Gochan vs. Young

A court or tribunal's 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 the allegations show they are bona fide stockholders — and, with the effectivity of RA 8799, intra-corporate controversies now fall within the jurisdiction of courts of general jurisdiction (regional trial courts), no longer the SEC.

• FGSRC is a family-held realty corporation registered since 1951; the dispute pits the Gochan majority and its directors against minority stockholders related by blood or marriage.
• The minority's grievances: the corporation's refusal to register inherited shares (invoking a right of first refusal in the Articles of Incorporation); the corporation's purchase of Cecilia Gochan-Uy's shares allegedly without unrestricted retained earnings, in violation of the trust fund doctrine; alleged appropriation of corporate funds through excessive salaries, cash advances, and personal expenses; and alleged transfers of corporate properties to corporations used as the directors' alter egos.
• Jurisdictional backdrop: when the complaint was filed in 1994, intra-corporate controversies were within the SEC's jurisdiction under the regime later referenced in Section 5 of PD 902-A. RA 8799 took effect on August 8, 2000 — while this case was pending — forcing the SC to determine where the case should be heard.

Felix Gochan & Sons Realty Corporation (FGSRC, also referred to as Gochan Realty) was registered with the Securities and Exchange Commission in June 1951, with Felix Gochan Sr., Maria Pan Nuy Go Tiong, Pedro Gochan, Tomasa Gochan, Esteban Gochan, and Crispo Gochan as incorporators. Alice, a daughter of Felix Gochan Sr. and the mother of herein respondents Richard G. Young, David G. Young, Jane G. Young-Llaban, John D. Young Jr., Mary G. Young-Hsu, and Alexander Thomas G. Young, inherited 50 shares of stock in the corporation from her father. When Alice died in 1955, the 50 shares passed to her husband, John D. Young Sr. In 1962, the Regional Trial Court of Cebu adjudicated 6/14 of these shares to the couple's six children.

The shares earned dividends over the years such that they numbered 179 by September 20, 1979. Five days later, on September 25, 1979, with all the children already of majority age, John Sr. requested Gochan Realty to partition the shares of his late wife by cancelling the stock certificates registered in his name and issuing in lieu thereof new certificates in the names of the children. On October 17, 1979, the corporation refused, citing the right of first refusal granted to the remaining stockholders by the Articles of Incorporation. John Sr. died in 1990, leaving the shares to the respondents.

A parallel transaction involving another branch of the family became the second flashpoint. According to the complaint later filed, on November 21, 1979, FGSRC bought 208 shares from Cecilia Gochan Uy at a time when it did not have unrestricted retained earnings in its books to cover the purchase price, thereby rendering the 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; the corporation paid her P1,200,000.00 for the shares, a payment the complaint branded an unlawful, premature and partial liquidation and distribution of assets that impaired corporate capital. Petitioners, for their part, took the position that the shares — which they described as 210 — had already been purchased by the corporation, such that Cecilia was no longer a stockholder when the suit was filed, and that the purchase was a simple contract of sale cognizable by the regular courts.

On February 8, 1994, respondents Cecilia Gochan-Uy and Miguel C. Uy — joined by the Young heirs suing in their own right and as heirs of, or beneficial owners of, shares held in trust for them during his lifetime by John Sr. — filed before the SEC the complaint described above. The complaint further alleged a conspiracy to depress the value of the corporate stock and to induce minority stockholders to sell their shares for inadequate consideration, in furtherance of which directors led by Esteban T. Gochan unlawfully and fraudulently appropriated corporate funds by drawing excessive salaries and cash advances and charging purely personal expenses to the corporation; it also impleaded Mactan Realty Development Corporation and Lapu-Lapu Real Estate Corporation as mere alter egos of the directors-petitioners which had acquired corporate properties in violation of the latter's fiduciary duties. A Notice of Lis Pendens was annotated on the real properties of the corporation. The complaint likewise disclosed that the intestate estate of John Sr. was then the subject of Special Proceedings No. 3694-CEB pending before the Regional Trial Court of Cebu, Branch VIII.

