Credit CYCLE OVERVIEW

for
relationship associates
Self-directed Learning Mechanics
The Relationship Associate (RA)

will be accompanied by the Mentor

while going through the module.

The Mentor may be the

Relationship Manager (RM) or
another RA.
 The e-Learning is designed to provide an OVERVIEW of the
credit cycle in relation to the Relationship Associate’s
daily tasks.

1. The newly hired RA is expected to complete the e-Learning during

the 1 month immersion period in the unit.

2. Content has been divided into 7 modules that must be taken in

correct succession.

3. After each module, the RA can download the hard-copy of the

module.

4. The RA will take an online exam before proceeding to the next

module.

5. A minimum of 2 modules/week must be completed. All modules

completed before attending the RATP.
As the RA and Mentor go through the module, the Credit/Legal
folder of a chosen account must be on-hand.

The Relationship Associate must:

1. Experience the Theory (the why)

2. Model (learn by doing with a mentor)
3. Rehearse as the skill needs to become habitual
4. Receive constructive Feedback to understand if they
can cope with the demands of the role and how they
can improve.
The CREDIT CYCLE refers to the different stages of loan
portfolio management, from client acquisition to loan
fulfillment .

Client Pre-Approval Approval Account Post- approval Transaction

Acquisition documentation Medium Approval documentation
Preparation
Post-approval
documentation
 Credit, legal and collateral
documents are required to be
submitted to operationalize
approved credit facilities

Documents In Order (DIO) Chopping shall be

conducted on all approved credit
accommodations (i.e., case-to-case and credit
line) prior to any booking/drawdown.
The Relationship Associate

Collect and organize all post-

approval documents from the
client for credit facility
establishment and Documents-
In-Order (DIO) Chopping.
What is DIO chopping?

The conduct of verifying and confirming the completeness of

credit, legal and collateral documents required to
operationalize the approved credit accommodation (as
specified in the Documentary Requirement Checklist).
Who conducts DIO chopping?
The DIO chopping authority for all facilities of commercial
loans shall be delegated to specific/named individuals at
amounts not exceeding the prescribed limits:
What are the Prescribed Documents for submission?

Credit, legal and collateral documents that are required to be

submitted to operationalize approved credit facilities (i.e., case-to-
case loan/trade transactions and credit lines) shall be classified as
follows:
1. Non-Deferrable Documents are documents that are required to be
submitted by the client prior to any loan/trade bookings (case-to-case or
availment against credit lines).
2. Deferrable Documents are documents that may be submitted after
loan release/trade booking but within the prescribed grace period.
 LIST OF LEGAL AND COLLATERAL DOCUMENTS
(VOL. 2, EXH. 1300-A)

1 A. ESTABLISHMENT OF LEGAL PERSONALITY /CAPACITY TO

ACT (Borrower/Mortgagor/Surety)
1. Documents are categorized as to 4
Capacity to act, Collateral, CSA 5
etc. 2
2. Documentary requirements listed in
the 1st column.
3. Deferment status is marked with an 3
“x”.
4. Deferrable document classification
varies if account is “new” or
“renewal.
5. Study the conditions under the
Remarks & Frequency of updating.
Deferrable Documents

On an exception basis, transactions of accounts with deficient

documents may be allowed, provided the approval to defer
documentation is obtained in either of the following ways:

1. Via a Transaction Release Slip (TRS) for approved credit

accommodation.
2. Via notations in the ERCA/OS together with the following minimum
information:

8.2.1. List of documents to be deferred

8.2.2. Target Date of DIO chop
8.2.3. Reason and justification for deferment
Transaction Release Slip (TRS)

The Transaction Release Slip (TRS) shall be used by

branches/lending units to secure approval to book/renew loans
with outstanding deficient documentation from designated
approving authorities.

CRG-Documentation and Collateral Management Department

(DCMD) (for CBG accounts) and
Credit Support Unit (CSU) (for branch/COMBANK) shall prepare the
TRS (on a per facility basis) upon request of the Relationship
Manager (‘Lending Officer’) via phone call or e-mail.
Transaction Release Slip (TRS)

To provide sufficient time for the approval of TRS, the requests shall
be sent by the Lending Officer to CRG-DCMD/CSU at least two (2)
banking days prior to scheduled booking date.

Endorsement of the TRS to the appropriate authorities for approval

shall be the responsibility of the handling Lending Officer.

RA to route for APPROVAL.

Transaction Release Slip (TRS)

An approved TRS shall have a default validity period of thirty (30)

calendar days which may be extended for another thirty (30) calendar
days.

However, the initial TRS approval may be granted up to sixty (60)

calendar days provided this is specifically stated and justified.

Deficient documents specified in the approved TRS should be completed

by the branch/lending unit within the validity period indicated by CRG-
DCMD/CSU in the TRS.
Transaction Release Slip (TRS)

The lending unit shall be held accountable for non-

regularization of document deficiencies within the
stipulated period and/or for losses that the bank may
incur because of document deficiency even if covered
with approved TRS.

