Ms. Marietta U. Tan

April 10, 1995 Ms. Marietta U. Tan Small Business Guarantee and Finance Corporation 11/flr.,SSS (Makati) Bldg.,Ayala Avenue, corner Herrera St.,Makati, Metro Manila Madam : This refers to your letter of April 4, 1995 requesting opinion on the following queries: 1. Whether the Small Business Guarantee and Finance Corporation (SBGFC), a government financial institution created pursuant to RA 6977, otherwise known as the Magna Carta for Small Enterprises, can invest its funds in a private venture capital corporation or private business firm on the basis of its charter : 2. What laws will govern the relationship of the two entities? 3. Will SBGFC's participation in the private entity be subject to COA rules and regulations? 4. What procedures are followed when a government entity enters into such a relationship (equity participation) with a private entity? The Commission, in the case of Alfredo C. Gray, Sr. et al vs. Agustin Marking, et al., SEC Case No. 2102 dated March 9, 1982 previously ruled that it has no jurisdiction over corporations created by special law. In line with this ruling, the Commission has consistently declined to render opinions on matters involving corporation created by special law or charter. Moreover, the Corporation Code expressly provides that a corporation created by a special law or charter shall be governed primarily by the provisions of the law creating it and only supplemented by the Corporation Code. "SECTION 4. Corporation created by special laws or charters . Corporation created by special laws or charters shall be governed primarily by the provision of the special law or charter creating them or applicable to them, supplemented by the provisions of this Code, insofar as they are applicable." (Emphasis supplied) The Commission, therefore, has refrain from rendering opinions on the issues raised in your letter as they involve interpretation of the provisions of the law creating the SBGFC which is not within the power of the SEC. However, it is suggested that the above matters be addressed to the Office of the Government Corporate Counsel considering that under PD 1415, that Office is the principal law office of all government-owned or controlled corporation created by special law or charter. LexLib Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner