Fernando, Jr., et al. vs. Torres

A stockholder's right to inspect corporate books is a property right incident to ownership of corporate assets that survives the stockholder's death, and piercing the corporate veil is warranted when a controlling stockholder uses separate corporate entities as conduits to defraud a minority stockholder; however, the appraisal right may not be exercised absent the statutory grounds and procedural requisites provided by the Corporation Code.

Torres owned and operated RRCG Transport System Company, Inc., a public utility bus company operating in Metro Manila. On April 15, 2005, Torres and Fernando incorporated OMSI, which offered automated fare ticketing systems for bus companies, with an authorized capital of ₱5 million. Torres subscribed to shares worth ₱999,980.00 but initially contributed only ₱950,000.00. Fernando later incorporated OHMCI, a holding company, which directly competed with OMSI and recorded OMSI's transactions in its own books. The dispute arose from Torres's systematic exclusion from OMSI's management and his subsequent demand to inspect corporate books, which Fernando refused.

Torres, who owned and operated RRCG Transport System Company, Inc., a public utility bus company in Metro Manila, incorporated OMSI on April 15, 2005 with Fernando. OMSI offered automated fare ticketing systems for bus companies and had an authorized capital of ₱5 million. Torres subscribed to shares worth ₱999,980.00 but initially contributed only ₱950,000.00. Despite his substantial financial stake, Torres became increasingly marginalized in company operations: he was not invited to board meetings, was not consulted on important corporate decisions, was denied dividends, and was excluded from financial matters. Critical decisions, including securing loans and authorizing expenditures, were made without his input.

In 2006, Torres communicated his concerns about his exclusion to Fernando. By March 15, 2007, he formally requested to audit OMSI's books, expressing suspicion about mismanagement and inadequate recordkeeping. Fernando offered to buy out Torres, but negotiations failed over price and terms. Torres then hired CPA Jess Coronel to assist in inspecting OMSI's financial records. Initial audit attempts revealed substantial deficiencies in OMSI's internal controls, including the lack of independent accounting records; OMSI's transactions were recorded under OHMCI, another company owned by Fernando. Investigations further revealed that in 2007 alone, OMSI received at least ₱1.2 million from JAC Liner, and as of September 30, 2006, OMSI had collectibles of at least ₱500,000.00 from other bus companies Torres had introduced to Fernando. Torres had also paid OMSI around ₱2.3 million by way of commissions from 2004 to 2006. After discovering that OMSI was materially understating its revenues, Torres formally demanded to inspect OMSI's corporate and financial records. Fernando refused.

After an unsuccessful attempt to reconcile, Torres filed a complaint with the RTC against Fernando and OMSI for inspection of corporate books, docketed as Civil Case No. 09-009. Fernando and OMSI contested the request, arguing it was made in bad faith to harass Fernando and to enable RRCG to evade payment of its debts to OMSI, and that inspection could jeopardize trade secrets. During the pendency of the proceedings, Torres moved to open OMSI's books and for the creation of a management committee. The RTC granted both motions. However, when Coronel and Torres's counsel visited OMSI's office on December 15 and 19, 2011, they were denied inspection, a staff member claiming Fernando's prior conformity was required and that Fernando had filed a motion to defer inspection. The RTC denied the motion to defer.

The Management Committee, created by the RTC on August 16, 2012, was authorized to take custody of OMSI's assets, take the place of its management and board, and submit status reports. In its reports, the Committee found that Fernando had effective overall control of OMSI, OHMCI, and OTSI; that OMSI had no operative Board of Directors and no effective internal control; that decisions were solely made by Fernando without corporate authority; that OMSI did not prepare periodic financial reports in violation of SEC Memorandum Circular No. 2, series of 2002; and that OHMCI operated outside its lawful purpose and competed directly with its subsidiary OMSI, causing undue disadvantage to Torres. The Committee also found that OMSI did not keep its own books of account in violation of Section 74 of the Corporation Code, that OMSI had only one client and four employees, and that as of December 31, 2011, OMSI had accumulated losses of ₱26,733,790.00, a capital deficiency of ₱24,742,960.00, and outstanding liabilities of ₱29,876,179.00. OHMCI's revenues increased while OMSI's abruptly decreased, although OHMCI's revenues were supposed to be derived only from dividends or management fees from OMSI. Evidence also suggested that OMSI's clients and intellectual assets were being improperly diverted to OHMCI, and that a conflict of interest existed because Fernando served as president of both corporations.

