G.R. No. 161776




FIRST DIVISION G.R. No. 161776 October 22, 2004 ALLIED BANKING CORPORATION and PACITA UY, petitioners, vs. SPOUSES DAVID E. ESERJOSE and ZENAIDA ESERJOSE, respondents. D E C I S I O N YNARES-SANTIAGO, J.: The period for appeal set by law must be deemed mandatory save for the most extraordinary of circumstances. Unfortunately, the case from which the present petition stems is not one of those extraordinary circumstances. We are asked by petitioners Allied Banking Corporation (hereinafter "ABC") and Pacita Uy to review on certiorari the decision and resolution of the Court of Appeals dated November 14, 2003 and January 16, 2004,¹ respectively. In the assailed decision, the appellate court upheld the order² of the Regional Trial Court of Quezon City, Branch 85, dated August 5, 2003, granting herein respondents’ motion to dismiss petitioners’ appeal for having been filed out of time and motion for execution of the trial court’s decision. The original action filed with the trial court is one for the release of mortgage, release from guaranty, reconveyance, cancellation of title and damages lodged by respondents Spouses David and Zenaida Eserjose against petitioners ABC and Pacita Uy as well as Johnnie C. So and Avelina Cruz, doing business under the name and style of Lucky Find Enterprises. Respondents allege that they are the registered owners of a piece of property, on which they have built their residential home, located in No. 78-E Tangali Street, Barangay San Jose, Quezon City. The lot is covered by Transfer Certificate of Title (TCT) No. RT-75353 (235715)³ and consists of 378 square meters. In February 1993, the adjoining lot, covered by TCT No. 50096, was offered to them for sale. While interested in buying this adjoining lot, respondents did not have sufficient funds to buy it. Hence, they sought the help of Johnnie C. So, who was then one of their closest friends. Johnnie C. So referred the respondents to petitioner Uy, manager of ABC’s Del Monte, Quezon City Branch. So and his mother-in-law, Avelina Uy, doing business under the name Lucky Find Enterprises, were familiar clients of the bank and maintained a credit accommodation with said bank. Respondents applied for a loan with the bank in the amount of Four Million Pesos (P4,000,000.00), which loan was approved by petitioner Uy, in her capacity as Branch Manager, on condition that the lot to be bought should be registered in the name of Lucky Find Enterprises and that the loan shall be secured by a Real Estate Mortgage dated February 10, 1993⁴ on the house and lot owned by respondent spouses under TCT No. 75353. The proceeds of the loan were released and the adjoining lot bought and registered in the name of Lucky Find Enterprises under TCT No. 80539.⁵ On or about February 2, 1994,⁶ another mortgage covering respondents’ residential lot was executed between ABC and respondent spouses. This mortgage is likewise in the amount of Four Million Pesos (P4,000,000.00). On November 27, 1996, respondent spouses paid ABC the remaining balance of their loan amounting to Two Million Pesos (P2,000,000.00).⁷ Having paid off the entire amount of their loan, respondents asked petitioner Uy for the return of their two titles, namely, the title to their residential lot and that pertaining to the adjoining lot which they bought. Petitioner Uy did not accede to the request and failed to give an explanation for her inaction. She failed to return the titles despite a formal written demand dated January 5, 1998 by respondents’ counsel. Upon their inquiry, respondents learned that aside from the two existing mortgages on their residential lot, another mortgage⁸ was also executed by So in favor of ABC covering the newly acquired lot to secure a loan of Five Million Pesos (P5,000,000.00) as evidenced by a Real Estate Mortgage agreement dated September 2, 1994. The foregoing events led to the filing of the complaint against the petitioners, Johnnie So and Avelina Cruz. Johnnie So and Avelina Cruz denied any participation in the