Implementation of Automatic Payroll Deduction System by the Department of Education Regarding the Inclusion of Financing Companies in Said System

DOJ OPINION NO. 006, s. 2019 November 20, 2018 Undersecretary Victoria L. Medrana Catibog Office of the Undersecretary for Finance Disbursement and Accounting Department of Education DepEd Complex, Meralco Avenue Pasig City Dear Undersecretary Medrana Catibog : This refers to your request for legal opinion regarding the implementation of the Automatic Payroll Deduction System (APDS) by the Department of Education (DepEd), specifically with regard to the inclusion of financing companies in the said system. You state that the APDS is the mechanism adopted by the DepEd to give effect to provisions of law authorizing deductions from salaries of government employees for payment of their obligations to various entities, the most recent of which is Section 48 of the General Provisions of the General Appropriations Act of 2018 (GAA 2018). It is your opinion, based on Section 48 of the General Provisions of the GAA 2018, that financing companies derive no authority for inclusion in the APDS Program since they are not among the listed entities, which are authorized to have their loan payment deducted from the salaries and benefits of government employees. You also state that ten years ago, this Department issued DOJ Opinion No. 36, series of 2008 dated 28 May 2008 addressed to Mr. Riche L. Tiblani of Baterina Casais Lozada & Tiblani, which ruled that "there is no reason to exclude financing companies from the APDS since they are duly qualified to participate in said program by virtue of the Finance Company Act, as amended, a special law which n specifically authorizes it to make deductions on the salaries of their consumers. As previously discussed above, such act is merely incidental in the performance of financing companies' activities and may not be considered illegal or unauthorized by the DepEd" ; and that the said Opinion was the basis of the DepEd for the accreditation of financing companies under the APDS in the previous years. You further state that Opinion No. 36 reversed Opinion No. 6, series of 2008, which was issued three months earlier or on 4 February 2008, addressed to former DepEd Undersecretary Teodosio C. Sangil, which opined that "financing corporations x x x cannot be included in the list of 'allowed entities' under the DepEd APDS because of the absence of any law or provision of law that allows automatic payroll deduction." Thus, you are seeking an updated opinion from this Department on whether the DepEd can legally accredit financing companies under the APDS Program, and correspondingly make deductions from the salaries of DepEd personnel and remit the same in their favor. After an examination of relevant laws, this Department is of the opinion that the DepEd has no authority to accredit the financing companies under its APDS Program for the following reasons: Deduction from salaries of government employees in favor of financing companies is not allowed under EO No. 292 in relation to the G A A of 2018 First, as compensation for services rendered, the government employees' salaries and benefits cannot be decreased, unless it is expressly authorized by law. Section 66, Title I (A) of Executive Order (EO) No. 292, also known as the "Administrative Code of 1987," as amended, prohibits deductions from the wages of government employees. Section 66. Liability of Disbursing Officer. Except as may otherwise be provided by law, it shall be unlawful of a treasurer or other fiscal officer to draw or retain from the salary due an officer or employee, any amount for contribution or payment of obligations other than those due the government or its instrumentalities. The contributions or payments due to the government or its instrumentalities are the only allowable deductions from the government employees' wages. The above-quoted provision, however, admits of an exception. The phrase "except as may otherwise be provided by law" indicates that loan payments or contributions to private entities may be allowed as a deduction from the salaries of government employees provided that there is an express provision of law authorizing such deductions. In particular, Section 48 of the General Provisions of Republic Act (RA) No. 10964, otherwise known as the "General Appropriations Act of 2018," operates as an exception to Section 66, Title I (A) of EO No. 292, as amended. It reads: Section 48. Authorized Deductions. Deductions from salaries and other benefits accruing to any government employee, chargeable against the appropriations for Personnel Services, may be allowed for the payment of an individual employee's contributions or obligations due to the following, and in the order of preference stated below: (a) The BIR, PHILHEALTH, GSIS and HDMF; (b) Non-stock savings and loan associations and mutual benefit associations duly operating under existing laws and cooperatives which are managed by and/or for the benefit of government employees; (c) Associations or provident funds organized and managed by government employees for their benefit and welfare; (d) GFIs authorized by law and accredited by appropriate government regulating bodies to engage in lending; (e) Licensed insurance companies; and (f) Thrift banks and rural banks accredited by BSP. In no case shall be foregoing deductions reduce the employee's monthly net take home pay to an amount lower than Five Thousand Pesos (5,000). Financing companies, as defined under Section 3 (a) of Republic Act (RA) No. 8556, otherwise known as the "Financing Company Act of 1998," as amended, are corporations, except banks, investment houses, savings and loan associations, insurance companies, cooperatives, and other financial institutions organized or operating under other special laws, which are primarily organized for