ACT NO.

3135

AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO
REAL-ESTATE MORTGAGES

Section 1. When a sale is made under a special power inserted in or attached to any real-estate mortgage
hereafter made as security for the payment of money or the fulfillment of any other obligation, the
provisions of the following election shall govern as to the manner in which the sale and redemption shall
be effected, whether or not provision for the same is made in the power.

Sec. 2. Said sale cannot be made legally outside of the province in which the property sold is situated; and
in case the place within said province in which the sale is to be made is subject to stipulation, such sale
shall be made in said place or in the municipal building of the municipality in which the property or part
thereof is situated.

Sec. 3. 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 at least three consecutive
weeks in a newspaper of general circulation in the municipality or city.

Sec. 4. The sale shall be made at public auction, between the hours or nine in the morning and four in the
afternoon; and shall be under the direction of the sheriff of the province, the justice or auxiliary justice of
the peace of the municipality in which such sale has to be made, or a notary public of said municipality,
who shall be entitled to collect a fee of five pesos each day of actual work performed, in addition to his
expenses.

Sec. 5. At any sale, the creditor, trustee, or other persons authorized to act for the creditor, may
participate in the bidding and purchase under the same conditions as any other bidder, unless the contrary
has been expressly provided in the mortgage or trust deed under which the sale is made.

Sec. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to,
the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any
person having a lien on the property subsequent to the mortgage or deed of trust under which the
property is sold, may redeem the same at any time within the term of one year from and after the date
of the sale; and such redemption shall be governed by the provisions of sections four hundred and sixty-
four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these are not
inconsistent with the provisions of this Act.

Sec. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First
Instance of the province or place where the property or any part thereof is situated, to give him possession
thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property
for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without
violating the mortgage or without complying with the requirements of this Act. Such petition shall be
made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the
property is registered, or in special proceedings in the case of property registered under the Mortgage
Law or under section one hundred and ninety-four of the Administrative Code, or of any other real
property encumbered with a mortgage duly registered in the office of any register of deeds in accordance
with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect
the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four
hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court
shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the
province in which the property is situated, who shall execute said order immediately.

Sec. 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty
days after the purchaser was given possession, petition that the sale be set aside and the writ of
possession cancelled, specifying the damages suffered by him, because the mortgage was not violated or
the sale was not made in accordance with the provisions hereof, and the court shall take cognizance of
this petition in accordance with the summary procedure provided for in section one hundred and twelve
of Act Numbered Four hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall
dispose in his favor of all or part of the bond furnished by the person who obtained possession. Either of
the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered
Four hundred and ninety-six; but the order of possession shall continue in effect during the pendency of
the appeal.

Sec. 9. When the property is redeemed after the purchaser has been given possession, the redeemer shall
be entitled to deduct from the price of redemption any rentals that said purchaser may have collected in
case the property or any part thereof was rented; if the purchaser occupied the property as his own
dwelling, it being town property, or used it gainfully, it being rural property, the redeemer may deduct
from the price the interest of one per centum per month provided for in section four hundred and sixty-
five of the Code of Civil Procedure.

Sec. 10. This Act shall take effect on its approval.

Approved: March 6, 1924

[A.M. No. 99-10-05-0. August 7, 2001]

(AS FURTHER AMENDED, AUGUST 7, 2001)

PROCEDURE IN EXTRA-JUDICIAL FORECLOSURE OF MORTGAGE

In line with the responsibility of an Executive Judge under Administrative Order No. 6, dated June 30,
1975, for the management of courts within his administrative area, included in which is the task of
supervising directly the work of the Clerk of Court, who is also the Ex-Office Sheriff, and his staff, and the
issuance of commissions to notaries public and enforcement of their duties under the law, the following
procedures are hereby prescribed in extrajudicial foreclosure of mortgages:

1. All applications for extra-judicial foreclosure of mortgage whether under the direction of the sheriff or
a notary public, pursuant to Act 3135, as amended by Act 4118, and Act 1508, as amended, shall be filed
with the Executive Judge, through the Clerk of court who is also the Ex-Officio Sheriff.

2. Upon receipt of an application for extra-judicial foreclosure of mortgage, it shall be the duty of the Clerk
of Court to:
a) receive and docket said application and to stamp thereon the corresponding file number, date and time
of filing;

b) collect the filing fees therefore pursuant to rule 141, Section 7(c), as amended by A.M. No. 00-2-01-SC,
and issue the corresponding official receipt;

c) examine, in case of real estate mortgage foreclosure, whether the applicant has complied with all the
requirements before the public auction is conducted under the direction of the sheriff or a notary public,
pursuant to Sec. 4 of Act 3135, as amended;

d) sign and issue the certificate of sale, subject to the approval of the Executive Judge, or in his absence,
the Vice-Executive Judge. No certificate of sale shall be issued in favor of the highest bidder until all fees
provided for in the aforementioned sections and in Rule 141, Section 9(1), as amended by A.M. No. 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;

e) after the certificate of sale has been issued to the highest bidder, keep the complete records, while
awaiting any redemption within a period of one (1) year from date of registration of the certificate of sale
with the Register of Deeds concerned, after which, the records shall be archived. Notwithstanding the
foregoing provision, juridical persons whose property is sold pursuant to an extra-judicial foreclosure,
shall have the right to redeem the property until, but not after, the registration of the certificate of
foreclosure sale which in no case shall be more than three (3) months after foreclosure, whichever is
earlier, as provided in Section 47 of Republic Act No. 8791 (as amended, Res. Of August 7, 2001).

Where the application concerns the extrajudicial foreclosure of mortgages of real estates and/or chattels
in different locations covering one indebtedness, only one filing 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 of payment indicating the amount of indebtedness, the filing fees collected, the mortgages
sought to be foreclosed, the real estates and/or chattels mortgaged and their respective locations, which
certificate shall serve the purpose of having the application docketed with the Clerks of Court of the places
where the other properties are located and of allowing the extrajudicial foreclosures to proceed thereat.

3. The notices of auction sale in extrajudicial foreclosure for publication by the sheriff or by a notary public
shall be published in a newspaper of general circulation pursuant to Section 1, Presidential Decree No.
1079, dated January 2, 1977, and non-compliance therewith shall constitute a violation of Section 6
thereof.

4. The Executive Judge shall, with the assistance of the Clerk of Court, raffle applications for extrajudicial
foreclosure of mortgage under the direction of the sheriff among all sheriffs, including those assigned to
the Office of the Clerk of Court and Sheriffs IV assigned in the branches.

5. The name/s of the bidder/s shall be reported by the sheriff or the notary public who conducted the sale
to the Clerk of Court before the issuance of the certificate of sale.

This Resolution amends or modifies accordingly Administrative Order No. 3 issued by then Chief Justice
Enrique M. Fernando on 19 October 1984 and Administrative Circular No. 3-98 issued by the Chief Justice
Andres R. Narvasa on 5 February 1998.
The Court Administrator may issue the necessary guidelines for the effective enforcement of this
Resolution.

The Clerk of Court shall cause the publication of this Resolution in a nuewspaper of general circulation not
later than August 14, 2001 and furnish copies thereof to the Integrated Bar of the Philippines.

This Resolution shall take effect on the 1st day of September of the year 2001.

Promulgated this 7th day of August 2001 in the City of Manila.