Republic of thePhilippinesSupreme CourtManilaTHIRD DIVISIONPHILIP TURNER andELNORA TURNER,Petitioners,-versus-LORENZO SHIPPINGCORPORATION,Respondent.G.R. No. 157479Present:CARPIO MORALES,Chairperson,BRION,BERSAMIN,VILLARAMA, JR., andARANAL-SERENO,JJ.Promulgated:November 24, 2010

x-----------------------------------------------------------------------------------------xD E C I S I O NBERSAMIN,J.:This case concerns the right of dissenting stockholders to demand payment of the value of their shareholdings.In the stockholders suit to recover the value of their shareholdings from the corporation, the Regional Trial Court (RTC) upheld the dissenting stockholders, herein petitioners, and ordered the corporation, herein respondent, to pay. Execution was partially carried out against the respondent. On the respondents petition forcertiorari, however, the Court of Appeals (CA) corrected the RTC and dismissed the petitioners suit on the ground that their cause of action for collection had not yet accrued due to the lack of unrestricted retained earnings in the books of the respondent.Thus, the petitioners are now before the Court to challenge the CAs decision promulgated onMarch 4, 2003in C.A.-G.R. SP No. 74156 entitledLorenzo Shipping Corporation v. Hon. Artemio S. Tipon, in his capacity as Presiding Judge of Branch 46 of the Regional Trial Court of Manila, et al.[1]AntecedentsThe petitioners held 1,010,000 shares of stock of the respondent, a domestic corporation engaged primarily in cargo shipping activities.In June 1999, the respondent decided to amend its articles of incorporation to remove the stockholders pre-emptive rights to newly issued shares of stock. Feeling that the corporate move would be prejudicial to their interest as stockholders, the petitioners voted against the amendment and demanded payment of their shares at the rate ofP2.276/share based on the book value of the shares, or a total ofP2,298,760.00.The respondent found the fair value of the shares demanded by the petitioners unacceptable. It insisted that the market value on the date before the action to remove the pre-emptive right was taken should be the value, orP0.41/share (or a total ofP414,100.00), considering that its shares were listed in the Philippine Stock Exchange, and that the payment could be made only if the respondent had unrestricted retained earnings in its books to cover the value of the shares, which was not the case.The disagreement on the valuation of the shares led the parties to constitute an appraisal committee pursuant to Section 82 of theCorporation Code, each of them nominating a representative, who together then nominated the third member who would be chairman of the appraisal committee. Thus, the appraisal committee came to be made up of Reynaldo Yatco, the petitioners nominee; Atty. Antonio Acyatan, the respondents nominee; and Leo Anoche of theAsian Appraisal Company, Inc., the third member/chairman.OnOctober 27, 2000, the appraisal committee reported its valuation ofP2.54/share, for an aggregate value ofP2,565,400.00 for the petitioners.[2]Subsequently, the petitioners demanded payment based on the valuation of the appraisal committee, plus 2%/month penalty from the date of their original demand for payment, as well as the reimbursement of the amounts advanced as professional fees to the appraisers.[3]In its letter to the petitioners dated January 2, 2001,[4]the respondent refused the petitioners demand, explaining that pursuant to theCorporation Code, the dissenting stockholders exercising their appraisal rights could be paid only when the corporation had unrestricted retained earnings to cover the fair value of the shares, but that it had no retained earnings at the time of the petitioners demand, as borne out by its Financial Statements for Fiscal Year 1999 showing a deficit ofP72,973,114.00 as ofDecember 31, 1999.Upon the respondents refusal to pay, the petitioners sued the respondent for collection and damages in the RTC inMakatiCityonJanuary 22, 2001. The case, docketed as Civil Case No. 01-086, was initially assigned to Branch 132.[5]OnJune 26, 2002, the petitioners filed theirmotion for partial summary judgment, claiming that:7) xxx the defendant has an accumulated unrestricted retained earnings of ELEVEN MILLION NINE HUNDRED SEVENTY FIVE THOUSAND FOUR HUNDRED NINETY (P11,975,490.00) PESOS, Philippine Currency, evidenced by its Financial Statement as of the Quarter Ending March 31, 2002; xxx8)xxx the fair value of the shares of the petitioners as fixed by the Appraisal Committee is final, that the same cannot be disputed xxx9)xxx there is no genuine issue to material fact and therefore, the plaintiffs are entitled, as a matter of right, to a summary judgment. xxx[6]The respondent opposed themotion for partial summary judgment, stating that the determination of the unrestricted retained earnings should be made at the end of the fiscal year of the respondent, and that the petitioners did not have a cause of action against the respondent.During the pendency of themotion for partial summary judgment, however, the Presiding Judge of Branch 133 transmitted the records to the Clerk of Court for re-raffling to any of the RTCs special commercial courts inMakatiCitydue to the case being an intra-corporate dispute. Hence,Civil Case No. 01-086was re-raffled to Branch 142.Nevertheless, because the principal office of the respondent was in Manila,Civil Case No. 01-086was ultimately transferred to Branch 46 of the RTC in Manila, presided by Judge Artemio Tipon,[7]pursuant to theInterim Rules of Procedure on Intra-Corporate Controversies(Interim Rules) requiring intra-corporate cases to be brought in the RTC exercising jurisdiction over the place where the principal office of the corporation was found.After the conference inCivil Case No. 01-086set onOctober 23, 2002, which the petitioners counsel did not attend, Judge Tipon issued an order,[8]granting the petitionersmotion for partial summary judgment, stating:As to the motion for partial summary judgment, there is no question that the 3-man committee mandated to appraise the shareholdings of plaintiff submitted its recommendation onOctober 27, 2000fixing the fair value of the shares of stocks of the plaintiff at P2.54 per share. Under Section 82 of the Corporation Code:The findings of the majority of the appraisers shall be final, and the award shall be paid by the corporation within thirty (30) days after the award is made.The only restriction imposed by the Corporation Code isThat no payment shall be made to any dissenting stockholder unless the corporation has unrestricted retained earning in its books to cover such payment.The evidence submitted by plaintiffs shows that in its quarterly financial statement it submitted to the Securities and Exchange Commission, the defendant has retained earnings of P11,975,490 as ofMarch 21, 2002. This is not disputed by the defendant. Its only argument against paying is that there must be unrestricted retained earning at the time the demand for payment is made.This certainly is a very narrow concept of the appraisal right of a stockholder. The law does not say that the unrestricted retained earnings must exist at the time of the demand. Even if there are no retained earnings at the time the demand is made if there are retained earnings later, the fair value of such stocks must be paid. The only restriction is that there must be sufficient funds to cover the creditors after the dissenting stockholder is paid. No such allegations have been made by the defendant.[9]OnNovember 12, 2002, the respondent filed amotion for reconsideration.On the scheduled hearing of themotion for reconsiderationonNovember 22, 2002, the petitioners filed amotion for immediate executionand amotion to strike out motion for reconsideration.In the latter motion, they pointed out that themotion for reconsiderationwas prohibited by Section 8 of the Interim Rules.Thus, also onNovember 22, 2002, Judge Tipon denied themotion for reconsiderationand granted the petitionersmotion for immediate execution.[10]Subsequently, onNovember 28, 2002, the RTC issued awrit of execution.[11]Aggrieved, the respondent commenced a special civil action forcertiorariin the CA to challenge the two aforecited orders of Judge Tipon, claiming that:A.JUDGE TIPON GRAVELY ABUSED HIS DISCRETION IN GRANTING SUMMARY JUDGMENT TO THE SPOUSES TURNER, BECAUSE AT THE TIME THE COMPLAINT WAS FILED, LSC HAD NO RETAINED EARNINGS, AND THUS WAS COMPLYING WITH THE LAW, AND NOT VIOLATING ANY RIGHTS OF THE SPOUSES TURNER, WHEN IT REFUSED TO PAY THEM THE VALUE OF THEIR LSC SHARES.ANY RETAINED EARNINGS MADE A YEAR AFTER THECOMPLAINT WAS FILED ARE IRRELEVANT TO THE SPOUSES TURNERS RIGHT TO RECOVER UNDER THE COMPLAINT, BECAUSE THE WELL-SETTLED RULE, REPEATEDLY BROUGHT TO JUDGE TIPONS ATTENTION, IS IF NO RIGHT EXISTED AT THE TIME (T)HE ACTION WAS COMMENCED THE SUIT CANNOT BE MAINTAINED, ALTHOUGH SUCH RIGHT OF ACTION MAY HAVE ACCRUED THEREAFTER.B.JUDGE TIPON IGNORED CONTROLLING CASE LAW, AND THUS GRAVELY ABUSED HIS DISCRETION, WHEN HE GRANTED AND ISSUED THE QUESTIONED WRIT OF EXECUTION DIRECTING THE EXECUTION OF HIS PARTIAL SUMMARY JUDGMENT IN FAVOR OF THE SPOUSES TURNER, BECAUSE THAT JUDGMENT IS NOT A FINAL JUDGMENT UNDER SECTION 1 OF RULE 39 OF THE RULES OF COURT AND THEREFORE CANNOT BE SUBJECT OF EXECUTION UNDER THE SUPREME COURTS CATEGORICAL HOLDING INPROVINCE OF PANGASINAN VS. COURT OF APPEALS.Upon the respondents application, the CA issued a temporary restraining order (TRO), enjoining the petitioners, and their agents and representatives from enforcing thewrit of execution. By then, however, thewrit of executionhad been partially enforced.The TRO lapsed without the CA issuing a writ of preliminary injunction to prevent the execution. Thereupon, the sheriff resumed the enforcement of thewrit of execution.The CA promulgated its assailed decision onMarch 4, 2003,[12]pertinently holding:However, it is clear from the foregoing that the Turners appraisal right is subject to the legal condition that no payment shall be made to any dissenting stockholder unless the corporation has unrestricted retained earnings in its books to cover such payment.Thus, the Supreme Court held that:The