Ejf 101

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EJF 101
Closer Look at the EJF Procedure
Important Laws & Regulations
Law/
Description
Circular
An Act to Regulate the Sale of Property under

Act 3135 Special Powers Inserted in or Annexed to Real
Estate Mortgages
AN ACT TO AMEND ACT NUMBERED THIRTY-

ONE HUNDRED AND THIRTY-FIVE, ENTITLED “AN
Act No. 4118 ACT TO REGULATE THE SALE OF PROPERTY
UNDER SPECIAL POWERS INSERTED IN OR
ANNEXED TO REAL-ESTATE MORTGAGES.”
A.M. No. 99-10- Re: Procedure in Extrajudicial Or Judicial

05-0 Foreclosure of Real Estate Mortgages
Walk-through of the EJF Procedure
Certificate of
Application filed
Public Auction Sale signed, with
with EJ thru COC
EJ’s approval
Compliance of Sheriff/Notary to
Application to be
notices before report names of
docketed
auction, if REM bidder/s
Payment of
Raffle Keep records
filing fees
Don’t Forget
Basis of EJF
• The special power inserted or
attached to the REM
• Without proof of petitioner's special
authority to foreclose, the Clerk of
Court as Ex-Oficio Sheriff is
precluded from acting on the
application for extrajudicial
foreclosure
:Section 1 of Act 3135
Can the Mortgagee still foreclose
the Mortgage extrajudicially after
the death of the Mortgagor?
Yes, the authority to sell the mortgaged property

upon default is not extinguished by death.
Don’t Forget
Where to Conduct Sale
• Province where the property to be

sold or a part thereof is situated
Section 2 of Act 3135
Don’t Forget
Filing Fee
• Only one (1) filing fee for

foreclosure of realties and chattels
in different locations but covered
only by one indebtedness
Don’t Forget
Notices
• Posted for a period of not less than
20 days
• Posted in at least three public places
of the City/Municipality where
property is situated
General Rule: Personal notice to the mortgagor is
not generally required. Exception: Unless
required in the mortgage contract, the lack of
personal notice to the mortgagor is not a ground
to set aside a foreclosure sale.
Don’t Forget
Publication
• Publication is once a week for at
least 3 consecutive weeks in a
newspaper of general circulation in
the city/municipality
To be a newspaper of general circulation, it is
enough that it is published for the dissemination
of local news and general information; that it has
a bona fide subscription list of paying
subscribers; and that it is published at regular
intervals xxx not be devoted to the interests or
entertainment of a particular class, profession,
trade, calling, race or religious denomination xxx
need not have the largest circulation xxx in the
municipality or city where the property is
located. Metrobank v. Peñafiel, G.R. No. 173976
Feb. 27, 2009
Republication is necessary for the validity of a
postponed extrajudicial foreclosure sale. Another
publication is required in case the auction sale is
rescheduled, and the absence of such
republication invalidates the foreclosure sale.
If the purpose of giving notice of the foreclosure
of sale could be attained by publication alone,
then the absence of actual posting should not
nullify the sale
Olizon vs. CA, GR No. 107075, September 1, 1994 and reiterated in the
case of Century Savings Bank vs. Samonte, GR No. 176212, October
20, 2010.
But, the failure to publish the notice of auction
constitutes as a jurisdictional defect.
DBP vs. Aguirre, GR No. 144877, September 7, 2001
The parties have absolutely no right to waive the

posting and publication requirements,
PNB vs. Nepomuceno Productions Inc., GR No. 139479, December 27,
2002
The form of the notice of extrajudicial sale is now
prescribed in Circular No. 7-2002 issued by OCA
on 22 January 2002. Section 4(a) of Circular No.
7-2002 provides: x x x The last paragraph of the
prescribed notice of sale allows the holding of a
rescheduled auction sale without reposting or
republication of the notice. However, the
rescheduled auction sale will only be valid if the
rescheduled date of auction is clearly specified in
the prior notice of sale.
DBP vs. CA, GR No. 125838, June 10, 2003
“NOTICE OF EXTRA-JUDICIAL SALE”
“Upon extra-judicial petition for sale under Act 3135/1508 filed _________
against (name and address of Mortgagor/s) to satisfy the mortgage
indebtedness which as of ___________ amounts to P __________ excluding
penalties, charges, attorney’s fees and expenses of foreclosure, the undersigned
or his duly authorized deputy will sell at public auction on (date of sale)
________ at 10:00 A.M. or soon thereafter at the main entrance of the
________ (place of sale) to the highest bidder, for cash or manager’s check and
in Philippine Currency, the following property with all its improvements, to wit:
“(Description of Property”)
“All sealed bids must be submitted to the undersigned on the above stated time
and date.”
“In the event the public auction should not take place on the said date, it shall
be held on ___________,______ without further notice.”
__________ (date)
“SHERIFF” (Emphasis supplied)
Section 4, Circular No. 7-2002
Don’t Forget
Public Auction
• Must be held between 9:00 to 4:00
under the direction of the sheriff of
the province or a notary public of
the municipality
• The creditor may participate in the
bidding the purchase the property
like any other bidder
The 2001 amendment of A.M. No.
99-10-05-0 no longer requires at
least two (2) bidders in an
extrajudicial foreclosure of
mortgage.
Certeza et.al., GR No. 190078, March 5, 2010
Does this provision still apply?
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.
:Section 5 of A.M. No. 99-10-05-0 , 14 December 1999
Don’t Forget
Possession after Auction