For credit lines, document chopping shall no longer be required on

succeeding drawdowns (whether loans) provided that the TRS is still
valid.
Transaction Release Slip (TRS)

Loan releases supported by approved TRS shall have the following

maximum tenors to mitigate the risk of incomplete documentation and
to aid in deficiency monitoring and document submission:

1. Major document deficiency - maximum tenor shall be 90 calendar days

2. Minor document deficiency - maximum tenor shall be per approved

terms
Deferrable Documents
The DIO chopping authority for all facilities of commercial loans shall
be delegated to specific/named individuals at amounts not exceeding
the prescribed limits:
Deferrable documents shall be sub-classified as Major and Minor
Documents which shall be the basis for determining:

3.1.2.1. The appropriate approver for the loan release/trade booking

(see MOPP Vol. 2 EXH.2001-B, re: TRS Approvers)

3.1.2.2. The appropriate penalties to be imposed on the account for

non submission of required documents (see MOPP Vol. 2 POL.1303, re:
Handling of Accounts with Outstanding Document Deficiencies )
Preparation for DIO
( Documents in Order ) Chopping
 Mentor to guide the RA in the validation of actual
documents*, routing, handling of deficiencies
etc.

*May use different accounts if document is not available in the folder on hand.

Step 1. The lending unit receives notice of

ERCA approval
Step 2. Identify from the folder the requirements for DIO
( Documents in Order ) Chopping
Secure copy of approved Request for set-up of RM and
ERCA thru ELAT (Electronic Customer number via email to CRG
Loan Transmittal). Systems Administrator-COSSD.

Submit pre-approval
documents to RM for
Submit ALL pre- authentication EXCEPT
approval documents internal documents
to CSU. like:
i. CIR
ii.IDBS
iii.Asset search
Secure DTS (Document
Transmittal Sheet) from the Email CSU-DA requesting for
DA (Documentation "Checklist" of Credit documents
Assistant)
 Credit Documents Preparation

Step 3. RA to COLLECT prescribed documents.

Step 4. RA to ascertain COMPLETENESS and ACCEPTABILITY
1. CORPORATION AND PARTNERSHIP
A. Secretary's Certificate

1. Check the type of collateral as

indicated in the approved ERCA.

2. Choose the appropriate Secretary's

Certificate template based on the type
of collateral
1. CORPORATION AND PARTNERSHIP
A. Secretary's Certificate

2. Choose the appropriate Secretary's

Certificate template based on the type
of collateral
1. CORPORATION AND PARTNERSHIP
A. Secretary's Certificate

3. Email the applicable Sec. Cert. to the Corporate Secretary.

A. Secretary's Certificate

4. Upon receipt of the Secretary's Certificate from the Company’s

Corporate Secretary, perform the following validation:

a. Marginal signature of the Corp. Sec. in long-hand on ALL pages

of the Secretary’s Certificate to ensure that the document is
not altered or amended without the knowledge of the Bank or
the Borrower-Client.

Note: For Sec. Cert. with notarial seal, the signature of the Corp.
Sec. on the designated signature portion is acceptable.
A. Secretary's Certificate

4. Upon receipt of the Secretary's Certificate from the Company’s

Corporate Secretary, perform the following validation:

b. All active authorized signatories including the Corp.Sec. should

submit valid government IDs (with signature) to serve as basis for
validating the identity of the signatories representing the
corporation or other entities.
A. Secretary's Certificate

5. Check the following items on the accomplished Sec Cert:

a. Name and address of the Corporate Secretary vs. the
latest GIS
*Incomplete recital is an Audit exception
b. Name and address of the Corporation.

6. Line by line comparison of the content.

7. Check the credit accommodation amount

A. Secretary's Certificate
8. Actual date of meeting as stated in the GIS.
9. Check if the listed Board of Directors and Principal Officers is the
same with GIS.
10. Check attestation of the President IF the Corp. Sec. is the sole
signatory.*
A. Secretary's Certificate

11. Check if Notary Public is not part of the MBTC blacklisted Notary
Public

12. Notarization of document.

A. Secretary's Certificate
13. a. Ensure completeness of notarial details

All blanks in the body of the instrument shall be filled out. If an item is
not applicable, it should be expressly stated.
The names of the parties concerned shall be indicated in the space for
signing.
The personal circumstances of the parties shall be clearly indicated and shall
describe the capacity in which they are signing the instrument (see MOPP
Vol. 2 EXH.1301-A).
For documents that will not follow the standard format, Legal Services
Department shall be consulted before accomplishing the document.
 A. Secretary's Certificate
13. b. Ensure completeness of Jurat - ID details of the Corp. Sec.

