FIRST DIVISION

April 17, 2017

G.R. No. 186717

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

x-----------------------x

G.R. No. 190357

REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEY LAUNDERING COUNCIL, Petitioner, 

vs.
HON. WINLOVE M. DUMAYAS, Presiding Judge of Branch 59, Regional Trial Court in Makati City, JOCELYN I.
BOLANTE, ARIEL C. PANGANIBAN, DONNIE RAY G. PANGANIBAN, EARL WALTER G. PANGANIBAN, DARRYL
G. PANGANIBAN, GAVINA G. PANGANIBAN, JAYPEE G. PANGANIBAN, SAMUEL S. BOMBEO, KA THERINE G.
BOMBEO, SAMUEL G. BOMBEO, JR., NATIONAL LIVELIHOOD DEVELOPMENT CORPORATION (FORMERLY
LIVELIHOOD CORPORATION), MOLUGAN FOUNDATION, ASSEMBLY OF GRACIOUS SAMARITANS
FOUNDATION, INC., ONE ACCORD CHRISTIAN COMMUNITY ENDEAVOR FOR SALVATION & SUCCESS
THROUGH POVERTY ALLEVIATION, INC., SOCIETY'S MULTI-PURPOSE FOUNDATION, INC., ALLIANCE FOR THE
CONSERVATION OF ENVIRONMENT OF PANGASINAN, INC., AND STA. LUCIA EDUCATIONAL ASSOCIATION OF
BULACAN, INC., Respondents.

DECISION

SERENO, J.:

G.R. No. 186717 is a petition for review on certiorari under Rule 45 of the Rules of Court, with an urgent prayer for the
issuance of a temporary restraining order and/or writ of preliminary injunction.1âwphi1 The petition seeks to nullify the
Court of Appeals (CA) Resolution 1 in CA-G.R. AMLC No. 00024. The CA Resolution denied petitioner's application to
extend the freeze order issued on 4 Fehruary 20092 over the bank deposits and investments of respondents.

G.R. No. 190357 is a petition for certiorari under Rule 65 of the Rules of Court challenging the Resolution 3 and the
Order4 issued by the Regional Trial Court of Makati, Branch 59 (RTC), in AMLC Case No. 07-001. The RTC Resolution
denied petitioner's application for an order allowing an inquiry into the bank deposits and investments of respondents. The
R TC Order denied petitioner's motion for reconsideration.

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).5 According to the reports, LIVECOR transferred to Molugan a total amount of' ₱172.6 million in a span of 15
months from 2004 to 2005.6 On 30 April 2004, LIVECOR transferred ₱40 million to AGS, which received another P38
million from Molugan on the same day. 7 Curiously, AGS returned the P38 million to Molugan also on the same day.8

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.9 In the case of Molugan, Samuel S. Bombeo, who holds the position of

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president, secretary and treasurer, is the lone signatory to the account. 10 In the case of AGS, Samuel S. Bombeo shares
this responsibility with Ariel Panganiban. 11

On 7 March 2006, the Senate furnished the AMLC a copy of its Committee Report No. 54 12 prepared by the Committee
on Agriculture and Food and the Committee on Accountability of Public Officers and Investigations. 13

Committee Report No. 54 14 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), 15 the use of the funds
was characterized by massive irregularities, overpricing, violations of the procurement law and wanton wastage of scarce
government resources.

Committee Report No. 54 also stated that at the time that he served as Undersecretary of Agriculture, Bolante was also
appointed by President Gloria Macapagal Arroyo as acting Chairman of LIVECOR.

The AMLC issued Resolution No. 75 16 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 pertinent portion of Resolution No. 75 provides:

Under the foregoing circumstances, there is probable cause to believe that the accounts of the foundations and its officers
are related to the fertilizer fund scam. The release of the amount of ₱728 million for the purchase of farm inputs to the
Department of Agriculture was made by Undersecretary Bolante. Undersecretary Bolante was the Acting Chairman of
LIVECOR. LIVECOR transferred huge amounts of money to Molugan and AGS, while the latter foundations transferred
money to each other. Mr. [Samuel S.] Bombeo was the President, Secretary, and Treasurer of Molugan. He, therefore,
played a key role in these transactions. On the other hand, Mr. [Ariel] Panganiban was the signatory to the account or
AGS. Without his participation, these transactions could not have been possible.

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). 17

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.

The 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. 19 It allowed the AMLC to inquire into and examine the
six bank deposits or investments and the related web of accounts.

Meanwhile, based on the investigation of the Compliance and Investigation Group of the AMLC Secretariat, a total of 70
bank accounts or investments were found to be part of the related web of accounts involved in the fertilizer fund scam.20

Accordingly, the AMLC issued Resolution No. 9021 finding probable cause to believe that these 70 accounts were related
to the fertilizer fund scam. It said that the scam may constitute violations of Section 3(e)22 of Republic Act No. (R.A.) 3019
(Anti-Graft and Corrupt Practices Act) and R.A. 7080 (An Act Defining and Penalizing the Crime of Plunder). The AMLC
therefore authorized the filing of a petition for the issuance of an order allowing an inquiry into these 70 accounts.23

On 14 February 2008, this Court promulgated Republic v. Eugenio.24 We ruled that when the legislature crafted Section
11 25 of R.A. 9160 (Anti Money Laundering Act of 2001), as amended, it did not intend to authorize ex parte proceedings
for the issuance of a bank inquiry order by the CA. Thus, a bank inquiry order cannot be issued unless notice is given to
the account holders.26 That notice would allow them the opportunity to contest the issuance of the order.

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.

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Hence, the Republic filed an Ex Parte Petition28 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.29 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, 30 after which the parties were ordered to submit their
memoranda, manifestations and comments/oppositions. 31 The freeze order was later extended for a period of 30 days
until 19 August 2008. 32

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. 33 The extension covered only 31 accounts, 34 which showed an existing balance based on the
returns of the covered institutions.

In the meantime, the Republic filed an Ex Parte Application 35 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. 36 It allowed the AMLC to inquire into and examine the
70 bank deposits or investments and the related web of accounts.

On 20 October 2008, this Court denied with finality the motion for reconsideration filed by the Republic in Eugenio. 37The
Court reiterated that Section 11 38 of R.A. 9160, as then worded, did not allow a bank inquiry order to be issued ex
parte; and that the concerns of the Republic about the consequences of this ruling could be more properly lodged in the
legislature.

Thus, in order to comply with the ruling in Eugenio, the Republic filed an Amended and Supplemental Application 39in
AMLC Case No. 07- 001 before the RTC. The Republic sought, after notice to the account holders, the issuance of an
order allowing an inquiry into the original 70 accounts plus the six bank accounts that were the subject of AMLC SP Case
No. 06-003. A summary hearing thereon ensued.

On the belief that the finality of Eugenio constituted a supervening event that might justify the filing of another petition for a
freeze order, the AMLC issued Resolution No. 5.40 The resolution authorized the filing of a new petition for the issuance of
a freeze order against 24 41 of the 31 accounts previously frozen by the CA.

Hence, the Republic filed an Urgent Ex Parte Petition 42 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 2009,43 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.

A summary hearing was conducted by the CA for the purpose of determining whether to modify, lift or extend the freeze
order. 44 Thereafter, the parties were required to submit memoranda.

THE CHALLENGED RESOLUTIONS

The assailed CA Resolution dated 27 February 200945 denied the application to extend the freeze order issued on 4
February 2009.

The CA found that the Republic had committed forum shopping.46 Specifically, the appellate court found that the parties in
CA-G.R. AMLC No. 00024 were the same as those in CA-G.R. AMLC No. 00014. The petition in CA-G.R. AMLC No.
00024 sought the issuance of a freeze order against the same accounts covered by CA-G.R. AMLC No. 00014. Finally,

3
the rights asserted and reliefs prayed for in both petitions were substantially founded on the same facts, thereby raising
identical causes of action and issues.

The CA found no merit in the assertion of the Republic that the ruling in Eugenio was a supervening event that prevented
the latter from concluding its financial investigation into the accounts covered by the freeze order in CA-G.R. AMLC No.
00014.47 The CA noted that Eugenio was promulgated on 14 February 2008, or almost five months before the Republic
filed CA-G.R. AMLC No. 00014 before the CA and AMLC Case No. 07-001 before the RTC. According to the appellate
court, since the Republic was faced with the imminent finality of Eugenio, it should have taken steps to expedite the
conduct of the inquiry and the examination of the bank deposits or investments and the related web of accounts.

At any rate, the CA found that the petition in CA-G.R. AMLC No. 00024 was effectively a prayer for the further extension
of the 5-month, 20- day freeze order already issued in CA-G.R. AMLC No. 00014. 48 The extension sought is proscribed
under Section 53 of Administrative Circular No. 05-11-04-SC.49 According to this provision, the effectivity of a freeze order
may be extended for good cause shown for a period not exceeding six months.

Aggrieved, the Republic filed the instant petition for review on certiorari with an urgent prayer for the issuance of a
temporary restraining order and/or writ of preliminary injunction docketed as G.R. No. 186717.

On 25 March 2009, this Court issued a Status Quo Ante Order50 enjoining the implementation of the assailed CA
Resolution.

At the time of the submission of respondents' Comment 51 and petitioner's Consolidated Reply52 in G.R. No. 186717, the
RTC issued the challenged Resolution dated 3 July 200953 in AMLC Case No. 07-001. The trial court denied the
Republic's application for an order allowing an inquiry into the total of 76 bank deposits and investments of respondents.

The RTC found no probable cause to believe that the deposits and investments of respondents were related to an
unlawful activity. 54 It pointed out that the Republic, in support of the latter's application, relied merely on two pieces of
evidence: Senate Committee Report No. 54 and the court testimony of witness Thelma Espina of the AMLC Secretariat.
According to the RTC, Senate Committee Report No. 54 cannot be taken "hook, line and sinker, " 55because the Senate
only conducts inquiries in aid of legislation.

Citing Neri v. Senate Committee on Accountability of Public Officers and Investigations, 56 the trial court pronounced that
the Senate cannot assume the power reposed in prosecutorial bodies and the courts - the power to determine who are
liable for a crime or an illegal activity. 57 On the other hand, the trial court noted that the testimony of the witness merely
relied on Senate Committee Report No. 54. The latter "admitted that the AMLC did not bother to confirm the veracity of
the statements contained therein." 58

The RTC instead gave credence to the Audit Report prepared by COA. While outlining the irregularities that attended the
use of the fertilizer fund, COA also showed that none of the funds were channeled or released to LIVECOR, Molugan or
AGS.59 The trial court also took note of the evidence presented by Bolante that he had ceased to be a member of the
board of trustees of LIVECOR on 1 February 2003, or more than 14 months before the transfers were made by LIVECOR
to Molugan as indicated in the suspicious transaction reports submitted by PNB. 60 Furthermore, the RTC found that the
transfers made by LIVECOR to Molugan and AGS came from the P60 million Priority Development Assistance Fund of
Senator Joker Arroyo.61

The Republic moved for reconsideration, but the motion was denied by the RTC in the challenged Order dated 13
November 2009. 62

Hence, the Republic filed the instant petition for certiorari docketed as G.R. No. 190357.

The Court resolved to consolidate G.R. No. 190357 with G.R. No. 186717, considering that the issues raised in the
petitions were closely intertwined and related.63 On 6 December 2010, these petitions were given due course, and all
parties were required to submit memoranda.64

Amid reports that the Office of the Ombudsman (Ombudsman) had filed plunder cases against those involved in the
fertilizer fund scam, the Court issued the Resolution dated 16 November 2011.65 We required the AMLC and the

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Ombudsman to move in the premises and jointly manifest whether the accounts, subject of the instant petitions, were in
any way related to the plunder cases already filed.

