SECOND DIVISION
[G.R. No. 152359.
Development Bank of the Philippines, petitioner, vs. West Negros College, Inc., respondent.
R E S O L U T I O N
Tinga, J.:
For resolution is the Motion for Reconsideration[1] dated November 26, 2002 filed by West Negros College, Inc. (West Negros) assailing the Court’s Decision[2] dated October 28, 2002.
Briefly, the facts are as follows:[3]
On P2,400,000.00 secured by a mortgage
on two (2) parcels of land, namely: Lots Nos. 1397-A and 1397-B-1 covered by
Transfer Certificates of Title (TCT) Nos. T-25053 and T-29169,
respectively. The mortgage was expressly
constituted subject to the provisions of Republic Act No. 85 (R.A. 85) creating
the Rehabilitation Finance Corporation, a predecessor agency of DBP.
For failure of BMC to pay the loan, DBP instituted on P4,090,117.36. On
Prior to the expiration of the redemption period on July 11,
1991, BMC and the Bacolod branch office of DBP agreed to peg the redemption
price at P21,500,000.00 representing the compromise settlement of the
outstanding account subject to the approval of DBP’s head office. BMC further resolved to pay an installment of
20% of the compromise amount, or P4,300,000.00, on or before
In the meantime, on P21,500,000.00 to P12,768,432.90
allegedly because of excessive interest charges.
On P21,500,000.00
since the amount was way below the re-appraised value of the foreclosed parcels
of land which stood at P28,895,500.00 as of
On P4,300,000.00 representing 20% of the compromise amount, with one
percent (1%) interest thereon including
other expenses defrayed by DBP at the extrajudicial sale. The computation of the redemption price made
by P358,128.58. In a letter of even date to the DBP, the Ex-Officio
Provincial Sheriff informed DBP of the request for a certificate of redemption
and the amount pegged for the full redemption of the foreclosed properties
based on Section 30, Rule 39 of the Rules of Court, and requested the surrender
of the TCTs covering the redeemed properties.
On P358,128.58. The Sheriff then requested the Manager of DBP
on P358,128.58 and bring with him the
owner’s duplicate copies of the TCTs covering the subject properties.
In response, the DBP sent a letter dated
This prompted
The trial court found merit in the petition and ordered DBP to
surrender the TCTs and, in case of failure to turn them over, instructed the
Register of Deeds to issue new certificates of title for the foreclosed
properties. Because DBP manifested that
it was not relinquishing the documents, new TCTs were issued in the name of
On appeal, the Court of Appeals held that the applicable legal
provisions were Section 30, Rule 39 of the Rules of Court and Act 3135 such
that the redemption price must be the amount of purchase with one percent (1%)
monthly interest thereon including other expenses defrayed by the purchaser at
the extrajudicial sale. On
DBP raised the matter on Petition for Review on Certiorari before this Court. The bone of contention, as summarized by the Court, was how much a mortgagor must pay to redeem real property mortgaged to and foreclosed extrajudicially by the DBP, i.e., whether the mortgagor must pay to the bank the entire amount he owed the latter on the date of the sale with interest on the total indebtedness at the rate agreed upon in the obligations, or whether it is enough for purposes of redemption that he reimburse the amount of purchase with one percent (1%) monthly interest thereon including other expenses defrayed by the purchaser at the extrajudicial sale.
In its Decision, the Court declared that “in redeeming the
foreclosed property respondent
WHEREFORE, the instant Petition for Review is GRANTED. The 7 August 2001 Decision and the 21 February 2002 Resolution of the Court of Appeals in CA-GR CV No. 38277 are REVERSED and SET ASIDE. The appealed Orders of RTC-Br. 50 in CAD. Case No. 2, GLRO CAD. REC. No. 55, dated 7 February 1992, 14 February 1992 and 28 April 1992, ordering petitioner Development Bank of the Philippines through the Ex-Officio Provincial Sheriff to surrender the transfer certificates of title covering the foreclosed parcels of land and, in case of the failure to turn them over, instructing the Register of Deeds to issue new transfer certificates of title for the foreclosed properties, as it did issue new transfer certificates of title designated as TCT Nos. T-165261 and T-165262 in the name of West Negros College; canceling the adverse claim and notice lis pendens in favor of petitioner Development Bank of the Philippines; and denying the separate motions for reconsideration of petitioner Development Bank of the Philippines, are also REVERSED and SET ASIDE.
