SCB PHILIPPINES VS SENATE COMMITTEE ON BANKS, FINANCIAL INSTITUTION AND CURRENCIES

EN BANC

Posted by kaye lee on 4:05 PM

G.R. No. 167173 December 27, 2007

FACTS:

SCB Phil Branch had criminal and civil charges against them before the courts in Metro Manila for
selling unregistered foreign securities in violation of Securities Regulation Code (RA 8799). Enrile, in
his privileged speech, urged the Senate to immediately conduct an inquiry in aid of legislation, to
prevent the occurrences of a similar fraudulent in the future. The respondent Committee then set an
initial hearing to investigate, in aid of legislation thereto. SCB stressed that there were cases
allegedly involving the same issues subject of legislative inquiry, thus posting a challenge to the
jurisdiction of respondent Committee to continue with the inquiry.

ISSUE:

Whether or not the respondent Committee, by aid of legislation, would encroach upon the judicial
powers vested solely in the courts who took cognizance of the foregoing cases.

RULING:

Yes. The unmistakable objective of the investigation, as set forth in the resolution, as initiated in the
privileged speech of Senate President Enrile, was simply "to denounce the illegal practices
committed by a foreign bank in selling unregistered foreign securities xxx", and at the conclusion of
the said speech "to immediately conduct an inquiry, in aid of legislation, so as to prevent the
occurrence of a similar fraudulent in the future."

The mere filing of a criminal or administrative complaint before a court or a quasi-judicial body
should not automatically bar the conduct of legislation. The exercise of sovereign legislative
authority, of which the power of legislative inquiry is an essential component, cannot be made
subordinate to a criminal or an administrative investigation.

The intent of legislative inquiries is to arrive at a policy determination, which may or may not be
enacted into law. Except only when it exercises the power to punish for contempt, the committees
of the Senate or the House of Representatives cannot penalize violators even there is
overwhelmingly evidence of criminal culpability. Other than proposing or initiating amendatory or
remedial legislation, respondent Committee can only recommend measures to address or remedy
whatever irregularities may be unearthed during the investigation, although it may include in its
Report a recommendation for criminal indictment of persons who may appear liable. At best, the
recommendation, along with the evidence, contained in such Report would only be persuasive, but it
is still up to the prosecutorial agencies and the courts to determine the liabilities of the offender.
Senate vs. Ermita (G.R. No. 169777) - Digest

Facts:

This case is regarding the railway project of the North Luzon Railways Corporation with the China
National Machinery and Equipment Group as well as the Wiretapping activity of the ISAFP, and the
Fertilizer scam.

The Senate Committees sent invitations to various officials of the Executive Department and AFP
officials for them to appear before Senate on Sept. 29, 2005. Before said date arrived, Executive Sec.
Ermita sent a letter to Senate President Drilon, requesting for a postponement of the hearing on
Sept. 29 in order to afford said officials ample time and opportunity to study and prepare for the
various issues so that they may better enlighten the Senate Committee on its investigation. Senate
refused the request.

On Sept. 28, 2005, the President issued EO 464, effective immediately, which, among others,
mandated that all heads of departments of the Executive Branch of the government shall secure
the consent of the President prior to appearing before either House of Congress. Pursuant to this
Order, Executive Sec. Ermita communicated to the Senate that the executive and AFP officials would
not be able to attend the meeting since the President has not yet given her consent. Despite the lack
of consent, Col. Balutan and Brig. Gen. Gudani, among all the AFP officials invited, attended the
investigation. Both faced court marshal for such attendance.

Issue:

Whether E.O. 464 contravenes the power of inquiry vested in Congress.

Ruling:

To determine the constitutionality of E.O. 464, the Supreme Court discussed the two different
functions of the Legislature: The power to conduct inquiries in aid of legislation and the power to
conduct inquiry during question hour.

