PHILIPPINE DEPOSIT INSURANCE CORPORATION v. MANU GIDWANI, GR No.

234616, 2018-06-20
Facts:
Pursuant to several resolutions of the Monetary Board (MB) of the Bangko Sentral ng
Pilipinas (BSP), the following rural banks owned and controlled by the Legacy Group of
Companies (Legacy Banks) were ordered closed and thereafter placed under the
receivership of petitioner Philippine Deposit Insurance Corporation (PDIC):[3]
Respondent Manu, together with his wife Champa Gidwani and eighty-six (86) other
individuals, represented themselves to be owners of four hundred seventy-one (471)
deposit accounts with the Legacy Banks and filed claims with PDIC. The claims were
processed and granted, resulting in the issuance of six hundred eighty-three (683)
Landbank of the Philippines (Landbank) checks in favor of the 86 individuals, excluding the
spouses Gidwani, in the aggregate amount of P98,733,690.21.
Two diagonal lines appeared in each of the Landbank checks, indicating that they were
crossed-checks "Payable to the Payee's Account Only." Despite these explicit instructions,
the individuals did not deposit the crossed checks in their respective bank accounts. Rather,
the face value of all the checks were credited to a single account with Rizal Commercial
Banking Corporation (RCBC)-RCBC Account No. 1-419-86822-8, owned by Manu.
PDIC alleges that it only discovered the foregoing circumstance when the checks were
cleared and returned to it. This prompted PDIC to conduct an investigation on the true
nature of the deposit placements of the 86 individuals. Based on available bank documents,
the spouses Gidwani and the 86 individuals maintained a total of 471 deposit accounts
aggregating P118,187,500 with the different Legacy Banks, and that 142 of these accounts,
with the total amount of P20,966,439.09, were in the names of helpers and rank-and-file
employees of the Gidwani spouses. Thus, they allegedly did not have the financial capacity
to deposit the amounts recorded under their names, let alone make the deposits in various
Legacy Banks located nationwide. PDIC likewise noted that advance interests on several of
the deposits were paid to the Gidwani spouses even though they are not the named owners
of the accounts.
It is PDIC's contention, therefore, that the Gidwani spouses and the 86 individuals, with the
indispensable cooperation of RCBC, deceived PDIC into issuing the 683 checks with the
total face value of P98,733,690.21. Petitioner posits that the 86 individuals are not entitled
to the proceeds of the deposit insurance since they are not the true owners of the accounts
with the Legacy Banks, albeit recorded under their names. Rather, it is the spouses Gidwani
who are the true beneficial owners thereof and can only be entitled to a maximum deposit
coverage of P250,000.00 each pursuant to Sec. 4(g) of the PDIC Charter, as amended.
However, with wilful malice and intent to circumvent the law, the Gidwani spouses made it
appear that the deposits for which the insurance was paid were owned by 86 distinct
individuals when, in truth and in fact, all the deposits were maintained for the sole benefit of
the Gidwani spouses.
Pursuant to its mandate to safeguard the deposit insurance fund against illegal schemes
and machinations, PDIC, on November 6, 2012, lodged a criminal complaint[4] before the
Department of Justice (DOJ) Task Force on Financial Fraud (DOJ Task Force) for estafa
through falsification under Art. 315(2)(a) in relation to Art. 172(1) and 171(4) of the Revised
Penal Code and for money laundering as defined in Section 4(a) of AMLA against the
Gidwani spouses and the 86 other individuals. To summarize, the complaint against the
respondents, docketed as I.S. No. XVI-INV-12K-00480, was built on the following
circumstances:
In their counter-affidavits, the Gidwani spouses denied the charges against them,
particularly on being owners of the accounts in question.[6] In brief, they claimed that there
was no falsification committed by them since what was stated about the 86 individuals being
the owners of their respective accounts was true. Manu merely had a fund management
agreement with the depositors who got into investing with the Legacy Banks because of
him. They sought his help in setting up investment portfolios and in managing them. The
funds that were remitted for him to manage were then placed in the different Legacy Banks
under their names to prevent co-mingling of funds.[7]
First, he explained that he funded the opening of some of the accounts in the name. of the
depositors merely for convenience and practicality, and in order to avail of better rates and
freebies. He also lamented that PDIC left out the fact that the other accounts were funded
by respondents themselves.
Second, it was the Legacy Banks themselves that requested that advanced interests for the
accounts being managed by Manu as a group to be paid to him, to which set-up the
individual depositors agreed for convemence.
Third, the crossed-checks issued by PDIC ended up in his RCBC account because the
other respondents did not have other accounts of their own. The payees then requested him
to advance the value of their checks in exchange thereof. Manu adds that there was nothing
illegal with the arrangement since the checks, although crossed, bore the endorsement of
the payees or their duly authorized representatives.
Fourth, the depositors had been using Manu's business and residential address because
some of them live abroad and stay at Manu's residence when in the Philippines. This is
aside from the fact that it is Manu who was managing their accounts and had to deal with all
concerns relating thereto.
Finally, respondent Manu pointed out that PDIC approved and realized the insurance claims
not because of any perceived misrepresentation, but because PDIC itself verified that the
individual respondents were in fact the owners of the subject bank accounts.
WHEREFORE, on premises considered, the above-entitled complaint is recommended
DISMISSED for lack of probable cause.
On June 3, 2016, then SOJ Emmanuel Caparas, however, overturned the Justianio
Resolution through his own ruling granting PDIC's motion for reconsideration (Caparas
Resolution).[14] The dispositive portion of the ruling states:WHEREFORE, the motion for
reconsideration is hereby GRANTED. The Resolution of this Office dated 11 September
2015, and the Resolutions dated 14 January 2014 and 03 December 2014 of the DOJTask
Force on Financial Fraud, are hereby REVERSED and SET ASIDE.
In so ruling, SOJ Caparas ratiocinated that, on the charge of estafa through falsification, the
individual depositors committed false pretenses when they made it appear that they were
the legitimate owners of the subject bank accounts with the Legacy Banks, which
information was used in the processing of the insurance claims with PDIC, even when in
truth and in fact, the accounts were owned and controlled by Manu. Had the depositors
truthfully divulged to PDIC that the true and beneficial owner of the subject bank accounts
was Manu, PDIC would not have been duped into treating the bank accounts individually
and separately. It would have only paid the Gidwani Spouses P250,000.00, and not
P98,733,690.21.[16]
SOJ Caparas did not give credence to the defense that there existed a fund management
agreement between Manu, on the one hand, and the 86 respondents, on the other. For
aside for the self-serving and barren allegation, no other piece of evidence was offered to
support the claim. Besides, a .fund management agreement, being essentially an
investment contract, would have required registration with the Securities and Exchange
Commission, so SOJ Caparas ruled.[17]
Aggrieved, several of the respondents filed their respective motions for reconsiqeration of
the Caparas Resolution. Meanwhile, herein respondent Manu immediately elevated the
matter to the CA, ascribing grave abuse of discretion on the part of SOJ Caparas in finding
probable cause to charge him with estafa and for violation of the AMLA. The case was
docketed as CA-G.R. SP No. 149497.
Through its challenged January 31, 2017 Decision, the CA reversed the Caparas
Resolution, thusly:WHEREFORE, petition is GRANTED. The Resolution dated June 3,
2016 of then DOJ Secretary Emmanuel L. Caparas is ANNULED and SET ASIDE.
Resultantly, the DOJ Resolutions dated September 11, 2015, dismissing the Complaint of
Philippine Deposit Insurance Corporation is REINSTATED.
According to the CA, SOJ Caparas gravely abused his discretion when he reversed and set
aside the earlier resolutions of the DOJ Task Force and of SOJ Justiniano even though no
new evidence was offered by PDIC to support its allegations against Manu and his co-
respondents.
The CA upheld the presumption that a depositor is presumed to be the owner of funds
standing in his name in a bank deposit, and ruled that the circumstances alleged by PDIC
do not dovetail with its theory that the subject accounts were owned solely by the spouses
Gidwani. For the appellate court, the opening of the accounts, the use of the mailing
address, the transmittal of advance interests, and the subsequent deposit of the checks in
the RCBC account of the Gidwani spouses are not indications of ownership. Rather, they
confirm the defense that an arrangement had been made between the spouses and the
individual depositors on the management of the latter's funds.[20] Consequently, the claims
filed before the PDIC cannot. be deemed as falsified claims.
Issues:
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN TAKING
COGNIZANCE OF RESPONDENT MANU GIDWANI'S PETITION FOR CERTIORARI
UNDER RULE 65 OF THE 1997 RULES OF CIVIL PROCEDURE TO ASSAIL THE
CAPARAS RESOLUTION DESPITE HIS FAILURE TO FILE A MOTION FOR
RECONSIDERATION WITH THE DOJ PRIOR TO THE FILING OF THE PETITION FOR
CERTIORARI
WHETHER OR NOT THE CAPARAS RESOLUTION BECAME FINAL AND EXECUTORY
INSOFAR AS RESPONDENT MANU GIDWANI IS CONCERNED FOR FAILURE TO
ASSAIL THE CAPARAS RESOLUTION THROUGH A MOTION FOR RECONSIDERATION
For his part, respondent Gidwani maintains that the complaint is based on nothing more
than PDIC's suspicion that the subject bank accounts were actually owned by him and his
spouse; that the presumption that each individual depositor is the owner of the funds under
his name in a bank deposit was not refuted by PDIC; that the circumstances surrounding
the case confirm the arrangement for fund management between the spouses Gidwani and
the individual depositors; that the individual depositors confirmed their ownership over the
deposited funds; and that PDIC itself acted on the applications of the individual claimants
