Union Bank v. Concepcion
REITERATIONFacts
The Antecedents: The EYCO Group of Companies (EYCO) filed a petition with the Securities and Exchange Commission (SEC) for suspension of payment, appointment of a rehabilitation receiver, and approval of a rehabilitation plan, with an alternative prayer for liquidation and dissolution. The SEC issued a Suspension Order, suspending all actions against EYCO. Union Bank of the Philippines (Union Bank), initially part of a consortium of creditor banks, withdrew and filed a collection suit against EYCO and its sureties before the Regional Trial Court (RTC) of Makati City, securing a writ of preliminary attachment. Procedural History: Union Bank moved to dismiss the SEC case for lack of jurisdiction, but the SEC appointed a management committee. Union Bank then filed a petition for certiorari with the Court of Appeals (CA) questioning the SEC suspension order, which was dismissed for forum shopping. This Court affirmed the CA's dismissal but clarified that the SEC had jurisdiction over EYCO's petition for suspension of payments, but not over the individual petitioners (Yutingcos), directing their removal. The Makati RTC indefinitely suspended proceedings in the collection suit against EYCO but denied the motion to dismiss against the individual defendants. The SEC en banc disapproved EYCO's rehabilitation plan and ordered its liquidation and dissolution, later appointing respondent Danilo L. Concepcion as liquidator. Concepcion filed a motion to intervene in the Makati RTC collection case to set aside the writ of attachment. The RTC denied Concepcion's motion to intervene, declared EYCO in default, and rendered a partial judgment in favor of Union Bank. Concepcion challenged these RTC orders via certiorari and prohibition before the CA. The Petition: The CA granted Concepcion's petition, annulling the RTC's orders and partial judgment, and ordering that Concepcion be allowed to intervene. Union Bank assailed the CA's decision before the Supreme Court, primarily questioning Concepcion's right to intervene based on the alleged nullity of his appointment as liquidator due to the SEC's lack of jurisdiction.
Issue(s)
Whether the respondent Concepcion has a legal interest in the matter in litigation to warrant intervention, and whether he has legal personality to intervene, given the alleged lack of jurisdiction of the SEC in appointing him as liquidator. Whether certiorari was the proper remedy for the denial of the motion for intervention. Whether the SEC had jurisdiction over the liquidation proceedings, considering the transfer of jurisdiction to regular courts under R.A. No. 8799.
Ruling
The petition is DENIED. The Court of Appeals' Decision and Resolution are AFFIRMED. The respondent Danilo L. Concepcion is allowed to intervene in Civil Case No. 97-2184.
Ratio Decidendi
On the issue of legal interest and personality to intervene: The Court affirmed that respondent Concepcion, as the duly-appointed liquidator of EYCO's remaining assets, possesses a legal interest in the matter litigated in Civil Case No. 97-2184. His appointment as liquidator by the SEC was valid because the SEC retained jurisdiction over the suspension of payments case filed before June 30, 2000, as provided by Section 5.2 of Republic Act No. 8799 (Securities Regulation Code). This retained jurisdiction extended to the liquidation and dissolution processes. The Court reiterated its ruling in Union Bank of the Philippines v. Court of Appeals et al. (G.R. No. 131729) that the SEC's jurisdiction over the suspension of payment petition was acquired at its inception and was not divested by subsequent allegations or findings of insolvency. As liquidator-trustee, Concepcion is empowered and duty-bound to represent EYCO in legal proceedings and to preserve its assets, thus having a direct and immediate interest in the attached properties. On the propriety of certiorari as a remedy: The Court held that while appeal is generally the proper remedy for an order denying intervention, certiorari was permissible in this case. The Court has allowed certiorari when appeal does not provide a speedy and adequate remedy. The CA found that an appeal would be slow, inadequate, and insufficient, justifying the resort to the extraordinary remedy of certiorari. Furthermore, the CA observed that the RTC exercised its judicial authority oppressively by interfering with the SEC's appointment of a liquidator, an act which the RTC had no jurisdiction to question. The RTC's cognizance of the case after being notified of the pending petition before the SEC was also noted as an error. On the jurisdiction of the SEC over liquidation: The Court clarified that while jurisdiction over a petition to declare a corporation in a state of insolvency strictly lies with regular courts under the Insolvency Law, the SEC possessed ample power under Presidential Decree No. 902-A, as amended, to declare a corporation insolvent as an incident of and in continuation of its already acquired jurisdiction over a petition for suspension of payments. EYCO's petition was a mix of a simple petition for suspension of payments and a plea for rehabilitation, which fell within the SEC's exclusive and original jurisdiction under Section 5(d) of P.D. No. 902-A. The subsequent transfer of jurisdiction to the RTCs under R.A. No. 8799 did not divest the SEC of its jurisdiction over cases pending as of June 30, 2000, until finally disposed. Therefore, the SEC's appointment of Concepcion as liquidator was valid.
Main Doctrine
The Securities and Exchange Commission (SEC) retains jurisdiction over pending suspension of payments/rehabilitation cases filed as of June 30, 2000, until finally disposed, including the liquidation and dissolution processes, even if the Securities Regulation Code transferred general jurisdiction over such cases to the Regional Trial Courts (RTCs).