Definitions.
SEC. 22. Definitions.—As used in this Act:
The term "mortgage" means a first mortgage on real estate in fee simple, or on the interest of either the lessor or leassee thereof under a lease for not less than ninety-nine years which is renewable or under a lease having a period of not less than fifty years to run from the date the mortgage was executed, upon which there is located or upon which there is to be constructed a building or buildings designed principally for residential use; and the term "first mortgage" means such classes of first liens as are commonly given to secure advances on, or the unpaid purchase price of, real estate together with the credit instrument or instruments, if any, secured thereby, and may be in the form of trust mortgages or mortgage indentures of deeds of trust securing notes, bonds, or other credit instruments.
The term "mortgagee" means the original lender under a mortgage, and its successors and assigns, and includes the holders of credit instruments issued under a trust mortgage or deed of trust pursuant to which such holders act by and thru a trustee herein named.
The term "mortgagor" means the original borrower under a mortgage and its successors and assigns.
The term "maturity date" means the date on which the mortgage indebtedness would be extinguished if paid in accordance with the periodic payments provided for in the mortgage.
The term "slum or blighted area" means any area where dwellings predominate which, by reason of dilapidation, overcrowding, faulty arrangement or design, lack of ventilation, light or sanitation facilities, or any combination of these factors, are detrimental to safety, health, or morals.
The term "rental housing" means housing, the occupancy of which is permitted by the owner thereof in consideration of the payment of agreed charges, whether or not by the terms of the agreement, such payment over a period of time will entitle the occupant to the ownership of the premises.
The term "Commission" means the Home Financing Commission.
Open-end Mortgages.
SEC. 23. Open-end Mortgages.—Notwithstanding any other provisions of this Act, in connection with any mortgage insured pursuant to any section of this act which covers a property upon which there is located a dwelling designed principally for residential use, the Commission is authorized, upon such terms and conditions as it may prescribe, to insure the amount of any advance for the improvement or repair of property made to the mortgagor pursuant to an "open-end" provisions in the mortgage, and to add the amount of such advance to the original principal obligation in determining the value of the mortgage for the purpose of computing the amounts of debentures and certificate of claim to which the mortgagee may be entitled: Provided, That the Commission may require, the payment of such charges, including charges in lieu of insurance premiums, as it may consider appropriate for the insurance of such "open-end" advances: Provided, further, That only advances for such improvements or repairs as substantially protect or improve the basic livability or utility of the property involved shall be eligible for insurance under this section: Provided, further, That no such advance shall be insured under this section if the amount thereof plus the amount of the unpaid balance of the original principal obligation of the mortgage would exceed the amount of such original principal obligation unless the mortgagor certifies that the proceeds of such advance will be used to finance the construction of additional rooms or other enclosed space as a part of the dwelling: And provided, further, That the insurance of "open-end" advances shall not be taken into account in determining the aggregate amount of principal obligations of mortgages which may be insured under this act.
Warranty.
SEC. 24. Warranty.—The Commission is hereby authorized and directed to require that, in connection with any property upon which there is located a dwelling designed principally for not more than a one family residence and which is approved for mortgage insurance or guaranty prior to the beginning of construction, the seller or builder, and such other person as may be required by the said Commission to become warrantor, shall deliver to the purchaser or owner of such property a warranty that the dwelling is constructed in substantial conformity with the plans and specifications on which the Commission based its valuation of the dwelling: Provided, That the Commission shall deliver to the builder, seller, or other warrantor their written approval of any amendment of or change or variation in, such plans and specifications which the Commission deems to be a substantial amendment thereof, or change or variation therein, and shall file a copy of such written approval with such plans and specifications: Provided, further, That such warranty shall apply only with respect to such instances of substantial nonconformity to such approved plans and specifications as to which the purchaser or homeowner has given written notice to the warrantor within one year from the date of conveyance of title to, or initial occupancy of, the dwelling, whichever first occurs: Provided, further, That such warranty shall be in addition to, and not in derogation of all other rights and privileges which such purchaser or owner may have under any other law or instrument: And provided, further, That the provisions of this section shall apply to any such Property covered by a mortgage after the passage of this Act.
The Commission is further directed to permit copies of the plans and specifications for dwellings in connections with which warranties are required by this section to be made available in their appropriate offices for inspection or for copying by any purchaser, homeowner, or warrantor during such hours or periods of time as the said Commission may determine to be reasonable.
