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G.R. Nos.

173654-765 August 28, 2008 That on or about the 1st day of August, 2002, in the Municipality
of Pototan, Province of Iloilo, Philippines, and within the
PEOPLE OF THE PHILIPPINES, petitioner,
jurisdiction of this Honorable Court, above-named
vs.
[respondents], conspiring, confederating, and helping one
TERESITA PUIG and ROMEO PORRAS, respondents.
another, with grave abuse of confidence, being
DECISION the Cashier and Bookkeeper of the Rural Bank of Pototan, Inc.,
Pototan, Iloilo, without the knowledge and/or consent of the
CHICO-NAZARIO, J.: management of the Bank and with intent of gain, did then and
This is a Petition for Review under Rule 45 of the Revised Rules there willfully, unlawfully and feloniously take, steal and carry
of Court with petitioner People of the Philippines, represented away the sum of FIFTEEN THOUSAND PESOS (P15,000.00),
by the Office of the Solicitor General, praying for the reversal of Philippine Currency, to the damage and prejudice of the said
the Orders dated 30 January 2006 and 9 June 2006 of the bank in the aforesaid amount.
Regional Trial Court (RTC) of the 6th Judicial Region, Branch After perusing the Informations in these cases, the trial court did
68, Dumangas, Iloilo, dismissing the 112 cases of Qualified not find the existence of probable cause that would have
Theft filed against respondents Teresita Puig and Romeo Porras, necessitated the issuance of a warrant of arrest based on the
and denying petitioner’s Motion for Reconsideration, in following grounds:
Criminal Cases No. 05-3054 to 05-3165.
(1) the element of ‘taking without the consent of the owners’
The following are the factual antecedents: was missing on the ground that it is the depositors-clients, and
On 7 November 2005, the Iloilo Provincial Prosecutor’s Office not the Bank, which filed the complaint in these cases, who are
filed before Branch 68 of the RTC in Dumangas, Iloilo, 112 the owners of the money allegedly taken by respondents and
cases of Qualified Theft against respondents Teresita Puig hence, are the real parties-in-interest; and
(Puig) and Romeo Porras (Porras) who were the Cashier and (2) the Informations are bereft of the phrase alleging
Bookkeeper, respectively, of private complainant Rural Bank of "dependence, guardianship or vigilance between the
Pototan, Inc. The cases were docketed as Criminal Cases No. 05- respondents and the offended party that would have created
3054 to 05-3165.
a high degree of confidence between them which the
The allegations in the Informations1 filed before the RTC were respondents could have abused."
uniform and pro-forma, except for the amounts, date and time of It added that allowing the 112 cases for Qualified Theft filed
commission, to wit: against the respondents to push through would be violative of
INFORMATION the right of the respondents under Section 14(2), Article III of
the 1987 Constitution which states that in all criminal concerning simple loans." Corollary thereto, Article 1953 of the
prosecutions, the accused shall enjoy the right to be informed of same Code provides that "a person who receives a loan of money
the nature and cause of the accusation against him. Following or any other fungible thing acquires the ownership thereof, and
Section 6, Rule 112 of the Revised Rules of Criminal Procedure, is bound to pay to the creditor an equal amount of the same kind
the RTC dismissed the cases on 30 January 2006 and refused to and quality." Thus, it posits that the depositors who place their
issue a warrant of arrest against Puig and Porras. money with the bank are considered creditors of the bank. The
bank acquires ownership of the money deposited by its clients,
A Motion for Reconsideration2 was filed on 17 April 2006, by
making the money taken by respondents as belonging to the
the petitioner.
bank.
On 9 June 2006, an Order3 denying petitioner’s Motion for
Petitioner also insists that the Informations sufficiently allege all
Reconsideration was issued by the RTC, finding as follows:
the elements of the crime of qualified theft, citing that a perusal
Accordingly, the prosecution’s Motion for Reconsideration of the Informations will show that they specifically allege that
should be, as it hereby, DENIED. The Order dated January 30, the respondents were the Cashier and Bookkeeper of the Rural
2006 STANDS in all respects. Bank of Pototan, Inc., respectively, and that they took various
amounts of money with grave abuse of confidence, and without
Petitioner went directly to this Court via Petition for Review the knowledge and consent of the bank, to the damage and
on Certiorari under Rule 45, raising the sole legal issue of: prejudice of the bank.
WHETHER OR NOT THE 112 INFORMATIONS FOR Parenthetically, respondents raise procedural issues. They
QUALIFIED THEFT SUFFICIENTLY ALLEGE THE challenge the petition on the ground that a Petition for Review
ELEMENT OF TAKING WITHOUT THE CONSENT OF on Certiorari via Rule 45 is the wrong mode of appeal because
THE OWNER, AND THE QUALIFYING CIRCUMSTANCE a finding of probable cause for the issuance of a warrant of arrest
OF GRAVE ABUSE OF CONFIDENCE. presupposes evaluation of facts and circumstances, which is not
Petitioner prays that judgment be rendered annulling and setting proper under said Rule.
aside the Orders dated 30 January 2006 and 9 June 2006 issued Respondents further claim that the Department of Justice (DOJ),
by the trial court, and that it be directed to proceed with Criminal through the Secretary of Justice, is the principal party to file a
Cases No. 05-3054 to 05-3165. Petition for Review on Certiorari, considering that the incident
Petitioner explains that under Article 1980 of the New Civil was indorsed by the DOJ.
Code, "fixed, savings, and current deposits of money in banks We find merit in the petition.
and similar institutions shall be governed by the provisions
The dismissal by the RTC of the criminal cases was allegedly Qualified Theft, as defined and punished under Article 310 of
due to insufficiency of the Informations and, therefore, because the Revised Penal Code, is committed as follows, viz:
of this defect, there is no basis for the existence of probable
ART. 310. Qualified Theft. – The crime of theft shall be
cause which will justify the issuance of the warrant of arrest.
punished by the penalties next higher by two degrees than those
Petitioner assails the dismissal contending that the Informations
respectively specified in the next preceding article, if committed
for Qualified Theft sufficiently state facts which constitute (a)
by a domestic servant, or with grave abuse of confidence, or if
the qualifying circumstance of grave abuse of confidence; and
the property stolen is motor vehicle, mail matter or large cattle
(b) the element of taking, with intent to gain and without the
or consists of coconuts taken from the premises of a plantation,
consent of the owner, which is the Bank.
fish taken from a fishpond or fishery or if property is taken on
In determining the existence of probable cause to issue a warrant the occasion of fire, earthquake, typhoon, volcanic eruption, or
of arrest, the RTC judge found the allegations in the Information any other calamity, vehicular accident or civil disturbance.
inadequate. He ruled that the Information failed to state facts (Emphasis supplied.)
constituting the qualifying circumstance of grave abuse of
Theft, as defined in Article 308 of the Revised Penal Code,
confidence and the element of taking without the consent of the
requires the physical taking of another’s property without
owner, since the owner of the money is not the Bank, but the
violence or intimidation against persons or force upon things.
depositors therein. He also cites People v. Koc Song,4 in which
The elements of the crime under this Article are:
this Court held:
1. Intent to gain;
There must be allegation in the information and proof of a
relation, by reason of dependence, guardianship or vigilance, 2. Unlawful taking;
between the respondents and the offended party that has created
a high degree of confidence between them, which the 3. Personal property belonging to another;
respondents abused. 4. Absence of violence or intimidation against persons or force
At this point, it needs stressing that the RTC Judge based his upon things.
conclusion that there was no probable cause simply on the To fall under the crime of Qualified Theft, the following
insufficiency of the allegations in the Informations concerning elements must concur:
the facts constitutive of the elements of the offense charged. This,
therefore, makes the issue of sufficiency of the allegations in the 1. Taking of personal property;
Informations the focal point of discussion. 2. That the said property belongs to another;
3. That the said taking be done with intent to gain;
4. That it be done without the owner’s consent; It is beyond doubt that tellers, Cashiers, Bookkeepers and other
employees of a Bank who come into possession of the monies
5. That it be accomplished without the use of violence or
deposited therein enjoy the confidence reposed in them by their
intimidation against persons, nor of force upon things;
employer. Banks, on the other hand, where monies are
6. That it be done with grave abuse of confidence. deposited, are considered the owners thereof. This is very clear
not only from the express provisions of the law, but from
On the sufficiency of the Information, Section 6, Rule 110 of the established jurisprudence. The relationship between banks and
Rules of Court requires, inter alia, that the information must depositors has been held to be that of creditor and debtor.
state the acts or omissions complained of as constitutive of the Articles 1953 and 1980 of the New Civil Code, as appropriately
offense. pointed out by petitioner, provide as follows:
On the manner of how the Information should be worded, Article 1953. A person who receives a loan of money or any
Section 9, Rule 110 of the Rules of Court, is enlightening: other fungible thing acquires the ownership thereof, and is
Section 9. Cause of the accusation. The acts or omissions bound to pay to the creditor an equal amount of the same kind
complained of as constituting the offense and the qualifying and and quality.
aggravating circumstances must be stated in ordinary and Article 1980. Fixed, savings, and current deposits of money in
concise language and not necessarily in the language used in the banks and similar institutions shall be governed by the
statute but in terms sufficient to enable a person of common provisions concerning loan.
understanding to know what offense is being charged as well as
its qualifying and aggravating circumstances and for the court to In a long line of cases involving Qualified Theft, this Court has
pronounce judgment. firmly established the nature of possession by the Bank of the
money deposits therein, and the duties being performed by its
It is evident that the Information need not use the exact language employees who have custody of the money or have come into
of the statute in alleging the acts or omissions complained of as possession of it. The Court has consistently considered the
constituting the offense. The test is whether it enables a person allegations in the Information that such employees acted with
of common understanding to know the charge against him, and grave abuse of confidence, to the damage and prejudice of the
the court to render judgment properly.5 Bank, without particularly referring to it as owner of the money
The portion of the Information relevant to this discussion reads: deposits, as sufficient to make out a case of Qualified Theft. For
A]bove-named [respondents], conspiring, confederating, and helping one another, with grave
a graphic illustration, we cite Roque v. People,6 where the
accused teller was convicted for Qualified Theft based on this
abuse of confidence, being the Cashier and Bookkeeper of the Rural Bank of Pototan, Inc.,
Pototan, Iloilo, without the knowledge and/or consent of the management of the Bank x x x.
Information:
That on or about the 16th day of November, 1989, in the That in or about and during the period compressed between
municipality of Floridablanca, province of Pampanga, January 24, 1992 and February 13, 1992, both dates inclusive, in
Philippines and within the jurisdiction of his Honorable Court, the City of Manila, Philippines, the said accused did then and
the above-named accused ASUNCION GALANG ROQUE, there wilfully, unlawfully and feloniously, with intent of gain
being then employed as teller of the Basa Air Base Savings and and without the knowledge and consent of the owner thereof,
Loan Association Inc. (BABSLA) with office address at Basa take, steal and carry away the following, to wit:
Air Base, Floridablanca, Pampanga, and as such was authorized
Cash money amounting to P6,000,000.00 in different
and reposed with the responsibility to receive and collect capital
denominations belonging to the PHILIPPINE COMMERCIAL
contributions from its member/contributors of said corporation,
INTERNATIONAL BANK (PCIBank for brevity), Luneta
and having collected and received in her capacity as teller of the
Branch, Manila represented by its Branch Manager, HELEN U.
BABSLA the sum of TEN THOUSAND PESOS (P10,000.00),
FARGAS, to the damage and prejudice of the said owner in the
said accused, with intent of gain, with grave abuse of
aforesaid amount of P6,000,000.00, Philippine Currency.
confidence and without the knowledge and consent of said
corporation, did then and there willfully, unlawfully and That in the commission of the said offense, herein accused acted
feloniously take, steal and carry away the amount of P10,000.00, with grave abuse of confidence and unfaithfulness, he being
Philippine currency, by making it appear that a certain depositor the Branch Operation Officer of the said complainant and as
by the name of Antonio Salazar withdrew from his Savings such he had free access to the place where the said amount of
Account No. 1359, when in truth and in fact said Antonio money was kept.