On March 16, 1994, petitioners moved to dismiss the complaint on three grounds: that the SEC had no jurisdiction over the nature of the action, that respondents were not the real parties in interest and had no capacity to sue, and that the causes of action were barred by the statute of limitations; respondents opposed. On March 29, 1994, petitioners filed a motion for the cancellation of the Notice of Lis Pendens, which respondents likewise opposed. On December 9, 1994, the SEC, through Hearing Officer Atty. Enrique L. Flores Jr., granted the motion to dismiss and ordered the cancellation of the lis pendens annotation on the titles of the corporate lands, reasoning that the Young heirs had never been stockholders of record of FGSRC, that the heirs could not compel delivery of the shares until the estate was settled and the deceased's debts paid, that actions for the recovery or protection of the deceased's property had to be brought by an executor or administrator, that the SEC had no jurisdiction over a controversy wherein one of the parties was not or not yet a stockholder, and that the derivative-suit requirement under Section 5, Rule III of the SEC's Revised Rules of Procedure had not been complied with.

Respondents moved for reconsideration, but the motion was denied for being pro-forma. They appealed to the SEC en banc, contending that the SEC had jurisdiction over the case; petitioners countered that the appeal was 97 days late, beyond the 30-day period for appeals. On March 3, 1995, the SEC en banc ruled for petitioners, holding that the respondents' motion for reconsideration did not interrupt the 30-day period because it was pro-forma. Aggrieved, respondents brought the case to the Court of Appeals, which summarized the foregoing facts as undisputed.

• No capacity of the Spouses Uy: The Spouses Uy had no legal standing to bring the suit before the SEC on February 8, 1994 because they were no longer stockholders — the stocks had already been purchased by the corporation; the purchase being allegedly a simple contract of sale cognizable by the regular courts, it does not come within the purview of an intra-corporate controversy.
• Prescription: The statute of limitations bars the Uy spouses' action, be it one for annulment of a voidable contract or one based upon a written contract.
• No derivative suit: The action filed by the Spouses Uy was not a derivative suit, because the spouses — not the corporation — were the injured parties.
• Estate not indispensable: 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.
• Estate improperly represented: Invoking Section 3, Rule 3 and Section 2, Rule 87 of the Rules of Court, they claimed 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."
• Lis pendens: The cancellation of the notice of lis pendens was justified because the suit did not involve real properties owned by Gochan Realty.
• Procedural point before the SEC en banc: The appeal was 97 days late, beyond the 30-day period, because respondents' motion for reconsideration was pro-forma.

• SEC jurisdiction: On appeal to the SEC en banc, they contended that the SEC had jurisdiction over the case.
• Continued stockholdership / no prescription: The complaint alleged that the November 21, 1979 purchase of Cecilia's 208 shares was null and void ab initio for being violative of the trust fund doctrine (no unrestricted retained earnings), so the sale produced no effect and she remained a stockholder; an action to declare a contract void does not prescribe.
• Derivative character: The complaint pleaded wrongs to the corporation itself — fraudulent appropriation of corporate funds through excessive salaries and cash advances, and impairment of capital by the P1,200,000.00 payment — for which the directors refused to sue.
• Estate representation: The heirs could represent the estate of John Sr., no administrator having been appointed, and the estate was indispensable as to the registration of the shares still in his name.
• Lis pendens: The reconveyance claims sought delivery to FGSRC of the parcels of land and their certificates of title, directly affecting title and possession, so the annotation was proper.
• Tolling: Their motion for reconsideration was not pro-forma and interrupted the 30-day appeal period (as the CA ruled in their favor).

• Capacity of the Spouses Uy: Whether the Spouses Uy have the personality to file an action before the SEC against Gochan Realty Corporation.
• Prescription: Whether the Spouses Uy's action is barred by the statute of limitations.
• Derivative Suit: Whether 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.
• Indispensable Party: Whether 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 stockholder's name.
• Notice of Lis Pendens: Whether the cancellation of the notice of lis pendens was justified considering that the suit did not involve real properties owned by Gochan Realty.
• Effect of RA 8799: What is the effect of Republic Act No. 8799 on the case, i.e., before which forum should the case now proceed.

