RULE 68

FORECLOSURE OF REAL ESTATE MORTGAGE

Two (2) types of foreclosure
Judicial Foreclosure= is governed by Rule 68
Extrajudicial Foreclosure= when so provided in the contracts in accordance with Act
3135 as amended by Act 4118.
Q= Where to brought action?
A= In the RTC where the land or any part thereof is situated.
Q= How if the Mortgage Contract covers several distinct parcels of land situated
in different premises?
A= It can be filed at any branch of RTC of the province where any of the land is situated.
Q= What action may a mortgagee can be filed for the amount due instead of the
foreclosure suit?
A= Personal Action ( Movido vs. RFC, et al., 105 Phil 886).
Q= What is the effect of the Personal Action?
A= Mortgagee will be deemed to have waive his right to proceed against the property in
foreclosure proceeding.
Q= What is the essence and effect of Republication of Notice of Sheriffs sale?
A= Republication is necessary for the validity of the sale. Another publication is required
in case the auction sale is re-scheduled.
Q=If there is no republication?
A= It invalidates the foreclosure sale.
Q= How about Unregistered REM?
A= It can be foreclosed.
General Rule= cause of action rise from non-payment of mortgage. In addition, the
violation of some of the other conditions.
Q= Who are defendants in foreclosure action?
A= 1. Person oblige to pay debts;
2. Person who own, occupy, and control the property under mortgage;
3. Transferee or grantee;
4. Second mortgage, junior encumbrancer, third party claiming right and interest.
Q= Suppose the action is brought by the junior encumbrancer?
A= First mortgage may also joined as a defendant.
Q= Prescription of action for foreclosure of mortgage.
A= Ten (10) years (Art. 1142 of NCC), an exception to Art.1141 of NCC, which speaks
of real actions over immovable or rights (Jaime Beltran Luz vs. National Amnesty
Commission, GR 159708).
Dragnet Clause= (Mortgage Blanket Clause)
Q= How Dragnet Clause Operates?
A= It is a convenience and accommodation to the borrowers as it makes available
additional funds without their having to execute additional security documents.
Q= What is the effect if junior encumbrancer was not impleaded?
A= Junior encumbrancer will remain his foreclosed right of redemption which is
enforceable against first mortgage or the purchase of the foreclosure sale under
S.27(b), R39 which has suppletory effect to R68 pursuant to S.2(a) R1.
Right of Redemption vs. Equity of Redemption
The former is the right granted to the debtor-mortgagor, his successor in interest, or
any judicial creditor or any person having a lien over the property subsequent to its
mortgage to redeem the property within one (1) year from the registration of the sheriffs
certificate of foreclosure sale.
The latter refers to the right of the defendant mortgagor to extinguish the mortgage and
retain ownership of the property by paying the amount fixed in the decision of the court
within ninety (90) to one hundred twenty (120) days after the entry of judgment or even
after the foreclosure sale but prior to its confirmation.
Writ of Possession in Judicial Foreclosure
If foreclosure sale is confirmed, the court, upon motion, may issue WOP to install the
buyer at auction into possession of the property sold.
Deficiency Judgment= Motion may be made after the sale and after it becomes know
that a deficiency exists. It also can be rendered against a non-resident defendant.
DJ cannot be rendered against the owner who is (a) not a mortgagor and (b) has not
assumed personal liability for the debt.
Q= How if the debtor dies?
A= Deficiency may be filed against his estate. R86, S.17
S.2 Judgment on foreclosure for payment sale.
Judgment oblige to pay the judgment account within a period of not less than 90 days
nor more than 120 days from the entry of the judgment.
Q= Reglamentary period for appeal.
A= Thirty (30) days, and record on appeal shall be required.
Q= What is the exception in judicial foreclosure as regards with the right of
redemption?
A= As a rule, there is no such right of redemption in judicial foreclosure, except in the
case of the mortgagee is a banking institution as provided by the General Banking Act.
Judicially or extrajudicially foreclosure of mortgage to banking institution, is subject to
legal redemption. But the redeeming party must pay the amount fixed by the court in the
order of execution, not the amount for which the property was purchased public auction
(Ponce de Leon vs. RFC, L-24571).
