PROCLAMATION NO.

50 (apt) &
presidential decree no. 385
 PROCLAMATION NO. 50
PROCLAIMING AND LAUNCHING A PROGRAM FOR THE
EXPEDITIOUS DISPOSITION AND PRIVATIZATION
OF CERTAIN GOVERNMENT CORPORATIONS AND/OR
THE ASSETS THEREOF, AND CREATING THE
COMMITTEE ON PRIVATIZATION AND THE ASSET
PRIVATIZATION TRUST
1. Reducing the number of government corporations which has
proliferated to unmanageable proportions;
2. Circumscribing the areas of economic activities within which
government corporations may operate; and
3. Aiming to achieve these goals through the privatization of a
good number of government corporations, and the disposition
and liquidation of the non-relevant and non-performing assets
of retained corporations as the logical first step to their
rehabilitation.
 1. Assets shall include:
(i) receivables and other obligations due
to government institutions under credit,
lease, indemnity and other agreements
together with all collateral security

Definition of Terms. (ii) real and personal property of any kind

owned or held by government institutions;
(iii) shares of stock and other investments
held by government institutions; and
(iv) the government institutions
themselves, whether as parent or subsidiary
corporations.
 Definition of Terms.

(2) Government institution shall refer to government-owned or controlled

corporations, financial or otherwise, whether organized by special charter
as in the case of a parent corporation, or under general law as in the case
of subsidiary corporation.
 Definition of Terms.

(3) Committee shall refer to the Committee on Privatization (COP).

(4) Trust shall mean the Asset Privatization Trust (APT).
Committee on Privatization
 Responsibilities and
Objectives OF THE
COMMITTEE
(a) divesting to the private sector those assets with viable and
productive potential, and
(b) disposing of such other assets as may be transferred to it, generating
the maximum cash recovery for the National Government in the process.
condition TO be Privatization of Government assets
classified as a strategic industry by the

adhered to in
National Economic and Development Authority
shall first be approved by the President of
the Philippines.||| Sec.2 (c) RA 7181,
expressly repealed Sections 3 and 10 of

privatization: Proclamation No. 50

 Powers and Functions OF THE COMMITTEE
(1) To identify and arrange for transfer to the National Government and/or to
the Trust and the subsequent divestment to the private sector of:

(a) such non-performing assets as may be identified by the Committee and

approved by the President, and

(b) such government corporations, whether parent or subsidiary, and/or such of

their assets, as may have been recommended by the Committee for disposition,
and approved by the President.

- No such identification, recommendation, or approval shall be necessary where

a parent corporation decides on its own to divest of, in whole or in part, or
liquidate a subsidiary corporation organized under the Corporation Code.

- Any such independent disposition shall be undertaken with the prior approval
of the Committee and in accordance with the general disposition guidelines as
the Committee may provide.

- The sale or disposition shall be approved by the Committee with respect to

the buyer and price only.
 Powers and Functions OF
THE COMMITTEE
(2) To determine which of such assets shall be transferred to the Trust or referred to other
government institutions, for disposition and, pending disposition, for conservation and
management;

(3) To establish, mandatory as well as indicative, guidelines for the conservation,

rehabilitation and disposition of such assets, whether by the Trust or any other government
institution;

(4) To approve or disapprove, on behalf of the National Government, the sale or disposition
of such assets; Provided that, the Committee shall not itself undertake the marketing of any
such assets, or participate in the negotiation of their sale;
(5) In its discretion, to approve or disapprove,

Powers and Functions OF

the rehabilitation of assets pending disposition;

(6) To exercise on behalf of the National

Government rights of ownership with respect to
such assets;
THE COMMITTEE
Powers and Functions OF
(7) To issue necessary guidelines to all
government agencies to govern ongoing
negotiations on the disposal of government

THE COMMITTEE
corporate assets;

(8) To monitor and review as necessary from

time to time the entire privatization and
divestment program.
 While Proclamation No. 50
mandates that non-performing
(Bagatsing v. Committee on
assets should promptly be sold, Privatization, G.R. Nos.
112399 & 115994, [July 14,
it does not prohibit the 1995], 316 PHIL 404-435)
disposal of the other kinds of
assets, whether performing,
necessary or appropriate.
|||

Speaker: Pangapalan, Jeanie Mae A.

