Case Digest (G.R. No. 196741)
Facts:
The case revolves around the dispute between Metropolitan Bank and Trust Company (Metrobank), the petitioner, and Fadcor, Inc. (or The Florencio Corporation), along with its officers and directors, who are the respondents. Metrobank extended five loans totaling P32,950,000.00 to Fadcor, which were guaranteed by two Real Estate Mortgages over ten parcels of land and two Continuing Surety Agreements executed by the officers of Fadcor. These agreements made the individual respondents jointly and severally liable for any debt up to P90,000,000.00. After failing to pay a total obligation of P32,350,594.12, Metrobank initiated an extrajudicial foreclosure of the mortgaged properties on April 20, 2001. Metrobank successfully acquired the properties through public auction on July 31, 2001, for P32,961,820.72 but still faced a deficiency obligation of P17,479,371.86. Attempts to collect this amount through demands went unanswered, leading to a complaint filed by Metrobank on September 23Case Digest (G.R. No. 196741)
Facts:
- Loan Transactions and Collateral Arrangement
- Metropolitan Bank and Trust Company (Metrobank) granted five loans totaling P32,950,000.00 to respondent Fadcor, Inc. (also referred to as The Florencio Corporation).
- Fadcor, Inc., represented by its President, Ms. Leticia D. Florencio, and Executive Vice-President, Ms. Rachel D. Florencio-Agustin, executed five Non‑negotiable Promissory Notes in favor of Metrobank.
- Additionally, individual respondents—comprising Ms. Leticia D. Florencio (President); Ms. Rachel D. Florencio-Agustin (Exec. Vice-President); Ms. Ma. Cecilia D. Florencio (Treasurer); Ms. Ma. Mercedes D. Florencio (Corporate Secretary); and Mr. Rosendo Cesar D. Florencio, Jr. (Director)—executed:
- Two Real Estate Mortgages in favor of Metrobank securing ten parcels of land as collateral for specified loans.
- An Amendment of Real Estate Mortgage to secure an additional loan.
- The transactions were further secured by two Continuing Surety Agreements binding the respondents jointly and severally for any present or future obligation up to P90,000,000.00.
- Default, Foreclosure, and Deficiency Obligation
- Respondents defaulted on amortization payments, causing an aggregate arrears of P32,350,594.12.
- After repeated demands for payment were ignored, Metrobank filed an extra-judicial petition for foreclosure on April 20, 2001 under Act No. 3135, as amended.
- The foreclosed properties were sold at public auction on July 31, 2001, with Metrobank as the highest bidder, resulting in a Certificate of Sale and application of proceeds to the indebtedness and related expenses.
- A deficiency obligation amounting to P17,479,371.86 remained unpaid, prompting Metrobank to initiate further legal proceedings.
- Procedural History and The RTC Decision
- On September 23, 2003, Metrobank filed a Complaint to recover the deficiency obligation.
- Respondents failed to appear at the pre‑trial, leading the RTC to issue an order for the ex parte presentation of evidence by Metrobank.
- Metrobank presented its lone witness, Ms. Irene Sih‑Tan, and subsequently filed its Formal Offer of Evidence on September 4, 2004.
- Despite a Motion for Reconsideration by respondents, on September 21, 2004, the RTC denied their motion.
- The RTC rendered its Decision on March 8, 2006, ordering respondents to pay the deficiency obligation with 12% interest per annum from August 1, 2001, and an additional P50,000.00 for attorney’s fees.
- Appeal to the Court of Appeals (CA)
- Following the RTC decision, Metrobank appealed.
- On May 17, 2011, the CA reversed and set aside the RTC’s decision.
- The CA’s reversal was premised on the contention that during the ex parte hearing held on August 24, 2004, the petitioner’s lone witness only identified and marked Exhibits “A” to “DD-4” as shown in the Transcript of Stenographic Notes (TSN) while the RTC admitted Exhibits “A” to “MM” in violation of Administrative Matter (A.M.) No. 03‑1‑09‑SC.
- Petition for Review on Certiorari
- Metrobank filed a Petition for Review on Certiorari under Rule 45 questioning the CA decision.
- Petitioner argued that the CA erred in reversing the RTC decision because:
- The ex parte presentation of evidence was justified given respondents’ failure to appear and file their pre‑trial brief.
- The proper guidelines under Section 5, Rule 18 of the Rules of Court were followed.
- The petition further examined exceptions under Rule 45 allowing the review of findings of fact under specific circumstances such as grave abuse of discretion, misapprehension of facts, or conflicting findings between the RTC and the CA.
Issues:
- Admissibility of Ex Parte Evidence
- Whether the RTC erred in admitting evidence (Exhibits “A” to “MM”) during the ex parte presentation by Metrobank when only a portion was marked in the TSN.
- The proper application of Administrative Matter (A.M.) No. 03‑1‑09‑SC concerning the identification and marking of exhibits during ex parte evidence presentation.
- Procedural Due Process in Pre‑trial Proceedings
- Whether the respondents’ failure to appear and their non‑submission of a pre‑trial brief justified the RTC’s decision to allow ex parte presentation of evidence.
- Whether the CA’s reversal of the RTC’s decision amounted to an abuse of discretion given the ex parte circumstances.
- Scope of Judicial Review under Rule 45
- Whether the issues raised under the petition qualify as questions of law or extend into matters of fact beyond the ambit of Rule 45.
- The extent to which findings of fact may be reviewed on appeal by certiorari when conflicting appellate and trial court findings exist.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)