CIVIL LAW

Book 4: Obligations & Contracts

Title XVI. PLEDGE, MORTGAGE AND ANTICHRESIS

CHAPTER 5 > CHATTEL MORTGAGE

Art. 2140. By a chattel mortgage, personal property is recorded in the
Chattel Mortgage Register as a security for the performance of an
obligation. If the movable, instead of being recorded, is delivered to
the creditor or a third person, the contract is a pledge and not a
chattel mortgage. (n)

Art. 2141. The provisions of this Code on pledge, insofar as they are not
in conflict with the Chattel Mortgage Law shall be applicable to
chattel mortgages. (n)

ACT NO. 1508


ACT NO. 1508 - AN ACT PROVIDING FOR THE MORTGAGING OF
PERSONAL PROPERTY AND FOR THE REGISTRATION OF THE MORTGAGES
SO EXECUTED



Section 1. The short title of this Act shall be "The Chattel Mortgage
Law."

Sec. 2. All personal property shall be subject to mortgage, agreeably
to the provisions of this Act, and a mortgage executed in pursuance
thereof shall be termed chattel mortgage.

Sec. 3. Chattel mortgage defined. A chattel mortgage is a
conditional sale of personal property as security for the payment of a
debt, or the performance of some other obligation specified therein,
the condition being that the sale shall be void upon the seller paying
to the purchaser a sum of money or doing some other act named. If
the condition is performed according to its terms the mortgage and
sale immediately become void, and the mortgagee is thereby
divested of his title.

Sec. 4. Validity. A chattel mortgage shall not be valid against any
person except the mortgagor, his executors or administrators, unless
the possession of the property is delivered to and retained by the
mortgagee or unless the mortgage is recorded in the office of the
register of deeds of the province in which the mortgagor resides at the
time of making the same, or, if he resides without the Philippine Islands,
in the province in which the property is situated: Provided, however,
That if the property is situated in a different province from that in which
the mortgagor resides, the mortgage shall be recorded in the office of
the register of deeds of both the province in which the mortgagor
resides and that in which the property is situated, and for the purposes
of this Act the city of Manila shall be deemed to be a province.

Sec. 5. Form. A chattel mortgage shall be deemed to be sufficient
when made substantially in accordance with the following form, and
shall be signed by the person or persons executing the same, in the
presence of two witnesses, who shall sign the mortgage as witnesses
to the execution thereof, and each mortgagor and mortgagee, or, in
the absence of the mortgagee, his agent or attorney, shall make and
subscribe an affidavit in substance as hereinafter set forth, which
affidavit, signed by the parties to the mortgage as above stated, and
the certificate of the oath signed by the authority administering the
same, shall be appended to such mortgage and recorded therewith.

FORM OF CHATTEL MORTGAGE AND AFFIDAVIT.

"This mortgage made this ____ day of ______19____ by _______________,
a resident of the municipality of ______________, Province of
____________, Philippine Islands mortgagor, to ____________, a resident
of the municipality of ___________, Province of ______________,
Philippine Islands, mortgagee, witnesseth:

"That the said mortgagor hereby conveys and mortgages to the said
mortgagee all of the following-described personal property situated in
the municipality of ______________, Province of ____________ and now
in the possession of said mortgagor, to wit:

(Here insert specific description of the property mortgaged.)

"This mortgage is given as security for the payment to the said ______,
mortgagee, of promissory notes for the sum of ____________ pesos, with
(or without, as the case may be) interest thereon at the rate of
___________ per centum per annum, according to the terms of
__________, certain promissory notes, dated _________, and in the
words and figures following (here insert copy of the note or notes
secured).

"(If the mortgage is given for the performance of some other
obligation aside from the payment of promissory notes, describe
correctly but concisely the obligation to be performed.)

"The conditions of this obligation are such that if the mortgagor, his
heirs, executors, or administrators shall well and truly perform the full
obligation (or obligations) above stated according to the terms
thereof, then this obligation shall be null and void.

"Executed at the municipality of _________, in the Province of ________,
this _____ day of 19_____

____________________
(Signature of mortgagor.)

"In the presence of

"_________________
"_________________
(Two witnesses sign here.)

