DOJ Opinion No. 115, s. 1984

DOJ OPINION NO. 115 , s. 1984 2nd Indorsement August 3, 1984 Respectfully returned to Atty. B.C. Fernandez, Jr., General Counsel, Commission on Audit, Don Mariano Marcos Avenue, Quezon City, the within request for opinion as to whether the contract entered into by and between the Central Luzon State University and the Central Luzon State University Foundation, Inc. is legally effective and enforceable in view of the seeming conflict of interests of the signatories thereto in the light of the pertinent provisions of the Anti-Graft Law. The Central Luzon Agricultural College was converted into the Central Luzon State University under Republic Act No. 4067(1964). As provided under Section 2 of the aforesaid Republic Act, the University was created primarily to "give professional and technical training in agriculture and mechanic arts besides providing advanced instruction and promoting research in Literature, philosophy, the sciences, technology and arts." On the other hand, the Central Luzon State University Foundation, Inc. is an non-stock, non-profit and non-political corporation duly registered with the Securities and Exchange Commission. The Foundation was formed to contribute to national development through the establishment of a private institutional medium to help and assist a Central Luzon State University attain and realize its goal of becoming a "model regional institution of higher learning for rural development in the Philippines and Southeast Asia . . ." It appears that a Construct of Management Service was entered into by and between the Central Luzon State University and the Central Luzon State University Foundation, Inc., pursuant to which the latter shall handle the marketing of all agricultural products of the former including syllabi, laboratory manuals and other printed materials or commodities heretofore undertaken by the University Marketing Center, for a service fee of 3 percent on gross sales. LexLib Doubt as to the legality of the above-mentioned contract is entertained in view of the fact that the incorporators and trustees of the Foundation are all officer of the Administration or Heads of College of the CLSU, except for Ms. Leonila V. Chaves, and in the light of the provisions of Republic Act No. 3019 (1960), otherwise known as the Anti-Graft and Corrupt Practices Act, particularly Section 3 thereof, which enumerates, among, others, the following corrupt practice or public officers: "Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest." (Sec. 3[h]) "Directly or indirectly becoming interested, for gain, or having a material interest in any transaction or act requiring the approval of a board, panel or group of which he is a member, and which exercises discretion in such approval, even if he votes against the same or does not participate in the action of the board, committee, panel or group." (Sec. 3[i]) It has been held in a long line of opinions that when Republic Act No. 3019 speaks of "financial or pecuniary interest" or "becoming interested, for personal gain, or having a materials interest", in any transaction or act, in connection with which a public officer intervenes or takes part, the provision should be taken to refer to interest of a personal or private character. (Op. dated Aug. 2, 1968; Ops. No. 155 & 157, s. 1960; Nos. 33 & 89, s. 1975). The By-laws of the CLSU Foundation, Inc. expressly provide that the Trustees shall not receive any salary for their services (Article VI, Section 5), and that upon the dissolution of the Foundation, its remaining assets shall be disposed of and turned over to the Central Luzon State University or such institution as shall succeed to the properties and functions of the University. (Article XI, Section 1) The Articles of Incorporation of the Foundation provide under paragraph eight that "no part of its earnings or income shall inure to the benefit of any individual, contributor or member." LexLib While the Foundation charges a services fee of 3 percent on gross sales in the Contract under considerations, we do not see any personal or private gain which the members of the Foundation may derive therefrom in view of the above-mentioned provisions in its Articles and By-laws. The ultimate beneficiary of whatever funds and properties it may acquire is the Central Luzon State University, a government educational institution. The reason behind the Anti-Graft Act, i.e., that a public office should not be used by public officers for their personal gain or advantage, does not exist if the government or any of its agencies, as in this case, is the direct recipient and beneficiary of a gift, present, share, percentage or benefit. (Secretary of Justice Op. dated Nov. 18, 1966) (SGD.) ESTELITO P. MENDOZA Minister of Justice