Whether Capital Contributions of Members of Non-Stock Savings and Loan Associations Are Subject to Confidentiality Provisions of R.A. No. 8367 and/or R.A. No. 1405

DOJ OPINION NO. 024, s. 2016 April 14, 2016 Atty. Elmore O. Capule General Counsel Office of the General Counsel and Legal Services Bangko Sentral ng Pilipinas A. Mabini St.,Malate 1004 Manila Dear Atty. Capule : This refers to your request for this Department's legal opinion on whether capital contributions of members of Non-Stock Savings and Loan Associations (NSSLAs) are subject to confidentiality provisions of Section 6, Republic Act (R.A.) No. 8367, 1 herein referred to as the NSSLA Law, and/or R.A. No. 1405. 2 We take it that you want to be clarified on whether the Bangko Sentral ng Pilipinas (BSP),in exercising its regulatory powers over NSSLA, may subject the latter to examination and monitoring, especially the capital contributions of its members. You state that BSP's examination and monitoring of NSSLAs, especially their membership profile, is limited because several NSSLAs maintain that their members' "capital contributions" are absolutely confidential, arguing that they are covered under the term "deposits" under Section 6 of the NSSLA Law. It is BSP's position that "capital contributions" are not "deposits" as the term is used under Section 6 of the NSSLA Law, on the following grounds: (a) Section 7 of the NSSLA Law clearly distinguishes between "capital contributions" and "deposits"; and (b) a contrary interpretation would render the supervisory and regulatory powers of the BSP over NSSLAs toothless; and (c) Section 6 of R.A. No. 8367, being a penal provision, must be strictly interpreted and cannot embrace acts not contemplated by law. Hence, this request for legal opinion. At the outset, in line with settled precedents, the Secretary of Justice does not generally render opinion on issues affecting the substantive rights of real parties in interest such as in this case which involves the NSSLAs and its officers (upon whom the opinion of this Department would have no binding effects) and which might, in all probability, be judicially litigated. However, we are constrained to rule on the issue in view of the importance thereof. DETACa Subject to discussions below, we agree with the BSP and are of the opinion that "capital contributions" of members of NSSLAs are not "deposits" and hence, shall not be subject to confidentiality provisions of Section 6 of the NSSLA Law and/or R.A. No. 1405 We agree with your position that "capital contributions" differs from "deposits" as can be read from Section 7 of the NSSLA law which provides that: Section 7. Powers of Associations . The Association shall accept deposits from and grant loans only to its members, subject to such rules and regulations as the Monetary Board may promulgate to ensure sound, stable and efficient operation: Provided, That no deposits shall be sourced or deducted from the loans granted to a member without his or her written consent. The loans shall not exceed the members' deposits and contributions in the Association ,... (Emphasis supplied) The Senate deliberations 3 on the bill that eventually became R.A. 8367 satisfactorily clarify the ambiguity by making it plain the definition or the difference between "deposits" and "contributions", thus: Senator Osmea : Thank you, Mr. President. Now in the bill under Section 7, the loans that the associations may grant will be computed on the basis of six months' salary or income plus members' deposits and contributions to the association. First, may I have a clarification on the definition or the difference between "deposits" and "contributions"? Senator Drilon : "Deposit" would be savings deposit which would be made by the members and accepted by the Savings and Loan Association which earns interest and not subject to the risk of investments that the association may make. "Contributions" on the other hand, are capital contributions of the members. (Emphasis supplied) Thus, as contemplated under the said Section 7 of the NSSLA law, we are of the view that the term "deposits" found in Section 6 of the NSSLA Law quoted below do not include contributions which may be subject to examination, inquiry or can be looked into by any person, government official, bureau or office. Section 6 of the NSSLA is clear that only deposits are covered reads: SECTION 6. Prohibition against inquiry into or disclosure of deposits. All deposits of whatever nature with an Association in the Philippines are hereby considered as of an absolutely confidential nature and may not be examined, inquired or looked into by any person, government official, bureau or office, except 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 litigation. It shall be unlawful for any official or employee of an Association to disclose to any person any information concerning said deposits, except in the cases mentioned in the preceding paragraph of this section. Any official or employee of an Association who violates this section shall be punished under Republic Act No. 1405, as amended. On whether the BSP, in exercising its regulatory powers over NSSLA, may subject the latter to examination and monitoring, particularly the capital contributions of its members, we answer in the affirmative. The relevant portions of Section 22 of R.A. No. 8367 expressly provides for BSP's regulatory powers over NSSLAs, as follows: SECTION 22. Regulatory powers over Associations . 4 Notwithstanding the provisions of Section 130 of Republic Act No. 7653, the power to regulate the operations of any Association by the Monetary Board shall continue and consist of the following: a) in seeing to it that the capital, financing, direction and administration, as well as the integrity, responsibility, and ability of organizers, administrators, trustees, and officers of all Associations organized and operated under this Act, shall reasonably assure the safety of the interests which its members entrust to them; xxx xxx xxx e) in issuing rules and regulations for the proper implementation of this Act, effective administration of the Associations, ...;and f) in conducting such investigations, taking such remedial measures and exercising all powers under Republic Act No. 7653, insofar as they are applicable in the enforcement of this Act. The Bangko Sentral shall have the power to enforce the laws, orders, instructions, rules and regulations promulgated by the Monetary Board applicable to Associations ;... The director and examiners of the department of the Bangko Sentral charged with the regulation of Associations are hereby authorized to administer oaths to any trustee, officer or employee of any Association or to any voluntary witness and to compel the presentation of all books, documents, papers or records necessary in his judgment to ascertain the facts relative to the true condition of any Association or to any loan. Moreover, Section 2 (b) of the NSSLA Law states the policy of the State to regulate and supervise the activities of NSSLAs so that they may be able to better provide for the establishment of additional savings and credit facilities in a fair manner to their members, and to curtail or prevent acts or practices of these Associations which are prejudicial to their members' interest. In view of the foregoing, we are of the legal opinion that capital contributions of members of NSSLAs are not subject to confidentiality provisions of Section 6 of the NSSLA Law and hence, BSP examiners may inquire, examine, or look into capital contributions of members of an NSSLA. aDSIHc Please be guided accordingly. Very truly yours, (SGD.) EMMANUEL L. CAPARAS Secretary Footnotes 1. An Act Providing for the Regulation of the Organization and Operation of Non-Stock Savings and Loan Associations. 2. An Act Prohibiting Disclosure of or Inquiry Into, Deposits with Any Banking Institution and Providing Penalty Therefor. 3. Record of the Senate, Interpellations S. 1699, June 4, 1997, pages 1084-1085. 4. Section 3 of R.A. No. 8367. Definition of Terms. (b) Association shall refer only to non-stock savings and loan associations organized under this Act and the Corporation Code of the Philippines.