Commercial Law 1 Review Notes
By Lyric Cyrus A. Cabrera – JD2
LOANS
LOAN - By the contract of loan, one of the parties
delivers to another, either something not
consumable so that the latter may use the same
for a certain time and return it, in which case the
contract is called a commodatum; or money or
other consumable thing, upon the condition that
the same amount of the same kind and quality
shall be paid, in which case the contract is simply
called a loan or mutuum. Art 1933 New Civil Code
- Perfected upon the delivery of the
object of the contract. Art 1934 New Civil
Code
DISTINGUISHMENT BETWEEN COMMODATUM
AND MUTUUM
COMMODATUM
1. Gratuitous
2. Bailor (lender) retains ownership of
the thing loaned
MUTUUM (Simple Loan)
1. May be gratuitous or with stipulation
to pay interest
2. Bailee (borrower) obtains ownership
of the thing loaned
CONCEPTS OF COMMODATUM
1. The bailee in commodatum acquires the use
of the thing loaned but not its fruits (Art 1935
New Civil Code), unless stipulated (Art 1940 New
Civil Code)
2. Consumables may be the subject of
commodatum, provided it’s merely for
exhibition and not for consumption. Art 1936
New Civil Code
3. Commodatum may involve movable or
immovable properties. Art 1937 New Civil Code
4. Bailor (lender) need not be the owner of the
thing loaned. Art 1938 New Civil Code
5. Purely personal. Art 1939 New Civil Code
OBLIGATIONS OF BAILEE
1. Pay for ordinary expenses for the use
and preservation of the thing loaned.
2. Liable for the loss of the thing.
3. Does not answer to the deterioration
of the thing loaned due to its use, if
without fault.
4. Cannot retain the thing even if the
bailor owes him/her something.
5. Has the right of retention over the
thing for damages unknown to him/her
upon and prior to the loan of the thing.
6. Shall be solidarily liable with other
bailees within the same contract.
OBLIGATIONS OF BAILOR
1. Cannot demand for the return of the
thing ‘till after the expiration of the
period, or after the accomplishment of
the purpose of the contract.
2. May demand for temporary use
should he have urgent need for the
thing.
3. May demand for the return of the
thing if the bailee acts with ingratitude.
4. Shall refund the extraordinary
expenses incurred for the preservation
of the thing.
5. Liable for the damages caused by the
flaws made unknown to the bailee.
6. Shall not be exempt from the payment
of expenses or damages by abandoning
the thing to the bailee.
CONCEPTS OF MUTUUM
1. Bailee acquires ownership of the thing and is
bound to pay the bailor an equal amount of the
same kind and quality. Art 1953 New Civil Code
2. No interest shall be due unless stipulated. Art
1956 New Civil Code
3. No stipulations circumventing the laws against
usury shall be valid. Art 1957 New Civil Code
4. If interest is paid in kind, its value shall be
appraised at the current price of the product at
the time and place of payment. Art 1958 New
Civil Code
5. Interest due and unpaid shall not earn
interest, unless otherwise stipulated. In which
case, the unpaid interest shall be capitalized and
shall earn interest.
6. Paid interest in the absence of any stipulation
shall be returned by virtue of solution indebiti or
natural obligation. Art 1960 New Civil Code
7. Usurious contracts shall be governed by usury
law and other special laws. Art 1961 New Civil
Code
MORTGAGE
MORTGAGE - a contract through which a debtor
gives security for the fulfillment of a principal
obligation to a creditor.
ESSENTIAL REQUISITES
1. Constituted to secure the fulfillment of a
principal obligation; Art 2085 New Civil Code
2. The mortgagor must be the absolute owner of
the thing mortgaged; Art 2085 New Civil Code
3. The mortgagor must be free to dispose the
thing being mortgaged; Art 2085 New Civil Code
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 Commercial Law 1 Review Notes
By Lyric Cyrus A. Cabrera – JD2
4. Recorded in the registry of property. Art 2125
New Civil Code
BASIC CONCEPTS OF MORTGAGE
1. The thing mortgaged may be alienated when
the principal obligation becomes due. Art 2087
New Civil Code
2. The appropriation by the creditor of the thing
mortgaged is not allowed. Art 2088 New Civil
Code
3. A mortgage is indivisible. Art 2089 New Civil
Code
4. A mortgage secures all kinds of obligation. Art
2091 New Civil Code
5. Criminal action may be instituted against him
who defrauds another. Art 2092 New Civil Code
6. A promise to constitute a mortgage may give
rise to personal action. Art 2092 New Civil Code
7. Mortgage directly and immediately subjects
the property to the fulfillment of the obligation.