Prompted by these findings, Torres filed a Consolidated Motion to admit an Amended and Supplemental Complaint, impleading OHMCI as an additional defendant and seeking ₱12 million in damages representing the value of his shares. The RTC granted the motion on March 10, 2014, but Fernando et al. failed to file an answer despite notice, and were declared in default upon Torres's motion. The RTC rendered judgment on February 15, 2017, piercing the corporate veils of OMSI and OHMCI and ordering petitioners to jointly and severally pay Torres ₱12 million as the fair market value of his investment, plus ₱100,000 in attorney's fees. The RTC also granted Torres's Motion for Execution Pending Appeal on December 1, 2017, leading to the levy and auction sale of Fernando's property to Filcontrading on May 3, 2018. Fernando did not redeem the property. Filcontrading subsequently obtained an RTC decision nullifying Fernando's withheld duplicate TCT and ordering a writ of possession, which Fernando did not appeal.

• Re-opening of Proceedings: Petitioners argued that the Interim Rules of Procedure for Intra-Corporate Controversies prohibits a motion for the re-opening of trial, and since the re-opening is a prohibited motion, it cannot be given legal effect.
• Order of Default: Petitioners maintained that they should not have been declared in default for failing to answer the Amended and Supplemental Complaint, asserting that as original defendants, Fernando and OMSI were not required to file a new answer since they already answered the original Complaint, and that OHMCI was not served with summons so the RTC did not acquire jurisdiction over its person.
• Docket Fees: Petitioners argued that respondent's claim for ₱12 million was only indicated as an estimate in the original and Amended and Supplemental Complaint, revealing an intention to evade payment of correct docket fees.
• Substitution of Deceased Party: Petitioners contended that the CA disregarded the rule on substitution of a deceased party after respondent's death, rendering the proceedings void.
• Extinction of Action: Petitioners claimed that respondent's death extinguished the present action since it involves a stockholder's "personal" right to inspect corporate books.
• Appraisal Rights: Petitioners asserted that the CA erred in concluding that respondent exercised his appraisal right, citing the lack of evidence establishing compliance with the old Corporation Code's requirements, the absence of any statutory ground for its exercise, and respondent's failure to prove the existence of unrestricted retained earnings in OMSI.
• Temperate Damages: Petitioners maintained that respondent is not entitled to temperate damages.
• Family Home Exemption: Petitioners claimed that the levied property is exempt from execution as a family home.
• Irreparable Injury: Petitioners argued that allowing the cancellation of Fernando's TCT and Filcontrading's possession of the property would work grave and irreparable injustice, costing Fernando the loss of his property.

• Real Party-in-Interest: Respondent-in-intervention Filcontrading submitted that it is a real party-in-interest as the buyer of the auctioned property in the execution sale, and that petitioners' failure to implead it renders the Petition dismissible.
• Execution Pending Appeal: Respondent-in-intervention argued that execution pending appeal in intra-corporate cases is allowed.
• Lifting of TRO — Due Process: Respondent-in-intervention contended that the TRO must be lifted as it violates its due process rights.
• Lifting of TRO — Lapse of Redemption: Respondent-in-intervention argued that the TRO must be lifted since petitioner Fernando no longer owns the subject property after failing to exercise his right of redemption.
• Lifting of TRO — Mootness: Respondent-in-intervention maintained that the acts sought to be restrained have already been executed before the issuance of the TRO.

• Re-opening of Proceedings: Whether the RTC properly granted the Consolidated Motion admitting the Amended and Supplemental Complaint and re-opening the proceedings, notwithstanding the Interim Rules of Procedure for Intra-Corporate Controversies.
• Docket Fees: Whether respondent's non-payment of additional docket fees for the Amended and Supplemental Complaint divested the court of jurisdiction.
• Order of Default: Whether petitioners were properly declared in default for failing to answer the Amended and Supplemental Complaint.
• Survival of Action: Whether the action survived the death of respondent Torres.
• Substitution of Deceased Party: Whether the failure of respondent's counsel to notify the CA of respondent's death and the lack of party substitution rendered the proceedings void.
• Appraisal Rights: Whether respondent exercised his appraisal right under the old Corporation Code.
• Temperate Damages: Whether respondent is entitled to temperate damages in the amount of ₱11,050,000.00.
• Lifting of TRO: Whether the TRO should be lifted in favor of respondent-in-intervention Filcontrading Corp.

