Candari, Jr. vs. Donasco

A case involving an intra-cooperative leadership dispute becomes moot and academic when the general assembly, as the highest policy-making body of the cooperative, validly exercises its exclusive powers to amend the by-laws and elect new officers, thereby rendering judicial intervention futile and divesting ousted or holdover directors of any cause of action.

DARBCI is an agrarian reform beneficiaries cooperative based in Polomolok, South Cotabato. Respondents were elected to its board of directors on 12 July 1998 for a term ending 12 July 2000, after which they continued serving in a holdover capacity. Petitioners are members who were elected to the board during a special general assembly held on 26 November 2005. The dispute centers on the legality of that election and the right of the respective parties to sit as directors of the cooperative. The governing statute is Republic Act No. 6938, the Cooperative Code of the Philippines, particularly Section 34, which vests in the general assembly exclusive powers including the election and removal of directors and the amendment of articles of cooperation and by-laws.

Respondents were members of the board of directors of DARBCI, elected on 12 July 1998 for a term that should have ended on 12 July 2000. They continued to occupy their positions in a holdover capacity after the expiration of their terms. On 23 November 2005, respondents filed Civil Case No. 471-05 before Branch 39 of the RTC of Polomolok, South Cotabato, seeking to enjoin petitioners from holding a special general assembly and an election of officers. They alleged that the process by which the GA had been called was not in accordance with Section 35 of Republic Act No. 6938, the Cooperative Code of the Philippines. The RTC issued a 72-hour Temporary Restraining Order on 24 November 2005, restraining petitioners from holding the GA.

Despite the TRO, and without the participation of petitioners, 5,910 members — constituting 78.68% of the total membership of the cooperative — proceeded with the GA on 26 November 2005 and elected petitioners in absentia as new members of the board. On 1 December 2005, the TRO was extended to its full term of twenty days. The trial court considered the evidence adduced during the hearing on the application for a writ of preliminary injunction, as well as the supervening events of the GA and the election of new officers. On 8 December 2005, the RTC found the provisional remedy of preliminary injunction to be moot, denied respondents' prayer for its issuance, and quashed the TRO.

Respondents thereafter filed an Amended Complaint seeking to enjoin petitioners from assuming office and exercising the powers of DARBCI directors. On 29 November 2006, the RTC issued an Omnibus Order dismissing the Amended Complaint. The trial court ruled that the supervening factors — the GA meeting and the election of officers by the overriding majority of DARBCI members — rendered respondents' averments insignificant, and that respondents had neither legal right nor requisite personality to file an action for nullification of the GA and election. The RTC found no delict or wrong attributable to petitioners owing to those supervening factors.

Respondents filed a Petition for Certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 01851, contending that the trial court committed grave abuse of discretion in considering evidence from the injunction hearing and that the Amended Complaint stated a cause of action based on their rights as incumbent officers. The CA rendered the assailed Decision remanding the case to the RTC for further proceedings. The appellate court stated that the "lingering organization and leadership crisis in the DARBCI undermines the cooperative's viability to pursue its objectives" and considered the case a potential impediment to the State's land reform program in Polomolok, taking cognizance in the interest of public welfare and public policy. The CA found that respondents' Amended Complaint contained sufficient allegations constituting a cause of action and held that the RTC gravely abused its discretion in dismissing the case. Petitioners' motion for reconsideration was denied.

In their Reply to respondents' Comment before the Supreme Court, petitioners informed the Court that two additional GA meetings had been held. On 20 December 2008, the GA ratified the Amended Articles of Cooperation and the Amended By-Laws of the cooperative, and the Cooperative Development Authority issued a Certificate of Registration to that effect on 9 February 2009. Article X, Section 1 of the Amended By-Laws provided that the incumbent members of the board and various committees elected during the November 25, 2005 special elections — which the Court deemed to refer to the 26 November 2005 GA, treating the date discrepancy as a typographical error — shall continue to serve until their successors have been elected and qualified. On 29 March 2009, a second meeting was held in which a new set of officers was elected by the GA.

