What is the redemption price in case of accommodation mortgagors?

Accommodation mortgagors are not liable for the payment of the loan of the debtor. The liability of the
accommodation mortgagors extends only up to the loan value of their mortgaged property and not to the
entire loan itself. Hence, it is only just that they be allowed to redeem their mortgaged property by paying
only the winning bid price thereof (plus interest thereon) at the public auction sale. (Belo v. PNB)
Sierra v PAIC Savings
Petitioners not knowledgeable – Sc ruled that petitioners are aware that they are accommodation mortgagors
debunking their claim that mistake vitiated their consent to the mortgage that they previously mortgaged two
(2) of the subject properties twice to the Rural Bank of Antipolo.
Laches- As mortgagors desiring to attack a mortgage as invalid, petitioners should act with reasonable
promptness, else its unreasonable delay may amount to ratification

The elements for pactum commissorium

(a) that there should be a pledge or mortgage wherein property is pledged or mortgaged by way of
security for the payment of the principal obligation; and
(b) that there should be a stipulation for an automatic appropriation by the creditor of the thing...
pledged or mortgaged in the event of non-payment of the principal obligation within the stipulated
period.[9]
Sps Pen V sps Julian ("undated, unfilled and unnotarized deed ) The first element was present
considering that the property of the respondents was mortgaged by Linda in favor of Adelaida as
security for the... former's indebtedness. As to the second, the authorization for Adelaida to
appropriate the property subject of the mortgage upon Linda's default was implied from Linda's having
signed the blank deed of sale simultaneously with her signing of the real estate mortgage.
Sps Martires v CHUA
While indeed a notarized document enjoys the presumption of regularity, the fact that a deed is
notarized is not a guarantee of the validity of its contents. The presumption is not absolute and may
be rebutted by clear and convincing evidence to the... contrary. An equitable mortgage has been
defined as one which... reveals the intention of the parties to charge real property as security for a
debt
Since the original transaction between the parties was a mortgage, the subsequent assignment of
ownership of the subject lots to petitioners without the benefit of foreclosure proceedings, partakes
of the nature of a pactum  commissorium
Dacquel v. Spouses Sotelo
A PROPERTY WAS MADE COLLATERAL TO SECURE A LOAN OF P140,000.00. THE MARKET VALUE OF THE PROPERTY WAS
P1,750,000.00. THE DOCUMENT EXECUTED WAS A DEED OF SALE. THE CREDITOR THEN CAUSED THE ISSUANCE OF NEW
TITLE IN HIS NAME.  THE SUPREME COURT DECLARED THE TRANSACTION AS EQUITABLE MORTGAGE. THE NEW TITLE IS
VOID.

As the transaction between the parties herein was demonstrated to be one of equitable mortgage, petitioner did not
become owner of the subject property but a mere mortgagee thereof. As such, petitioner was bound by the prohibition
against pactum commissorium as embodied in Article 2088 of the Civil Code:

Art. 2088. The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any
stipulation to the contrary is null and void.

The mortgagee’s consolidation of ownership over the mortgaged property upon the mortgagor’s mere failure to pay the
obligation is the essence of pactum commissorium. 36 The mortgagor’s default does not operate to automatically vest
on the mortgagee the ownership  of the encumbered property. This Court has repeatedly declared such arrangements
as contrary to morals and public policy and thus void.

Flores v lindo
Mortgage of property within the community or the conjugal partnership is void if done without the consent of
the other spouse. Nevertheless, the execution of special powers of attorney perfects the contract of
mortgage. In other words, the SPA cures the defect of the mortgage.
GANANCIAL CASE - Mere formal infirmities in the notarization of the instrument will not invalidate the
mortgage The notarization issues are rendered irrelevant. Sc held that their mortgage contract was perfected,
valid, and effective.

Mercene v gsis
prescription of the right to foreclose mortgages is not reckoned from the date of execution of the contract.
Rather, prescription commences from the time the cause of action accrues; in other words, from the time the
obligation becomes due and demandable, or upon demand by the creditor/mortgagor, as the case may be.

