Updated June 5, 2020
The Implementing Rules and Regulation (IRR) of the Bayanihan to Heal as One Act has been approved by the Department of Finance. If you have a credit card due during the Enhanced Community Quarantine, or if you have a loan payable within this period, what are your options? Check out the Bayanihan to Heal as One Act FAQs below:
For MECQ and GCQ Grace Period Guidelines, check the end of the article or click here.
(Update: This includes FAQ part II released by the BSP on April 22, 2020, Part III on May 19, 2020, Part IV released on June 1, 2020)
(Note the grace period will be extended if the ECQ is extended. As of today, the ECQ is extended in Metro Manila, CALABARZON, and other regions.)
Banks SHOULD extend their grace period and must not charge interest on interest, late payment fees, etc every time the ECQ is extended. Here is a list of banks with announced grace period extensions.
Which types of financial institutions are covered by the Bayanihan to Heal as One Act?
It covers all Bangko Sentral ng Pilipinas (BSP)-supervised financial institutions (BSFIs) including:
- Quasi Banks
- Non-Stock Savings
- Loan Associations
- Credit Card Issuers
- Trust Departments/Corporations
- Other credit granting entities
Does the law apply to loans extended by banks abroad to Filipino residents?
No, it applies only to loans extended by financial institutions established in the Philippines.
What if my bank made me sign a waiver of my right to avail of the benefits of the grace period granted by the Bayanihan to Heal as One Act?
That waiver is now invalid. The IRR states “no waiver previously executed by the borrowers covering payments falling due during the ECQ period shall be valid.”
Of course, borrowers may still choose to pay their loans.
Does it apply to all loan accounts whether current or past due?
Are loan accounts covered by post-dated checks, auto debit or auto deduct arrangements with lending FIs covered by the IRR?
Yes. The financial institutions are advised to coordinate with their clients if they wish to proceed with the arrangement despite the mandatory 30-day grace period granted by the law. The financial institution must also coordinate with their clients if they wish to reverse checks cleared or payments debited/deducted prior to the enactment of the Bayanihan Act and its IRR, during the mandatory 30-day grace period. The reversal shall be done without corresponding fees and charges.
Are fees/charges related to loans extended or credit lines granted (like credit card renewal fees) scheduled to be paid during the ECQ period covered
Yes, fees and charges related to loans extended or credit lines granted are covered by the IRR.
What exactly is the 30-day Grace Period?
The 30-day mandatory grace period under the law effectively moves the payment due date.
When will the 30-day Grace Period start?
It starts from the payment due date that falls within the ECQ period.
Is the principal amount payable during the grace period be added to principal amount due in the next payment date? Or will the final due date of the entire loan moved by 30 days?
The last payment due date will move by 30 days. Interested accrued during the 30-day mandatory grace period may be paid in lump sum on the new date or on a staggered basis over the remaining life of the loan.
Example: A 5-year loan with remaining maturity life of 4 years. If the monthly amortization of the loan due on April 2, 2020 is Php 10,500.00 with a portion applied to payment of the principal (ex: Php 10,000.00) and monthly interest (ex. Php 500.00)
- What is the new due date? – May 2, 2020
- How much will the borrower pay on the next due date? – Principal for 1 month plus interest for 2 months (10,000 + 500 + 500 = 11,000) or principal for 1 month plus interest for 1 month pust interest for 1 month/(4 yrs x 12 months) = 10,500 + 500 + (500/4 x 12) = Php 10,510.42 (Assuming the principal and interest are constant at Php 10,000 and Php 500).
Will Amortizations Be Rescheduled?
Yes. 30 day grace period.
Do Banks, etc need to issue new Promissory Note/Disclosure Statements for the new amortization schedule?
No. There is no need.
How will the IRR provisions apply to loans other than those amortized monthly? (ex. quarterly, semestral)
The 30-day grace period apply to all loans regardless of its amortization schedule, as long as the due date falls within the ECQ.
Do I need to apply or request approval from the bank/financial institution for the application of the 30-day grace period?
No. The 30-day grace period will automatically be applied by all lending financial institutions.
If I am a borrower that does not pay in full every payment period, will interest on my outstanding balance continue to accrue during the 30-day grace period?