requirement of unrestricted retained earnings to cover the shares is based on the trust fund doctrine which means that the capital stock, property and other assets of a corporation are regarded as equity in trust for the payment of corporate creditors. The reason is that creditors of a corporation are preferred over the stockholders in the distribution of corporate assets.There can be no distribution of assets among the stockholders without first paying corporate creditors. Hence, any disposition of corporate funds to the prejudice of creditors is null and void. Creditors of a corporation have the right to assume that so long as there are outstanding debts and liabilities, the board of directors will not use the assets of the corporation to purchase its own stock.In the instant case, it was established that there were no unrestricted retained earnings when the Turners filed their Complaint.In a letter dated20 August 2000, petitioner informed the Turners that payment of their shares could only be made if it had unrestricted earnings in its books to cover the same.Petitioner reiterated this in a letter dated 2 January 2001 which further informed the Turners that its Financial Statement for fiscal year 1999 shows that its retained earnings ending December 31, 1999 was at a deficit in the amount ofP72,973,114.00, a matter which has not been disputed by private respondents.Hence, in accordance with the second paragraph of sec. 82, BP 68supra, the Turners right to payment had not yet accrued when they filed their Complaint onJanuary 22, 2001, albeit their appraisal right already existed.In Philippine American General Insurance Co. Inc. vs. Sweet Lines, Inc., the Supreme Court declared that:Now, before an action can properly be commenced all the essential elements of the cause of action must be in existence, that is, the cause of action must be complete.All valid conditions precedent to the institution of the particular action, whether prescribed by statute, fixed by agreement of the parties or implied by law must be performed or complied with before commencing the action, unless the conduct of the adverse party has been such as to prevent or waive performance or excuse non-performance of the condition.It bears restating thata right of action is the right to presently enforce a cause of action, while a cause of action consists of the operative facts which give rise to such right of action.The right of action does not arise until the performance of all conditions precedent to the actionand may be taken away by the running of the statute of limitations, through estoppel, or by other circumstances which do not affect the cause of action.Performance or fulfillment of all conditions precedent upon which a right of action depends must be sufficiently alleged, considering that the burden of proof to show that a party has a right of action is upon the person initiating the suit.The Turners right of action arose only when petitioner had already retained earnings in the amount ofP11,975,490.00 onMarch 21, 2002; such right of action was inexistent onJanuary 22, 2001when they filed the Complaint.In the doctrinal case of Surigao Mine Exploration Co. Inc., vs. Harris, the Supreme Court ruled:Subject to certain qualifications, and except as otherwise provided by law,an action commenced before the cause of action has accrued is prematurely brought and should be dismissed.The fact that the cause of action accrues after the action is commenced and while it is pending is of no moment.It is a rule of law to which there is, perhaps, no exception, either at law or in equity, that to recover at all there must be some cause of action at the commencement of the suit. There are reasons of public policy why there should be no needless haste in bringing up litigation, and why people who are in no default and against whom there is as yet no cause of action should not be summoned before the public tribunals to answer complaints which are groundless. An action prematurely brought is a groundless suit.Unless the plaintiff has a valid and subsisting cause of action at the time his action iscommenced, the defect cannot be cured or remedied by the acquisition or accrual of one while the action is pending, and a supplemental complaint or an amendment setting up such after-accrued cause of action is not permissible.The afore-quoted ruling was reiterated in Young vs Court of Appeals and Lao vs. Court of Appeals.The Turners apprehension that their claim for payment may prescribe if they wait for the petitioner to have unrestricted retained earnings is misplaced.It is the legal possibility of bringing the action that determines the starting point for the computation of the period of prescription. Stated otherwise, the prescriptive period is to be reckoned from the accrual of their right of action.Accordingly, We hold that public respondent exceeded its jurisdiction when it entertained the herein Complaint and issued the assailed Orders.Excess of jurisdiction is the state of being beyond or outside the limits of jurisdiction, and as distinguished from the entire absence of jurisdiction, means that the act although within the general power of the judge, is not authorized and therefore void, with respect to the particular case, because the conditions which authorize the exercise of his general power in that particular case are wanting, and hence, the judicial power is not in fact lawfully invoked.We find no necessity to discuss the second ground raised in this petition.WHEREFORE, upon the premises, the petition isGRANTED.The assailed Orders and the corresponding Writs of Garnishment areNULLIFIED.Civil Case No. 02-104692 is hereby orderedDISMISSEDwithout prejudice to refiling by the private respondents of the action for enforcement of their right to payment as withdrawing stockholders.SO ORDERED.The petitioners now come to the Court for a review oncertiorariof the CAs decision, submitting that:I.THE COURT OF APPEALS COMMITTED SERIOUS ERRORS OF LAW WHEN IT GRANTED THE PETITION FOR CERTIORARI WHEN THE REGIONAL TRIAL COURT OF MANILA DID NOT ACT BEYOND ITS JURISDICTION AMOUNTING TO LACK OF JURISDICTION IN GRANTING THE MOTION FOR PARTIAL SUMMARY JUDGMENT AND IN GRANTING THE MOTION FOR IMMEDIATE EXECUTION OF JUDGMENT;II.THE COURT OF APPEALS COMMITTED SERIOUS ERRORS OF LAW WHEN IT ORDERED THE DISMISSAL OF THE CASE, WHEN THE PETITION FOR CERTIORARI MERELY SOUGHT THE ANNULMENT OF THE ORDER GRANTING THE MOTION FOR PARTIAL SUMMARY JUDGMENT AND OF THE ORDER GRANTING THE MOTION FOR IMMEDIATE EXECUTION OF THE JUDGMENT;III.THE HONORABLE COURT OF APPEALS HAS DECIDED QUESTIONS OF SUBSTANCE NOT THEREFORE DETERMINED BY THIS HONORABLE COURT AND/OR DECIDED IT IN A WAY NOT IN ACCORD WITH LAW OR WITH JURISPRUDENCE.RulingThe petition fails.The CA correctly concluded that the RTC had exceeded its jurisdiction in entertaining the petitioners complaint inCivil Case No. 01-086, and inrendering the summary judgment and issuing writ of execution.A.Stockholders Right of Appraisal, In GeneralA stockholder who dissents from certain corporate actions has the right to demand payment of the fair value of his or her shares. This right, known as the right of appraisal, is expressly recognized in Section 81 of theCorporation Code, to wit:Section 81.Instances of appraisal right.- Any stockholder of a corporation shall have the right to dissent and demand payment of the fair value of his shares in the following instances:1. In case any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholder or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence;2. In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets as provided in the Code; and3. In case of merger or consolidation. (n)Clearly, the right of appraisal may be exercised when there is a fundamental change in the charter or articles of incorporation substantially prejudicing the rights of the stockholders. It does not vest unless objectionable corporate action is taken.[13]It serves the purpose of enabling the dissenting stockholder to have his interests purchased and to retire from the corporation.[14]Under the common law, there were originally conflicting views on whether a corporation had the power to acquire or purchase its own stocks. InEngland, it was held invalid for a corporation to purchase its issued stocks because such purchase was an indirect method of reducing capital (which was statutorily restricted), aside from being inconsistent with the privilege of limited liability to creditors.[15]Only a few American jurisdictions adopted by decision or statute the strict English rule forbidding a corporation from purchasing its own shares. In some American states where the English rule used to be adopted, statutes granting authority to purchase out of surplus funds were enacted, while in others, shares might be purchased even out of capital provided the rights of creditors were not prejudiced.[16]The reason underlying the limitation of share purchases sprang from the necessity of imposing safeguards against the depletion by a corporation of its assets and against the impairment of its capital needed for the protection of creditors.[17]Now, however, a corporation can purchase its own shares,providedpayment is made out of surplus profits and the acquisition is for a legitimate corporate purpose.[18]In thePhilippines, this new rule is embodied in Section 41 of theCorporation Code, to wit:Section 41.Power to acquire own shares.- A stock corporation shall have the power to purchase or acquire its own shares for a legitimate corporate purpose or purposes, including but not limited to the following cases: Provided, That the corporation has unrestricted retained earnings in its books to cover the shares to be purchased or acquired:1.To eliminate fractional shares arising out of stock dividends;2. To collect or compromise an indebtedness to the corporation, arising out of unpaid subscription, in a delinquency sale, and to purchase delinquent shares sold during said sale; and3. To pay dissenting or withdrawing stockholders entitled to payment for their shares under the provisions of this Code. (n)TheCorporation Codedefines how the right of appraisal is exercised, as well as the implications of the right of appraisal, as follows:1.The appraisal right is exercised by any stockholder who has voted against the proposed corporate action by making a written demand on the corporation within 30 days after the date on which the vote was taken for the payment of the fair value of his shares. The failure to make the demand within the period is deemed a waiver of the appraisal right.