Panacan lumber V
Section 3 of Act No. 3135, as amended by Act No. 4118, requires only the posting of the notice of sale in three
public places and the publication of that notice in a newspaper of general circulation. An exception to this rule
is when the parties stipulate that personal notice is additionally required to be given to the mortgagor. Failure
to abide by the general rule or its exception renders the foreclosure proceedings null and void.
In the deed of rem, it was established that personal notice is required before Solidbank may proceed with the
foreclosure of the subject property. Thus, Solidbank's act of proceeding with the foreclosure despite the
absence of personal notice to petitioners violated the said deed of REM which accordingly renders the
foreclosure null and void. 
MAHINAY V DURA TIRE
The period to redeem a property sold in an extrajudicial foreclosure sale is not extendible. A pending action to
annul the foreclosure sale does not toll the running of the one  year period of redemption under Act No. 3135.
The “date of the sale” referred to in Section 6 is the date the certificate of sale is registered with the Register
of Deeds. This is because the sale of registered land does not ‘”take effect as a conveyance, or bind the land’
until it is registered.”
MAGSALANG V MANILA BANKING CORP
There are 3 remedies/options by secured creditor under Sec. 7, Rule 86:
(a) waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim; (b)
foreclose the mortgage judicially and prove the deficiency as an ordinary claim; and (c) rely on the mortgage
exclusively, or other security and foreclose the same before it is barred by prescription, without the right to
file a claim for any deficiency. These may be ALTERNATIVELY adopted for the satisfaction of his indebtedness.
However, these remedies are distinct, independent and mutually EXCLUSIVE from each other; the election of
one effectively BARS the exercise of the others
MBC had a right to extrajudicially foreclose the property but it cannot recover the deficiency. Both Sec.
7, Rule 86 of ROC and Act. 3135 apply complementarily in the case at bar. Foreclosure under the 3 remedy in
Sec. 7, Rule 86 of ROC includes extrajudicial foreclosure under Act. 3135. However, upon choosing said
remedy, creditor waives his right to recover the deficiency. When MBC sought to extra-judicially foreclose the
mortgage of the properties previously belonging to Sps. Maglasang and it therefore, availed of the third option
waiving its right to recover the deficiency.
I.a. REM cannot cover future property. This is in accord with the 2nd paragraph of Art. 2085, which requires
that the mortgagor must be the absolute owner of the thing mortgaged. Consequently, REM cannot be
constituted over a property that the mortgagor does not yet own. However, REM can be constituted over
after-acquired property or property that the mortgagor may subsequently acquire, install, or use in connection
with the immovable already mortgaged. The tools, equipment, and fixtures that the mortgagor may acquire,
use or attach to the commercial building are after-acquired properties. Thus, the REM is valid.
b. Any movable property which does not exist or which the grantor does not have rights in or the power to
encumber at the time the security agreement is concluded may be an object of a security interest [Sec. 1.05k,
IRR of RA 11057]. The security interest, however, in that property is created only when the grantor acquires
rights in it or the power to encumber it (Sec. 3.05a, RA 11057).
II. b.The rule on indivisibility of mortgage under Art. 2089 arises only when there is debtor-creditor
relationship. There is no debtor-creditor relationship between C and XYZ Bank because the former is merely an
accommodation mortgagor and not a debtor-mortgagor. It is then logical to allow C to redeem only his
property and not both lots.
III.Sec. 2 of Rule 68 of the Rules of Court provides a 120-period for the judgment-obligee (debtor-mortgagor)
to exercise his equity of redemption by paying the mortgage debt as determined by the court. If the judgment-
obligee does not pay within the period, the court orders the foreclosure of the REM upon motion of the
creditor-mortgagee. The judgment-obligee’s equity of redemption, however, does not end with the
foreclosure sale. He can still exercise it until the court confirms the sale. As there was yet no confirmation of
sale, E can still redeem the property from G.
IV.A mortgage with a "dragnet clause" is an "offer" by the mortgagor to the mortgagee to provide the security
of the mortgage for advances of and when they were made. In the absence of clear and supportive evidence
of a contrary intention, a mortgage containing a dragnet clause will not be extended to cover future advances,
unless the document evidencing the subsequent advance refers to the mortgage as providing security
therefor. (Asiatrust Development Bank v. Tuble)
V.a. The REM executed by H over their conjugal property is undoubtedly an act of strict dominion and must be
consented to by her husband to be effective. Hence, the REM, absent the authority or consent of the husband,
is necessarily void. the given problem, the REM was executed on 31 October 2015 and the SPA was executed
on 4 November 2015. The execution of the SPA is the acceptance by the other spouse that perfected the
continuing offer as a binding contract between the parties, making the Deed of Real Estate Mortgage a valid
contract. (Flores v. Spouses Lindo) Note: It is the Family Code that provides the basis for the disquisition.
b. The rule is that a mortgage-creditor has a single cause of action against a mortgagor-debtor, that is, to
recover the debt. The mortgage-creditor has the option of either filing a personal action for collection of sum
of money or instituting a real action to foreclose on the mortgage security. An election of the first bars
recourse to the second, otherwise there would be multiplicity of suits in which the debtor would be tossed
from one venue to another depending on the location of the mortgaged properties and the residence of the
parties. However, in Flores v. Spouses Lindo, the facts of which are identical to the problem, the SC
pronounced that J can file a collection suit against H on the basis of the principle of unjust enrichment.
Considering the circumstances of the case, the principle against unjust enrichment, being a substantive law,
should prevail over the procedural rule on multiplicity of suits.
VI. Possession of collateral is necessary only if it is the means to perfect the security interest. There is also
recovery of deficiency in REM. 8%
ANTICHRESIS V REAL MORTGAGE
1. In antichresis, the immovable property is DELIVERED TO THE CREDITOR, in mortgage the debtor usually
retains possession of the property.
2. Antichresis- the creditor acquires only the right to receive fruits of the property thus, no real right is
produced, creditor does not have any right to receive fruits, in mortgage-creates a real right over the
property which is enforceable against the whole world.
3. Antichresis- the creditor unless there is stipulation to the contrary is obliged to pay the taxes ans
charges upon the estate, in mortgage-creditor has no such obligation.
4. Antichresis- it is expressly stipulated that the creditor given possession of the property shall apply the
fruits thereof to the payment of ineterst, if owing and thereafter to the principal of the credit.
Mortgage- no obligation
Both are similar – subject matter is real property, antichresis gives real right if registered in registry of
property

