MikeLigalig.com

By Ignacio R. Bunye

MANILA, May 2 (PNA) -- Last week, we explained why, as lender of last resort, the Bangko Sentral ng Pilipinas (BSP) extends emergency loans to banks experiencing temporary liquidity problems.

In this concluding article, we will explain the steps taken by the BSP, before and after granting a loan, to ensure that its interest is adequately protected.

To illustrate, we use here an actual case of emergency loans granted 12 years ago. In that instance, the borrower submitted collaterals to the BSP covering titles of various real estate properties located in a number of provinces and cities, including Norzagaray, Bulacan.

According to BSP General Counsel, Juan de Zuniga Jr., it is standard procedure for the BSP to engage an independent appraisal company. The appraisal company is tasked to inspect, verify the titles and appraise the value of properties offered as collaterals by the borrower.

The appraisal company reported that the titles were authentic as they are the same as those officially on file with the Register of Deeds.

Moreover, the properties were situated in areas not covered by CARP (Comprehensive Agrarian Reform Program).

De Zuniga explained that based on representations of the borrower and the factual determination of the appraisal company, the BSP considered the properties as adequate collateral for the emergency loans.

The total appraised value of these properties met the loan valuation requirements of the BSP. Thus, the loans extended by the BSP were fully secured by the collaterals.

When the borrower defaulted, the BSP exercised its legal remedies by foreclosing on the mortgaged assets.

According to De Zuniga, the proceeds from the foreclosure exceeded the total loan amount plus interest and charges.

Titles to the foreclosed properties have since been transferred to the BSP. Said properties are now included in BSP’s program for disposal of acquired assets.

Some claimants, which included poor farmers and members of indigenous communities, have come forward claiming proprietary rights over the properties. These claims are now under litigation.

In these cases, the BSP has maintained and defended the validity and authenticity of its titles.

Nonetheless, De Zuniga asserted that the BSP will abide by the final judgment that may be rendered in these cases.

The foregoing illustrates the due diligence observed by the BSP as well the appropriate legal steps taken by the BSP to protect its rights whenever a borrower defaults. (PNA)

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