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EXTRA-JUDICIAL FORECLOSURE OF REAL ESTATE MORTGAGE & REDEMPTION

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Essential requirements under Act 3135 e) after the certificate of sale has been issued to the
highest bidder, keep the complete records, while
1. There must be a special power of attorney inserted or
awaiting any redemption within a period of one (1)
attached to the real estate mortgage authorizing the sale;
year from date of registration of the certificate of sale
2. The sale must be located in the province where the
with the Register of Deed concerned, after which, the
property or any part thereof is located, unless otherwise
records shall be archived. Notwithstanding the
stipulated; foregoing provision, juridical persons whose property
3. There must be a notice of sale to be posted in 3 public is sold pursuant to an extrajudicial foreclosure, shall
places in the municipality or city where the property is have the right to redeem the property until, but not
situated; after, the registration of the certificate of foreclosure
4. If the property is more than Php 400.00, the notice shall
sale which in no case shall be more than three (3)
be published once a week for 3 weeks in a newspaper of
months after foreclosure, whichever is earlier, as
general circulation in the city or municipality;
provided in Section 47 of Republic Act No. 8791 (as
5. The sale shall be made at public auction between the 9am
amended, Res. of August 7, 2001) Where the
and 4pm, and under the direction of the sheriff of the
application concerns the extrajudicial foreclosure of
province, the justice or auxiliary justice of peace of the
mortgages of real estates and/or chattels in different
municipality in which the sale shall be made, or a notary
locations covering one indebtedness, only one filing
of said municpality.
fee corresponding to such indebtedness shall be
collected. The collecting Clerk of Court shall, apart
from the official receipt of the fees, issue a certificate
Procedure of Extra-judicial Foreclosure under Act 3135 of payment indicating the amount of indebtedness,
the filing fees collected, the mortgages sought to be
1. All applications for extra-judicial foreclosure of mortgage
foreclosed, the real estates and/or chattels
whether under the direction of the sheriff or a notary
mortgaged and their respective locations, which
public shall be filed with the Executive Judge, through the
certificate shall serve the purpose of having the
Clerk of Court who is also the Ex-Officio Sheriff.
application docketed with the Clerks of Court of the
2. Upon receipt of an application for extra-judicial
places where the other properties are located and of
foreclosure of mortgage, it shall be the duty of the Clerk
allowing the extrajudicial foreclosures to proceed
of Court to:
thereat.
a) receive and docket said application and to stamp
3. The notices of auction sale in extrajudicial foreclosure for
thereon the corresponding file number, date and time
publication by the sheriff or by a notary public shall be
of filing;
published in a newspaper of general circulation pursuant
b) collect the filing fees therefore and issue the
to Section 1, Presidential Decree No. 1079, dated January
corresponding official receipt;
2, 1977, and non-compliance therewith shall constitute a
c) examine, in case of real estate mortgage foreclosure,
violation of Section 6 thereof.
whether the applicant has complied with all the
4. The Executive Judge shall, with the assistance of the Clerk
requirements before the public auction is conducted
of Court, raffle applications for extrajudicial foreclosure of
under the direction of the sheriff or a notary public
mortgage under the direction of the sheriff among all
d) sign and issue the certificate of sale, subject to the
sheriffs, including those assigned to the Office of the Clerk
approval of the Executive Judge, or in his absence, the
of Court and Sheriffs IV assigned in the branches.
Vice-Executive Judge. No certificate of sale shall be
5. The name/s of the bidder/s shall be reported by the sheriff
issued in favor of the highest bidder until all fees
or notary public who conducted the sale to the Clerk of
provided in the aforementioned sections and in Rule
Court before the issuance of the certificate of sale.
141, Section 9(1) as amended by A.M. 00-2-01-SC,
shall have been paid; Provided, that in no case shall
the amount payable under Rule 141, Section 9(1), as
amended, exceed P100,000.00; Time When to Conduct Auction Sale
 Issue: Whether a sale a public auction, to be valid, must be
conducted the whole day from 9:00 a.m. until 4:00 p.m. of the
scheduled auction day.
Section 4 of Act 3135 provides that the sale must take place
between the hours of nine in the morning and four in the
afternoon. The word “between” ordinarily means “in time
interval that separates.” Thus, “between the hours of nine in
the morning and four in the afternoon” merely provides a time
frame within which an auction sale may be conducted.
Therefore, a sale at public auction held within the intervening
period provided by law (i.e., at any time from 9:00 a.m. until
4:00 p.m.) is valid, without regard to the duration or length of
time it took the auctioneer to conduct the proceedings (PNB v.
Cabatingan, 557 SCRA 426 [2008]). Act 3135 regulates the
extrajudicial sale of mortgaged real properties by prescribing a
procedure which effectively safeguards the rights of both
debtor and creditor (ibid.).