and effectively ruled on the legitimacy of their claims by approving the same.
Ruling:
The petition is meritorious.
The CA erred in ruling that SOJ Caparas gravely abused his discretion In reversing the
Justiniano Resolution absent additional evidence from PDIC
[t]he rationale behind the general rule rests on the principle of separation of powers,
dictating that the determination of probable cause for the purpose of indicting a suspect is
properly an executive function; while the exception hinges on the limiting principle of checks
and balances, whereby the judiciary, through a special civil action of certiorari, has been
tasked by the present Constitution "to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government."
Grave abuse of discretion had been defined in jurisprudence to mean a "capricious or
whimsical exercise of judgment as is equivalent to lack of jurisdiction." The abuse of
discretion must be patent and gross so as to amount to an evasion of a positive duty or a
virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law.[23]
The underlying principle behind the courts' power to review a public prosecutor's
determination of probable cause is to ensure that the latter acts within the permissible
bounds of his authority or does not gravely abuse the same. This manner of judicial review
is a constitutionally-enshrined form of check and balance which underpins the very core of
our system of government.[24]
The question therefore may be asked - after he assumed the position of Acting Secretary of
Justice, can Caparas again make a second look on the said complaint and act favourably
on PDIC's motion for reconsideration taking into account that what the latter had presented
in its motion are the same arguments and theories already threshed out by his predecessor
making its motion as a pro forma motion?
The filing of a motion for reconsideration is not mere formality, but an opportunity for a
judicial or quasi-judicial body to correct imputed errors, in fact or in law, in its findings and
conclusions.[26] The office of the motion is precisely to grant the investigating body, the
DOJ in this case, the opening to give a second hard look at the matter at hand, and to
determine if its previous ruling is in accord with evidence on record and statute.
Jurisprudence teaches, in a litany of cases, that a motion for reconsideration is generally
considered as the plain, speedy, and adequate remedy that is a condition sine qua non to
the filing of a petition for certiorari,[27] within the contemplation of Rule 65, Section 1 of the
Rules of Court.[28] But if the judicial or quasi-judicial body would be precluded from
overruling its earlier pronouncement on reconsideration, then a motion for reconsideration
would be no remedy at all, let alone one that is plain, speedy, and adequate.
As can be gleaned, a motion for reconsideration may be granted if (1) the damages
awarded are excessive, (2) the evidence is insufficient to justify the decision or final order,
or (3) the decision or final order is contrary to law. The judicial or quasi-judicial body
concerned may arrive at any of the three enumerated conclusions even without requiring
additional evidence. To be sure, the introduction of newly discovered additional evidence is
a ground for new trial or a de novo appreciation of the case, but not for the filing of a motion
for reconsideration. Judicial proceedings even prohibit the practice of introducing new
evidence on reconsideration since it potentially deprives the opposing party of his or her
right to due process. While quasi-judicial bodies in administrative proceedings may extend
leniency in this regard and allow the admission of evidence offered on reconsideration or on
appeal,[30] this is merely permissive and does not translate to a requirement of attaching
additional evidence to support motions for reconsideration.
The CA erred in ruling that SOJ Caparas gravely abused his discretion in finding probable
cause
Proceeding to the crux of the controversy, the Court now resolves whether or not the CA
erred in dismissing due to lack of probable cause the criminal complaint for estafa through
falsification under Art. 315(2)(a) in relation to Art. 172(1)[31] and 171(4)[32] of the RPC, and
for money laundering as defined in Section 4(a) of RA 9160. Here, the legal proscriptions
purportedly violated by respondent read:Article 315. Swindling (estafa). - x x x
According to PDIC, the crime charged was committed when the 86 other individuals
fraudulently declared that they are the bona fide owners of 471 deposits with the legacy
banks; that the purported depositors, in conspiracy with Manu, falsified official documents
by making the untruthful statement of ownership in their deposit insurance claims; that PDIC
relied on the representations of the claimants when it released to them the deposit
insurance proceeds amounting to P98,733,690.21, of which P97,733,690.21 was deposited
to the RCBC account of Manu Gidwani; and that the government suffered damage when
PDIC discovered upon investigation that Manu was the sole beneficial owner of the bank
accounts.
In the assailed Decision, the CA did not give credence to the allegations of PDIC. It ruled
instead that "PDIC failed to prove that [Manu] is the owner of all subject bank accounts or
financed the same" and, as such, Manu could not be considered to have committed false
pretenses or misrepresentation against PDIC.
It must be recalled that the criminal case is still in the stage of preliminary investigation.
Under Rule 112, Section 1 of the Rules of Court, a preliminary investigation is "an inquiry or
proceeding to determine whether there is sufficient ground to engender a well-founded
belief that a crime has been committed and the respondent is probably guilty thereof, and
should be held for trial." The investigation is advisedly called preliminary, because it is yet to
be followed by the trial proper in a court of law.[34] The occasion is not for the full and
exhaustive display of the parties since the function of the investigating prosecutor is not to
determine the guilt or innocence of an accused.
In this case, the PDIC reportedly discovered that there was only one beneficial owner of the
471 bank accounts with the Legacy Banks of the 86 individual depositors respondent Manu.
To illustrate, PDIC reportedly discovered that 142 of these 471 accounts, with the total
amount of P20,966,439.09, were in the names of helpers and rank-and-file employees of
the Gidwani spouses who do not have the financial capacity to deposit the amounts
recorded under their names, viz:[35]
Moreover, the helpers and rank-and-file employees who reside and are employed in
Bacolod City maintained bank accounts in Legacy Banks located in different parts of the
country:[36]
That these individuals reported either respondent Manu's office or business address as their
own further arouses serious suspicion on the true ownership of the funds deposited. It gives
the impression that they had been used by respondent as dummies, and their purported
ownership mere subterfuge, in order to increase the amount of his protected deposit.
A crossed check is one where two parallel lines are drawn across its face or across its
comer, and carries with it the following effects: (a) the check may not be encashed but only
deposited in the bank; (b) the check may be negotiated only once to the one who has an
account with the bank; and (c) the act of crossing the check serves as a warning to the
holder that the check has been issued for a definite purpose and he must inquire if he
received the check pursuant to this purpose; otherwise, he is not a holder in due course.[37]
In other words, the crossing of a check is a warning that the check should be deposited only
in the account of the payee.[38] Thus, to the mind of the Court, the act of depositing
second-endorsed crossed-checks in the name of 86 different payees under a single account
is highly irregular if not potentially criminal.
Respondent seeks to exonerate himself from the charges by claiming that PDIC was
negligent in processing the insurance claims. This was, in fact, the ruling of the DOJ Task
Force - that there was a clear paper trail by which PDIC could have traced and uncovered
the status of the subject accounts before releasing the proceeds. The proposition, however,
deserves scant consideration. For negligence on the part of the PDIC does not preclude the
commission of fraud on the part of the claimants, and could have even made the agency
even more susceptible to abuse.
Whether or not there indeed existed an agreement between respondent Manu and the
individual depositors is a matter best left ventilated during trial proper, where evidence can
be presented and appreciated fully. Suffice it to state for now that the Court herein finds
probable cause to charge respondent for estafa and money laundering.
Principles:
In resolving the motion for reconsideration lodged with his office and in exercising
jurisdiction, SOJ Caparas has the power and discretion to make his own personal
assessment of the pleadings and evidence subject of review. He is not bound by the rulings
of his predecessors because there is yet to be a final resolution of the issue; the matter is
still pending before his office after all. To hold otherwise would render the filing of the
motion a futile exercise, and the recourse, pointless.
That no new evidence was offered by PDIC on reconsideration is of no moment. For under
Section 13 of Department Circular No. 70 of the DOJ, otherwise known as the 2000
National Prosecutorial Service Rule on Appeal (2000 NPS Rules), the party aggrieved by
the ruling of the SOJ during the preliminary investigation may file a motion for
reconsideration within a non-extendible period of ten (10) days from notice. Quite
conspicuous, however, is that the 2000 NPS Rules does not specify the grounds for filing
the said motion. In this regard, the Court refers to the Rules of Court for guidance.
Within the same period, the aggrieved party may also move for reconsideration upon the
grounds that the damages awarded are excessive, that the evidence is insufficient to justify
the decision or final order, or that the decision or final order is contrary to law. (emphasis
added)

2. By means of any of the following false pretenses or fraudulent acts executed prior to
or simultaneously with the commission of the fraud:(a) By using fictitious name, or
falsely pretending to possess power, influence, qualifications, property, credit,
agency, business or imaginary transactions, or by means of other similar deceits.

