G.R. No. 161771. February 15, 2012.

*
BANK OF THE PHILIPPINE ISLANDS, as successor-in-interest of Far East
Bank and Trust Company, petitioner, vs.  EDUARDO HONG, doing business
under the name and style “SUPER LINE PRINTING PRESS” and the COURT
OF APPEALS, respondents.

Remedial Law; Civil Procedure; Jurisdiction; The nature of an action and the
subject matter thereof, as well as which court or agency of the government has
jurisdiction over the same, are determined by the material allegations of the complaint
in relation to the law involved and the character of the reliefs prayed for, whether or not
the complainant/plaintiff is entitled to any or all of such reliefs.—Jurisdiction is defined
as the power and authority of a court to hear and decide a case. A court’s jurisdiction
over the subject matter of the action is conferred only by the Constitution or by statute.
The nature of an action and the subject matter thereof, as well as which

_______________
* FIRST DIVISION.

72

72 SUPREME
COURT
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ANNOTATED

Bank of the
Philippine Island vs.
Hong

court or agency of the government has jurisdiction over the same, are determined
by the material allegations of the complaint in relation to the law involved and the
character of the reliefs prayed for, whether or not the complainant/plaintiff is entitled
to any or all of such reliefs. And jurisdiction being a matter of substantive law, the
established rule is that the statute in force at the time of the commencement of the
action determines the jurisdiction of the court.
Same; Same; Injunction; An action for injunction is a suit which has for its purpose
the enjoinment of the defendant, perpetually or for a particular time, from the
commission or continuance of a specific act, or his compulsion to continue performance
of a particular act. It has an independent existence, and is distinct from the ancillary
remedy of preliminary injunction which cannot exist except only as a part or an incident
of an independent action or proceeding.—An action for injunction is a suit which has
for its purpose the enjoinment of the defendant, perpetually or for a particular time,
from the commission or continuance of a specific act, or his compulsion to continue
performance of a particular act. It has an independent existence, and is distinct from
the ancillary remedy of preliminary injunction which cannot exist except only as a part
or an incident of an independent action or proceeding. In an action for injunction, the
auxiliary remedy of preliminary injunction, prohibitory or mandatory, may issue. As a
rule, actions for injunction and damages lie within the jurisdiction of the RTC
pursuant to Section 19 of Batas Pambansa Blg. 129, otherwise known as the “Judiciary
Reorganization Act of 1980,” as amended by Republic Act (R.A.) No. 7691. Sec.
19. Jurisdiction in civil cases.—Regional Trial Courts shall exercise exclusive original
jurisdiction: (1) In all civil actions in which the subject of the litigations is incapable of
pecuniary estimation; x x x x (6) In all cases not within the exclusive jurisdiction of any
court, tribunal, person or body exercising x x x judicial or quasi-judicial functions; x x x
x (8) In all other cases in which the demand, exclusive of interest, damages of whatever
kind, attorney’s fees, litigation expenses, and costs or the value of the property in
controversy exceeds Three hundred thousand pesos (P300,000.00) or, in such other
cases in Metro Manila, where the demand exclusive of the above-mentioned items
exceeds Four hundred thousand pesos (P400,000.00).
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Same; Same; Jurisdiction; Regional Trial Courts; Republic Act No. 8799; R.A. No.
8799, which took effect on August 8, 2000, transferred to the appropriate regional trial
courts the Securities and Exchange Commission’s (SEC’s) jurisdiction over those cases
enumerated in Sec. 5 of P.D. No. 902-A.—R.A. No. 8799, which took effect on August 8,
2000, transferred to the appropriate regional trial courts the SEC’s jurisdiction over
those cases enumerated in Sec. 5 of P.D. No. 902-A. Section 5.2 of R.A. No. 8799
provides: SEC. 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 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 these 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
payments/rehabilitation cases filed as of 30 June 2000 until finally disposed.

PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
The facts are stated in the opinion of the Court.
Benedicto, Versoza, Gealogo & Burkley Law Offices for petitioner.
Noel Oliver E. Punzalan for private respondent.
VILLARAMA, JR., J.:
This petition for review on  certiorari  under Rule 45 assails the
Decision1 dated September 27, 2002 and Resolution2 dated January 12, 2004
of the Court of Appeals (CA) in CA-G.R. SP No. 64166.

