Introduced by Senator Ramon Bong Revilla, Jr. 
EXPLANATORY NOTE 
When applying for loans, it is not unusual for borrowers to reveal to banks a 
“second set” of financial books which are different from that presented to the Bureau of 
Internal Revenue to reflect a more favorable financial condition of the company or 
borrower to the bank. Section 40 of Republic Act No. 8791, otherwise known as the 
“General Banking Law of 2000”, provides that a bank may demand from its credit 
applicants “such information required by the Monetary Board to enable the bank to 
properly evaluate the credit application which includes the corresponding financial 
statements submitted for taxation purposes to the Bureau of Internal Revenue.” It can be 
observed, however, that the present wording of the law does not prevent tax evasion as it 
does not compel borrowers to submit the financial statements presented to the BIR when 
applying for loans. 
This bill proposes that all banks must base their loans on the audited financial 
statements reflecting the operations of the company or borrower, which have been 
presented to tax authorities. This bill intends to improve the collectioii of taxes by 
minimizing tax evasion as it proposes that the amount of loans granted by banks must be 
based on the audited financial statements that have been certified by the Bureau of 
Internal Revenue as the same set submitted to them. 
With such proposal, borrowers will have no choice but to declare their true 
income when submitting financial statements to the BIR so that they can avail of bigger 
loan amounts from banks and financial institutions. By causing the declaration of true 
income on the part of taxpayers - borrowers, government can increase tax collection thus 
minimizing the pressure to impose new tax measures. 
Considering that every effort needs to be exerted in reviving the country’s ailing 
economy and financial system during this critical period, we appeal for the immediate 
passage of this bill. 


14"' CONGRESS OF THE 
) 
First Regular Session 
) 
REPUBLIC OF THE PHILIPPINES 
1 
-(? 
1,a 
j ::;I1 
SENATE 
4. 
Introduced by Senator Ramon Bong Revilla, Jr. 
AN ACT 
REQUIRING AUDITED FINANCIAL STATEMENTS SUBMITTED TO TAX 
AUTHORITIES AS MINIMUM SECURITY REQUIREMENTS FOR BANK 
LOANS, AMENDING FOR THE PURPOSE SECTION 40 OF REPUBLIC ACT 
NO. 8791, OTHERWISE KNOWN AS THE "GENERAL B A N m G  LAW OF 
2000" 
Be it enacted by the Senate andHouse of Representatives of the Philippines in Congress 
assembled. 
Section 1. Section 40 of Republic Act No. 8791 is hereby amended to read as 
follows : 
"SEC. 40. Requirenient for Grant of Loans or Other Credit Accontniodations. - 
Before granting a loan or other credit accommodation, a bank must ascertain that 
the debtor is capable of fulfilling his commitments to the bank. [Toward this end, 
a ] A bank may demand from its credit applicants a statement of their assets and 
liabilities and of their income and expenditures and such information as may be 
prescribed by law or by rules and regulations of the Monetary Board to enable the 
bank to properly evaluate the credit application. FOR THIS PURPOSE, BANKS 
SHALL 
EXTEND 
LOANS 
BASED 
ON 
AUDITED 
FINANCIAL 
STATEMENTS 
PREPARED 
BY 
DULY 
CERTIFIED 
PUBLIC 
ACCOUNTANTS AND DULY CERTIFIED BY [ which includes the 
corresponding financial statements submitted for taxation purposes to ] the 
Bureau of Internal Revenue AS THE SAME SET SUBMITTED TO IT. ONLY 
UPON RECEIPT OF SAID CERTIFICATION SHALL BANKS APPROVE 
SUCH LOAN APPLICATIONS. THE SAME? SHALL BE REQUIRED FOR 
RENf3WAL OF LOANS. Should such statements prove to he false or incorrect in 
any material detail, the bank may terminate any loan or other credit 
accommodation granted on the basis of said statements and shall have the right to 
demand immediate repayment or liquidation of the obligation. THE BANGICO 
SENTRAL NG PILIPINAS SHALL HAVE THE SUPERVISORY AND 
EXAMINATION AUTHORITY OVER THE BANKS TO ENSURE THAT THE 
AMOUNT OF LOAN 
APPROVED IS BASED ON THE 
CAPACITY 'ro PAY OF THE 
BORROWING ENTITY AS ATTESTED BY THE INCOME TAX RETURNS 
AND SUPPORTING FINANCIAL STATEMENTS DULY PREPARED BY A 
CERTIFIED PUBLIC ACCOUNTANT AND CERTIFIED AS TRUE AND 
CORRECT BY THE BUREAU OF INTERNAL REVENUE, 
In formulating rules and regulations under this Section, the Monetary 
Board shall recognize the peculiar characteristics of micro financing, such as cash 
flow-based lending to the basic sectors that are not covered by traditional 
collateral." 
Section 2. Repealing Clause - All laws, orders, rules and regulations, other 
issuances, or parts thereof, inconsistent with any provision of this Act, are hereby 
repealed or modified accordingly. 


Section 3. Eflectivzp. - This Act shall take effect aRer fifteen (15) days following 
its publication in the Official Gazette or in two (2) newspapers of general circulation. 
Approved,