FORM OF OATH.
"We severally swear that the foregoing mortgage is made for the
purpose of securing the obligation specified in the conditions thereof,
and for no other purpose, and that the same is a just and valid
obligation, and one not entered into for the purpose of fraud."

FORM OF CERTIFICATE OF OATH.
"At ___________, in the Province of _________, personally appeared
____________, the parties who signed the foregoing affidavit and made
oath to the truth thereof before me.

"_____________________________"
(Notary public, justice of the peace, 1 or other officer, as the case
may be.)

Sec. 6. Corporations. When a corporation is a party to such
mortgage the affidavit required may be made and subscribed by a
director, trustee, cashier, treasurer, or manager thereof, or by a person
authorized on the part of such corporation to make or to receive such
mortgage. When a partnership is a party to the mortgage the affidavit
may be made and subscribed by one member thereof.

Sec. 7. Descriptions of property. The description of the mortgaged
property shall be such as to enable the parties to the mortgage, or
any other person, after reasonable inquiry and investigation, to
identify the same.

If the property mortgaged be large cattle," as defined by section one
of Act Numbered Eleven and forty-seven, 2 and the amendments
thereof, the description of said property in the mortgage shall contain
the brands, class, sex, age, knots of radiated hair commonly known as
remolinos, or cowlicks, and other marks of ownership as described and
set forth in the certificate of ownership of said animal or animals,
together with the number and place of issue of such certificates of
ownership.

If growing crops be mortgaged the mortgage may contain an
agreement stipulating that the mortgagor binds himself properly to
tend, care for and protect the crop while growing, and faithfully and
without delay to harvest the same, and that in default of the
performance of such duties the mortgage may enter upon the
premises, take all the necessary measures for the protection of said
crop, and retain possession thereof and sell the same, and from the
proceeds of such sale pay all expenses incurred in caring for,
harvesting, and selling the crop and the amount of the indebtedness
or obligation secured by the mortgage, and the surplus thereof, if any
shall be paid to the mortgagor or those entitled to the same.

A chattel mortgage shall be deemed to cover only the property
described therein and not like or substituted property thereafter
acquired by the mortgagor and placed in the same depository as the
property originally mortgaged, anything in the mortgage to the
contrary notwithstanding.

Sec. 8. Failure of mortgagee to discharge the mortgage. If the
mortgagee, assign, administrator, executor, or either of them, after
performance of the condition before or after the breach thereof, or
after tender of the performance of the condition, at or after the time
fixed for the performance, does not within ten days after being
requested thereto by any person entitled to redeem, discharge the
mortgage in the manner provided by law, the person entitled to
redeem may recover of the person whose duty it is to discharge the
same twenty pesos for his neglect and all damages occasioned
thereby in an action in any court having jurisdiction of the subject-
matter thereof.

Sec. 9-12. (inclusive) 3

Sec. 13. When the condition of a chattel mortgage is broken, a
mortgagor or person holding a subsequent mortgage, or a
subsequent attaching creditor may redeem the same by paying or
delivering to the mortgagee the amount due on such mortgage and
the reasonable costs and expenses incurred by such breach of
condition before the sale thereof. An attaching creditor who so
redeems shall be subrogated to the rights of the mortgagee and
entitled to foreclose the mortgage in the same manner that the
mortgagee could foreclose it by the terms of this Act.

Sec. 14. Sale of property at public auction; Officer's return; Fees;
Disposition of proceeds. The mortgagee, his executor, administrator,
or assign, may, after thirty days from the time of condition broken,
cause the mortgaged property, or any part thereof, to be sold at
public auction by a public officer at a public place in the municipality
where the mortgagor resides, or where the property is situated,
provided at least ten days' notice of the time, place, and purpose of
such sale has been posted at two or more public places in such
municipality, and the mortgagee, his executor, administrator, or
assign, shall notify the mortgagor or person holding under him and the
persons holding subsequent mortgages of the time and place of sale,
either by notice in writing directed to him or left at his abode, if within
the municipality, or sent by mail if he does not reside in such
municipality, at least ten days previous to the sale.