Salazar did not withdr[a]w the said amount of P10,000.00 to the
damage and prejudice of BABSLA in the total amount The judgment of conviction elaborated thus:
of P10,000.00, Philippine currency. The crime perpetuated by appellant against his employer, the
In convicting the therein appellant, the Court held that: Philippine Commercial and Industrial Bank (PCIB), is Qualified
Theft. Appellant could not have committed the crime had he not
[S]ince the teller occupies a position of confidence, and the bank been holding the position of Luneta Branch Operation Officer
places money in the teller’s possession due to the confidence which gave him not only sole access to the bank vault xxx. The
reposed on the teller, the felony of qualified theft would be management of the PCIB reposed its trust and confidence in the
committed.7 appellant as its Luneta Branch Operation Officer, and it was this
trust and confidence which he exploited to enrich himself to the
Also in People v. Sison,8 the Branch Operations Officer was
damage and prejudice of PCIB x x x.9
convicted of the crime of Qualified Theft based on the
Information as herein cited:
From another end, People v. Locson,10 in addition to People v. In summary, the Bank acquires ownership of the money
Sison, described the nature of possession by the Bank. The deposited by its clients; and the employees of the Bank, who are
money in this case was in the possession of the defendant as entrusted with the possession of money of the Bank due to the
receiving teller of the bank, and the possession of the defendant confidence reposed in them, occupy positions of confidence.
was the possession of the Bank. The Court held therein that The Informations, therefore, sufficiently allege all the essential
when the defendant, with grave abuse of confidence, removed elements constituting the crime of Qualified Theft.
the money and appropriated it to his own use without the consent
On the theory of the defense that the DOJ is the principal party
of the Bank, there was taking as contemplated in the crime of
who may file the instant petition, the ruling in Mobilia Products,
Qualified Theft.11
Inc. v. Hajime Umezawa13 is instructive. The Court thus
Conspicuously, in all of the foregoing cases, where the enunciated:
Informations merely alleged the positions of the respondents;
In a criminal case in which the offended party is the State, the
that the crime was committed with grave abuse of confidence,
interest of the private complainant or the offended party is
with intent to gain and without the knowledge and consent of the
limited to the civil liability arising therefrom. Hence, if a
Bank, without necessarily stating the phrase being assiduously
criminal case is dismissed by the trial court or if there is an
insisted upon by respondents, "of a relation by reason of
acquittal, a reconsideration of the order of dismissal or acquittal
dependence, guardianship or vigilance, between the
may be undertaken, whenever legally feasible, insofar as the
respondents and the offended party that has created a high
criminal aspect thereof is concerned and may be made only by
degree of confidence between them, which respondents
the public prosecutor; or in the case of an appeal, by the State
abused,"12 and without employing the word "owner" in lieu of
only, through the OSG. x x x.
the "Bank" were considered to have satisfied the test of
sufficiency of allegations. On the alleged wrong mode of appeal by petitioner, suffice it to
state that the rule is well-settled that in appeals by certiorari
As regards the respondents who were employed as Cashier and
under Rule 45 of the Rules of Court, only errors of law may be
Bookkeeper of the Bank in this case, there is even no reason to
raised,14 and herein petitioner certainly raised a question of law.
quibble on the allegation in the Informations that they acted with
grave abuse of confidence. In fact, the Information which As an aside, even if we go beyond the allegations of the
alleged grave abuse of confidence by accused herein is even Informations in these cases, a closer look at the records of the
more precise, as this is exactly the requirement of the law in preliminary investigation conducted will show that, indeed,
qualifying the crime of Theft. probable cause exists for the indictment of herein respondents.
Pursuant to Section 6, Rule 112 of the Rules of Court, the judge
shall issue a warrant of arrest only upon a finding of probable
cause after personally evaluating the resolution of the prosecutor Ynares-Santiago, Chairperson, Austria-Martinez, Reyes,
and its supporting evidence. Soliven v. Makasiar,15 as reiterated Leonardo-de Castro *, JJ., concur.
in Allado v. Driokno,16 explained that probable cause for the
issuance of a warrant of arrest is the existence of such facts and
circumstances that would lead a reasonably discreet and prudent
person to believe that an offense has been committed by the
person sought to be arrested.17 The records reasonably indicate
that the respondents may have, indeed, committed the offense
charged.
Before closing, let it be stated that while it is truly imperative
upon the fiscal or the judge, as the case may be, to relieve the
respondents from the pain of going through a trial once it is
ascertained that no probable cause exists to form a sufficient
belief as to the guilt of the respondents, conversely, it is also
equally imperative upon the judge to proceed with the case upon
a showing that there is a prima facie case against the
respondents.
WHEREFORE, premises considered, the Petition for Review
on Certiorari is hereby GRANTED. The Orders dated 30
January 2006 and 9 June 2006 of the RTC dismissing Criminal
Cases No. 05-3054 to 05-3165 are REVERSED and SET
ASIDE. Let the corresponding Warrants of Arrest issue against
herein respondents TERESITA PUIG and ROMEO PORRAS.
The RTC Judge of Branch 68, in Dumangas, Iloilo, is directed
to proceed with the trial of Criminal Cases No. 05-3054 to 05-
3165, inclusive, with reasonable dispatch. No pronouncement as
to costs.
SO ORDERED.
G.R. No. 94723 August 21, 1997 2.) Adjudging Section 113 of Central Bank Circular No. 960 as
contrary to the provisions of the Constitution, hence void;
KAREN E. SALVACION, minor, thru Federico N.
because its provision that "Foreign currency deposits shall be
Salvacion, Jr., father and Natural Guardian, and Spouses
exempt from attachment, garnishment, or any other order or
FEDERICO N. SALVACION, JR., and EVELINA E.
process of any court, legislative body, government agency or any
SALVACION, petitioners,
administrative body whatsoever
vs.
CENTRAL BANK OF THE PHILIPPINES, CHINA i.) has taken away the right of petitioners to have the bank
BANKING CORPORATION and GREG BARTELLI y deposit of defendant Greg Bartelli y Northcott garnished to
NORTHCOTT, respondents. satisfy the judgment rendered in petitioners' favor in violation of
substantive due process guaranteed by the Constitution;
ii.) has given foreign currency depositors an undue favor or a
TORRES, JR., J.:
class privilege in violation of the equal protection clause of the
In our predisposition to discover the "original intent" of a statute, Constitution;
courts become the unfeeling pillars of the status quo. Ligle do
iii.) has provided a safe haven for criminals like the herein
we realize that statutes or even constitutions are bundles of
respondent Greg Bartelli y Northcott since criminals could
compromises thrown our way by their framers. Unless we
escape civil liability for their wrongful acts by merely converting
exercise vigilance, the statute may already be out of tune and
their money to a foreign currency and depositing it in a foreign
irrelevant to our day.
currency deposit account with an authorized bank.
The petition is for declaratory relief. It prays for the following
The antecedent facts:
reliefs:
On February 4, 1989, Greg Bartelli y Northcott, an American
a.) Immediately upon the filing of this petition, an Order be
tourist, coaxed and lured petitioner Karen Salvacion, then 12
issued restraining the respondents from applying and enforcing
years old to go with him to his apartment. Therein, Greg Bartelli
Section 113 of Central Bank Circular No. 960;
detained Karen Salvacion for four days, or up to February 7,
b.) After hearing, judgment be rendered: 1989 and was able to rape the child once on February 4, and
three times each day on February 5, 6, and 7, 1989. On February
1.) Declaring the respective rights and duties of petitioners and 7, 1989, after policemen and people living nearby, rescued
respondents; Karen, Greg Bartelli was arrested and detained at the Makati
Municipal Jail. The policemen recovered from Bartelli the
following items: 1.) Dollar Check No. 368, Control No. March 13, 1989 to the Deputy Sheriff of Makati, China Banking
021000678-1166111303, US 3,903.20; 2.) COCOBANK Bank Corporation invoked Republic Act No. 1405 as its answer to the
Book No. 104-108758-8 (Peso Acct.); 3.) Dollar Account — notice of garnishment served on it. On March 15, 1989, Deputy
China Banking Corp., US$/A#54105028-2; 4.) ID-122-30-8877; Sheriff of Makati Armando de Guzman sent his reply to China
5.) Philippine Money (P234.00) cash; 6.) Door Keys 6 pieces; Banking Corporation saying that the garnishment did not violate
7.) Stuffed Doll (Teddy Bear) used in seducing the complainant. the secrecy of bank deposits since the disclosure is merely
incidental to a garnishment properly and legally made by virtue
On February 16, 1989, Makati Investigating Fiscal Edwin G.
of a court order which has placed the subject deposits in custodia
Condaya filed against Greg Bartelli, Criminal Case No. 801 for
legis. In answer to this letter of the Deputy Sheriff of Makati,
Serious Illegal Detention and Criminal Cases Nos. 802, 803,
China Banking Corporation, in a letter dated March 20, 1989,
804, and 805 for four (4) counts of Rape. On the same day,
invoked Section 113 of Central Bank Circular No. 960 to the
petitioners filed with the Regional Trial Court of Makati Civil
effect that the dollar deposits or defendant Greg Bartelli are
Case No. 89-3214 for damages with preliminary attachment
exempt from attachment, garnishment, or any other order or
against Greg Bartelli. On February 24, 1989, the day there was
process of any court, legislative body, government agency or any
a scheduled hearing for Bartelli's petition for bail the latter
administrative body, whatsoever.
escaped from jail.
This prompted the counsel for petitioners to make an inquiry
On February 28, 1989, the court granted the fiscal's Urgent Ex-
with the Central Bank in a letter dated April 25, 1989 on whether
Parte Motion for the Issuance of Warrant of Arrest and Hold
Section 113 of CB Circular No. 960 has any exception or
Departure Order. Pending the arrest of the accused Greg Bartelli
whether said section has been repealed or amended since said
y Northcott, the criminal cases were archived in an Order dated
section has rendered nugatory the substantive right of the
February 28, 1989.
plaintiff to have the claim sought to be enforced by the civil
Meanwhile, in Civil Case No. 89-3214, the Judge issued an action secured by way of the writ of preliminary attachment as
Order dated February 22, 1989 granting the application of herein granted to the plaintiff under Rule 57 of the Revised Rules of
petitioners, for the issuance of the writ of preliminary Court. The Central Bank responded as follows:
attachment. After petitioners gave Bond No. JCL (4) 1981 by
May 26, 1989
FGU Insurance Corporation in the amount of P100,000.00, a
Writ of Preliminary Attachment was issued by the trial court on Ms. Erlinda S. Carolino
February 28, 1989. 12 Pres. Osmena Avenue
South Admiral Village
On March 1, 1989, the Deputy Sheriff of Makati served a Notice
Paranaque, Metro Manila
of Garnishment on China Banking Corporation. In a letter dated
Dear Ms. Carolino: 2. To pay her parents, plaintiffs spouses Federico N. Salvacion,
Jr., and Evelina E. Salvacion the amount of P150,000.00 each or
This is in reply to your letter dated April 25, 1989 regarding your
a total of P300,000.00 for both of them;
inquiry on Section 113, CB Circular No. 960 (1983).
3. To pay plaintiffs exemplary damages of P100,000.00; and
The cited provision is absolute in application. It does not admit
of any exception, nor has the same been repealed nor amended. 4. To pay attorney's fees in an amount equivalent to 25% of the
total amount of damages herein awarded;
The purpose of the law is to encourage dollar accounts within
the country's banking system which would help in the 5. To pay litigation expenses of P10,000.00; plus
development of the economy. There is no intention to render
6. Costs of the suit.
futile the basic rights of a person as was suggested in your
subject letter. The law may be harsh as some perceive it, but it SO ORDERED.
is still the law. Compliance is, therefore, enjoined.
The heinous acts of respondent Greg Bartelli which gave rise to
Very truly yours, the award were related in graphic detail by the trial court in its
decision as follows:
(SGD) AGAPITO S. FAJARDO
Director1 The defendant in this case was originally detained in the
municipal jail of Makati but was able to escape therefrom on
Meanwhile, on April 10, 1989, the trial court granted petitioners'
February 24, 1989 as per report of the Jail Warden of Makati to
motion for leave to serve summons by publication in the Civil
the Presiding Judge, Honorable Manuel M. Cosico of the
Case No. 89-3214 entitled "Karen Salvacion, et al. vs. Greg
Regional Trial Court of Makati, Branch 136, where he was
Bartelli y Northcott." Summons with the complaint was a
charged with four counts of Rape and Serious Illegal Detention
published in the Manila Times once a week for three consecutive
(Crim. Cases Nos. 802 to 805). Accordingly, upon motion of
weeks. Greg Bartelli failed to file his answer to the complaint
plaintiffs, through counsel, summons was served upon
and was declared in default on August 7, 1989. After hearing the
defendant by publication in the Manila Times, a newspaper of
case ex-parte, the court rendered judgment in favor of petitioners
general circulation as attested by the Advertising Manager of the
on March 29, 1990, the dispositive portion of which reads:
Metro Media Times, Inc., the publisher of the said newspaper.
WHEREFORE, judgment is hereby rendered in favor of Defendant, however, failed to file his answer to the complaint
plaintiffs and against defendant, ordering the latter: despite the lapse of the period of sixty (60) days from the last
publication; hence, upon motion of the plaintiffs, through
1. To pay plaintiff Karen E. Salvacion the amount of
P500,000.00 as moral damages;
counsel, defendant was declared in default and plaintiffs were They walked from Plaza Fair along Pasong Tamo, turning right
authorized to present their evidence ex parte. to reach the defendant's house along Kalayaan Avenue. (Id., p.
6)
In support of the complaint, plaintiffs presented as witnesses the
minor Karen E. Salvacion, her father, Federico N. Salvacion, Jr., When they reached the apartment house, Karen noticed that
a certain Joseph Aguilar and a certain Liberato Madulio, who defendant's alleged niece was not outside the house but
gave the following testimony: defendant told her maybe his niece was inside. When Karen did
not see the alleged niece inside the house, defendant told her
Karen took her first year high school in St. Mary's Academy in
maybe his niece was upstairs, and invited Karen to go upstairs.
Pasay City but has recently transferred to Arellano University
(Id., p. 7)
for her second year.
Upon entering the bedroom defendant suddenly locked the door.
In the afternoon of February 4, 1989, Karen was at the Plaza Fair
Karen became nervous because his niece was not there.