_______________
1  Rollo,  pp. 18-23. Penned by Associate Justice Portia Aliño-Hormachuelos with Associate
Justices Elvi John S. Asuncion and Juan Q. Enriquez, Jr. concurring.
2 Id., at pp. 24-25.

74

74 SUPREME COURT
REPORTS
ANNOTATED
Bank of the Philippine
Island vs. Hong

On September 16, 1997, the EYCO Group of Companies (“EYCO”) filed a

petition for suspension of payments and rehabilitation before the Securities
and Exchange Commission (SEC), docketed as SEC Case No. 09-97-5764. A
stay order was issued on September 19, 1997 enjoining the disposition in any
manner except in the ordinary course of business and payment outside of
legitimate business expenses during the pendency of the proceedings, and
suspending all actions, claims and proceedings against EYCO until further
orders from the SEC.3 On December 18, 1998, the hearing panel approved the
proposed rehabilitation plan prepared by EYCO despite the recommendation
of the management committee for the adoption of the rehabilitation plan
prepared and submitted by the steering committee of the Consortium of
Creditor Banks which appealed the order to the Commission.4On September
14, 1999, the SEC rendered its decision disapproving the petition for
suspension of payments, terminating EYCO’s proposed rehabilitation plan
and ordering the dissolution and liquidation of the petitioning corporation.
The case was remanded to the hearing panel for liquidation proceedings.5  On
appeal by EYCO, (CA-G.R. SP No. 55208) the CA upheld the SEC ruling.
EYCO then filed a petition for  certioraribefore this Court, docketed as G.R.
No. 145977, which case was eventually dismissed under Resolution dated May
3, 2005 upon joint manifestation and motion to dismiss filed by the
parties.6Said resolution had become final and executory on June 16, 2005.7
Sometime in November 2000 while the case was still pending with the CA,
petitioner Bank of the Philippine Islands

_______________
 3  Records, Vol. I, pp. 2, 14-16; See also  Clarion Printing House, Inc. v. National Labor
Relations Commission, G.R. No. 148372, June 27, 2005, 461 SCRA 272, 276-278.
4 Id., at pp. 19-29, 34.
5 Id., at pp. 33-39.
6 Rollo (G.R. No. 145977), pp. 335-354.
7 Id., at p. 366.

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Bank of the Philippine
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(BPI), filed with the Office of the Clerk of Court, Regional Trial Court of
Valenzuela City, a petition for extrajudicial foreclosure of real properties
mortgaged to it by Eyco Properties, Inc. and Blue Star Mahogany, Inc. Public
auction of the mortgaged properties was scheduled on December 19, 2000.8
Claiming that the foreclosure proceedings initiated by petitioner was
illegal, respondent Eduardo Hong, an unsecured creditor of Nikon Industrial
Corporation, one of the companies of EYCO, filed an action for injunction and
damages against the petitioner in the same court (RTC of Valenzuela City).
On its principal cause of action, the complaint alleged that:
“18. The ex-officio sheriff has no authority to sell the mortgaged properties. Upon
his appointment as liquidator, Edgardo Tarriela was empowered by the SEC to receive
and preserve all assets, and cause their valuation (SEC Rules on Corporate Recovery,
Rule VI, Section 6-4). Therefore, the SEC retains jurisdiction over the mortgaged
properties of EYCO Properties, Inc. To allow the ex-officio sheriff to take possession of
the mortgaged properties and sell the same in a foreclosure sale would be in derogation
of said jurisdiction.
19. All the assets of the EYCO Group should thus be surrendered for collation to
the liquidator and all claims against the EYCO Group should be filed with the
liquidator in the liquidation proceedings with the SEC.  The SEC, at which the
liquidation is pending, has jurisdiction over the mortgaged properties to the
exclusion of any other court.Consequently, the  ex-officiosheriff has absolutely no
jurisdiction to issue the notice of sheriff’s sale and to sell the mortgaged properties on
19 December 2000.
20. Moreover, the sale of the mortgaged properties on 19 December 2000 would
give undue preference to defendant FEBTC to the detriment of other creditors,
particularly plaintiff. This was specifically proscribed by the Supreme Court stating in
the case of  Bank of the Philippine Islands v. Court of Appeals  that whenever a
distressed corporation asks SEC for rehabilitation and suspension of

_______________
8 Records, Vol. I, pp. 72-74.

76
76 SUPREME COURT
REPORTS
ANNOTATED
Bank of the Philippine
Island vs. Hong

payments, preferred creditors may no longer assert such preference, but shall stand on
equal footing with other creditors. Consequently, foreclosure should be disallowed
so as not to  prejudice other creditors or cause discrimination among
them.”9 (Emphasis supplied.)