 The decision to privatize and the
approval of the COP to privatization,
being made in accordance with
Proclamation No. 50, cannot be
reviewed by the Court. Such acts are
exercises of the executive function
as to which the Court will not pass
judgment upon or injure into their
wisdom.
(Bagatsing v. Committee
on Privatization, G.R.
Nos. 112399 & 115994,
[July 14, 1995], 316
PHIL 404-435) CITING
Llamas v. Orbos, 202
SCRA 844 [1991])
ASSET PRIVATIZATION TRUST
 Asset Privatization Trust (Trust)

- take title to and possession of, conserve, provisionally

manage and dispose of assets which have been identified for
privatization or disposition and transferred to the Trust.
 Principal Purpose of the Trust

- shall be to effect or cause to be effected, directly

or through other external agencies, the disposition
within the shortest possible period of assets
transferred to the Trust for the purpose.
 (1) To formulate and, after approval by the
Committee, implement a program for the

Powers of the Asset

disposition of assets transferred to it.
(2) To sell each asset referred to it by

Privatization Trust.
the Committee to such party, and for such
purpose to execute and deliver such deeds
of sale, contracts and other instruments as
may be necessary or appropriate to convey
title to such assets;
 (3) To take title to and possession of and to
take such steps as may be necessary to conserve

Powers of the Asset

assets transferred to it by the Committee;

Privatization Trust.
(4) To undertake the rehabilitation of such
assets in instances where such rehabilitation is
necessary to conserve the value of such assets or
permit their sale.

(5) To engage such external expertise as may be

necessary for it to fulfill its task;
 (6) To lease or own real and personal property;
to borrow money and incur such liabilities as may
be reasonably necessary to permit it to carry out
the responsibilities imposed upon it; to receive
and collect interest, rent and other income from

Powers of the Asset

the corporations and assets held by it and to
exercise all rights, powers and privileges of
ownership including the ability to compromise and

Privatization Trust.
release claims or settle liabilities,
(7) To adopt its internal rules and regulations;
to enter into contracts; to sue and be sued; and
(8) To submit periodic reports to the Committee
on the status of the disposition program under
its responsibility, and such other reports as may
be required by the Committee.
 The COP is a cabinet-level
committee headed by the Secretary of
The APT, on the other hand,
Finance that decides which
was created to act solely as
assets the APT is to sell.
a trustee of the national
government with respect to
COP approval is required for all
assets assigned for
privatizations, whether recommended by
privatization.
the APT or other
"disposition entities”
 Proc. 50-A prohibit the courts from
issuing restraining orders and writs
of injunction against the APT and the
purchasers of any assets sold by it,
(Asset Privatization Trust v.
to prevent courts from interfering in
Court of Appeals, G.R. No.
the discharge of its task of carrying 101344, [October 1, 1992], 289
out the expeditious disposition and PHIL 1-13)
privatization of certain government
corporations and/or the assets thereof
(Proc. No. 50), absent any grave abuse
of discretion amounting to excess or
lack of jurisdiction on its part.
 Republic Act No. 8758
Pursuant To Republic Act No. 8758 S. provided that, “All assets
held by the Asset
1999, The Life Of The Committee On Privatization Trust,
moneys and other properties
all

Privatization (COP) And The Asset belonging to it, and all its

Privatization Trust (APT) Will Expire On

liabilities outstanding upon
the expiration of its term

December 31, 2000.

shall revert to and be
assumed by the National
Government”.
Presently, Asset Privatization Its present function is to

Trust is known as the identify disposable assets,

monitor the progress of

Privatization and
privatization activities, and
approve the sale or divestment
of assets with respect to price

Management Office
and buyer.
 Qualifications of Trustee:

● Must be of good moral character

● Must have unquestionable integrity and
responsibility ; and
● Of recognized business competence
 No director, officer, consultant or stockholder of
corporations having an interest in assets held by the Trust
may be appointed Trustee. Except as may be considered
necessary to achieve the objectives of this Proclamation.

The President of the Philippines may remove any Trustee

on the ground of fraudulent, unlawful acts or conducts
opposed to the purposes of this Proclamation.
Vacancy of Trustee created by:
● Death;
● Resignation; or
● Removal

The President of the Philippines will appoint a new member

who shall serve for the unexpired portion of the term of the
previous member.
 ARTICLE IV. OPERATIONAL PROVISIONS

In transfer of Assets, the Committee shall:

(1) Arrange for the transfer to, and eventual disposition by, the National
Government of certain non-performing assets of government financial
institutions; and

(2) Arrange for the disposition of certain government owned or controlled

corporations which have been approved for divestment by the President of
the Philippines
Committee on Privatization shall:

1. identify the assets of government institutions as appropriate for

privatization and divestment in an appropriate instrument
describing such assets or identifying the loan or other transactions
giving rise to the receivables, obligations and other property
constituting assets to be transferred.

