THE Supreme Court has ruled with finality that a hearing or notification to owners of deposits or investments to be examined is required before the Anti-Money Laundering Council (AMLC) could conduct bank inquiries.

The Special Second Division dismissed the motion for reconsideration filed by the Office of the Solicitor General, representing AMLC, which sought to set aside its ruling of Feb.14, 2008 that upheld the orders issued by the Manila and Makati regional trial courts requiring notification before allowing examination of bank accounts of Pantaleon Alvarez, a former transportation secretary, Cheng Yong, president of Philippine International Air Terminals Corp. (Piatco), the NAIA-3 contractor, former DOTC undersecretary Wilfredo Trinidad and Piatco consultant Alfredo Liongson who were involved in the construction of Terminal 3 of the Ninoy Aquino International Airport (NAIA).

The high court ruled Manila RTC did not commit grave abuse of discretion when it issued orders dated July 25, 2006 and Aug. 15, 2006 which deferred the implementation of its Jan. 12, 2006 order granting the ex-parte application of AMLC to inquire into 13 accounts and two related web accounts alleged as having been used to facilitate the suspicious transfer of funds for the airport.

The AMLC filed before the Makati RTC an ex-parte application to inquire into the accounts of Alvarez, Yong, Trinidad and Liongson based on the findings of its Compliance and Investigation Staff (CIS) that amounts were transferred from a Hong Kong bank account owned by Jetstream Pacific Lt. to bank accounts in the Philippines maintained by Liongson and Yong.

In the assailed decision, the tribunal cited R.A. 9160 or the Anti Money Laundering Act, which prohibits the courts from issuing ex-parte bank inquiry order or without hearing or notification of the other parties.

The SC also dismissed the OSG’s contention that the bank inquiry order is of the same character as a search warrant, which can be issued ex-parte, as it does not involve the seizure of persons and properties.

"A bank inquiry order does not contemplate the seizure, but only an inquiry or examination, of the suspect deposits or investments thereto by the AMLC. Even if a bank inquiry order is properly issued by a competent court, such order will not preclude the depositor from withdrawing or augmenting the suspect accounts or investments," the SC said.

A bank inquiry issued after due notice and hearing would still allow the AMLC to examine the suspicious history of the bank accounts involved within the same scope as if it were issued ex-parte, the SC added.

The SC further said that even the closure of the bank account by the depositor after being alerted of a pending application for a bank inquiry order will not prevent the AMLC, once it obtains such order, from inquiring into the history of the subject account and proceeding with the prosecution for violation of AMLA.

The tribunal said that the OSG failed to challenge the Court’s acknowledgement that the preservation of the secrecy of bank deposits remains the general policy rule as enshrined in R.A. 1405 or the Bank Secrecy Act.

Such law, the Court said, established a statutory right to privacy with respect to the confidentiality of bank deposits.

Solicitor General Agnes Devanadera had argued that the requirement of "notice and hearing" would practically deny the AMLC the right to exercise its authority to inquire into or examine bank deposits or investments that are related to an unlawful activity.

Devanadera said the SC’s decision could undermine the AMLC’s mandate to go after perpetrators of money laundering operations in the country.

She said if the decision would not be reversed the Philippines would face serious repercussions in its financial transactions with other countries as it runs counter to standards by the Financial Action Task Force (FATF), which includes the ability to identify and trace the properties subject of the money laundering inquiry with expediency.