Case Summary (G.R. No. 134330)
Facts of the Case
Eduarda Belo owned a large agricultural tract of land in Capiz, which she leased to the Eslabons. In order to obtain financing, the Eslabons secured a loan from PNB, using both their residential properties and Eduarda Belo's agricultural land as collateral, with her assent obtained via a special power of attorney granted to the Eslabons. Upon defaulting on the loan, PNB initiated foreclosure proceedings, ultimately auctioning the property, with PNB as the highest bidder.
Redemption Process
Subsequently, Eduarda Belo sold her right to redeem the land to the petitioners. When they attempted to redeem the land by tendering payment based on PNB's bid price from the auction, PNB rejected the offer, claiming that the total amount due included additional interests and expenses. The petitioners initiated a suit to declare the mortgage null and, alternatively, to enforce redemption based on the bid price.
Trial Court Decision
The Regional Trial Court ruled in favor of the petitioners, allowing them to redeem the property by paying only the bid price plus certain charges, dismissing the bank's counterclaims.
Appeal and Court of Appeals Decision
Dissatisfied, PNB appealed, and the Court of Appeals modified the trial court's decision, asserting that the total amount owed by the petitioners included all claims against the Eslabons instead of solely the bid price. The appellate court upheld the validity of the mortgage and the foreclosure but determined the redemption price should cover the entirety of PNB's claims.
Legal Contentions by Petitioners
The petitioners contended four primary issues:
- The validity of the Special Power of Attorney and mortgage contract.
- Allegations of bad faith actions by PNB in acquiring consent.
- Waiver of the right to contest the contracts through the act of redeeming.
- The nature of the costs owed during the redemption process.
Supreme Court's Analysis and Conclusions
Upon review, the Supreme Court addressed the validity of the SPA and mortgage, concluding they were valid despite petitioners’ claims of duress or misrepresentation. The petitioners were ultimately estopped from questioning the mortgage’s validity due to their act of tendering payment, which constituted acknowledgment of the mortgage’s existence.
Redemption Price Authority
In relation to the redemption price, the Court analyzed the law governing such scenarios and concluded that the rights of accommodation mortgagors (like Eduarda Belo) differ from those of principal debtors. It asserted that the redemption rights appl
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Case Background
- The case revolves around a petition for review on certiorari of the Decision and Resolution in CA-G.R. No. 53865 of the Court of Appeals, which modified a prior ruling by the Regional Trial Court regarding a mortgage contract.
- Eduarda Belo owned an agricultural land in Capiz, which was leased to respondents spouses Marcos and Arsenia Eslabon for a sugar plantation business.
- The Eslabons secured a loan from Philippine National Bank (PNB) using both their residential houses and Eduarda Belo’s agricultural land as collateral, with Eduarda’s consent provided through a special power of attorney.
Procedural History
- The Eslabons defaulted on their loan, prompting PNB to initiate extrajudicial foreclosure proceedings on the mortgaged properties.
- PNB acquired the properties at an auction sale, and subsequently notified Eduarda Belo of the sale and her right to redeem the land.
- Eduarda sold her right of redemption to petitioners spouses Enrique and Florencia Belo, who attempted to redeem the property but were rebuffed by PNB, which claimed a higher redemption price.
Legal Issues Presented
- Petitioners raised two primary issues:
- The validity of the Special Power of Attorney (SPA) and related mortgage documents.
- The appropriate redemption price for the property post-fore