Section 4. Money Laundering Offense. - Money laundering is a crime whereby the proceeds
of an unlawful activity are transacted, thereby making them appear to have originated from
legitimate sources. It is committed by the following:... a. Any person knowing that any
monetary instrument or property represents, involves, or relates to the proceeds of any
unlawful activity, transacts or attempts to transact said monetary instrument or property.
Jurisprudence elucidates that the elements of estafa or swindling under paragraph 2 (a) of
Article 315 of the RPC are the following:[33]That there must be a false pretense, fraudulent
act or fraudulent means;That such false pretense, fraudulent act or fraudulent means must
be made or executed prior to or simultaneously with the commission of the fraud;That the
offended party must have relied on the false pretense, fraudulent act, or fraudulent means,
that is, he was induced to part with his money or property because of the false pretense,
fraudulent act, or fraudulent means;That as a result thereof, the offended party suffered
damage.
We disagree.
Under Republic Act No. 3591 (PDIC Charter), as amended, all deposits in a bank
maintained in the same right and capacity for a depositor's benefit, either in his name or in
the name of others, shall be added together for the purpose of determining the insured
deposit amount due to a bona fide depositor, which amount should not exceed the
maximum deposit insurance coverage (MDIC) of P250,000.00. Thus, the entitlement to a
deposit insurance is based not on the number of bank accounts held, but on the number of
beneficial owners. It is this government policy and P250,000.00 threshold that respondent
Manu purportedly circumvented by conspiring with the 86 individuals. If not for the fact that
the 683 Landbank crossed checks amounting to P97,733,690.21 were deposited in the
RCBC account of respondent Manu, petitioner would not have gotten wind of this probable
concealment of true ownership over the subject bank accounts.
ESTRADA V. SANDIGANBAYAN - CASE DIGEST -
CONSTITUTIONAL LAW
ESTRADA V. SANDIGANBAYAN                    G.R. No. 148560. November 19, 2001

FACTS:

Former President Estrada and co-accused were charged for Plunder under RA 7080 (An Act Defining and Penalizing
the Crime of Plunder), as amended by RA 7659.

On the information, it was alleged that Estrada have received billions of pesos through any or a combination or a
series of overt or criminal acts, or similar schemes or means thereby unjustly enriching himself or themselves at
the expense and to the damage of the Filipino people and the Republic of the Philippines.

Estrada questions the constitutionality of the Plunder Law since for him:

1. it suffers from the vice of vagueness

2. it dispenses with the "reasonable doubt" standard in criminal prosecutions

3. it abolishes the element of  mens rea in crimes already punishable under The Revised Penal Code.

Office of the Ombudsman filed before the Sandiganbayan 8 separate Informations against petitioner.

Estrada filed an Omnibus Motion on the grounds of lack of preliminary investigation,

reconsideration/reinvestigation of offenses and opportunity to prove lack of probable cause but was denied.

Later on, the Sandiganbayan issued a Resolution in Crim. Case No. 26558 finding that a probable cause for the
offense of plunder exists to justify the issuance of warrants for the arrest of the accused.

Estrada moved to quash the Information in Criminal Case No. 26558 on the ground that the facts alleged therein
did NOT constitute an indictable offense since the law on which it was based was unconstitutional for vagueness
and that the Amended Information for Plunder charged more than one offense. Same was denied.

The questioned provisions of the petitioners are Secs. 1, par. (d), 2 and 4 of the Plunder Law which states that:
Section 1. x x x x (d)  "Ill-gotten wealth" means any asset, property, business, enterprise or material possession of
any person within the purview of Section Two (2) hereof, acquired by him directly or indirectly through dummies,
nominees, agents, subordinates and/or business associates by any combination or series of the following means or
similar schemes:
(1) Through misappropriation, conversion, misuse, or malversation of public funds or raids on the public treasury;
(2) By receiving, directly or indirectly, any commission, gift, share, percentage, kickbacks or any other form of
pecuniary benefit from any person and/or entity in connection with any government contract or project or by reason of
the office or position of the public office concerned;
(3) By the illegal or fraudulent conveyance or disposition of assets belonging to the National Government or any of its
subdivisions, agencies or instrumentalities, or government owned or controlled corporations and their subsidiaries;
(4) By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any other form of interest
or participation including the promise of future employment in any business enterprise or undertaking;
(5) By establishing agricultural, industrial or commercial monopolies or other combinations and/or implementation of
decrees and orders intended to benefit particular persons or special interests; or
(6) By taking advantage of official position, authority, relationship, connection or influence to unjustly enrich himself or
themselves at the expense and to the damage and prejudice of the Filipino people and the Republic of the
Philippines.
Section 2. Definition of the Crime of Plunder, Penalties. - Any public officer who, by himself or in connivance with
members of his family, relatives by affinity or consanguinity, business associates, subordinates or other persons,
amasses, accumulates or acquires ill-gotten wealth through a  combination or series of overt or criminal acts as
described in Section 1 (d) hereof, in the aggregate amount or total value of at least fifty million pesos
(P50,000,000.00) shall be guilty of the crime of plunder and shall be punished by reclusion perpetua to death.  Any
person who participated with the said public officer in the commission of an offense contributing to the crime of
plunder shall likewise be punished for such offense. In the imposition of penalties, the degree of participation and the
attendance of mitigating and extenuating circumstances as provided by the  Revised  Penal Code shall be considered
by the court. The court shall declare any and all ill-gotten wealth and their interests and other incomes and assets
including the properties and shares of stocks derived from the deposit or investment thereof forfeited in favor of the
State (underscoring supplied).
Section 4. Rule of Evidence. - For purposes of establishing the crime of plunder, it shall not be necessary to
prove each and every criminal act done by the accused in furtherance of the scheme or conspiracy to amass,
accumulate or acquire ill-gotten wealth, it being sufficient to establish beyond reasonable doubt a pattern of
overt or criminal acts indicative of the overall unlawful scheme or conspiracy  (underscoring supplied).
ISSUE:

WON the crime of plunder is unconstitutional for being vague?

HELD:

NO. As long as the law affords some comprehensible guide or rule that would inform those who are subject to it
what conduct would render them liable to its penalties, its validity will be sustained. The amended information
itself closely tracks the language of the law, indicating w/ reasonable certainty the various elements of the offense
w/c the petitioner is alleged to have committed.

We discern nothing in the foregoing that is vague or ambiguous that will confuse petitioner in his defense.

Petitioner, however, bewails the failure of the law to provide for the statutory definition of the
terms “combination” and “series” in the key phrase “a combination or series of overt or criminal acts. These
omissions, according to the petitioner, render the Plunder Law unconstitutional for being impermissibly vague and
overbroad and deny him the right to be informed of the nature and cause of the accusation against him, hence
violative of his fundamental right to due process.

A statute is not rendered uncertain and void merely because general terms are used herein, or because of the
employment of terms without defining them.

A statute or act may be said to be vague when it lacks comprehensible standards that men of common intelligence
most necessarily guess at its meaning and differ in its application. In such instance, the statute is repugnant to the
Constitution in two (2) respects – it violates due process for failure to accord persons, especially the parties
targeted by it, fair notice of what conduct  to avoid; and, it leaves law enforcers unbridled discretion in carrying out
its provisions and becomes an arbitrary flexing of the Government muscle.

