G.R. No. 163511 - Lee Hiong Wee vs. Dee Ping Wee

Rico Philippines Industrial Corporation (RPIC) is a domestic corporation engaged in the seaweeds export business.
RPIC’s corporate by-laws mandate an annual regular stockholders’ meeting on the first Friday of May.
Since its incorporation on November 15, 1990, the management and control of RPIC had been monopolized by the petitioner Lee Hiong Wee’s family (hereinafter “the Lee Hiong group”), with Lee Hiong Wee serving as president and board chairman and his wife, Rosalinda, as a board member.

A faction of RPIC stockholders, dissatisfied with the close family management, formed the Dee Ping group led by Mario T. Tan (husband of respondent Marina Tan, now deceased) and Dee Ping Wee.
In July 2003, the Dee Ping group filed a petition with the Securities and Exchange Commission (SEC) demanding that an annual stockholders’ meeting be held because, pursuant to the by-laws, no such meeting had been convened.
On September 29, 2003, the SEC granted the petition and directed the corporation’s president (or, in his default, Mario Tan or Dee Ping Wee) to call a stockholders’ meeting by October 30, 2003.

With due notice, a stockholders’ meeting was held on October 9, 2003 with approximately 68.22% of shares in attendance.
The meeting resulted in the election of a new board of directors largely identified with or belonging to the Dee Ping group.
Although Lee Hiong Wee and his wife retained seats on the board initially, the new board replaced Lee Hiong Wee as corporate president and board chairman.
Among its first orders, the new board passed a resolution to designate an officer-in-charge for the RPIC plant.

On October 14, 2003, the Lee Hiong group filed a Complaint in the Regional Trial Court (RTC) of Imus, Cavite (Branch 21) seeking to nullify the SEC-ordained stockholders’ meeting and the subsequent board organizational changes (SEC Case No. 029-03).

Judge Norberto J. Quisumbing, Jr. initially issued a temporary restraining order (TRO) preventing the Dee Ping group from assuming board or officer functions and ordered parties to maintain the status quo as of October 9, 2003.

Concurrently, the spouses Mario Tan and Marina Tan filed a petition for certiorari in the Court of Appeals (CA) (CA-G.R. SP No. 79988) to overturn the TRO that was hindering their corporate control; the petition fell under the CA’s Fifteenth Division.
Due to motions for inhibition by parties (Judge Quisumbing and later Judge Tagle being replaced), the proceedings experienced changes in judges and divisions.
On February 19, 2004, the CA’s Fifteenth Division issued a decision directing the re-raffling of SEC Case No. 029-03 among remaining RTC judges and ordered an inventory of the plant’s assets, among other measures.
On March 3, 2004, Judge Cesar A. Mangrobang (RTC Branch 22) issued a Writ of Preliminary Mandatory Injunction with orders including:

Defendants (Dee Ping group) were enjoined from assuming board and officer functions and required to revert to the pre-October 9, 2003 status quo regarding positions and possession of the RPIC plant.
The Philippine National Police (PNP) was directed to assist in enforcing the order.

Dee Ping Wee and Marina Tan subsequently filed a petition for certiorari with additional prayers (including a TRO against Judge Mangrobang’s order) in CA-G.R. SP No. 82569, which landed in the CA’s Second Division.
In the interim, subsequent filings included:

Emergency Omnibus Motions filed by the Lee Hiong group to clarify or consolidate cases in light of what they allege as forum shopping and to prevent “bloodshed.”
A motion for inhibition to keep the controversy within one division.

On May 7, 2004, the RPIC held its regular annual stockholders’ meeting which led to electing a new board excluding Lee Hiong Wee and his wife.
On May 14, 2004, the CA (via its Former Second Division) rendered a Decision nullifying the preliminary mandatory injunction issued by Judge Mangrobang on the ground of grave abuse of discretion and other alleged irregularities, while also ordering:

A permanent prohibition on enforcing the writ issued by Judge Mangrobang.
Directing the RTC Branch 22 to continue with proceedings on SEC Case No. 029-03 pending its final rendering.

The CA’s Second Division acted with manifest partiality and undue haste in issuing a TRO.
The TRO was issued on a moot and academic matter, given that actual possession issues had been partially resolved as evidenced by the Sheriff’s report.
The ratio decidendi of the TRO appeared contrived and the division acted without proper jurisdiction by not considering the pending litigation before the CA’s Fifteenth Division.
The actions of the parties, especially the failure of Dee Ping Wee and Marina Tan to declare the pendency of CA-G.R. SP No. 79988, amounted to forum shopping and an abuse of judicial process.

The petitioner further contended that the issues raised pertain to extensive factual matters, which should preclude relief by a petition for review limited solely to questions of law.

Whether the CA’s Second Division improperly exercised jurisdiction by intervening in matters already pending before the Fifteenth Division (allegation of litis pendentia and forum shopping).
Whether the transfer of the case from one division to another was mishandled, especially in light of internal rules and the scheduled reorganization of the court.

Whether the issuance of the TRO by the CA’s Second Division, which allegedly was granted with undue haste (only 10 days after the filing) and on a moot, academic matter, was proper.
Whether the TRO and the subsequent preliminary mandatory injunction should be considered valid given that physical possession had been only partially transferred and the situation was evolving.

Whether the actions of the petitioners (Lee Hiong group) and the respondents (Dee Ping group) in prior and concurrent litigation justify the CA’s nullification of the writ of preliminary mandatory injunction.
Whether the alleged abuse of discretion, manifest partiality, and contrived ratio decidendi on the part of the CA’s Second Division substantiate a legal error that would warrant the granting of a TRO in favor of petitioner.