DOJ Opinion No. 039, s. 1994

DOJ OPINION NO. 039 , s. 1994 March 25, 1994 Administrator Renato C. Valencia Social Security System SSS Bldg., East Avenue, Diliman Quezon City Sir : This refers to your query on whether your proposed program of paying SSS pensioners living abroad in dollars will not violate any existing statute, particularly, the provisions of Republic Act No. 529, otherwise known as the Uniform Currency Law. LexLib You state that the aforesaid program will "ensure the safe and speedy delivery of the monthly pensions of subject pensioners thru their perspective foreign banks"; and that although there appears no legal impediment to the implementation of said scheme, as far as pertinent rules and regulations of the Bangko Sentral Ng Pilipinas is concerned, the Director of the Foreign Exchange Department of said bank has suggested that you first seek this Department's "legal stand" on the matter. Hence, the present query. Section 1 of R.A. No. 529, ( as amended by R.A. No. 9100), insofar as pertinent provides: "SECTION 1. Every provision contained in, or made with respect to, any domestic obligation to wit, any obligation contracted in the Philippines which provisions purports to give the obligee the right to require payment in gold or in a particular kind of coin or currency or in an amount of money of the Philippines measured thereby, be as it is hereby declared against public policy, and null, void, and of no effect, and such no provision shall be contained in, or made with respect to, any obligation hereafter incurred. . . . With the exception of the cases enumerated in items (a), (b), (c) and (d) in the foregoing provisions, in which cases the terms of the parties agreement shall apply, every other domestic obligation heretofore or hereafter incurred, whether or not any such provisions as to payments is contained therein or made with respect thereto, shall be discharged upon payment in any coin or currency which at the time of payment is legal tender for public and private debts: . . . (Emphasis ours) The forgoing provision of law nullifies and renders ineffective any provision with respect to domestic obligation which purports to require an obligee to pay in dollars, gold or in a particular kind of coin and currency other than that which is legal tender in the Philippines at the time of payment. Put otherwise, the party to a locally-executed contract in whose favor a monetary obligation is stipulated cannot legally demand that payment thereof should be made in foreign exchange or in any currency other than Philippine currency. Close examination of the above-quoted statutory provision shows that the only obligations/transactions arising from contracts are thereby covered. The Supreme Court has in a number of cases affirmed the rule that the Uniform Currency Act applies only to obligations or transactions founded from contracts (Kalalo vs. Luz, 34 SCRA 337; Pone vs. Court of Appeals, 90 SCRA 533; and Arrieta vs. National Rice and Corn Corp., 10 SCRA 79; General Insurance & Surety Corporation vs. Union Insurance Society of Canton Ltd., 179 SCRA 530). In the instant case, however, the obligation of the SSS to pay its pensioners is not contractual in nature; it is created by law. Under Republic Act No. 1161, as amended, the SSS was created "to provide covered employees and their families protection against the hazards of disability, sickness, old age and death with a view to promoting their well-being in the spirit or social justice" (Sec. 2). Section 8[f][g] & [i] thereof govern the computation of SSS benefits, while Section 9 enumerates the persons who are entitled to such benefits. Thus, no agreement is required to enable a beneficiary to receive his/her SSS pension. Moreover, it is noted from the abovequoted section of R.A. No. 529 that the obligations covered thereby refer to those where the obligee is given the right to require that payment be made in foreign right to require that payment be made in foreign exchange. This is clear from the following Congressional deliberations on the subject matter law, to wit: "Mr. ALLAS. My question is whether this measure will affect our tariff laws or not. Because if we consider the fact that this will be the Government's declared policy, how will this bill affect the payments of tariff duties? This bill prohibits the entering into a contract which stipulates that the payment should be made in dollars, not in peso. Now, if we approve the present bill, the importer will say, "I can pay you in pesos because you have passed a new law which provides that the contractor is not obliged to pay his obligation in dollars." In other words, the use of the dollar is prohibited or banned. Mr. PELAEZ. I should like to inform the distinguished Chairman of the Committee on Ways and Means that this bill will not affect the cause. This refers only to provisions in the contract which give the obligee, the one in whose favor the obligation is made, to require the payment is dollars or in other currency. Now we say, "you cannot have that option." Insofar as the payment of tariff duties in dollars is concerned, that is not covered by this contracts and the idea there is to keep the value of the peso, so that there should be no contracts which would require the obligor to pay more in the future in order to keep the stability of the peso; but, certainly, you can pay your tariff in dollars." (Congressional Record, House of Representatives Proceedings and Debates, Vol. I, Part II, April 22-May 18, 1950, 1st Regular Session, p. 1709). (Emphasis supplied) Thus, to bring a commercial transaction within the ambit of the Uniform Currency Act, it is the obligee who should require payment in foreign currency. This is not so under the proposed scheme because the SSS, which us the obligator in this case, motu proprio obligates itself to pay the pensioners, the obligees herein in dollars. Accordingly, we are of the opinion and so hold that the SSS program of allowing its pensioners, who are now permanently living abroad, to be paid in dollars does not violate the Uniform Currency Act. Cdpr Very truly yours, (SGD.) FRANKLIN M. DRILON Secretary