PHILIP TURNER and ELNORA TURNER, petitioners, vs.

Case Title Docket No. G.R. No. 157479

LORENZO SHIPPING CORPORATION, respondent.

Ponente BERSAMIN, J. Date November 24, 2010

FACTS: The Turners (petitioners) had shares of stock in Lorenzo Shipping (respondent). In response to a decision
to amend the AoI, the Turners exercised their appraisal right. The parties disputed the valuation of the shares and
more importantly to this case, whether the petitioners are entitled to the payment of their shares based on the point
of reckoning of the existence of unrestrained retained earnings in relation to when the complaint was filed (existence
of a cause of action).

ISSUE: W/N the right of dissenting stockholders to demand payment of the value of their shareholdings should be
granted – NO

RATIO: The Corp Code defines how the right of appraisal is exercised and the implications of such. Among these is
that no payment shall be made to any dissenting stockholder unless the corporation has unrestricted retained
earnings in its books to cover the payment. The cause of action of the Turners was premature: (1) the corp had no
unrestricted earnings in its books when the civil case for collection was commenced; (2) there was no prior valid
demand made by the Turners which the respondent refused to pay despite having unrestricted retained earnings; (3)
the subsequent existence of unrestricted retained earnings after the filing of the complaint did not cure the lack of
cause of action; and (4) the fact that the respondent already had unrestricted retained earnings more than sufficient
to cover the petitioners' claims when they filed their motion for partial summary judgment did not rectify the absence
of the cause of action at the time of the commencement. Hence, the complaint for collection is dismissed. The
dissenting stockholders cannot be granted the payment of the value of their shareholdings.