Fil-Agro Rural Bank, Inc. vs. Villaseñor, Jr.

All claims against an insolvent bank under liquidation — regardless of their nature or character, and irrespective of whether the relief sought directly affects the bank's property — fall within the exclusive jurisdiction of the liquidation court constituted pursuant to Section 30 of R.A. No. 7653, and any order or judgment rendered by another court lacking such jurisdiction is null and void and produces no legal effect.

Antonio J. Villaseñor, Jr. and Wilfreda V. Villaseñor are spouses who own conjugal properties covered by TCT No. PT-90776 and TCT No. PT-127965. Wilfreda mortgaged these properties to Fil-Agro Rural Bank, Inc. to secure a loan obligation. Fil-Agro is a rural bank that, during the pendency of the civil case, was placed under the receivership of the Philippine Deposit Insurance Corporation (PDIC) by the Monetary Board of the Bangko Sentral ng Pilipinas pursuant to Resolution No. 1486, and subsequently became subject to liquidation proceedings before the RTC of Malolos City. Section 30 of R.A. No. 7653 (the New Central Bank Act) governs the proceedings in receivership and liquidation of banks, vesting the liquidation court with jurisdiction to adjudicate disputed claims against the insolvent institution.

On June 23, 2014, Antonio J. Villaseñor, Jr. filed a complaint for Declaration of Nullity of Real Estate Mortgages and Quieting of Title with Damages before the RTC of Pasig City, docketed as Civil Case No. 74399. He sought to nullify two real estate mortgages dated May 10, 2012 and June 20, 2012 executed by his wife, Wilfreda V. Villaseñor, in favor of Fil-Agro Rural Bank, Inc. over their conjugal properties covered by TCT No. PT-90776 and TCT No. PT-127965. Antonio alleged that Wilfreda mortgaged these properties without his knowledge and consent while he was working abroad.

Sometime in September 2014, the Bangko Sentral ng Pilipinas placed Fil-Agro under the receivership of the PDIC. On September 30, 2014, Fil-Agro's counsel filed a withdrawal of appearance and requested that future notices and processes be sent directly to the PDIC or to the bank's new counsel. No entry of appearance or motion for substitution of new counsel was filed on behalf of Fil-Agro, so the RTC continued sending notices to Fil-Agro's address. On March 17, 2015, the RTC set the case for a pre-trial conference on June 29, 2015.

On June 23, 2015, the Office of the General Counsel of the PDIC filed an Entry of Appearance with Motion to Suspend Proceedings, set for hearing on June 29, 2015. Three days later, on June 26, 2015, the PDIC filed an urgent motion to cancel the June 29 hearing because its counsel was scheduled to appear in another hearing in Makati RTC. On June 29, 2015, the pre-trial conference proceeded. Antonio's counsel, armed with a Special Power of Attorney, appeared on behalf of his client who was then working abroad, and filed his pre-trial brief, the judicial affidavit of his witnesses, and his documentary evidence. Wilfreda and Fil-Agro failed to appear at the pre-trial conference and did not submit the judicial affidavits of their witnesses. Antonio's counsel moved in open court that they be declared in default and that he be allowed to present his evidence ex parte, which the RTC granted. Antonio also moved that the PDIC's urgent motion to cancel hearing be denied, but the RTC did not act on the motion.

On August 20, 2015, Atty. Ricardo C. Angeles filed an Entry of Appearance for Fil-Agro. On September 7, 2015, the RTC informed Fil-Agro's counsel that Antonio was already allowed to present his evidence ex parte on September 18, 2015. Fil-Agro filed a Motion for Reconsideration dated September 16, 2015, setting it for hearing on September 18, 2015. Antonio claimed he received the motion only on September 22, 2015, in violation of the three-day notice rule. On September 28, 2015, the RTC denied Fil-Agro's motion for reconsideration for being pro forma. On November 16, 2015, Antonio filed an Ex Parte Manifestation with Motion to Admit Formal Offer of Evidence, and the RTC admitted all documentary exhibits and considered the case submitted for decision.

Fil-Agro filed a Petition for Certiorari dated December 11, 2015 before the CA, seeking to annul the RTC Orders dated June 29, 2015 and September 28, 2015. The CA partly granted the petition, ordering consolidation of the case with the liquidation proceedings before the RTC of Malolos City, but sustained the RTC Orders declaring Fil-Agro and Wilfreda in default and allowing ex parte presentation of evidence. Both parties elevated the matter to the Supreme Court via consolidated Petitions for Review on Certiorari.

