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BANK OF PHILIPPINE ISLANDS v. EDUARDO

FACTS:

The EYCO Group of Companies filed a petition for suspension of payments and rehabilitation before the SEC. A stay order was issued, suspending all actions against EYCO. However, the SEC rendered a decision disapproving the petition for suspension of payments and ordered the dissolution and liquidation of the corporation. The case was remanded to the hearing panel for liquidation proceedings. During this time, Bank of the Philippine Islands (BPI) filed a petition for extra-judicial foreclosure of properties mortgaged to it by EYCO. Respondent Eduardo Hong, an unsecured creditor of one of EYCO's companies, filed an action for injunction and damages against BPI claiming that the foreclosure proceedings were illegal and should be disallowed. The trial court issued a temporary restraining order and denied BPI's motion to dismiss. BPI appealed to the CA, but the CA affirmed the trial court's ruling. BPI now raises the issue of whether the trial court can take cognizance of the injunction suit despite the pendency of the liquidation proceedings.

ISSUES:

  1. Whether the Regional Trial Court (RTC) of Valenzuela City can take cognizance of the injunction suit despite the pendency of SEC Case No. 09-97-5764.

RULING:

  1. Yes, the RTC of Valenzuela City has jurisdiction over the injunction suit filed by the respondent. Even though SEC Case No. 09-97-5764 was resolved and ordered for liquidation, the liquidation proceedings jurisdiction was transferred to the appropriate RTC. Since SEC Case No. 09-97-5764 had not yet been transferred to the designated RTC Special Commercial Court, the RTC of Valenzuela City properly took cognizance of the injunction case pursuant to its original jurisdiction over suits for injunction and damages under Section 19 of Batas Pambansa Blg. 129 (Judiciary Reorganization Act of 1980), as amended by Republic Act No. 7691.

PRINCIPLES:

  1. Jurisdiction is determined by the material allegations of the complaint in relation to the law involved and the nature of the relief prayed for.

  2. Jurisdiction over cases involving intra-corporate disputes and suspension of payments/rehabilitation proceedings was transferred from the SEC to the RTC under Republic Act No. 8799.

  3. The SEC retained jurisdiction over pending suspension of payments/rehabilitation cases filed as of June 30, 2000, but the liquidation of a corporation falls under the jurisdiction of the regular courts.

  4. The RTC has original jurisdiction over actions for injunction and damages pursuant to Section 19 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7691.

  5. In cases where SEC jurisdiction has ended and the case has not yet been transferred to the designated RTC Special Commercial Court, the RTC that has jurisdiction over the subject matter of the litigation can take cognizance of the same.