FIRST DIVISION

[G.R. No. 218738. March 9, 2022.]

METROPOLITAN BANK & TRUST COMPANY (METROBANK ),

petitioner, vs. SALAZAR REALTY CORPORATION * represented
by incorporators/stockholders Ramon Ang Salazar, Jr.,
Robert Ang Salazar, Roger Ang Salazar, and Rosemarie
Salazar Fernandez, ** respondents.

DECISION

GAERLAN, J : p

The present petition for review on certiorari 1 assails the Decision 2 and
the Resolution 3 of the Court of Appeals (CA) in CA-G.R. SP No. 05050, which
dismissed Metropolitan Bank & Trust Company's (Metrobank) petition for
certiorari against the June 16, 2009 4 and February 23, 2010 5 Orders issued
by Branch 9 of the Regional Trial Court (RTC) of Tacloban City, in Civil Case
No. 2001-11-164.
Antecedents
Petitioner Metrobank and respondent Salazar Realty Corporation
(SARC) are both Philippine corporations. Metrobank is engaged in the
banking business, 6 while SARC is engaged in the real estate business. 7 Also
involved in the events preceding the present litigation is another Philippine
corporation, Tacloban RAS Construction Corporation (Tacloban RAS).
On November 5, 2001, SARC filed an action for quieting of title and
nullification of contracts against Metrobank before the RTC of Tacloban City.
8 The petition was docketed as Civil Case No. 2001-11-164. 9 SARC alleged
that:
1) Based on its latest filings at the time of the filing of the petition,
SARC had the following officers, who also composed its board of directors: 10
Raymund A. Salazar, President; Ramon Ve. Salazar, Vice President; Ralph A.
Salazar, 11 Secretary; Rosarie A. Salazar, Treasurer; Consuelo A. Salazar, 12
Member, Board of Directors.
2) On October 6, 1992, Tacloban RAS obtained a loan from
Metrobank in the amount of ten million pesos (P10,000,000.00). 13 On
January 9, 1996, the loan amount was increased to twelve million pesos
(P12,000,000.00); and on October 6, 1999 it was further increased to
eighteen million five hundred thousand pesos (P18,500,000.00). 14 This final
amount was reflected in a promissory note executed on October 6, 1999
between Tacloban RAS and Metrobank, which was signed by Consuelo and
Ralph as president and corporate secretary, respectively, of Tacloban RAS.
15 To secure the loan, Metrobank and SARC entered into a mortgage contract
on January 9, 1996, with Consuelo and Ralph still signing, this time on behalf
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 of SARC. 16 The mortgage covered five parcels of land located in Tacloban
City, which were all registered in the name of SARC. 17 The mortgage was
likewise amended to cover the final amount of the loan. 18
3) Meanwhile, on March 30, 1995, Ramon Ve. Salazar, SARC's Vice
President and director, passed away. Consuelo likewise passed away on
October 21, 2001. The vacancies left by their passing were left unfilled. 19
4) The remaining directors of SARC, including Ralph, issued a board
resolution approving the mortgage of the five SARC-owned lots to secure the
loan obligation of Tacloban RAS. 20
5) Tacloban RAS defaulted on the loan, prompting Metrobank to
initiate extrajudicial foreclosure proceedings before the RTC of Tacloban
City. 21 Metrobank emerged as the winning bidder in the auction sale.22
Upon issuance of the certificate of sale 23 and filing of the affidavit of
consolidation of ownership, 24 SARC's certificates of title were cancelled and
new ones were issued in Metrobank's favor. 25
6) Upon hearing about the auction sale, Ramon Ang Salazar, Jr.,
Robert Ang Salazar, Roger Ang Salazar and Rosemarie Salazar Fernandez
(hereinafter referred to as Ramon et al.) as incorporators and stockholders
acting in behalf of SARC, immediately checked the status of the disputed
lands with the Register of Deeds. They discovered that SARC's certificates of
title had been cancelled. 26 In response, Ramon et al. registered an adverse
claim on the new certificates of title that were issued to Metrobank. 27
7) In view of the SARC board's inaction and tacit approval of the
unauthorized encumbrance and subsequent loss of the corporation's real
properties, Ramon et al. filed the present suit on SARC's behalf.
8) The loan agreement is void because Consuelo is not a
stockholder or officer of Tacloban RAS, based on its incorporation papers
filed with the SEC. 28
9) The mortgage agreement and the foreclosure proceedings are
void because Tacloban RAS has no authority to use SARC's properties as
collateral. Rather, the authorization for such purpose was issued by the SARC
board to a single proprietorship named RAS Construction, which is an entity
distinct and separate from Tacloban RAS. 29
10) SARC exceeded its corporate powers when it entered into a
mortgage contract to secure the obligation of a separate, distinct, and
unrelated corporation. Tacloban RAS is not a subsidiary of SARC. It likewise
holds no shares or any other form of investment in the latter corporation.
Thus, the mortgage contract is void for being ultra vires insofar as SARC is
concerned. 30
11) SARC's principal corporate assets are limited to six (6) parcels
of land. Consequently, the mortgage of the five parcels in dispute, including
the lot on which SARC's principal office is located, constitutes an
encumbrance of substantially all the assets of the corporation which must be
authorized by SARC's stockholders in a meeting for that purpose, pursuant to
Section 40 of the Corporation Code. Absent such authorization, the mortgage
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 contract is null and void. 31

12) SARC board and stockholder approvals for the mortgage

contract and the amendments thereto were not annotated on SARC's
certificates of title, giving rise to the presumption that neither the SARC
board nor its stockholders approved said contract and the amendments
thereto. 32
13) Metrobank failed to exercise due diligence when it extended an
eighteen-million-peso loan to Tacloban RAS, whose authorized capital stock
was only three million pesos. Furthermore, the loan was secured by
properties owned by SARC, whose authorized capital stock was only five
million pesos. More importantly, Metrobank was guilty of negligence when it
failed to thoroughly investigate Consuelo and Ralph's authority to enter
contracts and encumber properties on behalf of Tacloban RAS and SARC. 33
14) Assuming that the loan and mortgage contracts are valid and
binding, the foreclosure proceedings are nevertheless null and void, for the
following reasons: a) Metrobank's petition for foreclosure lacks several
material details which render it fatally defective under A.M. No. 99-10-05-0;
34 b) SARC was not given personal notice of the foreclosure sale; c) the