The officer making the sale shall, within thirty days thereafter, make in
writing a return of his doings and file the same in the office of the
register of deeds where the mortgage is recorded, and the register of
deeds shall record the same. The fees of the officer for selling the
property shall be the same as in the case of sale on execution as
provided in Act Numbered One hundred and ninety, 4 and the
amendments thereto, and the fees of the register of deeds for
registering the officer's return shall be taxed as a part of the costs of
sale, which the officer shall pay to the register of deeds. The return
shall particularly describe the articles sold, and state the amount
received for each article, and shall operate as a discharge of the lien
thereon created by the mortgage. The proceeds of such sale shall be
applied to the payment, first, of the costs and expenses of keeping
and sale, and then to the payment of the demand or obligation
secured by such mortgage, and the residue shall be paid to persons
holding subsequent mortgages in their order, and the balance, after
paying the mortgages, shall be paid to the mortgagor or person
holding under him on demand.

If the sale includes any "large cattle," a certificate of transfer as
required by section sixteen of Act Numbered Eleven hundred and
forty-seven 5 shall be issued by the treasurer of the municipality where
the sale was held to the purchaser thereof.

Sec. 15. 6, 6a

Sec. 16. This Act shall take effect on August first, nineteen hundred and
six.

Enacted, July 2, 1906.


CHATTEL MORTGAGE
(ARTICLES 2140-2141, CHATTEL MORTGAGE LAW)
Art. 2140. By a chattel mortgage, personal property is recorded in
the Chattel Mortgage Register as a security for the performance of an
obligation. If the movable, instead of being recorded, is delivered
to the creditor or a third person, the contract is a pledge and not a
chattel mortgage. (n)
CHATTEL MORTGAGE
> Contract by virtue of which personal property is recorded in
the Chattel Mortgage Register as security for the performance of
an obligation
CHARACTERISTICS
1. Accessory contract
2. Formal contract
WHAT MAKES IT DIFFERENT FROM A PLEDGE?
1. Delivery of the personal property to the mortgagee is not
necessary
2. The registration in the Register is required by law
3. Procedure for the sale of the thing is different
4. If the property is foreclosed and there is excess, the amount
goes to the debtor
5. If there is deficiency, the creditor may recover the deficiency
WHEN DO YOU DO A Chattel Mortgage OR PLEDGE?
> When property needs to be retained by the debtor, then opt
for a chattel mortgage

Art. 2141. The provisions of this Code on pledge, insofar as they are not
in conflict with the Chattel Mortgage Law shall be applicable to
chattel mortgages. (n)
LAWS GOVERNING CHATTEL MORTGAGE
1. Chattel mortgage law, Act 1508
2. Civil Code provisions
3. Revised Administrative Code
4. Revised Penal Code
OFFENSES INVOLVING CHATTEL MORTGAGE
1. Knowingly removing personal property mortgaged to any
province or city other than the one in which it was located at the time
of the execution of the mortgage without the written consent
2. Selling or pledging personal property already mortgaged or any
part thereof, under the terms of the Chattel Mortgage Law without
the consent of the mortgage written on the back of the
mortgage and duly recorded in the CM Register
REGISTRATION
> Registration shall be done in the Register of Deeds where the
mortgagor resides
> And when the property is situated somewhere else, it needs to
be registered also in the Register of Deeds of the area where the
property is situated
> Chattel mortgage would not be valid and binding as against
third persons absent any registration
> If what is mortgaged is a car, registration with the LTO is also
needed. Absent this, again, it would not be binding and invalid
as against third persons
FORM OF CONTRACT AS STATED IN THE LAW.
> Theoretically, the mortgagor may sign the contract alone but
practically, the mortgagee must sign also given that they both
need to sign the affidavit of good faith
AFFIDAVIT OF GOOD FAITH
> Part of the chattel mortgage contract wherein it is stated that
the chattel mortgage has been constituted to secure a principal
obligation and not meant for fraud or any ill purpose
> It is possible to defraud using mortgage. You can take away
property through mortgage from an unsecured creditor.
FORMAL REQUIREMENT OF DESCRIPTION OF PROPERTY
> Attach a description or schedule of the properties
mortgaged
> There is also the requirement of payment of registration fees
and documentary stamp taxes
FORECLOSURE (SIMILAR BUT NOT IDENTICAL WITH REM) SECTION 14,
CHATTEL MORTGAGE LAW
1. There is a 30-day cooling off period before the public auction,
from the time the condition is broken
2. Noticeat least 10 days notice of the time, day, place, and
purpose of such sale has been posted at 2 or more public places in
such municipality. Personal notice or mail shall also be given to
the mortgagor or person holding under him and the persons
holding subsequent mortgages of the time and place of sale.
3. Sheriff should possess the property as he needs to deliver the same
to the winning bidder. If the mortgagor refuses to do so, the
mortgagee can seek the help of the court. There could also be
a stipulation in the contract as well. But if the debtor is not willing
and able, the loss is with the creditor.
4. There is a 30-day equity of redemption period (payment of
obligation)
5. After foreclosure, there could be recovery of deficiency, but
there is Recto Law (1484) pertaining to sale of personal property
in installments and there is a Chattel Mortgage to secure payment
of price.
AN ACTION FOR SPECIFIC PERFORMANCE IS TANTAMOUNT TO THE
ABANDONMENT OF RIGHTS OF MORTGAGEE
APPLICATION OF PROCEEDS OF FORECLOSURE
1. Costs

