In view of the downward trend of Treasury Bill Rates, and after a careful evaluation by the Automatic Payroll Deduction System (ADDS) Task Force on the issues raised by numerous accredited Private Lending Institutions (PLIs) under the Department of Education (DepEd) APDS, the imposition of the newly adjusted ceiling for interest and non-interest rates as well as the manner of its computation on loans to be offered to DepEd teaching and non-teaching personnel shall be as follows:
Ceiling Rates/Manner of Computation
Nominal Interest Rates per annum
One (1) year
10.97% added on loan
7.50% added on the principal amount of loan
Two (2) years
12.00% added on loan
9.00% added on loan +
6.00% deducted upfront from the principal amount of loan
6.00% deducted upfront
Effective Interest Rates per annum
23.93% to 24.00%
19.31% to 19.49%
Grace period on first loan amortization
Two (2) months
Two (2) months
Based on the agreement between the parties
Only the principal loan balance shall be paid by the DepEd borrower, in case of advance payment of loan in full
The adjusted rates shall be made effective on loans to be incurred from July 1, 2011 onwards until further notice.
Please be advised that conformity with these rates and manner of computation is a required condition for every PLI's eligibility to participate in the DepEd APDS Program.
TERMS AND CONDITIONS IN THE MOA FOR APPLICATIONS FOUND IN ORDER
A. ROLES AND RESPONSIBILITIES OF THE LENDER
1. For loans to be collected through the DepEd APDS, the Lender shall accept loan applications only from teachers/personnel on the DepEd payroll, whether national, regional or school level;
2. The Lender shall process, grant and release loan proceeds in accordance with the terms and conditions agreed upon in the MOA;
3. The Lender shall ensure that every loan is fully documented with a completely filled out Promissory Note (PN), Authorization to Deduct (ATD) and Disclosure Statement (DS), in conformity with the DepEd standard forms/template;
4. The Lender shall abide by the APDS policies especially the ceiling of interest and non-interest rates on loan to be offered to DepEd borrowers. Any APDS policy subsequently issued by DepEd (in the form of DepEd Memoranda, Orders, etc.) shall be deemed incorporated as an annex to the MOA, and shall have the same force and effect. Any provision in the MOA inconsistent with the items in the aforesaid APDS policy as issued or modified by DepEd shall be deemed automatically repealed in the MOA.
5. The Lender shall not impose Other Charges, except only those specified under Annex C of the MOA. Claims for Insurance premiums by the Lender which also have deduction codes for insurance may not be enforced under the deduction codes for lending. The Lender shall not compel any DepEd borrower to take out any type of insurance contract as a condition to the loan agreement.
6. The Lender shall observe a minimum two (2) months grace period after the actual release of the loan before issuing a billing statement. Such term must be embodied in the DS for purposes of transparency. No billing shall be made by the Lender for loans not yet granted to DepEd borrowers.
7. The Lender shall not refuse to accept tender of payment to be made in advance by DepEd borrowers, whether partially or in full. Official receipt shall be issued in both cases.
8. In case of advance payment, the Lender shall charge and collect interest only up to the advance payment date. Interest accruing for the remaining life of the loan may not be levied nor collected from the DepEd borrowers.
9. In case of advance payment in full, the Lender shall, in addition to the Official Receipt, issue a dated Certificate of Full Payment of Loan to the DepEd Borrower, and correspondingly send a written request to the RPSU/fiscally autonomous secondary school concerned for the immediate stoppage of deduction.
10. In case of over-deductions, the Lender shall refund within thirty (30) days from receipt of written notice the corresponding amount deducted from the monthly salaries of the DepEd borrower concerned.
11. The Lender shall ensure the issuance of Certified Statement of Account every six (6) months to DepEd borrowers, and upon their request, as the case may be.
12. The Lender shall make available to DepEd for inspection at any time all ATDs, PNs, DS and other related documents in the course of periodic review of the loan portfolio.
13. The Lender shall submit monthly billings to the DepEd in any acceptable electronic medium with a hardcopy duly signed as true and correct. Any deduction record contained in submissions not supported by the required ATD, PN and DS, as well as photocopies of the cheques issued by the Lender and duly acknowledged by DepEd borrowers shall be considered as unauthorized deduction.
