Standard Chartered Bank (Philippine Branch) vs. Senate Committee On Banks, Financial Institutions and Currencies

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SUPREME COURT REPORTS ANNOTATED VOLUME 541

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Case Title:
STANDARD CHARTERED BANK (Philippine Branch), PAUL SIMON MORRIS, SUNDARA
RAMESH, OWEN BELMAN, SANJAY AGGARWAL, RAJAMANI CHANDRASHEKAR,
MARIVEL GONZALES, MA. ELLEN VICTOR, CHONA G. REYES, ZENAIDA IGLESIAS,
RAMONA BERNAD, MICHAELANGELO AGUILAR, and FERNAND TANSINGCO, petitioners,
vs. SENATE COMMITTEE ON BANKS, FINANCIAL INSTITUTIONS AND CURRENCIES, as
represented by its Chairperson, HON. EDGARDO J. ANGARA, respondent.
Citation: 541 SCRA 456
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456 SUPREME COURT REPORTS ANNOTATED
Standard Chartered Bank (Philippine Branch) vs. Senate Committee on Banks, Financial
Institutions and Currencies
G.R. No. 167173. December 27, 2007.*
STANDARD CHARTERED BANK (Philippine Branch), PAUL SIMON MORRIS, SUNDARA
RAMESH, OWEN BELMAN, SANJAY AGGARWAL, RAJAMANI CHANDRASHEKAR,
MARIVEL GONZALES, MA. ELLEN VICTOR, CHONA G. REYES, ZENAIDA IGLESIAS,
RAMONA BERNAD, MICHAELANGELO AGUILAR, and FERNAND TANSINGCO, petitioners,
vs. SENATE COMMITTEE ON BANKS, FINANCIAL INSTITUTIONS AND CURRENCIES, as
represented by its Chairperson, HON. EDGARDO J. ANGARA, respondent.
Legislature; Inquiries in Aid of Legislation; Judgments; Central to the Court’s ruling in Bengzon, Jr. v. Senate
Blue Ribbon Committee, 203 SCRA 767 (1991)—that the Senate Blue Ribbon Committee was without any
constitutional mooring to conduct the legislative investigation—was the Court’s dete rmination that the intended
inquiry was not in aid of legislation.—It is true that in Bengzon, the Court declared that the issue to be investigated
was one over which jurisdiction had already been acquired by the Sandiganbayan, and to
_______________
* EN BANC.
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Standard Chartered Bank (Philippine Branch) vs. Senate Committee on Banks, Financial Institutions
and Currencies
allow the [Senate Blue Ribbon] Committee to investigate the matter would create the possibility of conflicting
judgments; and that the inquiry into the same justiciable controversy would be an encroachment on the exclusive
domain of judicial jurisdiction that had set in much earlier. To the extent that, in the case at bench, there are a
number of cases already pending in various courts and administrative bodies involving the petitioners, relative to
the alleged sale of unregistered foreign securities, there is a resemblance between this case and Bengzon.
However, the similarity ends there. Central to the Court’s ruling in Bengzon—that the Senate Blue Ribbon
Committee was without any constitutional mooring to conduct the legislative investigation—was the Court’s
determination that the intended inquiry was not in aid of legislation. The Court found that the speech of Senator
Enrile, which sought such investigation contained no suggestion of any contemplated legislation; it merely called
upon the Senate to look into possible violations of Section 5, Republic Act No. 3019.
Same; Same; Separation of Powers; The mere filing of a criminal or an administrative complaint before a court
or a quasi-judicial body should not automatically bar the conduct of legislative investigation—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 mere filing of a criminal or an
administrative complaint before a court or a quasi-judicial body should not automatically bar the conduct of
legislative investigation. Otherwise, it would be extremely easy to subvert any intended inquiry by Congress
through the convenient ploy of instituting a criminal or an administrative complaint. Surely, 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. As succinctly stated in the landmark case
Arnault v. Nazareno, 87 Phil. 29 (1950)—[T]he power of inquiry—with process to enforce it—is an essential and
appropriate auxiliary to the legislative function. 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—which is not infrequently true—recourse
must be had to others who possess it.
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1
Same; Same; Same; Contempt; The exercise by Congress or by any of its committees of the power to punish
contempt is based on the principle of self-preservation—as the branch of the government vested with the
legislative power, independently of the judicial branch, it can assert its authority and punish contumacious acts
against it.— The exercise by Congress or by any of its committees of the power to punish contempt is based on
the principle of self-preservation. As the branch of the government vested with the legislative power,
independently of the judicial branch, it can assert its authority and punish contumacious acts against it. Such
power is sui generis, as it attaches not to the discharge of legislative functions per se, but to the sovereign
character of the legislature as one of the three independent and coordinate branches of government. In this case,
petitioners’ imputation that the investigation was “in aid of collection” is a direct challenge against the authority of
the Senate Committee, as it ascribes ill motive to the latter. In this light, we find the contempt citation against the
petitioners reasonable and justified.
