In December 1999, Maybank granted 4E Steel Builders a credit agreement of up to P4,800,000. To secure the payment, 4E and Spouses Ecraela, officers of 4E, mortgaged several real properties.

 In 2001, Maybank renewed 4E's credit line. In 2003, the obligation became due and demandable. Maybank informed 4E about it. The Spouses Ecreala, however, questioned the amount demanded on the grounds that they only actually received P2,800,000. The balance of P2 million was an accommodation for another person, which was neither them nor 4E. Maybank rejected this argument and sent them the statement of account, which by then had already become more than P6 million, interest and penalty on interest included.

This prompted 4E to file an action with the trial court for accounting and reapplication of payments. Maybank, on the other hand, filed for foreclosure of the real estate mortgage. 4E was then joined by the spouses in the action and asked for an injunction against Maybank's foreclosure. The trial court denied the application for injunction. Thus, foreclosure proceeded. 

Maybank emerged as the highest bidder and acquired the mortgaged parcels of land. 4E and the spouses questioned the foreclosure, arguing that Maybank, a foreign bank, is disqualified from owning real property. In 2021, the trial court dismissed the complaint of 4E and the spouses. It ruled that the foreclosure was in order and the liability of 4E and spouses, as alleged by Maybank.

On appeal by 4E and the spouses, the Court of Appeals partially reversed the decision. It declared the foreclosure void since Maybank is a foreign bank. It, however, sustained the liability of the complainants to Maybank as Four Million Eight Hundred Thousand.

Both parties appealed to the Supreme Court. Among others, the ownership by a foreign bank was an issue to be resolved. This is how the Highest Tribunal resolved this issue.      

Maybank, as a foreign bank, cannot acquire lands in the Philippines. It may possess the mortgaged properties after default and solely for foreclosure, but it cannot participate in any foreclosure sale.

 At the outset, Maybank admitted that it is a foreign bank. "As a foreign bank, Maybank is authorized to operate in the Philippine banking system, with the same rights and privileges as Philippine banks." Under RA 8791 or the General Banking Law, banks are allowed to foreclose real estate mortgages and to acquire real properties mortgaged to them in good faith.

"SECTION 52. Acquisition of Real Estate by Way of Satisfaction of Claims.

— Notwithstanding the limitations of the preceding Section, a bank may acquire, hold, or convey real property under the following circumstances:

52.1. Such as shall be mortgaged to it in good faith by way of security for debts; Any real property acquired or held under the circumstances enumerated in the above paragraph shall be disposed of by the bank within a period of five (5) years or as may be prescribed by the Monetary Board: Provided, however, that the bank may, after said period, continue to hold the property for its own use, subject to the limitations of the preceding Section."

Be that as it may, the participation of a corporation in the foreclosure sale of real property was specifically governed by special laws.           (To be continued)