The following must be indicated in the documents:

6.1. Current year’s Residence Certificates Number of the parties
concerned
6.2. Taxpayer's Identification Number (TIN) of the parties involved must
be indicated therein if the document is to be submitted to or registered
with any government office or entity.
 A. Secretary's Certificate
13. c. Venue of notarization.

The date and place of execution should be properly indicated in the

document.
1. If there are two (2) or more places of execution, there shall be
two (2) ending paragraphs before each signature, indicating the
place and the date the instrument will be signed.

2. The place of execution of the instrument shall match with the

place of acknowledgment and the date of execution shall be as
close as possible to the date of acknowledgment.
1. CORPORATION AND PARTNERSHIP
B. Signature Card
Policy Statement 1. Under Section X262.1 of the Manual of Regulations
for Banks (MORB), all banking institutions are required to set a
minimum of three (3) specimen signatures to be simultaneously
required from each of their depositors and to update the specimen
signatures of their depositors every five (5) years or sooner, at the
discretion of the Bank.

1. Forward the signature card to client to be signed by all

authorized signatories including the Corp. Sec. and Sureties. All
signatures shall be in long-hand.
B. Signature Card
1. Accomplishment of the CSC

1.1 CSCs shall be accomplished by clients in two (2) copies.

Submission of Customer Signature Cards (CSC) of active authorized signatories of

commercial loan borrowers (at least one complete set of signatures to satisfy
the signing rule) shall be strictly required.

The CSCs shall be required by CRG-DCMD/CSU for DIO chopping and shall be
considered as a non-deferrable document (except for express 1:1 branch loans
and purely DBP facilities). CRGDCMD/CSU shall indicate the “SVS Account
Number” and “RM Number” in the DIO-chopping stamp.
1. CORPORATION AND PARTNERSHIP
C. Letter of Advise
Shall be prepared only if it is a condition of the approval; otherwise,
issuance of the LOA shall be:
• Optional depending on the Lending Officer to advise clients of
facilities granted, subject to the signing rules of IBS and RBS.

• Only as needed, if required by the Non-Performing Asset Committee

(NPAC), Office of the General Counsel (OGC) or Special Accounts
Management (SAMG) Officer to document agreements that are not
covered by existing credit and legal documents.

• Only as needed, if client requests for it.

Validation of Credit documents from
CSU
Credit accommodations are classified depending on
the type of collateral that will cover the loan
exposure.

Credit facilities are Credit accommodations

loans/credit lines that are without collateral
adequately secured (i.e.,
loan value of collateral
adequately cover the loan
exposure).
Collateral Documents

1. Real Estate Mortgage 1. Continuing Surety Agreement

2. Deed of Assignment on Deposits 2. Chattel Mortgage

3. Deed of Assignment on Receivables

Collateral Documents - Secured
1. A Real Estate Mortgage (REM) is an accessory contract whereby the
mortgagor guarantees the performance of the principal obligation by
subjecting a real property as security in case of performance of such
obligation within the period agreed upon.

Subject Matter of REM – Immovable/Real properties

Formal Requirement or REM:

- Must be a public document, and the document in which it appears
should be recorded in the Registry of Property
Real Estate Mortgage (REM)

Parties involved in the REM contract:

Mortgagor (Client) Mortgagee (Bank)

 Mortgagor must be the absolute owner
and has the free disposal of the
property mortgaged, and in the
absence thereof, he should be legally
authorized for the purpose.

The documentary evidence of the right of ownership is the

Certificate of Title.

A municipal-issued document that identifies the owners of personal or

real property.
The Certificate of Title issued is based on how the property is registered.

The first registration of the land entered in the

Registry of Property is called Original Certificate of
Titles (OCT). A duplicate copy is issued to the owner by
the Registry of Deeds (RD).

Subsequent registration where the Original

Certificate of Titles (OCT) is cancelled and
subsequently registered under a Transfer
Certificate of Titles (TCT) in favor of the new
owner in cases of land conveyance such as sale,
donation or assignment
Real Estate Mortgage (REM)
The REM shall contain the, complete technical description of the properties
as specified in the Original Certificate of Titles (OTC), Transfer Certificate of
Titles (TCT) and Condominium Certificate of Titles (CCT).

2 1. TCT Number
2. Technical Description of Property
3. Lot Area
3 4. History & Dates of Survey
4 5. Approval Date
5
The REM executed to secure a specific loan/credit accommodation shall
be co-terminus with the loan /credit accommodation it secures.

In this sample, what will be the

validity period of the REM?
If there are more than five (5) titles, only the title number and the
issuing Registry of Deeds shall be indicated in the REM Agreement.

