OFFICE ORDER NO.

2010 - 119

SUBJECT : GUIDELINES FOR THE PENALTY CONDONATION PROGRAM FOR

UNREMITTED OR DELINQUENT LOAN AMORTIZATIONS OF
EMPLOYEES OF EMPLOYERS

Pursuant to the approval of the Penalty Condonation Program for Unremitted or

Delinquent Loan Amortizations of Employees of Employers by the President of the
Philippines on 03 June 2010, as recommended by the Social Security Commission (SSC)
under Resolution No. 238-s.2010 dated 25 March 2010, the following guidelines and
procedures are hereby issued:

I. COVERAGE OF THE PROGRAM

1. Employers who are delinquent in the remittance of their employees' loan

amortizations (salary, calamity, emergency, educational, special educational
loan for Y2K conversion, stock investment and privatization fund), including
the following:

1.1 Those with pending or approved installment proposals on loans;

1.2 Those with pending or approved applications to settle loan obligation
through Dacion en Pago; and
1.3 Those with pending cases before the SSC, Courts or the Office of the
Prosecutor.

2. Employers of employees with delinquent loans granted under the current or

previous employer or whose loans were granted as self-employed
(SE)/voluntary-paying members (VM).

II. IMPLEMENTING GUIDELINES

1. The Program shall apply only to penalties on unremitted or delinquent loan

amortizations (principal and interest) due on or before 01 April 2010.

2. Period of the Program

Availment period of the Program is six (6) months from 03 January 2011 to
30 June 2011.
 3. Restoration of loan privileges

Upon remittance of the delinquent loan amortizations in full or approval of the

installment proposal of the employer under this Program, the short-term
member loan privileges of their employees shall be restored, subject to the
existing guidelines on salary loan granting. However, said privileges shall
again be suspended in the event of violation of any of the terms and
conditions of the installment proposal.

4. Loan amortizations paid before effectivity of the program

Penalties already paid before the effectivity of the Program shall no longer be
subject of condonation.

Those who settled their arrears partially before the effectivity of the Program
should pay the balance in full or installment under the Program in order that
accrued penalties corresponding to the balance can be condoned.

5. Effect on pending or approved installment proposal for loans

Upon remittance of the delinquent loan amortizations in full or approval of the

installment proposal of the employer under this Program, a pending or
approved proposal submitted under other rules issued by the SSC allowing
employers to pay their loan delinquencies in installment shall be considered
withdrawn and the corresponding post-dated checks submitted shall be
returned.

6. Effect on pending or approved application to settle loan obligation through

Dacion en Pago

Upon remittance of the delinquent loan amortizations in full or approval of the

installment proposal of the employer under this Program, a pending
application submitted under other rules issued by the SSC allowing
employers to settle their loan delinquencies through dacion en pago shall be
modified to cover only contributions.

Further, upon submission of an installment proposal by an employer under

this Program, an approved dacion en pago application for settlement of loans
submitted under such other rules shall be considered annulled if the title of
the property has not yet been transferred to the SSS.

7. Effects of failure to pay in full or default in installment

In case the employer fails to pay in full the loan amortizations or defaults in
the payment of any installment within the period provided in the approved
installment proposal, the penalties shall be re-imposed on the remaining
balance and shall continue to accrue until the delinquent account is paid in
full.

Guidelines for the Penalty Condonation Program for Unremitted or Delinquent Loan Amortizations of Employees of
Employers

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 8. Modes of Payment under the Program

8.1 Full Payment

Pay within the period of effectivity of the Program the full amount of the
delinquent loan (principal and interest) through any SSS Branch with
tellering facilities or authorized collection agent of the SSS

Interest is computed up to the settlement of the loan and is based on the

prevailing interest rate at the time the loan was approved (Annex A).

8.2 Installment Payment

Submit a proposal to pay the amount of delinquent loan (principal and

interest) in installment to the SSS Branch having jurisdiction over the
place of business.

Interest is computed up to the approval of the installment proposal and is

based on the prevailing interest rate at the time the loan was approved.
An additional interest of three percent (3%) per annum is imposed on the
monthly installments (Annex B).

The proposal shall indicate the amount and number of months to pay.

9. Documentary Requirements for Submission

9.1 Full payment

- Accomplished Application for Member Loan Penalty Condonation
Program for Employers
- Loan delinquency report signed by the employer in the “conforme”
portion

9.2 Installment payment

- Accomplished Application for Member Loan Penalty Condonation
Program for Employers
- Loan delinquency report signed by the employer in the “conforme”
portion
- Agreed installment payment computation
- Installment proposal signed by the authorized signatory of the
company
- Notarized promissory note signed by the authorized signatory of the
company
- Secretary’s Certificate, in case the corporation is operational or
equivalent instrument in case of an unincorporated employer,
authorizing such officer to sign the proposal in behalf of the
employer

Guidelines for the Penalty Condonation Program for Unremitted or Delinquent Loan Amortizations of Employees of
Employers

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 10. Terms and Conditions on Installment Proposal

10.1 Submit application form together with the installment proposal and
promissory note to pay the balance of the delinquency in equal
monthly installment within a period not exceeding twenty-four (24)
months from the date of the approval of the proposal.