A facial challenge is allowed to be made to vague statute and to one which is overbroad because of
possible “chilling effect” upon protected speech.  The possible harm to society in permitting some unprotected
speech to go unpunished is outweighed by the possibility that the protected speech of others may be deterred and
perceived grievances left to fester because of possible inhibitory effects of overly broad statutes. But in criminal
law, the law cannot take chances as in the area of free speech.
REPUBLIC VS. CABRINI, GREEN, & ROSS, INC. G.R. NO. 154522

Republic vs. Cabrini, Green, & Ross, Inc.

G.R. NO. 154522

DATE: May 05, 2006

PONENTE: Corona, J.

FACTS: In the exercise of its power under Section 10 of RA 9160, the Anti-Money Laundering Council
(AMLC) issued freeze orders against various bank accounts of respondents. The frozen bank accounts
were previously found prima facie to be related to the unlawful activities of respondents.

Under RA 9160, a freeze order issued by the AMLC is effective for a period not exceeding 15 days unless
extended “upon order of the court.” Accordingly, before the lapse of the period of effectivity of its
freeze orders, the AMLC2 filed with the Court of Appeals (CA) various petitions for extension of
effectivity of its freeze orders.

The AMLC invoked the jurisdiction of the CA in the belief that the power given to the CA to issue a TRO
or writ of injunction against any freeze order issued by the AMLC carried with it the power to extend the
effectivity of a freeze order. In other words, the AMLC interpreted the phrase “upon order of the court”
to refer to the CA.

However, the CA disagreed with the AMLC and dismissed the petitions.

ISSUE/S: Which court has jurisdiction to extend the effectivity of a freeze order?

RULING: Court of Appeals.

During the pendency of these petitions, or on March 3, 2003, Congress enacted RA 9194 (An Act
Amending Republic Act No. 9160, Otherwise Known as the “Anti-Money Laundering Act of 2001”).6 It
amended Section 10 of RA 9160

as follows:

SEC. 7. Section 10 of [RA 9160] is hereby amended to read as follows:

SEC. 10. Freezing of Monetary Instrument or Property.—The Court of Appeals, upon application ex parte
by the AMLC and after determination that probable cause exists that any monetary instrument or
property is in any way related to an unlawful activity as defined in Sec. 3(i) hereof, may issue a freeze
order which shall be effective immediately. The freeze order shall be for a period of twenty (20) days
unless extended by the court.”(emphasis supplied)

Section 12 of RA 9194 further provides:

SEC. 12. Transitory Provision.—Existing freeze orders issued by the AMLC shall remain in force for a
period of thirty (30) days after theeffectivity of this Act, unless extended by the Court of Appeals.

(emphasis supplied)

The Office of the Solicitor General (OSG) filed a “Very Urgent Motion to Remand Cases to the Honorable

Court of Appeals. The OSG prayed for the remand of these cases to the CA pursuant to RA 9194.

