Rule 68 Rules of Court
1. The mortgagee should file a petition for judicial foreclosure in the court which has jurisdiction over the area where the property is situated 2. The court will conduct a trial. If, after trial, the court finds merit in the petition, it will render judgment ordering the mortgagor/debtor to pay the obligation within a period not less than 90 nor more than 120-days from the finality of judgment. 3. Within this 90 to 120-day period, the mortgagor has the chance to pay the obligation to prevent his property from being sold. This is called the EQUITY OF REDEMPTION PERIOD. 4. If mortgagor fails to pay within the 90-120 days given to him by the court, the property shall be sold to the highest bidder at public auction to satisfy the judgment. 5. There will be a judicial confirmation of the sale. After the confirmation of the sale, the purchaser shall be entitled to the possession of the property, and all the rights of the mortgagor with respect to the property are severed or terminated. The equity of redemption period actually extends until the sale is confirmed. Even after the lapse of the 90 to 120-day period, the mortgagor can still redeem the property, so long as there has been no confirmation of the sale yet. Therefore, the equity of redemption can be considered as the right of the mortgagor to redeem the property BEFORE the confirmation of the sale. After the confirmation of the sale, the mortgagor does not have a right to redeem the property anymore. This is the general rule in judicial foreclosures – there is no right of redemption after the sale is confirmed.
The proceeds of the sale of the property will be disposed as follows:
1. First, the costs of the sale will be deducted from the price at which the property was sold
2. The amount of the principal obligation and interest will be deducted. 3. The junior encumbrances will be satisfied. 4. If there is still an excess, the excess will go back to the mortgagor. In mortgage, the mortgagee DOES NOT get the excess unlike in pledge. If there is a deficiency, the mortgagee can ask for a DEFICIENCY JUDGMENT which can be imposed on other property of the mortgagor. The rule on extrajudicial foreclosure is different. The mortgagee must go to court and file another action for the collection of the deficiency. The proceeds from the judicial sale of foreclosed property shall be applied as follows: a. b. c.
To the total amount of the debt. To the costs of the sale. To the claims of subsequent mortgagees.
If there is any excess from the proceeds of the sale, such will be returned to the debtor/mortgagor.
A. Extra – judicial foreclosure – A mortgage may be foreclosed extra-judicially where there is inserted in the contract a clause giving the mortgagee the prior upon default of the debtor to foreclose the mortgage by an extra-judicial sale of the mortgaged property (Sec 1, Art No. 3155 as amended by Act no 4148).
1. Filing of application before the Executive Judge through the Clerk of Court; 2. Clerk of Court will examine whether the requirement of the law have been complied with. That is, whether the notice of sale has been posted for not less than 20 days in at least three (3) public places of the municipality or city where the property is situated, and where the same is more than
P400.00, that such notice has been published once a week for at least three (3) consecutive weeks in a newspaper of general circulation in the city or municipality; 3. The certificate of sale must be approved by the Executive Judge; 4. In extrajudicial foreclosure of real mortgages in different locations covering one indebtedness, only one filing fee corresponding to such debt shall be collected; 5. The Clerk of Court shall issue certificate of payment indicating the amount of indebtedness, the filing fees collected, the mortgages sought to be foreclosed, the description of the real estates and their respective locations; 6. The notice of sale shall be published in a newspaper of general circulation pursuant to Section 1, PD No. 1079; 7. The application shall be raffled among all sheriffs; 8. After the redemption period has expired, the Clerk of Court shall archive the records;
No auction sale shall be held unless there are at least two (2) participating bidders, otherwise the sale shall be postponed to another date. If on the new date there shall not be at least two (2) bidders, the sale shall then proceed. The names of the bidders shall be reported to the Sheriff or the Notary Public, who conducted the sale to the Clerk of Court before the issuance of the certificate of sale.
a. Right of Redemption – the right of the mortgagor to redeem the mortgaged property with a certain period after it was sold for the satisfaction of the mortgaged debt. In all cases of extra – judicial sale, the mortgagor may redeem the property at any time within the term of one year from and after the date of the registration of the sale. b. c. In judicial foreclosure, the general rule is that the mortgagor cannot exercise his right of redemption after the sale is confirmed by an order of the Court.
Remedies of the mortgagee where mortgagor is dead: a) He may abandon his security and share in the g eneral distribution of the asset of the estate; b) He may foreclose, secure a deficiency judgement and prove his deficiency judgment before the committee on claims; or c) He can rely on the security alone, in which case he can receive no share in the distribution of the assets of the estate.
