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A Major Victory for the AMLC

(Article published in the May 27, 2002 issue of TODAY, Business Section)

When the delegation head and members of the Anti-Money Laundering Council (AMLC) go to Australia early next month to meet with the Financial Action Task Force (FATF), they will have with them, in addition to President Arroyo’s firm commitment against international terrorism, a significant triumph in the Philipppine judiciary. In the case of Republic v. Price Richardson Corporation, et al, (CA-G.R. SP No. 67974, promulgated 30 April 2002), it was ruled that the 15-day freeze order issued by the AMLC may be extended upon order of the Court of Appeals and not by the regional trial court.

The case involved what appeared to be a "boiler room" operation being conducted by a company that, on paper, was organized to provide administrative services such as furnishing clerical, bookkeeping, mailing and billing services. The formal purpose, as stated in its articles of incorporation, provided the cover for the many telephone lines and several working desks manned by shifts of employees who were in fact illegally selling securities to the public.

To catch the perpetrators of the scam, the head of the Compliance and Enforcement Department of the Securities and Exchange Commission, Atty. Tomas Syquia, a worthy son of his worthy father, Ambassador Enrique Syquia, asked the Regional Court of Makati to issue three warrants to search on the company’s offices. In the course of the search, the raiding team - agents of the National Bureau of Investigation and the SEC - seized false buy-sell confirmation slips, stock quotations, brokers’ scripts, lists of fictitious names used by brokers with their corresponding real names, indicating that violation of Section 28 of Republic Act No. 8777, and some documents pertaining to the bank accounts of the company.

Convinced that the bank accounts were used to launder the proceeds of illegal activity, Tom Syquia applied for a freeze order with the Anti-Money Laundering Council on November 19, 2001. After reviewing the evidence presented, the AMLC found that there was probable cause and accordingly issued Resolution 011 directing the relevant banks to freeze the accounts. The company, through Consuelo Velarde Albert (of undetermined relation to the famous Jose Velarde) asked the council to lift the freeze order but her motion was denied for lack of merit. The 15-day life of the order was not long enough to complete the investigation. Hence, the AMLC had, under the law, to seek court extension of the freeze.

The question that confronted the AMLC was where to ask for the extension. The text of the law was not clear. It simply said "the fifteen (15)-day freeze order of the AMLC may be extended upon order of the court," without saying which court.

There were two possible answers. The first, which was espoused by Price Richardson, was that the proper court is the regional trial court because Section 5 of the anti-money laundering law says, in part that "the regional trial court shall have jurisdiction to try all cases on money laundering." The correct answer, however, is: Court of Appeals.

Section 5, the Court of Appeals observed, contemplates a situation when a person has been charged with an anti-money laundering offense. This is very clear from the second sentence of the section that appoints the Sandiganbayan as the trial court when the accused is a public official. Hence, Section 5 is not good authority for a proceeding where is yet no criminal information filed and where, as a matter of fact, the matter is still in the investigation stage. Indeed, the extension of the freeze order is sought in order to enable AMLC to complete the investigation preparatory to the filing of the case.

The proper authority is Section 10 itself which deals with the matter of freeze orders. The last sentence of Section 10 provides that "no court shall issue a temporary restraining order or writ of injunction against any freeze order issued by the AMLC except the Court of Appeals or the Supreme Court." If the Court of Appeals and the Supreme Court are the only courts granted the power to restrain a freeze order, then it stands to reason that only they can extend it. Actually, had Price Richardson decided to contest the denial of its motion to lift the freeze order, it would have had to go the Court of Appeals or the Supreme Court, to restrain it. Price Richardson, however, instead decided to wait out the 15-day life span, hoping, perhaps, that the AMLC would not be quick enough to do the right thing.

But, Price Richardson was to be disappointed. The executive director of the AMLC is Judge Pio Guerrero, a veteran litigator and addressed as "judge" not because he presided over a court but because he spent almost all of his entire illustrious career with the Office of the Solicitor General. He was, when he left that office, the Assistant Solicitor General. Correctly, he sought the right writ from the proper court and in due time. And most of all, presented the right reasons.

The case of Price Richardson should convince the FATF that, despite the textual inadequacies of the anti-money laundering law (no thanks to Congress, for that), the Philippine legal system, has enough features and processes to achieve the major thrust of anti-money laundering legislation. It should further persuade the FATF of the country’s seriousness in fighting cross-border money laundering since the onus of manning the money gates is placed in the hands of senior justices. This is not to say that the regional trial court, which is presided by a single judge, would not be able to do the same thing. But, there is always the comfort of a collective decision that both assuages hidden fears of a partial judge and assures the populace of mature and collective deliberation of a collegial court.