F.

Procedure for Registration: Foreclosure of Mortgage:

Foreclosure is the process by which a mortgagee acquires an absolute title to
the property of which he had previously been only the conditional owner, or
upon which he had previously a mere lien or encumbrance.
Judicial Foreclosure
A certified copy of the final order of the court confirming the sale shall be
registered with the Register of Deeds.
No right of redemption With right of redemption
The certificate of title of the mortgagor The certificate of title of the mortgagor
shall be canceled. shall not be canceled
A new certificate is issued in the name The certificate of sale and the order
of the purchaser. confirming the sale shall be registered
by a brief memorandum thereof
made by the Register of Deeds upon
the certificate of title.
Effect of Right of Redemption
If redeemed If not redeemed
Certificate or deed of redemption The final deed executed by the sheriff
shall be filed with the Register of shall be registered with the Register of
Deeds. Deeds
A brief memorandum shall be made Title of the mortgagor is cancelled
by the Register of deeds on the A new certificate is issued in the name
certificate of Title of the mortgagor. of the purchaser.

Extrajudicial Foreclosure
A certified copy of the sale executed by the officer who conducted the sale
shall be filed with the Register of Deeds who shall make a brief memorandum
thereof on the certificate of title.
No right of redemption With right of redemption
The certificate of title of the mortgagor The certificate of title of the mortgagor
shall be canceled. shall not be canceled
A new certificate is issued in the name The certificate of sale and the order
of the purchaser. confirming the sale shall be registered
by a brief memorandum thereof
made by the Register of Deeds upon
the certificate of title.
Effect of Right of Redemption
If redeemed If not redeemed
Certificate or deed of redemption The purchaser at a foreclosure sale will
shall be filed with the Register of file to the Register of Deeds either a:
Deeds. 1. final deed of sale executed by the
person duly authorized by virtue of
attorney embodied in the deed of
mortgage, or
2. his sworn statement attesting to the
fact of non-redemption
A brief memorandum shall be made The owner’s duplicate of certificate
by the Register of deeds on the will be delivered and cancelled.
certificate of Title of the mortgagor. The Register of Deeds will issue a new
certificate in favor of the new
purchaser.

G. Judicial Foreclosure of Mortgage

Guiding principles on judicial foreclosure of mortgage (Rural Bank vs CA 101

SCRA 5 (1980))
1. Under Section 3, Rule 68 of the Rules of Court, it is the confirmation by
the court of the auction sale that would divest the mortgagor of their
rights to the mortgaged lot and that would vest such rights in the
purchaser at the auction sale.
2. The clause “subject to such rights of redemption as may be allowed
by law” found in the last part of Sec. 3, has no application to a case
where the mortgagor did not exercise his right of redemption under
Sec. 78 of the General Banking Law.
3. A foreclosure sale is not complete until confirmed, and before said
confirmation, the court retains control of the proceedings by
exercising a sound discretion in regard to it, either granting or
withholding confirmation as the rights and interests of the parties and
the ends of justice may require.
4. In order that foreclosure sale may be validly confirmed by the court,
it is necessary that a hearing be given the interested parties, at which
they may have an opportunity to show cause why the sale should
not be confirmed.
5. The acceptance of a bid at the foreclosure sale confers no title on
the purchaser. Until the sale has been validly confirmed by the court,
he is nothing more than a preferred bidder. Title vests only when the
 sale has been validly confirmed by the court.
6. The confirmation retroacts to the date of sale. The mortgagor should
be notified of the hearing. Lack of notice vitiates the confirmation of
the sale. The mortgagor may still redeem the mortgaged lot after
rendition of the order confirming the sale which is void for lack of
hearing and notice to the mortgagor.
7. Notice and hearing of a motion of confirmation of sale are essential
to the validity of the order of confirmation, not only to enable the
interested parties to resist the motion but also to inform them of the
time when their right of redemption is cut-off.
8. An order of confirmation, void for lack of notice and hearing, may be
set aside anytime.
9. After the foreclosure but before its confirmation, the court may grant
the judgment debtor or mortgagor an opportunity to pay the
proceeds of the sale and thus refrain from confirming it.
10. If after the foreclosure sale and before the confirmation, the
mortgagee, as purchaser at the auction sale, sold the mortgaged
property to another person, that subsequent sale does not render the
foreclosure sale more effective. That subsequent sale does not
prevent the trial court from granting the mortgagor a period within
which to redeem the mortgaged lot by paying the judgment debt
and the expenses of the sale and costs.
11. Whatever may have been the old rule by all the modern authorities,
it is the policy of the courts to assist rather than to defeat the right of
redemption.
12. After confirmation of the sale, made after hearing and with due
notice to the mortgagor, the latter cannot redeem anymore the
mortgaged lot (unless the mortgagee is a banking institution).
13. It is after the confirmation of the sale that the mortgagor loses all
interest in the mortgaged property.

There is no right of redemption in judicial foreclosure unless the mortgagee

is a banking institution
Lonzame vs Amore
134 SCRA 386 (1985)
Facts:
Eufemia Corporal Blones was the registered owner of a parcel
of land, denominated as Lot No. 19, containing an area of
276.80 square meters more or less, situated at Tondo, Manila
 and covered by Transfer Certificate of Title No. 98530 of the
Registry of Deeds for Manila.

