Rizal Commercial Banking Corp. v. Plast-Print Industries Inc.
REITERATIONFacts
The Antecedents: Plast-Print Industries, Inc. (Plast-Print) obtained credit facilities from Rizal Commercial Banking Corporation (RCBC), secured by real estate mortgages. Plast-Print failed to pay its obligations. RCBC sent demand letters and statements of account. Plast-Print acknowledged its obligation but questioned the outstanding balance. A reconciliation meeting confirmed the correctness of RCBC's statements, except for three payment applications. Plast-Print still failed to settle its obligations. Despite a restructuring offer and a down payment, one of the post-dated checks was dishonored, and Plast-Print again failed to pay. RCBC initiated extra-judicial foreclosure proceedings, and some properties were sold at public auction. Procedural History: Unknown to RCBC, Plast-Print filed a petition for suspension of payments with the Securities and Exchange Commission (SEC) on October 5, 1998. The SEC ordered a 30-day suspension of payments, halting the second auction. Negotiations led to a Restructuring Agreement, approved by the SEC, where Plast-Print acknowledged an indebtedness of ₱11,216,178.22 to RCBC, payable within six years. However, Plast-Print again failed to settle its obligations. Plast-Print and Reynaldo Dequito filed a complaint with the Regional Trial Court (RTC) for accounting, cancellation of sale, injunction, and damages. RCBC filed a Motion to Dismiss, which the RTC denied. RCBC's petition for certiorari with the Court of Appeals (CA) challenging the RTC's denial was dismissed. The RTC subsequently rendered a decision in favor of Plast-Print and Dequito, ordering the cancellation of the Certificate of Sale and directing RCBC to render an accounting and pay attorney's fees. RCBC appealed to the CA, which affirmed the RTC decision. RCBC then filed a petition for review on certiorari with the Supreme Court. The Petition: RCBC argues that the RTC lacked jurisdiction due to the pending SEC Petition and that the CA erred in affirming the RTC's decision, which effectively disregarded the SEC Order approving the Restructuring Agreement and the principle of res judicata.
Issue(s)
Whether the CA erred when it held that the RTC had jurisdiction to act on the RTC Complaint. Whether the CA erred when it directed RCBC to make an accounting and re-computation of Plast-Print's payments. Whether the CA erred when it affirmed the nullification of the foreclosure sale and the Certificate of Sale arising therefrom.
Ruling
The Supreme Court granted the petition, reversed and set aside the decisions of the CA and RTC, and dismissed the complaint for lack of jurisdiction. The Register of Deeds of Rizal Province was directed to reinstate the annotation of the Certificate of Sale on the specified Transfer Certificates of Title.
Ratio Decidendi
On the issue of RTC's jurisdiction: The Supreme Court ruled that the RTC did not have jurisdiction to act on the RTC Complaint. Presidential Decree No. 902-A, as amended, grants the SEC original and exclusive jurisdiction over petitions for suspension of payments. When Plast-Print filed its SEC Petition, it invoked the special jurisdiction of the SEC, placing the assets securing its financial accommodations under the SEC's exclusive jurisdiction. The RTC, as a court of general jurisdiction, cannot interfere with matters falling under the special jurisdiction of a co-equal body like the SEC. The Court clarified that the doctrine of the law of the case, as argued by Plast-Print, cannot be applied to confer jurisdiction which the law does not grant, especially when the challenge involves the nature of the action. RCBC's assertion of lack of jurisdiction as an affirmative defense in its Answer Ad Cautelam preserved its objection. On the issue of accounting and re-computation of payments: The Supreme Court held that Plast-Print is bound to pay its indebtedness to RCBC in accordance with the computation detailed in the Restructuring Agreement. The Restructuring Agreement, which was approved by the SEC, acknowledged Plast-Print's indebtedness to RCBC in the amount of ₱11,216,178.22 and bound Plast-Print to pay this obligation. This agreement, having the force and effect of a judgment, precluded Plast-Print from insisting on another re-computation. The RTC's order for an accounting and re-computation effectively allowed Plast-Print to renege on its obligation and interfered with the SEC's jurisdiction. On the issue of nullification of the foreclosure sale and Certificate of Sale: The Supreme Court found that the Restructuring Agreement did not effect an extinctive novation of the Real Estate Mortgage (REM) constituted in RCBC's favor. While the agreement modified certain terms of the loans, these modifications did not extinguish the REM or nullify foreclosure proceedings conducted before the modifications took effect. Sections 2, 15, and 20 of the Restructuring Agreement explicitly allowed for the maintenance of the status quo regarding existing mortgages and the continuation of foreclosure proceedings in case of default. Therefore, the effects of the foreclosure conducted prior to the execution of the Restructuring Agreement must be respected, and the reinstatement of the annotation of the Certificate of Sale was proper.
Main Doctrine
The Regional Trial Court (RTC) lacks jurisdiction to act on a complaint that involves matters falling under the special jurisdiction of the Securities and Exchange Commission (SEC), particularly a petition for suspension of payments, even if the RTC ordinarily has jurisdiction over ordinary civil actions like annulment of foreclosure sales. Jurisdiction, once acquired by a quasi-judicial body, is not lost and continues until the case is terminated, to the exclusion of other courts.