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1. Judicial Foreclosure
A judicial foreclosure is done by filing a complaint in the Regional Trial Court of the
place where the property is located. The judge renders judgment, ordering the
mortgagor to pay the debt within a period of 90–120 days. If the debt is not paid
within the said period, a foreclosure sale satisfies the judgment.
*Note that these two modes specifically apply to real estate mortgages. Foreclosure
of chattel mortgages (mortgage of movable property) are governed by Sec. 14 of
Act No. 1506, which gives the mortgagee the right to sell the chattel at a public
sale. It has also been held that as regards chattel mortgages, the law does not
prohibit that the foreclosure sale be done privately if it is agreed upon by the
parties.
FORECLOSURE
There are two kinds of foreclosure:
1. Judicial – ordinary action for foreclosure under Rule 68 of the Rules of Court
*Note that these two modes specifically apply to real estate mortgages. Foreclosure
of chattel mortgages (mortgage of movable property) are governed by Sec. 14 of
Act No. 1506, which gives the mortgagee the right to sell the chattel at a public
sale. It has also been held that as regards chattel mortgages, the law does not
prohibit that the foreclosure sale be done privately if it is agreed upon by the
parties.
Rule 68: JUDICIAL FORECLOSURE
MORTGAGOR DEFAULTED ON
PAYMENTS • The court will conduct a trial.
• Within this 90 to 120
If, after trial, the court finds
day period, the
• The mortgagee should merit in the petition, it will
mortgagor has the
file a petition for judicial render judgment ordering the
chance to pay the
foreclosure in the court mortgagor/debtor to pay the
obligation to prevent his
which has jurisdiction over obligation within a period not
property from being
the area where the less than 90 nor more than
sold. This is called the
property is situated. (Sec.1) 120 days from the finality of
EQUITY OF REDEMPTION
judgment. (Sec. 2)
PERIOD. (Sec. 2)
•Sale of Mortgaged Property. There will be a judicial
confirmation of the sale. After the confirmation of the
sale, the purchaser shall be entitled to the possession of
•If mortgagor fails to pay
the property, and all the rights of the mortgagor with
within the 90-120 days
respect to the property are severed or terminated. The
given to him by the court,
equity of redemption period actually extends until the
the property shall be sold
sale is confirmed. Even after the lapse of the 90 to 120
to the highest bidder at
day period, the mortgagor can still redeem the property,
public auction to satisfy the
so long as there has been no confirmation of the sale
judgment. (Sec 3)
yet. Therefore, the Equity Of Redemption can be
considered as the right of the mortgagor to redeem the
property BEFORE the confirmation of the sale. (Sec.3)
Rule 68: JUDICIAL FORECLOSURE
a. The costs of the sale will be deducted from the price at which the property was sold.
b. The amount of the principal obligation and interest will be deducted.
c. The junior encumbrances will be satisfied.
d. If there is still an excess, the excess will go back to the mortgagor. In mortgage, the
mortgagee DOES NOT get the excess (unlike in pledge).
i. If there is a deficiency, the mortgagee can ask for a DEFICIENCY JUDGMENT which can
be imposed on other property of the mortgagor. (In extrajudicial foreclosure , the
mortgagee must go to court and file another action for the collection of the
deficiency) (Sec. 6)
Rule 68: JUDICIAL FORECLOSURE
Registration - after confirmation, the sale shall be registered in the registry of deeds. (Sec.
7)
• No right of redemption exists, a new certificate of title shall be issued in the name
of the purchaser.
•A right of redemption exists, the name of the mortgagor shall NOT be cancelled,
but the certificate and the order confirming the sale shall be registered with a memo
by the ROD upon the certificate of title.
If property is redeemed, the deed of redemption shall be registered with the
ROD, with a brief memorandum shall be made by the ROD 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
ROD; the name of the mortgagor shall be cancelled from the certificate of title
and a new one issued in the name of the purchaser.
• Right Of Redemption is a prerogative to re-acquire mortgaged property after
registration of the foreclosure sale (exists only in the case of the extrajudicial
foreclosure of the mortgage).