Procedure of extrajudicial foreclosure as prescribed in Administrative Matter No.

99-10-05-0:

1. Filing of application for extrajudicial foreclosure with the Executive Judge through
the Clerk of Court who is the ex- officio sheriff.

- Regardless of whether under the direction of the sheriff or notary public

2. Upon receipt of application, 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 and issue the corresponding official receipt

c. Examine, in case of real estate mortgage foreclosure, whether the

applicant has complied with all requirements before the public auction is
conducted under the direction of the sheriff or a notary public

d. Sign and issue the certificate of sale, subject to the approval of the
executive judge, or in his absence, the vice-executive judge. No certificate
shall be issued in favor of the highest bidder until all fees provided have
been paid provided that it shall not exceed P1000.

e. e. After the certificate of sale has been issued, keep the complete records
while awaiting any redemption within a period of 1 year from date of
registration of the certificate of foreclosure sale, which in no case shall be
more than three months after foreclosure whichever is earlier.

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 the other
properties are located and of allowing the extrajudicial foreclosures to
proceed thereat.

3. Notices of auction sale for extrajudicial foreclosure for publication by the sheriff or
the notary public shall be published in a newspaper of general circulation.

4. The Executive Judge, with the assistance of the Clerk of Court, raffle applications
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. The name/s of the bidder/s shall be reported by the sheriff or notary public who
conducted the sale to the Clerk of Court before the issuance of the Certificate of
Sale.

Mortgagee must account for the proceeds as if the price were paid in cash, and in an
action against the mortgagee to recover the surplus, the latter cannot raise the defense
that no actual cash was received.

 With surplus- belong to the mortgagor or his assigns. When there are junior
encumbrances, or when there are several liens it must be applied to their discharge in
the order of their priority

Redemption of the property sold- 1 year from and after the date of the sale.

Reckoning date is from the registration of the certificate of sale since it is the only from
the date that the sale takes effect as a conveyance if the redemptioner is a natural
person. If juridical persons, they have right to redeem until but not after registration of
the certificate of foreclosure sale which in no case shall be more than three months after
foreclosure whichever is earlier.

Remedy of party aggrieved by the foreclosure- petition that the sale be set aside and
the writ of possession be cancelled because the mortgage was not violated or the sale
was not made in accordance with the provisions.

Grounds for annulment:

1. There was fraud, collusion, accident, mutual mistake, breach of trust, or

misconduct by the purchaser

2. Sale had not been fairly and regularly conducted

3. Price was inadequate and the inadequacy was so great as to shock the
conscience of the court

Republication is necessary for the validity of a postponed extrajudicial foreclosure sale,

or if rescheduled.

Process of Judicial Foreclosure

 Judicial foreclosure is governed by the provisions of Rule 68 of the Revised Rules of
Court.

1. File a complaint in an action for foreclosure. (Sec. 1, Rule 68, ROC)

Contents of complaint:
a. Date and execution of mortgage;
b. Assignments of mortgage, if any;
c. Names and residences of the mortgagor and mortgagee;
d. Description of the mortgaged property;
e. Statement of the date of the evidence of obligation secured by mortgage- the
amount claimed to be unpaid thereon;
f. Names and residences of all persons having interest in the property whom
shall be made defendants.

2. Trial. If facts set forth in the complaint are found to be true, the court shall
ascertain the amount due, including interest and other charges. (Sec. 2, Rule 68,
ROC)

3. Judgment. The court shall render judgment against defendant for the sum found
due and order its payment to judgment obligee within a period not less than 90
days but not more than 120 days from the entry of judgment. (Sec. 2, Rule 68,
ROC)

Effect of default: Sale of property at public auction.