After hearing, the trial court issued a temporary restraining order (TRO).
Petitioner filed a motion to dismiss10  arguing that by plaintiff’s own
allegations in the complaint, jurisdiction over the reliefs prayed for belongs to
the SEC, and that plaintiff is actually resorting to forum shopping since he
has filed a claim with the SEC and the designated Liquidator in the ongoing
liquidation of the EYCO Group of Companies. In his Opposition,11  plaintiff
(respondent) asserted that the RTC has jurisdiction on the issue of propriety
and validity of the foreclosure by petitioner, in accordance with Section 1, Rule
4 of the  1997 Rules of Civil Procedure, as amended, the suit being in the
nature of a real action.
On January 17, 2001, the trial court denied the motion to
dismiss.12  Petitioner’s motion for reconsideration was likewise
13
denied. Petitioner challenged the validity of the trial court’s ruling before the
CA via a petition for certiorari under Rule 65.
The CA affirmed the trial court’s denial of petitioner’s motion to dismiss. It
held that questions relating to the validity or legality of the foreclosure
proceedings, including an action to enjoin the same, must necessarily be
cognizable by the RTC, notwithstanding that the SEC likewise possesses the
power to issue injunction in all cases in which it has jurisdiction as provided
in Sec. 6 (a) of Presidential Decree (P.D.) No. 902-A. Further, the CA stated
that an action for foreclosure of

_______________
9  Id., at pp. 4-5.
10 Id., at pp. 109-114.
11 Id., at pp. 116-119.
12 Id., at p. 123.
13 Id., at p. 135.

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 Bank of the Philippine
Island vs. Hong

mortgage and all incidents relative thereto including its validity or invalidity
is within the jurisdiction of the RTC and is not among those cases over which
the SEC exercises exclusive and original jurisdiction under Sec. 5 of P.D. No.
902-A. Consequently, no grave abuse of discretion was committed by the trial
court in issuing the assailed orders.
With the CA’s denial of its motion for reconsideration, petitioner is now
before this Court raising the sole issue of whether the RTC can take
cognizance of the injunction suit despite the pendency of SEC Case No. 09-97-
5764.
The petition has no merit.
Jurisdiction is defined as the power and authority of a court to hear and
decide a case.14 A court’s jurisdiction over the subject matter of the action is
conferred only by the Constitution or by statute.15 The nature of an action and
the subject matter thereof, as well as which court or agency of the government
has jurisdiction over the same, are determined by the material allegations of
the complaint in relation to the law involved and the character of the reliefs
prayed for, whether or not the complainant/plaintiff is entitled to any or all of
such reliefs.16  And jurisdiction being a matter of substantive law, the
established rule is that the statute in force at the time of the commencement
of the action determines the jurisdiction of the court.17
Perusal of the complaint reveals that respondent does not ask the trial
court to rule on its interest or claim—as an unse-

_______________
14 Asia International Auctioneers, Inc. v. Parayno, Jr.,G.R. No. 163445, December 18, 2007,
540 SCRA 536, 546.
15 Sevilleno v. Carilo, G.R. No. 146454, September 14, 2007, 533 SCRA 385, 388.
16 Del Valle, Jr. v. Dy, G.R. No. 170977, April 16, 2009, 585 SCRA 355, 364, citing Villamaria,
Jr. v. Court of Appeals, G.R. No. 165881, April 19, 2006, 487 SCRA 571, 589.
17 Llamas v. Court of Appeals,G.R. No. 149588, September 29, 2009, 601 SCRA 228, 233.

