The Supreme Court in a recent ruling said foreign banks may not own land but they may possess mortgaged properties subject to conditions.

After the effectivity of Republic Act 10641 that allowed full entry of foreign banks in the Philippines, foreign banks may now foreclose and acquire mortgaged properties, subject to limitations.

In a decision penned by Associate Justice Jhosep Y. Lopez, the SC Second Division, denied the consolidated petitions for review on certiorari filed by 4E Steel Builders Corporation, or 4E Steel, and Spouses Filomeno and Virginia Ecraela and Maybank Philippines, Inc.

The petitions assailed the issuances of the Court of Appeals, or CA, which had annulled the foreclosure sale and canceled the registration of parcels of land in favor of Maybank and ordered spouses Ecraela to pay Maybank their total loan obligation.

On appeal, the CA ruled that Maybank is disqualified from taking part in the extrajudicial foreclosure sale of the properties under the law then in effect, RA 133, as amended by RA 4882, since majority of Maybank's capital stock is owned and controlled by foreign nationals.

Credit agreement 

Maybank, a foreign banking corporation operating in the Philippines, in 1999 executed a credit agreement in favor of 4E Steel, represented by Filomeno Ecraela as president and Virginia Ecraela as corporate secretary.

To secure payment of drawdowns on the credit line, spouses Ecraela mortgaged five parcels of land.