Lu v. Lu Ym
REITERATIONFacts
The Antecedents: Ludo and Luym Development Corp. (LLDC) is a family corporation. In 1997, its Board of Directors authorized the issuance of 600,000 unsubscribed shares. The Lu Ym family subscribed to and paid for most of these shares. David Lu, along with other minority shareholders, alleged that these shares were issued to the Lu Ym family for less than their actual value, constituting a grave abuse of power by the directors to the prejudice of other shareholders. Consequently, David Lu and others filed a complaint seeking the nullification of the share issuance, the dissolution of the corporation, and the appointment of a receiver to protect LLDC's interests during the litigation. Procedural History: The initial complaint was filed before the Regional Trial Court (RTC) of Cebu City. The Lu Ym family moved to dismiss the complaint for non-compliance with the certificate of non-forum shopping and for failure to exert earnest efforts toward compromise. The RTC denied this motion. Subsequently, the RTC placed LLDC under receivership. The Lu Ym family appealed to the Court of Appeals (CA), which initially dismissed their petition but later reinstated it. The CA eventually dismissed David Lu's complaint, citing non-compliance with the certificate of non-forum shopping, and annulled the receivership orders. This led to David Lu's petition to the Supreme Court (G.R. No. 153690). Meanwhile, the Lu Ym family sought to lift the receivership, but David Lu filed a special civil action with the CA to enjoin the RTC proceedings, resulting in the CA ordering the RTC to desist from proceeding with the receivership issue (G.R. No. 157381). The RTC later rendered a decision on the merits, annulling the share issuance and ordering the dissolution of LLDC. The Lu Ym family appealed this decision (CA-G.R. CV No. 81163), and also sought an injunction from the CA, which was denied, leading to another petition before the Supreme Court (G.R. No. 170889). The Petition: These consolidated cases involve three petitions before the Supreme Court. In G.R. No. 153690, David Lu assails the CA's dismissal of his original complaint and the annulment of the receivership. In G.R. No. 157381, the Lu Ym family challenges the CA's order enjoining the RTC from proceeding with the receivership issue. In G.R. No. 170889, John Lu Ym and LLDC question the CA's denial of their application for a writ of preliminary injunction and its ruling on the sufficiency of docket fees paid for the original complaint. The Supreme Court consolidated these petitions to address the procedural and substantive issues, including the validity of the original complaint's dismissal, the propriety of the receivership suspension, and the issuance of injunctive relief, ultimately finding most issues moot and academic due to subsequent developments, including the RTC's decision on the merits and the admission of an amended complaint.
Issue(s)
Whether the original complaint filed before the RTC should have been dismissed for non-compliance with the rules on certificate of non-forum shopping. Whether the original complaint filed before the RTC should have been dismissed for non-payment of the correct docket fees. 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. 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.
Ruling
The Supreme Court denied the petitions in G.R. Nos. 153690 and 157381 for being moot and academic, and dismissed the petition in G.R. No. 170889 for lack of merit. The Status Quo Order dated January 23, 2006, was lifted, and the Court of Appeals was directed to proceed with CA-G.R. CV No. 81163 with dispatch.
Ratio Decidendi
On the dismissal of the original complaint for non-compliance with the certificate of non-forum shopping (G.R. No. 153690): The Supreme Court found the procedural issues raised by David Lu to be of no moment. It reiterated that a motion for reconsideration may be filed within the reglementary period without prior leave of court. The CA's entertainment of a supplemental petition, requiring comment and deciding the case thereon, constituted admission. Furthermore, a certificate of non-forum shopping is required only for initiatory pleadings, not for motions for reconsideration or supplements. Crucially, the subsequent admission of an amended complaint by the RTC, which supersedes the original pleading, rendered the issue of the original complaint's dismissal moot and academic. The Court emphasized that courts do not entertain moot questions where a declaration would be of no practical use or value. On the dismissal of the original complaint for non-payment of docket fees (G.R. No. 170889): The Court held that the case was incapable of pecuniary estimation, and thus the docket fees paid, as assessed by the Clerk of Court, were correct. Even if there were a deficiency, the Lu Ym father and sons were estopped from questioning the RTC's jurisdiction due to their active participation in the proceedings and the belated raising of the issue only in their motion for reconsideration before the CA. The Court noted that the erroneous assessment by the Clerk of Court, without bad faith or intent to defraud, meant the Manchester rule of dismissal did not apply. Instead, any deficiency could be considered a lien on the judgment. On the suspension of receivership proceedings (G.R. No. 157381): The Supreme Court ruled that the propriety of the injunction suspending the receivership proceedings was mooted by the amendment of the complaint and the RTC's subsequent decision on the merits. The appellate court's reason for enjoining the proceedings—the pending amendment of the original complaint—ceased to exist upon the amendment and admission of the new complaint. Moreover, the RTC's decision on the merits, which included orders regarding the cessation of receivers' functions and the creation of a management committee, rendered the issue of enjoining the lifting of receivership moot and academic, as the act sought to be enjoined had already been accomplished (fait accompli). On the issuance of a writ of preliminary injunction (G.R. No. 170889): The Court found that the Lu Ym father and sons failed to satisfy the requisites for the issuance of a writ of preliminary injunction under Rule 58 of the Rules of Court. They did not present evidence of a clear and unmistakable right to be protected or of serious damage or irreparable loss. The Court reiterated that injunction is a delicate power that should not be granted lightly or precipitately, emphasizing that it should only be issued when the law permits and the emergency demands it, and that no grave abuse of discretion could be attributed to the CA for denying the application.
Main Doctrine
An amended pleading supersedes the pleading it amends, rendering issues pertaining to the original pleading moot and academic. Issues regarding the propriety of injunctions or lifting of receivership may also be mooted by supervening events such as a decision on the merits of the main case. The payment of docket fees, as assessed by the Clerk of Court, negates bad faith, and any deficiency may be considered a lien on the judgment, especially when the issue is raised belatedly.