Makati Cinema Square, with her friend Edna Tangile whiling
Defendant got a piece of cotton cord and tied Karen's hands with
away her free time. At about 3:30 p.m. while she was finishing
it, and then he undressed her. Karen cried for help but defendant
her snack on a concrete bench in front of Plaza Fair, an American
strangled her. He took a packing tape and he covered her mouth
approached her. She was then alone because Edna Tangile had
with it and he circled it around her head. (Id., p. 7)
already left, and she was about to go home. (TSN, Aug. 15, 1989,
pp. 2 to 5) Then, defendant suddenly pushed Karen towards the bed which
was just near the door. He tied her feet and hands spread apart to
The American asked her name and introduced himself as Greg
the bed posts. He knelt in front of her and inserted his finger in
Bartelli. He sat beside her when he talked to her. He said he was
her sex organ. She felt severe pain. She tried to shout but no
a Math teacher and told her that he has a sister who is a nurse in
sound could come out because there were tapes on her mouth.
New York. His sister allegedly has a daughter who is about
When defendant withdrew his finger it was full of blood and
Karen's age and who was with him in his house along Kalayaan
Karen felt more pain after the withdrawal of the finger. (Id., p.
Avenue. (TSN, Aug. 15, 1989, pp. 4-5)
8)
The American asked Karen what was her favorite subject and
He then got a Johnson's Baby Oil and he applied it to his sex
she told him it's Pilipino. He then invited her to go with him to
organ as well as to her sex organ. After that he forced his sex
his house where she could teach Pilipino to his niece. He even
organ into her but he was not able to do so. While he was doing
gave her a stuffed toy to persuade her to teach his niece. (Id., pp.
it, Karen found it difficult to breathe and she perspired a lot
5-6)
while feeling severe pain. She merely presumed that he was able
to insert his sex organ a little, because she could not see. Karen
could not recall how long the defendant was in that position. (Id. And even if she shouted for help, nobody would hear her. She
pp. 8-9) was so afraid that if somebody would hear her and would be able
to call the police, it was still possible that as she was still inside
After that, he stood up and went to the bathroom to wash. He
the house, defendant might kill her. Besides, the defendant did
also told Karen to take a shower and he untied her hands. Karen
not leave that Sunday, ruling out her chance to call for help. At
could only hear the sound of the water while the defendant, she
nighttime he slept with her again. (TSN, Aug. 15, 1989, pp. 12-
presumed, was in the bathroom washing his sex organ. When
14)
she took a shower more blood came out from her. In the
meantime, defendant changed the mattress because it was full of On February 6, 1989, Monday, Karen was raped three times,
blood. After the shower, Karen was allowed by defendant to once in the morning for thirty minutes after a breakfast of
sleep. She fell asleep because she got tired crying. The incident biscuits; again in the afternoon; and again in the evening. At
happened at about 4:00 p.m. Karen had no way of determining first, Karen did not know that there was a window because
the exact time because defendant removed her watch. Defendant everything was covered by a carpet, until defendant opened the
did not care to give her food before she went to sleep. Karen window for around fifteen minutes or less to let some air in, and
woke up at about 8:00 o'clock the following morning. (Id., pp. she found that the window was covered by styrofoam and
9-10) plywood. After that, he again closed the window with a hammer
and he put the styrofoam, plywood, and carpet back. (Id., pp. 14-
The following day, February 5, 1989, a Sunday, after a breakfast
15)
of biscuit and coke at about 8:30 to 9:00 a.m. defendant raped
Karen while she was still bleeding. For lunch, they also took That Monday evening, Karen had a chance to call for help,
biscuit and coke. She was raped for the second time at about although defendant left but kept the door closed. She went to the
12:00 to 2:00 p.m. In the evening, they had rice for dinner which bathroom and saw a small window covered by styrofoam and
defendant had stored downstairs; it was he who cooked the rice she also spotted a small hole. She stepped on the bowl and she
that is why it looks like "lugaw". For the third time, Karen was cried for help through the hole. She cried: "Maawa no po kayo
raped again during the night. During those three times defendant so akin. Tulungan n'yo akong makalabas dito. Kinidnap ako!"
succeeded in inserting his sex organ but she could not say Somebody heard her. It was a woman, probably a neighbor, but
whether the organ was inserted wholly. she got angry and said she was "istorbo". Karen pleaded for help
and the woman told her to sleep and she will call the police. She
Karen did not see any firearm or any bladed weapon. The
finally fell asleep but no policeman came. (TSN, Aug. 15, 1989,
defendant did not tie her hands and feet nor put a tape on her
pp. 15-16)
mouth anymore but she did not cry for help for fear that she
might be killed; besides, all the windows and doors were closed.
She woke up at 6:00 o'clock the following morning, and she saw When she heard the voices of many people who were conversing
defendant in bed, this time sleeping. She waited for him to wake downstairs, she knocked repeatedly at the door as hard as she
up. When he woke up, he again got some food but he always could. She heard somebody going upstairs and when the door
kept the door locked. As usual, she was merely fed with biscuit was opened, she saw a policeman. The policeman asked her
and coke. On that day, February 7, 1989, she was again raped name and the reason why she was there. She told him she was
three times. The first at about 6:30 to 7:00 a.m., the second at kidnapped. Downstairs, he saw about five policemen in uniform
about 8:30 — 9:00, and the third was after lunch at 12:00 noon. and the defendant was talking to them. "Nakikipag-areglo po sa
After he had raped her for the second time he left but only for a mga pulis," Karen added. "The policeman told him to just
short while. Upon his return, he caught her shouting for help but explain at the precinct. (Id., p. 20)
he did not understand what she was shouting about. After she
They went out of the house and she saw some of her neighbors
was raped the third time, he left the house. (TSN, Aug. 15, 1989,
in front of the house. They rode the car of a certain person she
pp. 16-17) She again went to the bathroom and shouted for help.
called Kuya Boy together with defendant, the policeman, and
After shouting for about five minutes, she heard many voices.
two of her neighbors whom she called Kuya Bong Lacson and
The voices were asking for her name and she gave her name as
one Ate Nita. They were brought to Sub-Station I and there she
Karen Salvacion. After a while, she heard a voice of a woman
was investigated by a policeman. At about 2:00 a.m., her father
saying they will just call the police. They were also telling her
arrived, followed by her mother together with some of their
to change her clothes. She went from the bathroom to the room
neighbors. Then they were brought to the second floor of the
but she did not change her clothes being afraid that should the
police headquarters. (Id., p. 21)
neighbors call for the police and the defendant see her in
different clothes, he might kill her. At that time she was wearing At the headquarters, she was asked several questions by the
a T-shirt of the American because the latter washed her dress. investigator. The written statement she gave to the police was
(Id., p. 16) marked as Exhibit A. Then they proceeded to the National
Bureau of Investigation together with the investigator and her
Afterwards, defendant arrived and he opened the door. He asked
parents. At the NBI, a doctor, a medico-legal officer, examined
her if she had asked for help because there were many policemen
her private parts. It was already 3:00 in the early morning of the
outside and she denied it. He told her to change her clothes, and
following day when they reached the NBI. (TSN, Aug. 15, 1989,
she did change to the one she was wearing on Saturday. He
p. 22) The findings of the medico-legal officer has been marked
instructed her to tell the police that she left home and willingly;
as Exhibit B.
then he went downstairs but he locked the door. She could hear
people conversing but she could not understand what they were She was studying at the St. Mary's Academy in Pasay City at the
saying. (Id., p. 19) time of the incident but she subsequently transferred to
Apolinario Mabini, Arellano University, situated along Taft The issues raised and the arguments articulated by the parties
Avenue, because she was ashamed to be the subject of boil down to two:
conversation in the school. She first applied for transfer to Jose
May this Court entertain the instant petition despite the fact that
Abad Santos, Arellano University along Taft Avenue near the
original jurisdiction in petitions for declaratory relief rests with
Light Rail Transit Station but she was denied admission after she
the lower court? Should Section 113 of Central Bank Circular
told the school the true reason for her transfer. The reason for
No. 960 and Section 8 of R.A. 6426, as amended by P.D. 1246,
their denial was that they might be implicated in the case. (TSN,
otherwise known as the Foreign Currency Deposit Act be made
Aug. 15, 1989, p. 46)
applicable to a foreign transient?
xxx xxx xxx
Petitioners aver as heretofore stated that Section 113 of Central
After the incident, Karen has changed a lot. She does not play Bank Circular No. 960 providing that "Foreign currency
with her brother and sister anymore, and she is always in a state deposits shall be exempt from attachment, garnishment, or any
of shock; she has been absent-minded and is ashamed even to go other order or process of any court, legislative body, government
out of the house. (TSN, Sept. 12, 1989, p. 10) She appears to be agency or any administrative body whatsoever." should be
restless or sad, (Id., p. 11) The father prays for P500,000.00 adjudged as unconstitutional on the grounds that: 1.) it has taken
moral damages for Karen for this shocking experience which away the right of petitioners to have the bank deposit of
probably, she would always recall until she reaches old age, and defendant Greg Bartelli y Northcott garnished to satisfy the
he is not sure if she could ever recover from this experience. judgment rendered in petitioners' favor in violation of
(TSN, Sept. 24, 1989, pp. 10-11) substantive due process guaranteed by the Constitution; 2.) it has
given foreign currency depositors an undue favor or a class
Pursuant to an Order granting leave to publish notice of decision,
privilege in violation of the equal protection clause of the
said notice was published in the Manila Bulletin once a week for
Constitution; 3.) it has provided a safe haven for criminals like
three consecutive weeks. After the lapse of fifteen (15) days
the herein respondent Greg Bartelli y Northcott since criminals
from the date of the last publication of the notice of judgment
could escape civil liability for their wrongful acts by merely
and the decision of the trial court had become final, petitioners
converting their money to a foreign currency and depositing it in
tried to execute on Bartelli's dollar deposit with China Banking
a foreign currency deposit account with an authorized bank; and
Corporation. Likewise, the bank invoked Section 113 of Central
4.) The Monetary Board, in issuing Section 113 of Central Bank
Bank Circular No. 960.
Circular No. 960 has exceeded its delegated quasi-legislative
Thus, petitioners decided to seek relief from this Court. power when it took away: a.) the plaintiffs substantive right to
have the claim sought to be enforced by the civil action secured
by way of the writ of preliminary attachment as granted by Rule
57 of the Revised Rules of Court; b.) the plaintiffs substantive foreign currency deposits made by any person and therefore does
right to have the judgment credit satisfied by way of the writ of not violate the equal protection clause of the Constitution.
execution out of the bank deposit of the judgment debtor as
Respondent Central Bank further avers that the questioned
granted to the judgment creditor by Rule 39 of the Revised Rules
provision is needed to promote the public interest and the
of Court, which is beyond its power to do so.
general welfare; that the State cannot just stand idly by while a
On the other hand, respondent Central Bank, in its Comment considerable segment of the society suffers from economic
alleges that the Monetary Board in issuing Section 113 of CB distress; that the State had to take some measures to encourage
Circular No. 960 did not exceed its power or authority because economic development; and that in so doing persons and
the subject Section is copied verbatim from a portion of R.A. property may be subjected to some kinds of restraints or burdens
No. 6426 as amended by P.D. 1246. Hence, it was not the to secure the general welfare or public interest. Respondent
Monetary Board that grants exemption from attachment or Central Bank also alleges that Rule 39 and Rule 57 of the
garnishment to foreign currency deposits, but the law (R.A. 6426 Revised Rules of Court provide that some properties are
as amended) itself; that it does not violate the substantive due exempted from execution/attachment especially provided by law
process guaranteed by the Constitution because a.) it was based and R.A. No. 6426 as amended is such a law, in that it
on a law; b.) the law seems to be reasonable; c.) it is enforced specifically provides, among others, that foreign currency
according to regular methods of procedure; and d.) it applies to deposits shall be exempted from attachment, garnishment, or
all members of a class. any other order or process of any court, legislative body,
government agency or any administrative body whatsoever.
Expanding, the Central Bank said; that one reason for exempting
the foreign currency deposits from attachment, garnishment or For its part, respondent China Banking Corporation, aside from
any other order or process of any court, is to assure the giving reasons similar to that of respondent Central Bank, also
development and speedy growth of the Foreign Currency stated that respondent China Bank is not unmindful of the
Deposit System and the Offshore Banking System in the inhuman sufferings experienced by the minor Karen E.
Philippines; that another reason is to encourage the inflow of Salvacion from the beastly hands of Greg Bartelli; that it is only
foreign currency deposits into the banking institutions thereby too willing to release the dollar deposit of Bartelli which may
placing such institutions more in a position to properly channel perhaps partly mitigate the sufferings petitioner has undergone;
the same to loans and investments in the Philippines, thus but it is restrained from doing so in view of R.A. No. 6426 and
directly contributing to the economic development of the Section 113 of Central Bank Circular No. 960; and that despite
country; that the subject section is being enforced according to the harsh effect of these laws on petitioners, CBC has no other
the regular methods of procedure; and that it applies to all alternative but to follow the same.
This Court finds the petition to be partly meritorious. Indeed, after hearing the testimony of Karen, the Court believes
that it was undoubtedly a shocking and traumatic experience she
Petitioner deserves to receive the damages awarded to her by the
had undergone which could haunt her mind for a long, long time,
court. But this petition for declaratory relief can only be
the mere recall of which could make her feel so humiliated, as
entertained and treated as a petition for mandamus to require
in fact she had been actually humiliated once when she was
respondents to honor and comply with the writ of execution in
refused admission at the Abad Santos High School, Arellano
Civil Case No. 89-3214.
