DOJ Opinion No. 013, s. 1987

DOJ OPINION NO. 013 , s. 1987 February 24, 1987 Chairman Jovito R. Salonga Presidential Commission on Good Government (PCGG) PHILCOMCEN Bldg., 6th Flr. Ortigas Cor. San Miguel Pasig, Metro Manila Sir : This refers to your request for opinion as to the effect of R.A. No. 1405 and other related presidential issuances providing for secrecy of bank deposits, on the investigations being conducted by the PCGG involving the ill-gotten wealth of former President Ferdinand E. Marcos, his relatives and cronies. It appears that in the course of its investigations PCGG requires Philippine banks to produce bank records and documents of Marcos, et al, by virtue of subpoena duces tecum , and evidently, you are requesting the opinion in the light of information that this Ministry, in interpreting the provisions of R.A. No. 1405 and related presidential issuances, had opined that bank records are not to be disclosed except in pursuance of a court order or in connection with an investigation of an anti-graft case involving bank deposit. Thus, the issue boils down to whether or not PCGG can compel Philippine banks to produce or disclose bank Documents and records of Marcos, et al, without violating the laws providing for secrecy of bank deposits, the pertinent provisions of which reads: R.A. No. 1405, as amended by P.D. 1792 "SEC. 2. All deposits of whatever nature with banks or banking institutions in the Philippines including investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities, are hereby considered as of an absolutely confidential nature and may not be examined, inquired or looked into by any person, government official, bureau of office, except when the examination is made in the course of a special or general examination of a bank and is specifically authorized by the Monetary Board after being satisfied that there is reasonable ground to believe that a bank fraud or serious irregularity has been or is being committed and that it is necessary to look into the deposit to establish such fraud or irregularity, or when the examination is made by an independent auditor hired by the bank to conduct its regular audit provided that the examination is for audit purposes only and the results thereof shall be for the exclusive use of the bank, or upon written permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or invested is the subject matter of the litigation." "SEC. 3. It shall be unlawful for any official or employee of a bank to disclose to any person other than those mentioned in Section Two hereof, or for an independent auditor hired by a bank to conduct its regular audit to disclose to any person other than a bank director, official or employee authorized by the bank, any information concerning said deposits." "SEC. 5. Any violation of this law will subject offender upon conviction, to an imprisonment of not more than five years or a fine of not more than twenty thousand pesos or both, in the discretion of the court." R.A. No. 6426 (Foreign Currency Deposit Act of the Philippines), as amended by P.D. Nos. 1035 and 1246 . "SEC. 8. Secrecy of Foreign Currency Deposits . A foreign currency deposit authorized under this Act, as amended by Presidential Decree No. 1035, as well as foreign currency deposit authorized under Presidential Decree No. 1034 are hereby declared as and considered of an absolutely confidential nature and, except upon the written permission of the depositor, in no instance shall such foreign currency deposits be examined, inquired or looked into by any person, government official, bureau or office whether judicial or administrative or legislative, or any other entity whether public or private; Provided, however, that said foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever." Section 8 of R.A. No. 6426 as originally worded states that "(t)he secrecy of deposits under this Act shall be governed by the provisions of (R.A. No. 1405). The query is answered affirmatively. R.A. No. 1405, as amended, penalizes disclosure of, or inquiry into, deposits with any banking institution in line with the policy of government to give encouragement to people to deposit their money in banking institutions and to discourage private boarding (Tatalon Barrio Council vs. Chief Accountant, 7 SCRA 170; Op. No. 5, s. 1982). prcd On the other hand, the legislative history of R.A. no. 6426 would show that the reason for the grant therein of confidentiality to foreign currency deposits is to encourage the inflow of foreign currency into the Philippine banking system and boost out international resources for the benefit of our starving economy (see Explanatory Note, Cong. Rec., February 11, 1971, p. 73). While P.D. No. 1246 was issued to make absolute the