EXTRA JUDICIAL FORECLOSURE V JUDICIAL FORECLOSURE

1. A judicial foreclosure is governed by the Rules of Court; an extrajudicial foreclosure is governed by
Act No. 3135 as amended.
2. A judicial foreclosure involves the filing of an independent action; an extrajudicial
judicial foreclosure does not require filing of an action.
3. There is an equity of redemption in a judicial foreclosure but no right of redemption except when
the mortgagee is a banking institution; there is a right of redemption in extrajudicial foreclosure of
mortgage.
4. In a judicial foreclosure, there could be a deficiency judgment rendered by the court; there can be
no judgment for a deficiency in an extrajudicial foreclosure because there is no judicial proceeding,
although recovery of the deficiency is allowed.
5. In a judicial foreclosure, recovery of the deficiency can be done by mere motion for a deficiency
judgment; in an extrajudicial foreclosure, the recovery of the deficiency is through an
independent action and although nothing about the recovery of the deficiency is provided in Act
No. 3135, there is no prohibition either. 
RULE 39 Section 15. Notice of sale of property on execution. — Before the sale of property on execution, notice
thereof must be given as follows:

(a) In case of perishable property, by posting written notice of the time and place of the sale in three (3)
public places, preferably in conspicuous areas of the municipal or city hall, post office and public market in
the municipality or city where the sale is to take place, for such time as may be reasonable, considering the
character and condition of the property;

