G.R. No. 216914 , December 06, 2016
Subido Pagente Certeza Mendoza and Binay Law Offices v. The Court of Appeals, et al.

FACTS

The petitioner law firm challenged the constitutionality of Section 11 of the Anti-Money Laundering Act (AMLA), which authorizes the Anti-Money Laundering Council (AMLC) to inquire into or examine any particular deposit or investment with any banking institution or non-bank financial institution upon order of the Court of Appeals. The AMLC’s application for such an order is to be heard ex parte. The petitioner argued that this procedure violates constitutional rights to due process and privacy, as it allows an inquiry into bank accounts without prior notice to the depositor.

ISSUE

The primary issue is whether Section 11 of the AMLA, which permits an ex parte court inquiry into bank deposits, is unconstitutional for violating the rights to due process and privacy.

RULING

The Court, through a majority opinion, upheld the constitutionality of Section 11. It ruled that the ex parte inquiry procedure does not violate substantive due process because it does not involve a physical seizure of property at that preliminary stage. The Court emphasized that the law requires the AMLC to prove probable cause for the occurrence of a predicate crime and the account owner’s involvement before the Court of Appeals issues an inquiry order. This judicial oversight provides sufficient protection. Furthermore, the depositor has no right to prior notification of the inquiry application, as such notice could frustrate the investigation by enabling the dissipation of funds. The depositor’s right to be heard attaches later, when and if the AMLC seeks a freeze order under Section 10 of the AMLA. At that stage, the depositor can challenge the freeze by contesting the evidence of probable cause.
Justice Leonen, in a concurring opinion, agreed with the result but differed in legal reasoning. He argued that the majority’s focus on the absence of a “physical seizure” was an archaic view. He posited that the constitutional protections for “life, liberty, or property” and against unreasonable searches extend to intangible assets and privacy interests, including financial records. The numerical data in a bank account, while not physical, constitutes protected “property” and “papers.” For Justice Leonen, the constitutionality of Section 11 should be affirmed not because it involves no property seizure, but because the ex parte judicial process itself satisfies due process requirements by ensuring an independent determination of probable cause before any intrusion, thereby reasonably balancing state interest and individual rights.