SEC. 25. Amendatory provisions—
All banking institutions, trust companies, personal finance companies, mortgage companies, building and loan associations, installment lending companies, insurance companies, the Government Service Insurance System, and other financial institutions, are hereby authorized to invest part of their funds for the purpose of giving loans and advance of credit contemplated and provided in this Act, as well as in the purchases of obligations representing loans and advances of credit made pursuant to the provisions of this Act, any provision of their respective charters or by-laws to the contrary notwithstanding. Any amount invested by banks and/or insurance companies in the financing of mortgage loans for housing development under this Act, shall be guaranteed both as to principal and interest by both the Home Financing Commission and the Government of the Republic of the Philippines.
The Rehabilitation Finance Corporation shall:
Purchase, service or sell mortgages which are insured under the provisions of this Act.
Subject to the approval of the Monetary Board issue bonds, debentures, securities, collaterals and other obligations against the security of mortgages insured under this Act, in such amounts and in such proportion to the face value of such mortgage as the Board of Governors may designate and such obligations may be issued and offered for sale at such price or prices as the Rehabilitation Finance Corporation may determine, and shall be negotiable and exempt from taxes both as to principal and interest. The said obligations shall be and are hereby fully and unconditionally guaranteed both as to principal and interest by the Government of the Republic of the Philippines and such guarantee shall be expressed on the face thereof and the President is hereby authorized to endorse such debentures for the Government of the Republic of the Philippines as prime obligor in such form as may be designated by the International Bank of Reconstruction and Development.
Interests accumulated by lending institutions on mortgages insured under the provisions of this Act shall be exempt from all taxation.
Penalties.
SEC. 26. Penalties.—
Whoever, for the purpose of obtaining any loan or advance of credit from any person, partnership, association, or corporation with the intent that such loan or advance of credit shall be offered to or accepted by the Home Financing Commission for insurance, or for the purpose of credit, or mortgage insured by the said Commission, or the acceptance, release or substitution of any security on such a loan, advance of credit, or for the purpose of influencing in any way the action of the said Commission under this Act, makes, passes, utters, or publishes, or causes to be made, passed, uttered, or published any statement, knowing the same to be false, or alters, forges, or counterfeits, or causes or procures to be altered, forged, or counterfeited, any instrument, paper, or document, or utters, publishes, or passes as true, or causes to be uttered, published or passed as true, any instrument, paper, or documents, knowing it to have been altered, forged, or counterfeited, or willfully overvalues any security, asset, or income, shall be punished by a fine of not less than the amount of the loan or loans involved or by imprisonment for not more than ten years or both.
Whoever (1) falsely makes, forges, or counterfeits any obligation or coupon, in imitation of or purporting to be an obligation or coupon issued under authority of this Act, or (2) passes, utters, or publishes, or attempts to pass, utter, or publish, any false, forged, or counterfeited obligation or coupon purporting to have been so issued knowing the same to be false, forged, or counterfeited or (3) falsely alters any obligation or coupon so issued or purporting to have been so issued, or (4) passes, utters or publishes, or attempts to pass, utter, or publish, as true any falsely altered or spurious obligation or coupon, so issued or purporting to have been so issued, knowing the same to be falsely altered or spurious shall be punished by a fine of not more than ten thousand pesos, or by imprisonment for not more than five years, or both.
Any person who willfully and knowingly makes, circulates, or transmits to another or others any statement, or rumor written, printed or by work of mouth, which is untrue in fact and is directly or by inference derogatory to the financial condition or affects the solvency or financial standing of the Home Financing Commission, or who knowingly counsels, aids, procures, or induces another to start, transmit, or circulate any such statement of rumor, is guilty of felony punishable by a fine of not more than one thousand pesos or by imprisonment of not exceeding one year, or both.
Separability provisions.
SEC. 27. Separability provisions.—If any provisions of this Act, or the application thereof to any person or circumstances, is held invalid, the remainder of the Act, and the application of such provision to other persons or circumstances, shall not be affected thereby.
SEC. 28. All laws or parts of laws inconsistent with the provisions of this Act are hereby repealed.
SEC. 29. This Act shall take effect upon its approval.
Approved, June 16, 1956.
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