In their compliance dated 14 March 2012,66 the AMLC and the Ombudsman manifested that the plunder case filed in
connection with the fertilizer fund scam included Bolante, but not the other persons and entities whose bank accounts are
now the subject of the instant petitions. That plunder case was docketed as SB-l 1-CRM-0260 before the Second Division
of the Sandiganbayan.

ISSUES

The following are the issues for our resolution:

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

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

OUR RULING

I.

The Republic committed forum shopping.

As we ruled in Chua v. Metropolitan Bank and Trust Co., 67 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).

In the instant petitions, the Republic focused its energies on discussing why it did not commit forum shopping on the
ground of litis pendentia. In its Memorandum, it argued:

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 .. The principle of lit is pendentia presupposes the pendency of at least one
case when a second case is filed. Such situation does not exist in the present controversy since CA-G.R. AMLC No.
00014 was no longer pending but has attained finality when the second petition was filed. 68

In a clear illustration of the phrase, out of the frying pan and into the fire, the Republic vigorously resisted the application
of forum shopping on the ground of litis pendentia, only to unwittingly admit that it had possibly committed forum shopping
on the ground of res judicata.

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."69 In its assailed Resolution, the appellate court aptly
cited Quinsay v. CA,70 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."71 It then went on to enumerate the
aforecited elements of litis pendentia, namely: (I) identity of parties, or those that represent the same interests in both
actions; (2) identity of rights asserted and relief sought, with the relief founded on the same facts; and (3) identity of the
two preceding particulars, such that any judgment rendered in one proceeding will, regardless of which party is
successful, amount to res judicata in the other. The CA only discussed how these elements were present in CA-G.R.
AMLC No. 00024 and CA-G.R. AMLC No. 00014 in relation to each other. Nowhere did the CA make any categorical
pronouncement that the Republic had committed forum shopping on the ground of litis pendentia.

With this clarification, we discuss how all the elements of litis pendentia are present in the two petitions for the issuance of
a freeze order.
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First, there is identity of parties. In both petitions, the Republic is the petitioner seeking the issuance of a freeze order
against the bank deposits and investments. The 24 accounts sought to be frozen in CA-G.R. AMLC No. 00024 were part
of the 31 accounts previously frozen in CA-G.R. AMLC No. 00014,72 and the holders of these accounts were once again
named as respondents.

Second, there is an identity of rights asserted and relief sought based on the same facts. The AMLC filed both petitions in
pursuance of its function to investigate suspicious transactions, money laundering activities, and other violations of R.A.
9160 as amended. 73 The law also granted the AMLC the authority to make an ex parte application before the CA for the
freezing of any monetary instrument or property alleged to be the proceeds of any unlawful activity, as defined in Section
3(i) thereof.74

Both petitions sought the issuance of a freeze order against bank deposits and investments believed to be related to the
fertilizer fund scam. Notably, while the petition in CA-G.R. AMLC No. 00014 narrated the facts smTounding the issuance
of AMLC Resolution Nos. 75 and 40,75 the petition in CA-G.R. AMLC No. 00024 used as its foundation the previous grant
of the freeze order in CA-G.R. AMLC No. 00014 and the extensions of its effectivity. 76 Nevertheless, both petitions
highlighted the role of Senate Committee Report No. 54 in providing AMLC with the alleged link between the fertilizer fund
scam and the bank deposits and investments sought to be frozen. 77

Third, the judgment in CA-G.R. AMLC No. 00014 barred the proceedings in CA-G.R. AMLC No. 00024 by resjudicata.

Res judicata is defined as a matter adjudged, a thing judicially acted upon or decided, or a thing or matter settled by
judgment. 78 It operates as a bar to subsequent proceedings by prior judgment when the following requisites concur: (1)
the former judgment is final; (2) it is rendered by a court having jurisdiction over the subject matter and the parties; (3) it is
a judgment or an order on the merits; and (4) there is - between the first and the second actions - identity of parties,
subject matter, and causes of action. 79

Clearly, the resolution in CA-G.R. AMLC No. 00014 extending the effectivity of the freeze order until 20 December 2008
attained finality upon the failure of the parties to assail it within 15 days from notice. The

Resolution was rendered by the CA, which had jurisdiction over applications for the issuance of a freeze order under
Section 1080 of R.A. 9160 as amended. It was a judgment on the merits by the appellate court, which made a
determination of the rights and obligations of the parties with respect to the causes of action and the subject matter. 81 The
determination was based on the pleadings and evidence presented by the parties during the summary hearing and their
respective memoranda. Finally, there was - between CAG. R. AMLC No. 00014 and CA-G.R. AMLC No. 00024 - identity
of parties, subject matter and causes of action.

The Republic's commission of forum shopping is further illustrated by its awareness that the effectivity of the freeze order
in CA-G.R. AMLC No. 00014 had already been extended to 5 months and 20 days. Under

Section 5382 of A.M. No. 05-11-04-SC,83 the original 20-day effectivity period of a freeze order may only be extended by
the CA for good cause for a period not exceeding six months. Because of this predicament, the Republic sought to avoid
seeking a further extension that is clearly prohibited by the rules by allowing the extended freeze order in CA-G.R. AMLC
No. 00014 to lapse on 20 December 2008. Instead, it filed the petition in CA-G.R. AMLC No. 00024 alluding to the exact
same facts and arguments but citing a special factual circumstance that allegedly distinguished it from CA-G.R. AMLC No.
00014.

The Republic argued that CA-G.R. AMLC No. 00024 was filed at the advent of Eugenio. The ruling was a supervening
event that prevented the Republic from concluding its exhaustive financial investigation within the auspices of the bank
inquiry order granted by the RTC in AMLC Case No. 07-001 and the freeze order granted by the CA in CA-G.R. AMLC
No. 00014.84

We find no merit in this argument. The promulgation of Eugenio was not a supervening event under the circumstances.
"Supervening events refer to facts which transpire after judgment has become final and executory or to new
circumstances which developed after the judgment has acquired finality, including matters which the parties were not
aware of prior to or during the trial as they were not yet in existence at that time."85

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As aptly pointed out by the appellate court, Eugenio was promulgated five months before the filing of the petition in CA-
G .R. AMLC No. 00014.

Indeed the Decision therein only attained finality upon the denial of the motion for reconsideration on 20 October 2008, or
before the filing of the petition in CA-G.R. AMLC No. 0002. The ruling, however, cannot be regarded as a matter that the
parties were not aware of prior to or during the trial of CA-G.R. AMLC No. 00014.

In fact, it was because of Eugenio that CA-G.R. AMLC No. 00014 was filed in the first place.

We have not painstakingly narrated all the relevant facts of these cases for nothing. It should be noted that before the
ruling in Eugenio, the AMLC commenced its investigations into the fertilizer fund scam by filing petitions for bank inquiry
orders. Thus, it issued Resolutions No. 75 and 90, both authorizing the filing of petitions for the issuance of orders
allowing an inquiry into the pertinent bank deposits and investments.

According to the Court in Eugenio, "a requirement that the application for a bank inquiry order be done with notice to the
account holder will alert the latter that there is a plan to inspect his bank account on the belief that the funds therein are
involved in an unlawful activity or money laundering offense."86 Alarmed by the implications of this ruling, the AMLC
changed tack and decided to pursue the only other remedy within its power to obtain ex parte at the time. Hence, it issued
Resolution No. 40 authorizing the filing of CA-G.R. AMLC No. 00014 for the issuance of a freeze order to preserve the 70
bank deposits and investments and prevent the account holders from withdrawing them. The pertinent portion of AMLC
Resolution No. 40 provides:

In the Resolution No. 90, dated October 26, 2007, the Council found probable cause that the accounts of the subject
individuals and entities are related to the fertilizer fund scam and resolved to authorize the tiling of a petition for the
issuance of a freeze order allowing inquiry into the following accounts:

xxxx

However, in Republic vs. Eugenio (G.R. No. 174629, February 14, 2008), the Supreme Court ruled that proceedings in
applications for issuance of an order allowing inquiry should be conducted after due notice to the respondents/account
holders.

In the light of the aforesaid ruling of the Supreme Court, the Council resolved to:

1. Authorize the AMLC Secretariat to file with the Court of Appeals, through the Office of the Solicitor General, a petition
for freeze order against the following bank accounts and all related web of accounts wherever these may be found: 87

Notably, it was only after the freeze order had been issued that AMLC Case No. 07-001 was filed before the RTC to
obtain a bank inquiry order covering the same 70 accounts.

Presently, while Eugenio still provides much needed guidance in the resolution of issues relating to the freeze and bank
inquiry orders, the Decision in that case no longer applies insofar as it requires that notice be given to the account holders
before a bank inquiry order may be issued. Upon the enactment of R.A. 10167 on 18 June 2012, Section 11 of R.A. 9160
was further amended to allow the AMLC to file an ex parte application for an order allowing an inquiry into bank deposits
and investments. Section 11 of R.A. 9160 now reads:

Section 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, including related accounts, with any banking institution or non-bank
financial institution upon order of any competent court based on an ex parte application in cases of violations of this Act,
when it has been established that there is probable cause that the deposits or investments, including related accounts
involved, 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 activities defined in Section 3(i)(1 ), (2 ), and (12)
hereof and felonies or offenses of a nature similar to those mentioned in Section 3(i)(l ), (2), and (12), which are
Punishable under the penal laws of other countries, and terrorism and conspiracy to commit terrorism as defined and
penalized under Republic Act No. 9372.

7
The Court of Appeals shall act on the application to inquire in lo or examine any depositor or investment with any banking
institution or nonbank financial institution within twenty-four (24) hours from filing of the application.

To ensure compliance with this Act, the Bangko Sentral ng Pilipinas may, in the course of a periodic or special
examination, check the compliance of a Covered institution with the requirements of the AMLA and its implementing rules
and regulations.

For purposes of this section, related accounts' shall refer to accounts, the funds and sources of which originated from
and/or are materially linked to the monetary instrument(s) or property(ies) subject of the freeze order(s).

A court order ex parte must first be obtained before the AMLC can inquire into these related Accounts: Provided, That the
procedure for the ex parte application of the ex parte court order for the principal account shall be the same with that of
the related accounts.

The authority to inquire into or examine the main account and the related accounts shall comply with the requirements of
Article III, Sections 2 and 3 of the 1987 Constitution, which are hereby incorporated by reference. (Emphasis supplied)

The constitutionality of Section 11 of R.A. 9160, as presently worded, was upheld by the Court En Banc in the recently
promulgated Subido Pagente Certeza Mendoza and Binay Law Offices v. CA. 88 The Court therein ruled that the
AMLC's ex parte application for a bank inquiry, which is allowed under Section 11 of R.A. 9160, does not violate
substantive due process. There is no such violation, because the physical seizure of the targeted corporeal property is not
contemplated in any form by the law.89 The AMLC may indeed be authorized to apply ex parte for an inquiry into bank
accounts, but only in pursuance of its investigative functions akin to those of the National Bureau of Investigation. 90 As the
AMLC does not exercise quasi-judicial functions, its inquiry by court order into bank deposits or investments cannot be
said to violate any person's constitutional right to procedural due process.91

As regards the purported violation of the right to privacy, the Court recalled the pronouncement in Eugenio that the source
of the right to privacy governing bank deposits is statutory, not constitutional. 92 The legislature may validly carve out
exceptions to the rule on the secrecy of bank deposits, and one such legislation is Section 11 of R.A. 9160.93

The Comi in Subido emphasized that the holder of a bank account that is the subject of a bank inquiry order issued ex
parte has the opportunity to question the issuance of such an order after a freeze order has been issued against the
account. 94 The account holder can then question not only the finding of probable cause for the issuance of the freeze
order, but also the finding of probable cause for the issuance of the bank inquiry order. 95

II.