• Re-opening of Proceedings: Yes. The RTC properly granted the Consolidated Motion, the Rules of Court applying suppletorily to the Interim Rules and allowing amendments to pleadings, with the broad discretion of the trial court constrained only by abuse or dilatory intent.
• Docket Fees: No, jurisdiction was not divested. Under the liberal doctrine on docket fees, underpayment does not automatically divest the court of jurisdiction absent intent to defraud the government; the clerk of court is responsible for issuing a deficiency assessment, which constitutes a lien on the judgment.
• Order of Default: Yes, petitioners were properly declared in default. Petitioners Fernando and OMSI are estopped from questioning the default order, having failed to oppose the motion to declare them in default or to move to set aside the default order under Rule 9, Section 3(b); OHMCI cannot rely on its separate juridical personality because the corporate veil was properly pierced.
• Survival of Action: Yes. The stockholder's right to inspect corporate books is a property right incident to ownership of corporate assets, and the action — comprising inspection and recovery of damages for violation thereof — principally involves property rights that survive the stockholder's death.
• Substitution of Deceased Party: No, the proceedings were not rendered void. A court's duty to order substitution arises only upon proper notice by the deceased party's counsel; absent such notice, proceedings are not invalidated, and the resulting decision binds the successors-in-interest.
• Appraisal Rights: No. None of the statutory grounds for the exercise of the appraisal right under the old Corporation Code were present, and respondent failed to prove compliance with the procedural requisites under Section 82 or the existence of unrestricted retained earnings; the CA erred in awarding ₱950,000 on this basis.
• Temperate Damages: Yes. The CA's assessment of ₱11,050,000.00 in temperate damages was reasonable, based on the Management Committee's findings of fraud, mismanagement, and asset diversion between OMSI and OHMCI.
• Lifting of TRO: Yes. The TRO was lifted, respondent-in-intervention being an indispensable party whose ownership and possession rights over the auctioned property were directly affected, and the auction sale having been consummated with Fernando's failure to redeem.

• Re-opening of Proceedings: The summary nature of intra-corporate proceedings requires construction promoting a "just, summary, speedy, and inexpensive" settlement of cases. The Rules of Court, which applies suppletorily to the Interim Rules, allows parties to amend or supplement their complaint under Rule 10. A trial court has broad discretion to admit amended pleadings, constrained only if the amendments substantially alter the cause of action or are intended to delay. Even substantial alterations may be permitted when they serve substantial justice. The amendments filed by respondent were not dilatory but based on events transpiring since the original Complaint — specifically, the Management Committee's unearthing of mismanagement, anomalies, unauthorized transactions, and conflicts of interest. A petition solely seeking inspection of corporate books would have been futile given these circumstances. The factual findings of the Management Committee were adopted by both the RTC and the CA, and when the CA affirms the factual findings of the RTC, such findings become conclusive and binding on the Supreme Court.

• Docket Fees: The liberal doctrine on docket fees dictates that when insufficient filing fees are paid based on the clerk of court's assessment, underpayment will not automatically divest the court of jurisdiction provided there was no intent to defraud the government. The clerk of court or duly authorized deputy is responsible for issuing a deficiency assessment, and the filing party is obligated to pay the assessed deficiency, which constitutes a lien on the judgment. Here, the RTC branch clerk of court failed to issue a deficiency assessment, and respondent cannot be faulted for that omission. Petitioners failed to establish any intention on respondent's part to defraud the government. The CA already ordered the clerk of court to make a deficiency assessment and directed respondent to pay the deficiency.

• Order of Default: OHMCI, as co-petitioner, cannot rely on its separate juridical personality because the RTC and CA found the doctrine of piercing the veil of corporate fiction applicable. The determination of whether piercing is justified is a question of fact that cannot be entertained in a petition for review on certiorari; when the facts warranting piercing have been affirmed by the CA, the trial court's findings are deemed final and conclusive. While the corporate veil cannot typically be pierced to establish jurisdiction over a corporation not impleaded, an exception arises when clear and convincing evidence shows the corporation's separate juridical personality was deliberately used to evade a legitimate obligation or perpetuate fraud. Both the RTC and CA found piercing warranted based on evidence that Fernando incorporated OHMCI months after Torres's investment in OMSI, that OMSI failed to maintain its own books, and that OMSI lacked an operative Board of Directors. As to Fernando and OMSI, they are estopped from questioning the default order: they failed to oppose the motion to declare them in default and did not move to set aside the default order — the specific remedy under Rule 9, Section 3(b). Given that the case had languished for over eight years due to countless legal skirmishes, petitioners can no longer challenge the default order at this belated stage.