transaction between respondents and ABC. They alleged that the respondents dealt with petitioner Uy on their own accord. So further denied having executed the Real Estate Mortgage over the acquired lot "without notice to the [respondents]" since the latter verbally agreed and consented to the mortgage. He further stated that the respondents agreed to register the acquired lot in the name of Lucky Find Enterprises and to mortgage the same as part of the loan line guaranty with the understanding that the bank would release the same along with the title to respondents’ residential lot as soon as the "accommodation loan" was paid off by the respondents. Petitioners ABC and Uy insist on the validity of the agreements executed over the subject properties. They contend that the real estate mortgages, dated February 10, 1993 and February 2, 1994, as well as the Continuing Guaranty/Comprehensive Surety Agreement (CG/CS), dated September 8, 1994,⁹ were all executed by respondents on their own free will and with full knowledge of the legal implications thereof. Petitioners also allege that aside from the first loan amounting to Four Million Pesos (P4,000,000.00) which was paid, Lucky Find Enterprises/Avelina Cruz were also granted several other loans the total amount of which is Fourteen Million Five Hundred Thirty Four Thousand Seven Hundred Fifty (P14,534,750.00). In signing the CG/CS, respondents became sureties to all these loans to the extent of Twenty Five Million Pesos (P25,000,000.00). The two mortgages on respondents’ residential lot also serve as security for the loans. As Lucky Find Enterprises has not yet fully paid these loans, the title to respondents’ residential lot cannot be released. As to the mortgage executed by So for Lucky Find Enterprises over the acquired lot, petitioners maintain that they relied upon the title to the property which shows that it is registered in the name of Lucky Find Enterprises. On this premise, they accepted the property as collateral for the loan in the amount of Five Million Pesos (P5,000,000.00). On January 31, 2003, the trial court rendered its decision holding that the real estate mortgages covering the residential lot contained an annotation that these were executed to secure a loan line in favor of respondents or Lucky Find Enterprises/Avelina Cruz and "other credit accommodations". Effectively, respondents were made liable to ABC not only for the amount they borrowed but also for other obligations which Lucky Find Enterprises/Avelina Cruz may incur. The trial court ruled that, unless a continuing real estate mortgage is involved, a real estate mortgage is not a valid security for future loans under the so-called "dragnet clause". Thus, the trial court ruled: Premises considered, judgment is hereby rendered in favor of the plaintiffs: 1. Declaring the Real Estate Mortgages, dated February 10, 1993 and February 2, 1994, on the property covered by TCT No. 75353 (235715) as fully paid and released; 2. Declaring the Real Estate Mortgage on the property covered by TCT No. 80539 executed by Johnnie C. So in favor of Allied banking Corporation as null and void; 3. Declaring the Continuing Guaranty/Comprehensive Surety Agreement, insofar as plaintiffs are concerned, as null and void; 4. Ordering defendants Allied Banking Corporation and Pacita S. Uy to return TCT No. 75353 (235715) and TCT No. 80539 to the plaintiffs; and, in the event of their failure or refusal to comply, ordering the Registry of Deeds of Quezon City to cancel them and to issue new titles thereon in the name of the plaintiffs; 5. Ordering all the defendants to pay the plaintiffs, jointly and severally, the amount Four Million (P4,000,000.00) Pesos as moral damages; the amount of Four Million (P4,000,000.00) Pesos as exemplary damages and the amount of Fifty Thousand (P50,000.00) as attorney’s fees, plus costs of suit. SO ORDERED.