DoF: Bayanihan law orders loan-payment extension

LENDERS must give their borrowers a one-month extension to pay their obligations without additional charges under Republic Act 11469, or the “Bayanihan to Heal as One Act,” the Department of Finance (DoF) said on Wednesday.

“All covered institutions shall implement a 30-day grace period for all loans with principal and/or interest falling due within the ECQ (enhanced community quarantine) period without incurring interest on interest, penalties, fees and other charges,” said the law’s implementing rules and regulations (IRR) issued by the Finance department.

Covered institutions are banks, quasi-banks, nonstock savings and loan associations, credit-card issuers and pawnshops; and credit-granting financial institutions under the supervision of the Bangko Sentral ng Pilipinas, Securities and Exchange Commission, and Cooperative Development Authority, including the Government Service Insurance System, Social Security System and Home Development Mutual Fund (Pag-IBIG Fund).

The grace period “shall automatically be extended if the ECQ period is extended by the President of the Republic of the Philippines pursuant to his emergency powers under the Bayanihan to Heal as One Act,” the IRR signed by Finance Secretary Carlos Dominguez 3rd said.

Under the IRR, the quarantine covers the period from March 17 to April 12, 2020 as cited in Proclamation 929 issued by President Rodrigo Duterte on March 16.

“All covered institutions shall not charge or apply interest on interest, fees and charges during the 30-day grace period to future payments/ amortizations of the individuals; households; micro, small and medium enterprises; and corporate borrowers,” the IRR said.

In a statement, the DoF said all lenders were prohibited from requiring clients to waive the application of the provisions of the Bayanihan law, including the grace period.

Borrowers whose loans are due within the ECQ period are spared from paying additional documentary stamp tax (DST) as a consequence of the relief granted, it added.

No DST shall be imposed on “credit extensions and credit restructuring, micro-lending including those obtained from pawnshops and extensions thereof during the ECQ period,” the department said.

As for the accrued interest for grace period, the DoF said this might be paid by the borrower on a staggered basis over the remaining life of the loan.

“Nonetheless, this shall not preclude the borrower from paying the accrued interest in

full on the new date following the application of the 30- day grace period or extended grace

period, as the case may be,” the IRR said.

Those violating the IRR provisions will be penalized.

The IRR shall take effect immediately upon publication on April 2, 2020 in a daily newspaper.