G.R. No. L-30064 November 26, 1970
STA. CECILIA SAWMILLS, INC., petitioner, vs. HON. UNION C. KAYANAN, in his capacity as presiding Judge, Branch IV, Quezon CFI at Calauag, Quezon; PEDRO PICA, JR.; and FRANCISCO DEE, doing business under the name and style of “Camarines Standard Sawmills, Inc.,” respondents.

FACTS

In 1964, petitioner Sta. Cecilia Sawmills, Inc. (Sta. Cecilia), due to financial distress, entered into a management contract with Veneer Trading and Development Corporation (Veneer). This venture worsened its financial condition. In October 1965, Sta. Cecilia filed a complaint against Veneer and its officers (Robert Siy and Roberto Sabido) for annulment/reformation of the contract, praying for the return of its properties, appointment of a receiver, and a writ of preliminary injunction. The lower court appointed a receiver (first Eugenio G. Palileo, later replaced by Jorge B. Siacunco) over Sta. Cecilia’s properties. In December 1965 and April 1967, respondents Pedro Pica, Jr. and Francisco Dee, logging contractors, filed separate complaints in intervention for collection of unpaid amounts from Veneer acting as Sta. Cecilia’s administrator. In November 1967, Sta. Cecilia and Veneer (including Siy and Sabido) entered into a compromise agreement to terminate the management contract, return the properties to Sta. Cecilia, and dismiss their claims against each other. Pica and Dee opposed the approval of this compromise. In December 1968, Sta. Cecilia moved to terminate the receivership, arguing the main case was settled by compromise, the receivership was causing it heavy losses, and the intervenors’ claims were unsecured money claims. The lower court, on January 10, 1969, denied the motion to terminate receivership, discharged receiver Siacunco, and asked the intervenors to recommend a new receiver, fearing termination would prejudice the intervenors’ interests. Sta. Cecilia filed this petition for certiorari/prohibition. The respondent judge subsequently appointed a new receiver (Jose G. Gatchalian). During the pendency of this case, Sta. Cecilia compromised with Pica and Dee, settling their claims. The lower court, in a decision dated April 29, 1970, noted these compromise agreements and refrained from acting on the receivership due to a restraining order from the Supreme Court.

ISSUE

Whether the respondent judge committed grave abuse of discretion in refusing to terminate the receivership over Sta. Cecilia’s properties after the principal parties had settled the main case by compromise agreement.

RULING

The Supreme Court ruled that the issue had been rendered moot and academic. The supervening compromise agreements between Sta. Cecilia and the intervenors (Pica and Dee) terminated the controversy between them. Furthermore, the original defendants (Veneer, Siy, and Sabido) had assented to the termination of the receivership. The lower court’s decision of April 29, 1970, which ended the main litigation, also refrained from adjudicating matters related to the receivership in compliance with the Supreme Court’s restraining order. Consequently, there was no further reason for the continued receivership. The Court lifted its temporary restraining order and remanded the case to the lower court for the sole purpose of terminating the receivership in accordance with law.