DOJ Opinion No. 095, s. 1995

DOJ OPINION NO. 095 , s. 1995 September 11, 1995 Secretary Roberto F. de Ocampo Department of Finance Manila Madam : This has reference to your request for a legal opinion on whether or not the management of the bond sinking funds under R.A. No. 713 and R.A. No. 1000, as amended, is deemed included in the fiscal agency functions to be transferred from the Bangko Sentral ng Pilipinas (BSP) to the Department of Finance (DOF). prcd You state that Section 129 of R.A. No. 7653 ("New Central Bank Act") provides for the transfer of certain fiscal agency functions of the BSP to the DOF within the period prescribed therein: that Section 135 of the same law repeals the provisions of any law, special charter, and rule or regulation inconsistent therewith; and that you wish to know whether R.A. No. 7653 repeals section 1 of R.A. No 713 and Section 2 of R.A. No. 1000, as amended, which provisions place the custody and management of the bond sinking funds in the defunct Central Bank (now BSP) considering that the bond sinking funds are designed to redeem bonds issued by the government and "its management may be deemed an integral part of fiscal agency". The pertinent provisions of R.A. No. 7653 provide as follows: "SEC. 129. Phase-out of Fiscal Agency Functions . Unless circumstances warrant otherwise and approved by the Congress Oversight Committee, the Bangko Sentral shall, within a period of three (3) years but in no case longer than five (5) years from the approval of this Act, phase out all fiscal agency functions provided for in Sections 117, 118, 119, and 120 as well as in other pertinent provisions of this Act and transfer the same to the Department of Finance ." (Emphasis supplied.) "SEC. 117. Issue of Government Obligations . The issue of securities representing obligations of the Government, its political subdivisions or instrumentalities, may be made through the Bangko Sentral, which may act as agent of, and for the account of, the Government or its respective subdivisions or instrumentality, as the case may be: Provided, however, that the Bangko Sentral shall not guarantee the placement of said securities, and shall not subscribe to their issue except to replace its maturing holdings of securities with the same type as the maturing securities." "SEC. 118. Methods of Placing Government Securities . The Bangko Sentral may place the securities to which the preceding section refers through direct sale to financial institutions and the public. The Bangko Sentral shall not be a member of any stock exchange or syndicate, but may intervene therein for the sole purpose of regulating their operations in the placing of the aforesaid securities." "SEC. 119. Servicing and Redemption of the Public Debt . The servicing and redemption of the public debt shall also be affected through the Bangko Sentral." "SEC. 120. The Securities Stabilization Fund . There shall be established a 'Securities Stabilization Fund' which shall be administered by the Bangko Sentral for the account of the Government. The operations of the Securities Stabilization Fund shall consist of purchases and sales, in the open market, of bonds or other evidences of indebtedness issued or fully guaranteed by the Government. The purpose of these operations shall be to increase the liquidity and stabilize the value of said securities in order thereby to promote private investment on government obligations. The Monetary Board shall use the resources of the Fund to prevent, or moderate, sharp fluctuations in the quotation of said government obligations, but shall not endeavor to alter movements of the market resulting from basic changes in the pattern or level of interest rates. The Monetary Board shall issue such regulations as may be necessary to implement the provisions of this section." "SEC. 135. Repealing Clause . Except as may be provided for in Section 46 and 132 of this Act, Republic Act No. 265, as amended, the provisions of any other law, special charters, rule or regulation issued pursuant to said Republic Act No. 265, as amended, or parts thereof, which may be inconsistent with the provisions of this Act are hereby repealed. Presidential Decree No. 1792 is likewise repealed. On the other hand, the pertinent provision of R.A. No. 713 and R.A. No. 1000, as amended, provide as follows: R.A. No. 713 (amending Act no. 3014) "SECTION 1. The Central Bank of the Philippines shall hereafter have custody of the funds of all sinking funds for the retirement of bonds issued by the Government of the Philippines, provinces, municipalities, and cities. It shall invest such funds either directly or through any instrumentality which it may select, but investment may be made only in securities of the Philippine Government or the government of the United States and in such a manner as the Monetary Board may prescribe. All the expenses of such investment shall be charged to said sinking funds and the interest and other income from the investments shall be credited to them." (Emphasis ours.) R.A. No. 1000, as amended by R.A. Nos. 2008 and 4861 and P.D. No. 141 "SEC. 2. A sinking fund shall be established in such a manner that the total annual contributions thereto, accrued as at such rate of interests as may be