[19]2.If the withdrawing stockholder and the corporation cannot agree on the fair value of the shares within a period of 60 days from the date the stockholders approved the corporate action, the fair value shall be determined and appraised by three disinterested persons, one of whom shall be named by the stockholder, another by the corporation, and the third by the two thus chosen. The findings and award of the majority of the appraisers shall be final, and the corporation shall pay their award within 30 days after the award is made. Upon payment by the corporation of the agreed or awarded price, the stockholder shall forthwith transfer his or her shares to the corporation.[20]3.All rights accruing to the withdrawing stockholders shares, including voting and dividend rights, shall be suspended from the time of demand for the payment of the fair value of the shares until either the abandonment of the corporate action involved or the purchase of the shares by the corporation, except the right of such stockholder to receive payment of the fair value of the shares.[21]4.Within 10 days after demanding payment for his or her shares, a dissenting stockholder shall submit to the corporation the certificates of stock representing his shares for notation thereon that such shares are dissenting shares. A failure to do so shall, at the option of the corporation, terminate his rights under this Title X of theCorporation Code.If shares represented by the certificates bearing such notation are transferred, and the certificates are consequently canceled, the rights of the transferor as a dissenting stockholder under this Title shall cease and the transferee shall have all the rights of a regular stockholder; and all dividend distributions that would have accrued on such shares shall be paid to the transferee.[22]5.If the proposed corporate action is implemented or effected, the corporation shall pay to such stockholder, upon the surrender of the certificates of stock representing his shares, the fair value thereof as of the day prior to the date on which the vote was taken, excluding any appreciation or depreciation in anticipation of such corporate action.[23]Notwithstanding the foregoing, no payment shall be made to any dissenting stockholder unless the corporation has unrestricted retained earnings in its books to cover the payment. In case the corporation has no available unrestricted retained earnings in its books, Section 83 of theCorporation Codeprovides that if the dissenting stockholder is not paid the value of his shares within 30 days after the award, his voting and dividend rights shall immediately be restored.Thetrust fund doctrinebackstops the requirement of unrestricted retained earnings to fund the payment of the shares of stocks of the withdrawing stockholders. Under the doctrine, the capital stock, property, and other assets of a corporation are regarded as equity in trust for the payment of corporate creditors, who are preferred in the distribution of corporate assets.[24]The creditors of a corporation have the right to assume that the board of directors will not use the assets of the corporation to purchase its own stock for as long as the corporation has outstanding debts and liabilities.[25]There can be no distribution of assets among the stockholders without first paying corporate debts. Thus, any disposition of corporate funds and assets to the prejudice of creditors is null and void.[26]B.Petitioners cause of action was prematureThat the respondent had indisputably no unrestricted retained earnings in its books at the time the petitioners commencedCivil Case No. 01-086on January 22, 2001 proved that the respondents legal obligation to pay the value of the petitioners shares did not yet arise.Thus, the CA did not err in holding that the petitioners had no cause of action,and in ruling that the RTC did not validly render the partial summary judgment.A cause of action is the act or omission by which a party violates a right of another. The essential elements of a cause of action are: (a) the existence of a legal right in favor of the plaintiff; (b) a correlative legal duty of the defendant to respect such right; and (c) an act or omission by such defendant in violation of the right of the plaintiff with a resulting injury or damage to the plaintiff for which the latter may maintain an action for the recovery of relief from the defendant.[28]Although the first two elements may exist, a cause of action arises only upon the occurrence of the last element, giving the plaintiff the right to maintain an action in court for recovery of damages or other appropriate relief.[29]Section 1, Rule 2, of theRules of Courtrequires that every ordinary civil action must be based on a cause of action. Accordingly,Civil Case No. 01-086 was dismissible from the beginning for being without any cause of action.The RTC concluded that the respondents obligation to pay had accrued by its having the unrestricted retained earnings after the making of the demand by the petitioners. It based its conclusion on the fact that theCorporation Codedid not provide that the unrestricted retained earningsmust already exist at the time of the demand.The RTCs construal of theCorporation Codewas unsustainable, because itdid not take into account the petitioners lack of a cause of action against the respondent. In order to give rise to any obligation to pay on the part of the respondent, the petitioners should first make a valid demand that the respondent refused to pay despite having unrestricted retained earnings. Otherwise, the respondent could not be said to be guilty of any actionable omission that could sustain their action to collect.Neither did the subsequent existence of unrestricted retained earnings after the filing of the complaint cure the lack of cause of action inCivil Case No. 01-086. The petitioners right of action could only spring from anexistingcause of action. Thus, a complaint whose cause of action has not yet accrued cannot be cured by an amended or supplemental pleading alleging the existence or accrual of a cause of action during the pendency of the action.[30]For, only when there is an invasion of primary rights, not before, does the adjective or remedial law become operative.[31]Verily, a premature invocation of the courts intervention renders the complaint without a cause of action and dismissible on such ground.[32]In short,Civil Case No. 01-086, being agroundless suit, should be dismissed.Even the fact that the respondent already had unrestricted retained earnings more than sufficient to cover the petitioners claims on June 26, 2002 (when they filed theirmotion for partial summary judgment)did not rectify the absence of the cause of action at the time of the commencement ofCivil Case No. 01-086. Themotion for partial summary judgment, being a mere application for relief other than by a pleading,[33]was not the same as the complaintin Civil Case No. 01-086. Thereby, the petitioners did not meet the requirement of theRules of Courtthat a cause of action must exist at the commencement of an action, which is commenced by the filing of the original complaint in court.[34]The petitioners claim thatthe respondentspetition forcertiorarisought only the annulment of the assailed orders of the RTC (i.e., granting themotion for partial summary judgmentand themotion for immediate execution); hence, the CA had no right to direct the dismissal ofCivil Case No. 01-086.The claim of the petitioners cannot stand.Although the respondents petition forcertioraritargeted only the RTCs orders granting themotion for partial summary judgmentand themotion for immediate execution, the CAs directive for the dismissal ofCivil Case No. 01-086 was not an abuse of discretion, least of all grave, because such dismissal was the only proper thing to be done under the circumstances. According toSurigao Mine Exploration Co., Inc. v. Harris:[35]Subject to certain qualification, and except as otherwise provided by law,an action commenced before the cause of action has accrued is prematurely brought and should be dismissed. The fact that the cause of action accrues after the action is commenced and while the case is pending is of no moment. It is a rule of law to which there is, perhaps no exception, either in law or in equity, that to recover at all there must be some cause of action at the commencement of the suit. There are reasons of public policy why there should be no needless haste in bringing up litigation, and why people who are in no default and against whom there is as yet no cause of action should not be summoned before the public tribunals to answer complaints which are groundless. An action prematurely brought is a groundless suit.Unless the plaintiff has a valid and subsisting cause of action at the time his action is commenced, the defect cannot be cured or remedied by the acquisition or accrual of one while the action is pending, and a supplemental complaint or an amendment setting up such after-accrued cause of action is not permissible.Lastly, the petitioners argue that the respondents recourse of a special action forcertiorariwas the wrong remedy,in view of the fact that the granting of themotion for partial summary judgmentconstituted only an error of law correctible by appeal, not of jurisdiction.The argument of the petitioners is baseless. The RTC was guilty of an error of jurisdiction, for it exceeded its jurisdiction by taking cognizance of the complaint that was not based on an existing cause of action.WHEREFORE,the petition for review oncertiorariis denied for lack of merit.We affirm the decision promulgated onMarch 4, 2003in C.A.-G.R. SP No. 74156 entitledLorenzo Shipping Corporation v. Hon. Artemio S. Tipon, in his capacity as Presiding Judge of Branch 46 of the Regional Trial Court of Manila, et al.Costs of suit to be paid by the petitioners.SO ORDERED.