• Survival of Action: The test for whether an action survives a party's death is whether it "affects primarily and principally property and property rights." Actions primarily involving property rights survive even with incidental injuries to the person. The stockholder's right of inspection is based upon ownership of the assets and property of the corporation and is an incident of ownership of corporate property. Respondent's action, based on his rights as a stockholder — comprising not only inspection of corporate books but also recovery of damages arising from petitioners' violation thereof — principally involves property rights which, by their nature, survive his death.

• Substitution of Deceased Party: Rule 3, Section 16 of the Rules of Court provides that a court's order of substitution is predicated upon proper notification of a party's death by their counsel. Absent such notice, the CA could not be expected to act upon respondent's reported death based solely on petitioners' assertions without a formal manifestation from respondent's own counsel. Proceedings are not invalidated by counsel's failure to inform the court of the client's death and the lack of party substitution, provided the action survives the party's death; the resulting decision binds the successors-in-interest. Moreover, respondent is the adjudged creditor, and the non-substitution of his heirs would bear little consequence since the judgment actually favors the heirs.

• Appraisal Rights: The appraisal right is the right of a stockholder to dissent and demand payment of the fair value of shares when statutory grounds are present. Under the old Corporation Code, the appraisal right may be exercised in any of the following instances: (1) investment of corporate funds in another corporation, business, or purpose; (2) an amendment to the articles of incorporation changing or restricting stockholder rights, authorizing superior share preferences, or extending or shortening the corporate term; (3) substantial disposition of corporate assets; and (4) merger or consolidation. None of these grounds are present. While Fernando's actions were fraudulent, they do not fall under any statutory ground. Stockholders affected by mismanagement, fraud, or unauthorized acts have other legal remedies, but the appraisal right is not one of them unless the statutory grounds are met. Respondent also failed to prove compliance with the procedure under Section 82 and the existence of unrestricted retained earnings, both required for payment of share value to dissenting stockholders. The ₱950,000 award was therefore deleted.

• Temperate Damages: Temperate damages may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot be provided with certainty. The assessment is left to the sound discretion of the court, as long as it is reasonable, more than nominal, but less than compensatory. The CA's assessment was based on the Management Committee's findings: OHMCI's revenue increased while OMSI's decreased, although OHMCI's revenues should derive only from dividends or management fees from OMSI; and in 2011, OHMCI's total assets of ₱23,147,733.00 dwarfed OMSI's ₱5,133,219.00, creating an asset disparity exceeding ₱18 million. While these figures do not exactly represent the true pecuniary losses, they provide a reasonable basis to approximate losses at ₱11,050,000.00. Petitioners failed to demonstrate that this assessment was unreasonable. Legal interest at 6% per annum was imposed from the date of finality until fully paid.

• Lifting of TRO: A TRO may be issued ex parte only in exceptional circumstances involving great or irreparable injury or extreme urgency. None of these grounds are present. A non-party to a suit may not be subjected to an injunctive writ issued against one of the parties; injunction can bind only the parties, their privies, or successors-in-interest. Respondent-in-intervention is not a party but is an indispensable party, its status as winning bidder coupled with Fernando's failure to redeem rendering its interest directly affected by the TRO. The auction sale has been consummated, Filcontrading has fully paid the bid price, and Fernando allowed the redemption period to lapse. The complete transfer of rights leaves no justification for the restraining order. Petitioners' claim that the property is exempt as a family home was unsupported by proof.

• Piercing the Corporate Veil — The separate juridical personality of a corporation may be disregarded when clear and convincing evidence shows that the corporation's separate personality was deliberately used to evade a legitimate obligation or perpetuate fraud. In this case, the corporate veils of OMSI and OHMCI were pierced because Fernando incorporated OHMCI months after Torres's investment in OMSI, OMSI failed to maintain its own books (with transactions recorded by OHMCI), OMSI lacked an operative Board of Directors, and OHMCI directly competed with OMSI while diverting its assets and revenues. The determination of whether piercing is justified is a question of fact; when affirmed by the CA, the trial court's findings are deemed final and conclusive.

