OWWA Foreclosure Policy Guidelines

The addendum directs extra-judicial foreclosure of real estate mortgaged properties to be undertaken pursuant to Act 3135 as amended by RA 4118.
The addendum directs extra-judicial foreclosure of chattel mortgaged properties to be undertaken pursuant to Act 1508.
The addendum also prescribes notice requirements tied to the nature of the collateral in foreclosure proceedings.

The addendum establishes a foreclosure workflow that starts with demands for settlement and escalates to extra-judicial foreclosure only if delinquency persists.
The addendum requires a structured progression for delinquent clients: initial demand, final demand, then extra-judicial filing with the proper officer.
The addendum recognizes that foreclosure procedures depend on whether the mortgage is real estate or chattel.
The addendum ties validity and enforceability to proper notice and compliance with statutory foreclosure mechanics.

The addendum applies to delinquent clients whose accounts remain unpaid and who have obligations secured by mortgaged properties.
The addendum separates foreclosure treatment into two mortgage types: real estate mortgages and chattel mortgages.
The addendum covers foreclosure actions involving the Sheriff’s Office and foreclosure proceedings conducted under extra-judicial foreclosure rules.
The addendum addresses rules governing bidding, sale procedures, and the application of sale proceeds.

The EDD/Regional Units must first send a demand letter to delinquent clients for settlement of their obligation.
If settlement fails, Legal Counsel must send a final demand letter for final settlement of the accounts.
If the delinquent client fails and continues to ignore the demands, Legal Counsel must file extra-judicial foreclosure with the Sheriff’s Office.
Extra-judicial foreclosure for real estate mortgages must follow Act 3135 as amended by RA 4118.
Because foreclosure involves extra-judicial foreclosure in real estate mortgage, notice to mortgagor is imperative.
If the mortgagor fails to reply, foreclosure proceedings are in order.
After filing, a notice must be sent to the mortgagor informing that foreclosure proceedings have already been filed against the mortgagor.
A client who is properly notified cannot later seek relief from the court alleging non-notification or assailing the foreclosure procedure.

Publication of the extra-judicial sale must be contemplated in a newspaper of general circulation for three (3) consecutive weeks.
Redemption takes effect one (1) year from the date of registration of the Certificate of Sale with the Registry of Deeds.
After one (1) year, the highest bidder must petition the sheriff who conducted the auction sale to issue the final deed of sale.

For chattel mortgages, the EDD/Regional Units must first send a demand letter to delinquent clients for settlement of their outstanding obligation.
If settlement fails, Legal Counsel must send a final demand letter for final settlement of the accounts.
If delinquency persists and demands are ignored, Legal Counsel must file extra-judicial foreclosure with the Sheriff’s Office pursuant to Act 1508.
In chattel mortgage foreclosure, no notice is needed because the mortgagor might abscond with the property mortgaged.
For chattel mortgage foreclosure, no publication is required, and only posting of notice of sale is required.
Posting of the notice of sale for chattel mortgages must run from 5 to 10 days, but in any case not more than 10 days.

Certificates of sale issued to the highest bidder are final, and no redemption is required.
The property seized by the Sheriff must be placed under the Sheriff’s custody for 5 to 10 days.
The Sheriff is responsible for hiring guards, who must be deputized by him to protect the chattel.
The Mortgagee OWWA pays for the services of the guards and other sheriff’s fees and expenses.

If no bidders appear, the mortgagee must be declared the highest bidder.
For both real and chattel cases, OWWA must set a floor price and set a starting bid.
The sheriff must preside over the sale under the rules governing extra-judicial foreclosure.
Sale proceeds must be applied to the outstanding balance of the loan.
In cases of deficiency, this is without prejudice to the mortgagee’s separate civil action for recovery of sum of money.