S.3 Sale of mortgage property; effect.
Last redemptioner, entitled to the possession of the property
GR= The purchaser is entitled to possession of the property sold to him upon finality of
the order of the confirmation of the sale; and the same is true with respect to the last
redemptioner, upon the expiration of the period of redemption.
EXCEPTION= Unless a third party is actually holding the same adversely to the
judgment obligor. R68, S.2.2
Q= What is the remedy under S.2 in foreclosure if the debt is not paid?
A= It is the ministerial duty of the court to order the foreclosure sale of the property. A
motion for such order is non-ligitable and may be made ex-parte (Govt. of Philippine
Islands vs. De las Cajigas, 55 Phil.677).
The motion for the confirmation of the sale requires a hearing.
REASON= To grant an opportunity to the mortgagor to show cause why the sale should
not be confirmed (Tiglao vs. Botones, 90 Phil. 275).
Order confirming the foreclosure sale appealable.
Order confirming the foreclosure sale made by the sheriff is appealable.
Upon foreclosure sale, titles vests in favor of the purchaser retroactive to the date
of actual sale.
Upon the foreclosure sale, the equity of redemption is cut off and titles vests in favor of
the purchaser retroactive to the date of the actual sale (Grimalt vs. Velasquez, et al., 36
Phil. 936).
RULE 69
PARTITION
Q= What is partition?
A= In general, is the separation, division and assignment of the thing held in common
among to those whom it may belong (Art.1079, NCC).
Two stages of the action.
First Stage- Determination of the propriety of partition
Involves a determination whether or not the subject property owned in common and
whether the co-owners are made parties in the case.
Q= Is the order of partition appealable?
A= Yes (Miranda vs. CA, L-33007).
Q= If not appealed?
A= The parties may partition the property in a way they want.
Q= If cannot agree?
A= The case goes into second stage. However, the order of accounting may in the
meantime be executed.
Second Stage- The partitioning of the subject property
This is also a complete proceeding and the order or decision is appealable.
Prescription of Action
Action for partition is imprescriptible for as long as the co-owners expressly or impliedly
recognize the co-ownership (Art.494, NCC).
Q= How if a co-owner repudiates the co-ownership and makes know such
repudiation to the other co-owners?
A= Partition is no longer a proper remedy of the aggrieved co-owner.
REMEDY= File accion reinvidicatoria.
REASON= Accion Reinvidicatoria is prescriptible.
Prior Partition is valid even if title over the whole lot remains uncancelled.
Q= Is the so-called Oral Partition valid?
A= Yes. When it is fully consummated upon the parties thereto, therefore, binding.
Order of Partition if after the trial court finds that the plaintiff has the right thereto, shall
order the partition of the real estate among all the parties in interest (S.2 and 12).
Q= Can the Parties make partition among themselves?
A= Yes, provided the court shall confirm the partition in an order in relation to the
agreement of the parties.
Q= Is there a need for recording?
A= Yes. In the Registry of Deed where the property is situated (S.2).
Q= Is the final order decreeing partition and accounting may be appealed and by
whom?
A= Yes, by the aggrieved party.
Q= Where to file action in order to acquire jurisdiction?
A= RTC, where the property or a portion thereof is situated (R4, S.1).
S.3 Commissioners to make partition.
Q= When to appoint commissioners?
A= When the parties fails to agree.
Q= Whom to be appointed as commissioners?
A= Three (3) competent and disinterested persons.
Q= What are the duties of the commissioners?
A= 1. Shall set-off to the plaintiff and to each party in interest such part and proportion
of the property as the court shall direct;
2. Commissioners shall take oath before performing their duties (S.4).
Q= What is the duty of the commissioners about their proceedings in the
partition?
A= The commissioners shall make a full and accurate report of the proceedings as to
partition, or assignment of the real estate to one of the parties or the sale of the same
(R69, S.6)
Commissioners under this Rule have the power and duty to effect the partition of the
property. However, they have no power to inquire into the question of ownership or right
of the possession of property (Araullo vs. Aurallo, 3 Phil. 567), nor of claims to title or
right of possession by third persons (S.12).