MORNBFI Vol. 1 - Planters Development Bank

§§ 4119Q - 4136Q.109.12.31The guidelines shall take effect on01 January 2011.(Circular No. 639 dated 15 January 2009, as amended by CircularNo. 29 December 2009)Sec. 4120Q (Reserved)F. (RESERVED)Secs. 4121Q - 4135Q (Reserved)G. STOCK, STOCKHOLDERS ANDDIVIDENDSSec. 4136Q (2008 - 4126Q) DividendsPursuant to Section 57 of R.A. No. 8791,no QB shall declare dividends greaterthan its accumulated net profits then onhand, deducting therefrom its losses andbad debts. Neither shall the QB declaredividends if, at the time of declaration, ithas not complied with the provisions ofSubsec. 4136Q.2.§ 4136Q.1 (2008 - 4126Q.1) Definitionof terms. For purposes of this Section, thefollowing definitions shall apply:a. Bad debts shall include any debton which interest is past due for a periodof six (6) months, unless it is well securedand in process of collection.A loan payable in installment with anautomatic acceleration clause shall beconsidered a bad debt within thecontemplation of this Section whereinstallments or amortizations havebecome past due for a period of six (6)months, unless the loan is well securedand in process of collection. For a loanpayable in installments without anacceleration clause, only the installmentsor amortizations that have become pastdue for a period of six (6) months andwhich are not well secured and in theprocess of collection shall be consideredbad debts within the contemplation of thisSection.b. Well secured - A debt shall beconsidered well secured (or fullysecured) if it is covered by collateral inthe form of a duly constituted mortgage,pledge, or lien on real or personalproperties, including securities. Theoutstanding debt, accrued interest andother pertinent fees and expensesthereon shall not be in excess of seventypercent (70%) of the appraised value(AV) of real estate, or fifty percent (50%)of the other personal properties offeredas lien.c. In process of collection - A debtdue to a QB shall be considered in processof collection when it is the subject ofcontinuing extrajudicial or judicialproceedings aimed towards its fullsettlement or liquidation, or otherwise toplace it in current status.The extrajudicial proceedings, such asthe writing of collection or demand letters,must have been initiated by the QB and/orits lawyers before the interest or installmentsor amortizations on the debt become pastdue and unpaid for a period of six (6)months.The debt shall continue to beconsidered in process of collection for aperiod of six (6) months counted from dateof the first collection or demand letter andif, within this period, the debtor fails tomake a payment of at least twenty percent(20%) of the outstanding balance of theprincipal on his account, plus all interestswhich may have accrued thereon, thesame shall automatically be classified asbad debt unless judicial proceedings areinstituted.The debt shall continue to beconsidered in process of collection duringthe pendency of the judicial proceedings.When judgment against the debtor hasbeen obtained, the QB must be active inenforcing the judgment for the debt tocontinue to be considered in process ofcollection.Manual of Regulations for Non-Bank Financial InstitutionsQ RegulationsPart I - Page 23