[G.R. No. 138343.February 19, 2001]GILDA C. LIM, WILHELMINA V. JOVEN and DITAS A. LERIOS,petitioners, vs.PATRICIA LIM-YU, in her capacity as a minority stockholder of LIMPAN INVESTMENT CORPORATION,respondent.D E C I S I O NPANGANIBAN,J.:A suit to enforce preemptive rights in a corporation is not a derivative suit.Thus, a temporary restraining order enjoining a person from representing the corporation will not bar such action, because it is instituted on behalf and for the benefit of the shareholder, not the corporation.Statement of the CasePetitioners seek the reversal,[1]under Rule 45 of the Rules of Court, of the July 31, 1998 Decision[2]of the Court of Appeals[3](CA) in CA-GR SP No. 46292 and of its March 25, 1999 Resolution[4]denying reconsideration.The decretal portion of the appealed Decision, which affirmed the Securities and Exchange Commission (SEC), reads as follows:WHEREFORE, judgment is hereby rendered DISMISSING the Petition for lack of merit. The preliminary injunction previously issued is hereby LIFTED.[5]The FactsThe undisputed facts are summarized by the Court of Appeals as follows:"At a special meeting on 07 October 1994, the Board of Directors of Limpan Investment Corporation (LIMPAN) approved a resolution of the following tenor:RESOLVED that the corporation make a partial payment [for] the legal services of Gilda C. Lim in the handling of various cases on behalf of, or involving the corporation in the amount of P1,551,500.00 to be paid in equivalent value in shares of stock of the corporation totaling 15,515 shares, the same being found to be reasonable, and there being no available funds to pay the same.RESOLVED FURTHER, that the Corporate Secretary be authorized, as he is hereby authorized, to secure and comply with necessary requirements of the law for the issuance of said shares.On 18 October 1994, the Corporate Secretary Jaime G. Manzano filed a request before the Corporate and Legal Affairs Department of the SEC asking for the exemption of the 15,515 shares from the registration requirements of the Revised Securities Act; the request was granted in a Resolution dated 14 November 1994.Due to the issuance of the unsubscribed shares to the petitioner GILDA C. LIM (LIM), all of LIMPANs authorized capital stock became fully subscribed, with LIM ending up controlling 62.5% of the shares.In July 1996, the private respondent PATRICIA LIM YU (YU), a sister of the petitioner, LIM, filed a complaint against the members of the Board of Directors of LIMPAN who approved the aforesaid resolution (GILDA C. LIM, WILHELMINA V. JOVEN, DITAS A. LERIOS, AUGUSTO R. BUNDANG, TERESITA C. VELEZ and JAIME MANZANO).The action was docketed as SEC Case No. 07-95-5114.BUNDANG, VELEZ, and MANZANO filed an Answer, asserting as affirmative defenses that the complaint failed to state a cause of action against them; that YU had no legal capacity to sue; and that the issuance of the shares in LIMs favor was bona fide and valid pursuant to law and LIMPANs By-Laws.In turn, the herein petitioners LIM, JOVEN and LERIOS filed a Motion to Dismiss on the following grounds: that YU had no legal capacity to sue; that the complaint failed to state a cause of action against JOVEN and LERIOS, and that no earnest efforts were exerted towards a compromise, YU and LIM being siblings.In support of their ground that YU ha[d] no legal capacity to sue, the petitioners pointed out that LIM had previously filed a petition for guardianship before the Regional Trial Court of Manila, docketed as Special proceeding No. 94-71010, praying for the issuance of letters of guardianship over YU.On 14 July 1994, the Presiding Judge of Branch 48, the Hon. Demetrio M. Batario, Jr., issued an Order, the relevant portion of which enjoined YU from entering into, or signing, contracts or documents on her behalf or on behalf of others x x x.On 16 August 1994, LIM was appointed [as] YUs general guardian, and the former took her oath as such on the same day.YU appealed LIMs appointment to the Supreme Court (Patricia C. Lim-Yu, et al. v. Hon. Judge Demetrio M. Batario, Jr., et al., G.R. No. 116926).On 27 February 1994, the High Court issued a Resolution giving due course to YUs petition.It likewise issued a temporary restraining order, the pertinent portion of which is quoted hereunder:(b) to ISSUE the TEMPORARY RESTRAINING ORDER prayed for, limited however, to the Writ of Preliminary Injunction dated 22 August 1994 and the order dated 14 July 1994 both issued in SP Proceeding No. 94-71010 which in the opinion of the Court are all too encompassing and should be limited in scope and subject to the conditions set forth in the resolution of September 28, 1994 that, (D)uring the effectivity of the temporary restraining order, petitioner Patricia C. Lim, her attorneys, representatives, agents and any other persons assisting petitioner Patricia C. Lim will be able to act, enter into or sign contracts or documentssolelyfor and on behalf of Patricia C. Lim;said actions, contracts or documents should not in any way bind or affect the interests of her parents, Isabelo P. Lim and Purificacion C. Lim, her brothers and sisters and any family owned or controlled corporation in particular, the Limpan Investment Corporation.NOW THEREFORE, You (Respondent Hon. Judge Demetrio M. Batario, Jr.), your agents, representatives, and/or any person or persons, acting upon your orders or in your place or stead, are hereby RESTRAINED and ENJOINED from enforcing and carrying out the Writ of Preliminary Injunction dated 22 August 1994 and the Order dated 14 July 1994 both issued by respondent Judge In SP Proceeding No. 94-71010.(underscoring supplied)The petitioners argued that, under the aforesaid order, YU [was] incapacitated from filing a derivative suit. YU naturally espoused the opposite view.Acting on the petitioners Motion to Dismiss, the Hearing Officer,Atty. Manuel Perea, issued an Order dated 05 January 1996, holding in abeyance the resolution of the motion to dismiss, which reads as follows:Before this Commission is the motion to dismiss filed by respondents Gilda C. Lim, et al., as well as the opposition thereto.In view of the conflicting interpretation of the order issued by the Supreme Court in Sp. Proc. No. 94-70010 regarding the legal capacity of the plaintiff [--] x x x who is allegedly under guardianship [-- to file the instant action] either or both parties are directed to file a motion for clarification of the orders invoked by respondent Gilda C. Lim, et al.The desired clarification is perceived to settle the issue of plaintiffs capacity to file the instant action.Meanwhile, resolution of the pending incident shall be held in abeyance until the parties shall have secured the desired interpretation/opinion of the Supreme Court on the matter.Yu filed a Motion for Reconsideration dated 08 April 1996, which was denied in an Order dated 25 April 1996, on the ground that it was filed beyond the ten-day period allowed for seeking reconsideration. Yu filed a Motion for Leave to Admit Second Motion for Reconsideration dated 02 July 1996 which the Hearing Officer also denied.From the denial of her second motion for reconsideration, Yu filed a petition for certiorari before the SEC En Banc seeking to set aside the Order of 05 January 1994. On 04 February 1994, the SEC En Banc issued the first assailed order granting the petition for certiorari, and ordering the Securities Investigation & Clearing Department (SICD) to hear the other grounds of the Motion to Dismiss and to continue the case until its final determination. A motion for reconsideration filed by L[im] having been denied, the instant petition for review was instituted before this Court. x x x.[6]Ruling of the Court of AppealsRuling that the Supreme Courts TRO was clear, the CA agreed with the SEC that, pending clarification thereof, there was no need for the hearing officer to defer ruling on the Motion to Dismiss.The appellate court stated that the TRO did not prohibit herein Respondent Patricia Lim-Yu from acting or entering into contracts on her own behalf or from protecting her rights.The root of the present controversy -- the Complaint she filed before the SEC -- relates to a denial of her preemptive right as a shareholder.Thus, her capacity to file the suit must be sustained.Finally, on the question of the timeliness of respondents Petition for Certiorari before the SEC, the CA ruled that adherence to strict technical rules should be relaxed to prevent palpable injustice.Hence, this recourse.[7]IssuesIn their Memorandum,[8]petitioners raise the following issues:IThe Honorable Court of Appeals erred in sustaining the respondents legal capacity to sue the petitioners by relying solely on the first half of this Honorable Courts TRO and without considering the second half of said TRO.IIThe Honorable Court of Appeals erred in disregarding the sole power/authority of the Supreme Court to enforce/clarify its own resolutions/orders under the Rules of Court.IIIThe Honorable Court of Appeals in effect allowed the Securities and Exchange Commission (SEC) to maintain two conflicting positions on similar matters before it (SEC) when it upheld the SECs position that clarification of this Honorable Courts TRO was not needed in SEC Case No. 07-95-5114.IV.The Honorable Court of Appeals failed to consider that herein respondent had been repeatedly and notoriously guilty of laches.Simply put, the main issue is whether respondent had the legal capacity to file her Complaint before the SEC.The others are merely incidental to this main point.The Courts RulingThe Petition has no merit.First Issue:Legal Capacity to SuePetitioners point out that both the SEC and the Court of Appeals considered only the first part of the Supreme Court TRO and completely ignored the second part.Supposedly, the latter part barred respondent from entering into agreements that would affect her family and the corporation.Hence, they claim that the TRO, taken as a whole, proscribed respondentsderivative suit, which sought to enjoin herein [P]etitioner Gilda C. Lim from further voting or exercising any and all rights arising from the issuance to her of 15,515 shares of stock of the corporation.[9]We do not agree.The pertinent portion of the TRO issued by this Court reads as follows:(b) to ISSUE the TEMPORARY RESTRAINING ORDER prayed for, limited however, to the Writ of Preliminary Injunction dated 22 August 1994 and the Order dated 14 July 1994 both issued in SP Proceeding No. 94-71010 which in the opinion of the Court are all too encompassing and should be limited in scope and subject to the conditions set forth in the Resolution of September 28, 1994 that, (D)uring the effectivity of the Temporary Restraining Order, petitioner Patricia C. Lim, her attorneys, representatives, agents and any other persons assisting petitioner Patricia C. Lim will be able to act, enter into or sign contracts or documents solely for and on behalf of Patricia C. Lim; said actions, contracts or documents should not in any way bind or affect the interests of her parents, Isabelo P. Lim and Purificacion C. Lim, her brothers and sisters and any family owned or controlled corporation in particular, the Limpan Investment Corporation.Simply put, the TRO allows Respondent Patricia Lim-Yu to act for herself and to enter into any contract on her own behalf.However, she cannot transact in representation of or for the benefit of her parents, brothers or sisters, or the Limpan Investment Corporation.Contrary to what petitioners suggest, all that is prohibited is any action that will bind them.In short, she can act only on and in her own behalf, not that of petitioners or the Corporation.There appears to be a confusion on the nature of the suit initiated before the SEC.Petitioners describe it as a derivative suit, which has been defined as an action brought by minority shareholders in the name of the corporation to redress wrongs committed against it, for which the directors refuse to sue.It is a remedy designed by equity and has been the principal defense of the minority shareholders against abuses by the majority.