Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 385)
The main purpose of Presidential Decree No. 385 is to require government financial institutions to mandatorily foreclose all loans with arrearages amounting to at least twenty percent (20%) of the total outstanding obligation to ensure early collection of delinquent loans and enable continued financing of development needs.
The decree primarily affects the Philippine National Bank and its subsidiary the National Investment and Development Corporation, the Development Bank of the Philippines, the Government Service Insurance System, and the Social Security System.
Foreclosure is mandatory when the arrearages, including accrued interest and other charges, amount to at least twenty percent (20%) of the total outstanding obligations as recorded in the financial institution's books.
No. The decree allows government financial institutions to foreclose loans with less than 20% arrearages based on their contracts and discretion.
After application for foreclosure, the publication must be scheduled within 5 days, auction sale to be held within 10 days from last publication, Certificate of Sale issued on the sale date, and registered within 5 days after submission.
The Armed Forces of the Philippines shall assist government financial institutions in taking possession and control of foreclosed properties as necessary.
They are directed to report such officials to the Office of the President, and also report foreclosure actions and compliance to the Monetary Board through the Governor of the Central Bank according to prescribed procedures.