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DAVID LU v. PATERNO LU YM

FACTS:

This case involves three consolidated petitions challenging the decisions and resolutions of the Court of Appeals (CA) in connection with various issues arising from a complaint filed before the Regional Trial Court (RTC) of Cebu City, Branch 5. LLDC, a family corporation, issued shares to the Lu Ym father and sons. However, David Lu, Rosa Go, Silvano Ludo, and CL Corporation claimed that these shares were undervalued. They filed a complaint seeking the nullification of the shares issuance and the dissolution of the corporation.

The Lu Ym father and sons moved to dismiss the complaint, arguing non-compliance with the Rules of Court on non-forum shopping and failure to pursue a compromise. The trial court denied the motion. The RTC placed LLDC under receivership and appointed receivers. The Lu Ym father and sons filed a petition before the CA, which was later dismissed. After reconsideration, the CA granted the Lu Ym father and sons' petition, dismissed the complaint, and annulled the resolutions placing the corporation under receivership.

The Lu Ym father and sons filed a motion for inhibition against the presiding judge, which was granted, resulting in the transfer of the case to another branch of the RTC. These circumstances gave rise to the three consolidated petitions before the Supreme Court.

This case involves a dispute between the Lu Ym father and sons and David Lu over their shares in LLDC. The Lu Ym father and sons filed a complaint before the RTC, seeking the annulment of the shares issuance and the dissolution of LLDC. The RTC issued a receivership order over LLDC. David filed a special civil action before the CA, seeking to prevent the RTC from proceeding with the motion to lift receivership. The CA temporarily restrained the RTC from conducting any proceeding.

The case was transferred to another branch of the RTC. David filed a motion to admit complaint to conform to the Interim Rules Governing Intra-Corporate Controversies, which the court admitted. The Lu Ym father and sons raised the issue of docket fees paid by David. The RTC rendered a decision annulling the shares issuance, cancelling the Lu Ym father and sons' shares, and ordering the dissolution of LLDC. The Lu Ym father and sons filed a notice of appeal and sought a writ of preliminary injunction, which was opposed by David. The CA issued a TRO but denied the application for preliminary injunction.

The Lu Ym father and sons filed a motion for reconsideration, questioning the docket fees paid by David. The CA ruled that the issue should be raised in the appellants' brief. Two separate petitions were filed before the Supreme Court by David Lu and the Lu Ym father and sons.

ISSUES:

  1. Whether the original complaint filed before the RTC should have been dismissed for non-compliance with the rules on certificate of non-forum shopping and non-payment of the correct docket fees.

  2. Whether the receivership proceedings were validly suspended pending the amendment of the initial complaint in compliance with the Interim Rules of Procedure for Intra-Corporate Controversies.

  3. Whether a writ of preliminary injunction should have been issued pending the resolution of the appeal on the merits filed before the Court of Appeals.

  4. Whether the motion to lift the receivership should be held in abeyance pending the amendment of the original complaint.

  5. Whether the trial court's decision on the merits rendered the issue on the propriety of the injunction moot and academic.

  6. Whether the issue of payment of insufficient docket fees warrants the dismissal of the case.

  7. Whether the case before the RTC is capable of pecuniary estimation.

  8. Whether the belated objection to the payment of docket fees should be allowed.

  9. Whether or not the applicants have established the requisites for the grant of a writ of preliminary injunction.

RULING:

  1. The procedural issues raised regarding the original complaint are of no moment. The motion for reconsideration of an assailed order may be filed within the reglementary period without requiring leave of court. The supplemental petition was admitted by the Court of Appeals. The lack of certificate of non-forum shopping in the motion for reconsideration and supplement to the petition is not required for initiatory pleadings.

  2. The admission of the amended complaint rendered moot the question of whether the original complaint should have been dismissed. The amended complaint superseded the original complaint, and the RTC rendered a decision on the merits of the amended complaint. The issue is now moot and academic.

  3. The Court of Appeals had jurisdiction to issue the writ of preliminary injunction. The pendency of another case before the Supreme Court does not divest the Court of Appeals of its jurisdiction. The CA had the authority to issue the writ based on a finding of grave abuse of discretion. The order of the trial court requiring the parties to amend their pleadings did not bar the RTC from acting on the provisional remedy of receivership.

  4. The Court of Appeals (CA) granted the motion to lift the receivership to be held in abeyance pending the amendment of the original complaint. However, upon the amendment of the complaint and its admission by the Regional Trial Court (RTC), the reason for such injunction ceased to exist, and the CA can resolve the question of whether or not the receivership should be lifted.

  5. The trial court's decision on the merits rendered the issue on the propriety of the injunction moot and academic, regardless of its appeal before the Court of Appeals. The existence of a decision on the merits eliminates the need for an injunction.

  6. The Supreme Court denied the dismissal of the case based on insufficient payment of docket fees. The case is considered one incapable of pecuniary estimation, and the correct docket fees were paid. John and LLDC are estopped from questioning the jurisdiction of the trial court due to their active participation in the proceedings. Any deficiency in docket fees may be considered a lien on the judgment that may be rendered.

  7. The case before the RTC is incapable of pecuniary estimation because the main purpose of the complaint is the annulment of the issuance of shares of stocks and the dissolution of the corporation. The money claim is only incidental to the principal relief sought. Therefore, the case is incapable of pecuniary estimation.

  8. The belated objection to the payment of docket fees should not be allowed because the Lu Ym father and sons raised the issue only in their motion for reconsideration before the Court of Appeals. They actively participated in the proceedings without challenging the jurisdiction of the trial court. Additionally, even if the docket fees paid were inadequate, the deficiency may be considered a lien on the judgment to be rendered.

  9. No, the applicants failed to establish the requisites for the grant of a writ of preliminary injunction. The Court of Appeals did not commit any grave abuse of discretion in denying the application for a writ of preliminary injunction. The Supreme Court held that the issuance of an injunction is a delicate exercise of power that requires caution and sound discretion. It should only be granted when the law permits it and the situation demands it. The applicants failed to show the existence of a clear and unmistakable right that must be protected, as well as serious damage or irreparable loss that they would suffer if the writ is not granted.

PRINCIPLES:

  • A motion for reconsideration may be filed within the reglementary period without requiring leave of court.

  • The admission of an amended complaint supersedes the original complaint.

  • Courts do not entertain moot questions.

  • The pendency of another case before the Supreme Court does not divest the Court of Appeals of its jurisdiction.

  • The non-payment or insufficient payment of docket fees can result in significant losses to the government and the judiciary.

  • Courts acquire jurisdiction over a case upon the payment of prescribed fees.

  • The nature of the principal action or remedy sought determines whether the subject matter of an action is incapable of pecuniary estimation. If the primary issue is something other than the right to recover a sum of money, the claim is considered incapable of pecuniary estimation.

  • An action is incapable of pecuniary estimation if the main purpose of the complaint is something other than the recovery of a sum of money.

  • A party who actively participates in the proceedings and invokes the jurisdiction of the court cannot later challenge the court's jurisdiction in the same case.

  • The payment of insufficient docket fees, if not done in bad faith or with intent to defraud the government, may not warrant dismissal of the case, and the deficiency may be considered a lien on the judgment.

  • The grant of a writ of preliminary injunction requires the existence of a clear and unmistakable right that must be protected, as well as serious damage or irreparable loss that the applicant would suffer if the writ is not granted.

  • The issuance of an injunction is a delicate exercise of power that should not be granted lightly or precipitately. It is the strong arm of equity that should only be extended in cases of great injury where courts of law cannot provide an adequate remedy in damages.