2. Obligation itself. Pay first the interest and then the principal. If
there is penalty, then pay it first.
3. Junior encumbrances
4. Owner
















ACT NO. 3135 AN ACT TO REGULATE THE SALE OF PROPERTY UNDER
SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL-ESTATE
MORTGAGES, as amended by Act No. 4118
SECTION 1. When a sale is made under a special power inserted in or
attached to any real-estate mortgage hereafter made as security for
the payment of money or the fulfillment of any other obligation, the
provisions of the following election shall govern as to the manner in
which the sale and redemption shall be effected, whether or not
provision for the same is made in the power.
SECTION 2. Said sale cannot be made legally outside of the province
in which the property sold is situated; and in case the place within said
province in which the sale is to be made is subject to stipulation, such
sale shall be made in said place or in the municipal building of the
municipality in which the property or part thereof is situated.
SECTION 3. Notice shall be given by posting notices of the sale for not
less than twenty days in at least three public places of the municipality
or city where the property is situated, and if such property is worth
more than four hundred pesos, such notice shall also be published
once a week for at least three consecutive weeks in a newspaper of
general circulation in the municipality or city.
SECTION 4. The sale shall be made at public auction, between the
hours or nine in the morning and four in the afternoon; and shall be
under the direction of the sheriff of the province, the justice or auxiliary
justice of the peace of the municipality in which such sale has to be
made, or a notary public of said municipality, who shall be entitled to
collect a fee of five pesos each day of actual work performed, in
addition to his expenses.
SECTION 5. At any sale, the creditor, trustee, or other persons
authorized to act for the creditor, may participate in the bidding and
purchase under the same conditions as any other bidder, unless the
contrary has been expressly provided in the mortgage or trust deed
under which the sale is made.
Section 6. In all cases in which an extrajudicial sale is made under the
special power herein before referred to, 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 one year from and after the date
of the sale; and such redemption shall be governed by the provisions
of sections four hundred and sixty-four to four hundred and sixty-six,
inclusive, of the Code of Civil Procedure, in so far as these are not
inconsistent with the provisions of this Act. as amended
Section 7. In any sale made under the provisions of this Act, the
purchaser may petition the Court of First Instance of the province or
place where the property or any part thereof is situated, to give him
possession thereof during the redemption period, furnishing bond in an
amount equivalent to the use of the property for a period of twelve
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 this Act. Such petition shall be made under oath and
filed in form of an ex parte motion in the registration or cadastral
proceedings if the property is registered, or in special proceedings in
the case of property registered under the Mortgage Law or under
section one hundred and ninety-four of the Administrative Code, 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, and in each case the clerk of the court shall, upon the filing of
such petition, collect the fees specified in paragraph eleven of
section one hundred and fourteen of Act Numbered Four hundred
and ninety-six, as amended by Act Numbered Twenty-eight hundred
and sixty-six, and the court shall, upon approval of the bond, order
that a writ of possession issue, addressed to the sheriff of the province
in which the property is situated, who shall execute said order
immediately. as amended
Section 8. The debtor may, in the proceedings in which possession
was requested, but not later than thirty days after the purchaser was
given possession, petition that the sale be set aside and the writ of
possession cancelled, specifying the damages suffered by him,
because the mortgage was not violated or the sale was not made in
accordance with the provisions hereof, and the court shall take
cognizance of this petition in accordance with the summary
procedure provided for in section one hundred and twelve of Act
Numbered Four hundred and ninety-six; and if it finds the complaint of
the debtor justified, it shall dispose in his favor of all or part of the bond
furnished by the person who obtained possession. Either of the parties
may appeal from the order of the judge in accordance with section
fourteen of Act Numbered Four hundred and ninety-six; but the order
of possession shall continue in effect during the pendency of the
appeal. as amended
Section 9. When the property is redeemed after the purchaser has
been given possession, the redeemer shall be 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
purchaser occupied the property 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 one per centum per month
provided for in section four hundred and sixty-five of the Code of Civil
Procedure. as amended
SECTION 10. In any sale made under the provisions of this Act, the
purchaser may petition the Court of First Instance of the province or
place where the property or any part thereof is situated, to give him
possession thereof during the redemption period, furnishing bond in an
amount equivalent to the use of the property for a period of twelve
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 this Act. Such petition shall be made under oath and
filed in form of an ex parte motion in the registration or cadastral
proceedings if the property is registered, or in special proceedings in
the case of property registered under the Mortgage Law or under
section one hundred and ninety-four of the Administrative Code, 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, and in each case the clerk of the court shall, upon the filing of
such petition, collect the fees specified in paragraph eleven of
section one hundred and fourteen of Act Numbered Four hundred
and ninety-six, as amended by Act Numbered Twenty-eight hundred
and sixty-six, and the court shall, upon approval of the bond, order
that a writ of possession issue, addressed to the sheriff of the province
in which the property is situated, who shall execute said order
immediately. as amended
This Act shall take effect on its approval.
Act 3135 - Approved: March 6, 1924
Act 4118 - Approved, December 7, 1933