publication of the notice of sale was defective because copies thereof were
attached to the record only after the auction sale had taken place, and
notices of publication were not furnished for all instances of publication, in
violation of A.M. No. 99-10-05-0; d) there was only one bidder in the auction
sale, in violation of item 5 of A.M. No. 99-10-05-0; and e) Section 47 of
Republic Act No. 8791 which sets different redemption periods for natural
and juridical persons is unconstitutional. 35
Accordingly, SARC prayed that the cloud on its title be removed by: 1)
nullifying the loan and mortgage agreements between Metrobank and
Tacloban RAS/SARC; 2) nullifying the foreclosure proceedings initiated by
Metrobank; and 3) cancelling the certificates of title issued to Metrobank. 36
SARC's petition was raffled to Branch 9 of the Tacloban City RTC, which
assumed jurisdiction over the case.
On February 13, 2002, Metrobank filed a Comment with Motion to
Dismiss. It argued that Ralph had authority to enter into the loan and
mortgage agreements, and that the mortgaged properties were personally
owned by Ralph and Consuelo. 37 Metrobank further alleged that Consuelo
personally bound herself as surety; 38 and that the final amount of the loan
was agreed upon pursuant to a restructuring upon Ralph's request, with the
approval of the boards of directors of both Tacloban RAS and SARC. 39
Metrobank also argued that SARC and its stockholders have no
standing to seek the cancellation of the loan and mortgage agreements
since SARC is not a party thereto. 40 It also argued that the petition filed by
SARC through Ramon et al. is in the nature of a derivative suit which must
be directed against SARC's officers, directors, or stockholders. Likewise,
since the petition is in the nature of a derivative suit, it is an intra-corporate
controversy over which regular courts like Branch 9 of the Tacloban City RTC
have no jurisdiction. 41 Metrobank thus prayed that the petition be dismissed
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 for lack of standing on the part of both Ramon et al. and SARC, and for lack
of jurisdiction.
In its Reply, SARC reiterated Ralph's lack of authority to bind Tacloban
RAS and SARC. It also disputed Metrobank's argument on standing,
maintaining that the case was properly filed against Metrobank, who was
responsible for clouding its titles by initiating the foreclosure proceedings. 42
In the same vein, SARC also rejected Metrobank's characterization of the
petition as an intra-corporate controversy, arguing that the loan and
mortgage contracts, as well as the foreclosure proceedings, are clouds on
SARC's title which may only be removed by the RTC, thus: 43
12.3 x x x [W]hat [SARC] is claiming is that [Metrobank] violated
the right of ownership of the [SARC] over the lands which are the
subject matter of this suit by having the same sold at foreclosure
proceedings and having the titles of [SARC] corporation cancelled and
transferred in [Metrobank]'s name when it did not have the right to
do the same because [SARC] did not consent to the Mortgage
Contract under which [Metrobank] is claiming rights and such
Mortgage is not supported by a valid principal obligation as the loan
was not consented to by [Tacloban RAS] based on the petition filed by
[Metrobank] for the extrajudicial foreclosure of the Mortgage
allegedly executed by Petitioner Salazar Ang Realty Corporation.
12.4 The relief sought which is the declaration of nullity of the
mortgage contract and foreclosure proceedings is demandable only
from the [Metrobank] as the holder of rights under the contract as
Mortgagee and the public officials responsible for performing duties
under Act 3135 and not from Ralph Salazar who is not a party to the
contract in question — the parties involved being Salazar Ang Realty
Corporation as the alleged Mortgagor and [Metrobank] as the
Mortgagee. 44
On April 25, 2002, the trial court denied Metrobank's motion to dismiss,
and ordered SARC to file an answer or other responsive pleading. 45
Thereafter, the parties filed their respective pre-trial briefs. On March 11,
2003, Metrobank filed a motion for inhibition, 46 which was denied. 47 On
November 6, 2005, the trial court granted SARC's request for preliminary
injunction to prevent Metrobank from further enforcing its claim to the
properties. 48 On February 1, 2005, Metrobank filed a Motion for Leave to
File an Amended Answer with Motion to Dismiss, which was denied in an
Order dated December 6, 2005. 49
On February 2, 2009, Metrobank filed yet another motion to dismiss, 50
reiterating its argument that SARC's petition is a derivative suit and
therefore an intra-corporate controversy. Under A.M. No. 00-11-03-SC, a
special commercial court was created in the Tacloban City RTC; however,
Branch 9, which is a regular trial court, continued to exercise jurisdiction
over the present case even if it has no jurisdiction thereover other than to
dismiss it. 51 SARC filed an opposition to Metrobank's motion to dismiss, 52
reiterating its stance that the case falls within the jurisdiction of the regular
courts regardless of its nature as a derivative suit because the reliefs sought
are within the jurisdiction of the regular courts. 53
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 On June 16, 2009, the trial court issued the first assailed order denying
Metrobank's latest motion to dismiss. The trial court ruled that the
requirement that cases formerly cognizable by the SEC be filed with a
special commercial court does not apply to the present case, which was filed
before A.M. No. 03-03-03-SC took effect on July 1, 2003. Assuming that the
requirement is applicable, the trial court ruled that it retains the jurisdiction
to transfer the case to the special commercial court in the Tacloban City
RTC, on the ground that jurisdiction, once acquired, continues until final
resolution of the case. 54 The trial court further ruled that the present case
does not involve an intra-corporate controversy, because it does not involve
a dispute between a corporation and its stockholders; rather, it involves a
suit by a corporation through its shareholders against another corporation
and certain public officers. Furthermore, as SARC correctly points out, its
causes of action are within the jurisdiction of the regular courts. 55
On February 23, 2010, the trial court rendered the second assailed
order 56 denying Metrobank's motion for reconsideration. 57
Still adamant that the case involves an intra-corporate controversy,
Metrobank elevated the matter to the CA, arguing that the trial court
committed grave abuse of discretion in narrowly defining intra-corporate
controversies as limited to suits involving disputes between a corporation
and its stockholders. 58
In dismissing Metrobank's petition, the CA ruled that under Rule 1 of
A.M. No. 01-2-04-SC, or the Interim Rules of Procedure Governing Intra-
Corporate Controversies (2001 IRPIC), derivative suits are also intra-
corporate controversies. Therefore, to determine if SARC's petition must be
tried under the 2001 IRPIC by a special commercial court, it must pass the
two-tier intra-corporate controversy test. The appellate court found that
SARC's petition does not pass the two-tier test. It satisfies neither the
relationship test, since it does not involve any of the intra-corporate
relationships enumerated in Section 5 (b) of Presidential Decree No. 902-A;
59 nor the controversy test, since it does not involve a dispute which is