• Jurisdiction over the Claim: Antonio asserted that his complaint for declaration of nullity of real estate mortgage and quieting of title with damages is incapable of pecuniary estimation and falls within the jurisdiction of the RTC under Section 19(1) of Batas Pambansa Bilang 129.
• Improper Consolidation: Antonio argued that consolidation with the liquidation proceedings was improper because a claim falls under the jurisdiction of the liquidation court only when it involves property that forms part of the assets of the institution under liquidation. He maintained that the subject properties had not yet qualified as assets of the bank since they had not been foreclosed by Fil-Agro.
• Distinguishing Precedent: Antonio insisted that the CA erred in applying Vda. de Ballesteros vs. Rural Bank of Canaman, Inc. because in that case, foreclosure had already been made and the property was already owned by the insolvent bank, unlike here where no foreclosure had occurred.
• Validity of RTC Orders (Fil-Agro's petition): Fil-Agro contended that the CA's ruling requiring consolidation with the liquidation court rendered the June 29, 2015 and September 28, 2015 RTC Orders void, since the RTC of Pasig City lacked jurisdiction over the case.

• Consolidation with Liquidation Proceedings: Whether consolidation of the civil case for annulment of real estate mortgage, quieting of title, and damages with the liquidation case is proper.
• Validity of RTC Orders: Whether the June 29, 2015 and September 28, 2015 Orders of the RTC of Pasig City are valid.

• Consolidation with Liquidation Proceedings: Yes. Consolidation is proper because Antonio's complaint constitutes a disputed claim against the insolvent bank, which falls within the exclusive jurisdiction of the liquidation court under Section 30 of R.A. No. 7653, regardless of whether the mortgaged property has been foreclosed.
• Validity of RTC Orders: No. The June 29, 2015 and September 28, 2015 Orders are null and void, the RTC of Pasig City having no jurisdiction over Antonio's complaint; jurisdiction belongs exclusively to the liquidation court, and any order rendered without jurisdiction is no judgment at all.

• Consolidation with Liquidation Proceedings: Section 30 of R.A. No. 7653 recognizes the exclusive jurisdiction of the liquidation court to adjudicate disputed claims against the closed bank, assist in the enforcement of individual liabilities of stockholders, directors, and officers, and decide on all other issues material to implementing the liquidation plan. Jurisprudence has long established that "disputed claims" encompasses all claims — whether against the assets of the insolvent bank, for specific performance, breach of contract, damages, or otherwise — regardless of whether the relief sought directly affects the bank's property. Section 30(2) of R.A. No. 7653 authorizes the receiver to defend any action against the insolvent bank. In Provident Savings Bank vs. Court of Appeals, the Court held that the receiver is obliged to collect pre-existing debts due to the bank and to foreclose mortgages securing such debts. Antonio's complaint for annulment of the mortgages essentially assails Fil-Agro's right to foreclose the mortgages constituted to secure the principal obligation, including the bank's right to sell the property and apply the proceeds to the unpaid loan. This indubitably constitutes a disputed claim over which the liquidation court has jurisdiction. Antonio's argument that foreclosure must first occur before the claim falls within the liquidation court's jurisdiction was rejected, as the term "disputed claims" is defined in an all-encompassing and broad manner. The CA's order of consolidation was proper, serving the purposes of avoiding multiplicity of suits, preventing delay, and saving unnecessary costs and expenses.

• Validity of RTC Orders: A judgment rendered by a court without jurisdiction is null and void, creates no rights, and produces no effect. It may be attacked at any time, as a void judgment for want of jurisdiction is no judgment at all. Since the RTC of Pasig City, sitting as a court of general jurisdiction, had no jurisdiction over Antonio's complaint — the RTC of Malolos City as liquidation court having exclusive jurisdiction over all claims against Fil-Agro — any decision, judgment, resolution, or order rendered by the RTC of Pasig City is null and void and of no force and binding effect. The CA erred in sustaining the June 29, 2015 and September 28, 2015 Orders; these orders were rendered without jurisdiction and must be declared null and void.

• Exclusive Jurisdiction of the Liquidation Court over Disputed Claims — Under Section 30 of R.A. No. 7653, the liquidation court has exclusive jurisdiction to adjudicate all disputed claims against an insolvent bank. "Disputed claims" is defined broadly and all-encompassingly to include any cause of action against the insolvent bank, regardless of its nature or character, and irrespective of whether the relief sought would directly affect the property of the bank under liquidation. This covers claims against the bank's assets, claims for specific performance, breach of contract, damages, and any other cause of action. The claim need not involve property already foreclosed or already owned by the bank; a complaint for annulment of mortgage, which assails the bank's right to foreclose, is itself a disputed claim within the liquidation court's jurisdiction.

• Void Judgments for Want of Jurisdiction — A judgment rendered by a court without jurisdiction is null and void, creates no rights, and produces no effect. It may be attacked at any time, since a void judgment for want of jurisdiction is no judgment at all. All acts performed pursuant to it and all claims emanating from it have no legal effect. In this case, because the RTC of Pasig City lacked jurisdiction over Antonio's complaint — the liquidation court having exclusive jurisdiction — all orders it issued, including the declaration of default and the denial of the motion for reconsideration, were declared null and void.