The amendment by RA 9194 of RA 9160 erased any doubt on the jurisdiction of the CA over the
extension of freeze orders. As the law now stands, it is solely the CA which has the authority to issue a
freeze order as well as to extend its effectivity. It also has the exclusive jurisdiction to extend existing
freeze orders previously issued by the AMLC vis-à- vis accounts and deposits related to money-
laundering activities.
RET. LT. GEN. JACINTO C. LIGOT v. REPUBLIC, GR No. 176944, 2013-03-06
Facts:
On June 27, 2005, the Republic of the Philippines (Republic), represented by the Anti-
Money Laundering Council (AMLC), filed an Urgent Ex-Parte Application for the issuance of
a freeze order with the CA against certain monetary instruments and properties of... the
petitioners
This application was based on the February 1, 2005 letter of the Office of the Ombudsman
to the AMLC,... recommending that the latter conduct an investigation on Lt. Gen. Ligot and
his family for possible violation of RA No. 9160.
Lt. Gen. Ligot declared in his Statement of Assets, Liabilities, and Net Worth (SALN) that as
of December 31, 2003, he had assets in the total amount of Three Million Eight Hundred
Forty-Eight Thousand and Three Pesos (P3,848,003.00).[11] In... contrast, his declared
assets in his 1982 SALN amounted to only One Hundred Five Thousand Pesos
(P105,000.00).
side from these declared assets, the Ombudsman's investigation revealed that Lt. Gen.
Ligot and his family had other properties and bank accounts, not declared in his SALN,...
Bearing in mind that Lt. Gen. Ligot's main source of income was his salary as an officer of
the AFP,[17] and given his wife and children's lack of any other substantial sources of
income,[18] the Ombudsman declared the assets... registered in Lt. Gen. Ligot's name, as
well as those in his wife's and children's names, to be illegally obtained and unexplained
wealth, pursuant to the provisions of RA No. 1379 (An Act Declaring Forfeiture in Favor of
the State Any Property Found to Have Been Unlawfully
Acquired by Any Public Officer or Employee and Providing for the Proceedings Therefor).
the AMLC issued Resolution No. 52, Series of 2005, directing the Executive Director of the
AMLC Secretariat to file an application for a freeze order against the properties of Lt. Gen.
Ligot and the members of his family with the CA.
The appellate court granted the application in its July 5, 2005 resolution, ruling that probable
cause existed
Accordingly, the CA issued a freeze order against the Ligots' and Yambao's various bank
accounts, web accounts and vehicles, valid for a period of 20 days from the date of
issuance.
On July 26, 2005, the Republic filed an Urgent Motion for Extension of Effectivity of Freeze
Order, arguing that if the bank accounts, web accounts and vehicles were not continuously
frozen, they could be placed beyond the reach of law enforcement authorities... the CA
granted the motion in its September 20, 2005 resolution, extending the freeze order until
after all the appropriate proceedings and/or investigations have been terminated.
the Ligots filed a motion to lift the extended freeze order, principally arguing that there was
no evidence to support the extension of the freeze order. They further argued that the
extension not only deprived them of their property without due process;... it also punished
them before their guilt could be proven.
The appellate court subsequently denied this motion
Meanwhile, on November 15, 2005,... Republic Act No.
9160, as Amended"[23] (Rule in Civil Forfeiture Cases) took effect. Under this rule, a freeze
order could be extended for a maximum period of six months.
Ligots filed a motion for reconsideration of the CA's
When the CA denied this motion i
Ligots filed the present petition.
Lt. Gen. Ligot... maintains that the freeze order issued against them ceased to be effective
in view of the 6-month extension limit of freeze orders provided under the Rule in Civil
Forfeiture Cases.
the Republic claims that the CA can issue a freeze order upon a determination that
probable cause exists, showing that the monetary instruments or properties subject of the
freeze order are related to the unlawful activity
CA's September 20, 2005 resolution, granting the Republic's motion to extend the effectivity
of the freeze order, had already become final and executory, and could no longer be
challenged.
Issues:
conflict between Section 10 of RA No. 9160, as amended, and Section 53(b) of the Rule in
Civil Forfeiture Cases,
Ruling:
We find merit in the petition.
Without challenging the validity of the fixed 6-month extension period, the Republic
nonetheless asserts that the Rule in Civil Forfeiture Cases does not apply to the present
case because the CA had already resolved the issues regarding the extension of the freeze
order before... the Rule in Civil Forfeiture Cases came into effect.
This reasoning fails to convince us.
Notably, the Rule in Civil Forfeiture Cases came into effect on December 15, 2005. Section
59 provides that it shall "apply to all pending civil forfeiture cases or petitions for freeze
order" at the time of its effectivity.
A review of the record reveals that after the CA issued its September 20, 2005 resolution
extending the freeze order, the Ligots filed a motion to lift the extended freeze order on
September 28, 2005. Significantly, the CA only acted upon this motion on January 4,
2006,... when it issued a resolution denying it.
While denominated as a Motion to Lift Extended Freeze Order, this motion was actually a
motion for reconsideration, as it sought the reversal of the assailed CA resolution. Since the
Ligots' motion for reconsideration was still pending resolution at the time the Rule in
Civil Forfeiture Cases came into effect on December 15, 2005, the Rule unquestionably
applies to the present case.
Additionally, we would be giving premium to the government's failure to file an appropriate
case until only after six years (despite the clear provision of the Rule in Civil Forfeiture
Cases) were we to dismiss the petition because of the filing of the forfeiture case... during
the pendency of the case before the Court.
Substantive aspect... there are only two requisites for the issuance of a freeze order: (1) the
application ex parte by the AMLC and (2) the determination of probable cause by the CA.
[33] The probable cause required for the issuance... of a freeze order differs from the
probable cause required for the institution of a criminal action, and the latter was not an
issue before the CA nor is it an issue before us in this case.
As defined in the law, the probable cause required for the issuance of a freeze order refers
to "such facts and circumstances which would lead a reasonably discreet, prudent or
cautious man to believe that an unlawful activity and/or a money laundering offense is about
to be, is... being or has been committed and that the account or any monetary instrument or
property subject thereof sought to be frozen is in any way related to said unlawful activity
and/or money laundering offense.
In other words, in resolving the issue of whether probable cause exists, the CA's statutorily-
guided determination's focus is not on the probable commission of an unlawful activity (or
money laundering) that the Office of the Ombudsman has already determined to exist, but
on... whether the bank accounts, assets, or other monetary instruments sought to be frozen
are in any way related to any of the illegal activities... a freeze order is not dependent on a
separate criminal charge, much less does it depend on a conviction.
As we previously noted in Republic v. Eugenio, Jr.,[36] "[t]o make such freeze... order
anteceded by a judicial proceeding with notice to the account holder would allow for or lead
to the dissipation of such funds even before the order could be issued."
A freeze order, however, cannot be issued for an indefinite period
A freeze order is an extraordinary and interim relief
The primary objective of a freeze order is to temporarily preserve monetary instruments or
property that are in any way related to an unlawful activity or money laundering, by
preventing the owner from utilizing them... during the duration of the freeze order.[39] The
relief is pre-emptive in character, meant to prevent the owner from disposing his property
and thwarting the State's effort in building its case and eventually filing civil forfeiture
proceedings... and/or prosecuting the owner.
Our examination of the Anti-Money Laundering Act of 2001, as amended, from the point of
view of the freeze order that it authorizes, shows that the law is silent on the maximum
period of time that the freeze order can be extended by the CA.
As correctly noted by the petitioners, a freeze order is meant to have a temporary effect; it
was never intended to supplant or replace the actual forfeiture cases where the provisional
remedy - which means, the remedy is an adjunct of or an incident to the main action of
asking... for the issuance of an asset preservation order from the court where the petition is
filed is precisely available. For emphasis, a freeze order is both a preservatory and
preemptive remedy.
To stress, the evils caused by the law's silence on the freeze order's period of effectivity[46]
compelled this Court to issue the Rule in Civil Forfeiture Cases. Specifically, the Court fixed
the maximum allowable extension on the freeze order's... effectivity at six months. In doing
so, the Court sought to balance the State's interest in going after suspected money
launderers with an individual's constitutionally-protected right not to be deprived of his
property without due process of law, as well as to be presumed... innocent until proven
guilty.
We are not unmindful that the State itself is entitled to due process. As a due process
concern, we do not say that the six-month period is an inflexible rule that would result in the
automatic lifting of the freeze order upon its expiration in all instances. An... inflexible rule
may lend itself to abuse - to the prejudice of the State's legitimate interests - where the
property owner would simply file numerous suits, questioning the freeze order during the
six-month extension period, to prevent the timely filing of a money laundering or... civil
forfeiture case within this period. With the limited resources that our government
prosecutors and investigators have at their disposal, the end-result of an inflexible rule is
not difficult to see.
Thus, as a rule, the effectivity of a freeze order may be extended by the CA for a period not
exceeding six months. Before or upon the lapse of this period, ideally, the Republic should
have already filed a case for civil forfeiture against the property owner with the proper...
courts and accordingly secure an asset preservation order or it should have filed the
necessary information.[47] Otherwise, the property owner should already be able to fully
enjoy his property without any legal process affecting it. However, should... it become
completely necessary for the Republic to further extend the duration of the freeze order, it
should file the necessary motion before the expiration of the six-month period and explain
the reason or reasons for its failure to file an appropriate case and justify the... period of
extension sought. The freeze order should remain effective prior to the resolution by the CA,
which is hereby directed to resolve this kind of motion for extension with reasonable
dispatch.
In the present case, we note that the Republic has not offered any explanation why it took
six years (from the time it secured a freeze order) before a civil forfeiture case was filed in
court, despite the clear tenor of the Rule in Civil Forfeiture Cases allowing the extension...
of a freeze order for only a period of six months. All the Republic could proffer is its
temporal argument on the inapplicability of the Rule in Civil Forfeiture Cases; in effect, it
glossed over the squarely-raised issue of due process. Under these circumstances, we
cannot but... conclude that the continued ext... ension of the freeze order beyond the six-
month period violated the Ligots' right to due process; thus, the CA decision should be
reversed.
Principles:
Procedural aspect
Certiorari not proper remedy to assail freeze order; exception
Section 57 of the Rule in Civil Forfeiture Cases explicitly provides the remedy available in
cases involving freeze orders issued by the CA:
Section 57. Appeal. - Any party aggrieved by the decision or ruling of the court may appeal
to the Supreme Court by petition for review on certiorari under Rule 45 of the Rules of
Court. The appeal shall not stay the enforcement of the subject decision... or final order
unless the Supreme Court directs otherwise.
From this provision, it is apparent that the petitioners should have filed a petition for review
on certiorari, and not a petition for certiorari, to assail the CA resolution which extended the
effectivity period of the freeze order over their properties.
Even assuming that a petition for certiorari is available to the petitioners, a review of their
petition shows that the issues they raise (i.e., existence of probable cause to support the
freeze order; the applicability of the 6-month limit to the extension of freeze... orders
embodied in the Rule of Procedure in Cases of Civil Forfeiture) pertain to errors of judgment
allegedly committed by the CA, which fall outside the Court's limited jurisdiction when
resolving certiorari petitions.
Clearly, the Ligots should have filed a petition for review on certiorari, and not what is
effectively a second motion for reconsideration
SEC. 28. Precedence of proceedings. - Any criminal case relating to an unlawful activity
shall be given precedence over the prosecution of any offense or violation under Republic
Act No. 9160, as amended, without prejudice to the filing of a separate... petition for civil
forfeiture or the issuance of an asset preservation order or a freeze order. Such civil action
shall proceed independently of the criminal prosecution. [italics supplied; emphases ours]
Section 10 of RA No. 9160 (allowing the extension of the freeze order) and Section 28
(allowing a separate petition for the issuance of a freeze order to proceed independently) of
the Rule in Civil Forfeiture Cases are only consistent with the very purpose of the freeze
order,... which specifically is to give the government the necessary time to prepare its case
and to file the appropriate charges without having to worry about the possible dissipation of
the assets that are in any way related to the suspected illegal activity.
Republic v Judge Eugenio G.R. No. 174629, February
14, 2008
MARCH 16, 2014LEAVE A COMMENT

Sec. 2 of the Bank Secrecy Act itself prescribes exceptions whereby these bank accounts may be
examined by any person, government official, bureau or offial; namely when: (1) upon written
permission of the depositor; (2) in cases of impeachment; (3) the examination of bank accounts is
upon order of a competent court in cases of bribery or dereliction of duty of public officials; and
(4) the money deposited or invested is the subject matter of the litigation. Section 8 of R.A. Act No.
3019, the Anti-Graft and Corrupt Practices Act, has been recognized by this Court as constituting
an additional exception to the rule of absolute confidentiality, and there have been other similar
recognitions as well.[
Facts: Under the authority granted by the Resolution, the AMLC filed an application to inquire into
or examine the deposits or investments of Alvarez, Trinidad, Liongson and Cheng Yong before the
RTC of Makati, Branch 138, presided by Judge (now Court of Appeals Justice) Sixto Marella, Jr.
The application was docketed as AMLC No. 05-005. The Makati RTC heard the testimony of the
Deputy Director of the AMLC, Richard David C. Funk II, and received the documentary evidence of
the AMLC.[14] Thereafter, on 4 July 2005, the Makati RTC rendered an Order (Makati RTC bank
inquiry order) granting the AMLC the authority to inquire and examine the subject bank accounts of
Alvarez, Trinidad, Liongson and Cheng Yong, the trial court being satisfied that there existed
p]robable cause [to] believe that the deposits in various bank accounts, details of which appear in
paragraph 1 of the Application, are related to the offense of violation of Anti-Graft and Corrupt
Practices Act now the subject of criminal prosecution before the Sandiganbayan as attested to by the
Informations, Exhibits C, D, E, F, and G 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. [16]
Meanwhile, the Special Prosecutor of the Office of the Ombudsman, Dennis Villa-Ignacio, wrote a
letter dated 2 November 2005, requesting the AMLC to investigate the accounts of Alvarez,
PIATCO, and several other entities involved in the nullified contract. The letter adverted to probable
cause to believe that the bank accounts were used in the commission of unlawful activities that were
committed a in relation to the criminal cases then pending before the Sandiganbayan. Attached to the
letter was a memorandum on why the investigation of the [accounts] is necessary in the prosecution
of the above criminal cases before the Sandiganbayan. In response to the letter of the Special
Prosecutor, the AMLC promulgated on 9 December 2005 Resolution No. 121 Series of 2005,
[19]
 which authorized the executive director of the AMLC to inquire into and examine the accounts
named in the letter, including one maintained by Alvarez with DBS Bank and two other accounts in
the name of Cheng Yong with Metrobank. The Resolution characterized the memorandum attached
to the Special Prosecutors letter as extensively justif[ying] the existence of probable cause that the
bank accounts of the persons and entities mentioned in the letter are related to the unlawful activity
of violation of Sections 3(g) and 3(e) of Rep. Act No. 3019, as amended.
Issue: Whether or not the bank accounts of respondents can be examined.