Same; Same; Contempt; It is axiomatic that the power of legislative investigation includes the power to compel
the attendance of witnesses, and corollary to the power to compel the attendance of witnesses is the power to
ensure that said witnesses would be available to testify in the legislative investigation.—It is axiomatic that the
power of legislative investigation includes the power to compel the attendance of witnesses. Corollary to the
power to compel the attendance of witnesses is the power to ensure that said witnesses would be available to
testify in the legislative investigation. In the case at bench, considering that most of the officers of SCBPhilippines
are not Filipino nationals who may easily evade the compulsive character of respondent’s summons by leaving
the country, it was reasonable for the respondent to request the assistance of the Bureau of Immigration and
Deportation to prevent said witnesses from evading the inquiry and defeating its purpose. In any event, no HDO
was issued by a court. The BID instead included them only in the Watch List, which had the effect of merely
delaying petitioners’ intended travel abroad for five (5) days, provided no HDO is issued against them.
Same; Same; Same; Right to Privac y; Right to Information; Rational Basis Relationship Test; While it is true that
Section 21, Article VI of the Constitution, guarantees respect for the rights of persons
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affected by the legislative investigation, not every invocation of the right to privacy should be allowed to thwart a
legitimate congressional inquiry; The right of the people to access information on matters of public concern
generally prevails over the right to privacy of ordinary financial transactions; Under the rational basis relationship
test, there is no infringement of the individual’s right to privacy where the requirement to disclose information is
for a valid purpose, such as, to ensure that the government agencies involved in regulating banking transactions
adequately protect the public who invest in foreign securities.—With respect to the right of privacy which
petitioners claim respondent has violated, suffice it to state that privacy is not an absolute right. While it is true
that Section 21, Article VI of the Constitution, guarantees respect for the rights of persons affected by the
legislative investigation, not every invocation of the right to privacy should be allowed to thwart a legitimate
congressional inquiry. In Sabio v. Gordon, 504 SCRA 704 (2006), we have held that the right of the people to
access information on matters of public concern generally prevails over the right to privacy of ordinary financial
transactions. In that case, we declared that the right to privacy is not absolute where there is an overriding
compelling state interest. Employing the rational basis relationship test, as laid down in Morfe v. Mutuc, 22 SCRA
424 (1968), there is no infringement of the individual’s right to privacy as the requirement to disclosure information
is for a valid purpose, in this case, to ensure that the government agencies involved in regulating banking
transactions adequately protect the public who invest in foreign securities. Suffice it to state that this purpose
constitutes a reason compelling enough to proceed with the assailed legislative investigation.
Same; Same; Same; Right against Self-Incrimination; Witnesses; The right of the accused against self-
incrimination is extended in administrative investigations that partake of the nature of or are analogous to criminal
proceedings—the privilege has consistently been held to extend to all proceedings sanctioned by law; and to all
cases in which punishment is sought to be visited upon a witness, whether a party or not.—As regards the issue
of self-incrimination, the petitioners, officers of SCB-Philippines, are not being indicted as accused in a criminal
proceeding. They were summoned by respondent merely as resource persons, or as witnesses, in a legislative
inquiry. As distinguished by this Court—[An] accused occupies a different tier of protection from an ordinary
witness. Whereas an
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ordinary witness may be compelled to take the witness stand and claim the privilege as each question requiring
an incriminating answer is shot at him, an accused may altogether refuse to take the witness stand and refuse
to answer any and all questions. Concededly, this right of the accused against self-incrimination is extended to
respondents in administrative investigations that partake of the nature of or are analogous to criminal
proceedings. The privilege has consistently been held to extend to all proceedings sanctioned by law; and to all
cases in which punishment is sought to be visited upon a witness, whether a party or not. However, in this case,
petitioners neither stand as accused in a criminal case nor will they be subjected by the respondent to any penalty
by reason of their testimonies. Hence, they cannot altogether decline appearing before respondent, although
they may invoke the privilege when a question calling for an incriminating answer is propounded.
Same; Same; Same; Same; Same; Separation of Powers; It may be conceded that Congress is without authority
to compel disclosures for the purpose of aiding the prosecution of pending suits but the authority of that body,
directly or through its Committees, to require pertinent disclosures in aid of its own constitutional power is not
abridged because the information sought to be elicited may also be of use in such suits; The prosecution of
2
offenders by the prosecutorial agencies and the trial before the courts is for the punishment of persons who
transgress the law while the intent of legislative inquiries, on the other hand, is to arrive at a policy determination,
which may or may not be enacted into law.—Petitioners’ argument, that the investigation before respondent may
result in a recommendation for their prosecution by the appropriate government agencies, such as the
Department of Justice or the Office of the Ombudsman, does not persuade. As held in Sinclair v. United States,
279 U.S. 263, 73 L ed. 692, 698 (1928)—It may be conceded that Congress is without authority to compel
disclosures for the purpose of aiding the prosecution of pending suits; but the authority of that body, directly or
through its Committees, to require pertinent disclosures in aid of its own constitutional power is not abridged
because the information sought to be elicited may also be of use in such suits. x x x It is plain that investigation
of the matters involved in suits brought or to be commenced under the Senate resolution directing the institution
of suits for the cancellation of the leases might directly aid in respect of legislative action. The prosecution of
offenders by the prosecutorial
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agencies and the trial before the courts is for the punishment of persons who transgress the law. The intent of
legislative inquiries, on the other hand, is to arrive at a policy determination, which may or may not be enacted
into law.