1. from the list of assets deemed appropriate for divestment, identify

assets to be transferred to the Trust or to be referred to the
government institutions in an appropriate instrument.
Nothing in this Proclamation shall:

(1) Affect the right of the National Government to enforce any claim of a government
institution in respect of or in relation to any asset transferred hereunder;

(2) In relation to any debt hereby assigned and transferred to the National
Government of which a government institution is the original creditor, give rise to any
novation or requirement to obtain the consent of the debtor; and

(3) In relation to any share of stock or any interest therein, give rise to any claim by
any other stockholder for enforcement of rights of pre-emption or of first refusal or
other similar rights,
 Deeds of Assignment

Each government institution where the assets to be

transferred are from, shall be directed to execute a deed
of assignment in favor of the National Government, which
describe, account by account, the nature and extent of
such assets and to deliver to the Committee such
agreements, instruments, records and other papers in
respect of such assets as may be deemed necessary.
 A copy of such deed of assignment, together with excerpts
describing property to be transferred, duly certified a notary
public or other official authorized by law to administer oaths,
shall provide sufficient basis to registers of deeds, to the
agents of corporations and other persons authorized to issue
certificates of titles, shares of stock and other evidence of title
in order to issue new certificates, shares of stock or other
instruments evidencing title to the under the name of the
National Government or its duly authorized agent.
 The Committee is vested with full and complete
powers and prerogatives to determine the values,
other terms and conditions, at which government
corporate assets and liabilities shall be transferred
and conveyed to the Trust Provided, that such
valuation shall not be deemed as a condonation of
any obligation by any third party involved.
 During the period prior to receipt by a government
institution of notice from the National Government
SEC. 29. Interim through the Committee that arrangements for the
management of assets transferred from such
Responsibility for government institution under this Proclamation

Transferred Assets
have become effective, such government
institution shall be responsible for administering
such assets for and on behalf of the National
Government under such terms and conditions as
may be agreed upon by the National Government
and the government institution.
 The determination by and decision of the
Committee that the terms on which an
asset is to be sold or otherwise disposed
of are consistent with the objectives in
this Proclamation and in the best interest
of the National Government shall be
conclusive. The validity of any sale or
disposition concluded by the National
SEC. 30. Government acting through the Trust its

Incontestability
authorized agent or entity under this
Proclamation shall, except for fraud,
breach or material misrepresentation on
the part of the purchaser, be
incontestable and be binding and
enforceable against the National
Government and all third parties.
 (1) No civil action shall lie against t
he Committee and/or the Trust and no
civil or criminal action shall prosper
against a member of the Committee or a
Trustee in its or his discharge of the

SEC. 31. Immunity and tasks and functions contemplated by

this Proclamation, unless: (a) the act
or omission complained of clearly
Indemnity Provision for relates to a mandatory provision of
this Proclamation the performance of

Committee Members and

which is expressly devolved or
delegated to the concerned defendant as
a ministerial duty rather than a
Trustees discretionary or judgmental function,
and (b) the act or omission is attended
by fraud, bad faith, gross negligence,
or violations of the provisions of the
Anti-Graft Law;
 SEC. 31.
(2) In the event that any member of the Committee, or a
Trustee, or any member of their respective staffs during or
after his incumbency, is called upon to defend his actions,
Immunity and related to the performance or non-performance of an act, or
the execution of a transaction contemplated by this

Indemnity Proclamation, before any administrative, judicial or legislative

proceeding, the government shall provide him with counsel

Provision for
without cost, or shoulder and pay the cost of a counsel of his
choice, as well as other costs of litigation for which he may be
held liable: Provided, that where the civil or criminal action is

Committee based on (a) and (b) of the preceding paragraph, and the
member of the Committee or Trustee of their respective staffs

Members and
is found guilty of the acts complained of, such member shall be
fully liable to and reimburse the Government for all sums

