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Extrajudicial foreclosure

-to regulate the manner in w/c the extrajudicial


foreclosure and redemption of REM may be made.
The creditor/mortgagee cant foreclose
extrajudicially even in the absence of a stipulation
UNLESS the Authority to Forelclose although not
mentioned in the deed, is attached to the
mortgaged deed. SPA authorizing the EJF of RP
must be attached or inserted to the deed of REM.
The annotation of the final Certificate of Sale
in the OCT even w/o the presentation of duplicate
is VALID. Otherwise the purchaser can never
consolidate his title to the prop. Even the lapse of
the redemption period bec. Of the refusal of the
former owner to submit the duplicate of title.
1.
The mortgage deed is file together w/ the
Owners Duplicate Cert. of Title with RD province
or city land lies
2.
RD enters a memorandum of the purport
mortgage deed, time of filing, file no. and signing
the memo after the entry, also notes down the
volume and page of the reg. book where its
registered.
The buyers right of ownership, unregistered
are superior mortgage rights of a financing
institution provided the COS was executed
ahead of the mortgage agreement.
A mortgage annotated in a void title as VALID
if the mortgagee registered it in good faith.
If the foreclosed prop. Is not of the owner, the
foreclosure sale is VOID.
Notice of Requirement:
Notice of Sale- not less than 20 days posting in 3
public places in the city/muni where property is
situated,
Prop worth more than P400- publish notice of sale
once a week 3x consecutive weeks in a newspaper of
gen, circ. Otherwise stipulated by the parties to the
mortgaged contract, the mortgagor/debtor need not
need be personally served a copy of the notice of EJF.
Exception of publication: Rem covering loans not
exceeding 100k exclusive of interests dues and
unpaid, granted by RB and Thrift banks. Publication
not necessary-being sufficient that the notice of
foreclosure are posted for 60 days immediately
preceding the public auction in most conspicuous
areas, premises of RB & TB, municipal bldg., Muni
public market, brgy hall and brgy Pub. Market. If any
where the land is situated. Foreclosure proceeding of
mortgage delinquent accounts subject only to posting
of notice of date & place of auction sale for at least 20
days in 3 conspicuous public places in city/mun. where
prop is situated. Parties have no right to waive
the publication requirement: contrary to law
and public order
EJF: - sale must be made in public auction/bidding
through sealed bid. Submitted to sheriff between 9am
to 4pm on the date of auction. Highest bidder gets the
prop. In case of tie, open bidding shall be conducted
between highest bidders. Payment shall be made in
cash or managers check in phil. Currency within 5
days from notice.
The creditor is barred from participating in the
bdding
The debtor or his successor in interest (heirs)
or any judicial creditor or judgment creditor of the

debtor or any person having a lien on the prop


subsequent to the mortgage under w/c the prop is
sold.
RIGHT OF REDEMPTION
1.
Judicial or extra- 1 year from date of
registration of the sheriffs Cert. of Foreclosure
Sale in the office of RD. after the expiration of
the redemption period the purchaser becomes
the ABSOLUTE OWNER of prop when no
redemption is made
2.
3.
4.

2. If mortgagor is a Juridical person whose


prop mortgaged in favour of bank, qausi or
trust entity- 1 year is not available, if its done
extrajudicially. Redemption shall be made until
but not after, the reg. of the Cert. of Foreclose
Sale within the RD which shall be not more
than 3 mos after the foreclosure whichever is
earlier. The purchaser will file to RD a Sworn
statement attesting to the fact of nonredemption then RD will issue a new Cert of
Title and the owners; duplicate cert. has been
prev. delivered and cancelled.
CERTIFICATE OF POSTING
-is not required much less considered as
indispensable for the validity of the extrajudicial
foreclosure sale of real prop Law requires
posting of the notice of sale. In Chattel
Mortgage Law: only posting of the notice of
auction sale
WRIT OF POSSESSION
-Purchaser may apply during/after the
redemption period. File proper motion and pay
corresponding bond
COURT: to grant the WP is ministerial; no
discretion to refuse the issuance of WP; any
question re the validity/regularity of the sale, the
cancellation of writ is to be determined in
subsequent proceedings. Its ex-parte so such
question cant be opposed in the issuance of writ.
Party may petition to set aside foreclosure sale
in the same proceedings where the writ of
possession was requested.
Action to foreclose is not subject to prescription.
The right of action to foreclose prescribes after
10 years. The important effect of the registration
of the mortgage is to bind third parties.
IMMEDIATELY AFTER THE CONFIRMATION OF THE
AUCTION SALE, THE PURCHASER CAN
ADMINSITER THE PROP. IN ACCORDANCE WITH
LAW.
DURNG THE REDEMPTION PERIOD, THE
MORTGAGOR IS ENTITLED TO REMAIN IN
POSSESSION OF THE PROP (TO COLLECT RENT
ETC.) BUT THE PURCHASER MAY TAKE
POSSESSION OF THE PROP IF HE WANTS TO
TAKE OVER. HE MUST FILE A PETITION TO RTC(PROV./MUNI) WITH BOND EQUIVALENT IN VALUE
TO THE USE OF THE PROP IN 12 MOS. TO
INDIMNIFY THE DEBTOR WHEN THERES NO VIOL
OF THE MORTGAGE SALE.
WRIT OF POSSESSION-extrajudicial
Purchaser may apply after the redemption
period has expired may file an ex-parte motion
for WP with no necessary bond. But once bond is

filed the court has no discretion to refuse the WP


in public auction or set aside on the motion of
the adverse party attacking courts jurisdiction
Purchaser may apply during the redemption
period provided proper motion was filed, a bond
approved and no third person is involved.

