Ferriols, Rayjenn Charlotte M.

– BSA 3A

G.R. No. 174629

REPUBLIC OF THE PHILIPPINES, Represented by THE ANTI-MONEY

LAUNDERING COUNCIL (AMLC), Petitioners
vs.
HON. ANTONIO M. EUGENIO, JR., AS PRESIDING JUDGE OF RTC, MANILA,
BRANCH 34, PANTALEON ALVAREZ and LILIA CHENG, Respondents

NATURE OF THE CASE:

G.R. No. 174629 is a petition for judicial review (certiorari) under Rule 65 which assails
the orders and resolutions issued by the Regional Trial Court of Manila, Branch 24,
which heard the SP Case No. 06-114200, and the Court of Appeals, Tenth Division,
which heard CA-G.R. SP No. 95198.
The foregoing cases are part of the Supreme Court’s ruling on the Agan v. PIATCO
(G.R. No. 155001) which nullified the concession agreement which granted Ninoy
Aquino International Airport (NAIA 3) contracts to the Philippine International Airport
Terminal Corporation (PIATCO).

FACTS:
On the 24th of May 2005, the Office of the Solicitor General (OSG) requested the
assistance of the Anti-Money Laundering (AMLC) “in obtaining more evidence to
completely reveal the financial trail of corruption surrounding the NAIA 3 Project”. The
Compliance and Investigation Staff (CIS) of AMLC conducted an intelligence database
search on the financial transactions of individuals involved in the contract award,
involving Pantaleon Alvarez who had already been charged by the Ombudsman with
violation of Section 3(j) of R.A. No. 3019. The said search revealed that Alvarez
maintained eight (8) bank accounts with six (6) different banks.
On 27 June 2005, the AMLC issued Resolution No. 75, Series of 2005, whereby the
Council resolved to authorize the Executive Director of the AMLC to sign and verify an
application to inquire into and/or examine the deposits or investments of respondents
Alvarez, Trinidad, Liongson, and Yong. The said resolution also authorizes the AMLC
Secretariat to conduct an inquiry into subject accounts once the RTC grants the
application to inquire into and/or examine the bank accounts of those four individuals.
Resolution No. 75 was founded on the cited findings of the CIS that amounts were
transferred from a bank account in Hong Kong owned by Jetstream Pacific Ltd. Account
to PH bank accounts of Liongson and Yong. The Resolution also noted that "[b]y
awarding the contract to PIATCO despite its lack of financial capacity, Pantaleon
Alvarez caused undue injury to the government by giving PIATCO unwarranted
benefits, advantage, or preference in the discharge of his official administrative
functions through manifest partiality, evident bad faith, or gross inexcusable negligence,
in violation of Section 3(e) of Republic Act No. 3019."
On 4 July 2005, the Makati RTC rendered a bank inquiry order granting the AMLC the
authority to inquire and examine the subject bank accounts of Alvarez, Liongson, and
Yong. The RTC granted such order after being satisfied that there existed probable
cause to investigate for violation of Anti-Graft and Corrupt Practices Act. Pursuant to the
Makati RTC bank inquiry order, the CIS proceeded to inquire and examine the deposits,
investments, and related web accounts of the four.
In November 2005, the Special Prosecutor of the Office of the Ombudsman, Dennis
Villa-Ignacio, wrote a letter requesting AMLC to investigate the accounts of Alvarez,
PIATCO, and several other entities involved in the nullified contract.
In response to the letter, AMLC promulgated on 9 December 2005 Resolution No. 121
Series of 2005, which authorized the AMLC executive director to conduct further
investigations and examinations of the accounts named in the letter, including one
maintained by Alvarez (DBS Bank) and two other accounts in the name of Yong
(Metrobank).
Subsequent to the December 2005 AMLC Resolution, the AMLC filed on behalf of the
Republic an application before the Manila RTC to inquire into and/or examine thirteen
(13) accounts and two (2) related web of accounts alleged as being used for corruption
in the NAIA 3 Project. Among said accounts were the DBS Bank account of Alvarez and
the Metrobank accounts of Cheng Yong. The case was raffled to Manila RTC, Branch
24, presided by respondent Judge Antonio Eugenio, Jr., and docketed as SP Case No.
06-114200.
In the subsequent year, on 12 January 2006, the Manila RTC granted the Ex Parte
Application. Authority was thus granted to the AMLC to examine the bank accounts
listed therein.
On 25 January 2006, the counsel of Alvarez, entered his appearance before the Manila
RTC in SP Case No. 06-114200. An Urgent Motion to Stay Enforcement of Order of
January 12, 2006, was filed by his party. Alvarez alleged that he fortuitously learned of
the bank inquiry order, which was issued following an ex parte application, and that
nothing in R.A. No. 9160 authorized the AMLC to seek the authority to inquire into bank
accounts ex parte.
On the following day, 26 January 2006, the Manila RTC issued an Order which enforces
its bank inquiry order and giving the Republic five (5) days to respond to Alvarez’s
motion.
The Republic then filed an Omnibus Motion for Reconsideration of the 26 January 2006