On February 16, 1969, Blones and the spouses Segunda Manuel

and Melanio Flores entered into a "Kasunduan ng Pagbibilihan"
whereby Blones sold and spouses Flores bought a portion of Lot
No. 19, denominated under the subdivision plan, as Lot No. 19-
A and containing an area of 131.76 square meters, in
consideration of the price of P200.00 per square meter,
payable as follows: P10,000.00 upon signing of the contract,
P5,000.00 on February 6, 1970, and the balance on February 6,
1975. Said contract also contained stipulations which provided
that upon full payment of the purchase price, the vendor
would segregate the area sold to the vendees and cause to
be issued another title thereon in the name of said vendees.
The contract further stipulated that possession of Lot No. 19-A
passes to the vendees upon the signing of the agreement.
However, the "Kasunduan ng Pagbibilihan" was not registered
with the Registry of Deeds for the City of Manila.
The stipulated payments were duly complied with by the
Floreses.
In the meantime, on August 12, 1970, for value received, Blones
executed and delivered to Conchita Trinidad and Patrocinio
Trinidad, a promissory note in the sum of P24,000.00, payable
twelve months after date, with interest thereon at the rate of
12% per annum. Under the terms of the promissory note, if any
interest is not paid when due, then the principal, together with
all unpaid interests, shall at once become due and
demandable. As security for the payment of the promissory
note, Blones likewise executed a real estate mortgage on
August 12, 1970, over Lot No. 19. The real estate mortgage was
duly registered with the Registry of Deeds for Manila.
Before the first week of February, 1974, the Floreses offered to
pay the sum of P12,000.00 to cover the unpaid balance on the
purchase price but Blones and her son refused to accept the
same. Instead, the two proposed to return the spouses' but the
latter rejected the proposal. At this point in time, the Flores
spouses discovered that Lot No. 19 had been mortgaged to
Conchita and Patrocinio, both surnamed Trinidad and married
to Tito Tatoy and Fernando M. Marquez respectively. As a
consequence, the spouses executed an affidavit of adverse
claim and registered the same in the Register of Deeds for
 Manila. Thereafter, they filed an action against Blones and the
mortgagees to declare null and void the mortgage executed
by Blones in favor of her co-defendants-mortgagees and to
compel Blones to accept P12,000.00 as purchase price for Lot
No. 19-A.

Issue: Whether or not petitioner is required accept the tender

of payment made by the private respondents for the lot known
as Lot No. 19-A, after herein petitioner had already acquired
the same through a sale by public auction.

Held:
In the case of Villar v. Javier de Paderanga (97 Phil. 604, 608),
we held that in foreclosure of mortgages under Rule 70 (now
Rule 68 of the Rules of Court), there is no right of redemption
after the judicial sale is confirmed; and when the foreclosure
sale is validly confirmed by the court, title vests upon the
purchaser in the foreclosure sale and the confirmation
retroacts to the date of the sale. Thus, the rights of the
mortgagee and persons holding under him are cut off by the
sale upon confirmation, and with them the equity of
redemption.
The "Option to Buy" executed by herein petitioner in favor of
the private respondents has no merit. The rights of the parties
under the option to buy cannot be litigated and passed upon
by the court a quo in a decision already long final. If the private
respondents intended to enforce the "Option to Buy" against
the petitioner, they should have filed a separate action for that
purpose.

Banks and other financial institutions are cautioned to exercise more care
and prudence than private individuals before accepting a mortgage, for
their business is affected with public interest.
Gonzales vs Intermediate Appellate Court
157 SCRA 187
FACTS:
Asuncion Sustiguer and Dioscoro Buensuceso (Sps.
Buensuceso) were the original owners of Lot 2161 in
Barotac Nuevo. In 1955, for delinquency in the
payment of the real estate taxes, the land was sold at
a public auction to the Province of Iloilo.

Later on, their daughter Hortencia discovered that the

OCT was still in the name of her parents. She paid the
back-taxes in behalf of her mother. The Provincial
Treasurer then executed a deed of repurchase on April
10, 1969 in favor of Asuncion. Seven days later,
Hortencia and her husband Gaudioso Panzo (Sps.
Panzo) bought the land from Asuncion for P1,000. They
then filed a petition in the CFI for the reconstitution of
the OCT.
On Feb 26, 1971, a reconstituted OCT was issued in the
name of Asuncion alone. Thereafter, by virtue of the
sale to Sps. Panzo, such OCT was cancelled. On March
3, 1971, a TCT was issued in their favor.

Sps. Panzo then mortgaged the property to Rural Bank

of Pavia for P5,000.

On August 11, 1973, upon their failure to pay, the bank

foreclosed the mortgage. The bank emerged as the
highest bidder and the Provincial Sheriff executed a
certificate of sale in its favor.

On April 18, 1974, Lilia Gonzales, as the co-administratrix

of the intestate estate of Matias Yusay, brought an
action against Sps. Panzo and Rural Bank of Pravia,
seeking the annulment and cancellation of the TCT
and the issuance of a new title in favor of Yusay,
alleging the following:
● The property was first mortgaged to Yusay in 1929
by Sps. Buensuceso.
● In 1934, it was verbally sold to Yusay.
● From 1948 to 1971, Yusay and administratrix
Gonzales, have been in possession of the property
thru their tenant Elias Daguino until Sps. Panzo
“wrested” possession from him
● Gonzales filed an action of forcible entry against
Sps. Panzo. The CFI ruled in favor of Gonzales.
Sps. Panzo filed an appeal and such is still
pending.
 ● The Rural Bank was not a mortgagee in good faith
for not having taken the necessary precaution
before accepting the subject property as
collateral for the loan.

The Rural Bank invoked good faith, alleging that the

TCT in the name of Sps. Panzo was free from any lien. It
later on added that the land is now their property after
it emerged as the highest bidder in the foreclosure sale.

As a response, Gonzales moved to dismiss the case as

regards Sps. Panzo on the ground that the property
had been sold to Rural Bank and said spouses have
ceased to have any interest in the property. The lower
court granted such motion and dismissed the case
against Sps. Panzo only.

In July 1975, the trial court ruled in favor of the bank

and dismissed Gonzales' complaint for annulment and
ordered her to deliver possession of the property and to
account for the produce to the Rural Bank.