Trustees
advanced by the Government in accordance with the provisions
of this SEC. to cover cost of counsel and other costs of
litigation.
 Without prejudice to any other remedy or course of action available to
the Trust, the Securities and Exchange Commission shall, in addition to
the jurisdiction and powers conferred on it by Presidential Decree No.
902-A, upon petition filed ex-parte by the Trust, appoint a receiver
nominated by the Trust to take over the management and custody of the
properties of a corporation referred to the Trust or whose obligations
have been referred to the Trust under this Proclamation, or which holds

SEC. 32.
assets subject to liens in favor of the Trust, in cases where such equity,
obligations or liens have been referred by the Trust to external agencies

Receiverships
for conservation and disposition and there is imminent danger of
dissipation, loss, wastage, or destruction of assets or other properties or
paralization of the business operations of such corporation which may be
prejudicial to the interest of its stockholders, creditors, the general public
or the National Government or where the appointment of a receiver has
been stipulated by the parties to a real or chattel mortgage or other
agreement as an aid to foreclosure thereof. Such receiver shall have all
powers of a regular receiver under the provisions of the Rules of Court
and of a management board or body under SEC. 6 (d) of Presidential
Decree No. 902-A.
 All proceeds from the sale or other disposition of assets
not of fees, commissions and other reimbursable
expenses of the Trust shall form part of the General
Fund of the National Government and be remitted to the
National Treasury immediately upon receipt of such

SEC. 33.
proceeds: Provided, however, that the Trust shall be
entitled to retain, upon approval by the Committee,

Proceeds from
such portion of the proceeds as may be necessary to
maintain a revolving fund to be utilized for the payment
of fees and reimbursable expenses and meeting the
Sales of Assets costs and expenses incurred by the Trust in the
conservation and disposition of the assets held by it, or
otherwise in the performance of its responsibilities
under this Proclamation, including such amounts as may
be required to serve borrowings incurred by the Trust
pursuant to the authority and for the purposes provided
in this Proclamation.
 In respect of the proceeds from the sale or other

SEC. 33. disposition of corporate subsidiaries of parent

government corporations, such proceeds shall accrue

Proceeds from to the parent corporation. The proceeds shall be net

of fees, commissions and other reimbursable

Sales of Assets expenses of the Trust as approved by the

Committee, where the disposition was undertaken by
or through the Trust.
 The provisions of any law to the contrary notwithstanding,
the Trust as well as the corporations and assets held by it,

SEC. 34.
shall be exempt from all taxes, fees, charges, imposts, and
assessments arising from or occasioned by the passing of title
over such corporations or assets from the government
Exemption institutions to the Trust and/or from the Trust to a private
acquisitor or buyer imposed by the National Government or

from Taxes, any subdivision thereof including but not limited to stock
transfer taxes, capital gains taxes, documentary stamps,

Fees, and Other

registration fees and the like: Provided, that in case the said
government institutions acquired the said assets by

Charges.
foreclosure, the non-payment of similar taxes, fees, charges,
imposts, and assessments shall not be a bar to the
consolidation of title in the foreclosing institutions and the
subsequent passing of title to the Trust or the corporations
held by the Trust.
 SEC. 34. The sale or transfer of such corporations or
Exemption existence of any liens by way of taxes, charges
assets shall not be enjoined or hindered by the

from Taxes, at the time of sale or transfer: Provided, that the

or other assessments in favor of the government

Fees, and Other subject to a tax lien and first be applied to satisfy
proceeds from such sale or transfer shall be

Charges. such obligations secured by said liens

 Generally accepted accounting principles shall be
observed in the recording of the transactions of the
Committee and the Trust, of the corporations
trusted to the National Government or the Trust, or

SEC. 35. Audit

of transactions related to assets similarly trusteed.
For the purpose of insuring the regularity and
integrity of financial transactions of aforementioned
entities, and of transactions related to the assets
with which they officially deal, and to facilitate the
disposition of assets to private entities, such entities
and assets may be audited as follows:
 (1) The Committee and the Trust shall be
subject to audit by the Commission on Audit;
Provided, however, that consonant with the
flexibility criterion mandated on its operations
SEC. 35. Audit under the provisions of SEC. 13 of this
Proclamation, the Trust at its discretion and
option may utilize the services of reputable
private auditors if authorized by the Commission
on Audit;
 (2) The non-performing assets of
government financial institutions
trusted to the National Government
SEC. 35. Audit directly or through the Trust for
disposition or privatization may
continue to be subject to audit by
private auditors; and
 (3) Government owned or controlled corporations
approved for disposition and transferred to the
National Government directly or through the Trust
shall continue to be audited by the Commission on
SEC. 35. Audit Audit for as long as they have not yet been disposed
of; and, if considered necessary by the Trust for
facilitating the divestment thereof to prospective
private sector buyers, may also be audited by private
auditors.
 Such sum or sums as may be necessary for the