[10]In a derivative action, the real party in interest is the corporation itself, not the shareholder(s) who actually instituted it.If the suit filed by respondent was indeed derivative in character, then respondent may not have the capacity to sue.The reason is that she would be acting in representation of the corporation, an act which the TRO enjoins her from doing.We hold, however, that the suit of respondent cannot be characterizedasderivative,because she was complaining only of the violation of her preemptive right under Section 39 of the Corporation Code.[11]She was merely praying that she be allowed to subscribe to the additional issuances of stocks in proportion to her shareholdings to enable her to preserve her percentage of ownership in the corporation.She was therefore not acting for the benefit of the corporation.Quite the contrary, she was suing on her own behalf, out of a desire to protect and preserve her preemptive rights.Unquestionably, the TRO did not prevent her from pursuing that action.To repeat, the TRO issued by this Court had two components: (1) it allowed respondent to enter into agreements on her own behalf; and (2) it clarified that respondents acts could not bind or affect the interests of her parents, brothers or sisters, or Limpan.In other words, respondent was, as a rule, allowed to act; but, as an exception, was prohibited from doing anything that would bind the corporation or any of the above-named persons.In this light, the TRO did not prohibit respondent from filing, on and in her own behalf, a suit for the alleged violation of her preemptive rights to purchase additional stock subscriptions.In other words, it did not restrain respondent from acting and enforcing her own rights.It merely barred her from acting in representation of the corporation.Petitioners fail to appreciate the distinction between the act itself and its net result.Theactof filing the suit did not in any way bind the corporation.Theresultof such act affected it, however.Similarly, respondent can sell her shares to the corporation or make a will and designate her parents, for example, as beneficiaries.It would be quite far-fetched to say that these acts are prohibited by the TRO, even if they will definitely affect the corporation and her parents.Section 2 of Rule 3 of the Rules of Court[12]defines a real party in interest as one who is entitled to the avails of any judgment rendered in a suit, or who stands to be benefited or injured by it.In the present case, it is clear that respondent was suing on her own behalf in order to enforce her preemptive rights.Nothing, not the TRO, barred her from filing that suit.Incidental IssuesPower to Clarify Own ResolutionsPetitioners also assail the ruling of the Court of Appeals that the SEC hearing officer was bound to interpret the Supreme Courts order instead of burdening[it] with the responsibility of clarifying what already appears to be a clear order. Citing Section 5 (5) of Article VIII[13]of the Constitution and Section 5 of Rule 135,[14]petitioners contend that the ruling disregarded the Supreme Courts power to control and to clarify its own orders, as granted by the Constitution.The argument must be rejected outright.First, as stated earlier, the TRO was very clear.In such instances, it was axiomatic that there was no need for interpretation, only for application.[15]Hence, there was no reason for the SEC hearing officer to rely on the rules of statutory construction or for this Court to clarify its Order.Second,even assuming that there was a need to interpret the TRO, the hearing officer was duty-bound to do so.Indeed, the mandate to apply and interpret pertinent laws and rulings is necessarily included in the adjudicative functions[16]of the SEC or of any other quasi-judicial body for that matter.[17]Verily, the power of this Court to clarify its own orders does not divest the SEC of its function to apply those orders to cases before it.If parties disagree with the SEC, they can file the proper suit in a regular court in accordance with law.In any event, the seeming obscurity or ambiguity of a TRO is not an excuse for a quasi-judicial body, or any regular court or judge, to shirk from the responsibility of applying and interpreting it.[18]Alleged Conflicting Positions of the SECPetitioners further contend that the CA effectively allowed the SEC to maintain contradictory positions on similar matters.They citePhilippine Commercial International Bank v. Aquaventures Corporation, docketed as SEC En Banc Case No. 455, in which the SEC referred a TRO to this Court for clarification.[19]This argument is untenable.The alleged contradictory SEC ruling in the said case is irrelevant and unnecessary to the resolution of the present one.Petitioners do not claim that the factual milieu of the former is similar to that of the latter.Moreover, the actions of the SEC in the above-mentioned case have not been put at issue by the proper parties in these proceedings.In any event, they are neither binding nor conclusive on appeal.They may be the subject of the Courts review in accordance with the applicable provisions of the Rules of Court.LachesPetitioners further contend that the CA failed to appreciate that respondent had been repeatedly and notoriously guilty of laches. They point out that she filed a Motion for Reconsideration of the SEC hearing officers Order almost four months late.They further allege that it took her another two and a half months to file a Motion for Leave to Admit Second Motion for Reconsideration.[20]We reject this argument.It has been held that it is the better rule that courts, under the principle of equity, shall not be bound strictly by the doctrine of laches, when a manifest wrong or injustice would result.[21]To rule that respondent can no longer question the hearing officer would deprive her of the opportunity to sue in order to enforce her preemptive rights, an act that is not proscribed by this Courts TRO.WHEREFORE, the Petition is herebyDENIEDand the assailed DecisionAFFIRMED.Costs against petitioners.SO ORDERED.

[G.R. No. 131889.March 12, 2001]VIRGINIA O. GOCHAN, FELIX Y. GOCHAN III, MAE GOCHAN-EFANN, LOUISE Y. GOCHAN, ESTEBAN Y. GOCHAN JR., DOMINIC Y. GOCHAN, FELIX O. GOCHAN III, MERCEDES R. GOCHAN, ALFREDO R. GOCHAN, ANGELINA R. GOCHAN-HERNAEZ, MARIA MERCED R. GOCHAN, CRISPO R. GOCHAN JR., MARION R. GOCHAN, MACTAN REALTY DEVELOPMENT CORPORATION and FELIX GOCHAN & SONS REALTY CORPORATION,petitioners, vs.RICHARD G. YOUNG, DAVID G. YOUNG, JANE G. YOUNG-LLABAN, JOHN D. YOUNG JR., MARY G. YOUNG-HSU and ALEXANDER THOMAS G. YOUNG as heirs of Alice Gochan; the INTESTATE ESTATE OF JOHN D. YOUNG SR.; and CECILIA GOCHAN-UY and MIGUEL C. UY, for themselves and on behalf and for the benefit of FELIX GOCHAN & SONS REALTY CORPORATION,respondents.D E C I S I O NPANGANIBAN,J.:A court or tribunals jurisdiction over the subject matter is determined by the allegations in the complaint.The fact that certain persons are not registered as stockholders in the books of the corporation will not bar them from filing a derivative suit, if it is evident from the allegations in the complaint that they are bona fide stockholders.In view of RA 8799, intra-corporate controversies are now within the jurisdiction of courts of general jurisdiction, no longer of the Securities and Exchange Commission.The CaseBefore us is a Petition for Review onCertiorariunder Rule 45 of the Rules of Court.The Petition assails the February 28, 1996 Decision[1]of the Court of Appeals (CA), as well as its December 18, 1997 Resolution denying petitioners Motion for Reconsideration.The dispositive part of the CA Decision reads as follows:WHEREFORE, the petition as far as the heirs of Alice Gochan, is DISMISSED, without prejudice to filing the same in the regular courts.SO ORDERED.[2]In dismissing the Complaint before the SEC regarding only Alice Gochans heirs but not the other complainants, the CA effectively modified the December 9, 1994 Order of the hearing officer[3]of the Securities and Exchange Commission (SEC).The Order, which was affirmed in full by the SEC en banc, dismissed theentirecase.The FactsThe undisputed facts are summarized by the Court of Appeals as follows:Felix Gochan and Sons Realty Corporation (Gochan Realty, for brevity) was registered with the SEC on June, 1951, with Felix Gochan, Sr., Maria Pan Nuy Go Tiong, Pedro Gochan, Tomasa Gochan, Esteban Gochan and Crispo Gochan as its incorporators.Felix Gochan Sr.s daughter, Alice, mother of [herein respondents], inherited 50 shares of stock in Gochan Realty from the former.Alice died in 1955, leaving the 50 shares to her husband, John Young, Sr.In 1962, the Regional Trial Court of Cebu adjudicated 6/14 of these shares to her children, herein [respondents] Richard Young, David Young, Jane Young Llaban, John Young Jr., Mary Young Hsu and Alexander Thomas Young.Having earned dividends, these stocks numbered 179 by 20 September 1979.Five days later (25 September), at which time all the children had reached the age of majority, their father John Sr., requested Gochan Realty to partition the shares of his late wife by cancelling the stock certificates in his name and issuing in lieu thereof, new stock certificates in the names of [herein respondents].On 17 October 1979, respondent Gochan Realty refused, citing as reason, the right of first refusal granted to the remaining stockholders by the Articles of Incorporation.On 21, 1990, [sic] John, Sr. died, leaving the shares to the [respondents].On 8 February 1994, [respondents] Cecilia Gochan Uy and Miguel Uy filed a complaint with the SEC for issuance of shares of stock to the rightful owners, nullification of shares of stock, reconveyance of property impressed with trust, accounting, removal of officers and directors and damages against respondents.A Notice of Lis Pendens was annotated as [sic] real properties of the corporation.On 16 March 1994, [herein petitioners] moved to dismiss the complaint alleging that: (1) the SEC ha[d] no jurisdiction over the nature of the action; (2) the [respondents] [were] not the real parties-in-interest and ha[d] no capacity to sue; and (3) [respondents] causes of action [were] barred by the Statute of Limitations.The motion was opposed by herein [respondents].On 29 March 1994, [petitioners] filed a Motion for cancellation of Notice of Lis Pendens.