10.2 The first monthly installment shall be paid on the 10th day of the
succeeding month after the approval of the proposal.

10.3 The total amount due shall bear an interest rate of three percent (3%)
per annum. The monthly installment payments shall be computed
using the Amortization Factor Table (Annex C).

10.4 Current contributions and loan amortizations of its employees shall be

paid every month as they fall due.

10.5 The managing head, director or partner shall sign the proposal and the
promissory note if the employer is an association, partnership,
corporation or any other institution.

10.6 The managing head, director or partner shall sign the proposal and the
promissory note if the employer has already ceased operations.

10.7 Upon approval of the proposal, the employer shall issue corresponding
post-dated checks payable to the SSS to cover all monthly
installments. The checks shall be under the corporate’s name, if the
company is a corporation, or under the business name/name of owner,
if single proprietorship.

The employer shall replace post-dated checks whenever necessary

(e.g., change in check signatory/ies, closure of account, etc.)

10.8 Failure by the employer to comply with the above requirements shall
automatically terminate the approved installment proposal and shall
have the same effect as in case of default in the payment of any
installment.

III. PROCEDURAL HIGHLIGHTS

1. The Junior/Senior Member Service Representative (J/S MSR) of Member

Services Section (MSS), Receiving Center (RC) shall verify employer
eligibility to avail of the Member Loan Penalty Condonation Program for
Employers thru the Delinquency Sub-module of the Employer Loan
Information Module of the Online Inquiry System.

Guidelines for the Penalty Condonation Program for Unremitted or Delinquent Loan Amortizations of Employees of
Employers

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 2. The Junior/Senior Analyst of the Inspectorate Section, Receiving Center,
shall:

2.1 Issue application forms and loan delinquency reports to employers.

2.2 Evaluate the applications and supporting documents based on program
guidelines.
2.3 Prepare notices of approval of applications for condonation.

3. The Corporate Executive Officer II of the Inspectorate Section shall review the
applications and notices of approval.

4. The Branch Head shall perform the following activities:

4.1 Approve the applications and installment proposals within five (5) days.
4.2 Sign notices of approval/letters of advice.

5. The Junior Data Encoder of the Operations Accounting Section (OAS),

Processing Center (PC), shall encode the following:

5.1 Data of the approved applications in the Condonation of Penalty:

Application Details sub-module of Data Entry Module of the Loans
Management System (LMS).
5.2 Payment data in the Payment Set-Up: Collection List sub-module of the
Data Entry Module of the LMS.

IV. FORMS

1. Application for Member Loan Penalty Condonation Program for Employers –

shall be accomplished by an employer who applies for the penalty
condonation.

2. Installment Proposal – shall be accomplished by an employer who applies for

the penalty condonation through installment.

3. Promissory Note - shall be accomplished by an employer who promises to

pay the SSS the amount representing their unremitted loan amortization and
interest within a number of months (stating the start and end date of
payment). It should be notarized and submitted by the employer together
with the installment proposal.

4. Notice of Approval - shall be issued by the SSS to inform an employer of the

approval of their application for penalty condonation.

This Office Order supersedes Office Order No. 2009-050.

Guidelines for the Penalty Condonation Program for Unremitted or Delinquent Loan Amortizations of Employees of
Employers

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 For strict compliance.

(Original Signed)
EMILIO S. DE QUIROS, JR.
President and CEO

25 November 2010
Date

ATTACHMENTS:

Annex A: Sample Computation of Amount Due to be Paid in Full

Annex B: Sample Computation of Amount Due to be Paid in

Installment, Term of Payment : 12 Months

Annex C: Amortization Factor Table

Annex D: Forms
- Application for Member Loan Penalty Condonation Program for
Employers
- Installment Proposal
- Promissory Note
- Notice of Approval (Full Payment)
- Notice of Approval (Installment Payment)
- Letter of Advice

Annex E: Procedures
- Verification of Employer's Loan Delinquency
- Receipt of Applications for Member Loan Penalty Condonation
Program for Employers
- Processing of Applications for Member Loan Penalty Condonation
Program for Employers
- Encoding of Approved Applications for Member Loan Penalty
Condonation Program for Employers
- Receipt and Handling of Post-Dated Checks Under Installment
Payment of the Member Loan Penalty Condonation Program for
Employers
- Processing of Full Payment of Employers Under the Member Loan
Penalty Condonation Program for Employers

(Policies and Procedures – Loans Collection)

Guidelines for the Penalty Condonation Program for Unremitted or Delinquent Loan Amortizations of Employees of
Employers

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