SOP No:

SOP Amendment / Addendum

Date : 02/26/1998

SOP Amedment / Addendum No. : HR-PB29.B
Title : Amendment/Addendum to the SOP on Vehicle Loan Program
Digest :

For the information, guidance and compliance of all concerned, published hereunder is the amendment/addendum to the SOP on Vehicle Loan Program.

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IV. IMPLEMENTING GUIDELINES

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I. TERMS AND CONDITIONS

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5. In the event of default in payment of monthly amortization, the Official shall be given a grace period of fifteen (15) days to settle his dishonored check, otherwise the total outstanding balance, plus 2% interest per month and 2% penalty per month from date of default, shall become immediately due and demandable without prejudice to the filing of administrative case for violation of B.P. Bilang 22 or the Bouncing Check Law. NFA management, thru DLA shall file charges against the Official within fifteen (15) days from receipt of notice from Department for Treasury, Budget and Fund Management (DTBFM) to file the charges.

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Q. FORECLOSURE OF CHATTEL MORTGAGE

1. The following shall be the grounds for foreclosure of the Chattel Mortgage:

If the borrower fails to pay one monthly amortization, after having been given a grace period of fifteen (15) days to settle his dishonored check, and/or if the terms and conditions of the chattel mortgage contract has been violated, the total outstanding balance plus 2% interest per month and 2% penalty per month from the date of default of payment shall become due and demandable without prejudice to the filing of administrative case for violation of the terms and conditions of the SOP and/or criminal case for estafa. If the borrower fails to pay the total amount within the stipulated period, the chattel mortgage shall be foreclosed.

As a special condition of the Contract of Loan, the borrower and his/her heirs shall not sell, transfer or in any other manner encumber the vehicle until fully paid, without prior notice of the NFA. Violation of this condition shall give the NFA the option to rescind the Contract and foreclose the Chattel Mortgage, and the payments made by the borrower be automatically forfeited in favor of the NFA and considered as rental for the use of the vehicle.

2. In the event of foreclose, NFA shall execute

judicial or extra-judicial

proceedings, as it deems appropriate under the situation.

3. Procedures for Judicial Foreclosure

DTBFM shall inform the Department for Legal Affairs (DLA) of any default in payment of amortization and subsequent filing of charges. DLA shall then send a

notice

(Exhibit 1) to the concerned borrower for the settlement of his/her entire obligation within 15 days from receipt thereof.

If at the end of the 15-day period the borrower has not yet paid his/her obligations, DLA shall institute a case at the Regional Trial Court of Quezon City in accordance with

Rule 68 of the Rules of Cour

If in the trial the court finds the facts presented in the complaint to be true, it shall ascertain the amount due to the NFA, including interest and costs, and after rendering judgement for the sum found due, order that the same be paid into court within a period of not less than ninety (90) days from the date of the service of such order. (Sec. 2, Rule 68, Rules of Court)

If the borrower, after being directed to do so, fails to pay the principal, interest, and costs at the time directed in the Order, the Court shall order the property to be sold in the manner and under the regulations that govern sales under execution.

(Sec. 3, Rule of the Rules of Court).

The money realized from the sale of the vehicle under the regulations mentioned in the preceding paragraph, after deducting the costs of the sale, shall be paid to the NFA which is foreclosing the mortgage. If, after paying such mortgage or other encumbrances, there shall be any balance or residue, the balance or residue shall be paid to junior encumbrances in the order of their priority, to be ascertained by the court. If there be no encumbrances, any balance or residue shall then be paid to the mortgagor or his agent, or the person entitled to it.

(Sec. 4, Rule 68 of Rules of Court)

The final record in the case shall include, in brief, the petition and other pleadings, judgement and orders, the proceedings under the order of sale, the name of the purchaser, with a description of the vehicle purchased, and the certificate of redemption, if any, of the final deed of conveyance executed in favor of the purchaser

(Sec. 7, rule 68, Rules of Court).