determined by the Secretary of Finance in consultation with the Monetary Board, shall be sufficient to redeem at maturity the bonds issued under this Act. Said fund shall be under the custody the Central bank of the Philippines which shall invest the same in such a manner as the Monetary Board may approve ; shall charge all expenses of such investment to said sinking fund, and shall credit the same with the interest on investments and others belonging to it." (Emphasis ours.) Section 129, supra , directs that within a period of three to five years from the approval of R.A. No. 7653, the fiscal agency functions of the BSP under Sections 117, and 118, 119 and 120 and other pertinent provisions thereof shall be transferred to the DOF. In particular, the functions to be transferred pertain to the authority of the BSP: (a) to act as agent for and in behalf of the Government or its political subdivisions or instrumentalities in the issuance of securities (Section 117); (b) to place such securities through direct sale to financial institutions and the public (Section 118); (c) to service and redeem the securities (Section 119); and (d) to administer the Securities Stabilization Fund (Section 120). It will be noted that the management of the bond sinking funds, which was vested in the defunct Central Bank (now BSP) pursuant to Section 1 of R.A. No. 713 and Section 2 of R.A. No. 1000, as amended, is not expressly mentioned in the enumeration of functions of BSP under Sections 117, 118, 119 and 120 which will be transferred to the DOF. However, it is your view, that since the bond sinking funds are intended for the redemption or retirement of government bonds which is a fiscal agency function transferred to the DOF, the management of the bond sinking funds "may be deemed an integral part of fiscal agency" which is also deemed transferred to the DOF pursuant to Section 129 of R.A. No. 7653. You cite in this connection the provisions of Section 135 of R.A. No. 7653 which repeals all provisions of laws inconsistent with said Act, and by which you imply that Section 1 of R.A. No. 713 and Section 2 of R.A. No. 1000, as amended, are inconsistent with the provisions of R.A. No. 7653 and, therefore, said provisions of R.A. No. 713 and R.A. No. 1000, as amended, are repealed by R.A. No. 7653. It is a settled rule that implied repeals are not favored because the legislature is presumed to know the existing laws and if its intention is to repeal a particular or specific law, it would so expressly repeal the same. Section 135 does not expressly repeal Section 1 of R.A. No. 713 and Section 2 of R.A. No. 1000, as amended, although it expressly repeals P.D. No. 1792. It is, however, recognized that there can be an implied repeal of a former law by a subsequent law on the same subject matter if the two laws are totally repugnant to, or irreconcilably inconsistent with each other. But such is not the case here because the fiscal agency functions of the BSP under Sections 117, 118, 119 and 120 of R.A. No. 7653 may be exercised apart from, or independently of, its management function vis-a-vis the bond sinking funds under Section 1 of R.A. No. 713 and Section 2 of R.A. No. 1000, as amended. While both functions should ideally be lodged in one and the same agency, it does not have to be indispensably integrated or consolidated in one and the same body. The legislative history of R.A. No. 713 set forth below would, in fact, attest to this. The explanatory note and the records of deliberations on H.B. No. 739 that was later enacted into law as R.A. No. 713 (amending Act No. 3014) disclose that the administration of the bond sinking funds was originally vested in the Insular Treasurer (now the Bureau of Treasury) under Act No. 3014. However, the passage of the Central Bank Act (R.A. No. 265) which constituted the Central Bank as the fiscal agent, banker and financial adviser of the Government, made it necessary and expedient to transfer the administration of the bond sinking funds from the Bureau of Treasury to the Central Bank. Such transfer was effected through R.A. No. 713. The fact that the two functions were originally lodged in two different agencies the Bureau of Treasury with respect to the management of the bond sinking funds, and the CB with respect to the other fiscal agency functions of issuing, marketing and redeeming bonds bolsters the conclusion that no irreconcilable inconsistency exists between the two sets of provisions aforementioned and, therefore, it cannot be said that R.A. No. 7653, in authorizing the transfer of certain fiscal agency functions of the BSP said Act to the DOF, has impliedly repealed Section 1 of R.A. No. 713 and Section 2 of R.A. No. 1000, as amended. We may repeat that the functions of the BSP under these laws are not interdependent and may be exercised singly and apart from each other. Wherefore, we are of the view 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. To effect the transfer of the said function to the DOF, legislation is necessary for the purpose, as it was necessary then to pass R.A. No. 713 to transfer the said function from the Bureau of Treasurer to the Central Bank. Please be guided accordingly. Very truly yours, (SGD.) TEOFISTO T. GUINGONA, JR. Secretary