Facts:

This case involves Allied Banking Corporation and Pacita Uy as petitioners against spouses David E. Eserjose and Zenaida Eserjose as respondents. The events leading to this litigation arose from a series of loans and mortgages connected to the respondents' properties. The respondents own property registered under Transfer Certificate of Title No. RT-75353 in Quezon City, covering 378 square meters, where they built their residential home. In February 1993, while interested in purchasing an adjoining lot, they sought assistance from their friend Johnnie C. So, who referred them to Pacita Uy, the manager of Allied Banking Corporation (ABC). Respondents applied for a loan of Four Million Pesos (P4,000,000.00), which was approved under the condition that the newly purchased lot would be registered in the name of Lucky Find Enterprises, owned by So and Avelina Cruz, with the loan secured by a Real Estate Mortgage on the respondents' existing property.

In early 1994, a second

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Facts:

Parties and Transaction Background

• Petitioners
• Allied Banking Corporation (ABC)
• Pacita Uy, acting in her capacity as branch manager of ABC’s Quezon City branch
• Respondents
• Spouses David E. Eserjose and Zenaida Eserjose, registered owners of a residential lot in Quezon City (TCT No. RT-75353)
• Johnnie C. So and Avelina Cruz (doing business as Lucky Find Enterprises) also play roles in the background transactions

Real Estate and Loan Arrangements

• Respondents’ Property
• A residential lot covered by TCT No. RT-75353, measuring 378 square meters located in Barangay San Jose, Quezon City
• In February 1993, their adjacent lot (TCT No. 50096) was offered for sale
• Involvement of Petitioners in Financing
• Respondents, lacking sufficient funds, sought assistance from Johnnie So
• So referred them to petitioner Pacita Uy
• Respondents applied for a loan of Four Million Pesos (P4,000,000.00) with ABC
• Loan approval was conditional on:
• Registering the adjoining lot in the name of Lucky Find Enterprises
• Securing the loan with a Real Estate Mortgage on the respondents’ residential property (dated February 10, 1993)
• The proceeds were used to purchase and transfer title of the adjoining lot (TCT No. 80539) to Lucky Find Enterprises

Execution of Multiple Mortgages and Subsequent Developments

• Additional Mortgage
• On or about February 2, 1994, a second mortgage was executed on the residential lot for a Four Million Pesos (P4,000,000.00) loan
• Payment and Request for Title Release
• On November 27, 1996, respondents paid the remaining balance of Two Million Pesos (P2,000,000.00) on the initial loan
• After full repayment, respondents formally requested the return of the titles for both the residential lot and the adjoining lot
• Petitioner Uy failed to return the titles and did not provide an explanation
• Controversy Over a Third Mortgage
• An additional mortgage executed by Johnnie So in favor of ABC on the acquired lot secured a loan of Five Million Pesos (P5,000,000.00)
• Petitioners maintained that the property being collateral was appropriately evidenced by its registration in the name of Lucky Find Enterprises

Trial Court Proceedings and Judgment

• The original complaint
• Filed by respondents for release of mortgage, cancellation of title, reconveyance, and damages
• Involved claims against ABC, Pacita Uy, and the intervening parties (Johnnie C. So and Avelina Cruz)
• Trial Court Decision (January 31, 2003)
• The real estate mortgages on the residential lot contained annotations linking them to a loan line arrangement
• The court ruled:
• The two mortgages (dated February 10, 1993 and February 2, 1994) were to be considered fully paid and released
• The mortgage on the acquired lot (executed by So) was declared null and void
• The Continuing Guaranty/Comprehensive Surety Agreement (CG/CS) was similarly declared null and void
• An order was issued requiring the return (or cancelation by the Registry of Deeds) of TCT Nos. 75353 and 80539 in favor of respondents
• Monetary awards were imposed on ABC including moral damages (P4,000,000.00), exemplary damages (P4,000,000.00), attorney’s fees (P50,000.00), plus costs of suit

Subsequent Motions and Appeal Process

• Motions for Reconsideration
• Petitioners (ABC and Pacita Uy) filed motions for reconsideration as did Johnnie So and his subsequent supplemental motion
• The trial court denied these motions (Order dated June 30, 2003)
• Filing of the Notice of Appeal
• Petitioners filed their Notice of Appeal on July 14, 2003
• Respondents argued that the proper deadline (July 11, 2003) had passed, as the period was tolled only until July 11, 2003
• Order Dismissing Appeal and Issuance of Writ of Execution
• On August 5, 2003, the trial court granted respondents’ motions, dismissing the appeal and issuing a Writ of Execution
• Subsequent petitions for certiorari and review on certiorari were filed and denied by both the Court of Appeals and the Supreme Court

Petitioners’ Arguments on Appeal

• Allegation of Grave Prejudice
• Petitioners contended that a one-day delay in filing did not warrant dismissal given the substantial injustice and prejudice to their right to be heard
• They cited jurisprudence (e.g., Ditching v. Court of Appeals) where technical defaults were excused under extraordinary circumstances
• Emphasis on Equity and Substantial Justice
• Argued that the dismissal, based solely on a one-day technical delay, was disproportionate
• Claimed that aspects of the mortgage contracts, surety agreements, and damages award were disfavored by the court’s ruling
• Reliance on Liberal Interpretation of Procedural Rules
• Petitioners asserted that the Rules of Court should be interpreted liberally in the interest of justice
• Noted that similar delays in other cases were excused due to overwhelming circumstances related to workload and case volume

Issue:

Timeliness of the Notice of Appeal

• Whether the mandatory period for filing an appeal under Rule 41 was strictly observed
• Whether the one-day delay in filing the Notice of Appeal (filed July 14, 2003 instead of the required July 11, 2003) is excusable under the circumstances

Applicability of the “Extraordinary Circumstances” Doctrine

• Whether the petitioners’ allegation that the delay was caused by workload and inadvertence qualifies as an “extraordinary circumstance” that might justify a liberal interpretation of the filing period
• Comparison with other cases where delays were excused under substantial justice considerations

Effect of the Alleged Injustice in Terms of Damages and Mortgage Nullification

• Whether the dismissal of the appeal solely on a technicality (a one-day delay) overlooks other substantive issues such as the award of moral and exemplary damages
• Whether the nullification of mortgage and continuing guaranty agreements renders ABC an unsecured creditor, thereby impacting substantive justice

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)