intrinsically connected with the regulation of SARC or a dispute which arises

out of intra-corporate relations within SARC. 60 Rather, the case involves the
removal of the cloud on SARC's titles, which was created by the contracts
executed by Ralph and Consuelo allegedly on behalf of Tacloban RAS and
SARC. 61 Furthermore, Ramon, et al. are not stockholders of the corporation
they are suing; rather, they are suing on behalf of the corporation in which
they hold shares. 62 Citing jurisprudence, the CA held that "Where the
complaint is for annulment of mortgage with the mortgagee bank as
one of the defendants, the jurisdiction over said complaint is lodged
with the regular courts because the mortgagee bank has no intra-
corporate relationship with the stockholders;" 63 and that "the
question as to who is the true owner of the disputed property is civil in
nature and should be threshed out by a regular court," not by a special
commercial court. 64
The CA denied Metrobank's motion for consideration 65 through the
assailed resolution; hence, this petition, which raises the following errors:
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 1). THE COURT OF APPEALS SERIOUSLY ERRED IN USING THE TWO
TIER TEST AS A GAUGE IN DETERMINING WHETHER OR NOT A SUIT IS
A DERIVATIVE SUIT. ITS CONSEQUENT EMPLOYMENT OF SUCH TEST IS
WITHOUT BASIS AND VIOLATES SETTLED JURISPRUDENCE, SUCH AS,
THE CASE OF FILIPINAS PORT SERVICES, INC. V. GO AND HI-YIELD
REALTY V. COURT OF APPEALS AND THE INTERIM RULES OF
PROCEDURE GOVERNING INTRACO[R]PORATE CASES.
2). THE REGIONAL TRIAL COURT, BRANCH [9] TACLOBAN CITY,
WHICH IS AN ORDINARY COURT AND NOT A COMMERCIAL COURT,
DOES NOT HAVE JURISDICTION OVER A DERIVATIVE SUIT.
3). THE FINDING OF THE COURT OF APPEALS THAT THE CASE A
QUO IS NOT A DERIVATIVE SUIT BECAUSE THE STOCKHOLDERS WHO
BROUGHT THE SUIT FOR OR ON BEHALF OF RESPONDENT
CORPORATION ARE NOT STOCKHOLDERS OF PETITIONER, ASSUMING
EX ARGUMENTI, IS CORRECT WILL CAUSE THE DISMISSAL OF THE
CASE A QUO ON THE GROUND OF LACK OF CAUSE OF ACTION OR
PERSONALITY TO SUE. 66
The essential issue raised by the petition is whether Branch 9 of the
Tacloban City RTC, not being a special commercial court, has jurisdiction
over a derivative suit to annul a mortgage allegedly entered into by
corporate officers without proper authorization and where the defendants
are third parties with no relation to the suing corporation.
The Court's Ruling
I.
Metrobank argues that jurisdiction over derivative suits is vested in the
special commercial courts. It asserts that the CA erred in applying the two-
tier test to determine whether the case should be tried by a special
commercial court. The two-tier test applies only to the determination of the
existence of an intra-corporate controversy, and not to the determination of
whether an action is a derivative suit, which is determined using a different
three-part test.
The special commercial courts were organized pursuant to the
provisions of the Securities Regulation Code (SRC). 67 Sections 4.1 and 5.2
thereof provide:
Section 4. Administrative Agency. — 4.1. This Code shall be
administered by the Securities and Exchange Commission
(hereinafter referred to as the "Commission") as a Collegial body,
composed of a chairperson and (4) Commissioners, appointed by the
President for a term of (7) seven years each and who shall serve as
such until their successor shall have been appointed and qualified. A
Commissioner appointed to fill a vacancy occurring prior to the
expiration of the term for which his/her predecessor was appointed,
shall serve only for the unexpired portion of their terms under
Presidential Decree No. 902-A. Unless the context indicates
otherwise, the term "Commissioner" includes the Chairperson.
5.2. The Commission's jurisdiction over all cases
enumerated under section 5 of Presidential Decree No. 902-A
is hereby transferred to the Courts of general jurisdiction or
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 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 the 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 payment/rehabilitation cases
filed as of 30 June 2000 until finally disposed. (Underscoring and
emphasis supplied)
In turn, Section 5 of Presidential Decree No. 902-A, or the SEC
Reorganization Decree, defines certain classes of disputes and the tribunal
with jurisdiction over them. Over time, these classes of disputes have
become known as intra-corporate disputes o r intra-corporate controversies.
68

Pursuant to the transfer of jurisdiction effected therein, Section 5.2 of

the SRC also authorized the Supreme Court to designate certain RTCs to try
intra-corporate disputes. Thus, the Supreme Court designated certain RTCs
a s special commercial courts 69 and enacted the 2001 IRPIC to provide for
the procedure to be observed in trying the above-enumerated cases. 70
Interestingly, Rule 1, Section 1 (a) of the 2001 IRPIC also enumerates the
cases to which it shall be applicable. At this point, we compare this provision
with Section 5 of the SEC Reorganization Decree, which remains the source
provision for the subject matter jurisdiction of the special commercial courts:

Section 5, SEC Rule 1, Section 1(a), 2001 IRPIC

Reorganization Decree

SECTION 5. In addition to the SECTION 1. (a) Cases Covered. —

regulatory and adjudicative These Rules shall govern the
functions of the Securities and procedure to be observed in civil
Exchange Commission over cases involving the following:
corporations, partnerships 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 (1) Devices or schemes
involving: employed by, or any act of, the
board of directors, business
associates, officers or partners,
a) Devices or schemes amounting to fraud or
employed by or any acts, of the misrepresentation which may be
board of directors, business detrimental to the interest of the
associates, its officers or public and/or of the stockholders,
partners, amounting to fraud and partners, or members of any
misrepresentation which may be corporation, partnership, or
detrimental to the interest of the association;
public and/or of the stockholder,
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 partners, members of
associations or organizations (2) Controversies arising out of
registered with the Commission; intra-corporate, partnership, or
b) Controversies arising out association relations, between and
of intra-corporate or partnership among stockholders, members, or
relations, between and among associates; and between, any or all
stockholders, members, or of them and the corporation,
associates; between any or all of partnership, or association of which
them and the corporation, they are stockholders, members, or
partnership or association of associates, respectively;
which they are stockholders,
members or associates,
respectively; and between such
corporation, partnership or
association and the state insofar
as it concerns their individual (3) Controversies in the election
franchise or right to exist as such or appointment of directors,
entity; trustees, officers, or managers of
corporations, partnerships, or
c) Controversies in the associations;
election or appointments of
directors, trustees, officers or
managers of such corporations, (4) Derivative suits; and
partnerships or associations.
(5) Inspection of corporate
books.

