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Coverage
The law covers only real estate mortgages. It is intended merely to regulate
the extrajudicial sale and redemption of the property if and when the
mortgagee is given a special power or express authority to do so in the deed
itself or in a document annexed thereto.
The mortgagee has the right to foreclose the mortgage and to have the
property seized and sold, in order to apply the proceeds to the payment of
the principal obligation.
Requisites:
Note:
Once the proceeds have been applied to the payment of the obligation, the
debtor cannot anymore be required to pay, unless there is a deficiency
between the amount of the loan and the foreclosure sale price.
The only rights which a mortgagor can legally transfer, cede and convey
after the foreclosure of his property are the right to redeem the same and the
possession, use, and enjoyment of the same during the period of redemption.
Kinds of foreclosure
Note: The authority to sell is not extinguished by the death of the mortgagor
(or mortgagee).
All applications shall be filed with the Executive Judge, through the Clerk of
Court, who is also Ex-Officio Sheriff.
(2) Where to sell
General Rule: The Sale must be made inside the province in which the
property sold is situated.
Exception: In case the place within said province in which the sale is to be
made is subject to stipulation, such sale shall be made in said place or in the
municipal building of the municipality in which the property or part thereof is
situated.
Notice of Sale shall be posted for not less than 20 days in at least 3 places of
the municipality/city where the property is situated. (Sheriffs Office,
Assessors Office and Register of Deeds).
Notice shall also be published once a week for at least 3 consecutive weeks in
a newspaper of general circulation in the municipality or city where the
property is located. (Metrobank v. Peafiel G.R. No. 173976 Feb. 27, 2009)
The purchaser may file a petition with the CFI of the province or place where
the property or any part thereof is situated, to give him possession thereof
during the redemption period.
Required Bond: A bond in an amount equivalent to the use of the property for
a period of twelve months shall be filed, to indemnify the debtor in case it is
shown that the sale was made without violating the mortgage or without
complying with the requirements of this Act.
Note: The court shall order that a writ of possession be issued upon approval
of the bond.
The sheriff of the province in which the property is situated shall execute the
writ of possession immediately.
The debtor may petition that the sale be set aside and the writ of possession
cancelled for the reason that the mortgage was not violated or the sale was
not made in accordance with the provisions thereof.
Redemption
Right of Redemption is the right of the mortgagor to redeem the mortgage
property within a certain period (1 year) after it was sold for the satisfaction
of the mortgage debt.
2. Payment of purchase price plus 1% interest per month thereon if any, paid
by purchaser; AND
a. Debtor,
c. Judicial creditors,
General Rule: The property may be redeemed at any time within the term of
one (1) year from and after the date of the sale.
Table:
Mortgagee
Banks
Non-Banks
Individual Debtors/Mortgagors
The filing of court action to enforce redemption has effect of preserving the
redemptioners rights; and freezing the expiration of one year period to
redeem (Banco Filipino v CA).
Writ of possession
Upon finality of the order of confirmation or upon the expiration of the period
of redemption allowed by law, the purchaser or last redemptioner shall be
entitled to possession of the property.
Note:
A bond is required for the writ to be issued when it is within the 1 year
period of redemption.
If the mortgagor fails to redeem within the 1 year period, the buyer in the
public auction may file a motion for the issuance of a writ of possession. On
the strength of the sheriffs certificate of sale, the she sheriff is duty-bound to
place the buyer at the public auction in actual possession of the foreclosed
property after the consolidation of title in the buyers name for failure of the
mortgagor to redeem (De Vera v. Agloro).
After the consolidation of title in the buyers name for failure of the
mortgagor to redeem, the writ of possession becomes a matter of right.
Note:
The judge to whom an application for writ of possession is filed need not
look into the validity of the mortgage or the manner of its foreclosure. In the
issuance of a writ of possession, no discretion is left to the Trial Court. Any
question regarding the cancellation of the writ in respect to the
validity/regularity of the foreclosure sale or the mortgage should be
determined in a subsequent proceeding (PNB v. Sanao).
The Person who obtained possession shall furnish a bond. If the court finds
the complaint of the debtor justified, it shall dispose in his favor of all or part
of the bond furnished by the person who obtained possession.
The order of possession shall continue in effect during the pendency of the
appeal.
Annulment of Sale
The debtor may petition that the sale be set aside and the writ of possession
cancelled, specifying the damages suffered by him, because the mortgage
was not violated or the sale was not made in accordance with the provisions
hereof.
Period for filing shall not be later than thirty (30) days after the purchaser
was given possession.
Note:
Either of the parties may appeal from the order of the judge. xtrajudicial
Foreclosure of Real Estate Mortgage
Coverage
The law covers only real estate mortgages. It is intended merely to regulate the
extrajudicial sale and redemption of the property if and when the mortgagee is given a
special power or express authority to do so in the deed itself or in a document annexed
thereto.
