Pag-IBIG Foreclosed Property Bidding in the Philippines
A comprehensive legal guide for prospective buyers, lawyers, brokers and lenders
1 Legal Foundations
| Instrument | Key Points |
|---|---|
| Republic Act No. 9679 (HDMF Charter) | Converts Pag-IBIG into a government-owned and controlled corporation (GOCC) with corporate powers to foreclose, acquire, manage and dispose of real estate securing defaulted housing loans. |
| Rule 68, 2019 Amendments to the Rules of Court | Governs judicial foreclosure procedure; Pag-IBIG normally forecloses extra-judicially under Act 3135 (as amended by Act 4118). |
| Act No. 3135 | Allows extra-judicial foreclosure of real property mortgages by the mortgagee through a sheriff or notary public after 30-day demand. |
| Supreme Court A.M. 99-10-05-O | Supersedes scattered circulars; fixes uniform extra-judicial foreclosure fees and venue. |
| Urban Development & Housing Act of 1992 (RA 7279) | Imposes 3-month grace period and relocation requirements before eviction of qualified socialized housing beneficiaries occupying foreclosed property. |
| Pag-IBIG Circulars (latest series: Nos. 454-B, 459, 464, 478 & 497) | Detail classification of assets, bidding modalities, discounts, payment terms, broker accreditation, and e-bidding mechanics. |
Take-away: Pag-IBIG’s authority to foreclose and auction comes straight from its charter; the conduct of foreclosure follows Act 3135, while the disposition (bidding) is an administrative sale governed by its own circulars—not the sheriff’s auction rules.
2 Asset Pipeline: From Default to Bidding
Loan Default – Borrower misses three consecutive monthly amortisations (or triggers other events of default).
Demand & Pre-Foreclosure Loss-Mitigation
- Remedial options: restructuring, dacion en pago, or short sale.
- Mandatory pre-foreclosure notices under BSP and HDMF servicing guidelines.
Extra-Judicial Foreclosure Sale
- Conducted before a notary public or sheriff; highest bidder is usually Pag-IBIG itself via credit bid equal to the total debt, interest, penalties and costs.
Consolidation of Title
- After failure of mortgagor to redeem within the 1-year statutory period (for judicial foreclosures) or 90 days (for extra-judicial) plus 5-day grace under Act 3135 §6.
Asset Classification
- Acquired Assets (AA) – already titled under Pag-IBIG’s name; Property Under Redemption (PUR) – still within redemption; and Occupied vs. Vacant.
Public Bidding / Negotiated Sale – the focus of this article.
3 Who May Bid?
- Filipino citizens, naturalized Filipinos, and dual citizens under RA 9225.
- Domestic corporations & cooperatives 60 % Filipino-owned (Constitution Art. XII, §11).
- Foreign nationals may not purchase lands but may bid for condominium units (up to 40 % of total project or building floor area) under the Condominium Act.
- Pag-IBIG employees, officers, and their relatives up to 2nd degree are disqualified.
4 Types of Disposition Events
| Mode | Asset Status | Pricing Method | Typical Discount | Occupancy |
|---|---|---|---|---|
| Sealed Public Bidding | Newly listed AAs & PURs | Minimum bid price fixed by appraisal committee | 0 – 30 % of FVM | May be occupied |
| e-Bidding (online) | AAs with clean titles | Dynamic ranking; real-time updates | 10 – 35 % | Vacant preferred |
| 1st Negotiated Sale | Unsold after 1 public bidding | Fixed price | Additional 5 % | Varies |
| 2nd Negotiated Sale | Unsold after 2 rounds | Fixed price | Up to 40 % | Often occupied |
| Bulk or Portfolio Sale | Large clusters of assets | Swiss Challenge or negotiated | Up to 50 % | Mixed |
Pag-IBIG publishes monthly “Invitation to Bid” (ITB) per branch. Check the Acquired Assets page or the PhilGEPS portal.