[Respondents] opposed the said motion.On 9 December 1994, the SEC, through its Hearing Officer, granted the motion to dismiss and ordered the cancellation of the notice of lis pendens annotated upon the titles of the corporate lands.In its order, the SEC opined:In the instant case, the complaint admits that complainants Richard G. Young, David G. Young, Jane G. Young Llaban, John D. Young, Jr., Mary G. Young Hsu and Alexander Thomas G. Young, who are the children of the late Alice T. Gochan and the late John D. Young, Sr. are suing in their own right and as heirs of and/or as the beneficial owners of the shares in the capital stock of FGSRC held in trust for them during his lifetime by the late John D. Young.Moreover, it has been shown that said complainants ha[d] never been x x x stockholder[s] of record of FGSRC to confer them with the legal capacity to bring and maintain their action.Conformably, the case cannot be considered as an intra-corporate controversy within the jurisdiction of this Commission.The complainant heirs base what they perceived to be their stockholders rights upon the fact of their succession to all the rights, property and interest of their father, John D. Young, Sr.While their heirship is not disputed, their right to compel the corporation to register John D. Youngs Sr. shares of stock in their names cannot go unchallenged because the devolution of property to the heirs by operation of law in succession is subject to just obligations of the deceased before such property passes to the heirs.Conformably, until therefore the estate is settled and the payment of the debts of the deceased is accomplished, the heirs cannot as a matter of right compel the delivery of the shares of stock to them and register such transfer in the books of the corporation to recognize them as stockholders.The complainant heirs succeed to the estate of [the] deceased John D. Young, Sr. but they do not thereby become stockholders of the corporation.Moreover, John D. [Young Sr.s] shares of stocks form part of his estate which is the subject of Special Proceedings No. 3694-CEB in the Regional Trial Court of Cebu, Branch VIII, [par. 4 of the complaint].As complainants clearly claim[,] the Intestate Estate of John D. Young, Sr. has an interest in the subject matter of the instant case.However, actions for the recovery or protection of the property [such as the shares of stock in question] may be brought or defended not by the heirs but by the executor or administrator thereof.Complainants further contend that the alleged wrongful acts of the corporation and its directors constitute fraudulent devices or schemes which may be detrimental to the stockholders.Again, the injury [is] perceived[,] as is alleged[,] to have been suffered by complainants as stockholders, which they are not.Admittedly, the SEC has no jurisdiction over a controversy wherein one of the parties involved is not or not yet a stockholder of the corporation.[SEC vs. CA, 201 SCRA 134].Further, by the express allegation of the complaint, herein complainants bring this action as [a] derivative suit on their own behalf and on behalf of respondent FGSRC.Section 5, Rule III of the Revised Rules of Procedure in the Securities and Exchange Commission provides:Section 5. Derivative Suit.No action shall be brought by stockholder in the right of a corporation unless the complainant was a stockholder at the time the questioned transaction occurred as well as at the time the action was filed and remains a stockholder during the pendency of the action. x x x.The rule is in accord with well settled jurisprudence holding that a stockholder bringing a derivative action must have been [so] at the time the transaction or act complained of [took] place.(Pascual vs. Orozco, 19 Phil. 82; Republic vs. Cuaderno, 19SCRA 671; San Miguel Corporation vs. Khan, 176 SCRA 462-463)The language of the rule is mandatory, strict compliance with the terms thereof thus being a condition precedent, a jurisdictional requirement to the filing of the instant action.Otherwise stated, proof of compliance with the requirement must be sufficiently established for the action to be given due course by this Commission.The failure to comply with this jurisdictional requirement on derivative action must necessarily result in the dismissal of the instant complaint. (pp. 77-79, Rollo)[Respondents] moved for a reconsideration but the same was denied for being pro-forma.[Respondents] appealed to the SEC en banc, contending, among others, that the SEC ha[d] jurisdiction over the case.[Petitioners], on the other hand, contend that the appeal was 97 days late, beyond the 30-day period for appeals.On 3 March 1995, the SEC en banc ruled for the [petitioners,] holding that the [respondents] motion for reconsideration did not interrupt the 30-day period for appeal because said motion was pro-forma.[4]Aggrieved, herein respondents then filed a Petition for Review with the Court of Appeals.Ruling of the Court of AppealsThe Court of Appeals ruled that the SEC had no jurisdiction over the case as far as the heirs of Alice Gochan were concerned, because they were not yet stockholders of the corporation.On the other hand, it upheld the capacity of Respondents Cecilia Gochan Uy and her spouse Miguel Uy.It also held that the intestate Estate of John Young Sr. was an indispensable party.The appellate court further ruled that the cancellation of the notice oflis pendenson the titles of the corporate real estate was not justified.Moreover, it declared that respondents Motion for Reconsideration before the SEC was not pro forma;thus, its filing tolled the appeal period.Hence, this Petition.[5]The IssuesThese are the issues presented before us:A.Whether or not the Spouses Uy have the personality to file an action before the SEC against Gochan Realty Corporation.B.Whether or not the Spouses Uy could properly bring a derivative suit in the name of Gochan Realty to redress wrongs allegedly committed against it for which the directors refused to sue.C.Whether or not the intestate estate of John D. Young Sr. is an indispensable party in the SEC case considering that the individual heirs shares are still in the decedent stockholders name.D.Whether or not the cancellation of [the] notice of lis pendens was justified considering that the suit did not involve real properties owned by Gochan Realty.[6]In addition, the Court will determine the effect of Republic Act No. 8799[7]on this case.The Courts RulingThe Petition has no merit.In view of the effectivity of RA 8799, however, the case should be remanded to the proper regional trial court, not to the Securities and Exchange Commission.First Issue:Personality of the Spouses Uy to File a Suit Before the SECPetitioners argue that Spouses Cecilia and Miguel Uy had no capacity or legal standing to bring the suit before the SEC on February 8, 1994, because the latter were no longer stockholders at the time.Allegedly, the stocks had already been purchased by the corporation.Petitioners further assert that, being allegedly a simple contract of sale cognizable by the regular courts, the purchase by Gochan Realty of Cecilia Gochan Uys210 shares does not come within the purview of an intra-corporate controversy.As a general rule, the jurisdiction of a court or tribunal over the subject matter is determined by the allegations in the complaint.[8]For purposes of resolving a motion to dismiss, Cecilia Uys averment in the Complaint -- that the purchase of her stocks by the corporation was null and void ab initio is deemed admitted.It is elementary that a void contract produces no effect either against or in favor of anyone; it cannot create, modify or extinguish the juridical relation to which it refers.[9]Thus, Cecilia remains a stockholder of the corporation in view of the nullity of the Contract of Sale.Although she was no longer registered as a stockholderin the corporate recordsas of the filing of the case before the SEC, the admitted allegations in the Complaint made her still a bona fide stockholder of Felix Gochan & Sons Realty Corporation (FGSRC), as between said parties.In any event, the present controversy, whether intra-corporate or not, is no longer cognizable by the SEC, in view of RA 8799, which transferred to regional trial courts the formers jurisdiction over cases involving intra-corporate disputes.Action Has Not PrescribedPetitioners contend that the statute of limitations already bars the Uy spouses action, be it one for annulment of a voidable contract or one based upon a written contract.The Complaint, however, contains respondents allegation that the sale of the shares of stock was not merely voidable, but was voidab initio.Below we quote its relevant portion:38.That on November 21, 1979, respondent Felix Gochan & Sons Realty Corporation did not have unrestricted retained earnings in its books to cover the purchase price of the 208 shares of stock it was then buying from complainant Cecilia Gochan Uy, thereby rendering said purchase null and void ab initio for being violative of the trust fund doctrine and contrary to law, morals good customs, public order and public policy;Necessarily, petitioners contention that the action has prescribed cannot be sustained.Prescription cannot be invoked as a ground if the contract is alleged to be voidab initio.[10]It is axiomatic that the action or defense for the declaration of nullity of a contract does not prescribe.[11]Second Issue:Derivative Suit and the Spouses UyPetitioners also contend that the action filed by the Spouses Uy was not a derivative suit, because the spouses and not the corporation were the injured parties.The Court is not convinced.The following quoted portions of the Complaint readily shows allegations of injury to the corporation itself:16.That on information and belief, in further pursuance of the said conspiracy and for the fraudulent purpose of depressing the value of the stock of the Corporation and to induce the minority stockholders to sell their shares of stock for an inadequate consideration as aforesaid, respondent Esteban T. Gochan . . ., in violation of their duties as directors and officers of the Corporation . . ., unlawfully and fraudulently appropriated [for] themselves the funds of the Corporation by drawing excessive amounts in the form of salaries and cash advances. . . and by otherwise charging their purely personal expenses to the Corporation.x x xx x xx x x41. That the payment of P1,200,000.00 by the Corporation to complainant Cecilia Gochan Uy for her shares of stock constituted an unlawful, premature and partial liquidation and distribution of assets to a stockholder, resulting in the impairment of the capital of the Corporation and prevented it from otherwise utilizing said amount for its regular and lawful business, to the damage and prejudice of the Corporation, its creditors, and of complainants as minority stockholders;[12]As early as 1911, this Court has recognized the right of a single stockholder to file derivative suits.In its words:[W]here corporate directors have committed a breach of trust either by their frauds, ultra vires acts, or negligence, and the corporation is unable or unwilling to institute suit to remedy the wrong, a single stockholder may institute that suit, suing on behalf of himself and other stockholders and for the benefit of the corporation, to bring about a redress ofthe wrong done directly to the corporation and indirectly to the stockholders.