University, where she sought to transfer from another school,
This Court has no original and exclusive jurisdiction over a simply because the school authorities of the said High School
petition for declaratory relief.2 However, exceptions to this rule learned about what happened to her and allegedly feared that
have been recognized. Thus, where the petition has far-reaching they might be implicated in the case.
implications and raises questions that should be resolved, it may
xxx xxx xxx
be treated as one for mandamus.3
The reason for imposing exemplary or corrective damages is due
Here is a child, a 12-year old girl, who in her belief that all
to the wanton and bestial manner defendant had committed the
Americans are good and in her gesture of kindness by teaching
acts of rape during a period of serious illegal detention of his
his alleged niece the Filipino language as requested by the
hapless victim, the minor Karen Salvacion whose only fault was
American, trustingly went with said stranger to his apartment,
in her being so naive and credulous to believe easily that
and there she was raped by said American tourist Greg Bartelli.
defendant, an American national, could not have such a bestial
Not once, but ten times. She was detained therein for four (4)
desire on her nor capable of committing such a heinous crime.
days. This American tourist was able to escape from the jail and
Being only 12 years old when that unfortunate incident
avoid punishment. On the other hand, the child, having received
happened, she has never heard of an old Filipino adage that in
a favorable judgment in the Civil Case for damages in the
every forest there is a
amount of more than P1,000,000.00, which amount could
snake, . . . .4
alleviate the humiliation, anxiety, and besmirched reputation she
had suffered and may continue to suffer for a long, long time; If Karen's sad fate had happened to anybody's own kin, it would
and knowing that this person who had wronged her has the be difficult for him to fathom how the incentive for foreign
money, could not, however get the award of damages because of currency deposit could be more important than his child's rights
this unreasonable law. This questioned law, therefore makes to said award of damages; in this case, the victim's claim for
futile the favorable judgment and award of damages that she and damages from this alien who had the gall to wrong a child of
her parents fully deserve. As stated by the trial court in its tender years of a country where he is a mere visitor. This further
decision, illustrates the flaw in the questioned provisions.
It is worth mentioning that R.A. No. 6426 was enacted in 1983 PD No. 1246 and CB Circular No. 960 applies when the deposit
or at a time when the country's economy was in a shambles; does not come from a lender or investor but from a mere
when foreign investments were minimal and presumably, this transient or tourist who is not expected to maintain the deposit
was the reason why said statute was enacted. But the realities of in the bank for long.
the present times show that the country has recovered
The resolution of this question is important for the protection of
economically; and even if not, the questioned law still denies
nationals who are victimized in the forum by foreigners who are
those entitled to due process of law for being unreasonable and
merely passing through.
oppressive. The intention of the questioned law may be good
when enacted. The law failed to anticipate the iniquitous effects xxx xxx xxx
producing outright injustice and inequality such as the case
before us. . . . Respondents China Banking Corporation and Central Bank
of the Philippines refused to honor the writ of execution issued
It has thus been said that — in Civil Case No. 89-3214 on the strength of the following
provision of Central Bank Circular No. 960:
But I also know,5 that laws and institutions must go hand in hand
with the progress of the human mind. As that becomes more Sec. 113. Exemption from attachment. — Foreign currency
developed, more enlightened, as new discoveries are made, new deposits shall be exempt from attachment, garnishment, or any
truths are disclosed and manners and opinions change with the other order or process of any court, legislative body, government
change of circumstances, institutions must advance also, and agency or any administrative body whatsoever.
keep pace with the times. . . We might as well require a man to
wear still the coat which fitted him when a boy, as civilized Central Bank Circular No. 960 was issued pursuant to Section 7
society to remain ever under the regimen of their barbarous of Republic Act No. 6426:
ancestors. Sec. 7. Rules and Regulations. The Monetary Board of the
In his Comment, the Solicitor General correctly opined, thus: Central Bank shall promulgate such rules and regulations as may
be necessary to carry out the provisions of this Act which shall
The present petition has far-reaching implications on the right of take effect after the publication of such rules and regulations in
a national to obtain redress for a wrong committed by an alien the Official Gazette and in a newspaper of national circulation
who takes refuge under a law and regulation promulgated for a for at least once a week for three consecutive weeks. In case the
purpose which does not contemplate the application thereof Central Bank promulgates new rules and regulations decreasing
envisaged by the alien. More specifically, the petition raises the the rights of depositors, the rules and regulations at the time the
question whether the protection against attachment, garnishment deposit was made shall govern.
or other court process accorded to foreign currency deposits by
The aforecited Section 113 was copied from Section 8 of WHEREAS, in order to assure the development and speedy
Republic Act NO. 6426, as amended by P.D. 1246, thus: growth of the Foreign Currency Deposit System and the
Offshore Banking System in the Philippines, certain incentives
Sec. 8. Secrecy of Foreign Currency Deposits. — All foreign
were provided for under the two Systems such as confidentiality
currency deposits authorized under this Act, as amended by
of deposits subject to certain exceptions and tax exemptions on
Presidential Decree No. 1035, as well as foreign currency
the interest income of depositors who are nonresidents and are
deposits authorized under Presidential Decree No. 1034, are
not engaged in trade or business in the Philippines;
hereby declared as and considered of an absolutely confidential
nature and, except upon the written permission of the depositor, WHEREAS, making absolute the protective cloak of
in no instance shall such foreign currency deposits be examined, confidentiality over such foreign currency deposits, exempting
inquired or looked into by any person, government official, such deposits from tax, and guaranteeing the vested rights of
bureau or office whether judicial or administrative or legislative depositors would better encourage the inflow of foreign
or any other entity whether public or private: Provided, however, currency deposits into the banking institutions authorized to
that said foreign currency deposits shall be exempt from accept such deposits in the Philippines thereby placing such
attachment, garnishment, or any other order or process of any institutions more in a position to properly channel the same to
court, legislative body, government agency or any loans and investments in the Philippines, thus directly
administrative body whatsoever. contributing to the economic development of the country;
The purpose of PD 1246 in according protection against Thus, one of the principal purposes of the protection accorded to
attachment, garnishment and other court process to foreign foreign currency deposits is "to assure the development and
currency deposits is stated in its whereases, viz.: speedy growth of the Foreign Currency Deposit system and the
Offshore Banking in the Philippines" (3rd Whereas).
WHEREAS, under Republic Act No. 6426, as amended by
Presidential Decree No. 1035, certain Philippine banking The Offshore Banking System was established by PD No. 1034.
institutions and branches of foreign banks are authorized to In turn, the purposes of PD No. 1034 are as follows:
accept deposits in foreign currency;
WHEREAS, conditions conducive to the establishment of an
WHEREAS, under the provisions of Presidential Decree No. offshore banking system, such as political stability, a growing
1034 authorizing the establishment of an offshore banking economy and adequate communication facilities, among others,
system in the Philippines, offshore banking units are also exist in the Philippines;
authorized to receive foreign currency deposits in certain cases;
WHEREAS, it is in the interest of developing countries to have It is evident from the above [Whereas clauses] that the Offshore
as wide access as possible to the sources of capital funds for Banking System and the Foreign Currency Deposit System were
economic development; designed to draw deposits from
foreign lenders and investors (Vide second Whereas of PD No.
WHEREAS, an offshore banking system based in the
1034; third Whereas of PD No. 1035). It is these deposits that
Philippines will be advantageous and beneficial to the country
are induced by the two laws and given protection and incentives
by increasing our links with foreign lenders, facilitating the flow
by them.
of desired investments into the Philippines, creating
employment opportunities and expertise in international finance, Obviously, the foreign currency deposit made by a transient or a
and contributing to the national development effort. tourist is not the kind of deposit encouraged by PD Nos. 1034
and 1035 and given incentives and protection by said laws
WHEREAS, the geographical location, physical and human
because such depositor stays only for a few days in the country
resources, and other positive factors provide the Philippines with
and, therefore, will maintain his deposit in the bank only for a
the clear potential to develop as another financial center in Asia;
short time.
On the other hand, the Foreign Currency Deposit system was
Respondent Greg Bartelli, as stated, is just a tourist or a
created by PD. No. 1035. Its purposes are as follows:
transient. He deposited his dollars with respondent China
WHEREAS, the establishment of an offshore banking system in Banking Corporation only for safekeeping during his temporary
the Philippines has been authorized under a separate decree; stay in the Philippines.

WHEREAS, a number of local commercial banks, as depository For the reasons stated above, the Solicitor General thus submits
bank under the Foreign Currency Deposit Act (RA No. 6426), that the dollar deposit of respondent Greg Bartelli is not entitled
have the resources and managerial competence to more actively to the protection of Section 113 of Central Bank Circular No.
engage in foreign exchange transactions and participate in the 960 and PD No. 1246 against attachment, garnishment or other
grant of foreign currency loans to resident corporations and court processes.6
firms;
In fine, the application of the law depends on the extent of its
WHEREAS, it is timely to expand the foreign currency lending justice. Eventually, if we rule that the questioned Section 113 of
authority of the said depository banks under RA 6426 and apply Central Bank Circular No. 960 which exempts from attachment,
to their transactions the same taxes as would be applicable to garnishment, or any other order or process of any court,
transaction of the proposed offshore banking units; legislative body, government agency or any administrative body
whatsoever, is applicable to a foreign transient, injustice would
result especially to a citizen aggrieved by a foreign guest like
accused Greg Bartelli. This would negate Article 10 of the New Bartelli y Northcott in such amount as would satisfy the
Civil Code which provides that "in case of doubt in the judgment.
interpretation or application of laws, it is presumed that the
SO ORDERED.
lawmaking body intended right and justice to prevail. "Ninguno
non deue enriquecerse tortizeramente con dano de otro." Simply Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo,
stated, when the statute is silent or ambiguous, this is one of Puno, Vitug, Kapunan, Francisco and Panganiban, JJ., concur.
those fundamental solutions that would respond to the vehement
urge of conscience. (Padilla vs. Padilla, 74 Phil. 377). Padilla, J., took no part.

It would be unthinkable, that the questioned Section 113 of Mendoza and Hermosisima, Jr., JJ., are on leave.
Central Bank No. 960 would be used as a device by accused
Greg Bartelli for wrongdoing, and in so doing, acquitting the
guilty at the expense of the innocent.
Call it what it may — but is there no conflict of legal policy
here? Dollar against Peso? Upholding the final and executory
judgment of the lower court against the Central Bank Circular
protecting the foreign depositor? Shielding or protecting the
dollar deposit of a transient alien depositor against injustice to a
national and victim of a crime? This situation calls for fairness
against legal tyranny.
We definitely cannot have both ways and rest in the belief that
we have served the ends of justice.
IN VIEW WHEREOF, the provisions of Section 113 of CB
Circular No. 960 and PD No. 1246, insofar as it amends Section
8 of R.A. No. 6426 are hereby held to be INAPPLICABLE to
this case because of its peculiar circumstances. Respondents are
hereby REQUIRED to COMPLY with the writ of execution
issued in Civil Case No. 89-3214, "Karen Salvacion, et al. vs.
Greg Bartelli y Northcott, by Branch CXLIV, RTC Makati and
to RELEASE to petitioners the dollar deposit of respondent Greg
EN BANC 1. Account Opening Documents;
G.R. Nos. 157294-95 November 30, 2006 2. Trading Order No. 020385 dated January 29, 1999;
JOSEPH VICTOR G. EJERCITO, Petitioner, 3. Confirmation Advice TA 858;
vs.
4. Original/Microfilm copies, including the dorsal side, of the
SANDIGANBAYAN (Special Division) and PEOPLE OF
following:
THE PHILIPPINES, Respondents.
a. Bank of Commerce MC # 0256254 in the amount of
DECISION
₱2,000,000.00;
CARPIO MORALES, J.:
b. Urban bank Corp. MC # 34181 dated November 8, 1999 in
The present petition for certiorari under Rule 65 assails the the amount of P10,875,749.43;
Sandiganbayan Resolutions dated February 7 and 12, 2003
c. Urban Bank MC # 34182 dated November 8, 1999 in the
denying petitioner Joseph Victor G. Ejercito’s Motions to Quash
amount of ₱42,716,554.22;
Subpoenas Duces Tecum/Ad Testificandum, and Resolution
dated March 11, 2003 denying his Motion for Reconsideration d. Urban Bank Corp. MC # 37661 dated November 23, 1999 in
of the first two resolutions. the amount of ₱54,161,496.52;
The three resolutions were issued in Criminal Case No. 26558, 5. Trust Agreement dated January 1999:
"People of the Philippines v. Joseph Ejercito Estrada, et al.," for
Trustee: Joseph Victor C. Ejercito
plunder, defined and penalized in R.A. 7080, "AN ACT
DEFINING AND PENALIZING THE CRIME OF Nominee: URBAN BANK-TRUST DEPARTMENT
PLUNDER."
Special Private Account No. (SPAN) 858; and
In above-stated case of People v. Estrada, et al., the Special
Prosecution Panel1 filed on January 20, 2003 before the 6. Ledger of the SPAN # 858.
Sandiganbayan a Request for Issuance of Subpoena Duces II. For Savings Account No. 0116-17345-9
Tecum for the issuance of a subpoena directing the President of
Export and Industry Bank (EIB, formerly Urban Bank) or his/her SPAN No. 858
authorized representative to produce the following documents 1. Signature Cards; and
during the hearings scheduled on January 22 and 27, 2003:
2. Statement of Account/Ledger
I. For Trust Account No. 858;
III. Urban Bank Manager’s Check and their corresponding Duces Tecum/Ad Testificandum was accordingly issued on
Urban Bank Manager’s Check Application Forms, as follows: January 24, 2003.