Manila RTC Order and sought to strike out Alvarez’s motion that led to the issuance of
said order.
On the other part, Alvarez filed a Reply and Motion to Dismiss the application for a bank
inquiry order. However, the motion of Alvarez was denied by the Omnibus Order issued
by the Manila RTS on the 2nd of May 2006, which reinstated the full force and effect of
the 12 January 2006 Order.
In July 2006, Alvarez sought for the Manila RTC bank inquiry order to be refrained from
being enforced by the AMLC. This was granted by the Manila RTC which then directed
AMLC to refrain from such inquiry until the expiration of the period to appeal which was
filed by Alvarez with the Manila RTC on the same day. Later during the month, Alvarez
alleged that AMLC had already begun to inquire into the bank accounts of the other
respondents despite the ex parte issuance of the bank inquiry and without notice to
those other persons. This led to Alvarez praying for non-disclosure and non-publication
of any information obtained by AMLC which violated the 11 May 2006 Order.
On 25 July 2006, the Manila RTC issued an Order clarifying that the 12 January 2006
Ex Parte Order cannot be implemented against any of the persons enumerated in the
AMLC Application until the appeal of Alvarez is resolved. The Manila RTC also ordered
the AMLC not to disclose or publish any information or document obtained in violation of
the May 11, 2006 Order. To respond to this, the Republic filed an Urgent Omnibus
Motion for Reconsideration dated 27 July 2006, expressing that it be allowed to enforce
the bank inquiry order against Alvarez and for Alvarez’s notice of appeal be purged from
the records since an appeal from an order of inquiry is disallowed under AMLA.
Concurrently, Lilia Cheng, wife of Cheng Yong filed with the Court of Appeals on 10 July
2006 against the Republic through the AMLC, Manila RTC Judge Eugenio Jr., and
Makati RTC Jude Marella Jr. a Petition for Certiorari, Prohibition and Mandamus with
Application for TRO and/or Writ of Preliminary Injunction. Lilia Cheng owns a conjugal
bank account jointly with Cheng Yong with Citibank that is covered by the Manila RTC
bank inquiry order.
She expressed grave abuse of discretion on the part of the Makati and Manila RTCs in
granting the ex parte applications for a bank inquiry order and that the ex parte
applications violated her constitutional right to due process. She imputed that the bank
inquiry order under the AMLA can only be granted in connection with AMLA violations
and that the AMLA does not have jurisdiction over bank accounts outside the
Philippines and those opened and entered prior to the AMLA.
Acting on Lilia Cheng’s petition, the Court of Appeals issued on 1 August 2006 a TRO
enjoining the manila and Makati RTCs from executing the respective bank inquiry
orders previously issued, and the AMLC from enforcing and implementing such orders.
On the same day, the Manila RTC issued an Order to temporarily suspend the
resolution of the pending urgent omnibus motion for reconsideration until the resolution
of Lilia Cheng’s petition for certiorari. This is the second of the four rulings assailed in
the petition.
On 15 August 2006, the third assailed ruling was issued by the Manila RTC, which acts
on the Urgent Motion for Clarification filed by Alvarez dated 14 August 20016. It was
found that the 1 August 2006 Manila RTC order amended its previous 25 July 2006
Order by deleting the part which required the non-disclosure and non-publication of any
information or document obtained in violation of the 11 May 2006 Order. However, the
Manila RTS reiterated in the 15 August 2006 Order that the bank inquiry order it issued
could not be implemented nor enforced by the AMLC until the pending appeal is
resolved.
The petition for judicial review (certiorari) and prohibition was filed on 2 October 2006,
assailing the two Orders of the Manila RTC dated 25 July and 15 August 2006 and the
TRO dated 1 August 2006 of the Court of Appeals. By 9 October 2006, the petitioner
informed the court through Urgent Manifestation and Motion, that on 22 September
2006, the CA hearing the petition of Lilia Cheng granted a writ of preliminary injunction
in her favor. The petitioner then sought for the nullification of the 22 September 2006
Resolution of the CA, thereby constituting the fourth ruling assailed in the petition.
The TRO dated 6 October 2006 was initially granted by the court which was followed by
the issuance of a Supplemented TRO dated 13 October 2006 in petitioner’s favor,
enjoining the implementation of the assailed rulings of the Manila RTC and the CA.
The Court initially granted a TRO dated 6 October 2006 and later on a Supplemented
TRO dated 13 October 2006 in petitioner’s favor, enjoining the implementation of the
assailed rulings of the Manila RTC and the CA. However, on the respondent’s motion,
the Court, through a Resolution dated 11 December 2006, suspended the
implementation of the restraining orders it had earlier issued.
Oral arguments were held on 17 January 2007.