4. Procedures for Extra-Judicial Foreclosure

a. DTBFM shall inform DLA (

Exhibit 3

) of any default in payment of amortization and subsequent filing of charges. DLA shall then send a

notice

(Exhibit 1) to the concerned employee for the settlement of his/her entire obligation within 15 days from receipt of such notice.

b. If said NFA employee still failed to pay his obligation after the lapse of 15-day period, DLA shall inform GSD to take possession of the vehicle. The GSD representative/s shall present

notice of foreclosure/repossession

(Exhibit 2) to the borrower. After repossession, GSD will inspect and appraise the cost of vehicle and set the auction price for the approval by Management. Thereafter, the Special Project Office (SPO) shall set a schedule of auction.

c. At least ten (10) days prior to the auction date, a notice of the time, place, and purpose of such auction sale shall be posted at two (2) or more public places in such municipality, and SPO shall notify (

Exhibit 4

) the mortgagor of the time and place of sale, either by notice in writing directed to him or left at his abode, if within the municipality (

Sec. 14, Chattel Mortgage Law (R.A. 1508

). The mortgagor may choose to participate in the auction sale.

d. The money realized from the auction sale of the vehicle, after deducting the costs of the sale, shall be paid to the NFA thus foreclosing the mortgage. If after paying such mortgage or other encumbrances, there shall be any balance or residue, the balance or residue shall be paid to junior encumbrances in the order of their priority, to be ascertained by SPO and in accordance by the rules of law. If there be no encumbrances or there be a balance or residue after payment of such encumbrances, any balance or residue shall then be paid to the mortgagor or his agent, or the person entitled to it.

V. RESPONSIBILITIES

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2. BENEFITS UNIT, HRMD

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j. In case of default of the official in the payment of monthly amortization (beyond the 15-day grace period), coordinates with DAS/Regional/Provincial Accountant on the computation of the 2% interest and 2% penalty per month.

k. Monitors the strict implementation of the program.

l. Maintains an SVLF Ledger to monitor available funds for the month.

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4. CHIEF, ADMINISTRATIVE FACILITY SERVICES DIVISION - NFA MOTORPOOL

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c. Takes possession of the vehicle after presenting notice of repossession (Exhibit 2).

d. Inspects and appraises the cost of repossed vehicle.

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6. DEPARTMENT MANAGER, DLA

a. Issues certificate of no pending administrative case filed against the applicant.

b. Upon notification from DTBFM that the borrower failed to pay his monthly amortization, sends a demand

notice

(Exhibit 1) to the concerned borrower for the settlement of his/her entire obligation within (15) days from receipt thereof.

c. Files case/s against defaulting borrower after failure to settle his account after fifteen (15) days.

d. Informs GSD to take possession of the mortgaged vehicle.

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10. CASH DIVISION, DTBFM

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e. Notifies the official in case the check has no sufficient fund giving fifteen
(15) days grace period within which to make good his check.

f. Notifies DLA to file charges against defaulting borrowers. (Exhibit 3)

11. SPECIAL PROJECT OFFICE

a. Sets a schedule of auction.

b. Posts a notice of auction in 2 or more public places (Exhibit 4)

c. Sends the mortgagor a notice of auction of his/her repossessed vehicle.

12. ASST. ADMINISTRATOR FOR FINANCE & ADMINISTRATION

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13. DEPUTY ADMINISTRATOR FOR FINANCE & ADMINISTRATION

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14. ADMINISTRATOR

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Corollary to the amendment of item IV.1.5, the Contract of Loan shall also be amended (Exhibit 5A)
to be used by future borrowers. All borrowers whose loans have been approved before the
implementation of this amendment/addendum shall be issued an Amendment to the Contract
(Exhibit 5B).

All rulings and/or issuances inconsistent herewith are hereby superseded.

This SOP shall take effect this 15th of March, 1998.

(SGD.) JOEMARI D. GEROCHI
Administrator

Date Approved: February 26, 1998