The mortgagee has the right to foreclose the mortgage and to have the property seized
and sold, in order to apply the proceeds to the payment of the principal obligation.
Requisites:
Note:
If there is an acceleration clause, the failure of the mortgagor to pay any installment
will trigger the activation of the acceleration clause and give the mortgagee
the right to foreclose the mortgage against the convention of prematurity.
Once the proceeds have been applied to the payment of the obligation, the debtor
cannot anymore be required to pay, unless there is a deficiency between the
amount of the loan and the foreclosure sale price.
The only rights which a mortgagor can legally transfer, cede and convey after the
foreclosure of his property are the right to redeem the same and the
possession, use, and enjoyment of the same during the period of redemption.
Kinds of foreclosure
1. Judicial Foreclosure (Rule 68 of the Rules of Court)
Under Section 1 of Act No. 3135, An SPA must be inserted in or attached to any Real-
Estate Mortgage.
Note: The authority to sell is not extinguished by the death of the mortgagor (or
mortgagee).
All applications shall be filed with the Executive Judge, through the Clerk of Court, who
is also Ex-Officio Sheriff.
General Rule: The Sale must be made inside the province in which the property sold is
situated.
Exception: In case the place within said province in which the sale is to be made is
subject to stipulation, such sale shall be made in said place or in the municipal building of
the municipality in which the property or part thereof is situated.
Notice of Sale shall be posted for not less than 20 days in at least 3 places of the
municipality/city where the property is situated. (Sheriffs Office, Assessors Office and
Register of Deeds).
Exemption: Unless required in the mortgage contract, the lack of personal notice to the
mortgagor is not a ground to set aside a foreclosure sale.
The purchaser may file a petition with the CFI of the province or place where the
property or any part thereof is situated, to give him possession thereof during the
redemption period.
Required Bond: A bond in an amount equivalent to the use of the property for a period of
twelve months shall be filed, to indemnify the debtor in case it is shown that the sale was
made without violating the mortgage or without complying with the requirements of this
Act.
Note: The court shall order that a writ of possession be issued upon approval of the bond.
The sheriff of the province in which the property is situated shall execute the writ of
possession immediately.
The debtor may petition that the sale be set aside and the writ of possession cancelled for
the reason that the mortgage was not violated or the sale was not made in accordance
with the provisions thereof.
Redemption
Right of Redemption is the right of the mortgagor to redeem the mortgage property
within a certain period (1 year) after it was sold for the satisfaction of the mortgage debt.
2. Payment of purchase price plus 1% interest per month thereon if any, paid by purchaser;
AND
c. Judicial creditors,
e. Any person having a lien on the property subsequent to the mortgage or deed of trust
under which the property is sold.
General Rule: The property may be redeemed at any time within the term of one (1) year
from and after the date of the sale.
Table:
Writ of possession
Upon finality of the order of confirmation or upon the expiration of the period of
redemption allowed by law, the purchaser or last redemptioner shall be entitled to
possession of the property.
The said purchaser or last redemptioner may secure a writ of possession, upon motion,
from the court that ordered the foreclosure.
Note:
A bond is required for the writ to be issued when it is within the 1 year period of
redemption.
If the mortgagor fails to redeem within the 1 year period, the buyer in the public
auction may file a motion for the issuance of a writ of possession. On the
strength of the sheriffs certificate of sale, the she sheriff is duty-bound to
place the buyer at the public auction in actual possession of the foreclosed
property after the consolidation of title in the buyers name for failure of the
mortgagor to redeem (De Vera v. Agloro).
After the consolidation of title in the buyers name for failure of the mortgagor to redeem,
the writ of possession becomes a matter of right.
Note:
The judge to whom an application for writ of possession is filed need not look into
the validity of the mortgage or the manner of its foreclosure. In the issuance
of a writ of possession, no discretion is left to the Trial Court. Any question
regarding the cancellation of the writ in respect to the validity/regularity of the
foreclosure sale or the mortgage should be determined in a subsequent
proceeding (PNB v. Sanao).
The purchaser or last redemption shall be entitled to possession of the property upon the
finality of the order of confirmation or upon the expiration of the period of redemption,
unless a third party is actually holding the same adversely to the judgment debtor.
The Person who obtained possession shall furnish a bond. If the court finds the complaint
of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by
the person who obtained possession.
The order of possession shall continue in effect during the pendency of the appeal.
Annulment of Sale
The debtor may petition that the sale be set aside and the writ of possession cancelled,
specifying the damages suffered by him, because the mortgage was not violated or the
sale was not made in accordance with the provisions hereof.
Period for filing shall not be later than thirty (30) days after the purchaser was given
possession.
Note:
Either of the parties may appeal from the order of the judge.