DOJ Opinion No. 058, s. 2001

DOJ OPINION NO. 058 , s. 2001 October 16, 2001 Hon. Alberto V. Reyes Deputy Governor Bangko Sentral ng Pilipinas Manila Sir : This has reference to your request for the conformity of this Department to the legal opinion of your General Counsel on the issue of whether the Al-Amanah Islamic Investment Bank of the Philippines (AIIBP) may incorporate a subsidiary to be invested with Islamic banking powers. You state that the issue for consideration involves the interpretation of the charter of the AIIBP (R.A. No. 6848) and related provisions of the General Banking Law of 2000 (R.A. No. 8791); that your General Counsel has opined that AIIBP may incorporate a subsidiary to be invested with Islamic banking powers based on the provisions of R.A. No. 6848 and R.A. No. 8791; that the present request for conformity to such opinion is made in connection with the privatization of AIIBP; and that the conformity of the Securities and Exchange Commission (SEC) has also been requested because it is the agency that will approve the incorporation of any subsidiary of AIIBP. As you have indicated your General Counsel is of the view that "Section 16 ( sic ) . . . [R.A. No. 6848] invests . . . [the Islamic bank] with authority to invest in an allied undertaking as the Monetary Board has declared or may declare as appropriate" and that the Manual of Regulations has classified "banks" as among the financial allied undertakings of a bank; that "Section 17 of the same law authorizes the Islamic bank to participate 'in any way' in 'banks performing activities similar to its own'", that R.A. No. 6848 does not preclude the Monetary Board from declaring a subsidiary with Islamic banking powers as an appropriate 'allied undertaking' of AIIBP"; that Section 3.2 of R.A. No. 8791, which includes "Islamic banks" among the classification of banks, suggests that the law contemplated a number of institutions performing Islamic banking functions; and that even without such specific classification, the Monetary Board is believed to have the power "to constitute a special type of banks performing Islamic banking based on its statutory authority to provide for 'other classification of banks as may be determined by the Monetary Board of the Bangko Sentral'". cCESTA With regret, this Department is unable to render the requested opinion. The determination of whether AIIBP may incorporate a subsidiary pertains to the primary jurisdiction of the SEC. On the other hand, the Bangko Sentral is in the best position to determine whether an entity may be invested with Islamic banking powers considering its authority over banking institutions and familiarity with the banking laws and the rules and regulations promulgated by it or the Monetary Board and the policy repercussions of the issues involved. Pursuant to settled practice and precedents, this Department has consistently refrained from expressing its views on matters that fall within the primary jurisdiction of another office over which he possesses no revisory authority. 1 This practice has evolved not only out of respect and deference for the competence and expertise of the office or agency having primary jurisdiction to resolve the matter and for its familiarity with the policy repercussions of the resolution of the question involved but also from a logical recognition of the lawful exercise of an authority conferred by law. 2 Very truly yours, (SGD.) HERNANDO B. PEREZ Secretary Footnotes 1. Secretary of Justice Opinion No. 2, series of 1991. 2. Secretary of Justice Opinion No. 17, series of 1994; No. 7, series of 1996.