Photocopies of the titles containing the signatures of the

mortgagors, mortgagors’ spouse (if any) and lending officer (on all
copies and all pages) shall be attached to the REM as annexes (see
MOPP Vol. 2 EXH.2100-A).
The amount indicated in the REM agreement and annotated on
the OTC/TCT/CCT shall be Loan Value of the property:
 Any deferment of collateral
documentation which renders
the exposure clean will require
The required documents on credit approval from the appropriate
accommodations secured by Real authority with the delegated
Estate Mortgage (REM) shall be clean loan limit covering the
submitted by the client to
total resulting clean loan
operationalize approved credit
facilities
exposure.
(Collateral Documents VOL. 2,
EXH. 1300-A )
The Relationship Associate

Will collect, validate 1. Original Transfer Certificate of Title (TCT)

and submit the following /Condominium Certificate of Title (CCT/Original
documents to CSU Certificate of Title (OCT)

2. Title Investigation Report & Trace Back

3. Appraisal Report and CRIAD requirements to

make the collateral acceptable

4. Notarized Real Estate Mortgage Agreement and

Amendments as required (change in amount, borrower,
collateral)
The Relationship Associate

Will collect, validate

and submit the following 5. Original Tax Declaration
documents to CSU (land/improvements/condominium)

6. Original/Updated RETR (current year/quarter)

7. Original/Updated Tax Clearance (current

year/quarter)

8. Fire Insurance policy at appraised value

of improvements endorsed to the Bank &
Original Receipt
 1. Owner's original copy of Transfer Certificate of Title (TCT)

What’s the difference

between the 2 TCTs?
Which of the 2 TCTs is valid?
Pursuant to the “IMPLEMENTING GUIDELINES ON ELECTRONIC REGISTRATION
OF LAND TITLES AND DEEDS” on the adoption of PHILARIS.

Registration and/or recording of transactions on registered land shall be

processed using the PHILARIS

PHILARIS – refers to the Philippine Land Registration and Information

System, which is a computer program designed and develop to automate
the processes of the Land Registration Authority and its Registries.
 Owner's original copy of Transfer Certificate of Title (TCT)

TCT old format PHILARIS TCT

What’s the difference
between the 2 TCTs?

Which of the 2 TCTs is

valid?
Both TCT formats are
acceptable.
For validation on the Transfer Certificate of Title (TCT)

1. TCT Number
2
2. Technical Description of Property
3
3. Owner of property

4. History of Title
4
For validation on the Condominium Certificate of Title (CCT)

1. TCT Number
2
2. Technical Description of Property

3. Owner of property
3
 Memorandum of Encumbrances
An encumbrance is a legal claim (as a mortgage) against property
and “lien” as likewise a legal claim on the property of another
person until he or she has met certain obligation (as a debt)

Encumbrances are annotated at

the back of the title under the
“Memorandum of Encumbrances”.

Effect: An encumbrance can restrict the owner's ability to transfer title to the
property or lessen its value. It represents some right or claim of another to a
portion of the property or the use of the property .
 For validation on the Annotations on Title

1. TCT Number 1

2. Entry number
2
3. Entry date & Time 4
3

4. Encumbrance details

5. Signature of Register of Deeds 5

1. Original Transfer Certificate of Title (TCT) /Condominium Certificate of
Title (CCT) /
Original Certificate of Title (OCT)

DIO Document classification: New Credit Line/Loan – Deferrable, Major

Remarks: None

Updating: No updating required.

2. What is a Title Investigation Report (TIV)

This report contains the complete history (including the transfer of

ownership, annotation, encumbrance, liens, etc..) of the present title
up to the 3rd trace back from the original title

What is the difference between a Title Investigation Report (TIV) and

Title Verification Report?

Title Verification reports status of the current title (present

annotations, liens and encumbrances).
For validation on the Title 1
Investigation 2

1. TCT Number & Details

2. Present Title Details
3. Trace back / History of Title
4
4. Annotations & Other Findings
5. Conclusion & Recommendation
5
 For validation on the Title Verification Report

1. Title Details
1
2. Present Title Details
2
3. Present Title Annotations
3 4. Remarks & Conclusion
4
2. Title Investigation Report (TIV)

DIO Document classification: New Credit Line/Loan – Deferrable,

Major

Remarks: - For MM - to be requested from DIA; - For countryside to be

done by the CCU with the appraisal

Updating: Title Verification Report - Upon re-appraisal (3 years), title

verification to be done by CRIAD Appraisal.
3. Appraisal Report and CRIAD requirements to make the collateral
acceptable.

Real estate appraisal, property valuation or land valuation is the

process of developing an opinion of value, for real property
(usually market value).
Appraisal of properties handled by Credit Group Appraisal Units.
 Findings
Title of Appraisal
no. and Technical Officer
description
For validation on the Appraisal
Report

Registered owner and location of

property (collateral)
Lending units and Credit Support Units
(CSU)/Credit Group-Credit Evaluation
and Analysis Division (CREAD) shall
Loan Value
Appraised Value
request for appraisal of collaterals
through the Credit Appraisal System
(CAS).
3. Appraisal Report and CRIAD requirements to make the collateral
acceptable.