(b) In case of other personal property, by posting a similar notice in the three (3) public places above-
mentioned for not less than five (5) days;

(c) In case of real property, by posting for twenty (20) days in the three (3) public places abovementioned a
similar notice particularly describing the property and stating where the property is to be sold, and if the
assessed value of the property exceeds fifty thousand (P50,000.00) pesos, by publishing a copy of the
notice once a week for two (2) consecutive weeks in one newspaper selected by raffle, whether in English,
Filipino, or any major regional language published, edited and circulated or, in the absence thereof, having
general circulation in the province or city;

(d) In all cases, written notice of the sale shall be given to the judgment obligor, at least three (3) days
before the sale, except as provided in paragraph (a) hereof where notice shall be given the same manner as
personal service of pleadings and other papers as provided by section 6 of Rule 13.

The notice shall specify the place, date and exact time of the sale which should not be earlier than nine o'clock in
the morning and not later than two o'clock in the afternoon. The place of the sale may be agreed upon by the
parties. In the absence of such agreement, the sale of the property or personal property not capable of manual
delivery shall be held in the office of the clerk of court of the Regional Trial Court or the Municipal Trial Court which
issued the writ of or which was designated by the appellate court. In the case of personal property capable of
manual delivery, the sale shall be held in the place where the property is located. (18a)

Section 16. Proceedings where property claimed by third person. — If the property levied on is claimed by any
person other than the judgment obligor or his agent, and such person makes an affidavit of his title thereto or right to
the possession thereof, stating the grounds of such right or title, and serves the same upon the officer making the
levy and copy thereof, stating the grounds of such right or tittle, and a serves the same upon the officer making the
levy and a copy thereof upon the judgment obligee, the officer shall not be bound to keep the property, unless such
judgment obligee, on demand of the officer, files a bond approved by the court to indemnity the third-party claimant
in a sum not less than the value of the property levied on. In case of disagreement as to such value, the same shall
be determined by the court issuing the writ of execution. No claim for damages for the taking or keeping of the
property may be enforced against the bond unless the action therefor is filed within one hundred twenty (120) days
from the date of the filing of the bond.

The officer shall not be liable for damages for the taking or keeping of the property, to any third-party claimant if
such bond is filed. Nothing herein contained shall prevent such claimant or any third person from vindicating his
claim to the property in a separate action, or prevent the judgment obligee from claiming damages in the same or a
separate action against a third-party claimant who filed a frivolous or plainly spurious claim.

When the writ of execution is issued in favor of the Republic of the Philippines, or any officer duly representing it, the
filing of such bond shall not be required, and in case the sheriff or levying officer is sued for damages as a result of
the levy, he shall be represented by the Solicitor General and if held liable therefor, the actual damages adjudged by
the court shall be paid by the National Treasurer out of such funds as may be appropriated for the purpose. (17a)

RULE 68 Foreclosure of Real Estate Mortgage

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)

Art. 2085. The following requisites are essential to the contracts of pledge and mortgage:
(1) That they be constituted to secure the fulfillment of a principal obligation;
(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;
(3) That the persons constituting the pledge or mortgage have the free disposal of their property, and in the absence
thereof, that they be legally authorized for the purpose.
Third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own
property. (1857)
Art. 2087. It is also of the essence of these contracts that when the principal obligation becomes due, the things in which
the pledge or mortgage consists may be alienated for the payment to the creditor. (1858)
Art. 2088. The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any
stipulation to the contrary is null and void. (1859a)
Art. 2089. A pledge or mortgage is indivisible, even though the debt may be divided among the successors in interest of
the debtor or of the creditor. Therefore, the debtor's heir who has paid a part of the debt cannot ask for the
proportionate extinguishment of the pledge or mortgage as long as the debt is not completely satisfied.
Neither can the creditor's heir who received his share of the debt return the pledge or cancel the mortgage, to the
prejudice of the other heirs who have not been paid. From these provisions is expected the case in which, there being
several things given in mortgage or pledge, each one of them guarantees only a determinate portion of the credit.
The debtor, in this case, shall have a right to the extinguishment of the pledge or mortgage as the portion of the debt for
which each thing is specially answerable is satisfied. (1860)
Art. 2090. The indivisibility of a pledge or mortgage is not affected by the fact that the debtors are not solidarily liable.
Art. 2091. The contract of pledge or mortgage may secure all kinds of obligations, be they pure or subject to a
suspensive or resolutory condition. (1861)
 MORTGAGE