• Capacity of the Spouses Uy: Yes. Jurisdiction over the subject matter is determined by the allegations in the complaint; Cecilia Uy's averment that the corporate purchase of her shares was null and void ab initio is deemed admitted for purposes of the motion to dismiss, making her a bona fide stockholder despite her absence from the corporate books. In any event, the controversy is no longer cognizable by the SEC in view of RA 8799.
• Prescription: No. Prescription cannot be invoked where the contract is alleged to be void ab initio; the action or defense for the declaration of nullity of a contract does not prescribe (Article 1410, Civil Code).
• Derivative Suit: Yes. The complaint alleges injury to the corporation itself, and the Spouses Uy — as alleged stockholders at the time the questioned transaction occurred, at the time the action was filed, and during its pendency — satisfy the requisites of a derivative suit under Section 5, Rule III of the SEC's Revised Rules of Procedure.
• Indispensable Party: Yes, as to the cause of action for registering the shares in the heirs' names. Since all the shares that belonged to Alice are still registered under John D. Young Sr.'s name, no final determination can be had without his estate being impleaded; and because no administrator had been appointed, the heirs could properly represent the estate.
• Notice of Lis Pendens: No, the cancellation was not justified. The suit sought reconveyance to FGSRC of parcels of land and their certificates of title, necessarily affecting their title or possession, so annotation under Section 14, Rule 13 of the Rules of Court was proper; the alter-ego allegations also made the non-stockholder respondents proper parties as to Mactan Realty and Lapu-Lapu.
• Effect of RA 8799: The case must be remanded to the proper regional trial court, not the SEC. Section 5.2 of RA 8799 transferred the SEC's jurisdiction over the cases enumerated under Section 5 of PD 902-A to courts of general jurisdiction; pursuant to AM No. 00-8-10-SC, the records of SEC Case No. 02-94-4674 are to be transferred to the appropriate RTC.