Question Hour:

The power to conduct inquiry during question hours is recognized in Article 6, Section 22 of the 1987
Constitution, which reads:

The heads of departments may, upon their own initiative, with the consent of the President, or
upon the request of either House, as the rules of each House shall provide, appear before and be
heard by such House on any matter pertaining to their departments. Written questions shall be
submitted to the President of the Senate or the Speaker of the House of Representatives at least
three days before their scheduled appearance. Interpellations shall not be limited to written
questions, but may cover matters related thereto. When the security of the State or the public
interest so requires and the President so states in writing, the appearance shall be conducted in
executive session.

The objective of conducting a question hour is to obtain information in pursuit of Congress

oversight function. When Congress merely seeks to be informed on how department heads are
implementing the statutes which it had issued, the department heads appearance is merely
requested.

The Supreme Court construed Section 1 of E.O. 464 as those in relation to the appearance of
department heads during question hour as it explicitly referred to Section 22, Article 6 of the 1987
Constitution.

In aid of Legislation:

The Legislatures power to conduct inquiry in aid of legislation is expressly recognized in Article 6,
section21 of the 1987 Constitution, which reads:

The Senate or the House of Representatives or any of its respective committees may conduct
inquiries in aid of legislation in accordance with its duly published rules of procedure. The rights of
persons appearing in, or affected by, such inquiries shall be respected.

The power of inquiry in aid of legislation is inherent in the power to legislate. A legislative body
cannot legislate wisely or effectively in the absence of information respecting the conditions which
the legislation is intended to affect or change. And where the legislative body does not itself possess
the requisite information, recourse must be had to others who do possess it.

But even where the inquiry is in aid of legislation, there are still recognized exemptions to the power
of inquiry, which exemptions fall under the rubric of executive privilege. This is the power of the
government to withhold information from the public, the courts, and the Congress. This is
recognized only to certain types of information of a sensitive character. When Congress exercise its
power of inquiry, the only way for department heads to exempt themselves therefrom is by a valid
claim of privilege. They are not exempt by the mere fact that they are department heads. Only one
official may be exempted from this power -- the President.

Section 2 & 3 of E.O. 464 requires that all the public officials enumerated in Section 2(b) should
secure the consent of the President prior to appearing before either house of Congress. The
enumeration is broad. In view thereof, whenever an official invokes E.O.464 to justify the failure to
be present, such invocation must be construed as a declaration to Congress that the President, or a
head of office authorized by the President, has determined that the requested information is
privileged.

The letter sent by the Executive Secretary to Senator Drilon does not explicitly invoke executive
privilege or that the matter on which these officials are being requested to be resource persons falls
under the recognized grounds of the privilege to justify their absence. Nor does it expressly state
that in view of the lack of consent from the President under E.O. 464, they cannot attend the
hearing. The letter assumes that the invited official possesses information that is covered by the
executive privilege. Certainly, Congress has the right to know why the executive considers the
requested information privileged. It does not suffice to merely declare that the President, or an
authorized head of office, has determined that it is so.

The claim of privilege under Section 3 of E.O. 464 in relation to Section 2(b) is thus invalid per se. It is
not asserted. It is merely implied. Instead of providing precise and certain reasons for the claim, it
merely invokes E.O. 464, coupled with an announcement that the President has not given her
consent.

When an official is being summoned by Congress on a matter which, in his own judgment, might be
covered by executive privilege, he must be afforded reasonable time to inform the President or the
Executive Secretary of the possible need for invoking the privilege. This is necessary to provide the
President or the Executive Secretary with fair opportunity to consider whether the matter indeed
calls for a claim of executive privilege. If, after the lapse of that reasonable time, neither the
President nor the Executive Secretary invokes the privilege, Congress is no longer bound to respect
the failure of the official to appear before Congress and may then opt to avail of the necessary legal
means to compel his appearance.

Wherefore, the petitions are partly granted. Sections 2(b) and 3 of E.O. 464 are declared void.
Section 1(a) are however valid.