¹⁰ Petitioners ABC and Pacita Uy filed a motion for reconsideration¹¹ dated February 21, 2003 while Johnnie So filed his motion¹² on March 5, 2003. Petitioner Uy filed a Supplemental Motion for Reconsideration¹³ on March 12, 2003. Respondents, for their part, filed their Opposition to Motion for Reconsideration¹⁴ on April 4, 2003. The trial court denied the foregoing motions for reconsideration in its Order¹⁵ dated June 30, 2003. From the denial of its motion for reconsideration, petitioners filed their Notice of Appeal on July 14, 2003. The respondents filed their Motion to Dismiss Appeal and Motion for Execution. They alleged that the Notice of Appeal was belatedly filed. According to them, two days before it was to expire, the period to appeal was tolled by the prior filing of the motion for reconsideration. Petitioners received a copy of the Order denying their motion on July 9, 2003. The Notice of Appeal, therefore, should have been filed not later than July 11, 2003. As the filing was done only on July 14, 2003, petitioners were unable to perfect their appeal. On August 5, 2003, the trial court issued an Order granting respondents’ motions. Petitioners’ appeal was denied due course and a Writ of Execution was issued by the trial court. Petitioners filed a petition for certiorari before the Court of Appeals seeking to annul the Order and Writ of Execution for having been issued in excess of jurisdiction or with grave abuse of discretion. The Court of Appeals, in its decision dated November 14, 2003, ruled that judgments or orders become final and executory by operation of law and not by judicial declaration. Hence, it disposed of the case as follows: Based on the foregoing pronouncement of the Supreme Court, it appears that public respondent did not commit grave abuse of discretion in rendering the assailed Order dated August 5, 2003 and issuing the Writ of Execution. WHEREFORE, premises considered, the instant petition is hereby DENIED for lack of merit and ordered DISMISSED. SO ORDERED.¹⁶ Petitioners’ motion for reconsideration was denied on January 16, 2004. A petition for review on certiorari filed before us was denied in a resolution dated February 23, 2004 for failure of the petitioners to sufficiently show that the Court of Appeals committed any reversible error in the challenged decision and resolution as to warrant the exercise by this Court of its discretionary appellate jurisdiction in this case. On a motion for reconsideration, we resolved to grant the motion for reconsideration and to reinstate the petition. The following arguments were presented as grounds for the petition: I THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DENYING THE PETITION BASED ON MERE TECHNICALITY AND IN THE PROCESS, OVERLOOKED THE GREAT PREJUDICE AND GREAT MISCARRIAGE OF JUSTICE TO PETITIONER ABC BY REASON OF THE FACT THAT: A. THE AWARD OF EXEMPLARY AND MORAL DAMAGES AMOUNTING TO EIGHT MILLION PESOS (P8,000,000.00) AGAINST ABC IS NOT SUPPORTED BY EVIDENCE. B. ASSUMING THAT RESPONDENTS ARE ENTITLED TO AN AWARD OF DAMAGES, ABC MUST NOT BE HELD LIABLE TO PAY RESPONDENTS. C. THE NULLIFICATION OF THE CONTINUING GUARANTY/COMPREHENSIVE SURETY CONTRACT AND THE REAL ESTATE MORTGAGE CONTRACTS BY THE COURT A QUO IN ITS ASSAILED DECISION DATED 30 JANUARY 2003 RENDERS PETITIONER ABC AN UNPAID AND UNSECURED CREDITOR OF LUCKY FIND ENTERPRISES, AVELINA CRUZ, JOHNNIE SO AND THE PRIVATE RESPONDENTS. II THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DENYING THE INSTANT PETITION BASED ON MERE TECHNICALITY, WITHOUT CONSIDERING THE ABUNDANCE OF LAW, JURISPRUDENCE AND ACCEPTED AND USUAL JUDICIAL PROCEEDINGS RELEVANT TO THE INSTANT CASE. III THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DENYING THE PETITION BASED ON ITS SOLE RELIANCE IN THE RULING OF THE SUPREME COURT IN DITCHING VS. COURT OF APPEALS, 263 SCRA 343. IV THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DENYING THE PETITIONERS’ MOTION FOR RECONSIDERATION BASED ON ITS SOLE RELIANCE ON THE RESPONDENTS’ MANIFESTATION DATED 05 JANUARY 2004. The petition is not meritorious. Petitioners invoke a liberal interpretation of procedural rules in the interest of justice. According to