The RTC's finding that there was no

probable cause for the issuance of a
bank inquiry order was not tainted
with grave abuse of discretion.
 

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." As we observed in Subido,96 this definition refers to
probable cause for the issuance of a freeze order against an account or any monetary instrument or property subject
thereof. Nevertheless, we shall likewise be guided by the pronouncement in Ligot v. Republic97 that "probable cause refers
to the sufficiency of the relation between an unlawful activity and the property or monetary instrument."

In the issuance of a bank inquiry order, the power to determine the existence of probable cause is lodged in the trial court.
As we ruled in Eugenio:

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
8
process of inquiring into the existence of probable cause would involve the function of determination reposed on the trial
court. Determination clearly implies a function of adjudication on the part of the trial court, and not a mechanical
application of a standard predetermination by some other body. The word "determination'' implies deliberation and is, in
normal legal contemplation, equivalent to ''the decision of a court of justice."

The court receiving the application for inquiry order cannot simply take the AMLC's word that probable cause exists that
the deposits or investments are related to an unlawful activity. It will have to exercise its own determinative function in
order to be convinced of such fact.98

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 RTC 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.

Grave abuse of discretion is present where power is exercised in an arbitrary or despotic manner by reason of passion,
prejudice or personal hostility, that is so patent and gross as to amount to an evasion of a positive duty or to a virtual
refusal to perform a duty enjoined or to act at all in contemplation of law.99 For certiorari to lie, it must be shown that there
was a capricious, arbitrary and whimsical exercise of power - the very antithesis of the judicial prerogative. 100

We find no reason to conclude that the R TC determined the existence of probable cause, or lack thereof, in an arbitrary
and whimsical manner.1âwphi1

To repeat, the application for the issuance of a bank inquiry order was supported by only two pieces of evidence: Senate
Committee Report No. 54 and the testimony of witness Thelma Espina.

We have had occasion to rule that reports of the Senate stand on the same level as other pieces of evidence submitted by
the parties, and that the facts and arguments presented therein should undergo the same level of judicial scrutiny and
analysis. 101 As courts have the discretion to accept or reject them, 102 no grave error can be ascribed to the RTC for
rejecting and refusing to give probative value to Senate Committee Report No. 54.

At any rate, Senate Committee Report No. 54 only provided the AMLC with a description of the alleged unlawful activity,
which is the fertilizer fund scam. It also named the alleged mastermind of the scam, who was respondent Bolante. The
entire case of the AMLC, however, hinged on the following excerpt of Senate Committee Report No. 54:

But Undersecretary Bolante's power over the agriculture department was widely known. And it encompasses more than
what the Administrative Code provided.

In fact, at the time that he was Undersecretary, Jocelyn Bolante was concurrently appointed by the President in other
powerful positions: as Acting Chairman of the National Irrigation Administration, as Acting Chairman of the Livelihood
Corporation x x x. 103 (Emphasis supplied)

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 pro mu I gated, 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
9
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.

SO ORDERED.

10
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 192302               June 4, 2014

REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEY LAUNDERING COUNCIL, Petitioner, 

vs.
RAFAEL A. MANALO, GRACE M. OLIVA, and FREIDA Z. RIVERA-YAP, Respondents.

RESOLUTION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari 1 are the Decision2 dated May 21, 2009 and the Resolution3 dated May 17,
2010.ofthe Court of Appeals (CA) in CA-G.R. SP No. 102724 which nullified and set aside the Joint Order4dated August 8,
2007 and the Order5 dated January 1 o; 2008 of the Regional Trial Court (RTC) of Manila, Branch 24 (Manila RTC) in Civil
Case Nos. 03-107325 and 03-107308, denying the separate Motions for Leave to Intervene and Admit Attached Answer-
in-Intervention filed by respondents Rafael A. Manalo, Grace M. Oliva, and Freida Z. Rivera-Yap (respondents).

The Facts

On July 18, 2003, petitioner Republic of the Philippines (Republic), represented in this case by the Anti-Money Laundering
Council (AMLC), filed a complaint for civil forfeiture, entitled "Republic v. R.A.B. Realty, Inc., et al.," 6docketed as Civil
Case No. 03-107308, before the Manila RTC.

Subsequently, or on July 21, 2003, it filed a second complaint for civil forfeiture, entitled "Republic v. Ariola, Jr., et
al.,"7 docketed as Civil Case No. 03-107325 (collectively, civil forfeiture cases), also before the same RTC. 8 In the said
civil forfeiture cases, the Republic sought the forfeiture in its favor of certain deposits and government securities
maintained in several bank accounts by the defendants therein, which were related to the unlawful activity of fraudulently
accepting investments from the public,9 in violation of the Securities Regulation Code10 as well as the Anti-Money
Laundering Act of 2001.11

On September 25 and 27, 2006, herein respondents filed separate Motions for Leave to Intervene and Admit Attached
Answer-in Intervention12 (separate motions for intervention), in the civil forfeiture cases, respectively, alleging, inter alia,
that they have a valid interest in the bank accounts subject thereof. In this relation, they asserted that in a separate
petition for involuntary insolvency proceedings, i.e., Spec. Proc. Case No. 03-026 filed before the RTC of Makati City,
Branch 204 (insolvency case), they were appointed as assignees of the properties of Spouses Saturnino and Rosario
Baladjay (Sps. Baladjay) (as well as their conduit companies) who were impleaded as defendants in the aforementioned
civil forfeiture cases.13

The Manila RTC Ruling

On August 8, 2007, the Manila RTC rendered a Joint Order 14 denying respondents’ separate motions for intervention,
citing Section 35 of the Rule of Procedure in Cases of Civil Forfeiture15 (Civil Forfeiture Rules) which states:

Sec. 35.Notice to file claims.- Where the court has issued an order of forfeiture of the monetary instrument or property in a
civil forfeiture petition for any money laundering offense defined under Section 4 of Republic Act No. 9160, as amended,
any person who has not been impleaded nor intervened claiming an interest therein may apply, by verified petition, for a
declaration that the same legitimately belongs to him and for segregation or exclusion of the monetary instrument or
property corresponding thereto. The verified petition shall be filed with the court which rendered the order of forfeiture
within fifteen days from the date of finality of the order of forfeiture, in default of which the said order shall be executory
and bar all other claims. (Emphasis supplied)

11
In view of the remedy stated in the foregoing provision, the Manila RTC thus ratiocinated that respondents "need not
unduly worry as they are amply protected in the event the funds subject of the instant case are ordered forfeited in favor of
the [Republic]."16

Dissatisfied, respondents moved for reconsideration, which was likewise denied by the Manila RTC in an Order 17dated
January 10, 2008, prompting them to elevate the case to the CA on certiorari.18

The CA Ruling

In a Decision19 dated May 21, 2009, the CA granted respondents’ petition, ruling that the Manila RTC gravely abused its
discretion in denying respondents’ separate motions for intervention. It found that respondents were able to establish their
rights as assignees in the insolvency case filed by Sps. Baladjay. As such, they have a valid interest in the bank accounts
subject of the civil forfeiture cases.20 Moreover, a reading of Section 35 of the Civil Forfeiture Rules as above-cited
revealed that there is nothing therein that prohibits an interested party from intervening in the case before an order of
forfeiture is issued.21

Feeling aggrieved, the Republic moved for reconsideration which was, however, denied by the CA in a Resolution 22dated
May 17, 2010, hence, this petition.

The Issue Before the Court

The essential issue for the Court’s resolution is whether or not the CA erred in holding that the Manila RTC committed
grave abuse of discretion in issuing the Joint Order dated August 8, 2007 and the Order dated January 10, 2008 which
denied respondents’ separate motions for intervention in the civil forfeiture cases.

At this point, the Court duly notes that during the pendency of the instant petition, the Manila RTC rendered a Decision on
September 23, 2010 in Civil Case No. 03-107325, and, thereafter, a Decision dated February 11, 2011 and Amended
Decision dated May 9, 2011 in Civil Case No. 03-107308, all of which ordered the assets subject of the said cases
forfeited in favor of the government.23In view thereof, the Republic prayed that it be excused from filing the required
reply,24 which the Court granted in a Resolution25 dated June 3, 2013.1âwphi1

The Court’s Ruling

The petition must be dismissed for having become moot and academic.

A case or issue is considered moot and academic when it ceases to present a justiciable controversy by virtue of
supervening events, so that an adjudication of the case or a declaration on the issue would be of no practical value or
use. In such instance, there is no actual substantial relief which a petitioner would be entitled to, and which would be
negated by the dismissal of the petition. Courts generally decline jurisdiction over such case or dismiss it on the ground of
mootness,26 as a judgment in a case which presents a moot question can no longer be enforced.27

In this case, the Manila RTC's rendition of the Decision dated September 23, 2010 in Civil Case No. 03-107325, as well
as the Decision dated February 11, 2011 and the Amended Decision dated May 9, 2011 in Civil Case No. 03-107308, by
virtue of which the assets subject of the said cases were all forfeited in favor of the government, are supervening events
which have effectively rendered the essential issue in this case moot and academic, that is, whether or not respondents
should have been allowed by the Manila RTC to intervene on the ground that they have a legal interest in the forfeited
assets. As the proceedings in the civil forfeiture cases from which the issue of intervention is merely an incident have
already been duly concluded, no substantial relief can be granted to the Republic by resolving the instant petition.
WHEREFORE, the petition is DISMISSED for being moot and academic.

SO ORDERED.

12
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 176944               March 6, 2013

RET. LT. GEN. JACINTO C. LIGOT, ERLINDA Y. LIGOT, PAULO Y. LIGOT, RIZA Y. LIGOT, and MIGUEL Y.
LIGOT, Petitioners, 
vs.
REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEY LAUNDERING COUNCIL, Respondent.

DECISION

BRION, J.:

In this petition for certiorari,1 retired Lieutenant General (Lt. Gen.) Jacinto C. Ligot, Erlinda Y. Ligot (Mrs. Ligot), Paulo Y.
Ligot, Riza Y. Ligot, and Miguel Y. Ligot (petitioners) claim that the Court of Appeals (CA) acted with grave abuse of
discretion amounting to lack or excess of jurisdiction when it issued its January 12, 2007 resolution2 in CA G.R. SP No.
90238. This assailed resolution affirmed in toto the CA’s earlier January 4, 2006 resolution 3 extending the freeze order
issued against the Ligot’s properties for an indefinite period of time.

BACKGROUND 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, pursuant to Section 104 of Republic Act (RA) No. 9160, as amended (otherwise known
as the Anti-Money Laundering Act of 2001). 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. 9160.5

In support of this recommendation, the Ombudsman attached the Complaint6 it filed against the Ligots for perjury under
Article 183 of the Revised Penal Code, and for violations of Section 87 of RA No. 67138 and RA No. 3019 (Anti-Graft and
Corrupt Practices Act).