Art 2126 New Civil Code
8. The creditor may claim payments from thirds
persons who are in possession of the mortgaged
property. Art 2129 New Civil Code
9. A stipulation forbidding the owner to alienate
the immovable mortgaged shall be void. Art
2130 New Civil Code
OBJECTS OF A CONTRACT OF MORTGAGE
1. Immovable
2. Alienable real rights over immovables
3. Movables (subject to chattel mortgage;
provisions on PLEDGE shall be applied)
EXTENT OF MORTGAGE
A mortgage extends to:
1. Natural accessions;
2. Improvements;
3. Growing fruits;
4. Rents or income;
5. Indemnities from insurers;
6. Just compensation when expropriated.
ANTICHRESIS
ANTICHRESIS - By the contract of antichresis the
creditor acquires the right to receive the fruits of
an immovable of his debtor, with the obligation
to apply them to the payment of the interest, if
owing, and thereafter to the principal of his
credit. Art 2132 New Civil Code
BASIC CONCEPTS OF ANTICHRESIS
1. Must be in writing indicating therein the
amount the principal and interest.
2. The debtor cannot reacquire the enjoyment of
the immovable without first having totally paid
what he owes the creditor. Art 2136 New Civil
Code
3. The creditor does not acquire the ownership
of the real estate for non-payment of the debt
within the period agreed upon, but he can for the
sale of the real property. Art 2137 New Civil Code
PLEDGE
PLEDGE - a contract through which a debtor
gives security for the fulfillment of a principal
obligation to a creditor wherein which such
security must be delivered to the creditor.
ESSENTIAL REQUISITES
1. Constituted to secure the fulfillment of a
principal obligation; Art 2085 New Civil Code
2. The pledgor must be the absolute owner of
the thing mortgaged; Art 2085 New Civil Code
3. The pledgor must be free to dispose the thing
being mortgaged; Art 2085 New Civil Code
BASIC CONCEPTS OF PLEDGE
1. The thing pledged may be alienated when the
principal obligation becomes due. Art 2087 New
Civil Code
2. The appropriation by the creditor of the thing
pledged is not allowed. Art 2088 New Civil Code
3. A pledge is indivisible. Art 2089 New Civil Code
4. A pledge secures all kinds of obligation. Art
2091 New Civil Code
5. Criminal action may be instituted against him
who defrauds another. Art 2092 New Civil Code
6. A promise to constitute a pledge may give rise
to personal action. Art 2092 New Civil Code
7. To be valid, the thing pledged must be
delivered to the creditor. Art 2093 New Civil
Code
8. If the pledge earns or produces fruits, income,
dividends, or interests, the creditor shall
compensate what he receives with those which
are owing him; but if none are owing him, or
insofar as the amount may exceed that which is
due, he shall apply it to the principal. Unless
there is a stipulation to the contrary, the pledge
shall extend to the interest and earnings of the
right pledged. Art 2102 New Civil Code
9. If the thing pledged was auctioned, the
proceeds of the auction shall be a security for the
principal obligation in the same manner as the
thing originally pledged. Art 2108 New Civil Code
10. If the thing pledged is returned by the
pledgee to the pledgor or owner, or renounces
the pledge in writing, the pledge is extinguished.
Art 2110 and 2111 New Civil Code
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 Commercial Law 1 Review Notes
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11. The sale of the thing pledged shall extinguish
the principal obligation, whether or not the
proceeds of the sale are equal to the amount of
the principal obligation, interest and expenses in
a proper case. Art 2115 New Civil Code
OBJECTS THAT MAY BE PLEDGED
1. All movables that are within the commerce of
man.
2. Incorporeal rights, evidenced by negotiable
instruments, bills of lading, shares of stock,
bonds, warehouse receipts and similar
documents may also be pledged.
RIGHTS AND OBLIGATIONS OF PLEDGOR
(Debtor)
1. Alienate the thing pledged, provided the
pledgee consents.
2. Liable for the damages caused by the flaws
made unknown to the pledgee. Art 1951 New
Civil Code
3. Cannot ask for the return of the thing pledged
against the will of the creditor, unless and until
he has paid the debt and its interest.