Same; Same; Same; Same; Same; Same; Except only when the Congress and/or its Committees exercises the
power to punish for contempt, it cannot penalize violators even if there is overwhelming evidence of criminal
culpability—it 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 the criminal indictment of
persons who may appear liable.—Except only when it exercises the power to punish for contempt, the
respondent, as with the other Committees of the Senate or of the House of Representatives, cannot penalize
violators even if there is overwhelming evidence of criminal culpability. Other than proposing or initiating
amendatory or remedial legislation, respondent 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 the criminal indictment of persons who may appear liable. At best, the recommendation, along with the
evidence, contained in such a Report would be persuasive, but it is still up to the prosecutorial agencies and the
courts to determine the liabilities of the offender.
SPECIAL CIVIL ACTION in the Supreme Court. Prohibition.
The facts are stated in the opinion of the Court.
Romulo, Mabanta, Buenaventura, Sayoc and Delos Angeles for petitioners.
Senate Legal Counsel and Jeri Alanz A. Banta for respondent.
NACHURA, J.:
Before us is a Petition for Prohibition (With Prayer for Issuance of Temporary Restraining Order
and/or Injunction) dated and filed on March 11, 2005 by petitioners against respondent Senate
Committee on Banks, Financial Institutions
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and Currencies, as represented by its Chairperson Edgardo J. Angara (respondent).
Petitioner Standard Chartered Bank (SCB)-Philippines is an institution incorporated in England
with limited liability and is licensed to engage in banking, trust, and other related operations in the
Philippines. Petitioners Paul Simon Morris, Sundara Ramesh, Owen Belman, Sanjay Aggarwal,
Rajamani Chandrashekar, Marivel Gonzales, Ma. Ellen Victor, Chona G. Reyes, Zenaida Iglesias,
Ramona Bernad, Michaelangelo Aguilar, and Fernand Tansingco are the Chief Executive Officer,
Chief Operations Officer, Country Head of Consumer Banking, General Manager for Credit Card
and Personal Loans, Chief Financial Officer, Legal and Compliance Officer, former Trust and
Investment Services Head, Country Tax Officer, Head of Corporate Affairs, Head of Banking
Services, Head of Client Relationships, and the Head of Global Markets of SCB-Philippines,
respectively. Respondent, on the other hand, is one of the permanent committees of the Senate
of the Philippines.
The petition seeks the issuance of a temporary restraining order (TRO) to enjoin respondent from
(1) proceeding with its inquiry pursuant to Philippine Senate (P.S.) Resolution No. 166; (2)
compelling petitioners who are officers of petitioner SCB-Philippines to attend and testify before
any further hearing to be conducted by respondent, particularly that set on March 15, 2005; and
(3) enforcing any hold-departure order (HDO) and/or putting the petitioners on the Watch List. It
also prays that judgment be rendered (1) annulling the subpoenae ad testificandum and duces
tecum issued to petitioners, and (2) prohibiting the respondent from compelling petitioners to
appear and testify in the inquiry being conducted pursuant to P.S. Resolution No. 166.
The facts are as follows:
On February 1, 2005, Senator Juan Ponce Enrile, Vice Chairperson of respondent, delivered a
privilege speech enti-
3
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tled “Arrogance of Wealth”1 before the Senate based on a letter from Atty. Mark R. Bocobo
denouncing SCB-Philippines for selling unregistered foreign securities in violation of the
Securities Regulation Code (R.A. No. 8799) and urging the Senate to immediately conduct an
inquiry, in aid of legislation, to prevent the occurrence of a similar fraudulent activity in the future.
Upon motion of Senator Francis Pangilinan, the speech was referred to respondent. Prior to the
privilege speech, Senator Enrile had introduced P.S. Resolution No. 166,2 to wit:
RESOLUTION
DIRECTING THE COMMITTEE ON BANKS, FINANCIAL INSTITUTIONS AND CURRENCIES, TO CONDUCT
AN INQUIRY, IN AID OF LEGISLATION, INTO THE ILLEGAL SALE OF UNREGISTERED AND HIGH-RISK
SECURITIES BY STANDARD CHARTERED BANK, WHICH RESULTED IN BILLIONS OF PESOS OF
LOSSES TO THE INVESTING PUBLIC
WHEREAS, Republic Act No. 7721, otherwise known as the “Law Liberalizing the Entry and Scope of
Operations of Foreign Banks in the Philippines,” was approved on May 18, 1994 to promote greater
participation of foreign banks in the Philippine Banking Industry that will stimulate economic growth and serve
as a channel for the flow of funds into the economy;
WHEREAS, to promote greater competition in the Philippine Banking Industry, foreign banks were accorded
the same privileges, allowed to perform the same functions and subjected to the same limitations under
relevant banking laws imposed upon domestic banks;
WHEREAS, Standard Chartered Bank was among the foreign banks granted the privilege to do business in our
country under Republic Act No. 7721;
WHEREAS, there are complaints against Standard Chartered Bank whose actions have reportedly defrauded