The Ombudsman’s Complaint

a. Lt. Gen. Ligot and immediate family

The Ombudsman’s complaint alleges that Lt. Gen. Ligot served in the Armed Forces of the Philippines (AFP) for 33 years
and 2 months, from April 1, 1966 as a cadet until his retirement on August 17, 2004.9 He and Mrs. Ligot have four
children, namely: Paulo Y. Ligot, Riza Y. Ligot,

George Y. Ligot and Miguel Y. Ligot, who have all reached the age of majority at the time of the filing of the complaint.10

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
(₱3,848,003.00).11 In contrast, his declared assets in his 1982 SALN amounted to only One Hundred Five Thousand
Pesos (₱105,000.00).12

Aside 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, amounting to at least Fifty Four Million One Thousand Two
Hundred Seventeen Pesos (₱54,001,217.00). These undeclared assets consisted of the following:

13
 Undeclared Assets Amount
Jacinto Ligot’s undeclared assets P 41,185,583.5313
Jacinto Ligot’s children’s assets 1,744,035.6014
Tuition fees and travel expenses P 2,308,047.8715
Edgardo Yambao’s assets relative to the real properties P 8,763,550.0016
Total P 54,001,217.00

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).

b. Edgardo Tecson Yambao

The Ombudsman’s investigation also looked into Mrs. Ligot’s younger brother, Edgardo Tecson Yambao. The records of
the Social Security System (SSS) revealed that Yambao had been employed in the private sector from 1977 to 1994.
Based on his contributions to the SSS, Yambao did not have a substantial salary during his employment. While Yambao
had an investment with Mabelline Foods, Inc., the Ombudsman noted that this company only had a net income of
₱5,062.96 in 2002 and ₱693.67 in 2003.19 Moreover, the certification from the Bureau of Internal Revenue stated that
Yambao had no record of any annual Individual Income

Tax Return filed for the calendar year 1999 up to the date of the investigation.

Despite Yambao’s lack of substantial income, the records show that he has real properties and vehicles registered in his
name, amounting to Eight Million Seven Hundred Sixty Three Thousand Five Hundred Fifty Pesos (₱8,763,550.00), which
he acquired from 1993 onwards. The Office of the Ombudsman further observed that in the documents it examined,
Yambao declared three of the Ligots’ addresses as his own.

From these circumstances, the Ombudsman concluded that Yambao acted as a dummy and/or nominee of the Ligot
spouses, and all the properties registered in Yambao’s name actually belong to the Ligot family.

Urgent Ex-Parte Freeze Order Application

As a result of the Ombudsman’s complaint, the Compliance and Investigation staff (CIS) of the AMLC conducted a
financial investigation, which revealed the existence of the Ligots’ various bank accounts with several financial
institutions.20 On April 5, 2005, the Ombudsman for the Military and Other Law Enforcement Officers issued a resolution
holding that probable cause exists that Lt. Gen. Ligot violated Section 8, in relation to Section 11, of RA No. 6713, as well
as Article 18321 of the Revised Penal Code.

On May 25, 2005, 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.22 Subsequently, on June 27, 2005, the Republic filed an Urgent Ex-Parte Application with the appellate court
for the issuance of a Freeze Order against the properties of the Ligots and Yambao.

The appellate court granted the application in its July 5, 2005 resolution, ruling that probable cause existed that an
unlawful activity and/or money laundering offense had been committed by Lt. Gen. Ligot and his family, including
Yambao, and that the properties sought to be frozen are related to the unlawful activity or money laundering offense.
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

14
enforcement authorities and the government’s efforts to recover the proceeds of the Ligots’ unlawful activities would be
frustrated. In support of its motion, it informed the CA that the Ombudsman was presently investigating the following
cases involving the Ligots:

Case Number Complainant(s) Nature

OMB-P-C-05- 0523
OMB-P-C-05- 0003
OMB-P-C-05- 0184
OMB-P-C-05-0352
Wilfredo Garrido
AGIO Gina Villamor, et al.
Field Investigation Office
David Odilao
Plunder
Perjury
Violation of RA No. 3019, Section 3(b);
Perjury under Article 183, Revised
Penal Code in relation to Section 11 of
RA No. 6713; Forfeiture Proceedings
in Relation to RA No. 1379
Malicious Mischief; Violation of Section
20, RA No. 7856

Finding merit in the Republic’s arguments, 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.

On September 28, 2005, 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 in its January 4, 2006 resolution.

Meanwhile, on November 15, 2005, the "Rule of Procedure in Cases of Civil Forfeiture, Asset Preservation, and Freezing
of Monetary Instrument, Property, or Proceeds Representing, Involving, or Relating to an Unlawful Activity or Money
Laundering Offense under 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.

On January 31, 2006, the Ligots filed a motion for reconsideration of the CA’s January 4, 2006 resolution, insisting that
the freeze order should be lifted considering: (a) no predicate crime has been proven to support the freeze order’s
issuance; (b) the freeze order expired six months after it was issued on July 5, 2005; and (c) the freeze order is
provisional in character and not intended to supplant a case for money laundering. When the CA denied this motion in its
resolution dated January 12, 2007, the Ligots filed the present petition.

THE PETITIONERS’ ARGUMENTS

Lt. Gen. Ligot argues that the appellate court committed grave abuse of discretion amounting to lack or excess of
jurisdiction when it extended the freeze order issued against him and his family even though no predicate crime had been
duly proven or established to support the allegation of money laundering. He also 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 CA, in extending the freeze order, not only unduly deprived him and his family of their property, in
violation of due process, but also penalized them before they had been convicted of the crimes they stand accused of.

THE REPUBLIC’S ARGUMENTS

In opposition, 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
enumerated in RA No. 9160. Contrary to the petitioners’ claims, it is not necessary that a formal criminal charge must
have been previously filed against them before the freeze order can be issued.

The Republic further claims that the 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. The Republic
notes that the Ligots erred when they filed what is effectively a second motion for reconsideration in response to the CA’s
January 4, 2006 resolution, instead of filing a petition for review on certiorari via Rule 45 with this Court. Under these

15
circumstances, the assailed January 4, 2006 resolution granting the freeze order had already attained finality when the
Ligots filed the present petition before this Court.

THE COURT’S RULING

We find merit in the petition.

I. Procedural aspect

a. 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. [italics supplied]

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. As held
in People v. Court of Appeals:24

In a petition for certiorari, the jurisdiction of the court is narrow in scope. It is limited to resolving only errors of jurisdiction.
It is not to stray at will and resolve questions or issues beyond its competence such as errors of judgment. Errors of
judgment of the trial court are to be resolved by the appellate court in the appeal by and of error or via a petition for review
on certiorari in this Court under Rule 45 of the Rules of Court. Certiorari will issue only to correct errors of jurisdiction. It is
not a remedy to correct errors of judgment. An error of judgment is one in which the court may commit in the exercise of
its jurisdiction, and which error is reversible only by an appeal. Error of jurisdiction is one where the act complained of was
issued by the court without or in excess of jurisdiction and which error is correctible only by the extraordinary writ of
certiorari. Certiorari will not be issued to cure errors by the trial court in its appreciation of the evidence of the parties, and
its conclusions anchored on the said findings and its conclusions of law. As long as the court acts within its jurisdiction,
any alleged errors committed in the exercise of its discretion will amount to nothing more than mere errors of judgment,
correctible by an appeal or a petition for review under Rule 45 of the Rules of Court.25 (citations omitted; italics supplied)

Clearly, the Ligots should have filed a petition for review on certiorari, and not what is effectively a second motion for
reconsideration (nor an original action of certiorari after this second motion was denied), within fifteen days from receipt of
the CA’s January 4, 2006 resolution. To recall, this resolution denied the petitioners’ motion to lift the extended freeze
order which is effectively a motion for reconsideration of the CA ruling extending the freeze order indefinitely.26

However, considering the issue of due process squarely brought before us in the face of an apparent conflict between
Section 10 of RA No. 9160, as amended, and Section 53(b) of the Rule in Civil Forfeiture Cases, this Court finds it
imperative to relax the application of the rules of procedure and resolve this case on the merits in the interest of justice.27

b. Applicability of 6-month extension period under the Rule in Civil Forfeiture Cases

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.

16
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.

c. Subsequent events

During the pendency of this case, the Republic manifested that on September 26, 2011, it filed a Petition for Civil
Forfeiture with the Regional Trial Court (RTC) of Manila. On September 28, 2011, the RTC, Branch 22, Manila, issued a
Provisional Asset Preservation Order and on October 5, 2011, after due hearing, it issued an Asset Preservation Order.

On the other hand, the petitioners manifested that as of October 29, 2012, the only case filed in connection with the frozen
bank accounts is Civil Case No. 0197, for forfeiture of unlawfully acquired properties under RA No. 1379 (entitled
"Republic of the Philippines v. Lt. Gen. Jacinto Ligot, et. al."), pending before the Sandiganbayan.

These subsequent developments and their dates are significant in our consideration of the present case, particularly the
procedural aspect. Under Section 56 of the Rule in Civil Forfeiture Cases which provides that after the post-issuance
hearing on whether to modify, lift or extend the freeze order, the CA shall remand the case and transmit the records to the
RTC for consolidation with the pending civil forfeiture proceeding. This provision gives the impression that the filing of the
appropriate cases in courts in 2011 and 2012 rendered this case moot and academic.

A case is considered moot and academic when it "ceases to present a justiciable controversy by virtue of supervening
events, so that a declaration thereon would be of no practical use or value. Generally, courts decline jurisdiction over such
case or dismiss it on ground of mootness."28 However, the moot and academic principle is not an iron-clad rule and is
subject to four settled exceptions,29 two of which are present in this case, namely: when the constitutional issue raised
requires the formulation of controlling principles to guide the bench, the bar, and the public, and when the case is capable
of repetition, yet evading review.

The apparent conflict presented by the limiting provision of the Rule in Civil Forfeiture Cases, on one hand, and the very
broad judicial discretion under RA No. 9160, as amended, on the other hand, and the uncertainty it casts on an
individual’s guaranteed right to due process indubitably call for the Court’s exercise of its discretion to decide the case,
otherwise moot and academic, under those two exceptions, for the future guidance of those affected and involved in the
implementation of RA No. 9160, as amended.

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. The sheer length of time and the constitutional
violation involved, as will be discussed below, strongly dissuade us from dismissing the petition on the basis of the "moot
and academic" principle. The Court should not allow the seeds of future violations to sprout by hiding under this principle
even when directly confronted with the glaring issue of the respondent’s violation of the petitioners’ due process right30 -
an issue that the respondent itself chooses to ignore.

We shall discuss the substantive relevance of the subsequent developments and their dates at length below.

II. Substantive aspect

a. Probable cause exists to support the issuance of a freeze order

17
The legal basis for the issuance of a freeze order is Section 10 of RA No. 9160, as amended by RA No. 9194, which
states:

Section 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 Section

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. [italics supplied]

The Ligots claim that the CA erred in extending the effectivity period of the freeze order against them, given that they have
not yet been convicted of committing any of the offenses enumerated under RA No. 9160 that would support the AMLC’s
accusation of money-laundering activity.

We do not see any merit in this claim. The Ligots’ argument is founded on a flawed understanding of probable cause in
the context of a civil forfeiture proceeding31 or freeze order application.32

Based on Section 10 quoted above, 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."34

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 enumerated under RA No. 9160, as amended. 35 Otherwise stated,
probable cause refers to the sufficiency of the relation between an unlawful activity and the property or monetary
instrument which is the focal point of Section 10 of RA No. 9160, as amended. To differentiate this from any criminal case
that may thereafter be instituted against the same respondent, the Rule in Civil Forfeiture Cases expressly provides –

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. Thus, contrary to the Ligots’ claim, a freeze order is not dependent on a separate criminal
charge, much less does it depend on a conviction.

That a freeze order can be issued upon the AMLC’s ex parte application further emphasizes the law’s consideration of
how critical time is in these proceedings. As we previously noted in Republic v. Eugenio, Jr.,36 "to 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."

It should be noted that the existence of an unlawful activity that would justify the issuance and the extension of the freeze
order has likewise been established in this case.

