 July 2011, 654 SCRA 539, 554 citing Tantoy, Sr. v. Abrogar, G.R. No. 156128, 9 May 2005, 458 SCRA 301, 305.
[6] Bangko Sentral ng Pilipinas v. Orient Commercial Banking Corporation, G.R. No. 148483, 29 June 2011, 653 SCRA 1, 9 citing Chuidian v. Sandiganbayan, 529 Phil. 318, 337 (2006).
[7] Rollo, p. 184.