CASE #4 ONG vs.

PDIC
Doctrine:
A petition for liquidation of an insolvent corporation is a special proceeding. An appeal in a special proceeding
requires both the filing of a notice of appeal and the record on appeal within thirty days from receipt of the
notice of judgment or final order.
FACTS:
Sometime in 1982 and 1983, petitioner Jerry Ong made some money market placements with Omnibus Finance
Inc. (OFI), which later on suffered serious financial difficulties. As petitioner's money market placements matured,
he demanded from OFI the return of the same. However, OFI's checks issued thereby were dishonored by the
drawee bank. It was alleged that OFI sought the assistance of its sister companies which included the Rural Bank
of Olongapo (RBO). On December 29, 1983, Jose Ma. Carballo, OFI President, and Cynthia Gonzales, Chairperson
of the Board of Directors of RBO, executed in favor of petitioner a Deed of Real Estate Mortgage3 over two
parcels of land located in Tagaytay City covered by Transfer Certificates of Title Nos. T-13769 and T-13770, which
are both registered in RBO's name, as collateral to guarantee the payment of OFI's money market obligations to
petitioner in the amount of ₱863,517.02. The mortgage was executed by Gonzales by virtue of a Secretary's
Certificate4 issued by Atty. Efren L. Legaspi, RBO's alleged Assistant Corporate Secretary, showing that Gonzales
was authorized by the RBO Board to execute such mortgage. The deed of mortgage was annotated on TCT Nos.
T-13769 and T-13770 of the Register of Deeds of Tagaytay City on January 13, 1984.
As OFI failed to pay petitioner the obligation secured by the real estate mortgage, petitioner foreclosed the
mortgage on March 18, 1984. A Certificate of Sale was correspondingly issued which was registered with the
Register of Deeds of Tagaytay City on July 16, 1985. Petitioner alleged that representatives of the Central Bank of
the Philippines (Central Bank) had approached him and borrowed TCT Nos. T-13769 and T-13770 for the on-
going audit and inventory of the assets of the RBO; however, these titles were not returned despite petitioner's
demand. Petitioner filed with the RTC of Tagaytay City, Branch 18, a case for the surrender of said titles, docketed
as TC-803. The case was subsequently dismissed for being premature as the one year redemption period had not
yet expired.
On May 22, 1984, RBO's Corporate Secretary and Acting Manager, Atty. Rodolfo C. Soriano, filed with the RTC of
Tagaytay City, an action for the annulment of real estate mortgage, extrajudicial foreclosure of mortgage
proceedings, sheriff's certificate of sale with damages against petitioner, OFI, Cynthia Gonzales, the Sheriff and
the Register of Deeds of Tagaytay City, raffled off to Branch 18, and was docketed as Civil Case No. TG-805.
However, the case was later suspended due to OFI's pending application for rehabilitation with the Securities and
Exchange Commission.
On May 9, 1985, the Central Bank, as petitioner, which was later substituted by respondent Philippine Deposit
Insurance Corporation5 (PDIC) filed with the RTC of Olongapo City a petition for assistance in the liquidation of
RBO, docketed as Sp. Proc. No. 170-0-85 and was raffled off to Branch 73. Later, upon respondent's motion, Civil
Case No. TG-805, i.e., for annulment of mortgage, was consolidated with RBO's liquidation proceedings.
On February 5, 1991, petitioner filed with Branch 79 of the RTC of Quezon City6 a petition for the surrender of
the titles of the Tagaytay properties against RBO, which petition was eventually ordered dismissed by the CA
after finding that the RTC lacked jurisdiction to try the case, but without prejudice to petitioner's right to file his
claim in RBO's liquidation proceedings pending before Branch 73 of the RTC of Olongapo City.
Consequently, on February 16, 1996, petitioner filed in Sp. Proc. No. 170-0-85 a Motion to Admit Claim against
RBO's assets as a secured creditor and the winning bidder and/or purchaser of the Tagaytay properties in the
foreclosure sale. Respondent filed its Comment/Opposition to the motion. Trial, thereafter, ensued on
petitioner's claim.
On June 25, 2001, Acting Presiding Judge Philbert I. Iturralde issued an Order7 declaring petitioner's claim
against RBO valid and legitimate
Respondent filed its motion for reconsideration. Judge Renato J. Dilag reversed the June 25, 2001 Decision.
