LU v. LU YM, SR., GR No. 153690, August 26, 2008 (Third Division), Nachura J.

Facts:

(GR 153690) DAVID LU v. PATERNO LU YM, SR., PATERNO LU YM, JR., VICTOR LU YM, ET
AL., & LUYM DEVELOPMENT CORP.,

Ludo and Luym Development Corp. is a family corporation founded by respondent, Paterno Lu
Ym Sr. and his brothers primarily to hold real estate for the family. LLDC’s Board of Directors
authorized the issuance of its 600,000 unsubscribed and unissued shares at par value of Php 100.00
per share.

Lu Ym father and sons subscribed to and paid most of the shares.

Petitioner David, et. al., however, claimed that the 600,000 LLDC stocks were issued in favour
of the Lu Ym father and sons for less than their real values, that respondents gravely abused their
powers as members of the Board to the prejudice of petitioner. Thus, they filed for DECLARATION
OF NULLITY OF SHARE ISSUE RECEIVERSHIP AND DISSOLUTION before RTC Cebu. They
therefore, asked for dissolution of the corporation as the ultimate remedy to obtain redress. To
protect the interest during pendency of the case, petitioner asked that a receiver be appointed.

Respondent moved to dismiss the complaint for non-compliance with the Rules of Court on the
required certificate of non-forum shopping, since only one of the four plaintiffs signed the same,
without any showing that he was authorized to sign on behalf of the other parties. Respondent further
contended that the case was dismissible because no effort was exerted towards a compromise.

RTC DENIED the motion of RESPONDENT on the ground that the signature of only one of the
plaintiffs was substantial compliance with the rules on the certificate of non-forum shopping. LLDC
was placed under receivership pendente lite.

Respondent appealed to CA but was also INITIALLY DISMISSED but later GRANTED
respondents’ petition. Complaint filed by petitioners were DISMISSED, except for David Lu’s, for
failure to sign the certificate of non-forum shopping.

Hence, this petition of David Lu praying that the Court annul and set aside the Decision
dismissing the initial complaint filed before the RTC for non-compliance with the rules on non-forum
shopping and assailing the court’s resolution denying his motion for reconsideration.

(GR 157381) PATERNO LU YM, SR., PATERNO LU YM, JR., VICTOR LU YM, JOHN LU YM,
KELLY LU YM, and LUDO & LUYM DEVELOPMENT CORP v. DAVID LU

Petitioner, Lu Ym father and sons filed a MOTION FOR INHIBITION against RTC Judge,
Ireneo Gako, Jr., thus the case was re-raffled to Judge Isaias Dicdican who directed the parties to
amend their respective pleadings to conform with the Interim Rules of Procedure Governing Intra-
Corporate Controversies (Sec. 4(2) & 6(7), RA 8799).

Meanwhile, Lu Ym father and sons filed a MANIFESTATION AND MOTION praying for the
immediate lifting of the receivership order over LLDC. However, hearing did not proceed due to
repeated actions of respondent, David Lu, to stop it. Respondent instituted a CIVIL ACTION FOR
CERTIORARI and PROHIBITION with CA with urgent application for TRO and WRIT OF
PRELIMENARY INJUNCTION on the sole issue of “whether or not the RTC should proceed to hear
the Lu Ym father and sons’ motion to lift the receivership.”

CA GRANTED the petition of respondent and ordered RTC to desist from conducting any
proceeding relating to the receivership of LLDC on the ground that proceedings on receivership could
not proceed without the parties complying first with the earliest court order which required the parties
to amend their pleadings because it could not rule on the propriety of the appointment of a receiver
since it would have to base its decision on the pleadings that were yet to be amended.

Hence this petition by Lu Ym father and sons to this Court, assailing the decision of CA
ordering the RTC to desist from conducting any proceeding relating to the receivership over LLDC.

(GR 170889) JOHN LU YM and LUDO & LUYM DEVELOPMENT CORPORATION v. HON. COURT
OF APPEALS OF CEBU CITY (former 20th division), DAVID LU, ROSA GO, SILVANO LUDO, &
CL CORPORATION

Meanwhile Judge Dicdican inhibited himself and the case was again re-raffled.

