The Supreme Court TRO Against the Senate Impeachment Court

In Philippine Savings Bank vs. Senate Impeachment Court, G.R. No. 200238, Philippine Savings Bank (PS Bank) and its President, Pascual M. Garcia III, filed before the Supreme Court an original civil action for certiorari and prohibition with application for temporary restraining order and/or writ of preliminary injunction. The TRO was sought to stop the Senate, sitting as impeachment court, from further implementing the Subpoena Ad Testificandum et Duces Tecum, dated February 6, 2012, that it issued against the Branch Manager of PS Bank, Katipunan Branch.

On February 9, 2012, the Court, voting 8-5-2, issued a TRO enjoining the impeachment court from further implementing the subpoena with respect to the foreign currency denominated accounts of CJ Corona. Those who voted for the issuance of the TRO are Justices De Castro, Brion, Bersamin, Abad, Villarama, Perez, Mendoza and Reyes. Dissenting were Justices Carpio, Peralta, Del Castillo, Sereno and Bernabe. Chief Justice Corona and Justice Velasco inhibited.

The majority opinion

In issuing the TRO, the Court majority held that a “clear right to maintain the confidentiality of the foreign currency deposits of the Chief Justice is provided under Section 8 of Republic Act No. 6426, otherwise known as the Foreign Currency Deposit Act of the Philippines (RA 6426).  This law establishes the absolute confidentiality of foreign currency deposits[.]” There is only a single exception to the secrecy of foreign currency deposits, according to the majority, and that is, disclosure is allowed only upon the written permission of the depositor.

In this case, neither the prosecution nor the Impeachment Court has presented any such written waiver by the alleged depositor, Chief Justice Renato C. Corona.  Also, while impeachment may be an exception to the secrecy of bank deposits under RA 1405, it is not an exemption to the absolute confidentiality of foreign currency deposits under RA 6426. Thus, the Court issued a TRO against the impeachment court.

The dissent of Justice Carpio

Justice Carpio wrote a dissenting opinion and opined that the foreign currency accounts of Chief Justice Corona are not covered by Sec. 8 of RA No. 6426. Because of this, petitioners PS Bank and its President, Pascual M. Garcia III, will not suffer grave and irreparable injury by the implementation of the subpoenas issued by the impeachment court. Thus, the prayer for TRO must be denied.

According to Justice Carpio, the “whereas” clause of PD No. 1246, which inserted the current Sec. 8 into RA 6426, expressly declares that the secrecy of foreign currency deposits under Section 8 of RA No. 6426 is intended to protect “depositors who are non-residents” because the purpose of the secrecy is to “encourage the inflow of foreign currency deposits” to Philippine banks from such “depositors who are non-residents.” His thesis is that as regards Philippine citizens who hold foreign currency deposits with local banks, the secrecy applicable is that provided by RA 1405, the general law on secrecy of bank deposits, and not Sec. 8 into RA 6426. Under Section 2 of RA No. 1405, “all deposits of whatever nature with banks xxx may be examined, inquired or looked into xxx in cases of impeachment.” Thus, there is no question that the impeachment court can pry open the foreign currency accounts of impeachable officers.

Justice Carpio provided what he calls an “even a more compelling legal ground why the foreign currency accounts in question are not confidential,” thus:

xxx. Section 8 of RA No. 6713, as amended, mandates the disclosure of the assets of government officials and employees who “have an obligation” to disclose their assets. Moreover, Section 8 expressly states that “the public has the right to know the assets” of government officials and employees. xxx.

            xxx                   xxx                   xxx

Thus, government officials and employees have the “obligation” to disclose their assets to the public, and the public has “the right to know” the assets of government officials and employees. This “obligation” of government officials and employees to disclose all their assets is absolute and has no exception. The right of the public to know the assets of government officials and employees is also absolute and has no exception.

What the majority has ruled is that government officials and employees have no obligation to disclose their foreign currency accounts, and that the public has no right to know such foreign currency accounts. This completely violates Section 8 of RA No. 6713. The majority ruling invents an exception that is not found in Section 8 of RA 6713. This exception renders Section 8 of RA 6713 useless. Government officials and employees can simply open foreign currency accounts and deposit all their cash in such accounts. Then they no longer have the “obligation” to disclose their cash assets, and the public no longer has “the right to know” such assets.

Section 8 of RA No. 6713 is a much later law than Section 8 of RA No. 6426. The repealing clause of RA No. 6713 states that “all laws, decrees and orders or parts thereof inconsistent herewith, are deemed repealed or modified accordingly, unless the same provide for a heavier penalty.” Since there is an irreconcilable inconsistency between Section 8 of RA No. 6713 and Section 8 of RA No. 6426, the later law, which is RA No. 6713, prevails. In short, the government officials and employees’ “obligation” to disclose their assets, and the people’s “right to know” such assets, as expressly mandated by Section 8 of RA No. 6713, prevails over the secrecy of foreign currency deposits under Section 8 of RA No. 6426, granting that such secrecy applies to Philippine citizens.