Real Estate Mortgage Law
(Act 3135, as amended by RA 4118)

a. Coverage

Governs sales made under a special power inserted in or attached to
any real-estate mortgage, which is made as security for the payment
of money or the fulfillment of any other obligation. The Act will govern
the manner in which the sale and redemption shall be effected,
whether or not provision for the same is made in the power. (Sec 1,
Act 3135)

The law covers only real estate mortgages. It is intended merely to
regulate the extrajudicial sale and redemption of the property if and
when the mortgagee is given a special power or express authority to
do so in the deed itself or in a document annexed thereto.

b. Remedies available to mortgagee upon default of the mortgagor

The mortgagee has a choice of one (1) of two (2) remedies,
but he cannot have both. The mortgagee may (i) foreclose the
mortgage or (ii) file an ordinary action to collect the debt, i.e. specific
performance.

When the mortgagee chooses the foreclosure of the mortgage
as a remedy, he enforces his lien by the sale on foreclosure of the
mortgaged property. The proceeds of the sale will be applied to the
satisfaction of the debt. With this remedy, he has a prior lien on the
property. In case of a deficiency, the mortgagee has the right to
claim for the deficiency resulting from the price obtained in the sale of
the real property at public auction and the outstanding obligation at
the time of the foreclosure proceedings. (Soriano v. Enriquez, 24 Phil.
584; Banco de Islas Filipinas v. Concepcion Hijos, 53 Phil. 86;
BancoNacional v. Barreto, 53 Phil. 101)

On the other hand, if the mortgagee resorts to an action to collect the
debt, he thereby waives his mortgage lien. He will have no more
priority over the mortgaged property. If the judgment in the action to
collect is favorable to him, and it becomes final and executory, he
can enforce said judgment by execution. He can even levy execution
on the same mortgaged property, but he will not have priority over
the latter and there may be other creditors who have better lien on
the properties of the mortgagor. Caltex Phils. vs. IAC, August 25, 1989

If mortgagor issues post-dated checks, resorting to a criminal action
for violation of BP 22 also precludes the remedy of foreclosure and
vice versa. Recovery of the amount due is deemed included in the
action for violation of BP 22.