Conspicuous here is the fact that the first three items of both
enumerations are essentially the same, for the obvious reason that the 2001
IRPIC was intended to serve as the procedural regime for the cases defined
in Section 5 of the SEC Reorganization Decree, jurisdiction over which has
been transferred to the RTCs. The confusion which arose in the present case
is engendered partly by the addition of derivative suits as a separate item in
the 2001 IRPIC.
II.
A derivative suit is one of three kinds of suits that may be filed by a
stockholder or member of a corporation or association, viz.:
Suits by stockholders or members of a corporation based on wrongful
or fraudulent acts of directors or other persons may be classified into
individual suits, class suits, and derivative suits. Where a stockholder
or member is denied the right of inspection, his suit would be
individual because the wrong is done to him personally and not to the
other stockholders or the corporation. Where the wrong is done to a
group of stockholders, as where preferred stockholders' rights are
violated, a class or representative suit will be proper for the
protection of all stockholders belonging to the same group. But where
the acts complained of constitute a wrong to the corporation itself,
then the cause of action belongs to the corporation and not to the
individual stockholder or member. Although in most every case of
wrong to the corporation, each stockholder is necessarily affected
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 because the value of his interest therein would be impaired, this fact
of itself is not sufficient to give him an individual cause of action since
the corporation is a person distinct and separate from him, and can
and should itself sue the wrongdoers. Otherwise, not only would the
theory of separate entity be violated, but there would be multiplicity
of suits as well as a violation of the priority rights of creditors.
Furthermore, there is the difficulty of determining the amount of
damages that should be paid to each individual stockholder.
However, in cases of mismanagement where the wrongful acts
committed by the directors or trustees themselves, a
stockholder or member may find that he has no redress
because the former are vested by law with the right to decide
whether or not the corporation should sue, and they will
never be willing to sue themselves. The corporation would
thus be helpless to seek remedy. Because of the frequent
occurrence of such a situation, the common law gradually
recognized the right of a stockholder to sue on behalf of the
corporation in what eventually became known as a
"derivative suit." It has been proven to be an effective
remedy of the minority against abuses of management. Thus,
an individual stockholder is permitted to institute a derivative
suit on behalf of the corporation wherein he holds stock in
order to protect or vindicate corporate rights, whenever
officials of the corporation refuse to sue or are the ones to be
sued or hold the control of the corporation. In such actions, the
suing stockholder is regarded as the nominal party, with the
corporation as the party in interest. 71
In Ago Realty & Development Corp. v. Ago, 72 we further elaborated on
this basic principle that derivative suits are equitable exception to the rule
that a corporation's power to bring suits may only be exercised through its
board of directors:
While corporations are subjected to the State's broad regulatory
powers, it is their directors and officers who are tasked with
addressing questions of internal policy and management. The
business of a corporation is conducted by its board of directors, and
so long as the board acts in good faith, the State, through the courts,
may not interfere with its management decisions. This finds support
in Section 23 of the Corporation Code, which provides that a
corporation exercises its powers, conducts its business, and controls
and holds its property through its board of directors.
As creatures of the law, corporations only possess those powers that
are granted through statute, either expressly or by way of implication,
or those that are incidental to their existence.
One of the powers expressly granted by law to corporations is the
power to sue. As with other corporate powers, the power to sue is
lodged in the board of directors, acting as a collegial body. Thus, in
the absence of any clear authority from the board, charter, or by-
laws, no suit may be maintained on behalf of the corporation. A case
instituted by a corporation without authority from its board of
directors is subject to dismissal on the ground of failure to state a
cause of action.
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 In certain instances, however, the
stockholders may sue on behalf of the
corporation
As an exception to the foregoing rule, jurisprudence has recognized
certain instances when minority stockholders may bring suits on
behalf of corporations. Where the board of directors itself is a party to
the wrong, either because it is the author thereof or because it
refuses to take remedial action, equity permits individual
stockholders to seek redress. These actions have come to be known
as derivative suits. In Chua v. Court of Appeals , the Court defined a
derivative suit as "a suit by a shareholder to enforce a corporate
cause of action."
In derivative suits, it is the corporation that is the victim of the wrong.
As such, it is the corporation that is properly regarded as the real
party in interest, while the relator-stockholder is merely a nominal
party. The corporation must be impleaded so that the benefits of the
suit accrue to it and also because it must be barred from bringing a
subsequent case against the same defendants for the same cause of
action. Stated otherwise, the judgment rendered in the suit must
constitute res judicata against the corporation, even though it refuses
to sue through its board of directors.
xxx xxx xxx
The right of stockholders to bring derivative suits is not based on any
provision of the Corporation Code or the Securities Regulation Code,
but is a right that is implied by the fiduciary duties that directors owe
corporations and stockholders. Derivative suits are, therefore,
grounded not on law, but on equity. 73
Jurisprudence has developed three requisites for a derivative suit,
which are first enumerated together in the 1989 case of San Miguel
Corporation v. Kahn: 74
The requisites for a derivative suit are as follows:
a) the party bringing suit should be a shareholder as of the time of
the act or transaction complained of, the number of his shares not
being material;
b) he has tried to exhaust intra-corporate remedies, i.e., has
made a demand on the board of directors for the appropriate relief
but the latter has failed or refused to heed his plea;
c) the cause of action actually devolves on the corporation, the
wrongdoing or harm having been, or being caused to the corporation
and not to the particular stockholder bringing the suit. 75
This is the three-part test insisted upon by Metrobank; however, this
test has been superseded by Rule 8, Section 1 of the 2001 IRPIC, which
obliquely defines a derivative suit, or a derivative action, as an action
brought by a stockholder or member in the name of a corporation or
association. 76 That same provision states that such actions may be brought,
provided that the following requisites, which must be specifically alleged in
the complaint, 77 are met:
(1) The party suing on the corporation or association's behalf was
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 a stockholder or member at the time the acts or transactions subject
of the action occurred and at the time the action was filed;
(2) Such party exerted all reasonable efforts, and alleges the
same with particularity in the complaint, to exhaust all remedies
available under the articles of incorporation, by-laws, laws or rules
governing the corporation or partnership to obtain the relief he
desires;
(3) No appraisal rights are available for the act or acts complained
of; and
(4) The suit is not a nuisance or harassment suit.
(5) The suit must be brought in the name of the corporation. 78
III.
Prior to the enactment of the SEC Reorganization Decree in 1976,
jurisdiction over derivative suits was lodged with the courts of general
jurisdiction. 79
With the advent of the SEC Reorganization Decree, jurisprudence has
resorted to Section 5 thereof to allocate jurisdiction between the SEC and the
regular courts. The application of Section 5 was eventually standardized into
a two-tier test which has been applied to all kinds of stockholder suits,
whether individual, class, or derivative. 80 The two "tiers" are actually two
separate tests: the first test assesses the relationship of the parties of the
case to one another, 81 and the second test assesses nature of the
controversy among the parties: 82
To determine whether a case involves an intra-corporate controversy,
x x x two elements must concur: (a) the status or relationship of the
parties; and (2) the nature of the question that is the subject of their
controversy.
The first element requires that the controversy must arise out of
intra-corporate or partnership relations between any or all of the
parties and the corporation, partnership or association of which they
are 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 franchises. The second element requires
that the dispute among the parties be intrinsically connected with the
regulation of the corporation. If the nature of the controversy involves
matters that are purely civil in character, necessarily, the case does
not involve an intra-corporate controversy. 83
The two-tier test ensures that cases involving corporations but do not
involve actual intra-corporate disputes are filtered out:
[I]n the 1984 case of DMRC Enterprises v. Este del Sol Mountain
Reserve, Inc., the Court introduced the nature of the controversy test.
We declared in this case that it is not the mere existence of an intra-
corporate relationship that gives rise to an intra-corporate
controversy; to rely on the relationship test alone will divest the
regular courts of their jurisdiction for the sole reason that the dispute
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 involves a corporation, its directors, officers, or stockholders. We saw
that there is no legal sense in disregarding or minimizing the value of
the nature of the transactions which gives rise to the dispute.
Under the nature of the controversy test, the incidents of that
relationship must also be considered for the purpose of ascertaining
whether the controversy itself is intra-corporate. The controversy
must not only be rooted in the existence of an intra-corporate
relationship, but must as well pertain to the enforcement of the
parties' correlative rights and obligations under the Corporation Code
and the internal and intra-corporate regulatory rules of the
corporation. If the relationship and its incidents are merely incidental
to the controversy or if there will still be conflict even if the
relationship does not exist, then no intra-corporate controversy
exists. 84
Subsequent decisions further hold that the following relationships are
considered intra-corporate: (1) those between the corporation, partnership
or association and the public; (2) those between the corporation, partnership
or association and the State insofar as its franchise, permit or license to
operate is concerned; (3) those between the corporation, partnership or
association and its stockholders, partners, members or officers; and (4)
those among the stockholders, partners or associates themselves. 85
Likewise, a controversy is intra-corporate in nature if it involves the
enforcement of the parties' correlative rights and obligations under the
Corporation Code and the internal and intra-corporate regulatory rules of the
corporation. 86
Thus, under the regime of the SEC Reorganization Decree, it appears
that derivative suits which satisfy the two-tier test must be tried by the SEC,
while those that do not must be tried by the regular courts. 87 This view is
manifested in the 2012 case of Lisam Enterprises v. Banco de Oro Unibank
(Lisam), 88 which, like the present case, also involved a derivative suit for
annulment of mortgage filed by a shareholder against the president and the
treasurer of the corporation, as well as the mortgagee bank. The bank filed a
motion to dismiss, claiming the stockholder's lack of legal capacity to sue,
failure to state a cause of action, and litis pendentia. The trial court granted
the motion to dismiss and denied the stockholder's motion to amend the
complaint to include an allegation that she tried to exhaust intra-corporate
remedies. We allowed the stockholder to resort directly to the Supreme
Court to resolve pure questions of law, and reversed the trial court, viz.:
With the amendment stating "that plaintiff Lolita A. Soriano likewise
made demands upon the Board of Directors of Lisam Enterprises, Inc.,
to make legal steps to protect the interest of the corporation from
said fraudulent transaction, but unfortunately, until now, no such
legal step was ever taken by the Board, hence, this action for the
benefit and in behalf of the corporation," does the amended
complaint now sufficiently state a cause of action? In Hi-Yield Realty,
Incorporated v. Court of Appeals, the Court enumerated the requisites
for filing a derivative suit, as follows:
a) the party bringing the suit should be a shareholder as of the
time of the act or transaction complained of, the number of his shares
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 not being material;
b) he has tried to exhaust intra-corporate remedies, i.e., has
made a demand on the board of directors for the appropriate relief
but the latter has failed or refused to heed his plea; and
c) the cause of action actually devolves on the corporation, the
wrongdoing or harm having been, or being caused to the corporation
and not to the particular stockholder bringing the suit.
A reading of the amended complaint will reveal that all the foregoing
requisites had been alleged therein. Hence, the amended complaint
remedied the defect in the original complaint and now sufficiently
states a cause of action.
Respondent PCIB should not complain that admitting the amended
complaint after they pointed out a defect in the original complaint
would be unfair to them. They should have been well aware that due
to the changes made by the 1997 Rules of Civil Procedure,
amendments may now substantially alter the cause of action or
defense. It should not have been a surprise to them that petitioners
would redress the defect in the original complaint by substantially
amending the same, which course of action is now allowed under the
new rules.
The next question then is, upon admission of the amended complaint,
would it still be proper for the trial court to dismiss the complaint?
The Court answers in the negative.
Saura v. Saura, Jr. is closely analogous to the present case. In Saura,
the petitioners therein, stockholders of a corporation, sold a disputed
real property owned by the corporation, despite the existence of a
case in the Securities and Exchange Commission (SEC) between
stockholders for annulment of subscription, recovery of corporate
assets and funds, etc. The sale was done without the knowledge of
the other stockholders, thus, said stockholders filed a separate case
for annulment of sale, declaration of nullity of deed of exchange,
recovery of possession, etc., against the stockholders who took part
in the sale, and the buyer of the property, filing said case with the
regular court (RTC). Petitioners therein also filed a motion to dismiss
the complaint for annulment of sale filed with the RTC, on the ground
of forum shopping, lack of jurisdiction, lack of cause of action, and litis
pendentia among others. The Court held that the complaint for
annulment of sale was properly filed with the regular court, because
the buyer of the property had no intra-corporate relationship with the
stockholders, hence, the buyer could not be joined as party-defendant
in the SEC case. To include said buyer as a party-defendant in the
case pending with the SEC would violate the then existing rule on
jurisdiction over intra-corporate disputes. The Court also struck down
the argument that there was forum shopping, ruling that the issue of
recovery of corporate assets and funds pending with the SEC is a
totally different issue from the issue of the validity of the sale, so a
decision in the SEC case would not amount to res judicata in the case
before the regular court. Thus, the Court merely ordered the
suspension of the proceedings before the RTC until the final outcome
of the SEC case.