• Capacity of the Spouses Uy: As a general rule, the jurisdiction of a court or tribunal over the subject matter is determined by the allegations in the complaint (Lim Tay vs. Court of Appeals, citing Javelosa vs. Court of Appeals). For purposes of resolving a motion to dismiss, Cecilia Uy's averment in the Complaint — that the purchase of her stocks by the corporation was null and void ab initio — is deemed admitted. 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 (citing Tolentino's Civil Code commentary). Cecilia therefore remains a stockholder of the corporation in view of the nullity of the Contract of Sale: although no longer registered as a stockholder in the corporate records as of the filing of the case, the admitted allegations made her still a bona fide stockholder of FGSRC as between the 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 former's jurisdiction over cases involving intra-corporate disputes.
• Prescription: Petitioners framed the action as either annulment of a voidable contract or one based on a written contract. The Complaint, however, alleged that the sale was not merely voidable but void ab initio — paragraph 38 states that on November 21, 1979 FGSRC "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." Prescription cannot be invoked as a ground if the contract is alleged to be void ab initio (Ruiz vs. CA; Castillo vs. Heirs of Vicente Madrigal); it is axiomatic that the action or defense for the declaration of nullity of a contract does not prescribe (Article 1410, Civil Code).
• Derivative Suit: The SC was not convinced that only the spouses were injured. Quoted portions of the Complaint show allegations of injury to the corporation itself: directors, in furtherance of an alleged conspiracy to depress the stock's value and force minority stockholders to sell for inadequate consideration, "unlawfully and fraudulently appropriated [for] themselves the funds of the Corporation by drawing excessive amounts in the form of salaries and cash advances" and charged personal expenses to the Corporation; and the P1,200,000.00 payment to Cecilia "constituted an unlawful, premature and partial liquidation and distribution of assets to a stockholder, resulting in the impairment of the capital of the Corporation," to the damage of the corporation, its creditors, and the minority stockholders. As early as 1911, the SC recognized the right of a single stockholder to file derivative suits (Pascual vs. Del Saz Orozco, per Trent, J.): where directors commit a breach of trust by their frauds, ultra vires acts, or negligence, and the corporation is unable or unwilling to sue, a single stockholder may sue on behalf of himself and other stockholders and for the benefit of the corporation. 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 does not disqualify them and merely gives rise to an additional cause of action for damages against the erring directors, which is also included in the Complaint. The Spouses Uy thus have capacity because 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.
• Indispensable Party: One of the causes of action in the Complaint refers to the registration, in the name of the other heirs of Alice Gochan Young, of 6/14 of the shares still registered under John D. Young Sr.'s name. Since all the shares that belonged to Alice are still in his name, no final determination can be had without his estate being impleaded — his estate is thus an indispensable party with respect to that cause of action. On representation, petitioners' cited rules do not make the categorical statement they claim: Section 3, Rule 3 (representatives as parties; the beneficiary is included in the title and deemed the real party in interest) and Section 2, Rule 87 (executor or administrator may bring or defend actions which survive) permit, but do not prohibit, the heirs from representing the deceased. Those rules easily apply where an administrator has already been appointed; no rule categorically addresses the situation where special proceedings for the settlement of an estate have been instituted yet no administrator has been appointed. In such instances, the heirs cannot be expected to wait for an administrator's appointment, then wait further to see if that administrator would care enough to sue, and in the meantime do nothing while the decedent's rights and properties are violated or dissipated. The Rules are to be interpreted liberally to promote their objective of securing a just, speedy and inexpensive disposition of every action (Rule 1, Section 6), and the SC has in previous instances recognized heirs as proper representatives of the decedent even when an administrator has already been appointed (Pascual vs. Pascual; Velasquez vs. George; Borromeo vs. Borromeo). With no administrator appointed at the time the Complaint was instituted, there was nothing wrong with the heirs of John D. Young Sr. representing his estate.
• Notice of Lis Pendens: Under the third, fourth and fifth causes of action, the Complaint alleges 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 ask for the delivery to the Corporation of possession of the parcels of land and their corresponding certificates of title. The suit necessarily affects the title to or right of possession of the real property sought to be reconveyed, and Section 14, Rule 13 of the Rules of Court allows the annotation of a notice of lis pendens in actions affecting the title or right of possession of real property (Alberto vs. CA; Viewmaster Construction Corp. vs. CA; Villanueva vs. CA). The CA was therefore correct in reversing the SEC Order for cancellation. The fact that respondents are not stockholders of Mactan Realty Development Corporation and Lapu-Lapu Real Estate Corporation does not make them non-parties: jurisdiction is determined by the allegations in the Complaint, which allege that those corporations are mere alter egos of the directors-petitioners that acquired the properties sought to be reconveyed in violation of the directors' fiduciary duty to FGSRC. The notion of corporate entity will be pierced or disregarded, and the individuals composing it treated as identical, when the corporate entity is used as a cloak or cover for fraud or illegality, as a justification for a wrong, or as an alter ego, adjunct, or business conduit for the sole benefit of the stockholders (Yutivo Sons Hardware Co. vs. CTA; Umali vs. CA).
• Effect of RA 8799: While the SC sustained the appellate court, the case can no longer be remanded to the SEC. RA 8799 (The Securities Regulation Code), effective August 8, 2000, transferred the SEC's jurisdiction over cases involving intra-corporate disputes to courts of general jurisdiction or the regional trial courts. Section 5.2 transfers the Commission's jurisdiction over all cases enumerated under Section 5 of PD 902-A to the courts of general jurisdiction or the appropriate RTC (with the SC empowered to designate the RTC branches that shall exercise this jurisdiction), while the Commission retains jurisdiction only over pending intra-corporate cases submitted for final resolution (which should be resolved within one year from enactment) and pending suspension of payments/rehabilitation cases filed as of June 30, 2000. In light of the SC's Resolution in AM No. 00-8-10-SC ("In Re: Transfer of Cases from the Securities and Exchange Commission to the Regular Courts pursuant to RA 8799"), the Court Administrator and the SEC were directed to cause the transfer of the records of SEC Case No. 02-94-4674 to the appropriate court of general jurisdiction.

