11. BICOL SAVINGS AND LOAN ASSOC. VS.

CA, JOSE DE JESUS AND HIS CO-HEIRS to other parties in installments. Conditional deeds of sales were made between the bank
GR NO. 85302 and said parties. A writ of possession was granted by the RTC.
MARCH 31, 1990  Jose filed a case with CFI Naga to annul the foreclosure or repurchase of the property.
BY: Ryan The CFI, noting that the action was to annul the definite deed of sale issued to Bicol
TOPIC: NATURE, FORM, KINDS OF AGENCY; SPECIAL POWER OF ATTORNEY Savings, dismissed the case. It held that the title of the bank over the subject property
PETITIONERS: BICOL SAVINGS AND LOAN ASSOC. had become absolute upon issuance of the deed and that Jose was guilty of laches.
RESPONDENTS: CA, JOSE DE JESUS AND HIS CO-HEIRS  The CA reversed the RTC ruling. The CA applied NCC 1879. It held that since the SPA
PONENTE: MELENCIO-HERRERA, J. excluded the power to sell, the RTC erred in not declaring the foreclosure and auction as
void as the SPA explicitly stated that Jose was only to mortgage the property, and not
foreclose and sell the property. To add, Bicol Savings should have resorted to judicial
SUMMARY: Juan issued an SPA to his son Jose to mortgage his land to Bicol Savings. Jose
foreclosure. Ultimately, the CA annulled the foreclosure, deeds of sale, registration and
got a P20k loan and executed a mortgaged on said land. Juan died and left his loan unpaid
writ of possession issued to Bicol Savings.
hence the land was auctioned off. Jose tried to buy back the land but was sold to other
parties. Jose wanted to annul the foreclosure but failed. SC held that NCC 1879 was
ISSUE: WON the foreclosure was valid in view of that Jose lacked/exceeded his authority as
inapplicable as it a voluntary/independent contract. The stipulation which granted power to
stated in the SPA
foreclose is ancillary in nature and is an essential part of the agreement. Even if the
mortgagor died, the power to foreclose remains for the mortgagee’s protection. Bicol
HELD/RATIO: YES.
Savings had the right to foreclose as it was independent on the authorization in the
 NCC 1879 is inapplicable in this case. The sale proscribed by special power in NCC 1879
mortgage deed.
is a voluntary and independent contract and not an auction sale due to extrajudicial
foreclosure which was caused by the mortgagor’s default. Absent such default, no
DOCTRINE: The power to foreclose is an ordinary agency. It is primarily an authority
foreclosure results. The stipulation which granted authority to extrajudicially foreclose a
conferred upon the mortgagee for its own protection. The power survives the mortgagor’s
mortgage is an ancillary stipulation supported by the same cause/consideration for the
death. The right of mortgagee bank to extrajudicially foreclose after the morgtgagor’s death
mortgage and forms an essential part of the agreement.
did not depend on the authorization in the mortgage deed. Such right existed independently
 The power to foreclose is an ordinary agency. It is primarily an authority conferred upon
of said stipulation.
the mortgagee for its own protection. The power survives the mortgagor’s death. The
right of mortgagee bank to extrajudicially foreclose after Juan’s death did not depend on
FACTS:
the authorization in the mortgage deed. Such right existed independently of said
 Juan de Jesus owned a land in Naga. He executed aa Special Power of Attorney (SPA) in
stipulation.
his son’s favor, Jose, “to negotiate, mortgage my real property in any either private or
o In Sec. 7, Rule 86, RoC, which grants to a mortgagee 3 remedies when a mortgagor
public bank preferably in the Bicol Savings Bank, in any amount that may be agreed
dies: 1) to waive the mortgage and claim the whole debt from the mortgagor’s
upon between the bank and my atty-in-fact”.
estate as an ordinary claim; 2) to foreclose the mortgage judicially and prove any
 Jose obtained a PhP20kloan from Bicol Savings. To secure payment, Jose executed a
deficiency as an ordinary claim; 3) to rely on the mortgage exclusively, foreclosing
deed of mortgage on real property referred in the SPA. It had the ff. stipulation:
the same at any time before prescription.
o If at any time the Mortgagor shall refuse to pay the obligations herein secured, or
 Bicol Savings had the right of extrajudicial foreclosure and was availed of. It matters that
any of the amortizations of such indebtedness when due, or to comply with any of
the authority to extrajudically foreclose was granted by an atty-in-fact and not by the
the conditions and stipulations herein agreed .... then all the obligations of the
mortgagor personally. The stipulation forms an essential part of the mortgage contract
Mortgagor secured by this Mortgage, all the amortizations thereof shall immediately
and is inseparable. No creditor will agree to enter into a mortgage contract without a
become due, payable and defaulted and the Mortgagee may immediately foreclose
stipulation to protect itself. Hence, Bicol Savings, in effecting the extrajudicial
this mortgage in accordance with the Rules of Court, or extrajudicially in accordance
foreclosure, merely availed of the right conferred by law. The auction that followed was
with Act No. 3135, as amended, or Act No. 1508. For the purpose of extrajudicial
a result of it
foreclosure, the Mortgagor hereby appoints the Mortgagee his attorney-in-fact to
sell the property mortgaged. . . .
DISPOSITIVE PORTION: WHEREFORE, the Decision of respondent Court of Appeals in CA-G.R.
 Juan died. Because Juan failed to pay his loan when he was alive, Bicol Savings
CV No. 02213 is SET ASIDE, and the extrajudicial foreclosure of the subject mortgaged
foreclosed the property and was auctioned off to the highest bidder to whom a
property, as well as the Deeds of Sale, the registration thereof, and the Writ of Possession in
Provisional Cert. of Sale was issued.
petitioner bank's favor, are hereby declared VALID and EFFECTIVE.
 Jose and his co-heirs failed to redeem the property within 1 year of the said issuance
hence a Definite Cert. of Sale was issued in favor of the bank.
WINNER: BICOL SAVINGS
 Jose still negotiated with the bank to repurchase the property. Offers and counter-offers
LOSER: JUAN AND JOSE
were made but nothing was agreed upon. As a result, the bank sold the property instead