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 The foregoing pronouncements of the Court are exactly in point with
the issues in the present case. Here, the complaint is for annulment of
mortgage with the mortgagee bank as one of the defendants, thus, as
held in Saura, jurisdiction over said complaint is lodged with the
regular courts because the mortgagee bank has no intra-corporate
relationship with the stockholders. There can also be no forum
shopping, because there is no identity of issues. The issue being
threshed out in the SEC case is the due execution,
authenticity or validity of board resolutions and other
documents used to facilitate the execution of the mortgage,
while the issue in the case filed by petitioners with the RTC is
the validity of the mortgage itself executed between the bank
and the corporation, purportedly represented by the spouses
Leandro and Lilian Soriano, the President and Treasurer of
petitioner LEI, respectively. Thus, there is no reason to
dismiss the complaint in this case. 89
Obviously, Lisam relies heavily on the earlier ruling in Saura v. Saura,
Jr. (Saura) , 90 which was decided prior to the transfer of jurisdiction over
intra-corporate controversies from the SEC to the courts. One of the reasons
put forth by the Saura court in making a distinction between derivative suits
cognizable by the SEC and derivative suits cognizable by the regular courts
is that the SEC is a specialized administrative agency which has jurisdiction
over intra-corporate disputes but not over actions to annul mortgages or
sales:
"It is true that the trend is towards vesting administrative bodies like
the SEC with the power to adjudicate matters coming under their
particular specialization, to insure a more knowledgeable solution of
the problems submitted to them. This would also relieve the regular
courts of a substantial number of cases that would otherwise swell
their already clogged dockets. But as expedient as this policy may be,
it should not deprive the courts of justice of their power to decide
ordinary cases in accordance with the general laws that do not
require any particular expertise or training to interpret and apply.
Otherwise, the creeping take-over by the administrative agencies of
the judicial power vested in the courts would render the judiciary
virtually impotent in the discharge of the duties assigned to it by the
Constitution."
Since Sandalwood has no intra-corporate relationship with the
respondents, it cannot be joined as party-defendant in the SEC case
as to do so would violate the rule on jurisdiction. Therefore,
respondents' complaint against Sandalwood for the annulment of the
sale of realty was properly filed before the regular court. This action
must await the final ruling of the issue raised in SEC Case No. 2968,
questioning the validity of the deed of exchange, the resolution of
which is a logical antecedent of the issue involved in the civil action
against Sandalwood. Thus, respondents' complaint for annulment of
sale can only succeed if final judgment is rendered in SEC Case No.
2968, annulling the deed of exchange executed in favor of VGFI. 91
IV.
Upon the transfer of the SEC's jurisdiction over intra-corporate disputes
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 pursuant to Section 5.2 of the SRC and the 2001 IRPIC, the distinction
between "intra-corporate" and "non-intra-corporate" derivative suits was
obliterated; and jurisdiction over all derivative suits was returned to the trial
courts.
Relative thereto, we have already mentioned that the 2001 IRPIC was
intended to serve as the procedural regime to govern the cases defined in
Section 5 of the SEC Reorganization Decree, Thus, the express inclusion of
derivative suits in the classes of cases governed by the 2001 IRPIC implies
that all derivative suits must now be tried by the special commercial courts.
This conclusion is further bolstered by an examination of the concept and
nature of a derivative suit. Since a derivative suit is an equity-based
procedural device which allows an unauthorized person to sue on behalf of a
corporation in order to remedy official or directorial mismanagement, the
very act of instituting a derivative suit implies the existence of an intra-
corporate dispute, regardless of the relief sought by such suit or the parties
impleaded therein. Couched in the language of Section 5 (b) of the SEC
Reorganization Decree, the mere resort to a derivative suit implies the
existence of a "controvers[y] arising out of intra-corporate x x x relations,
between and among stockholders [or] members; between any or all
of them and the corporation x x x or association of which they are
stockholders [or] members." In the case of a derivative suit, this would
normally entail a dispute between an individual stockholder or a group of
stockholders, against the directors, the officers, or the majority stockholders.
This view is based not only on the text of the statute but also on
jurisprudence. In an obiter dictum in the 1997 case of Western Institute of
Technology, Inc. v. Salas , the Court expressly acknowledged that a
derivative suit is an intra-corporate dispute as defined in Section 5 (b) of the
SEC Reorganization Decree. 92 This obiter dictum became doctrine in Forest
Hills Golf and Country Club, Inc. v. Fil-Estate Properties, Inc. , 93 where we
rejected the suing shareholder's argument that the case, while admittedly a
derivative suit, did not involve an intra-corporate dispute because he was
suing the other shareholders not in their capacity as shareholders but as
third-party developers of a property owned by the corporation, viz.:
Petitioner FHGCCI's contention that the instant case does not involve
an intra-corporate controversy as it was filed against respondents
FEPI and FEGDI as developers, and not as shareholders of the
corporation holds no water. Apparent in the Complaint are allegations
of the interlocking directorships of the Board of Directors of petitioner
FHGCCI and respondents FEPI and FEGDI, the conflict of interest of
the Board of Directors of petitioner FHGCCI, and their bad faith in
carrying out their duties. Likewise alleged is that respondent FEPI
and, later, respondent FEGDI are shareholders of petitioner FHGCCI
which under the project agreement, respondent FEPI was tasked to
perform the development and construction work and other
obligations and undertakings of the project as full payment of its
subscription to the authorized capital stock of petitioner FHGCCI,
which it later assigned to respondent FEGDI. Considering these
allegations, we find that, contrary to the claim of petitioner FHGCCI,
there are unavoidably intra-corporate controversies intertwined in the
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 specific performance case.
Moreover, a derivative suit is a remedy designed by equity as a
principal defense of the minority shareholders against the abuses of
the majority. Under the Corporation Code, the corporation's power to
sue is lodged with its board of directors or trustees. However, when
its officials refuse to sue, or are the ones to be sued, or hold control of
the corporation, an individual stockholder may be permitted to
institute a derivative suit to enforce a corporate cause of action on
behalf of a corporation in order to protect or vindicate its rights. In
such actions, the corporation is the real party in interest, while the
stockholder suing on behalf of the corporation is only a nominal party.
Considering its purpose, a derivative suit, therefore, would
necessarily touch upon the internal affairs of a corporation. It
is for this reason that a derivative suit is among the cases covered by
the Interim Rules of Procedure Governing Intra-Corporate
Controversies, A.M. No. 01-2-04-SC, March 13, 2001. 94
V.
The cognizability of derivative suits by the special commercial courts is
further bolstered by the 2015 case of Gonzales, et al. v. GJH Land, Inc., et al.
(Gonzales), 95 where the Court En Banc laid down the following guidelines:
1. If a commercial case filed before the proper RTC is wrongly
raffled to its regular branch, the proper courses of action are as
follows:
1.1 If the RTC has only one branch designated as a
Special Commercial Court, then the case shall be referred
to the Executive Judge for re-docketing as a commercial
case, and thereafter, assigned to the sole special branch;
1.2 If the RTC has multiple branches designated as
Special Commercial Courts, then the case shall be
referred to the Executive Judge for re-docketing as a
commercial case, and thereafter, raffled off among those
special branches; and
1.3 If the RTC has no internal branch designated as a
Special Commercial Court, then the case shall be referred
to the nearest RTC with a designated Special Commercial
Court branch within the judicial region. Upon referral, the
RTC to which the case was referred to should re-docket
the case as a commercial case, and then: (a) if the said
RTC has only one branch designated as a Special
Commercial Court, assign the case to the sole special
branch; or (b) if the said RTC has multiple branches
designated as Special Commercial Courts, raffle off the
