Article 149p. 149

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

financial statements submitted for taxation purposes to

the Bureau of Internal Revenue. Should such statements

prove to be false or incorrect in any material detail, the

bank

may

terminate

any

loan

or

other

credit

accommodation granted on the basis of said statements

and

shall

have

the

right

to

demand

immediate

repayment or liquidation of the obligation.

In formulating rules and regulations under this Section,

the

Monetary

Board

shall

recognize

the

peculiar

characteristics

of

microfinancing,

such

as

cash

flow-based lending to the basic sectors that are not

covered by traditional collateral. (76a)

SECTION

41.

Unsecured

Loans

or

Other

Credit

Accommodations . — The Monetary Board is hereby

authorized to issue such regulations as it may deem

necessary with respect to unsecured loans or other credit

accommodations that may be granted by banks. (n)

SECTION 42. Other Security Requirements for Bank

Credits . — The Monetary Board may, by regulation,

prescribe further security requirements to which the

various types of bank credits shall be subject, and, in

accordance with the authority granted to it in Section 106

of

the

New

Central

Bank

Act ,

the

Board

may

by

regulation, reduce the maximum ratios established in

Sections 36 and 37 of this Act, or, in special cases, increase

the maximum ratios established therein. (78)

SECTION

43.

Authority

to

Prescribe

Terms

and

Conditions

of

Loans

and

Other

Credit

Accommodations . — The Monetary Board may, similarly,

in accordance with the authority granted to it in Section

106 of the New Central Bank Act , and taking into account

the

requirements

of

the

economy

for

the effective

utilization of long-term funds, prescribe the maturities, as

well as related terms and conditions for various types of

bank

loans

and

other

credit

accommodations.

Any

change by the Board in the maximum maturities shall

apply only to loans and other credit accommodations

made after the date of such action.

The Monetary Board shall regulate the interest imposed

on microfinance borrowers by lending investors and

similar

lenders,

such

as,

but

not

limited

to,

the

unconscionable rates of interest collected on salary loans

and similar credit accommodations. (78a)

SECTION 44. Amortization on Loans and Other Credit

Accommodations . — The amortization schedule of bank

loans and other credit accommodations shall be adapted

to the nature of the operations to be financed.

In case of loans and other credit accommodations with

maturities of more than five (5) years, provisions must be

made

for

periodic amortization payments, but such

payments must be made at least annually: Provided ,

however , That when the borrowed funds are to be used

for purposes which do not initially produce revenues

adequate for regular amortization payments therefrom,

the bank may permit the initial amortization payment to

be deferred until such time as said revenues are sufficient

for

such

purpose,

but

in

no

case

shall

the

initial

amortization date be later than five (5) years from the

date on which the loan or other credit accommodation is

granted. (79a)

In case of loans and other credit accommodations to

microfinance sectors, the schedule of loan amortization

shall take into consideration the projected cash flow of

the

borrower

and

adopt

this

into

the

terms

and

conditions formulated by banks. (n)

SECTION 45. Prepayment of Loans and Other Credit

Accommodations . — A borrower may at any time prior to

the agreed maturity date prepay, in whole or in part, the

unpaid

balance

of

any

bank loan and other credit

accommodation, subject to such reasonable terms and

conditions as may be agreed upon between the bank and

its borrower. (80a)

SECTION 46. Development Assistance Incentives . — The

Bangko Sentral shall provide incentives to banks which,

without government guarantee, extend loans to finance

educational institutions, cooperatives, hospitals and other

medical services, socialized or low-cost housing, local

government units and other activities with social content.

(n)

SECTION 47. Foreclosure of Real Estate Mortgage . — In

the

event

of

foreclosure,

whether

judicially

or

extrajudicially, of any mortgage on real estate which is

security for any loan or other credit accommodation

granted, the mortgagor or debtor whose real property

has been sold for the full or partial payment of his

obligation shall have the right within one year after the

sale of the real estate, to redeem the property by paying

the amount due under the mortgage deed, with interest

thereon at the rate specified in the mortgage, and all the

costs and expenses incurred by the bank or institution

from the sale and custody of said property less the

income derived therefrom. However, the purchaser at the

auction

sale

concerned

whether

in

a

judicial

or

extrajudicial foreclosure shall have the right to enter upon

and take possession of such property immediately after

the date of the confirmation of the auction sale and

administer the same in accordance with law. Any petition

in court to enjoin or restrain the conduct of foreclosure

proceedings instituted pursuant to this provision shall be

given due course only upon the filing by the petitioner of

a bond in an amount fixed by the court conditioned that

he will pay all the damages which the bank may suffer by

the

enjoining

or

the

restraint

of

the

foreclosure

proceeding.

Notwithstanding

Act

3135,

juridical

persons

whose

property

is

being

sold

pursuant

to

an

extrajudicial

foreclosure, shall have the right to redeem the property in

accordance with this provision until, but not after, the

registration of the certificate of foreclosure sale with the

applicable Register of Deeds which in no case shall be

more than three (3) months after foreclosure, whichever is

earlier. Owners of property that has been sold in a

foreclosure sale prior to the effectivity of this Act shall

retain their redemption rights until their expiration. (78a)

SECTION 48. Renewal or Extension of Loans and Other

Credit Accommodations . — The Monetary Board may, by

regulation, prescribe the conditions and limitations under

which a bank may grant extensions or renewals of its

loans and other credit accommodations. (81)

SECTION 49. Provisions for Losses and Write-Offs . — All

debts due to any bank on which interest is past due and

unpaid for such period as may be determined by the

Monetary Board, unless the same are well-secured and in

the process of collection shall be considered bad debts

within the meaning of this Section.

The Monetary Board may fix, by regulation or by order in

a specific case, the amount of reserves for bad debts or

doubtful accounts or other contingencies.

Writing

off

of

loans,

other

credit

accommodations,

advances and other assets shall be subject to regulations

issued by the Monetary Board. (84a)

SECTION 50. Major Investments . — For the purpose of

enhancing bank supervision, the Monetary Board shall

establish

criteria

for

reviewing major acquisitions or

investments by a bank including corporate affiliations or

structures that may expose the bank to undue risks or in

any way hinder effective supervision.

SECTION 51. Ceiling on Investments in Certain Assets . —

Any bank may acquire real estate as shall be necessary for

its own use in the conduct of its business: Provided ,

however , That the total investment in such real estate and

improvements thereof, including bank equipment, shall

not

exceed

fifty

percent

(50%) of combined capital

accounts: Provided , further , That the equity investment of

a bank in another corporation engaged primarily in real

estate shall be considered as part of the bank's total

investment in real estate, unless otherwise provided by

the Monetary Board. (25a)

SECTION 52. Acquisition of Real Estate by Way of

Satisfaction

of

Claims .

—

Notwithstanding

the

limitations of the preceding Section, a bank may acquire,

© Compiled by RGL

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