Facts:

This case involves two consolidated petitions: G.R. No. 243396, filed by Bank of the Philippine Islands (BPI) as the petitioner against LCL Capital, Inc. (LCL) as the respondent, and G.R. No. 243409, filed by LCL as the petitioner against BPI as the respondent. The decision was rendered by the Supreme Court on September 14, 2021, arising from events that began in 1997 when LCL obtained a loan of P3,000,000 from Far East Bank & Trust Co. (FEBTC) with an interest rate of 17% per annum. To secure the loan, LCL executed a Real Estate Mortgage on two condominium units. In 2000, FEBTC merged with BPI, which assumed all assets and liabilities of FEBTC.

After LCL defaulted on the loan, BPI initiated extrajudicial foreclosure proceedings. BPI was the highest bidder at the auction sale on May 21, 2003, and this led to a Certificate of Sale being issued to them. BPI subsequently executed an Affidavit of Consolidation of Ownership over the properties on July 11, 2003. LCL then filed an

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Facts:

Loan and Mortgage Formation

• In 1997, LCL Capital, Inc. (LCL) obtained a loan amounting to ₱3,000,000.00 from Far East Bank & Trust Co. (FEBTC), secured by a deed of real estate mortgage over two condominium units.
• In 2000, Bank of the Philippine Islands (BPI) merged with FEBTC, with BPI assuming FEBTC’s assets and liabilities, including the loan and mortgage obligations of LCL.

Foreclosure and Consolidation Process

• LCL defaulted on its payment obligations including interests and penalties.
• BPI initiated an extrajudicial foreclosure of the real estate mortgage before the Office of the Clerk of Court and the Ex-Officio Sheriff of the Regional Trial Court (RTC) of Pasig City.
• At the public auction sale, BPI became the highest bidder, and a Certificate of Sale was issued on May 21, 2003.
• On July 11, 2003, BPI executed an Affidavit of Consolidation of ownership, after which new condominium certificates of title were issued in its name.

RTC Action and Subsequent Proceedings

• LCL filed an action in the RTC of Pasig City, Branch 161 (Civil Case No. 69591) seeking the annulment of the premature consolidation of titles, arguing that such consolidation occurred before the expiration of the redemption period.
• The RTC, in its Decision dated November 14, 2008, declared the consolidation void and ordered the Register of Deeds to reinstate the certificates of title in LCL’s name, subject to the exercise of its right of redemption within one year.
• BPI subsequently elevated the case to the Court of Appeals (CA) and later moved to withdraw its appeal. On April 4, 2014, the CA granted the motion, rendering the RTC Decision final and executory.

Redemption Price Computation Dispute

• LCL later sought a determination of the actual cost of redemption. The RTC computed the redemption price at ₱2,513,583.15, applying a 6% per annum interest rate and excluding real estate taxes paid by BPI, basing the computation on the auction’s bid price and related foreclosure expenses.
• BPI contended that the applicable interest rate should be the 17% per annum as expressly stipulated in the mortgage contract and that real estate taxes should be reimbursed as part of the redemption price.

Procedural History and Petitions for Review

• On May 17, 2018, the CA partly granted BPI’s petition for certiorari, holding that the computation of the redemption price in cases involving banking institutions must be governed by Section 78 of Republic Act No. 337 (General Banking Act).
• The CA remanded the case for recomputation of the redemption price using the stipulated 17% interest rate, while upholding the exclusion of real estate taxes.
• Both parties subsequently filed partial reconsideration petitions with conflicting positions regarding the inclusion of real estate taxes and the applicable interest rate.
• On February 6, 2019, the petitions for review in G.R. Nos. 243396 and 243409 were consolidated and eventually resolved by the Supreme Court.

Issue:

Computation of the Redemption Price

• Should the redemption price be computed based on the bid price from the auction plus foreclosure expenses or should it be based on the principal amount due under the mortgage deed accompanied by the stipulated interest rate and additional fees?

Applicable Interest Rate

• Whether the interest applied in the computation should be the 6% per annum used by the RTC or the 17% per annum specified in the mortgage contract.

Inclusion of Real Estate Taxes

• Whether real estate taxes paid by BPI should be included in the computation of the redemption price, thereby making LCL liable to reimburse these taxes.

Doctrine of Final Judgment

• Whether the remand for recomputation of the redemption price violates the doctrine of the immutability of a final judgment, given that the RTC Decision declaring the void consolidation was already final and executory.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)