• Jurisdiction over the subject matter is determined by the allegations in the complaint — In testing jurisdiction (and resolving a motion to dismiss), the tribunal looks to the complaint's averments, which are deemed admitted. Applied twice here: (a) Cecilia Uy's averment that the sale of her shares was void ab initio was deemed admitted, making her a bona fide stockholder despite her absence from the corporate books; (b) the allegation that Mactan Realty and Lapu-Lapu were mere alter egos of the directors made the respondents proper parties despite their non-stockholdership in those corporations.
• Derivative suit (stockholder's derivative right) — A suit by a stockholder on behalf of himself and other stockholders and for the benefit of the corporation, to redress wrongs done directly to the corporation and indirectly to the stockholders, where directors have committed a breach of trust by their frauds, ultra vires acts, or negligence, and the corporation is unable or unwilling to institute suit. Requisites under Section 5, Rule III of the SEC's Revised Rules of Procedure: the complainant must have been a stockholder (a) at the time the questioned transaction occurred, (b) at the time the action was filed, and (c) during the pendency of the action. Applied: the complaint's allegations of corporate injury (diversion of funds; impairment of capital) and of the spouses' stockholdership at all three points satisfied the doctrine; personal injuries to the suing stockholder do not disqualify — they merely add a direct cause of action for damages.
• Void contracts produce no effect; nullity does not prescribe — A void contract cannot create, modify or extinguish the juridical relation to which it refers, and the action or defense for the declaration of nullity of a contract does not prescribe (Article 1410, Civil Code). Applied: because the complaint alleged the sale of Cecilia's shares void ab initio, she remained a stockholder as between the parties, and the limitation defense failed.
• Heirs as representatives of the decedent where no administrator has been appointed — The rules empowering executors/administrators to sue for the deceased are permissive, not prohibitive, of the heirs' representation; where estate proceedings are pending but no administrator has been appointed, the heirs may sue to protect the decedent's rights and property, the Rules being liberally construed (Rule 1, Section 6) to secure a just, speedy and inexpensive disposition. Applied: the heirs of John D. Young Sr. properly represented his estate; the estate itself was indispensable as to the cause of action for registering the shares still in his name.
• Notice of lis pendens — Section 14, Rule 13 of the Rules of Court allows annotation in actions affecting the title to or right of possession of real property. Applied: the reconveyance claims sought delivery to FGSRC of the parcels and their certificates of title, so the annotation on the corporate titles was proper and its cancellation unjustified.
• Piercing the veil of corporate fiction (alter ego doctrine) — The corporate entity will be disregarded and the individuals composing it treated as identical when it is used as (a) a cloak or cover for fraud or illegality, (b) a justification for a wrong, or (c) an alter ego, adjunct, or business conduit for the sole benefit of the stockholders. Applied: the allegation that Mactan Realty and Lapu-Lapu were mere alter egos of the directors-petitioners kept the respondents properly before the tribunal on the reconveyance claims.
• RA 8799 transfer of jurisdiction over intra-corporate disputes — Section 5.2 of RA 8799 transferred to courts of general jurisdiction/appropriate RTCs the SEC's jurisdiction over all cases enumerated under Section 5 of PD 902-A; the SEC retains jurisdiction only over pending intra-corporate cases submitted for final resolution (resolvable within one year from enactment) and pending suspension of payments/rehabilitation cases filed as of June 30, 2000. Applied: the case not yet being submitted for final resolution, it was remanded to the proper RTC, with the records ordered transferred pursuant to AM No. 00-8-10-SC.

• "A court or tribunal's 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."
• "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."
• "Prescription cannot be invoked as a ground if the contract is alleged to be void ab initio."
• "[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 of the wrong done directly to the corporation and indirectly to the stockholders." (quoting Pascual vs. Del Saz Orozco)
• "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."
• "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 notion of corporate entity will be pierced or disregarded and the individuals composing it will be treated as identical 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."

