Plan estratégico de GE 2011-2014

Rule 68, Sec. 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.

b. Sale of mortgaged property; effect

Rule 68, Sec. 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

c. Disposition of proceeds of sale

Rule 68, Sec. 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.

d. Deficiency judgment

(1) Instances when court cannot render deficiency judgment Rule 68, Sec. 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.

Rule 68, Sec. 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.

e. Judicial foreclosure versus extrajudicial foreclosure Judicial and extrajudicial foreclosures distinguished

Judicial foreclosure of mortgage is governed by Rule 68 and must be done in accordance with the procedure therein prescribed.

Extrajudicial foreclosure of mortgage is governed by Act No. 3135 as amended and done by the sheriff pursuant to the special power of attorney inserted in the mortgage document.

Extra-judicial Foreclosure (Act 3135) Judicial foreclosure (Rule 68)

No complaint is filed; Complaint is filed with the courts;

There is a right of redemption. Mortgagor has a right of redemption for 1 year from registration of the sale;

No right of redemption except when mortgagee is a banking institution; equity of redemption only (90 to 120 days, and any time before confirmation of foreclosure sale) ;

Mortgagee has to file a separate action to recover any deficiency;

Mortgagee can move for deficiency judgment in the same action

Buyer at public auction becomes absolute owner only after finality of an action for consolidation of ownership;

Buyer at public auction becomes absolute owner only after confirmation of the sale;

Mortgagee is given a special power of attorney in the mortgage contract to foreclose the mortgaged property in case of default.

Mortgagee need not be given a special power of attorney.

To enable the extrajudicial foreclosure of the Real Estate Mortgage of petitioners, the special power to sell should have been either inserted in the REM itself or embodied in a separate instrument attached to the REM. But it is not disputed that no special power to sell was either

inserted in the REM or attached to the REM. Hence, respondent spouses as the foreclosing mortgagees could not initiate the extrajudicial foreclosure, but must resort to judicial foreclosure pursuant to the procedure set forth in Rule 68. The omission of the special power to sell the property subject of the mortgage was fatal to the validity and efficacy of the extrajudicial foreclosure, and warranted the invalidation of the entire proceedings conducted by the sheriff. (Baysa vs. Plantilla, G.R. No. 159271, July 13, 2015) LPB

f. Equity of redemption versus right of redemption Right of redemption

Right of redemption is the prerogative to re acquire the mortgaged property after registration of the foreclosure sale exists only in extrajudicial foreclosure of mortgage. No such right is recognized in judicial foreclosure except only when mortgagee is the PNB or a bank or banking institution.

In extrajudicial foreclosure, mortgagor may exercise right of redemption within 1 year from registration of sheriffs certificate of foreclosure sale.

Equity of redemption

Equity of redemption in judicial foreclosure of mortgage is the right to pay the court or the judgment obligee the amount of the judgment within a period of not less than 90 days nor more

than 120 days from entry of judgment or even before confirmation of sale by the court. After such order of confirmation, no redemption can be effected. Limpin vs. IAC, 166 SCRA 87 (1988) In default of such payment, the property shall be sold at public auction to satisfy the judgment (Rule 68, Sec, 2).

Equity of Redemption Right of Redemption

The right of defendant mortgagor to extinguish the mortgage and retain ownership of the property by paying the debt within 90 to 120 days after the entry of judgment or even after the foreclosure sale but prior to confirmation.

A right granted to a debtor mortgagor, his successor in interest or any judicial creditor or judgment creditor or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold to repurchase the property within one year even after the confirmation of the sale and even after the registration of the certificate of foreclosure sale.

May be exercised even after the foreclosure sale provided it is made before the sale is confirmed by order of the court.

There is no right of redemption in a judicial foreclosure of mortgage under Rule 68. This right of redemption exists only in extrajudicial foreclosures where there is always a right of redemption within one year from the date of sale(Sec. 3, Act 3135) , but interpreted by the Court to mean one year from the registration of the sale.

May also exist in favor or other encumbrances. If subsequent lien holders are not impleaded as parties in the foreclosure suit, the judgment in favor of the foreclosing mortgagee does not bind the other lien holders. In this case, their equity of redemption remains unforeclosed. A separate foreclosure proceeding has to be brought against them to require them to redeem from the first mortgagee or from the party acquiring the title to the mortgaged property.