The Certificate of Redemption dated
In the event that respondent West Negros College is not interested in redeeming the mortgaged properties at the statutory redemption price, or that the redemption period of sixty (60) days expires without any redemption having been undertaken or without a compromise agreement for such purpose having been reached and perfected, respondent West Negros College shall yield possession of the properties in question to petitioner Development Bank of the Philippines as TCT No. T-165261 for Lot No. 1397-A and TCT No. 165262 for Lot No. 1397-B-1 issued in the name of West Negros College are DECLARED VOID and OF NO EFFECT and the Register of Deeds of Bacolod City is ORDERED TO ISSUE new transfer certificates of title over the mortgaged properties in the name of the Development Bank of the Philippines. No Costs.[6]
Contending that it is desirous of redeeming the subject
properties,
The respondent further avers that DBP is estopped by its
agreement to reduce the redemption amount to P21,500.000.00, acceptance
of part of the redemption price and representation that BMC would be allowed to
redeem the property. Finally,
In its Comment to Respondent’s Motion for Reconsideration
Dated
DBP stresses that it cannot be deemed in estoppel by its
acceptance of the amount of P4,300,000.00 as deposit on the proposed
redemption price of P21,500,000.00 because the deposit was accepted on
condition that it would form part of the redemption price only if approved by
DBP’s higher management. DBP notes that
the instant motion substantially raises factual issues which may not be passed
upon by the Court. Furthermore, the
constitutionality of E.O. 81 was never raised by the respondent except in the
instant motion.
In its Reply to Comment[10]
dated
In the main,
Before we resolve this issue, we shall answer the more
fundamental question of whether the properties can still be redeemed in the
first place. It should be recalled that the certificate of sale in favor of DBP
was registered with the Registry of Deeds on
The right of legal redemption must be exercised within specified
time limits.[13]
However, the statutory period of redemption can be extended by agreement of the
parties.[14]
It bears noting that DBP accepted installment payments of 20% of the compromise
amount beyond the
We now resolve the petitioner’s main argument.
We note that P21,500,000.00 to P12,768,432.90
allegedly because of excessive interest charges. However, the issue as to the validity of
these impositions was not squarely raised before nor passed upon by the trial
court and the appellate court. In fact,
in its order[15]
dated
Accordingly, without determining the total outstanding obligation of BMC/West Negros, both the trial court and the Court of Appeals upheld the respondent’s theory that Section 30, Rule 39 of the Rules of Court and Act 3135, and not E.O. 81, apply in the determination of the redemption price. With our Decision declaring otherwise, however, West Negros now asks the Court to settle the issue as to the validity of the imposition of compounded interest, penalties and other charges to enable it to redeem the foreclosed properties.
The determination of the validity or invalidity of these
impositions turns on whether the parties stipulated on the imposition of
compounded interest, penalties and other charges or whether DBP judicially
demanded payment. According to P2,400,000.00 was supported by the PN dated
These questions are largely factual in nature and beyond the province of this Court to determine, not being a trier of facts.[18] Moreover, it is a fundamental rule of procedure that higher courts are precluded from entertaining matters neither alleged in the pleadings nor raised during the proceedings below, but ventilated for the first time only in a motion for reconsideration or on appeal.[19] On appeal, only errors specifically assigned and properly argued in the brief will be considered, with the exception of those affecting jurisdiction over the subject matter as well as plain and clerical errors.[20]
These procedural rules notwithstanding, we find that the remand
of this case to the Court of Appeals is both necessary and appropriate given
the compelling legal and equitable considerations which this Court cannot
ignore. Foremost of these is the fact
that prior to the expiration of the redemption period on P21,500,000.00. This commitment binds P21,500,000.00.