Garcillano vs. The House of Representatives Committees

Facts:

During the hype of Arroyo administration, a new controversy arises. During the 2007 election the
conversation of President Arroyo and the herein petitioner Virgilio Garciliano, COMELEC regional
director, regarding the desire of the president to have a favourable outcome in terms of his
senatoriables. Such conversation was recorded and was played during the house of representative
investigation. Because of such turn of events, a petition was filed before the court praying that such
playing of the illegally seized communication was in violation of RA 4200 or the anti-wire tapping
law. Also such petition for injunction prays that the Senate committee be prevented from further
conducting such investigation for the basic reason that there was no proper publication of the
senate rules, empowering them to make such investigation of the unlawfully seized documents.
Issue:

Whether or not there was proper publication of the rules as to empower the senate to further
proceed with their investigation?

Held:

No, the Supreme Court mentioned the following:

The Senate cannot be allowed to continue with the conduct of the questioned legislative inquiry
without duly published rules of procedure, in clear derogation of the constitutional requirement.

Section 21, Article VI of the 1987 Constitution explicitly provides that "the Senate or the House of
Representatives, or any of its respective committees may conduct inquiries in aid of legislation in
accordance with its duly published rules of procedure." The requisite of publication of the rules is
intended to satisfy the basic requirements of due process.Publication is indeed imperative, for it will
be the height of injustice to punish or otherwise burden a citizen for the transgression of a law or
rule of which he had no notice whatsoever, not even a constructive one.What constitutes
publication is set forth in Article 2 of the Civil Code, which provides that "laws shall take effect after
15 days following the completion of their publication either in the Official Gazette, or in a newspaper
of general circulation in the Philippines."

Respondents justify their non-observance of the constitutionally mandated publication by arguing

that the rules have never been amended since 1995 and, despite that, they are published in booklet
form available to anyone for free, and accessible to the public at the Senates internet web page.

The Court does not agree. The absence of any amendment to the rules cannot justify the Senates
defiance of the clear and unambiguous language of Section 21, Article VI of the Constitution. The
organic law instructs, without more, that the Senate or its committees may conduct inquiries in aid
of legislation only in accordance with duly published rules of procedure, and does not make any
distinction whether or not these rules have undergone amendments or revision. The constitutional
mandate to publish the said rules prevails over any custom, practice or tradition followed by the
Senate.

The invocation by the respondents of the provisions of R.A. No. 8792,otherwise known as the
Electronic Commerce Act of 2000, to support their claim of valid publication through the internet is
all the more incorrect. R.A. 8792 considers an electronic data message or an electronic document as
the functional equivalent of a written document only for evidentiary purposes.In other words, the
law merely recognizes the admissibility in evidence (for their being the original) of electronic data
messages and/or electronic documents.It does not make the internet a medium for publishing laws,
rules and regulations.

Given this discussion, the respondent Senate Committees, therefore, could not, in violation of the
Constitution, use its unpublished rules in the legislative inquiry subject of these consolidated cases.
The conduct of inquiries in aid of legislation by the Senate has to be deferred until it shall have
caused the publication of the rules, because it can do so only "in accordance with its duly published
rules of procedure."

Indeed the inquiry to be conducted by the senate in aid of legislation cannot proceed for the reason
that the rules that they will observe was not properly published as provided by the Fundamental Law
of the land. Such inquiry if allowed without observance of the required publication will put a
persons life, liberty and property at stake without due process of law. Also, the further assertion of
the senate that they already published such rules through their web page, in observance of the RA
8792 or the Electronic Commerce Act was only viewed by the court as matter of evidence and still
does not conforme with what the constitution propounded.

In this regard the high court granted the petition for injunction preventing the senate to conduct
such inquiry in aid of legislation.

