Category Archives: Banking/Lending

30-Day Grace Period No Longer Available for Loans with Due Dates Falling on 1 June 2020 and Thereafter (BSP FAQ)

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[The Department of Finance (DOF) and the Bangko Sentral ng Pilipinas (BSP) did not issue any new guidelines, which means that the original Implementing Rules and Regulations covering the 30-day grace period for loans remain the same. The rule is different for rents. Loans with due dates falling before 1 June 2020 still enjoy the 30-day grace period, but loans with due dates falling on 1 June 2020 and thereafter do not enjoy such benefit. This is clear in the latest Frequent Asked Questions (FAQ) of the BSP, reproduced below for the purpose of disseminating the information.]

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COVID-19 Lockdown: Fortuitous Event or Force Majeure Exemption from Obligations

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The entire Luzon has been placed under enhanced community quarantine (ECQ), also called a lockdown, by the President. On 8 March 2020, the President issued Proclamation No. 922, declaring a State of Public Health Emergency throughout the Philippines due to the Corona Virus Disease 2019 (Covid-19). A lockdown was declared on 14 March 2020 over the National Capital Region (NCR), expanded to the entire Luzon effective 17 March 2020. The ECQ has been extended to 30 April 2020; further extended to May 15 in high-risk areas. Local Government Units (LGUs) throughout the Philippines also declared a lockdown in their respective territorial jurisdictions.

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Primer on the Rules on Liquidation of Closed Banks (A.M. No. 19-12-02-SC)

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The Rules on Liquidation of Closed Banks (“Rules”), which took effect on 1 April 2020, was approved by the Supreme Court on 18 February 2020 (A.M. No. 19-12-02-SC). The Rules applies to banks closed and placed under liquidation by the Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP). The summary or primer is provided below.

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Grace Period for Loans: FAQ from BSP (Memorandum No. M-2020-018; full text)

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[The Bangko Sentral ng Pilipinas (BSP) issued Memorandum No. M-2020-018 dated 6 April 2020 (“Frequently-Asked Questions  on the Implementing Rules and Regulations (IRR) on Section 4(aa) of Republic Act (R.A.) No. 11469, Otherwise Known as the “Bayanihan to Heal As One Act”). This clarifies some of the points discussed in our previous post. See updated quarantine classifications in all areas and the updated BSP FAQ, clarifying that loans with due dates falling on 1 June 2020 and thereafter are no longer entitled to the 30-day grace period. We are reproducing the full text of the BSP FAQs for educational purposes and to help in the dissemination of the information.]

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Bouncing Checks, Grace Periods and the Enhanced Community Quarantine

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Post-dated checks or PDCs are usually issued to cover future payments in various transactions. PDCs are used for loan and rental payments for residential and commercial units. PDCs are also used for payments in supply agreements and non-loan commercial transactions. Now that the government has imposed a 30-day grace period (see extension of quarantine), what happens to PDCs and the accompanying risk of being charged under the Bouncing Checks Law (Batas Pambasa Blg. 22)?

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Grace Period for Loans Already in Effect: Implementing Rules and Regulations Issued by DOF

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The grant of grace period for all loans, which is part of the emergency powers granted by Congress to the President, is now set for implementation. On 1 April 2020, the Department of Finance (DOF) issued the Implementing Rules and Regulations (IRR) of Section 4(aa) of Republic Act No. 11469, Otherwise Known as the “Bayanihan to Heal as One Act”. The salient points of the IRR are as follows: 

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Grace Period for Loans: Implementing Rules and Regulations of Section 4(aa) of the “Bayanihan to Heal as One Act”

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[On 1 April 2020, the Department of Finance (DOF) issued the Implementing Rules and Regulations of Section 4 (aa) of Republic Act No. 11469, otherwise known as the “Bayanihan to Heal as One Act”. Refer to the extended discussion or the latest BSP FAQ. Note the important changes introduced by IATF Resolution No. 33. See updated classifications. Here is the full text of the IRR.]

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Suspension of Rents and Loan Payments During the Covid-19 Lockdown

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To help address the national crisis brought about by the Coronavirus Disease 2019 (COVID-19), Congress granted temporary emergency powers to the President, through the “Bayanihan to Heal As One Act” (Republic Act No. 11469). This law already took effect but not self-executory, which is why on 28 March 2020, the President, through the Executive Secretary, issued a directive to implement the emergency powers. Among the matters covered by the temporary emergency powers is the suspension of rent and loan payments. 

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