Section 35. Limit on Loans, Credit Accommodations and Guarantees. —

35.1. 

Except as the Monetary Board may otherwise prescribe for reasons of national interest, the total amount of loans, credit accommodations and guarantees as may be defined by the Monetary Board that may be extended by a bank to any person, partnership, association, corporation or other entity shall at no time exceed twenty percent (20%) of the net worth of such bank. The basis for determining compliance with single-borrower limit is the total credit commitment of the bank to the borrower.

35.2. 

Unless the Monetary Board prescribes otherwise, the total amount of loans, credit accommodations and guarantees prescribed in the preceding paragraph may be increased by an additional ten percent (10%) of the net worth of such bank provided the additional liabilities of any borrower are adequately secured by trust receipts, shipping documents, warehouse receipts or other similar documents transferring or securing title covering readily marketable, non-perishable goods which must be fully covered by insurance.

35.3. 

The above prescribed ceilings shall include:

1. the direct liability of the maker or acceptor of paper discounted with or sold to such bank and the liability of a general indorser, drawer or guarantor who obtains a loan or other credit accommodation from or discounts paper with or sells papers to such bank;

2. in the case of an individual who owns or controls a majority interest in a corporation, partnership, association or any other entity, the liabilities of said entities to such bank;

3. in the case of a corporation, all liabilities to such bank of all subsidiaries in which such corporation owns or controls a majority interest; and

4. in the case of a partnership, association or other entity, the liabilities of the members thereof to such bank.

35.4. 

Even if a parent corporation, partnership, association, entity or an individual who owns or controls a majority interest in such entities has no liability to the bank, the Monetary Board may prescribe the combination of the liabilities of subsidiary corporations or members of the partnership, association, entity or such individual under certain circumstances, including but not limited to any of the following situations:

1. the parent corporation, partnership, association, entity or individual guarantees the repayment of the liabilities;

2. the liabilities were incurred for the accommodation of the parent corporation or another subsidiary or of the partnership or association or entity or such individual; or

3. the subsidiaries though separate entities operate merely as departments or divisions of a single entity.

35.5. 

For purposes of this Section, loans, other credit accommodations and guarantees shall exclude:

1. loans and other credit accommodations secured by obligations of the Bangko Sentral or of the Philippine Government;

2. loans and other credit accommodations fully guaranteed by the government as to the payment of principal and interest;

3. loans and other credit accommodations covered by assignment of deposits maintained in the lending bank and held in the Philippines;

4. loans, credit accommodations and acceptances under letters of credit to the extent covered by margin deposits; and

5. other loans or credit accommodations which the Monetary Board may from time to time, specify as non-risk items.

35.6. 

Loans and other credit accommodations, deposits maintained with, and usual guarantees by a bank to any other bank or non-bank entity, whether locally or abroad, shall be subject to the limits as herein prescribed.

35.7. 

Certain types of contingent accounts of borrowers may be included among those subject to these prescribed limits as may be determined by the Monetary Board. (23a)