18
From the ex parte application and the Ombudsman’s complaint, we glean that Lt. Gen. Ligot himself admitted that his
income came from his salary as an officer of the AFP. Yet, the Ombudsman’s investigation revealed that the bank
accounts, investments and properties in the name of Lt. Gen. Ligot and his family amount to more than Fifty-Four Million
Pesos (₱54,000,000.00). Since these assets are grossly disproportionate to Lt. Gen. Ligot’s income, as well as the lack of
any evidence that the Ligots have other sources of income, the CA properly found that probable cause exists that these
funds have been illegally acquired. On the other hand, the AMLC’s verified allegations in its ex parte application, based on
the complaint filed by the Ombudsman against Ligot and his family for violations of the Anti-Graft and Corrupt Practices
Act, clearly sustain the CA’s finding that probable cause exists that the monetary instruments subject of the freeze order
are related to, or are the product of, an unlawful activity.

b. A freeze order, however, cannot be issued for an indefinite period

Assuming that the freeze order is substantively in legal order, the Ligots now assert that its effectiveness ceased after
January 25, 2006 (or six months after July 25, 2005 when the original freeze order first expired), pursuant to Section 53(b)
of the Rule in Civil Forfeiture Cases (A.M. No. 05-11-04-SC). This section states:

Section 53. Freeze order. –

xxxx

(b) Extension. – On motion of the petitioner filed before the expiration of twenty days from issuance of a freeze order, the
court may for good cause extend its effectivity for a period not exceeding six months. [italics supplied; emphasis ours]

We find merit in this claim.

A freeze order is an extraordinary and interim relief37 issued by the CA to prevent the dissipation, removal, or disposal of
properties that are suspected to be the proceeds of, or related to, unlawful activities as defined in Section 3(i) of RA No.
9160, as amended.38 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.
The final sentence of Section 10 of the Anti-Money Laundering Act of 2001 provides, "the freeze order shall be for a
period of twenty (20) days unless extended by the court." In contrast, Section 55 of the Rule in Civil Forfeiture Cases
qualifies the grant of extension "for a period not exceeding six months" "for good cause" shown.

We observe on this point that nothing in the law grants the owner of the "frozen" property any substantive right to demand
that the freeze order be lifted, except by implication, i.e., if he can show that no probable cause exists or if the 20-day
period has already lapsed without any extension being requested from and granted by the CA. Notably, the Senate
deliberations on RA No. 9160 even suggest the intent on the part of our legislators to make the freeze order effective until
the termination of the case, when necessary.40

The silence of the law, however, does not in any way affect the Court’s own power under the Constitution to "promulgate
rules concerning the protection and enforcement of constitutional rights xxx and procedure in all courts."41 Pursuant to this
power, the Court issued A.M. No. 05-11-04-SC, limiting the effectivity of an extended freeze order to six months – to
otherwise leave the grant of the extension to the sole discretion of the CA, which may extend a freeze order indefinitely or
to an unreasonable amount of time – carries serious implications on an individual’s substantive right to due process.42 This
right demands that no person be denied his right to property or be subjected to any governmental action that amounts to a
denial.43 The right to due process, under these terms, requires a limitation or at least an inquiry on whether sufficient
justification for the governmental action.44

In this case, the law has left to the CA the authority to resolve the issue of extending the freeze order it issued. Without
doubt, the CA followed the law to the letter, but it did so by avoiding the fundamental law’s command under its Section 1,

19
Article III. This command, the Court – under its constitutional rule-making power – sought to implement through Section
53(b) of the Rule in Civil Forfeiture Cases which the CA erroneously assumed does not apply.

The Ligots’ case perfectly illustrates the inequity that would result from giving the CA the power to extend freeze orders
without limitations. As narrated above, the CA, via its September 20, 2005 resolution, extended the freeze order over the
Ligots’ various bank accounts and personal properties "until after all the appropriate proceedings and/or investigations
being conducted are terminated."45 By its very terms, the CA resolution effectively bars the Ligots from using any of the
property covered by the freeze order until after an eventual civil forfeiture proceeding is concluded in their favor and after
they shall have been adjudged not guilty of the crimes they are suspected of committing. These periods of extension are
way beyond the intent and purposes of a freeze order which is intended solely as an interim relief; the civil and criminal
trial courts can very well handle the disposition of properties related to a forfeiture case or to a crime charged and need
not rely on the interim relief that the appellate court issued as a guarantee against loss of property while the government
is preparing its full case. The term of the CA’s extension, too, borders on inflicting a punishment to the Ligots, in violation
of their constitutionally protected right to be presumed innocent, because the unreasonable denial of their property comes
before final conviction.

In more concrete terms, the freeze order over the Ligots’ properties has been in effect since 2005, while the civil forfeiture
case – per the Republic’s manifestation – was filed only in 2011 and the forfeiture case under RA No. 1379 – per the
petitioners’ manifestation – was filed only in 2012. This means that the Ligots have not been able to access the properties
subject of the freeze order for six years or so simply on the basis of the existence of probable cause to issue a freeze
order, which was intended mainly as an interim preemptive remedy.

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.

To our mind, the six-month extension period is ordinarily sufficient for the government to act against the suspected money
launderer and to file the appropriate forfeiture case against him, and is a reasonable period as well that recognizes the
property owner’s right to due process. In this case, the period of inaction of six years, under the circumstances, already far
exceeded what is reasonable.

We are not unmindful that the State itself is entitled to due process.1âwphi1 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.

We observe, too, that the factual complexities and intricacies of the case and other matters that may be beyond the
government’s prosecutory agencies’ control may contribute to their inability to file the corresponding civil forfeiture case
before the lapse of six months. Given these considerations, it is only proper to strike a balance between the individual’s
right to due process and the government’s interest in curbing criminality, particularly money laundering and the predicate
crimes underlying it.

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
20
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 extension of the freeze order beyond
the six-month period violated the Ligot’s right to due process; thus, the CA decision should be reversed.

We clarify that our conclusion applies only to the CA ruling and does not affect the proceedings and whatever order or
resolution the RTC may have issued in the presently pending civil cases for forfeiture. We make this clarification to ensure
that we can now fully conclude and terminate this CA aspect of the case.

As our last point, we commend the fervor of the CA in assisting the State’s efforts to prosecute corrupt public officials. We
remind the appellate court though that the government’s anti-corruption drive cannot be done at the expense of cherished
fundamental rights enshrined in our Constitution. So long as we continue to be guided by the Constitution and the rule of
law, the Court cannot allow the justification of governmental action on the basis of the noblest objectives alone. As so oft-
repeated, the end does not justify the means. Of primordial importance is that the means employed must be in keeping
with the Constitution. Mere expediency will certainly not excuse constitutional shortcuts.48

WHEREFORE, premises considered, we GRANT the petition and LIFT the freeze order issued by the Court of Appeals in
CA G.R. SP No. 90238. This lifting is without prejudice to, and shall not affect, the preservation orders that the lower
courts have ordered on the same properties in the cases pending before them. Pursuant to Section 56 of A.M. No. 05-11-
04-SC, the Court of Appeals is hereby ordered to remand the case and to transmit the records to the Regional Trial Court
of Manila, Branch 22, where the civil forfeiture proceeding is pending, for consolidation therewith as may be appropriate.

SO ORDERED.

21
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 174629             February 14, 2008

REPUBLIC OF THE PHILIPPINES, Represented by THE ANTI-MONEY LAUNDERING COUNCIL (AMLC),petitioner, 

vs.
HON. ANTONIO M. EUGENIO, JR., AS PRESIDING JUDGE OF RTC, MANILA, BRANCH 34, PANTALEON ALVAREZ
and LILIA CHENG, respondents.

DECISION

TINGA, J.:

The present petition for certiorari and prohibition under Rule 65 assails the orders and resolutions issued by two different
courts in two different cases. The courts and cases in question are the Regional Trial Court of Manila, Branch 24, which
heard SP Case No. 06-1142001 and the Court of Appeals, Tenth Division, which heared CA-G.R. SP No. 95198.2 Both
cases arose as part of the aftermath of the ruling of this Court in Agan v. PIATCO3 nullifying the concession agreement
awarded to the Philippine International Airport Terminal Corporation (PIATCO) over the Ninoy Aquino International Airport
– International Passenger Terminal 3 (NAIA 3) Project.

I.

Following the promulgation of Agan, a series of investigations concerning the award of the NAIA 3 contracts to PIATCO
were undertaken by the Ombudsman and the Compliance and Investigation Staff (CIS) of petitioner Anti-Money
Laundering Council (AMLC). On 24 May 2005, the Office of the Solicitor General (OSG) wrote the AMLC requesting the
latter’s assistance "in obtaining more evidence to completely reveal the financial trail of corruption surrounding the [NAIA
3] Project," and also noting that petitioner Republic of the Philippines was presently defending itself in two international
arbitration cases filed in relation to the NAIA 3 Project.4 The CIS conducted an intelligence database search on the
financial transactions of certain individuals involved in the award, including respondent Pantaleon Alvarez (Alvarez) who
had been the Chairman of the PBAC Technical Committee, NAIA-IPT3 Project.5 By this time, Alvarez had already been
charged by the Ombudsman with violation of Section 3(j) of R.A. No. 3019. 6 The search revealed that Alvarez maintained
eight (8) bank accounts with six (6) different banks.7

On 27 June 2005, the AMLC issued Resolution No. 75, Series of 2005, 8 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 Pantaleon Alvarez, Wilfredo Trinidad, Alfredo Liongson, and Cheng Yong, and their related web of
accounts wherever these may be found, as defined under Rule 10.4 of the Revised Implementing Rules and Regulations;"
and to authorize the AMLC Secretariat "to conduct an inquiry into subject accounts once the Regional Trial Court grants
the application to inquire into and/or examine the bank accounts" of those four individuals.9 The resolution enumerated the
particular bank accounts of Alvarez, Wilfredo Trinidad (Trinidad), Alfredo Liongson (Liongson) and Cheng Yong which
were to be the subject of the inquiry.10 The rationale for the said resolution was founded on the cited findings of the CIS
that amounts were transferred from a Hong Kong bank account owned by Jetstream Pacific Ltd. Account to bank
accounts in the Philippines maintained by Liongson and Cheng Yong. 11 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."12

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. 05-005.13 The Makati RTC
heard the testimony of the Deputy Director of the AMLC, Richard David C. Funk II, and received the documentary

22
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."15 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" in relation to the criminal cases then pending before the
Sandiganbayan.17 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."18

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 Prosecutor’s 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."20

Following the December 2005 AMLC Resolution, the Republic, through the AMLC, filed an application21 before the Manila
RTC to inquire into and/or examine thirteen (13) accounts and two (2) related web of accounts alleged as having been
used to facilitate 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.

On 12 January 2006, the Manila RTC issued an Order (Manila RTC bank inquiry order) granting the Ex ParteApplication
expressing therein "[that] the allegations in said application to be impressed with merit, and in conformity with Section 11
of R.A. No. 9160, as amended, otherwise known as the Anti-Money Laundering Act (AMLA) of 2001 and Rules 11.1 and
11.2 of the Revised Implementing Rules and Regulations." 22 Authority was thus granted to the AMLC to inquire into the
bank accounts listed therein.

On 25 January 2006, Alvarez, through counsel, entered his appearance 23 before the Manila RTC in SP Case No. 06-
114200 and filed an Urgent Motion to Stay Enforcement of Order of January 12, 2006. 24 Alvarez alleged that he
fortuitously learned of the bank inquiry order, which was issued following an ex parte application, and he argued that
nothing in R.A. No. 9160 authorized the AMLC to seek the authority to inquire into bank accounts ex parte.25 The day after
Alvarez filed his motion, 26 January 2006, the Manila RTC issued an Order26 staying the enforcement of its bank inquiry
order and giving the Republic five (5) days to respond to Alvarez’s motion.

