DOJ Opinion No. 087, s. 1992

DOJ OPINION NO. 087 , s. 1992 June 3, 1992 Undersecretary Romeo L. Bernardo Department of Finance Manila Sir : This has reference to your queries concerning the loan obtained by the Philippine Government from the Overseas Economic Cooperation Fund of Japan for the MERALCO Rural Electrification Project. You state that inasmuch as under the Foreign Borrowings Act (R.A. 4860, as amended), the Government may relend the proceeds of the abovesaid loan only to a government-owned or controlled corporation ("GOCC") or a government financial institution ("GFI"), the Philippine National Bank ("PNB") was chosen as a conduit for the aforesaid project. However, under PNB's privatization program, the Government will eventually become a minority stockholder of the said bank which would then be required to register with the Securities and Exchange Commission ("SEC"). You now inquire as follows: "(1) Will PNB lose its status as a GOCC once the National Government becomes a minority shareholder and the Bank becomes a SEC-registered corporation? "(2) If so, would the Government have a legal basis to continue the present relending arrangements of would the Government be required to replace PNB with another GFI as conduit?" prcd The first question is answered in the affirmative. The reason is Section 6 of Executive Order No. 80 ("Providing for the 1986 Revised Charter of the Philippine National Bank") which reads: "SEC. 6. Change in Ownership of the Majority of the Voting Equity of the Bank . When the ownership of the majority of the issued common voting shares passes to private investors, the stockholders shall cause the adoption and registration with the Securities and Exchange Commission of the appropriate Articles of Incorporation and revised by-laws within three (3) months from such transfer of ownership. Upon the issuance of the certificate of incorporation under the provisions of the Corporation Code, this Charter shall cease to have force and effect, and shall be deemed repealed. Any special privileges granted to the Bank such as the authority to act as official government depository, or restrictions imposed upon the Bank, shall be withdrawn, and the Bank shall thereafter be considered a privately organized bank subject to the laws and regulations generally applicable to private banks. The bank shall likewise cease to be a government owned or controlled corporation subject to the coverage of service-wide agencies such as the Commission on Audit and the Civil Service Commission . The fact of the change of the nature of the Bank from a government-owned and controlled financial institution to a privately-owned entity shall be given publicity." (Italics supplied) It is clear from the language of the aforequoted provisions that PNB will lose its status as a GOCC once the Government because a minority shareholder thereof and the SEC has issued in its favor a certificate of incorporation. Well-settled is the rule that where the words and phrases of a statute are not obscure or ambiguous, its meaning and the intention of the legislature must be determined from the language employed, and where there is no ambiguity in the words, there is no room for construction and the law must be taken to mean what it exactly says (IBAA Employees Commission V. Inciong, 132 SCRA 663; Baranda V. Gustilo, 165 SCRA 757; Provincial Board of Cebu v. Presiding Judge of Cebu court of First Instance, Branch IV, 171 SCRA 1). prcd Anent the second question, the abovequoted provisions of law indicate that once PNB becomes a privately-organized bank, it will cease to be a GOCC and will lose its privileges as such. Thus, the retention of PNB as conduit bank for the subject loan would have no legal basis and the requirements of the Foreign Borrowings Law can be satisfied only with the replacement of PNB as such conduit bank. Please be guided accordingly. Very truly yours, (SGD.) FRANKLIN M. DRILON Secretary