Round one goes to Congress

MORE than just the country's grudging compliance with a suggestion from the Financial Action Task Force to conform our bank secrecy law to international standards, the law signed last Monday by PNoy, R.A. No. 10167, constitutes, in my view, but one-round in a broader struggle for supremacy between Congress and the Supreme Court. I, as self-appointed judge, score this round in favor of Congress.

Atty. Reynaldo Geronimo

The Trust Guru

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This round was opened with the passage of R.A. No. 9194, amending R.A. No. 9160, otherwise known as the Anti-Money Laundering Act of 2001. The Supreme Court came out swinging in its decision of Republic of the Philippines, represented by the Anti-Money Laundering Council (AMLC) v. Hon. Antonio M. Eugenio, et al, G.R. No. 174629, promulgated February 14, 2008.

The central issue in Eugenio was whether or not the petition to be filed by AMLC before the court for authority to inquire into a bank deposit or investment may be filed and heard ex parte, that is, without notice to the depositor or owner. The AMLC answered in the affirmative; the respondents in the negative.

The question arose because Congress initial blow was tentative; it did not make itself indubitably clear. The relevant portion of Section 11 of Anti-Money Laundering Law (R.A. No. 9160, as amended by R. A. No. 9194), as it stood contemporaneous to Eugenio, provided as follows:

"Sec. 11. Authority to Inquire into Bank Deposits.- Notwithstanding the provisions of Republic Act No. 1405, as amended, Republic Act No. 6426, as amended, Republic Act No. 8791, and other laws, the AMLC may inquire into or examine any particular deposit or investment with any banking institution or non bank financial institution upon order of any competent court in cases of violation of this Act, when it has been established that there is probable cause that the deposits or investments are related to an unlawful activity as defined in Section 3(i) hereof or a money laundering offense under Section 4 hereof, except that no court shall be required in cases involving unlawful activities in Sections 3(i)1, (2) and (12)."

Notable is the silence of the law on the question of whether, contrary to the general practice required by the Due Process Clause of the Constitution to inform the concerned party at the earliest possible time whenever a proceeding is brought that could result in his jeopardy, the depositor or owner of the investment ought to be given, or not given, notice that an actual petition has in fact been filed to inquire into his deposit or investment. The AMLC argued that the silence of the law on the notice requirement meant that Congress purposely intended not to require notice.

The reason for such an exceptional stance, the AMLC maintained, is because requiring notification prior to inquiry was likely to impair the effectiveness of the AMLC. The depositor, upon being so advised that a petition has been filed to look into his funds, could simply spirit his funds away, if not from the country, at least from the bank account where it originally was. This the country recently learned too well to be likely when it was proven at the Impeachment Trial that the former Chief Justice, on the day he was impeached, took out certain funds from an his account in a local bank only to have them deposited in another account at the same bank. The obvious objective was to play hide-and-seek.

But the Supreme Court, with then Justice Dante Tinga as ponente, did not agree with the AMLC and interpreted that Congressional silence of the law differently. On the contrary, the Supreme Court ruled, the lack of an express requirement of notice to the depositor meant that Congress must have intended to require it. And the way the court justified its position explains, to a certain extent, why some sneer while saying "you sound like a lawyer."

The first reason espoused by the court is based on its comparison of Section 11 with the preceding section. Section 10 contains specific language allowing the filing of an ex parte petition to freeze a bank deposit; Section 11, as quoted above, does not. From this the court maintained: "if indeed the legislature had intended to authorize ex parte proceedings for the issuance of bank inquiry order, then it could have easily expressed such intent in the law, as it did with the freeze order under Section 10." Different language meant different intents.

The court then reinforced its first reason with an appeal to legislative history, i.e. what transpired in Congress when the law was crafted. The court pointed out that both Section 10, which permitted ex parte petition to freeze, and Section 11, were "crafted at the same time, through the passage of R.A. No. 9194." Making much of this, the court asserted: "It certainly would have been convenient, through the amendatory law, to allow a similar ex parte procedure in the case of a bank inquiry order had the Congress been so minded. Yet nothing in the provision itself, or even (in) the available legislative record, explicitly points to an ex parte judicial procedure in the application of a bank inquiry order, unlike in the case of the freeze order."

Then, the understanding of the designated administrative agencies, which the Supreme Court had often ruled in previous cases to be legally inferior to its, was invoked as persuasive authority. As its third argument the court observed that "with respect to freeze orders under Section 10, the implementing rules do expressly provide that the application for freeze orders be filed ex parte, but no similar clearance is granted in the case of inquiry orders under Section 11." Continuing with this stance of respect to the administrative authorities, the court continued, "These implementing rules were promulgated by the Bangko Sentral ng Pilipinas, the Insurance Commission and the Securities and Exchange Commission and if it was the true belief of these institutions that inquiry orders could be issued ex parte similar to freeze orders, language to the effect would have been incorporated in the said Rules."

Then the court unabashedly cited itself as its own authority. It recited "Even the Rules of Procedure adopted by this Court in A.M. No. 05-11-04-SC to enforce the provisions of the AMLA specifically authorize(s) ex parte applications with respect to freeze orders under Section 10 but make no similar authorization with respect to bank inquiry order under Section 11."

Finally, the court went into a divination of sorts. It maintained, "The Court could divine the sense in allowing ex parte proceedings under Section 10 and in proscribing the same under Section 11...A freeze order...is aimed at preserving monetary instruments or property...the owner would thus be inhibited from utilizing the same for the duration of the freeze order."

"On the other hand," the court under the influence of the spirit continued, "...What a bank inquiry authorizes is the examination of the particular deposits or investments...the monetary instruments or property...are not seized in a physical sense, but are examined on particular details such as the account holder's record of deposits and transactions...the records to be inspected...cannot be physically seized or hidden by the account holder...as that would require the extraordinary cooperation and devotion of the bank." It is not certain whether or not Justice Tinga had in mind the "extraordinary cooperation and devotion" of Philippine Savings Bank in resisting the Impeachment Court's efforts to inquire into former Chief Justice Corona's dollar accounts.

Congress, unfazed calmly ducked the blow and simply, among other things, amended Section 11 by expressly allowing an ex parte application by the AMLC with the Court of Appeals for a bank examination order. R.A. No. 10167 was a well-executed move by Congress.

After all, Congress is the vox populi and, while in several instances it can be argued that it is not been the vox dei (for instance, the RH bill debate), Congress not the Supreme Court, is the direct tool by which the people communicates what it likes.

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