Foreclosure is the process by which a mortgagee acquires an absolute title to the property of which he had previously been only the conditional owner, or upon which he had previously a mere lien or encumbrance. (Benedicto vs. Yulo)
In case of default of the mortgagor in the payment of loan obligations, the mortgagee may foreclose the mortgaged property by filing a petition for extrajudicial foreclose of mortgage following the procedure laid down in A.M. No. 99-10-05-0 (December 14, 1999)
Without foreclosure proceedings, the act is considered pactum commissorium.
Once the proceeds have been applied to the payment of the obligation, the debtor can no longer be required to pay. Unless there is a deficiency between the amount of the loan and the foreclosure sale price. (State Investment House vs. CA)
The power to foreclose survives the death of the mortgagor because the mortgage is not a power of agency but an authority conferred upon the mortgagee for his own protection. (Homeowners Savings and Loan Bank v. Felonia)
Cases when foreclosure may be applied
This can be done by the mortgagee when the mortgagor hypothecated or mortgaged a certain property as its collateral.
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