Art. 2124. Only the following property may be the object of a contract of mortgage:
(1) Immovables;
(2) Alienable real rights in accordance with the laws, imposed upon immovables.
Nevertheless, movables may be the object of a chattel mortgage. (1874a)
Art. 2125. In addition to the requisites stated in Article 2085, it is indispensable, in order that a mortgage may be validly
constituted, that the document in which it appears be recorded in the Registry of Property. If the instrument is not
recorded, the mortgage is nevertheless binding between the parties.
The persons in whose favor the law establishes a mortgage have no other right than to demand the execution and the
recording of the document in which the mortgage is formalized. (1875a)
Art. 2126. The mortgage directly and immediately subjects the property upon which it is imposed, whoever the
possessor may be, to the fulfillment of the obligation for whose security it was constituted. (1876)
Art. 2127. The mortgage extends to the natural accessions, to the improvements, growing fruits, and the rents or
income not yet received when the obligation becomes due, and to the amount of the indemnity granted or owing to the
proprietor from the insurers of the property mortgaged, or in virtue of expropriation for public use, with the
declarations, amplifications and limitations established by law, whether the estate remains in the possession of the
mortgagor, or it passes into the hands of a third person. (1877)
Art. 2128. The mortgage credit may be alienated or assigned to a third person, in whole or in part, with the formalities
required by law. (1878)
Art. 2129. The creditor may claim from a third person in possession of the mortgaged property, the payment of the part
of the credit secured by the property which said third person possesses, in the terms and with the formalities which the
law establishes. (1879)
Art. 2130. A stipulation forbidding the owner from alienating the immovable mortgaged shall be void. (n)
Art. 2131. The form, extent and consequences of a mortgage, both as to its constitution, modification and
extinguishment, and as to other matters not included in this Chapter, shall be governed by the provisions of the
Mortgage Law and of the Land Registration Law. (1880a)
 
CHAPTER 4
ANTICHRESIS

Art. 2132. By the contract of antichresis the creditor acquires the right to receive the fruits of an immovable of his
debtor, with the obligation to apply them to the payment of the interest, if owing, and thereafter to the principal of his
credit. (1881)
Art. 2133. The actual market value of the fruits at the time of the application thereof to the interest and principal shall
be the measure of such application. (n)
Art. 2134. The amount of the principal and of the interest shall be specified in writing; otherwise, the contract of
antichresis shall be void. (n)
Art. 2135. The creditor, unless there is a stipulation to the contrary, is obliged to pay the taxes and charges upon the
estate.
He is also bound to bear the expenses necessary for its preservation and repair.
The sums spent for the purposes stated in this article shall be deducted from the fruits. (1882)
Art. 2136. The debtor cannot reacquire the enjoyment of the immovable without first having totally paid what he owes
the creditor.
But the latter, in order to exempt himself from the obligations imposed upon him by the preceding article, may always
compel the debtor to enter again upon the enjoyment of the property, except when there is a stipulation to the
contrary. (1883)
Art. 2137. The creditor does not acquire the ownership of the real estate for non-payment of the debt within the period
agreed upon.
Every stipulation to the contrary shall be void. But the creditor may petition the court for the payment of the debt or the
sale of the real property. In this case, the Rules of Court on the foreclosure of mortgages shall apply. (1884a)
Art. 2138. The contracting parties may stipulate that the interest upon the debt be compensated with the fruits of the
property which is the object of the antichresis, provided that if the value of the fruits should exceed the amount of
interest allowed by the laws against usury, the excess shall be applied to the principal. (1885a)
Art. 2139. The last paragraph of Article 2085, and Articles 2089 to 2091 are applicable to this contract. (1886a)
 