14. The Lender shall pay DepEd a service fee of % of the total monthly collections to be deducted thereof upon remittance (0.5% for teachers cooperative, teachers associations, non-stock/profit savings and loan associations, mutual benefits association, or 1% for private lending institutions such as banks and insurance companies).
15. The Lender shall pick-up the monthly collections from DepEd and correspondingly issue Official Receipt thereof. In case of failure to pick up the collection checks within a period of six (6) months, the Lender shall not impose any interest/penalty/surcharges against the DepEd borrowers. Any claim for replacement of stale remittance checks shall be supported with written justification from the Lender.
16. The Lender shall limit its operation to regions where it has an office/s or branch/es.
• "Office" shall be defined as a fully equipped physical site of transaction, inside a building or commercial structure, with local business permit, proper sign board, with a full-time manager and staff who shall maintain the complete records/loan documents and attend to loan transactions and any queries/complaints of DepEd teachers/personnel.
• Annex C, which forms an integral part of this MOA, contains the region/s where the Lender is authorized to operate based on its reported office/s or branch/es.
17. The Lender shall submit the following on annual basis:
• Audited financial statements duly filed and stamped received by the BIR • Corporate income tax return • Business Permits for the year in regions where the Lender has its Office • Certificate of Good Standing (for cooperatives and teacher-associations) • Certificate of Authority (for financing, banks, insurance companies)
18. In case of revocation of Certificate of Authority/Registration of the Lender by the IC/SEC/CDA, the Lender shall make proper representations with DepEd as to the collections of remittance checks for loan deductions already incorporated in the payroll program.
19. The Lender shall not enter into a contract or local MOA with fiscally autonomous secondary schools regarding salary loan under APDS, as well as with the government servicing banks (e.g. DBP, LBP, Veterans, etc.) on automatic debit scheme to pay loans contracted by DepEd borrowers outside APDS.
20. The Lender shall not also accept Automated Teller Machine (ATM) card from DepEd borrowers to serve as collaterals of their loans.
B. ROLES AND RESPONSIBILITIES OF DEPED
1 The DepEd shall validate, through the RPSUs/fiscally autonomous secondary school/s concerned, the monthly deduction billings submitted by the Lender.
2. The DepEd shall deduct from the salary of the concerned DepEd borrowers the sum as stipulated in the ATD, as validated, until the loan amount is fully paid. The deduction will, however, be subject to the monthly net take home pay as stated in the General Appropriations Act for the current year, and/or existing DepEd orders, rules and regulations and other laws on the matter.
3. The DepEd shall strictly observe the "First In - First Served" queuing system in managing the order of salary deductions. If deduction cannot be made due to insufficient take home pay, the claim of the Lender shall be given preference in the order of queuing until such time that deduction may be validly made.
4. The DepEd shall remit to the Lender on a monthly basis the authorized deductions net of service fee within thirty (30) days after each payroll month.
5. The DepEd shall replace stale remittance checks only once for a particular check on the basis of written justification from the Lender. In case of non-collection of payment/s by the Lender, the DepEd shall deposit the same in a Trust Fund, subject to existing government accounting and auditing rules and regulations.
6. The DepEd may review the operation of the Lender at anytime during office hours to ensure compliance with the agreed terms and conditions of the MOA.
7. The DepEd shall send Advisory and furnish the Lender of the DepEd issuances for any amendment to the APDS policies which shall be automatically incorporated as an annex to the MOA for implementation of both parties.
C. ASSIGNMENT OF APDS CODE NUMBER
1. The DepEd assigns only one (1) APDS Code Number for lending, for the exclusive use of the Lender.
2. The APDS Code is strictly for loans extended to DepEd teachers/ personnel only.'
3. The APDS Code is not transferable, for sale, or further assignment to any other entity. In the event the Lender changes corporate name or effects other corporate changes, the Lender shall furnish DepEd with duly certified copies of the amended articles of incorporation/ cooperation and by-laws approved by the SEC or CDA to enable the DepEd to update its records accordingly.
4. In case of merger, and the surviving entity is the Lender, DepEd shall suspend the acceptance of new billings from the Lender until such time that they submit a certified true copy of the articles of merger and a request for validation of newly acquired offices/branches. If in the same case, the company other than the Lender survives, the APDS accreditation, as well as the APDS code shall be terminated immediately without notice. Said surviving entity may, however, file a whole new application if it wishes to be accredited under the APDS.