1.
-

DEED OF POSSESSION= is given after


lapse/expiration of redemption period;
a. No redemption within 1 yr from the date of
Cert. of Sale
-Purchaser entitled to conveyance &
possession
of the prop.
b. Redeem but 60 days have elapsed & no other
redemption has been made, notice given &
redemption expired- last redemptioner is
entitled to the conveyance and possession.
BUT the judgment obligor shall have the
entire period of 1 year from date if the
registration of sale to redeem the prop

MP

2 REMEDIES
FORECLOSE THE MORTGAGE
Enforces his lien by sale on foreclosure of the

The proceeds will be applied in the


satisfaction of the debt
He has prior lien on the prop
IN CASE OF DEFICINECY- the mortgagee has
the right to claim for the deficiency
2.
FILE AN ORDINARY ACTION TO COLLECT
DEBT
He waives his mortgage lien
No more priority over the MP
If the judgement is favourable to him, FINAL &
EXECUTORY and enforce said judgment by
execution.
Can levy execution on the same MP BUT will
not have priority over the prop as there maybe
other creditors who have better liens on the prop
of the mortgagor.
EQUITY OF REDEMPTION
Right of the defendant mortgagor to
extinguish the mortgage & retain ownership of the
prop by paying the secured debt w/n 90-day period
after judgment becomes Final or even after the
foreclosure sale but prior to its confirmation.
RIGHT OF REDEMPTION (for extrajudicial only
except when the mortgagee is PNP or bank or banking
institution) Judicial- No Right
A prerogative to re-acquire MP after the
registration of the foreclosure sale.
When foreclosed extrajudicially, grants the
mortgagor the right of redemption w/n 1 year from
the reg of the sheriffs cert. of foreclosure sale
PD 115
Malum prohibitum. A mere failure to deliver
the proceeds of the sale or the goods, if not sold
constituted a criminal offense that causes
prejudice not only to another but more to the
public interest.
Malum prohibitum but classified as estafa
under par 1(b) Art 315 RPC or estafa with abused
of discretion. May be committed by a corp or other
juridical entity or by natural persons.

TRUST RECEIPTS: ENTREGARLA- money


received with a duty to deliver to the owner of the
merchandise sold. DEVOLVERA- merchandise
received under the obligation to return to the
owner.
Non-payment of debt is not what is penalized
but the dishonesty and the abuse of
confidence in handling of money/goods to the
prejudice f the another; an offense against public
order and not against property.
Breach of TR Agreement is ESTAFA
Police power of the state, thus constitutional
Civil liability arising from criminal offense, the
person signing the TR for the corp is NOT
SOLIDARILY LIABLE w/ the entrustee-corp.
Theres a right to collect deficiency, TR
agreement is merely a collateral contract
agreement for the purpose of which is to serve as
a security loan intended to aid in financing
importers and retail dealers
The real owner of the goods is the Entrustee
Entruster (Bank) merely the holder of the
security title for the advances it made to the
importer. The goods the importer had purchased
through bank financing, remains the importers
prop and hold it at his own risk. The TR agreement
doesnt convert the bank into an investor; it
remains a lender and a creditor. The bank has
previously extended a loan w/c the LC represents
to the importer and by that loan, the importer
should be the real owner of the goods.

BSP IS NOT A BANK NOR A QUASI BANK


NOR ENGANED IN BANKING ACTIVITIES
-banks shall refer to those corp entities
engaged in the lending of funds obtain from
the public in the form of deposits and are
classified into universal, commercial, thrift,
cooperative, rural, Islamic banks and other
classification of banks as may determine by
the MB or BSP.
BSP- the operation it undertakes are geared
towards the attainment of the its
constitutional & statutory mandates and not
in pursuant of commercial or business
activities. The propriety mandates of BSP are
necessary to sustain its existence as a body
corporate enjoying fiscal and administrative
autonomy. To maintain price stability &
sustainable growth of the economy. Promote
and maintain monetary stability &
convertibility of the peso
The bank has the right to off-set the
deposits in its hand for the payment of
the depositors indebtedness BUT is
under NO OBLIGATION to make an
application or set-off against the deposit
account of the borrower. Its a matter of
privilege on the bank or an option to
exercise but not the obligation.
QUASI-BANK- non-bank financial instituition
authorized by BSP to engaged in quasibanking functions to borrow funds from more
than 19 lenders through Issuance,

Endorsement/Assignment w/ recourse or
acceptance of deposit substitute.
TRUST ENTITIES- are corp/person duly
authorized by the MB to engage in trust
business, to act as a trustees or administer
any trust/ hold prop in trust/on deposit from
the use, benefit or behalf of others.
LENDING CO.- corp engaged in the granting
of loans from its own capital funds or from
fund sourced from not more than 19 persons.
UNIVERSAL BANK- expanded commercial
bank, CB plus power of an investment house
and invest in non-allied entr. Highest capital
requirement
COMMERCIAL BANK- power of
ordinary/regular commercial banks, lower
capitalization than UB, cant exercise power of
an investment house and invest in non-allied
entr

THRIFT BANK- savings and mortgage banks,


stock savings and loan ass and private
development bank
RURAL BANKS- mandated to make needed
credits available and readily accessible in
rural areas on reasonable terms
COOPERATIVE BANKS- organized primarily
to make financial and credit services available
to cooperative
ISLAMIC BANK- whose business dealings &
activities are subject to the basic principles &
rulings of Islamic Sharia
The banking business is impressed with
public interest and great reliance. The
fiduciary relationship between bank asn
depositors must always be in paramount
concern. Banks are under obligation to
treat the account of the depositors w/
meticulous care.