[13]In the present case, the Complaint alleges all the components of a derivative suit.The allegations of injury to the Spouses Uy can coexist with those pertaining to the corporation.The personal injury suffered by the spouses cannot disqualify them from filing a derivative suit on behalf of the corporation.It merely gives rise to an additional cause of action for damages against the erring directors.This cause of action is also included in the Complaint filed before the SEC.The Spouses Uy have the capacity to file a derivative suit in behalf of and for the benefit of the corporation.The reason is that, as earlier discussed, the allegations of the Complaint make them out as stockholders at the time the questioned transaction occurred, as well as at the time the action was filed and during the pendency of the action.Third Issue:Capacity of the Intestate Estate of John D. Young Sr.Petitioners contend that the Intestate Estate of John D. Young Sr. is not an indispensable party, as there is no showing that it stands to be benefited or injured by any court judgment.It would be useful to point out at this juncture that one of the causes of action stated in the Complaint filed with the SEC refers to the registration, in the name of the other heirs of Alice Gochan Young, of 6/14th of the shares still registered under the name of John D. Young Sr.Since all the shares that belonged to Alice are still in his name, no final determination can be had without his estate being impleaded in the suit.His estate is thus an indispensable party with respect to the cause of action dealing with the registration of the shares in the names of the heirs of Alice.Petitioners further claim that the Estate of John Young Sr. was not properly represented.They claim that when the estate is under administration, suits for the recovery or protection of the property or rights of the deceased may be brought only by the administrator or executor as approved by the court.[14]The rules relative to this matter do not, however, make any such categorical and confining statement.Section 3 of Rule 3 of the Rules of Court, which is cited by petitioner in support of their position, reads:Sec. 3.Representatives as parties. - Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest.A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules.An agent acting in his own name and for the benefit of an undisclosed principal may sue or be sued without joining the principal except when the contract involves things belonging to the principal.Section 2 of Rule 87 of the same Rules, which also deals with administrators, states:Sec. 2.Executor or administrator may bring or defend actions which survive.- For the recovery or protection of the property or rights of the deceased, an executor or administrator may bring or defend, in the right of the deceased, actions for causes which survive.The above-quoted rules, whilepermittingan executor or administrator to represent or to bring suits on behalf of the deceased, do notprohibitthe heirs from representing the deceased.These rules are easily applicable to cases in which an administrator has already been appointed.But no rule categorically addresses the situation in which special proceedings for the settlement of an estate have already been instituted, yet no administrator has been appointed.In such instances, the heirs cannot be expected to wait for the appointment of an administrator; then wait further to see if the administrator appointed would care enough to file a suit to protect the rights and the interests of the deceased; and in the meantime do nothing while the rights and the properties of the decedent are violated or dissipated.The Rules are to be interpreted liberally in order to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding.[15]They cannot be interpreted in such a way as to unnecessarily put undue hardships on litigants.For the protection of the interests of the decedent, this Court has in previous instances[16]recognized the heirs as proper representatives of the decedent, even when there is already an administrator appointed by the court.When no administrator has been appointed, as in this case, there is all the more reason to recognize the heirs as the proper representatives of the deceased.Since the Rules do not specifically prohibit them from representing the deceased, and since no administrator had as yet been appointed at the time of the institution of the Complaint with the SEC, we see nothing wrong with the fact that it was the heirs of John D. Young Sr. who represented his estate in the case filed before the SEC.Fourth IssueNotice ofLis PendensOn the issue of the annotation of the Notice ofLis Pendenson the titles of the properties of the corporation and the other respondents, we still find no reason to disturb the ruling of the Court of Appeals.Under the third, fourth and fifth causes of action of the Complaint, there are allegations of breach of trust and confidence and usurpation of business opportunities in conflict with petitioners fiduciary duties to the corporation, resulting in damage to the Corporation.Under these causes of action, respondents are asking for the delivery to the Corporation ofpossession of the parcels of land and their corresponding certificates of title.Hence, the suit necessarily affects the title to or right of possession of the real property sought to be reconveyed.The Rules of Court[17]allows the annotation of a notice oflis pendensin actions affecting the title or right of possession of real property.[18]Thus, the Court of Appeals was correct in reversing the SEC Order for the cancellation of the notice oflis pendens.The fact that respondents are not stockholders of the Mactan Realty Development Corporation and the Lapu-Lapu Real Estate Corporation does not make them non-parties to this case.To repeat, the jurisdiction of a court or tribunal over the subject matter is determined by the allegations in the Complaint.In this case, it is alleged that the aforementioned corporations are mere alter egos of the directors-petitioners, and that the former acquired the properties sought to be reconveyed to FGSRC in violation of the directors-petitioners fiduciary duty to FGSRC.The notion of corporate entity will be pierced or disregarded and the individuals composing it will be treated as identical[19]if, as alleged in the present case, the corporate entity is being used as a cloak or cover for fraud or illegality; as a justification for a wrong; or as an alter ego, an adjunct, or a business conduit for the sole benefit of the stockholders.Effect of RA 8799While we sustain the appellate court, the case can no longer be remanded to the SEC.As earlier stated, RA 8799, which became effective on August 8, 2000, transferred SECs jurisdiction over cases involving intra-corporate disputes to courts of general jurisdiction or to the regional trial courts.[20]Section 5.2 thereof reads as follows:5.2. The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court:Provided, That the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over these cases.The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final resolution which should be resolved within one (1) year from the enactment of this Code.The Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed.In the light of the Resolution issued by this Court in AM No. 00-8-10-SC,[21]the Court Administrator and the Securities and Exchange Commission should be directed to cause the transfer of the records of SEC Case No. 02-94-4674 to the appropriate court of general jurisdiction.WHEREFORE, the Petition is herebyDENIEDand the assailed DecisionAFFIRMED, subject to the modification that the case be remanded to the proper regional trial court.The December 9, 1994 Order of Securities and Exchange Commission hearing officer dismissing the Complaint and directing the cancellation of the notice oflis pendens,as well as the March 3, 1995 Order denying complainants motion for reconsideration areREVERSEDandSET ASIDE.Pursuant to AM No. 00-8-10-SC, the Office of the Court Administrator and the SEC areDIRECTEDto cause the actual transfer of the records of SEC Case No. 02-94-4674 to the appropriate regional trial court.SO ORDERED..

SECOND DIVISIONOSCAR C. REYES,Petitioner,-versus-HON.REGIONALTRIAL COURT OF MAKATI, Branch 142, ZENITH INSURANCE CORPORATION, and RODRIGO C. REYES,Respondents.G.R. No.165744Present:QUISUMBING,J., Chairperson,*CORONA,CARPIO MORALES,VELASCO, JR., andBRION,JJ.Promulgated:August 11, 2008

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D E C I S I O N

BRION,J.:

This Petition for Review onCertiorariunder Rule 45 of the Rules of Court seeks to set aside the Decision of the Court of Appeals (CA)[1]promulgated onMay 26, 2004in CA-G.R. SP No. 74970.The CA Decision affirmed the Order of the Regional Trial Court (RTC), Branch 142, Makati City dated November 29, 2002[2]in Civil Case No. 00-1553 (entitled "Accounting of All Corporate Funds and Assets, and Damages") which denied petitioner Oscar C. Reyes (Oscar) Motion to Declare Complaint as Nuisance or Harassment Suit.BACKGROUND FACTSOscar and private respondent Rodrigo C. Reyes (Rodrigo) are two of the four children of the spouses Pedro and Anastacia Reyes.Pedro, Anastacia, Oscar, and Rodrigo each owned shares of stock of Zenith Insurance Corporation (Zenith), a domestic corporation established by their family.Pedro died in 1964, while Anastacia died in 1993.Although Pedros estate was judicially partitioned among his heirs sometime in the 1970s, no similar settlement and partition appear to have been made with Anastacias estate, which included her shareholdings in Zenith.As ofJune 30, 1990, Anastacia owned 136,598 shares of Zenith; Oscar and Rodrigo owned 8,715,637 and 4,250 shares, respectively.[3]OnMay 9, 2000, Zenith and Rodrigo filed a complaint[4]with the Securities and Exchange Commission (SEC) against Oscar, docketed as SEC Case No. 05-00-6615.The complaint stated that it isa derivative suit initiated and filed by the complainant Rodrigo C. Reyesto obtain an accounting of the funds and assets of ZENITHINSURANCE CORPORATION which are now or formerly in the control, custody, and/or possession of respondent [herein petitioner Oscar] andto determine the shares of stock of deceased spouses Pedro and Anastacia Reyesthat were arbitrarily and fraudulently appropriated [by Oscar] for himself [and] which were not collated and taken into account in the partition, distribution, and/or settlement of the estate of the deceased spouses, for which he should be ordered to account for all the income from the time he took these shares of stock, and should now deliver to his brothers and sisters their just and respective shares.[5][Emphasissupplied.]In his Answer with Counterclaim,[6]Oscar denied the charge that he illegally acquired the shares of Anastacia Reyes.He asserted, as a defense, that he purchased the subject shares with his own funds from the unissued stocks of Zenith, and that the suit is not abona fidederivative suit because the requisites therefor have not been complied with.He thus questioned the SECs jurisdiction to entertain the complaint because it pertains to the settlement of the estate of Anastacia Reyes.When Republic Act (R.A.) No. 8799[7]took effect, the SECs exclusive and original jurisdiction over cases enumerated in Section 5 of Presidential Decree (P.D.) No. 902-A was transferred to the RTC designated as a special commercial court.[8]The records of Rodrigos SEC case were thus turned over to the RTC, Branch 142,Makati, and docketed as Civil Case No. 00-1553.OnOctober 22, 2002, Oscar filed a Motion to Declare Complaint as Nuisance or Harassment Suit.