(Philippine Legal and Practical Overview)

I. What Are Pag-IBIG “Acquired Assets”?

The Pag-IBIG Fund (Home Development Mutual Fund, HDMF) grants housing loans to members. When a borrower defaults and fails to redeem the property after foreclosure and applicable redemption periods, Pag-IBIG eventually becomes the owner. These properties are then classified as Acquired Assets and are offered for sale to the public.

Key points:

They are usually foreclosed or dacion-in-payment properties.
Titles are transferred to Pag-IBIG before resale.
Properties are sold “AS IS, WHERE IS” – the Fund generally makes no warranty as to physical condition, occupants, liens not known to it, and improvements.

These assets can be:

House and lot (subdivision housing)
Condominium units (with Condominium Certificate of Title, CCT)
Raw or developed lots
Townhouses, duplexes, apartments, etc.

II. Legal and Policy Framework

Pag-IBIG Charter – R.A. 9679
- Authorizes the Fund to acquire and dispose of real properties in connection with housing finance operations.
Civil Code & Property Law
- Sale of Pag-IBIG acquired assets is a contract of sale governed by general rules on obligations and contracts.
- Ownership is transferred upon delivery (often symbolized by the Deed of Absolute Sale and registration of title).
Auction and Government Disposal Rules (By Policy)
- Pag-IBIG follows internal guidelines and public bidding principles to ensure transparency: publication, minimum bid price, bid rules, etc.
Tax Laws
- Applicable taxes: Capital Gains Tax (CGT) or Creditable Withholding Tax (depending on classification), Documentary Stamp Tax (DST), transfer tax, registration fees, etc.
- Allocation of which party pays what is usually set in the contract and guidelines, and may differ from ordinary private sales.

III. Modes of Sale of Pag-IBIG Acquired Assets

Pag-IBIG generally disposes of acquired assets through:

Public Sealed Bidding / Auction
- Properties are grouped and offered at a minimum bid price.
- Interested buyers submit sealed bids.
- Highest complying bidder wins, subject to conditions.
Negotiated Sale / First-Come-First-Served
- For properties left unsold after bidding, or those specially designated for negotiated sale.
- The first qualified buyer who completes the reservation and documentary requirements gets the unit.
Bulk Sale / Portfolio Sale
- Multiple properties sold as a package (often for institutional or corporate investors).
- Requires more complex evaluation and documentation.
Special Offering Programs / Housing Fairs
- Pag-IBIG may hold housing fairs or caravans where acquired assets are offered under special terms, discounts, or interest rates.

The purchase procedure depends slightly on the mode, but common legal concepts and steps apply.

IV. General Principles Before Buying Any Acquired Asset

1. “As Is, Where Is” Basis

Legally crucial:

The buyer accepts the property in its present physical and legal condition.
Pag-IBIG does not guarantee:
- Structural soundness,
- Absence of informal settlers,
- Absence of unpaid association dues or utilities,
- Quality of repairs, finishes, or materials.

Because of this, due diligence is essential.

2. Due Diligence by the Buyer

A prudent buyer should:

Personally inspect the property (inside and outside, if possible).
Check for occupants (former owners, tenants, informal settlers).
Inquire with:
- Barangay / Homeowners’ Association (HOA) about peace and order issues and dues,
- City/Municipal Assessor and Treasurer about real property tax arrears,
- Utility companies about unpaid bills or service status.

3. Priority Rights of Former Borrower / Occupant

Pag-IBIG programs often recognize priority rights or right of first refusal of certain occupants (e.g., former borrower still in the unit), for a limited period. After such period, the property is opened to other buyers.

V. Purchase Procedure via Public Sealed Bidding

This is a typical framework; exact forms and deadlines are set by current Pag-IBIG guidelines.

Step 1: Identify Property and Read the Invitation/Bidding Rules

Locate the property in Pag-IBIG’s acquired assets listing (posted by branch/region).
Take note of:
- Property ID (TCT/CCT no., lot/block/unit, location),
- Appraised value / minimum bid price,
- Bid date, time, and venue or online platform,
- Required bid bond / deposit,
- Accepted payment modes (cash, short-term installment, long-term Pag-IBIG financing).

Step 2: Property Inspection and Verification

Visit the site personally or through a representative.
Take photos, ask neighbors or HOA about the history of the unit.
Verify title info at the Registry of Deeds (optional but recommended through an owner’s or certified true copy) to check encumbrances and exact technical description.

Step 3: Secure Bid Forms and Instructions

Obtain the Bid Offer Form and other required documents (often provided by Pag-IBIG branch/office).
Forms typically ask for:
- Personal data (or corporate information for entities),
- Property identification,
- Offered bid price,
- Preferred payment scheme (cash, installment, Pag-IBIG housing loan).

Step 4: Prepare Bid Bond / Deposit

To ensure seriousness, bidders are required to submit a bid bond (often in cash, manager’s check, or equivalent, in an amount or percentage specified by Pag-IBIG).
The bond is typically:
- Applied to the downpayment of the winning bidder; or
- Returned to losing bidders, subject to guidelines.