Incidentally, Chief Justice Renato C. Corona has publicly admitted that he owns the foreign currency accounts in question. xxx.

With this admission that he owns the foreign currency accounts in question, Chief Justice Corona has the “obligation” to disclose these foreign currency assets to the people, who have “the right to know” his assets.

The dissent of Justice Sereno

Justice Sereno likewise wrote a dissenting opinion and held that in the present case, petitioners failed to show an actual existing right that is violated or threatened with violation, a condition for the issuance of a TRO. The issuance by the Impeachment Court of a subpoena relating to the alleged FCDs of therein respondent Chief Justice Renato C. Corona does not entitle petitioners to a preliminary injunctive relief.

The thesis of Justice Sereno: since anyone has yet to claim ownership of the subject 5 foreign currency deposits (FCDs), petitioners cannot prematurely invoke the privilege of absolute confidentiality. The confidential nature of the FCDs is extended only in favor of the owner of the account. Stated differently, it is only the depositor who may invoke the confidentiality privilege and the exception thereto. In the present case, the prosecution alleges that the FCD accounts are owned by the Chief Justice, while the defense denies his ownership of the same. The documents relating to these accounts were in fact subpoenaed to ascertain whether the Chief Justice is the named depositor therein. Thus, until the ownership of these FCDs is established, the confidentiality privilege under R.A. 6426 is yet to attach. And until there is a clear claim by the Chief Justice of ownership of the 5 FCDs, the Court has to consider that there exists an implied denial of ownership of any bank account containing money beyond what is disclosed in the Chief Justice’s SALN.

Justice Sereno also submitted an interesting proposition: because the Chief Justice is a public officer, he is constitutionally and statutorily mandated to perform a positive duty to disclose all of his assets and liabilities.  This already operates as the consent required by law. When a public officer affixes his signature on his Oath of Office, he embraces all his constitutional and statutory duties as a public officer, one of which is the positive duty to disclose all of his assets and liabilities. Thus, for all public officers, what is absolute is not the confidentiality privilege, but the obligation of disclosure. 

According to the lady Justice, public interest must be held paramount over private or economic concerns. She argued: 

Even if this Court were to accept the mistaken view of petitioners that they need to secure a written consent to disclose the alleged FCD accounts, the circumstances of this case would nevertheless warrant their exemption from the confidentiality rule of Sec. 8 of R.A. 6426.

Granting the prayer of petitioners for injunctive relief is tantamount to endorsing their position on absolute confidentiality, so much so that higher values, such as public accountability, cannot even be considered as a valid exception to the said privilege. This contention pushes the law to an absurdity, as the adherence to this absolutist stance invites unscrupulous public officers to convert their peso deposits to foreign currency accounts in order to hide from the law and evade criminal liability. As a result, R.A. 6426 is used as a shield to conceal malfeasance and other unlawful conduct. This Court’s Resolution has therefore created a safe haven for criminal acts and cultivated an atmosphere of impunity. Certainly, this was never the intendment of the law.

In the end, this Court’s Resolution results in an iniquitous situation, where the supreme interest of the public to maintain accountability among public officers is relegated to the sidelines in favor of a statutory privilege that arose purely out of economic considerations. Considering that petitioners’ alleged entitlement to the injunctive relief is based on mere news reports, exaggerated theories of a possible bank run, or stubborn fears of culpability, this Court has no basis to enjoin the Impeachment Court from exercising its constitutional mandate to require the production of documents and the rendering of testimony before it under the assailed subpoena. 

The concurring opinion of Justice Brion

Justice Brion concurred with the majority ruling and refuted the dissents in his separate concurrence. In his concurring opinion, he argued that the decisions in Salvacion vs. Central Bank, China Banking Corporation vs. CA and Ejercito vs. Sandiganbayan, which were cited to support the claim that the rule on absolute confidentiality of foreign currency deposits has been relaxed or liberalized, are inapplicable in this case. He noted:

 The impact of the principle of stare decisis that is cited as basis is limited; specific judicial decisions are binding only on the parties to the case and on future parties with similar or identical factual situations. As will be explained below, the cited cases do not share the same factual antecedents as the present case.

 First, the Court in Salvacion made it abundantly clear that because of the “peculiar circumstances” obtaining in the case, the rule that exempts dollar deposits (of a transient) from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body, cannot serve as an instrument of injustice and deprive a Philippine national who is the victim of a heinous crime of the damages awarded to her by the court.  The “peculiar circumstances” in Salvacion hardly obtains in the present case, so that the ruling cannot be applied to Chief Justice Corona’s impeachment trial.   

Second, in China Bank, the Court ruled that the respondent, as owner of the funds (dollar deposit checks) unlawfully taken and which were deposited in China Bank, had the right to inquire into the said deposits because his consent was deemed given.  From this perspective, China Bank is an example of the waiver done by the rightful owner of the absolute confidentiality of foreign currency deposits.  This situation does not obtain in the present case.  At any rate, the Court also admitted that due to the distinctive circumstances attendant to the case, its ruling was on a limited pro hac vice. This express limitation negates any application of the ruling to the present case, save only if the facts of this ruling are similar or identical to Chief Justice Corona’s case, which they are not.

