DOJ Opinion No. 097, s. 1993

DOJ OPINION NO. 097 , s. 1993 August 3, 1993 Mr. Aurelio Periquet, Jr. 7th Floor, Exchange Corner Bldg. Herrera St., Cor. Esteban Legaspi Village, Makati Metro Manila Sir : This has reference to your request for opinion/ruling and advice on whether you can keep your investments in the Philippine Exhibitions and Themeparks Corp. and whether you can retain your position as director and chairman of its Board of Directors upon your assumption of office as a member of the Monetary Board of the Bangko Sentral ng Pilipinas . You state that the Philippines Exhibitions and Themeparks Corp. is engaged in real estate and themeparks development; that it is not subject to the supervision, regulation or examination by the Bangko Sentral ; and that your investment in said corporation is not substantial or sufficient to elect a director thereof. I Regarding your investment, the issue is whether there is a need to divest yourself of the same before entering upon the performance of your duty as a member of the Monetary Board. The provision in point is Section 9 of R.A. No. 7653 ("The New Central Bank Act") which provides: "SEC. 9. Disqualifications. In addition to the disqualifications imposed by Republic Act No. 6713, a member of the Monetary Board is disqualified from being a director, officer, employee, consultant, lawyer, agent or stockholder of any bank, quasi-bank or any other institution which is subject to supervision or examination by the Bangko Sentral, in which case such member shall resign from, and divest himself of any and all interests in such institution before assumption of office as member of the Monetary Board. . . ." The aforequoted provision disqualifies a member of the Monetary Board from being a director, office, employee, consultant, lawyer, agent or stockholder of any bank, quasi-bank or any other institution which is subject to supervision or examination by the Bangko Sentral . It further mandates that in such a case, the member concerned shall resign from, and divest himself of any and all interests in, such institution prior to assumption of his office in the Monetary Board. Evidently, your situation does not fall within the ambit of the subject provision since, as you describe it, the private firm of which you are currently a director and chairman of the Board and stockholder is neither a bank or quasi-bank nor is it subject to the supervision, regulation and examination of the Bangko Sentral . Based thereon, we believe that there is no need for you to divest yourself of your interest in the subject corporation prior to your assumption of office as a member of the Monetary Board. prcd We hasten to add, however, that Section 9 of R.A. No. 7653 itself provides that the disqualification imposed therein on a member of the Monetary Board is in addition to those imposed in R.A. No. 6713, otherwise known as the "Code of Conduct and Ethical Standards for Public Officials and Employees" (Code of Public Ethics), the pertinent provisions of which state: "SEC. 9. Divestment. A public official or employee shall avoid conflict of interest at all times. When a conflict of interest arises, he shall resign from his position in any private business enterprise within thirty (30) days from his assumption of office and or divest himself of his shareholdings or interest within sixty (60) days from such assumption. The same rule shall apply where the public official or employee is a partner in a partnership. The requirement of divestment shall not apply to those who serve the Government in an honorary capacity nor to laborers and casual or temporary workers." "SEC. 3. Definition of Terms . xxx xxx xxx (b) 'Public officials' includes elective and appointive officials and employee, permanent or temporary, whether in the career or non-career service, including military and police personnel, whether or not they receive compensation, regardless of amount. xxx xxx xxx (1) 'Conflict of interest' arises when a public official or employee is a member of a board, an officer, or substantial stockholder of a private corporation or owner or has a substantial interest in a business and the interest of such corporation or business, or his rights or duties therein, may be opposed to or affected by the faithful performance of official duty . (Emphasis supplied.) xxx xxx xxx Relevantly, the "Rules Implementing the Code of Conduct and Ethical Standards For Public Officials and Employees" provides: "RULE I. COVERAGE "SECTION 1. These Rules shall cover all officials and employees in the government, elective and appointive, permanent or temporary, whether in the career or non-career service, including military and police personnel, whether or not they receive compensation, regardless of amount. xxx xxx xxx "RULE IX. CONFLICT OF INTEREST AND DIVESTMENT "SECTION 1. (a) An official or employee shall avoid conflict of interest at all times. (b) Conflict of interest occurs: (1) When the official or employee is: (a) a substantial stockholder; or (b) a member of the Board of Directors; or (c) an officer of the corporation; or (d) an owner or has substantial interest in a business; or (e) a partner in a partnership; and (2) The interest of such corporation or his rights or duties therein, are opposed to or affected by the faithful performance of official duty. (c) A substantial stockholder is