GR 180274; (September, 2009) (Digest)
G.R. No. 180274; September 4, 2009
VIRGILIO C. CRYSTAL and GLYNNA F. CRYSTAL, Petitioners, vs. BANK OF THE PHILIPPINE ISLANDS, Respondent.
FACTS
Petitioners obtained a loan from Citytrust Banking Corporation, secured by a real estate mortgage. Respondent Bank of the Philippine Islands (BPI) later absorbed Citytrust. Upon petitioners’ default, BPI extrajudicially foreclosed the mortgage. The property was sold at auction for ₱5,604,000, which BPI applied to the mortgage debt. BPI then filed a complaint for collection of a deficiency, claiming the obligation on the auction date was ₱6,490,623.18, leaving a shortfall.
The Regional Trial Court (RTC) recomputed the obligation, finding the stipulated interest and charges exorbitant. It reduced the total outstanding obligation to ₱5,284,888.65. Since the foreclosure proceeds exceeded this recomputed amount by ₱319,111.35, the RTC ordered BPI to refund this excess to petitioners, with 12% interest per annum from the date of the auction sale. The Court of Appeals affirmed the refund but deleted the award of interest.
ISSUE
Whether the excess amount from the foreclosure sale, which BPI must refund to petitioners, should earn legal interest.
RULING
Yes, the excess amount should earn legal interest. The Supreme Court granted the petition, modifying the Court of Appeals decision. The legal logic proceeds from the application of Section 4, Rule 68 of the Rules of Civil Procedure, which mandates that any residue from a foreclosure sale, after paying the mortgage debt and costs, must be paid to the mortgagor. The RTC’s final computation, which was affirmed, established that a residue of ₱319,111.35 existed in favor of petitioners. This created a liquidated sum due to them from BPI.
The Court rejected BPI’s reliance on Dio v. Japor, as that case involved a scenario where a judicial recomputation merely reflected the true debt, creating no actual surplus. Here, a genuine surplus was conclusively determined. Regarding interest, the Court applied established jurisprudence on liquidated sums. Since the amount became certain and payable only upon the RTC’s judgment on September 27, 2004, legal interest at 6% per annum is imposed from that date until the finality of this Decision. Thereafter, the total judgment award shall earn interest at 12% per annum until full satisfaction. The RTC erred in computing interest from the auction date, as the obligation was unliquidated until judicial determination.