4. Sale to highest bidder at public auction.

If the mortgagor fails to pay at the time directed in the order , the court, upon
motion, shall order the property to be sold to the highest bidder at public auction.

a. Notice of sale of property on execution. (Sec. 15, Rule 39, ROC)

 Notice shall specify the place, date and exact time of sale (9am to 2pm
only)
 Place of Sale
General Rule: Office of the Clerk of Court of the court which issued the
writ of execution.
Exception: Agreement of parties.
 Posting of notice for 20 days in 3 public places, preferably in
conspicuous areas of the municipal or city hall, post office and public
market, describing the property and stating where the property is to be
sold.
 If assessed value of property exceeds 50, 000- publish copy in
newspaper once a week for two consecutive weeks.
  Written notice should be given to judgment obligor at least 3 days
before the sale.

b. Public auction. (Sec. 19, Rule 39, ROC)

 Sale must be made at public auction to the highest bidder.
 After sufficient property has been sold to satisfy the execution, no more
shall be sold.
 Excess property/ proceeds: delivered to the judgment obligor.
 If real property consists of several known lots- to be sold separately.
 If portion of real property is claimed by 3rd person- 3rd person may
require it to be sold separately.
 Officer conducting execution sale cannot become purchaser, or
interested directly or indirectly in any purchase at such sale.
 No sale if judgment and costs paid before the sale of property on
execution (Sec. 18, Rule 39, ROC)

 Effect of refusal of purchaser at auction to pay his bid amount:

 Officer may again sell the property to the highest bidder.

 Court may require such purchaser to pay unto the court the amount
of whatever loss, with costs, occasioned by his refusal to pay. Court
may punish him for contempt if he disobeys the order.

 His subsequent bids may be refused by the officer conducting the

bidding. (Sec. 20, Rule 39, ROC)

c. Adjournment of sale
 Officer may adjourn the sale to any date and time agreed upon by
parties, if with written consent.
 Officer may adjourn the sale from day to day if it becomes necessary
to do so for lack of time to complete the sale on the day fixed in the
notice or the day to which it was adjourned. (Sec. 22, Rule 39, ROC)

d. Conveyance of real property.

- Upon sale of a real property, the officer must give to the purchaser
a certificate of sale. Such certificate must be registered in the
registry of deeds of the place where the property is situated. (Sec.
23, Rule 39, ROC)

- Buyer has the right to take possession of the property upon petition
to court.
 e. Redemption

- a transaction by which the mortgagor reacquires or buys back the

property which may have passed under the mortgage or divests the
property of the lien which the mortgage may have created.

-  allows the owner to repurchase or buy back, within a certain period

and for a certain amount, a property that has been sold due to debt,
tax, or encumbrance.

5. Confirmation of sale

 The sale when confirmed by an order of the court, also upon motion, shall
operate to divest the rights of all parties to the action and to vest their
rights in the purchaser subject to such right of redemption as may be
allowed by law.

 Before confirmation of judicial foreclosure sale, the court would retain

control of the proceedings by exercising a sound discretion in regard to it,
either granting or withholding confirmation as the rights and interests of
the parties and the ends of justive may require.

6. Execution of judgment

 No judgment rendered in an action for foreclosure or mortgage can be

executed otherwise than in the manner prescribed by the law on
mortgages, because parties to an action are not authorized to change the
procedure it prescribed.

 The proper remedy to seek reversal of judgment in an action for

foreclosure of real estate mortgage is an appeal from the judgment itself
confirming the sale.

7. Application of the proceeds of the sale.

 Proceeds of the sale should be applied to the payment of the:

 Cost of the sale

  The amount due the mortgagee

 Claims of junior encumbrances or persons holding subsequent mortgages in

the order of their priority; and

 The balance if any, shall be paid to the mortgagor or his duly authorized
agent, or to the person entitled to it.

8. Execution of sheriff’s certificate.

 The foreclosure will only be complete with the issuance of the sheriff’s
certificate acknowledged and recorded. The absence of a certificate of sale
will not transfer the title to the vendee. Only the foreclosure proceedings are
completed and the mortgaged property sold to the purchaser that all interest
of the mortgagor are cut off from the property.