case among those special branches.
2. If an ordinary civil case filed before the proper RTC is wrongly
raffled to its branch designated as a Special Commercial Court, then
the case shall be referred to the Executive Judge for re-docketing as
an ordinary civil case. Thereafter, it shall be raffled off to all courts of
the same RTC (including its designated special branches which, by
statute, are equally capable of exercising general jurisdiction same as
regular branches), as provided for under existing rules. 96
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 T h e Gonzales guidelines are based on the Court En Banc's ruling
therein that the transfer of jurisdiction effected by Section 5.2 of the SRC
was directed at "the courts of general jurisdiction," that is, to the RTCs in
general, rather than to the special commercial courts alone. In authorizing
the Supreme Court to designate special commercial courts, the statute did
not delegate the power to define subject matter jurisdiction; rather, it
authorized the Supreme Court to designate the specific branches of the
RTCs which will exercise the jurisdiction that has been vested in the RTCs
in general. 97 This interpretation supersedes previous rulings which
mandated the dismissal of intra-corporate cases that were mistakenly filed
with the regular RTCs. 98 Under the current rules, mistakenly filed intra-
corporate cases and non-intra-corporate cases can now be shuttled to the
proper RTC.
Given that jurisdiction over both derivative suits and intra-corporate
controversies has now been essentially coalesced with the RTCs, the
objection interposed in Saura and Lisam with respect to the SEC's lack of
competence and jurisdiction over non-corporate issues that may be
implicated in a derivative suit, or over parties without any relation to the
corporation, has already been obviated. In Concorde Condominium, Inc. v.
Baculio, 99 we ruled that special commercial courts are still considered
courts of general jurisdiction, and are therefore empowered not only to hear
and decide cases under its general jurisdiction, but also to assume
jurisdiction over parties unrelated to the corporation. 100
Furthermore, splitting the exercise of jurisdiction over cases governed
by the 2001 IRPIC between the regular courts and the special commercial
courts, as the assailed CA decision decrees, could lead to confusion and case
management problems. For the sake of uniformity and efficiency in judicial
administration, it is imperative that all cases governed by the 2001 IRPIC,
derivative suits included, be tried by the special commercial courts.
VI.
Applying the foregoing disquisitions to the case at bar, we find that
while SARC's suit is indeed a derivative suit which is transferable to the
relevant special commercial court in accordance with the Gonzales
guidelines, it nevertheless suffers from fatal defects which merit its
dismissal.
SARC's petition expressly alleges that it is being filed as a derivative
suit:
6. This is a stockholder's derivative suit instituted by
PETITIONERS RAMON A. SALAZAR, JR., ROGER A. SALAZAR, ROBERT
A. SALAZAR and ROSEMARIE S. FERNANDEZ for and in behalf of
SALAZAR ANG REALTY CORPORATION (Plaintiff-corporation), as its
incorporators and stockholders x x x. Said Petitioners were
stockholders of the corporation at the time that: 1) a loan in the
amount of EIGHTEEN MILLION FIVE HUNDRED THOUSAND PESOS was
obtained from the Respondent Bank evidenced by a promissory note
(Annex "B") allegedly signed by the late Consuelo Ang Salazar and
Ralph Ang Salazar as representatives of Tacloban RAS Construction
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 Corporation x x x; 2) the mortgage contract (Annex "C") in favor of
the Respondent bank was allegedly executed by the corporation
through the late Consuelo A. Salazar who was described as the
corporation's President and its Secretary Ralph A. Salazar x x x;
xxx xxx xxx
7. This suit is brought by the above[-]mentioned incorporators and
stockholders for the following reasons:
xxx xxx xxx
7.2. Ramon Ve. Salazar, director and Vice President of the
Corporation died on March 30, 1995, before the mortgage contract
which is sought to be declared null and void was executed. No
document was filed with the SEC which shows that an election was
held by the board of directors in order to fill the vacancy. Consuelo A.
Salazar passed away last October 21, 2001. The remaining directors
of the corporation have not taken any steps to vindicate the
corporation's rights. Demand upon the board of directors to file suit in
behalf of the corporation would be useless in that the mortgage
contract, the validity of which is being questioned in this suit
appeared to have been approved by said board through a supposed
board resolution certified by the corporate secretary Ralph A. Salazar
and the Secretary's Certificate of said resolution was annotated on
the titles issued in the name of Salazar Ang Realty Corporation. This
however, cannot be determined with certainty by the Petitioners
stockholders as Ralph A. Salazar acting as the corporate secretary of
Plaintiff Corporation has custody of the stock and transfer book as
well as the resolutions and other documents and papers of the
corporation.
7.3. Time is of the essence considering that corporate assets have
now been registered in the name of the Respondent Bank and the
exhaustion of remedies within the corporation which would delay the
filing of a suit would only cause irreparable damage to the
corporation. 101
Apart from the express statement in paragraph 6, the rest of the
petition's allegations clearly reveal that the crux of the dispute is the illegal
and ultra vires approval of the mortgage by the SARC board without the
consent of the suing shareholders, and despite the vacancies in the board
created by the deaths of Ramon. Sr. and Consuelo. These allegations
unmistakably show the existence of a "controversy arising out of intra-
corporate relations," with the suing shareholders assailing the decisions of
Ralph and the SARC board. The non-joinder of Ralph and the other officers or
shareholders of SARC, or even of Tacloban RAS, is of no moment, because
non-joinder of parties is not a ground for dismissal, and the court can order
their inclusion at any time. 102 While the reliefs sought are directed at
Metrobank and the officers who conducted the auction sale, the suing
shareholders' cause of action is ultimately rooted in the illegal and improper
ratification and authorization of the mortgage contract by Ralph and the
SARC board.
Having established that the petition is a derivative suit, we determine
its compliance with the requisites therefor under the 2001 IRPIC.
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 There is no question that the suit was brought in SARC's name by
Ramon et al., who were stockholders at the time the assailed mortgage
contract was entered into. The petition also contains allegations justifying
the non-exhaustion of intra-corporate remedies. 103 However, it does not
comply with Rule 1, Section 1 (3) of the 2001 IRPIC, regarding the availment
of appraisal rights.
Among the grounds raised by SARC for the nullification of the mortgage
contract is that it constitutes an encumbrance of substantially all the assets
of the corporation which must be authorized by its stockholders in a meeting
for that purpose, pursuant to Section 40 of the Corporation Code. 104 Under
that provision, a mortgage of all or substantially all of the corporation's
assets is subject to the exercise of the appraisal right. It was therefore
incumbent upon herein respondents to make particular allegations regarding
their availment of their appraisal rights or the impossibility or futility thereof.
105 Under the 2001 IRPIC, a derivative suit must particularly allege that there
are no appraisal rights available against the assailed corporate action. 106
Conversely, if appraisal rights are available, such fact must be alleged and
the non-availment thereof must be properly explained, more so since a
derivative suit must particularly allege that the stockholder exerted all
reasonable efforts to exhaust all remedies available under the laws and
regulations governing the corporation. 107
Furthermore, SARC's petition lacks a categorical statement that it is
not a nuisance or harassment suit. In order to provide legal justification for
what is essentially an unauthorized suit filed on behalf of the corporation,
stockholders who resort to the equitable remedy of a derivative suit must
categorically declare under oath that the remedy is being sought for just and
legitimate purposes and not as a form of nuisance or harassment. 108 This
principle is now enshrined in Rule 8, Section 1 of the 2001 IRPIC, which
explicitly states that nuisance or harassment suits shall be dismissed. 109
To conclude, we reiterate that a derivative suit is an equitable
exception to the rule that the corporate power of suit is exercisable only
through the board of directors. A proper resort to this equitable procedural
device must satisfy the requisites laid down by law and procedure for its
institution; thus, courts must deny resort when such requisites are not met.
110