DIO Document classification: New Credit Line/Loan – Deferrable, Major

Remarks: Documentation unit to verify acceptability of collateral and

any special CRIAD requirements based on characteristics of property

Updating: None
4. Notarized Real Estate Mortgage Agreement and Amendments as
required (change in amount, borrower, collateral).

REM should be notarized according to law (Art. 1358 of the

Civil Code)

What are the effects if the document is notarized?

- Converts a private document into a public one;
- Renders said document admissible in court without further
proof of its authenticity and due execution;

Signatories of documents for notarization must personally

appear before the Notary Public. (MOPP Vol. 2, Pol 1302)
The following bank forms shall be used for the specific
transactions secured by REM:
TYPE OF TRANSACTIONS OFFICIAL BANK FORMS
For renewal/extension of loan/line Agreement on Existing Mortgage (AEM) / Side
or for a new loan/line for the same amount secured Agreement)
by the existing parcels of land mortgaged in favor of
Metrobank.
Increase in loan/line using the same parcel(s) of land Amendment of Real Estate Mortgage
mortgaged in favor of Metrobank.
Increase in loan/line using new parcels of land in Amendment of Real Estate Mortgage with Additional
addition to the existing parcels of land mortgaged in Collateral
favor of Metrobank.
NOTE: By using this form, the Registry of Deeds shall
collect registration fees not on the basis of the
increased in the loan/line but on the total line.

For amendment of real estate mortgage with Amendment of Real Estate Mortgage with a Decrease
decrease in the loan/line and release of properties in the loan/line and Release of Real Properties
previously mortgaged with the Bank.
4. Notarized Real Estate Mortgage Agreement and Amendments as
required (change in amount, borrower, collateral).

DIO Document classification: New Credit Line/Loan – Deferrable, Major

Remarks: None

Updating: No updating required.

5. Original Tax Declaration (land/improvements / condominium)

Tax receipts and declarations are prima facie proofs of ownership or

possession of the property for which such taxes have been paid.
Coupled with proof of actual possession of the property, they may
become the basis of a claim for ownership.

Three (3) types:

1. Tax declaration on land
2. Tax declaration on improvements
3. Tax declaration of condominium
1 For validation on
2 the Original Tax
3 5 Declaration - Land

1. Property Index Number (PIN)

2. Details of Owner
4 3. Land Description
4. Land Value
5. Land Appraisal
 1
For validation on the
Original Tax Declaration - 2
4
Improvements

3
1. Property Index Number (PIN)
2. Details of Owner 5

3. Building Description
4. Building Appraisal
5. Building Assessment
5. Original Tax Declaration (land/improvements / condominium)

DIO Document classification: New Credit Line/Loan – Deferrable, Major

Remarks: None

Updating: Updating required for new improvements, change in

ownership of improvement, new zoning issued by the government or if
there has been a reclassification of land use.
6. Original/Updated Real Estate Tax Receipt (RETR) (current
year/quarter)

Real estate tax is a kind of tax levied by the local government on

properties and should be paid by property owners. Properties that
are taxable include land, building, improvements on the land and/or
the building, and machinery. RETR is the proof of payment for the tax
due.
6. Original/Updated Real Estate Tax Receipt (RETR) (current
year/quarter)

Non-payment/Delinquency renders property unacceptable as

collateral.

“…tax and all penalties subsequently accruing thereto shall

constitute a lien upon the property subject to such tax. Said lien
shall be superior to all other liens, mortgages, or encumbrances of
any kind whatsoever, shall be enforceable against the property
whether in the possession of the delinquent or any subsequent owner
or possessor, and shall be removable only by the payment of the
delinquent taxes and penalties.” (PRESIDENTIAL DECREE NO. 464,
Sec.56)
 For validation on the Real Property Tax Bill –assessment of tax due

1. Tax Declaration Number

2. Property Index Number (PIN) 1 2 3
4

3. Tax Year 5

4. RETR Number
6

5. Name of Registered Owner 7

6. RETR Type
7. Amount Due/Paid
RETR validate against the
Real Property Tax Bill
4
2
1. Payor - Name of Registered Owner 1

2. Bill Number - RETR Number

3. Grand Total - Amount Due/Paid 3

4. Machine validation
6. Original/Updated RETR (current year/quarter)

DIO Document classification: New Credit Line/Loan – Deferrable, Major;

Renewal Credit Line/Loan – Deferrable, Major

Remarks: None
Updating:
- RETR of the last full year required for line renewals;
- For new lines/loans, RETR for the current year required.
7. Original/Updated Tax Clearance (current year/quarter)

When Real Property Tax payments are up to date, the Land Tax
Division issues a Tax Clearance Certificate that is required in certain
transactions (e.g. conveyances, loans) may be considered proof that
taxes on real property have been paid and updated.
 For validation on the Original/Updated Tax Clearance (current year/quarter)

B
A

A. Registered Owner
A

B. Property Index Number B

C
C
C. Assessed Value D

D. Taxable year
7. Original/Updated Tax Clearance (current year/quarter)

DIO Document classification: New Credit Line/Loan – Deferrable, Major

Remarks: Only for registration of mortgage purposes

Updating: No updating required.

