RULE 68

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

1.date and due execution of the mortgage; its assignments, if any; the

2.names and residences of the mortgagor and the mortgagee; a

3.description of the mortgaged property; a

4.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

5.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)
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.

Approved: March 6, 1924

Source: http://www.chanrobles.com/acts/actsno3135.html

By the way, there is an amendment to Act No. 3135 and it is Act No. 4118.