Procedure in Extra-Judicial Foreclosure of Mortgage (A.M. No.

99-10-
05-0)
EN BANC

[A.M. No. 99-10-05-0. August 7, 2001]

(AS FURTHER AMENDED, AUGUST 7, 2001)

PROCEDURE IN EXTRA-JUDICIAL FORECLOSURE OF

MORTGAGE

In line with the responsibility of an Executive Judge under Administrative Order

No. 6, dated June 30, 1975, for the management of courts within his administrative
area, included in which is the task of supervising directly the work of the Clerk of
Court, who is also the Ex-Office Sheriff, and his staff, and the issuance of
commissions to notaries public and enforcement of their duties under the law, the
following procedures are hereby prescribed in extrajudicial foreclosure of
mortgages:

1. All applications for extra-judicial foreclosure of mortgage whether under the

direction of the sheriff or a notary public, pursuant to Act 3135, as amended by Act
4118, and Act 1508, as amended, 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 therefore pursuant to rule 141, Section 7(c), as amended
by A.M. No. 00-2-01-SC, 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, pursuant to Sec. 4 of Act 3135, as
amended;

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 provided for in the
aforementioned sections and in Rule 141, Section 9(1), as amended by A.M. No.
00-2-01-SC, 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 pursuant to Section 1, Presidential Decree No. 1079, dated January 2,
1977, and non-compliance therewith shall constitute a violation of Section 6
thereof.

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.

This Resolution amends or modifies accordingly Administrative Order No. 3

issued by then Chief Justice Enrique M. Fernando on 19 October 1984 and
Administrative Circular No. 3-98 issued by the Chief Justice Andres R. Narvasa on
5 February 1998.

The Court Administrator may issue the necessary guidelines for the effective
enforcement of this Resolution.

The Clerk of Court shall cause the publication of this Resolution in a nuewspaper
of general circulation not later than August 14, 2001 and furnish copies thereof to
the Integrated Bar of the Philippines.
 EXTRAJUCIAL FORECLOSURE
WHERE SHOULD AN EXTRAJUDICIAL FORECLOSURE SALE BE DONE?

> Sale  cannot  be  made  legally  outside  the  city  or  province wherein  the 
property  sold  is  situated.    In  case  the  place has  been  stipulated,  it  shall  be 
made  in  the  municipal building of the said place
NOTICE OF THE SALE

1.   POSTING  of  the  notices  of  the  sale  FOR  NOT  LESS  THAN 20 DAYS
in at  least 3 public  places  of the municipality or city where the property is
situated
2.   IF  THE  PROPERTY  IS  WORTH  MORE  THAN  P400,  such notice  shall 
also  be  published  once  a  week  at  least  3 consecutive weeks in a newspaper of
general circulation in the municipality or city.  (You don't need to count 6 days
between publications.)
NOTE:  there  is  jurisprudence,  which  held  that  there  is  sufficient notice when
there is publication.
PUBLIC AUCTION/SALE

1.   Time shall be between 9AM and 4PM.  It shall be made in the  direction  of 
the  sheriff  of  the  province,  the  justice  or auxiliary justice of the peace of the
municipality, or of the notary    public    of    the    municipality,    who    shall    be
compensated  with  P5  for  each  day  of  actual  work  or performance in addition
to his expenses.

2.   Anyone may  bid at the  sale,  unless there  are  stipulations in the agreement.

POSSESSION

> Upon foreclosure, if the mortgagor is in possession of the property,  he  will 
retain  possession  during  the  redemption period—1 year from the date of sale

> If   the   winning   bidder   wants   possession   during   the redemption period, he
may execute a bond in the amount equivalent  to  the  use  of  the  property  for  12 
months,  to indemnify the debtor in case it be shown that the sale was made
without violating the mortgage or without complying with the requirements of the
Act.  Upon approval, a writ of possession will be issued in his favor.

>  If  the  winning  bidder  is  able  to  secure  possession,  the mortgagor may
petition that the sale is set aside and the writ  of  possession  be  cancelled  on  the 
ground  that  he wasn't   in   default   or   that   the   sale   wasn't   made   in
accordance  with  Act  3135.    This must be filed within 30 days from issuance of
the writ of possession.

RIGHT OF REDEMPTION

> The  debtor,  his  successors-in-interest,  or  any  judicial creditor or judgment
creditor of said debtor, or any person having a lien on the property subsequent to
the mortgage or  deed  of  trust  under  which  the  property  is  sold,  may redeem 
the  same  at  any  time  WITHIN  THE  TERM  OF  1 YEAR FROM AND
AFTER THE DATE OF THE SALE and such will be governed by the Rules of
Court
> When  the  property  is  redeemed  after  the  purchaser  has been given
possession, the redeemer is entitled to deduct from  the   price   of  redemption  
any  rentals  that  said purchaser may have collected in case the property or any
part thereof was rented.  If the property  was used as  his own dwelling, it being
town property, or used it gainfully, it being  rural  property,  the  redeemer  may 
deduct  from  the price the interest of 1% per month provided in the Rules of
Court.
RULES OF COURT, RULE 39, SECTIONS 29 TO 31, AND 35

Sec.  29.  Effect  of  redemption  by  judgment  obligor,  and  a certificate  to  be 
delivered  and  recorded  thereupon;  to whom payments on redemption made. If 
the  judgment  obligor  redeems,  he  must  make  the  same payments   as   are  
required   to   effect   a   redemption   by   a redemptioner, whereupon, no further
redemption shall be allowed and  he  is  restored  to  his  estate.  The  person  to 
whom  the
redemption  payment  is  made  must  execute  and  deliver  to  him acertificate  of 
redemption  acknowledged  before  a  notary  public  or other officer authorized to
take  acknowledgments of conveyances of real property. Such certificate must be
filed and recorded in the registry of deeds of the place in which the property is
situated, and the registrar of deeds must note the record thereof on the margin of
the record of the certificate of sale. The payments mentioned in this and the last
preceding sections may be made to the purchaser r redemptioner, or for him to the
officer who made the sale.

Sec. 30. Proof required of redemptioner.

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.  31.  Manner  of  using  premises  pending  redemption; waste restrained.

Until the expiration  of the time allowed for redemption, the court may,  as  in 
other  proper  cases,  restrain  the  commission  of  waste on the property by
injunction, on the application of the purchaser or the judgment obligee, with or
without notice; but it is not waste for a person in possession of the property at the
time of the sale, or entitled to possession afterwards, during the period allowed for
redemption, to continue to use it in the same  manner in which it was  previously 
used;  or  to  use  it  in  the  ordinary  course  of husbandry; or to make the
necessary repairs to buildings thereon while he occupies the property.

Sec. 35. Right to contribution or reimbursement.

When  property  liable  to  an  execution  against  several  persons  is sold thereon,
and more than a due proportion  of the judgment is satisfied out of the proceeds of
the sale of the property of one of them,  or  one  of  them  pays,  without  a  sale, 
more  than  his proportion,  he  may  compel  a  contribution  from  the  others; 
and when a judgment is upon an obligation of one of them, as security for another,
and the surety pays the amount, or any part thereof, either  by  sale  of  his 
property  or  before  sale,  he  may  compel repayment from the principal.