G.R. No. 193499. April 23, 2018.
BANCO DE ORO UNIBANK, INC., petitioner, vs. VTL REALTY, INC., respondent.

FACTS

Victor T. Bollozos mortgaged his property to petitioner Banco de Oro Unibank, Inc. (BDO) to secure a loan. On August 12, 1994, Bollozos sold the property to respondent VTL Realty, Inc. (VTL) via a Deed of Definite Sale with Assumption of Mortgage. BDO refused to accept VTL’s payment, insisting the loan obligation be settled first. VTL filed an action for specific performance with damages. During proceedings, BDO foreclosed the mortgage on March 29, 1995, and after no redemption, consolidated ownership. On January 6, 1997, the Regional Trial Court (RTC) directed BDO to furnish VTL with a new Statement of Account based on the August 12, 1994 account, plus accrued interests and penalties, and for VTL to pay upon receipt. This was affirmed by the Court of Appeals (CA) on May 26, 2004, and an Entry of Judgment was issued. During execution, BDO submitted a Statement of Account showing a total obligation of ₱41,769,596.94 as of March 16, 2007. VTL moved to correct this, arguing interests and penalties should be computed only up to April 28, 1995 (date of registration of the Certificate of Sale), citing Development Bank of the Philippines vs. Zaragoza. The RTC initially granted VTL’s motion but later reversed itself, upholding BDO’s computation. VTL’s petition for certiorari to the CA was granted, reversing the RTC and reinstating its earlier order limiting computation to April 28, 1995, making VTL liable only for ₱6,631,840.95. BDO filed the present petition, arguing the CA violated the principle of immutability of judgments.

ISSUE

Whether the Court of Appeals erred in applying DBP vs. Zaragoza and PNB vs. CA to limit the computation of interests and penalty charges on VTL’s assumed obligation to the date of registration of the certificate of sale (April 28, 1995), thereby modifying the final and executory 1997 RTC Decision which directed payment based on the August 12, 1994 Statement of Account “plus the corresponding interests and penalty charges that have accrued thereafter.”

RULING

The Supreme Court GRANTED the petition. The Court of Appeals’ Decision and Resolution were REVERSED and SET ASIDE. The Orders of the RTC dated January 8, 2009 and June 3, 2009 were REINSTATED.
The Supreme Court held that the CA erred in applying DBP vs. Zaragoza and PNB vs. CA. DBP vs. Zaragoza dealt with the liability for interest from the date of foreclosure to the date of sale during a delayed foreclosure process, which is inapplicable as VTL seeks to recover a property BDO already owns. PNB vs. CA pertained to the redemption price under Act No. 3135, which is not the issue here as VTL is not a redemptioner but a buyer seeking to assume the mortgage. The core issue is the execution of the final and immutable 1997 RTC Decision, which explicitly ordered VTL to pay the obligation based on the August 12, 1994 Statement of Account “plus the corresponding interests and penalty charges that have accrued thereafter.” This judgment had long become final. The CA’s interpretation effectively modified this final judgment by stopping the accrual of interests and penalties on April 28, 1995, which was a substantive alteration violating the doctrine of immutability of final judgments. The RTC correctly implemented the judgment as written by ordering payment of the obligation with interests and penalties accruing thereafter without a cut-off date.