Rule 68: Foreclosure of Real Estate Mortgage

Rule 68
foreclosure of real estate

mortgage
2
FORECLOSURE OF REAL
ESTATE MORTGAGE
ALTERNATIVE REMEDIES:
1.PERSONAL ACTION – 2. REAL ACTION –

to file an action for collection of to file for a foreclosure of the
sum of money mortgage
NOTE: Even if the creditor has two alternative remedies it only

has a single CAUSE OF ACTION
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example
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“
▣ Section 1. Complaint in action for foreclosure.
1. date and due execution of the mortgage;

2. its assignments, if any;
3. the names and residences of the mortgagor and the mortgagee;
4. a description of the mortgaged property;
5. a statement of the date of the note or other documentary
evidence of the obligation secured by the mortgage,
6. the amount claimed to be unpaid thereon;
7. the names and residences of all persons having or claiming an
interest in the property subordinate in right to that of the holder of
the mortgage
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WHO ARE DEFENDANTS IN A FORECLOSURE OF
MORTGAGE?
▣ Persons obliged to pay the mortgage debt

▣ Persons who owns, occupy or control mortgage premises
▣ 2nd mortgagee or junior encumbrances, and any persons
claiming right and interest
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venue
RULE 4, Section 1
-where the property is located
jurisdiction
LOCATION AMOUNT COURT
WITHIN METRO LESS THAN 50,000 MTC

MANILA
MORE THAN 50,000 RTC
OUTSIDE LESS THAN 20,000 MTC

METRO MANILA
MORE THAN 20,000 RTC
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SECTION 2 –
JUDGMENT ON FORECLOSURE FOR PAYMENT OR SALE
▣ If upon the trial in such action the court shall find the facts set
forth in the complaint to be true, it shall ascertain the amount
due to the plaintiff upon the mortgage debt or obligation,
including interest and other charges as approved by the court,
and costs, and shall render judgment for the sum so found due
and order that the same be paid to the court or to the judgment
obligee within a period of not less than ninety (90) days nor
more than one hundred twenty (120) days from the entry of
judgment, and that in default of such payment the property
shall be sold at public auction to satisfy the judgment.
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Section 3. Sale of mortgaged property; effect. — When the defendant, after being directed to
do so as provided in the next preceding section, fails to pay the amount of the judgment within
the period specified therein, the court, upon motion, shall order the property to be sold in the
manner and under the provisions of Rule 39 and other regulations governing sales of real
estate under execution. Such sale shall not affect the rights of persons holding prior
encumbrances upon the property or a part thereof, and when confirmed by an order of the
court, also upon motion, it shall operate to divest the rights in the property of all the parties to
the action and to vest their rights in the purchaser, subject to such rights of redemption as may
be allowed by law.
Upon the finality of the order of confirmation or upon the expiration of the period of redemption
when allowed by law, the purchaser at the auction sale or last redemptioner, if any, shall be
entitled to the possession of the property unless a third party is actually holding the same
adversely to the judgment obligor. The said purchaser or last redemptioner may secure a writ of
possession, upon motion, from the court which ordered the foreclosure.
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Section 4. Disposition of proceeds of sale.
The amount realized from the foreclosure sale of the mortgaged

property shall, after deducting the costs of the sale, be paid to the
person foreclosing the mortgage, and when there shall be any
balance or residue, after paying off the mortgage debt due, the
same shall be paid to junior encumbrancers in the order of their
priority, to be ascertained by the court, or if there be no such
encumbrancers or there be a balance or residue after payment to
them, then to the mortgagor or his duly authorized agent, or to the
person entitled to it.
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Section 5. How sale to proceed in case the debt is not all due. — If the
debt for which the mortgage or encumbrance was held is not all due as
provided in the judgment as soon as a sufficient portion of the property has
been sold to pay the total amount and the costs due, the sale shall
terminate; and afterwards as often as more becomes due for principal or
interest and other valid charges, the court may, on motion, order more to
be sold. But if the property cannot be sold in portions without prejudice to
the parties, the whole shall be ordered to be sold in the first instance, and
the entire debt and costs shall be paid, if the proceeds of the sale be
sufficient therefor, there being a rebate of interest where such rebate is
proper.
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Section 6. Deficiency judgment. — If upon the sale of any real property
as provided in the next preceding section there be a balance due to the
plaintiff after applying the proceeds of the sale, the court, upon motion,
shall render judgment against the defendant for any such balance for
which, by the record of the case, he may be personally liable to the
plaintiff, upon which execution may issue immediately if the balance is
all due at the time of the rendition of the judgment; otherwise; the plaintiff
shall be entitled to execution at such time as the balance remaining
becomes due under the terms of the original contract, which time shall
be stated in the judgment.
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INSTANCES WHERE THE COURT CANNOT ISSUE
DEFICIENCY JUDGMENT
(1) Cases under Recto Law;

(2) When the mortgagor is a non-resident and is not found in the Philippines
because jurisdiction cannot be acquired over his person;
(3) When the mortgagor dies, the mortgagee may file his claim with the probate
court;
(4) If mortgagor is a third person but not solidarily liable with the debtor; and
(5) In case of a mortgage debt due from the estate of a deceased mortgagor and the
mortgage creditor availed of the third remedy which is to rel;y upon his mortgage
alone and foreclosing the same within the statute of limitation.
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Section 7. Registration. — A certified copy of the final order of the court confirming
the sale shall be registered in the registry of deeds. If no right of redemption exists,
the certificate of title in the name of the mortgagor shall be cancelled, and a new one
issued in the name of the purchaser.
Where a right of redemption exists, the certificate of title in the name of the
mortgagor shall not be cancelled, but the certificate of sale and the order confirming
the sale shall be registered and a brief memorandum thereof made by the registrar
of deeds upon the certificate of title. In the event the property is redeemed, the deed
of redemption shall be registered with the registry of deeds, and a brief
memorandum thereof shall be made by the registrar of deeds 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 registry of
deeds; whereupon the certificate of title in the name of the mortgagor shall be
cancelled and a new one issued in the name of the purchaser.
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Section 8. Applicability of other provisions. — The provisions
of sections 31, 32 and 34 of Rule 39 shall be applicable to the
judicial foreclosure of real estate mortgages under this Rule
insofar as the former are not inconsistent with or may serve to
supplement the provisions of the latter.
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Thank you
for
listening
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What are the alternative remedies available to a creditor?

What are the requirements for filing a complaint in a foreclosure action?

Rule 68

foreclosure of real estate

1.PERSONAL ACTION – 2. REAL ACTION –

NOTE: Even if the creditor has two alternative remedies it only

1. date and due execution of the mortgage;

▣ Persons obliged to pay the mortgage debt

WITHIN METRO LESS THAN 50,000 MTC

OUTSIDE LESS THAN 20,000 MTC

The amount realized from the foreclosure sale of the mortgaged

(1) Cases under Recto Law;

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