Respondent David Lu, filed a MOTION TO ADMIT COMPLAINT TO CONFORM TO THE

INTERIM RULES GOVERNING INTRA-CORPORATE CONTROVERSIES which the court admitted.

Petitioner Lu Ym father and sons inquired on the amount of docket fees paid by respondent
David, et al., and of the correctness of the amount thereof, and they were informed that the matter of
docket fees should be brought to the attention of the regular courts and not the OCA which was not in
the position to give an opinion.

Finally, RTC rendered a decision on the first case, to ANNULL the issuance of LLDC’s 600,000
shares of stocks, divesting Lu Ym father and sons of their shares and cancelling their certificate of
stocks. The court further ordered the DISSOLUTION of LLDC and the liquidation of its assets. A
MANAGEMENT COMMITTEE was created to take over LLDC and officers were STRIPPED of their
powers. Further the order was declared IMMEDIATELY EXECUTORY.

Aggrieved, petitioner Lu Ym father and sons applied for a WRIT OF PRELIMENARY

INJUNCTION and/or TRO. Since the original records had been transmitted to the appellate court, the
RTC was divested of jurisdiction to resolve pending incidents therein. Thus, it ordered all motions to
be filed with the CA. CA DENIED the motion.

Lu Ym Father and sons assailed the denial of their application for preliminary injunction and,
questioned the sufficiency of the docket fees paid by David et. al., in the RTC where the original
complaint was filed. CA did not reconsider, anf as to the question of the docket fees, it ruled that the
matter be raised in their appellants’ brief anf that the issue be threshed out in the appeal of the merits.

Hence, this special civil action for certiorari and prohibition questioning the CA for denying their
application for writ of preliminary injunction and their motion for reconsideration and seeking the
dismissal of the initial complaint on the ground of lack of jurisdiction by the insufficient payment of
docket fees..

Issue/s:

(a) (In GR 153690) Whether the original complaint filed before the RTC should have been
dismissed for non-compliance with the rules on certificate of non-forum shopping
(b) (In GR 157381) Whether or not the CA committed grave abuse of discretion amounting to lack
or excess of jurisdiction when it issued the WRIT OF PRELIMENARY INJUNCTION to make
the same permanent, in view of pendency of GR 153690, on the ground that: (1) application
for writ should have been filed with SC and not through a separate civil action before CA; (2)
CA should not have issued the writ as there was no finding of grave abuse of discretion to
begin with; and (3) the order of the RTC requiring the parties to amend their pleadings did not
bar the RTC from acting on the provisional remedy for receivership.
(c) (In GR 170889) (1) Whether or not the CA abused its discretion in denying the Lu Ym father
and sons’ application for a writ of preliminary injunction and (2) Whether or not the initial
complaint should be dismissed on the ground of lack of jurisdiction for insufficient payment of
docket fees.
Ruling:

GR 153690

No. The question of whether or not the original complaint should have been dismissed was
mooted. Sec. 8, Rule 10 of the Rules of Court specifically provides that an amended pleading
superseded the pleading that it amends. The original complaint was deemed withdrawn from the
records upon the admission of the amended complaint. This conclusion becomes even more
pronounced in that the RTC already rendered a decision on the merits of the said amended
complaint. It is settled that courts do not entertain a moot question, when it ceases to present a
justiciable controversy, so that a declaration on the issue would be of no practical use or value.

GR 157381

No. Again, the propriety of such injunction is mooted by the amendment of the complaint, and
the RTC decision in the case on the merits thereof. Upon the amendment of the complaint, and the
admission thereof by the RTC, the reason for such injunction ceased to exist. Thus the CA could
resolve, as it in fact resolved, the question of whether or not the receivership should be lifted.

To reiterate, the trial court’s decision on the merits rendered in the issue on the propriety of the
injunction moot and academic, notwithstanding the fact that said decision has been appealed to the
CA. Courts are called upon to resolve actual cases and controversies, not to render advisory
opinions.