In November 1983, on appeal, the IAC affirmed the

CFI's decision, holding that:
● It is irrelevant whether the bank inspected the premises
or whether the reconstituted title was void. After the
land was confiscated for non-payment of taxes to be
sold at a public auction, it lost its identity as a private
land and acquired the status of a government land.
● Asuncion became the exclusive owner of the land after
the auction sale.
● The subsequent sale to Sps. Panzo, and later, the
acquisition by the Rural Bank, is beyond question.
Hence, Gonzales filed a petition for review on certiorari
in the SC.

ISSUES:
A. Whether the bank was an innocent mortgagee in
good faith.
B. Whether the bank was a buyer for value and in good
faith.
 HELD:
It affirmed the IAC and dismissed Gonzales' petition,
holding that:

A. Yes, the Rural bank was an innocent mortgagee. In

this respect, the SC held the following:
● When the certificate of title in the name of the Panzo
spouses was submitted to the bank for purposes of their
loan application, it was free from any lien and
encumbrance. The mortgage was duly constituted
and registered with the Register of Deeds in 1971. The
forcible case was filed by Gonzales against Sps. Panzo
only in 1973. There was therefore nothing on the face of
the title which would arouse the suspicion of the bank
at the time of the loan application. The bank, as
mortgagee, had the right to rely on what appeared on
the certificate of title and, in the absence of anything
to excite suspicion, was under no obligation to look
beyond the certificate and investigate the title of the
mortgagor appearing on the face of said certificate.
● The bank was not negligent. The loan application of
the Panzos was subjected to its rigid requirements.
There was a physical or ocular inspection of the
property proving that Sps. Panzo possessed a
substantial part of the land and were recognized as
owners by the construction workers on the land. The
loan application passed thru the scrutiny of the Credit
Committee.
● A person dealing with a registered land has a right to
rely upon the face of the Torrens certificate of title and
to dispense with the need of inquiring, except when the
party concerned has actual knowledge of facts and
circumstances that would impel a reasonably cautious
man to make inquiry.
● If anyone can be faulted for being negligent, it is the
petitioner herself and her predecessors-in-interest.
In the complaint, she alleged that the property was
sold verbally to Yusay by in 1934. But the forcible
entry case was filed in 1971 or almost 37 years
 later. Prior to that, they did not take any step to perfect
their title over the property. There was not even a
tax declaration over the subject property.
● During the public auction in 1955, the previous
administrator did not do anything to redeem the
property. The law helps the vigilant but not those who
sleep on their rights. For time is a means of destroying
obligations and actions, because time runs against the
slothful and contemners of their own rights. By their
inexplicable inaction for such a long period of time,
they are now barred by laches to lay claim over the
property.

B. Yes, the bank was also a subsequent purchaser in

good faith and for value. The SC further held that:
● At the time of the purchase at the foreclosure sale in
1973, the notice of lis pendens had been inscribed in
the TCT. Such notice is an announcement to the
whole world that a particular real property is in
litigation, and serves as a warning that one
whoacquires an interest over said property does so at
his own risk, so that he gambles on the results of the
litigation over said property. However, it has also
been held that any subsequent lien or encumbrance
annotated at the back of the certificate of title cannot
in any way prejudice the mortgage previously
registered, and the lot passes to the purchaser at the
public auction sale free from any lien or encumbrance.
Otherwise, the value of the mortgage could be easily
destroyed by a subsequent record of an adverse claim,
for no one would purchase at a foreclosure sale if
bound by the posterior claim.
● Being an innocent mortgagee with a superior lien over
that of Gonzales, its right to a foreclosure of the
property is reserved. The notice of lis pendens which
antedated the foreclosure and sale at public auction
of subject property could not affect the rights of the
respondent bank because the foreclosure sale
 retroacts to the date of registration of the mortgage. Its
character of being an innocent mortgagee continues
up to the date of actual foreclosure and sale at public
auction.
● Even if the pending appeal on the forcible entry case
would be decided in favor of Gonzales, it will have no
effect on the ownership rights of the bank over the
property since a forcible entry suit is not conclusive as
to ownership but only as to possession.
● Gonzales questions the validity of the previous titles and
alleging that such were void, and thus, the bank's title
over the property is likewise void. The bank contended
that such arguments constitute a collateral attack on
said titles. There is merit in this contention. A Torrens Title
cannot be collaterally attacked. The issue on the
validity of the title can only be raised in an action
expressly instituted for that purpose.
● A Torrens Title can be attacked only for fraud within
one year after the date of the issuance of the decree
of registration. Such attack must be direct and not by
collateral proceeding. After one year, the sole remedy
of the landowner whose property has been wrongfully
or erroneously registered in another's name is not to set
aside the decree, but to file an action for
reconveyance or, if the property has passed into the
hands of an innocent purchaser for value, for
damages. Sps. Panzo obtained the TCT in 1971. The
complaint was only filed 3 years later, hence, the
TCT had already become indefeasible.
Even assuming that previous titles were void, it will still be
irrelevant. Where the title of the land was in the name of
the mortgagor and later given as security for a bank
loan, the subsequent declaration of said title as null and
void is not a ground for nullifying the mortgage right of
the bank, which had acted in good faith. Being thus an
innocent mortgagee for value, its right or lien upon the
land mortgaged must be respected and protected,
even if the mortgagors obtained their title thereto thru
fraud
Procedures for Judicial Mortgage

1. Confirmation
A foreclosure sale is not complete until it is confirmed, and before
said confirmation, the court retains control of the proceedings by
exercising a sound discretion in regard to it, either granting or
withholding confirmation as the rights and interests of the parties and
the ends of justice may require. (Salazar vs. Tor res, 108 Phil. 209, 214-
5).
It is equally settled that after the foreclosure sale but before its
confirmation, the court may grant the judgment debtor or mortgagor
an opportunity to pay the proceeds of the sale and thus refrain from
confirming it.
If after the foreclosure sale and before the confirmation thereof,
the mortgagee, as purchaser at the auction sale, sold the mortgaged
property to another person, that subsequent sale does not render the
foreclosure sale more effective. That subsequent sale does not
prevent the trial court from granting the mortgagor a period within
which to redeem the mortgaged lot by paying the judgment debt
and the expenses of the sale and costs (Anderson and De Mesa vs.
Reyes and Gutierrez Saenz, 54 Phil. 944).

