LEGAL NOTE 0018: IS RPN 9 A GOVERNMENT-OWNED AND CONTROLLED CORPORATION?

 SOURCE: ANTONIO M. CARANDANG VS. HONORABLE ANIANO A. DESIERTO, OFFICE OF THE OMBUDSMAN (G.R. NO. 148076); ANTONIO M. CARANDANG VS. SANDIGANBAYAN (FIFTH DIVISION) (G.R. NO. 153161) (12 JANUARY 2011, BERSAMIN, J.)

X ————————————————————————————————- X

 

IS RADIO PHILIPPINE NETWORK (RPN) A GOVERNMENT OWNED AND CONTROLLED CORPORATION?

 

NO.

Consequently, RPN was neither a government-owned nor a controlled corporation because of the Government’s total share in RPN’s capital stock being only 32.4%.

SANDIGANBAYAN ORDERED BENEDICTO TO TRANSFER HIS 72.4%  IN RPN TO RPN. DOES THIS MAKE RPN NOW A GOVERNMENT-OWNED AND CONTROLLED CORP?

 

NO. BECAUSE BENEDICTO FILED A MOTION FOR RECONSIDERATION WHERE HE CLARIFIED THAT THE SHARES CEDED TO RPN WAS ONLY 32.4%. SUCH MOTION IS NOT YET RESOLVED WITH FINALITY.

Parenthetically, although it is true that the Sandiganbayan (Second Division) ordered the transfer to the PCGG of Benedicto’s shares that represented 72.4% of the total issued and outstanding capital stock of RPN, such quantification of Benedicto’s shareholding cannot be controlling in view of Benedicto’s timely filing of a motion for reconsideration whereby he  clarified and insisted that the shares ceded to the PCGG had accounted for only 32.4%, not 72.4%, of RPN’s outstanding capital stock. With the extent of Benedicto’s holdings in RPN remaining unresolved with finality, concluding that the Government held the majority of RPN’s capital stock as to make RPN a government-owned or -controlled corporation would be bereft of any factual and legal basis.  

 

 

WHAT OTHER PROOF EXISTS  THAT RPN IS NOT AN OGCC?

 

EVEN OFFICE OF THE PRESIDENT AND PCGG RECOGNIZED RPN’S STATUS AS BEING NEITHER A GOVERNMENT-OWNED NOR CONTROLLED CORP. CONSTRUCTION OF A STATUTE BY GOVT AGENCIES DESERVE RESPECT.

 

Even the PCGG and the Office of the President (OP) have recognized RPN’s status as being neither a government-owned nor -controlled corporation.

In its Opinion/Clarification dated August 18, 1999, the PCGG communicated to San Luis as the president and general manager of RPN regarding a case involving RPN and Carandang:[1][29]

MR. EDGAR S. SAN LUIS

President & General Manager

Radio Philippines Network, Inc.

Broadcast City, Capitol Hills

Diliman, Quezon City

Sir:

This refers to your letter dated August 4, 1999, seeking “PCGG’s position on the following:

“1. Whether RPN-9 is a GOCC x x x or a private corporation outside the scope of OGCC and COA’s control given 32% Government ownership x x x.

x x x

It appears that under the RP-Benedicto Compromise Agreement dated November 3, 1990 – validity of which has been sustained by the Supreme Court in G.R. No. 96087, March 31, 1992, (Guingona, Jr. vs. PCGG, 207 SCRA 659) – Benedicto ceded all his rights, interest and/or participation, if he has any, in RPN-9, among others, to the government which rights, interest and/or participation per PCGG’s understanding, include 9,494,327.50 shares of stock, i.e, about 72.4% of the total issued and outstanding capital stock of RPN-9.

Accordingly, the Sandiganbayan (Second Division), on motion of the government through PCGG, ordered the president and corporate secretary of the RPN-9 to “effect the immediate cancellation and transfer of the 9,494,327.50 shares corresponding to Benedicto’s proprietary interest in RPN-9 to the Republic of the Philippines c/o PCGG” (Sandiganbayan’s Resolution of February 3, 1998 in Civil Case No. 0034, RP vs. Roberto Benedicto, et. al.) Benedicto, however, filed a motion for reconsideration of said Resolution, contending that the number of RPN-9 shares ceded by him embraces only his personal holdings and those of his immediate family and nominees totaling 4,161,207.5 shares but excluding the RPN-9 shares in the name of Far East Managers and Investors, Inc. (“FEMIE”), which is about 40%, as they are corporate properties/assets of FEMIE and not his personal holdings. Said motion for reconsideration is still pending resolution by the Sandiganbayan.

x x x

We agree with your x x x view that RPN-9 is not a government owned or controlled corporation within the contemplation of the Administrative Code of 1987, for admittedly, RPN-9 was organized for private needs and profits, and not for public needs and was not specifically vested with functions relating to public needs.