8. Fire Insurance policy

What is a Fire Insurance policy?

A property coverage that pays for damages to property and other
losses from a fire.

2. Insurance Cover for Collaterals

2.1. Charter Ping An Corp. (CPAIC) is the sole insurance
company/agency accredited by the Bank for
insurance cover for collaterals.

2.6. The type and amount of insurance coverage including the

insurance company/agency shall be indicated in the Evaluation
and Recommendation for Credit Accommodation (ERCA)/OS.
Insurance VOL. 2, POL. 1313
8. Fire Insurance policy

2.4. Acceptance of insurance cover from non-accredited

insurance agencies shall be subject to the approval of the
following provided the insurer is among the Top 10 insurance
companies by Total Assets and Net Worth:
2.4.1. For committee level accounts – Credit Member of
the Committee and 1 DSO
2.4.2. For below committee level accounts – 2 DSOs

Acceptance of coverage of insurance companies that are not

among the Top 10 insurance companies by Total Assets and Net
Worth shall be routed to the Committee for approval.

Insurance VOL. 2, POL. 1313

8. Fire Insurance policy
at appraised value of improvements

2.6. The insurance coverage for real estate improvements shall be

equivalent to the appraised value of the improvement.

The insurance coverage secures the Bank’s interest on the collateral.

If appraised value of improvements is Php. 8M

Fire insurance coverage is also Php. 8M

Insurance VOL. 2, POL. 1313

8. Fire Insurance policy
at appraised value of improvements
endorsed to the Bank

2.5. Insurance policies must be properly endorsed in favor

of the Bank with the appropriate coverage amounts.

2.7. Waiver of insurance coverage shall be endorsed to the next

higher authority for approval.

Insurance VOL. 2, POL. 1313

8. Fire Insurance policy at appraised value of improvements
endorsed to the Bank
& Original Receipt.
4. Acknowledgment of Insurance Cover
4.1. Pending submission of original insurance policies and Official
Receipts (OR) for insurance covers on approved credit
accommodations (i.e. credit life insurance, fire insurance, etc.),
validated Payment Slips and Debit Memos (DM) evidencing
premium payments shall be accepted by CRG-CSU/CRG-
Documentation and Collateral Management Department (DCMD).

Insurance VOL. 2, POL. 1313

8. Fire Insurance policy at appraised value of improvements
endorsed to the Bank
& Original Receipt.
4. Acknowledgment of Insurance Cover 4.1
If there are no discrepancies vis-à-vis Premium Invoice of the
insurance coverage, the Payment Slip/DM shall serve as temporary
compliance to the required insurance documents for a period of
fifteen (15) calendar days from the date of payment.
Any discrepancy between the invoice and the Payment Slip/DM shall
invalidate the temporary compliance of the document
requirement.

Insurance VOL. 2, POL. 1313

 For validation on the Fire Insurance Policy

1. Policy Number 1

2. Policy Coverage Period 3

3. Premium Paid 1 4
4. Policy Amount Coverage
3
5. Insured Property Details 5
8. Fire Insurance policy at appraised value of improvements
endorsed to the Bank & Original Receipt.

DIO Document classification: New Credit Line/Loan – Deferrable, Major;

Renewal Credit Line/Loan – Deferrable, Major

Remarks: None

Updating: Yearly
Collateral Documents

1. Real Estate Mortgage 1. Continuing Surety Agreement

2. Deed of Assignment on Deposits 2. Chattel Mortgage

3. Deed of Assignment on Receivables

Collateral Documents - Secured
2. Deed of Assignment (DOA) on Deposits

What is a Deed of Assignment ?

An agreement executed by the Borrower in favor of the Lender, as a

security for a debt.

Formal Requirement of DOA

• No effect as against third persons unless it appear in a public
instrument (must be notarized (Article 1626, Civil Code)).

• If real property, it must be recorded in the Registry of Property

Under the DOA on deposits, in consideration of a financial
accommodation, the Bank becomes the “Assignee” and is granted full
and absolute control of the said deposit/placement.

Upon Borrower’s non-performance of the obligation, the ‘Assignee” is

fully authorized and empowered to apply the said deposit/placement
for the purpose of liquidating the loan either partially or totally.

Types of Acceptable Assets:

1. Traditional Deposits

2. Non-traditional Deposits
2. Deed of Assignment (DOA) on Deposits
1. Traditional Deposits

Peso and FXCY deposits are acceptable as collateral subject to loan

valuation factors (see MOPP VOL. 2 Exhibit 2120-A).

2. Non-traditional Deposits

Government Securities are evidences of unconditional and direct

liabilities of the Republic of the Philippines and servicing of which
is lodged with the issuing agency and are issuable in either bearer
form or such buyer's names as registered and are redeemable on
specified dates or upon surrender to servicing agents.

