DOJ Opinion No. 014, s. 2003

DOJ OPINION NO. 014 , s. 2003 March 14, 2003 Executive Secretary Alberto G. Romulo Malacaang, Manila Sir : This refers to your request for legal opinion clarifying whether the Executive Secretary may execute, on behalf of the President, a Special Authority or Full Powers authorizing other public officials to enter into loan contracts and loan guarantees for the Republic of the Philippines. It is stated that the request for legal opinion is based on the issue of whether the Chief Executive can/may delegate to the Executive Secretary special authority to authorize the Secretary of Finance to enter into loan contracts or loan guarantees for the government. Section 20, Article VII of the Constitution provides that: "Sec. 20. The President may contract or guarantee foreign loans on behalf of the Republic of the Philippines with the prior concurrence of the Monetary Board, and subject to such limitations as may be provided by law." (Emphasis supplied) Likewise, Sections 1 and 3 of Republic Act No. 4860 state as follows: "Sec. 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 has diplomatic or trade relations or which are members of the United Nations or with reputable international organizations or non-governmental national or international lending institutions or firms extending supplier's credit or deferred payment arrangements ...."(Emphasis supplied) "Sec. 3. The President of the Philippines ,upon recommendation of the Secretary of Finance, the Monetary Board of the Central Bank of the Philippines and the National Economic Development Authority, is further authorized, in behalf of the Republic of the Philippines, to guarantee such loans, credits or indebtedness as may be necessary and upon such terms and conditions, not inconsistent with this Act, as may be agreed upon with the governments of foreign countries with whom the Philippines has diplomatic or trade relations or which 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, loans, credits or indebtedness extended directly to, or bonds, debentures, securities or other evidences of indebtedness for sale in international markets issued by: (A) Corporations-owned or controlled by the Government of the Philippines .... (B) Government-owned or controlled financial institutions ...." (Emphasis supplied) Pursuant to the above-quoted constitutional and statutory provisions, it is our opinion that since it is the President of the Philippines who is expressly authorized to contract or guarantee foreign loans, she cannot delegate to the Executive Secretary the execution of a Special Authority or Full Powers authorizing other public officials to enter into loan contracts and guarantees for the Republic of the Philippines. The above-quoted provisions are explicit rules that are made applicable by the Constitution and the statute to foreign loans. While the President of the Philippines is the official authorized by law to contract or guarantee foreign loans, she, being the official expressly authorized to contract or guarantee foreign loans, not her Executive Secretary, may, by issuing Full Powers or Special Authority, designate a representative to conclude, sign, execute and deliver, for and on behalf of the Republic of the Philippines, the loan agreement/guarantee agreement and any deed or other document of whatsoever kind and nature which may be necessary or proper for the purpose of executing or implementing the agreement; vest said representative with full and all manner of power and authority for the purpose; and grant him with full power and authority to do and perform every act and thing which may be requisite and necessary to be done for the accomplishment of the special power therein granted. Moreover, under Section 27, Chapter 9, Title III, Book III, of the Administrative Code of 1987 (E.O. No. 292), it is not one of the functions of the Executive Secretary to execute, on behalf of the President, Special Authority or Full Powers authorizing public officials to enter into loan contracts or guarantee agreements for the Republic of the Philippines. Neither can it be inferred from the functions enumerated in the said section of the Administrative Code. Furthermore, under Article 1868 of the Civil Code, it is provided that "Art. 1868. By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter ." (Emphasis supplied) By virtue of this provision, it is clear, that the representative must have the consent of the principal. Hence, the President's representative must derive his authority directly from her. To summarize, we are of the opinion that since it is the President of the Philippines who is expressly authorized to contract or guarantee foreign loans, the authority to execute a Special Authority or Full Powers authorizing other public officials to enter into such contracts and guarantees cannot be delegated to the Executive Secretary. Any such authority must come directly from the President herself. HcACST Very truly yours, (SGD.) SIMEON A. DATUMANONG Secretary