EXTRAJUDICIAL FORECLOSURE OF REAL ESTATE MORTGAGE GOVERNING LAW Act 3135, as amended by Act No. 4118
and Sec. 47, R.A. 8791 (General Banking Law of 2000) governs sales made under a special power inserted in or attached
to any real estate mortgage made as security for the payment of money or the fulfillment of any other obligation. (Also,
there is a SC circular that outlines the procedure for foreclosure of Real Estate Mortgages.

FORECLOSURE SALE TYPE OF SALE: Public auction VENUE OF SALE: Province where the property is situated If venue is
subject to stipulation, such sale shall be made in said place (i.e., the place so stipulated) or in the municipal building of
the municipality in which the property or part thereof is situated.

NOTICE: Notices of the sale are to be posted in at least 3 public places of the municipality or city where the property is
situated for not less than 20 days. Such notice shall likewise be published once a week for at least 3 consecutive weeks
in a newspaper of general circulation in the municipality or city.

TIME OF SALE: Between 9 AM and 4 PM WHO MAY BID: The creditor; The trustee; Other persons authorized to act for
the creditor; Other bidders not privy to the mortgage or trust deed

PROCEDURE: 1. The mortgagee files an application for foreclosure with the Executive Judge through the Clerk of Court,
who will receive and docket the application and collect the appropriate filing fees. (SC Circular)

2. Notice of the sale is posted in at least 3 public places of the municipality or city where the property is situated for not
less than 20 days and published once a week for at least 3 consecutive weeks in a newspaper of general circulation in
the municipality or city. (Sec. 3, Act 3135)

3. The auction sale is conducted under the direction of the sheriff, the Executive Judge, or a notary public of the
municipality. (Sec. 4, Act 3135) At the 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. (Sec. 5, Act 3135) There must be at least
2 participating bidders for the auction sale to be valid. (SC Circular)

4. Once the sale has been confirmed, the Clerk of Court issues a certificate of sale to the winning bidder. (Confirm this!)
5. After the date of the confirmation of the auction sale, the winning bidder has the right to enter upon and take
possession of such property and administer the same in accordance with law. (Sec. 47, R.A. 8791) Within 30 days after
the purchaser is given possession of the property, the debtor may petition that the sale be set aside on the ground that
the mortgage was not violated or the sale was not made in accordance with the provisions of Act 3135. (Sec. 8, Act
3135)

6. Upon failure of the debtor to redeem the property within the period allowed him by the law, absolute ownership over
the purchased property vests in the winning bidder.

POSSESSION The purchaser at the auction sale has the right to enter upon and take possession of the property
immediately after the date of the confirmation of the auction sale and administer the same in accordance with law. (Sec.
47, R.A. 8791, amending Sec. 7 of Act 3135)

REDEMPTION WHO MAY REDEEM:

(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

PERIOD FOR REDEMPTION:

Natural persons: Within 1 year from and after the date of the sale (Sec. 6, Act 3135)

Juridical persons: 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 3 months after foreclosure, whichever is earlier. (Sec. 47, R.A. 8791)
 EFFECT OF INADEQUACY OF PRICE When there is a right to redeem, inadequacy of price is of no moment for the reason
that the judgment debtor always has the chance to redeem and reacquire the property. In fact, the property may be
sold for less than its fair market value precisely because the lesser the price the easier for the owner to effect a
redemption. (Valmonte v. CA, 303 SCRA 278, citing DBP v. Moll, 43 SCRA 82) EFFECT OF REQUEST FOR EXTENSION OF
TIME ON RIGHT TO QUESTION VALIDITY OF FORECLOSURE SALE The act of seeking an extension of the redemption
period estops the mortgagors from questioning the foreclosure sale thereafter. (Valmonte v. CA, 303 SCRA 27