SEC. 36. transfer of assets and liabilities, including liabilities of

government financial institutions due the National

Appropriations. Government, to the National Government as well as

servicing thereof are hereby appropriated subject to
the availability of funds in the National Treasury.
 The Committee shall at least on a semi-annual

SEC. 37.
basis submit to the President of the Philippines
and to the legislative body a report on the status

Reporting of its asset disposition program, which report shall

include a description of the individual assets
Requirements. disposed of, the purchasers thereof, the
consideration received therefor, and the agreed
terms of payment.
 The Trust shall report on a quarterly basis its
performance and financial condition to the Committee;

SEC. 37.
and within three (3) months from the closure of books
at the end of each fiscal year, submit a comprehensive

Reporting
annual report through the Committee, to the President,
and to the legislative body on the status of the
privatization efforts and its assets disposition program,
Requirements which report shall include a description of the individual
corporations privatized and assets disposed of, the
purchasers thereof, the consideration received therefor,
and the agreed terms of payment.
PRESIDENTIAL DECREE No. 385

REQUIRING GOVERNMENT FINANCIAL INSTITUTIONS TO

FORECLOSE MANDATORILY ALL LOANS WITH
ARREARAGES, INCLUDING INTEREST AND CHARGES
AMOUNTING TO AT LEAST TWENTY (20%) PERCENT OF THE
TOTAL OUTSTANDING OBLIGATION
Presidential Decree No. 385 was issued primarily
to see to it that government financial
institutions are not denied substantial cash
inflows, which are necessary to finance
development projects all over the country, by
large borrowers who, when they become
delinquent, resort to court actions in order to
prevent or delay the government's collection of
their debts and loans.
 The government, however, is bound by basic principles of fairness and decency
under the due process clause of the Bill of Rights. P.D. 385 was never meant to
protect officials of government lending institutions who take over the management
of a borrower corporation, lead that corporation to bankruptcy through
mismanagement or misappropriation of its funds, and who, after ruining it, use the
mandatory provisions of the decree to avoid the consequences of their misdeeds.
cdll

The designated officers of the government financing institution cannot simply

walk away and then state that since the loans were obtained in the corporation's
name, then P.D. 385 must be peremptorily applied and that there is no way the
borrower corporation can prevent the automatic foreclosure of the mortgage on its
properties once the arrearages reach twenty percent (20%) of the total obligation no
matter who was responsible.
||| (Filipinas Marble Corp. v. Intermediate Appellate Court, G.R. No. L-68010, [May 30,
1986], 226 PHIL 109-120)
 PRESIDENTIAL DECREE No. 385
AUTOMATIC FORECLOSURE PROVISIONS OF PD 385; CAN BE INVOKED AFTER SETTLEMENT OF QUESTION INVOLVING
INTEREST AND ONLY AFTER DEBTORS REFUSED TO MEET OBLIGATION FOLLOWING SUCH DETERMINATION. — In the
first place, because of the dispute regarding the interest rate increases, an issue which was never settled on merit in the
courts below, the exact amount of petitioner's obligations could not be determined. Thus, the foreclosure provisions of P.D.
385 could be validly invoked by respondent only after settlement of the question involving the interest rate on the loan, and
only after the spouses refused to meet their obligations following such determination. (Spouses Almeda v. Court of
|||

Appeals, G.R. No. 113412, [April 17, 1996], 326 PHIL 309-326)
While it is mandatory for government financial institution to foreclose a mortgage upon failure of the debtor to meet his
obligation, an injunction will lie against the foreclosure sales if included among the obligation sought to be satisfied by it is
an unsecured obligation. The prohibition in P.D. 385 is not intended to make the debtor's mortgaged property answer for an
unsecured obligation||| (C & C Commercial Corp. v. Philippine National Bank, G.R. No. L-42449, [July 5, 1989], 256 PHIL
451-468)
PRESIDENTIAL DECREE No. 385

REQUIRING GOVERNMENT FINANCIAL INSTITUTIONS TO

FORECLOSE MANDATORILY ALL LOANS WITH
ARREARAGES, INCLUDING INTEREST AND CHARGES
AMOUNTING TO AT LEAST TWENTY (20%) PERCENT OF THE
TOTAL OUTSTANDING OBLIGATION

