FORECLOSURE PROCEDURE

REAL ESTATE
MORTGAGE
JUDICIAL FORECLOSURE

DEMAND
A judicial foreclosure is initiated by a
complaint.
The complaint must contain:
- Date and due execution of mortgage
- Assignments, if any
- Names and residences of the
mortgagors and the
mortgagee
- Description of mortgaged property
- Date of note or other documentary
evidence regarding the
mortgage
- Unpaid amount
- Names and residences of all persons
having or claiming an
interest in the property with subordinate
right to the
mortgagor
3. If the court finds the facts in the
complaint to be true, it
shall:
a. Ascertain amount due to the plaintiff
(judgment oblige)
b. Order that the same be paid to the
court or judgment
oblige within a period of not less than
90 days and not
more than 120 days (equity of
redemption)
- An order presupposes a trial was
conducted
- 90-120 days = period of grace
4. Equity of redemption expires
(assuming judgment obligor
did not pay)
5. Sale will be conducted, where the
purchaser is the highest
bidder
- Acceptance of a bid at the foreclosure
sale confers no
title on the purchaser
- Until the court has validly confirmed
the foreclosure
sale, the purchaser is nothing more than
a preferred
bidder

CHATTEL MORTGAGE
NOT APPLICABLE

6. A hearing will be conducted for

interested parties to show
cause why the sale should not be
confirmed
7. Court will issue a confirmation order
(upon MOTION) (Rule
68, Sec. 3)
- The order of confirmation operates to
divest the
mortgagors rights in the property and
vests it in the
purchaser, subject only to right of
redemption (if it
exists)
- Purchaser acquires certain rights

EXTRAJUDICIAL
FORECLOSURE

8. Finality of confirmation order or

expiration of redemption
period (if there is a right of redemption)
- Consequence: purchaser is entitled to
possession
unless a third party is actually holding
the same
adversely to the judgment obligor
(mortgagor). In such
a case, the possession will also have to
be litigated
9. Proceeds of the sale paid in this
order:
a. Costs of the sale
b. Mortgage debt specified in the
contract
c. Junior encumbrancers in order of
priority
d. Mortgagor
10. Registration: at the Register of
Deeds, present the final
order of court confirming the sale
a. No right of redemption: Certificate of
title is
cancelled and a new one issued in the
name of the
purchaser
b. Right of redemption exists:
i. Certificate is not cancelled: (1)
certificate of sale and
(2) confirmation order are registered
and a brief
memo made by registrar of deeds
ii. Redeemed: deed of redemption
registered
iii. Not redeemed: final deed of sale
registered and
new certificate of title issued
11. Move for the court to render
judgment on deficiency, if any
WHERE: Province in which the
property is situated
- As stipulated (within the province) or
- In the municipal building of the
municipality in which the
property or part of it is located

PROCEDURE:
1. File with the executive judge through
the clerk of court (but
it is the sheriff who conducts the sale)
- You file with the executive judge in
order to avail of the

NOTICE:
- For all: 3 public places of the
municipality or city (for at least
20 days)
- If property > P400: newspaper of
general circulation (once a
week for 3 consecutive weeks)
PROCEDURE:
1. Apply for extrajudicial foreclosure
sale filed with the
executive judge through the clerk of
court
2. Duties of the clerk of court:
a. Ensure SPA is inserted/attached to
the deed of REM
b. Docket the application
c. Collect filing fee and issue a receipt
XPN: Coperatives, thrift banks, rural
banks
d. Issue certificate of payment if
collateral is located
separately and covers only 1
indebtedness
3. Raffle among the sheriffs with the
supervision of the
executive judge
4. Duties of sheriff assigned
a. Prepare notice of extrajudicial sale
b. Cause publication
c. Executive judge will distribute copies
to newspaper
companies for publication
d. Debtor-mortgagor need not be served
a copy of notice
unless the mortgage contract requires it
(case of Grand
Farms)
e. For loans < P100,000 by rural/thrift
banks: no more
need for publication, only notice posted
for 60 days in
conspicuous areas of municipality
where property is
located (municipal building, municipal
public market,
rural bank, barangay hall)

services of the sheriff

2. Notice requirement #1 (posting): 10
days before the sale
(post in 2 or more public places in the
municipality where
the collateral is located or where the
mortgagor resides)
- Usually posted in the bulletin board
3. Notice requirement #2 (personal
notice): 10 days before
sale, sheriff must notify: a) mortgagor;
b) person holding
under him (assignee of mortgagor); c)
persons holding
subsequent mortgages personally or by
mail
- Effected: personally, abode, or mail
- A person holding under mortgagor is a
successor-ininterest
4. Equity of redemption or grace
period: Wait for 30 days from
time of default
5. Public sale is conducted (where
property
situated/mortgagor resides), then sheriff
should make a
return
- The return operates to discharge the
lien
6. Payment of the proceeds (in order)
a. Costs and expenses of sale
b. Payment of demand/obligation
secured by mortgage
(principal obligation)
c. Residue shall be paid to persons
holding subsequent
mortgages (principal obligation of
2nd/3rd/etc
mortgages)
d. Balance: mortgagor/person holding
under him
7. Winning bidder acquires ownership
a. 1st mortgagee: has the right to
foreclose, and the
exercise of the right to foreclose wipes
out any lien until
it is the only one that subsists
b. 2nd mortgagee: has an inferior right to
the first
mortgagee, and can only participate in
the proceeds to
put an end to the claim against the
debtor