4. May require that the thing pledged be
deposited to third person if it is in danger of
being lost or impaired thru the negligence or
willful act of the pledgee.
5. May demand the return of the thing, upon
offering another thing in pledge, if there are
reasonable grounds to fear the destruction or
impairment of the thing pledged, without the
fault of the pledgee.
6.
RIGHTS AND OBLIGATIONS OF PLEDGEE
(Creditor)
1. Retain the thing in his possession, until the
debt is paid.
2. Take care of the thing pledged with the
diligence of a good father of a family.
3. Has a right to the reimbursement of the
expenses made for its preservation.
4. Liable for its loss or deterioration.
5. Cannot deposit the thing pledged with a third
person, unless otherwise authorized.
6. Responsible for the acts of his agents or
employees with respect to the thing pledged.
7. Cannot use the thing pledged, without the
authority of the owner.
8. Advise the pledgor, without delay, of any
danger to the thing pledged.
9. May cause the thing pledged to be sold at a
public auction, if without his fault there is danger
of destruction, impairment, or diminution in
value of the thing pledged.
10. If deceived on the substance or quality of the
thing pledged, he may either claim another
thing, or demand immediate payment of the
principal obligation.11. If two or more things are
pledged, the pledgee may choose which he will
cause to be sold, unless there is a stipulation to
the contrary. He may demand the sale of only as
many of the things as are necessary for the
payment of the debt.
THIRD PARTY ON PLEDGE
1. Any third person who has any right in or to the
thing pledged may satisfy the principal obligation
as soon as the latter becomes due and
demandable. Art 2117 New Civil Code
2. If a third party secures an obligation by
pledging his own movable property under the
provisions of article 2085 he shall have the same
rights as a guarantor under articles 2066 to 2070,
and articles 2077 to 2081. He is not prejudiced
by any waiver of defense by the principal obligor.
Art 2120 New Civil Code
GUARANTY
GUARANTY - By guaranty a person, called the
guarantor, binds himself to the creditor to fulfill
the obligation of the principal debtor in case the
latter should fail to do so. Art 2047 New Civil
Code
VERSUS SURETYSHIP
- The contract shall be suretyship, and
not a guaranty, if the person binds
himself solidarily with the principal
debtor.
CHARACTERISTICS OF GUARANTY
1. Gratuitous or onerous
2. Conventional, legal or judicial
3. May be instituted not only in favor of the
principal debtor but also in favor for the other
guarantor
4. Cannot exist without a valid obligation
5. May be given as a security for future debt
6. Not presumed, must be expressed
WHO CAN BE A GUARANTOR?
Any person can be a guarantor if:
1. He/she has integrity;
2. Has capacity to bind himself/herself
3. Have sufficient property to answer for
the obligation
4. Not convicted of a crime involving
dishonesty
5. Not subsequently become insolvent
6. The creditor stipulated a specified
person to be a guarantor
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 Commercial Law 1 Review Notes
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EFFECTS OF GUARANTY
BETWEEN GUARANTOR AND CREDITOR
1. Guarantor is liable only after the
creditor has exhausted all the
property of the debtor and has
availed all remedies against the
debtor. (Principle of Excussion).
Provided, he points out to the
creditor the property of the debtor
within the Philippine territory.
Except:
a. If guarantor has expressly
renounced it
b. If guarantor is solidarily liable
c. If debtor is insolvent
d. If guarantor absconded
e. If it will appear that the
properties of the debtor cannot
satisfy the obligation
2. The creditor who is negligent in
exhausting the property pointed out
shall suffer the loss.
3. Every creditor’s actions must be
against the debtor alone, but the
guarantor shall be notified.
4. The compromise between creditor
and debtor benefits the guarantor.
5. If there be several guarantors, the
creditor cannot claim from the
guarantors except the shares which
they are respectively bound to pay.
BETWEEN GUARANTOR AND DEBTOR
1. The debtor must indemnify the
guarantor who paid the obligation
for the principal, legal interest, and
expenses incurred and damages, if
any.
2. The guarantor subrogates to the
rights of a creditor.
3. If the guarantor paid the obligation
without the knowledge of the
debtor, the latter may enforce
available defenses which he/she
could have set up against the
creditor.
4. If the guarantor paid the obligation
before it become due, he/she
cannot demand for reimbursement
from the debtor until the obligation
becomes due.
5. If the guarantor has paid without
notifying the debtor, and the latter
not being aware of the payment,
repeats the payment, the former has
no remedy whatever against the
debtor, but only against the creditor.
