Republic of the Philippines 
HOUSE OF REPRESEN TATIVES 
Quezon City, Metro Manila 
N IN ETEEN TH CON GRESS 
First Regular Session 
House Bill N o. 
Introduced by Representative Irwin C. Tieng 
EXPLAN ATORY N OTE 
This bill seeks to prohibit the requirement of a co-maker when applying for loans in 
banks and lending companies, and to protect the co-maker from the obligation of paying loans 
plus interests and penalties of the principal borrower. Furthermore, this bill aims to define the 
role and responsibilities of banks and lending companies, as well as the agencies tasked to 
supervise and oversee their compliance with the provisions of this bill. 
One of the primary roles of banks and lending companies is lending money to 
consumers and businesses. However, to improve the chances of the credit applicant of getting 
his or her loan approved, it is a common practice for banks and lending companies to require 
the credit applicant to provide a co-maker. This requirement then becomes burdensome and 
oppressive to the credit applicant as he or she will be obliged to look for someone who is in 
good credit standing and has sufficient income to assist him or her in securing such loan. 
Furthermore, while the Manual of Regulations for Banks of the Bangko Sentral ng Pilipinas 
explicitly provides that a co-maker is no longer required when the principal borrower has the 
financial capacity and good track record of paying his obligations, banks and other financial 
institutions fail to comply with the said rule due to the lack of appropriate sanctions, and a 
proper mechanism for its implementation. In the end, it is the credit applicant that suffers from 
the ill-effects of finding a co-maker. 
In addition, not everyone is willing to be a co-maker. In the Philippines, the co-maker 
is often burdened with the obligation of paying the loans plus interests and penalties of the 
principal borrower. More so, in the event the principal borrower defaults from payment of the 
February 6, 2023
2:48 pm
7076


loan, the co-maker in turn is subjected to the almost never-ending and inconvenient calls and 
demands from these banks and lending companies. 
Rather than requiring a co-maker which is clearly oppressive to the credit applicant, 
banks and lending companies may determine the creditworthiness of the credit applicant by 
running a background check, reviewing credit score, asking for references and submission of 
other documentary requirements showing his or her proof of financial c 
ity. 
In view of the foregoing, this bill is earnestly sought for. 


Republic of the Philippines 
HOUSE OF REPRESEN TATIVES 
Quezon City, Metro Manila 
N IN ETEEN TH CON GRESS 
First Regular Session 
House Bill N o. ---
Introduced by Representative Irwin C. Tieng 
AN  ACT 
PROHIBITIN G BAN KS AN D LEN DIN G COMPAN IES FROM REQUIRIN G A CO-
MAKER BEFORE EXTEN DIN G LOAN S 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION  1. Short Title. -This Act shall be known as the ''No Co-Maker Act of 2023." 
SEC. 2. Declaration of Policy. - It is hereby declared to be the policy of the State to protect 
Its borrowers from oppressive practice of banks and lending companies by eliminating the 
requirement of a co-maker when applying for loans with a view of regulating the operation of 
banks and lending companies when extending loans to credit applicants. 
SEC. 3. Definition of Terms. -As used in this Act, the following terms shall be defined: 
a) Banks refers to entities engaged in the lending of funds obtained in the form of deposits. 
b) Lending company refers to a corporation engaged in granting loans from Its own capital 
funds or from funds sourced from not more than nineteen (19) persons. It shall not be 
deemed to include banking institutions, investment houses, savings and loan 
associations, financing companies, pawnshops, insurance companies, cooperatives and 
other credit institutions regulated by law. 
c) Credit applicant refers to a debtor, borrower or person granted a loan by banks and 
lending companies. 
7076


d) Co-maker refers to a person who signs a loan instrument to indicate a promise to pay 
the loan obligation. 
SEC. 4. Prohibited Actis - It shall be unlawful for any bank or lending company, in 
connection with any loan application, to require the credit applicant to provide a co-maker in 
the loan information sheet, if the credit applicant can prove that he has the financial capacity 
and a good track record of paying his obligations. Without prejudice to the criminal sanctions 
against the culpable persons provided in Section 36 of the New Central Bank Act, the Monetary 
Board shall, impose upon any bank or lending company, their directors and/or officers, for any 
violation of this section the following administrative sanctions, whenever applicable: 
a) First Offense. Reprimand for the directors/officers responsible for the violation; 
b) Second offense. Disqualification of the bank or lending company concerned from the 
credit facilities of the BSP, except as may be allowed under Section 84 of Republic 
Act No. 7653; 
c) Subsequent offense/s: Penalties and sanctions provided under Section 37 of Republic 
Act No. 7653 . 
SEC. 5. Implementing Rules and Regulations. - The Monetary Board in consultation with 
concerned government agencies, baking and lending companies, shall formulate the 
implementing rules and regulations of this Act within thirty (30) days after its approval. Such 
rules and regulations shall take effect fifteen (15) days after the publication in a newspaper of 
general circulation. 
SEC. 6. Role of BSP and SEC. - The BSP and SEC shall supervise and oversee the 
compliance by the bank and lending companies of the provisions of this Act. 
SEC. 7. Separability Clause. - If any provision of this Act is held invalid or 
unconstitutional, the same shall not affect the validity and effectivity of the other provisions 
hereof. 
SEC. 8. Repealing Clause. -All provisions of existing laws, presidential decrees or issuances, 
executive orders, letters of instruction, administrative orders, rules and regulations contrary to 
or inconsistent with the provisions of this Act are hereby repealed, amended, or modified 
accordingly. 
SEC. 9. Effectivity. - This Act shall take effect fifteen (15) days after its publication in the 
Official Gazette or in a newspaper of general circulation. 
Approved,