DOJ Opinion No. 092, s. 1991

DOJ OPINION NO. 092 , s. 1991 May 24, 1991 Atty. Mariano M. Martinez Assistant Solicitor General Office of the Solicitor General 134 Amorsolo St., Legaspi Village Makati, Metro Manila Sir : This has reference to your request for reconsideration of this Department's action in declining opinion on your query regarding the applicability of Section 8 of the Foreign Currency Deposit Act (R.A. 6426, as amended) to the Management Committee appointed by the Securities and Exchange Commission (SEC) for the Herdis Group, Inc. (HERDIS). It appearing that this Department's refusal to render opinion was anchored upon its finding that the abovesaid query involves the substantial rights of a private party, namely, the Philippine Banking Corporation, that said bank itself has initiated the said query for its guidance on the action it shall have to take regarding requests for documents relative to the HERDIS case, without having to resort to court litigation, and that no party has opposed the SEC petition for the dissolution of the HERDIS group, it is believed that there is sufficient basis to reconsider our initial refusal to render opinion herein. Accordingly, we shall proceed to rule on your inquiry. prcd As we see it, the issue raised for opinion is whether or not the management Committee for HERDIS may, in the instant case, give the consent contemplated in Section 8 of R.A. No. 6426, which reads: "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 deposits 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." (Emphasis supplied) It is your Office's position that the abovestated issue should be answered affirmatively since the Management Committee "steps into the shoes" of the HERDIS Board of Directors, which is non-existent. We find this view legally tenable. The documents accompanying the query show that there is pending before the SEC a petition for the dissolution of HERDIS filed by the government; that a management committee for HERDIS was appointed because the corporation has already stopped business operations in 1985, its board of directors have ceased to function and no meeting of the stockholders has been called, and there was imminent danger of loss, wastage or destruction of its assets, records or other properties; and that this management committee has not been opposed or objected to since its establishment. Under the laws, a management committee of a distressed corporation shall manage its business affairs, shall hold custody and control of its existing assets and properties, and shall take such action which shall best protect the interest of the investors and creditors; moreover, it can revoke or overrule the actions of the previous corporate management. (Sec. 6[d], P.D. 902-A, as amended). Indeed, the SEC has ruled that the Management Committee shall act in place of the HERDIS board of directors (See SEC Order dated October 2, 1990). It thus stands to reason that since there is no extant governing body which can manage the affairs of HERDIS and make decisions affecting its assets and properties, the SEC-appointed Management Committee should be authorized to discharge these administrative responsibilities. The said authority should cover the banking accounts of HERDIS, which are part of the corporate assets and, therefore, it may give its permission on matters affecting such bank accounts. Indeed, the authority of the committee to grant such permission may be implied from its explicit power of "custody and control" over the HERDIS assets and properties. prcd It is pertinent to add that this Department, on precious occasions, has said that the statutes on the secrecy of bank deposits were not meant to frustrate the collection of just and lawful debts by providing a sanctuary to debtor's money so as to place them beyond the reach of creditors (Secretary of Justice Op. No. 59, s. 1956); neither were these laws enacted to allow the use of banking institutions as instruments to facilitate or conceal criminal wrong doping (Opn. No. 126, s. 1989). The on-going official investigation of HERDIS is being pursued not only to protect the interest of its investors and creditors, but also to uncover the fraudulent acts and serious irregularities perpetrated by its owners during the previous regime. To argue that the management committee cannot grant the required permission under Section 8 of R.A. No. 6426 would be to frustrate the ends of justice, which is inconsistent with the rule that in case of doubt in the construction of the statute, it is presumed that the lawmaking authority intended right and justice to prevail (Art. 16, Civil Code). Please be guided accordingly. Very truly yours, (SGD.) EDUARDO G. MONTENEGRO Undersecretary