hundreds of Filipino
_______________
1 Rollo, pp. 63-72.
2 Id., at pp. 59-60.
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investors of billions of pesos through the sale of unregistered securities in the form of high-risk mutual funds
falsely advertised and marketed as safe investment havens;
WHEREAS, there are reports that Standard Chartered Bank clearly knew that its actions were violative of
Philippine banking and securities laws but cleverly disguised its illegal acts through the use of pro-forma
agreements containing waivers of liability in favor of the bank;
WHEREAS, there are reports that in the early stages of conducting these questionable activities, the Bangko
Sentral ng Pilipinas warned and eventually fined Standard Chartered Bank a measly P30,000 for violating
Philippine banking laws;
WHEREAS, the particular operations of Standard Chartered Bank may constitute “conducting business in an
unsafe and unsound manner,” punishable under Section 37 of Republic Act No. 7653 and should have drawn
the higher penalty of revocation of its quasibanking license;
WHEREAS, Republic Act No. 8791 or the “General Banking Act of 2000” deems a particular act or omission as
conducting business in an unsafe and unsound manner as follows:
“Section 56.2 The act or omission has resulted or may result in material loss or damage or abnormal risk to the institution’s
depositors, creditors, investors, stockholders or to the Bangko Sentral or to the public in general.”
WHEREAS, the sale of unregistered securities is also a clear violation of Republic Act No. 8799 or “The Securities
Regulation Code of 2000” which states:
“Section 8.1 Securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement
duly filed with and approved by the Commission. Prior to such sale, information on the securities, in such form and with such
substance as the Commission may prescribe, shall be made available to each prospective purchaser.”
WHEREAS, the Securities and Exchange Commission (SEC) reportedly issued a Cease-and-Desist Order
(CDO) against Standard Chartered Bank for the sale of these unregistered securities but the case was reportedly
settled administratively and dismissed after Standard Chartered Bank paid a fine of P7 Million;
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WHEREAS, the SEC reportedly made an official finding that Standard Chartered Bank actively engaged in
promoting and marketing the so-called “Global Third Party Mutual Funds” to the investing public and even set
revenue quotas for the sale of these funds;
WHEREAS, existing laws including the Securities Regulation Code seem to be inadequate in preventing the sale
of unregistered securities and in effectively enforcing the registration rules intended to protect the investing public
from fraudulent practices;
WHEREAS, the regulatory intervention by the SEC and BSP likewise appears inadequate in preventing the
conduct of proscribed activities in a manner that would protect the investing public;
WHEREAS, there is a need for remedial legislation to address the situation, having in mind the imposition of
proportionate penalties to offending entities and their directors, officers and representatives among other
additional regulatory measures;
4
Now, therefore, BE IT RESOLVED, AS IT IS HEREBY RESOLVED, to direct the Committee on Banks,
Currencies, and Financial Institutions, to conduct an inquiry, in aid of legislation, into the reported sale of
unregistered and high-risk securities by Standard Chartered Bank which resulted in billions of losses to the
investing public.”
Acting on the referral, respondent, through its Chairperson, Senator Edgardo J. Angara, set the
initial hearing on February 28, 2005 to investigate, in aid of legislation, the subject matter of the
speech and resolution filed by Senator Enrile.
Respondent invited petitioners, among others, to attend the hearing, requesting them to submit
their written position paper. Petitioners, through counsel, submitted to respondent a letter 3 dated
February 24, 2005 presenting their position, particularly stressing that there were cases pending
in court allegedly involving the same issues subject of the legislative inquiry, thereby posing a
challenge to the jurisdiction of respondent to continue with the inquiry.
_______________
3 Id., at pp. 73-83.
466
On February 28, 2005, respondent commenced the investigation. Senator Enrile inquired who
among those invited as resource persons were present and who were absent. Thereafter, Senator
Enrile moved that subpoenae be issued to those who did not attend the hearing and that the
Senate request the Department of Justice, through the Bureau of Immigration and Deportation,
to issue an HDO against them and/or include them in the Bureau’s Watch List. Senator Juan
Flavier seconded the motion and the motion was approved.
Respondent then proceeded with the investigation proper. Towards the end of the hearing,
petitioners, through counsel, made an Opening Statement4 that brought to the attention of
respondent the lack of proper authorization from affected clients for the bank to make disclosures
of their accounts and the lack of copies of the accusing documents mentioned in Senator Enrile’s
privilege speech, and reiterated that there were pending court cases regarding the alleged sale
in the Philippines by SCB-Philippines of unregistered foreign securities.
The February 28, 2005 hearing was adjourned without the setting of the next hearing date.
However, petitioners were later served by respondent with subpoenae ad testificandum and
duces tecum to compel them to attend and testify at the hearing set on March 15, 2005. Hence,
this petition.
The grounds relied upon by petitioners are as follows:
I.
THE COMMITTEE ACTED WITHOUT JURISDICTION AND/OR ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN CONDUCTING AN INVESTIGATION,
PURPORTEDLY IN AID OF LEGISLATION, BUT IN REALITY PROBING INTO THE ISSUE OF WHETHER THE
STANDARD CHARTERED BANK HAD SOLD UNREGISTERED FOREIGN SECURITIES IN THE
PHILIPPINES. SAID ISSUE HAS LONG BEEN THE SUBJECT OF CRIMINAL AND CIVIL AC-
_______________
4 Id., at pp. 86-90.
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TIONS NOW PENDING BEFORE THE COURT OF APPEALS, REGIONAL TRIAL COURT OF PASIG CITY,
METROPOLITAN TRIAL COURT OF MAKATI CITY AND THE PROSECUTOR’S OFFICE OF MAKATI CITY.
