Rules and regulations to implement Republic Act No. 8501

(NAR) VOL. 9 NO. 1/JANUARY-MARCH 1998

[ HDMF, March 22, 1998 ]

RULES AND REGULATIONS IMPLEMENTING REPUBLIC ACT NO. 8501

Pursuant to the authority granted to the Board of Trustees of the Home Development Mutual Fund under Section 5 of Republic Act No. 8501, otherwise known as the HOUSING LOAN CONDONATION ACT OF 1998, as well as under Section 12 of Presidential Decree No. 1752, as amended, the following rules and regulations are hereby promulgated and issued for the guidance of all concerned.


RULE I
PRELIMINARY PROVISIONS

SECTION 1. Title. — These Rules shall be known as the HDMF Rules and Regulations Implementing Republic Act No. 8501, otherwise known as the HOUSING LOAN CONDONATION ACT OF 1998.

SECTION 2. Construction. — Any doubt in the interpretation of these Rules shall be resolved in favor of the Housing Loan Borrower.

RULE II
DEFINITION OF TERMS
SECTION 1. Definition of Terms. — The following terms shall mean:

1. Fund — the Home Development Mutual Fund created by Presidential Decree No. 1752, as amended by Executive Order No. 35, Republic Act No. 7742 and Republic Act No. 8501;

2. Board — the duly constituted Board of Trustees of the Home Development Mutual Fund;

3. Condonation Programs — the condonation of penalties pursuant to NEMO 32 issued by the then President Corazon C. Aquino as well as the Restructuring Program of the Fund.

4. Loans — any loan obligation with the Fund such as but not limited to the following:

(a) A Pag-IBIG housing/lot purchase loan availed of by a bona fide Pag-IBIG member under any of the Pag-IBIG Housing Loan Programs based on his loan entitlement and which is now under the management of the Fund;

(b) A housing/lot purchase loan originally with National Home Mortgage Finance Corporation (NHMFC) which has been assigned, transferred and ceded to the Fund (Folio 1 Accounts);

(c) A housing/lot purchase loan under the Unified Home Lending Program (UHLP) originally with NHMFC which, by Deed of Assignment, is now under the Management of the Fund;

(d) A housing/lot purchase loan under the Unified Home Lending Program (UHLP) with the Fund as a lending window;

(e) A Pag-IBIG housing/lot purchase loan availed of by a bona fide Pag-IBIG member under any of the Pag-IBIG Housing Loan Programs which has been subsequently and validly assumed by a person either through contract of sale with assumption of mortgage, assumption of mortgage or under legal orders duly issued by a competent court provided, however, said account is under the management of the Fund;

(f) Open housing loan accounts which were incurred by Pag-IBIG borrowers in excess of their loan entitlement under the National Home Mortgage Finance Corporation (NHMFC) Lending Program and which accounts were transferred/assigned by NHMFC to the Fund after the expiration of their Trust Agreement;

(g) A Pag-IBIG housing/lot purchase loan availed of by a bona fide Pag-IBIG member under any of the Pag-IBIG Housing Loan Programs which by reason of delinquency has been under foreclosure proceedings or has been subsequently foreclosed but still within the redemption period; and

(h) Loan obligation incurred by the member-borrower under any of the Fund's loan programs.

5. Employer — any person, natural or juridical, domestic or foreign, who carries on in the Philippines any trade, business, industry, undertaking or activity of any kind, and uses the services of another person who is under his orders as regards such services; the Government, its national and local offices, political subdivisions; branches, agencies or instrumentalities including corporations owned and/or controlled by the Government;

6. Employee — any person in the service of an employer who receives compensation for such service;

7. Housing Loan Borrower — a person who has an outstanding housing loan account with the Fund;

8. Due and demandable arrearages — total unpaid principal and interest plus insurance premiums which form part of the unpaid amortizations due at the time of application for condonation of penalties.

9. Restructured loan — the due and demandable arrearages which were restructured within the remaining period of the loan in accordance with the Restructuring program of the Fund.

10. Undue balance of the original loan — the remaining balance of the principal and interest plus insurance premiums after separating the due and demandable arrearages at the time of the application for condonation of penalties.

11. Total outstanding housing loan — the restructured loan plus the undue balance in the original loan.

12. Default — shall mean failure of the housing loan borrower/member borrower, his heirs, successors-in-interest to pay any three (3) consecutive monthly amortizations and/or monthly membership contributions and other obligations on the loan.

13. Member-borrower — a Pag-IBIG member who has an outstanding loan under any of the Fund's loan programs.

RULE III
CONDONATION OF PENALTIES UNDER SECTION 2 OF REPUBLIC ACT 8501

SECTION 1. Who may apply under this Rule. — Any housing loan borrower or in the event of his death, his heirs, or successors-in-interest, who has unpaid penalties on his housing loan with the Fund as of the effectivity of R.A. 8501 and has not yet availed of any previous condonation program from any government institution or agency involved in the National Shelter Program, may apply for the condonation of penalties under this Rule. A housing loan borrower or in the event of his death, his heirs, or successors-in-interest, who failed or refused to pay his monthly amortizations due to structurally defective or substandard housing units and/or subdivisions lacking in basic amenities such as water, light, drainage, good roads and others and as required by law, may likewise apply for condonation of penalties under this Rule.