2. Notice and Hearing

In order that a foreclosure sale may be validly confirmed by the
court, it is necessary that a hearing be given the interested parties, at
which they may have an opportunity to show cause why the sale
should not be confirmed.
The mortgagor should be notified of that hearing. Lack of notice
vitiates the confirmation of the sale. The mortgagor may still redeem
the mortgaged lot after the rendition of the order confirming the sale
which is void for lack of hearing and notice to the mortgagor.
Essential to the validity of the order of confirmation, not only to
enable the interested parties to resist the motion but also to inform
them of the time when their right of redemption is cut off . An order of
confirmation, void for lack of notice and hearing, may be set aside
anytime. (Tiglao vs. Botones, 90 Phil. 275, 279).

3. Acceptance
 The acceptance of a bid at the foreclosure sale confers no title on
the purchaser. Until the sale has been validly confirmed by the court,
he is nothing more than a preferred bidder. Title vests only when the
sale has been validly confirmed by the court." (Raymundo vs. Sunico,
25 Phil. 365).

4. The confirmation retroacts to the date of the sale. (Villar vs. Javier de
Paderanga 97 Phil. 604, citing Binalbagan Estate, Inc. vs. Gatuslao, 74
Phil. 128).

5. Whatever may have been the old rule by all of the modern
authorities, it is the policy of the courts to assist rather than to defeat
the right of redemption. (De Castro vs. Olondriz and Escudero 50 Phil.
725, 732).

6. After the confirmation of the sale, made after hearing and with
due notice to the mortgagor, the latter cannot redeem anymore
the mortgaged lot (unless the mortgagee is a banking institution)
(Piano vs. Cayanong 117 Phil. 415). There is no right of redemption
in judicial foreclosure unless the mortgagee is a banking institution.
(Lonzame v. Amore)
It is after the confirmation of the sale that the mortgagor loses all
interest in the mortgaged property.
Banks and other financial institutions are cautioned to exercise
more care and prudence than private individuals before accepting a
mortgage, for their business is affected with public interest. (Gonzales
v. IAC)

Disposition of the proceeds

The amount realized from the foreclosure sale of the mortgaged property
shall be distributed in the following order:
1. Costs of the sale
2. Paid to the person foreclosing the mortgage
3. If there is any balance or residue after paying off the mortgage debt
due, the same shall be paid to junior encumbrances, in the order of their
priority, to be ascertained by the court
4. 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. (Sec. 4, Rule 68)
H. Procedure for extrajudicial foreclosure
(AM NO. 99-10-05-SC, DECEMBER 14,999, AS AMENDED BY SC
RESOLUTIONS DATED JANUARY 30, 2001 AND AUGUST 7, 2001 AND THE SC
CIRCULAR NO. 7-2002)

Extrajudicial Foreclosure
Any property brought within the ambit of Act No 3135 is foreclosed
by filing of a petition, not with any court of justice, but with the office of
the sheriff of the province where the sale is to be made.

Procedure for Extrajudicial Mortgages

1. All applications for extra-judicial foreclosure of mortgage whether
under the direction of the sheriff or a notary public shall be filed with
the Executive Judge, through the Clerk of court who is also the Ex-
Officio Sheriff.
2. Upon receipt of an application for extra-judicial foreclosure of
mortgage, it shall be the duty of the Clerk of Court to:
a) receive and docket said application and to stamp thereon the
corresponding file number, date and time of filing;
b) collect the filing fees and issue the corresponding official receipt;
c) examine, in case of real estate mortgage foreclosure, whether
the applicant has complied with all the requirements before the
public auction is conducted under the direction of the sheriff or
a notary public,
d) sign and issue the certificate of sale, subject to the approval of
the Executive Judge, or in his absence, the Vice-Executive
Judge. No certificate of sale shall be issued in favor of the
highest bidder until all fees shall have been paid; Provided, that
in no case shall the amount payable under Rule 141, Section
9(1), as amended, exceed P100,000.00;
e) after the certificate of sale has been issued to the highest bidder,
keep the complete records, while awaiting any redemption
within a period of one (1) year from date of registration of the
certificate of sale with the Register of Deeds concerned, after
which, the records shall be archived. Notwithstanding the
foregoing provision, juridical persons whose property is sold
pursuant to an extra-judicial foreclosure, shall have the right to
redeem the property until, but not after, the registration of the
certificate of foreclosure sale which in no case shall be more than
 three (3) months after foreclosure, whichever is earlier, as
provided in Section 47 of Republic Act No. 8791 (as amended,
Res. Of August 7, 2001).
Where the application concerns the extrajudicial foreclosure of
mortgages of real estates and/or chattels in different locations
covering one indebtedness, only one filing fee corresponding to
such indebtedness shall be collected. The collecting Clerk of Court
shall, apart from the official receipt of the fees, issue a certificate of
payment indicating the amount of indebtedness, the filing fees
collected, the mortgages sought to be foreclosed, the real estates
and/or chattels mortgaged and their respective locations, which
certificate shall serve the purpose of having the application
docketed with the Clerks of Court of the places where the other
properties are located and of allowing the extrajudicial foreclosures
to proceed thereat.
3. The notices of auction sale in extrajudicial foreclosure for publication
by the sheriff or by a notary public shall be published in a newspaper
of general circulation.
4. The Executive Judge shall, with the assistance of the Clerk of Court,
raffle applications for extrajudicial foreclosure of mortgage under the
direction of the sheriff among all sheriffs, including those assigned to
the Office of the Clerk of Court and Sheriffs IV assigned in the
branches.
5. The name/s of the bidder/s shall be reported by the sheriff or the
notary public who conducted the sale to the Clerk of Court before
the issuance of the certificate of sale.