TIP: If the mortgage covers the total claim, then foreclose. If not, still
foreclose for after all you can still collect the deficiency from the
principal debtor (if mortgagor is a third person), not the mortgagor
unless the latter bound himself solidarily liable with the borrower. Make
it a last resort to file a criminal action because in reality it takes much
longer to pursue BP 22.

c. Need for special power of attorney

Under Section 1 of Act No. 3135, a special power of attorney
must be inserted in or attached to any Real Estate Mortgage.

Without proof of petitioner's special authority to foreclose, the Clerk of
Court as Ex-Oficio Sheriff is precluded from acting on the application
for extrajudicial foreclosure. (Office of the Court Administrator v.
Pardo, RTJ-08-2109, April 30, 2008; Casano v. Magat, 425 Phil. 356, 360-
361 (2002); Paguyo v. Gatbunton, A.M. No. P-06-2135, May 25, 2007,
523 SCRA 156, 161).

d. Authority to foreclose extrajudicially

A mortgage may be foreclosed extrajudicially where there is
inserted in the contract a clause giving the mortgagee the power
upon default of the debtor, to foreclose the mortgage by an
extrajudicial sale of the mortgaged property. The authority to sell is not
extinguished by the death of the mortgagor (or mortgagee).

e. Procedure

(1) Where to file

All applications shall be filed with the Executive Judge through the
Clerk of Court, who is also the Ex-Officio Sheriff. See Sec. 1, Circular No.
7-2002, Guidelines for the enforcement of Supreme Court Resolution of
December 14, 1999 in A.M. no. 99-10-05-0 (re: Procedure in extra-
judicial foreclosure of mortgage), as amended by the Resolutions
dated January 30, 2001 and August 7, 2001.

(2) Where to sell

Province where the property is situated. (Sec. 2, R.A. 3135, as
amended) Sale cannot be made legally outside of the province in
which the property sold is situated.

If venue is subject to stipulation, such sale shall be made in said place
(i.e., the place so stipulated) or in the municipal building of the
municipality in which the property or part thereof is situated. (ibid.)

(3) Posting requirement

Notice of the sale is posted in at least three (3) public places of the
municipality or city (Sheriffs Office, Assessors Office and Register of
Deeds) where the property is situated for not less than twenty (20)
days and published once a week for at least three (3) consecutive
weeks in a newspaper of general circulation in the municipality or city
(Sec. 3, ibid). Posting of notice on mortgaged property not required.

Failure to advertise a mortgage foreclosure sale in compliance with
statutory requirements constitutes a jurisdictional defect invalidating
the sale. A substantial error or omission in a notice of sale will render
the notice insufficient and vitiate the sale. (PNB v. Nepomuceno, 394
SCRA 405, 2002)

(4) Publication requirement

(a) Sufficiency of newspaper publication

Notice shall also be published once a week for at least three (3)
consecutive weeks in a newspaper of general circulation. The
newspaper need not have the largest circulation so long as it is of
general circulation. To be a newspaper of general circulation, it is
enough that it is published for the dissemination of local news and
general information; that it has a bona fide subscription list of paying
subscribers; and that it is published at regular intervals. The newspaper
must not be devoted to the interests or entertainment of a particular
class, profession, trade, calling, race or religious denomination. The
newspaper need not have the largest circulation so long as it is of
general circulation (Perez vs. Perez (2005)) in the municipality or city
where the property is located. Metrobank v. Peafiel, G.R. No. 173976
Feb. 27, 2009

(b) Need for republication in case of postponement

Republication is necessary for the validity of a postponed extrajudicial
foreclosure sale. Another publication is required in case the auction
sale is rescheduled, and the absence of such republication invalidates
the foreclosure sale. The last paragraph of the prescribed notice of
sale (under SC Circular 7-2002) allows the holding of a rescheduled
auction sale without reposting or republication of the notice. In the
event the public auction should not take place on the said date, it
shall be held on ___________,______ without further notice. However,
the rescheduled auction sale will only be valid if the rescheduled date
of auction is clearly specified in the prior notice of sale. The absence
of this information in the prior notice of sale will render the rescheduled
auction sale void for lack of reposting or republication. (DBP vs.
Emerald Resorts Hotel)

(c) Personal notice to the mortgagor when and when not needed

General Rule: Personal notice to the mortgagor is not generally
required. Exception: Unless required in the mortgage contract, the
lack of personal notice to the mortgagor is not a ground to set aside a
foreclosure sale.

