G.R. No. 146553 - BANK OF THE PHILIPPINE ISLANDS, VS. SPOUSES

Ruling

WHEREFORE, premises considered, the petition is GIVEN DUE COURSE and the writ prayed for accordingly GRANTED. The Resolution dated June 19, 2000 of respondent Judge Salvador S. Abad Santos of Branch 65 of the Regional Trial Court of Makati City in Civil Case No. 00-495 entitled Bank of the Philippine Islands v. Spouses Willie Evangelista and Julie L. Evangelista , and the Order dated July 21, 2000 denying the motion for reconsideration thereof, are both hereby ANNULLED and SET ASIDE. The respondent court is hereby ordered to DISMISS Civil Case No. 00-495 WITHOUT PREJUDICE . The Facts The appellate court narrated the facts of the case in this manner: Factual antecedents show that on April 12, 2000, private respondent [now petitioner] Bank of the Philippine Islands (BPI) filed Civil Case No. 00-495 to collect a sum of money against herein petitioners [now respondents] before the Regional Trial Court of Makati City. The case was raffled off to the sala of herein respondent Judge. Petitioner [now respondent] LTS Philippines Corporation (LTS) has obtained various loans from BPI in the aggregate amount of TWENTY MILLION PESOS ( P 20,000,000.00) and as security for the said loans, Spouses Evangelista, also herein petitioners, executed in favor of BPI a continuing suretyship and bound themselves to pay any or all indebtedness of the LTS in the principal amount of THIRTY MILLION PESOS ( P 30,000,000.00) and other charges thereon, and to pay BPI, its successors, assigns or its subsidiaries in case of default of LTS. Later on, a loan was obtained by Spouses Evangelista from BPI in the amount of SIX MILLION SIX HUNDRED THOUSAND PESOS ( P 6,600,000.00). As security for the said loan, Spouses Evangelista executed a real estate mortgage over one (1) parcel of land located at Quezon City, covered by Transfer Certificate of Title No. N-134746 of the Registry of Deeds of Quezon City. The real estate mortgage executed in favor of BPI not only secured the obligation of Spouses Evangelista, but also the obligation of LTS on the basis of the continuing suretyship executed by Spouses Evangelista in favor of BPI. After LTS and Spouses Evangelista failed to pay their respective loan obligations, BPI instituted an extrajudicial foreclosure on the mortgaged land. The mortgaged property was sold at public auction to BPI as the highest bidder therefor for the amount of EIGHT MILLION THIRTEEN THOUSAND TWO HUNDRED PESOS ( P 8,013,200.00). As alleged in BPIs complaint, petitioners outstanding obligation with BPI was THIRTY FOUR MILLION FIFTEEN THOUSAND FOUR HUNDRED THIRTY TWO AND 22/100 [PESOS] ( P 34,015, 432.22), exclusive of interest, penalty and other charges as of July 12, 1999. It turns out, however, that the proceeds of the auction sale of the mortgaged property were insufficient to cover/pay petitioners outstanding obligation. The deficiency obligation, exclusive of interest, penalty and other charges as of July 12, 1999, was pegged as TWENTY SIX MILLIO