The Republic filed an Omnibus Motion for Reconsideration 27 of the 26 January 2006 Manila RTC Order and likewise
sought to strike out Alvarez’s motion that led to the issuance of said order. For his part, Alvarez filed a Reply and Motion
to Dismiss28 the application for bank inquiry order. On 2 May 2006, the Manila RTC issued an Omnibus Order29 granting
the Republic’s Motion for Reconsideration, denying Alvarez’s motion to dismiss and reinstating "in full force and effect" the
Order dated 12 January 2006. In the omnibus order, the Manila RTC reiterated that the material allegations in the
application for bank inquiry order filed by the Republic stood as "the probable cause for the investigation and examination
of the bank accounts and investments of the respondents."30

Alvarez filed on 10 May 2006 an Urgent Motion31 expressing his apprehension that the AMLC would immediately enforce
the omnibus order and would thereby render the motion for reconsideration he intended to file as moot and academic;
thus he sought that the Republic be refrained from enforcing the omnibus order in the meantime. Acting on this motion,
the Manila RTC, on 11 May 2006, issued an Order 32 requiring the OSG to file a comment/opposition and reminding the
parties that judgments and orders become final and executory upon the expiration of fifteen (15) days from receipt thereof,
as it is the period within which a motion for reconsideration could be filed. Alvarez filed his Motion for Reconsideration33 of
the omnibus order on 15 May 2006, but the motion was denied by the Manila RTC in an Order34 dated 5 July 2006.

23
On 11 July 2006, Alvarez filed an Urgent Motion and Manifestation 35 wherein he manifested having received reliable
information that the AMLC was about to implement the Manila RTC bank inquiry order even though he was intending to
appeal from it. On the premise that only a final and executory judgment or order could be executed or implemented,
Alvarez sought that the AMLC be immediately ordered to refrain from enforcing the Manila RTC bank inquiry order.

On 12 July 2006, the Manila RTC, acting on Alvarez’s latest motion, issued an Order36 directing the AMLC "to refrain from
enforcing the order dated January 12, 2006 until the expiration of the period to appeal, without any appeal having been
filed." On the same day, Alvarez filed a Notice of Appeal37 with the Manila RTC.

On 24 July 2006, Alvarez filed an Urgent Ex Parte Motion for Clarification.38 Therein, he alleged having learned that the
AMLC had began to inquire into the bank accounts of the other persons mentioned in the application for bank inquiry
order filed by the Republic.39 Considering that the Manila RTC bank inquiry order was issued ex parte, without notice to
those other persons, Alvarez prayed that the AMLC be ordered to refrain from inquiring into any of the other bank deposits
and alleged web of accounts enumerated in AMLC’s application with the RTC; and that the AMLC be directed to refrain
from using, disclosing or publishing in any proceeding or venue any information or document obtained in violation of the
11 May 2006 RTC Order.40

On 25 July 2006, or one day after Alvarez filed his motion, the Manila RTC issued an Order 41 wherein it clarified that
"the Ex Parte Order of this Court dated January 12, 2006 can not be implemented against the deposits or accounts of any
of the persons enumerated in the AMLC Application until the appeal of movant Alvarez is finally resolved, otherwise, the
appeal would be rendered moot and academic or even nugatory." 42 In addition, the AMLC was ordered "not to disclose or
publish any information or document found or obtained in [v]iolation of the May 11, 2006 Order of this Court." 43 The Manila
RTC reasoned that the other persons mentioned in AMLC’s application were not served with the court’s 12 January 2006
Order. This 25 July 2006 Manila RTC Order is the first of the four rulings being assailed through this petition.

In response, the Republic filed an Urgent Omnibus Motion for Reconsideration44 dated 27 July 2006, urging that it be
allowed to immediately enforce the bank inquiry order against Alvarez and that Alvarez’s notice of appeal be expunged
from the records since appeal from an order of inquiry is disallowed under the Anti money Laundering Act (AMLA).

Meanwhile, respondent Lilia Cheng filed with the Court of Appeals a Petition for Certiorari, Prohibition and Mandamus with
Application for TRO and/or Writ of Preliminary Injunction 45 dated 10 July 2006, directed against the Republic of the
Philippines through the AMLC, Manila RTC Judge Eugenio, Jr. and Makati RTC Judge Marella, Jr.. She identified herself
as the wife of Cheng Yong46 with whom she jointly owns a conjugal bank account with Citibank that is covered by the
Makati RTC bank inquiry order, and two conjugal bank accounts with Metrobank that are covered by the Manila RTC bank
inquiry order. Lilia Cheng imputed grave abuse of discretion on the part of the Makati and Manila RTCs in granting
AMLC’s ex parte applications for a bank inquiry order, arguing among others that the ex parte applications violated her
constitutional right to due process, that the bank inquiry order under the AMLA can only be granted in connection with
violations of the AMLA and that the AMLA can not apply to bank accounts opened and transactions entered into prior to
the effectivity of the AMLA or to bank accounts located outside the Philippines.47

On 1 August 2006, the Court of Appeals, acting on Lilia Cheng’s petition, issued a Temporary Restraining
Order48enjoining the Manila and Makati trial courts from implementing, enforcing or executing the respective bank inquiry
orders previously issued, and the AMLC from enforcing and implementing such orders. On even date, the Manila RTC
issued an Order49 resolving to hold in abeyance the resolution of the urgent omnibus motion for reconsideration then
pending before it until the resolution of Lilia Cheng’s petition for certiorari with the Court of Appeals. The Court of Appeals
Resolution directing the issuance of the temporary restraining order is the second of the four rulings assailed in the
present petition.

The third assailed ruling50 was issued on 15 August 2006 by the Manila RTC, acting on the Urgent Motion for
Clarification51 dated 14 August 2006 filed by Alvarez. It appears that the 1 August 2006 Manila RTC Order had amended
its previous 25 July 2006 Order by deleting the last paragraph which stated that the AMLC "should not disclose or publish
any information or document found or obtained in violation of the May 11, 2006 Order of this Court." 52 In this new motion,
Alvarez argued that the deletion of that paragraph would allow the AMLC to implement the bank inquiry orders and
publish whatever information it might obtain thereupon even before the final orders of the Manila RTC could become final
and executory.53 In the 15 August 2006 Order, the Manila RTC reiterated that the bank inquiry order it had issued could
not be implemented or enforced by the AMLC or any of its representatives until the appeal therefrom was finally resolved
and that any enforcement thereof would be unauthorized.54

24
The present Consolidated Petition55 for certiorari and prohibition under Rule 65 was filed on 2 October 2006, assailing the
two Orders of the Manila RTC dated 25 July and 15 August 2006 and the Temporary Restraining Order dated 1 August
2006 of the Court of Appeals. Through an Urgent Manifestation and Motion56 dated 9 October 2006, petitioner informed
the Court that on 22 September 2006, the Court of Appeals hearing Lilia Cheng’s petition had granted a writ of preliminary
injunction in her favor.57 Thereafter, petitioner sought as well the nullification of the 22 September 2006 Resolution of the
Court of Appeals, thereby constituting the fourth ruling assailed in the instant petition.58

The Court had initially granted a Temporary Restraining Order 59 dated 6 October 2006 and later on a Supplemental
Temporary Restraining Order60 dated 13 October 2006 in petitioner’s favor, enjoining the implementation of the assailed
rulings of the Manila RTC and the Court of Appeals. However, on respondents’ motion, the Court, through a
Resolution61 dated 11 December 2006, suspended the implementation of the restraining orders it had earlier issued.

Oral arguments were held on 17 January 2007. The Court consolidated the issues for argument as follows:

1. Did the RTC-Manila, in issuing the Orders dated 25 July 2006 and 15 August 2006 which deferred the
implementation of its Order dated 12 January 2006, and the Court of Appeals, in issuing its Resolution dated 1
August 2006, which ordered the status quo in relation to the 1 July 2005 Order of the RTC-Makati and the 12
January 2006 Order of the RTC-Manila, both of which authorized the examination of bank accounts under Section
11 of Rep. Act No. 9160 (AMLA), commit grave abuse of discretion?

(a) Is an application for an order authorizing inquiry into or examination of bank accounts or investments
under Section 11 of the AMLA ex-parte in nature or one which requires notice and hearing?

(b) What legal procedures and standards should be observed in the conduct of the proceedings for the
issuance of said order?

(c) Is such order susceptible to legal challenges and judicial review?

2. Is it proper for this Court at this time and in this case to inquire into and pass upon the validity of the 1 July
2005 Order of the RTC-Makati and the 12 January 2006 Order of the RTC-Manila, considering the pendency of
CA G.R. SP No. 95-198 (Lilia Cheng v. Republic) wherein the validity of both orders was challenged?62

After the oral arguments, the parties were directed to file their respective memoranda, which they did, 63 and the petition
was thereafter deemed submitted for resolution.

II.

Petitioner’s general advocacy is that the bank inquiry orders issued by the Manila and Makati RTCs are valid and
immediately enforceable whereas the assailed rulings, which effectively stayed the enforcement of the Manila and Makati
RTCs bank inquiry orders, are sullied with grave abuse of discretion. These conclusions flow from the posture that a bank
inquiry order, issued upon a finding of probable cause, may be issued ex parte and, once issued, is immediately
executory. Petitioner further argues that the information obtained following the bank inquiry is necessarily beneficial, if not
indispensable, to the AMLC in discharging its awesome responsibility regarding the effective implementation of the AMLA
and that any restraint in the disclosure of such information to appropriate agencies or other judicial fora would render
meaningless the relief supplied by the bank inquiry order.

Petitioner raises particular arguments questioning Lilia Cheng’s right to seek injunctive relief before the Court of Appeals,
noting that not one of the bank inquiry orders is directed against her. Her "cryptic assertion" that she is the wife of Cheng
Yong cannot, according to petitioner, "metamorphose into the requisite legal standing to seek redress for an imagined
injury or to maintain an action in behalf of another." In the same breath, petitioner argues that Alvarez cannot assert any
violation of the right to financial privacy in behalf of other persons whose bank accounts are being inquired into,
particularly those other persons named in the Makati RTC bank inquiry order who did not take any step to oppose such
orders before the courts.

Ostensibly, the proximate question before the Court is whether a bank inquiry order issued in accordance with Section 10
of the AMLA may be stayed by injunction. Yet in arguing that it does, petitioner relies on what it posits as the final and
immediately executory character of the bank inquiry orders issued by the Manila and Makati RTCs. Implicit in that position
25
is the notion that the inquiry orders are valid, and such notion is susceptible to review and validation based on what
appears on the face of the orders and the applications which triggered their issuance, as well as the provisions of the
AMLA governing the issuance of such orders. Indeed, to test the viability of petitioner’s argument, the Court will have to
be satisfied that the subject inquiry orders are valid in the first place. However, even from a cursory examination of the
applications for inquiry order and the orders themselves, it is evident that the orders are not in accordance with law.

III.

A brief overview of the AMLA is called for.

Money laundering has been generally defined by the International Criminal Police Organization (Interpol) `as "any act or
attempted act to conceal or disguise the identity of illegally obtained proceeds so that they appear to have originated from
legitimate sources."64 Even before the passage of the AMLA, the problem was addressed by the Philippine government
through the issuance of various circulars by the Bangko Sentral ng Pilipinas. Yet ultimately, legislative proscription was
necessary, especially with the inclusion of the Philippines in the Financial Action Task Force’s list of non-cooperative
countries and territories in the fight against money laundering.65 The original AMLA, Republic Act (R.A.) No. 9160, was
passed in 2001. It was amended by R.A. No. 9194 in 2003.

Section 4 of the AMLA states that "[m]oney laundering is a crime whereby the proceeds of an unlawful activity as [defined
in the law] are transacted, thereby making them appear to have originated from legitimate sources."66 The section further
provides the three modes through which the crime of money laundering is committed. Section 7 creates the AMLC and
defines its powers, which generally relate to the enforcement of the AMLA provisions and the initiation of legal actions
authorized in the AMLA such as civil forfeiture proceedings and complaints for the prosecution of money laundering
offenses.67

In addition to providing for the definition and penalties for the crime of money laundering, the AMLA also authorizes
certain provisional remedies that would aid the AMLC in the enforcement of the AMLA. These are the "freeze order"
authorized under Section 10, and the "bank inquiry order" authorized under Section 11.

Respondents posit that a bank inquiry order under Section 11 may be obtained only upon the pre-existence of a money
laundering offense case already filed before the courts.68 The conclusion is based on the phrase "upon order of any
competent court in cases of violation of this Act," the word "cases" generally understood as referring to actual cases
pending with the courts.

We are unconvinced by this proposition, and agree instead with the then Solicitor General who conceded that the use of
the phrase "in cases of" was unfortunate, yet submitted that it should be interpreted to mean "in the event there are
violations" of the AMLA, and not that there are already cases pending in court concerning such violations. 69 If the contrary
position is adopted, then the bank inquiry order would be limited in purpose as a tool in aid of litigation of live cases, and
wholly inutile as a means for the government to ascertain whether there is sufficient evidence to sustain an intended
prosecution of the account holder for violation of the AMLA. Should that be the situation, in all likelihood the AMLC would
be virtually deprived of its character as a discovery tool, and thus would become less circumspect in filing complaints
against suspect account holders. After all, under such set-up the preferred strategy would be to allow or even encourage
the indiscriminate filing of complaints under the AMLA with the hope or expectation that the evidence of money laundering
would somehow surface during the trial. Since the AMLC could not make use of the bank inquiry order to determine
whether there is evidentiary basis to prosecute the suspected malefactors, not filing any case at all would not be an
alternative. Such unwholesome set-up should not come to pass. Thus Section 11 cannot be interpreted in a way that
would emasculate the remedy it has established and encourage the unfounded initiation of complaints for money
laundering.

Still, even if the bank inquiry order may be availed of without need of a pre-existing case under the AMLA, it does not
follow that such order may be availed of ex parte. There are several reasons why the AMLA does not generally
sanction ex parte applications and issuances of the bank inquiry order.

IV.

It is evident that Section 11 does not specifically authorize, as a general rule, the issuance ex parte of the bank inquiry
order. We quote the provision in full:

26
 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 non bank 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.70 (Emphasis supplied)

Of course, Section 11 also allows the AMLC to inquire into bank accounts without having to obtain a judicial order in
cases where there is probable cause that the deposits or investments are related to kidnapping for ransom, 71certain
violations of the Comprehensive Dangerous Drugs Act of 2002,72 hijacking and other violations under R.A. No. 6235,
destructive arson and murder. Since such special circumstances do not apply in this case, there is no need for us to pass
comment on this proviso. Suffice it to say, the proviso contemplates a situation distinct from that which presently confronts
us, and for purposes of the succeeding discussion, our reference to Section 11 of the AMLA excludes said proviso.

In the instances where a court order is required for the issuance of the bank inquiry order, nothing in Section 11
specifically authorizes that such court order may be issued ex parte. It might be argued that this silence does not preclude
the ex parte issuance of the bank inquiry order since the same is not prohibited under Section 11. Yet this argument falls
when the immediately preceding provision, Section 10, is examined.

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 Section 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.73

Although oriented towards different purposes, the freeze order under Section 10 and the bank inquiry order under Section
11 are similar in that they are extraordinary provisional reliefs which the AMLC may avail of to effectively combat and
prosecute money laundering offenses. Crucially, Section 10 uses specific language to authorize an ex parte application
for the provisional relief therein, a circumstance absent in Section 11. If indeed the legislature had intended to
authorize ex parte proceedings for the issuance of the bank inquiry order, then it could have easily expressed such intent
in the law, as it did with the freeze order under Section 10.

Even more tellingly, the current language of Sections 10 and 11 of the AMLA was crafted at the same time, through the
passage of R.A. No. 9194. Prior to the amendatory law, it was the AMLC, not the Court of Appeals, which had authority to
issue a freeze order, whereas a bank inquiry order always then required, without exception, an order from a competent
court.74 It was through the same enactment that ex parte proceedings were introduced for the first time into the AMLA, in
the case of the freeze order which now can only be issued by the Court of Appeals. It certainly would have been
convenient, through the same amendatory law, to allow a similar ex parte procedure in the case of a bank inquiry order
had Congress been so minded. Yet nothing in the provision itself, or even the available legislative record, explicitly points
to an ex parte judicial procedure in the application for a bank inquiry order, unlike in the case of the freeze order.

That the AMLA does not contemplate ex parte proceedings in applications for bank inquiry orders is confirmed by the
present implementing rules and regulations of the AMLA, promulgated upon the passage of R.A. No. 9194. With respect
to freeze orders under Section 10, the implementing rules do expressly provide that the applications for freeze orders be
filed ex parte,75 but no similar clearance is granted in the case of inquiry orders under Section 11. 76 These implementing
rules were promulgated by the Bangko Sentral ng Pilipinas, the Insurance Commission and the Securities and Exchange
Commission,77 and if it was the true belief of these institutions that inquiry orders could be issued ex parte similar to freeze
orders, language to that effect would have been incorporated in the said Rules. This is stressed not because the
implementing rules could authorize ex parte applications for inquiry orders despite the absence of statutory basis, but
rather because the framers of the law had no intention to allow such ex parte applications.

27
Even the Rules of Procedure adopted by this Court in A.M. No. 05-11-04-SC78 to enforce the provisions of the AMLA
specifically authorize ex parte applications with respect to freeze orders under Section 1079 but make no similar
authorization with respect to bank inquiry orders under Section 11.

The Court could divine the sense in allowing ex parte proceedings under Section 10 and in proscribing the same under
Section 11. A freeze order under Section 10 on the one hand is aimed at preserving monetary instruments or property in
any way deemed related to unlawful activities as defined in Section 3(i) of the AMLA. The owner of such monetary
instruments or property would thus be inhibited from utilizing the same for the duration of the freeze order. To 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.

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.

Interestingly, petitioner’s memorandum does not attempt to demonstrate before the Court that the bank inquiry order
under Section 11 may be issued ex parte, although the petition itself did devote some space for that argument. The
petition argues that the bank inquiry order is "a special and peculiar remedy, drastic in its name, and made necessary
because of a public necessity… [t]hus, by its very nature, the application for an order or inquiry must necessarily, be ex
parte." This argument is insufficient justification in light of the clear disinclination of Congress to allow the issuance ex
parte of bank inquiry orders under Section 11, in contrast to the legislature’s clear inclination to allow the ex parte grant of
freeze orders under Section 10.

Without doubt, a requirement that the application for a bank inquiry order be done with notice to the account holder will
alert the latter that there is a plan to inspect his bank account on the belief that the funds therein are involved in an
unlawful activity or money laundering offense.80 Still, the account holder so alerted will in fact be unable to do anything to
conceal or cleanse his bank account records of suspicious or anomalous transactions, at least not without the whole-
hearted cooperation of the bank, which inherently has no vested interest to aid the account holder in such manner.

V.

The necessary implication of this finding that Section 11 of the AMLA does not generally authorize the issuance ex
parte of the bank inquiry order would be that such orders cannot be issued unless notice is given to the owners of the
account, allowing them the opportunity to contest the issuance of the order. Without such a consequence, the legislated
distinction between ex parte proceedings under Section 10 and those which are not ex parte under Section 11 would be
lost and rendered useless.

There certainly is fertile ground to contest the issuance of an ex parte order. 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. Determination
clearly implies a function of adjudication on the part of the trial court, and not a mechanical application of a standard pre-
determination by some other body. The word "determination" implies deliberation and is, in normal legal contemplation,
equivalent to "the decision of a court of justice."81

The court receiving the application for inquiry order cannot simply take the AMLC’s word that probable cause exists that
the deposits or investments are related to an unlawful activity. It will have to exercise its

own determinative function in order to be convinced of such fact. The account holder would be certainly capable of
contesting such probable cause if given the opportunity to be apprised of the pending application to inquire into his
account; hence a notice requirement would not be an empty spectacle. It may be so that the process of obtaining the
inquiry order may become more cumbersome or prolonged because of the notice requirement, yet we fail to see any
unreasonable burden cast by such circumstance. After all, as earlier stated, requiring notice to the account holder should
28
not, in any way, compromise the integrity of the bank records subject of the inquiry which remain in the possession and
control of the bank.

Petitioner argues that a bank inquiry order necessitates a finding of probable cause, a characteristic similar to a search
warrant which is applied to and heard ex parte. We have examined the supposed analogy between a search warrant and
a bank inquiry order yet we remain to be unconvinced by petitioner.

The Constitution and the Rules of Court prescribe particular requirements attaching to search warrants that are not
imposed by the AMLA with respect to bank inquiry orders. A constitutional warrant requires that the judge personally
examine under oath or affirmation the complainant and the witnesses he may produce, 82 such examination being in the
form of searching questions and answers.83 Those are impositions which the legislative did not specifically prescribe as to
the bank inquiry order under the AMLA, and we cannot find sufficient legal basis to apply them to Section 11 of the AMLA.
Simply put, a bank inquiry order is not a search warrant or warrant of arrest as it contemplates a direct object but not the
seizure of persons or property.

Even as the Constitution and the Rules of Court impose a high procedural standard for the determination of probable
cause for the issuance of search warrants which Congress chose not to prescribe for the bank inquiry order under the
AMLA, Congress nonetheless disallowed ex parte applications for the inquiry order. We can discern that in exchange for
these procedural standards normally applied to search warrants, Congress chose instead to legislate a right to notice and
a right to be heard— characteristics of judicial proceedings which are not ex parte.Absent any demonstrable constitutional
infirmity, there is no reason for us to dispute such legislative policy choices.

VI.

The Court’s construction of Section 11 of the AMLA is undoubtedly influenced by right to privacy considerations. If
sustained, petitioner’s argument that a bank account may be inspected by the government following an ex
parteproceeding about which the depositor would know nothing would have significant implications on the right to privacy,
a right innately cherished by all notwithstanding the legally recognized exceptions thereto. The notion that the government
could be so empowered is cause for concern of any individual who values the right to privacy which, after all, embodies
even the right to be "let

alone," the most comprehensive of rights and the right most valued by civilized people.84

One might assume that the constitutional dimension of the right to privacy, as applied to bank deposits, warrants our
present inquiry. We decline to do so. Admittedly, that question has proved controversial in American jurisprudence.
Notably, the United States Supreme Court in U.S. v. Miller85 held that there was no legitimate expectation of privacy as to
the bank records of a depositor.86 Moreover, the text of our Constitution has not bothered with the triviality of allocating
specific rights peculiar to bank deposits.

