G.R. No. 190445, July 23, 2014
BANCO DE ORO UNIBANK, INC., Petitioner, v. SPOUSES ENRIQUE GABRIEL LOCSIN AND MA. GERALDINE R. LOCSIN, Respondents.
D E C I S I O N
On 29 September 1995, [respondent] spouses Enrique Gabriel and Ma. Geraldine Locsin obtained a loan in the sum of Seven Hundred Thousand (P700,000.00) Pesos from [petitioner] Banco De Oro Universal Bank (BDO), secured by a real estate mortgage on their property covered by TCT No. N-138739 (1st Loan).
The promissory note covering the 1st Loan provides for an acceleration clause, as follows –“Upon the occurrence as to Maker or any Co-Maker of this Promissory Note of any of the following events of default, the outstanding principal, accrued interest and any other sum payable hereunder or under any related agreement shall become immediately due and payable without presentment, demand, protest or notice of any kind (other than notice of the event and fact of default) all of which are hereby expressly waived by the Maker and all of the Co-Makers, if any x x x.”On 6 November 1996, the Locsins obtained a credit line facility of P2.5 Million from BDO, secured by a third-party real estate mortgage on the property of their business partners (Juanito and Anita Evidente) covered by TCT Nos. N-166336 and N-166637 (the Evidente properties).
BDO's letter of approval of the Locsins' P2.5 Million credit line facility contains a cross-default provision, which reads:“3.6 A default on any availment under this credit line facility shall automatically mean a default on (the Locsins') existing term loan under Promissory Note No. 29-01-9080-95 (covering the 1st Loan) and vice versa.”It appears that the Evidente properties used as security for the credit line facility were insufficient to cover the amount thereof; nevertheless, BDO approved the same because of the Locsins' good paying record. Unfortunately, the Locsins' good paying record ended in October 1997, when they defaulted in the payment of the credit line facility.
On 7 January 1998, BDO sent the Locsins a demand letter informing them that their default on the credit line facility automatically resulted in their 1st Loan becoming due and demandable as well, by virtue of the cross-default provision under the credit line facility and the acceleration clause under the 1st Loan. The Locsins tried to restructure their loans but, in the end, failed to come up with the amount required by BDO.
On 24 August 1998, the Locsins filed a complaint for Specific Performance, Tort and Damages against BDO, docketed as Civil Case No. Q-98-35337 before the Regional Trial Court, Br. 223, Quezon City, seeking to compel the Bank to restructure the loans and to enjoin the foreclosure of the mortgages. However, the trial court in said case did not grant the injunctive reliefs prayed for.
Thus, on 23 September 1998, BDO extrajudicially foreclosed the mortgages on both the Evidente properties and the property securing the 1st Loan. At the auction sale, BDO was declared as the highest bidder with a bid of Three Million Eight Hundred Seventy-Nine Thousand Four Hundred Six Pesos and Eighty Centavos (P3,879,406.80) for the properties. According to the Sheriff's Certificate of Sale, the total outstanding balance on the Locsins' two loans at the time of the foreclosure was Three Million Four Hundred Sixty Thousand Three Hundred Sixty-Three Pesos and Ninety-Seven Centavos (P3,460,363.97).
On 5 February 1999, BDO sent a letter to the Locsins demanding the payment of an additional One Million Two Hundred Fifty-Nine Thousand One Hundred Sixty-Six Pesos and Twenty-One Centavos (P1,259,166.21), representing an alleged deficiency on the foreclosure after deducting from the bid price all expenses for foreclosure and registration of the certificate of sale.
However, according to the Bid Statement prepared by BDO's legal counsel, the deficiency was not P1,259,166.21 but only One Million One Hundred Forty Four Thousand Eighty-Nine Pesos and Eighty-Four Centavos (P1,144,089.84), x x x.
x x x x
On 29 November 1999, BDO filed [with the Regional Trial Court (RTC) of Mandaluyong City] the instant action for Collection of a Sum of Money against the Locsins, praying that the latter be ordered to pay the deficiency of P1,144,089.84.
Instead of filing an answer, the Locsins, on 21 February 2000, filed a Motion to Dismiss on the ground that BDO's action for the deficiency should have been raised as a compulsory counterclaim in Civil Case No. Q-98-35337, the action for Specific Performance etc. that the Locsins had previously filed against BDO.
