Legal basis and decentralized pilot authority
- The Memorandum directs the Regional Office Unit in Cebu (ROU-VII-Cebu) to pilot decentralization of the Pre-departure Loan Program in Cebu.
- The pilot is ordered to expedite granting of the Pre-departure Loan (PDL) to applicants residing in the Visayas and Mindanao areas.
- With the establishment of a one-stop processing center of the POEA in Cebu City, the ROU-VII-Cebu must process and approve PDL applications for the covered regions.
- Until decentralization for all regions, ROU-VII-Cebu acts as the focal processing center for other regional office units located in the Visayas and Mindanao.
- ROU-VII-Cebu must process and approve applications instead of sending them to Head Office in Manila for approval and release.
Loan nature, purpose, and eligibility
- A Pre-departure loan is a financial assistance program for newly-hired overseas contract workers (OCWs) designed to provide money to help defray documentation expenses prior to departure.
- The loan is extended to newly-hired OCWs who have a valid employment offer and a confirmed departure schedule.
- Newly-hired OCWs (both land-based and sea-based) are entitled to the pre-departure loan if they have at least one recorded paid contribution to the OWWA fund.
- The program applies to qualified OCWs who are processed through ROU-VII-Cebu (for Cebu and the covered pilot regions) and also through other regional office units that file applications for the Visayas and Mindanao coverage under the Memorandum’s decentralization structure.
Maximum loanable amount and rate schedule
- The maximum loanable amount under the Pre-departure Loan is PHP 5,000.00.
- The loanable amount is determined by the co-maker’s salary as follows:
- US$ 450.00 a above: PHP 5,000.00 (monthly) / PHP 3,703.00 (annually) / PHP 44,444.40.
- 350.00 a 449.00: PHP 4,500.00 (monthly) / PHP 3,333.33 (annually) / PHP 39,999.96.
- 250.00 a 349.00: PHP 4,000.00 (monthly) / PHP 2,962.97 (annually) / PHP 35,555.64.
- 200.00 a 249.00: PHP 3,500.00 (monthly) / PHP 2,592.59 (annually) / PHP 31,111.08.
- 150.00 a 199.00: PHP 2,500.00 (monthly) / PHP 1,851.86 (annually) / PHP 22,222.32.
- The Memorandum fixes the loanable amount using the salary brackets and figures above as the basis for the maximum loanable amount computations under the PDL program.
Loan terms, interest, charges, and default rules
- The loan period is payable within six (6) months from the release of the loan, including one (1) grace period and five (5) months equal payment period.
- The loan is interest free if it is paid within the scheduled installment due dates.
- An administrative handling fee of 4% is deducted from the loan proceeds.
- Failure to pay two (2) consecutive installments renders the entire obligation due and demandable.
- A penalty charge of 1% per month is imposed on unpaid amortization/due obligation.
Required documents and co-maker qualification
- The loan applicant must accomplish and submit the loan application forms together with the following requirements:
- A Xerox copy of Overseas Employment Certificate (OEC); and an OCW Info Sheet and Contract of Employment certified as true copy from the original by the POEA.
- A Xerox copy of Passport/Seaman’s book showing the OCW’s name, picture, and validity date, certified as true copy from the original by the Agency Manager.
- A Xerox copy of Visa/NOC, Working Permit and Plane Ticket with confirmed flight schedule, certified as true copy from the original by the Agency Manager.
- The original copy of latest Income Tax Return (ITR) and Tax Withheld Certificate (W-2) of a locally, and gainfully employed co-maker, and a certificate of employment indicating basic salary, position, and length of service together with the employee’s Identification Card (ID).
- A co-maker is any person except spouse who is of good moral standing and has the capacity to pay.
- The applicant’s eligibility is also conditioned by the Memorandum’s availability policy on prior outstanding accounts under the applicant’s name (as applied as a program rule).
Program availability policy limits
- Availment of the program is open only to an applicant with no outstanding loan account under the applicant’s name, either as principal borrower or as co-maker to another borrower.
- Outstanding loans previously contracted must be first liquidated before the applicant is accorded the loan privilege.
Revolving fund creation, custody, and accounting
- A revolving fund of PHP 100,000.00 is initially appropriated for the program.
- The revolving fund is immediately transferred and placed under the full responsibility of ROU-Cebu.
- For control and accounting purposes, the fund must be immediately deposited with LBP (OWWA account).
- The fund must be treated in the books of ROU-VII-Cebu as separate and distinct from other funds for other programs.
- The fund is used to service accounts for this program covering loans granted/approved under the PDL program for applications filed in ROU-Cebu or through other regional office units in the Visayas and Mindanao regions.
Booking, collections, remittance, and ledger responsibility
- ROU-VII-Cebu must maintain adequate individual subsidiary ledgers for PDL loan accounts.
- ROU-VII-Cebu is responsible for efficient collection of PDL loan accounts.
- Concerned regional office units must help in collection of loan accounts within their jurisdictional area when applications are filed through them.
- When other ROUs in other regions receive payments for loan borrowers whose loan records are maintained in Cebu, those payments must be remitted to ROU-VII-Cebu in the same manner remittances to Head Office are made, using telegraphic transfers.
- When remitting by telegraphic transfers, the remitting office must send the receiving office in separate mail advice details of the remittance for whose account(s) the payment(s) is/are intended, indicating, among others:
- dates of payment,
- the name of the accountees/payors,
- amount, and
- the identification of the Loan Program.
- Depending on the convenience of the ROUs, PDL remittances received may be done on a monthly basis preferably at the end of the month within ten (10) days following the reference month, but must not be later than one (1) month from receipt of the payment.
Disbursement signatories and operational approval
- Drawings against the fund representing releases of loan proceeds must be signed by the OWWA regional Supervisor and counter-signed by the DOLE Regional Director or the DOLE Regional Director’s authorized representative.
- Counter-signing must follow the normal rule “as usual” and applies in the absence of, or until, a designated Cashier or another officer in the Regional Office Unit has been named and authorized.
- For the immediate purpose of ROU-Cebu office, until any change is effected, all requests for fund disbursement by ROU-VII-Cebu must continue to be approved by the DOLE Regional Director or the authorized representative.
Monthly reporting and prescribed account codes
- For management and monitoring, ROU-VII-Cebu must submit a monthly report on Loan Releases and Collections for both Pre-departure Loan (PDL) and Family Assistance Loan (FAL).
- The monthly reports must be submitted not later than the 10th day following the reference month and must comply with prescribed formats.
- The ROU-Supervisor must ensure strict and prompt compliance with reportorial requirements.
- The Memorandum prescribes the following account codes for ROU-VII-Cebu for the program:
- Cash in Bank (8-70-320 VII (PDL))
- Accounts Receivable (PDL) (8-71-908 V (PDL))
- Trust Fund (PDL) (8-84-400 V (PDL))
- Interest Income (PDL) (1-56-300 V)
- Miscellaneous Income (1-58-300 V)
- Withholding Tax/ Expenses (PDL) (1-58-300 V)
- Bank Charges (PDL) (3-06-302 V)
- Miscellaneous Expenses (3-06-306 V)
Repeal clause for inconsistent issuances
- All previous issuances of the Secretariat that are inconsistent with any provision of OWWA Memorandum of Instructions No. 125 are deemed to be repealed or modified accordingly.