6. The guarantor may, even before
having paid, may proceed against
the debtor:
a. When he is sued for the
payment
b. In case of insolvency of the
principal debtor
c. When the debtor has bound
himself to relieve him from the
guaranty within a specified
period, and this period has
expired
d. When the debt has become
demandable, by reason of the
expiration of the period for
payment
e. After the lapse of ten years
f. If there are reasonable grounds
to fear that the principal debtor
intends to abscond
g. If the principal debtor is in
imminent danger of becoming
insolvent
BETWEEN GUARANTOR AND CO-
GUARANTOR
1. The one among them who has paid
may demand of each of the others
the share which is proportionally
owing from him.
2. If any of the guarantors should be
insolvent, his share shall be borne by
the others.
3. The co-guarantors may set up
against the one who paid, the same
defenses which would have
pertained to the principal debtor
against the creditor.
4. A sub-guarantor, in case of the
insolvency of the guarantor for
whom he bound himself, is
responsible to the co-guarantors in
the same terms as the guarantor.
EXTINGUISHMENT OF GUARANTY
The guaranty shall be extinguished in the
following manners:
1. If the creditor voluntarily accepts
immovable or other property in
payment of the debt.
2. A release made by the creditor in favor
of one of the guarantors without the
consent of the others.
3. An extension granted to the debtor by
the creditor without the consent of the
guarantor.
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 Commercial Law 1 Review Notes
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4. Even though they be solidary, are
released from their obligation whenever
by some act of the creditor they cannot
be subrogated to the rights, mortgages,
and preference of the latter.
DEPOSIT
DEPOSIT - A deposit is constituted from the
moment a person receives a thing belonging to
another, with the obligation of safely keeping it
and of returning the same. If the safekeeping of
the thing delivered is not the principal purpose
of the contract, there is no deposit but some
other contract. Art 1962 New Civil Code
CHARACTERISTICS OF DEPOSIT
1. A real contract
2. Principal purpose is safekeeping
3. Only movable things can be the object of
deposit
4. A gratuitous contract, unilateral, or
bilateral (onerous)
5. Depositary cannot use the thing
deposited, except;
a. With the express permission
b. When the preservation of the thing
deposited requires its use
KINDS OF DEPOSIT
1. JUDICIAL (SEQUESTRATION) – when an
attachment or seizure of property in
litigation is ordered.
2. EXTRA-JUDICIAL
a. VOLUNTARY – made by the will of
the depositor
b. NECESSARY – made in
- Compliance with legal obligation
- On the occasion of calamity
- By travelers in hotels or inns
- By travelers with common carrier
VOLUNTARY DEPOSIT
A voluntary deposit is that wherein the
delivery is made by the will of the
depositor. A deposit may also be made
by two or more persons each of whom
believes himself entitled to the thing
deposited with a third person, who shall
deliver it in a proper case to the one to
whom it belongs.
NECESSARY DEPOSIT
A deposit is necessary:
1. When it is made in compliance with
a legal obligation
2. When it takes place on the
occasion of any calamity, such as
fire, storm, flood, pillage,
shipwreck, or other similar
events.
JUDICIAL (SEQUESTRATION)
A judicial deposit or
sequestration takes place when
an attachment or seizure of
property in litigation is ordered.
SALES
SALE - By the contract of sale one of the
contracting parties obligates himself to transfer
the ownership and to deliver a determinate
thing, and the other to pay therefor a price
certain in money or its equivalent.
A contract of sale may be absolute or
conditional.
REQUISITES OF A CONTRACT OF SALES
1. Consent or meeting of minds – on the
part of the seller, to transfer and deliver,
and on the part of the buyer, to pay
2. Object or subject matter – a determinate
thing, licit and the vendor must have the
right to transfer ownership thereof at
the time it is delivered
3. Cause – price certain in money or its
equivalent, such as a check or a
promissory note
CHARACTERISTICS OF A CONTRACT OF SALES
1. Nominate
2. Consensual
3. Commutative
4. Bilateral
5. Onerous
6. Principal
KINDS OF A CONTRACT OF SALES
Absolute – where the sale is not subject to any
condition whatsoever and where title passes to
the buyer upon the delivery of the thing sold.
Conditional – where the sale contemplates a
contingency and in general, where the contract
is subject to certain conditions
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 Commercial Law 1 Review Notes
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BASIC CONCEPTS OF A CONTRACT OF SALES
1. The contract of sale is perfected at the
moment there is a meeting of minds upon the
thing which is the object of the contract and
upon the price.