When the principal obligation becomes due and the debtor fails to
perform his obligation, the creditor may foreclose on the mortgage for the
purpose of alienating the mortgaged property to satisfy his credit.
DBP vs Doyon GR No 167238, 25 March 2009

FACTS:
Jesus and Anacorita Doyon obtained several loans amounting to P10
million from petitioner Development Bank of the Philippines (DBP). As
security for the loans, respondents mortgaged their real estate
properties as well as the motor vehicles of JD Bus Lines. Due to their
inability to fully pay their obligations upon maturity, respondents
requested petitioner to restructure their past due loans. Petitioner
agreed. Hence, respondents signed three promissory notes on June
29, 1994.Respondents still failed to pay the quarterly installments on
the promissory notes. Thus, petitioner demanded the payment of the
total value of their loans from respondents. Respondents, however,
ignored petitioner and adamantly refused to pay their loans.

Petitioner filed an application for extrajudicial foreclosure of real

estate mortgages in the Regional Trial Court (RTC) of Ormoc City in
1995. To forestall the foreclosure proceedings, respondents
immediately filed an action for their nullification in the RTC of Ormoc
City, Branch 35 claiming that they had already paid the principal
amount of their loans (or P10 million) to petitioner.

Petitioner withdrew the application for extrajudicial foreclosure and

thereafter moved for the dismissal of Civil Case. The RTC granted the
motion and the case is considered dismissed with prejudice.

Weeks later, petitioner demanded from respondents the payment of

their outstanding obligations which had by then ballooned to more
than P20 million. Again, respondents ignored petitioner.

Petitioner filed an application for extrajudicial foreclosure of

respondents’ real and chattel mortgages with the DBP special sheriff
in Makati and subsequently took constructive possession of the
foreclosed properties.

Respondents Doyon filed a complaint for damages against petitioner

and the DBP special sheriff in the RTC of Ormoc City, Branch 35.
According to respondents, by withdrawing the application for
extrajudicial foreclosure and moving for the dismissal of Civil Case No.
3314-O, petitioner led them to believe that it would no longer seek the
satisfaction of its claims. Petitioner therefore acted contrary to Article
19 of the Civil Code when it foreclosed on the real and chattel
mortgages anew.

ISSUE:
Whether or not DBP has the legal right to foreclose on the real
property and the chattel mortgage?
 RULING:
Since respondents neither assailed the due execution of the June 29,
1994 promissory notes nor presented proof of payment thereof, their
obligation remained outstanding. Upon default, by prior mutual
agreement, petitioner had the right to foreclose on the real and
chattel mortgages securing their loans.

The promissory notes uniformly stated that failure to pay an

installment (or interest) on the due date was an event of
default. Respondents were therefore in default when they failed to
pay the quarterly amortizations on the designated due dates.

When the principal obligation becomes due and the debtor fails to
perform his obligation, the creditor may foreclose on the mortgage for
the purpose of alienating the (mortgaged) property to satisfy his
credit.

I. Right of Redemption in Extrajudicial Foreclosure of Mortgage

Who may redeem:
1. the debtor, his successors in interest or any judicial creditor or judgment
creditor of said debtor; or
2. any person having a lien on the property subsequent to the mortgage
or deed of trust under which the property is sold. (Sec 6, Art. 3135)

Proof required:
A redemptioner must produce to the officer, or person from whom
he seeks to redeem, and serve with his notice to the officer a copy of the
judgment or final order under which he claims the right to redeem,
certified by the clerk of the court wherein the judgment or final order is
entered; or, if he redeems upon a mortgage or other lien, a memorandum
of the record thereof, certified by the registrar of deeds; or an original or
certified copy of any assignment necessary to establish his claim; and an
affidavit executed by him or his agent, showing the amount then actually
due on the lien. (Sec. 30, Rule 39 of the Rules of Court)

When to redeem:
 Any time within one year from the date of registration of the
certificate sale. A year is understood to have 365 days each. The period
should be reckoned from the date the certificate of sale of the property
involved was registered, since it is only from the date of its registration that
a certificate of sale takes effect as a conveyance.

How exercised:
Redemption can be exercised by paying only the purchase price
paid by the successful bidder plus one percent (1%) monthly interest up
to the time of redemption.

The right to redeem may be transferred or assigned by the owner

(Gorospe vs UCPB 193 SCRA 546 (1991))

One-year period to redeem

The one-year period to redeem is counted from the date of the
registration of the sheriff’s sale, not from the date of the auction sale.
Gorospe vs Santos
69 SCRA 191 (1976)
In cases of redemption of registered land, the
period should be reckoned from the date the
certificate of sale of the property involved was
registered, since it is
only from the date of its registration that a certificate
of sale takes effect as a conveyance.

Limpin vs IAC
166 SCRA 87 (1980)
After an extrajudicial foreclosure, a mortgager has the
right of redemption which he may exercise within one
year from the registration of the sheriff’s certificate of
sale.

Option to redeem is personal to the mortgagor, hence may be waived.

Tolentino vs CA
193 SCRA 546 (1991)
The act of redeeming of a property mortgaged is not
an obligation but a privilege, in the sense that the
 mortgagor may or may not redeem his property. That
of course is a privilege. He may choose to give up the
property and have the mortgage foreclosed, or
redeem the property with the obligation of course to
pay the loan or indebtedness. But where he elects to
redeem the property and he has to pay the loan for
which the mortgage was constituted, then Art. 1249 of
the Civil Code applies because it involves now the
'payment of debts.' It is only the act of redeeming or
not that is considered a privilege, but not the act of
paying the obligation once the mortgagor has
elected to redeem the property, in which case the
check issued or drawn shall produce the effect of
payment only when it has been cashed.

