DOJ Opinion No. 077, s. 2003

DOJ OPINION NO. 077 , s. 2003 October 10, 2003 Hon. Eduardo Sergio G. Edeza Treasurer of the Philippines Bureau of the Treasury Intramuros, Manila Sir : This refers to your request for opinion on the authority of the Department of Finance/Bureau of the Treasury (DOF/BTr) to enter into an investment management contract with another entity relative to the investment of sinking funds. It appears that we have previously refrained from expressing our views on the issue and advised that Bureau to instead consult the Bangko Sentral ng Pilipinas (BSP), 1 in view of our earlier stated position 2 that "the management of the bond sinking funds is not deemed included among the fiscal agency functions to be transferred from the BSP to the DOF pursuant to Section 129 of R.A. No. 7653" and that legislation is necessary to effect such transfer. It also appears that upon your consultation, the BSP General Counsel expressed the view that since its fiscal agency functions under Section 119 of R.A. No. 7953, including the custody of bond sinking funds (BSFs), has already been transferred to the DOF through the Memorandum of Agreement (MOA) dated June 30, 1995, the "DOF has now full discretionary powers on how said BSFs will be invested and managed" and that "whether or not DOF has the authority to enter into an investment management contract pertaining to the investment and management of such sinking funds" is a separate legal issue that is within the province of the DOF to resolve and settle. 3 In view of the foregoing, and considering also the opinion rendered by the BTr Legal Service that, "on the assumption that there was a legal and total transfer of functions from the BSP to the DOF/BTr", there is "legal basis for it to enter into an investment contract with another entity", you now seek confirmation, by way of a legal opinion, from this Department since you believe that whether or not DOF/BTr has such authority is "a question of law which is within the power of the DOJ to resolve." We take it that you want us to reconsider our aforesaid position of refraining to pass upon the issue raised. The BSP, the government agency which, under Section 129 of R.A. No. 7653, has been specifically mandated to "phase out all fiscal agency functions" "and transfer the same to the Department of Finance" has already expressed its views on the issue of whether or not the management of the BSFs is deemed included among the bank's fiscal agency functions already transferred to the DOF. Hence, our inability to render opinion on the issue. Any opinion that we may render on the extent of the functions transferred cannot prevail upon the determination made by the government agency transferring the said functions. 4 Besides, our resolution of the issue raised would inevitably require a determination of the correctness of the views advanced or position taken by the BSP which is beyond the revisory authority of this Department. 5 Moreover, under the Administrative Code of 1987, the DOF is mandated to be "responsible for the review, approval and management of all public sector debt, whether foreign or domestic, with the end in view of insuring that all borrowed funds are effectively utilized and all such obligations are promptly serviced by the government." 6 In the exercise of said mandate, the DOF is empowered to, among others, "(a)ct as custodian and manage all financial resources of the national government" and "(u)ndertake and supervise activities related to the negotiation, servicing and restructuring of domestic and foreign debt incurred or guaranteed by the government and its instrumentalities, including taking part in activities which affect the country's capacity to service foreign debt." 7 Since, as explained by the BSP General Counsel, the "maintenance of sinking funds is intertwined and forms an integral part of the whole process of servicing and redemption of public debt as sinking funds are used principally for the purpose of redeeming or paying the bonded indebtedness," and that "the DOF has now full discretionary powers on how said BSFs will be managed and invested," 8 in view of the transfer to it of all of BSP's fiscal agency functions, it appears logical to say that the DOF has also now the power to enter into an investment management contract. However, whether or not to exercise said power is purely a policy and management decision that properly falls within the jurisdiction of the DOF Secretary to act and decide. 9 We suggest that the matter be elevated to the DOF Secretary for consultation and consideration. TcIAHS Very truly yours, (SGD.) SIMEON A. DATUMANONG Secretary Footnotes 1. See, DOJ Opinion No. 33, s. 2002. 2. See, DOJ Opinion No. 95, s. 1995. 3. See, BSP General Counsel Letter dated October 14, 2002. 4. Sec. of Justice Op. No. 24, s. 1999; No. 7, s. 1996; and No. 1, s. 1983. 5. Id ., No. 82, s. 1995, citing opinions. 6. Sec. 2, Chap. 1, Title II, Book IV, Executive Order No. 292. 7. Sec. 3 [4] and [5], id . 8. Pages 2 and 3, BSP Letter dated October 14, 2002. 9. The Administrative Code of 1987 pertinently provides: Sec. 38. Definition of Administrative Relationship . Unless otherwise expressly stated in the Code or in other laws defining the special relationships of particular agencies, administrative relationships shall be categorized and defined as follows: xxx xxx xxx (3) Attachments . (a) . . .. (b) Matters of day-to-day administration or all those pertaining to internal operations shall be left to the discretion or judgment of the executive officer of the agency or corporation. In the event that the Secretary and the head of the board or the attached agency or corporation strongly disagree on the interpretation and application of policies, and the Secretary is unable to resolve the disagreement, he shall bring the matter to the President for resolution and direction; (Chap. 7, Book IV, E.O. No. 292).