Implementation of Mandatory Grace Period for All Loans Pursuant to the Bayanihan to Recover as One Act

September 21, 2020 CORPORATE GOVERNANCE AND FINANCE DEPARTMENT TO : Financing Companies (FCs), Lending Companies (LCs), and Microfinance NGOs (MF-NGOs) SUBJECT : Implementation of Mandatory Grace Period for All Loans Pursuant to the Bayanihan toRecover as One Act NOTICE On 15 September 2020, Republic Act No. 11494, otherwise known as the Bayanihan to Recover as One Act , took effect. 1 Section 4 (uu) thereof provides: SEC. 4. COVID-19 Response and Recovery Interventions . Pursuant to Article VI, Section 23 (2) of the Constitution, the President is hereby authorized to exercise powers that are necessary and proper to undertake and implement the following COVID-19 response and recovery interventions: xxx xxx xxx (uu) Directing all banks, quasi-banks, financing companies, lending companies , real estate developers, insurance companies providing life insurance policies, pre-need companies, entities providing in-house financing for goods and properties purchased, assets and liabilities management companies and other financial institutions , public and private, including the Government Service Insurance System (GSIS), the SSS and Home Development Mutual Fund (Pag-IBIG Fund), to implement a one-time sixty (60)-day grace period to be granted for the payment of all existing, current and outstanding loans falling due, or any part thereof, on or before December 31, 2020 , including, but not limited to, salary, personal, housing, commercial, and motor vehicle loans, amortizations, financial lease payments and premium payments, as well as credit card payments, without incurring interest on interests, penalties, fees, or other charges and thereby extending the maturity of the said loans: Provided , That all loans may be settled on staggered basis without interest on interests, penalties and other charges until December 31, 2020 or as may be agreed upon by the parties: Provided, further , That nothing shall stop the parties from mutually agreeing for a grace period longer than sixty (60) days: x x x (Emphasis supplied) In view thereof, all FCs, LCs, and MF-NGOs are required to implement a one-time 60-day grace period for all loans that are existing, current and outstanding, falling due or any part thereof on or before 31 December 2020. The mandatory one-time 60-day grace period shall apply to each loan, whether the borrower has a single loan or multiple loans with the subject FC, LC, or MF-NGO. FCs, LCs, and MF-NGOs shall not charge or apply interest on interest, penalties, fees, or other charges during the mandatory one-time 60-day grace period to future payments or amortizations of the borrowers. Furthermore, FCs, LCs, and MF-NGOs are prohibited from requiring their clients to waive the application of the provisions of the Bayanihan to Recover as One Act. No waiver previously executed by borrowers covering payments falling due until 31 December 2020 shall be valid. The accrued interest for the one-time 60-day grace period may be paid by the borrower on a staggered basis until 31 December 2020. Nonetheless, this shall not preclude the borrower from paying the accrued interest in full on the new due date. The parties may agree on a grace period longer than 60 days, and/or the payment of accrued interest on a staggered basis beyond 31 December 2020. For your immediate compliance. Pasay City ATTACHMENT Republic Act No. 11494 September 11, 2020 Footnotes 1. Signed on 11 September 2020 and published in Manila Bulletin on 15 September 2020. A copy of Republic Act No. 11494, or the Bayanihan to Recover as One Act follows.