Held: Any exception to the rule of absolute confidentiality must be specifically legislated. Section 2
of the Bank Secrecy Act itself prescribes exceptions whereby these bank accounts may be examined
by any person, government official, bureau or offial; namely when: (1) upon written permission of
the depositor; (2) in cases of impeachment; (3) the examination of bank accounts is upon order of a
competent court in cases of bribery or dereliction of duty of public officials; and (4) the money
deposited or invested is the subject matter of the litigation. Section 8 of R.A. Act No. 3019, the Anti-
Graft and Corrupt Practices Act, has been recognized by this Court as constituting an additional
exception to the rule of absolute confidentiality, and there have been other similar recognitions as
well.
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 violation of the AMLA, it
having been established that there is probable cause that the deposits or investments are related to
unlawful activities as defined in Section 3(i) of the law, or a money laundering offense under Section
4 thereof. Further, in instances where there is probable cause that the deposits or investments are
related to kidnapping for ransom, [certain violations of the Comprehensive Dangerous Drugs Act of
2002,hijacking and other violations under R.A. No. 6235, destructive arson and murder, then there is
no need for the AMLC to obtain a court order before it could inquire into such accounts. It cannot be
successfully argued the proceedings relating to the bank inquiry order under Section 11 of the AMLA
is a litigation encompassed in one of the exceptions to the Bank Secrecy Act which is when money
deposited or invested is the subject matter of the litigation. The orientation of the bank inquiry order
is simply to serve as a provisional relief or remedy. As earlier stated, the application for such does
not entail a full-blown trial. Nevertheless, just because the AMLA establishes additional exceptions
to the Bank Secrecy Act it does not mean that the later law has dispensed with the general principle
established in the older law that all deposits of whatever nature with banks or banking institutions in
the Philippines x x x are hereby considered as of an absolutely confidential nature. Indeed, by force
of statute, all bank deposits are absolutely confidential, and that nature is unaltered even by the
legislated exceptions referred to above.
Share this:
Subido Pagente Certeza Mendoza and Binay Law Offices
vs. Court of Appeals, et al. Case Digest
Subido Pagente Certeza Mendoza and Binay Law Offices vs. The Court of Appeals, et al.

G.R. No. 216914. December 6, 2016

Facts

Challenged in this petition for certiorari and prohibition under Rule 65 of the Rules of Court is the
constitutionality of Section 11 of R.A No. 9160, the Anti-Money Laundering Act, as amended, specifically
the Anti-Money Laundering Council's authority to file with the Court of Appeals (CA) in this case, an ex-
parte application for inquiry into certain bank deposits and investments, including related accounts based
on probable cause.

In 2015, a year before the 2016 presidential elections, reports abounded on the supposed
disproportionate wealth of then Vice President Jejomar Binay and the rest of his family, some of whom
were likewise elected public officers. The Office of the Ombudsman and the Senate conducted
investigations and inquiries thereon.

From various news reports announcing the inquiry into then Vice President Binay's bank accounts,
including accounts of members of his family, petitioner Subido Pagente Certeza Mendoza & Binay Law
Firm (SPCMB) was most concerned with the article published in the Manila Times on 25 February 2015
entitled "Inspect Binay Bank Accounts" which read, in pertinent part:

xxx The Anti-Money Laundering Council (AMLC) asked the Court of Appeals (CA) to allow the [C]ouncil to
peek into the bank accounts of the Binays, their corporations, and a law office where a family member
was once a partner.

xx xx

Also the bank accounts of the law office linked to the family, the Subido Pagente Certeza Mendoza &
Binay Law Firm, where the Vice President's daughter Abigail was a former partner.

By 8 March 2015, the Manila Times published another article entitled, "CA orders probe of Binay 's
assets" reporting that the appellate court had issued a Resolution granting the ex-parte application of the
AMLC to examine the bank accounts of SPCMB. Forestalled in the CA thus alleging that it had no
ordinary, plain, speedy, and adequate remedy to protect its rights and interests in the purported ongoing
unconstitutional examination of its bank accounts by public respondent Anti-Money Laundering Council
(AMLC), SPCMB undertook direct resort to this Court via this petition for certiorari and prohibition on the
following grounds that the he Anti-Money Laundering Act is unconstitutional insofar as it allows the
examination of a bank account without any notice to the affected party: (1) It violates the person's right to
due process; and (2) It violates the person's right to privacy.

Issues:

1. Whether Section 11 of R.A No. 9160 violates substantial due process.

2. Whether Section 11 of R.A No. 9160 violates procedural due process.
3. Whether Section 11 of R.A No. 9160 is violative of the constitutional right to privacy enshrined in
Section 2, Article III of the Constitution.

Rulings

1. No. We do not subscribe to SPCMB' s position. Succinctly, Section 11 of the AMLA providing for ex-
parte application and inquiry by the AMLC into certain bank deposits and investments does not violate
substantive due process, there being no physical seizure of property involved at that stage.

In fact, .Eugenio delineates a bank inquiry order under Section 11 from a freeze order under Section 10
on both remedies' effect on the direct objects, i.e. the bank deposits and investments:

On the other hand, a bank inquiry order under Section 11 does not necessitate any form of physical
seizure of property of the account holder. What the bank inquiry order authorizes is the examination of the
particular deposits or investments in banking institutions or non-bank financial institutions. The monetary
instruments or property deposited with such banks or financial institutions are not seized in a physical
sense, but are examined on particular details such as the account holder's record of deposits and
transactions. Unlike the assets subject of the freeze order, the records to be inspected under a bank
inquiry order cannot be physically seized or hidden by the account holder. Said records are in the
possession of the bank and therefore cannot be destroyed at the instance of the account holder alone as
that would require the extraordinary cooperation and devotion of the bank.

At the stage in which the petition was filed before us, the inquiry into certain bank deposits and
investments by the AMLC still does not contemplate any form of physical seizure of the targeted corporeal
property.

2. No. The AMLC functions solely as an investigative body in the instances mentioned in Rule 5.b.26
Thereafter, the next step is for the AMLC to file a Complaint with either the DOJ or the Ombudsman
pursuant to Rule 6b. Even in the case of Estrada v. Office of the Ombudsman, where the conflict arose at
the preliminary investigation stage by the Ombudsman, we ruled that the Ombudsman's denial of Senator
Estrada's Request to be furnished copies of the counter-affidavits of his co-respondents did not violate
Estrada's constitutional right to due process where the sole issue is the existence of probable cause for
the purpose of determining whether an information should be filed and does not prevent Estrada from
requesting a copy of the counter-affidavits of his co-respondents during the pre-trial or even during trial.
Plainly, the AMLC's investigation of money laundering offenses and its determination of possible money
laundering offenses, specifically its inquiry into certain bank accounts allowed by court order, does not
transform it into an investigative body exercising quasi-judicial powers. Hence, Section 11 of the AMLA,
authorizing a bank inquiry court order, cannot be said to violate SPCMB's constitutional right to due
process.

3. No. We now come to a determination of whether Section 11 is violative of the constitutional right to
privacy enshrined in Section 2, Article III of the Constitution. SPCMB is adamant that the CA's denial of its
request to be furnished copies of AMLC's ex-parte application for a bank inquiry order and all subsequent
pleadings, documents and orders filed and issued in relation thereto, constitutes grave abuse of discretion
where the purported blanket authority under Section 11: ( 1) partakes of a general warrant intended to aid
a mere fishing expedition; (2) violates the attorney-client privilege; (3) is not preceded by predicate crime
charging SPCMB of a money laundering offense; and ( 4) is a form of political harassment [of SPCMB' s]
clientele.

