G.R. No. 134330 ; March 1, 2001
SPOUSES ENRIQUE M. BELO and FLORENCIA G. BELO, petitioners, vs. PHILIPPINE NATIONAL BANK and SPOUSES MARCOS and ARSENIA ESLABON, respondents.

FACTS

Eduarda Belo owned agricultural land in Capiz, which she leased to respondents Spouses Eslabon. To finance their sugar plantation, the Eslabons obtained a loan from respondent Philippine National Bank (PNB). The loan was secured by a real estate mortgage on the Eslabons’ own residential properties and, crucially, on Eduarda Belo’s land, with her consent given via a special power of attorney in favor of Marcos Eslabon. Upon the Eslabons’ default, PNB extrajudicially foreclosed the mortgaged properties. At the auction sale, PNB emerged as the highest bidder for the properties, including Eduarda Belo’s land, for P447,632.00.
Subsequently, Eduarda Belo sold her right of redemption to petitioners Spouses Belo. Before the redemption period expired, the petitioners tendered payment to PNB to redeem the agricultural land. Their tender was based on the bank’s bid price plus interest and expenses as provided under Act No. 3135 . PNB rejected this tender, insisting that the redemption price should be the total loan obligation of the Eslabons on the date of the auction sale, amounting to over P2.7 million, pursuant to Section 25 of its charter (P.D. No. 694).

ISSUE

What is the correct redemption price for the foreclosed property: the bid price under Act No. 3135 or the total loan obligation under PNB’s charter?

RULING

The Supreme Court ruled in favor of the petitioners, holding that the applicable redemption price is the bid price plus interest and expenses as stipulated in Act No. 3135 , not the total outstanding loan obligation. The Court applied the principle of statutory construction that a special law prevails over a general law. Act No. 3135 , which governs extrajudicial foreclosure of real estate mortgages, is a special law on the matter. In contrast, Section 25 of the PNB Charter is a general provision applicable to the bank’s foreclosure sales in general.
The Court found no express provision in the PNB Charter repealing Act No. 3135 . For a special law to be deemed repealed by a later general statute, the intent to repeal must be clear and manifest, which was absent here. Furthermore, the mortgage contract itself did not unequivocally stipulate that redemption would be based on the total claim; it merely referenced the PNB Charter’s provisions. Any ambiguity in a contract of adhesion, such as this mortgage contract prepared by the bank, must be construed strictly against the party who prepared it. Therefore, PNB could not unilaterally impose a redemption condition not clearly provided by law or expressly agreed upon. The petitioners validly exercised their right of redemption by tendering the amount based on the bid price.