5 Step-by-Step Bidding Procedure
5.1 Pre-Bid Due Diligence
Site Inspection
- Verify physical boundaries versus technical description; watch out for boundary disputes and informal settlers.
Title Verification at the Registry of Deeds
- Ensure Original/Transfer Certificate of Title (OCT/TCT) is clean (no adverse claims, liens, CARP annotations).
Tax Clearance
- Check Real Property Tax (RPT) arrears with local treasurer. Pag-IBIG often shoulders delinquencies incurred before date of consolidation, but buyers must shoulder current quarter onwards.
Zoning / LGU clearances
- Confirm permitted land use, especially for commercial bids.
Subdivision/Homeowners’ Dues
- Ask for statement of account; arrears rarely waived.
5.2 Bid Submission
| Requirement | Details |
|---|---|
| Bid Form (HDMF-AA-BF) | One property per form; signed under oath. |
| Bid Bond | ₱1,000 or 10 % of bid price, whichever is higher; manager’s cheque payable to Pag-IBIG Fund. |
| Photocopies of Government ID | For individuals; SEC/DTI docs for entities. |
| Authority to Deduct | If bidder is an active Pag-IBIG member planning to loan the balance. |
| Broker Accreditation (optional) | Must attach valid Authority to Sell if bidding through a licensed broker. |
Seal all documents in an envelope; indicate reference number, lot/unit number, and bid price. Submit to the Committee on Disposition of Acquired Assets (CDAA) desk on or before the deadline (usually 5 pm of auction day).
5.3 Opening of Bids & Award
- Conducted the next working day at the branch social hall or via Zoom for e-bidding.
- Winning criterion: highest bid ≥ minimum price and compliant with documentary checklist.
- Tie-breaking: sealed verbal bidding or toss coin.
- Notice of Award (NOA): issued within 5–10 working days.
5.4 Post-Award Payments
| Mode | Down-payment | Balance | Interest | Term |
|---|---|---|---|---|
| Cash | 100 % within 30 days | N/A | N/A | N/A |
| Short-Term Installment | 10 % w/in 30 days | 90 % interest-free | Up to 12 months | |
| Pag-IBIG Housing Loan | 5 % within 30 days | 95 % amortised | Prevailing HDMF rate (as low as 6.25 % p.a. fixed 3 years) | Up to 30 years |
| Deferred Payment | 20 % within 30 days | 80 % at 9 % p.a. | 2 years |
Failure to pay the down-payment annuls the NOA and forfeits the bid bond.
6 Taxes, Fees & Closing Costs
| Item | Who Pays | Statutory Rate/Remarks |
|---|---|---|
| Capital Gains Tax (CGT) | Waived (Pag-IBIG is a GOCC exempt per RA 9679) | |
| Documentary Stamp Tax | Buyer | 1.5 % of higher of bid price or zonal value |
| Transfer Tax | Buyer | 0.5 %–0.75 % depending on LGU |
| Registration Fees (ROD) | Buyer | Graduated; see LRA circulars |
| Real Property Tax (current) | Buyer | pro-rated from date of NOA |
| VAT | Not applicable (Pag-IBIG’s sale of foreclosed property is an isolated transaction under Sec. 109(1)(V), NIRC) | |
| Association Dues | Buyer | As billed by HOA |
7 Interaction with Occupants and Redemption Rights
Redemption Period
- For extra-judicial foreclosures: 1 year after registration of certificate of sale (COS) – only the mortgagor may redeem, not third parties.
- If property is still within this period, buyer’s title will be annotated as subject to redemption.
Writ of Possession (WOP)
- Once consolidation is annotated, Pag-IBIG (or the awarded buyer by subrogation) may move for a WOP; RTC/MTC must issue ex-parte under Act 3135.
Informal Settlers / Socialized Housing Occupants
- LGU and PAG-IBIG must comply with UDHA: 30-day notice, options for relocation; eviction may take 3–12 months.
