DOJ Opinion No. 144, s. 1993

DOJ OPINION NO. 144 , s. 1993 October 11, 1993 Mr. Perfecto R. Yasay, Jr. Associate Commissioner Securities and Exchange Commission SEC Building EDSA, Greenhills Mandaluyong, Metro Manila Sir : This refers to your request for opinion on whether or not Section 299 of R.A. No. 7160 (the Local Government Code of 1991) has amended Section 5(a)(1) of Batas Pambansa Blg. 178 (the Revised Securities Act) such that the issuance of bonds and other securities by provinces, cities and municipalities are no longer exempt from the registration requirements of that Commission. The abovecited statutory provisions read: R.A. No. 7160 - "SEC. 299. Bonds and Other Long-Term Securities. Subject to the rules and regulations of the Central Bank and the Securities and Exchange Commission, provinces, cities, and municipalities are hereby authorized to issue bonds, debentures, securities, collaterals, notes and other obligations to finance self-liquidating, income-producing development or livelihood projects pursuant to the priorities established in the approved local development plan or the public investment program. The sanggunian concerned shall, through an ordinance approved by a majority of all its members, declare and state the terms and conditions of the bonds and the purpose for which the proposed indebtedness is to be incurred." prLL B.P. Blg. 178 "Sec. 5. Exempt Securities. (a) Except as expressly provided, the requirement of registration under subsection (a) of Section four of this Act shall not apply to any of the following classes of securities: "(1) Any security issued or guaranteed by the Government of the Philippines, or by any political subdivision or agency thereof or by any of its public instrumentalities, or by any person controlled or supervised by, and acting as an instrumentality of said Government, or any certificate of deposit for any of the foregoing. xxx xxx xxx The instant query was posed apparently because while Section 5(a)(1) of B.P. Blg. 178 exempts securities issued by local government units from registration with the SEC, Section 299 of R.A. 7160 subjects such securities to SEC rules and regulations. Examination of the repealing clause of R.A. No. 7160 reveals that the abovequoted provision of B.P. Blg. 178 is not among those explicitly mentioned therein (See Sec. 534). Thus, any alleged repeal or modification by the former statute of Section 5(a)(1) of the latter should perforce be by implication. Well-established, however, is the rile that repeals or amendments by implication are neither presumed nor favored. For such repeals to arise, there must be a showing of repugnancy or inconsistency between the two legal provisions involved such that one cannot operate without nullifying the other. And if by reasonable construction both provisions can be made to stand together, then both should be given effect (Iloilo Palay and Corn Planters Assn. vs. Feliciano, 13 SCRA 377; Villegas vs. Subido, 41 SCRA 180; Jalandoni vs. Endaya, 55 SCRA 261). True, Section 534 of R.A. No. 7160 repeals or modifies "[a]ll general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of [the] Code." However, a repealing clause of such nature cannot be considered as having the effect of an express repeal for it does not only fail to identify or designate the act or acts that it intends to abrogate but it predicates such intended abrogation upon the existence of a substantial conflict with existing prior acts. (Iloilo Palay and Corn Planters Association, Inc. vs. Feliciano, supra). It is difficult to believe that the bare provision of Section 299 of R.A. No. 7160, authorizing provinces, cities and municipalities to issue bonds and other securities subject to the rules and regulations of the Central bank and the SEC, necessarily implies the withdrawal of the exemption privilege granted such securities under B.P. Blg. 178. For if such were the congressional intention, it could have easily said so clearly and unequivocally. Upon the other hand, there is actually no conflict between the two provisions of law since it is safe to assume that under current SEC rules and regulations, bonds or other debt instruments of local government units are not required to be registered with the SEC as a condition for issuance, consistent with Section 5(a)(1) of B.P. Blg. 178. Wherefore, it is our view that Section 5(a)(1) of B.P. Blg. 178 has not been repealed or modified by Section 299 of R.A. No. 7160 and, therefore, the bonds, debentures, securities and other debt instruments of provinces, cities and municipalities remain as exempt securities under the former law. Very truly yours, (SGD.) FRANKLIN M. DRILON Secretary