What is Foreclosure?
Foreclosure is the remedy available to the mortgagee by which he subjects the mortgaged property to the satisfaction of the obligation, to secure that for which the mortgage was given. It may mean the usual methods including the sale of the goods at a public auction. The right to foreclose a mortgage prescribes in ten (10) years.
What are the kinds of foreclosure?
1. ORDINARY- an ordinary execution sale is governed by the pertinent provisions of Rule 39 of the Rules of Court
2. JUDICIAL – ordinary action for foreclosure under Rule 68 of the Rules of Court.
3. EXTRAJUDICIAL- when mortgagee is given a special power of attorney to sell the mortgaged property by public auction, under Act No. 3135
What is Act No. 3135 on Extrajudicial Foreclosure of Real Property all about?
The law covers only real estate mortgages. It is intended merely to regulate the extrajudicial sale of the property mortgaged. The authority to sell is not extinguished by the death of the mortgagor/mortgagee as it is an essential and inseparable part of a bilateral agreement. No sale can be legally made outside 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 the subject of stipulation, such sale shall be made in the said place in the municipality building of the municipality in which the property or part thereof is situated
What is the procedure for Extrajudicial Foreclosure of both real estate mortgage under Act No. 3135 and Chattel Mortgage under Act No. 1508?
1. Filing of application before the Executive Judge through the Clerk of Court;
2. Clerk of Court will examine whether the requirement of the law have been complied with. That is, whether the notice of sale has been posted for not less than 20 days in at least three (3) public places of the municipality or city where the property is situated, and where the same is worth more than PHP400.00, that such notice has been published once a week for at least three (3) consecutive weeks in a newspaper of general circulation in the city or municipality;
3. The certificate of sale must be approved by the Executive Judge;
4. In extrajudicial foreclosure of real mortgages in different locations covering one indebtedness, only one filing fee corresponding to such debt shall be collected;
5. The Clerk of Court shall issue certificate of payment indicating the amount of indebtedness, the filing fees collected, the mortgages sought to be foreclosed, the description of the real estates and their respective locations;
6. The notice of sale shall be published in a newspaper of general circulation pursuant to Section 1, PD No. 1079;
7. The application shall be raffled among all sheriffs;
8. After the redemption period has expired, the Clerk of Court shall archive the records;
9. No auction sale shall be held unless there are at least two (2) participating bidders, otherwise the sale shall be postponed to another date. If on the new date there shall not be at least two (2) bidders, the sale shall then proceed. The names of the bidders shall be reported to the Sheriff or the Notary Public, who conducted the sale to the Clerk of Court before the issuance of the certificate of sale.