• Wrong Remedy: Petitioners argued that the CA erred in allowing respondents' Petition for Certiorari, as it was the wrong remedy.
• Mootness: Petitioners insisted that the CA erred in ruling that a cause of action existed despite the fact that the issue had become moot.
• Trial Court's Authority to Consider Evidence: Petitioners alleged that the trial court was not limited to the allegations of the Complaint but could also consider the evidence presented during the hearing for the issuance of the writ of preliminary injunction.
• Misappreciation of Facts: Petitioners contended that the CA misappreciated the facts in stating that the issue concerned the implementation of the agrarian reform program, when it was merely the legality of the elections of the new board of directors.

• Cause of Action: Respondents asserted that their Amended Complaint stated a cause of action based on their rights as then-incumbent officers of DARBCI.
• Trial on the Merits: Respondents argued that the trial court should have conducted a trial on the merits instead of dismissing the Amended Complaint, especially when petitioners failed to present proof that a GA and an election of officers were held on 26 November 2005.
• Grave Abuse of Discretion: Respondents contended that the RTC's act of dismissing the case constituted grave abuse of discretion, reviewable via their Petition for Certiorari.

• Mootness: Whether the case has become moot and academic due to supervening events, specifically the GA's exercise of its exclusive powers to amend the by-laws and elect new officers.
• Grave Abuse of Discretion: Whether the RTC committed grave abuse of discretion in dismissing the Amended Complaint for failure to state a cause of action.
• Propriety of Certiorari: Whether the Petition for Certiorari was the proper remedy before the Court of Appeals.

• Mootness: Yes. The case had become moot and academic because the GA, as the highest policy-making body of the cooperative, had validly amended the by-laws and elected new officers, rendering any judicial resolution of the original dispute futile.
• Grave Abuse of Discretion: No. The RTC committed no grave abuse of discretion in dismissing the Amended Complaint, as the supervening acts of the GA extinguished respondents' legal standing and cause of action.
• Propriety of Certiorari: No. The CA erred in allowing the Petition for Certiorari and remanding the case, as there was nothing left for the trial court to execute should respondents succeed, given the mootness of the controversy.

• Mootness: The power of adjudication requires an actual case or controversy — one involving a conflict of legal rights susceptible of judicial resolution — and a case becomes moot and academic when its purpose has become stale. In this case, the GA, which Section 34 of the Cooperative Code designates as the highest policy-making body of the cooperative with exclusive powers to elect or remove directors and approve amendments to the articles of cooperation and by-laws, had clearly expressed its intentions through the subsequent amendment of DARBCI's Articles of Cooperation and By-Laws and through the election of new officers on 29 March 2009. The replacement of respondents with other members of the board was willed by the GA itself. Moreover, respondents were merely occupying their positions in a holdover capacity when they filed the case, their terms having ended on 12 July 2000. Remanding the case to the trial court would be a futile attempt and a waste of resources, as there would be nothing left for the trial court to execute even if respondents prevailed. The Court relied on Joya vs. PCGG, which established that a case becomes moot and academic when its purpose has become stale, and on KBMBPM vs. Dominguez, where the Court denied a petition on mootness grounds after the GA had already elected a new set of officers, even though petitioners' right to due process had been violated.

• Grave Abuse of Discretion: The RTC's Omnibus Order made clear that it dismissed the Amended Complaint because the supervening events had rendered the case moot through the voluntary act of the GA — as the highest policy-making body of the cooperative — in declaring the contested positions vacant and electing a new set of officers. As a consequence, respondents no longer had the personality or the cause of action to maintain the case against petitioners. The RTC's dismissal was therefore grounded in law and equity, and did not constitute grave abuse of discretion.