Notice and Publication Requirements
Notice and publication under PD 1079 and Act 3135, as
amended.
Section 1 of PD 1079, as amended provides:
“All notices of auction sales in extra-judicial
foreclosure of real estate mortgage under Act
3135, as amended x x x required by law to be
published in a newspaper of general circulation in
particular provinces and/or cities shall be
published in newspapers or publications
published, edited and circulated in the same city
and/or province where the requirement of
general circulation applies: Provided, That the
province or city where the publication’s principal
office is located shall be considered the place
where it is edited and published x x x.”
Section 3 of Act 3135, as amended, reads:
“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 three consecutive weeks in a newspaper of
general circulation in the municipality or city.”
A reading of the above provisions gives us the impression that
the publication of extra-judicial sales under Act, 3135, if the
property is worth more than four hundred pesos, shall be in a
newspaper of general circulation in the city or municipality
where the property lies. Hence, if the property in question is
located in Quezon City, it logically follows that the auction sale
of said property should be published in a newspaper of general
circulation that is edited and published in Quezon City.
However, such application and/or interpretation are too
narrow and very limited that it virtually defeats the purpose
and intention of the law. If this is the case, the leading dailies,
like the Philippine Daily Inquirer (PDI) (with head office in
Makati City) and Manila Bulletin (with head office in Manila),
which enjoys a wide circulation nationwide, cannot publish
notice of extra-judicial sales of properties located in Quezon
City simply because it is outside their place of publication.
What is important is that the newspaper is of general
circulation in the place where the property/ies to be
foreclosed is/are located. In a line of cases, the Highest
Court declared that publication of the extra-judicial sale in a
newspaper of general circulation is more than sufficient
compliance with the notice-posting requirement of the law
(Fortune Motors v. Metrobank, 265 SCRA 72; Cristobal v. CA,
328 SCRA 256; Concepcion v. CA, 274 SCRA 614; Bohanan v.
CA, 256 SCRA 355; Olizon v. CA, 236 SCRA 148; Gravina v. CA
220 SCRA 178). PD 1079 and Act 3135 do not require that the
newspaper which publishes judicial notices should be a daily
newspaper (Fortune Motors, 265 SCRA 72).
In Olizon at 156, it was ruled that:
“x x x the publication of the notice of sale in the
newspaper of general circulation alone is more than sufficient
compliance with the notice-posting requirement of the law. By
such publication, a reasonably wide publicity had been
effected such that those interested might attend the public
sale, and the purpose of the law had thereby subserved. The
object of a notice of sale is to inform the public of the nature
and condition of the property to be sold, and inform of the
time, place and terms of the sale. Notices are given for the
purpose of securing bidders and to prevent a sacrifice of the
property. If these objects are attained, immaterial errors and
mistakes will not affect the sufficiency of the notice; x x x”
(emphases supplied)
An extra-judicial foreclosure sale is an action in rem and thus
requires only notice by publication and posting to bind the
parties in the foreclosed property. No personal notice is
necessary (Langkaan Realty Dev’t., supra; Bohanan v. CA,
supra; Fortune Motors, 265 SCRA 72).
A certificate of posting is not required, much less considered
indispensable, for the validity of a foreclosure sale under Act
3135 – it is significant only in the matter of providing
compliance with the required posting of notice (Bohanan v. CA,
256 SCRA 355; Olizon v. CA, 256 SCRA 355; Cristobal v. CA, 328
SCRA 256 [2000]; DBP v. CA, GR No. 125838, 10 June 2003).
The failure to post a notice is not per se a ground for
invalidating the sale provided that the notice thereof is duly
published in a newspaper of general circulation (DBP v.
Aguirre, GR No. 144877, 07 September 2001).
However, the failure to publish the notice of auction sale as
required by the statute constitutes a jurisdictional defect
which invalidates the sale (DBP v. Aguirre, GR No. 144877, 07
Sept. 2001).
The affidavit of publication executed by the publisher,
business/advertising manager that a newspaper is a
newspaper of general circulation constitutes prima facie
evidence of compliance with the requisite publication
(Bonnevie v. CA, 125 SCRA 122 [1983]; Sadang v. GSIS, 18 SCRA
491).
A single act of posting the notice of auction sale satisfies the
requirements of law. The burden of proving that the posting
requirement was not complied with is shifted to the one who
alleges non-compliance (Bonnevie v. CA, 125 SCRA 122 [1983]).
Purpose of Notice and Publication:
The object of a notice of sale is to inform the public of the
nature and condition of the property to be sold, and inform of
the time, place and terms of the sale. Notices are given for the
purpose of securing bidders and to prevent a sacrifice of the
property (Olizon v. CA, 236 SCRA 148). Publication, therefore,
is required to give the foreclosure sale a reasonably wide
publicity such that those interested might attend the public
sale (Ouano v. CA, 129279, 04 March 2003).
The notice and publication requirement are mandatory and
failure to comply is a jurisdictional defect that vitiates the
