G.R. No. 153690 , G.R. No. 157381, G.R. No. 170889; August 26, 2008
DAVID LU, petitioner, vs. PATERNO LU YM, SR., ET. AL. & LUYM DEVELOPMENT CORP., respondents. (Consolidated Cases)

FACTS

The consolidated petitions originated from an intra-corporate dispute within Ludo and Luym Development Corporation (LLDC), a family-owned corporation. David Lu, along with other relatives (Rosa Go, Silvano Ludo, and CL Corporation), filed a complaint against the Lu Ym father and sons (Paterno Sr., Paterno Jr., Victor, John, and Kelly) and LLDC. The complaint sought the nullity of the issuance of 600,000 corporate shares to the Lu Ym family at a price alleged to be grossly below real value, claiming breach of fiduciary duty, and prayed for corporate dissolution and the appointment of a receiver pendente lite. The Regional Trial Court (RTC) denied the defendants’ motion to dismiss, which argued defective certification against forum shopping as only one of the four plaintiffs signed it, and placed LLDC under receivership.
The Court of Appeals (CA), in CA-G.R. SP No. 64523, initially dismissed the defendants’ petition but later reinstated and granted it. The CA dismissed the main complaint for failure to comply with the rule on certification against forum shopping, applying Loquias v. Ombudsman, which requires all plaintiffs to sign the certification. Consequently, the CA annulled the RTC’s receivership orders. David Lu elevated this to the Supreme Court ( G.R. No. 153690 ). Meanwhile, the case was re-raffled and re-docketed as an intra-corporate case under the Interim Rules. David Lu filed an amended complaint, and the RTC subsequently created a management committee for LLDC, which the CA later set aside, leading to the other petitions (G.R. Nos. 157381 & 170889).

ISSUE

The core issue is whether the Court of Appeals correctly dismissed the original complaint for non-compliance with the rule on certification against forum shopping.

RULING

The Supreme Court reversed the Court of Appeals and reinstated the complaint. The legal logic hinges on the proper application of the forum shopping rule to multiple plaintiffs in a single action. The Court clarified that the rule requiring all plaintiffs to sign the certification, as stated in Loquias, applies strictly to petitions filed before appellate courts, not to complaints initiating an action in trial courts. For an original complaint filed in the RTC, substantial compliance is sufficient. The signature of one plaintiff in the certification, coupled with the verification signed by all plaintiffs, constitutes substantial compliance. The verification itself serves as an assurance against forum shopping. Furthermore, the complaint alleged a collective injury to all plaintiffs arising from the same corporate acts, making the lone signatory’s certification representative of a common cause. Therefore, the CA erred in applying the stringent Loquias rule to an initiatory complaint. The dismissal was improper, warranting the remand of the case for trial on the merits of the intra-corporate controversy.