G.R. No. 157033. March 28, 2005
GERARDO O. LANUZA, JR., Petitioner, vs. MA. VIVIAN YUCHENGCO, ET AL., Respondents.

FACTS

Petitioner Gerardo O. Lanuza, Jr., a member of the Makati Stock Exchange (MKSE), filed an election protest before the Securities and Exchange Commission (SEC) against respondents, who were elected to the MKSE Board of Governors on February 26, 1993. Lanuza contended that respondents, being nominees of corporate members, were not themselves “members” as defined by the MKSE Amended By-Laws, which required Board members to be members in good standing owning a seat in the Exchange. Respondents countered that the Revised Securities Act and the MKSE’s amended constitution allowed corporate members to designate nominees to exercise all membership rights, including being voted upon.
The SEC-SICD Hearing Panel rendered a Partial Decision on March 3, 1994, disqualifying respondents and declaring their board seats vacant. Respondents appealed to the SEC En Banc. During the pendency of the appeal, the MKSE merged with the Manila Stock Exchange to form the Philippine Stock Exchange (PSE). On July 22, 1997, the SEC En Banc dismissed the appeal, declaring the disqualification issue moot and academic due to the merger. Subsequently, the case was transferred to the Regional Trial Court (RTC) following the enactment of the Securities Regulation Code. The RTC and later the Court of Appeals affirmed the dismissal on the ground of mootness.

ISSUE

Whether the Court of Appeals erred in dismissing the election protest and affirming the SEC En Banc’s ruling that the issue of respondents’ disqualification from the MKSE Board had been rendered moot by the merger of the stock exchanges.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The core legal principle applied is that a case becomes moot and academic when it ceases to present a justiciable controversy because the issues have become dead or the parties lack a legally cognizable interest in the outcome. Here, the central issue was the qualification of respondents to sit on the Board of Governors of the defunct MKSE. The merger of the MKSE with the Manila Stock Exchange into the PSE effectively dissolved the MKSE as a separate entity and, consequently, its Board of Governors. No practical or legally enforceable relief could be granted, as declaring the seats vacant in a board that no longer existed would be a useless exercise.
The Court rejected petitioner’s argument that the case presented an exception to the mootness doctrine, as it was capable of repetition yet evading review. The merger was a singular corporate event, and the legal and factual milieu governing the PSE is distinct from that of the former MKSE. Furthermore, the claim for attorney’s fees was correctly denied, as the complaint failed to allege any of the specific grounds under Article 2208 of the Civil Code that would justify such an award. The dismissal on the ground of mootness was therefore proper.