Sta. Cecilia Sawmills v. Kayanan
REITERATIONFacts
The Antecedents: Sta. Cecilia Sawmills, Inc. (Sta. Cecilia) entered into a management contract with Veneer Trading and Development Corporation (Veneer). Due to financial distress, Sta. Cecilia filed a complaint against Veneer for annulment/reformation of the contract, seeking the return of its properties and the appointment of a receiver. Intervenors Pedro Pica, Jr. and Francisco Dee filed complaints for payment of alleged unpaid obligations issued by Veneer as administrator of Sta. Cecilia's properties. Procedural History: The lower court appointed Eugenio G. Palileo as receiver, who was later replaced by Jorge B. Siacunco. Sta. Cecilia, Veneer, Siy, and Sabido entered into a compromise agreement to terminate the management contract and dismiss their respective claims. However, intervenors Pica and Dee opposed the approval of the compromise agreement. Sta. Cecilia moved to terminate the receivership, arguing that the compromise agreement settled the main controversy and that the receivership was causing it losses. The lower court denied the motion to terminate the receivership, discharged Siacunco, and ordered the intervenors to recommend a successor. Sta. Cecilia filed a petition for certiorari with the Supreme Court. The Petition: Sta. Cecilia filed a petition for certiorari and/or prohibition with preliminary injunction, alleging grave abuse of discretion by the respondent judge in denying its motion to terminate the receivership. Sta. Cecilia argued that the receivership was no longer necessary because the main complaint was settled by compromise, the intervenors' claims were unsecured money claims, the receivership caused it losses, and it was made to answer for its own losses through its posted bond.
Issue(s)
Whether the respondent judge committed grave abuse of discretion in denying Sta. Cecilia's motion to terminate and/or dissolve the receivership. Whether the petition for certiorari has become moot and academic due to supervening events.
Ruling
The Supreme Court lifted the temporary restraining order issued on February 6, 1969, and remanded the case to the lower court for the sole and limited purpose of terminating the receivership in accordance with law. The Court found that the petition had become moot and academic due to subsequent compromise agreements entered into by the parties.
Ratio Decidendi
On Whether the respondent judge committed grave abuse of discretion in denying Sta. Cecilia's motion to terminate and/or dissolve the receivership: The Court found that while the respondent judge initially denied the motion to terminate the receivership to protect the interests of intervenors Pica and Dee, subsequent events rendered this issue moot. The parties, including Pica and Dee, entered into compromise agreements with Sta. Cecilia, which resolved their respective claims. These agreements provided Pica and Dee with means to protect their remaining claims and also stipulated their conformity to the termination of the receivership. Therefore, the original basis for denying the termination of the receivership was extinguished by these supervening compromises. On Whether the petition for certiorari has become moot and academic due to supervening events: The Court held that the petition for certiorari had become moot and academic. The primary issue was the denial of the motion to terminate the receivership. However, during the pendency of the case before the Supreme Court, Sta. Cecilia entered into compromise agreements with both intervenors, Pica and Dee. These agreements settled the disputes between them and, crucially, included provisions for the termination of the receivership. The defendants also expressed their assent to the termination. Consequently, with all parties agreeing to the termination and their underlying disputes resolved, the controversy before the Supreme Court regarding the receivership ceased to present a justiciable issue.
Main Doctrine
The Supreme Court reiterated that a petition for certiorari, which seeks to annul an order denying a motion to terminate receivership, becomes moot and academic when the parties involved subsequently enter into compromise agreements that resolve their underlying disputes. The Court found that the supervening events, including the compromise agreements between Sta. Cecilia Sawmills, Inc. and the intervenors Pedro Pica, Jr. and Francisco Dee, effectively settled the controversy, rendering the issue of the receivership's continuation moot and academic.