G.R. No. 182403 March 9, 2010
ATTY. RESTITUTO G. CUDIAMAT, ERLINDA P. CUDIAMAT and CORAZON D. CUDIAMAT, Petitioners, vs. BATANGAS SAVINGS AND LOAN BANK, INC., and THE REGISTER OF DEEDS, NASUGBU, BATANGAS, Respondents.

FACTS

Petitioner Atty. Restituto Cudiamat and his brother Perfecto were co-owners of a parcel of land in Balayan, Batangas. Restituto entrusted the custody of the title to Perfecto. In 1979, Perfecto, without Restituto’s knowledge and consent, obtained a loan from respondent Batangas Savings and Loan Bank, Inc. and mortgaged the property, presenting a Special Power of Attorney purportedly executed by Restituto. In 1991, Restituto was informed the property was foreclosed. Perfecto died in 1990. In 1998, as Perfecto’s widow, petitioner Corazon, was being evicted, she and petitioner-spouses Restituto and Erlinda filed a complaint for quieting of title on August 9, 1999 before the Regional Trial Court (RTC) of Balayan, assailing the mortgage as null and void. The bank, in its Answer, maintained the mortgage’s validity, alleged it had secured a title in its name, and contended the Balayan RTC had no jurisdiction because the bank was under receivership and liquidation by the PDIC, and that a petition for assistance in liquidation was filed before the RTC of Nasugbu (SP No. 576), lodging jurisdiction with that liquidation court. The Balayan RTC ruled in favor of petitioners, ordering the cancellation of the bank’s title and the reinstatement of the original title. The bank appealed to the Court of Appeals, contending the Balayan RTC had no jurisdiction. The appellate court dismissed the complaint, without prejudice to petitioners filing their claims with the Nasugbu RTC sitting as a liquidation court, ruling the Balayan RTC should have deferred to the liquidation court. Petitioners’ motion for reconsideration was denied.

ISSUE

Whether the Balayan RTC had jurisdiction over petitioners’ complaint for quieting of title, or whether jurisdiction was exclusively lodged with the Nasugbu RTC as the liquidation court.

RULING

The Supreme Court GRANTED the petition, SET ASIDE the Court of Appeals’ Decision and Resolution, and REINSTATED the Balayan RTC’s Decision. The Court held that estoppel bars the bank from raising the issue of lack of jurisdiction of the Balayan RTC. The Balayan RTC, as a court of general jurisdiction, had jurisdiction over the complaint for quieting of title filed on August 9, 1999. The Nasugbu RTC, as a liquidation court, assumed jurisdiction only on May 25, 2000, when the PDIC’s petition for assistance in liquidation was raffled. While lack of jurisdiction over the subject matter can generally be raised at any time, this case is an exception. The bank actively participated in the proceedings before the Balayan RTC. To compel petitioners to re-file and relitigate their claims before the Nasugbu RTC after a full-blown trial and a decision by the Balayan RTC would be an exercise in futility and would unjustly burden petitioners, especially considering petitioner Restituto’s advanced age, his wife’s death, and his residence in Ozamiz City. The Court applied the exception recognized in Valenzuela v. Court of Appeals, where the general rule that claims against an insolvent bank should be filed in the liquidation proceeding was not applied to avoid an exercise in futility when the parties’ claims and defenses had already been properly ventilated and considered by a judicial court.