A mortgagor is deemed to have waived the statutory period of

redemption of one year from the date of expiration of redemption period
Ramirez vs CA
219 SCRA 598 (1993)
The PNB accepted the redemption price from the
petitioner after the one (1) year period had expired.
By accepting the redemption price after the statutory
period for redemption had expired, PNB is considered
to have waived the one (1) year period within which
Ramirez could redeem the property. There is nothing in
the law which prevents such a waiver. Allowing a
redemption after the lapse of the statutory period,
when the buyer at the foreclosure does not object but
even consents to the redemption, will uphold the
policy of the law recognized in such cases as
Javellana v. Mirasol and Nuñez and in the more recent
case of Tibajia, et al. v. Honorable Court of Appeals,
et al. which is to aid rather than defeat the right of
redemption. Thus, there is no doubt that the
redemption made by petitioner Ramirez is valid.

A mortgagor may still execute another mortgage contract during the

redemption period.
Medida vs CA
208 SCRA 887 (1992)
Since the mortgagor remains as the absolute
 owner of the property during the redemption period
and has the free disposal of his property, there would
be compliance with the requisites of Article 2085 of the
Civil Code for the constitution of another mortgage on
the property. To hold otherwise would create the
inequitable.

J. Procedure for Foreclosure of Prior Mortgage

The rule is that upon a proper foreclosure of a prior mortgage, all liens
subordinate to the mortgage are likewise foreclosed, and the purchaser at
public auction held pursuant thereto acquires title free from the subordinate
liens. Ordinarily, thereafter the Register of Deeds is authorized to issue the new
titles without carrying over the annotation of subordinate liens.

Effect of liens subordinate to the First Mortgage

The rights of a subsequent lien holder over the mortgaged property
are inferior to that of the prior mortgagee. A subsequent lien holder
acquires only the right of redemption vested in the mortgagor, and his
rights are strictly subordinate to the superior lien of the anterior
mortgagee. After the foreclosure sale, the remedy of the second
mortgagee is limited to the right to redeem by paying off the debt
secured by the first mortgage.
Upon a proper foreclosure of a prior mortgage, all liens
subordinate to the mortgage are likewise foreclosed, and the purchaser
at public auction held pursuant thereto acquires title free from the
subordinate liens. Ordinarily, thereafter the Register of Deeds is authorized
to issue the new titles without carrying over the annotation of subordinate
liens.

Issuance of titles without carrying over the annotations of subordinate

liens.
PNB vs IAC
199 SCRA 508 (1991)
In a case with similar features, the failure of the
subsequent attaching creditor to redeem, within the
time allowed by Section 6 of Act 3136, the land which
was sold extrajudicially to satisfy the first mortgage,
gives the purchaser a perfect right to secure the
cancellation of the annotation of said creditor's
 attachment lien on the certificates of title of said land.

K. Writ of Possession in Foreclosure Proceedings

A writ of possession is an order by which the sheriff is commanded to place
a person in possession of a real or personal property. It may be issued in any
of the following instances:
a. land registration proceedings which is a proceeding in rem to place
the applicant or oppositors, or whoever is the successful litigant, in
possession of the property;
b. in extrajudicial foreclosure of a realty mortgage;
c. in a judicial mortgage, a quasi-judicial in rem proceeding, provided
that the mortgagor is in possession of the mortgaged realty and no
third person, not a party to the foreclosure suit, had intervened; and
d. in execution sales.

The purchaser at the public auction sale of an extrajudicially foreclosed

real property may seek possession in accordance with Section 7 of Act no.
3135, as amended by Act no. 4118. The same procedure is applicable to
a purchaser seeking possession of the foreclosed property bought at the
auction sale after redemption period has expired without redemption
having been made.
a. The purchaser in the extrajudicial foreclosure may petition the
Regional Trial Court where the property is located.
Purpose of the petition: to give him possession of the land during the
redemption period.
Form: Shall be made under oath and filed in form of (1) an ex parte
motion in the registration or cadastral proceedings if the property is
registered, or (2) in special proceedings in the case of property
registered under the Mortgage Law or of any other real property
encumbered with a mortgage duly registered in the office of any
register of deeds in accordance with any existing law.
b. The purchaser also has a duty to furnish bond
Amount: equivalent to the use of the property for 12 months.
Purpose: To indemnify the debtor if
i. it be shown that the sale was made without
violating the mortgage; or
ii. without complying with the requirements of this
Act.
c. The clerk of court has a duty to collect fees upon filing of the petition.
d. The court, upon approval of the bond, order that a writ of possession
issue. The writ of possession is addressed to the sheriff of the province
where the property is located. The sheriff shall execute the order
immediately.

General Rule: Upon the expiration of the one-year period for redemption
counted from the registration of the sale, the right of the purchaser to the
possession of the foreclosed property becomes absolute.

China Banking Corporation vs Lozada

GR No. 164919, July 4, 2008
The buyer in a foreclosure sale becomes the absolute
owner of the property purchased if it is not redeemed
during the period of one year after the registration of
the sale. As such, he is entitled to the possession of the
said property and can demand it at any time following
the consolidation of ownership in his name and the
issuance to him of a new transfer certificate of title.

PNB vs Gotesco
GR No. 183211, June 5, 2009
Upon the expiration of the redemption period, the
right of the purchaser to the possession of the
foreclosed property becomes absolute. Thus, the mere
filing of an ex parte motion for the issuance of a writ of
possession would suffice, and there is no bond
required since possession is a necessary consequence
of the right of the confirmed owner. It is a settled
principle that a pending action for annulment of
mortgage or foreclosure sale does not stay the
issuance of the writ of possession.

He is entitled to possession following consolidation of ownership in his

name.
BPI vs Tarampi
GR No. 174988, December 10, 2008
It is settled that the buyer in a foreclosure sale
becomes the absolute owner of the property
 purchased if it is not redeemed during the period of
one year after the registration of sale. As such, he is
entitled to the possession of the property and can
demand it any time following the consolidation of
ownership in his name and the issuance of a new
transfer certificate of title. In such a case, the bond
required in Section 7 of Act No. 3135 is no longer
necessary. Possession of the land then becomes an
absolute right of the purchaser as confirmed owner.
Upon proper application and proof of title, the
issuance of the writ of possession becomes a ministerial
duty of the court.

