DOJ Opinion No. 048, s. 1981

DOJ OPINION NO. 048 , s. 1981 March 13, 1981 The President Philippine National Bank Escolta, Manila Sir : This refers to your request for opinion on whether Section 7(b) of the National Internal Revenue Code (NIRC) of 1977 (P.D. No. 1158, as amended) has repealed Section 2 and 3 of the law on Secrecy of Bank Deposits (R.A. No. 1405) and Sections 20 and 21 of the Revised PNB Charter (P.D. No. 694). Subject to the extended discussion below, your query is answered in the negative. You state that the above-cited provision of the NIRC "appears to be broad enough to include PNB as among those which may be legally compelled by the BIR Commissioner to reveal information deemed by him as necessary . . . [in] the tax investigation of a particular taxpayer"; and that "such requested information could include information deemed confidential under RA 1405 and/or Sections 20 and 21 of the PNB Charter". Nonetheless, you submit the view that "despite the apparently broad language" of section 7(b) of the NIRC . . . it has not so amended or repealed RA 1405 or Section 20 or 21 of the PNB Charter, as to authorize the BIR Commissioner to compel the disclosure or revelation of information" prohibited in the latter laws. prLL The provisions of law involved read, insofar as are pertinent: Section 7(b), NIRC, PD 1158 as amended by PD 1705 "(b) From other persons . For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any Internal Revenue tax or collecting any such liability, the Commissioner is authorized: "(1) To examine any books, papers, records, or other data which may be relevant or material to such inquiry." "(2) To summon any person having possession, custody, or care of books of accounts containing entries, or of any information relating to the tax liability of any person to appear before the Commissioner or his authorized representative at a time and place named in the summons and to produce such books, papers, records or other data, and to give such testimony; and "(3) To take such testimony of the person concerned under oath, as may be relevant or material to such inquiry. "Any person who neglects or refuse to obey such summons, or to produce books, papers, records, or other data, or to give testimony, as required, shall be liable to the penalties prescribed by Section 337 hereof;" Sections 2 & 3, RA 1405 "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 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." "SEC. 3. It shall be unlawful for any official or employee of a banking institution to disclose to any person other than those mentioned in Section two thereof any information concerning said deposits." Sections 20 & 21, PNB Charter "SEC. 20. Confidential Information . Banking transactions relating to loans, credit accommodations, and all deposits of whatever nature are confidential in character and may not be examined, inquired or looked into by any person, government official, bureau or office, except as provided in the preceding Section, or upon written permission of the client, or upon order of a competent court, after due hearing, and only in cases where the money deposited or the transaction concerned is the subject matter of the litigation. "Production of banking records or giving testimony relative to the details of bank transactions or deposits may be ordered by a competent court only after formal notice and hearing and due finding that the transactions or deposits to which they pertain are the subject matter of the litigation, or in cases of impeachment, bribery, or dereliction of duty of public officials, or for violations of the Anti-Graft and Corrupt Practices Law." "SEC. 21. Prohibition on Officers and Employees of the Bank. Except in the situations authorized in Sections 19 and 20, no officer or employee of the Bank shall reveal to any third person, government official, bureau or office any information relative to the details of banking transactions, all deposits of whatever nature, and such other matters which the Board of Directors may classify as confidential in character, unless authorized by the Board of Directors. "This prohibition shall not apply to the exchange of credit information among government financial institutions or among banks, in accordance with established banking practices." It is noted that neither Section 7 of the NIRC nor PD 1705, by virtue of which the present version of section 7 was introduced into the NIRC as an amendment, contains a provision expressly and specifically repealing the subject provisions of the law on the Secrecy of Bank Deposits and of the PNB Charter. However, the rule of statutory construction against implied repeals is settled by jurisprudence, to wit: "Repeals and even amendments by implication are not favored." (Quimsing vs. Lachica, 2 SCRA 182) "A subsequent statute, general in character as to its terms and application, is not construed as repealing a special or specific enactment, unless the legislative purpose is manifest." (Jalondoni vs. Endaya 55 SCRA 261) "It has been the constant holding of this court that repeals by implication are not favored and will not be so declared unless it be manifest that the legislature so intended. Such a doctrine goes as far back as United States vs. Reyes, a 1908 decision. It is necessary then before such a repeal is deemed to exist that it be shown that the statutes or statutory provisions deal with the same subject matter and that the latter be inconsistent with the former. There must be a showing of repugnancy clear and convincing in character . The language used in the latter statute must be such as to render it irreconcilable with what had been formerly enacted. An inconsistency that falls short of that standard does not suffice. What is needed is a manifest indication of the legislative purpose to repeal ." (Bacobo vs. Estanislao, 72 SCRA 520; Emphasis supplied.) An examination of the provisions of Section 7, supra , fails to yield any manifest legislative intention to repeal or modify the provisions on confidentiality of bank deposits. If there had been such a legislative intent, the lawmaking authority could have easily so provided in Section 7, as it did in the Anti-Graft Law (RA 3019, as amended), section 8 of which explicitly states that "bank deposits shall be taken into consideration in the enforcement of this section [referring to dismissals of public official due to unexplained wealth], notwithstanding any provision to the contrary" and which according to the Supreme Court (PNB vs. Gancayco, 15 SCRA 91) was indicative of the legislative desire to modify the laws on confidentiality of bank accounts in connection with the enforcement of the Anti-Graft law. Another reason why the Court in the abovecited case deemed Section 8 of the Anti-Graft law, supra , to have modified the law on the secrecy of bank deposits is that an unexplained wealth case is analogous to bribery and dereliction of duty of public officials, which are among those instances expressly taken out of the scope of immunity guaranteed in the latter law. However, the same cannot be said of investigations under Section 7(b) of the Tax Code. Whereas bribery, dereliction and unexplained wealth cases proceed upon an assumption of criminal wrongdoing and therefore the procedure is accusatory in nature, a tax investigation under Section 7 NIRC does not proceed on such a premise, it being merely exploratory in character, Besides, the financial records of a private taxpayer cannot be placed in the same category as those of a government officer, whose very actuations are open to public scrutiny. Moreover, we are enable to see any irreconcilable inconsistency between the NIRC on the one hand and the cited provisions of RA 1405 and the PNB Charter, on the other hand, Bank deposits and bank transactions may be kept confidential pursuant to the latter provisions of law without doing violence to the investigative powers of the tax agency, as outlined in the former provision. Verily, the exclusion of bank deposits from the matters which the BIR may examine to determine the correctness of a taxpayer's liability would not frustrate or significantly hamper the said office in the accomplishment of its task. There are several other sources of information from which the financial condition of an individual may be ascertained, such as his books of accounts, his statement of assets and liabilities, and other documents executed in his dealings with the government or the private sector. Whatever prejudice might result from shielding bank deposits from BIR scrutiny is more than outweighted by the accomplishment of the objective of the law in safeguarding the confidentiality of bank deposits, to discourage private hoarding so that private savings may be utilized for economic development (Sec. 1, RA 1405, supra ). In view of the foregoing, we reiterate the negative reply to the query hereinabove set forth. LexLib Very truly yours, (SGD.) RICARDO C. PUNO Minister of Justice