DOJ Opinion No. 052, s. 1991

DOJ OPINION NO. 052 , s. 1991 April 2, 1991 Mr. Felix C. de Veyra Administrator Leyte Sab-a Basin Development Authority Government Center Palo, Leyte Sir : This refers to your request for opinion, which was endorsed to this Department by the Office of the Government Corporate Counsel, as to whether the President of the Philippines may, by Memorandum or Administrative Order, lawfully approve and/or order the abolition of: 1. A Corporation created under the Corporation Code of the Philippines and registered with the Securities and Exchange Commission, or 2. A government-owned and controlled corporation created under a Presidential Decree. It appears that the Leyte Sab-a Basin Development Authority (LSBDA) is a government-owned corporation which was created under Presidential Decree No. 625 on December 26, 1974 principally to integrate Government and private sector efforts and resources for a planned development and balanced growth of the Sab-a Basin the Province of Leyte on a self- sustaining basis. All the subsidiaries of LSBDA, on the other hand, were created under the Corporation Code of the Philippines and registered with the Securities and Exchange Commission (SEC). prcd You state that on August 11, 1987 and November 20, 1987, the Department of Budget and Management (DBM) and the Asset Privatization Trust (APT), respectively, formally informed the Leyte Sab-a Basin Development Authority (LSBDA) of the approval by the President of the Philippines of the privatization of two (2) of its subsidiaries, namely; 1) Basin Dredging and Development Corporation (BDDC) and 2) East Visayas Agricultural Projects, Inc. (EVAPI); that on June 10, 1988, DBM advised LSBDA of the dissolution of five (5) of its subsidiary corporations, namely: 1) Basin Fiberglass Corporation, 2) East Visayas Transport Corporation, 3) Leyte Woods Exports Corporation, 4) Sab-a Feeds Enterprises, Inc., and 5) Philippine Rural Development and Services Corporation (PRUDASCO), in accordance with Administrative Order No. 57 dated February 12, 1988 and Presidential Memorandum dated May 10, 1988; and that on June 30, 1989, the President approved the abolition of LSBDA itself and another subsidiary company, the Eastern Visayas Resources Trading Corporation (EVRTC), upon the recommendation of the DBM. You further stated that LSBDA requested for a reconsideration of the above-cited presidential actions on the ground that "there's a need to maintain the development programs and services of LSBDA and its subsidiaries as they appropriately exemplify government concern for economic development in the countryside"; and that you proposed the consolidation of PRUDASCO, EVAPI, EVRTC and LSBDA with the latter (LSBDA) as the surviving entity; that however, instead of an answer to your request for reconsideration, you received a copy of an Implementation Plan covering the abolition of LSBDA as reviewed and developed by DBM; and that you also received a letter dated March 26, 1990 from the Presidential Management Staff enclosing DBM'S memorandum to Secretary Macaraig stating their position on your said request for reconsideration. You contend that LSBDA cannot be abolished by a mere Presidential Memorandum and its abolition can only be effected by the repeal of P.D. No. 625 by Congress which had already convened at the time of the issuance of the above-cited Memorandum dated June 30, 1988 by the President. We are constrained to refrain from expressing our views on the matter since it involves the exercise of Presidential powers which no executive department, or official thereof, should question or review. Under our system of government, the President is the head of the Executive Department and the Members of the Cabinet and other executive officers are only her subalterns. As a matter of courtesy and official propriety, the Secretary of Justice, as a subaltern of the President, does not pass upon the actuations and official actions of the Office of the President unless specifically directed by the President herself or upon her authority. Nonetheless, for your information and guidance, we invite attention to the pertinent rulings of this Department on related issues as embodied in its Opinions No. 210, s. 1988 and No. 43, s. 1990, to wit: "We subscribe to the view that the President may continue to exercise the power to terminate the Corporate existence of government-owned or controlled corporations identified and approved for privatization or divestment after the convening power of Congress. The reason is that this power is not based upon her lawmaking authority under Section 6 Article XVIII of the 1978 Constitution, but is founded a lawmaking authority delegated to hereunder Section 22 of Proclamation No. 50, above-quoted. Expressed, otherwise, the subject authority shall be exercised by the President, not as repository of lawmaking powers, but as delegate of the legislative body. Proclamation No. 50 was issued by the President, as lawmaker, under the Freedom Constitution. It is noted that Congress has neither amended, much less revoked, Proclamation No. 50. "Summarizing, we submit that the President may, in the implementation of the privatization program of the government, amend or repeal the charters of government-owned or controlled corporations pursuant to her delegated legislative authority under Section 22 of Proclamation No, 50, which remains to be operative until it is amended, repealed or revoked by Congress (Sec. 3, Art. XVIII, Constitution).: (Op. No,. 210, s. 1988) prcd "Section 22 envisions a limited grant of legislative power (i.e. to amend charters of GOCCs) to the President and the parameters of such power are: (1) that it shall be exercised in the implementation of the program of privatization of GOCCs (2) that the purpose is to terminate the corporate existence of GOCCs; (3) that the GOCCs shall have been identified within six months from date of issuance of the Proclamation; and (4) that the authority shall be exercised within five years from the date of the Proclamation and in no case beyond the lifetime of the Committee on Privatization (COP) or the Asset Privatization Trust (APT). "Privatization means disposition or divestment to the private sector of certain GOCCs. Hence, where the purpose is not to privatize, which brings about the consequent effect of terminating the corporate existence of GOCCs, the power to amend charters of GOCCs under Section 22, to our mind, cannot be exercised by the President. Indeed, the disposition actions which mentioned in the provision, i e., merger or regularization into a regular line agency, all contemplate actions which mean termination of the corporate status of affected GOCCs." (Op. No. 43, s. 1990) Attached are copies of the aforecited opinions for your ready reference. Very truly yours, (SGD.) SILVESTRE H. BELLO III Acting Secretary