• "Simply put, if there is a judicial liquidation of an insolvent bank, all claims against the bank should be filed in the liquidation proceeding." — This passage articulates the core ratio decidendi: the liquidation court's exclusive jurisdiction over all claims against an insolvent bank, irrespective of the nature of the claim.

• "Here, when Antonio filed the complaint for annulment of the mortgages, he is essentially assailing Fil-Agro's right to foreclose the mortgages constituted to secure the principal obligation, including the closed bank's right to sell the property and apply the proceeds of the sale to the satisfaction of the unpaid loan." — This passage explains why a complaint for annulment of mortgage qualifies as a disputed claim against the insolvent bank, even without prior foreclosure.

• "Time and again, the Court has held that a judgment rendered by a court without jurisdiction is null and void, creates no rights, and produces no effect. It may be attacked anytime since a void judgment for want of jurisdiction is no judgment at all." — This is the canonical formulation of the void judgment doctrine as applied to orders issued by a court lacking jurisdiction over the subject matter.

• Vda. de Ballesteros vs. Rural Bank of Canaman, Inc., 650 Phil. 476 (2010) — Distinguished by Antonio but relied upon by the CA; in that case, the Court ordered consolidation of a case for annulment of deed of mortgage and damages with liquidation proceedings where foreclosure had already been made. The Court here found the distinction irrelevant, as disputed claims encompass all causes of action regardless of foreclosure status.
• Provident Savings Bank vs. Court of Appeals, G.R. No. 97218, March 17, 1993 — Cited for the proposition that the receiver of a bank is obliged to collect pre-existing debts due to the bank and to foreclose mortgages securing such debts, supporting the conclusion that Antonio's annulment complaint is a disputed claim.
• Cu vs. Small Business Guarantee and Finance Corp., 815 Phil. 617 (2017) — Cited for the principle that Section 30 of R.A. No. 7653 recognizes the exclusive jurisdiction of the liquidation court to adjudicate disputed claims against the closed bank.
• Cudiamat vs. Batangas Savings and Loan Bank, Inc., Phil. 641 (2010) — Cited for the rule that if there is a judicial liquidation of an insolvent bank, all claims against the bank should be filed in the liquidation proceeding.
• Ong vs. Court of Appeals, 323 Phil. 126 (1996) — Cited for the principle that the liquidation court's jurisdiction over disputed claims holds true regardless of whether the claim was initially disputed in a court or agency before it was filed with the liquidation court.
• Miranda vs. Philippine Deposit Insurance Corp., 532 Phil. 723 (2006) — Cited for the broad definition of "disputed claims" as encompassing all claims against the insolvent bank.
• Lotto Restaurant Corp. vs. BPI Family Savings Bank, Inc., 662 Phil. 267 (2011) — Cited to support the characterization of Antonio's complaint as assailing Fil-Agro's right to foreclose.
• Tan vs. Cinco, 787 Phil. 441 (2016) — Cited for the doctrine that a judgment rendered without jurisdiction is null and void and may be attacked at any time.

• Section 30, Republic Act No. 7653 (New Central Bank Act) — Governs proceedings in receivership and liquidation of banks. It provides that upon the Monetary Board's finding that a bank is unable to pay its liabilities, has insufficient assets, cannot continue in business, or has willfully violated a cease and desist order, the PDIC may be designated as receiver. The receiver is required to gather and take charge of all assets and liabilities, determine whether the institution can be rehabilitated, and if not, proceed with liquidation by filing a petition with the proper RTC. The court, upon acquiring jurisdiction, shall adjudicate disputed claims against the institution, assist in enforcing individual liabilities of stockholders, directors, and officers, and decide other issues material to implementing the liquidation plan. The provision was applied to hold that the liquidation court has exclusive jurisdiction over all disputed claims against the insolvent bank, including Antonio's complaint for annulment of mortgage.
• Sections 4 and 5, Rule 18, Rules of Court — Govern pre-trial procedures, including the consequences of failure to appear at pre-trial. The CA cited these provisions to sustain the RTC's declaration of default, but the Supreme Court rendered this analysis moot by declaring the RTC orders void for lack of jurisdiction.
• Sections 4 and 5, Rule 15, Rules of Court — Govern the requirements for motions, including notice and hearing. The CA cited these to sustain the RTC's finding that Fil-Agro's motion for reconsideration was pro forma, but the Supreme Court rendered this analysis moot by declaring the RTC orders void for lack of jurisdiction.
• Section 19(1), Batas Pambansa Bilang 129 — vests RTCs with jurisdiction over cases not capable of pecuniary estimation. Antonio invoked this provision to argue that the RTC of Pasig City had jurisdiction over his complaint, but the Court held that the liquidation court's exclusive jurisdiction under Section 30 of R.A. No. 7653 prevails.

Peralta, C.J. (Chairperson), Caguioa, Lazaro-Javier, and Lopez, JJ., concurred.