General rule: In judicial foreclosures there is only an equity of redemption which can be exercised prior to the confirmation of the foreclosure sale. This means that after the foreclosure sale but before its confirmation, the mortgagor may exercise his right of pay the proceeds of the sale and prevent the confirmation of the sale.

If not by banks, the mortgagors merely have an equity of redemption, which is simply their right, as mortgagor, to extinguish the mortgage and retain ownership of the property by paying the secured debt prior to the confirmation of the foreclosure sale.

Exception: there is a right of redemption if the foreclosure is in favor of banks as mortgagees, whether the foreclosure be judicial or extrajudicial. This right of redemption is explicitly provided in Sec. 47 of the General Banking Law of 2000. While the law mentions the redemption period to be one year counted from the date of registration of the certificate in the Registry of Property

Requisites for valid redemption in extrajudicial foreclosure

1.) Redemption must be made within 12 months from registration of sale in the Register of Deeds.

2.) Payment of purchase price plus 1% interest per month, together with

assessments or taxes thereon, if any, paid by the purchaser after the sale with the

3.) Written notice of the redemption must be served on the officer who made the sale and a duplicate filed with the Register of Deeds (Rosales vs. Yboa, 120 SCRA 869 [1983]).

Deficiency judgment

Deficiency judgment may be awarded in favor of the plaintiff against the mortgagor, if the proceeds of the sale of the property are not sufficient to satisfy the judgment. Motion for deficiency judgment must be filled after then sale, when the deficiency is known.

What is the prescriptive period to file action for deficiency in extrajudicial foreclosure of real estate mortgage?

Ten (10) years (Arts. 1144 and 1142, Civil Code)

Writ of possession in extrajudicial foreclosure of mortgage

De Vera vs. Agloro, 448 SCRA 203 (2005)

The purchaser at public auction, who has a right to possession that extends after the expiration of the redemption period, becomes the absolute owner of the property when no redemption is made

After the 1 year period, the mortgagor loses all interest over it. The bond required under Sec. 7 of RA 3135 is no longer needed. Possession becomes an absolute right of the purchaser as confirmed owner. The purchaser can demand possession at any time following the consolidation of ownership in his name and the issuance to him of a new TCT.

After the consolidation of title in the buyers name for failure of the mortgagor to redeem the property, the writ of possession becomes a matter of right. Its issuance to a purchaser in an extrajudicial foreclosure is a merely ministerial function.

.An ex parte petition for issuance of a possessory writ under Sec. 7 of Act 3135 is not, strictly speaking, a judicial process as contemplated in Art. 433 of the Civil Code it is a non litigious proceeding authorized in an extrajudicial foreclosure of mortgage. It is brought for the benefit of one party only, and without notice to, or consent by any person adversely interested. No need to notify the mortgagors since they had already lost all their interests in the property when they failed to redeem the same.

Even if the mortgagor appeals an order denying a petition assailing the writ of possession granted to the buyer and the sale at public auction, the buyer remains in possession of the property pending resolution of the appeal. It is the ministerial duty of the court to issue writ of possession

in favor of the purchaser in a foreclosure sale. The trial court has no discretion on the matter. A writ of possession is a writ of execution employed to enforce a judgment to recover the possession of land. It commands the sheriff to enter the land and give possession of it to the

person entitled under the judgment.

A writ of possession may be issued under the following instances: (1) in land registration proceedings under Section 17 of Act 496; (2) in a judicial foreclosure, provided the debtor is in possession of the mortgaged realty and no third person, not a party to the foreclosure suit, had intervened; (3) in an extrajudicial foreclosure of a real estate mortgage under Section 7 of Act No. 3135, as amended by Act No. 4118; and (4) in execution sales (last paragraph of Section 33, Rule 39 of the Rules of Court).