We thus subjected Section 11 of the AMLA to heightened scrutiny and found nothing arbitrary in the
allowance and authorization to AMLC to undertake an inquiry into certain bank accounts or deposits.
Instead, we found that it provides safeguards before a bank inquiry order is issued, ensuring adherence to
the general state policy of preserving the absolutely confidential nature of Philippine bank accounts:

1. The AMLC is required to establish probable cause as basis for its ex-parte application for bank
inquiry order;
2. The CA, independent of the AMLC's demonstration of probable cause, itself makes a finding of
probable cause that the deposits or investments are related to an unlawful activity under Section 3(i) or a
money laundering offense under Section 4 of the AMLA;
3. A bank inquiry court order ex-parte for related accounts is preceded by a bank inquiry court order
ex-parte for the principal account which court order ex-parte for related accounts is separately based on
probable cause that such related account is materially linked to the principal account inquired into; and
4. The authority to inquire into or examine the main or principal account and the related accounts
shall comply with the requirements of Article III, Sections 2 and 3 of the Constitution. The foregoing
demonstrates that the inquiry and examination into the bank account are not undertaken whimsically and
solely based on the investigative discretion of the AMLC. In particular, the requirement of demonstration
by the AMLC, and determination by the CA, of probable cause emphasizes the limits of such
governmental action. We will revert to these safeguards under Section 11 as we specifically discuss the
CA' s denial of SPCMB' s letter request for information concerning the purported issuance of a bank
inquiry order involving its accounts.

All told, we affirm the constitutionality of Section 11 of the AMLA allowing the ex-parte application by the
AMLC for authority to inquire into, and examine, certain bank deposits and investments.

WHEREFORE, the petition is DENIED. Section 11 of Republic Act No. 9160, as amended, is

declared VALID and CONSTITUTIONAL.
REPUBLIC v. BOLANTE

REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEY LAUNDERING COUNCIL, Petitioners vs.
JOCELYN I. BOLANTE, OWEN VINCENT D. BOLANTE, MA. CAROL D. BOLANTE, ALEJO LAMERA, CARMEN
LAMERA, EDNA CONSTANTINO, ARIEL C. PANGANIBAN, KATHERINE G. BOMBEO, SAMUEL S. BOMBEO,
MOLUGAN FOUNDATION, SAMUEL G. BOMBEO, JR., and NATIONAL LIVELIHOOD DEVELOPMENT
CORPORATION (Formerly Livelihood Corporation), Respondents

G.R. No. 186717

April 17, 2017

Facts:

In April 2005, the Philippine National Bank (PNB) submitted to the Anti-Money Laundering Council
(AMLC) a series of suspicious transaction reports involving the accounts of Livelihood Corporation
(LIVECOR), Molugan Foundation (Molugan), and Assembly of Gracious Samaritans, Inc. (AGS).

According to the reports, LIVECOR transferred to Molugan a total amount of' ₱172.6 million in a span of
15 months from 2004 to 2005. On 30 April 2004, LIVECOR transferred ₱40 million to AGS, which
received another P38 million from Molugan on the same day. Curiously, AGS returned the P38 million to
Molugan also on the same day.

The transactions were reported '"suspicious" because they had no underlying legal or trade obligation,
purpose or economic justification; nor were they commensurate to the business or financial capacity of
Molugan and AGS, which were both lowly capitalized at P50, 000 each. In the case of Molugan, Samuel
S. Bombeo, who holds the position of president, secretary and treasurer, is the lone signatory to the
account. In the case of AGS, Samuel S. Bombeo shares this responsibility with Ariel Panganiban.

On 7 March 2006, the Senate furnished the AMLC a copy of its Committee Report No. 54 prepared by
the Committee on Agriculture and Food and the Committee on Accountability of Public Officers and
Investigations.

Committee Report No. 54 narrated that former Undersecretary of Agriculture Jocelyn I. Bolante
(Bolante) requested the Department of Budget and Management to release to the Department of
Agriculture the amount of ₱728 million for the purchase of farm inputs under the Ginintuang
Masaganang Ani Program. This amount was used to purchase liquid fertilizers from Freshan Philippines,
Inc., which were then distributed to local government units and congressional districts beginning
January 2004. Based on the Audit Report prepared by the Commission on Audit (COA), the use of the
funds was characterized by massive irregularities, overpricing, and violations of the procurement law
and wanton wastage of scarce government resources.

The AMLC issued Resolution No.75 finding probable cause to believe that the accounts of LIVECOR,
Molugan and AGS - the subjects of the suspicious transaction reports submitted by PNB - were related to
what became known as the "fertilizer fund scam. The acts involved in the "fertilizer scam" may
constitute violation of Section 3(e) of Republic Act No. 3019, x x x as well as violation or Republic Act No.
7080 (Plunder).

Thus, the AMLC authorized the filing of a petition for the issuance of an order allowing an inquiry into
the six accounts 18 of LIVECOR, Molugan, AGS, Samuel S. Bombeo and Ariel Panganiban. The AMLC also
required all covered institutions to submit reports of covered transactions and/or suspicious
transactions of these entities and individuals, including all the related web of accounts.

Petition was filed ex parte before the R TC and docketed as AMLC SP Case No. 06-003. On 17 November
2006, the trial court found probable cause and issued the Order prayed for. It allowed the AMLC to
inquire into and examine the six bank deposits or investments and the related web of accounts.

In view of this development, the AMLC issued Resolution No. 40.27 It authorized the filing of a petition
for the issuance of a freeze order against the 70 accounts found to be related to the fertilizer fund scam.
Hence, the Republic filed an Ex Parte Petition docketed as CA-G.R. AMLC No. 00014 before the CA,
seeking the issuance of a freeze order against the 70 accounts.

The CA issued a freeze order effective for 20 days. The freeze order required the covered institutions of
the 70 accounts to desist from and not allow any transaction involving the identified monetary
instruments. It also asked the covered institutions to submit a detailed written return to the CA within
24 hours from receipt of the freeze order.

The CA conducted a summary hearing of the application, after which the parties were ordered to submit
their memoranda, manifestations and comments/oppositions. The freeze order was later extended for a
period of 30 days until 19 August 2008.

Finding that there existed probable cause that the funds transferred to and juggled by LIVECOR,
Molugan, and AGS formed pati of the ₱728 million fertilizer fund, the CA extended the effectivity of the
freeze order for another four months, or until 20 December 2008. The extension covered only 31
accounts, which showed an existing balance based on the returns of the covered institutions.
In the meantime, the Republic filed an Ex Parte Application docketed as AMLC Case No. 07-001 before
the RTC. Drawing on the authority provided by the AMLC through Resolution No. 90, the ex parte
application sought the issuance of an order allowing an inquiry into the 70 accounts.

The RTC found probable cause and issued the Order prayed for. It allowed the AMLC to inquire into and
examine the 70 bank deposits or investments and the related web of accounts.

Hence, the Republic filed an Urgent Ex Parte Petition docketed as CA-G.R. AMLC No. 00024 before the
CA seeking the issuance of a freeze order against the 24 accounts.

In the Resolution dated 4 February 2009, the CA issued a freeze order effective for 20 days. The freeze
order required the covered institutions of the 24 accounts to desist from and not allow any transaction
involving the identified monetary instruments. It also asked the covered institutions to submit a detailed
written return to the CA within 24 hours from receipt of the freeze order.

Issue:

Whether the Republic committed forum shopping in filing CA-G.R. AMLC No. 00024 before the CA.

Whether the RTC committed grave abuse of discretion in ruling that there exists no probable cause to
allow an inquiry into the total of 76 deposits and investments of respondents.

Held:

Yes. The Republic committed forum shopping. As we ruled in Chua v. Metropolitan Bank and Trust Co,
forum shopping is committed in three ways: (1) filing multiple cases based on the same cause of action
and with the same prayer, where the previous case has not yet been resolved (the ground for dismissal
is litis pendentia); (2) filing multiple cases based on the same cause of action and with the same prayer,
where the previous case has finally been resolved (the ground for dismissal is res judicata); and (3) filing
multiple cases based on the same cause of action, but with different prayers (splitting of causes of
action, where the ground for dismissal is also either litis pendentia or res judicata).

While it is true that a previous freeze order was issued in CA-G.R. AMLC No. 00014 covering some of the
accounts subject of CA-G.R. AMLC No. 00024, CA-G.R. AAILC No. 00014 had already attained finality
when the second petition was filed, neither petitioner nor any of the respondents interposed an appeal
therefrom, pursuant to Section 57 of the Rule of Procedure in Cases of Civil F01feiture, etc.
 We are not even sure where the Republic got the notion that the CA found "that the filing of the second
petition for freeze order constitutes forum shopping on the ground of litis pendentia. In its assailed
Resolution, the appellate court aptly cited Quinsay v. CA, stating that "forum shopping concurs not only
when a final judgment in one case will amount to res judicata in another, but also where the elements of
litis pendentia are present."

