DOJ Opinion No. 057, s. 1995

DOJ OPINION NO. 057 , s. 1995 May 29, 1995 Governor Gabriel C. Singson Bangko Sentral ng Pilipinas Manila Sir : This has reference to your request for a clarificatory opinion on whether or not under the existing laws "1. Government funds may be deposited in private banking institutions; and 2. If so, do such institutions have to secure the prior approval of the Monetary Board to become eligible as official depository of government funds?" LLjur The queries have arisen in view of the conflicting provisions of Section 14(5) of R.A. No. 7663 (General Appropriations Act [GAA] of 1994 now embodied in Section 14[5] of R.A. No. 7845 or the GAA of 1995) which prohibit the deposit of government funds in private banking institutions, on the one hand, and the provisions of Section 311 of R.A. No. 7160 (the ("Local Government Code of 1991"), Section 113 of R.A. No. 7653 ("New Central Bank Act"), Section 12 of R.A. No. 7353 ("Rural Banks Act of 1992") and Section 108[2] of R.A. No. 6938 ("Cooperative Code of the Philippines"), which seem to allow the deposit of government funds in private banking institutions, on the other hand. The cited provisions of the abovementioned laws read: R . A . No . 7663 ("General Appropriations Act of 1994") "Sec. 14. Restrictions on the Use of Government Funds. No government funds shall be utilized for the following purposes: xxx xxx xxx 5. To be invested in non-government securities, money market placements and similar investments or deposited in private banking institutions . The provisions of this section shall apply to local government units, political subdivisions and government-owned and/or controlled corporations. . . ." (Emphasis supplied; now Section 14[5] of R.A. No. 7845 General Appropriations Act of 1995.) R.A. No. 7160 ("Local Government Code of 1991") Section 311. Depository Accounts . Local treasurers shall maintain depository accounts in the name of their respective local government units with banks, preferably government-owned located in or nearest to their respective areas of jurisdiction. Earnings of each depository account shall accrue exclusively thereto." (Emphasis supplied.) R . A . No . 7653 ("The New Central Bank Act") "Section 113. Official Deposits . The Bangko Sentral shall be the official depository of the Government, its political subdivisions and instrumentalities as well as of government-owned or controlled corporations and, as general policy, their cash balances should be deposited with the Bangko Sentral, with only minimum working balances to be held by government-owned banks and such other banks incorporated in the Philippines as the Monetary Board may designate, subject to such rules and regulations as the board may prescribe : Provided, that such banks may hold deposits of the political subdivisions and instrumentalities of the Government beyond their minimum working balances whenever such subdivisions and instrumentalities have outstanding loans with banks." . . . (Emphasis supplied.) R . A . No . 7353 ("Rural Banks Act of 1992") "Section 12. In addition to the operations specifically authorized in this Act, any rural bank may : e) Act as official depository of municipal, city or provincial funds in the municipality, city or province where it is located subject to such guidelines as may be established by the Monetary Board : . . ." (Emphasis supplied.) R . A . No . 6938 ("Cooperative Code of the Philippines") "Article 108. Privileges . Cooperative banks shall have the following privileges subject to the approval of the Central Bank and compliance with applicable banking laws, rules and regulations . xxx xxx xxx (2) To act as a depository of government funds . For this purpose, all government departments, agencies and units of the national and local governments, including government-owned and controlled corporations are hereby authorized to deposit their funds in any cooperative bank ." (Emphasis supplied.) Not mentioned in your letter is the provision of Section 10(e) of R.A. No. 7906 ("The Thrift Banks Act of 1995") which similarly allows any thrift bank to "(e) Act as official depository of national agencies and of municipal, city or provincial funds in the municipality city or province where the thrift bank is located, subject to such guidelines as may be established by the Monetary Board." (Emphasis supplied.) You posit the view that Section 14(5) of R.A. No. 7663 [1994 GAA, now Sec. 14(5) of R.A. No. 7845, the 1995 GAA] has not repealed the abovequoted specific provisions of the Local Government Code (R.A. No. 7160), the New Central Bank Act (R.A. No. 7653), The Rural Banks Act of 1992 (R.A. No. 7353), and the Cooperative Code of the Philippines (R.A. No. 6938) relying on the rules of statutory construction that implied repeals are not favored and that when the legislature enacts a law, it is presumed to be aware of all existing laws on the subject. In other words, it is your view that government funds may be deposited in private banking institutions subject to the prior approval of the Monetary Board. cdlex We find you view legally sustainable. Section 14(5) of R.A. No. 7663 (1994 GAA), which is re-enacted in the same section of R.A. No. 7845 (1995 GAA), generally prohibits the deposit of government funds in private banking institutions while the other cited specific provisions of laws allow, either expressly or by implication, the deposit of government funds in private banks with the prior approval of the Monetary Board and subject to compliance with the rules and regulations promulgated by the Central Bank (now Bangko Sentral ng Pilipinas [BSP]). We see no irreconcilable conflict between Section 14(5) of the GAA, on the one hand, and the rest of the provisions mentioned above, on the other hand, which means that harmonization of these provisions is possible. We agree that based on settled rules of interpretation, a repeal of prior laws by a subsequent law will not be inferred unless the conflict is so clearly repugnant or irreconcilable that the conflicting laws or provisions thereof cannot stand and be implemented side by side. Implied repeals are not favored. Every effort must be used to make all acts stand and harmonize. For it is to be presumed that laws are enacted with full knowledge on the part of the legislature of all existing laws on the subject, and that if it intends to repeal a prior law, it will manifest such intention in clear and explicit terms (U.S. vs. Palacio, 33 Phil. 208; Villegas vs. Subido, 41 SCRA 190; Magtajas vs. Pryce Properties Corp. Inc., 234 SCRA 255). There is nothing in the language of Section 14(5) of the GAA which intimates the legislative intent to repeal any inconsistent provision of existing laws. On the contrary, the enactment of R.A. No. 7906 ("Thrift Banks Act of 1995"), a much later law, on February 23, 1995, and which authorizes any thrift bank to act as official depository of government funds subject to guidelines to be established by the Monetary Board, a reiteration of a similar authority granted to rural banks, cooperative banks and other private banks designated by the BSP under the aforequoted special provisions of laws, clearly evinces the legislative intent to lay down in Section 14(5) of the GAA a general prohibition which is subject to exceptions as may be specifically allowed under existing laws. In fine, as we said earlier, harmonization of all the abovementioned laws is possible and the rules of harmonization may be stated as follows: The general prohibition under Section 14(5) of the GAA stays no government funds shall be deposited in private banking institutions. By way of exception, the Monetary Board may approve, subject to such guidelines as it may establish, a request for the deposit of government funds, whether pertaining to national or local agencies or government-owned or controlled corporations, in any rural bank pursuant to R.A. No. 7353, or any cooperative bank pursuant to R.A. No. 6938, or any thrift bank pursuant to R.A. No. 7906, or in any private bank designated by the Monetary Board pursuant to R.A. No. 7653. It should be stressed that unless the Monetary Board approves it, government funds shall not be deposited in any private banking institution in view of the general prohibition in Section 14(5) of the GAA. cdll Please be guided accordingly. Very truly yours, (SGD.) TEOFISTO T. GUINGONA, JR. Secretary