G.R. No. 134068; June 25, 2001
UNION BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS, APOLONIA DE JESUS GREGORIO, GONZALO VINCOY, married to TRINIDAD GREGORIO VINCOY, respondents.

FACTS

On March 2, 1990, respondents-spouses Gonzalo and Trinidad Vincoy mortgaged their residence to petitioner Union Bank of the Philippines to secure a loan of P2,000,000.00 for Delco Industries (Phils.), Inc. Due to non-payment, the bank extrajudicially foreclosed the mortgage. At the foreclosure sale on April 10, 1991, the bank was the highest bidder for P3,290,000.00, and a certificate of sale was issued and annotated on the title on May 8, 1991. Before the redemption period expired on May 8, 1992, the respondents filed a complaint for annulment of mortgage, alleging the property was constituted as a family home on October 27, 1989, and the mortgage was void under Article 158 of the Family Code for lack of written consent from the majority of the adult beneficiaries (including Apolonia and Luciana De Jesus Gregorio). The bank countered that the property could not be a valid family home under Article 157 as its value exceeded the P300,000.00 maximum for urban areas. The trial court declared the family home constitution void and the mortgage valid, ordering respondents/Delco to pay the bank P4,816,194.44 as of February 15, 1993, plus interests and penalties. On appeal, the Court of Appeals upheld the mortgage’s validity, agreeing the property’s value exceeded the Family Code limit. However, it fixed the redemption price at P3,290,000.00 (the foreclosure sale price) plus 1% monthly interest from April 19, 1991, pursuant to Section 30, Rule 39 of the Rules of Court. The bank’s petition for review was initially dismissed by the Supreme Court, prompting this motion for reconsideration.

ISSUE

1. Whether the Court of Appeals erred in allowing the respondents to redeem the foreclosed property and in fixing the redemption price under Section 30, Rule 39 of the Rules of Court, despite the respondents not praying for redemption in their complaint and having consistently sought the mortgage’s annulment.
2. Whether the applicable law for determining the redemption price is Section 30, Rule 39 of the Rules of Court or Section 78 of the General Banking Act (as amended by P.D. No. 1828).

RULING

The Supreme Court granted the motion for reconsideration.
1. The Court of Appeals erred in allowing redemption. The respondents’ complaint before the trial court sought only the annulment of the mortgage, cancellation of the certificate of sale, and damages. They never prayed for redemption. The issue of redemption was raised for the first time on appeal only to contest the amount ordered by the trial court. It is settled that an issue not averred in the complaint nor raised during trial cannot be raised for the first time on appeal, as it violates basic rules of fair play and justice. The appellate court’s role is limited to reviewing errors committed by the lower court. Since the trial court did not rule on redemption, the Court of Appeals had no authority to introduce and grant that relief.
2. On the applicable redemption price, the Supreme Court clarified that for extrajudicial foreclosures of real estate mortgages under Act No. 3135, the redemption price is governed by Section 6 of that Act, which refers to Sections 464-466 of the Code of Civil Procedure (now Sections 29, 30, and 34, Rule 39 of the Rules of Court). Section 30, Rule 39 provides the redemption price is the purchase price plus 1% monthly interest. Section 78 of the General Banking Act applies to judicial foreclosures. Since this was an extrajudicial foreclosure, Section 30, Rule 39, via Act No. 3135, is the correct basis. However, this point is moot as the respondents are not entitled to redeem the property, having failed to properly raise and pray for that relief in the trial court.