Interest will continue to accrue and this will be payable on the next due date, following the application of the grace period, either in lump sum or on a staggered basis.
For credit card transactors, will interest accrue on the outstanding balance during the 30-day grace period ?
Credit card transactors will not be charged any interest during the 30-day grace period if they pay the total outstanding balance on or before the new due date?
(Part II – April 22, 2020)
How will the extension of the Extension of the Enhanced Community Quarantine (ECQ) period affect the 30-day mandatory grace period
The IRR provides that the initial 30-day grace period shall automatically be extended if the ECQ is extended.
Does the mandatory grace period provided under the Bayanihan Act and its IRR apply only to loans extended by covered financial institutions operating in Luzon since IRR refers to the ECQ imposed in Luzon pursuant to proclamation No. 929 (s. 2020)?
The Bayanihan Act and its IRR cover all lenders without distinction. Thus, the mandatory grace period shall apply to loans extended by all covered financial institutions irrespective of their place of operation. The ECQ period under Proclamation NO. 929 (s. 2020) serves as reference date for determining the loan accounts that qualify for the mandatory application of the 30-day grace period based on the loan payment due dates.
Does the mandatory grace period apply to letter of credits, bills purchase, guarantees and other contingent facilities that were funded by the covered financial institution?
Yes, the mandatory grace period shall apply to payment for said facilities that will fall due within the ECQ period.
Does the IRR apply to employees’ benefit loans extended by financial institutions to their own workforce (e.g. appliance loan, emergency loan, provident fund loan)?
Yes, the IRR covers all types of loans.
How will the mandatory grace period be applied to past due accounts?
Accounts that became past due prior the ECQ period shall not be charged interest on interest, charges and other fees during the mandatory grace period.
Are insurance premium payments covered by the mandatory grace period? Will the mandatory grace period be applied to insurance products bundled with bank loans (e.g. mortgage redemption insurance, fire insurance)?
Insurance premium payments are not covered by the mandatory grace period since they do not represent payments for loan obligations/borrowings. However, insurance companies are not precluded from providing a grace period for the payment of the insurance premiums.
Insurance products that are bundled with bank loans are covered by the 30-day grace period.
How will the relief for loans particularly on the non-imposition of Documentary Stamp Tax (DST) be applied if the DST has already been paid by the borrower during the ECQ period but prior the issuance of the IRR?
Borrowers who paid DSTs during the ECQ period but before the issuance of the IRR may apply for a tax refund. The law provides that all loans with payment due dates falling with the ECQ period shall qualify for the mandatory application of the 30-day grace period.
Can financial institutions allow the payment of the lump sum amount of the accrued interest during the mandatory grace period on the last payment date of the loan?
The IRR provides that borrowers have the option to pay the interest accrued during the mandatory grace period either in lump-sum on the new due date or on a staggered basis over the life of the loan. Nonetheless, covered financial institutions are not precluded from offering less onerous payment schemes with the consent of the borrower, such as allowing lump-sum payment or accrued interest on the last payment date of the loan, provided that the interest accrued during the mandatory grace period will not be charged with interest, fees, and other charges.
How will the grace period be applied to DOSRI transactions under Section 342 of the Manual of Regulations for Banks (MORB)?
The mandatory grace period shall apply to DOSRI transactions with payments falling due within the ECQ. No penalty/sanction shall be imposed on such DOSRI transactions when payment is made on the new due date following the application of the mandatory grace period.
DOSRI credit card holders may pay the amount falling due within the ECQ period on or before the new due date following the application of the mandatory grace period. Bank/Credit Card companies may offer other payment schemes to DOSRI credit card-holders for purchases made during the ECQ period, subject to prior BSP approval.
Will covered financial institutions be given a transitory period to complete any needed reversals and/or adjustments considering the likely limitations of the existing banking systems and processes in complying with the IRR of the Act?
This will be handled on a case by case basis. Concerned financial institutions should coordinate with their respective supervising department.
What interest rate should covered financial institutions apply in computing for interest accruing during the mandatory grace period?
Covered financial institutions should use the interest rate stipulated in the loan agreement.
How will the implementation of Modified Enhanced Community Quarantine (MECQ) in selected parts of the country affect the application of the mandatory grace period for the payment of all loans provided under the “Bayanihan to Heal as One Act”?
