G.R. No. 175263 ; March 14, 2012
MANUEL H. NIETO, JR., Petitioner, vs. 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.

FACTS

This petition is an offshoot of an intra-corporate dispute between the groups of Manuel H. Nieto, Jr. and Victor Africa within Philcomsat Holdings Corporation (PHC). The PHC Board decided not to convene the 2005 stockholders’ meeting pending court litigations regarding the 2004 election. Minority stockholder Jose Ozamiz requested the SEC to issue a cease and desist order to prevent the alleged dissipation of corporate assets by the Nieto group and to order the convening of a stockholders’ meeting. In response to Ozamiz’s follow-up letter, the SEC issued an Order dated 26 February 2006 directing PHC’s directors and officers to, among other things, form a Nomination Committee (NOMELEC) and convene the annual stockholders’ meeting not later than 17 April 2006. The SEC issued subsequent orders on 5 April 2006 reiterating this directive and denying Nieto’s motion for reconsideration. Nieto filed a petition for certiorari and prohibition with the Court of Appeals to enjoin the SEC from calling the meeting. During the pendency of this petition, on 1 July 2006, the majority stockholders of PHC, including the Nieto and Africa groups, entered into a Memorandum of Understanding (MOU) agreeing to unite, form a common slate for the Board, and call for stockholders’ meetings. Four days later, the Court of Appeals issued a Temporary Restraining Order against the SEC. On 1 September 2006, Nieto filed a Motion to Withdraw Petition in view of the MOU. Despite this motion, the Court of Appeals proceeded to render a Decision annulling the SEC’s orders and directing the SEC to cease exercising its regulatory powers in the matter. Nieto filed the present petition, arguing the Court of Appeals should have granted his withdrawal and not decided the case. The SEC agreed with Nieto. Subsequently, Roberto L. Abad, claiming to be an independent director of PHC, filed a motion for leave to intervene to sustain the Court of Appeals’ Decision.

ISSUE

Whether the petition before the Supreme Court, and the antecedent case before the Court of Appeals, have been rendered moot and academic.

RULING

Yes, the petition is dismissed for being moot and academic. The Supreme Court held that the execution of the Memorandum of Understanding (MOU) by the contending parties, including petitioner Nieto, effectively mooted the core issue of the SEC’s authority to call a stockholders’ meeting. By signing the MOU, Nieto agreed to the convening of the annual stockholders’ meeting, which was the very relief he sought to prevent in his petition before the Court of Appeals. Consequently, he no longer had any actual substantial relief to obtain from the case. A case becomes moot when there is no more actual controversy between the parties or no useful purpose can be served by passing upon the merits. The Court further noted that whichever way the Court of Appeals decided the case on the SEC’s authority would not affect the parties’ agreement to call a meeting on their own accord. The rendering of the petition as moot also forecloses any interest on the part of the movant-intervenor, Roberto L. Abad, to intervene.