The present case falls under the third instance. Under Section 7 of Act No. 3135, as amended by Act No. 4118, a writ of possession may be issued either (1) within the one year redemption period, upon the filing of a bond, or (2) after the lapse of the redemption period, without need of a bond. (PNB vs. Sanao Marketing Corporation, G.R. No. 153951, July 29, 2005)

A pending action for annulment of mortgage or foreclosure sale does not stay the issuance of the writ of possession. The trial court, where the application for a writ of possession is filed, does

not need to look into the validity of the mortgage or the manner of its foreclosure. The purchaser is entitled to a writ of possession without prejudice to the outcome of the pending annulment case. To stress the ministerial character of the writ of possession, the Court has disallowed injunction to prohibit its issuance, just as it has held that its issuance may not be stayed by a pending action for annulment of mortgage or the foreclosure itself.

Until the foreclosure sale of the property in question is annulled by a court of competent jurisdiction, the issuance of a writ of possession remains the ministerial duty of the trial court.

The same is true with its implementation; otherwise, the writ will be a useless paper judgment a result inimical to the mandate of Act No. 3135 to vest possession in the purchaser immediately. (Sps. Gatuslao vs. Yanson, G.R. No. 191540, January 21, 2015)

Where the extra-judicially foreclosed real property is in the possession of a third party who is holding the same adversely to the judgment debtor or mortgagor, the RTCs duty to issue a writ of possession in favor of the purchaser of said real property ceases to be ministerial and, as

such, may no longer proceed ex parte. In such a case, the trial court must order a hearing to determine the nature of the adverse possession. For this exception to apply, however, it is not enough that the property is in the possession of a third party, the property must also be held by the third party ADVERSELY to the judgment debtor or mortgagor, such as a co owner, agricultural tenant or usufructuary. (Sps. Gatuslao vs. Yanson, G.R. No. 191540, January 21, 2015)

The obligation of the court to issue an ex parte writ of possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial once there is a third party in possession of the property who has an adverse claim to the mortgagor.

However, the third party claim in this case was not presented at the onset of litigation. In this case, petitioners opposed the writ of possession because of the pendency of a civil case wherein they sought the annulment of the mortgage and the foreclosure proceedings and not as vendees to an alleged sale of the land in dispute. Petitioners raised for the first time their theory that they are third parties (vendees) holding the property adversely to the mortgagor only after the trial court had already granted a writ of possession. Worse, petitioners failed to adduce evidence of the purported sale in their favor. (Cahilig &Siel vs. Terencio & Mercantile Credit Resources Corp., G.R. No. 164470; November 28, 2011)

Respondent may rightfully take possession of the subject properties through a writ of possession, even if he was not the actual buyer thereof at the public auction sale. Respondent,

as a transferee or successor in interest of PNB by virtue of the contract of sale between them, is considered to have stepped into the shoes of PNB. As such, he is necessarily entitled to avail of the provisions of Section 7 of Act No. 3135, as amended, as if he is PNB. One of the rights that PNB acquired as purchaser of the subject properties at the public auction sale, which it could validly convey by way of its subsequent sale of the same to respondent, is the availment of a writ of possession. (Sps. Gatuslao vs. Yanson, G.R. No. 191540, January 21, 2015)

The remedy of a party from the trial courts order granting the issuance of a writ of possession is to file a petition to set aside the sale and cancel the writ of possession, and the aggrieved party may then appeal from the order denying or granting said petition (Sec.8, Act 3135). When

a writ of possession had already been issued as in this case, the proper remedy is an appeal and not a petition for certiorari. To be sure, the trial courts order granting the writ of possession is final. The soundness of the order granting the writ of possession is a matter of judgment, with respect to which the remedy of the party aggrieved is ordinary appeal. As respondent availed of the wrong remedy, the appellate court erred in not dismissing outright the petition for certiorari.

(Producers Bank of the Philippines vs. Excelsa Industries, Inc, G.R. No. 173820, April 16, 2012)

11. Partition (Rule 69)

a. Who may file complaint; who should be made defendants Rule 69, Section 1. Complaint in action for partition of real estate.

A person having the right to compel the partition of real estate may do so as provided in this Rule, setting forth in his complaint the nature and extent of his title and an adequate description of the real estate of which partition is demanded and joining as defendants all other persons interested in the property.

b. Matters to allege in the complaint for partition Contents of the Complaint:

1.) Nature and extent of his title;

3.) Defendants and all other persons interested in the property are joined. (Rules of Court, Rule 69, Section 1)

c. Two (2) stages in every action for partition Two Stages of the Action

1.) First Stage Determination of the propriety of partition