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[BENITO TAN CHAT v. C. N. HODGES](https://www.lawyerly.ph/juris/view/c3099?user=fbGU2WFpmaitMVEVGZ2lBVW5xZ2RVdz09)
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[ GR No. L-8219, Apr 28, 1956 ]

BENITO TAN CHAT v. C. N. HODGES +

DECISION

98 Phil. 928

[ G.R. No. L-8219, April 28, 1956 ]

BENITO TAN CHAT, PLAINTIFF AND APPELLEE, VS. C. N. HODGES, ET AL., DEFENDANTS; C. N. HODGES, DEFENDANT AND APPELLANT.

D E C I S I O N

PARAS, C.J.:

The defendant-appellant, C. N. Hodges,  was the owner of three lots which he sold on July 6, 1941 to the plaintiff-appellee,  Benito Tan  Chat,, for P15.105.  The latter paid PS,105  in cash and mortgaged the lots in  favor  of the  appellant to secure  the  payment  of the balance  of P12,000. The appellant  handed over  to  the appellee a printed  form of  mortgage contract  which the  appellee more  or less  followed  in drafting  the deed of mortgage actually executed and signed by him.   In view of appellee's failure  to comply with  its conditions,  the  appellant filed a petition with  the sheriff of Iloilo City for  the sale  of the  mortgaged lots in  accordance with the provisions  of Act No. 31S5 as amended.  The corresponding notice was , made and the sale at public  auction  was set for November  23,  1953. Whereupon  the  appellee filed in the Court of First Instance of Iloilo  a petition for prohibition with injunction.  After  trial  the   court  rendered  a  decision granting the petition  and  ordering the defendants C. N. Hodges and the sheriff of Iloilo  City to desist from carrying out the scheduled sale.  The defendant C. N. Hodges has appealed.

The main issue  to  be  decided is whether or  not the deed  of mortgage  contains a special  power  to  foreclose extra-judicially. The model printed form, Exhibit E, contains in paragraph 7 of the condition that  "this mortgage shall, after  notice to the  mortgagor, be considered automatically foreclosed, without the necessity  of  any judicial proceedings upon the failure of the mortgagor (to comply with the conditions therein specified)"; and, in paragraph 8, the condition that "when this  mortgage is automatically foreclosed for  any of the  causes or reasons  enumerated in the next preceding paragraph, the mortgagee is hereby authorized by the mortgagor to take possession of the property  herein  mortgage without the  necessity  of resorting to  any court  proceeding's, or  any other  judicial action."   These provisions were omitted in the deed of mortgage, Exhibit D, actually executed by  the appellee in favor of the appellant, although  this contains the following conditions:
"3. It is also stipulated tliat the mortgagee,  in selling the property at public  auction, shall follow the procedure provided for in Act No. 3135, the MORTGAGOR in any case to be notified  by the MORTGAGEE in writing  by registered mail of the sale.

"4. It is further  agreed and stipulated  that the  conditions and stipulations set forth in the  preceding paragraphs shall not be construed as depriving the mortgagee of his right to institute the corresponding judicial  proceedings to foreclose this mortgage if, in the opinion of the mortgagee, Ms interests require such an action."
It is contended for  the appellee that the elimination from Exhibit D of the conditions contained in paragraphs 7 and 8 of Exhibit E shows a clear intention on his part to disauthorize extra-judicial foreclosure; and  that, in any event, the  special  power  to  foreclose  extra-judicially referred  to  in  Act No.  3185  should  be  specific  and unequivocal.

Upon the other hand, it is the theory of the appellant that while the provisions  contained in paragraphs 3 and 4 of  the  deed of  mortgage, Exhibit  D,  do not  contain direct phaseology, they nevertheless amount to an  express authority  to foreclose extra-judicially.

We are inclined  to rule in favor of appellant's  contention.  Section 1  of Act  No. 3135, as amended  by Act No. 4118,  provides that  "when a sale is  made under a special power inserted in or attached to  any real estate mortgage hereafter made  as security  for the payment of money or  the fulfillment of any other obligations, the provisions  of  the  following sections  shall  govern as to the manner in which the sale and  redemption shall be effected, whether or not provisions for the same is made in the  power."  The  sale  spoken of is  extra-judicial. Paragraphs 3 and  4 of the deed of mortgage, Exhibit D, taken together,  is  plainly an express authority  for the mortgagee to  foreclose extra-judicially. It is  noteworthy that paragraph  3 is to the  effect that the mortgagee, in selling the property at public  auction, shall follow the procedure prescribed in Act No.  3135, the mortgagor to be notified by the mortgagee  in  writing by  registered mail of the date of the sale; and paragraph 4 reserves to the mortgagee  the right to foreclose  judicially.  If these  were not intended to allow extra-judicial foreclosure, the procedure prescribed in Act No. 3135 would not have been mentioned  and the mortgagee would  not  have been required to notify the mortgagor in writing by registered mail of the sale;  and the right  would not be reserved to the mortgagee to institute judicial foreclosure proceedings.  This reservation necessarily implies  the  existence of another right, namely,  the only remaining remedy of extra-judicial  foreclosure.  The  omission in Exhibit  D of paragraphs 7 and 8 contained in the printed form, Exhibit E is of no moment since paragraphs 3 and 4 of the deed of mortgage are already sufficient.
"While it has been held that  a power of sale will not be recognized as contained in a mortgage unless it  is given by express grant and in clear and explicit terms, and that there can be no implied power of sale where  a mortgage holds by a deed absolute In form,  it is generally held that no particular formality is required in the creation, of the power  of  sale.  Any words are sufficient which evince an intention that  the sale may bo made upon default or  other contingency,"  (41  Corpus Juris, p. 926.)
We are  not inclined,  however, to render  judgment in favor of the appellant with reference to his claim for expenses, attorney's fees,, and damages.

Wherefore, the appealed  decision is reversed and the petition for prohibition with injunction filed in the court. below dismissed.  So ordered, with costs of both instances against, the plaintiff-appellee.

Reyes, A. Jugo, Bautista Angelo, Concepcion,  and Reyes, J. B. L.,  JJ., concur.

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