Government Financial Institutions-
Government Financial Institutions (GFIs)
refer to financial institutions or corporations
in which the government directly or
indirectly owns majority of the capital stock
and. which are either: (1) registered with or
directly supervised by the Bangko Sentral
ng Pilipinas; or (2) collecting or transacting
funds or contributions from the public and
places them in financial instruments or
assets such as deposits, loans, bonds and
equity.
 It shall be mandatory for government financial institutions,
after the lapse of sixty (60) days from the issuance of this
Decree, to foreclose the collaterals and/or securities for any
loan, credit, accommodation, and/or guarantees granted by
them whenever the arrearages on such account, including
accrued interest and other charges, amount to at least twenty
percent (20%) of the total outstanding obligations, including
interest and other charges, as appearing in the books of
Section 1 account and/or related records of the financial institution
concerned. This shall be without prejudice to the exercise by
the government financial institutions of such rights and/or
remedies available to them under their respective contracts
with their debtors, including the right to foreclose on loans,
credits, accommodations and/or guarantees on which the
arrearages are less than twenty per cent (20%).
 No restraining order, temporary or permanent injunction
shall be issued by the court against any government
financial institution in any action taken by such institution
in compliance with the mandatory foreclosure provided in
Section 1 hereof, whether such restraining order,
Section 2 temporary or permanent injunction is sought by the
borrower(s) or any third party or parties, except after due
hearing in which it is established by the borrower and
admitted by the government financial institution concerned
that twenty percent (20%) of the outstanding arrearages
has been paid after the filing of foreclosure proceedings.
 In case a restraining order or injunction is issued, the borrower shall
nevertheless be legally obligated to liquidate the remaining balance of
the arrearages outstanding as of the time of foreclosure, plus interest
and other charges, on every succeeding thirtieth (30th) day after the
issuance of such restraining order or injunction until the entire
arrearages have been liquidated. These shall be in addition to the
payment of amortization currently maturing. The restraining order or
injunction shall automatically be dissolved should the borrower fail to
make any of the above-mentioned payments on due dates, and no
Section 2 restraining order or injunction shall be issued thereafter. This shall be
without prejudice to the exercise by the government financial institutions
of such rights and/or remedies available to them under their respective
charters and their respective contracts with their debtors, nor should this
provision be construed as restricting the government financial
institutions concerned from approving, solely at its own discretion, any
restructuring, recapitalization, or any other arrangement that would
place the entire account on a current basis, provided, however, that at
least twenty percent (20%) of the arrearages outstanding at the time of
the foreclosure is paid.
 All restraining orders and injunctions existing
as of the date of this Decree on foreclosure
proceedings filed by said government
Section 2
financial institutions shall be considered lifted
unless finally resolved by the court within
sixty (60) days from date hereof
 Upon the application for foreclosure of the collateral of
delinquent borrowers, whether judicially or extrajudicially, by
any government financial institution, the court and/or officials
concerned shall immediately act and give priority to the same
and schedule the publication thereof within Five (5) days from
Section 3. receipt of the application, the auction sale to be held not later
than ten (10) days from date of the last publication. The
Certificate of Sale must be issued on the date of sale and the
same must be registered by the Register of Deeds concerned
not later than five (5) days after submission of the Certificate
of Sale.
 As a result of foreclosure or any other legal proceedings
wherein the properties of the debtor which are
foreclosed, attached, or levied upon in satisfaction of a
judgment are sold to a government financial institution,
the said properties shall be placed in the possession
Section 4
and control of the financial institution concerned, with
the assistance of the Armed Forces of the Philippines
whenever necessary. The Petition for Writ of Possession
shall be acted upon by the court within fifteen (15) days
from the date of filing.
 The government financial institutions are hereby directed
to report to the Office of the President any official who
delays the proceedings as provided herein or who
violates any of the provisions of this Decree. Actions
taken pursuant to the provisions of this Decree shall,
Section 5. likewise, be reported by the government financial
institution concerned to the Monetary Board, through the
Governor, Central Bank of the Philippines, in accordance
with such schedule, forms and procedures as the
Government may prescribe for the purpose.
case
 ROYAL SAVINGS BANK, formerly Comsavings
Bank, now GSIS FAMILY BANK, Petitioner,
vs.
FERNANDO ASIA, MIKE LATAG, CORNELIA MARANAN,
JIMMY ONG, CONRADO MACARALAYA, ROLANDO SABA,
TOMAS GALLEGA, LILIA FEDELIMO, MILAGROS
HAGUTAY and NORMA GABATIC (Collectively
referred to as respondents Asia, et al.)
represented by their counsel on record, ATTY.
ROGELIO U. CONCEPCION., Respondent
 In January 1974, Paciencia Salita (Salita) and her nephew,
Franco Valenderia (Valenderia), borrowed the amount of
₱25,000 from petitioner. The latter loaned to them an additional

