Union Bank of the Philippines v. Court of Appeals
REVERSALFacts
The Antecedents: Respondents-spouses Gonzalo and Trinidad Vincoy mortgaged their residence to petitioner Union Bank of the Philippines (UBP) to secure a P2,000,000.00 loan for Delco Industries (Phils.), Inc. The mortgage was constituted on March 2, 1990. For failure to pay the loan, UBP extrajudicially foreclosed the mortgage, with UBP submitting the highest bid of P3,290,000.00 on April 10, 1991. A certificate of sale was issued and annotated on May 8, 1991. Prior to the expiration of the redemption period on May 8, 1992, respondents filed a complaint for annulment of the mortgage, alleging that the property was a family home constituted on October 27, 1989, and the consent of beneficiaries Apolonia and Luciana De Jesus Gregorio was not obtained, violating Article 158 of the Family Code. UBP countered that the property's value exceeded the P300,000.00 limit for family homes in urban areas under Article 157 of the Family Code, thus the mortgage was valid. Procedural History: The Regional Trial Court (RTC) declared the family home void and the mortgage valid, holding Article 158 inapplicable due to the property's value exceeding P300,000.00. The RTC ordered respondent Gonzalo Vincoy and/or Delco Industries to pay UBP P4,816,194.44 plus interest and penalties. Respondents appealed to the Court of Appeals (CA), arguing the RTC erred in finding the family home not duly constituted and the mortgage valid. They also contested the redemption amount. The CA upheld the validity of the mortgage, agreeing that the family home's value exceeded the statutory limit. However, it fixed the redemption price at P3,290,000.00 plus 1% monthly interest from April 19, 1991, pursuant to Section 30, Rule 39 of the Rules of Court. The Petition: UBP filed a petition for review on certiorari with the Supreme Court, assailing the CA's resolution of the redemption issue, claiming it was not raised by the parties and was contrary to evidence. UBP argued that respondents had lost their right to redeem due to failure to exercise it within the statutory period and that Section 78 of the General Banking Act, not Section 30, Rule 39 of the Rules of Court, should govern the redemption price.
Issue(s)
Whether the Court of Appeals erred in allowing respondents to redeem the foreclosed property when the issue of redemption was not raised in the lower court and the respondents consistently prayed for the annulment of the mortgage. Whether respondents lost their right to redeem the foreclosed property by failing to exercise it within the one-year period prescribed by law. Whether Section 78 of the General Banking Act, and not Section 30, Rule 39 of the Rules of Court, governs the determination of the redemption price when the mortgagee is a bank.
Ruling
The Supreme Court granted the motion for reconsideration, modified its previous resolution, and found that the respondents had lost their right to redeem the subject foreclosed property.
Ratio Decidendi
On the issue of raising redemption for the first time on appeal: The Court held that an issue which was neither averred in the complaint nor raised during the trial in the court below cannot be raised for the first time on appeal. It noted that respondents consistently prayed for the annulment of the mortgage and never sought redemption before the RTC. The issue of redemption was raised only on appeal before the CA. Therefore, the CA's act of allowing redemption was not legally permissible, as appellate tribunals are limited to determining reversible errors committed by the lower court. Allowing a new issue on appeal violates basic rules of fair play, justice, and due process. On the loss of the right to redeem: The Court found that respondents had lost their right to redeem the property. Pursuant to Section 78 of the General Banking Act, the mortgagor has one year after the sale of the real estate at public auction to redeem the property, reckoned from the date of registration of the sale. In this case, the sale was registered on May 8, 1991, giving respondents until May 8, 1992, to redeem. They failed to exercise this right within the period, having instead persisted in their theory that the mortgage was null and void. The Court reiterated that the filing of an action for annulment of the mortgage does not toll the running of the one-year redemption period, citing Sumerariz v. Development Bank of the Philippines and Vaca v. Court of Appeals. To rule otherwise would create a dangerous precedent, encouraging frivolous suits to extend redemption periods. On the applicable law for redemption price: The Court clarified that Section 78 of the General Banking Act governs the determination of the redemption price when the mortgagee is a bank, as in this case. This provision amends Section 6 of Act No. 3135 concerning the redemption price. The Court cited Ponce de Leon v. Rehabilitation Finance Corporation and Sy v. Court of Appeals, holding that the redeemable amount is the outstanding obligation plus interest and expenses as per Section 78 of the General Banking Act. Therefore, the CA erred in applying Section 30, Rule 39 of the Rules of Court.
Main Doctrine
An issue not raised in the lower court cannot be raised for the first time on appeal. Furthermore, the filing of an action questioning the validity of a mortgage does not toll the one-year redemption period after a foreclosure sale.