• Purchaser may petition for the
possession of the property during
the redemption period upon the
posting of a bond equivalent to the
use of the property for 12 months
Can Creditor still be entitled to collect
the deficiency mortgage obligation
from the Debtor, plus interest?
Yes, if “the proceeds of the sale are insufficient
to cover the debt in an extrajudicial foreclosure
of mortgage, the mortgagee is entitled to claim
the deficiency from the debtor. While Act No.
3135, as amended, does not discuss the
mortgagee’s right to recover the deficiency,
neither does it contain any provision expressly or
impliedly prohibiting recovery.”
BPI Family Savings vs. Sps. Avenido, G.R. No. 175816
What remedies are available to the
Mortgagee upon the Mortgagor’s
default of payment ?
If the mortgage covers the total claim, then foreclose. If
not, still foreclose for after all you can still collect the
deficiency from the principal debtor (if mortgagor is a
third person), not the mortgagor unless the latter
bound himself solidarily liable with the borrower. Make
it a last resort to file a criminal action because in reality
it takes much longer to pursue BP 22.
Don’t Forget
Redemption Period
• One (1) year from the date of
registration of the Certificate of Sale
with the RD
• If owner of the property mortgaged
is a juridical person, period to
redeem shall be prior to the
registration of the certificate of sale
but shall in no case exceed 3
months
:Section 2(e) of A.M. No. 99-10-05-0 , 7 August 2001
What are the requisites of a valid
redemption?
Requisites for valid redemption:

1. Redemption within 1 year from registration of sale;
2. Payment of purchase price plus 1% interest per month
thereon if any, paid by purchaser; and
3. Written notice of redemption served on officer who
made the sale.
Who may redeem the foreclosed
property?
1. The debtor;
2. The debtor's successors-in-interest;
3. Any judicial creditor or judgment creditor of the
debtor;
4. Any person having a lien on the property
subsequent to the mortgage or deed of trust
under which the property is sold.
How is the redemption price
determined?
• Limited to the winning bid price plus twelve
percent (12%) interest per annum.
• Purchase price if judgment obligor. Sum paid on
last redemption if redemptioner. (Rule 39, Sec.
28, Rules of Court). The redemptioner should
make an actual tender in good faith of the full
amount of the purchase price (Hi-Yield Realty vs.
CA (2002)
1.
Don’t Forget
Additional Rules with respect to EJF of REM
A.M. No. 99-10-05-0 , 20 February 2007
No issuance of TRO or Preliminary
Injunction against the EJF if the allegation
is payment of the loan or loan is not
delinquent UNLESS supported by evidence
of payment
No issuance of TRO or Preliminary
Injunction against the EJF if the allegation
is unconscionable interest of the loan
UNLESS debtor pays 12% interest on the
principal, which payment shall be updated
monthly while the case is pending
Don’t Forget
Additional Rules with respect to EJF of REM
A.M. No. 99-10-05-0 , 20 February 2007
If Preliminary Injunction was issued against
the EJF, court shall speedily resolve the case
and shall submit quarterly update to the
OCA on the case progress if the foreclosure
involves an amount of P10M or above
All requirements for the issuance of TRO or
Preliminary Injunction including the posting
of a bond shall apply
Geraldine Faith A. Econg
Program Management Office
Supreme Court of the Philippines

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WELCOME

An Act to Regulate the Sale of Property under

AN ACT TO AMEND ACT NUMBERED THIRTY-

A.M. No. 99-10- Re: Procedure in Extrajudicial Or Judicial

:Section 1 of Act 3135

Yes, the authority to sell the mortgaged property

Where to Conduct Sale

• Province where the property to be

• Only one (1) filing fee for

The parties have absolutely no right to waive the

No auction sale shall be held unless

Possession after Auction

Requisites for valid redemption:

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