My land that was mortgaged to a bank in our province was foreclosed and is intended to be sold at public auction this November 2016. I have tried to negotiate with the bank before the mortgage was foreclosed with respect to the payment of my loan. We, however, failed to reach any agreement. The land has a fair market value of P2,000,000.00 and my loan to the bank is almost P1,500,000.00. I would be losing half a million if the intended sale pushed through. What shall I do?
In foreclosure proceedings, a complaint shall be filed against the debtor and the court will render judgment dismissing the complaint or for the sum found, as well as the payment of the same to the court within a period of not less than ninety (90) days nor more than one-hundred-twenty (120) days from entry of judgment. In case of default in such payment, the mortgaged property shall be sold at public auction to satisfy the judgment. This is in accordance with the provisions of Sections 1 and 2, Rule 68 of the 1997 Rules of Court.
So, if the property will be sold at public auction, the judgment debtor may still redeem the property within one (1) year from the date of registration of the certificate of sale (Section 28, Rule 39, Id).
Your worry that you might be losing half a million pesos if the sale will proceed, because the fair market value of the land is two (2) million pesos and your debt is only one and a half (1.5) million pesos has no basis. The residue or balance will be given or returned to you. This finds support under Section 4, Rule 68 of the same law, which states:
“The amount realized from the foreclosure sale of the mortgaged property shall, after deducting the costs of the sale, be paid to the person foreclosing the mortgage, and when there shall be 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, or if there be no such encumbrances or there be a balance or residue after payment to them, then to the mortgagor or his duly authorized agent, or the person entitled to it.”
Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.
We hope that we were able to enlighten you on the matter.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to email@example.com