GR 197970; (January, 2016) (Digest)
G.R. No. 197970 January 25, 2016
Metropolitan Bank and Trust Company, Petitioner, vs. Fadcor, Inc. or The Florencio Corporation, Leticia D. Florencio, Rachel Florencio-Agustin, Ma. Mercedes Florencio and Rosendo Cesar Florencio, Jr., Respondents.
FACTS
Metrobank granted several loans to respondent Fadcor, Inc., secured by real estate mortgages over ten parcels of land and continuing surety agreements executed by the individual respondents. Upon default, Metrobank extrajudicially foreclosed the mortgages. The properties were sold at public auction, with Metrobank as the highest bidder. After applying the proceeds, a deficiency obligation of P17,479,371.86 remained. Metrobank filed a complaint for recovery of this deficiency.
Respondents failed to appear at the pre-trial. The RTC thus allowed Metrobank to present evidence ex parte. Its lone witness identified and marked certain exhibits during the hearing. The RTC later rendered a decision in favor of Metrobank, ordering respondents to pay the deficiency. The Court of Appeals reversed the RTC, ruling that the trial court erroneously admitted exhibits beyond those identified by the witness during the ex parte hearing, violating A.M. No. 03-1-09-SC, which requires that evidence be pre-marked and identified during trial.
ISSUE
Whether the Court of Appeals erred in reversing the RTC’s decision based on a procedural violation concerning the admission of evidence during an ex parte presentation.
RULING
The Supreme Court granted Metrobank’s petition and reinstated the RTC’s decision. The Court held that the CA misapplied the procedural guidelines. A.M. No. 03-1-09-SC, which governs the pre-marking of exhibits, presupposes a pre-trial conference where the parties agree on the evidence to be presented. In this case, no pre-trial was conducted due to respondents’ failure to appear and file their pre-trial brief. Consequently, the rule on pre-marking during pre-trial was inapplicable.
The legal logic is anchored on the consequences of a party’s default during pre-trial. When respondents failed to appear, they forfeited their right to object to the presentation of Metrobank’s evidence. The ex parte hearing was properly conducted, and the RTC had the discretion to admit the formally offered exhibits. The CA’s strict application of the rule, despite the absence of a pre-trial, was a misapprehension of the procedural context. The Supreme Court emphasized that the plaintiff, in such a scenario, is given the privilege to present evidence without objection, and the trial court’s decision based on that evidence is valid. The RTC’s factual findings and the validity of the deficiency claim were thus upheld.