MORTGAGE


Act 3135 (as amended by Act 4118)

ACT NO. 3135 – AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS
INSERTED IN OR ANNEXED TO REAL-ESTATE MORTGAGES

SECTION 1. 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 obligation,
the provisions of the following election shall govern as to the manner in which the sale and redemption
shall be effected, whether or not provision for the same is made in the power.

SECTION 2. Said sale cannot be made legally outside of the province in which the property sold is
situated; and 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.

SECTION 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least
three public places of the municipality or city where the property is situated, and if such property is worth
more than four hundred pesos, such notice shall also be published once a week for at least three
consecutive weeks in a newspaper of general circulation in the municipality or city.

SECTION 4. The sale shall be made at public auction, between the hours or nine in the morning and four
in the afternoon; and shall be under the direction of the sheriff of the province, the justice or auxiliary
justice of the peace of the municipality in which such sale has to be made, or a notary public of said
municipality, who shall be entitled to collect a fee of five pesos each day of actual work performed, in
addition to his expenses.


SECTION 5. At any sale, the creditor, trustee, or other persons authorized to act for the creditor, may
participate in the bidding and purchase under the same conditions as any other bidder, unless the
contrary has been expressly provided in the mortgage or trust deed under which the sale is made.

SECTION 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore
referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said
debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under
which the property is sold, may redeem the same at any time within the term of one year from and after
the date of the sale; and such redemption shall be governed by the provisions of sections four hundred
and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these
are not inconsistent with the provisions of this Act.

SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of
First Instance of the province or place where the property or any part thereof is situated, to give him
possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of
the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was
made without violating the mortgage or without complying with the requirements of this Act. Such petition
shall be made under oath and filed in form of an ex parte motion in the registration or cadastral
proceedings if the property is registered, or in special proceedings in the case of property registered
under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of
any other real property encumbered with a mortgage duly registered in the office of any register of deeds
in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such
petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act
Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-
six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the
sheriff of the province in which the property is situated, who shall execute said order immediately.

SECTION 8. The debtor may, in the proceedings in which possession was requested, but not later than
thirty days after the purchaser was given possession, 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, and the court shall take cognizance of
this petition in accordance with the summary procedure provided for in section one hundred and twelve of
Act Numbered Four hundred and ninety-six; and if it 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. Either of
the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered
Four hundred and ninety-six; but the order of possession shall continue in effect during the pendency of
the appeal.

SECTION 9. When the property is redeemed after the purchaser has been given possession, the
redeemer shall be entitled to deduct from the price of redemption any rentals that said purchaser may
have collected in case the property or any part thereof was rented; if the purchaser occupied the property
as his own dwelling, it being town property, or used it gainfully, it being rural property, the redeemer may
deduct from the price the interest of one per centum per month provided for in section four hundred and
sixty-five of the Code of Civil Procedure.

SECTION 10. This Act shall take effect on its approval.




AM No. 99-10-05-0 August 7, 2001 (as amended)

PROCEDURE IN EXTRA-JUDICIAL FORECLOSURE OF MORTGAGE

In line with the responsibility of an Executive Judge under Administrative Order No. 6, dated June 30,
1975, for the management of courts within his administrative area, included in which is the task of
supervising directly the work of the Clerk of Court, who is also the Ex Officio Sheriff, and his staff, and the
issuance of commissions to notaries public and enforcement of their duties under the law, the following
procedures are hereby prescribed in extrajudicial foreclosure of mortgages:


1. All applications for extra-judicial foreclosure of mortgage whether under the direction of the
sheriff or a notary public, pursuant to Act 3135, as amended by Act 4118, and Act 1508, as
amended, shall be filed with the Executive Judge, through the Clerk of Court who is also the
Ex-Officio Sheriff.


2. Upon receipt of an application for extra-judicial foreclosure of mortgage, it shall be the duty
of the Clerk of Court to:

a) receive and docket said application and to stamp thereon the

corresponding file number, date and time of filing;

b) collect the filing fees therefor and issue the corresponding official receipt;

c) examine, in case of real estate mortgage foreclosure, whether the

applicant has complied with all the requirements before the public auction is
conducted under the direction of the sheriff or a notary public, pursuant to
Sec. 4 of Act 3135, as amended;

d) sign and issue the certificate of sale, subject to the approval of the
Executive Judge, or in his absence, the Vice-Executive Judge; and

