DOJ Opinion No. 174, s. 1993

DOJ OPINION NO. 174 , s. 1993 December 22, 1993 The President Home Insurance Guaranty Corporation 349 Sen. Gil J. Puyat Avenue Makati, Metro Manila Sir : This has reference to your request for "confirmation" of the view that securities issued by the Home Insurance and Guaranty Corporation ("HIGC") are exempt from registration with the Securities and Exchange Commission under Section 5 [a] [1] of Batas Pambansa Blg. 178 (the Revised Securities Act), which reads: prcd "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 We are informed that HIGC has recently launched a program on Housing Asset Mortgage-Backed Securities (the "Securities") in response to its thrust of developing new programs to adopt to the changing market needs; that the aforesaid program aims to mortgages in order to raise more funds for housing: and that the receivables backed by home mortgages are pooled into a Trust Fund, which will issue the Securities. We are further informed that HIGC has securitized its own receivables from the sale of its various foreclosed housing projects; that it extended its guaranty on the receivables comprising the asset pool backing up the Securities, such that if there is a default in the payment of monthly amortizations, HIGC shall advance the principal amount with the corresponding interest for a maximum of three (3) consecutive months, after which if the buyer continues to be in default, HIGC shall pay the principal balance in exchange for an assignment of the mortgage of the defaulting account. We are finally informed that the SEC initially required HIGC to register the Securities for the reason that the said instruments shall be issued not by the HIGC, but by the "special purpose trust," thus constituting them as non-exempt securities. However, upon a request for reconsideration, Chairman Rosario Lopez of the SEC opined that "in view of HIGC's guaranty, the issued need not be registered". Thus, the instant request. This Office deeply regrets that it cannot with propriety render any opinion herein. As noted above, the SEC has already expressed its view/position on the matter; thus, any opinion by this Office thereon would amount to passing upon or reviewing the correctness of the said position. Pursuant to established precedents, this Department has consistently desisted from passing upon the rulings and/or official actuations of other government offices over which the Secretary of Justice possesses neither revisory authority nor supervisory jurisdiction (Secretary of Justice Opns. No. 22, s. 1977; No. 181, s. 1976; No. 9, s. 1987; and No. 48, s. 1990). This practice has evolved not only from practical considerations but also out of respect and deference for the competence and expertise of the office having primary jurisdiction to resolve the matter and its familiarity with the policy repercussions of the question, as well as from a logical recognition of the lawful exercise of an authority conferred by law (Id., No. 1, s. 1983). Very truly yours, (SGD.) RAMON J. LIWAG Acting Secretary