Standard Chartered Bank v.

Senate Committee on Banks

DOCTRINE:
• 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
• With respect to the right of privacy which petitioners claim respondent has violated, suffice it to state that privacy is not an
absolute right. The right to privacy is not absolute where there is an overriding compelling state interest.

RELEVANT FACTS
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.

On February 1, 2005, Senator Juan Ponce Enrile, Vice Chairperson of respondent, delivered a privilege speech entitled
"Arrogance of Wealth" 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.

Petitioners, through counsel, submitted to respondent a letter 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.

Respondent then proceeded with the investigation proper. Towards the end of the hearing, petitioners, through counsel, made an
Opening Statement 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.

Petitioners have also raised the issue of “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.

ISSUE
1. Whether or not respondent senate committee has a jurisdiction to conduct inquiry considering such subject matter is
alleged in cases pending in the court. – YES.

2. Whether or not the investigation done in the case at bar is for the purpose of “Aid of Collection” and not in the “Aid of
Legislation”. – NO.

3. Whether or not the senate committee has authorization to make disclosure on the accounts of SCB’s clients. – YES.

RATIO DECIDENDI

1. Yes, the senate committee has jurisdiction to conduct inquiry.

Petitioner citing Bengzon Jr. v. Senate Blue Ribbon Committee is misplaced. The petitioners claimed 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.

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. 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.

In the given “Whereas clauses”, Senator Enrile urged to immediately conduct an inquiry, in aid of legislation, so as to prevent the
occurrence of a similar fraudulent activity in the future" and not only "to denounce the illegal practice committed by a foreign bank
in selling unregistered foreign securities x x x."

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(Note: In the case at bar, mas focus sila sa pag fight ng fraudulent activity in the future and in general, not only towards sa SCB, so
kahit may pending cases na sa court against SCB, they may still conduct aid of legislation para makapag-isip sila ng remedy just in
case it happens again in the future. Such will be different if they are only focused on investigating in SCB’s activities)

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.

2. No, it is for the purpose of “Aid of Legislation”.

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. 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.

3. Yes, the Senate committee has the authorization to disclose their client’s account.

With respect to the right of privacy which petitioners claim respondent has violated, suffice it to state that privacy is not an
absolute right. 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, 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.

4. The congress may contempt the petitioner.

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.

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. 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 impotent by itself to punish or
deal therewith, with affronts committed against its authority or dignity

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. (note: The committee has no jurisdiction to penalized them, it will still depend
on the prosecutorial agencies if they would convict or give them penalties)

RULING

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.

NOTES

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 possess the requisite information - which is not infrequently true -
recourse must be had to others who possess it.

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