G.R. No. 196637 - Far East Bank and Trust Co. vs. Union Bank of the Philippines

On September 16, 1997, the EYCO Group of Companies and its controlling stockholders (the Yutingcos) filed a petition with the Securities and Exchange Commission (SEC) seeking the declaration of suspension of payments, the formation and appointment of a rehabilitation receiver/committee, and the approval of a rehabilitation plan with an alternative prayer for liquidation and dissolution of corporations (SEC Case No. 09-97-5764).
A consortium of EYCO’s creditors, including Union Bank of the Philippines, met to determine their course of action should EYCO invoke the provisions of Presidential Decree (PD) No. 902-A. During this meeting, critical decisions were taken regarding legal representation and the formation of a management committee.

Union Bank, acting independently from the consortium, instituted a suit in the Regional Trial Court (RTC) of Pasig City (Civil Case No. 66477) on September 26, 1997, against EYCO, the Yutingcos, and others.
In its complaint, Union Bank alleged that the Spouses Yutingco were liable as debtors under a Continuing Surety Agreement for credit accommodations of P110,000,000.00 granted to various companies collectively known as NIKON.
It was further alleged that EYCO, in collusion with the Yutingcos and Far East Bank and Trust Company (FEBTC), purposefully diverted NIKON’s assets through fraudulent real estate transactions—including the sale of condominium units and parking spaces—designed to shield NIKON from its debts.
Union Bank asserted that such transactions, occurring shortly before the petition for suspension of payments was filed with the SEC, were fraudulent and qualified as sales in fraud of creditors, rendering FEBTC a trustee for the benefit of the unpaid creditor.

The SEC, on September 19, 1997, issued an order enjoining the disposition of EYCO’s assets except in the ordinary course of business and suspended all actions, claims, and proceedings against EYCO pending further orders.
An omnibus order on October 27, 1997, directed the creation of a Management Committee (MANCOM) to oversee the rehabilitation process.
Various orders followed—such as the temporary approval of an unsolicited rehabilitation proposal by Strategies and Alliances Corporation (SAC) and its eventual disapproval on September 14, 1999 by the SEC En Banc—leading to the termination of the suspension of payments proceedings and, ultimately, the appointment of a Liquidator pursuant to SEC rules.
On October 10, 2000, the SEC directed all creditors to file formal claims with the Liquidator, and on May 31, 2001, Atty. Danilo L. Concepcion was appointed as Liquidator.
In March 2002, a Liquidation Plan was submitted and approved by the SEC.

Both the Spouses Yutingco and FEBTC filed motions to dismiss Civil Case No. 66477 on several grounds:

The existence of a pending SEC proceeding (litis pendentia) which allegedly precluded the RTC’s jurisdiction.
The assertion that NIKON, as indispensable parties, had not been impleaded in the suit.
The claim that Union Bank’s legal capacity (or personality) to sue was impaired since its rights were, in fact, vested in the rehabilitation receiver or MANCOM after their creation.

Union Bank countered these motions by arguing that it did not submit itself to the SEC jurisdiction and that the issues in the SEC case and the RTC suit were distinct (i.e., collection of credit versus rescission of sale).
Additional allegations were raised accusing Union Bank of forum shopping by pursuing multiple remedies in different courts concerning the same set of transactions, including parallel actions before the SEC, RTC, and Court of Appeals (CA).

On March 22, 2005, the RTC granted the motions to dismiss on grounds including litigant redundancy (litis pendentia) and the lack of standing since the SEC had acquired jurisdiction over EYCO’s suspension of payments.
Union Bank’s subsequent motion for reconsideration was denied by the RTC on August 26, 2005.
On November 15, 2010, the CA reversed the RTC’s dismissal. The appellate court held that:

There was no identity of parties between the SEC case and Civil Case No. 66477.
The rights asserted and the reliefs prayed for in the two cases were not identical.
Union Bank maintained its capacity to institute the civil action, given the chronology of events, namely, the filing of the complaint before the creation of the MANCOM.

On April 19, 2011, the CA granted a substitution motion by BAYAN Delinquent Loan Recovery 1 (SPV-AMC, Inc.) and admitted related comments, while denying further motions for reconsideration by FEBTC and the Yutingcos.
Finally, the petition before the Supreme Court, filed by FEBTC on May 13, 2011, was denied, thereby affirming the CA decisions.

Whether Civil Case No. 66477 should be dismissed for being in conflict with the concurrent SEC proceedings (i.e., SEC Case No. 09-97-5764) concerning the suspension of payments and the disposition of EYCO’s assets.

Whether Union Bank’s simultaneous or successive filing of actions in different courts—raising substantially identical issues regarding the alleged fraudulent conveyance and jurisdiction—constituted improper forum shopping.

Whether Union Bank had the legal capacity to file Civil Case No. 66477 given that, after October 27, 1997, the rights and interests of creditors were purportedly vested in the rehabilitation receiver or MANCOM, thereby questioning its standing to pursue the rescission of the sale.