protective cloak of confidentiality over such foreign deposits and to better encourage the inflow of foreign currency deposits in the banking institutions authorized to accept such deposits so that said institutions can properly channel the same to loan and investments in the Philippines (see 3rd and 4th Whereas Clauses of P.D. No. 1246; Op. No. 131, s. 1985). This Ministry has had the occasion to rule that the immunity granted under Section 2 of R.A. No. 1405 is limited to two matters, namely; bank deposits and investments in government bonds; it does not extend to papers and documents pertaining to commercial transactions conducted through banking institutions such as the issuance of letters of credit or trust receipts which do not involve the deposit of money, as instrument of indebtedness, such as bank drafts or pertaining to banking transactions are covered by the immunity (Op. No. 5, s. 1982). It has likewise been ruled that the said law prohibiting examination of bank accounts does not prohibit seizure thereof to satisfy just and lawful debts, as it is inconceivable that Congress intended to convert banks into sanctuaries or places of refuge for debtor's money, placing this beyond the reach of creditors (Op. No. 54, s. 1956). The confidential nature of bank deposits has however been held to preclude inquiry or investigation of bank records for purposes of verifying estate tax liability (Op. No. 115, s. 1985), or the filing by the banks of BIR Forms that would disclose the identities of depositors to whom interest payments exceeding a given amount have been paid in any taxable year (Op. No. 313, s. 1959; Op. No. 168, s. 1981). You will note that while Section 2 of R.A. No. 1405 declares absolute confidentiality of bank deposits, it nevertheless allows disclosure under certain instances specified in the law. In the case of PNB v. Gancayco, 15 SCRA 91, where the principal issue presented is whether a bank can be compelled to disclose the records of accounts of depositor who is under investigation for unexplained wealth, the Court held that Section 8 of the Anti-Graft Law which directs in mandatory terms that bank deposits "shall be taken into consideration in the enforcement of this Section, notwithstanding any provision of law to the contrary" has amended Section 2 of Republic Act No. 1405 by providing an additional exception to the rule against disclosure of bank deposits. The Court stated: "With regard to the claim that disclosure would be contrary to the policy making bank deposits confidential, it is enough to point out that while Section 2 of Republic Act 1405 declares bank deposits to be 'absolutely confidential,' it nevertheless allows such disclosure in the following instances; (1) Upon written permission of the depositor; (2) In cases of impeachment; (3) Upon order of a competent court in cases of bribery or dereliction of duty of public officials; (4) In cases where the money deposited is the subject matter of the litigation. Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason is seen why these two classes of cases cannot be excepted from the rule making bank deposits confidential. The policy as to one cannot be different from the policy as to one cannot be different from the policy as to the other. This policy expresses the notion that a public office is a public trust and any person who enters upon its discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to public scrutiny." llcd I believe that the above case of PNB v. Gancayco is applicable to the PCGG because similarly, the proceedings it conducts are ultimately one under the Anti-Graft Law and R.A. No. 1379, the law declaring the forfeiture of ill-gotten wealth, and since the government is already in possession of evidence showing that there are assets and properties purportedly pertaining to former Pres. Marcos and his relatives and associates which were acquired as a result of the illegal use of government funds or properties by taking advantage of their office (1st Whereas Clause, E.O. No. 2) and freezing or sequestration of such assets/properties has been ordered pending the outcome of appropriate proceedings to establish this fact (par, 4, E.O. No. 2). E.O. No. 1 created the PCGG to recover the vast resources of the government that have been illegally amassed by former Pres. F.E. Marcos, his family and associates (1st Whereas clause), which are in the form of bank accounts, deposits, trust accounts, share of stocks, and real and personal properties in the Philippines and abroad. The PCGG is empowered, among others: "(a) To conduct investigation as may be necessary in order to accomplish and carry out the purpose of this order. xxx xxx xxx "(e) To administer oaths, and issue subpoenas requiring the attendance