foreclosure auction sale.
Non-compliance with the notice and publication requirement
in Act 3135, as amended is a jurisdictional defect that vitiates
the auction sale (Tambunting v. CA, 167 SCRA 16).
“The rule is that statutory provisions governing publication of
notice of mortgage foreclosure sales must be strictly complied
with, and that even slight deviation therefrom will invalidate
the notice and render the sale at least voidable. x x x It has
been held that failure to advertise a mortgage foreclosure sale
in compliance with statutory requirements constitute a
jurisdictional defect invalidating the sale and that a substantial
error or omission in a notice of sale will render the notice
insufficient and vitiate the sale.” (Tambunting v. CA, 167 SCRA
16).
Statutory provisions governing publication of notice of
mortgage foreclosure sales must be strictly complied with and
slight deviations therefrom will invalidate the notice and
render the sale at the very least voidable (PNB v. Nepomuceno
Productions, Inc., GR No. 139479, 27 December 2002; Ouano v.
CA, GR No. 129279, 04 March 2003; Lucena v. CA, 313 SCRA47,
[1999]).
The failure to publish the notice of auction sale as required by
the statute constitutes a jurisdictional defect which invalidates
the sale (DBP v. Aguirre, GR No. 144877, 07 September 2001).
The right of a bank to foreclose a mortgage upon the
mortgagor’s failure to pay his obligation must be exercised
according to its clear mandate and every requirement of the
law must be complied with, lest the valid exercise of the right
end. The valid exercise of the right ends when the right
disappears, and it disappears when it is abused especially to
the prejudice of others (PNB v. Nepomuceno, supra.).
The parties have no right to waive the notice and publication
requirements. There is no estoppel in case of an agreement to
dispense with the notice and publication requirements.
The parties have absolutely no right to waive the posting and
publication requirements (PNB v. Nepomuceno Productions,
Inc., GR No. 139479, 27 December 2002; Ouano v. CA, GR No.
129279, 04 March 2003). Foreclosure auction sale is imbued
with public policy considerations and any waiver on the notice
and publication requirements would be inconsistent with the
intent and letter of Act 3135, as amended (PNB v.
Nepomuceno, supra.).
To request postponement of the sale is one thing; to request it
without need of compliance with the statutory requirements
is another. Therefore, a party is not estopped from
questioning the validity of the foreclosure sale for non-
compliance with Act 3135 (PNB v. Nepomuceno, supra.).
Publication, therefore, is required to give the foreclosure sale
a reasonably wide publicity such that those interested might
attend the public sale. To allow the parties to waive this
jurisdictional requirement would result in converting into a
private sale what ought to be a public auction (Ouano v. CA, GR
No. 129279, 04 March 2003).
In the case of DPB v. CA, GR No. 125838, 10 June 2003, the
Supreme Court clarified that:
“The form of the notice of extrajudicial sale is now prescribed
in Circular No. 7-2002 issued by the Office of the Court
Administrator on 22 January 2002. Section 4(a) of Circular No.
7-2002 provides that: x x x The last paragraph of the prescribed
notice of sale allows the holding of a rescheduled auction sale
without reposting or republication of the 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. If the notice of auction sale contains this
particular information, whether or not the parties agreed to
such rescheduled date, there is no more need for the reposting
or republication of the notice of the rescheduled auction sale.”
Personal notice to the mortgagor is REQUIRED if it is stipulated.
There being no contractual stipulation therefore, personal
notice is not necessary and what governs is the general rule in
Section 3 of Act 3135, as amended, which directs the posting
of notices of the sale in at least three (3) public places of the
municipality where the property is situated, and the
publication therefore in a newspaper of general circulation in
said municipality (PNB v. International Corporate Bank, 199
SCRA 508).
Act 3135 only requires:
(1) the posting of notices of sale in three public places,
and
(2) the publication of the same in a newspaper of
general circulation.
Personal notice to the mortgagor is not necessary.
Nevertheless, the parties to the mortgage contract are not
precluded from exacting additional requirement (Metrobank
v. Wong, GR No. 120859, 26 June 2001; Concepcion v. CA, 274
SCRA 614). Thus, while publication of the foreclosure
proceedings in the newspaper of general circulation was
complied with, personal notice is still required when the same
was mutually agreed upon by the parties as additional
condition of the mortgage contract. Failure to comply with
such stipulation is fatal (Community Savings & Loan
Association, Inc. v. CA, 153 SCRA 564; Grand Farms Inc. v. CA,
193 SCRA 748; Concepcion v. CA, GR No. 122079, 27 June
1997).
The rule is that statutory provisions governing publication of
mortgage foreclosure sales must be strictly complied with, and
that even slight deviation therefrom will invalidate the notice
and render the sale at least voidable. x x x Where required by
the statute or by the terms of the foreclosure decree, public
notice of the place and time of the mortgage foreclosure sale
must be given, a statute requiring it being held applicable to