It is true that we have held in a number of cases that moot and academic principle is not a
magical formula that can automatically dissuade the courts from resolving a case. Courts will still
decide cases otherwise moot and academic, if: (1) there is grave violation of the Constitution; (2) the
exceptional character of the situation and the paramount public interest is involved; (3) the
constitutional issue raised requires formulation of controlling principles to guide the bench, the bar,
and the public; and (4) the case is capable of repetition yet evading review. Not one of the
enumerated exceptions obtains in the instant case. Thus a denial of the petition is warranted.

GR 170889

No. Section 3, Rule 58 of the Rules of Court sets forth the requisites for the issuance of a writ
of preliminary injunction: (1) That the applicant is entitled to the relief demanded, and the whole or
part of such relief consists in restraining the commission or continuance of the act or acts complained
of, or in requiring the performance of an act or acts, either for a limited period or perpetually; (b) that
the commission, continuance, or non-performance of the act or acts complained of during the
litigation would probably work injustice to the applicant; or (3) that a party, court, agency, or a person,
is doing, threatening, or is attempting to do, or is procuring or suffering to be done, some act or acts
probably in violation of the rights of the applicant respecting the subject of the action or proceeding,
and tending to render the judgment ineffectual.

In the instant case, respondent failed to satisfy the above requisites. Except for their claim of
nullity of the RTC decision because of insufficient payment of docket fees, no evidence was offered to
establish the existence of a clear and unmistakable right on their part that must be protected, as well
as the serious damage or irreparable loss that they would suffer if the writ is not granted.

Every court should remember that an injunction is a limitation upon the freedom of action of the
defendant and should not be granted lightly or precipitately. It should be granted only when the court
is fully satisfied that the law permits it and the emergency demands it. Clearly then, no grave abuse
of discretion can be attributed to the CA in denying the Lu Ym father and sons’ application for a writ of
preliminary injunction.

On the second issue, a court acquires jurisdiction over a case only upon the payment of the
prescribed fees. In the instant case, however, we cannot grant the dismissal prayed for because of
the following reasons: First, the case instituted before the RTC is one incapable of pecuniary
estimation. Hence, the correct docket fees were paid. Second, John and LLDC are estopped from
questioning the jurisdiction of the trial court because of their active participation in the proceedings
below, and because the issue of payment of insufficient docket fees had been belatedly raised before
the Court of Appeals, (i.e., only in their motion for reconsideration.) Lastly, assuming that the docket
fees paid were truly inadequate, the mistake was committed by the Clerk of Court who assessed the
same and not imputable to David; and as to the deficiency, if any, the same may instead be
considered a lien on the judgment that may thereafter be rendered.

The Court had, in the past, laid down the test in determining whether the subject matter of an
action is incapable of pecuniary estimation. If the action is primarily for recovery of a sum of money,
the claim is considered capable of pecuniary estimation. However, where the basic issue is
something other than the right to recover a sum of money, the money claim being only incidental to or
merely a consequence of, the principal relief sought, the action is incapable of pecuniary estimation.

Even assuming that the subject in the instant case is capable of pecuniary estimation, still, the
case should not be dismissed because the insufficiency of the fees actually paid was belatedly raised
in their motion for reconsideration before the CA. Well-established is the rule that after vigorously
participating in all stages of the case before the trial court and even invoking the trial court’s authority
in order to ask for affirmative relief, John and LLDC are barred by estoppels from challenging the trial
court’s jurisdiction.

One final note. We observe that these consolidated cases involve interluctory orders of the
RTC. The delay in the disposition of the main case, which is now pending appeal before the CA, was
occasioned by the actions of all the contending parties in seeking affirmative relief before the CA and
before this Court. Our disposition of these three petitions should now pave the way for the final
resolution of the corporate dispute which started as early as 2000.

Wherefore, petitions GR 153690 and 157381 are DENIED for being moot and academic; while
petition GR 170889 is DISMISSED for lack of merit.