Assignment of Peso and FXCY Traditional Deposits VOL. 2, POL. 2120

2. Deed of Assignment (DOA) on Deposits

Deed of Assignment (DOA) DOCUMENTS REQUIRED

• Deed of Assignment
• Board & Stockholders Resolution to Assign
Deposit
• Passbook/Certificate of Deposit/Original SIR
of Placement
Traditional Deposits • Updated Certificate of Placement with
“Hold-Out” Stamp
• Hold-Out Notice
• Inquiry & Confirmation of RMM/BLOD holding
placement
 For validation on the DOA on TRADITIONAL Deposits

1
1. Name & Address of Placement
Owner
2. Amount of Loan
2
3
4 3. Name of Borrower

4. Amount of Placement

5. Branch / Unit & Address where

5 Placement is with.
For validation on the DOA on TRADITIONAL Deposits

6. Loan Value
7. Duly Notarized

1. For Notarization by Borrower following the guidelines set by the Bank

2. Forward signed document to the authorized signatory of the unit.
3. For notarization by the bank.

*If company address is the same City with that of the Lending Unit, only 1 notarization is required.
 For validation on the Passbook/ Certificate of Deposit /Original SIR of
Placement

1 1.Certificate of Time Deposit

2
2. Stamped and acknowledged by BH
where placement is located.

The maturity date of the loan

shall be co-terminus with the
maturity date of the placement.
In no case should the loan term
be longer that the placement
term.

Assignment of Peso and FXCY Traditional Deposits VOL. 2, POL. 2120

2. Deed of Assignment (DOA) on Deposits

Bank Policy on Assignment of Deposits FOR Married Individuals

1. Borrower is the owner of deposit
• PN : both spouses must sign -
• DA: only the depositor must sign

2. Borrower is husband/Deposit owned by one spouse

• PN: both spouses must sign
• DA: only the depositor must sign

3. Borrower is either spouse/Deposit co-owned by spouses

• PN and DA: both must sign Vol. 2, Pol 2120 on Secured
Loans
2. Deed of Assignment (DOA) on Deposits

Deed of Assignment (DOA) DOCUMENTS REQUIRED

• Deed of Assignment with Power of Attorney
(DA) (see MOPP Vol. 2 EXH.2110-B) duly
notarized and with the signature of the
deposit owners.
• If the deposit is owned by a third party
assignor, the borrower shall also be required
Non-traditional Deposits to sign the DA.
• For deposits under joint accounts, the
following signatures are required in the DA.
• 2.1. For joint “OR” accounts, any one of the
account holders.
• 2.2. For joint “AND” accounts, all
accountholders.
Lifting of holdout on deposit/placement shall be made only upon full
payment of the loan account (i.e., principal and interest) subject to
the confirmation of OPG-LoD and approval of the Lending Officer as
advised to the Managing Bank Unit via IOL.

Any officer who allows the lifting of the deposit/placement while the
loan is outstanding or fails to tag/hold the assigned account during the
term of the loan shall be held administratively, civilly and criminally
liable.

Assignment of Peso and FXCY Traditional Deposits VOL. 2, POL. 2120

DIO Document classification:
Collateral Documents

1. Real Estate Mortgage 1. Continuing Surety Agreement

2. Deed of Assignment on Deposits 2. Chattel Mortgage

3. Deed of Assignment on Receivables

Collateral Documents - Clean
1. Continuing Suretyship Agreement
What is Suretyship?
An agreement whereby one person, the surety is answerable for the
debt, default or miscarriage of another, known as the principal.
(Garcia vs CA, GR No. 80201)

The Surety’s obligation:

Is merely accessory or collateral but he is directly and equally bound
with the principal.
Although he possesses no direct or personal interest over the
obligations nor does he receive any benefit therefrom.
Continuing Suretyship Agreement are required in the following:

• CSA of its principal stockholders, principal partners and spouse of the

proprietor, respectively for loan granted to corporation, partnerships
and sole proprietorship (including small/medium scale enterprises)

• CSA of the 3rd party mortgagor for 3rd party REM

• CSA of children of legal age and their spouses, for unsecured loans of
family corporation,

• CSA of the parent company in favor of the subsidiary, for loan under
Group of Companies
CSA, MOPP vol 2, POL 1311
Continuing Suretyship Agreement are required in the following:

Multinational and large corporation, if CSA cannot be obtained, require

“Company Support” by way of “Letter of Support”

CSA must be notarized by in-house notary public

Upon execution of CSA, the sureties shall no longer be required as co-

maker in the PN

Upon loan renewal, CSA will be required if loan amount is increased.

CSA, MOPP vol 2, POL 1311

DIO Document classification:
DIO Document classification:
Collateral Documents

1. Real Estate Mortgage 1. Continuing Surety Agreement

2. Deed of Assignment on Deposits 2. Chattel Mortgage

3. Deed of Assignment on Receivables

Collateral Documents - Clean
2. Chattel Mortgage
What is a Chattel?