WHEREFORE, the present petition is GRANTED. The March 25, 2014

Decision and the May 8, 2015 Resolution of the Court of Appeals in CA-G.R.
SP No. 05050 are hereby REVERSED and SET ASIDE. Civil Case No. 2001-
11-164, entitled Salazar Ang Realty Corporation, represented by
Incorporators-Stockholders Ramon A. Salazar, Jr., Robert A. Salazar, Roger A.
Salazar and Rosemarie Salazar-Fernandez, versus Metropolitan Bank & Trust
Company, Ex Officio Sheriff Atty. Blanche Astilla Salino, Sheriff IV Luis G.
Copuaco, and the Register of Deeds, Tacloban City, is hereby DISMISSED.
SO ORDERED.
Gesmundo, C.J., Caguioa, Inting and Dimaampao, JJ., concur.

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 Footnotes

* Also referred to in the records as "Salazar Ang Realty Corporation."

** Presiding Judge Rogelio C. Sescon of the Regional Trial Court of Tacloban City,
Branch 9 was dropped as a party respondent pursuant to Rule 45, Section 4
of the Rules of Court. See Supreme Court Resolution dated August 17, 2015,
rollo, p. 528.
1. Id. at 32-68.
2. Id. at 12-24. Promulgated on March 25, 2014. Penned by Associate Justice
Marilyn B. Lagura-Yap, with Associate Justices Gabriel T. Ingles and Ma. Luisa
C. Quijano-Padilla concurring.

3. Id. at 27-29. Promulgated on May 8, 2015. Penned by Associate Justice Marilyn

B. Lagura-Yap, with Associate Justices Gabriel T. Ingles and Ma. Luisa C.
Quijano-Padilla concurring.

4. Id. at 140-145.

5. Id. at 146.
6. Id. at 34.

7. Id. at 178-180.
8. Id. at 147.

9. Id.

10. Id. at 149, 195.

11 Hereinafter referred to as Ralph. Also referred to in the records as "Ralph Pastor
A. Salazar."

12. Hereinafter referred to as Consuelo.

13. Rollo, p. 148.

14. Id. at 162.

15. Id. at 148.

16. Id. at 148-149, 193-194, 225.

17. Id. at 150-153.

18. Id. at 162.

19. Id. at 149.

20. Id. at 150.

21. Id. at 225-226.

22. Id. at 275-281, 300.

23. Id. at 216.

24. Id. at 215.

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 25. Id. at 210-214.
26. Id. at 150-153.

27. Id. at 219-223.

28. Id. at 154-155.

29. Id. at 156-157.

30. Id. at 157-160.

31. Id. at 160-161.

32. Id. at 161-162.

33. Id. at 162-164.

34. Procedure in Extra-Judicial Foreclosure of Mortgage.

35. Rollo, pp. 164-173.

36. Id. at 174.

37. Id. at 305-307.

38. Id. at 307.

39. Id. at 307-308.

40. Id. at 311-312.

41. Id. at 311.

42. Id. at 337.

43. Id.
44. Id. at 338.

45. Id. at 350.

46. Id. at 426-431.

47. Id. at 435-437.

48. Id. at 433-434.

49. Id. at 79.

50. Id. at 454-456.

51. Id. at 455-456.

52. Id. at 459-464.
53. Id. at 459-461.

54. Id. at 144.

55. Id. at 145.
56. Id. at 146.
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 57. Id. at 465-473.
58. Id. at 115-116.

