Philippine National Bank vs. Gancayco

Section 8 of the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019) impliedly amended Section 2 of Republic Act No. 1405 (the Bank Secrecy Law) by providing an additional exception to the rule on confidentiality of bank deposits, such that bank deposits of a public official under investigation for unexplained wealth may be examined, inquired into, or looked into notwithstanding the general rule of absolute confidentiality.

The plaintiffs were the Philippine National Bank (PNB), a government banking institution, and Eduardo Z. Romualdez, in his capacity as its president. The defendants were Emilio A. Gancayco and Florentino Flor, special prosecutors of the Department of Justice. The dispute arose from the intersection of two statutes: Republic Act No. 1405, which declared bank deposits of whatever nature as absolutely confidential and subject to examination only in enumerated instances, and Republic Act No. 3019, the Anti-Graft and Corrupt Practices Act, which took effect on August 17, 1960, and whose Section 8 directed that bank deposits "shall be taken into consideration" in enforcing the dismissal of public officials who acquired unexplained wealth, "notwithstanding any provision of law to the contrary." Ernesto T. Jimenez, former administrator of the Agricultural Credit and Cooperative Administration (ACCFA), was under investigation for unexplained wealth, and the special prosecutors sought his bank records from the PNB.

The defendants, Emilio A. Gancayco and Florentino Flor, acting as special prosecutors of the Department of Justice, required the Philippine National Bank to produce at a hearing scheduled for 10 a.m. on February 20, 1961 the records of the bank deposits of Ernesto T. Jimenez, former administrator of the Agricultural Credit and Cooperative Administration, who was then under investigation for unexplained wealth. The PNB declined to reveal its records, invoking Section 2 of Republic Act No. 1405, which declares all deposits with banks in the Philippines as "absolutely confidential" and prohibits their examination except upon written permission of the depositor, in cases of impeachment, upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited is the subject matter of the litigation. The bank also called attention to Section 5 of the same law, which penalizes violations with imprisonment of not more than five years, a fine of not more than twenty thousand pesos, or both.

The defendants, in turn, cited Section 8 of the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019), which provides that if a public official has been found to have acquired during his incumbency property or money manifestly out of proportion to his salary and other lawful income, that fact shall be a ground for dismissal or removal, and that "bank deposits shall be taken into consideration in the enforcement of this section, notwithstanding any provision of law to the contrary." The defendants demanded anew that Eduardo Z. Romualdez, as bank president, produce the records, threatening prosecution for contempt if he refused.

Because of the threat of prosecution, the plaintiffs filed an action for declaratory judgment in the Manila Court of First Instance. After trial, during which Senator Arturo M. Tolentino, author of the Anti-Graft and Corrupt Practices Act, testified, the court rendered judgment sustaining the power of the defendants to compel the disclosure of the bank accounts. The court said that by enacting Section 8 of the Anti-Graft and Corrupt Practices Act, Congress clearly intended to provide an additional ground for the examination of bank deposits, and that without such provision prosecutors would be hampered, if not altogether frustrated, in prosecuting those charged with having acquired unexplained wealth while in public office. The plaintiffs appealed to the Supreme Court.

• Reconciliation of Statutes: Plaintiffs argued that Section 8 of the Anti-Graft Law "simply means that such bank deposits may be included or added to the assets of the Government official or employee for the purpose of computing his unexplained wealth if and when the same are discovered or revealed in the manner authorized by Section 2 of Republic Act 1405," namely: (1) upon written permission of the depositor; (2) in cases of impeachment; (3) upon order of a competent court in cases of bribery or dereliction of duty of public officials; and (4) in cases where the money deposited or invested is the subject matter of the litigation.
• No Implied Repeal: Plaintiffs contended that the Anti-Graft Law, which took effect on August 17, 1960, is a general law that cannot be deemed to have impliedly repealed Section 2 of Republic Act No. 1405, which took effect on September 9, 1955, because repeals by implication are not favored.
• Legislative Policy: Plaintiffs argued that to construe Section 8 of the Anti-Graft Law as allowing inquiry into bank deposits would negate the policy expressed in Section 1 of Republic Act No. 1405, which is "to give encouragement to the people to deposit their money in banking institutions and to discourage private hoarding so that the same may be utilized by banks in authorized loans to assist in the economic development of the country."

• Authority Under Anti-Graft Law: Defendants cited the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019) in support of their claim of authority to compel disclosure of the bank records, and demanded that Romualdez produce the records or be prosecuted for contempt.

• Disclosure of Bank Deposits: Whether a bank can be compelled to disclose the records of accounts of a depositor who is under investigation for unexplained wealth.
• Implied Repeal: Whether Section 8 of the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019) impliedly amended Section 2 of Republic Act No. 1405 by providing an additional exception to the rule against disclosure of bank deposits.

• Disclosure of Bank Deposits: Yes. A bank can be compelled to disclose the records of accounts of a depositor under investigation for unexplained wealth, because Section 8 of the Anti-Graft and Corrupt Practices Act provides an additional exception to the confidentiality rule of Republic Act No. 1405.
• Implied Repeal: Yes. Section 8 of the Anti-Graft Law is intended to amend Section 2 of Republic Act No. 1405 by providing an additional exception to the rule against the disclosure of bank deposits, the two provisions being so repugnant to each other that no reconciliation is possible.