e) after the certificate of sale has been issued to the highest bidder, keep the
complete records, while awaiting any redemption within a period of one (1)
year from date of registration of the certificate of sale with the Register of
Deeds concerned, after which the records shall be archived.
Where the application concerns the extrajudicial foreclosure of mortgages of
real estates and/or chattels in different locations covering one indebtedness,
only one filing fee corresponding to such indebtedness shall be collected. The
collecting Clerk of Court shall, apart from the official receipt of the fees, issue
a certificate of payment indicating the amount of indebtedness, the filing fees
 collected, the mortgages sought to be foreclosed, the real estates and/or
chattels mortgaged and their respective locations, which certificate shall
serve the purpose of having the application docketed with the Clerks of Court
of the places where other properties are located and of allowing the
extrajudicial foreclosures to proceed thereat.


3. The notices of auction sale in extrajudicial foreclosure for publication by the sheriff or by a
notary public shall be published in a newspaper of general circulation pursuant to Section 1,
Presidential Decree No. 1709, dated January 26, 1977, and non-compliance therewith shall
constitute a violation of Section 6 thereof.


4. The Executive Judge shall, with the assistance of the Clerk of Court, raffle application for
extrajudicial foreclosure of mortgage under the direction of the sheriff among all sheriffs,
including those assigned to the Office of the Clerk of Court and Sheriffs IV assigned in the
branches.


5. 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 set for the sale there
shall not be at least two bidders, the sale shall then proceed. The names of the bidders shall be
reported by the sheriff or the notary public who conducted the sale to the Clerk of Court before
the issuance of the certificate of sale.


This Resolution amends or modifies accordingly Administrative Order No. 3 issued by then Chief Justice
Enrique M. Fernando on 19 October 1984 and Administrative Circular No. 3-98 issued by the Chief
Justice Andres R. Narvasa on 5 February 1998.


The Court Administrator may issue the necessary guidelines for the effective enforcement of this
Resolution.


The Clerk of Court shall cause the publication of this Resolution in a newspaper of general circulation not
later than 27 December 1999 and furnish copies thereof to the Integrated Bar of the Philippines.
This Resolution shall take effect on the fifteenth day of January year 2000.
Enacted this 14th day of December 1999 in the City of Manila.

Section 6, RA 7353

AN ACT PROVIDING FOR THE CREATION, ORGANIZATION AND OPERATION OF RURAL BANKS,
AND FOR OTHER PURPOSES

Section 6. Loans or advances extended by rural banks organized and operated under this Act shall be
primarily for the purpose of meeting the normal credit needs of farmers, fishermen or farm families owning
or cultivating land dedicated to agricultural production as well as the normal credit needs of cooperatives
and merchants. In granting of loans, the rural bank shall give preference to the application of farmers and
merchant whose cash requirements are small.
Loans may be granted by rural banks on the security of lands without Torrens Title where the owner of
private property can show five (5) years on more peaceful, continuous and uninterrupted possession in
concept of owner; or of portions of friar land estates or other lands administered by the Bureau of Lands
that are covered by sales contracts and the purchase have paid at least five (5) years installment thereon,
without the necessity of prior approval and consent by the Director of lands; or of portions of other estates
under the administration of the Department of Agrarian Reform or other government agency which are
likewise covered by sales contracts and the purchasers have paid at least five (5) years installment
thereon, without the necessity of prior approval and consent of the Department of Agrarian Reform or
corresponding government agency; or of homesteads or free patent lands pending the issuance of titles
but already approved, are issued, the provisions of any law or regulations to the contrary notwithstanding:
Provided, That when the corresponding titles are issued, the same shall be delivered to the Register of
Deeds of the province where such lands are situated to the annotation of the encumbrance: Provided,
further, That in the case of lands pending homestead of free patent titles, copies of notices for the
presentation of the final proof shall also be furnished the creditor rural bank and, if the borrower
applicants fail to present the final proof within thirty (30) days from date of notice, the creditor rural bank
may do so for them at their expense: Provided, furthermore, That the applicant for homestead or free
patent has already made improvements on the land and the loan applied for is to be used for further
development of the same or for other productive economic activities: Provided, finally, That the appraisal
and verification of the status of a land is a full responsibility of the rural bank and any loan granted on any
land which shall be found later to be within the forest zone shall be for the sole account of the rural bank.