78

78 SUPREME COURT
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Bank of the Philippine
Island vs. Hong

cured creditor of two companies under EYCO—against the latter’s properties

mortgaged to petitioner. The complaint principally seeks to enjoin the
foreclosure proceedings initiated by petitioner over those properties on the
ground that such properties are held in trust and placed under the jurisdiction
of the appointed Liquidator in SEC Case No. 09-97-5764. Thus, Civil Case No.
349-V-00 is one for injunction with prayer for damages.
An action for injunction is a suit which has for its purpose the enjoinment
of the defendant, perpetually or for a particular time, from the commission or
continuance of a specific act, or his compulsion to continue performance of a
particular act. It has an independent existence, and is distinct from the
ancillary remedy of preliminary injunction which cannot exist except only as a
part or an incident of an independent action or proceeding. In an action for
injunction, the auxiliary remedy of preliminary injunction, prohibitory or
mandatory, may issue.18
As a rule, actions for injunction and damages lie within the jurisdiction of
the RTC pursuant to Section 19 of Batas Pambansa Blg. 129, otherwise known
as the “Judiciary Reorganization Act of 1980,” as amended by Republic Act
(R.A.) No. 7691.
“Sec. 19. Jurisdiction in civil cases.—Regional Trial Courts shall exercise
exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigations is incapable of
pecuniary estimation;
xxxx

_______________
18 Subic Bay Metropolitan Authority v. Rodriguez, G.R. No. 160270, April 23, 2010, 619 SCRA 176, 188,
citing Manila Banking Corporation v. Court of Appeals, G.R. No. 45961, July 3, 1990, 187 SCRA 138, 144-
145.

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(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or
body exercising x x x judicial or quasi-judicial functions;
xxxx
(8) In all other cases in which the demand, exclusive of interest, damages of
whatever kind, attorney’s fees, litigation expenses, and costs or the value of the
property in controversy exceeds Three hundred thousand pesos (P300,000.00) or, in
such other cases in Metro Manila, where the demand exclusive of the above-mentioned
items exceeds Four hundred thousand pesos (P400,000.00).” (Italics supplied.)

On the other hand, Sec. 6 (a) of P.D. No. 902-A empowered the SEC to
“issue preliminary or permanent injunctions, whether prohibitory or
mandatory, in all cases in which it has jurisdiction.” Such cases in which the
SEC exercises original and exclusive jurisdiction are the following:
(a) Devices or schemes employed by or any acts, of the board of directors, business
associates, its officers or partnership, amounting to fraud and misrepresentation which
may be detrimental to the interest of the public and/or of the stockholder, partners,
members of associations or organizations registered with the Commission;
(b) Controversies arising out of intra-corporate or partnership relations, between
and among 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 franchise or right to exist as such
entity; and
(c) Controversies in the election or appointments of directors, trustees, officers or
managers of such corporations, partnerships or associations.19

Previously, under the Rules of Procedure on Corporate Recovery, the SEC

upon termination of cases involving petitions for suspension of payments or
rehabilitation may, motu pro-

_______________
19 Sec. 5, P.D. No. 902-A.

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80 SUPREME COURT
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ANNOTATED
Bank of the Philippine
Island vs. Hong

prio, or on motion by any interested party, or on the basis of the findings and
recommendation of the Management Committee that the continuance in
business of the debtor is no longer feasible or profitable, or no longer works to
the best interest of the stockholders, parties-litigants, creditors, or the general
public, order the dissolution of the debtor and the liquidation of its remaining
assets appointing a Liquidator for the purpose.20 The debtor’s properties are
then deemed to have been conveyed to the Liquidator in trust for the benefit of
creditors, stockholders and other persons in interest. This notwithstanding,
any lien or preference to any property shall be recognized by the Liquidator in
favor of the security or lienholder, to the extent allowed by law, in the
implementation of the liquidation plan.21
However, R.A. No. 8799, which took effect on August 8, 2000, transferred to
the appropriate regional trial courts the SEC’s jurisdiction over those cases
enumerated in Sec. 5 of P.D. No. 902-A. Section 5.2 of R.A. No. 8799 provides:
 “SEC. 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 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 these 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
payments/rehabilitation cases filed as of 30 June 2000 until finally
disposed.”(Emphasis supplied.)

Upon the effectivity of R.A. No. 8799, SEC Case No. 09-97-5764 was no
longer pending. The SEC finally disposed of said case when it rendered on
September 14, 1999 the decision

