DOJ Opinion No. 070, s. 1983

DOJ OPINION NO. 070 , s. 1983 2nd Indorsement May 2, 1983 Respectfully returned to Mr. J. Roberto L. Abling, and Livelihood Development Group, Kilusang Kabuhayan at Kaunlaran, Pasig, Metro Manila, with comments and recommendations as requested on the within letter from Mr. Cenon L. Dimacali, DBP Executive Officer referring for advisement Opinion No. 5 series of 1983 of the Chief Legal Counsel, Development Bank of the Philippines (DBP) regarding the registration with the Securities and Exchange Commission (SEC) of associations registered with the Bureau of Cooperatives Development. The said opinion of the DBP Legal Counsel dealt with the following queries: 1. Whether cooperatives with KKK loans to be funded by the DBP which are registered with the Bureau of Cooperatives Development are still required to be registered with the SEC; and 2. Whether a mere certification from the SEC that the association has filed an application for registration suffices for acceptance of KKK endorsed projects. The above questions appear to have arisen in connection with requirement that applicants for DBP loans must have juridical personality. We share the view of the DBP's Chief Legal Counsel that cooperatives already registered with the Bureau of Cooperatives Development in connection with their application for KKK loans from DBP, have to register with the SEC for them to acquire corporate existence and juridical personality; and that a mere certification from the SEC that the association has filed an application for registration will not suffice for acceptance of KKK endorsed projects. prcd Juridical personality commences from the date the SEC issues a certificate of incorporation. This is clear from Section 19 of Batas Pambansa Blg. 68, otherwise known as "The Corporation Code of the Philippines", which states that "A private corporation formed or organized under this Code commences to have corporate existence and juridical personality and is deemed incorporated from the date the Securities and Exchange Commission issues a certificate of incorporation under its official seal. . . ." Nowhere is it stated in Executive Order No. 715, dated August 6, 1981, Establishing The Kilusang Kabuhayan At Kaunlaran As A Priority Program of Government, Providing For Its Organizational Machinery, And For Other Purposes, that such cooperatives are exempt from registering with the SEC for them to acquire corporate existence and juridical personality. On the contrary, it is noted that Section 11 thereof provides: prcd "SECTION 11. Approval of Municipal and Barangay Level Projects . The establishment of productive enterprises in the municipality or the barangay under the Kilusang Kabuhayan at Kaunlaran program shall not require the approval of higher local government authorities, including provincial or regional authorities; provided that such enterprises have no special financing requirements needing approval from higher authorities . This dispensation from approval does not extend to exemption from such permits and licenses from the provincial or national governments as my be required in the normal course of the establishment and operation of enterprises ." ( Emphasis ours) The DBP's Chief Legal Counsel correctly distinguished the purpose of registration with the Bureau of Cooperatives Development from that with the SEC, to wait: ". . . The Bureau of Cooperatives Development us empowered among others, to register cooperatives, re-register existing cooperatives and regulate and supervise the types of cooperatives mentioned therein. The purpose thereof is to enable the Bureau of Cooperatives Development to determine from the documents on file whether the cooperatives are organized in accordance with the purposes and/or goals of PD No. 175, as amended by P.D. No. 501, and thus, enjoy the powers, privileges and support granted to cooperatives therein. Notwithstanding the foregoing, we believe that the same does not negate the authority granted the Securities and Exchange Commission by Sec. 3 of P.D. No. 902-A, as amended by P.D. No. 1758, to have 'absolute jurisdiction, supervision and control over all corporations, partnerships or associations. Moreover, a private corporation commences to have corporate existence and juridical personality and is deemed incorporated from the date the Securities and Exchange Commission issues a certificate of incorporation under its official seal. (Sec. 19, the Corporation Code of the Philippines). Hence, insofar as private corporations are concerned, it is the certificate of registration issued by the SEC that gives personality to the corporation. . . ." On the other hand, we also find merit in the position taken by the DBP Executive Officer that subject to fund availability, DBP may accept endorsements of KKK loans to such association and effect initial release thereon as may be authorized by the RAO provided the corresponding loan contracts/documents are signed jointly and severally by all the association members. In such cases, the individual members are the borrowers, and their obligation is solidary. In connection with all the foregoing, it may be stated that the above queries may become academic with the organization of the KKK Processing Center Authority as provided in Executive Order No. 866 dated January 11, 1983 entitled "Creating The KKK Processing Center Authority, Providing Funds Therefor and For Other Purposes", Section 3(h) of which expressly empowers said Authority: "To require submission of and register articles of incorporation of community organizations or associations who are proponents or beneficiaries of KKK programs and issue certificates of incorporation/registration, upon compliance by the registering associations with the duly promulgated rules and regulations thereof; maintain a registry thereof; and exercise all the powers, authorities and responsibilities that are vested in the Security and Exchange Commission with respect to such association;" prcd Please be guided accordingly. Very truly yours, (SGD.) RICARDO C. PUNO Minister of Justice