On June 17, 2003, petitioner, thru counsel, filed a Notice of Appeal12 which the RTC gave due course in an
Order.
Respondent sought reconsideration of the Order giving due course to petitioner's appeal as the latter failed to
file a record on appeal within the reglementary period; thus, the appeal was not perfected.
RTC issued an Order that the appeal is dismissed for having been taken out of time.
Petitioner's motion for reconsideration was denied
Petitioner then filed with the CA a petition for certiorari with prayer for the issuance of a writ of preliminary
injunction assailing the RTC Orders dated May 31, 2005 and December 7, 2005 for having been issued with grave
abuse of discretion.
CA issued its assailed Decision on July 31, 2006, dismissing the petition.
Hence, the present petition
Issues:
W/N CA GRAVELY ERRED AND ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT DISMISSED THE PETITION FOR CERTIORARI BASED SOLELY ON TECHNICAL RULES OF PROCEDURE.
W/N COURT OF APPEALS GRAVELY ERRED AND ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN IT DISMISSED THE PETITION FOR CERTIORARI WITHOUT PASSING UPON THE MERIT OF
PETITIONER'S APPEAL.17
Petitioner reiterates his argument raised before the CA that his counsel's failure to submit a record on appeal on
time is an excusable neglect as the failure was due to the serious complications surrounding the case that led her
to commit an error of judgment; that petitioner's counsel honestly believed that their claim filed against RBO in
the special proceedings and the civil case filed by RBO against petitioner for the annulment of mortgage under
Civil Case No. TG-805, which was eventually consolidated with the special proceedings, were ordinary civil
actions since they sought the enforcement or protection of a right or prevention or redress of a wrong; thus, a
mere notice of appeal would be sufficient to perfect petitioner's appeal.

Ruling:
As to the main issues raised by petitioner, we find the same unmeritorious.
It has been held that a petition for liquidation of an insolvent corporation is classified as a special proceeding.20
The RTC decision, which petitioner sought to appeal from, was rendered in the special proceeding for the
liquidation of RBO's assets; thus, applying the above-quoted provisions, an appeal in a special proceeding
requires both the filing of a notice of appeal and the record on appeal within thirty days from receipt of the
notice of judgment or final order.
In this case, petitioner filed his Notice of Appeal on June 17, 2003, and the RTC gave due course to the appeal
after it found that the notice of appeal was filed within the reglementary period. However, upon respondent's
motion for reconsideration, where it argued that petitioner failed to file a record on appeal, considering that the
decision was rendered in a petition for liquidation of RBO which was a special proceeding, the RTC reversed itself
as no record on appeal was filed, and dismissed petitioner's appeal for having been taken out of time. The RTC
did not commit a grave abuse of discretion in dismissing petitioner's appeal, since it is clearly stated under the
Rules that filing of the notice of appeal must be accompanied by a record on appeal to perfect one's appeal in a
special proceeding. In fact, the RTC's dismissal of petitioner's appeal was expressly allowed under Section 13 of
Rule 41 of the Rules of Court which states:
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 propio or on motion to dismiss the appeal for having been taken out of
time.
Thus, we find no error committed by the CA when it sustained the RTC's dismissal of petitioner's appeal for
failure to comply with the Rules.
Withal, petitioner's ratiocinations that he failed to submit a Record on Appeal on time could be taken as
excusable neglect due to serious complications surrounding the case leading him to an error of judgment where
"an ordinary human being, courts, not excepted, is susceptible to commit, is highly unsustainable. Petitioner
counsel's honest belief that the claim of petitioner Ong and the civil case for annulment of mortgage under TG-
085 were ordinary actions and, as such, mere filing of a notice of appeal would be sufficient, is far from being
persuasive. This is not the excusable neglect as envisioned by the rules in order to sidestep on the strict
compliance with the rules on appeal. Petitioner was fully aware that Sp. Proc. No. 170-0-85 is a petition for
liquidation because they filed their claim in the case claiming to be a preferred creditor, participated in the trial
thereof in every step of the way, and filed the disputed Notice of Appeal under the title of the said case. We
cannot find any reason to accept petitioner's feigned ignorance that the case they were appealing is a liquidation
petition. In fine, such miscalculation of the petitioner cannot justify an exception to the rules, and to apply the
liberal construction rule.
An erroneous application of the law or rules is not excusable error."26 Petitioner is bound by the mistake of his
counsel.
WHEREFORE, the petition is hereby DENIED.