Appeals court upholds restraining order vs DBP on mortgaged land in Santiago City

THE COURT of Appeals has upheld the temporary restraining order (TRO) issued by a regional court against state-owned Development Bank of the Philippines (DBP) on the foreclosure of properties used as collateral by a private company for a P28-million loan.

The DBP foreclosed the properties on Aug. 28, 2012 and obtained new titles under its name on Nov. 23, 2012.

The borrower, New Wishing Star Trading Corp., asked the Santiago City Regional Trial Court (RTC) to nullify the foreclosure order and the new titles, and to issue a TRO against the bank, claiming that it was not yet in default of its loan obligation and it did not receive any notice of the foreclosure.

The RTC granted the company’s petition on May 28, 2020.

The DBP elevated the case before the Court of Appeals, seeking to reverse the TRO. It claimed that the lower court committed “grave abuse of discretion” in the issuance of the TRO.

DBP cited that under Presidential Decree 385, courts cannot prohibit government financial institutions from the conduct of foreclosures.

However, the Court of Appeals said in its decision dated June 14 that RTC did not commit grave abuse of discretion because PD 385 “does not prohibit courts from issuing a restraining order against these government financial institutions” but clearly states “the necessity of conducting a hearing before any restraining order is issued.”

The CA said the RTC duly conducted such hearings.

It further claimed that PD 385 seeks only to prevent the foreclosure of property mortgaged to a government financial institution.

In this case, the foreclosure proceedings have already been completed. —  Bianca Angelica D. Añago