1. MC # 039975 dated January 18, 2000 in the amount of Petitioner, claiming to have learned from the media that the
₱70,000,000.00; Special Prosecution Panel had requested for the issuance of
subpoenas for the examination of bank accounts belonging to
2. MC # 039976 dated January 18, 2000 in the amount of
him, attended the hearing of the case on January 27, 2003 and
₱2,000,000.00;
filed before the Sandiganbayan a letter of even date expressing
3. MC # 039977 dated January 18, 2000 in the amount of his concerns as follows, quoted verbatim:
₱2,000,000.00;
Your Honors:
4. MC # 039978 dated January 18, 2000 in the amount of
It is with much respect that I write this court relative to the
₱1,000,000.00;
concern of subpoenaing the undersigned’s bank account which I
The Special Prosecution Panel also filed on January 20, 2003, a have learned through the media.
Request for Issuance of Subpoena Duces Tecum/Ad
I am sure the prosecution is aware of our banking secrecy laws
Testificandum directed to the authorized representative of
everyone supposed to observe. But, instead of prosecuting those
Equitable-PCI Bank to produce statements of account pertaining
who may have breached such laws, it seems it is even going to
to certain accounts in the name of "Jose Velarde" and to testify
use supposed evidence which I have reason to believe could only
thereon.
have been illegally obtained.
The Sandiganbayan granted both requests by Resolution of
The prosecution was not content with a general request. It even
January 21, 2003 and subpoenas were accordingly issued.
lists and identifies specific documents meaning someone else in
The Special Prosecution Panel filed still another Request for the bank illegally released confidential information.
Issuance of Subpoena Duces Tecum/Ad Testificandum dated
If this can be done to me, it can happen to anyone. Not that
January 23, 2003 for the President of EIB or his/her authorized
anything can still shock our family. Nor that I have anything to
representative to produce the same documents subject of the
hide. Your Honors.
Subpoena Duces Tecum dated January 21, 2003 and to testify
thereon on the hearings scheduled on January 27 and 29, 2003 But, I am not a lawyer and need time to consult one on a situation
and subsequent dates until completion of the testimony. The that affects every bank depositor in the country and should
request was likewise granted by the Sandiganbayan. A Subpoena interest the bank itself, the Bangko Sentral ng Pilipinas, and
maybe the Ombudsman himself, who may want to investigate,
not exploit, the serious breach that can only harm the economy, He further claimed that the specific identification of documents
a consequence that may have been overlooked. There appears to in the questioned subpoenas, including details on dates and
have been deplorable connivance. amounts, could only have been made possible by an earlier
illegal disclosure thereof by the EIB and the Philippine Deposit
xxxx
Insurance Corporation (PDIC) in its capacity as receiver of the
I hope and pray, Your Honors, that I will be given time to retain then Urban Bank.
the services of a lawyer to help me protect my rights and those
The disclosure being illegal, petitioner concluded, the
of every banking depositor. But the one I have in mind is out of
prosecution in the case may not be allowed to make use of the
the country right now.
information.
May I, therefore, ask your Honors, that in the meantime, the
Before the Motion to Quash was resolved by the Sandiganbayan,
issuance of the subpoena be held in abeyance for at least ten (10)
the prosecution filed another Request for the Issuance of
days to enable me to take appropriate legal steps in connection
Subpoena Duces Tecum/Ad Testificandum dated January 31,
with the prosecution’s request for the issuance of subpoena
2003, again to direct the President of the EIB to produce, on the
concerning my accounts. (Emphasis supplied)
hearings scheduled on February 3 and 5, 2003, the same
From the present petition, it is gathered that the "accounts" documents subject of the January 21 and 24, 2003 subpoenas
referred to by petitioner in his above-quoted letter are Trust with the exception of the Bank of Commerce MC #0256254 in
Account No. 858 and Savings Account No. 0116-17345-9.2 the amount of ₱2,000,000 as Bank of Commerce MC #0256256
in the amount of ₱200,000,000 was instead requested.
In open court, the Special Division of the Sandiganbayan, Moreover, the request covered the following additional
through Associate Justice Edilberto Sandoval, advised petitioner documents:
that his remedy was to file a motion to quash, for which he was
given up to 12:00 noon the following day, January 28, 2003. IV. For Savings Account No. 1701-00646-1:

Petitioner, unassisted by counsel, thus filed on January 28, 2003 1. Account Opening Forms;
a Motion to Quash Subpoena Duces Tecum/Ad Testificandum
2. Specimen Signature Card/s; and
praying that the subpoenas previously issued to the President of
the EIB dated January 21 and January 24, 2003 be quashed.3 3. Statements of Account.
In his Motion to Quash, petitioner claimed that his bank accounts The prosecution also filed a Request for the Issuance of
are covered by R.A. No. 1405 (The Secrecy of Bank Deposits Subpoena Duces Tecum/Ad Testificandum bearing the same
Law) and do not fall under any of the exceptions stated therein. date, January 31, 2003, directed to Aurora C. Baldoz, Vice
President-CR-II of the PDIC for her to produce the following Petitioner’s Motion for Reconsideration dated February 24,
documents on the scheduled hearings on February 3 and 5, 2003: 2003 seeking a reconsideration of the Resolutions of February 7
and 12, 2003 having been denied by Resolution of March 11,
1. Letter of authority dated November 23, 1999 re: SPAN
2003, petitioner filed the present petition.
[Special Private Account Number] 858;
Raised as issues are:
2. Letter of authority dated January 29, 2000 re: SPAN 858;
1. Whether petitioner’s Trust Account No. 858 is covered by the
3. Letter of authority dated April 24, 2000 re: SPAN 858;
term "deposit" as used in R.A. 1405;
4. Urban Bank check no. 052092 dated April 24, 2000 for the
2. Whether petitioner’s Trust Account No. 858 and Savings
amount of P36, 572, 315.43;
Account No. 0116-17345-9 are excepted from the protection of
5. Urban Bank check no. 052093 dated April 24, 2000 for the R.A. 1405; and
amount of P107,191,780.85; and
3. Whether the "extremely-detailed" information contained in
6. Signature Card Savings Account No. 0116-17345-9. the Special Prosecution Panel’s requests for subpoena was
(Underscoring supplied) obtained through a prior illegal disclosure of petitioner’s bank
accounts, in violation of the "fruit of the poisonous tree"
The subpoenas prayed for in both requests were issued by the doctrine.
Sandiganbayan on January 31, 2003.
Respondent People posits that Trust Account No. 8585 may be
On February 7, 2003, petitioner, this time assisted by counsel, inquired into, not merely because it falls under the exceptions to
filed an Urgent Motion to Quash Subpoenae Duces Tecum/Ad the coverage of R.A. 1405, but because it is not even
Testificandum praying that the subpoena dated January 31, 2003 contemplated therein. For, to respondent People, the law applies
directed to Aurora Baldoz be quashed for the same reasons only to "deposits" which strictly means the money delivered to
which he cited in the Motion to Quash4 he had earlier filed. the bank by which a creditor-debtor relationship is created
On the same day, February 7, 2003, the Sandiganbayan issued a between the depositor and the bank.
Resolution denying petitioner’s Motion to Quash Subpoenae The contention that trust accounts are not covered by the term
Duces Tecum/Ad Testificandum dated January 28, 2003. "deposits," as used in R.A. 1405, by the mere fact that they do
Subsequently or on February 12, 2003, the Sandiganbayan not entail a creditor-debtor relationship between the trustor and
issued a Resolution denying petitioner’s Urgent Motion to the bank, does not lie. An examination of the law shows that the
Quash Subpoena Duces Tecum/Ad Testificandum dated term "deposits" used therein is to be understood broadly and not
February 7, 2003.
limited only to accounts which give rise to a creditor-debtor SECTION 2. All deposits of whatever nature with banks or
relationship between the depositor and the bank. banking institutions in the Philippines including investments in
bonds issued by the Government of the Philippines, its political
The policy behind the law is laid down in Section 1:
subdivisions and its instrumentalities, are hereby considered as
SECTION 1. It is hereby declared to be the policy of the of an absolutely confidential nature and may not be examined,
Government to give encouragement to the people to deposit their inquired or looked into by any person, government official,
money in banking institutions and to discourage private bureau or office, except upon written permission of the
hoarding so that the same may be properly utilized by banks in depositor, or in cases of impeachment, or upon order of a
authorized loans to assist in the economic development of the competent court in cases of bribery or dereliction of duty of
country. (Underscoring supplied) public officials, or in cases where the money deposited or
invested is the subject matter of the litigation. (Emphasis and
If the money deposited under an account may be used by banks underscoring supplied)
for authorized loans to third persons, then such account,
regardless of whether it creates a creditor-debtor relationship The phrase "of whatever nature" proscribes any restrictive
between the depositor and the bank, falls under the category of interpretation of "deposits." Moreover, it is clear from the
accounts which the law precisely seeks to protect for the purpose immediately quoted provision that, generally, the law applies not
of boosting the economic development of the country. only to money which is deposited but also to those which
are invested. This further shows that the law was not intended to
Trust Account No. 858 is, without doubt, one such account. The apply only to "deposits" in the strict sense of the word.
Trust Agreement between petitioner and Urban Bank provides Otherwise, there would have been no need to add the phrase "or
that the trust account covers "deposit, placement or investment invested."
of funds" by Urban Bank for and in behalf of petitioner.6 The
money deposited under Trust Account No. 858, was, therefore, Clearly, therefore, R.A. 1405 is broad enough to cover Trust
intended not merely to remain with the bank but to be invested Account No. 858.
by it elsewhere. To hold that this type of account is not protected
The protection afforded by the law is, however, not absolute,
by R.A. 1405 would encourage private hoarding of funds that
there being recognized exceptions thereto, as above-quoted
could otherwise be invested by banks in other ventures, contrary
Section 2 provides. In the present case, two exceptions apply, to
to the policy behind the law.
wit: (1) the examination of bank accounts is upon order of a
Section 2 of the same law in fact even more clearly shows that competent court in cases of bribery or dereliction of duty of
the term "deposits" was intended to be understood broadly: public officials, and (2) the money deposited or invested is the
subject matter of the litigation.
Petitioner contends that since plunder is neither bribery nor declare any and all ill-gotten wealth and their interests and other
dereliction of duty, his accounts are not excepted from the incomes and assets including the properties and shares of stock
protection of R.A. 1405. Philippine National Bank v. derived from the deposit or investment thereof forfeited in favor
Gancayco7 holds otherwise: of the State. (Emphasis and underscoring supplied)
Cases of unexplained wealth are similar to cases of bribery or An examination of the "overt or criminal acts as described in
dereliction of duty and no reason is seen why these two classes Section 1(d)" of R.A. No. 7080 would make the similarity
of cases cannot be excepted from the rule making bank deposits between plunder and bribery even more pronounced since
confidential. The policy as to one cannot be different from the bribery is essentially included among these criminal acts. Thus
policy as to the other. This policy expresses the notion that a Section 1(d) states:
public office is a public trust and any person who enters upon
d) "Ill-gotten wealth" means any asset, property, business
its discharge does so with the full knowledge that his life, so far
enterprise or material possession of any person within the
as relevant to his duty, is open to public scrutiny.
purview of Section Two (2) hereof, acquired by him directly or
Undoubtedly, cases for plunder involve unexplained wealth. indirectly through dummies, nominees, agents, subordinates and
Section 2 of R.A. No. 7080 states so. or business associates by any combination or series of the
following means or similar schemes.
SECTION 2. Definition of the Crime of Plunder; Penalties.
— Any public officer who, by himself or in connivance with 1) Through misappropriation, conversion, misuse, or
members of his family, relatives by affinity or consanguinity, malversation of public funds or raids on the public treasury;
business associates, subordinates or other persons, amasses,
2) By receiving, directly or indirectly, any commission, gift,
accumulates or acquires ill-gotten wealth through a
share, percentage, kickbacks or any other form of pecuniary
combination or series of overt or criminal acts as described in
benefit from any person and/or entity in connection with any
Section 1(d) hereof, in the aggregate amount or total value of at
government contract or project or by reason of the office or
least Seventy-five million pesos (P75,000,000.00), shall
position of the public officer concerned;
be guilty of the crime of plunder and shall be punished by life
imprisonment with perpetual absolute disqualification from 3) By the illegal or fraudulent conveyance or disposition of
holding any public office. Any person who participated with said assets belonging to the National Government or any of its
public officer in the commission of plunder shall likewise be subdivisions, agencies or instrumentalities or government-
punished. In the imposition of penalties, the degree of owned or -controlled corporations and their subsidiaries;
participation and the attendance of mitigating and extenuating
circumstances shall be considered by the court. The court shall 4) By obtaining, receiving or accepting directly or indirectly any
shares of stock, equity or any other form of interest or
participation including promise of future employment in any 1405 is explained in Union Bank of the Philippines v. Court of
business enterprise or undertaking; Appeals,9 thus:
5) By establishing agricultural, industrial or commercial Petitioner contends that the Court of Appeals confuses the
monopolies or other combinations and/or implementation of "cause of action" with the "subject of the action". In Yusingco v.
decrees and orders intended to benefit particular persons or Ong Hing Lian, petitioner points out, this Court distinguished
special interests; or the two concepts.
