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Bicol Savings and Loan Association vs.

CA Facts: Juan de Jesus was the owner of a parcel of land in Naga City. He executed a Special Power of Attorney in favor of Jose de Jesus, his son, wherein the latter could negotiate and mortgage the formers property in any bank preferably in the Bicol Savings and Loan Association. By virtue of such document, Jose was able to obtain P20,000 from Bicol Savings. To secure payment, he executed a deed of mortgage wherein it was stipulated that upon the mortgagors failure or refusal to pay the obligation, the mortgagee may immediately foreclose the property. Juan de Jesus died and the loan obligation was not paid. As a result, Bicol Savings extrajudicially foreclosed the mortgaged property. The bank won as the highest bidder during the auction sale. Jose and the other heirs failed to redeem the property. Thereafter, they tried to negotiate with Bicol Savings but the parties did not come up to an agreement. Bicol Savings sold the property to another person. Hence, Jose filed for annulment of the foreclosure sale. The lower court dismissed the case. On appeal, the CA reversed RTCs decision. Hence, this appeal. Issue: Whether or not the extrajudicial foreclosure sale of the property was valid. Ruling. Yes. Art 1879 of the CC which states that special power to sell excludes the power to mortgage and vice versa is inapplicable in the case. What it proscribes is a voluntary and independent contract of sale and not an auction sale resulting from extrajudicial foreclosure caused by the default of the mortgagor. The power to foreclose is not an ordinary agency but is primarily conferred upon the mortgagee for its protection. The right of the bank to foreclose is independent of the mortgage contract as it is recognized by the Rules of Court.