Step 5: Submission of Sealed Bid

Place the completed Bid Offer Form and proof of bid bond in a sealed envelope as per instructions (proper labelling, etc.).
Submit within the deadline at the specified venue or channel.
Late or incomplete bids are usually disqualified.

Step 6: Opening of Bids and Determination of Winner

On the bid date, Pag-IBIG opens all qualified bids.
The highest bid equal to or above the minimum bid price generally wins, subject to compliance with all rules.
In case of ties, there are tie-breaking procedures (e.g., additional bidding among tied bidders).

Step 7: Issuance of Notice of Award (NOA)

The winning bidder is issued a Notice of Award, stating:
- The property won,
- The awarded price,
- The payment terms selected,
- Deadlines for downpayment / full payment,
- Deadline to submit requirements for those availing of Pag-IBIG financing.

Failure to comply with the NOA conditions can result in forfeiture of the bid bond and cancellation of the award.

Step 8: Payment According to Chosen Mode

Depending on the chosen mode (cash, short-term installment, long-term Pag-IBIG loan):

Cash – pay the full purchase price (less bid bond) within the allowed period.
Installment – pay downpayment and subsequent amortizations directly to Pag-IBIG over a fixed short-term.
Pag-IBIG Housing Loan – submit loan application and documentary requirements; Pag-IBIG evaluates and, if approved, the long-term housing loan proceeds will be applied to the purchase price.

Step 9: Execution of Sale Documents

Depending on the mode and stage of payment:

Deed of Conditional Sale (DCS) – commonly used when the property is being paid on installment or through a housing loan where title transfer is conditional on full compliance.
Contract to Sell – may also be used in some program structures.
Deed of Absolute Sale (DOAS) – executed once full payment conditions are met and is used to transfer title.

VI. Purchase Procedure via Negotiated Sale / First-Come-First-Served

When a property is offered under negotiated sale:

Step 1: Confirm Availability and Status

Identify the property from the negotiated sale listing.
Confirm that it is still available and not reserved, and verify its mode of payment options.

Step 2: On-Site Inspection and Due Diligence

Same due diligence steps as above: inspect, verify occupancy, check environment, verify taxes (if possible), and assess estimated cost of repairs.

Step 3: Reservation / Letter of Intent

Usually, the process involves:

Submitting a Letter of Intent (LOI) or Offer to Purchase for negotiated sale using Pag-IBIG’s prescribed form.
Paying a reservation fee or equivalent (terms differ by program).
This often marks the “first-come” point; if two parties appear the same day, priority is usually based on time of complete submission.

Step 4: Payment Option and Pre-Qualification (if via Housing Loan)

The applicant chooses:

Cash: usually with possible discount vs. installment.
Short-term installment: spread over a shorter period.
Long-term Pag-IBIG Housing Loan: subject to standard membership and underwriting requirements.

If financing:

The buyer undergoes loan pre-qualification:
- Must meet Pag-IBIG membership requirements (monthly contributions, age, insurability, etc.).
- Must meet income and capacity-to-pay benchmarks.
- Must not be in default in any existing Pag-IBIG loan unless remedied under policies.

Step 5: Submission of Documentary Requirements

Typical documents (vary by buyer type, but often include):

For Individuals (Local)
- Government-issued IDs
- Pag-IBIG Membership proof (MID number, recent contributions)
- Tin (Tax Identification Number)
- Birth certificate / CENOMAR or marriage certificate (for civil status)
- Income documents (payslips, Certificate of Employment and Compensation, ITR, etc.)
For OFWs
- Passport and work visa / permit
- Employment contract or POEA documentation
- Proof of remittances / income, etc.
- Consularized SPA if represented by an attorney-in-fact.
For Corporations / Partnerships (Bulk or Corporate Purchase)
- SEC registration and Articles of Incorporation
- Board Resolution authorizing the purchase and designating signatories
- Secretary’s Certificate, TIN, etc.

Pag-IBIG specifies exact and updated requirements, and some documents must be notarized or consularized.

Step 6: Approval and Issuance of Notice of Approval / NOA

For cash/short-term: once requirements are complete, Pag-IBIG issues a Notice of Approval or similar document with payment schedule.
For long-term financing: once the housing loan is approved, a separate Notice of Approval (NOA) and other loan documentation (e.g., Loan and Mortgage Agreement) are prepared.

Step 7: Execution of DCS/DOAS and Other Documents

Buyer signs Deed of Conditional Sale, Loan and Mortgage Agreement (if applicable), and related documents.
After full compliance/payment, Pag-IBIG executes the Deed of Absolute Sale in favor of the buyer.

VII. Financing Modes in Detail

1. Cash Sale

Buyer pays the entire purchase price within the prescribed period.
Often eligible for a cash discount (subject to current program rules).
Title transfer can be processed comparatively faster after full payment and completion of documentary requirements.

2. Short-Term Installment (Deferred Cash)

Buyer pays a downpayment and then fixed monthly installments over a short term.
Typically no long-term mortgage is created, but strict rules apply on default.
DCS often governs until fully paid; then DOAS is executed.