II.
THE COMMITTEE ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION
BY CONDUCTING AN INVESTIGATION, PURPORTEDLY “IN AID OF LEGISLATION,” BUT IN REALITY IN
“AID OF COLLECTION” BY A HANDFUL OF TWO (2) CLIENTS OF STANDARD CHARTERED BANK OF
LOSSES WHICH WERE FOR THEIR ACCOUNT AND RISK. AT ANY RATE, SUCH COLLECTION IS WITHIN
THE PROVINCE OF THE COURT RATHER THAN OF THE LEGISLATURE.
III.
THE COMMITTEE ACTED WITHOUT JURISDICTION AND/OR ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN COMPELLING PETITIONERS, SOME OF WHOM
ARE RESPONDENTS IN THE PENDING CRIMINAL AND CIVIL ACTIONS BROUGHT BY SAID CLIENTS, IN
VIOLATION OF PETITIONERS’ RIGHT AGAINST SELF-INCRIMINATION AND RIGHT TO PURSUE AND
DEFEND THEIR CAUSE IN COURT RATHER THAN ENGAGE IN TRIAL BY PUBLICITY—A CLEAR
VIOLATION OF DUE PROCESS, RIGHT TO PRIVACY AND TO TRAVEL.
IV.
THE COMMITTEE ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION
BY DISREGARDING ITS OWN RULES.5
Petitioners argue that respondent has no jurisdiction to conduct the inquiry because its subject
matter is the very same subject matter of the following cases, to wit:
5
1 (a)  CA-G.R. SP No. 85078, entitled “Manuel V. Baviera vs. Hon. Esperanza P. Rosario, et al.,
pending before the 9th Division of
_______________
5 Id., at pp. 15-16.
468
1 the Court of Appeals. In the petition, Mr. Baviera seeks to annul and set aside the dismissal by
the Department of Justice of his complaint against Standard Chartered Bank and its
officers accusing them of SELLING UNREGISTERED FOREIGN SECURITIES IN
VIOLATION OF P.D. NO. 1869 (SYNDICATED ESTAFA) AND ARTICLE 315 OF THE
REVISED PENAL CODE.
2 (b)  CA-G.R. SP No. 86200, entitled “Manuel V. Baviera vs. Hon. Rafael Buenaventura, et al.,”
pending before the 15th Division of the Court of Appeals. In the petition, Mr. Baviera seeks
to annul and set aside the termination for lack of probable cause by the AntiMoney
Laundering Council (“AMLC”) of the investigation of Standard Chartered Bank for money
laundering activities BY SELLING UNREGISTERED FOREIGN SECURITIES.
3 (c)  CA-G.R. SP No. 87328, entitled “Manuel V. Baviera vs. Hon. Esperanza Paglinawan
Rozario, et al.,” pending before the 16th Division of the Court of Appeals. The petition
seeks to annul and set aside the dismissal by the Department of Justice of Mr. Baviera’s
complaint accusing SCB and its officers of violation of the Securities Regulation Code by
SELLING UNREGISTERED FOREIGN SECURITIES.
4 (d)  Civil Case No. 70173, entitled “Mr. Noel G. Sanchez, et al. vs. Standard Chartered Bank,”
pending before Branch 155 of the Regional Trial Court of Pasig City. Plaintiff seeks
damages and recovery of their investment accusing the bank of SELLING
UNREGISTERED FOREIGN SECURITIES.
5 (e)  Criminal Case No. 332034, entitled “People of the Philippines vs. Manuel V. Baviera,”
pending before Branch 64 of the Metropolitan Trial Court of Makati City. Petitioner Morris
is the private complainant in this information for extortion or blackmail against Mr. Baviera
for demanding the payment of US$2 Million with the threat to EXPOSE THE BANK’S
“LARGE SCALE SCAM” CONSISTING [OF] ILLEGAL SELLING OF UNREGISTERED
FOREIGN SECURITIES BY THE BANK, before various government offices, such as the
Department of Justice, the BIR, Bangko Sentral ng Pilipinas, Regional Trial Courts, and
both houses of Congress.
6 (f)  Criminal Case No. 331395, entitled “People of the Philippines vs. Manuel V. Baviera,”
pending before Branch 64 of the Metropolitan Trial Court of Makati City. Petitioners Victor
and Chona Reyes are the private complainants in this information for perjury
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1 committed by Mr. Baviera in securing a hold departure order against the petitioners herein from
the Department of Justice for their alleged involvement in syndicated estafa and swindling
BY SELLING UNREGISTERED FOREIGN SECURITIES.
2 (g)  I.S. No. 2004-B-2279-80, entitled “Aurelio Litonjua III and Aurelio Litonjua, Jr. vs. Antonette
de los Reyes, et al.,” pending before the Office of the Prosecutor, Makati City. This is a
criminal complaint accusing SCB and its officers of estafa for SELLING UNREGISTERED
FOREIGN SECURITIES.6
Citing Bengzon, Jr. v. Senate Blue Ribbon Committee,7 the petitioners claim that since the issue
of whether or not SCB-Philippines illegally sold unregistered foreign securities is already
preempted by the courts that took cognizance of the foregoing cases, the respondent, by this
investigation, would encroach upon the judicial powers vested solely in these courts.