The court a quo denied the Motion to Dismiss on 18 September 2000, prompting the Locsins to elevate the matter to the Court of Appeals on certiorari. In the meantime, the court a quo archived the case in view of the pending incident.
The Locsins prevailed in the Court of Appeals, but was reversed by the Supreme Court. Hence, the Supreme Court ordered the remand of the case to the court a quo and the continuance of the proceedings. The Supreme Court's decision became final on 19 December 2005. Thereafter, nothing more was heard from the Locsins, who failed to answer the original complaint before the court a quo.
On 28 April 2006, BDO called the court a quo's attention to the finality of the Supreme Court's decision ordering the remand and continuance of the proceedings in the instant action, and to the failure of the Locsins to file an answer despite such finality. BDO prayed that the case be reinstated and that it be allowed to present its evidence ex parte in view of the Locsins' default.
On 9 October 2006, the court a quo granted BDO's motion and allowed the latter to present its evidence ex parte.
Among the evidence presented by BDO was a Statement of Account showing that the Locsins' original deficiency of P1,144,089.84 had ballooned to P3,709,961.00 by 24 November 2006. The Statement of Account appears to have been prepared by a certain Pham Arcenal, checked by Evelyn Magdangan and noted by Paul Gasatan, Senior Manager-LAMU. However, none of these people were presented by BDO to properly identify the document. Only BDO's Vice-President, Ms. Agnes C. Tuason, testified on the allegations of the complaint.
The Statement of Account shows how BDO arrived at the figure of P3,709,961.00 x x x.3
WHEREFORE, the court hereby renders judgment in favor of plaintiff BANCO DE ORO UNIVERSAL BANK, declaring defendant SPOUSES ENRIQUE GABRIEL LOCSIN AND MA. GERALDINE LOCSIN, jointly and severally liable to plaintiff hereby ordering aforesaid defendants to pay plaintiff Banco De Oro Universal Bank, the following, viz.:1) Php3,709,961.00 representing the outstanding obligation from November 25, 2006;SO ORDERED.5
2) The amount equivalent to 12% per annum on the outstanding obligation as interest and charges from November 25, 2006;
3) Php10,000.00 as and by way of attorney's fees.
1. In rendering judgment in favor of plaintiff-appellee [herein petitioner] and declaring defendants-appellants [herein respondents] Spouses Enrique Gabriel Locsin and Ma. Geraldine Locsin, jointly and severally liable to the former to pay the sum/deficiency resulting from the foreclosure sale of the defendants-appellants['] real property covered by TCT No. N-138739 and the two “Evidente properties” covered by TCT Nos. N-166336 and N-166337 of the Registry of Deeds of Quezon City;
2. In not considering in favor of the defendants-appellants their claim for moral, exemplary damages and attorney's fees contained and extensively discussed in their complaint in Civil Case No. Q-98-35337 and attached to the Motion To Dismiss and treat the same as the latter's Answer to the complaint of the appellee in the instant case.6
WHETHER THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR WHEN IT GRANTED THE APPEAL OF RESPONDENTS LOCSIN BASED ON A GROUND NOT RAISED IN THEIR APPEAL;
WHETHER THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR IN RULING THAT PETITIONER BDO FAILED TO PROVE BY A PREPONDERANCE OF EVIDENCE ITS RIGHT TO RECOVER THE DEFICIENCY AMOUNT OF P3,709,961.00
WHETHER THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR IN FAILING TO DISMISS THE APPEAL CONSIDERING THAT:A. IT FAILED TO COMPLY WITH THE MANDATORY REQUIREMENTS STATED UNDER SECTION 7, RULE 44 OF THE RULES OF COURT;
B. IT FAILED TO COMPLY WITH SECTION 13 (D) AND (E), RULE 44 OF THE RULES OF COURT.8
While it may be said that by defaulting, the defendant leaves himself at the mercy of the court, the rules nevertheless see to it that any judgment against him must be in accordance with the evidence required by law. The evidence of the plaintiff, presented in the defendant’s absence, cannot be admitted if it is basically incompetent. Although the defendant would not be in a position to object, elementary justice requires that only legal evidence should be considered against him. If the same should prove insufficient to justify a judgment for the plaintiff, the complaint must be dismissed. And if a favorable judgment is justifiable, it cannot exceed in amount or be different in kind from what is prayed for in the complaint.27
x x x [P]ursuant to Section 1 of Rule 50 of the Rules of Court, “(a)n appeal may be dismissed by the Court of Appeals, on its own motion or on that of the appellee” upon the ground, among others, of “(f)ailure of the appellant … to serve and file the required number of copies of his brief,” within the reglementary period. Manifestly, this provision confers a power and does not impose a duty. What is more, it is directory, not mandatory.32
* Designated Acting Member, per Special Order No. 1691 dated May 22, 2014, in view of the vacancy in the Third Division.