SECTION 2. Condonation of Penalties After Full Payment. — All unpaid penalties on said housing loan shall be condoned after full payment by the housing loan borrower of all due and demandable arrearages composed of the principal and interest.

SECTION 3. Partial Condonation of Penalties. — In the event the housing loan borrower is able to pay only part of his/her due and demandable arrearages, only the penalties corresponding to the portion paid shall be condoned. Thus, the penalties to be condoned shall be proportionate to whatever downpayment is made on the restructured loan which downpayment shall not be less than ten (10%) percent of the due and demandable arrearages at the time of application for condonation.

SECTION 4. Restructuring of the Loan Balance. — The unpaid due and demandable arrearages after partial payment shall be restructured within the remaining period of the loan and to be paid together with the scheduled amortization for the undue balance of the original loan in accordance with the terms and conditions of both promissory notes. The uncondoned penalties shall be put in a suspense account until the total outstanding balance of the loan shall have been fully settled and satisfied. After full settlement of the total outstanding housing loan, the penalties under suspense account shall be condoned.

SECTION 5. Effect of Default. — In the event of default, the uncondoned penalties under the suspense account together with the total outstanding housing loan shall immediately become due and demandable.

SECTION 6. Period within which to avail under this Rule. — A housing loan borrower or in the event of his death, his heirs, or successors-in-interest may only avail of his right to apply for the condonation of penalties under this Rule within a period of one (1) year reckoned from the date of effectivity of these Rules and such right may only be exercised once within the repayment period.

RULE IV
CONDONATION OF PENALTIES ON LOAN OBLIGATIONS UNDER SECTION 3 OF REPUBLIC ACT 8501

SECTION 1. Who may apply for Condonation Under this Rule. — Any member borrower, or in the event of his death, his heirs, or successors-in-interest, who after availing of any previous condonation program of the Fund, failed to pay on time any obligation to the Fund for justifiable reasons, may apply for condonation of penalties subject to the requirements or conditions as herein provided.

SECTION 2. Justifiable Reasons. — The following shall be considered as justifiable reasons for failure to pay the required amortization on due date which may allow a delinquent member-borrower to apply for condonation of penalties accrued:

a) Unemployment;

b) Total or partial disability of the member-borrower, as certified by a duly licensed physician, which by reason thereof resulted in his failure to pay the required amortization when due;

c) Illness of the member-borrower or illness or death of any of his immediate family which by reason thereof resulted in his failure to pay the required amortizations when due;

d) Death of the member-borrower which by reason thereof resulted in the failure to pay the amortizations due on the remaining balance of the loan after due application of the Mortgage Redemption Insurance proceeds, if any;

e) Fire that gutted his Pag-IBIG mortgaged property;

f) Failure or refusal to pay his monthly amortizations due to structurally defective or substandard housing units and/or subdivisions lacking in basic amenities such as water, light, drainage, good roads and others and as required by law;

g) Failure of the employer to remit to the Fund whatever amortizations due from the employee after deducting/collecting the same from the said employee;

h) Other causes as may be considered as justifiable by the Board of Trustees.

SECTION 3. Eligibility of Applicant. — To be eligible for penalty condonation under this Rule, the member-borrower, or successors-in-interest, applying for penalty condonation shall have an annual family income of not more than Three Hundred Thousand (P 300,000.00) Pesos except those applying for condonation of penalties under sub-paragraph (f) of Section 2 hereof.

SECTION 4. Condonation of Penalties After Full Payment. — All unpaid penalties on said loan shall be condoned after full payment by the member-borrower of all due and demandable arrearages composed of the principal and interest.

SECTION 5. Partial Condonation of Penalties. — In the event the member-borrower is able to pay only part of his/her due and demandable arrearages, only the penalties corresponding to the portion paid shall be condoned. Thus, the penalties to be condoned shall be proportionate to whatever downpayment is made on the restructured loan which downpayment shall not be less than ten (10%) percent of the due and demandable arrearages at the time of application for condonation.

SECTION 6. Restructuring of the Loan Balance. — The unpaid due and demandable arrearages after partial payment shall be restructured within the remaining period of the loan and to be paid together with the scheduled amortization for the undue balance of the original loan in accordance with the terms and conditions of both promissory notes. The uncondoned penalties shall be put in suspense account until the total outstanding balance of the loan shall have been fully settled and satisfied. After full settlement of the total outstanding loan, the penalties under suspense account shall be condoned.