The argument is misplaced. Bengzon does not apply squarely to petitioners’ case.
It is true that in Bengzon, the Court declared that the issue to be investigated was one over which
jurisdiction had already been acquired by the Sandiganbayan, and to allow the [Senate Blue
Ribbon] Committee to investigate the matter would create the possibility of conflicting judgments;
and that the inquiry into the same justiciable controversy would be an encroachment on the
exclusive domain of judicial jurisdiction that had set in much earlier.
To the extent that, in the case at bench, there are a number of cases already pending in various
courts and administrative bodies involving the petitioners, relative to the alleged sale of
unregistered foreign securities, there is a resemblance between this case and Bengzon. However,
the similarity ends there.
6
_______________
6 Id., at pp. 18-19.
7 G.R. No. 89914, November 20, 1991, 203 SCRA 767, 784.
470
Central to the Court’s ruling in Bengzon—that the Senate Blue Ribbon Committee was without
any constitutional mooring to conduct the legislative investigation—was the Court’s determination
that the intended inquiry was not in aid of legislation. The Court found that the speech of Senator
Enrile, which sought such investigation contained no suggestion of any contemplated legislation;
it merely called upon the Senate to look into possible violations of Section 5, Republic Act No.
3019. Thus, the Court held that the requested probe failed to comply with a fundamental
requirement of Section 21, Article VI of the Constitution, which states:
“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.”
Accordingly, we stopped the Senate Blue Ribbon Committee from proceeding with the legislative
investigation in that case.
Unfortunately for the petitioners, this distinguishing factual milieu in Bengzon does not obtain in
the instant case. P.S. Resolution No. 166 is explicit on the subject and nature of the inquiry to be
(and already being) conducted by the respondent Committee, as found in the last three Whereas
clauses thereof, viz.:
“WHEREAS, existing laws including the Securities Regulation Code seem to be inadequate in preventing the
sale of unregistered securities and in effectively enforcing the registration rules intended to protect the investing
public from fraudulent practices;
WHEREAS, the regulatory intervention by the SEC and BSP likewise appears inadequate in preventing the
conduct of proscribed activities in a manner that would protect the investing public;
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VOL. 541, DECEMBER 27, 2007 471
WHEREAS, there is a need for remedial legislation to address the situation, having in mind the imposition of
proportionate penalties to offending entities and their directors, officers and representatives among other
additional regulatory measures;” (emphasis supplied)
The unmistakable objective of the investigation, as set forth in the said resolution, exposes the
error in petitioners’ allegation that the inquiry, as initiated in a privilege speech by the very same
Senator Enrile, was simply “to denounce the illegal practice committed by a foreign bank in selling
unregistered foreign securities x x x.” This fallacy is made more glaring when we consider that, at
the conclusion of his privilege speech, Senator Enrile urged the Senate “to immediately conduct
an inquiry, in aid of legislation, so as to prevent the occurrence of a similar fraudulent activity in
the future.”
Indeed, the mere filing of a criminal or an administrative complaint before a court or a quasi-
judicial body should not automatically bar the conduct of legislative investigation. Otherwise, it
would be extremely easy to subvert any intended inquiry by Congress through the convenient
ploy of instituting a criminal or an administrative complaint. Surely, 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.
As succinctly stated in the landmark case Arnault v. Nazareno8—
“[T]he power of inquiry—with process to enforce it—is an essential and appropriate auxiliary to the legislative
function. 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
pos-
_______________
8 87 Phil. 29, 45 (1950), citing McGrain v. Daugherty, 273 U.S. 135; 71 L. ed. 580, 50 A.L.R. 1 [1927].
472
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sess the requisite information—which is not infrequently true—recourse must be had to others who possess it.”
Neither can the petitioners claim that they were singled out by the respondent Committee. The
Court notes that among those invited as resource persons were officials of the Securities and
Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP). These officials were
subjected to the same critical scrutiny by the respondent relative to their separate findings on the
illegal sale of unregistered foreign securities by SCB-Philippines. It is obvious that the objective
of the investigation was the quest for remedies, in terms of legislation, to prevent the recurrence
of the allegedly fraudulent activity.
7
Still, petitioners insist that the inquiry conducted by respondent was, in fact, “in aid of collection.”
They claim that Atty. Bocobo and Manuel Baviera, the latter a party to the pending court cases
cited by petitioners, were only seeking a friendly forum so that they could recover their
investments from SCB-Philippines; and that the respondent has allowed itself to be used as the
conveniently available vehicle to effect this purpose.
However, as correctly pointed out by respondent in its Comment on the petition, Atty. Bocobo did
not file a complaint before the Senate for the purpose of recovering his investment. On the
contrary, and as confirmed during the initial hearing on February 28, 2005, his letter-complaint
humbly requested the Senate to conduct an inquiry into the purportedly illegal activities of SCB-
Philippines, with the end view of preventing the future occurrence of any similar fraudulent activity
by the banks in general.9 Baviera, on the other hand, was not a “complainant” but merely a witness
in the investigation, invited to testify on the alleged illegal sale of unregistered foreign securities
by SCB-Philippines, being one of the supposed victims thereof.