3. Long-Term Pag-IBIG Housing Loan

Buyer pays a minimum equity/downpayment, and the balance is financed by Pag-IBIG under its regular housing loan program.
Terms typically include:
- Maximum loanable amount (subject to program ceiling and affordability)
- Loan term (e.g., up to a certain number of years depending on age and rules)
- Fixed or repricing-based interest rates as per Pag-IBIG circulars.
Borrower must:
- Be a Pag-IBIG member (with minimum required contributions, or the ability to pay in lump sum retroactive contributions),
- Be within the eligible age and insurability range,
- Have sufficient income and show capacity to pay the monthly amortization,
- Not have unresolved defaults in other Pag-IBIG obligations, subject to rehabilitation policies.

VIII. Taxes, Fees, and Transfer of Title

1. Typical Transactional Costs

A buyer should budget beyond the bid/offer price for:

Capital Gains Tax (CGT) or Withholding Tax
Documentary Stamp Tax (DST) on the sale and mortgage
Transfer tax (at the LGU where the property is located)
Registration fees at the Registry of Deeds
Notarial fees
Association dues (if any) and other arrears (depending on agreement)
Possible real property tax arrears and penalties (depending on allocation set in the sale terms)

Pag-IBIG often specifies in the Guidelines / Terms and Conditions which party shoulders which items. In many acquired asset programs, a large part of the incidental costs (transfer tax, registration, etc.) is borne by the buyer, but one must rely on the exact wording of the contract and Pag-IBIG circulars in effect at the time.

2. Title Transfer Process

After full payment and execution of the Deed of Absolute Sale:

Payment of CGT/withholding tax and DST at the BIR.
Issuance of Certificate Authorizing Registration (CAR) by BIR.
Payment of transfer tax at the LGU.
Submission to Registry of Deeds of:
- Owner’s duplicate title in Pag-IBIG’s name,
- DOAS,
- CAR,
- Tax clearances,
- Transfer tax receipt, etc.
Issuance of new TCT or CCT in buyer’s name.
Annotation of mortgage, if financed via Pag-IBIG housing loan.
Transfer of Tax Declaration to the buyer’s name at the Assessor’s office.

Only then does the buyer fully secure registered ownership, subject to any mortgage encumbrance.

IX. Occupancy and Ejectment Issues

1. If Property Is Vacant

After clearance from Pag-IBIG and upon execution of the relevant sale documents and/or release of loan proceeds, the buyer can take possession and change locks, fence, or secure the property.

2. If Property Is Occupied

Pag-IBIG usually sells even if occupied, under “as is, where is”:
- The buyer will have to address ejectment or settlement with occupants.
- This may involve:
  - Negotiated cash settlement for voluntary vacating, or
  - Filing an ejectment case (unlawful detainer / forcible entry) in court.
Buyers must carefully cost and factor in the time, expense, and risk of dealing with occupants when bidding on or reserving such units.

X. Common Issues and Practical Tips

Hidden Costs
- Repair and renovation expenses can be substantial.
- Budget for cleaning, structural repairs, plumbing/electrical work, and possible professional inspection.
Tax and HOA Arrears
- Confirm who shoulders past due taxes and HOA dues under the specific program guidelines and contract.
- Even if the seller (Pag-IBIG) shoulders some items, delays in settlement can affect title transfer timing.
Loan Denial Risk
- If buying through Pag-IBIG housing loan, a buyer who fails to qualify may lose the reservation and possibly part of fees (depending on rules).
- It’s wise to assess credit capacity and employment stability beforehand.
Compliance with Timelines
- Notices of Award and approval documents have strict deadlines for payment and submission of requirements.
- Non-compliance can lead to cancellation and forfeiture of bid bond or reservation fee.
Read All Fine Print
- Carefully read:
  - Guidelines for the specific bidding or negotiated sale tranche;
  - Terms and Conditions of Sale;
  - Deed of Conditional Sale / Contract to Sell;
  - Loan and Mortgage Agreement (if applicable).
Seek Professional Help if Needed
- Lawyers, brokers, or consultants experienced in Pag-IBIG acquired assets can help interpret terms, spot legal risks, and manage documentation.

XI. Summary

The purchase of Pag-IBIG acquired assets is a structured process with both legal and practical components:

Legally, it is a sale of foreclosed property owned by a government-controlled fund, governed by the Civil Code, Pag-IBIG’s charter, tax statutes, and internal Pag-IBIG guidelines.
Practically, the buyer must:
- Select property and choose a mode (public bidding / negotiated sale),
- Conduct thorough due diligence,
- Follow the prescribed steps (forms, bid/reservation, payments),
- Satisfy membership and underwriting rules if availing of a housing loan,
- Budget for taxes, fees, and repairs, and
- Actively manage possession and occupancy issues.

Handled properly, buying a Pag-IBIG acquired asset can offer significant savings compared to market prices, but it also carries higher responsibility and risk than purchasing a brand-new, developer-delivered unit.