Facts:

The case of Banco de Oro Unibank, Inc. vs. VTL Realty, Inc. originated from a dispute involving a property that was owned by Victor T. Bollozos, who was the registered owner of a parcel of land with a building situated in Barangay Guizo, Mandaue City, covered by Transfer Certificate of Title (TCT) No. 12892. Bollozos mortgaged this property to Banco de Oro Unibank, Inc. (BDO) as security for a loan obtained by World's Arts & Crafts, Inc. On August 12, 1994, Bollozos sold the property to VTL Realty, Inc. (VTL) through a Deed of Definite Sale with Assumption of Mortgage. However, BDO refused to recognize VTL as the new owner and rejected its payment, arguing that the loan obligation needed to be settled prior to any change in ownership. Consequently, VTL filed a lawsuit for specific performance and damages against BDO in the Regional Trial Court (RTC) of Cebu City. During the legal proceedings, BDO foreclosed on the mortgage on March 29, 1995, and issued a Certificate of S

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Facts:

Origin of the Property and Mortgage

• Victor T. Bollozos was the registered owner of a parcel of land, including a building, located in Barangay Guizo, Mandaue City, covered by TCT No. 12892.
• Bollozos mortgaged the property to Banco de Oro Unibank, Inc. (BDO) as security for a loan obtained by World's Arts & Crafts, Inc.

Sale of the Property and Assumption of Mortgage

• On August 12, 1994, Bollozos sold the property to VTL Realty Corporation (VTL) by executing a Deed of Definite Sale with Assumption of Mortgage.
• BDO refused to recognize VTL as the new owner on the ground that the underlying loan obligation of Bollozos (and/or World’s Arts & Crafts, Inc.) had not been settled.

Initiation of Foreclosure and Judicial Proceedings

• VTL filed an action for specific performance with damages against BDO before the Regional Trial Court (RTC) of Cebu City.
• Due to the continued non-payment of the loan, BDO foreclosed the real estate mortgage on March 29, 1995, and an issued Certificate of Sale designated BDO as the lone bidder.
• With the expiration of the redemption period without any redemption being effected, BDO consolidated its ownership over the property.

RTC Rulings and Subsequent Motions

• On January 6, 1997, the RTC directed BDO to provide a new Statement of Account reflecting the outstanding principal, accrued interests, and penalty charges based on the original Statement of Account dated August 12, 1994.
• VTL was ordered to assume and settle Bollozos’ obligation upon receipt of such updated Statement of Account.
• VTL appealed the RTC decision to the Court of Appeals (CA), which affirmed the RTC’s ruling in a Decision dated May 26, 2004.
• During execution proceedings in 2007, BDO submitted a Statement of Account showing a total obligation of P41,769,596.94 as of March 16, 2007, while VTL moved to have BDO correct the computation and stop interest accumulation as of April 28, 1995—the date of registration of the Certificate of Sale.

Developments in CA Proceedings and the Issue of Interest Computation

• The RTC initially granted VTL's motion based on its interpretation of DBP vs. Zaragoza, thereby limiting the interest computation to April 28, 1995.
• Following BDO’s motion for reconsideration, the RTC reversed its initial ruling and reinstated its original computation.
• The CA, on May 31, 2010, reversed the RTC Order dated January 8, 2009, but reinstated the earlier Order dated January 25, 2008, holding that interest accumulation should cease upon registration of the Certificate of Sale.
• BDO challenged the CA’s decision on the ground that it violated the principle of the immutability of final judgments, prompting its petition before the Supreme Court.

Issue:

Whether the accrual of interest on the mortgaged property should cease upon the registration of the Certificate of Sale.

• The determination centers on the proper application of the principle that foreclosure terminates the mortgagor's rights only when the foreclosure proceedings are complete.

The proper interpretation and application of DBP vs. Zaragoza and PNB vs. CA in computing interest and penalty charges.

• Whether these cases, which dealt with extrajudicial foreclosure and redemption price, directly control the computation of interests in a situation where redemption was not pursued.

Whether VTL, as the purported purchaser under the Deed of Sale with Assumption of Mortgage, is liable for interest beyond the date of foreclosure completion.

• The case explores the extent of VTL’s obligations in the absence of a formal redemption action.

The implications of challenging an executory and final CA decision through subsequent motions and the principle of res judicata.

• BDO’s argument that the CA’s modification of a final judgment contravenes the principle of immutability of decisions.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)