11 points to remember judical foreclosure

7/25/2019 11 Points to Remember Judical Foreclosure

1/18

RULE 68:

JUDICIAL

FORECLOSURE11 POINTS TO REMEMBER


2/18

PURPOSE:

It is a remedy used for the satisfaction of any monetary obligation, which a

owes to another, by proceeding against the property used to secu

obligation.

Its purpose is to have the property seized and sold by the court order to

that the proceeds therof to be applied to the payment of the plaintiffs claim


3/18

PARTIES:

It is commenced by a complaint setting forth the date and due execution

mortgage; the names and residences of the mortgagor and the mortg

description of the mortgaged property; date of the note or other docum

evidence of the obligation secured by the mortgage, the amount claime

unpaid thereon; and the names and residences of all person claiming and

in the property subordinate in the right to that of the holder of the mortgag

1)

Defendants are 1. The person obliged to pay; 2. The person who own, occucontrol the property subject to the mortgage; 3. Transferee or grantee;

Second mortgage, junior encumbrancer, third party claiming right and inter


4/18


5/18

JURISDICTION:

Traditionally, Jurisdiction in an action to foreclose mortgage is in the R

(incapable of pecuniary estimation)

Cite: Brgy San Roqu e v Heirs of Pastor


6/18

REQUISITES:

First, debtor is in default in the payment of his obligation; and second, fore

is limited to the amount mentioned in the mortgaged document.

Note: if thereis an acceleration clause this will trigger the right

mortgagee to foreclose the mortgage against the convention of prematu

the mortgager fails to pay any instalment.

Also, the rights which a mortgagor can legally transfer, cede and convey af

foreclosure of his property are the right to redeem the same and the posses

use, and enjoyment of the same during the period of redemption.


7/18

JUDGMENT:

Judgement in judicial foreclosure proceedings is the judgment of the cour

ordering the debtor to pay within a period of not less than 90 days nor more120 days from the entry of judgement after ascertaining the amount due pla

(sec 2)


8/18

POST JUDGMENT

The debtor may petition that the sale be set aside and the writ of possessio

cancelled for the reason that the mortgage was not violated or the sale wasmade in accordance with the provisions thereof.


9/18

POST JUDGMENT REMEDY:

Another post-judgement remedy is the equityof redemption

In order to explain this, the Supreme Court in a decided case compared the cof rightof redemptionand equityredemptionto wit:

In Huerta Alba Resort , Inc. vs. Court of A ppeals,

The court held that the right of redemption is not recognized in a judicial forethus:

The right of redemption in relation to a mortgage understood in the senprerogative to re-acquire mortgaged property after registration of the foreclos

exists only in the case of the extrajudicial foreclosure of the mortgage. No suis recognized in a judicial foreclosure except only where the mortgageePhilippine National bank or a bank or a banking institution.

Where a mortgage is foreclosed extrajudicially, Act 3135 grants to the mortgaright of redemption within one (1) year from the registration of the sheriffs ceof foreclosure sale.


10/18

POST JUDGMENT REMEDY: Where the foreclosure is judicially effected, however, no equivalent right of redem

law declares that a judicial foreclosure sale, when confirmed by an order of theoperate to divest the rights of all the parties to the action and to vest their rights

subject to such rights of redemption as may be allowed by law. Such rights exceby law (i.e., even after the confirmation by an order of the court) are those grantof the Philippine National Bank (Act Nos. 2747 and 2938), and the General BankThese laws confer on the mortgagor, his successors in interest or any judgmemortgagor, the right to redeem the property sold on foreclosure after confirmatiothe foreclosure sale which right may be exercised within a period of one (1) year,date of registration of the certificate of sale in the Registry of Property.

But, to repeat, no such right of redemption exists in case of judicial foreclosurethe mortgagee is not the PNB or a bank or banking institution. In such a case, thewhen confirmed by an order of the court, x x x shall operate to divest the rights othe action and to vest their rights in the purchaser. There then exists only whaequity of redemption. This is simply the right of the defendant mortgagor tmortgage and retain ownership of the property by paying the secured debt wperiod after the judgment becomes final, in accordance with Rule 68, or even aft

sale but prior to its confirmation.


11/18

IMPORTANT POINTS:


12/18

LANDMARK CASES


13/18

FLOWCHART:

Judicial foreclosure of real estate mortgage is governed by the provisions o

68 of the Rules of Court. It is like any ordinary civil action filed in court thatbe proven by preponderance of evidence.

Procedure:

Preparation and filing of complaint which shall set forth the following allega(Sec. 1, Rule 68):

a) Date and due execution of the mortgage and its assignments, if any b) N

and residences of the mortgagor and mortgagee; c) Description of the morproperty/ies;

d) Documentary evidence/s of the obligation/s secured by the mortgage anunpaid obligation; e) Names and residences of all persons having or claimiinterest in the mortgaged property/ies.


14/18

FLOWCHART:

First step:

The trial court shall render a judgment based on the facts proven and shall ascthe amount due based on the mortgage debt or obligation, including interests,charges and costs. The court shall then direct the defendant to pay said amouna period of not less than ninety (90) days nor more than one-hundred twenty (1days (Sec. 2, Rule 68).

Second step:

In the event of failure to pay as directed within 90 to 120 days, the mortgage reashall be sold at an auction sale, the proceeds of which shall be applied to the

mortgage debt, pursuant to Rule 39 of the Rules of Court (Sec. 3, Rule 68).

Third step:

Before the sale of the real property/ies, notice must be given By posting for 20in three (3) public places. If the assessed value is more than P50,000.00, by puba copy of the notice once a week for two (2) consecutive weeks in one newspapselected by raffle (Sec. 15c, Rule 39).


15/18

FLOWCHART:

Written notice to the judgment obligor at least three (3) days before the sale (Sec. 15d, R

The highest bidder shall be issued a certificate of sale (Sec. 25, Rule 39).

Upon motion and after notice and hearing, the trial court will issue an order of confirmatthe sale (Rural Bank of Oroquieta v. CA, 101 SCRA 5 [1980]).

4.1. The final order of confirmation shall be registered with the Registry of Deeds (Sec. 768).

a) If no right of redemption exists, the certificate of title in the name of the mortgagor shcancelled and a new one issued in the name of the purchaser.

b) Where a right of redemption exists, the certificate of title of the mortgagor shall not bcancelled. Instead, the certificate of sale and order of confirmation shall be registered wmemorandum of the right redemption. If the property is not redeemed a final deed of salbe executed by the sheriff in favor of the purchaser which shall be registered in the RegDeeds, whereupon the title of the mortgagor shall be cancelled and a new one issued in name of the purchaser.

If the proceeds of the auction sale of the property are not sufficient, the trial court, uponshall render a deficiency judgment against the defendant (Sec. 6, Rule 68).


16/18

FLOWCHART:

Equity of Redemption

Equity of redemption is the right of the mortgagor to redeem the mortgage

property after his default in the performance of the conditions of the mortga

before the sale of the property or the confirmation of the sale after judicial

foreclosure thereof (International Services, Inc. v. IAC, 142 SCRA 467 [1986

is the right of the defendant mortgagor to extinguish the mortgage and reta

ownership of the property by paying the secured debt within a 90-day perio

the judgment becomes final or after the foreclosure sale but prior to itsconfirmation (GSIS v. CFI, 175 SCRA 19 [1989]).


17/18

SAMPLE PLEADING:

See Document


18/18

11 points to remember judical foreclosure

Documents