Credit phaseout under EO 138 does not include Quedancor, says OGCC

The phaseout of direct credit programs (DCPs) to the agriculture sector as mandated by Executive Order 138 issued by former President Joseph Estrada in August 1999 will not apply to the Quedan Rural Credit and Guarantee Corp. (Quedancor).

This is the opinion of the Office of the Government Corporate Counsel (OGCC), penned by Government Corporate Counsel Amado Valdez, in response to a query raised by Agriculture Secretary Leonardo Q. Montemayor, concurrent Quedancor chairman, on whether the company is covered by said EO. The opinion was coursed through Quedancor president & CEO Nelson C. Buenaflor.

Buenaflor relayed the OGCC opinion to Montemayor as he reaffirmed his company’s commitment to "help spur the growth and development of agriculture and fisheries by making accessible rural finance and investments in the countryside."

The credit phaseout, scheduled for February 2002, is stipulated by EO138 which "prohibits government non-financial agencies (GNFAs) and government owned and controlled corporations (GOCCs) from engaging or providing credit services directly or indirectly to various sectors and lodged the authority to make credit decisions with the government financial institutions (GFIs)."

"It is our well-considered opinion that EO138 did not repeal, abrogate nor supersede Republic Act 7393 (reorganizing the Quedancor). . . as EO 138 is a mere administrative issuance or order and prevailing jurisprudence is to the effect that in case of conflict between a statute and an administrative order, the former must prevail," the OGCC opinion stated.

Moreover, "granting that EO138 is a law, it should be noted that RA 7393 is a special law that involves the operations of Quedancor, while that of EO 138 is a general statute that pertains to all GNFs and GOCCs extending credit services to various sectors. In case of conflict between a special law and a general statute, the special law prevails," the OGCC said citing three Supreme Court rulings.

It added: "repeal of special laws by implication is not favored and frowned upon as there must be a clear and manifest declaration to repeal or alter the law. Such is wanting in the case at point."

Lastly, it said, the GOCCs contemplated in EO138 which are prohibited in engaging/providing credit services directly or indirectly to various clientele, clearly refers to GOCCs which are not government financing institutions.

"Considering that Quedancor is a GFI, albeit, it is classified as a non bank government financial institution, it is not covered by the prohibitions prescribed under EO138," the OGCC ruled.

It concluded: "It is the well-considered opinion of this office (OGCC) that Quedancor may continue to engage in its lending and guarantee operations as mandated by its charter."