G.R. No. 87135 - Magalad vs. Premiere Ficing Corp.

Alma Magalad (plaintiff-appellee) filed a complaint for damages against Premiere Financing Corporation (defendant-appellant), a financing company engaged in soliciting and accepting money market placements or deposits.
The case was docketed as Civil Case No. Q-40392 before the Regional Trial Court (RTC), Branch LXXXV, Quezon City.

On September 12, 1983, Premiere, despite having an expired permit to issue commercial papers, induced Magalad to make a money market placement of P50,000.00 at an interest rate of 22% per annum.
Premiere issued a receipt to Magalad evidencing this transaction, as well as two post-dated checks totaling P51,079.00 and assigned a receivable from a third party to Magalad for the same amount.
When the checks were presented on their due dates, they were dishonored due to insufficient funds.
Despite repeated demands by Magalad for cash replacement, Premiere refused to comply without providing a valid reason.

Magalad, suffering mental anguish and financial hardship, engaged counsel agreeing to pay 20% attorney’s fees and filed a complaint for damages with a prayer for writ of preliminary attachment.
Premiere failed to file an answer, leading to a default judgment rendered by the RTC on May 22, 1984, ordering Premiere to pay Magalad:

Premiere moved for reconsideration, arguing the Securities and Exchange Commission’s (SEC) exclusive jurisdiction due to Premiere’s state of suspension of payments.
The RTC denied the motion; Premiere appealed, and the case was elevated to the Court of Appeals (CA).
The CA dismissed the appeal for failure to file a brief, later admitted the brief, and eventually certified the case to the Supreme Court as it involved a pure question of law.

Magalad contended the RTC had jurisdiction as this was an ordinary action for damages.
Premiere argued for original and exclusive jurisdiction of the SEC under Presidential Decree (PD) No. 902-A, as amended, because the company was under suspension of payments and the transaction involved fraud detrimental to the public.

Whether or not the Regional Trial Court had jurisdiction over the case involving Premiere Financing Corporation, a company under suspension of payments.
Whether the Securities and Exchange Commission had original and exclusive jurisdiction over the claims relating to a corporation in the state of suspension of payments involving alleged fraud.