Professional Documents
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GOVERNING LAW
Act 3135, as amended by Act No. 4118 and Sec. 47, R.A. 8791 (General
Banking Law of 2000) governs sales made under a special power inserted
in or attached to any real estate mortgage made as security for the
payment of money or the fulfillment of any other obligation.
FORECLOSURE SALE
TYPE OF SALE: Public auction
VENUE OF SALE: Province where the property is situated
If venue is subject to stipulation, such sale shall be made in said place
(i.e., the place so stipulated) or in the municipal building of the
municipality in which the property or part thereof is situated.
NOTICE: Notices of the sale are to be posted in at least 3 public places of
the municipality or city where the property is situated for not less than
20 days. Such notice shall likewise be published once a week for at least
3 consecutive weeks in a newspaper of general circulation in the
municipality or city.
TIME OF SALE: Between 9 AM and 4 PM
WHO MAY BID: The creditor;
The trustee;
Other persons authorized to act for the creditor; Other bidders not privy
to the mortgage or trust deed
PROCEDURE:
1. The mortgagee files an application for foreclosure with the Executive
Judge through the Clerk of Court, who will receive and docket the
application and collect the appropriate filing fees. (SC Circular)
2. Notice of the sale is posted in at least 3 public places of the
municipality or city where the property is situated for not less than 20
days and published once a week for at least 3 consecutive weeks in a
newspaper of general circulation in the municipality or city. (Sec. 3, Act
3135)
3. The auction sale is conducted under the direction of the sheriff, the
Executive Judge, or a notary public of the municipality. (Sec. 4, Act
3135)
At the 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. (Sec. 5, Act 3135)
There must be at least 2 participating bidders for the auction sale to be
valid. (SC Circular)
4. Once the sale has been confirmed, the Clerk of Court issues a
certificate of sale to the winning bidder.
5. After the date of the confirmation of the auction sale, the winning
bidder has the right to enter upon and take possession of such property
and administer the same in accordance with law. (Sec. 47, R.A. 8791)
Within 30 days after the purchaser is given possession of the property,
the debtor may petition that the sale be set aside on the ground that
the mortgage was not violated or the sale was not made in accordance
with the provisions of Act 3135. (Sec. 8, Act 3135)
6. Upon failure of the debtor to redeem the property within the period
allowed him by the law, absolute ownership over the purchased
property vests in the winning bidder.
POSSESSION
The purchaser at the auction sale has the right to enter upon and take
possession of the property immediately after the date of the
confirmation of the auction sale and administer the same in accordance
with law. (Sec. 47, R.A. 8791, amending Sec. 7 of Act 3135)
REDEMPTION
• WHO MAY REDEEM:
(1) The debtor;
(2) The debtor's successors-in-interest;
(3) Any judicial creditor or judgment creditor of the debtor;
(4) Any person having a lien on the property subsequent to the
mortgage or deed of trust under which the property is sold
PERIOD FOR REDEMPTION:
Natural persons: Within 1 year from and after the date of the sale (Sec. 6, Act
3135)
Juridical persons: Until but not after the registration of the certificate of
foreclosure sale with the applicable Register of Deeds, which in no case shall
be more than 3 months after foreclosure, whichever is earlier. (Sec. 47, R.A.
8791)
EFFECT OF INADEQUACY OF PRICE
When there is a right to redeem, inadequacy of price is of no moment for the
reason that the judgment debtor always has the chance to redeem and
reacquire the property. In fact, the property may be sold for less than its fair
market value precisely because the lesser the price the easier for the owner
to effect a redemption. (Valmonte v. CA, 303 SCRA 278, citing DBP v. Moll, 43
SCRA 82)
EFFECT OF REQUEST FOR EXTENSION OF TIME ON RIGHT TO QUESTION
VALIDITY OF FORECLOSURE SALE
• The act of seeking an extension of the redemption period estops the
mortgagors from questioning the foreclosure sale thereafter.
(Valmonte v. CA, 303 SCRA 27
B. Real Estate Mortgage Law (Act 3135, as amended by R.A. 4118)
1. Coverage
2. Remedies available to mortgagee upon default of the mortgagor
3. Need for special power of attorney
4. Authority to foreclose extrajudicially
5. Procedure
• a) Where to file
• b) Where to sell
c) Posting requirement
• d) Publication requirement
(i) Sufficiency of newspaper publication
(ii) Need for republication in case of postponement
(iii) Personal notice to the mortgagor when and when not needed
6. Possession by purchaser of foreclosed property
7. Remedy of debtor if foreclosure is not proper
8. Redemption
a) Who may redeem
b) Amount of redemption price
c) Period for redemption
d) Effect of pendency of action for annulment of sale
9. Writ of possession
a) Ministerial duty of the court
b) Enforcement against third parties
c) Pendency of action for annulment of sale
10. Annulment of sale
The Chattel Mortgage Law (Act 15
The Chattel Mortgage Law (Act 1508 in rel. to Arts. 1484, 1485, 2140 and
2141 of the Civil Code)
Growing crops (Sec. 6, Act 150 ; \
House built on another person's land (Tumalad v. Vicencio, 41 SCRA 143;
1971)
Machinery permanently affixed to a building, under the doctrine of estoppel
1. Substantial compliance with the form prescribed in Sec. 5 of Act No. 1508;
2. The chattel mortgage must be signed in the presence of at least 2
witnesses;
3. Affidavit of good faith;The affidavit of good faith states that:
"We (the parties) severally swear that the foregoing mortgage is made for
the purpose of securing the obligation specified in the conditions thereof,
and for no other purpose, and that the same is a just and valid obligation,
and one not entered into for the purpose of fraud." (Sec. 5)
4. Certificate of oath / Notarial acknowledgment;
5. Sufficiency of description
Requisites to bind 3rd Person