59. Decree on the Reorganization of the Securities and Exchange Commission.

Hereinafter referred to as SEC Reorganization Decree.
60. Rollo, pp. 85-87.
61. Id. at 87.

62. Id. at 86-87.

63. Id. at 87. Emphasis in the original.
64. Id. at 87-88.
65. Id. at 478-493.

66. Id. at 51-52. Citations omitted.

67. REPUBLIC ACT NO. 8799, enacted on July 19, 2000.
68. See Sunset View Condominium Corp. v. Hon. Campos, Jr. etc., et al., 191 Phil.
606, 610-611 (1981); Philex Mining Corp. v. Hon. Reyes, et al., 204 Phil. 241,
245-246 (1982); Union Glass & Container Corp., et al. v. SEC, et al., 211 Phil.
222, 236 (1983); DMRC Enterprises v. Este Del Sol Mountain Reserve, Inc. ,
217 Phil. 280, 287 (1984); Zaide, Jr. v. Court of Appeals, 263 Phil. 464, 469
(1990); Securities and Exchange Commission v. Court of Appeals, 278 Phil.
141, 154 (1991); Espino v. NLRC, et al., 310 Phil. 60, 73 (1995).
69. A.M. No. 00-11-03-SC, Designation of Certain Branches of RTCs to Try and
Decide Cases Formerly Cognizable by SEC, November 21, 2000; A.M. No. 03-
03-03-SC, Re: Consolidation of Intellectual Property Courts with Commercial
Courts, June 17, 2003.
70. The original heading of the resolution enacting the 2001 IRPIC is "RE: Proposed
Interim Rules of Procedure Governing Intra-Corporate Controversies under
R.A. No. 8799."

71. Cua, Jr., et al. v. Tan, et al., 622 Phil. 661, 715-716 (2009), citing I Jose C.
Campos & Ma. Clara Lopez-Campos, THE CORPORATION CODE: COMMENTS,
NOTES, AND SELECTED CASES 819-820 (1990). Emphasis and underlining
supplied.

72. G.R. Nos. 210906 & 211203, October 16, 2019.

73. Id. Citations omitted.
74. 257 Phil. 459 (1989).

75. Id. at 470. Citations omitted. These requisites are derived from earlier
jurisprudence. See citations in the original reported text. See also I Jose C.
Campos & Ma. Clara Lopez-Campos, supra note 71 at 820-821.

76. Villamor, Jr. v. Umale, 744 Phil. 31, 46-47 (2014).

77. Forest Hills Golf and Country Club, Inc. v. Fil-Estate Properties. Inc., et al. , 790
Phil. 729, 743-744 (2016).

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 78. The bringing of the suit in the corporation's name is a requisite for a derivative
suit which is implicit from the first sentence of Rule 8, Section 1 of the 2001
IRPIC. Villamor, Jr. v. Umale, supra note 76. The corporation is an
indispensable party in a derivative suit. Cua, Jr., et al. v. Tan, et al., supra
note 71 at 688. Thus, any judgment rendered without impleading the
corporation is null and void. See Guy, et al. v. Guy, 694 Phil. 354 (2012).
79. See REPUBLIC ACT NO. 296, Sections 44 & 86, in relation to the following
cases: Gamboa v. Victoriano , 179 Phil. 36, 42-43 (1979); Republic Bank v.
Cuaderno, et al., 125 Phil. 1076, 1083 (1967); Evangelista v. Santos, 86 Phil.
387, 395 (1950); Everett v. Asia Banking Corporation, et al., 49 Phil. 512, 527
(1926); and Pascual v. Del Saz Orozco, 19 Phil. 82, 95-96 (1911).
80. See Lisam Enterprises, Inc., et al. v. Banco de Oro Unibank, Inc., et al., 686 Phil.
293 (2012); Saura v. Saura, Jr., 372 Phil. 337 (1999); Union Glass & Container
Corp., et al. v. SEC, et al., 211 Phil. 222 (1983).
81. SEC REORGANIZATION DECREE, Section 5, Paragraph (b).

82. Id., id., Paragraphs (a) and (c). See Ku v. RCBC Securities, Inc., G.R. No.
219491, October 17, 2018, citing Medical Plaza Makati Condominium Corp. v.
Cullen, 720 Phil. 732, 742-743 (2013).
83. Speed Distributing Corp. v. Court of Appeals, 469 Phil. 739, 758-759 (2004).
Citations omitted.
84. Reyes v. Hon. RTC of Makati, Branch 142, et al., 583 Phil. 591, 608 (2008).
Citations omitted.
85. PHILCOMSAT Corp., et al. v. Sandiganbayan 5th Division, et al., 760 Phil. 893,
905 (2015).

86. San Jose, et al. v. Ozamiz, 813 Phil. 669, 679 (2017).
87. See Imperial, et al. v. Judge Armes, et al., 804 Phil. 439, 470 (2017), and cases
cited therein.
88. Supra note 80.
89. Id. at 305.

90. Supra note 80.

91. Id. at 348-349. Contra, Aquino, J., dissenting in Union Glass & Container Corp.,
et al. v. SEC, et al., supra note 80.
92. 343 Phil. 742, 754 (1997).

93. Supra note 77.

94. Id. at 741-742. Citations omitted, emphasis and underlining supplied.
95. 772 Phil. 483 (2015).
96. Id. at 518-519.

97. Id. at 506.

98. See Calleja v. Panday , 518 Phil. 801, 809 (2006).

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 99. 781 Phil. 174 (2016).

100. See also GD Express Worldwide N.V. et al. v. Court of Appeals (4th Div.), et al.,
605 Phil. 406, 418-419 (2009).
101. Rollo, pp. 148-150. Underlining and emphasis supplied.
102. RULES OF COURT, Rule 3, Section 11; Divinagracia v. Parilla, et al., 755 Phil.
783, 792 (2015); Gamboa v. Victoriano , 179 Phil. 36 (1979).

103. Non-exhaustion of intra-corporate remedies is justified where demand upon

the board to exercise the corporate power of suit is pointless, e.g., when the
defendants are in complete control of the corporation, or the acts complained
of were ostensibly approved by a majority of shareholders despite proof of
prejudice to the corporation. See Ago Realty & Development Corp. v. Ago,
supra note 72; Republic Bank v. Cuaderno, Evangelista v. Santos, and
Everett v. Asia Banking Corp., supra note 79.
104. Id. at 160-161.

105. Cf. Villamor, Jr. v. Umale, supra note 76 at 50.

106. Forest Hills Golf and Country Club, Inc. v. Fil-Estate Properties, Inc., supra
note 77 at 741; Spouses Yu, et al. v. Yukayguan, et al., 607 Phil. 581, 611
(2009).
107. Ching, et al. v. Subic Bay Golf and Country Club, Inc., et al., 742 Phil. 606, 614
(2014); Spouses Yu, et al. v. Yukayguan, id.
108. Spouses Yu, et al. v. Yukayguan, id. at 611.

109. See Cua, Jr., et al. v. Tan, et al., supra note 71 at 722; Spouses Yu, et al. v.
Yukayguan, id. at 612.
110. Forest Hills Golf and Country Club, Inc. v. Fil-Estate Properties, Inc., supra
note 77 at 744; Spouses Yu, et al. v. Yukayguan, id. at 596, citing Bitong v.
Court of Appeals, 354 Phil. 516, 545 (1998).

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