The foreclosure of mortgage covering loans granted by rural banks and executions of judgment thereon
involving real properties levied upon by a sheriff shall be exempt from the publications in newspaper now
required by law where the total amount of loan, excluding interest due and unpaid, does not exceed One
hundred thousand pesos (P100,000) or such amount as the Monetary Board may prescribe as may be
warranted by prevailing economic conditions. It shall be sufficient publication in such cases if the notices
of foreclosure and execution of judgment are posted in the most conspicuous area of the municipal
building, the municipal public market, the rural bank, the barangay hall, the barangay public market, if any,
where the land mortgaged is situated during the period of sixty (60) days immediately preceding the
public auction or execution of judgment. Proof of publication as required herein shall be accomplished by
an affidavit of the sheriff or officer conducting the foreclosure sale or execution of judgment and shall be
attached with the records of the case: Provided, That when a homestead or free patent is foreclosed, the
homesteader or free patent holder, as well as his heirs shall have the right to redeem the same within one
(1) year from the date of the registration of the foreclosure in the case of land covered by a Torrens Title:
Provided, finally, That in any case, borrowers, especially those who are mere tenants, need only to secure
their loans with the procedure corresponding to their share.


A rural bank shall be allowed to foreclose lands mortgaged to it: Provided, That said lands shall be
covered under Republic Act No. 6657.

Section 18, RA 7906

AN ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION AND OPERATIONS OF

THRIFT BANKS, AND FOR OTHER PURPOSES.

Sec. 18. Exemption from Publication Requirement. — The foreclosure of mortgage covering loans
granted by thrift banks and executions of judgments thereon involving real properties and levied upon by
a sheriff shall be exempt from publication requirements where the total amount of the loan, excluding
interest due and unpaid, does not exceed One hundred thousand pesos (P100,000) or such amount as
the Monetary Board may prescribe, as may be warranted by the prevailing economic conditions and by
the nature of service of customers served by each category of the thrift bank. It shall be sufficient
publication in such cases if the notice of foreclosure and execution of judgment are posted in the
conspicuous area of a thrift bank's premises, municipal building, the municipal public market, the
barangay hall, and the barangay public market, if there be any, where the land mortgaged is situated
within a period of sixty (60) days immediately preceding the public auction of the execution of judgment.
Proof of publication as required herein shall be accomplished by an affidavit of the sheriff or officer
conducting the foreclosure sale or execution of judgment and shall be attached with the records of the
case.


A thrift bank shall be allowed to foreclose lands mortgaged to it; Provided, That said lands shall be
covered under Republic Act No. 6657.

Section 47, RA 8791

AN ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION AND OPERATIONS OF

BANKS, QUASI-BANKS, TRUST ENTITIES AND FOR OTHER PURPOSES

SECTION 47. Foreclosure of Real Estate Mortgage. — In the event of foreclosure, whether judicially or
extrajudicially, of any mortgage on real estate which is security for any loan or other credit
accommodation granted, the mortgagor or debtor whose real property has been sold for the full or partial
payment of his obligation shall have the right within one year after the sale of the real estate, to redeem
the property by paying the amount due under the mortgage deed, with interest thereon at the rate
specified in the mortgage, and all the costs and expenses incurred by the bank or institution from the sale
and custody of said property less the income derived therefrom. However, the purchaser at the auction
sale concerned whether in a judicial or extrajudicial foreclosure shall have the right to enter upon and take
possession of such property immediately after the date of the confirmation of the auction sale and
administer the same in accordance with law. Any petition in court to enjoin or restrain the conduct of
foreclosure proceedings instituted pursuant to this provision shall be given due course only upon the filing
by the petitioner of a bond in an amount fixed by the court conditioned that he will pay all the damages
which the bank may suffer by the enjoining or the restraint of the foreclosure proceeding.


Notwithstanding Act 3135, juridical persons whose property is being sold pursuant to an extrajudicial
foreclosure, shall have the right to redeem the property in accordance with this provision until, but not
after, the registration of the certificate of foreclosure sale with the applicable Register of Deeds which in
no case shall be more than three (3) months after foreclosure, whichever is earlier. Owners of property
that has been sold in a foreclosure sale prior to the effectivity of this Act shall retain their redemption
rights until their expiration. (78a)

Rule 68, Rules of Court

Foreclosure of Real Estate Mortgage

Section 1. Complaint in action for foreclosure. — In an action for the foreclosure of a mortgage or other
encumbrance upon real estate, the complaint shall set forth the date and due execution of the mortgage;
its assignments, if any; the names and residences of the mortgagor and the mortgagee; a description of
the mortgaged property; a statement of the date of the note or other documentary evidence of the
obligation secured by the mortgage, the amount claimed to be unpaid thereon; and the names and
residences of all persons having or claiming an interest in the property subordinate in right to that of the
holder of the mortgage, all of whom shall be made defendants in the action. (1a)