5. In case of consolidation involving the Lender, DepEd shall not accept any new billings from such Lender or the resulting company, until the following are submitted:
• Formal letter signifying their intention to maintain their APDS accreditation for lending under the same deduction code together with a board resolution or secretary's certificate; • Certified true copy of the Articles of Consolidation; • Articles of incorporation and by-laws of the resulting company; and • Deed of Assignment, if any.
6. In case of revocation of Certificate of Authority/Registration of the Lender by the IC/SEC/CDA, the DepEd shall continue servicing the collections of existing loans already incorporated in the payroll system until fully paid, but shall no longer accept new business from the Lender. Thereafter, the lending code is automatically revoked. The remittance checks to this effect shall be temporarily withheld until proper representations by the Lender with DepEd.
D. NECESSARY ATTACHMENTS IN THE MOA
The MOA shall include as integral parts the following attachments:
1. Annex A - Board resolution authorizing the Lender's representative to enter into and execute this MOA
E. CONDITIONS FOR SUSPENSION AND/OR REVOCATION/ CANCELLATION OF THE MOA
1. The violations or offenses considered for the suspension, and/or revocation/cancellation of the MOA are enumerated in Enclosure "C."
2. The imposable sanctions for the violations that may be committed by the Lender are classified as follows:
• Ist Offense - Warning • 2nd Offense - Withholding of remittance for not less than one (1) month but not more than six (6) months, and the corresponding non-acceptance of new business or deduction billing • 3rd Offense - cancellation/revocation of the privilege to transact business under the APDS 2.2 LESS GRAVE • 1st Offense - Withholding of remittance for not less than one (1) month but not more than six (6) months, and the corresponding non-acceptance of new business or deduction billing • 2nd Offense - cancellation/revocation of the privilege to transact business under the APDS
• 1st Offense - cancellation/revocation of the privilege to transact business under the APDS
3. The imposition of the corresponding administrative sanctions enumerated under Item 2 is subject to the following rules:
3.1 Any sanctions handed down against a particular office/branch shall be imposed upon all other offices/branches within the same region; in case the violation is committed by the Head Office, all sanctions handed down against the latter shall likewise be imposed upon all its other offices/branches in the national level; and
3.2 In case of grave violation of the MOA, the Lender shall no longer be allowed to grant new business under APDS. The DepEd, however, shall continue servicing the collection of existing loans already incorporated in the payroll system as of the date of termination of the MOA and remit the same to the Lender, until fully paid. Thereafter, the APDS Code is automatically revoked.
4. No penalties/fines/surcharges due to lapses/delays of payments shall be charged to the concerned DepEd borrowers by the Lender, as a result of any of the following:
4.1 Failure on the part of the Lender to pick up remittance checks;
4.2 Non-remittance due to imposition of sanctions stipulated under Item E.2; and
4.3 Failure of the DepEd to remit on time due to mistake, inadvertence, force majeure, or any extreme circumstance.
5. Except as initiated by DepEd, any complaint arising from commission or violation of the grounds for suspension/cancellation/revocation mentioned above should be sufficient in form and substance (i.e. complaint must be in writing containing the names and addresses of the complainants and the entity or person complained of, the acts or omissions complained of constituting the violation, based on the personal knowledge of the complainant, and the complaint is verified under oath), which shall serve as a basis for an investigation by DepEd.
6. Offenses arising from violation of the MOA as reported by the Regional APDS Task Force shall be investigated or determined by the Committee that may be designated by the DepEd Secretary in an appropriate Memorandum.
7. The Lender, in case committed any of the following, as determined by the aforementioned Committee, shall no longer be allowed to participate in the re-accreditation process:
7.1 Those who at the time of the application for re-accreditation, have already sold, transferred or assigned its lending code without the prior consent and approval of DepEd Central Office.
7.2 That the lending institution was found guilty of violating four (4) or more provisions of the MOA regardless of the penalty/sanction imposed for such violations.
8. The venue of civil actions arising from violation of the terms and conditions of the MOA shall be under the exclusive jurisdiction of the courts of Pasig City.
F. EFFECTIVITY OF THE MOA
1. The MOA shall be valid upon signing/execution by both parties and shall be effective for a period of five (5) years from the date of signing. The DepEd, however, may anytime revoke the MOA for a cause.
2. For purposes of renewal of the MOA, the Lender shall submit the required documents for APDS re-accreditation at least three (3) months prior to the date of expiration of the MOA.
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