subsequent sales as well as to the first advertised sale of the
property. It has been held that failure to advertise a mortgage
foreclosure sale in compliance with statutory requirements
constitutes a jurisdictional defect invalidating the sale and that
a substantial error or omission in a notice of sale will render
the notice insufficient and vitiates the sale (Tambunting v. CA,
167 SCRA 16, 23 [1988] citing Jalandoni v. Ledesma, 64 Phil
1058 & 59 CJS 1314, emphases supplied).
The failure to publish the notice of auction sale as required by
the statute constitutes a jurisdictional defect which invalidates
the sale (DBP v. Aguirre, GR No. 144877, 07 September 2001).
“The Act only requires (1) the posting of notices of sale in three
public places, and (2) the publication of the same in a
newspaper of general circulation. Personal notice to the
mortgagor is not necessary. Nevertheless, the parties to the
mortgage contract are not precluded from exacting additional
requirements. In this case, petitioner and respondent in
entering into a contract of real estate mortgage, agree inter
alia:
“all correspondence relative to this mortgage,
including demand letters, summonses, subpoenas,
or notifications of any judicial or extrajudicial action
shall be sent to the MORTGAGOR at 40-42 Aldeguer
St., Iloilo City, or at the address that may hereafter
be given in writing by the MORTGAGOR to the
MORTGAGEE.”
Precisely, the purpose of the foregoing stipulation is to apprise
respondent of any action which petitioner might take on the
subject property, thus according him the opportunity to
safeguard his rights. When petitioner failed to send the notice
of foreclosure sale to respondent, he committed a contractual
breach sufficient to render the foreclosure sale on November
23, 1981 null and void.” (Metrobank v. Wong, 359 SCRA 608
[2001])
The OLIZON CASE is an exception:
“Obviously, as correctly pointed out by respondent, what
prompted the Court to dispense with the posting requirement
is the “unusual nature of the attendant facts and the
peculiarity of the confluent circumstances” involved in Olizon.
It bears stressing that in the said case, the extrajudicial-judicial
foreclosure sale sought to be annulled was conducted more
than 15 years ago, thus, even on the equitable ground of
laches, the Olizons’ action for annulment of foreclosure
proceedings and certificate of sale was bound to fail. An
extrajudicial foreclosure sale is an action in rem and thus
requires only notice of publication and posting to bind the
parties in the foreclosed property. (Langkaan Realty Dev’t. v.
UCPB, GR No. 139437, 08 December 2000; Olizon v. CA, 2236
SCRA 148; Bohanan v. CA, 256 SCRA 355). No personal notice
is necessary to the mortgagor (Bonnevie v. CA, 125 SCRA 122;
Fortune Motors v. Metrobank, 265 SCRA 72) unless stipulated
upon by the parties (PNB v. International Corporate Bank, 199
SCRA 508; Community and Savings Loan Association, Inc. v. CA,
153 SCRA 564; Grand Farms Inc. v. CA, 193 SCRA 748).
Publication of the extrajudicial sale in a newspaper of general
circulation is more than sufficient compliance with the notice-
posting requirement of the law (Cristobal v. CA, 328 SCRA 256;
Gravina v. CA, 220 SCRA 178; Concepcion v. CA, 274 SCRA 614;
Olizon v. CA, 236 SCRA 148). The notice and publication
requirement are mandatory and failure to comply is a REDEMPTION
jurisdictional defect that vitiates the foreclosure auction sale
Redemption Period
(Tambunting v. CA, 167 SCRA 16). The parties have absolutely
no right to waive the posting and publication requirements. After the issuance of the certificate of sale to the highest
Foreclosure auction sale is imbued with public policy bidder, this shall be registered with the Register of Deeds
considerations and any waiver on the notice and publication where the property is located. At this point, the remaining
requirements would be inconsistent with the intent and letter right of the mortgagor/debtor is to redeem the property.
of Act 3135, as amended (PNB v. Nepomuceno, GR No.
1139479, 27 December 2002). Publication is therefore The period to redeem property sold extrajudicially following
required to give the foreclosure sale a reasonably wide the foreclosure of mortgage is one (1) year from the
publicity such that those interested might attend the public registration of the sheriff’s certificate of foreclosure
sale. To allow the parties to waive this jurisdictional sale (Bernardez v. Reyes, 201 SCRA 648; Section 6, Act 3135, as
requirement would result in converting into a private sale what amended).
ought to be public auction (Ouano v. CA, GR No. 129279, 04 In case the mortgagor is a juridical person Section 47, RA 8791,
March 2003). Notices are given for the purpose of securing the General Banking Law of 2000 provides: “Notwithstanding
bidders and to prevent a sacrifice of the property (Olizon v. CA, Act 3135, juridical persons x x x shall have the right to redeem
236 SCRA 148). the property in accordance with this provision 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 three (3) months after the foreclosure, whichever is
earlier.” Redemption period not suspended by TRO or a
separate civil case. The period to redeem was not suspended
by the institution of a separate civil case for annulment of
mortgage, foreclosure, etc. (Sumerariz v. DBP, 21 SCRA
1374; Unionbank v. CA, GR No. 134068, 25 June 2001) and
NEITHER is it suspended by the issuance of a TRO by the courts
(Peoples Financing Corp. v. CA, 192 SCRA 34).
Redemption Price

