Enough with the loans

Caught unawares, state workers are in quite wobbly financial condition following the implementation of the General Appropriations Act of 2012 which among others provides a take home pay threshold in the allowable deductions in their monthly pay. With such provision in full force, government employees are groping for ways to augment their income dwindled by too many deductions, increased basic expenditures and escalating price of commodities and cost of services. Section 37 of the GAA (RA No. 10155) is effectively making belt-tightening a necessary reaction among the rank and file in government service.

Not like in the previous GAAs which placed the minimum required take home pay among government employees at P3,000 for purpose of deductions, this year’s National Budget increased the cap at a hefty P5,000. Meaning no other deductions are allowed if such will make the take home pay of the employee lower than P5,000 per month. Section 37 of RA 10155 states (in toto):

“Section 37. Authorized Deductions. Deductions from salaries, emoluments or other benefits accruing to any government employee chargeable against the appropriations for Personal Services may be allowed for the payment of individual employee’s contributions or obligations due the following:

(a) The BIR, PHILHEALTH, GSIS and HDMF; (b) Mutual benefits associations, thrift banks and non-stock savings and loan associations duly operating under existing laws which are managed by and/or for the benefit of government employees; (c) Associations/cooperatives/provident funds organized and managed by government employees for their benefit and welfare; and (d) Duly licensed insurance companies accredited by national government agencies.

PROVIDED, That such deductions shall not reduce the employee’s monthly net take home pay to an amount lower than Five Thousand Pesos (P5,OOO), after all authorized deductions: PROVIDED, FURTHER, That in the event total authorized deductions shall reduce net take home pay to less than Five Thousand Pesos (P5,OOO), authorized deductions under item (a) shall enjoy first preference, those under item (b) shall enjoy second preference, and so forth.”

This improvement in the Annual Budget of the country has led offices, agencies and instrumentalities in the government to issue their respective memorandum circulars for the smooth implementation of Section 37 of GAA. The Dept. of Education through Sec. Armin Luistro issued on January 25th this year DepEd Order No. 8, s. 2012 titled Implementation of P5,000.00 Net Take Home Pay for DEPED Personnel. Also early this January, Court Administrator Jose Midas Marquez of the Supreme Court issued OCA Circular No. 04-2012 regarding the implementation of same provision in the GAA.

In simplest terms, the provision prohibits a state worker to take on a loan unless, after the new deduction is made, his monthly net take home pay will be at least P5,000.00. Thus, conversely, if such loan will lower his net take home pay below the cap, such loan will not be allowed. Similarly, if the loan applicant’s monthly net take home pay is already below P5,000.00 his application will automatically be disapproved, unless, in case of a reloan, a lower loanable amount is indicated. In this way, the net take home pay will be adjusted to higher amount because the principal loan is reduced significantly from the previous amount.

While this poses a negative impact on the recourse that employees could take for very important and urgent expenses like payment of tuition and other school fees or of hospital bills or household utility bills, this presents an advantage to them. It is the national government’s martial-law-type of discipline upon government employees who have the habit of taking out loans as recourse to tide-over their basic needs but to apply for a salary-deduction loan. It is also perhaps the national government’s way of saying: you go one moonlighting (second or third job / sidelines) for additional income.

The only dismal thing, though, is that the employees were caught by surprise or without warning. Had they been informed earlier, they could have taken the necessary precautionary steps before the dearth happens and no more recourse is available. Because of the sudden implementation, the employees resort not anymore to GSIS or Pag-Ibig Fund (HMDF) or other office-based lending institutions for financial recourse but to the loan sharks.

By: Eileen Nazareno-Ballesteros

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