• Propriety of Certiorari: The CA took cognizance of the case in the interest of public welfare and the advancement of public policy, framing it as a potential impediment to the State's land reform program. This framing misappreciated the facts, as the case concerned merely the legality of the elections of the new board of directors, not the implementation of the agrarian reform program. Because the controversy had become moot, the CA's remand served no practical purpose and was erroneous.

• Moot and Academic Doctrine — A case becomes moot and academic when its purpose has become stale, such that there is no longer an actual case or controversy involving a conflict of legal rights susceptible of judicial resolution. Courts require an actual case or controversy to exercise the power of adjudication. In this case, the doctrine was applied to hold that the GA's exercise of its exclusive powers to amend the by-laws and elect new officers rendered the intra-cooperative leadership dispute moot, as there was nothing left for the trial court to execute.

• General Assembly as Highest Policy-Making Body of a Cooperative — Under Section 34 of the Cooperative Code, the general assembly is the highest policy-making body of the cooperative and exercises exclusive powers that cannot be delegated, including: (1) determining and approving amendments to the articles of cooperation and by-laws; (2) electing or appointing members of the board of directors and removing them for cause; (3) approving developmental plans of the cooperative; and (4) acting on such other matters requiring a two-thirds vote of all members of the general assembly. The Court applied this doctrine to validate the GA's actions in amending the by-laws and electing new officers, which superseded respondents' claims.

• "For a court to exercise its power of adjudication, there must be an actual case or controversy — one which involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial resolution; the case must not be moot or academic or based on extra-legal or other similar considerations not cognizable by a court of justice. A case becomes moot and academic when its purpose has become stale, such as the case before us." — This passage, quoting Joya vs. PCGG, articulates the constitutional requirement of an actual case or controversy and defines the threshold for mootness, serving as the ratio decidendi for the Court's dismissal.

• "In the present case, the replacement of respondents with other members of the board was willed by the GA. It is also important to note that respondents were only occupying their positions in a holdover capacity when they filed the case with the RTC, as their terms had ended on 12 July 2000. Undoubtedly, it would be a futile attempt and a waste of resources to remand the case to the trial court. There would be nothing left for the trial court to execute, should respondents be successful in their Petition." — This passage applies the mootness doctrine to the specific facts, explaining why remand would be futile and why the RTC's dismissal was proper.

• Joya vs. PCGG, G.R. No. 96541, 24 August 1993, 225 SCRA 568 — Cited as controlling authority for the moot and academic doctrine. The Court quoted its formulation that a case becomes moot and academic when its purpose has become stale, and applied it to hold that the supervening GA actions rendered the case moot.

• KBMBPM vs. Dominguez, G.R. Nos. 85439 and 91927, 13 January 1992, 205 SCRA 92 — Cited as analogous precedent. In that case, the Court denied a petition on mootness grounds after the GA had already elected a new set of officers, even though petitioners' right to due process had been violated. The Court found the same principle applicable here: the GA's election of new officers rendered the dispute moot, regardless of the merits of respondents' original claims.

• Section 34, Republic Act No. 6938 (Cooperative Code of the Philippines) — Defines the general assembly as the highest policy-making body of the cooperative and enumerates its exclusive, non-delegable powers: (1) to determine and approve amendments to the articles of cooperation and by-laws; (2) to elect or appoint members of the board of directors and remove them for cause; (3) to approve developmental plans of the cooperative; and (4) to act on other matters requiring a two-thirds vote of all members. The Court relied on this provision to validate the GA's actions in amending the by-laws and electing new officers, which superseded respondents' claims.

• Section 35, Republic Act No. 6938 (Cooperative Code of the Philippines) — Referenced in respondents' original complaint as the provision governing the process for calling a general assembly, which respondents alleged was not followed. The provision provides the statutory backdrop for the procedural challenge that initiated the dispute.

Carpio, A.T. (Chairperson); Villarama, Jr., M.S.; Perez, J.P.; Reyes, B.L.