facts:
₱20,000 in May 1975. To secure the payment of the
aforementioned amounts loaned, Salita executed a Real Estate
Mortgage over her property, which was covered by Transfer
Certificate of Title (TCT) No. 103538. Notwithstanding
demands, neither Salita nor Valenderia were able to pay off
their debts.
 As a result of their failure to settle their loans, petitioner
instituted an extra-judicial foreclosure proceeding against
the Real Estate Mortgage. Pursuant to Act No. 3135, the
facts: mortgaged property was sold at a public auction at which
petitioner was the highest bidder. Later, the redemption
period expired. Both Salita and Valenderia failed to
redeem the foreclosed property.
 Salita filed with the RTC a case for Reconveyance, Annulment of Title and
Damages against petitioner. She prayed for the nullification of foreclosure
proceedings and the reconveyance of the property

facts: The RTC granted her prayer.

Petitioner appealed to the Court of Appeals (CA), which reversed the
Decision of the RTC. Since Salita did not appeal the CA ruling, it became
final and executory.
 Respondents Fernando Asia, Mika Latag, Cornelia Maranan, Jimmy Ong, Conrado
Macaralaya, Rolando Saba, Tomas Gallega, Lilia Fedelimo, Milagros Hagutay and
Norma Gabatic claimed to have been in open, continuous, exclusive and notorious
possession in the concept of owners of the land in question for 40 years.8

facts:
Allegedly, they had no knowledge and notice of all proceedings involving the
property until they were served a Notice to Vacate9 by RTC Sheriff IV Neri Loy, on
20 July 2007.10 They further claimed that, prior to the service of the Notice to
Vacate, they had no knowledge or notice of the lower court’s proceedings or the
foreclosure suit of petitioner
 Petitioner insists that because it is a government-owned financial institution, the
general rules on real estate mortgage found in Act 3135 do not apply to it. It prays
that this Court rule that Presidential Decree (P.D.) No. 38519—the law intended
facts: specifically to govern mortgage foreclosures initiated by government-owned
financial institutions—should be applied to this caser
 According to petitioner, when the RTC quashed the Writ of Possession,20 the latter
violated Section 2 of P.D. 385, which reads:
Section 2. No restraining order, temporary or permanent injunction shall be issued
by the court against any government financial institution in any action taken by
such institution in compliance with the mandatory foreclosure provided in Section 1

facts: hereof, whether such restraining order, temporary or permanent injunction is

sought by the borrower(s) or any third party or parties, except after due hearing in
which it is established by the borrower and admitted by the government financial
institution concerned that twenty percent (20%) of the outstanding arrearages has
been paid after the filing of foreclosure proceedings.
 WON Petioner’s contention that as a
issue: government financial institution (GFI), it cannot be enjoined from
foreclosing on its delinquent accounts in observance of the
mandate of P.D. 385
 NO.ndeed, while this Court had already declared in Philippine National Bank
v. Adil21 that once the property of a debtor is foreclosed and sold to a GFI, it
would be mandatory for the court to place the GFI in the possession and
control of the property—pursuant to Section 4 of P.D. No. 385—this rule should
not be construed as absolute or without exception.
The evident purpose underlying P.D. 385 is sufficiently served by allowing
foreclosure proceedings initiated by GFIs to continue until a judgment therein
becomes final and executory, without a restraining order, temporary or

COURT’S RULING: permanent injunction against it being issued. But if a parcel of land is occupied
by a party other than the judgment debtor, the proper procedure is for the court
to order a hearing to determine the nature of said adverse possession before it
issues a writ of possession.22

This is because a third party, who is not privy to the debtor, is protected by the
law. Such third party may be ejected from the premises only after he has been
given an opportunity to be heard, to comply with the time-honored principle of
due process
THANK YOU !!!!!!