Unless otherwise stipulated by the parties to the mortgage
contract, the debtor-mortgagor need not be personally served a
copy of the notice of the extra- judicial foreclosure. SC Circular 7-2002

f. Possession by purchaser of foreclosed property

Upon failure of the debtor to redeem the property within one (1) year
after the date of the registration of the certificate of sale, winning
bidder becomes the absolute owner.

g. Remedy of debtor if foreclosure is not proper

Within thirty (30) days after the purchaser is given possession of the
property, the debtor may petition that the sale be set aside on the
ground that the mortgage was not violated or the sale was not made
in accordance with the provisions of Act 3135. (Sec. 8. This may be
done in the proceedings in which possession was requested)

h. Redemption

Right of Redemption is the right of the mortgagor to redeem
the mortgage property within a certain period (1 year) after it was sold
for the satisfaction of the mortgage debt.

Requisites for valid redemption:
1. Redemption within 1 year from registration of sale;
2. Payment of purchase price plus 1% interest per month thereon if
any, paid by purchaser; and
3. Written notice of redemption served on officer who made the
sale.

(1) Who may redeem

a. The debtor;
b. The debtor's successors-in-interest;
c. Any judicial creditor or judgment creditor of the debtor;
d. Any person having a lien on the property subsequent to the
mortgage or deed of trust under which the property is sold
(Redemption price to be paid by accommodation mortgagors).

(2) Amount of Redemption price

a. Limited to the winning bid price plus twelve percent (12%) interest
per annum.
b. Purchase price if judgment obligor. Sum paid on last redemption if
redemptioner. (Rule 39, Sec. 28, Rules of Court). The redemptioner
should make an actual tender in good faith of the full amount of the
purchase price (Hi-Yield Realty vs. CA (2002)

(3) Period for redemption

Natural persons: Within 1 year from and after the date of the sale. Sec.
6
Juridical persons: Until but not after the registration of the certificate of
foreclosure sale with the applicable Register of Deeds, which in no
case shall be more than 3 months after foreclosure, whichever is
earlier. (Sec. 47, R.A. 8791)

(4) Effect of pendency of action for annulment of sale

The filing of court action to enforce redemption has effect of
preserving the redemptioners rights; and freezing the expiration of
one year period to redeem. (Banco Filipino v Court of Appeals)

i. Writ of possession

(1) Ministerial duty of the court

The duty of the trial court to grant a writ of possession is ministerial.
Such writ issues as a matter of course upon the filing of the proper
motion and the approval of the corresponding bond. Any question
regarding the regularity and validity of the sale is to be determined in
a subsequent proceeding. (Sec. 8). Mandamus will lie.

The judge to whom an application for writ of possession is filed need
not look into the validity of the mortgage or the manner of its
foreclosure. In the issuance of a writ of possession, no discretion is left
to the Trial Court. Any question regarding the cancellation of the writ
in respect to the validity/regularity of the foreclosure sale or the
mortgage should be determined in a subsequent proceeding (PNB v.
Sanao). Such question cannot be raised to oppose the issuance of
the writ, since the proceeding is ex parte. (Samson vs Rivera, 2004)

After the consolidation of title in the buyers name for failure of the
mortgagor to redeem, the writ of possession becomes a matter of
right

(2) Enforcement against third parties

The purchaser or last redemption shall be entitled to possession
of the property upon the finality of the order of confirmation or upon
the expiration of the period of redemption, unless a third party is
actually holding the same adversely to the judgment debtor.

(3) Pendency of action for annulment of sale

The pendency of a separate civil suit questioning the validity of
the sale of the mortgaged property cannot bar the issuance of the
writ of possession. DBP vs Spouses Gatal (2005)

j. Annulment of sale (See g. Remedy of debtor if foreclosure is not
proper, supra)