Sabio vs. Gordon

FACTS:

Pursuant to Senate Resolution No. 455, Senator Gordon requested PCGG Chairman Sabio and his
Commissioners to appear as resource persons in the public meeting jointly conducted by the
Committee on Government Corporations and Public Enterprises and Committee on Public Services.

Chairman Sabio declined the invitation because of prior commitment, and at the same time invoked
Section 4(b) of EO No. 1: No member or staff of the Commission shall be required to testify or
produce evidence in any judicial, legislative or administrative proceeding concerning matters within
its official cognizance.

ISSUE:

Whether or not Section 4(b) of E.O. No.1 limits power of legislative inquiry by exempting all PCGG
members or staff from testifying in any judicial, legislative or administrative proceeding.

RULING:

No. Article VI, Section 21 of the 1987 Constitution grants the power of inquiry not only to the Senate
and the House of Representatives, but also to any of their respective committees. Clearly, there is a
direct conferral of investigatory power to the committees and it means that the mechanism which
the Houses can take in order to effectively perform its investigative functions are also available to
the committees.

It can be said that the Congress power of inquiry has gained more solid existence and expansive
construal. The Courts high regard to such power is rendered more evident in Senate v. Ermita,
where it categorically ruled that the power of inquiry is broad enough to cover officials of the
executive branch. Verily, the Court reinforced the doctrine in Arnault that the operation of
government, being a legitimate subject for legislation, is a proper subject for investigation and that
the power of inquiry is co-extensive with the power to legislate.

Considering these jurisprudential instructions, Section 4(b) is directly repugnant with Article VI,
Section 21. Section 4(b) exempts the PCGG members and staff from the Congress power of inquiry.
This cannot be countenanced. Nowhere in the Constitution is any provision granting such
exemption. The Congress power of inquiry, being broad, encompasses everything that concerns
the administration of existing laws as well as proposed or possibly needed statutes. It even extends
to government agencies created by Congress and officers whose positions are within the power of
Congress to regulate or even abolish. PCGG belongs to this class.

A statute may be declared unconstitutional because it is not within the legislative power to enact; or
it creates or establishes methods or forms that infringe constitutional principles; or its purpose or
effect violates the Constitution or its basic principles.

Moreover, Sec. 4(b) of E.O. No. 1 has been repealed by the Constitution because it is inconsistent
with the constitutional provisions on the Congress power of inquiry (Art. VI, Sec. 21), the principle of
public accountability (Art. XI, Sec. 1), the policy of full disclosure (Art. II, Sec. 28), and the right of
access to public information (Art. III, Sec. 7).

Certainly, a mere provision of law cannot pose a limitation to the broad power of Congress, in the
absence of any constitutional basis.

Senate Blue Ribbon Committee vs. Majaducon (G.R. No. 136760)

Facts:

This case had its aegis when the Senate Blue Ribbon Committee conducted an inquiry into the
alleged mismanagement of the funds and investment of the Armed Forces Retirement and
Separation Benefits System (AFP-RSBS). During the public hearings by the Blue Ribbon Committee, it
appeared that the AFP-RSBS purchased a lot from Atty. Nilo J. Flaviano worth P10,500 per square
meter. However, the deed of sale filed with the Register of Deeds indicated that the purchase price
of the lot was only P3,000 per square meter. The Committee caused the service of a subpoena to
Atty. Flaviano, directing him to appear and testify before it. Respondent refused to appear and filed
a petition for prohibition and preliminary injunction with prayer for temporary restraining order with
the RTC of General Santos City. The trial court issued a TRO directing the committee to cease and
desist from proceeding with the inquiry. The Committee filed a motion to dismiss on the ground of
lack of jurisdiction and failure to state a valid cause of action. The Trial Court denied the motion to
dismiss. Hence, this petition for certiorari alleging that Judge Majaducon committed grave abuse of
discretion and acted without or in excess of jurisdiction.

