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Jurisprudence on the AMLA

(Article published in the May 23,2012 issue of Manila Standard Today)  

Because of the current interest on what the Anti-Money Laundering Law is all about, I asked two students from the the Ateneo School of Law, Dan Abraham G. Guinigundo and Ma. Lourdes N. Colinares, both currently doing their legal internship at the law office I work in, to gather for me the resolutions issued and cases decided to date by the Supreme Court relating to the Anti-Money Laundering Law from the time it was enacted to the present. The original version was enacted into law on September 29, 2001; it was subsequently amended on March 7, 2003 by R.A. No. 9194.

The first group (Republic v. Cabrini Green & Ross, GR No. 154522, promulgated May 5, 2006) was the Supreme Court’s resolution on the consolidated petitions brought by the Republic of the Philippines on the common issue of which court had jurisdiction to extend the effectivity of freeze orders on bank deposits and similar accounts that were issued by the Anti-Money Laundering Council (AMLC) under Section 10 of the original law, R.A. No. 9160.

The question arose because of an imperfection in drafting the text of the said law, tell tale of the rush and confusion that attended its birth here.  While R.A. No. 9160 permitted the extension of the AMLC’s freeze order “upon order of the court”, it failed to identify which court was to give the order of extension.  The AMLC thought it was the Court of Appeals (CA); the CA did not agree.  Hence, the issue went up to the Supreme Court.

Before the Supreme Court could resolve the question, Congress took it upon itself to clarify the mess of its own doing.  It passed R.A. No. 9194. That amendatory law took away the power to freeze bank deposits from the AMLC and gave it to the CA.  It also clearly vested the power to extend freeze orders to the same court. 


The then Associate Justice Renato C. Corona, writing for the 2nd Division, restated the rule: “As the law now stands, it is solely the CA which has the authority to issue as freeze order as well as to extend its effectivity.”

The Cabrini Green & Ross resolution was followed by Republic v. Glassgow Credit, G.R. No. 170281, promulgated on January 18, 2008. Like Cabrini Green & Ross, it was penned by then Associate Justice Renato C. Corona.  This time, the subject involved was civil forfeiture of bank deposits involved in money laundering.

Civil forfeiture is authorized under Section 12(a) of R.A. No. 9160.  It provided that the law to be followed for civil forfeiture is the Rules of Court.  The Court saw the need to issue a special rule of court on among other matters, civil forfeitures under the AMLA.  Hence the issuance on November 15, 2005 of A.M. (abbreviation for “Administrative Matter”) No. 05-11-04-SC known as the Rule of Procedure in Cases of Civil Forfeiture, Asset Preservation and Freezing of Money Instrument, Property, or Proceeds Representing, Involving, or Relating to an Unlawful Activity or Money Laundering Offense under RA 9160, as amended.  It is known by its short name,  “Rule in Cases of Civil Forfeiture.”

Glassgow Credit reiterated the venue rule in Section 3, Title II, of A.M. 05-11-04 which says that a civil forfeiture case is to be filed in the regional trial court (RTC) of the judicial region where the monetary instrument, property or proceeds representing, involving, or relating to an unlawful activity or to a money laundering offense is located.  If located abroad, the case for civil forfeiture may be filed in the judicial region of Manila or where any portion of the instrument, property or proceeds is located, at the option of the petitioner.

More significant than the venue rule, however, was the affirmation of the process of civil forfeiture as an independent civil action. Glassgow Credit stressed that “regardless of the absence, pendency or outcome of a criminal prosecution for the unlawful activity or for money laundering, an action for civil forfeiture may be separately and independently prosecuted and resolved.”

After less than a month, Glassgow Credit was followed by Republic v. Hon. Antonio M. Eugenio, Jr., G.R. No. 174629.  Promulgated on February 14, 2008, this decision was written for the Second Division by Associate Justice Dante Tinga.  It dealt with the power of AMLC to get court authority to inquire into bank deposits.

Specifically, the issue before the Supreme Court was, may a court order to inquire into a bank deposit be secured in a proceeding that was ex parte, i.e. without notice to the person whose bank deposit the AMLC wants to look into?  The Supreme Court, citing several grounds, answered in the negative. It ruled that notice must be given to the depositor of AMLC’s request for a court authority to look into his deposit. 

One ground that was invoked exhibited, in my view, a surprising measure of judicial naiveté.   In its disquisition, the Supreme Court pointed out that whereas Section 10 of R.A. No. 9160, as amended, on seeking a freeze order, permits the proceeding ex parte, Section 11 on bank deposits does not.  The court began its justification of the different treatment by noting that “to make such freeze order anteceded by a judicial proceeding with notice to the account holder would allow for or lead to the dissipation of such funds even before the order could be issued.”

On the other hand, the Supreme Court continued, when a bank deposit is sought to be inquired into, as authorized under Section 11,  “the records to be inspected...cannot be physically seized or hidden by the account holder.  Said records are in the possession of the bank and therefore cannot be destroyed at the instance of the account holder alone as that would require the extraordinary cooperation and devotion of the bank.”  This, to the Supreme Court, justified the requirements to notify the depositor.

Apparently, the Supreme Court had overlooked the fact that, insofar as a money launderer, or any other criminal, is concerned, any notice of any official or government interest in his bank account, regardless of purpose, is not to be taken lightly.  It is in fact a strong signal for him and his money to take flight.  True his records are left behind, but what does it profit the AMLC to know the information contained in the records of a deposit, if, as early as the very beginning of such inquiry, the money in the deposit account is able to flee the coup?

          The fourth, and most recent case, that mentions the AMLC does involve money-laundering at all.  The AMLA is mentioned in GSIS v, The Hon. 15th Division of the Court of Appeals, et al, G.R. No. 189206 promulgated June 8, 2011 simply as a fifth exception to the rule on bank secrecy that is in addition to the four instances articulated in R.A. No. 1405 itself.  In itself the ruling is innocuous; but subliminally, does it open the door to argue that the law creating the AMLA can, by the same token, to be also recognized as an exception to the R.A. No. 6426, known as the Foreign Currency Deposit Act?  Both R.A. No. 1405 and R.A. No. 6426 anteceded the AMLA.  If it is an exception to the first, is it not also an exception to the other?