Republic vs. Sandiganbayan, G.R. Nos.

232724-27, February 15, 2021

Facts:

This case is an offshoot of another case which involves among others the plunder case of the former
First Gentleman Jose Miguel T. Arroyo (Arroyo) in his involvement in the purchase of the two
secondhand helicopters but were categorized as brand-new from Lionair, Inc.

The petition assails the resolution and order of the Sandiganbayan which denied the AMLC’s Motion to
Quash Subpoena Duces Tecum and Ad Testificandum.

In the investigation, the president of Lionair claims that it was the FG who owns the helicopters, partial
payment was made by the deposit of payment to their account with Union Bank, these deposit where
validated but the manager of the said bank informed the special prosecutor that the account has been
closed and recommended that the BSP or the AMLC may have reports to the said transaction since it
was part of what has been reported as covered transaction. Hence the Office of the Special Prosecutor
requested the Sandiganbayan to issue Subpoena Duces Tecum and Ad Testificandum directing Executive
Director Julia C. Bacay-Abad, then Secretariat of the Council, to testify and to produce Lionair's bank
records. But the Council sought to quash the subpoena on the ground that bank accounts are
confidential. Sandiganbayan ruled in favor of the Office of the Prosecutor, and the Motion for
Reconsideration was also dismissed. Hence, this petition.

AMLC through the Republic argues that the accounts sought to be investigated are confidential as
provided by Section 9 of Anti-Money Laundering Law, that the confidentiality requirement keeps
"suspected money launderers oblivious of the fact that their financial transactions are being monitored
and reported by the covered person to [petitioner]." That the prohibition in the disclosure includes
AMLC, and that the petition fails to reasonably describe the information sought to be disclosed.

The respondent in its opposition claims that the Sandiganbayan did not commit grave abuse of
discretion, it claims that AMLC is not included in the list of covered person prohibited to disclose
information, that the law does not intend the preservation of confidentiality of the bank transaction, in
the main objective remains to prohibit money laundering through the reporting of covered and
suspicious transactions, that Lionair has waived its right of confidentiality, and that the Subpoena
complied with the requirement of the Rules of Court.

Issue:

1. Whether or not Section 9(c) of the Anti-Money Laundering Act prohibits the petitioner, Anti-
Money Laundering Council, from disclosing confidential and suspicious transaction reports.
2. Whether or not the written permission of Lionair, Inc. is sufficient to disclose the transaction
reports.
3. Whether or not the Subpoena failed to reasonably describe the documents sought to be
produced.

Ruling: (SC dismissed the petition of the Republic)

1. No, AMLC is not among the covered institution that is prohibited to disclose suspicious
transactions, while they are the very arm of the government to investigate and use the
information it has to institute cases against violators.
The Supreme Court, through the ponente explained that:

“First, as the text of the Anti-Money Laundering Act reveals, petitioner is not one of the covered
institutions prohibited from disclosing information on covered and suspicious transactions. Section 3(a)1
enumerates those that are prohibited from disclosing such information, and petitioner is not one of
them.

Second, contrary to petitioner's claim, the rationale behind the prohibition does not extend and apply to
it. To reiterate, covered institutions are precluded from disclosing the reports or the fact they are
reported to petitioner, because it will impede the possible investigation on the covered and suspicious
transactions. Unlike covered institutions, petitioner is mandated to investigate and use the information
it has to institute cases against violators.

The international standards that petitioner cites, which advocate confidentiality of the transaction
reports and prohibits their disclosure, only apply to covered institutions. As the wording of the
standards shows, the prohibition avoids "tipping-off" or situations where covered transactions will warn
depositors and possible violators that they are being reported to petitioner.

Third, the prohibition and confidentiality provisions cannot apply to petitioner; otherwise, it would
contravene its direct mandate under Section 7 of the Anti-Money Laundering Act.”

2. Yes, the waiver of the account holder is sufficient as it is an exemption to the absolute
confidentiality of the bank accounts.

Republic Act No. 6426, or the Foreign Currency Deposit Act, provides the rule on the secrecy of foreign
currency deposits. Section 8 states:

SECTION 8. Secrecy of foreign currency deposits. - All foreign currency deposits authorized under this
Act, as amended by PD No. 1035, as well as foreign currency deposits authorized under PD No. 1034, are
hereby declared as and considered of an absolutely confidential nature and, except upon the written
permission of the depositor, in no instance shall foreign currency deposits be examined, inquired or
looked into by any person, government official, bureau or office whether judicial or administrative or
1
(a) "Covered institution" refers to:

(1) banks, non-banks, quasi-banks, trust entities, and all other institutions and their subsidiaries and affiliates
supervised or regulated by the Bangko Sentral ng Pilipinas (BSP);

(2) insurance companies and all other institutions supervised or regulated by the Insurance Commission; and

(3) (i) securities dealers, brokers, salesmen, investment houses and other similar entities managing securities or
rendering services as investment agent, advisor, or consultant, (ii) mutual funds, closed-end investment
companies, common trust funds, pre¬-need companies and other similar entities, (iii) foreign exchange
corporations, money changers, money payment, remittance, and transfer companies and other similar entities,
and (iv) other entities administering or otherwise dealing in currency, commodities or financial derivatives based
thereon, valuable objects, cash substitutes and other similar monetary instruments or property supervised or
regulated by Securities and Exchange Commission.
The prohibition applies to institutions and persons that, under the law and by reason of their business, possess
information on covered and suspicious transactions. It supports the functions of the Anti-Money Laundering
Council and other prosecuting agencies. If these institutions were allowed to disclose information to anyone,
especially to persons subject of the report, their investigatory functions will be rendered ineffective.
legislative, or any other entity whether public or private; Provided, however, that said foreign currency
deposits shall be exempt from attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body whatsoever.

Here, there is no question that the owner of the bank account submitted its written permission to allow
the inquiry and examination of its accounts. Lionair, the owner of the dollar account subject of the
Subpoena, waived its rights under the Foreign Currency Deposit Act and granted the prosecution access
to its account. It issued a Board Resolution reflecting this waiver.

On the argument of the AMLC that a CA must first issue an order before the prosecutor could inquire
into the deposited account as provided in Section 11 of the AMLA is misplaced, because Republic Act
No. 6426 applies in this case. Section 11 applies to situations where there is no written permission from
the depositor and owner of the bank account. Thus, in Section 11, there is a need for a finding of
probable cause and a court order, this is an exception to R.A. 6426.

3. No, the subpoena was able to describe what is sought to be produced in accordance to the
requirement of the Rules of Court.

For a subpoena duces tecum, Section 3 demands a reasonable description of the books, documents, or
things demanded, and these must appear to be relevant

The Subpoena Duces Tecum issued by the Sandiganbayan satisfies the test of definiteness. Its simple
reading clearly shows which specific reports and transactions are being requested. The contested
paragraph of the Subpoena reads:

"Documents to be produced:

The original or certified copies of any and all reports, identification documents, statement of accounts
and other transaction documents obtained by the said office from any and all banking institutions, non-
bank financial institutions and other covered institutions, in connection with the above-¬specified
transactions reflected in the savings passbook of Lionair under Union Bank Savings Account No. 13133-
000119-3. Copy of said passbook is hereby attached for easy reference."[87]

The documents requested are readily and reasonably identifiable: (1) the reports; (2) identification
documents; (3) statement of accounts; and (4) other transaction documents particularly pertaining to
the specific account number and three specific bank transactions.

Wherefore, the petition is dismissed.