_______________
9 Rollo, p. 1064.
473
VOL. 541, DECEMBER 27, 2007 473
The Court further notes that when it denied petitioners’ prayer for the issuance of a TRO to restrain
the hearing set on March 15, 2005,10 respondent proceeded with the investigation. On the said
date, outraged by petitioners’ imputation that it was conducting the investigation “in aid of
collection,” respondent held petitioners, together with their counsel, Atty. Reynaldo Geronimo, in
contempt and ordered their detention for six hours.
Petitioners filed a Motion for Partial Reconsideration of this Court’s Resolution dated March 14,
2005 only with respect to the denial of the prayer for the issuance of a TRO and/or writ of
preliminary injunction, alleging that their being held in contempt was without legal basis, as the
phrase “in aid of collection” partakes of an absolutely privileged allegation in the petition.
We do not agree. The Court has already expounded on the essence of the contempt power of
Congress and its committees in this wise—
“The principle that Congress or any of its bodies has the power to punish recalcitrant witnesses is founded upon
reason and policy. Said power must be considered implied or incidental to the exercise of legislative power. How
could a legislative body obtain the knowledge and information on which to base intended legislation if it cannot
require and compel the disclosure of such knowledge and information, if it is impotent to punish a defiance of its
power and authority? When the framers of the Constitution adopted the principle of separation of powers, making
each branch supreme within the realm of its respective authority, it must have intended each department’s
authority to be full and complete, independently of each other’s authority or power. And how could the authority
and power become complete if for every act of refusal, every act of defiance, every act of contumacy against it,
the legislative body must resort to the judicial department for the appropriate remedy, because it is
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10 Per the Resolution dated March 14, 2005.
474
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impotent by itself to punish or deal therewith, with affronts committed against its authority or dignity.” 11
The exercise by Congress or by any of its committees of the power to punish contempt is based
on the principle of selfpreservation. As the branch of the government vested with the legislative
power, independently of the judicial branch, it can assert its authority and punish contumacious
acts against it. Such power is sui generis, as it attaches not to the discharge of legislative functions
per se, but to the sovereign character of the legislature as one of the three independent and
coordinate branches of government.12
In this case, petitioners’ imputation that the investigation was “in aid of collection” is a direct
challenge against the authority of the Senate Committee, as it ascribes ill motive to the latter. In
this light, we find the contempt citation against the petitioners reasonable and justified.
Furthermore, it is axiomatic that the power of legislative investigation includes the power to
compel the attendance of witnesses. Corollary to the power to compel the attendance of
witnesses is the power to ensure that said witnesses would be available to testify in the legislative
investigation. In the case at bench, considering that most of the officers of SCBPhilippines are
not Filipino nationals who may easily evade the compulsive character of respondent’s summons
by leaving the country, it was reasonable for the respondent to request the assistance of the
Bureau of Immigration and Deportation to prevent said witnesses from evading the inquiry and
defeating its purpose. In any event, no HDO was issued by a court. The BID instead included
them only in the Watch List, which had the effect of merely delaying petitioners’ intended
_______________
8
11 Negros Oriental II Electric Cooperative, Inc. v. Sangguniang Panlungsod of Dumaguete, No. L-72492, November 5, 1987,
155 SCRA 421, 429, citing Arnault v. Balagtas, 97 Phil. 358, 370 (1955).
12 Id., at p. 430.
475
VOL. 541, DECEMBER 27, 2007 475
travel abroad for five (5) days, provided no HDO is issued against them.13
With respect to the right of privacy which petitioners claim respondent has violated, suffice it to
state that privacy is not an absolute right. While it is true that Section 21, Article VI of the
Constitution, guarantees respect for the rights of persons affected by the legislative investigation,
not every invocation of the right to privacy should be allowed to thwart a legitimate congressional
inquiry. In Sabio v. Gordon,14 we have held that the right of the people to access information on
matters of public concern generally prevails over the right to privacy of ordinary financial
transactions. In that case, we declared that the right to privacy is not absolute where there is an
overriding compelling state interest. Employing the rational basis relationship test, as laid down
in Morfe v. Mutuc,15 there is no infringement of the individual’s right to privacy as the requirement
to disclosure information is for a valid purpose, in this case, to ensure that the government
agencies involved in regulating banking transactions adequately protect the public who invest in
foreign securities.
_______________
13 Under the BID’s Rules and Guideline In Handling Travelers Under Watchlist (November 19, 1999):
1 1.  A passenger whose name is in the Bureau’s Watchlist shall be allowed to depart after the lapse of five (5) days from
his first attempt, provided no Hold Departure Order is issued;
2 2.  The head Supervisor and/or Alien Control Officer shall immediately notify the requesting person/agency of the attempt
to leave by the person whose name appears in the watchlist and the said requesting person/agency has only five
(5) days to secure a Hold Departure Order (HDO) from the Department of Justice or the Courts; otherwise, after five
(5) days and there is no HDO issued, the passenger shall be allowed to leave.
