Development Bank of the Philippines v. Jimenez
REITERATIONFacts
The Antecedents: Spouses Leonardo Jimenez and Corazon Benito were registered owners of a parcel of land covered by Original Certificate of Title No. 14483-Pangasinan. They mortgaged this property to the Development Bank of the Philippines (DBP) for P15,000 and P2,000 on January 16 and July 28, 1958, respectively. Due to non-payment of amortizations, the property was sold at an extra-judicial foreclosure sale on March 25, 1966, with DBP as the sole bidder for P11,000. Procedural History: In 1967, the mortgagors sold their right of redemption to their daughter, Josefina B. Jimenez. Redemptioner Jimenez paid the Provincial Sheriff P11,000 (redemption price) plus P1,320 (legal interest), totaling P12,320, and obtained a Deed of Redemption. She presented this to the Register of Deeds for annotation and cancellation of the title, but DBP refused to surrender the owner's duplicate copy of the title. Jimenez filed an ex-parte motion with the Court of First Instance (CFI) of Pangasinan, which ordered DBP to surrender the title. DBP moved for reconsideration, arguing the Provincial Sheriff had no authority to execute the Deed of Redemption and that the redemption price was inadequate, claiming the amount should be DBP's total claim plus interest (P32,020.57) as of March 27, 1967. The CFI denied DBP's motion for reconsideration. The Petition: DBP appealed the CFI's order, assigning as errors the issuance of the order without a hearing and the court's holding that Section 31 of Commonwealth Act No. 459 was not applicable, thus denying its motion for reconsideration.
Issue(s)
Whether the lower court erred in issuing an order for the surrender of the owner's duplicate copy of title without a prior hearing, contrary to Section 111 of Act No. 496. Whether Section 31 of Commonwealth Act No. 459 is applicable to properties mortgaged to and foreclosed by the DBP, and consequently, whether the redemption price should be the total amount owed to the bank or merely the auction sale price.
Ruling
The Supreme Court reversed the order of the lower court, declared the Deed of Redemption and its annotation void and of no effect. However, it granted appellee Josefina B. Jimenez a grace period of thirty (30) days from notice to redeem the property by paying DBP the balance of its credit secured by the property as of the date of sale, plus expenses and agreed interest, provided DBP has not yet disposed of the property.
Ratio Decidendi
On the procedural issue of lack of hearing: While it is true that the redemptioner initially filed an ex-parte motion, the procedural defect was cured when the DBP was given the opportunity to be heard through its Motion for Reconsideration. The lower court considered DBP's objections and arguments regarding the validity of the Deed of Redemption and the redemption price. Therefore, the objection of lack of notice or opportunity to be heard was overcome when the court overruled DBP's motion for reconsideration, effectively giving DBP its day in court. On the applicability of Commonwealth Act No. 459 and the redemption price: The Court reiterated its ruling in Nepomuceno, et al. vs. The Rehabilitation Finance Corporation (now DBP) that Section 31 of Commonwealth Act No. 459, not Section 26 of Rule 39 of the Rules of Court, is the applicable law for the redemption of real estate mortgaged to the DBP. Commonwealth Act No. 459 is a special law specifically governing DBP's transactions, while Section 26 of Rule 39 is a general law. Under the principle that a special law prevails over a general law, Section 31 of CA 459 dictates the redemption price. This means the mortgagor or their assignee must pay the DBP "all the amount he owes the latter on the date of the sale, with interest on the total indebtedness at the rate agreed upon." The Court emphasized that this rule is paramount to protect the government's investment in the institution, preventing substantial losses to DBP if redemption were allowed at the auction price alone. The ruling in Sumerariz vs. Development Bank of the Philippines further supported this interpretation, noting that Section 31 of CA 459 does not contain provisions for extending the period of redemption, unlike the Rules of Court. The Court also clarified that the case of Register of Deeds of Iloilo vs. Hodges did not contradict these rulings, as the issue in Hodges was different and any reference to redemption provisions was merely obiter.
Main Doctrine
In cases involving properties mortgaged to the Development Bank of the Philippines (DBP), redemption must be made by paying the total amount owed to the DBP on the date of the sale, with interest at the agreed rate, as provided by Commonwealth Act No. 459, which is a special law, and not merely the purchase price at the auction sale plus interest as provided by the general law (Section 26, Rule 39 of the Rules of Court).