* Designated Acting Member, in lieu of Associate Justice Jose Catral Mendoza, per Special Order No. 1735 dated July 21,2014.
1 Penned by Associate Justice Ricardo R. Rosario, with Associate Justices Jose L. Sabio, Jr. and Vicente S. E. Veloso, concurring; rollo, pp. 48-65.
2Id. at 67.
3Id. at 49-54. (Emphasis and italics in the original; citations omitted)
4 Records, p. 671.
5Id. at 671-672.
6 CA rollo, p. 41.
7Id. at 152-159.
8Rollo, pp. 21-22.
9Spouses Mario and Julia Campos v. Republic of the Philippines, G.R. No. 184371, March 5, 2014.
10General Milling Corporation v. Ramos, G.R. No. 193723, July 20, 2011, 654 SCRA 256, 264.
11 Spouses Mario and Julia Campos v. Republic of the Philippines, supra note 8; Martires v. Chua, G.R. No. 174240, March 20, 2013, 694 SCRA 38, 54. (Emphases supplied)
12Spouses Mario and Julia Campos v. Republic of the Philippines, supra note 8, citing Mendoza v. Bautista, G.R. No. 143666, March 18, 2005, 493 SCRA 804, 817-818.
13 Exhibits “F” and “F-1,” records, pp. 649-650.
14 Exhibits “G” and “G-1,” id. at 651-652.
15 Exhibit “K,” id. at. 657.
16 Exhibit “M,” id. at 658.
17 Exhibits “O” “O-1,” “O-2,” and “O-3,” id. at 660-661.
18 See Exhibits “K” and “M,” id. at 657-658.
19Atienza v. De Castro, 538 Phil. 440, 448 (2006).
21 Gajudo v. Traders Royal Bank, 519 Phil. 791, 803 (2006).
22Atienza v. De Castro, supra note 19.
25Id. at 448-449.
26 G.R. No. 200134, August 15, 2012, 678 SCRA 583.
27Otero v. Tan, supra, at 594-595.
28 Exhibit “H,” records, p. 653.
29 Sec. 7. Appellant's brief. – It shall be the duty of the appellant to file with the court, within forty- five (45) days from receipt of the notice of the clerk that all the evidence, oral and documentary, are attached to the record, seven (7) copies of his legibly typewritten, mimeographed or printed brief, with proof of service of two (2) copies thereof upon the appellee.
30 Section 1. Grounds for dismissal of appeal. – An appeal may be dismissed by the Court of Appeals, on its own motion or on that of the appellee, on the following grounds:
x x x x
(f) Absence of specific assignment of errors in the appellant's brief, or of page references to the record as required in Section 13, paragraphs (a), (c), (d) and (f) of Rule 44;
x x x x
31 136 Phil. 212 (1969).
32Philippine National Bank v. Philippine Milling Co., Inc., supra, at 215. (Emphasis ours)
33Tiangco v. Land Bank of the Philippines, G.R. No. 153998, October 6, 2010, 632 SCRA 256, 266.
34Go v. Chaves, G.R. No. 182341, April 23, 2010, 619 SCRA 333, 343.
35 Section 13. Contents of appellant's brief. – The appellant's brief shall contain, in the order herein indicated, the following:
x x x x
(d) Under the heading “Statement of Facts,” a clear and concise statement in a narrative form of the facts admitted by both parties and of those in controversy, together with the substance of the proof relating thereto in sufficient detail to make it clearly intelligible, with page references to the record;
(e) A clear and concise statement of the issues of fact or law to be submitted to the court for its judgment;
x x x x
36Rizal v. Naredo, G.R. No. 151898, March 14, 2012, 668 SCRA 114, 124, citing Tan v. Planters Products, Inc., 573 Phil. 416, 428 (2008)
37Asiatrust Development Bank v. First Aikka Development, Inc., G.R. No. 179558, June 1, 20 11, 650 SCRA 172, 186.
38 Id. at 186-187.
39 Tan v. Planters Products, Inc., supra note 36, at 429.