In case of redemption, a written notice of redemption must be

served on the officer who made the sale and a duplicate filed
with the applicable Register of Deeds (Rosales v. Yboa, 120
SCRA 869; Section 28[par. 3], Rule 39, Rules of Court). The
redemption price shall be: the purchase price with one percent
(1%) per month interest; assessment or taxes paid with 1% per
month interest (Section 28, Rule 39). When the mortgagee is
a bank or a banking or credit institution, the redemption price
is that which is stipulated in the mortgage document or the
outstanding obligation of the mortgage plus interest and
expenses (Unionbank v. CA, GR No. 134068, 25 June 2001;
Ponce de Leon v. RFC, 36 SCRA 289; Sy v. CA, 172 SCRA
125). The redemption amount includes the assessment of
taxes paid by the purchaser and the interest on the auction
price that should be computed from the date of the
registration of the certificate of sale (Sps. Estanislao, Jr. v. CA,
GR No. 143687, 31 July 2001).

Effect of failure to redeem.

If no redemption is made within the prescribed period, the

buyer at foreclosure sale becomes the absolute owner of the
property purchased (Joven v. CA, 212 SCRA 700; PNB v. Adil,
118 SCRA 110). The purchaser then has the absolute right to a
writ of possession that is the final process to carry out or
consummate the extrajudicial foreclosure. Henceforth, the
mortgagor/debtor loses his right over the property (Bernardez
v. Reyes, 201 SCRA 648; Section 6, Act 3135, as amended).
Consolidation of title likewise becomes a matter of right on the
part of the auction buyer, and the issuance of a certificate of
title in favor of the purchaser becomes ministerial upon the
Register of Deeds (Unionbank v. CA, GR No. 133366, 05 August
1999).

Redemption v. Repurchase

The right to redeem (a foreclosed property) becomes functus

oficio on the date of its expiry, and its exercise after the period
is not really one of redemption but of repurchase. Distinction
must be made because redemption is by force of law; the
purchaser at public auction is bound to accept redemption.
Repurchase however of a foreclosed property, after
redemption period, imposes no such obligation. After expiry,
the purchaser may or may not resell the property but no law
will compel him to do so. And, he is not bound by the bid price;
it is entirely within his discretion to set a higher price, for after
all, the property already belongs to him as owner (Prudencio v.
CA, 431 SCRA 566).