View full case

LUCIA BARRAMEDA VDA. DE BALLESTEROS v. RURAL BANK OF CANAMAN INC.

FACTS:

The case involves a petition for review on certiorari filed by Lucia Barrameda Vda. De Ballesteros against her children and the Rural Bank of Canaman, Inc. (RBCI). Lucia filed a complaint for Annulment of Deed of Extrajudicial Partition, Deed of Mortgage, and Damages with prayer for Preliminary Injunction before the Regional Trial Court of Iriga City (RTC-Iriga). She alleged that her children executed a deed of extrajudicial partition and waiver of the estate of her deceased husband without her knowledge and consent, and that her son Rico mortgaged a parcel of land without her knowledge and consent as well. Lucia sought the nullification of the said documents and the subsequent mortgage, as well as damages. RBCI claimed that Lucia had sold one of the parcels of land to Rico in 1979 and that the extrajudicial partition, waiver, and mortgage were executed with her knowledge and consent. The case was set for pre-trial, during which RBCI's counsel filed a motion to withdraw after learning that the Philippine Deposit Insurance Corporation (PDIC) would handle the case as RBCI had been closed and placed under receivership. PDIC filed a motion to dismiss the case on the ground that the RTC-Iriga had no jurisdiction as the liquidation court in RTC-Makati was already constituted to handle cases involving RBCI. The RTC-Iriga granted the motion to dismiss, prompting Lucia to appeal to the Court of Appeals (CA). The CA modified the RTC-Iriga's decision and ordered the consolidation of the case with the liquidation case pending before the RTC-Makati.

Lucia filed Civil Case No. IR-3128 before the Regional Trial Court (RTC) of Iriga City on March 17, 2000. The case is for annulment of deed of partition and waiver, deed of mortgage, and damages against Rural Bank of Canaman, Camarines Sur, Inc. (RBCI). However, before the case could be resolved, RBCI was ordered closed and placed under receivership of the Philippine Deposit Insurance Corporation (PDIC) in January 2001.

Meanwhile, PDIC also filed a petition for assistance in the judicial liquidation of RBCI, which was docketed as Special Proceeding No. M-5290 and assigned to Branch 59 of the RTC of Makati City. On August 10, 2001, the RTC-Makati granted the petition and ordered the liquidation of RBCI.

Lucia argued that the RTC-Iriga should continue to have jurisdiction over Civil Case No. IR-3128, as it was filed before RBCI was placed under receivership. She also argued that the consolidation of her case with the liquidation case before the RTC-Makati is improper, as her cause of action involves her rights and interest over a certain property irregularly acquired by RBCI, and she is not a creditor of the bank.

PDIC countered that the consolidation of the two cases is proper, and the liquidation court of RBCI has exclusive jurisdiction over all claims against the bank.

The Court of Appeals (CA) denied Lucia's motion for reconsideration, prompting her to file a petition for review on certiorari before the Supreme Court.

ISSUES:

  1. Whether the Regional Trial Court of Iriga City, Branch 36 has jurisdiction to continue trying and ultimately decide Civil Case No. IR-3128.

  2. Whether the consolidation of Civil Case No. IR-3128 with the liquidation case docketed as Special Proceedings No. M-5290 before Branch 59 of the Regional Trial Court of Makati City is proper.

RULING:

  1. No. The Supreme Court found that the liquidation court has exclusive jurisdiction over all claims against the bank, including Lucia's action for annulment of deed of partition and waiver, deed of mortgage, and damages, as it falls within the purview of a disputed claim in contemplation of Section 30 of the New Central Bank Act.

  2. Yes. The Supreme Court affirmed the consolidation, holding that the liquidation court has jurisdiction over all claims, and it is proper to consolidate in order to prevent multiplicity of suits, avoid prejudice to other creditors and depositors, and ensure an equitable and orderly liquidation process.

PRINCIPLES:

  • Doctrine on Adherence of Jurisdiction Jurisdiction once attached continues until final termination of the case except when there is a curative legislation.

  • Jurisdiction of Liquidation Courts Liquidation courts have exclusive jurisdiction over all claims against insolvent banks, aimed at preventing multiplicity of actions and ensuring equitable distribution of assets among creditors.

  • Disputed Claims in Liquidation Refers to all claims against an insolvent bank, including those for specific performance, breach of contract, and damages.

  • Curative Character of Legislation Legislation affecting jurisdiction that is designed to address procedural issues and establish orderliness in legal processes.

  • Effect of Insolvency on Claims Once a bank is declared insolvent, legal actions against it must conform to the liquidation process to prevent prejudicing the rights of other creditors.