G.R. No. 185644 ; March 2, 2010
Heirs of ESTELITA BURGOS-LIPAT, namely: ALAN B. LIPAT and ALFREDO B. LIPAT, JR., Petitioners, vs. Heirs of EUGENIO D. TRINIDAD, namely: ASUNCION R. TRINIDAD, VICTOR R. TRINIDAD, IMACULADA T. ALFONSO, CELESTINA T. NAGUIAT, FERNANDO R. TRINIDAD, MICHAEL R. TRINIDAD and JOSEFINA T. NAGUIAT, Respondents.

FACTS

On April 16, 1979, petitioners Estelita Burgos-Lipat and Alfredo Lipat obtained a loan from Pacific Banking Corporation (PBC), secured by a real estate mortgage on their property. Due to non-payment, PBC foreclosed on the property. Eugenio D. Trinidad was the highest bidder at the public auction, and a certificate of sale was issued on January 31, 1989, and registered on April 12, 1989. On November 28, 1989, petitioners filed a complaint for annulment of mortgage, extra-judicial foreclosure, and certificate of sale. The Regional Trial Court (RTC) dismissed the complaint on February 10, 1993, but granted petitioners five months and 17 days from the finality of the decision to exercise their right of redemption. This decision was affirmed by the Supreme Court in Lipat v. Pacific Banking Corporation on April 30, 2003. Petitioners assigned their redemption rights to Partas Transportation Co., Inc. (PTCI). On June 16, 2004, within the period granted by the RTC, PTCI exercised the right of redemption and paid the amount computed by the sheriff. Respondents refused to accept the payment, claiming it was inadequate. The RTC upheld the redemption and directed respondents to surrender the certificate of title. Respondents’ motion for reconsideration was denied. Petitioners moved for execution, which the RTC granted on August 22, 2006. Respondents filed a petition for certiorari with the Court of Appeals (CA) without a motion for reconsideration. The CA granted the petition on July 31, 2008, setting aside the RTC order, holding that the redemption period was one year from the date of registration of the certificate of sale. The CA denied petitioners’ motion for reconsideration on December 5, 2008.

ISSUE

Whether the Court of Appeals erred in ruling that the right of redemption had expired one year from the registration of the certificate of sale, thereby reversing the final and executory judgment in Lipat v. Pacific Banking Corporation which granted petitioners a specific period to redeem.

RULING

The Supreme Court REVERSED and SET ASIDE the decision and resolution of the Court of Appeals. The Court held that the doctrine of “law of the case” applies. The final and executory decision in Lipat v. Pacific Banking Corporation, which upheld the RTC’s grant of five months and 17 days from its finality for petitioners to redeem the property, is the controlling legal rule between the parties. The CA had no power to reverse this Court’s final and executory judgment and overstepped its authority. Consequently, petitioners validly exercised their right of redemption within the period stipulated in Lipat. However, the Court modified the redemption price computation. Applying Section 78 of the General Banking Act, the redemption price should include the amount fixed by the court, with interest at the rate specified in the mortgage contract for the one-year period from the date of registration of the certificate of sale. Furthermore, for the period beyond one year up to the actual date of consignation (June 16, 2004), justice, fairness, and equity require payment of interest at 12% per annum. The order of the RTC dated August 22, 2006, was reinstated with the modification that the redemption price be recomputed accordingly.