A.M. No. P-93-995 - Jalbuena vs. Gellada

Case Digest (A.M. No. P-93-995)
Expanded Legal Reasoning Model

Facts:

Background of the Parties and Corporate Structure

LLDC is a family corporation founded by Paterno Lu Ym, Sr. and his brothers, established primarily to hold real estate.
In 1997, LLDC’s Board of Directors authorized the issuance of 600,000 unsubscribed and unissued shares at par value of ₱100.00 per share, with the Lu Ym father and sons subscribing to most of such shares.
Dispute arose when David Lu, together with Rosa Go, Silvano Ludo, and CL Corporation, claimed that the shares were issued for less than their real value and that the Lu Ym father and sons had abused their powers as members of the Board.

Initiation of Legal Proceedings

On August 14, 2000, David Lu and his co-plaintiffs filed a complaint before the Regional Trial Court (RTC) of Cebu City, Branch 5, seeking:

Declaration of nullity of the share issue;
Dissolution of LLDC; and
Appointment of a receiver to protect the interests of the corporation.

The complaint alleged that the improper issuance violated the minority stockholders’ rights and enriched the majority (the Lu Ym father and sons).

Pre-Trial and Procedural Developments

The defendants (the Lu Ym father and sons) moved to dismiss the complaint on the ground of non-compliance with the certificate of non-forum shopping.
The RTC initially denied the motion for dismissal on the basis that:

The case was exempt from the requirements of the Katarungang Pambarangay Law; and
The signature of one plaintiff was held as a substantial compliance.

On February 16, 2001, the RTC placed LLDC under receivership and appointed two receivers.
The Lu Ym father and sons elevated the matter to the Court of Appeals (CA), contesting the RTC’s rulings on dismissal and the receivership order.
The case was refiled and re-raffled, eventually assigned docket numbers CA-G.R. SP No. 64523, CA-G.R. CV No. 81163, and consolidated with issues related to the admission of David’s amended complaint.
David Lu later amended his complaint conforming to the Interim Rules of Procedure for Intra-Corporate Controversies, and the RTC subsequently decided on the merits, annulling the share issuance, ordering the dissolution of LLDC, and creating a management committee.

Development in the Court of Appeals and Consolidated Petitions

In G.R. No. 153690, David Lu challenged:

The CA’s dismissal of his original complaint due to failure to sign a certificate of non-forum shopping, and
The denial of his motion for reconsideration.

In G.R. No. 157381, the Lu Ym father and sons contested the CA’s order enjoining the RTC from proceeding with the receivership motion.
In G.R. No. 170889, John Lu and LLDC questioned:

The CA’s resolution denying their application for a writ of preliminary injunction; and
The issues arising from the alleged insufficiency of the docket fees paid.

Throughout the proceedings:

Multiple motions, supplements, and requests (including a motion to lift receivership and to challenge docket fees) were filed at the RTC, CA, and eventually raised in the petition before the Supreme Court.
The issue of non-forum shopping certification and the proper timing of filing supplemental pleadings were recurrent themes in the dispute.

Supervening Events and Adjacent Issues

The amended complaint filed by David Lu eventually superseded the original complaint, leading to:

The admission of the new pleadings by the RTC; and
A decision on the merits evidencing the annulment of the share issuance and the dissolution of LLDC.

Several interlocutory orders and temporary restraining orders (TRO) were issued by the CA:

One ordering the RTC to suspend receivership proceedings; and
Another denying the Lu Ym father and sons’ application for a writ of preliminary injunction.

The dispute regarding the sufficiency of docket fees and whether it affected jurisdiction remained a critical procedural matter raised on appeal.

Issues:

Issues Raised in G.R. No. 153690 (David Lu’s Petition)

Whether or not the CA gravely erred in:

Disregarding alleged fatal defects and violations of the Rules of Court and the IRCA in respondents’ petition, motion, and supplement;
Dismissing the RTC case solely for failure to sign the certificate of non-forum shopping despite the permissive joinder of parties.

Issues Raised in G.R. No. 157381 (Lu Ym Father and Sons’ Petition)

Whether the CA had jurisdiction to issue a writ of preliminary injunction enjoining the RTC from proceeding with the receivership motion, particularly considering:

The preexisting appeal pending before the Supreme Court; and
The argument that the CA’s grant of the petition lacked a finding of grave abuse of discretion.

Issues Raised in G.R. No. 170889 (John Lu and LLDC’s Petition)

Whether the CA abused its discretion in denying the petition for a writ of preliminary injunction despite the alleged insufficiency in payment of docket fees when the original complaint was filed; and
Whether such insufficiency, if it existed, should amount to a lack of subject-matter jurisdiction of the RTC.

Consolidated Matter for Supreme Court Resolution

Whether the original complaint should have been dismissed for non-compliance with certificate of non-forum shopping and for non-payment (or insufficient payment) of the correct docket fees.
Whether the receivership proceedings should have been validly suspended pending the amendment of the complaint or other remedial actions.
Whether a writ of preliminary injunction should have been issued to enjoin the RTC from acting pending the resolution of the appeals.

Ruling:

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Ratio:

(Subscriber-Only)

Doctrine:

(Subscriber-Only)

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Case Digest (A.M. No. P-93-995) Core Legal Reasoning Model Expanded

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Case Digest (A.M. No. P-93-995)
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Case Digest (A.M. No. P-93-995)
Expanded Legal Reasoning Model