and testimony of witnesses and/or the production of such books, papers, contracts, records, statement of accounts and other documents as may be material to the investigation conducted by the Commission." (Section 3) xxx xxx xxx Additionally, E.O. No. 2 required "all persons in the Philippines holding such assets or properties, whether located in the Philippines or abroad, in their names as nominees, agents or trustees, to make full disclosure of the same to the Commission on Good Government within (30) days from publication of this Executive Order, or the substance thereof, in at least two (2) newspapers of general circulation in the Philippines." A subsequent issuance, Executive Order No. 14, provided as follows: "Sec. 4. No person shall be excused from attending and testifying or from producing books, papers, correspondence, memoranda and other records on the ground that the testimony or evidence, documentary or otherwise, required of him may tend to incriminate him or subject him to prosecution; but no individual shall be prosecuted criminally for or on account of any transaction, matter or thing concerning which he is compelled, after having claimed the privilege against self-incrimination, to testify or produce evidence, documentary or otherwise, except that such individual so testifying shall not be exempt from prosecution and conviction for perjury or false testimony committed in so testifying or from such administrative proceedings as may be proper and necessary." (As amended by E.O. No. 14-A) "Sec. 5. The Presidential Commission on Good Government is authorized to grant immunity from criminal prosecution to any person who testifies to the unlawful manner in which any respondent, defendant, or accused has acquired or accumulated the property or properties in question in cases where such testimony is necessary to prove violations of existing laws." (As amended by E.O. No. 14-A) "Sec. 7. The provisions of this Executive Order shall prevail over any and all laws, or parts thereof, as regards the investigation, prosecution, and trial of cases for violations of laws involving the acquisition and accumulation of ill-gotten wealth as mentioned in Executive Order Nos. 1 and 2." The foregoing executive orders creating and defining the jurisdiction of the PCGG were issued in pursuance of the mandate in Article II, Section 1(D) of Proclamation No. 3 dated March 25, 1986, declaring a national policy to implement the reforms mandated by the people to "recover ill-gotten properties amassed by the leaders and supporters of the previous regime". The vast powers of the Commission were conceived to enable it to achieve its vital task which involves "the just and expeditious recovery of such ill-gotten wealth in order that the funds, assets and other properties may be used to hasten national economic recovery" (See 3rd and 4th Whereas Clauses E.O. No. 14). prcd It is not doubted that the laws creating and defining the jurisdiction of the PCGG should prevail over the provisions of R.A. No. 1405, even assuming that the disclosure of bank records sought to be compelled would involve an inquiry into the bank deposits themselves, and not merely the use of bank account as conduits to transfer money to other places. This should also hold true with respect to the provisions of R.A. No. 6426, and its mandatory decrees regarding foreign currency deposits. To hold that such a massive undertaking to track down the ill-gotten wealth of former Pres. Marcos and his associates can be subject to the constraints of the law on the secrecy of bank deposits, would frustrate the mission of the Commission as clearly directed by law. The Marcos assets include bank accounts and deposits (2nd Whereas Clause, E.O. No. 2) and such bank deposits are to be taken into consideration in such cases of unexplained wealth (Sec. 8, R.A. No. 3019). It is believed that the bank deposits secrecy law cannot prevail over the mandated functions of the Commission in the conduct of investigations to accomplish its purposes, and in the issuance of subpoenas to require the production of bank records and other documents as may be material to the investigation conducted by the Commission (Sec. 3[a] and [e], E.O. No. 1). This overriding power of the commission is stressed in E.O. No. 14 as amended by E.O. No. 14-A, above-quoted, which excuses no person from testifying or from producing books and records before the Commission (Sec. 4) and authorizes the PCGG to grant immunity from criminal prosecution to such witnesses. Clearly, the provisions of R.A. No. 1405, R.A. No. 6426 and its amendatory decrees have to give way to the enabling laws of the PCGG. Please be guided accordingly. Very truly yours, (SGD.) NEPTALI A. GONZALES Secretary of Justice