_______________
20 Sec. 6-1, Rule VI.
21 Sec. 6-2, id.

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Bank of the Philippine
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disapproving the petition for suspension of payments, terminating the

proposed rehabilitation plan, and ordering the dissolution and liquidation of
the petitioning corporation. With the enactment of the new law, jurisdiction
over the liquidation proceedings ordered in SEC Case No. 09-97-5764 was
transferred to the RTC branch designated by the Supreme Court to exercise
jurisdiction over cases formerly cognizable by the SEC. As this Court held
in Consuelo Metal Corporation v. Planters Development Bank: 22
“The SEC assumed jurisdiction over CMC’s petition for suspension of payment and
issued a suspension order on 2 April 1996 after it found CMC’s petition to be sufficient
in form and substance. While CMC’s petition was still pending with the SEC as of 30
June 2000, it was finally disposed of on 29 November 2000 when the SEC issued its
Omnibus Order directing the dissolution of CMC and the transfer of the liquidation
proceedings before the appropriate trial court. The SEC finally disposed of CMC’s
petition for suspension of payment when it determined that CMC could no
longer be successfully rehabilitated.
However, the SEC’s jurisdiction does not extend to the liquidation of a
corporation.  While the SEC has jurisdiction to order the dissolution of a
corporation, jurisdiction over the liquidation of the corporation now pertains
to the appropriate regional trial courts. This is the reason why the SEC, in its 29
November 2000 Omnibus Order, directed that “the proceedings on and implementation
of the order of liquidation be commenced at the Regional Trial Court to which this case
shall be transferred.” This is the correct procedure because the liquidation of a
corporation requires the settlement of claims for and against the corporation, which
clearly falls under the jurisdiction of the regular courts. The trial court is in the best
position to convene all the creditors of the corporation, ascertain their claims, and
determine their preferences.”23 (Emphasis supplied.)

_______________
22 G.R. No. 152580, June 26, 2008, 555 SCRA 465.
23 Id., at pp. 473-474.

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82 SUPREME COURT
REPORTS
ANNOTATED
Bank of the Philippine
Island vs. Hong

There is no showing in the records that SEC Case No. 09-97-5764 had been
transferred to the appropriate RTC designated as Special Commercial Court
at the time of the commencement of the injunction suit on December 18, 2000.
Given the urgency of the situation and the proximity of the scheduled public
auction of the mortgaged properties as per the Notice of Sheriff’s Sale,
respondent was constrained to seek relief from the same court having
jurisdiction over the foreclosure proceedings—RTC of Valenzuela City.
Respondent thus filed Civil Case No. 349-V-00 in the RTC of Valenzuela City
on December 18, 2000 questioning the validity of and enjoining the
extrajudicial foreclosure initiated by petitioner. Pursuant to its original
jurisdiction over suits for injunction and damages, the RTC of Valenzuela
City, Branch 75 properly took cognizance of the injunction case filed by the
respondent. No reversible error was therefore committed by the CA when it
ruled that the RTC of Valenzuela City, Branch 75 had jurisdiction to hear and
decide respondent’s complaint for injunction and damages.
Lastly, it may be mentioned that while the Consortium of Creditor Banks
had agreed to end their opposition to the liquidation proceedings upon the
execution of the Agreement24 dated February 10, 2003, on the basis of which
the parties moved for the dismissal of G.R. No. 145977, it is to be noted that
petitioner is not a party to the said agreement. Thus, even assuming that the
SEC retained jurisdiction over SEC Case No. 09-97-5764, petitioner was not
bound by the terms and conditions of the Agreement relative to the foreclosure
of those mortgaged properties belonging to EYCO and/or other accommodation
mortgagors.
WHEREFORE, the petition for review on  certiorari  is DENIED. The
Decision dated September 27, 2002 and Resolution dated January 12, 2004 of
the Court of Appeals in CA-G.R. SP No. 64166 are AFFIRMED.

_______________
24 Rollo (G.R. No. 145977), pp. 338-349.

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With costs against the petitioner.

SO ORDERED.

Corona (C.J., Chairperson), Leonardo-De Castro, Bersamin  and  Del

Castillo, JJ., concur. 

Petition denied, judgment and resolution affirmed.

Notes.—Injunction is not a remedy to protect or enforce contingent,

abstract, or future rights—it will not issue to protect a right not  inesse  and
which may never arise, or to restrain an act which does not give rise to a cause
of action. (Go vs. Villanueva, Jr., 581 SCRA 126 [2009]
Under Sec. 5.2 of Republic Act (RA) No. 8799, the Securities and Exchange
Commission (SEC) original and exclusive jurisdiction over all cases
enumerated under Sec. 5 of Presidential Decree (PD) No. 902-A was
transferred to the appropriate Regional Trial Court (RTC); The Commission
however, shall retain jurisdiction over pending suspension of payment;
rehabilitation cases filed as of 30 June 2000 until finally disposed. (Lee vs.
Bangkok Bank Public Company, Limited,642 SCRA 447 [2011])