them, the dismissal of their appeal on the sole ground of one-day delay will gravely prejudice their right to be given the amplest opportunity to be heard on appeal. In support of their contention, petitioners cite our rulings in several cases where, in the exercise of equity jurisdiction, we stayed the dismissal of an appeal based on a technicality. They maintain that the case relied upon by the Court of Appeals, namely Ditching v. Court of Appeals,¹⁷ should not be applied to their case considering the difference in circumstances. In Ditching, the Notice of Appeal was filed twenty (20) days late due to the negligence of counsel. Petitioners argue that their one-day delay may be excused as the inadvertence was due to the volume and pressure of work brought about by numerous cases handled by their counsel. We are not persuaded. Under Rule 41 of the Rules of Court, an appeal to the Court of Appeals from a case decided by the regional trial court in the exercise of the latter's original jurisdiction shall be taken within fifteen (15) days from the notice of judgment or final order appealed from. The period of appeal shall be interrupted by a timely motion for new trial or reconsideration.¹⁸ A party’s appeal by notice of appeal is deemed perfected as to him upon the filing of the notice of appeal in due time.¹⁹ At the outset, the Court emphasizes that the power of the trial court to disallow or disapprove a notice of appeal for being filed out of time is expressly recognized. Section 13 of Rule 41 provides: SECTION 13. Dismissal of appeal. — Prior to the transmittal of the original record or the record on appeal to the appellate court, the trial court may motu proprio, or on motion, dismiss the appeal for having been taken out of time or for non-payment of the docket and other lawful fees within the reglementary period. (Emphasis supplied) The approval of a notice of appeal then becomes the ministerial duty of the lower court, provided the appeal is filed on time. If the notice of appeal is filed beyond the reglementary period, the trial court may exercise its power to deny the same in accordance with Section 13 of Rule 41 of the Rules of Court. The right to appeal is not a natural right or a part of due process. It is a procedural remedy of statutory origin and, as such, may be exercised only in the manner prescribed by the provisions of law authorizing its exercise. Hence, its requirements must be strictly complied with.²⁰ Moreover, the perfection of an appeal within the period and in the manner prescribed by law is essential; noncompliance with this legal requirement is fatal and has the effect of rendering the judgment final and executory.²¹ After a decision is declared final and executory, vested rights are acquired by the winning party. Just as a losing party has the right to appeal within the prescribed period, the winning party has the correlative right to enjoy the finality of the case.²² We are mindful of our rulings in the cases cited by petitioners where we held that the interests of substantial justice and equity prevailed over the constraints of technicalities. A careful reading of the cases cited by petitioners show that exceptional circumstances were obtaining in those cases. In the case of Ace Navigation Co., Inc. v. Court of Appeals,²³ we found merit in the case of the appealing party considering the disparity between the $450.00 unpaid vacation leave pay awarded by the labor arbiter and the $36,000.00 award granted by the NLRC. We ruled that the appeal may be considered even if the requirement regarding proof of service was not followed since the subsequent attaching of the affidavit of service to the motion for reconsideration was substantial compliance of the requirement of the rules. Likewise, in Nerves v. Civil Service Commission,²⁴ we allowed the petition notwithstanding that it was made through a wrong mode of appeal because the petition substantially complied with the Rules. More importantly, the appeal on its face appears to be impressed with merit. In Dela Rosa