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Development Bank of The Philippines vs. Court of Appeals, Et - Al

The Development Bank of the Philippines (DBP) filed a case against spouses Jesus de Jesus and Aludia Mariano to collect on an unpaid loan. At the first pre-trial conference, the spouses failed to appear and were declared in default, allowing DBP to present evidence without them. The trial court later scheduled a second pre-trial conference over DBP's objection, then non-suited DBP for failing to attend. The Supreme Court ruled that the trial court erred in scheduling a second pre-trial and non-suiting DBP, as DBP had already presented evidence in the legal pre-trial. The case was sent back to allow the spouses to cross-examine DBP

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66 views2 pages

Development Bank of The Philippines vs. Court of Appeals, Et - Al

The Development Bank of the Philippines (DBP) filed a case against spouses Jesus de Jesus and Aludia Mariano to collect on an unpaid loan. At the first pre-trial conference, the spouses failed to appear and were declared in default, allowing DBP to present evidence without them. The trial court later scheduled a second pre-trial conference over DBP's objection, then non-suited DBP for failing to attend. The Supreme Court ruled that the trial court erred in scheduling a second pre-trial and non-suiting DBP, as DBP had already presented evidence in the legal pre-trial. The case was sent back to allow the spouses to cross-examine DBP

Uploaded by

Janine Castro
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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DEVELOPMENT BANK OF THE PHILIPPINES vs. COURT OF APPEALS, et.al.

G.R. No. L-49410 January 26, 1989

FACTS:

The case was commenced by a complaint filed by the Development Bank of the
Philippines with the Court of First Instance of Masbate against the spouses Jesus de
Jesus and Aludia Mariano. The complaint prayed for a judgment condemning the
defendant spouses to pay a loan in the aggregate obtained by the latter from the
plaintiff's predecessor-in-interest, the Rehabilitation Finance Corporation. The loan,
payable with interest at six per cent per annum, was secured by a deed of assignment
of the debtor spouses' leasehold rights over land covered by Fishpond Lease
Agreement No. 396. Suit was brought when the spouses failed to pay the loan in
accordance with its term.

The defendants' answer admitted the loan and the failure to pay the amortizations
thereon but sought to avoid liability by setting up the defense of laches, usury, and an
agreement with respect to the fishpond: for its development by the plaintiff, as capitalist
partner, and the defendants as industrial partners. Thereafter, DBP filed a reply in which
it denied under oath the averment of usury, and controverted the existence of the
asserted partnership.

The CFI rendered the decision in favor of Sps. Mariano declaring that DBP is non-
suited. DBP filed a motion for reconsideration but this was denied. Aggrieved, DBP
appealed to the appellate court. However, CA upheld the decision rendered by the CFI.

Hence, this petition.

ISSUE:

Whether or not DBP is non-suited or considered to be in default, notwithstanding its


lawyer’s presence.

HELD:

YES. The Court held that it finds merit in the petition.

After issues had been joined in the Trial Court and a first pre-trial conference had been
scheduled, the private respondents failed to appear thereat, were on that account
declared in default and DBP was allowed to, and did, present its evidence ex parte. The
effect of these successive incidents was to terminate the pre-trial stage of the action
and to limit the effect of the subsequent lifting of the order of default issued against the
private respondents to the restoration of their right to notice of subsequent proceedings
and to take part in the trial. Such lifting, as has also been held by this Court on another
occasion, did not revert the action to the pre-trial stage or authorize, much less render
mandatory, a second pretrial.

There is nothing in the Rules that empowers or authorizes the court to call a second
pre-trial hearing after it has called a first pre-trial duly attended by the parties, and
lacking such authority, the court perforce lacks the authority to declare a failure to
prosecute on the part of plaintiff for failing to attend such second pre-trial; it also lacks
the authority to declare the defendant as in default by reason of the latter's failure to be
present at the said second pre-trial.

The scheduling of a second pre-trial after DBP had finished presenting its evidence
frustrated, rather than advanced, the primary purpose of pre-trials of abbreviating trial
by limitation and simplification of the issues, if not indeed of dispensing altogether with
the necessity of trial. Neither is that purpose served by non-suiting a plaintiff at such a
stage of the action. The correct course would have been to proceed with the trial, in fact
already well under way, allowing the defendants (private respondents) to cross-examine
the plaintiffs (DBP's) witnesses and thereafter to offer their evidence.

WHEREFORE, finding sufficient merit in the petition, the Court hereby grants the same.
The Decision of the Court of Appeals complained of is reversed, and the order
dismissing the petitioner's complaint is set aside.

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