6) By taking undue advantage of official position, authority, x x x "The cause of action is the legal wrong threatened or
relationship, connection or influence to unjustly enrich himself committed, while the object of the action is to prevent or redress
or themselves at the expense and to the damage and prejudice of the wrong by obtaining some legal relief; but the subject of the
the Filipino people and the Republic of the Philippines. action is neither of these since it is not the wrong or the relief
(Emphasis supplied) demanded, the subject of the action is the matter or thing with
respect to which the controversy has arisen, concerning which
Indeed, all the above-enumerated overt acts are similar to
the wrong has been done, and this ordinarily is the property or
bribery such that, in each case, it may be said that "no reason is
the contract and its subject matter, or the thing in dispute."
seen why these two classes of cases cannot be excepted from the
rule making bank deposits confidential."8 The argument is well-taken. We note with approval the
difference between the ‘subject of the action’ from the ‘cause of
The crime of bribery and the overt acts constitutive of plunder
action.’ We also find petitioner’s definition of the phrase
are crimes committed by public officers, and in either case the
‘subject matter of the action’ is consistent with the term ‘subject
noble idea that "a public office is a public trust and any person
matter of the litigation’, as the latter is used in the Bank Deposits
who enters upon its discharge does so with the full knowledge
Secrecy Act.
that his life, so far as relevant to his duty, is open to public
scrutiny" applies with equal force. In Mellon Bank, N.A. v. Magsino, where the petitioner bank
inadvertently caused the transfer of the amount of
Plunder being thus analogous to bribery, the exception to R.A.
US$1,000,000.00 instead of only US$1,000.00, the Court
1405 applicable in cases of bribery must also apply to cases of
sanctioned the examination of the bank accounts where part of
plunder.
the money was subsequently caused to be deposited:
Respecting petitioner’s claim that the money in his bank
‘x x x Section 2 of [Republic Act No. 1405] allows the disclosure
accounts is not the "subject matter of the litigation," the meaning
of bank deposits in cases where the money deposited is the
of the phrase "subject matter of the litigation" as used in R.A.
subject matter of the litigation. Inasmuch as Civil Case No.
26899 is aimed at recovering the amount converted by the that, following the "fruit of the poisonous tree" doctrine, the
Javiers for their own benefit, necessarily, an inquiry into the subpoenas must be quashed.
whereabouts of the illegally acquired amount extends to
Petitioner further contends that even if, as claimed by respondent
whatever is concealed by being held or recorded in the name
People, the "extremely-detailed" information was obtained by
of persons other than the one responsible for the illegal
the Ombudsman from the bank officials concerned during a
acquisition."
previous investigation of the charges against President Estrada,
Clearly, Mellon Bank involved a case where the money such inquiry into his bank accounts would itself be illegal.
deposited was the subject matter of the litigation since the
Petitioner relies on Marquez v. Desierto10 where the Court held:
money deposited was the very thing in dispute. x x x" (Emphasis
and underscoring supplied) We rule that before an in camera inspection may be
allowed there must be a pending case before a court of
The plunder case now pending with the Sandiganbayan
competent jurisdiction. Further, the account must be clearly
necessarily involves an inquiry into the whereabouts of the
identified, the inspection limited to the subject matter of the
amount purportedly acquired illegally by former President
pending case before the court of competent jurisdiction. The
Joseph Estrada.
bank personnel and the account holder must be notified to be
In light then of this Court’s pronouncement in Union Bank, the present during the inspection, and such inspection may cover
subject matter of the litigation cannot be limited to bank only the account identified in the pending case. (Underscoring
accounts under the name of President Estrada alone, but must supplied)
include those accounts to which the money purportedly acquired
As no plunder case against then President Estrada had yet been
illegally or a portion thereof was alleged to have been
filed before a court of competent jurisdiction at the time the
transferred. Trust Account No. 858 and Savings Account No.
Ombudsman conducted an investigation, petitioner concludes
0116-17345-9 in the name of petitioner fall under this
that the information about his bank accounts were acquired
description and must thus be part of the subject matter of the
illegally, hence, it may not be lawfully used to facilitate a
litigation.
subsequent inquiry into the same bank accounts.
In a further attempt to show that the subpoenas issued by the
Petitioner’s attempt to make the exclusionary rule applicable to
Sandiganbayan are invalid and may not be enforced, petitioner
the instant case fails. R.A. 1405, it bears noting, nowhere
contends, as earlier stated, that the information found therein,
provides that an unlawful examination of bank accounts shall
given their "extremely detailed" character, could only have been
render the evidence obtained therefrom inadmissible in
obtained by the Special Prosecution Panel through an illegal
evidence. Section 5 of R.A. 1405 only states that "[a]ny violation
disclosure by the bank officials concerned. Petitioner thus claims
of this law will subject the offender upon conviction, to an instant case, then there would be no "poisonous tree" to begin
imprisonment of not more than five years or a fine of not more with, and, thus, no reason to apply the doctrine.
than twenty thousand pesos or both, in the discretion of the
How the Ombudsman conducted his inquiry into the bank
court."
accounts of petitioner is recounted by respondent People of the
The case of U.S. v. Frazin,11 involving the Right to Financial Philippines, viz:
Privacy Act of 1978 (RFPA) of the United States, is instructive.
x x x [A]s early as February 8, 2001, long before the issuance
Because the statute, when properly construed, excludes a of the Marquez ruling, the Office of the Ombudsman, acting
suppression remedy, it would not be appropriate for us to under the powers granted to it by the Constitution and R.A. No.
provide one in the exercise of our supervisory powers over the 6770, and acting on information obtained from various sources,
administration of justice. Where Congress has both established including impeachment (of then Pres. Joseph Estrada) related
a right and provided exclusive remedies for its violation, we reports, articles and investigative journals, issued a Subpoena
would "encroach upon the prerogatives" of Congress were we to Duces Tecum addressed to Urban Bank. (Attachment "1-b") It
authorize a remedy not provided for by statute. United States v. should be noted that the description of the documents sought to
Chanen, 549 F.2d 1306, 1313 (9th Cir.), cert. denied, 434 U.S. be produced at that time included that of numbered accounts
825, 98 S.Ct. 72, 54 L.Ed.2d 83 (1977). 727, 737, 747, 757, 777 and 858 and included such names as
Jose Velarde, Joseph E. Estrada, Laarni Enriquez, Guia Gomez,
The same principle was reiterated in U.S. v. Thompson:12
Joy Melendrez, Peachy Osorio, Rowena Lopez, Kevin or Kelvin
x x x When Congress specifically designates a remedy for one Garcia. The subpoena did not single out account 858.
of its acts, courts generally presume that it engaged in the
xxxx
necessary balancing of interests in determining what the
appropriate penalty should be. See Michaelian, 803 F.2d at Thus, on February 13, 2001, PDIC, as receiver of Urban Bank,
1049 (citing cases); Frazin, 780 F.2d at 1466. Absent a specific issued a certification as to the availability of bank documents
reference to an exclusionary rule, it is not appropriate for the relating to A/C 858 and T/A 858 and the non-availability of bank
courts to read such a provision into the act. records as to the other accounts named in the subpoena.
(Attachments "2", "2-1" and "2-b)
Even assuming arguendo, however, that the exclusionary rule
applies in principle to cases involving R.A. 1405, the Court finds Based on the certification issued by PDIC, the Office of the
no reason to apply the same in this particular case. Ombudsman on February 16, 2001 again issued a Subpoena
Duces Tecum directed to Ms. Corazon dela Paz, as Interim
Clearly, the "fruit of the poisonous tree" doctrine13 presupposes
a violation of law. If there was no violation of R.A. 1405 in the
Receiver, directing the production of documents pertinent to dated March 16, 2001. (Attachment "6")14 (Emphasis in the
account A/C 858 and T/C 858. (Attachment "3") original)
In compliance with the said subpoena dated February 16, 2001, The Sandiganbayan credited the foregoing account of
Ms. Dela Paz, as interim receiver, furnished the Office of the respondent People.15 The Court finds no reason to disturb this
Ombudsman certified copies of documents under cover latter finding of fact by the Sandiganbayan.
dated February 21, 2001:
The Marquez ruling notwithstanding, the above-described
1. Transaction registers dated 7-02-99, 8-16-99, 9-17-99, 10-18- examination by the Ombudsman of petitioner’s bank accounts,
99, 11-22-99, 1-07-00, 04-03-00 and 04-24-00; conducted before a case was filed with a court of competent
jurisdiction, was lawful.
2. Report of Unregularized TAFs & TDs for UR COIN A & B
Placements of Various Branches as of February 29, 2000 and as For the Ombudsman issued the subpoenas bearing on the bank
of December 16, 1999; and accounts of petitioner about four months before Marquez was
promulgated on June 27, 2001.
3. Trading Orders Nos. A No. 78102 and A No. 078125.
While judicial interpretations of statutes, such as that made
Trading Order A No. 07125 is filed in two copies – a white copy
in Marquez with respect to R.A. No. 6770 or the Ombudsman
which showed "set up" information; and a yellow copy which
Act of 1989, are deemed part of the statute as of the date it was
showed "reversal" information. Both copies have been
originally passed, the rule is not absolute.
reproduced and are enclosed with this letter.
Columbia Pictures, Inc. v. Court of Appeals16 teaches:
We are continuing our search for other records and documents
pertinent to your request and we will forward to you on Friday, It is consequently clear that a judicial interpretation becomes a
23 February 2001, such additional records and documents as we part of the law as of the date that law was originally
might find until then. (Attachment "4") passed, subject only to the qualification that when a doctrine
of this Court is overruled and a different view is adopted,
The Office of the Ombudsman then requested for the manger’s
and more so when there is a reversal thereof, the new
checks, detailed in the Subpoena Duces Tecum dated March 7,
doctrine should be applied prospectively and should not apply
2001. (Attachment "5")
to parties who relied on the old doctrine and acted in good faith.
PDIC again complied with the said Subpoena Duces (Emphasis and underscoring supplied)
Tecum dated March 7, 2001 and provided copies of the
When this Court construed the Ombudsman Act of 1989, in light
manager’s checks thus requested under cover letter
of the Secrecy of Bank Deposits Law in Marquez, that "before
an in camera inspection may be allowed there must be a pending Ombudsman under R.A. 6770 was essentially the same as that
case before a court of competent jurisdiction", it was, in fact, under P.D. 1630. Thus Section 15 of R.A. 6770 empowers the
reversing an earlier doctrine found in Banco Filipino Savings Office of the Ombudsman to
and Mortgage Bank v. Purisima17.
(8) Administer oaths, issue subpoena and subpoena duces tecum,
Banco Filipino involved subpoenas duces tecum issued by the and take testimony in any investigation or inquiry, including the
Office of the Ombudsman, then known as the Tanodbayan,18 in power to examine and have access to bank accounts and records;
the course of its preliminary investigation of a charge of
A comparison of this provision with its counterpart in Sec. 10(d)
violation of the Anti-Graft and Corrupt Practices Act.
of P.D. 1630 clearly shows that it is only more explicit in stating
While the main issue in Banco Filipino was whether R.A. 1405 that the power of the Ombudsman includes the power to examine
precluded the Tanodbayan’s issuance of subpoena duces and have access to bank accounts and records which power was
tecum of bank records in the name of persons other than the one recognized with respect to the Tanodbayan through Banco
who was charged, this Court, citing P.D. 1630,19 Section 10, the Filipino.
relevant part of which states:
The Marquez ruling that there must be a pending case in order
(d) He may issue a subpoena to compel any person to appear, for the Ombudsman to validly inspect bank records in camera
give sworn testimony, or produce documentary or other thus reversed a prevailing doctrine.21 Hence, it may not be
evidence the Tanodbayan deems relevant to a matter under his retroactively applied.
inquiry,
The Ombudsman’s inquiry into the subject bank accounts prior
held that "The power of the Tanodbayan to issue subpoenae to the filing of any case before a court of competent jurisdiction
ad testificandum and subpoenae duces tecum at the time in was therefore valid at the time it was conducted.
question is not disputed, and at any rate does not admit of
Likewise, the Marquez ruling that "the account holder must be
doubt."20
notified to be present during the inspection" may not be applied
As the subpoenas subject of Banco Filipino were issued during retroactively to the inquiry of the Ombudsman subject of this
a preliminary investigation, in effect this Court upheld the power case. This ruling is not a judicial interpretation either of R.A.
of the Tandobayan under P.D. 1630 to issue subpoenas duces 6770 or R.A. 1405, but a "judge-made" law which, as People v.
tecum for bank documents prior to the filing of a case before a Luvendino22 instructs, can only be given prospective
court of competent jurisdiction. application:
Marquez, on the other hand, practically reversed this ruling in x x x The doctrine that an uncounselled waiver of the right
Banco Filipino despite the fact that the subpoena power of the to counsel is not to be given legal effect was initially a judge-
made one and was first announced on 26 April (a) bank records and all documents relative thereto pertaining
1983 in Morales v. Enrile and reiterated on 20 March 1985 to all bank accounts (Savings, Current, Time Deposit, Trust,
in People v. Galit. x x x Foreign Currency Deposits, etc…) under the account
names of Jose Velarde, Joseph E. Estrada, Laarni Enriquez,
While the Morales-Galit doctrine eventually became part of
Guia Gomez, Joy Melendrez, Peach Osorio, Rowena Lopez,
Section 12(1) of the 1987 Constitution, that doctrine affords no
Kevin or Kelvin Garcia, 727, 737, 747, 757, 777 and 858.
comfort to appellant Luvendino for the requirements and
(Emphasis and underscoring supplied)
restrictions outlined in Morales and Galit have no
retroactive effect and do not reach waivers made prior to 26 The information on the existence of Bank Accounts bearing
April 1983 the date of promulgation of Morales. (Emphasis number "858" was, according to respondent People of the
supplied) Philippines, obtained from various sources including the
proceedings during the impeachment of President Estrada,
In fine, the subpoenas issued by the Ombudsman in this case
related reports, articles and investigative journals.23 In the
were legal, hence, invocation of the "fruit of the poisonous tree"
absence of proof to the contrary, this explanation proffered by
doctrine is misplaced.
respondent must be upheld. To presume that the information was
At all events, even if the challenged subpoenas are quashed, the obtained in violation of R.A. 1405 would infringe the
Ombudsman is not barred from requiring the production of the presumption of regularity in the performance of official
same documents based solely on information obtained by it from functions.
sources independent of its previous inquiry.