2. From that moment, the parties may
reciprocally demand performance, subject to the
provisions of the law governing the form of
contracts
3. The ownership of the thing sold shall be
transferred to the vendee upon actual or
constructive delivery thereof
4. The parties may stipulate that ownership in
the things shall not pass to the purchaser until he
has paid the price
5. Subject to the provisions of the Statute of
Frauds and of any other applicable statute, a
contract of sale may be made in writing, or by
word of mouth, or partly in writing and partly by
word of mouth, or may be inferred from the
conduct of the parties
OBLIGATIONS OF VENDOR
1. To transfer the ownership of the
determinate thing sold
2. To deliver the thing
3. To warrant against eviction and
against hidden defects
4. To take care of the thing pending
delivery with proper diligence
5. To pay for the expenses of the deed
of sale, unless there is a stipulation
to the contrary
OBLIGATIONS OF VENDEE
1. To accept delivery of the thing sold
2. To pay the price of the thing sold at
the time and place stipulated in the
contract
3. To bear the expenses for the
execution and registration of the
sale and of putting the goods in a
deliverable state if such is the
stipulation
WHEN THERE IS DOUBLE SALE
If the same thing should have been sold to
different vendees, the ownership shall be
transferred to the person who may have first
taken possession thereof in good faith, if it
should be movable property.
Should it be immovable property, the ownership
shall belong to the person acquiring it who in
good faith first recorded it in the Registry of
Property.
Should there be no inscription, the ownership
shall pertain to the person who in good faith was
first in the possession; and, in the absence
thereof, to the person who presents the oldest
title, provided there is good faith.
IN CASE OF LOSS OR DETERIORATION
1. In an obligation to deliver a generic
thing, the loss or destruction of anything
of the same kind does not extinguish the
obligation.
2. If at the time the contract of sale is
perfected, the thing which is the object
of the contract has been entirely lost,
the contract shall be without any effect.
But if the thing should have been lost in
part only, the vendee may choose
between withdrawing from the contract
and demanding the remaining part,
paying its price in proportion to the total
sum agreed upon.
3. Where the parties purport a sale of
specific goods, and the goods without
the knowledge of the seller have
perished in part or have wholly or in a
material part so deteriorated in quality
as to be substantially changed in
character, the buyer may at his option
treat the sale:
a. As avoided; or
b. As valid in all of the existing
goods or in so much thereof as
have not deteriorated, and as
binding the buyer to pay the
agreed price for the goods in
which the ownership will pass, if
the sale was divisible.
WARRANTY
A warranty is a collateral undertaking in a sale of
either real or personal property, express or
implied; that if the property sold does not
possess certain incidents or qualities, the
purchaser may either consider the sale void or
claim damages for breach of warranty. Thus, a
warranty may either be express or implied.
BANKING
THE NEW CENTRAL BANK ACT (RA 7653)
The state shall maintain a central monetary
authority that shall function and operate as an
Independent and accountable body corporate in
the discharge of its mandated responsibilities
concerning money, banking and credit. (Section
1, R.A. 7653)
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 Commercial Law 1 Review Notes
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CREATION OF BSP
It is a GOCC which the law established to be the
independent central monetary authority of the
country.
CORPORATE POWERS OF BSP
1. Enter into contracts
2. Lease or own real and personal property
3. Sell or otherwise dispose same property
4. Sue or be sued
5. Perform any and all things that may be
necessary or proper to carry out the
purposes of the charter creating it
HOW BSP HANDLES BANKS IN DISTRESS
1. Conservatorship
2. Receivership
3. Closure and Liquidation
CONSERVATORSHIP
Whenever the basis of the report of the
appropriate supervising and examining
department, the Monetary Board finds that
a bank or quasi-bank is in a state of
continuing inability or unwillingness to
maintain a condition of liquidity to protect
its depositors and creditors.
