MANILA, Philippines - State-run Home Mutual Development Fund, more commonly known as Pag-IBIG Fund, was able to lend out P32 billion worth of housing loans in the first eight months of the year, its top executive said.
In an interview, Pag-IBIG chief executive Darlene Marie Berberabe said the total loan amount is comparable to the 2007 level, pointing out that it is difficult to compare the figures from 2008 to 2010 due to the controversy surrounding Pag-IBIG’s lending to real estate developer Globe Asiatique.
But this year, Berberabe said despite stricter rules and processes in their lending, the agency expects to still hit P42 billion worth of housing loans.
For multi-purpose loans, Berberabe said for the first seven months they were able to increase lending by 35 percent to P24 billion compared to the figure in the same period a year ago.
Meanwhile, Pag-IBIG has filed a motion for reconsideration before the Bureau of Internal Revenue (BIR) regarding its decision to cancel tax exemptions given to voluntary contributions of Pag-IBIG members.
Berberabe said Pag-IBIG offers an investment package to its members encouraging higher voluntary contribution which is non-taxable and government guaranteed.
Because of its tax-exempt feature, Berberabe said the fund for voluntary contribution has reached P1 billion and is expected to reach as high as P1.5 billion by the end of the year. However, a recent decision of the BIR has repealed the tax-exempt characteristic of the fund.
In a letter to BIR Commissioner Kim Henares, Berberabe said Revenue Memorandum Circular (RMC) 27-2011 which cancelled the tax exemption contravenes the policy and purpose of Pag-IBIG.
“While Pag-IBIG recognizes that the collection of taxes is of paramount importance, the imposition and collection of such taxes should not be to the detriment of other policies and programs of the government,” she stated.
Pag-IBIG has likewise filed a motion for reconsideration to the BIR last Monday. Pointing out that the tax exemption granted to the contributions is part of the design to encourage additional savings and contributions from its members.
The fund insisted that not taxing additional contributions does not reflect any abuse on the part of Pag-IBIG because through them, the government has been able to effectively use private resources to address the housing backlog.
The current housing backlog is estimated at 3.6 million units nationwide.
Pag-IBIG explained that the government borrows money from Filipino workers and the interest on the borrowing is guaranteed and paid through the employers’ counterpart. The borrowed money and the interest, plus accrued dividends, are then re-lent by the government through the Pag-IBIG Fund to individual home loan borrowers.
Under this system, the fund has become the biggest single source of home financing in the country. Since the fund is used to address the housing backlog, there is no abuse of the grant of tax exemption because both the mandatory and voluntary contribution serves as the government’s principal source of funds to finance the housing requirement.