• Stockholder's Right to Inspect Corporate Books as a Property Right — The stockholder's right of inspection of corporate books and records is based upon ownership of the assets and property of the corporation and is an incident of ownership of corporate property, whether termed equitable, beneficial, or quasi-ownership. As a property right, it survives the stockholder's death. An action comprising inspection of corporate books and recovery of damages for violation thereof principally involves property rights.

• Survival of Actions Upon Death of a Party — The test for whether an action survives a party's death is whether it "affects primarily and principally property and property rights." Actions primarily involving property rights survive even with incidental injuries to the person; those involving injuries to the person are extinguished even with incidental property rights affected.

• Substitution of Deceased Party — A court's duty to order substitution of a deceased party arises only upon proper notice by the deceased party's counsel. Absent such notice, proceedings are not invalidated by counsel's failure to inform the court and the lack of party substitution, provided the action survives the party's death. The resulting decision binds the successors-in-interest.

• Appraisal Right — Statutory Grounds Required — The appraisal right is the right of a stockholder to dissent and demand payment of the fair value of shares when statutory grounds are present. Under the old Corporation Code, the grounds are: (1) investment of corporate funds in another corporation, business, or purpose; (2) amendment to the articles of incorporation changing or restricting stockholder rights, authorizing superior share preferences, or extending or shortening the corporate term; (3) substantial disposition of corporate assets; and (4) merger or consolidation. Mismanagement, fraud, or unauthorized acts do not constitute grounds for the appraisal right. Compliance with the procedure under Section 82 and the existence of unrestricted retained earnings are also required.

• Temperate Damages — Temperate damages may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be provided with certainty. The assessment is left to the sound discretion of the court, as long as it is reasonable, more than nominal, but less than compensatory.

• Liberal Doctrine on Docket Fees — When insufficient filing fees are paid based on the clerk of court's assessment, underpayment will not automatically divest the court of jurisdiction provided there was no intent to defraud the government. The clerk of court is responsible for issuing a deficiency assessment, and the filing party is obligated to pay the deficiency, which constitutes a lien on the judgment.

• Amendment of Pleadings in Intra-Corporate Proceedings — The Rules of Court applies suppletorily to the Interim Rules of Procedure for Intra-Corporate Controversies, allowing parties to amend or supplement their complaint. A trial court has broad discretion to admit amended pleadings, constrained only if the amendments substantially alter the cause of action or are intended to delay. Even substantial alterations may be permitted when they serve substantial justice.

• Estoppel from Questioning Default Order — A party who fails to oppose a motion to declare them in default and does not move to set aside the default order — the specific remedy under Rule 9, Section 3(b) — is estopped from questioning the default order at a belated stage, particularly where the case has already been protracted by numerous legal skirmishes.

• Injunction Binds Only Parties — A writ of injunction can bind only the parties in the action, their privies, or successors-in-interest. No person who has not been impleaded and duly served with summons should be adversely affected by the outcome of the action, conforming to the constitutional guarantee of due process.

• "The stockholder's right of inspection of the corporation's books and records is based upon their ownership of the assets and property of the corporation. It is, therefore, an incident of ownership of the corporate property, whether this ownership or interest be termed an equitable ownership, a beneficial ownership, or a quasi-ownership." — This passage, quoted from Gokongwei, Jr. vs. Securities and Exchange Commission, defines the doctrinal basis for classifying the inspection right as a property right that survives the stockholder's death, the pivotal reasoning for the survival-of-action ruling.

• "The test to determine whether an action survives the death of a party is whether it 'affects primarily and principally property and property rights.'" — This states the controlling test for survival of actions, applied to hold that Torres's complaint — combining inspection of corporate books with recovery of damages — principally involves property rights and thus survives his death.

• "Stockholders affected by mismanagement, fraud, or unauthorized acts have other available legal remedies, but the appraisal right is not one of them unless the statutory grounds are met." — This delineates the boundary between the appraisal right and other remedies available to defrauded stockholders, forming the ratio for deleting the ₱950,000 appraisal-rights award.

• "No person who has not been impleaded and duly served with the summons should be adversely affected by the outcome of the action." — This articulates the due process principle governing injunctive relief, applied to lift the TRO that had been issued without impleading Filcontrading, the auction purchaser whose property rights were directly affected.

• Gokongwei, Jr. vs. Securities and Exchange Commission, 178 Phil. 266 (1979) — Controlling precedent for the proposition that the stockholder's right to inspect corporate books is an incident of ownership of corporate property, thus a property right that survives death. Quoted verbatim by the Court.

