Bank secrecy, and why It may not matter after all

As of this Thursday, PSBank’s petition for the issuance of a TRO against the Impeachment Court subpoena of Chief Justice Renato Corona’s dollar account has yet to be taken up by the Supreme Court en banc. Both sides argue their position from the laws. Those who see the subpoenas as proper, and even the Senate itself, rely on Republic Act 1405, or the Bank Secrecy Law. Those who oppose it, on the other hand, cite a special law, RA 6426, known as the Foreign Currency Deposit Act of the Philippines. In a nutshell, Act 1405 allows bank records to be revealed in cases of impeachment, while R.A. 6426 does not provide for such an exception.

This issue is not without precedent. In the case of Intengan v. Court of Appeals, Citibank N.A. officers suspected of illegal activities were investigated. In the course of the investigation, the dollar bank records involved with the activities were obtained by law enforcement and used as basis to file criminal charges against the officers. The owners of the accounts, who were not accused of any crimes but where indirectly involved with the scheme, invoked Act 1405 (mistakenly, as the Court would later point out), claiming that the disclosure of their accounts did not fall under any of the exceptions listed.

The Supreme Court through Justice De Leon, Jr. ruled that foreign accounts are covered exclusively by R.A. 6426, while peso accounts are covered by Act 1405. And since R.A. 6426 provides for only one exception to bank records disclosures (namely, written permission from the account holder), no other grounds can be invoked. And in this case involving dollar accounts, the Court ruled in favor of the account-holders.

Tracing the history of R.A. 6426 reveals that foreign currency accounts were, at one point, subject to the exact same secrecy provisions of Act 1405, but such exceptions were later removed by amendment via two presidentialdecrees. The unmistakable intent of the amendments was to remove foreign currency accounts from the expanded list of exceptions to the bank secrecy laws and subject it to a much more restricted list of exceptions, to encourage foreign depositors to utilize our banking system for their purposes. In hindsight and in light of the current situation, this may seem like a harsh restriction against government agents pursuing justice, but as the maxim goes: Dura lex, sed lex. The law is harsh, but it is law..

The inescapable conclusion, therefore, is that impeachment cannot be a ground to force PSBank to divulge the contents of CJ Corona’s dollar accounts. Whether we like it or not, the defense is clearly correct in its objection.

But at this point, is it even necessary to discuss the issues of bank secrecy?

In the defense’s petition to the Supreme Court, the petition makes an argument out of a lack of a waiver from CJ Corona granting the prosecution authority to examine the account. Yet this argument can only be held valid if CJ Corona had a dollar account to begin with. Without this account, the subpoena is void from the beginning, and there would be no need to argue its illegality.

In fact, PSBank President Pascual Garcia III practically confirmed that CJ Corona indeed has dollar accounts with their bank, by stating in the Impeachment Court that he refused to bring the pertinent records “for fear of exposure to criminal liability.” Again, such a defense could only make sense if CJ Corona indeed had such accounts; otherwise, why risk the ire of the Senate over accounts that don’t exist?

As it stands, a year-on-year comparison of CJ Corona’s SALN and available bank records show large discrepancies between the numbers, and the SALN values are the ones that are lower. What’s more, from the SALN records, no items indicate any cash in foreign currency bank accounts, as required by the SALN form itself.

For all intents and purposes, the mere establishment of the continued existence of these dollar accounts, from the testimony of the PSBank chief and even from the defense’ own petition to the Supreme Court, is itself another piece of evidence against Corona as far as Art. II goes. For all the hue and cry on bank secrecy laws and its supposed violation, it may not even matter after all.

Juan G. M. Ragragio is a thirtysomething year-old nerd/geek hybrid who blogs athttp://raggster.wordpress.com and tweets at https://twitter.com/raggster. When not online, he either attends law school at the University of the Philippines College of Law or stays home inventing new ways to use chicken noodle soup.