Rule 10.2 of the Revised Rules and Regulations Implementing Republic Act No. 9160, as Amended by
Republic Act No. 9194, defined probable cause as "such facts and circumstances which would lead a
reasonably discreet, prudent or cautious man to believe that an unlawful activity and/or a money
laundering offense is about to be, is being or has been committed and that the account or any monetary
instrument or property subject thereof sought to be frozen is in any way related to said unlawful activity
and/or money laundering offense.

Section 11, itself requires that it be established that "there is probable cause that the deposits or
investments are related to unlawful activities," and it obviously is the court which stands as arbiter
whether there is indeed such probable cause. The process of inquiring into the existence of probable
cause would involve the function of determination reposed on the trial court.

For the trial court to issue a bank inquiry order, it is necessary for the AMLC to be able to show specific
facts and circumstances that provide a link between an unlawful activity or a money laundering offense,
on the one hand, and the account or monetary instrument or property sought to be examined on the
other hand. In this case, the R TC found the evidence presented by the AMLC wanting. For its part, the
latter insists that the RTC's determination was tainted with grave abuse of discretion for ignoring the
glaring existence of probable cause that the subject bank deposits and investments were related to an
unlawful activity.

It was this excerpt that led the AMLC to connect the fertilizer fund scam to the suspicious transaction
reports earlier submitted to it by PNB. However, the R TC found during trial that respondent Bolante had
ceased to be a member of the board of trustees of LIVECOR for 14 months before the latter even made
the initial transaction, which was the subject of the suspicious transaction reports. Furthermore, the RTC
took note that according to the Audit Report submitted by the Commission on Audit, no part of the P728
million fertilizer fund was ever released to LIVECOR.

We note that in the RTC Order dated 17 November 2006 in AMLC SP Case No. 06-003, the AMLC was
already allowed ex parte to inquire into and examine the six bank deposits or investments and the
related web of accounts of LIVECOR, Molugan, AGS, Samuel S. Bombeo and Ariel Panganiban.
With the resources available to the AMLC, coupled with a bank inquiry order granted 15 months before
Eugenio was even promulgated, the AMLC should have been able to obtain more evidence establishing a
more substantive link tying Bolante and the fertilizer fund scam to LIVECOR. It did not help that the
AMLC failed to include in its application for a bank inquiry order in AMLC SP Case No. 06-003 LIVECOR's
PNB account as indicated in the suspicious transaction reports. This PNB account was included only in
the application for a bank inquiry order in AMLC Case No. 07-001.

As it stands, the evidence relied upon by the AMLC in 2006 was still the same evidence it used to apply
for a bank inquiry order in 2008. Regrettably, this evidence proved to be insufficient when weighed
against that presented by the respondents, who were given notice and the opportunity to contest the
issuance of the bank inquiry order pursuant to Eugenio. In fine, the RTC did not commit grave abuse of
discretion in denying the application.

WHEREFORE, the petition in G.R. No. 186717 is DENIED. The Court of Appeals Resolution dated 27
February 2009 in CA-G.R. AMLC No. 00024 is AFFIRMED.

The petition in G.R. No. 190357 is DISMISSED. The Resolution dated 3 July 2009 and Order dated 13
November 2009 issued by the Regional Trial Court of Makati, Branch 59, in AMLC Case No. 07-001 are
AFFIRMED.

The Status Quo Ante Order issued by this Court on 25 March 2009 is hereby LIFTED.
BLOOMBERRY RESORTS & HOTELS v. BIR, , GR No. 212530, 2016-08-10
Facts:
This is a Petition for Certiorari and Prohibition under Rule 65 of the Rules on Court seeking:
(a) to annul the issuance by the Commissioner of Internal Revenue (CIR) of an alleged
unlawful governmental regulation, specifically the provision of Revenue Memorandum
Circular (RMC) No. 33-2013[1] dated 17 April 2013 subjectingcontractees and licensees of
the Philippine Amusement and Gaming Corporation (PAGCOR) to income tax under the
National Internal Revenue Code (NIRC) of 1997, as amended; and (b) to enjoin respondent
CIR from implementing the assailed provision of RMC No. 33-2013.
s narrated in the present petition, the factual antecedents of the case reveal that, on 8 April
2009, PAGCOR granted to petitioner a provisional license to establish and operate an
integrated resort and casino complex at the Entertainment City project site of PAGCOR.
Petitioner and its parent company, Sureste Properties, Inc., own and operate Solaire Resort
& Casino. Thus, being one of its licensees, petitioner only pays PAGCOR license fees, in
lieu of all taxes, as contained in its provisional license and consistent with the PAGCOR
Charter or Presidential Decree (PD) No. 1869,[3] which provides the exemption from taxes
of persons or entities contracting with PAGCOR in casino operations.
However, when Republic Act (R.A.) No. 9337 took effect[4], it amended Section 27(C) of the
NIRC of 1997, which excluded PAGCOR from the enumeration of government-owned or
controlled corporations (GOCCs) exempt from paying corporate income tax.
The enactment of the law led to the case of PAGCOR v. The Bureau of Internal Revenue, et
al.,[5] where PAGCOR questioned the validity or constitutionality of R.A. No. 9337 removing
its exemption from paying corporate income tax, and therefore alleging the same to be void
for being repugnant to the equal protection and the non-impairment clauses embodied in
the 1987 Philippine Constitution
Respondent, in her Comment filed on 18 December 2014,[8] counters that there was no
grave abuse of discretion on her part when she issued the subject revenue memorandum
circular since it did not alter, modify or amend the intent and meaning of Section 13(2)(b) of
PD No. 1869, as amended, insofar as the imposition is concerned, considering that it
merely clarified the taxability of PAGCOR and its contractees and licensees for income tax
purposes as well as other franchise grantees similarly situated under prevailing laws; that
prohibition will not lie to restrain a purely administrative act, nor enjoin acts already done,
being a preventive remedy; and that tax exemptions are strictly construed against the
taxpayer.
Issues:
Hence, we are now presented with the following issues for our consideration and resolution:
(i) whether or not the assailed provision of RMC No. 33-2013 subjecting the contractees
and licensees of PAGCOR to income tax under the NIRC of 1997, as amended, was issued
by respondent CIR with grave abuse of discretion amounting to lack or excess of
jurisdiction; and (ii) whether or not said provision is valid or constitutional considering that
Section 13(2)(b) of PD No. 1869, as amended (PAGCOR Charter), grants tax exemptions to
such contractees and licensees.
Ruling:
At the outset, although it is true that direct recourse before this Court is occasionally allowed
in exceptional cases without strict observance of the rules on hierarchy of courts and on
exhaustion of administrative remedies, we find the imperious need to first determine
whether or not this case falls within the said exceptions, before we delve into the merits of
the instant petition.
We thus find the need to look back at the dispositions rendered in Asia International
Auctioneers, Inc., et al. v. Parayno, Jr.,[9] wherein we ruled that revenue memorandum
circulars[10] are considered administrative rulings issued from time to time by the CIR. It
has been explained that these are actually rulings or opinions of the CIR issued pursuant to
her power under Section 4[11] of the NIRC of 1997, as amended, to make rulings or
opinions in connection with the implementation of the provisions of internal revenue laws,
including ruling on the classification of articles of sales and similar purposes. Therefore, it
was held that under R.A. No. 1125,[12] which was thereafter amended by RA No. 9282,[13]
such rulings of the CIR (including revenue memorandum circulars) are appealable to the
Court of Tax Appeals (CTA), and not to any other courts.
The determination of the submissions of petitioner will have to follow the pilot case of
PAGCOR v. The Bureau of Internal Revenue, et al.,[18] where this Court clarified its earlier
ruling in G.R. No. 172087[19] involving the same parties, and expressed that: (i) Section 1
of RA No. 9337, amending Section 27(C) of the NIRC of 1997, as amended, which
excluded PAGCOR from the enumeration of GOCCs exempted from corporate income tax,
is valid and constitutional; (ii) PAGCOR's tax privilege of paying five percent (5%) franchise
tax in lieu of all other taxes with respect to its income from gaming operations is not
repealed or amended by Section l(c) of R.A. No. 9337; (iii) PAGCOR's income from gaming
operations is subject to the 5% franchise tax only; and (iv) PAGCOR's income from other
related services is subject to corporate income tax only.