The MECQ shall have the same effect as the ECQ with respect to the application of the mandatory grace period for the payment of all loans falling due within the period of MECQ. Hence, the mandatory grace period shall still apply to all loans extended by all covered financial institutions irrespective of their place of operation. In this respect, lending institutions shall implement a 30-day grace period for all loan payments with principal and interest falling due within the period of MECQ, without incurring interest on interest, penalties, fees, and other charges. Lending institutions shall also implement an additional 30-day grace period for loan accounts that qualified for an initial 30-day grace period with the new due date falling within the MECQ period without incurring interest on interest, penalties, fees, and other charges.
Will the mandatory grace period provided under the Bayanihan Act apply if the entire country is placed under General Community Quarantine (GCQ)?
No. The mandatory grace period under the Bayanihan Act shall only apply if there are still areas in the country under ECQ or MECQ. The application of the mandatory grace period shall cease one the ECQ and MECQ are lifted in the entire country.
How will the classification of NCR under GCQ and certain parts of the country under Enhanced Community Quarantine (ECQ/Modified ECQ effective June 1, 2020 affect the application of the mandatory grace period provided under the Bayanihan Act?
The 30-day mandatory grace period under the Bayanihan Act shall no longer apply effective 01 June 2020, pursuant to the declaration of the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF) under its Resolution No. 40, dated May 27, 2020, which already places a majority of provinces and cities under GCQ or Modified GCQ. Therefore, all loan payments with principal and interest falling due from 01 June 2020 onwards shall be due and demandable.
The termination of the grant of the 30-day grace period for the payment of loans with maturity dates on or subsequent to 01 June 2020 is premised on the lifting of the restrictions on economic activities in majority of the provinces and cities in the country. With the lifting of ECQ in majority of the provinces and cities, the condition for the grant of the 30-day grace period under Sec. 4(aa) of Republic Act No. 11469 is no longer present.
Will the 30-day mandatory grace period under the Bayanihan Act still apply to loan and/or interest payments falling due until 31 May 2020 even if the new dates will fall on or after 1 June 2020?
Yes. The 30-day mandatory grace period under the Bayanihan Act shall continue to apply to loan and/or interest payments falling due until 31 May 2020.
Pursuant to IATF Resolution No. 40 dated 27 May 2020, ECQ/MECQ is lifted in majority of provinces and cities effective 1 June 2020. Are the borrowers required to pay in June 2020 all loan payments that were granted 30-day grace period in March, April, and May 2020?
No. As stated in item 10 of the FAQs contained in Memorandum No. M-2020-018, the 30-day mandatory grace period under the law has the effect of moving the payment due date by 30 days. Item 11 of the same memorandum also clarifies that the amortization will be effectively rescheduled in accordance with the 30-day grace period. Thus, effective 1 June 2020, the borrower shall only pay the amount of the loan principal and/or interest that is effectively due in June 2020 or for one month following the appplication of the 30-day grace period. The last payment due date of the loan is effectively extended by a period equivalent to the grace period granted for the duration of the ECQ. For accrued interest in March, April, and May 2020, the borrower may pay it in lumpsum in June 2020 or on a staggered basis over the remaining term of the loan.
Can covered institutions set a deadline for payment of interest accrued during the mandatory grace period?
Under the IRR, borrowers have the option to pay the interest accrued during the mandatory grace period in lumpsum on the next payment due date or on a staggered basis over the remaining life of the loan. Covered institutions may offer less onerous payment terms, with the consent of the borrower, that include setting new payment due dates for interest accrued during the mandatory grace period.
Can covered institutions impose additional Documentary Stamp Tax (DST) for credit extensions/restructuring granted during the ECQ/MECQ period?
No. Section 5.01 of the IRR of the Bayanihan Act IRR provides that “no DST shall be imposed on credit extension and credit restructuring, micro-lending including those obtained from pawnshops and extensions thereof during the ECQ period.” The BIR has issued Revenue Regulations No. 8-2020 dated 01 April 2020 and Revenue Memorandum Circular Nos. 35-2020 dated 02 April 2020 and 36-2020 dated 03 April 2020 to this effect.
This article is published on BitPinas: BSP Bayanihan to Heal as One Act FAQs