• Lim Tay vs. Court of Appeals, 293 SCRA 634 (August 5, 1998), citing Javelosa vs. Court of Appeals, 265 SCRA 493 (December 10, 1996) — Followed; source of the controlling rule that jurisdiction over the subject matter is determined by the allegations in the complaint.
• Pascual vs. Del Saz Orozco, 19 Phil. 82 (March 17, 1911) — Followed; the SC's earliest recognition of the stockholder's derivative suit (penned by Trent, J.), quoted for the definition of the remedy; later cited in Bitong vs. Court of Appeals, 292 SCRA 503 (July 13, 1998).
• Ruiz vs. Court of Appeals, 79 SCRA 525 (October 21, 1977) and Castillo vs. Heirs of Vicente Madrigal, 198 SCRA 556 (June 27, 1991) — Followed; prescription cannot be invoked against a contract alleged void ab initio.
• Pascual vs. Pascual, 73 Phil. 561 (1942); Velasquez vs. George, 125 SCRA 456 (October 27, 1983); Borromeo vs. Borromeo, 98 Phil. 432 (1956) — Followed; heirs recognized as proper representatives of the decedent even where an administrator exists — applied a fortiori where none had been appointed.
• Yutivo Sons Hardware Co. vs. Court of Tax Appeals, 1 SCRA 160 (January 28, 1961); Umali vs. Court of Appeals, 189 SCRA 529 (September 13, 1990) — Followed; piercing the corporate veil where the entity is used as a cloak for fraud or illegality, a justification for a wrong, or an alter ego/business conduit.
• Alberto vs. CA, G.R. No. 119088 (June 30, 2000); Viewmaster Construction Corp. vs. CA, G.R. No. 136283 (February 29, 2000); Villanueva vs. CA, 281 SCRA 298 (November 5, 1997) — Followed; annotation of a notice of lis pendens in actions affecting real property.
• Pascual vs. CA, G.R. No. 138542 (August 25, 2000) — Cited; on the effect of RA 8799's jurisdictional transfer.
• SEC vs. CA, 201 SCRA 134 — Cited within the SEC hearing officer's (since-reversed) order for the proposition that the SEC has no jurisdiction over a controversy wherein one of the parties is not or not yet a stockholder; the SC's ruling superseded that position as applied to the facts here.

• Section 5, Rule III, Revised Rules of Procedure of the SEC — Sets the derivative-suit requisites (stockholder at the time of the transaction, at the filing, and during the pendency). Quoted by the SEC hearing officer in dismissing the case; the SC applied the same requisites to hold that the complaint's allegations showed compliance.
• Section 3, Rule 3, Rules of Court — Representatives as parties; where the action is prosecuted by a representative or fiduciary, the beneficiary shall be included in the title and deemed the real party in interest. Read as permitting, not prohibiting, the heirs' representation of the decedent.
• Section 2, Rule 87, Rules of Court — An executor or administrator may bring or defend, in the right of the deceased, actions for causes which survive, for the recovery or protection of the deceased's property or rights. Read as permissive, not exclusive.
• Rule 1, Section 6, Rules of Court — Liberal construction of the Rules to secure a just, speedy and inexpensive disposition of every action; basis for allowing the heirs to represent the estate.
• Section 14, Rule 13, Rules of Court — Notice of lis pendens in actions affecting the title to or possession of real property; basis for sustaining the annotation on the corporate titles.
• Article 1410, Civil Code — The action or defense for the declaration of nullity of a contract does not prescribe; defeated the statute-of-limitations defense.
• Section 5.2, Republic Act No. 8799 (The Securities Regulation Code) — Transferred the Commission's jurisdiction over all cases enumerated under Section 5 of PD 902-A to courts of general jurisdiction or the appropriate RTC; the SEC retains jurisdiction only over pending intra-corporate cases submitted for final resolution (within one year from enactment) and pending suspension of payments/rehabilitation cases filed as of June 30, 2000; basis for remanding the case to the RTC.
• Section 5, Presidential Decree No. 902-A — The enumeration of cases whose jurisdiction RA 8799 transferred to the regular courts.
• AM No. 00-8-10-SC — SC Resolution ("In Re: Transfer of Cases from the Securities and Exchange Commission to the Regular Courts pursuant to RA 8799"); basis for directing the Court Administrator and the SEC to transfer the records of SEC Case No. 02-94-4674.

• Melo, Vitug, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ. — concurred. No separate concurring opinions are noted in the text.

• None — the text shows a unanimous Third Division (the ponente plus four concurring justices) with no dissenting opinion.