Thus, with the filing of the plunder case against former President
In particular, the Ombudsman, even before its inquiry, had Estrada before the Sandiganbayan, the Ombudsman, using the
already possessed information giving him grounds to believe above independent information, may now proceed to conduct the
that (1) there are bank accounts bearing the number "858," (2) same investigation it earlier conducted, through which it can
that such accounts are in the custody of Urban Bank, and (3) that eventually obtain the same information previously disclosed to
the same are linked with the bank accounts of former President it by the PDIC, for it is an inescapable fact that the bank records
Joseph Estrada who was then under investigation for plunder. of petitioner are no longer protected by R.A. 1405 for the
reasons already explained above.1âwphi1
Only with such prior independent information could it have been
possible for the Ombudsman to issue the February 8, Since conducting such an inquiry would, however, only result in
2001 subpoena duces tecum addressed to the President and/or the disclosure of the same documents to the Ombudsman, this
Chief Executive Officer of Urban Bank, which described the Court, in avoidance of what would be a time-wasteful and
documents subject thereof as follows:
circuitous way of administering justice,24 upholds the application of this rule. Moreover, there is no basis for applying
challenged subpoenas. the same in this case since the primary source for the detailed
information regarding petitioner’s bank accounts – the
Respecting petitioner’s claim that the Sandiganbayan violated
investigation previously conducted by the Ombudsman – was
his right to due process as he was neither notified of the requests
lawful.
for the issuance of the subpoenas nor of the grant thereof, suffice
it to state that the defects were cured when petitioner ventilated 3. At all events, even if the subpoenas issued by the
his arguments against the issuance thereof through his earlier Sandiganbayan were quashed, the Ombudsman may conduct on
quoted letter addressed to the Sandiganbayan and when he filed its own the same inquiry into the subject bank accounts that it
his motions to quash before the Sandiganbayan. earlier conducted last February-March 2001, there being a
plunder case already pending against former President Estrada.
IN SUM, the Court finds that the Sandiganbayan did not commit
To quash the challenged subpoenas would, therefore, be
grave abuse of discretion in issuing the challenged subpoenas for
pointless since the Ombudsman may obtain the same documents
documents pertaining to petitioner’s Trust Account No. 858 and
by another route. Upholding the subpoenas avoids an
Savings Account No. 0116-17345-9 for the following reasons:
unnecessary delay in the administration of justice.
1. These accounts are no longer protected by the Secrecy of Bank
WHEREFORE, the petition is DISMISSED. The
Deposits Law, there being two exceptions to the said law
Sandiganbayan Resolutions dated February 7 and 12, 2003 and
applicable in this case, namely: (1) the examination of bank
March 11, 2003 are upheld.
accounts is upon order of a competent court in cases of bribery
or dereliction of duty of public officials, and (2) the money The Sandiganbayan is hereby directed, consistent with this
deposited or invested is the subject matter of the litigation. Court’s ruling in Marquez v. Desierto, to notify petitioner as to
Exception (1) applies since the plunder case pending against the date the subject bank documents shall be presented in court
former President Estrada is analogous to bribery or dereliction by the persons subpoenaed.
of duty, while exception (2) applies because the money
SO ORDERED.
deposited in petitioner’s bank accounts is said to form part of the
subject matter of the same plunder case.
2. The "fruit of the poisonous tree" principle, which states that
once the primary source (the "tree") is shown to have been
unlawfully obtained, any secondary or derivative evidence (the
"fruit") derived from it is also inadmissible, does not apply in
this case. In the first place, R.A. 1405 does not provide for the
OCTOBER 2, 2017 Sometime in July 2001, EIB entered into a three-way merger
with Urban Bank, Inc. (UBI) and Urbancorp Investments, Inc.
G.R. No. 214866
(UII) in an attempt to rehabilitate UBI which was then under
APEX BANCRIGHTS HOLDINGS, INC., LEAD receivership.4 In September 2001, following the said merger,
BANCFUND HOLDINGS, INC., ASIA WIDE EIB itself encountered financial difficulties which prompted
REFRESHMENTS CORPORATION, MEDCO ASIA respondent the Philippine Deposit Insurance Corporation
INVESTMENT CORPORATION, ZEST-O (PDIC) to extend financial assistance to it. However, EIB still
CORPORATION, HARMONY BANCSHARES failed to overcome its financial problems, thereby causing PDIC
HOLDINGS, INC., EXCALIBUR HOLDINGS, INC., and to release in May 2005 additional financial assistance to it,
ALFREDO M. YAO, Petitioners conditioned upon the infusion by EIB stockholders of additional
vs. capital whenever EIB' s adjusted Risk Based Capital Adequacy
BANGKO SENTRAL NG PILIPINAS DEPOSIT Ratio falls below 12.5%. Despite this, EIB failed to comply with
CORPORATION, and PHILIPPINE INSURANCE, the BSP's capital requirements, causing EIB's stockholders to
Respondents commence the process of selling the bank.5

DECISION Initially, Banco de Oro (BDO) expressed interest in acquiring


EIB. However, certain issues derailed the acquisition, including
PERLAS-BERNABE, J.: BDO's unwillingness to assume certain liabilities of EIB,
Before the Court is a petition for review on certiorari 1 filed by particularly the claim of the Pacific Rehouse Group against it. In
petitioners Apex Bancrights Holdings, Inc., Lead Bancfund the end, BDO's acquisition of EIB did not proceed and the latter's
Holdings, Inc, Asia Wide Refreshments Corporation, Medco financial condition worsened. Thus, in a letter6 dated April 26,
Asia Investment Corporation, Zest-O Corporation, Harmony 2012, EIB 's president and chairman voluntarily turned-over the
Bancshares Holdings, Inc., Excalibur Holdings, Inc., and full control of EIB to BSP, and informed the latter that the
Alfredo M. Yao (petitioners) assailing the Decision2 dated former will declare a bank holiday on April 27, 2012.7
January 21, 2014 and the Resolution3 dated October 10, 2014 of On April 26, 2012, the BSP, through the Monetary Board, issued
the Court of Appeals in CA-G.R. SP No. 129674, which Resolution No. 6868 prohibiting EIB from doing business in the
affirmed Resolution No. 571 dated April 4, 2013 of the Philippines and placing it under the receivership of PDIC, in
Monetary Board of respondent Bangko Sentral ng accordance with Section 30 of Republic Act No. (RA) 7653,
Pilipinas (BSP) ordering the liquidation of the Export and otherwise known as "The New Central Bank
Industry Bank (EIB). Act."9 Accordingly, PDIC took over EIB.10
The Facts
In due course, PDIC submitted its initial receivership report to to increase its liquidity when PDIC disapproved EIB's proposal
the Monetary Board which contained its finding that EIB can be to sell its MRT bonds to a private third party and, instead,
rehabilitated or permitted to resume business; provided, that a required EIB to sell the same to government entities; (c) imposed
bidding for its rehabilitation would be conducted, and that the impossible and unnecessary bidding requirements; and
following conditions would be met: (a) there are qualified (d) delayed the public bidding which dampened investors'
interested banks that will comply with the parameters for interest.17
rehabilitation of a closed bank, capital strengthening, liquidity,
In defense, PDIC countered18 that petitioners were already
sustainability and viability of operations, and strengthening of
estopped from assailing the placement of EIB under receivership
bank governance; and (b) all parties (including creditors and
and its eventual liquidation since they had already surrendered
stockholders) agree to the rehabilitation and the revised payment
full control of the bank to the BSP as early as April 26,
terms and conditions of outstanding liabilities.11 Accordingly,
2012.19 For its part, BSP maintained20 that it had ample factual
the Monetary Board issued Resolution No. 1317 on August 9,
and legal bases to order EIB's liquidation.21
2012 noting PDIC's initial report, and its request to extend the
period within which to submit the final determination of whether The CA Ruling
or not EIB can be rehabilitated. Pursuant to the rehabilitation
efforts, a public bidding was scheduled by PDIC on October 18, In a Decision22 dated January 21, 2014, the CA dismissed the
2012, but the same failed as no bid was submitted. A re-bidding petition for lack of merit. It ruled that the Monetary Board did
was then set on March 20, 2013 which also did not materialize not gravely abuse its discretion in ordering the liquidation of EIB
as no bids were submitted.12 pursuant to the PDIC's findings that the rehabilitation of the bank
is no longer feasible. In this regard, the CA held that there is
On April 1, 2013, PDIC informed BSP that EIB can hardly be nothing in Section 30 of RA 7653 that requires the Monetary
rehabilitated.13 Based on PDIC's report that EIB was insolvent, Board to make its own independent factual determination on the
the Monetary Board passed Resolution No. 571 on April 4, 2013 bank's viability before ordering its liquidation. According to the
directing PDIC to proceed with the liquidation of EIB.14 CA, the law only provides that the Monetary Board "shall notify
in writing the board of directors of its findings and direct the
On April 29, 2013, petitioners, who are stockholders
receiver to proceed with the liquidation of the
representing the majority stock of EIB,15 filed a petition
institution,"23 which it did in this case.
for certiorari 16 before the CA challenging Resolution No. 571.
In essence, petitioners blame PDIC for the failure to rehabilitate Undaunted, petitioners moved for reconsideration24 which was,
EIB, contending that PDIC: (a) imposed unreasonable and however, denied by the CA in its Resolution25 dated October 10,
oppressive conditions which delayed or frustrated the 2014; hence, this petition.
transaction between BDO and EIB; (b) frustrated EIB's efforts
The Issue Before the Court in the Philippines and designate the Philippine Deposit
Insurance Corporation as receiver of the banking institution.
The sole issue before the Court is whether or not the CA
correctly ruled that the Monetary Board did not gravely abuse its xxxx
discretion in issuing Resolution No. 571 which directed the
The receiver shall immediately gather and take charge of all the
PDIC to proceed with the liquidation of EIB.
assets and liabilities of the institution, administer the same for
The Court's Ruling the benefit of its creditors, and exercise the general powers of a
receiver under the Revised Rules of Court x x x[.]
The petition is without merit. Section 30 of RA 7653 provides
for the proceedings in the receivership and liquidation of banks If the receiver determines that the institution cannot be
and quasi-banks, the pertinent portions of which read: rehabilitated or permitted to resume business in accordance with
the next preceding paragraph, the Monetary Board shall notify
Section 30. Proceedings in Receivership and Liquidation. -
in writing the board of directors of its findings and direct the
Whenever, upon report of the head of the supervising or
receiver to proceed with the liquidation of the institution. The
examining department, the Monetary Board finds that a bank or
receiver shall:
quasi-bank:
xxxx
(a) is unable to pay its liabilities as they become due in the
ordinary course of business: Provided, That this shall not The actions of the Monetary Board taken under this section or
include inability to pay caused by extraordinary demands under Section 29 of this Act shall be final and executory, and
induced by financial panic in the banking community; may not be restrained or set aside by the court except on petition
for certiorari on the ground that the action taken was in excess
(b) has insufficient realizable assets, as determined by
of jurisdiction or with such grave abuse of discretion as to
the Bangko Sentral, to meet its liabilities; or
amount to lack or excess of jurisdiction. The petition
(c) cannot continue in business without involving probable for certiorari may only be filed by the stockholders of record
losses to its depositors or creditors; or representing the majority of the capital stock within ten (10)
days from receipt by the board of directors of the institution of
(d) has willfully violated a cease and desist order under Section the order directing receivership, liquidation or conservatorship.
