G.R. No. L-78412 September 26, 1989
TRADERS ROYAL BANK, petitioner, vs. THE HONORABLE COURT OF APPEALS, HON. BALTAZAR M. DIZON, Presiding Judge, Regional Trial Court, Branch 113, Pasay City and ALFREDO CHING, respondents.

FACTS

On March 30, 1982, Philippine Blooming Mills, Inc. (PBM) and its stockholder Alfredo Ching jointly filed a petition for suspension of payments with the Securities and Exchange Commission (SEC Case No. 2250). Ching was included as a co-petitioner, being a surety for PBM’s obligations under a Deed of Suretyship. Traders Royal Bank was listed as a creditor. On July 9, 1982, the SEC issued an order placing PBM under rehabilitation receivership and suspending all actions for claims against it. This order was duly published.
Subsequently, on May 13, 1983, Traders Royal Bank filed a collection suit (Civil Case No. 1028-P) in the Regional Trial Court of Pasay City against PBM and Alfredo Ching to recover a loan. The bank later moved to drop PBM from the complaint due to the SEC receivership, but proceeded against Ching individually as surety. Ching moved to dismiss, arguing the SEC had assumed jurisdiction over him as a co-petitioner, thus suspending the court action. The RTC denied the motion, ruling that PD 902-A, as amended, conferred jurisdiction only over corporations, not individuals. The Court of Appeals later granted Ching’s petition, nullifying the RTC orders and prohibiting further proceedings, holding that the SEC’s assumption of jurisdiction over Ching suspended the action against him.

ISSUE

Whether the Securities and Exchange Commission, having assumed jurisdiction over a corporation under rehabilitation, can also assume jurisdiction over an individual surety of that corporation to the exclusion of regular courts, thereby barring a separate collection suit against the surety.

RULING

The Supreme Court granted the petition and reversed the Court of Appeals. The legal logic is anchored on the limited jurisdiction of the SEC and the distinct personality of a corporation from its stockholders or sureties. Under PD 902-A, as amended by PD 1758, the SEC’s jurisdiction is confined to corporations, partnerships, and associations, and their corporate assets. It does not extend to private individuals in their personal capacity, except in specific intra-corporate disputes involving them as stockholders, directors, or officers. While Ching was impleaded as a co-petitioner in the SEC case, this did not vest the SEC with jurisdiction over his personal properties. The rehabilitation receivership order applied only to PBM’s assets, not Ching’s individual estate.
Consequently, the suspension of claims under the SEC order pertained solely to actions against the corporation under receivership, not against individual sureties. To hold otherwise would allow sureties to improperly shield themselves from liability by joining a corporate petition, creating an anomalous escape from contractual obligations. Article 1216 of the Civil Code explicitly permits a creditor to proceed against any solidary debtor, including a surety, independently. Jurisdiction is conferred by law, not by party consent or joinder. Therefore, the RTC retained jurisdiction over the separate collection suit against Ching in his personal capacity as surety, and the case was ordered reinstated.