However, sufficient for our purposes, we can assert there is a right to privacy governing bank accounts in the Philippines,
and that such right finds application to the case at bar. The source of such right is statutory, expressed as it is in R.A. No.
1405 otherwise known as the Bank Secrecy Act of 1955. The right to privacy is enshrined in Section 2 of that law, to wit:

SECTION 2. All deposits of whatever nature with banks or banking institutions in the Philippines
including investments in bonds issued by the Government of the Philippines, its political subdivisions
and its instrumentalities, are hereby considered as of an absolutely confidential natureand may not be
examined, inquired or looked into by any person, government official, bureau or office, except upon written
permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or
dereliction of duty of public officials, or in cases where the money deposited or invested is the subject matter of
the litigation. (Emphasis supplied)

Because of the Bank Secrecy Act, the confidentiality of bank deposits remains a basic state policy in the
Philippines.87 Subsequent laws, including the AMLA, may have added exceptions to the Bank Secrecy Act, yet the
secrecy of bank deposits still lies as the general rule. It falls within the zones of privacy recognized by our laws. 88The
framers of the 1987 Constitution likewise recognized that bank accounts are not covered by either the right to
information89 under Section 7, Article III or under the requirement of full public disclosure 90 under Section 28, Article
II.91 Unless the Bank Secrecy Act is repealed or

29
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 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
office"; 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,92 and there have been other similar recognitions as well.93

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,94 certain violations of the Comprehensive Dangerous Drugs Act of
2002,95 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 "the 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 "[a]ll deposits of whatever nature with
banks or banking institutions in the Philippines x x x are hereby considered as of an absolutely confidential
nature."96 Indeed, by force of statute, all bank deposits are absolutely confidential, and that nature is unaltered even by the
legislated exceptions referred to above. There is disfavor towards construing these exceptions in such a manner that
would authorize unlimited discretion on the part of the government or of any party seeking to enforce those exceptions
and inquire into bank deposits. If there are doubts in upholding the absolutely confidential nature of bank deposits against
affirming the authority to inquire into such accounts, then such doubts must be resolved in favor of the former. Such a
stance would persist unless Congress passes a law reversing the general state policy of preserving the absolutely
confidential nature of Philippine bank accounts.

The presence of this statutory right to privacy addresses at least one of the arguments raised by petitioner, that Lilia
Cheng had no personality to assail the inquiry orders before the Court of Appeals because she was not the subject of said
orders. AMLC Resolution No. 75, which served as the basis in the successful application for the Makati inquiry order,
expressly adverts to Citibank Account No. 88576248 "owned by Cheng Yong and/or Lilia G. Cheng with Citibank
N.A.,"97 whereas Lilia Cheng’s petition before the Court of Appeals is accompanied by a certification from Metrobank that
Account Nos. 300852436-0 and 700149801-7, both of which are among the subjects of the Manila inquiry order, are
accounts in the name of "Yong Cheng or Lilia Cheng." 98 Petitioner does not specifically deny that Lilia Cheng holds rights
of ownership over the three said accounts, laying focus instead on the fact that she was not named as a subject of either
the Makati or Manila RTC inquiry orders. We are reasonably convinced that Lilia Cheng has sufficiently demonstrated her
joint ownership of the three accounts, and such conclusion leads us to acknowledge that she has the standing to assail
via certiorari the inquiry orders authorizing the examination of her bank accounts as the orders interfere with her statutory
right to maintain the secrecy of said accounts.

While petitioner would premise that the inquiry into Lilia Cheng’s accounts finds root in Section 11 of the AMLA, it cannot
be denied that the authority to inquire under Section 11 is only exceptional in character, contrary as it is to the general rule
preserving the secrecy of bank deposits. Even though she may not have been the subject of the inquiry orders, her bank
accounts nevertheless were, and she thus has the standing to vindicate the right to secrecy that attaches to said accounts
and their owners. This statutory right to privacy will not prevent the courts from authorizing the inquiry anyway upon the
fulfillment of the requirements set forth under Section 11 of the AMLA or Section 2 of the Bank Secrecy Act; at the same
time, the owner of the accounts have the right to challenge whether the requirements were indeed complied with.

VII.

30
There is a final point of concern which needs to be addressed. Lilia Cheng argues that the AMLA, being a substantive
penal statute, has no retroactive effect and the bank inquiry order could not apply to deposits or investments opened prior
to the effectivity of Rep. Act No. 9164, or on 17 October 2001. Thus, she concludes, her subject bank accounts, opened
between 1989 to 1990, could not be the subject of the bank inquiry order lest there be a violation of the constitutional
prohibition against ex post facto laws.

No ex post facto law may be enacted,99 and no law may be construed in such fashion as to permit a criminal prosecution
offensive to the ex post facto clause. As applied to the AMLA, it is plain that no person may be prosecuted under the
penal provisions of the AMLA for acts committed prior to the enactment of the law on 17 October 2001. As much was
understood by the lawmakers since they deliberated upon the AMLA, and indeed there is no serious dispute on that point.

Does the proscription against ex post facto laws apply to the interpretation of Section 11, a provision which does not
provide for a penal sanction but which merely authorizes the inspection of suspect accounts and deposits? The answer is
in the affirmative. In this jurisdiction, we have defined an ex post facto law as one which either:

(1) makes criminal an act done before the passage of the law and which was innocent when done, and punishes
such an act;

(2) aggravates a crime, or makes it greater than it was, when committed;

(3) changes the punishment and inflicts a greater punishment than the law annexed to the crime when committed;

(4) alters the legal rules of evidence, and authorizes conviction upon less or different testimony than the law
required at the time of the commission of the offense;

(5) assuming to regulate civil rights and remedies only, in effect imposes penalty or deprivation of a right for
something which when done was lawful; and

(6) deprives a person accused of a crime of some lawful protection to which he has become entitled, such
as the protection of a former conviction or acquittal, or a proclamation of amnesty. (Emphasis supplied)100

Prior to the enactment of the AMLA, the fact that bank accounts or deposits were involved in activities later on
enumerated in Section 3 of the law did not, by itself, remove such accounts from the shelter of absolute confidentiality.
Prior to the AMLA, in order that bank accounts could be examined, there was need to secure either the written permission
of the depositor or a court order authorizing such examination, assuming that they were involved in cases of bribery or
dereliction of duty of public officials, or in a case where the money deposited or invested was itself the subject matter of
the litigation. The passage of the AMLA stripped another layer off the rule on absolute confidentiality that provided a
measure of lawful protection to the account holder. For that reason, the application of the bank inquiry order as a means
of inquiring into records of transactions entered into prior to the passage of the AMLA would be constitutionally infirm,
offensive as it is to the ex post facto clause.

Still, we must note that the position submitted by Lilia Cheng is much broader than what we are willing to affirm. She
argues that the proscription against ex post facto laws goes as far as to prohibit any inquiry into deposits or investments
included in bank accounts opened prior to the effectivity of the AMLA even if the suspect transactions were entered into
when the law had already taken effect. The Court recognizes that if this argument were to be affirmed, it would create a
horrible loophole in the AMLA that would in turn supply the means to fearlessly engage in money laundering in the
Philippines; all that the criminal has to do is to make sure that the money laundering activity is facilitated through a bank
account opened prior to 2001. Lilia Cheng admits that "actual money launderers could utilize the ex post facto provision of
the Constitution as a shield" but that the remedy lay with Congress to amend the law. We can hardly presume that
Congress intended to enact a self-defeating law in the first place, and the courts are inhibited from such a construction by
the cardinal rule that "a law should be interpreted with a view to upholding rather than destroying it."101

Besides, nowhere in the legislative record cited by Lilia Cheng does it appear that there was an unequivocal intent to
exempt from the bank inquiry order all bank accounts opened prior to the passage of the AMLA. There is a cited
exchange between Representatives Ronaldo Zamora and Jaime Lopez where the latter confirmed to the former that
"deposits are supposed to be exempted from scrutiny or monitoring if they are already in place as of the time the law is
enacted."102 That statement does indicate that transactions already in place when the AMLA was passed are indeed

31
exempt from scrutiny through a bank inquiry order, but it cannot yield any interpretation that records of transactions
undertaken after the enactment of the AMLA are similarly exempt. Due to the absence of cited authority from the
legislative record that unqualifiedly supports respondent Lilia Cheng’s thesis, there is no cause for us to sustain her
interpretation of the AMLA, fatal as it is to the anima of that law.

IX.

We are well aware that Lilia Cheng’s petition presently pending before the Court of Appeals likewise assails the validity of
the subject bank inquiry orders and precisely seeks the annulment of said orders. Our current declarations may indeed
have the effect of preempting that0 petition. Still, in order for this Court to rule on the petition at bar which insists on the
enforceability of the said bank inquiry orders, it is necessary for us to consider and rule on the same question which after
all is a pure question of law.

WHEREFORE, the PETITION is DISMISSED. No pronouncement as to costs.

SO ORDERED.

32
 SECOND DIVISION

G.R. No. 154522             May 5, 2006

REPUBLIC OF THE PHILIPPINES, Represented by the ANTI-MONEY LAUNDERING COUNCIL, Petitioner, 

vs.
CABRINI GREEN & ROSS, INC., MICHAEL J. FINDLAY and JANE GELBERG, Respondents,

x----------------------------------x

G.R. No. 154694             May 5, 2006

REPUBLIC OF THE PHILIPPINES, Represented by the ANTI-MONEY LAUNDERING COUNCIL, Petitioner, 

vs.
R.A.B. REALTY, INC., MULTINATIONAL TELECOM INVESTORS CORPORATION, ROSARIO A. BALADJAY and
SATURNINO M. BALADJAY, Respondents,

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G.R. No. 155554             May 5, 2006

REPUBLIC OF THE PHILIPPINES, Represented by the ANTI-MONEY LAUNDERING COUNCIL, Petitioner, 

vs.
MARIO N. MISA, MICHAEL Z. LAFUENTE, JESUS SILVERIO, REYNALDO NICHOLAS and REX D.
JAO, Respondents,

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G.R. No. 155711             May 5, 2006

REPUBLIC OF THE PHILIPPINES, Represented by the ANTI-MONEY LAUNDERING COUNCIL, Petitioner, 

vs.
ALBERTO DE LOS REYES, LORENZO CASTRO, HERMIE DE VERA, EDUARDO LAZO and DANILO
LIWAG,Respondents.

RESOLUTION

CORONA, J.:

In the exercise of its power under Section 10 of RA 9160,1 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 AMLC 2filed with the
Court of Appeals (CA)3 various petitions for extension of effectivity of its freeze orders.1avvphil.net

The AMLC invoked the jurisdiction of the CA in the belief that the power given to the CA to issue a temporary restraining
order (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. It uniformly ruled that it was not vested by RA
9160 with the power to extend a freeze order issued by the AMLC.4

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Hence, these consolidated petitions5 which present a common issue: which court has jurisdiction to extend the effectivity
of a freeze order?

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.7 (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 the effectivity of this Act, unless extended by the Court of Appeals. (emphasis supplied)

On April 3, 2003, the Office of the Solicitor General (OSG) filed a "Very Urgent Motion to Remand Cases to the Honorable
Court of Appeals (with Prayer for Issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction)."8 The
OSG prayed for the remand of these cases to the CA pursuant to RA 9194. It also asked for the issuance of a TRO on the
ground that the freeze orders would be automatically lifted on April 22, 2003 by operation of law and the money or
deposits in the concerned bank accounts may be taken out of the reach of law enforcement authorities. The OSG further
manifested that pending in the CA were 29 other cases involving the same issue. It requested that these cases be
included in the coverage of the TRO prayed for.

On April 21, 2003, the Court issued a TRO in these cases and in all other similar cases pending before all courts in the
Philippines. Respondents, the concerned banks, and all persons acting in their behalf were directed to give full force and
effect to existing freeze orders until further orders from this Court.

On May 5, 2003, the OSG informed the Court that on April 22, 2003 the CA issued a resolution in CA-G.R. SP No. 69371
(the subject of G.R. No. 154694) granting the petition for extension of freeze orders.9 Hence, the OSG prayed for the
dismissal of G.R. No. 154694 for being moot. It also reiterated its earlier prayer for the remand of G.R. Nos. 154522,
155554 and 155711 to the CA.

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.

WHEREFORE, G.R. No. 154694 is hereby DISMISSED for being moot while G.R. Nos. 154522, 155554 and 155711
are REMANDED to the Court of Appeals for appropriate action. Pending resolution by the Court of Appeals of these
cases, the April 21, 2003 temporary restraining order is hereby MAINTAINED.

No costs.

SO ORDERED.

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