Facts:

The case involves Bicol Savings and Loan Association as the petitioner and Corazon de Jesus, Lydia de Jesus, Nelia de Jesus, Jose de Jesus, and Pablo de Jesus as the respondents. The events leading to this case began with Juan de Jesus, the owner of a parcel of land in Naga City, who executed a Special Power of Attorney on March 31, 1976, in favor of his son, Jose de Jesus. This document authorized Jose to negotiate and mortgage the property with any bank, preferably Bicol Savings Bank, for an amount agreed upon. On April 13, 1976, Jose de Jesus secured a loan of P20,000 from Bicol Savings Bank, executing a mortgage deed on the property. The mortgage included a stipulation allowing the bank to foreclose the mortgage extrajudicially if the mortgagor defaulted on payments. Juan de Jesus passed away, and despite his death, the loan remained unpaid. Consequently, the bank extrajudicially foreclosed the mortgage on November 16, 1978, and the property was sold to the bank at a publ...

Facts:

Ownership and Special Power of Attorney

• Juan de Jesus owned a parcel of land in Naga City with an area of 6,870 square meters.
• On March 31, 1976, he executed a Special Power of Attorney (SPA) in favor of his son, Jose de Jesus, authorizing him to "negotiate, mortgage my real property in any bank either private or public entity preferably in the Bicol Savings Bank, Naga City, in any amount that may be agreed upon between the bank and my attorney-in-fact."

Loan and Mortgage

• On April 13, 1976, Jose de Jesus obtained a loan of P20,000 from Bicol Savings and Loan Association (petitioner bank).
• To secure the loan, Jose executed a mortgage deed over the property. The mortgage contract included a stipulation allowing the bank to extrajudicially foreclose the property in case of default.

Death of Juan de Jesus and Foreclosure

• Juan de Jesus died, and the loan remained unpaid.
• On November 16, 1978, the bank extrajudicially foreclosed the mortgage. The property was sold at a public auction, with the bank as the highest bidder. A Provisional Certificate of Sale was issued on November 21, 1980.
• The heirs of Juan de Jesus (private respondents) failed to redeem the property within one year, leading to the issuance of a Definite Certificate of Sale on September 7, 1982.

Negotiations and Sale to Third Parties

• Private respondents attempted to repurchase the property but failed to reach an agreement with the bank.
• The bank subsequently sold the property to third parties in installments and obtained a Writ of Possession from the Regional Trial Court.

Legal Action by Heirs

• On January 31, 1983, private respondents filed a complaint to annul the foreclosure sale or to repurchase the property.
• The Trial Court dismissed the case, ruling that the bank's title had become absolute and that the heirs were guilty of laches.

Appeal to the Court of Appeals

• The Court of Appeals reversed the Trial Court, holding that the SPA granted to Jose de Jesus did not include the power to sell the property through extrajudicial foreclosure. The Appellate Court annulled the foreclosure sale, the deeds of sale, and the Writ of Possession.

Issue:

1. Whether the extrajudicial foreclosure sale of the mortgaged property was valid.
2. Whether Jose de Jesus, as attorney-in-fact, exceeded the scope of his authority by agreeing to a stipulation allowing extrajudicial foreclosure.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)