any person who owns, directly or indirectly, shares of stock sufficient to elect a director of a corporation. This term shall also apply to the parties to a voting trust. (d) A voting trust means an agreement in writing between one or more stockholders of a stock corporation for the purpose of conferring upon a trustee or trustees the right to vote and other rights pertaining to the shares for certain periods and subject to such other conditions provided for in the Corporation Law. (Emphasis supplied.) "SEC. 2. (a) When a conflict of interest arises, the official or employee involved shall resign from his position in any private business enterprise within thirty (30) days from his assumption of office and/or divest himself of his shareholdings or interests within sixty (60) days from such assumption. For those who are already in the service, and conflict of interest arises, the officer or employee must resign from his position in the private business enterprise and/or divest himself of his shareholdings or interests within the periods herein-above provided, reckoned from the date when the conflict of interest had arisen. The same rule shall apply where the public official or employee is a partner in a partnership. (b) If the conditions in Section 1(b) concur, divestment shall be mandatory for any official or employee even if he has resigned from his position in any private business enterprise. (c) Divestment shall be to a person or persons other than his spouse and relatives within the fourth civil degree of consanguinity or affinity. (d) The requirements for divestment shall not apply to those specifically authorized by law and those who serve the government in an honorary capacity nor to laborers and casual or temporary workers." It should be noted that the law mandates a public official or employee, whether holding an elective or appointive position, to avoid conflict of interest at all times. A public official is not required to divest himself of any and all kinds of business interests, but only those which exhibit a conflict of interest with his public duties. Thus, while under "The New Central Bank Act" you need not divest yourself of you present stockholdings in the private firm above-mentioned prior to your assumption of office as member of the Monetary Board, you may be constrained to do so afterwards under the provisions of the Code of Public Ethics, in the event that you become a substantial stockholder of said private firm and a conflict of interest arises between your private interest therein and your public duties as such member of the Monetary Board. Given the aforementioned legal standards, we believe that you alone would be in the best position to determine whether a conflict of interest has arisen which would require you to make a divestment under the Code of Public Ethics. II On the question of whether you can retain your directorship and chairmanship of the subject corporation during your incumbency as a member of the Monetary Board, Section 20 of R.A. No. 7653 is pertinent: "SEC. 20. Outside Interests of the Governor and the Full-time Members of the Board. The Governor of the Bangko Sentral and the full-time members of the Board shall limit their professional activities to those pertaining directly to their positions with the Bangko Sentral, Accordingly, they may not accept any other employment, whether public or private, remunerated or ad honorem, with the exception of positions in eleemosynary, civic, cultural or religious organizations or whenever, by designation of the President, the Governor or the full-time member is tasked to represent the interest of the Government or other government agencies in matters connected with or affecting the economy or the financial system of the country." (Emphasis supplied.) Quite obviously, the aforecited provision merely implements Section 6 of the same law which requires that all the "five (5) members who shall come from the private sector . . . shall serve fulltime". Hence, Section 20 mandates the full-time members of the Board to limit their professional activities to those pertaining directly to their positions in the Bangko Sentral and in the same vein, prohibits them from accepting any other employment whether public or private, remunerated or ad honorem, with the exception only of the positions specifically mentioned therein. In Opinion No. 98, s. 1992, wherein this Department had the occasion to pass upon an issue involving a constitutional provision (Section 13, Article VII) prohibiting Cabinet Members from holding any other office or employment during their tenure, it was ruled that "being an officer, trustee or director of a private corporation, whether profit or non-profit" constitutes employment that falls within the contemplation of the prohibition. The reason is that the term " employment " connotes service or that which engages one's time or attention, whether for or without compensation" (State ex rel. Cooper v. Roth, 44 NE 2d. 456). In view whereof, and considering that your case does not fall within any of the exceptions provided for in Section 20 of R.A. No. 7653, we are of the view that you cannot retain your position as director and chairman of the subject corporation without contravening the said statutory provision. Please be guided accordingly. Very truly yours, (SGD.) FRANKLIN M. DRILON Secretary