Case Digest (G.R. No. L-57905)
Facts:
This is Development Bank of the Philippines v. Hon. Joaquin Ilustre, Jr., et al., G.R. No. 57905, promulgated August 01, 1985, Supreme Court Second Division, Escolin, J., writing for the Court. Petitioner Development Bank of the Philippines (DBP) sought certiorari relief to annul and set aside a restraining order issued by respondent Judge Joaquin Ilustre, Jr. in Civil Case No. 6599 of the then Court of First Instance (CFI) of Albay, and to prohibit the respondent judge from further proceeding with that case; the other respondents were members of the Silverio family who sued DBP and Philippine Investment Management, Inc. (PHINMA) in CFI Albay.In 1973 Isarog Pulp and Paper Co., Inc. (ISAROG) entered into a turnkey contract with the French firm Creusot Loire Enterprise (CLE). To finance the plant, DBP guaranteed foreign financing (FF40,329,150) and extended an agricultural loan (P17.5 million). After completion in 1975 a dispute over the plant’s “guarantee test run” arose; CLE abandoned the project and arbitration in Geneva followed. ISAROG sought injunctive relief against DBP in the CFI of Rizal, but the case was dismissed after the parties executed a memorandum agreement dated March 18, 1977.
Pursuant to that memorandum agreement DBP undertook several accommodations: joint re-study, financial extensions, conversion of indebtedness into equity, refraining from collections during the re-study, and prosecution of claims against CLE. Between 1977 and 1979 DBP approved and extended several loans and guarantees and converted sizeable ISAROG liabilities into DBP equity—resulting in DBP holding approximately 91% of ISAROG’s outstanding shares, thereby controlling board composition. In 1977 the board created an executive committee and engaged PHINMA as management consultant; day-to-day powers shifted away from the Silverio family.
On May 18, 1981 the Silverios declared the 1977 agreement rescinded and demanded return of ownership and control. At ISAROG’s June 30, 1981 annual stockholders’ meeting, majority shareholders (representing the DBP-acquired shares) elected a new board and appointed new officers; the Silverios were not reappointed. On July 9, 1981 the Silverios filed Civil Case No. 6599 in the CFI of Albay against DBP and PHINMA, seeking among other reliefs the rescission of the 1977 memorandum agreement, restoration to prior management positions, damages, and an ex parte writ of preliminary injunction/TRO to enjoin DBP and agents from exercising rights arising from their shareholdings or effecting reorganizations.
On July 10, 1981 the Silverios filed an ex parte motion for injunctive relief and the respondent judge issued a restraining order enjoining DBP from exercising specified shareholder and managerial powers. DBP moved to dismiss on the ground that the dispute fell within the exclusive original jurisdiction of the Securities and Exchange Commission (SEC) under P.D. No. 902-A, Sec. 5, and moved to lift the restraining order; the motion to lift was de...(Subscriber-Only)
Issues:
- Does Civil Case No. 6599 fall within the original and exclusive jurisdiction of the Securities and Exchange Commission under P.D. No. 902-A, Sec. 5?
- Did the respondent judge commit grave abuse of discretion in issuing and maintaining the restraining order enjoining DBP from exercising rights as a shareholder and from participati...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)