Section 2. Judgment on foreclosure for payment or sale. — If upon the trial in such action the court shall
find the facts set forth in the complaint to be true, it shall ascertain the amount due to the plaintiff upon the
mortgage debt or obligation, including interest and other charges as approved by the court, and costs,
and shall render judgment for the sum so found due and order that the same be paid to the court or to the
judgment obligee within a period of not less than ninety (90) days nor more than one hundred twenty
(120) days from the entry of judgment, and that in default of such payment the property shall be sold at
public auction to satisfy the judgment. (2a)


Section 3. Sale of mortgaged property; effect. — When the defendant, after being directed to do so as
provided in the next preceding section, fails to pay the amount of the judgment within the period specified
therein, the court, upon motion, shall order the property to be sold in the manner and under the provisions
of Rule 39 and other regulations governing sales of real estate under execution. Such sale shall not affect
the rights of persons holding prior encumbrances upon the property or a part thereof, and when confirmed
by an order of the court, also upon motion, it shall operate to divest the rights in the property of all the
parties to the action and to vest their rights in the purchaser, subject to such rights of redemption as may
be allowed by law.


Upon the finality of the order of confirmation or upon the expiration of the period of redemption when
allowed by law, the purchaser at the auction sale or last redemptioner, if any, shall be entitled to the
possession of the property unless a third party is actually holding the same adversely to the judgment
obligor. The said purchaser or last redemptioner may secure a writ of possession, upon motion, from the
court which ordered the foreclosure. (3a)


Section 4. Disposition of proceeds of sale. — The amount realized from the foreclosure sale of the
mortgaged property shall, after deducting the costs of the sale, be paid to the person foreclosing the
mortgage, and when there shall be any balance or residue, after paying off the mortgage debt due, the
same shall be paid to junior encumbrancers in the order of their priority, to be ascertained by the court, or
if there be no such encumbrancers or there be a balance or residue after payment to them, then to the
mortgagor or his duly authorized agent, or to the person entitled to it. (4a)
Section 5. How sale to proceed in case the debt is not all due. — If the debt for which the mortgage or
encumbrance was held is not all due as provided in the judgment as soon as a sufficient portion of the
property has been sold to pay the total amount and the costs due, the sale shall terminate; and
afterwards as often as more becomes due for principal or interest and other valid charges, the court may,
on motion, order more to be sold. But if the property cannot be sold in portions without prejudice to the
parties, the whole shall be ordered to be sold in the first instance, and the entire debt and costs shall be
paid, if the proceeds of the sale be sufficient therefor, there being a rebate of interest where such rebate
is proper. (5a)


Section 6. Deficiency judgment. — If upon the sale of any real property as provided in the next preceding
section there be a balance due to the plaintiff after applying the proceeds of the sale, the court, upon
motion, shall render judgment against the defendant for any such balance for which, by the record of the
case, he may be personally liable to the plaintiff, upon which execution may issue immediately if the
balance is all due at the time of the rendition of the judgment; otherwise; the plaintiff shall be entitled to
execution at such time as the balance remaining becomes due under the terms of the original contract,
which time shall be stated in the judgment. (6a)


Section 7. Registration. — A certified copy of the final order of the court confirming the sale shall be
registered in the registry of deeds. If no right of redemption exists, the certificate of title in the name of the
mortgagor shall be cancelled, and a new one issued in the name of the purchaser.


Where a right of redemption exists, the certificate of title in the name of the mortgagor shall not be
cancelled, but the certificate of sale and the order confirming the sale shall be registered and a brief
memorandum thereof made by the registrar of deeds upon the certificate of title. In the event the property
is redeemed, the deed of redemption shall be registered with the registry of deeds, and a brief
memorandum thereof shall be made by the registrar of deeds on said certificate of title.


If the property is not redeemed, the final deed of sale executed by the sheriff in favor of the purchaser at
the foreclosure sale shall be registered with the registry of deeds; whereupon the certificate of title in the
name of the mortgagor shall be cancelled and a new one issued in the name of the purchaser. (n)


Section 8. Applicability of other provisions. — The provisions of sections 31, 32 and 34 of Rule 39 shall
be applicable to the judicial foreclosure of real estate mortgages under this Rule insofar as the former are
not inconsistent with or may serve to supplement the provisions of the latter. (8a)