RESOLUTION

Decision was, on motion for reconsideration, the Court voting 4-1, 3 reversed by Resolution of August
4, 2009, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the Motion for Reconsideration filed by John Lu
Ym and Ludo & LuYm Development Corporation is GRANTED. The Decision of this Court
dated August 26, 2008 is RECONSIDERED and SET ASIDE. The Complaint in SRC
Case No. 021-CEB, now on appeal with the Court of Appeals in CA-G.R. CV No. 81163,
is DISMISSED.
All interlocutory matters challenged in these consolidated petitions are DENIED for being
moot and academic.

SO ORDERED.

David Lu's Motion for Reconsideration and Motion to Refer Resolution to the Court En Banc
was denied by minute Resolution of September 23, 2009. Following his receipt on October 19, 2009
of the minute Resolution, David Lu personally filed on October 30, 2009 a Second Motion for
Reconsideration and Motion to Refer Resolution to the Court En Banc.

Several incidents arising from the complaint reached the Court through the present three
petitions.

In G.R. No. 153690 wherein David, et al. assailed the appellate court's resolutions dismissing
their complaint for its incomplete signatory in the certificate of non-forum shopping and consequently
annulling the placing of the subject corporation under receivership pendente lite, the Court, by
Decision of August 26, 2008, found the issue to have been mooted by the admission by the trial court
of David et al.'s Amended Complaint, filed by them pursuant to the trial court's order to conform to the
requirements of the Interim Rules of Procedure Governing Intra-Corporate Controversies. jur2005

Since an amended pleading supersedes the pleading that it amends, the original complaint of
David, et al. was deemed withdrawn from the records.

The Court noted in G.R. No. 153690 that both parties admitted the mootness of the issue and
that the trial court had already rendered a decision on the merits of the case. It added that the
Amended Complaint stands since Lu Ym father and sons availed of an improper mode (via an Urgent
Motion filed with this Court) to assail the admission of the Amended Complaint.

In G.R. No. 157381 wherein Lu Ym father and sons challenged the appellate court's resolution
restraining the trial court from proceeding with their motion to lift the receivership order which was
filed during the pendency of G.R. No. 153690, the Court, by Decision of August 26, 2008 resolved
that the issue was mooted by the amendment of the complaint and by the trial court's decision on the
merits. The motion having been filed ancillary to the main action, which main action was already
decided on the merits by the trial court, the Court held that there was nothing more to enjoin.

G.R. No. 170889 involved the denial by the appellate court of Lu Ym father and sons'
application in CA-G.R. CV No. 81163 for a writ of preliminary injunction. By August 26, 2008
Decision, the Court dismissed the petition after finding no merit on their argument — which they
raised for the first time in their motion for reconsideration before the appellate court — of lack of
jurisdiction for non-payment of the correct RTC docket fees.

As reflected early on, the Court, in a turnaround, by Resolution of August 4, 2009,

reconsidered its position on the matter of docket fees. It ruled that the trial court did not acquire
jurisdiction over the case for David Lu, et al.'s failure to pay the correct docket fees, hence, all
interlocutory matters and incidents subject of the present petitions must consequently be denied.

It bears stressing that where, as in the present case, the Court En Banc entertains a case for
its resolution and disposition, it does so without implying that the Division of origin is incapable of
rendering objective and fair justice. The action of the Court simply means that the nature of the cases
calls for en banc attention and consideration. Neither can it be concluded that the Court has taken
undue advantage of sheer voting strength. It was merely guided by the well-studied finding and
sustainable opinion of the majority of its actual membership — that, indeed, subject cases are of
sufficient importance meriting the action and decision of the whole Court. It is, of course, beyond cavil
that all the members of this highest Court of the land are always embued with the noblest of
intentions in interpreting and applying the germane provisions of law, jurisprudence, rules and
Resolutions of the Court — to the end that public interest be duly safeguarded and rule of law be
observed. 11

It is argued that the assailed Resolutions in the present cases have already become final, 12
since a second motion for reconsideration is prohibited except for extraordinarily persuasive reasons
and only upon express leave first obtained; 13 and that once a judgment attains finality, it thereby
becomes immutable and unalterable, however unjust the result of error may appear.