Neither could RPN-9 be considered a “government-owned or controlled corporation” under Presidential Decree (PD) No. 2029 dated February 4, 1986, which defines said terms as follows:

“Sec.2. Definition. – A government owned- or controlled corporation is a stock or non-stock corporation, whether performing governmental or proprietary functions which is directly chartered by special law or organized under the general corporation law is owned or controlled by the government directly, or indirectly through a parent corporation or subsidiary corporation, to the extent of at least a majority of its outstanding capital stock or of its outstanding voting capital stock;

Provided, that a corporation organized under the general corporation law under private ownership at least a majority of the shares of stock of which were conveyed to a government corporation in satisfaction of debts incurred with a government financial institution, whether by foreclosure or otherwise, or a subsidiary corporation of a government corporation organized exclusively to own and manage, or lease, or operate specific physical assets acquired by a government financial institution in satisfaction of debts incurred therewith, and which in any case by enunciated policy of the government is required to be disposed of to private ownership within a specified period of time, shall not be considered a government-owned or controlled corporation before such disposition and even if the ownership or control thereof is subsequently transferred to another government-owned or controlled corporation.”

A government-owned or controlled corporation is either “parent” corporation, i.e., one “created by special law” (Sec. 3 (a), PD 2029) or a “subsidiary” corporation, i.e, one created pursuant to law where at least a majority of the outstanding voting capital stock of which is owned by parent government corporation and/or other government-owned subsidiaries. (Sec. 3 (b), PD 2029).

RPN-9 may not likewise be considered as an “acquired asset corporation” which is one organized under the general corporation law (1) under private ownership at least a majority of the shares of stock of which were conveyed to a government corporation in satisfaction of debts incurred with a government financial institution, whether by foreclosure or otherwise, or (2) as a subsidiary corporation of a government corporation organized exclusively to own and manage, or lease, or operate specific physical assets acquired by a government financial institution in satisfaction of debts incurred therewith, and which in any case by enunciated policy of the government is required to be disposed of to private ownership within a specified period of time” (Sec 3 c, PD 2029), for the following reasons:

1.   as noted above, the uncontested (not litigated) RPN-9 shares of the government is only 32.4% (not a majority) of its capital stock;

2.   said 32.4% shares of stock, together with the contested/litigated 40%, were not conveyed to a government corporation or the government “in satisfaction of debts incurred with government financial institution, whether by foreclosure or otherwise;

3.   RPN-9 was not organized as a subsidiary corporation of a government corporation organized exclusively to own and manage, or lease, or operate specific physical assets acquired by a government financial institution in satisfaction of debts incurred therewith.

It should be parenthetically noted that the 32.4% or 72.4% shares of stocks were turned over to the government by virtue of a compromise agreement between the government and Benedicto in Civil Case No. 0034 which is “a civil action against Defendants Roberto S. Benedicto, Ferdinand E. Marcos, Imelda R. Marcos” and others, to recover from them ill-gotten wealth” (Amended Complaint, Aug. 12, 1987, Civil Case No. 0034, p. 2.) As the case between the government and Benedicto, his family and nominees was compromised, no judicial pronouncement was made as to the character or nature of the assets and properties turned over by Benedicto to the government – whether they are ill-gotten wealth or not.[2][30]    

The PCGG’s Opinion/Clarification was affirmed by the OP itself on February 10, 2000: [3][31]                     

                                                               February 10, 2000

Mr. Edgar S. San Luis

President and General Manager

Radio Philippines Network Inc.

Broadcasting City, Capitol Hills, Diliman

Quezon City

Dear President San Luis,

x x x

Relative thereto, please be informed that we affirm the PCGG’s opinion that RPNI is not a government-owned and/or controlled corporation (GOCC). Section 2 (13), Introductory Provisions of the Administrative Code of 1987 defines a GOCC as an agency organized as a stock or non-stock corporation vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the government directly or indirectly through its instrumentalities either wholly, or where applicable as in the case of stock corporations to the extent of at least 51% of its capital stock. As government ownership over RPNI is only 32.4% of its capital stock, pending the final judicial determination of the true and legal ownership of RPNI, the corporation is deemed private.[4][32]

Even earlier, a similar construction impelled the Ombudsman to dismiss a criminal  complaint  for violation of R.A. 3019 filed against certain RPN officials, as the Ombudsman’s resolution dated December 15, 1997 indicates,[5][33] a pertinent portion of which is quoted thus:

This is not to mention the fact that the other respondents, the RPN officials, are outside the jurisdiction of this Office (Office of the Ombudsman); they are employed by a private corporation registered with the Securities and Exchange Commission, the RPN, which is not a government owned or controlled corporation x x x[6][34]

Considering that the construction of a statute given by administrative agencies deserves respect,[7][35] the uniform administrative constructions of the relevant aforequoted laws defining what are government-owned or -controlled corporations as applied to RPN is highly persuasive.


[1][29] Rollo (G.R. No. 153161), pp. 66-72.

[2][30] Emphasis and underscoring supplied..

[3][31] Rollo (G.R. No. 148076), p. 358.

[4][32] Emphasis supplied.

[5][33] Rollo (G.R. No. 148076), pp. 634-638.

[6][34] Emphasis supplied.

[7][35] Philippine Amusement and Gaming Corporation (PAGCOR) v. Philippine Gaming Jurisdiction, Incorporated (PEJI), G.R. No. 177333, April 24, 2009, 586 SCRA 658, 667; Alfonso v. Office of  the President, G.R. No. 150091, April 2, 2007, 520 SCRA 64, 75; Delos Santos v. Court of Appeals, G.R. No. 147912, April 26, 2006, 488 SCRA 351, 359.