DOF issues rules on mandatory 30-day grace period for loans falling due within Luzon quarantine

The Department of Finance (DOF) on Wednesday issued the implementing rules and regulations (IRR) for the 30-day mandatory grace period of all loans falling due within the Luzon-wide enhanced community quarantine.

The IRR serves as the guidelines for the implementation of Section 4(aa) of Republic Act No. 11469 or the “Bayanihan to Heal as One Act.” It was signed by Finance Secretary Carlos Dominguez III.

Under the said section of the law, bank, quasi-banks, financing firms, lending companies, and other financial institutions both private and public including the Government Service Insurance System, Social Security System, and Pag-IBIG Fund were directed to implement a 30-day minimum grace period for the payment of all loans.

The loans include, but are not limited to salary, personal, housing, and motor vehicle loans, as well as credit card payments falling due within the period of enhanced community quarantine — March 17 to April 13 — “without incurring interests, penalties, fees, or other charges.”

Persons with multiple loans are also given a 30-day minimum grace period.

The IRR, likewise, stated that the initial 30-day grace period shall automatically be extended if the enhanced community quarantine period is extended by the President pursuant to his emergency powers under the “Bayanihan to Heal as One Act.”

“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 individuals, households, micro, small, and medium enterprises (MSMEs), and corporate borrowers,” the implementing rules said.

“Covered institutions are prohibited from requiring their clients to waive the application of the provisions of the ‘Bayanihan to Heal as One Act,’ including among others, the mandatory 30-day grace period,” the IRR read.

Meanwhile, waivers previously executed by borrowers covering payments falling due during the enhanced community quarantine period shall be valid.

“Nonetheless, the grant of grace period by the above-mentioned covered institutions shall not preclude the borrowers from paying their obligations as they fall due during the period of enhanced community quarantine should they so desire,” the IRR read.

For multiple loans falling due within the enhanced community quarantine, the grace period shall apply to each loan.

Accrued interest for the grace period may be paid by the borrower on 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,” according to the IRR.

The rules shall take effect immediately upon publication. 

It will be published on April 2, 2020 in a newsdaily.

Violators of the IRR provisions shall be subject to the appropriate penalties under  RA 11469, as well as existing laws, rules and regulations.

“We trust that the provisions under the IRR are meant to protect the collective interests of our stakeholders,” the Bankers Association of the Philippines (BAP) said in a separate statement.

“The banking industry and individual banks respect the IRR and will follow the law and its implementing rules in order to achieve its objectives,” BAP said.—KG/LDF, GMA News