Cudiamat v. Batangas Savings and Loan Bank
REITERATIONFacts
The Antecedents: Petitioners Atty. Restituto G. Cudiamat and his brother Perfecto were co-owners of a parcel of land. In 1979, Perfecto, without Restituto's knowledge, obtained a loan from respondent Batangas Savings and Loan Bank, Inc., and mortgaged the property as security. Perfecto purportedly used a Special Power of Attorney (SPA) allegedly executed by Restituto, with the marital consent of Restituto's wife, Erlinda Cudiamat. Restituto learned of the foreclosure in 1991 and informed the bank that he had not authorized the mortgage. Perfecto died in 1990. Procedural History: In 1999, following eviction proceedings against Perfecto's widow, Corazon Cudiamat, the petitioners filed a complaint for quieting of title with damages against the bank and the Register of Deeds. They argued the mortgage was null and void. The bank countered that the Balayan Regional Trial Court (RTC) lacked jurisdiction because the bank was under liquidation by the Philippine Deposit Insurance Corporation (PDIC), and claims against it should be filed with the liquidation court in Nasugbu. The Balayan RTC ruled in favor of the petitioners, ordering the cancellation of the bank's title and the return of the property. The bank appealed, and the Court of Appeals reversed the RTC's decision, dismissing the complaint and advising the petitioners to pursue their claims in the liquidation court. The Petition: Petitioners seek review of the Court of Appeals' decision, arguing that the Balayan RTC had jurisdiction and that the bank is estopped from questioning it due to its active participation in the proceedings. They contend that their complaint was filed before the PDIC's liquidation petition. The Supreme Court granted the petition, finding that the Balayan RTC had jurisdiction and that estoppel barred the bank from raising the issue of jurisdiction. The Court applied the exception in Valenzuela v. Court of Appeals, deeming it an exercise in futility to compel the petitioners to relitigate their case in the liquidation court, considering the age of petitioner Restituto, the death of his wife Erlinda, and the fact that the issues were already fully ventilated and decided by the Balayan RTC.
Issue(s)
Whether the Court of Appeals erred in ruling that the Regional Trial Court of Balayan had no jurisdiction over the complaint for quieting of title; and whether the bank is estopped from questioning the jurisdiction of the Regional Trial Court of Balayan.
Ruling
The petition is GRANTED. The Decision of December 21, 2007, and Resolution dated March 27, 2008, of the Court of Appeals are SET ASIDE. The Decision dated January 17, 2006, of the Regional Trial Court of Balayan, Batangas, Branch 9 is REINSTATED.
Ratio Decidendi
On the issues of jurisdiction and estoppel: The Supreme Court held that estoppel bars the bank from raising the issue of lack of jurisdiction of the Balayan RTC. The Court reiterated the rule from Lozon v. NLRC and Metromedia Times Corporation v. Pastorin, stating that while lack of jurisdiction over the subject matter can be raised at any time and is not lost by estoppel, the present case is an exception. The Balayan RTC, as a court of general jurisdiction, had jurisdiction over the complaint for quieting of title filed by petitioners on August 9, 1999. The Nasugbu RTC, as a liquidation court, assumed jurisdiction over claims against the bank only on May 25, 2000, when the PDIC's petition for assistance in liquidation was raffled and given due course. To compel petitioners to re-file and relitigate their claims before the Nasugbu RTC, after the parties had already presented their evidence and the Balayan RTC had decided the case, would be an exercise in futility and would unjustly burden the petitioners. The Court found analogous considerations to Valenzuela v. Court of Appeals, where the general rule of filing claims in liquidation proceedings was not applied because it would be an "exercise in futility." Such considerations included the advanced age of petitioner Restituto, the death of co-petitioner Erlinda during the pendency of the case, and Restituto's residence in Ozamis City, making it superfluous to compel him to relitigate the same issues already exhaustively passed upon and decided by the Balayan RTC.
Main Doctrine
Estoppel bars a bank from raising the issue of lack of jurisdiction of a Regional Trial Court over a complaint for quieting of title, especially when the RTC, as a court of general jurisdiction, had jurisdiction over the complaint filed earlier than the liquidation court's assumption of jurisdiction over claims against the bank, and compelling the complainants to relitigate would be an exercise in futility.