DOJ Opinion No. 016, s. 1999

DOJ OPINION NO. 016 , s. 1999 February 2, 1999 Mr. Jose Luis U. Yulo, Jr. President and CEO Philippine Stock Exchange, Inc. Phil. Stock Exchange Centre, Exchange Road Ortigas Center, Pasig City Sir : The opinion of this Department is requested on the correct interpretation of Section 3(c) of the Foreign Investments Act of 1991 (R.A. No. 7042), as amended, which reads, to wit: "SECTION 3. Definitions . As used in this Act: xxx xxx xxx "c) the term 'foreign investment' shall mean an equity investment made by a non-Philippine national in the form of foreign exchange and/or other assets actually transferred to the Philippines and duly registered with the Central Bank (now Bangko Sentral ng Pilipinas) which shall assess and appraise the value of such assets other than foreign exchange." (R.A. 7042, as amended) (emphasis supplied) The request, it appears, was precipitated by a conflict of views between the Philippine Stock Exchange (PSE) and the Bangko Sentral ng Pilipinas (BSP), on one hand, and the Board of Investments (BOI), on the other, on the meaning and application of the above-quoted legal provision vis-a-vis the securities borrowing and lending (SBL) and short selling transactions which the PSE intends to introduce in the country. dctai While both the PSE and the BSP believe that the said definition does not contemplate SBL and short selling transactions as to require prior registration with the BSP, the BOI is of the view that "the aforesaid definition is clear and unequivocal: the twin requirements of actual transfer of assets and registration with the BSP are indispensable before a foreign investment can be said to be a 'foreign investment' within the meaning of Rep. Act No. 7042, as amended by Rep. Act No. 8179." We deeply regret our inability to render opinion on the instant request. First : As rightfully stated, the instant query would involve an interpretation and/or examination of the provisions of R.A. No. 7042, as amended. However, the interpretation and application of the provisions of the said law properly fall within the jurisdiction of the National Economic Development Authority (NEDA) which, in consultation with the Board of Investments (BOI), the Securities and Exchange Commission (SEC), and other concerned government agencies, is mandated to issue the rules and regulations necessary for the implementation of the said law (Sec. 13, R.A. No. 7042; Sec. 7, R.A. No. 8179). Pursuant to settled policy and precedents, the Secretary of Justice does not rule on issues which fall within the primary jurisdiction of another office or agency, in this case, the NEDA, over which rulings or actuations this Department exercises no revisory authority, unless the request comes from such office or agency (Sec. of Justice Opn. No. 3, current series; Nos. 16, 44 and 45, s. 1998). cdll Moreover, to rule on your request would be tantamount to passing upon or reviewing the position/opinion advanced by the BOI, an agency primarily involved in investments, and the BSP, an agency principally involved in the implementation of the law in issue. The Secretary of Justice, however, has time and again desisted from passing upon issues which have already been the subject of official action by other offices/officials over whose actuations he possesses no revisory authority (id., No. 150, s. 1998, citing cases). Nonetheless, for your information and guidance only, your attention is invited to the provision of Section 1, Rule I of the Implementing Rules and Regulations of R.A. No. 7042, as amended, which pertinently provides, to wit: "SECTION 1. Definition of Terms . For purposes of this Rules and Regulations: xxx xxx xxx "e. Foreign Investment shall mean an equity investment made by a non-Philippine national; . . . Provided, further, that only foreign investments in the form of foreign exchange and/or other assets actually transferred to the Philippines and duly registered with the Central Bank (CB) and profits derived therefrom can be repatriated ; cdpr xxx xxx xxx (Rule I, RR of R.A. No. 7042, as amended ) (emphasis ours). Very truly yours, (SGD.) JUSTICE SERAFIN R. CUEVAS Secretary