SECTION 7. Effect of Default. — In the event of default, the uncondoned penalties under the suspense account together with the total outstanding housing loan shall immediately become due and demandable.

SECTION 8. Loans eligible for penalty condonation. — Only loans, which have been in arrears for a period of at least two (2) years, shall be eligible for penalty condonation except those applying for condonation of penalties under sub-paragraph (f) of Section 2 hereof.

SECTION 9. Limitation on the availment of penalty condonation under this Rule. — A member-borrower who had already availed of penalty condonation under this Rule shall forever be disqualified from availing of the penalty condonation during the remaining period of the term of his loan and/or until such loan has been fully settled and satisfied. This disqualification shall likewise apply to his heirs as well as to his successors-in-interest.

RULE V
CONDONATION OF PENALTIES IMPOSED ON DELINQUENT EMPLOYERS

SECTION 1. Who may apply under this Rule. — Any employer, who failed to register his covered employees and/or failed to remit the required contributions pursuant to Presidential Decree No. 1752, as amended for justifiable reasons, may apply for condonation of penalties under this Rule.

SECTION 2. Justifiable Reasons. — The following shall be considered as justifiable reasons for failure to register covered employees and/or to remit the required contributions which may allow a delinquent employer to apply for condonation of penalties:

a) Financial difficulty to meet his statutory obligation under Presidential Decree No. 1752, as amended. Financial difficulty means that remittance of the required contributions shall affect the business operations of the company;

b) Failure of his concerned official to register the covered employees and/or to remit the required contributions pursuant to P.D. 1752, as amended and such failure has not been brought to the knowledge of the higher management;

c) Coverage under P.D. 1752, as amended has been unsuccessfully contested in Court;

d) Other reasons acceptable to the Board of Trustees.

SECTION 3. Condonation of Penalties. — All penalties imposed in accordance with P.D. 1752, as amended shall be condoned after registration by the delinquent employer of all his covered employees and remittance of the required contributions retroactive as of the date of his coverage pursuant to law or as determined by the Board of Trustees.

SECTION 4. Approved Schedule of Payments. — In the event the employer is financially incapable of remitting the required contributions in full, the employer may submit a schedule of payment of how to settle the unremitted required contributions. Such schedule of payment may be approved by management provided the period of settlement shall not be longer than two (2) years and provided further that the remaining balance which shall be composed of the unpaid required contributions and uncondoned penalties shall earn an interest of one (1%) percent a month. The penalties to be condoned shall be proportionate to the downpayments made by the delinquent employer pursuant to his approved schedule of payments.

SECTION 5. Effect of full payment or approved schedule of payments. — Full payments of the required contributions or approval of the schedule of payment submitted by the delinquent employer shall result in the withdrawal of a complaint filed by the Fund against the delinquent employer with the Fiscal's Office or the dismissal of the case, for full settlement, or provisional dismissal, for approved schedule of payment, in the event an information has already been filed in Court.

SECTION 6. Violation of approved schedule of payment. — Any violation of the approved schedule of payment, either by defaulting in his payment of the required contributions or short-remitting what is required in the schedule shall result in the restoration of whatever penalties previously condoned and the refiling of the complaint against the delinquent employer.

SECTION 7. Effectivity of the employee membership. — The effectivity of the membership of an employee registered by the delinquent employer shall be retroactive to the determined date of the employer's coverage unless said employee has been previously registered by his previous employer in which case the effectivity of his membership in the Fund shall remain the same and unaffected.

RULE VI
PROCESSING OF APPLICATIONS

SECTION 1. Processing of Applications. — The President of the Fund shall issue the rules or procedures that shall govern the filing, receipt, requirements, processing and actions on applications for condonation of penalties in accordance with the preceding Rules. Application for condonation of penalties shall be made in such forms as may be prescribed by the President of the Fund.


RULE VII
GENERAL PROVISIONS


SECTION 1. Payment of penalties under protest. — These Rules shall likewise apply to member-borrowers who paid under protest the penalties imposed on their housing loans prior to the enactment of Republic Act No. 8501 and signified in writing to be covered by the provisions of the same upon its enactment into law. The affected member-borrowers may file their applications for condonation of penalties under any of the Rules and after approval thereof shall correspondingly receive the refund of whatever condoned penalties, provided said penalties together with the principal and interest have been fully paid. For member-borrowers who have not fully paid their loan but merely settled the due and demandable arrearages and penalties, the penalties condoned in proportion to what has been paid shall be credited to the remaining principal and interest.

SECTION 2. Repealing Clause. — All rules and regulations, policies, orders and issuances contrary to or inconsistent with these Rules are hereby repealed or modified accordingly.

SECTION 3. Effectivity. — These Rules shall take effect fifteen (15) days after the publication thereof in two (2) newspapers of general circulation.

Adopted: 22 March 1998

Attested by:

(SGD.) WILFREDO E. NUESA
Corporate Secretary

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