RECONCILIATION OF JUDICIAL FORECLOSURE AND EXTRAJUDICIAL

FORCLOSURE ON REAL MORTGAGE

1. On the governing law. Extrajudicial foreclosure is governed by the provisions of Act

3135, as amended, while judicial foreclosure is by the provisions of Rule 68 of the Rules
of Court.

2. On the publication requirement. In extrajudicial foreclosure, the auction sale shall be

published once a week for three (3) consecutive weeks in a newspaper of general
circulation; in judicial foreclosure, the publication shall only be for two (2) consecutive
weeks.

3. On filing of an action. A judicial foreclosure involves the filing of an independent

action; an extrajudicial judicial foreclosure does not require filing of an action because
the right to foreclose is granted in the mortgagee in the
(a)contract of real estate mortgage or in a (b) separate instrument.

4. On how to initiate proceedings. In judicial foreclosure, it is filed in court by the

mortgagee-creditor against the mortgagor-debtor or any other persons claiming
subordinate interest in the property intended to secure performance of the principal
obligation by directly going after the mortgaged property; while in extrajudicial
foreclosure, it is initiated by merely filing a petition with the executive judge, through the
clerk of court, also the ex-officio sheriff.

5. On the notice requirement. Personal notice to the mortgagor is not required in

extrajudicial foreclosure as a rule, UNLESS stipulated upon; in judicial foreclosure,
written notice to the judgment obligor at least three (3) days before the auction sale is
required.

6. On redemption. There is a right of redemption in extrajudicial foreclosure, which is one

year from registration of the certificate of sale. If the mortgagor is a juridical person the
redemption period is until, but not after, the registration of the certificate of foreclosure
sale with the applicable Register of Deed which in no case shall be more than three (3)
months after the foreclosure, whichever is earlier; in judicial foreclosure, there is no right
of redemption but only equity of redemption, unless the mortgagee is a bank or banking
institution. In the latter instance, the redemption period shall be one (1) year from the
date of registration of the certificate of sale.

7. On period of redemption. The period of redemption starts from the finality of the
judgment until order of confirmation in judicial foreclosure; while in extrajudicial
foreclosure, the period to redeem starts from the date of registration of the certificate of
sale.

8. On judgment for deficiency. In a judicial foreclosure, there could be a deficiency

judgment rendered by the court; there can be no judgment for a deficiency in an
 extrajudicial foreclosure because there is no judicial proceeding, although recovery of the
deficiency is allowed.

9. On recovery of deficiency. In a judicial foreclosure, recovery of the deficiency can be

done by mere motion for a deficiency judgment; in an extrajudicial foreclosure, the
recovery of the deficiency is through an independent action and although nothing about
the recovery of the deficiency is provided in Act No. 3135, there is no prohibition either.

10. On the right to appeal. In judicial foreclosure, the decisions are appealable; in an
extrajudicial foreclosure, the decisions are immediately executory and not appealable.

11. On the cutting off of right. In judicial foreclosure, the order of the Court cuts off all
rights of the parties impleaded; while in extrajudicial foreclosure, the rights of the parties
involved will not be cut off by foreclosure.

12. On the necessity of a special power of attorney. There is no need for a special power of
attorney in the contract of mortgage in judicial foreclosure; while a special power of
attorney in favor of the mortgagee is necessary in extrajudicial foreclosure.

EDITOR’S OPINION:

I think extrajudicial foreclosure can be more advantageous to both the mortgagor and the
mortgagee than the judicial foreclosure.

If the foreclosure was extra-judicially made, you have the right to redeem the real property
within one year from the registration of the sale of the property. On the other hand, if the
foreclosure was judicially made, then your right would depend on whether the mortgagee is a
bank. If the mortgagee is a bank, you can redeem the property within one year from the
registration of the sale. If not, you only have equity of redemption or the right to pay the debt
before the confirmation of the sale.

Note, however, that the amount you need to pay to redeem the property will not be equal to your
unpaid obligation. In extra-judicial foreclosure, you may redeem the property by paying the
purchase price paid by the buyer and any assessments or taxes that the buyer may have paid on
the property after the purchase, with interest of one percent per month in accordance with Sec.
30, Rule 39 of the Rules of Court (PNB vs. Court of Appeals, 140 SCRA 360). In case of judicial
foreclosure by a bank, you may redeem the property by paying the amount due under the
mortgage deed, with interest at the rate specified in the mortgage, and all the costs and expenses
incurred by the bank or institution from the sale and custody of said property less the income
derived therefrom (Sec. 47, RA 8791).