Third, Ejercito does not involve foreign currency deposits and, therefore, should be rejected outright as a ruling applicable to the present case.  In Ejercito, the Court held that the petitioner’s accounts are no longer protected by RA No. 1405 (Secrecy of Bank Deposits Law) because of the presence of two exceptions, namely: (1) the examination of bank accounts is upon order of a competent court in cases of bribery or dereliction of duty of public officials (plunder case against the petitioner is analogous to bribery or dereliction of duty) and (2) the money deposited or invested is the subject matter of litigation.  Aside from the involvement of local currency deposits and the inapplicability of RA No. 1405 to a foreign currency deposit situation, the two exceptions are not present in the Chief Justice’s present impeachment case.

Justice Brion also took issue with the thesis of Justice Carpio that the “whereas” clause of PD No. 1246, which inserted the current Sec. 8 into RA 6426, justify the non-application of the absolute confidentiality rule, thus:

Reference to the “whereas” clause to justify the non-application of the absolute confidentiality rule, however, is unnecessary and inappropriate in light of the clear language of RA No. 6426.  “Preambles, or ‘whereas clauses’ x x x are not part of the act x x x and consequently ‘cannot enlarge or confer powers, nor control the words of the act, unless they are doubtful or ambiguous.’” Stated otherwise, as a tool for statutory construction, preambles and “whereas” clauses may be utilized only if an ambiguity exists in the statute.  In Echegaray v. Secretary of Justice, this Court had occasion to declare:

a preamble is not really an integral part of a law.  It is merely an introduction to show its intent or purposes.  It is merely an introduction to show its intent or purposes.  It cannot be the origin of rights and obligations.  Where the meaning of a statute is clear and unambiguous, the preamble can neither expand nor restrict its operation, much less prevail over its text. 

RA No. 6426, by its plain terms, is clear that all foreign currency deposits are considered to be absolutely confidential.  The law expressly refers to deposits not to the identity, nationality, or residence of the depositors.  Thus, to claim that the depositors must be considered is misplaced.  Also, to so claim is to read into the clear words of the law exemptions that its literal wording does not support.  To so claim may even amount to judicial legislation. 

In light of the express and clear terms of the law, the basic rule of statutory construction should therefore apply: “legislative intent is to be determined from the language employed, and where there is no ambiguity in the words, there is no room for construction.” In the absence of ambiguity, the Court may not construe a law’s provisions by taking into account questions of expediency, good faith, practical utility and other similar reasons so as to relax non-compliance therewith.

Justice Brion noted that the Court had previously ruled that bank accounts laws are not covered by the right to information under Article III, Section 7 and the requirement of full public disclosure under Article II, Section 28 of the Constitution, which is statutorily implemented through RA No. 6713 (Code of Conduct and Ethical Standards for Public Officials and Employees).  The Constitution in fact declares that the public’s right to information is “subject to such limitations as may be provided by law.” The implied repeal of inconsistent laws that RA No. 6713 mandates cannot be interpreted as a repeal of the express substantive right granted to confidentiality under Section 8 of RA No. 6426, even if the latter was enacted earlier. Implied repeals are not favored; the presumption is against inconsistency or repugnance and, accordingly, against implied repeals. He added:

The ruling in Republic v. Eugenio, to my mind, reflects the prevailing view under our jurisprudence pointing towards the retention and dominance of the absolute confidential nature of bank deposits.  In the recent case of BSB Group, Inc. v. Go (a 2010 case), the Court reiterated the importance of “financial privacy.”  As observed by Tajan, despite the multiplication of the exceptions to bank secrecy, the Court declared that bank secrecy, which falls within the legally-recognized zones of privacy, remains the general rule and that the “present legal order is obliged to conserve the absolutely confidential nature of bank deposits.”  The Court found disfavor in construing the exceptions in a manner that authorizes unwarranted and unbridled inquiry into bank accounts.

Finally, Justice Brion averred that Justice Carpio’s view that the majority’s TRO is “a mockery of all existing laws designed to insure transparency and good governance in public service” is not well taken.  This view, said Justice Brion, declares that “the majority ruling advises all government officials and employees that they can legally evade reporting their actual assets in their Statement of Assets, Liabilities, and Net Worth x x x by simply opening foreign currency deposit accounts with local banks.” He summed up the import of the issuance by the Court majority of the TRO:

xxx.  The question the Court has resolved for now is whether the facts and the law justify the issuance of a TRO.  The object of a TRO, as earlier mentioned, is to simply maintain the status quo.  The TRO, to be sure, is not a ruling encouraging public officials to use foreign deposits to legally evade the correct SALN report.  To so claim is to extend the import of TRO beyond its clear objective to maintain the status quo.