Special Civil Actions Initiated by Complaint: Foreclosure of Real Estate Mortgage (Rule 68)

Monzon vs. Sps. Relova (GR 171827)

Rule 68 governs the judicial foreclosure of mortgages. Extra-judicial foreclosure of mortgages, which was what transpired in the case at bar, is governed by Act No. 3135, as amended by Act No. 4118, Section 6 of Republic Act No. 7353, Section 18 of Republic Act No. 7906, and Section 47 of Republic Act No. 8791.

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Even if, for the sake of argument, Rule 68 is to be applied to extrajudicial foreclosure of mortgages, such right can only be given to second mortgagees who are made parties to the (judicial) foreclosure.While a second mortgagee is a proper and in a sense even a necessary party to a proceeding to foreclose a first mortgage on real property, he is not an indispensable party, because a valid decree may be made, as between the mortgagor and the first mortgagee, without regard to the second mortgage; but the consequence of a failure to make the second mortgagee a party to the proceeding is that the lien of the second mortgagee on the equity of redemption is not affected by the decree of foreclosure.

ABACA Corp. of the Phils. vs. Garcia (GR 118408)

There are three (3) types of sales arising from failure to pay a mortgage debt, namely, the extrajudicial foreclosure sale, the judicial foreclosure sale and the ordinary execution sale. These in turn are governed by three (3) different laws. Act No. 3135 governs extrajudicial foreclosure sale, Rule 68 of the Rules of Court deals with judicial foreclosure sale, while Rule 39 covers ordinary execution sale. Act No. 3135 or An Actto Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate Morgage applies to the case at bar.

Villanueva vs. Cherdan Lending Investors Corp. (GR 177881)

A writ of possession is an order of the court commanding the sheriff to place a person in possession of a real or personal property. It may be issued in an extrajudicial foreclosure of a real estate mortgage under Section 7 of Act 3135, as amended by Act 4118, either 1) within the one-year redemption period, upon the filing of a bond, or 2) after the lapse of the redemption period, without need of a bond or of a separate and independent action.

Sps. Rosales vs. Sps. Suba (GR 137792)

Clearly, as a general rule, there is no right of redemption in a judicial foreclosure of mortgage. The only exemption is when the mortgagee is the Philippine National Bank or a bank or a banking institution. Since the mortgagee in this case is not one of those mentioned, no right of redemption exists in favor of petitioners. They merely have an equity of redemption, which, to reiterate, is simply their right, as mortgagor, to extinguish the mortgage and retain ownership of the property by paying the secured debt prior to the confirmation of the foreclosure sale. However, instead of exercising this equity of redemption, petitioners chose to delay the proceedings by filing several manifestations with the trial court. Thus, they only have themselves to blame for the consequent loss of their property.

Metropolitan Bank and Trust company vs. Lamb Construction Consortium Corp. (GR 170906)

Once the foreclosure is declared valid and a re-computation of the total amount of obligation is made, the court in the same case may order petitioner to return the surplus, if any, pursuant to the legal maxim, Nemo cum alterius detrimento locupletari potest no person shall be allowed to enrich himself unjustly at the expense of others.

 

 

 

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