Issue:

Whether or not respondent Judge Jose Majaducon committed grave abuse of discretion when he
dismissed the petition for prohibition and issued the writ of preliminary injunction.
Ruling:

The assailed resolution of respondent Judge Majaducon was issued without legal basis. The principle
of separation of powers essentially means that legislation belongs to Congress, execution to the
Executive, and settlement of legal controversies to the Judiciary. Each is prevented from invading the
domain of the others. When the Senate Blue Ribbon Committee served subpoena on respondent
Flaviano to appear and testify before it in connection with its investigation of the alleged misuse and
mismanagement of the AFP-RSBS funds, it did so pursuant to its authority to conduct inquiries in aid
of legislation. This is clearly provided in Article 6, Section 21 of the 1987 Constitution:

The Senate of the House of Representatives or any of its respective committees may conduct
inquiries in aid of legislation in accordance with its duly published rules of procedure. The rights of
persons appearing in or affected by such inquiries shall be respected.

Hence, the RTC of General Santos City, or any court for that matter, had no authority to prohibit the
Committee from requiring respondent t appear and testify before it.

Also, the ruling in Bengzon vs. Blue Ribbon Committee cited by the respondent does not apply in this
case. The factual circumstances therein are different from those in the case at bar. In Bengzon, no
intended legislation was involved and the subject matter of the inquiry was more within the
province of the courts rather than the legislature. On the other hand, there was in this case a clear
legislative purpose, and this is to look into the reported misuse and mismanagement of the AFP-
RSBS funds, with the intention of enacting appropriate legislation to protect the rights and interests
of the officers and members of the Armed Forces of the Philippines.

Wherefore, the petition is GRANTED.

Spouses de la Paz vs. Senate Committee on Foreign Relations

Facts:

n October 2008, Gen. De La Paz, a senior officer of the PNP, headed a delegation of 8 to attend an
Interpol GA. De La Paz brought with him his wife and 3 days after the scheduled GA, de la Paz is also
scheduled to retire. After the GA, De La Paz was apprehended in the departure area for he was
carrying with him 105,000.00 (P6,930,000.00). He was also carrying with him 45,000.00
(P2,970,000.00). He failed to declare in writing that he is carrying such an amount and this is in
violation of the United Nations Convention Against Corruption and the United Nations Convention
Against Transnational Organized Crime. De La Paz and his group was later released but the s were
confiscated by the Russians. Upon arrival to the Philippines, De La Paz was issued a subpoena by the
Senate Committee on Foreign Relations for the investigation it was to conduct involving the Moscow
incident. De La Paz averred that the said committee does not have jurisdiction of the case. De La Paz
argued that the Committee is devoid of any jurisdiction to investigate the Moscow incident as the
matter does not involve state to state relations as provided in paragraph 12, Section 13, Rule 10 of
the Senate Rules of Procedure (Senate Rules). They further claim that respondent Committee
violated the same Senate Rules when it issued the warrant of arrest without the required signatures
of the majority of the members of respondent Committee. They likewise assail the very same Senate
Rules because the same were not published as required by the Constitution, and thus, cannot be
used as the basis of any investigation involving them relative to the Moscow incident.

ISSUE: Whether or not the said Committee has jurisdiction over the matter.

HELD: The SC ruled against De La Paz. Section 16(3), Article VI of the Philippine Constitution states:
Each House shall determine the rules of its proceedings. This provision has been traditionally
construed as a grant of full discretionary authority to the Houses of Congress in the formulation,
adoption and promulgation of its own rules. The challenge to the jurisdiction of the Senate Foreign
Relations Committee, raised by petitioner in the case at bench, in effect, asks this Court to inquire
into a matter that is within the full discretion of the Senate. The issue partakes of the nature of a
political question. Also, the signatures were properly obtained as evidenced by the approval of the
Senate president and it is shown that the gathering of the signatures is in accordance with the Rules.
It is also shown that the Rules of Procedure Governing Inquiries in Aid of Legislation were also
published in two newspapers of general circulation.