A mortgagor is entitled to a writ of possession after extrajudicial possession

after extrajudicial foreclosure even before the expiration of the period of
redemption.
Veloso vs IAC
205 SCRA 227 (1992)

Nature of writ of possession in foreclosure proceedings

A petition for a writ of possession is ex parte and summary in nature. It is a
judicial proceeding brought for the benefit of one party only and without
notice by the court to any person having any adverse interest. Relief is
granted without giving the person against whom the relief is sought an
opportunity to be heard. By its very nature, an ex parte petition for an
issuance of a writ of possession is a non-litiguous proceeding authorized
under Act No. 3135, as amended. It is not strictly speaking a judicial
process as contemplated in Art 433 of the Civil Code. It is a judicial
proceeding for the enforcement of one’s right or possession as purchaser
in a foreclosure sale. It is not an ordinary suit filed in court.

A mortgagee becomes the absolute owner after expiration of the period

of redemption without mortgagor exercising the right to redeem.
Lam vs Metrobank
GR No. 178881, 18 February 2008, 546 SCRA 200
It is settled that the issuance of a writ of possession to
a purchaser in a public auction is a ministerial act.
After the consolidation of title in the buyer's name for
failure of the mortgagor to redeem the property,
entitlement to the writ of possession becomes a matter
 of right. Its issuance to a purchaser in an extrajudicial
foreclosure sale is merely a ministerial function. It is
undisputed that herein petitioners failed to redeem
the property within the redemption period and
thereafter, ownership was consolidated in favor of
herein respondent and a new certificate of title was
issued in its name. Thus, it was a purely ministerial duty
for the trial court to issue a writ of possession in favor of
herein respondent upon the latter's filing of a petition.

Possession may be demanded after consolidation of ownership

F. David Enterprises vs Insular Bank of Asia and
America
191 SCRA 516 (1990)
The buyer can in fact demand possession of the land
even during the redemption period except that he has
to post a bond in accordance with Section 7 of Act
No. 3133 as amended. No such bond is required after
the redemption period if the property is not
redeemed. Possession of the land then becomes an
absolute right of the purchaser as confirmed owner.
Upon proper application and proof of title, the
issuance of the writ of possession becomes a ministerial
duty of the court.

The purchaser at the public auction sale of an extrajudicially foreclosed

real property may seek possession thereof in accordance with Sec. 7 of
same Act
China Banking Corporation vs Lozada
GR No. 164919, July 4, 2008
No such bond is required after the redemption period
if the property is not redeemed. Possession of the land
then becomes an absolute right of the purchaser as
confirmed owner. Upon proper application and proof
of title, the issuance of the writ of possession becomes
a ministerial duty of the court.[

It is a ministerial duty of the court to issue a writ of possession.

Sueno vs LBP
GR No. 174711, 17 September 2008
 A writ of possession may also be issued after
consolidation of ownership of the property in the
name of the purchaser. It is settled that the buyer in a
foreclosure sale becomes the absolute owner of the
property purchased if it is not redeemed during the
period of one year after the registration of sale. As
such, he is entitled to the possession of the property
and can demand it any time following the
consolidation of ownership in his name and the
issuance of a new transfer certificate of title. In such a
case, the bond required in Section 7 of Act No. 3135 is
no longer necessary. Possession of the land then
becomes an absolute right of the purchaser as
confirmed owner. Upon proper application and proof
of title, the issuance of the writ of possession becomes
a ministerial duty of the court.

Joven vs CA
212 SCRA 700 (1992)
To give effect Section 7 of Act No. 3135, as amended
by Act No. 4118, provides that in case of extrajudicial
foreclosure of mortgage, the court may issue as a
matter of course a writ of possession in favor of the
purchaser even during the redemption period,
provided that a proper motion has been filed, a bond
is approved, and no third person is involved to his right
of possession, the purchaser must invoke the aid of the
courts and ask for a writ of possession. He cannot
simply take the law into his own hands and enter the
property without judicial authorization. We have
consistently held that he need not bring a separate
and independent suit for this purpose. Nevertheless, it
is essential that he ask for and be granted a writ of
possession in order that he may be legally installed in
the property he has bought.

General Rule: The pendency of a separate civil suit questioning the

validity of the mortgage cannot be a legal ground for refusing the
issuance of a writ of possession because the same is a ministerial act of
the trial court after title has been consolidated in the name of the
mortgagee.
 Sps. Vaca vs CA
GR No. 109672, 14 July 1994
The pendency of a separate civil suit questioning the
validity of the mortgage cannot bar the issuance of
the writ of possession, because the same is a
ministerial act of the trial court after title on the
property has been consolidated in the mortgagee.
The ruling was reiterated in Navarra v. Court of
Appeals, in which we held that as a rule any question
regarding the validity of the mortgage or its
foreclosure cannot be a legal ground for refusing the
issuance of a writ of possession.

Exceptions: Instances when the issuance of a writ of possession is not

ministerial
1. When the third party is actually holding the property adversely to
the judgment debtor
Clapano vs Gapultos
132 SCRA 429
Under Sec. 35, Rule 39 of the Revised Rules of Court,
which was made applicable to the extrajudicial
foreclosure of real estate mortgages by Sec. 6 Act No.
3135, the possession of the mortgaged property may
be awarded to a purchaser in extrajudicial
foreclosures "unless a third party is actually holding the
property adversely to the judgment debtor."
In an extrajudicial foreclosure of real property, when
the foreclosed property is in the possession of a third
party holding the same adversely to the defaulting
debtor/mortgagor, the issuance by the RTC of a writ of
possession in favor of the purchaser of the said real
property ceases to be ministerial and may no longer
be done ex parte. For the exception to apply,
however, the property need not only be possessed by
a third party, but also held by the third party adversely
to the debtor/mortgagor.

