Rule 68 Rules of Court

1. The mortgagee should file a petition for judicial

foreclosure in the court which has jurisdiction over the
area where the property is situated

2. The court will conduct a trial. If, after trial, the court
finds merit in the petition, it will render judgment
ordering the mortgagor/debtor to pay the obligation within
a period not less than 90 nor more than 120-days from the
finality of judgment.

3. Within this 90 to 120-day period, the mortgagor has the

chance to pay the obligation to prevent his property from
being sold. This is called the EQUITY OF REDEMPTION PERIOD.

4. If mortgagor fails to pay within the 90-120 days given to

him by the court, the property shall be sold to the highest
bidder at public auction to satisfy the judgment.

5. There will be a judicial confirmation of the sale.

After the confirmation of the sale, the purchaser

shall be entitled to the possession of the property, and
all the rights of the mortgagor with respect to the
property are severed or terminated.

The equity of redemption period actually extends until

the sale is confirmed. Even after the lapse of the 90 to
120-day period, the mortgagor can still redeem the
property, so long as there has been no confirmation of the
sale yet. Therefore, the equity of redemption can be
considered as the right of the mortgagor to redeem the
property BEFORE the confirmation of the sale. After the
confirmation of the sale, the mortgagor does not have a
right to redeem the property anymore.

This is the general rule in judicial foreclosures –

there is no right of redemption after the sale is
confirmed.

The proceeds of the sale of the property will be disposed as

follows:

1. First, the costs of the sale will be deducted from the price
at which the property was sold
2. The amount of the principal obligation and interest will be
deducted.

3. The junior encumbrances will be satisfied.

4. If there is still an excess, the excess will go back to the

mortgagor. In mortgage, the mortgagee DOES NOT get the excess
unlike in pledge.

If there is a deficiency, the mortgagee can ask for a

DEFICIENCY JUDGMENT which can be imposed on other property of
the mortgagor. The rule on extrajudicial foreclosure is
different. The mortgagee must go to court and file another
action for the collection of the deficiency.

The proceeds from the judicial sale of foreclosed property

shall be applied as follows:

a. To the total amount of the debt.

b. To the costs of the sale.
c. To the claims of subsequent mortgagees.

If there is any excess from the proceeds of the sale, such

will be returned to the debtor/mortgagor.

A. Extra – judicial foreclosure – A mortgage may be foreclosed

extra-judicially where there is inserted in the contract a
clause giving the mortgagee the prior upon default of the
debtor to foreclose the mortgage by an extra-judicial sale of
the mortgaged property (Sec 1, Art No. 3155 as amended by Act
no 4148).

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 more than
 P400.00, 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;

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.

a. Right of Redemption – the right of the mortgagor to redeem

the mortgaged property with a certain period after it was
sold for the satisfaction of the mortgaged debt. In all
cases of extra – judicial sale, the mortgagor may redeem
the property at any time within the term of one year from
and after the date of the registration of the sale.
b.
c. In judicial foreclosure, the general rule is that the
mortgagor cannot exercise his right of redemption after the
sale is confirmed by an order of the Court.
Remedies of the mortgagee where mortgagor is dead:

a) He may abandon his security and share in the general distribution of the asset of the estate;

b) He may foreclose, secure a deficiency judgement and prove his deficiency judgment before
the committee on claims; or

c) He can rely on the security alone, in which case he can receive no share in the distribution of
the assets of the estate.