In an extrajudicial foreclosure under Act 3135, the sale must be preceded by posting of notice for not less than 20 days in at least three public places and, for property worth more than 400 pesos, publication once a week for at least three consecutive weeks in a newspaper of general circulation. The debtor may generally redeem within one year from the registration of the sale. Juridical persons foreclosed by a bank have a far shorter window under the General Banking Law.
Foreclosure is where a mortgage stops being paperwork. Yet borrowers routinely misunderstand it in both directions — some believe missing one payment costs them the house immediately, others believe they can stay indefinitely because “the case will take years.” Neither is right. This commentary explains how foreclosure actually works and where the real opportunities to save the property are.
Two Kinds of Foreclosure
A real estate mortgage may be foreclosed judicially, through a court action, or extrajudicially, without one. Extrajudicial foreclosure is by far the more common because it is faster, and it is available when a special power to sell is inserted in or attached to the mortgage — which is why virtually every bank mortgage contains one. That special power is what Act No. 3135 governs.
The Notice Requirements Are Jurisdictional
Because an extrajudicial foreclosure happens without a judge, the law’s protection for the debtor is publicity. Under Section 3 of Act 3135:
- Notice of the sale must be posted for not less than twenty (20) days in at least three (3) public places of the municipality or city where the property is situated; and
- If the property is worth more than four hundred pesos — which today means every property — the notice must also be published once a week for at least three (3) consecutive weeks in a newspaper of general circulation.
These are not formalities to be waved through. Defective publication is one of the most successful grounds for annulling a foreclosure sale, and it is the first thing a lawyer should check: the newspaper’s qualification, the actual dates, and the accuracy of the property description in the notice.
The Redemption Period: One Year
Losing the auction is not losing the property. Under Section 6, the debtor, his successors in interest, any judicial or judgment creditor, or any person having a lien subsequent to the mortgage may redeem the property within one year from and after the date of the sale. In practice the courts count that year from the registration of the certificate of sale with the Registry of Deeds, which is what gives constructive notice — so the registration date is the one to diarise.
To redeem, the debtor pays the purchase price plus the interest and the costs the law allows. If nobody redeems within the year, the purchaser becomes the absolute owner and may consolidate title.
The Trap for Companies: Three Months, Not One Year
This catches corporate borrowers badly. Under Section 47 of the General Banking Law (Republic Act No. 8791), and notwithstanding Act 3135, juridical persons whose property is sold in an extrajudicial foreclosure may redeem only until, but not after, the registration of the certificate of foreclosure sale with the Registry of Deeds, which in no case shall be more than three (3) months after foreclosure, whichever is earlier.
So a corporation, partnership, or other juridical entity whose property is foreclosed by a bank does not get a year. It may get only weeks, if the bank registers the certificate promptly. Owners who put property under a corporation for tax or estate reasons often have no idea they traded away eleven months of redemption.
The Writ of Possession
Borrowers are often shocked that the buyer can take possession during the redemption period. Under Section 7 of Act 3135, as amended by Act 4118, the purchaser may petition the court to be given possession of the property during the redemption period, furnishing a bond in an amount equivalent to the use of the property for a period of twelve (12) months. The issuance of the writ is generally treated as ministerial — the court does not weigh the merits of the loan dispute — which is why fighting the writ itself is usually the wrong battle. Act 3135 provides a separate remedy: a petition to set aside the sale and cancel the writ on the ground that the mortgage was not violated or the sale was not made in accordance with the law.
Where the Real Opportunities Are
Realistically, a borrower has four:
- Before default becomes foreclosure: negotiate a restructuring. Banks generally prefer a performing restructured loan to a foreclosed asset, and this is the cheapest moment to fix the problem.
- Attack the procedure: check the posting and publication, the notice, the special power, the amount claimed, and the sheriff’s compliance. Real defects annul sales.
- Redeem: within the year, by paying the price plus allowable interest and costs. Third-party financing to redeem is often cheaper than losing the equity.
- Sell before the auction: where there is real equity, a private sale almost always beats an auction price.
Practical Warnings
Two things kill claims. First, time: the redemption period runs whether or not you are negotiating, and a “the bank said they would consider it” conversation does not stop the clock. Get any restructuring in writing. Second, silence: borrowers who ignore the demand letters and the notices lose the chance to challenge the procedure while it is happening. If a foreclosure notice has been published against your property, treat it as urgent — the calendar is short, and it does not pause.
Frequently Asked Questions
How long do I have to redeem a foreclosed property? Generally one year. Under Section 6 of Act 3135 the debtor may redeem within one year from the sale, and the courts count that period from the registration of the certificate of sale with the Registry of Deeds. If nobody redeems, the purchaser becomes the absolute owner.
Is the redemption period different for a corporation? Yes, and it is much shorter. Under Section 47 of the General Banking Law, a juridical person whose property is extrajudicially foreclosed may redeem only until the registration of the certificate of foreclosure sale, and in no case more than three months after the foreclosure, whichever is earlier.
What notice is required before a foreclosure sale? Notice must be posted for not less than 20 days in at least three public places of the municipality or city where the property is located, and for property worth more than 400 pesos it must also be published once a week for at least three consecutive weeks in a newspaper of general circulation. Defective publication is a common ground to annul a sale.
Can the buyer take possession before my redemption period ends? Yes. The purchaser may petition the court for a writ of possession during the redemption period upon furnishing a bond equivalent to the use of the property for twelve months, and issuance is generally treated as ministerial. The separate remedy is a petition to set aside the sale where the mortgage was not violated or the sale did not comply with the law.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
If your property is facing foreclosure, or you need to assess a redemption or a defective sale, our firm can act quickly. You may reach us via Viber or WhatsApp, call us at 0995 433 5550, or send an email to vivasnobles@gmail.com. We look forward to hearing from you.