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 Outsta

MALACAÑANG
M a n i l a

PRESIDENTIAL DECREE No. 385 January 31, 1974

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

WHEREAS, the government financial institutions particularly 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, are the largest individual mobilizer of savings and investment capital in the country;

WHEREAS, these institutions have a large and important role to play in the economic development of the country by reason of the magnitude of the resources they command for financing in essential and high-priority program and projects;

WHEREAS, the loans and investments made by these institutions in favor of private projects and enterprises reflect the trust and confidence placed by these institutions in the ability and willingness of the recipients to use such funds efficiently and faithfully in pursuing the projects being financed and to...

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Summary of Presidential Decree No. 385

Mandatory Foreclosure of Delinquent Loans by Government Financial Institutions

- Requires government financial institutions to mandatorily foreclose loans with arrearages of at least 20% of the total outstanding obligation, including interest and charges. (Section 1)
- Prohibits courts from issuing restraining orders or injunctions against foreclosure proceedings, except after a hearing where the borrower establishes that 20% of arrearages have been paid after foreclosure filing. (Section 2)
- If a restraining order or injunction is issued, the borrower must liquidate the remaining arrearages balance in 30-day installments until fully paid, in addition to current amortizations. Failure to make any installment payment will automatically dissolve the restraining order or injunction. (Section 2)
- Existing restraining orders or injunctions on foreclosure proceedings will be lifted unless finally resolved by the court within 60 days from the decree's date. (Section 2)
- Courts and officials must prioritize foreclosure applications, schedule publication within 5 days, hold auction sale within 10 days after last publication, issue Certificate of Sale on the sale date, and register it with the Register of Deeds within 5 days. (Section 3)
- Properties foreclosed, attached, or levied upon and sold to a government financial institution shall be placed in its possession and control, with assistance from the Armed Forces of the Philippines if necessary. The court must act on the Petition for Writ of Possession within 15 days from filing. (Section 4)
- Government financial institutions must report any official who delays proceedings or violates the decree to the Office of the President and the Monetary Board through the Central Bank Governor. (Section 5)
- The decree takes effect immediately. (Section 6)