DOJ Opinion No. 040, s. 2002

DOJ OPINION NO. 040 , s. 2002 June 4, 2002 Secretary Vincent S. Perez Department of Energy Energy Center, Merritt Road Fort Bonifacio, Taguig Metro Manila Sir : Reference is made to your request for opinion on certain issues relating to conflict of interest. You state that East Asia Power Resources Corporation (EAPRC), a publicly listed corporation which is traded in the Philippine Stock Exchange, is the holding company for various independent power producers; that its major shareholders include El Paso Phils. Energy Co. Inc. (El Paso Energy) and HEIPC Phils. Holdings Co., Inc., with JMJ Holdings Corporation (JMJ) as one of its minority stockholders; that Mr. Jesus Alcordo used to be a stockholder of JMJ but on account of his appointment as President of the National Power Corporation (NPC), he fully divested himself of his equity in JMJ in favor of his children pursuant to the requirements of law; that some of the minority owners of EAPRC, including JMJ, recently filed a case against El Paso Energy for specific performance on the basis of the unfulfilled commitment of El Paso Energy to purchase the shares of all the minority ownership of EAPRC; and that because Mr. Alcordo was President and CEO of EAPRC when the commitment was purportedly made, it is almost certain that he would be asked to be a witness or give a deposition in favor of the minority shareholders. In the light of the foregoing developments, this Department's opinion is now sought on "whether being such a witness in trial or deposition, under compulsion of a court order, would violate any law, rule or regulation, particularly the conflicts of interest rules governing public officials." Opinion is also requested on whether Mr. Alcordo, as President of NPC, may be elected and receive compensation as director of private corporations not involved in the power or energy sectors, within or outside of the Philippines. With regret, this Department is unable to render opinion on the first issue. By established precedents, the Secretary of Justice has consistently desisted from expressing his views on matters that are speculative and anticipatory, 1 as well as issues that relate or involve the exercise of the constitutional prerogatives and powers of the courts. 2 To rule on your query would be an unwarranted intrusion into the exercise of judicial powers and functions pertaining to a separate and coordinate branch of the government and could subject this Department to criticism for violation of the independence of the judiciary. 3 Regarding the second issue, this Department, subject to the discussion below, resolves the same in the affirmative. Absent any constitutional proscription, a public officer may generally be allowed to hold an office or employment in a private enterprise. Holding this view, this Department issued Opinion No. 49, series of 1989, which, in part, reads: xxx xxx xxx "There is no provision in the Constitution that generally prohibits a public officer from holding any other office or employment or financial interest in any private business or enterprise. The prohibition in Section 7, Article IX-B of the 1987 Constitution enjoins any appointive or elective official from holding any other government office or position. It does not, therefore, proscribe the holding of a private office or position. There are specific provisions in the Constitution prohibiting the concurrent holding of positions in the government or in a private enterprise, such as those found in Article VI, Sections 13 and 14, in Article VII, Section 13, and in Article IX-A, Section 2, . . . xxx xxx xxx However, we have repeatedly ruled that the Anti-Graft Law (R.A. No. 3019, as amended) does not preclude any public officer from intervening in the management or control of, or from having any material or financial interest in, a private enterprise which does not have any transaction with the office held by him (Ops. No. 93, s. 1961; No. 103, s. 1962; No. 54, s. 1975; No. 53, s. 1977; No. 23, s. 1984). Likewise, mere financial or material interest on the part of the public officer in a business or enterprise which might, at some future time, transact business with his office is not prohibited. What is prohibited under the Anti-Graft Law is actual taking part or intervention in his official capacity with respect to a transaction in which he has 'financial or pecuniary interest' (Ops. No. 94, s. 1972; No. 51, s. 1979). This is also the kind of office or interest proscribed under the newly enacted 'Code of Conduct and Ethical Standards for Public Officials and Employees' (see Sec. 3[i] and Sec. 7, R.A. No. 6713). In this connection, 'financial or pecuniary interest' refers to interest of a personal or private character and the legal injunction, though apparently comprehensive and unqualified, should be confined to cases which might exhibit conflict between public and private interests (Op. No. 127, s. 1976). Relatedly, the interest of the wife has been held to be the interest of the husband in view of the prevailing law in our jurisdiction governing the property relations between husband and wife. Similarly, the interest of the unemancipated children is deemed to be the indirect interest of the parents in view of the usufructuary rights that the law vests in the parents over their property (Op. No. 208, s. 1960). In fine, the test which has been invariably applied to determine whether or not a violation of the Anti-Graft Law has been committed by a public officer is the existence or non-existence of a conflict between his private interest and his public duty. . . " Section 7(b)(1) of the Code of Conduct and Ethical Standards for Public Officials and Employees (RA No. 6713), however, provides the limitation on the employment in a private enterprise as it describes the nature of outside employment that is proscribed. It reads: SEC. 7. Prohibited Acts and Transactions . In addition to acts and omissions of public officials and employees now prescribed in the Constitution and existing laws, the following shall constitute prohibited acts and transactions of any public official and employee and are hereby declared to be unlawful: xxx xxx xxx (b) Outside employment and other activities related thereto . Public officials and employees during their incumbency shall not: (1) Own, control, manage or accept employment as officer, employee, consultant, counsel, broker, agent, trustee or nominee in any private enterprise regulated, supervised or licensed by their office unless expressly allowed by law. xxx xxx xxx The said provision expressly prohibits a public officer from being employed in a private enterprise regulated, supervised or licensed by his office, unless expressly allowed by law. Closely related to the above legal provision is Section 1, Rule IX of the Rules Implementing the Code of Conduct and Ethical Standards for Public Officials and Employees which enjoins an official or employee to avoid conflict of interest at all times. "Conflict of interest arises when a public official or employee is a member of a board, or officer, or a substantial stockholder of a private corporation or owner or has a substantial interest in a business, and the interest of such corporation or business, or his rights or duties therein, may be opposed to or affected by the faithful performance of official duty." 4 A public officer should then keep as a norm of conduct the avoidance of conflict of interest. Subject to the above limitations, therefore, a public officer, like Mr. Alcordo, may hold a position in a private corporation and receive compensation for the services rendered therefor. Receipt of such compensation will not violate the constitutional provision against double compensation because the prohibition of double compensation applies only when compensation is also paid for the other public position sans express legal authority. SaAcHE Very truly yours, (SGD.) HERNANDO B. PEREZ Secretary Footnotes 1. Secretary of Justice Opinion No. 58, series of 2000. 2. Secretary of Justice Opinion No. 133, series of 1994. 3. Secretary of Justice Opinions No. 161, series of 1973; No. 14, series of 1989. 4. Section 3 (i), RA No. 6713.