Chattel is movable personal property. Chattel property can be either

animate or inanimate property and can be borrowed against using a
chattel mortgage.

Chattel property and other personal property is tracked separately

from land or improvements made to land because it can be
depreciated more quickly.
2. Chattel Mortgage
An accessory contract by virtue of which personal property is recorded
in the Chattel Mortgage Register as security for the performance of an
obligation. (Act No. 1508 and Civil Code)

Subject Matter of CHM - It covers personal or movable properties

(i.e. shares of stock, machineries, vessels, motor vehicles)

Mortgagor must be the absolute owner and should have the free
disposal of the property mortgaged, and in the absence thereof, he
should be legally authorized for the purpose
2. Chattel Mortgage
Formal Requirement of CHM
Registration in the Chattel Mortgage Register:

• If the mortgagor resides in the Philippines- where the

mortgagor resides

• If the mortgagor resides abroad - where the property is situated

• If the place of residence is different from the place where the

property is situated - then in both place of residence of the
mortgagor and place where the property is situated
2. Chattel Mortgage
Formal Requirement of CHM

What is the effect if the CHM is not registered?

• Still binding between the parties but not against third persons
(Filipinas Marble Corp. vs.IAC, 142 SCRA 180 [1986])

• Registration creates a lien that follows the property and serves

as notice to third persons (Northern Motors, Inc. vs. Coquia, 68
SCRA 374 [1975]
2. Chattel Mortgage
Types of acceptable assets:
TYPE OF CHM DOCUMENTS
• Detached Endorsement on the Certificate of
Stock
Shares of Stock • Notice of lien to Corporate Secretary seeking
conforme to mortgage
• Proof of Ownership
• Certification “free from lien and
Machinery & Equipment encumbrances”
• Notarized list of Machinery & Equipment

Merchandise Inventory • Certified List of Merchandise Inventory

• Original Certificate of Registration and
Vehicle Original Receipt
• Stencil in LTO Form
2. Chattel Mortgage

Secure from the Client original copies of the following:

a. Proof of ownership depending on the item

b. Notarized list of all mortgaged equipment/machineries.
c. Fire insurance endorsed to Metrobank with OR (equivalent to
appraised value of improvements) if applicable.
d. IAR (Inspection and Appraisal Report)
e. For Corporations - original copy of Secretary's Certificate to
Mortgage.

Submit all documents to Credit Support Unit (CSU)

Machinery & Equipment –Proof of Ownership
Presentation of Commercial Invoice
 Motor Vehicles – Proof of Ownership
Certificate of Registration (CR) & Official Receipt (OR)
 Machinery & Equipment –For validation on
Certification “free from lien and encumbrances”

1
1. Affirmation that
collateral is free from
Lien or any other form of
3 encumbrance
2
2. Complete List of
Equipment & Machinery
used as Collateral

3. Duly Notarized
For validation on the Endorsed Fire Insurance

1 2

3
1. Type of Insurance
2. Validity of Insurance

4
3. Details of Insured
4. Location of Insured Items
5
5. Amount Coverage
For validation on the Endorsed Fire Insurance

1 1. Coverage Details
2. Other Coverage Details

2
For validation on the Endorsed Fire Insurance

1. Endorsed to the Bank

For validation on the Inspection & Appraisal Report CHM

2 1. Date of Request / Inspection

3 2. Name of Borrower
4
3. Collateral Assessment
4. Total Appraised Value
5
5. Other Findings
DIO Document classification:
For validation on the Inspection & Appraisal Report CHM

1. Final Assessment
2. Signature of Appraiser
2
Collateral Documents

1. Real Estate Mortgage 1. Continuing Surety Agreement

2. Deed of Assignment on Deposits 2. Chattel Mortgage

3. Deed of Assignment on Receivables

Collateral Documents - Clean
2. Deed of Assignment on Receivables

1. Account Receivables documentary requirements:

a. Deed of Assignment

b. Certified List of Receivables signed by authorized signatories

c. Other Documents as Required by the Bank

 For validation on the Certified List of Receivables

1 2 3

1. Name of Company (Client)

2. Amount Due
3. Date Due
4
4. Authorized Signatories
 For validation on the DOA on Deposits

1 1. Name & Address of Placement

Owner
2. Amount of Loan
2
3 3. Name of Borrower
4
4. Amount of Placement

5. Branch/Unit & Address where

Placement is with.
5
For validation on the DOA on Receivables

6. Loan Value
7. Duly Notarized

1. For Notarization by Borrower following the guidelines set by the Bank

2. Forward signed document to the authorized signatory of the unit.
3. For notarization by the bank.

*If company address is the same City with that of the Lending Unit, only 1 notarization is required.
DIO Document classification:

DIO Document classification:

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