• I/AME vs. Litton and Company, Inc., 822 Phil. 610 (2017) — Followed for the rule that piercing the corporate veil is a question of fact, and that when the CA affirms the trial court's findings on piercing, such findings are final and conclusive; also for the exception allowing piercing to establish jurisdiction when separate personality is used to perpetuate fraud.

• Pacific Rehouse Corporation vs. Ngo, 784 Phil. 488 (2016) — Followed for the test on survival of actions: whether the action "affects primarily and principally property and property rights."

• Power Sector Assets and Liabilities Management Corp vs. Court of Appeals, 805 Phil. 786 (2017) — Followed for the doctrine that injunction can bind only parties, their privies, or successors-in-interest, and that a non-party may not be subjected to an injunctive writ.

• Muñoz vs. Atty. Yabut, Jr., 665 Phil. 488 (2011) — Followed for the principle that a judgment cannot be executed against non-parties and that only real parties in interest are bound by judgments and writs of execution.

• Ramones vs. Spouses Guimoc, 838 Phil. 542 (2018) — Followed for the liberal doctrine on docket fees: underpayment does not divest the court of jurisdiction absent intent to defraud, with the clerk of court responsible for deficiency assessment.

• Lisam Enterprises, Inc. vs. Banco de Oro Unibank, Inc., 686 Phil. 293 (2012) — Followed for the rule that even substantial alterations to a cause of action in amended pleadings may be permitted when they serve substantial justice.

• Regalado vs. Regalado, 655 Phil. 837 (2011) — Distinguished. Petitioners' reliance on this case — that no adjudication can be made against successors of a deceased if the right to a day in court is denied — was held misplaced because the judgment in the present case actually favors the heirs of the deceased respondent.

• Section 74, Corporation Code (1980) — Requires every corporation to keep and preserve at its principal office the records of all business transactions. The Management Committee found OMSI violated this provision by not keeping its own books of account, with transactions instead recorded by OHMCI.

• Sections 75, Corporation Code (1980) — Governs the stockholder's right to inspect corporate books and records. The RTC ordered inspection pursuant to this provision.

• Section 80, Corporation Code (1980) — Defines the appraisal right as the right of a stockholder to dissent and demand payment of the fair value of shares when grounds are present as provided by law. The Court found no statutory ground present.

• Section 81, Corporation Code (1980) — Enumerates the instances when the appraisal right may be exercised: investment of corporate funds in another corporation, amendment of articles changing stockholder rights, substantial disposition of corporate assets, and merger or consolidation. None were established in this case.

• Section 82, Corporation Code (1980) — Prescribes the procedure for exercising the appraisal right: written demand within 30 days after the vote, payment upon surrender of stock certificates, appraisal by three disinterested persons if no agreement, and the requirement of unrestricted retained earnings. Respondent failed to prove compliance.

• Section 42, Corporation Code (1980) — Pertains to investment of corporate funds in another corporation or business, one of the statutory grounds for the appraisal right. Not established in this case.

• Rule 3, Section 16, Rules of Court — Governs the duty of counsel to inform the court of a party's death within 30 days and the procedure for substitution. The Court held that a court's order of substitution is predicated upon proper notification by the deceased party's counsel.

• Rule 9, Section 3(b), Rules of Court — Provides the specific remedy of moving to set aside a default order. Petitioners' failure to invoke this remedy estopped them from questioning the default order.

• Rule 10, Sections 2-3 and 6, Rules of Court — Governs amendment and supplementation of pleadings, applied suppletorily to the Interim Rules to uphold the RTC's admission of the Amended and Supplemental Complaint.

• Rule 58, Section 5, Rules of Court — Governs the issuance of ex parte TROs, limited to exceptional circumstances of great or irreparable injury or extreme urgency. The Court found none present.

• Article 2224, Civil Code — Defines temperate damages as recoverable when some pecuniary loss has been suffered but its amount cannot be provided with certainty. Applied to sustain the ₱11,050,000 award.

• SEC Memorandum Circular No. 2, series of 2002 (Code of Corporate Governance) — Requires corporations to prepare periodic financial reports for transparency. The Management Committee found OMSI violated this circular.

Gesmundo, C.J. (Chairperson), Hernando, Zalameda, and J. Lopez, JJ., concurred.