BANK PREMISES; MANUAL OF ACCOUNT

The Monetary Board, in its Resolution No. 604 dated 14 April 2000,
approved the amendments to the Manual of Regulations and the Manual of
Accounts for Banks and for Non-bank Financial Institutions to read as
follows:

MANUAL OF REGULATIONS

SECTION 1.        Subsection X 606.3 of the Manual of Regulations for Banks is hereby renumbered as Subsection X606.4.

SECTION 2.       Subsection X606.3 as hereby added to the Manual of Regulations for Banks, shall read as follows:

“REAL AND OTHER PROPERTIES OWNED OR ACQUIRED

REAL AND OTHER PROPERTIES OWNED OR ACQUIRED (ROPOA) RECLASSIFIED
AS BANK PREMISES SHALL BE BOOKED AT THEIR ROPOA BALANCE, NET OF ANY
VALUATION RESERVES: PROVIDED, THAT ONLY SUCH ACQUIRED ASSET OR A PORTION
THEREOF THAT WILL BE IMMEDIATELY USED OR EARMARKED FOR FUTURE USE MAY
BE RECLASSIFIED AND BOOKED AS BANK PREMISES.

BANKS, PRIOR TO THE RECLASSIFICATION OF THEIR ROPOA ACCOUNTS TO
BANK PREMISES, SHALL FIRST SECURE PRIOR BANGKO SENTRAL APPROVAL BEFORE
EFFECTING THE RECLASSIFICATION AND SHALL SUBMIT, IN CASE OF FUTURE USE,
JUSTIFICATION AND PLANS FOR EXPANSION/USE.”

SECTION 3.       Sections 4657Q, 4655S, 4653P, 4653B and
4104N as hereby added to the Manual of Regulations for Non-bank
Financial Institutions shall read as follows:

“REAL AND OTHER PROPERTIES OWNED OR ACQUIRED

REAL AND OTHER PROPERTIES OWNED OR ACQUIRED (ROPOA) RECLASSIFIED
EITHER AS REAL PROPERTY-LAND OR REAL PROPERTY-BUILDING SHALL BE BOOKED
AT THEIR ROPOA BALANCE, NET OF ANY VALUATION RESERVES: PROVIDED, THAT
ONLY SUCH ACQUIRED ASSET OR A PORTION THEREOF THAT WILL BE IMMEDIATELY
USED OR EARMARKED FOR FUTURE USE MAY BE RECLASSIFIED AND BOOKED AS REAL
PROPERTY LAND/BUILDING.

NON-BANKS, PRIOR TO THE RECLASSIFICATION OF THEIR ROPOA ACCOUNTS
TO REAL PROPERTY LAND/BUILDING, SHALL FIRST SECURE THE BANGKO SENTRAL
APPROVAL BEFORE EFFECTING THE RECLASSIFICATION AND SHALL SUBMIT, IN CASE
OF FUTURE USE, JUSTIFICATION AND PLANS FOR EXPANSION/USE.”

MANUAL OF ACCOUNTS

SECTION 4.       The first paragraph of Item 20.a of the
Manual of Accounts for banks, as amended by Circular Letter dated 4
February 1999, is hereby further amended to read as follows:

“REAL AND OTHER PROPERTIES OWNED OR ACQUIRED

This represents real and other properties, other than those used
for banking purposes or held in the investment portfolio, acquired by
the bank in settlement of loans and/or for other reasons. The property
acquired by the bank in settlement of loans THROUGH FORECLOSURE OR
DATION IN PAYMENT shall be recorded at the balance of the loan
(principal plus booked accrued interest receivable after considering
allowance for uncollected interest on loans less unamortized income) or
bid/PURCHASE PRICE, whichever is lower. The amount of the non-refundable
capital gains tax and documentary stamp tax paid in connection with the
foreclosure/purchase may be included in the book value of the acquired
real estate, provided that the total book value does not exceed the
appraised value of the asset acquired, as determined by an independent
appraiser acceptable to Bangko Sentral ng Pilipinas. However, the
property acquired for other reasons shall be recorded at cost or
appraised value when cost is not involved/determinable in the
acquisition of the property”.

SECTION 5.       The first paragraph on the definition of
ROPOA in the Manual of Accounts for non-bank financial Institutions, as
amended by Circular Letter dated 4 February 1999, is hereby further
amended to read as follows:

“REAL AND OTHER PROPERTIES OWNED OR ACQUIRED

This represents real and other properties, other than those used
for business purposes or held in the investment portfolio, acquired by
the non-bank in settlement of loans and/or for other reasons. The
property acquired by the non-bank in settlement of loans THROUGH
FORECLOSURE OR DATION IN PAYMENT shall be recorded at the balance of the
loan (principal plus booked accrued interest receivable after
considering allowance for uncollected interest on loans less unamortized
income) or bid/PURCHASE PRICE, whichever is lower. The amount of the
non- refundable capital gains tax and documentary stamp tax paid in
connection with the foreclosure/purchase may be included in the book
value of the acquired real estate, provided that the total book value
does not exceed the appraised value of the asset acquired, as determined
by an independent appraiser acceptable to Bangko Sentral ng Pilipinas.
However, the property acquired for other reasons shall be recorded at
cost or appraised value when- cost is not involved/determinable in the
acquisition of the property.”

This Circular shall take effect immediately.

Adopted: 4 May 2000

(SGD.) RAFAEL B. BUENAVENTURA
Governor