G.R. No. 208792 - Bank of the Philippine Islands vs. Spouses Genuino

The Bank of the Philippine Islands (petitioner) filed a Complaint for Sum of Money/Judgment on the Deficiency against Spouses Roberto and Teresita Genuino before the Regional Trial Court (RTC) of Makati on October 6, 2009.

The Complaint arose from a mortgage deal where the Spouses Genuino executed deeds of real estate mortgage (on May 27, 1997 and May 11, 1999) covering a 10,000-square-meter parcel of land in General Trias, Cavite.

The bank’s relief was based on a deficiency computation following an auction sale after the Spouses Genuino defaulted on their loan obligations.

The Spouses Genuino, through their Answer filed on November 25, 2009, raised special and affirmative defenses including questioning the validity of the auction sale and alleging waiver of the remedy of collection by the bank.

The Spouses Genuino availed a loan amounting to P8,840,000.00, evidenced by promissory notes, but defaulted on installment payments.

On April 18, 2004, the bank foreclosed the mortgaged property following due notice and publication.

The property was sold at a public auction for P2,900,000.00, leaving a deficiency of P27,744,762.49 when deducted from the overall obligation of P30,644,762.49.

In its Complaint, the petitioner sought a reduced recovery of P10,626,121.69, partially waiving the stipulated interest and completely waiving the late payment charges and attorney’s fees.

Under Rule 18, Section 1 of the Rules of Court, the plaintiff is required to move for the case to be set for pre-trial after the last pleading is served and filed.

A.M. No. 03-1-09-SC, effective August 16, 2004, provides that the plaintiff must file an ex parte motion to set the case for pre-trial within five (5) days from the filing of the reply, failing which the Branch Clerk of Court (COC) must issue a notice of pre-trial.

Despite this guideline, the petitioner failed to file the required motion for pre-trial, leading to the RTC’s dismissal of the Complaint without prejudice pursuant to Rule 17, Section 3 for failure to prosecute or appear on the scheduled presentation of evidence.

The bank, in its Motion for Reconsideration, explained that the case folder had been misplaced along with records of terminated cases, attributing the lapse to administrative negligence and the departure of the assigned secretary.

The trial court’s order of dismissal was challenged by the petitioner in the Court of Appeals and later in a Petition for Certiorari before the Supreme Court.

The Court of Appeals, in its February 26, 2013 Decision, found no grave abuse of discretion in dismissing the Complaint, and subsequent resolutions denied reconsideration.

The petitioner argued that the issuance of A.M. No. 03-1-09-SC should preclude dismissal for failure to move for pre-trial, contending that the responsibility to set the case had shifted to the Clerk of Court.

Respondents contended that notwithstanding the guidelines, the plaintiff’s duty to diligently prosecute its case remained unabated, emphasizing that reliance solely on the clerk’s duty was insufficient.

Whether the failure of the Bank of the Philippine Islands to file a motion to set the case for pre-trial conference constitutes a justifiable cause to dismiss its Complaint.
Whether the issuance of A.M. No. 03-1-09-SC shifts the entire burden of setting the case for pre-trial to the clerk of court, thereby relieving the plaintiff of its own procedural duty under Rule 18, Section 1.
Whether the dismissal of the Complaint for failure to prosecute, based on the non-filing of the motion for pre-trial, was a grave abuse of discretion or a proper application of Rule 17, Section 3 of the Rules of Court.