[9]He claimed that the complaint is a mere nuisance or harassment suit and should, according to the Interim Rules of Procedure for Intra-Corporate Controversies, be dismissed; and that it is not abona fidederivative suit as it partakes of the nature of a petition for thesettlement of estate of the deceased Anastacia that is outside the jurisdiction of a special commercial court.The RTC, in its Order datedNovember 29, 2002(RTC Order), denied the motion in part and declared:A close reading of the Complaint disclosed the presence of two (2) causes of action, namely: a) a derivative suit for accounting of the funds and assets of the corporation which are in the control, custody, and/or possession of the respondent [herein petitioner Oscar] with prayer to appoint a management committee; and b) an action for determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent, its accounting and the corresponding delivery of these shares to the parties brothers and sisters.The latter is not a derivative suit and should properly be threshed out in a petition for settlement of estate.Accordingly, the motion is denied.However, only the derivative suit consisting of the first cause of action will be taken cognizance of by this Court.[10]Oscar thereupon went to the CA on a petition forcertiorari, prohibition, andmandamus[11]and prayed that the RTC Order be annulled and set aside and that the trial court be prohibited from continuing with the proceedings.The appellate court affirmed the RTC Order and denied the petition in its Decision datedMay 26, 2004.It likewise denied Oscars motion for reconsideration in a Resolution datedOctober 21, 2004.Petitioner now comes before us on appeal through a petition for review oncertiorariunder Rule 45 of the Rules of Court.ASSIGNMENT OF ERRORSPetitioner Oscar presents the following points as conclusions the CA should have made:1.that the complaint is a mere nuisance or harassment suit that should be dismissed under the Interim Rules of Procedure of Intra-Corporate Controversies; and2.that the complaint is not abona fidederivative suit but is in fact in the nature of a petition for settlement of estate; hence, it is outside the jurisdiction of the RTC acting as a special commercial court.Accordingly, he prays for the setting aside and annulment of the CA decision and resolution, and the dismissal of Rodrigos complaint before the RTC.THE COURTS RULINGWe find the petition meritorious.The core question for our determination is whether the trial court, sitting as a special commercial court, has jurisdiction over the subject matter of Rodrigos complaint.To resolve it, we rely on the judicial principle that jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations of the complaint, irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein.[12]JURISDICTION OF SPECIAL COMMERCIAL COURTSP.D. No. 902-A enumerates the cases over which the SEC (now the RTC acting as a special commercial court) exercises exclusive jurisdiction:SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnership, and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:a)Devices or schemes employed by or any acts of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, members of associations or organizations registered with the Commission.b)Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members, or associates, respectively; and between such corporation, partnership or association and the State insofar as it concerns their individual franchise or right to exist as such entity; andc)Controversies in the election or appointment of directors, trustees, officers, or managers of such corporations, partnerships, or associations.The allegations set forth in Rodrigos complaint principally invoke Section 5, paragraphs (a) and (b) above as basis for the exercise of the RTCs special court jurisdiction.Our focus in examining the allegations of the complaint shall therefore be on these two provisions.Fraudulent Devices and SchemesThe rule is that a complaint must contain a plain, concise, and direct statement of the ultimate facts constituting the plaintiffs cause of action and must specify the relief sought.[13]Section 5, Rule 8 of the Revised Rules of Court provides thatin all averments of fraud or mistake, the circumstances constituting fraud or mistake must be stated with particularity.[14]These rules find specific application to Section 5(a) of P.D. No. 902-A which speaks of corporate devices or schemes that amount to fraud or misrepresentation detrimental to the public and/or to the stockholders.In an attempt to hold Oscar responsible for corporate fraud, Rodrigo alleged in the complaint the following:3. This is acomplaintto determine the shares of stock of the deceased spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated for himself [herein petitioner Oscar]which were not collated and taken into account in the partition, distribution, and/or settlement of the estate of the deceased Spouses Pedro and Anastacia Reyes, for which he should be ordered to account for all the income from the time he took these shares of stock, and should now deliver to his brothers and sisters their just and respective shares with the corresponding equivalent amount of P7,099,934.82 plus interest thereon from 1978 representing his obligations to the Associated Citizens Bank that was paid for his account by his late mother, Anastacia C. Reyes.This amount was not collated or taken into account in the partition or distribution of the estate of their late mother, Anastacia C. Reyes.3.1.Respondent Oscar C. Reyes, through other schemes of fraud including misrepresentation, unilaterally, and for his own benefit, capriciously transferred and took possession and control of the management of ZenithInsurance Corporation which is considered as a family corporation, and other properties and businesses belonging to Spouses Pedro and Anastacia Reyes.x x x x4.1. During the increase of capitalization of Zenith Insurance Corporation, sometime in 1968, the property covered by TCT No. 225324 was illegally and fraudulently used by respondent as a collateral.x x x x5. The complainant Rodrigo C. Reyes discovered thatby some manipulative scheme, the shareholdings of their deceased mother, Doa Anastacia C. Reyes, shares of stocks and [sic] valued in the corporate books at P7,699,934.28, more or less,excluding interest and/or dividends,had been transferred solely in the name of respondent. By such fraudulent manipulations and misrepresentation, the shareholdings of said respondent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic] and becomes [sic] the majority stockholder of Zenith Insurance Corporation, which portion of said shares must be distributed equally amongst the brothers and sisters of the respondent Oscar C. Reyes including the complainant herein.x x x x9.1 Theshareholdings of deceasedSpouses Pedro Reyes andAnastacia C. Reyes valued at P7,099,934.28 wereillegally and fraudulently transferred solely to the respondents [herein petitioner Oscar] name and installed himself as a majority stockholder of ZenithInsurance Corporation [and] thereby deprived his brothers and sisters of their respective equal shares thereof including complainant hereto.x x x x10.1By refusal of the respondent to account of his [sic] shareholdings in the company, he illegally and fraudulently transferred solely in his name wherein [sic] the shares of stock of the deceased Anastacia C. Reyes [which] must be properly collated and/or distributed equally amongst the children, including the complainant Rodrigo C. Reyes herein, to their damage and prejudice.x x x x11.1 By continuous refusal of the respondent to account of his [sic] shareholding with Zenith Insurance Corporation[,] particularly the number of shares of stocks illegally and fraudulently transferred to him from their deceased parents Sps. Pedro and Anastacia Reyes[,] which are all subject for collation and/or partition in equal shares among their children. [Emphasis supplied.]Allegations of deceit, machination, false pretenses, misrepresentation, and threats are largely conclusions of law that, without supporting statements of the facts to which the allegations of fraud refer, do not sufficiently state an effective cause of action.[15]The late Justice Jose Feria, a noted authority in Remedial Law, declared that fraud and mistake are required to be averred with particularity in order to enable the opposing party to controvert the particular facts allegedly constituting such fraud or mistake.[16]Tested against these standards, we find that the charges of fraud against Oscar were not properly supported by the required factual allegations.While the complaint contained allegations of fraud purportedly committed by him, these allegations are not particular enough to bring the controversy within the special commercial courts jurisdiction; they are not statements of ultimate facts, but are mere conclusions of law: how and why the alleged appropriation of shares can be characterized as illegal and fraudulent were not explained nor elaborated on.Not every allegation of fraud done in a corporate setting or perpetrated by corporate officers will bring the case within the special commercial courts jurisdiction.To fall within this jurisdiction, there must be sufficient nexus showing that the corporations nature, structure, or powers were used to facilitate the fraudulent device or scheme.Contrary to this concept, the complaint presented a reverse situation.No corporate power or office was alleged to have facilitated the transfer of the shares; rather, Oscar, as an individual and without reference to his corporate personality, was alleged to have transferred the shares of Anastacia to his name, allowing him to become the majority and controlling stockholder of Zenith, and eventually, the corporations President.This is the essence of the complaint read as a whole and is particularly demonstrated under the following allegations:5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their deceased mother, Doa Anastacia C. Reyes, shares of stocks and [sic] valued in the corporate books at P7,699,934.28, more or less, excluding interest and/or dividends, had been transferred solely in the name of respondent.By such fraudulent manipulations and misrepresentation, the shareholdings of said respondent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic] and becomes [sic] the majority stockholder of Zenith Insurance Corporation,which portion of said shares must be distributed equally amongst the brothers and sisters of the respondent Oscar C. Reyes including the complainant herein.x x x x9.1The shareholdings ofdeceased Spouses Pedro Reyes andAnastacia C. Reyesvalued at P7,099,934.28wereillegally and fraudulently transferred solely to the respondents [herein petitioner Oscar] name and installed himself as a majority stockholder of ZenithInsurance Corporation [and] thereby deprived his brothers and sisters of their respective equal shares thereof including complainant hereto. [Emphasis supplied.]In ordinary cases, the failure to specifically allege the fraudulent acts does not constitute a ground for dismissal since such defect can be cured by a bill of particulars.In cases governed by the Interim Rules of Procedure on Intra-Corporate Controversies, however, a bill of particulars is a prohibited pleading.[17]It is essential, therefore, for the complaint to show on its face what are claimed to be the fraudulent corporate acts if the complainant wishes to invoke the courts special commerc