The contention, however, misses an important point. The doctrine of immutability of

decisions applies only to final and executory decisions. Since the present cases may involve a
modification or reversal of a Court-ordained doctrine or principle, the judgment rendered by the
Special Third Division may be considered unconstitutional, hence, it can never become final. It finds
mooring in the deliberations of the framers of the Constitution:

On proposed Section 3(4), Commissioner Natividad asked what the effect would be of a
decision that violates the proviso that "no doctrine or principle of law laid down by the court in a
decision rendered en banc or in division may be modified or reversed except by the court en
banc." The answer given was that such a decision would be invalid. Following up, Father Bernas
asked whether the decision, if not challenged, could become final and binding at least on the
parties. Romulo answered that, since such a decision would be in excess of jurisdiction, the
decision on the case could be reopened anytime. 14 (emphasis and underscoring supplied)
 A decision rendered by a Division of this Court in violation of this constitutional provision would
be in excess of jurisdiction and, therefore, invalid. 15 Any entry of judgment may thus be said to be
"inefficacious" 16 since the decision is void for being unconstitutional.

While it is true that the Court en banc exercises no appellate jurisdiction over its Divisions,
Justice Minerva Gonzaga-Reyes opined in Firestone and concededly recognized that "[t]he only
constraint is that any doctrine or principle of law laid down by the Court, either rendered en banc or in
division, may be overturned or reversed only by the Court sitting en banc."

That a judgment must become final at some definite point at the risk of occasional error cannot
be appreciated in a case that embroils not only a general allegation of "occasional error" but also a
serious accusation of a violation of the Constitution, viz., that doctrines or principles of law were
modified or reversed by the Court's Special Third Division August 4, 2009 Resolution.

The law allows a determination at first impression that a doctrine or principle laid down by the
court en banc or in division may be modified or reversed in a case which would warrant a referral to
the Court En Banc. The use of the word "may" instead of "shall" connotes probability, not certainty, of
modification or reversal of a doctrine, as may be deemed by the Court. Ultimately, it is the entire
Court which shall decide on the acceptance of the referral and, if so, "to reconcile any seeming
conflict, to reverse or modify an earlier decision, and to declare the Court's doctrine."

The Court has the power and prerogative to suspend its own rules and to exempt a case
from their operation if and when justice requires it, 19 as in the present circumstance where
movant filed a motion for leave after the prompt submission of a second motion for reconsideration
but, nonetheless, still within 15 days from receipt of the last assailed resolution.

Well-entrenched doctrines or principles of law that went astray need to be steered back to their
proper course. Specifically, as David Lu correctly points out, it is necessary to reconcile and declare
the legal doctrines regarding actions that are incapable of pecuniary estimation, application of
estoppel by laches in raising an objection of lack of jurisdiction, and whether bad faith can be
deduced from the erroneous annotation of lis pendens.

Upon a considered, thorough reexamination, the Court grants David Lu's Motion for
Reconsideration. The assailed Resolutions of August 4, 2009 and September 23, 2009, which turn
turtle settled doctrines, must be overturned. The Court thus reinstates the August 26, 2008 Decision
wherein a three-tiered approach was utilized to analyze the issue on docket fees:

In the instant case, however, we cannot grant the dismissal prayed for because of the
following reasons: First, the case instituted before the RTC is one incapable of pecuniary
estimation. Hence, the correct docket fees were paid. Second, John and LLDC are estopped from
questioning the jurisdiction of the trial court because of their active participation in the
proceedings below, and because the issue of payment of insufficient docket fees had been
belatedly raised before the Court of Appeals, i.e., only in their motion for reconsideration. Lastly,
assuming that the docket fees paid were truly inadequate, the mistake was committed by the
Clerk of Court who assessed the same and not imputable to David; and as to the deficiency, if
any, the same may instead be considered a lien on the judgment that may thereafter be
rendered. 20 (italics in the original; emphasis and underscoring supplied)