DOJ Opinion No. 012, s. 1986

DOJ OPINION NO. 012 , s. 1986 January 23, 1986 Mr. Dennis S. Deveza Technical Assistant to the Commissioner Bureau of Internal Revenue Quezon City Sir : With reference to BIR's computerization project, involving the purchase of computer equipment from IBM costing US$18 million, 85% of the project cost of which will be financed by a loan from Bankers Trust Company, the question has been raised as to whether the proposed loan is governed by the provisions of R.A. 4860, as amended. It appears that the issue being actually raised is whether R.A. 4860 may serve as legal authority for securing the said loan. The question may be answered affirmatively. Section 1 (A) of the subject statute reads insofar as pertinent: "Section 1. The President of the Philippines is hereby authorized, in behalf of the Republic of the Philippines, to contract such loans, credits, including supplier's credit deferred payment arrangements, and to enter into and conclude bilateral agreements, involving other forms of official assistance such as grants and commodity credit arrangements or indebtedness as may be necessary and upon such terms and conditions as may be agreed upon not inconsistent with this Act, with Governments of foreign countries with whom the Philippines are members of the United Nations, their agencies, instrumentalities or financial institutions or with reputable international organizations or non-governmental national or international lending institutions or deferred payment arrangements to enable the government of the Republic of the Philippines to: (A) Undertake, through any government office, agency or instrumentality, or government-owned or controlled corporation industrial, agricultural or other economic and social development projects and feasibility studies, which are authorized by law including but not limited to those enumerated in "A" including lists 1, 2, 3 to 4 hereof, which are made integral parts of the Act and such projects which may from time to time be recommended by the National Economic and Development Authority and approved by the President of the Philippines." (Emphasis supplied.) prcd In previous opinions of this Ministry, the foregoing provision of law has been interpreted as authorizing the President to incur a foreign loan for the purchase of equipment, such as fire trucks and other firefighting aids (Opn. No. 113, s. 1983), air navigational facilities (Opn. No. 143, s. 1974) and a training vessel (Opn. No. 100, s. 1983). Pursuant to said provision the burden of determining whether a project is eligible for financing with a foreign loan obtained under the said law falls upon the National Economic and Development Authority, in cases where such project does not belong to any of those specifically mentioned in Annex "A" thereof. In connection with the observation that Bankers Trust Company, being privately-owned, is not qualified as a lender under said law, it is believed that said banking institution undoubtedly falls within the purview of the phrase "non-governmental national or international lending institutions" as used in the quoted provision. In fact, precedents show that the fund source is either governmental or private in character. Very truly yours, (SGD.) REYNATO S. PUNO Deputy Minister