• Disclosure of Bank Deposits: The Court held that cases of unexplained wealth are similar to cases of bribery or dereliction of duty, which are already enumerated exceptions to the rule making bank deposits confidential. No reason was seen why these two classes of cases cannot be excepted from the rule, as the policy as to one cannot be different from the policy as to the other. The policy expresses the notion that a public office is a public trust, and any person who enters upon its discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to public scrutiny.
• Implied Repeal: The Court found that the plaintiffs' claim that their position effects a reconciliation of the provisions of the two laws was incorrect; rather, they were actually making the provisions of Republic Act No. 1405 prevail over those of the Anti-Graft Law, because even without the latter law the balance standing to the depositor's credit could be considered provided its disclosure is made in any of the cases provided in Republic Act No. 1405. The Court found the laws to be "so repugnant to each other than no reconciliation is possible." While Republic Act No. 1405 provides that bank deposits are "absolutely confidential" and may not be examined except in those cases enumerated therein, the Anti-Graft Law directs in mandatory terms that bank deposits "shall be taken into consideration in the enforcement of this section, notwithstanding any provision of law to the contrary." The Court cited the rule that if the new law is inconsistent with or repugnant to the old law, the presumption against the intent to repeal by implication is overthrown because the inconsistency or repugnancy reveals an intent to repeal the existing law, and whether a statute has been repealed by implication is ultimately a matter of legislative intent. The Court compared the case to People vs. De Venecia, where a later statute was held to be an exception to, or at most an amendment of, an earlier statute.

• Implied Repeal by Irreconcilable Conflict — If a new law is inconsistent with or repugnant to an old law, the presumption against the intent to repeal by implication is overthrown because the inconsistency or repugnancy reveals an intent to repeal the existing law. Whether a statute, either in its entirety or in part, has been repealed by implication is ultimately a matter of legislative intent. The Court applied this doctrine in finding that Section 8 of the Anti-Graft Law impliedly amended Section 2 of Republic Act No. 1405, the two provisions being irreconcilable.
• Public Office as a Public Trust — A public office is a public trust, and any person who enters upon its discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to public scrutiny. The Court invoked this principle to justify treating cases of unexplained wealth similarly to cases of bribery or dereliction of duty for purposes of allowing disclosure of bank deposits.

• "The truth is that these laws are so repugnant to each other than no reconciliation is possible. Thus, while Republic Act No. 1405 provides that bank deposits are 'absolutely confidential ... and [therefore] may not be examined, inquired or looked into,' except in those cases enumerated therein, the Anti-Graft Law directs in mandatory terms that bank deposits 'shall be taken into consideration in the enforcement of this section, notwithstanding any provision of law to the contrary.' The only conclusion possible is that section 8 of the Anti-Graft Law is intended to amend section 2 of Republic Act No. 1405 by providing additional exception to the rule against the disclosure of bank deposits." — This passage states the core ratio decidendi: the irreconcilable conflict between the two statutes and the conclusion that the later law impliedly amended the earlier one.
• "Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason is seen why these two classes of cases cannot be excepted from the rule making bank deposits confidential. The policy as to one cannot be different from the policy as to the other. This policy express the motion that a public office is a public trust and any person who enters upon its discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to public scrutiny." — This passage articulates the policy rationale for allowing disclosure of bank deposits in cases of unexplained wealth, analogizing them to the recognized exceptions of bribery or dereliction of duty.

• People vs. De Venecia, G.R. No. L-20808, July 31, 1965 — Cited for comparison; the Court noted that in that case, although Section 54 of the Revised Election Code prohibited a classified civil service employee from aiding any candidate, Section 29 of the Civil Service Act of 1959 allowed such employee to express views on current political problems or issues, and the later provision was held to be an exception to, or at most an amendment of, the earlier provision.
• Iloilo Palay and Corn Planters Ass'n vs. Feliciano, G.R. No. L-24022, March 3, 1965 — Cited in support of the proposition that whether a statute has been repealed by implication is ultimately a matter of legislative intent.

• Section 2, Republic Act No. 1405 — Declares all deposits of whatever nature with banks or banking institutions in the Philippines, including investments in bonds issued by the Government, as of an absolutely confidential nature, and prohibits examination, inquiry, or looking into them except upon written permission of the depositor, in cases of impeachment, upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or invested is the subject matter of the litigation. The Court held that this provision was impliedly amended by Section 8 of the Anti-Graft Law.
• Section 5, Republic Act No. 1405 — Provides the penalty for violation of the law: imprisonment of not more than five years, a fine of not more than twenty thousand pesos, or both, in the discretion of the court. The bank invoked this provision in declining to reveal its records.
• Section 8, Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) — Provides that if a public official has been found to have acquired during his incumbency property or money manifestly out of proportion to his salary and other lawful income, that fact shall be a ground for dismissal or removal, and that bank deposits shall be taken into consideration in the enforcement of the section, notwithstanding any provision of law to the contrary. The Court held that this provision impliedly amended Section 2 of Republic Act No. 1405.
• Section 1, Republic Act No. 1405 — States the policy of the law: to give encouragement to the people to deposit their money in banking institutions and to discourage private hoarding so that the same may be utilized by banks in authorized loans to assist in the economic development of the country. The plaintiffs invoked this policy in arguing against disclosure, but the Court found the argument unavailing.

Concepcion, Reyes, J.B.L., Makalintal, Bengzon, and Zaldivar, JJ., concurred. Bengzon, C.J., Bautista Angelo and Barrera, JJ., were on leave.