ISSUE:
Whether or not the AMLC is authorized to conduct an ex parte bank inquiry order in
violation of the Bank Secrecy Act.
HELD:
Section 11 of AMLA expresses that the AMLC may examine any particular deposit with
any banking institution. However, it does not specifically authorize, as a general rule,
the issuance ex parte of the bank inquiry order. The section provides:
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 order shall be required in cases involving unlawful activities defined in
Sections 3(i)1, (2) and (12).
To ensure compliance with this Act, the Bangko Sentral ng Pilipinas (BSP) may
inquire into or examine any deposit of investment with any banking institution or
nonbank financial institution when the examination is made in the course of a
periodic or special examination, in accordance with the rules of examination of
the BSP.
In the instances where a court order is required for the issuance of a bank inquiry order,
there is no specific authority written in Section 11 that any such court order may be
issued ex pare.
Pursuant to Section 2 of the Bank Secrecy Act of 1955 (R.A. 1405), it was found that
the execution of the order to inquire into and investigate the accounts of the
respondents was not valid. The Bank Secrecy Act remains a basic state policy in the
Philippines whose general rule is that every bank deposit must stand as private and
undisclosed. Unless the Bank Secrecy Act is repealed or amended, the legal order is
obliged to conserve the absolutely confidential nature of Philippine bank deposits.
Any exception to the rule of absolute confidentiality must be explicitly legislated.
However, it is to be noted that the AMLA also provides exceptions to the Bank Secrecy
Act. Under Section 11, the AMLC may inquire into a bank account upon order of any
competent court in cases of AMLA violations provided that there is a probable cause
that such bank account’s deposits and investments are related to unlawful activities.
Furthermore, it is also to be noted that if such funds were involved in the conduct of
kidnapping for ransom, violation of the Comprehensive Dangerous Drugs Act of 2002,
hijacking, and other violations under R.A. 6235, then there is no need for the AMLC to
obtain a court order before conducting inquiry and investigation on such accounts.
It cannot be properly argued that the proceedings relating to the bank inquiry order
under Section 11 of the AMLA are a “litigation” encompassed in one of the exceptions to
the Bank Secrecy Act which is when “the money deposited or invested in the subject
matter of the litigation”. The orientation of the bank inquiry order is simply to serve as a
provisional relief or remedy and does not entail a full-blown trial.
The Court is satisfied that Lilia Cheng has reasonably demonstrated her joint ownership
of the three accounts. Such supposition brings the court to acknowledge that she has
the standing to assail via certiorari the inquiry orders authorizing the examination of her
bank accounts. The statutory right to confidentiality provides us a reasonable conviction
that the bank inquiry orders issued by the courts in satisfaction of the AMLC’s request
indeed interfered with her statutory rights to maintain the secrecy of said accounts.