Drowned

Last week, President Duterte assured the nation’s schoolteachers he would work for an increase in their salaries.

In his first two years in office, Duterte substantially improved the pay levels of the police and the military. Teachers are expecting the same alleviation.

Improvement in teachers’ pay, however, cannot come dramatically and swiftly. There are fiscal constraints to contend with. Because of the size of our teaching force, any minor increment to their pay will add up to a very large sum government revenues might not be ready to support.

In the interim, government might try to help the teachers by tweaking policy to wean them away from the propensity to borrow money. It might require some amount of tough love on the part of government to prevent teachers from drowning in debt.

Shortly before the House of Representatives went on recess last March, Ako Bicol Rep. Rodel Batocabe delivered a privilege speech detailing the extent of the debt crisis afflicting our teachers. By his account, our teachers now owe private lending institutions about P300 billion in debt. DepEd confirms that estimate.

Of the total debt incurred by teachers, P177 billion are owed private lending institutions. Of this amount, P112.226 billion comes from loans granted by entities owned by the large universal banks through their rural and thrift bank subsidiaries. In nearly every region, teacher indebtedness is rising dramatically over the past few years after automatic pay deductions were allowed by policy.

The private lending institutions are, by nature, vultures. They see a soft target, they will lend as much as they can. The ability to collect on debt by means of salary deductions is simply too attractive for the banks to resist. It lowers risk and creates a large and fat market for the lenders. 

The teachers, by nature, are not experts in finance. With their meager pay, they are prone to borrowing. They continue to do so until they realize that interest and financing charges make the debt unsustainable.

The explosion in teachers’ debts may be traced to the issuance of Memorandum Order No. 228 dated October 14, 2011. This Memo allowed (even expanded) the entry of private lending institutions into the list of entities privileged to collect from the pay slips of teachers.

The previous administration, in what may seem to be an innocuous policy decision, opened to floodgates to explosive debt crisis that now threatens to wipe out the incomes of our teachers. This is a time bomb that could decimate our teaching force.

Perhaps someone short of financial sense thought that allowing the private lending institutions to participate in the salary deduction scheme would be helpful to the teachers. Now we have a situation where deductions are made even before salaries are earned. A large portion of our teaching force is in imminent danger of bankruptcy.

The situation requires some tough love. The salary deduction scheme must be abolished and private lending institutions banished from the list of entities that may participate in this. Some financial literacy program must be devised for the teachers and they should be actively dissuaded from borrowing beyond their means.

If DepEd could not administer the tough love, then Congress should step in and enforce the prudential elements of the Magna Carta for Public School Teachers with tougher legislation.

Probable Cause

The Home Development Mutual Fund (HDMF), also known as Pag-IBIG Fund, wrote to clarify some points made in a previous column (‘Delay’, April 10, 2018). The column cited the case of Delfin Lee to illustrate the “inordinate delay” plaguing judicial proceedings. Lee has been detained in a Pampanga jail since 2014 on charges of syndicated estafa, a non-bailable offense.

HDMF denies that agency ever admitted that Lee did not defraud it of P6.4 billion. It has not filed a separate collection suit because the offense is deemed subsumed under the criminal case now pending.

The January 12, 2012 decision of the Makati Trial Court ruled that it was the HDMF that is guilty of being in breach of its contract with Lee’s Globe Asiatique. That decision was upheld by the Court of Appeals. The Supreme Court, however, issued a restraining order against the ruling of the inferior courts while it reviewed the case. HDMF interprets the restraining order as a finding of probable cause. 

HDMF points out that proceedings at the level of the Pampanga trial court have been going on with regular bi-monthly hearings. The petitions for early resolution were filed by Lee before the Supreme Court and not before the trial court. Therefore, HDMF concludes, there is no case here for “inordinate delay.”

The implication here seems to be that if it is the Supreme Court that takes its time ruling on a case, the delay cannot be deemed “inordinate.” That must be the practice.

Although Delfin Lee’s syndicated estafa case is being heard at the Pampanga court, he seems to be pinning his hopes on the ruling of the Makati court that was affirmed by the Court of Appeals. It is this ruling that is the subject of a temporary restraining order issued by the Supreme Court. There is no benchmark, as far as the High Tribunal is concerned, on how temporary a temporary restraining order might be. 

True, the HDMF is supposed to exhaust all legal means to keep its case against Lee alive. This is why so many cases like this one end up in the Supreme Court. There, because of the sheer volume of cases needing the magistrates’ attention, they end up gathering much dust.