This is especially significant in light of the fact that DBP, in
essence, had extended the redemption period when it agreed to BMC’s payment of
20% of the redemption price in installments beyond the redemption period. Had DBP not agreed to the extension, BMC
would not have been able to exercise its right of redemption at all and
ownership would have been consolidated at that point in favor of DBP. Moreover, contrary to West Negros’
contention, DBP is not estopped by its Bacolod branch’s agreement to peg the
redemption price at P21,500,000.00 and acceptance of the 20% installment
because the Bacolod branch expressly made its agreement subject to the approval
of its head office.
This Court in its Decision ordered the payment of the
balance of BMC’s obligation, plus expenses and interest, to be computed as of
the date of the public auction on P21,500,000.00.
Finally, we have to debunk the challenge on the constitutionality of E.O. 81 on the ground that it violates the non-impairment clause of the Constitution as it allegedly allows the DBP to impose penalties and interest which were not originally agreed upon. It is well-settled that all presumptions are indulged in favor of constitutionality, such that one who attacks a statute, alleging unconstitutionality must prove its invalidity beyond a reasonable doubt.[21] In fact, this Court does not decide questions of a constitutional nature unless that question is properly raised and presented in appropriate cases and is necessary to a determination of the case, i.e., the issue of constitutionality must be the very lis mota presented.[22]
WHEREFORE, the instant Motion for Reconsideration is
GRANTED only insofar as it seeks the determination of the total redemption
price to be paid by West Negros College, Inc. to the Development Bank of the P21,500,000.00. For this purpose, the case is hereby REMANDED
to the Court of Appeals which is directed to proceed accordingly with all
deliberate dispatch.
SO ORDERED.
Quisumbing, (Acting Chairman), and
Callejo, Sr., JJ., concur.
Puno, (Chairman), J., on
official leave.
Austria-Martinez, J., no part.
[1] Rollo, pp. 348-381, with Annexes.
[2]
[3]
[4]
[5]
[6]
[7] Supra, note 1.
[8]
Sec. 16. Right of Redemption.—Any
mortgagor of the Bank whose real property has been extrajudicially sold at
public auction shall, within one (1) year counted from the date of registration
of the certificate of sale, have the right to redeem the real property by
paying to the Bank all of the latter’s claims against him, as determined by the
Bank.
The Bank may take possession of the foreclosed property during the redemption period. When the Bank takes possession during such period, it shall be entitled to the fruits of the property with no obligation to account for them, the same being considered compensation for the interest that would otherwise accrue on the account. Neither shall the Bank be obliged to post a bond for the purpose of such possession. [Underscoring supplied.]
[9] Supra, note 1 at 402-421.
[10]
[11] Art. 1959. Without prejudice to the provisions of Article 2212, interest due and unpaid shall not earn interest. However, the contracting parties may by stipulation capitalize the interest due and unpaid, which as added principal, shall earn new interest.
Art. 2212. Interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent upon this point. Civil Code.
[12] Sec. 16, E.O. No. 81.
[13] Spouses Estanislao, Jr. v. Court of Appeals, 414 Phil. 509 (2001), citing Basbas v. Entena, 28 SCRA 665 (1969).
[14] Ibaan Rural Bank, Inc. v. Court of Appeals, 378 Phil. 707 (1999).
[15] RTC Records, pp. 102-109.
[16]
[17]
CA Records, p. 122, Decision of the Court of Appeals dated
[18] Mirasol v. CA, G.R. No. 128448, February 1, 2001, 351 SCRA 44; Suan v. NLRC, G.R. No. 141441, June 19, 2001, 358 SCRA 819.
[19] Solid Homes, Inc. v. CA, 341 Phil. 261 (1997) citing People v. Echegaray, G.R. No. 117472, February 7, 1997 citing Manila Bay Club Corporation v. Court of Appeals, 249 SCRA 303, October 13, 1995.
[20] Solid Homes, Inc. v. CA, supra, citing Sec. 7, Rule 51 of the Rules of Court.
[21] Caleon v. Agus Development Corporation, G.R. No. 77365, April 7, 1992, 207 SCRA 748, 751, citing Victoriano v. Elizaldo Rope Workers’ Union, 59 SCRA 54.
[22] Id. citing Tropical Homes, Inc. v. National Housing Authority, 152 SCRA 540.