Residential Rent Control (RA 9653)
- If tenants were in place pre-acquisition, 3-month grace before ejectment and refund of deposit.
8 Practical Tips for Bidders
| Tip | Why It Matters |
|---|---|
| Attend Pre-Bid Conferences | CDAA secretariat clarifies obscure liens, updated pricing, and occupancy status. |
| Bring a surveyor | Many AAs have missing monuments; resurvey cost falls on buyer. |
| Bid Aggressively on Occupied Assets | Fewer competitors; discount can offset ejectment expenses. |
| Check Pag-IBIG’s Member Services Branch (MSB) | Some properties have pending appraisal adjustments you can leverage to lower bid. |
| Leverage Combination Financing | Pay 10 % cash to lock in, use HDMF End-User Home Loan for balance; amortization starts only after full release. |
| Compute Effective Yield if you plan to rent out—include vacancy during ejectment. |
9 Common Legal Pitfalls
- Mistaking Certificate of Sale for Ownership – Ownership ripens only after consolidation & issuance of new TCT.
- Ignoring Real Property Tax Liens – RPT attaches to land, not owner; ask for updated tax declaration.
- Assuming CGT is always waived – If asset is Dacion (acquired via payment in kind), CGT may have been paid; verify capital gains clearance.
- Overlooking HOA litigation – Some subdivisions sue Pag-IBIG for unpaid dues; buyers inherit exposure.
- Not Registering the NOA – The NOA itself is not registrable; what must be annotated is the Deed of Conditional Sale or Deed of Absolute Sale. Delay invites double sale claims.
10 Timeline Snapshot (Typical Sealed Bid)
| Day | Milestone |
|---|---|
| 0 | Pag-IBIG publishes ITB |
| 1-20 | Due diligence period |
| 21 (5 pm) | Deadline for envelope submission |
| 22 (10 am) | Opening of bids & announcement |
| 30 | NOA issuance |
| 60 | Deadline for down-payment / loan application |
| 90-120 | Signing of Deed of Sale |
| 150 | Entry at Registry of Deeds |
| 180-360 | Turn-over / eviction completed |
11 Frequently Asked Questions
Q1: Can I use my existing Pag-IBIG membership savings as part of the bid bond or down-payment? A: No. Savings may only be applied as equity for an End-User Home Loan after award, not as bid security.
Q2: Is the 12 % VAT exempt even if the asset is commercial? A: Yes, so long as Pag-IBIG is the seller and the sale is its own foreclosed property; BIR confirms exemption in RMC 44-2013.
Q3: What happens if my housing loan is denied after award? A: You may either (a) convert to Deferred Cash terms at nine-percent interest, or (b) cancel the award and forfeit the bid bond.
Q4: Are brokers’ commissions built into bid prices? A: No. Pag-IBIG pays brokers up to 5 % separately; it does not affect the minimum bid price.
12 Compliance Checklist for Counsel
- ☐ Verified title & tax declaration
- ☐ Confirmed redemption period lapse
- ☐ Ensured property is not timberland, foreshore, or ancestral domain
- ☐ Secured original bidding guidelines (latest circular)
- ☐ Reviewed loan proceeds computation if financing
- ☐ Drafted board resolution (if corporation) authorizing bid
- ☐ Prepared affidavit of non-relationship for disqualified Pag-IBIG insiders
- ☐ Scheduled sheriff or RTC coordination for Writ of Possession, if occupied
13 Conclusion
Buying Pag-IBIG-foreclosed assets remains one of the few ways ordinary Filipinos can acquire real estate at 20 %–50 % below market with government-backed financing. Yet it sits at the intersection of mortgage law, HDMF circulars, tax regulation, and socialized-housing policy. Successful bidders treat the process not merely as an auction but as a legal transaction requiring meticulous due diligence, strategic price modelling, and post-award enforcement.
This article is for informational purposes only and does not constitute legal advice. Always consult a Philippine lawyer or licensed broker before bidding.