Professional Documents
Culture Documents
FORECLOSURE
FORECLOSURE
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VALIDITY AND EFFECT OF FORECLOSURE
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KINDS OF FORECLOSURE
1. Judicial
2. Extrajudicial
AN ACT TO AUTHORIZE THE MORTGAGE OF PRIVATE REAL PROPERTY IN
FAVOR OF ANY INDIVIDUAL, CORPORATION, OR ASSOCIATION SUBJECT TO
CERTAIN CONDITIONS
Section 1. Any provision of law to the contrary notwithstanding,
private real property may be mortgaged in favor of any individual,
corporation, or association, but the mortgagee or his successor in interest,
if disqualified to acquire or hold lands of the public domain in the
Philippines, shall not take possession of the mortgaged property during
the existence of the mortgage and shall not take possession of the
mortgaged property except after default and for the sole purpose
of foreclosure, receivership, enforcement or other proceedings and in
no case for a period of more than 5 years from actual possession and
shall not bid or take part in any sale of such real property in case of
foreclosure: Provided, that said mortgagee or successor in interest may
take possession of said property after default in accordance with the
prescribed judicial procedures for foreclosure and receivership and
in no case exceeding 5 years from actual possession.
Section 2. All laws, orders, or regulations, or parts thereof inconsistent with
the provisions of this Act, are repealed or modified accordingly.
the obligation within a period not less than 90 nor more than 120
days from the finality of judgment.
Within this 90 to 120 day period, the mortgagor has the chance to
pay the obligation to prevent his property from being sold. This is
called the EQUITY OF REDEMPTION PERIOD.
If mortgagor fails to pay within the 90-120 days given to him by the
court, the property shall be sold to the highest bidder at public auction
to satisfy the judgment.
There will be a judicial confirmation of the sale. After the confirmation
of the sale, the purchaser shall be entitled to the possession of the
property, and all the rights of the mortgagor with respect to the
property are severed or terminated. The equity of redemption period
actually extends until the sale is confirmed. Even after the lapse of the
90 to 120 day period, the mortgagor can still redeem the property, so
long as there has been no confirmation of the sale 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.
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EXTRAJUDICIAL FORECLOSURE
(UNDER ACT 3135/4118 AND SC ADMINISTRATIVE CIRCULAR)
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The mortgagee should file a petition for judicial foreclosure in the court
which has jurisdiction over the area where the property is situated
The court will conduct a trial. If, after trial, the court finds merit in the
petition, it will render judgment ordering the mortgagor/debtor to pay
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POSTING of the notices of the sale FOR NOT LESS THAN 20 DAYS
in at least 3 public places of the municipality or city where the
property is situated
IF THE PROPERTY IS WORTH MORE THAN P400, such notice shall
also be published once a week at least 3 consecutive weeks in a
newspaper of general circulation in the municipality or city. (You don't
need to count 6 days between publications.)
NOTE: there is jurisprudence, which held that there is sufficient notice when
there is publication.
PUBLIC AUCTION/SALE
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Time shall be between 9AM and 4PM. It shall be made in the direction
of the sheriff of the province, the justice or auxiliary justice of the
peace of the municipality, or of the notary
public
of
the
municipality, who shall be compensated with P5 for each day
of actual work or performance in addition to his expenses.
Anyone may bid at the sale, unless there are stipulations in the
agreement.
POSSESSION
RIGHT OF REDEMPTION