April 28, 2011

Hon. Rosalina L. Bistoyong
Undersecretary
Special Program on Agrarian Reform
Stakeholders' and Relations Office
Department of Agrarian Reform
Elliptical Road, Diliman, Quezon City

Madam:

This has reference to your request for our opinion on the powers of the Commission and Audit (COA) under Sections 35 and 36 of Presidential Decree No. 1445 1 and that of the Presidential Agrarian Reform Council (PARC) under Section 49 of Republic Act No. 6657, as amended by R.A. 9700, 2 to condone interests, penalties and surcharges on backloans of agricultural cooperatives.

You state that the Department of Agrarian Reform (DAR) was mandated by law to provide financial assistance to qualified proponents to enhance agricultural productivity and to promote small and medium scale industries in agrarian reform areas; and that one of the financing programs of DAR is the DAR-SPO/DBP Loan Window III (the "Program") where the Development Bank of the Philippines (DBP) was tapped by DAR as trustee and loan administrator of the Php400 Million fund for lending to Agrarian Reform Beneficiaries (ARBs).

You also state that the project was subsequently terminated whereby DBP resigned as trustee and loan administrator, which function thereof was accepted by DAR; and that DAR, through the Inter-Agency Task Force Collection (TFC), is now facilitating the collection of the loan amortizations.

You further state that due to financial difficulties, some of the beneficiaries of the Program have requested for the condonation of interests, penalties and surcharges; and that DAR sent the PARC a Memorandum requesting the latter to formulate policies for the condonation of said interests and/or penalties on the basis that Section 49 of R.A. 6657, as amended by R.A. 9700 provides DAR and PARC the mandate to provide support services appurtenant to credit financing programs.

On the other hand, COA issued its opinion that only COA has the power to condone interests, penalties and surcharges of backloans due to the government pursuant to P.D. No. 1445.

You wish to know the following:

(a)       Whether or not the PARC by virtue of Section 49 of R.A. 6657, as amended by R.A. 9700 may grant authority to DAR to condone interests, penalties and surcharges incurred due to default in the payment of amortization on loans granted to cooperatives under the DAR/DBP/SPO Window III Financing Program; and,

(b)       Which law shall prevail in this case, i.e., P.D. 1445, as amended or R.A. 6657, as amended by R.A. 9700?

With regret, this Department is constrained not to render the requested opinion.

The Secretary of Justice time and again desisted from passing upon issued that have already been the subject of official action by other officials/offices over whose actuations he possesses no revisory authority. 3 This rule arises not only from practical considerations but also out of due respect and deference for the competence and expertise of the office having primary jurisdiction to resolve the matter for its familiarity with the policy repercussions of the question as well as from logical recognition of the lawful exercise of an authority conferred by law. 4

If reconsideration or clarification of the aforementioned ruling/issuance is desired, the request should be addressed to the said office, which is in the best position to act thereon.

As a matter of principle, it is not advisable for the Department of Justice to provide, separate opinion or to set aside the conclusions reached by agencies, such as the Commission on Audit and PARC, which, by nature of their functions, have necessarily developed and expertise on the subject. The reason is because findings or conclusions of administrative bodies which have gained expertise in their fields because their jurisdiction is confined to specific matters, supported by substantial evidence, are generally respected and even given finality, in the absence of a showing of unfairness or arbitrariness on the part of the administrative body amounting to abuse of discretion or lack of jurisdiction. 5

Finally, the issue involves the use of government funds that will be dealt with ultimately by COA, the agency constitutionally empowered to "examine, audit and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities," and "promulgate accounting and auditing rules and regulations, including those for the prevention and disallowances of irregular, unnecessary, excessive, extravagant or unconscionable expenditures, or uses of government funds and properties." 6

Please be guided accordingly.

Very truly yours,

For the Secretary of Justice:

(SGD.) RICARDO V. PARAS III
Chief State Counsel

Footnotes

  1.       Government Auditing Code of the Philippines.

  2.       An Act Strengthening the Comprehensive Agrarian Reform Program (CARP), Extending the Acquisition and Distribution of all Agricultural Lands, instituting necessary reforms, amending for the purpose certain provisions of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988, as amended, and appropriating funds thereof.

  3.       Secretary of Justice Opinion Nos. 11, 10, s. 2011; Nos. 55, 47, 45, 42, 35, 27, 25, 14, 6, 4, s. 2010.

  4.       Secretary of Justice Opinion No. 5, s. 2011; Nos. 35, 31, 25, 14, 6, s. 2010.

  5.       Secretary of Justice Opinion No. 35, s. 2010; Nos. 68, 45, s. 2009; Nos. 49, 18, s. 2008; No. 4, 9, 16, 55, s. 2007; No. 81, s. 2000.

  6.       Sections 1 and 2, Article IX-D, 1987 Constitution.