v. Court of Appeals,²⁵ we stated that as a rule, periods prescribed to do certain acts must be followed unless, under exceptional circumstances, a delay in the filing of an appeal may be excused on grounds of substantial justice. We took exception in the delay in that case because "strong considerations of substantial significance [were] manifest, as attested to by the appellate court’s findings". It must be emphasized that our decisions in these cases are not meant to undermine the force and effectivity of the periods set by law. Rather, it is clear that in cases where procedural rules were not stringently applied, an imperative existed lest a grave injustice be committed. Verily, our judicial system and courts have made a great effort to tread the narrow balance between the enforcement of procedural laws and the guarantee that every party-litigant is given the amplest opportunity for the proper and just disposition of his cause. Unlike the cases cited by petitioners, however, the instant petition on its face is not impressed with merit. We do not find any manifest error in the decision of the Court of Appeals affirming the dismissal by the trial court of petitioner’s appeal. As found by both the trial court and the appellate court, petitioners’ counsel received the copy of the denial of their motion for reconsideration on July 9, 2003. They had two (2) days within which to perfect their appeal. Petitioners argue that the Notice was already prepared and ready for filing as of July 10, 2003 but by inadvertence, "due to the volume and pressure of work brought about by numerous cases handled by" the counsel, they were able to file the same only on July 14, 2003, or three (3) days late. We are not convinced by the reason offered by petitioners. It is neither compelling nor does it impress us as a highly exceptional circumstance to warrant a liberal application of the rules. To excuse their tardiness on the ground of inadvertence due to "volume and pressure of work" undermines the mandatory nature of these prescribed periods. A lawyer is never without scores of pleadings to do or motions to file. Yet it is incumbent upon him, pursuant to the oath he took, to monitor the progress of the cases he is handling to the end that no client is unduly prejudiced by any oversight. WHEREFORE, premises considered, the instant petition is DENIED. The decision and resolution of the Court of Appeals, dated November 14, 2003 and January 16, 2004, in CA-G.R. SP No. 78645 are AFFIRMED. SO ORDERED. Davide, Jr., Quisumbing, Carpio, and Azcuna*, JJ., concur. Footnotes ¹ Penned by Court of Appeals Associate Justice Remedios A. Salazar-Fernando and concurred in by Associate Justices Eubulo G. Verzola and Edgardo F. Sundiam. ² Penned by Presiding Judge Marlene Gonzales-Sison. ³ Rollo, pp. 58-61. ⁴ Id., pp. 97-100. ⁵ Id., pp. 62-64. ⁶ Id., pp. 101-104. ⁷ As evidenced by an official receipt issued by the bank to "Lucky Find Ent. (David Eserjose)". Id., p. 69. ⁸ Id., pp. 105-108. ⁹ Id., pp. 109-110. ¹⁰ Id., pp. 142-143. ¹¹ Id., pp. 144-161. ¹² Id., pp. 163-171. ¹³ Id., pp. 172-187. ¹⁴ Id., pp. 188-199. ¹⁵ Id., pp. 200-201. ¹⁶ Id, p. 40. ¹⁷ G.R. No. 109834, 18 October 1996, 263 SCRA 343. ¹⁸ Section 3. ¹⁹ Section 9. ²⁰ Ortiz v. Court of Appeals, 360 Phil. 95 (1998); Pedrosa v. Hill, 327 Phil. 153 (1996); Philippine Commercial International Bank v. Court of Appeals, G.R. No. 106956, 27 January 1994, 229 SCRA 560; Aris (Phil.), Inc. v. National Labor Relations Commission, G.R. No. 90501, 5 August 1991, 200 SCRA 246. ²¹ Oro v. Diaz, G.R. No. 140974, 11 July 2001, 361 SCRA 108, citing MERS Shoes Manufacturing, Inc. v. NLRC, 350 Phil. 294 (1998); Kathy-O Enterprises v. NLRC, 350 Phil. 380 (1998); Mabuhay Development Industries v. NLRC, 351 Phil. 227 (1998). ²² Videogram Regulatory Board v. Court of Appeals, 332 Phil. 820 (1996). ²³ G.R. No. 140364, 15 August 2000, 338 SCRA 70. ²⁴ G.R. No. 123561, 31 July 1997, 276 SCRA 610. ²⁵ G.R. No. 103028, 10 October 1997, 280 SCRA 444. The Lawphil Project - Arellano Law Foundation