REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
QUEZON CITY

FIFTEENTH CONGRESS,
FIRST REGULAR SESSION

HB.NO_8673

Introduced by HON. AL FRANCIS C. BICHARA

EXPLANATORY NOTE

During this time of global financial recession, there is an impending need to
protect the interest not only of banks but other financial institutions in the country in
order to ensure the long-term financial stability of our economy. Undeniably, the power
to collect loans and/or credits when due strengthens the ability of banks and financial
creditors to sustain themselves. Some of the major contributing factors in the collapse of
Lehman Brothers and other established institutions in Wall Street are the lax standards of
lenders in approving mortgages and other easy credit innovations, which led to its
eventual failure to collect loans upon maturity.

In the Philippines, loans, most especially those involving large amounts of money,
are usually secured by real estate mortgages. Unfortunately, the power of banks to collect
and foreclose said real estate mortgages upon default of the debtor are usually hampered
by the injunctive power of the courts, which are sometimes used by cunning debtors
unjustifiably.

It is important to remember however, that, public auction sales arising from extra-
judicial foreclosure of real estate mortgages generally enjoys the presumption of
regularity. More importantly, even the Supreme Court has already adopted measures to
temper the injunctive powers of courts in relation to extra-judicial foreclosure
proceedings, in order to fully protect the interest of innocent lenders and/or creditors.

This bill seeks to prohibit courts from issuing restraining orders or preliminary
injunctions in cases involving public auction sales arising from the foreclosure of Real
Estate Mortgages in the Philippines, provided all the requisites provided for under Act
No. 3135 are complied with, in order to protect the interest of banks and other financial
institutions against scheming and unscrupulous debtors who abuse court procedures to
evade their valid financial obligations.

In view of the foregoing considerations, approval of thjg bill is quested.

AL FRANCIS C, BICHARA
2" Disfrict, Albay


FIFTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
FIRST REGULAR SESSION )

HB.NOS673

Introduced by HON. AL FRANCIS C. BICHARA.

AN ACT PROHIBITING COURTS FROM ISSUING RESTRAINING ORDERS
OR PRELIMINARY INJUNCTIONS IN CASES INVOLVING PUBLIC
AUCTION SALES ARISING FROM EXTRA-JUDICIAL FORECLOSURE OF
REAL ESTATE MORTGAGES IN THE PHILIPPINES, AND FOR OTHER
PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

Section 1. No court in the Philippines shall have the jurisdiction to issue any
restraining order, preliminary injunction, or preliminary mandatory injunction in any
case, dispute or controversy involving public auction sales arising from foreclosure of
real estate mortgages, including the prohibition of any person or persons, entity or
governmental official from proceeding with, or continuing the execution or
implementation of public auction sales arising from the extra-judicial foreclosure of real
estate mortgages, provided that the following basic essential requisites are duly complied
with, to wit: The Notice of Sale has been 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 such property is worth more than P400.00, that such notice has been published once a
week for at least three (3) consecutive weeks in a newspaper of general circulation in the
municipality and/or city.

Section 2. Notwithstanding the absence of the basic essential requisites as
provided for in the preceding section, no restraining order, preliminary injunction, or
preliminary mandatory injunction shall issue when the mortgagor has clearly established
that the loan secured by the real estate mortgage is due and demandable and that the
‘mortgagee is delinquent in his payments and/or has failed to make payments.

____ Seetion 3. No restraining order, preliminary injunction, or preliminary mandatory
injunction shall issue based solely on the following allegations of the mortgagee:

a) That the loan secured by the real estate mortgage has been paid, or is not
delinquent;

b) That the interest in the loan secured by the real estate mortgage is
unconscionable.


Section 4. Public auction sales arising from the extra-judicial foreclosure of real
estate mortgages shall at all times be presumed regular and all public officers acting
pursuant thereto shall be presumed to have performed their duties in a regular manner.

Section 5. Repealing Clause —All laws, decrees, executive orders, rules and
regulations and other issuances or parts thereof which are inconsistent with this Act are
hereby repealed or modified accordingly.

Section 6. Effectivity.—This Act shall take effect upon its approval.

Approved.