the purpose of extending credit facilities to consumers and to industrial, commercial, or agricultural enterprises, by direct lending or by discounting or factoring commercial papers or accounts receivable, or by buying and selling contracts, leases, chattel mortgages, or other evidences of indebtedness, or by financial leasing of movable as well as immovable property. Under the above definition, it is very evident that financing companies are not among those private entities specifically exempted under Section 48 of the General Appropriations Act of 2018, by virtue of which authorized deductions from salaries may be allowed. Also, when Section 48, quoted above, enumerated the exceptions to the application of the general prohibition against salary deduction, the exceptions should be construed as exclusive. The obvious import of the law is to limit the exemption to the enumerated private companies whose loan payments or contributions are authorized to be deducted from the income and benefits of government employees. It is a settled rule of statutory construction that the express mention of one person, thing, act, or consequence excludes all others. This rule is expressed in the familiar maxim expressio unius est exclusio alterius . Where a statute, by its terms, is expressly limited to certain matters, it may not, by interpretation or construction, be extended to others. The rule proceeds from the premise that the legislature would not have made specified enumerations in a statute had the intention been not to restrict its meaning and to confine its terms to those expressly mentioned. 1 Applying the legal maxim expressio unius est exclusio alterius , the express mention of: (1) savings and loans associations; (2) mutual benefit associations; (3) associations or provident funds; (4) government financial institutions; (5) insurance companies; and (6) thrift banks and rural banks, excluded all the other entities from the authorized payroll deductions of government employees. Had it been the intention of the legislature to cover financing companies in the exemption, then, it would have specifically mentioned it in the enumeration. Financing institutions have no mandate to participate in the APDS under R A 85 56 Second, an examination of the enabling law of financing companies likewise reveals the lack of a specific mandate that would allow them to participate in the salary deduction scheme of the DepEd. Section 9 (e) of RA No. 8556, 2 as amended, provides: Section 9. Rights and Powers . Financing companies shall have the following powers, in addition to those granted by this Act and by other laws: xxx xxx xxx (e) Participate in special loan or credit programs sponsored by or made available through government financial institutions; xxx xxx xxx Nothing in this Section shall be construed as precluding a financing company from performing such services or exercising such powers as may be granted by the Bangko Sentral ng Pilipinas or the Securities and Exchange Commission or as may be incidental to its activities as a corporation. Section 9 (e) of RA No. 8556 does not permit financing companies to extend loans to government employees and receive payment through payroll deductions. Instead, it empowers the financing companies to participate in special loan or credit programs sponsored by or made available through government financial institutions (GFIs). As pointed out by the DepEd, its APDS is neither a special loan nor a credit program sponsored by or made available through GFIs. It is a mere mechanism to implement the authorized deduction from the salaries of DepEd personnel. The Ma gna Ca rta of Public School Teachers has no application Thirdly, Section 21 or RA No. 4670 or the "Magna Carta for Public School Teachers" finds no application to the instant request. It reads: Sec. 21. Deductions Prohibited . No person shall make any deduction whatsoever from the salaries of teachers except under specific authority of law authorizing such deductions: Provided, however , that upon written authority executed by the teacher concerned, (1) lawful dues and fees owing to the Philippine Public School Teachers Association, and (2) premiums properly due on insurance policies, shall be considered deductible. As highlighted by the DepEd, its APDS is not only limited to the authorized deductions of its teaching personnel but also covers all DepEd employees. Besides, the allowable salary deductions for teachers contemplated in the foregoing provision only apply: (1) when there is a specific authority of law; or (2) upon the execution of a written authority by the concerned teachers for the payment of dues and to the Philippine Public School Teachers Associations and premiums to insurance companies. Thus, the prohibition against salary deductions under RA No. 4670 still applies to financing companies. In conclusion, it follows inevitably that in the absence of a specific authority of law that allows payroll deductions, the DepEd cannot act as collection agent for the financing companies under its APDS. Verily, the DepEd cannot make deductions from the salaries and benefits of DepEd personnel and remit the deductions to the financing companies. As a final note, government offices are not compelled to discharge duties that primarily redound to the benefit of private companies, in the absence of an express provision of law, since the execution of these tasks may affect the performance of their regular functions. Consequently, this supersedes Opinion No. 36, series of 2008. Very truly yours, (SGD.) MENARDO I. GUEVARRA Secretary Footnotes 1. Lung Center of the Philippines v. Quezon City , G.R. No. 144104, June 29, 2004. 2. AN ACT AMENDING REPUBLIC ACT NO. 5980, AS AMENDED, OTHERWISE KNOWN AS THE FINANCING COMPANY ACT. n Note from the Publisher: Written as "a special law which previously discussed above" in the official document.