Banco de Oro Unibank, Inc. v. VTL Realty, Inc.
REITERATIONFacts
The Antecedents: Victor T. Bollozos (Bollozos) mortgaged his property to Banco de Oro Unibank, Inc. (BDO) to secure a loan. On August 12, 1994, Bollozos sold the property to VTL Realty Corporation (VTL) via a Deed of Definite Sale with Assumption of Mortgage. BDO refused to accept VTL's payment, insisting the loan be settled first. VTL filed a specific performance case against BDO. During the proceedings, the obligation remained unpaid, leading BDO to foreclose the mortgage on March 29, 1995, and subsequently consolidate ownership after no redemption was made. Procedural History: The RTC initially directed BDO to furnish VTL with a new Statement of Account and for VTL to assume and pay the obligation. The CA affirmed this. Separate motions for execution were filed. BDO submitted a Statement of Account showing an obligation of P41,769,596.94. VTL moved to correct the Statement of Account, arguing interest and penalties should only be computed up to April 28, 1995 (date of Certificate of Sale registration), citing DBP v. Zaragoza. The RTC initially granted VTL's motion but later reversed its stance, ordering VTL to pay P41,769,596.94 based on BDO's computation, which it found consistent with its January 6, 1997 Decision. VTL petitioned the CA via certiorari. The Petition: The CA reversed the RTC, reinstating its January 25, 2008 Order and holding that interest and penalties should only be computed up to April 28, 1995, based on its interpretation of DBP v. Zaragoza and PNB v. CA. BDO filed the present petition, arguing the CA violated the principle of immutability of judgments.
Issue(s)
Whether the Court of Appeals violated the principle of immutability of judgments. Whether the accrual of interest and penalty charges should be computed only up to the date of registration of the Certificate of Sale, or until the actual settlement of the obligation.
Ruling
The Supreme Court granted the petition, reversed the Court of Appeals' Decision and Resolution, and reinstated the Regional Trial Court's Orders dated January 8, 2009, and June 3, 2009. The Court held that VTL is liable to pay BDO the amount of P41,769,596.94 as of March 16, 2007.
Ratio Decidendi
On the Immutability of Judgments: The Court held that the Court of Appeals (CA) violated the principle of immutability of judgments when it rendered its assailed Decision dated May 31, 2010. This principle dictates that final and executory judgments can no longer be attacked or modified, directly or indirectly, even by the highest court. The CA's prior Decision dated May 26, 2004, which affirmed the RTC's disposition that the amount to be paid by VTL shall be based on the Statement of Account dated August 12, 1994, plus corresponding interests and penalty charges that have accrued thereafter, had already become final and executory. The CA's subsequent ruling effectively modified this final judgment, which is impermissible. On the Accrual of Interest and Penalty Charges: The Court distinguished the present case from DBP v. Zaragoza and PNB v. CA. In DBP v. Zaragoza, the issue was the mortgagor's liability for interest from the date of foreclosure to the date of sale, where there was a significant delay in the sale of the property. In PNB v. CA, the issue concerned the redemption price. The Court clarified that in the present case, there was no redemption price to speak of because VTL did not exercise its right of redemption. VTL neither made a tender of payment nor deposited any amount to stop the running of interest and penalties. Therefore, the cited cases, which deal with the computation of interest during the redemption period or deficiency claims after sale, were inapplicable. VTL's situation was one where it sought to purchase the property from BDO after the redemption period had lapsed, and its obligation to pay the full amount, including accrued interests and penalties as affirmed by the final judgment, remained. The Court emphasized that VTL's failure to settle the obligation it assumed, as affirmed by the final and executory decision, meant that the property became part of BDO's foreclosed assets, and VTL could not escape liability for the full outstanding balance.
Main Doctrine
The Court reiterated that the principle of immutability of judgments bars the modification of a final and executory decision. Furthermore, the Court clarified that the rulings in DBP v. Zaragoza and PNB v. CA, which limit the accrual of interest and penalties after foreclosure, are inapplicable when the issue is not about redemption price but about the total obligation to be settled by a party who failed to redeem the property and whose obligation was affirmed by a final judgment.