14 G.R. Nos. 174340, 174318, 174177, October 16, 2006, 504 SCRA 704.
15 No. L-20387, January 31, 1968, 22 SCRA 424, citing Whalen v. Roe, 429 U.S. 589 (1977).
476
Suffice it to state that this purpose constitutes a reason compelling enough to proceed with the
assailed legislative investigation.16
As regards the issue of self-incrimination, the petitioners, officers of SCB-Philippines, are not
being indicted as accused in a criminal proceeding. They were summoned by respondent merely
as resource persons, or as witnesses, in a legislative inquiry. As distinguished by this Court—
“[An] accused occupies a different tier of protection from an ordinary witness. Whereas an ordinary witness may
be compelled to take the witness stand and claim the privilege as each question requiring an incriminating answer
is shot at him, an accused may altogether refuse to take the witness stand and refuse to answer any and all
questions.”17
Concededly, this right of the accused against self-incrimination is extended to respondents in
administrative investigations that partake of the nature of or are analogous to criminal
proceedings. The privilege has consistently been held to extend to all proceedings sanctioned by
law; and to all cases in which punishment is sought to be visited upon a witness, whether a party
or not.18
However, in this case, petitioners neither stand as accused in a criminal case nor will they be
subjected by the respondent to any penalty by reason of their testimonies. Hence, they cannot
altogether decline appearing before respondent, although they may invoke the privilege when a
question calling for an incriminating answer is propounded.19
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16 Supra note 14 at p. 738.
17 Chavez v. Court of Appeals, 133 Phil. 661, 679; 24 SCRA 663, 680 (1968).
18 Bengzon, Jr. v. Senate Blue Ribbon Committee, supra note 7, at p. 786, citing Galman v. Pamaran, 138 SCRA 294 (1985).
19 Senate Rules of Procedure Governing Inquiries in Aid of Legislation, Sec. 19.
477
VOL. 541, DECEMBER 27, 2007 477
Petitioners’ argument, that the investigation before respondent may result in a recommendation
for their prosecution by the appropriate government agencies, such as the Department of Justice
or the Office of the Ombudsman, does not persuade.
As held in Sinclair v. United States20—
“It may be conceded that Congress is without authority to compel disclosures for the purpose of aiding the
prosecution of pending suits; but the authority of that body, directly or through its Committees, to require pertinent
disclosures in aid of its own constitutional power is not abridged because the information sought to be elicited
9
may also be of use in such suits. x x x It is plain that investigation of the matters involved in suits brought or to
be commenced under the Senate resolution directing the institution of suits for the cancellation of the leases
might directly aid in respect of legislative action.”
The prosecution of offenders by the prosecutorial agencies and the trial before the courts is for
the punishment of persons who transgress the law. The intent of legislative inquiries, on the other
hand, 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 respondent, as with the other
Committees of the Senate or of the House of Representatives, cannot penalize violators even if
there is overwhelming evidence of criminal culpability. Other than proposing or initiating
amendatory or remedial legislation, respondent 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 the criminal indictment of persons who may appear liable. At
best, the recommendation, along with the evidence, contained in such a Report would be
persuasive, but it is still up to the prosecutorial agencies and the courts to determine the liabilities
of the offender.
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20 279 U.S. 263, 73 L ed. 692, 698 (1928).
478
Finally, petitioners sought anew, in their Manifestation and Motion21 dated June 21, 2006, the
issuance by this Court of a TRO and/or writ of preliminary injunction to prevent respondent from
submitting its Committee Report No. 75 to the Senate in plenary for approval. However, 16 days
prior to the filing of the Manifestation and Motion, or on June 5, 2006, respondent had already
submitted the report to the Senate in plenary. While there is no showing that the said report has
been approved by the Senate, the subject of the Manifestation and Motion has inescapably
become moot and academic.
WHEREFORE, the Petition for Prohibition is DENIED for lack of merit. The Manifestation and
Motion dated June 21, 2006 is, likewise, DENIED for being moot and academic.
SO ORDERED.
Puno (C.J.), Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona,
Carpio-Morales, Azcuna, Tinga, Chico-Nazario, Velasco, Jr. and Reyes, JJ., concur.
Quisumbing, J ., On Leave.
Leonardo-De Castro, J., No Part.
Petition denied.
Notes.—The exercise of judicial restraint over justiciable issues is not an option before the
Supreme Court, otherwise the Court would be shirking from its duty vested under Art. VIII, Sec.
1(2) of the Constitution. (Francisco, Jr. vs. House of Representatives, 415 SCRA 44 [2003])
The Congress, in common with all the other branches of the Government, must exercise its
powers subject to the limitations placed by the Constitution on governmental action, more
particularly, the relevant limitations of the Bill of Rights. (Sabio vs. Gordon, 504 SCRA 704 [2007])
——o0o——
_______________
21 Rollo, pp. 1152-1177.
479
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SUPREME COURT REPORTS ANNOTATED VOLUME 541

VOL. 541, DECEMBER 27, 2007 457

VOL. 541, DECEMBER 27, 2007 459

460 SUPREME COURT REPORTS ANNOTATED

VOL. 541, DECEMBER 27, 2007 461

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