2. Where the price is unjustifiably higher that the real mount of the
 obligation
Sulit vs CA
268 SCRA 441
The general rule that mere inadequacy of price is not
sufficient to set aside a foreclosure sale is based on the
theory that the lesser the price the easier it will be for
the owner to effect the redemption. The same thing
cannot be said where the amount of the bid is in
excess of the total mortgage debt. The reason is that
in case the mortgagor decides to exercise his right of
redemption, Section 30 of Rule 39 provides that the
redemption price should be equivalent to the amount
of the purchase price, plus one per cent monthly
interest up to the time of the redemption, together with
the amount of any assessments or taxes which the
purchaser may have paid thereon after purchase,
and interest on such last-named amount at the same
rate.

L. Effect of Granting a Writ of Possession

Where the trial court had already granted a writ of possession sought by
the buyer at an extrajudicial foreclosure sale, a petition to consolidate said case
with the case pending before another court for Declaration of Nullity of
Contracts/ Discharge of Mortgage, Annulment of Extrajudicial Foreclosure Sales
& Reconveyance had become moot and academic.
A moot and academic case is one that ceases to present a justiciable
controversy by virtue of supervening events, so that a declaration thereon
would be of no practical value. As a rule, courts decline jurisdiction over such
case, or dismiss it on ground of mootness.
Leong vs Tanguangco
548 SCRA 387 (2008)
Facts: Petitioners filed an Opposition with Urgent Motion to
Dismiss/Suspend Proceedings and Motion for Consolidation,[5]
countering that the extrajudicial foreclosure of the real estate mortgages
as well as the subsequent auction sale of the three parcels of land are
null and void.
Petitioners alleged that before the Cavite RTC could issue a writ of
possession, the issues as to the validity of the real estate mortgage
contracts, loan agreements, promissory notes, extrajudicial foreclosure
and auction sale of the subject properties must first be resolved by the
Las Pias RTC. They averred that their rights in Civil Case No. LP-99-0072
 would be greatly and gravely prejudiced and that their claims in said
case would be rendered nugatory if the court would allow Hermosa Bank
to prematurely take possession of the properties
Held: As the CA correctly found, the RTC of Bacoor, Cavite had already
granted the writ of possession sought by Hermosa. Hence, the petition to
consolidate the case before the RTC of Bacoor, Cavite with the case
pending before the RTC of Las Pias, had become moot and academic.
moot and academic case is one that ceases to present a justiciable
controversy by virtue of supervening events, so that a declaration
thereon would be of no practical value. As a rule, courts decline
jurisdiction over such case, or dismiss it on ground of mootness.
Remedy of the mortgagor is to question the sale and the move for the
cancellation of the writ of possession.
Section 5, Rule 16 of the Rules of Court which provides:
"SEC. 5. Pleading grounds as affirmative defenses. — Any of the grounds
for dismissal provided for in this rule, except improper venue, may be
pleaded as an affirmative defense, and a preliminary hearing may be
had thereon as if a motion to dismiss had been filed."

M. Remedy of the Mortgagor

Mortgagor may question the sale and the move for the cancellation of
the writ of possession
De Ramos vs CA
213 SCRA 207 (1992)
FACTS: On 26 July 1983, the Bank filed a petition for the
issuance of a writ of possession with the RTC which was
docketed as SLRC Case No. III-83-C. Demamay filed a
verified opposition to the petition alleging that the
court has no jurisdiction over the petition because she
was not notified of both the foreclosure proceedings
and the auction sale, and that the issues involved are
highly controversial and litigious in nature.
During the pendency of the petition for a writ of
possession, or specifically on 3 September 1983, the
Bank sold to the herein petitioners the property in
question under a Deed of Conditional Sale payable in
installments. The said balance having been paid, the
Bank executed in the petitioners favor a Deed of
Absolute Sale
Estelita Demamay filed a complaint "To Set
 Aside the Sale of Mortgaged Property and Subsequent
Transactions Pertinent Thereto And Cancel Writ of
Possession Issued Thereon" which was docketed as
Civil Case No. 894-85-C
In said complaint, she reiterated the grounds
raised in her opposition to the petition for the issuance
of a writ of possession and further alleged that the writ
of possession has no more leg to stand on because the
Bank had already sold the property

HELD: After having submitted to the jurisdiction of the

court in SLRC No. 111-83-C, testifying therein and
offering documentary evidence to resist the petition
for a writ of possession and to obtain affirmative relief
such as the nullification of the foreclosure proceedings
and all incidents thereto including, necessarily, the
sale at the public auction, Demamay cannot now be
heard to challenge the jurisdiction of the said court
and to suggest, in order to escape from the effects of
the finality of the Order, that all that had transpired in
the said case was an exercise in futility.
A party cannot invoke the jurisdiction of the
court to secure affirmative relief against his opponent
and, after obtaining or failing to obtain such relief,
repudiate or question that same.

N. Order Granting a Writ of Possession

The order of the RTC granting the petition for a writ of possession is final
which can also be questioned on appeal
San Fernando Rural Bank vs Pampanga Omnibus
Development Corp
GR No. 168088, 4 April 2007
An error of judgment is one which the court may commit
in the exercise of its jurisdiction, and which error is
reviewable only by an appeal. Error of jurisdiction is one
where the act complained of was issued by the court
without or in excess of jurisdiction and which error is
correctible only by the extraordinary writ of certiorari. As
long as the court acts within its jurisdiction, any alleged
errors committed in the exercise of its discretion will
amount to nothing more than mere errors of judgment,
correctible by an appeal if the aggrieved party raised
factual and legal issues; or a petition for review under
Rule 45 of the Rules of Court if only questions of law are
involved