POWER OF A CONSERVATOR
a. Take charge of the assets, liabilities
and management of the institution.
b. Reorganize management
c. Collect all monies and debts due to
said institution
d. Exercise all powers necessary to
restore its viability
e. Overrule or revoke the actions of the
previous management or BODs
REECIVERSHIP
Whenever, upon report of the head of the
supervising or examining department, the
Monetary Board finds that a bank or quasi-
bank:
1. Is unable to pay its liabilities as they
become due in the ordinary course of
business: Provided, that this shall not
include inability to pay caused by
extraordinary demands induced by
financial panic in the banking
community;
2. Has insufficient realizable assets, as
determined by the Bangko Sentral, to
meet its liabilities;
3. Cannot continue in business without
involving probable losses to its
depositors or creditors;
4. Has willfully violated a cease and desist
order under Section 37 that has become
final, involving acts or transactions
which amount to fraud or a dissipation
of the assets of the institution.
POWER OF A RECEIVER
a. Immediately gather and take charge
of all the assets and liabilities of the
institution
b. Administer the same for the benefit
of its creditors
c. Exercise the general powers of a
receiver under the Revised Rules of
Court
d. The receiver shall not pay or commit
any act that will involve the transfer
or disposition of any asset of the
institution
EFFECTS OF RECEIVERSHIP
a. Suspends the authority of the bank
and of its directors and officers over
its property and effects.
b. The bank shall be forbidden to do
business.
c. The receiver shall immediately
gather and take charge of all assets
and liabilities of the institution,
administer the same for the benefit
of its creditors and exercise the
general powers of a receiver under
the Revised Rules of Court.
CLOSURE AND LIQUIDATION
If the receiver determines that the
institution cannot be rehabilitated or
permitted to resume business, the Monetary
Board shall notify in writing the board of
directors of its findings and direct the
receiver to proceed with the liquidation of
the institution.
RULES ON LIQUIDATION
a. Once a bank is closed, liquidation of
the bank follows. Philippine Deposit
Insurance Corporation (PDIC) shall
file a petition with the RTC for
assistance in liquidation
b. All disputed claims against the bank
should be filed before the
liquidation proceeding
c. The claims against the bank shall be
determined and passed upon and
then paid based on the rules on
concurrence and preference of
credit
d. Any final judgment against the bank
should be stayed
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 Commercial Law 1 Review Notes
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GENERAL BANKING LAW OF 2020 (RA 8791) FORECLOSURE OF MORTGAGE

An Act providing for the Regulation of and
Organization and Operations of Banks, Quasi-
banks, Trust Entities and for other purposes.
The law that generally governs the regulation,
organization and operation of banks, quasi-
banks, and other quasi-entities. It primarily
governs Universal Banks (UB) and Commercial
Banks (CB), and has suppletory application to
Thrift Banks (which is primarily governed by RA
7906, the Thrift Banks Act), Rural Banks
governed by RA 7353, the Rural Banks Act), and
Cooperative Banks (primarily governed by RA
6938, the Cooperative Code).
a. The period of redemption is one year
from the registration of certificate of
foreclosure sale.
b. However, the period to redeem real
property is reduced to three months
after foreclosure or registration
whichever comes earlier, under the
following:
1. The mortgagor is a juridical person
2. The mode of foreclosure is extra-
judicial
3. The mortgagee is a bank
NATURE OF BANK FUNDS AND BANK DEPOSITS

BANK - Entities engage in the lending of funds A creditor and debtor relationship is created
obtained from the public in the form of deposits. between a bank and its depositor.
(Section 3.1, General Banking Law of 2000)
The fiduciary nature of a bank-depositor does
CLASSIFICATION OF BANKS not convert the contract between the bank and
1. Universal bank its depositor from a loan to a trust agreement.
2. Commercial bank
3. Thrift bank Failure by the bank to pay the depositor is failure
4. Rural bank to pay a simple loan and not a breach of trust.
5. Cooperative bank
6. Islamic bank

GRANT OF LOANS
1. Any person, partnership, association,
corporation or other entity shall at no
time exceed 25% of the net worth of
such bank. – Single Borrower’s Limit
2. Loans granted to directors, officers,
stockholders, and their related interests
must conform to certain procedural and
substantial requirement.
3. Loans and other credit accommodations
against real estate shall not exceed 75%
of the appraised value of such estate
security, plus 60% of the appraised value
of the insured improvements.
4. Loans and other credit accommodations
on security of chattels and intangible
properties such as, but not limited to,
patents, trademarks, trade names, and
copyrights shall not exceed 75% of its
appraised value.
5. Bank shall grant loans and other credit
accommodations only in amounts and
for the periods of time essential for the
effective completion of the operation to
be financed.
6. The amortization schedule of bank loans
and other credit accommodations shall
be adapted to the nature of the
operation to be financed.

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