37 that has become final, involving acts or transactions which
amount to fraud or a dissipation of the assets of the institution; The designation of a conservator under Section 29 of this Act or
in which cases, the Monetary Board may summarily and without the appointment of a receiver under this section shall be vested
need for prior hearing forbid the institution from doing business exclusively with the Monetary Board.1âwphi1 Furthermore, the
designation of a conservator is not a precondition to the conducted, and that the following conditions would be
designation of a receiver. (Emphases and underscoring supplied) met: (a) there are qualified interested banks that will comply
with the parameters for rehabilitation of a closed bank, capital
It is settled that "[t]he power and authority of the Monetary
strengthening, liquidity, sustainability and viability of
Board to close banks and liquidate them thereafter when public
operations, and strengthening of bank governance; and (b) all
interest so requires is an exercise of the police power of the State.
parties (including creditors and stockholders) agree to the
Police power, however, is subject to judicial inquiry. It may not
rehabilitation and the revised payment terms and conditions of
be exercised arbitrarily or unreasonably and could be set aside if
outstanding liabilities.28 However, the foregoing conditions for
it is either capricious, discriminatory, whimsical, arbitrary,
EIB 's rehabilitation "were not met because the bidding and re-
unjust, or is tantamount to a denial of due process and equal
bidding for the bank's rehabilitation were aborted since none of
protection clauses of the Constitution."26 Otherwise stated and
the pre-qualified Strategic Third Party Investors (STPI)
as culled from the above provision, the actions of the Monetary
submitted a letter of interest to participate in the
Board shall be final and executory and may not be restrained or
bidding,"29 thereby resulting in the PDIC's finding that EIB is
set aside by the court except on petition for certiorari on the
already insolvent and must already be liquidated - a finding
ground that the action taken was in excess of jurisdiction or with
which eventually resulted in the Monetary Board's issuance of
such grave abuse of discretion as to amount to lack or excess of
Resolution No. 571.
jurisdiction. "There is grave abuse of discretion when there is an
evasion of a positive duty or a virtual refusal to perform a duty In an attempt to forestall EIB's liquidation, petitioners insist that
enjoined by law or to act in contemplation of law as when the the Monetary Board must first make its own independent finding
judgment rendered is not based on law and evidence but on that the bank could no longer be rehabilitated - instead of merely
caprice, whim and despotism."27 relying on the findings of the PDIC - before ordering the
liquidation of a bank.30
In line with the foregoing considerations, the Court agrees with
the CA that the Monetary Board did not gravely abuse its Such position is untenable.
discretion in ordering the liquidation of EIB through its
As correctly held by the CA, nothing in Section 30 of RA 7653
Resolution No. 571.
requires the BSP, through the Monetary Board, to make an·
To recount, after the Monetary Board issued Resolution No. 686 independent determination of whether a bank may still be
which placed EIB under the receivership of PDIC, the latter rehabilitated or not. As expressly stated in the afore-cited
submitted its initial findings to the Monetary Board, stating that provision, once the receiver determines that rehabilitation is no
EIB can be rehabilitated or permitted to resume longer feasible, the Monetary Board is simply obligated
business; provided, that a bidding for its rehabilitation would be
to: (a) notify in writing the bank's board of directors of the same; by the factual circumstances at hand and made in accordance
and (b) direct the PDIC to proceed with liquidation, viz.: with prevailing law and jurisprudence. To note, the "actions of
the Monetary Board in proceedings on insolvency are explicitly
If the receiver determines that the institution cannot be
declared by law to be 'final and executory.' They may not be set
rehabilitated or permitted to resume business in accordance with
aside, or restrained, or enjoined by the courts, except upon
the next preceding paragraph, the Monetary Board shall notify
'convincing proof that the action is plainly arbitrary and made in
in writing the board of directors of its findings and direct the
bad faith,"[['34]] which is absent in this case.
receiver to proceed with the liquidation of the institution. x x x.
WHEREFORE, the petition is hereby DENIED. The Decision
x x x x31
dated January 21, 2014 and the Resolution dated October 10,
Suffice it to say that if the law had indeed intended that the 2014 of the Court of Appeals in CA-G.R. SP No. 129674 are
Monetary Board make a separate and distinct factual hereby AFFIRMED.
determination before it can order the liquidation of a bank or
SO ORDERED.
quasi-bank, then there should have been a provision to that
effect. There being none, it can safely be concluded that the
Monetary Board is not so required when the PDIC has already
made such determination. It must be stressed that the BSP (the
umbrella agency of the Monetary Board), in its capacity as
government regulator of banks, and the PDIC, as statutory
receiver of banks under RA 7653, are the principal agencies
mandated by law to determine the financial viability of banks
and quasi-banks, and facilitate the receivership and liquidation
of closed financial institutions, upon a factual determination of
the latter's insolvency.32 Thus, following the maxim verba legis
non est recedendum - which means "from the words of a statute
there should be no departure" - a statute that is clear, plain, and
free from ambiguity must be given its literal meaning and
applied without any attempted interpretation,33 as in this case.
In sum, the Monetary Board's issuance of Resolution No. 571
ordering the liquidation of EIB cannot be considered to be
tainted with grave abuse of discretion as it was amply supported
FIRST DIVISION CORPORATION), MOLUGAN FOUNDATION,
ASSEMBLY OF GRACIOUS SAMARITANS
April 17, 2017
FOUNDATION, INC., ONE ACCORD CHRISTIAN
G.R. No. 186717 COMMUNITY ENDEAVOR FOR SALVATION &
SUCCESS THROUGH POVERTY ALLEVIATION, INC.,
REPUBLIC OF THE PHILIPPINES, represented by the SOCIETY'S MULTI-PURPOSE FOUNDATION, INC.,
ANTI-MONEY LAUNDERING COUNCIL, Petitioners
ALLIANCE FOR THE CONSERVATION OF
vs.
ENVIRONMENT OF PANGASINAN, INC., AND STA.
JOCELYN I. BOLANTE, OWEN VINCENT D. LUCIA EDUCATIONAL ASSOCIATION OF BULACAN,
BOLANTE, MA. CAROL D. BOLANTE, ALEJO INC., Respondents.
LAMERA, CARMEN LAMERA, EDNA CONSTANTINO,
ARIEL C. PANGANIBAN, KATHERINE G. BOMBEO, DECISION
SAMUEL S. BOMBEO, MOLUGAN FOUNDATION,
SERENO, J.:
SAMUEL G. BOMBEO, JR., and NATIONAL
LIVELIHOOD DEVELOPMENT CORPORATION G.R. No. 186717 is a petition for review on certiorari under
(Formerly Livelihood Corporation), Respondents Rule 45 of the Rules of Court, with an urgent prayer for the
issuance of a temporary restraining order and/or writ of
x-----------------------x
preliminary injunction.1âwphi1 The petition seeks to nullify the
G.R. No. 190357 Court of Appeals (CA) Resolution 1 in CA-G.R. AMLC No.
00024. The CA Resolution denied petitioner's application to
REPUBLIC OF THE PHILIPPINES, represented by the extend the freeze order issued on 4 Fehruary 20092 over the bank
ANTI-MONEY LAUNDERING COUNCIL, Petitioner, deposits and investments of respondents.
vs.
HON. WINLOVE M. DUMAYAS, Presiding Judge of G.R. No. 190357 is a petition for certiorari under Rule 65 of the
Branch 59, Regional Trial Court in Makati City, JOCELYN Rules of Court challenging the Resolution 3 and the
I. BOLANTE, ARIEL C. PANGANIBAN, DONNIE RAY G. Order4 issued by the Regional Trial Court of Makati, Branch 59
PANGANIBAN, EARL WALTER G. PANGANIBAN, (RTC), in AMLC Case No. 07-001. The RTC Resolution denied
DARRYL G. PANGANIBAN, GAVINA G. PANGANIBAN, petitioner's application for an order allowing an inquiry into the
JAYPEE G. PANGANIBAN, SAMUEL S. BOMBEO, KA bank deposits and investments of respondents. The R TC Order
THERINE G. BOMBEO, SAMUEL G. BOMBEO, JR., denied petitioner's motion for reconsideration.
NATIONAL LIVELIHOOD DEVELOPMENT
FACTS
CORPORATION (FORMERLY LIVELIHOOD
In April 2005, the Philippine National Bank (PNB) submitted to Ani Program. This amount was used to purchase liquid fertilizers
the Anti-Money Laundering Council (AMLC) a series of from Freshan Philippines, Inc., which were then distributed to
suspicious transaction reports involving the accounts of local government units and congressional districts beginning
Livelihood Corporation (LIVECOR), Molugan Foundation January 2004. Based on the Audit Report prepared by the
(Molugan), and Assembly of Gracious Samaritans, Inc. Commission on Audit (COA), 15 the use of the funds was
characterized by massive irregularities, overpricing, violations
(AGS).5 According to the reports, LIVECOR transferred to
of the procurement law and wanton wastage of scarce
Molugan a total amount of' ₱172.6 million in a span of 15
government resources.
months from 2004 to 2005.6 On 30 April 2004, LIVECOR
transferred ₱40 million to AGS, which received another P38 Committee Report No. 54 also stated that at the time that he
million from Molugan on the same day. 7 Curiously, AGS served as Undersecretary of Agriculture, Bolante was also
returned the P38 million to Molugan also on the same day.8 appointed by President Gloria Macapagal Arroyo as acting
Chairman of LIVECOR.
The transactions were reported '"suspicious" because they had
no underlying legal or trade obligation, purpose or economic The AMLC issued Resolution No. 75 16 finding probable cause
justification; nor were they commensurate to the business or to believe that the accounts of LIVECOR, Molugan and AGS -
financial capacity of Molugan and AGS, which were both lowly the subjects of the suspicious transaction reports submitted by
capitalized at P50,000 each.9 In the case of Molugan, Samuel S. PNB - were related to what became known as the "fertilizer fund
Bombeo, who holds the position of president, secretary and scam." The pertinent portion of Resolution No. 75 provides:
treasurer, is the lone signatory to the account. 10 In the case of
Under the foregoing circumstances, there is probable cause to
AGS, Samuel S. Bombeo shares this responsibility with Ariel
believe that the accounts of the foundations and its officers are
Panganiban. 11
related to the fertilizer fund scam. The release of the amount of
On 7 March 2006, the Senate furnished the AMLC a copy of its ₱728 million for the purchase of farm inputs to the Department
Committee Report No. 54 12 prepared by the Committee on of Agriculture was made by Undersecretary Bolante.
Agriculture and Food and the Committee on Accountability of Undersecretary Bolante was the Acting Chairman of LIVECOR.
Public Officers and Investigations. 13 LIVECOR transferred huge amounts of money to Molugan and
AGS, while the latter foundations transferred money to each
Committee Report No. 54 14 narrated that former
other. Mr. [Samuel S.] Bombeo was the President, Secretary,
Undersecretary of Agriculture Jocelyn I. Bolante (Bolante)
and Treasurer of Molugan. He, therefore, played a key role in
requested the Department of Budget and Management to release
these transactions. On the other hand, Mr. [Ariel] Panganiban
to the Department of Agriculture the amount of ₱728 million for
the purchase of farm inputs under the Ginintuang Masaganang
was the signatory to the account or AGS. Without his therefore authorized the filing of a petition for the issuance of an
participation, these transactions could not have been possible. order allowing an inquiry into these 70 accounts.23
The acts involved in the "fertilizer scam" may constitute On 14 February 2008, this Court promulgated Republic v.
violation of Section 3(e) of Republic Act No. 3019, x x x as well Eugenio.24 We ruled that when the legislature crafted Section
as violation or Republic Act No. 7080 (Plunder). 17 11 25 of R.A. 9160 (Anti Money Laundering Act of 2001), as
amended, it did not intend to authorize ex parte proceedings for
Thus, the AMLC authorized the filing of a petition for the
the issuance of a bank inquiry order by the CA. Thus, a bank
issuance of an order allowing an inquiry into the six accounts 18
inquiry order cannot be issued unless notice is given to the
of LIVECOR, Molugan, AGS, Samuel S. Bombeo and Ariel
account holders.26 That notice would allow them the opportunity
Panganiban. The AMLC also required all covered institutions to
to contest the issuance of the order.
submit reports of covered transactions and/or suspicious
transactions of these entities and individuals, including all the In view of this development, the AMLC issued Resolution No.
related web of accounts. 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
The petition was filed ex parte before the R TC and docketed as
fertilizer fund scam.
AMLC SP Case No. 06-003. On 17 November 2006, the trial
court found probable cause and issued the Order prayed for. 19 It Hence, the Republic filed an Ex Parte Petition28 docketed as
allowed the AMLC to inquire into and examine the six bank CA-G.R. AMLC No. 00014 before the CA, seeking the issuance
deposits or investments and the related web of accounts. of a freeze order against the 70 accounts.
Meanwhile, based on the investigation of the Compliance and The CA issued a freeze order effective for 20 days.29 The freeze
Investigation Group of the AMLC Secretariat, a total of 70 bank order required the covered institutions of the 70 accounts to
accounts or investments were found to be part of the related web desist from and not allow any transaction involving the
of accounts involved in the fertilizer fund scam.20 identified monetary instruments. It also asked the covered
institutions to submit a detailed written return to the CA within
Accordingly, the AMLC issued Resolution No. 9021 finding
24 hours from receipt of the freeze order.
probable cause to believe that these 70 accounts were related to
the fertilizer fund scam. It said that the scam may constitute The CA conducted a summary hearing of the application, 30 after
violations of Section 3(e)22 of Republic Act No. (R.A.) 3019 which the parties were ordered to submit their memoranda,
(Anti-Graft and Corrupt Practices Act) and R.A. 7080 (An Act manifestations and comments/oppositions. 31 The freeze order
Defining and Penalizing the Crime of Plunder). The AMLC was later extended for a period of 30 days until 19 August
2008. 32
Finding that there existed probable cause that the funds On the belief that the finality of Eugenio constituted a
transferred to and juggled by LIVECOR, Molugan, and AGS supervening event that might justify the filing of another petition
formed pati of the ₱728 million fertilizer fund, the CA extended for a freeze order, the AMLC issued Resolution No. 5.40 The
the effectivity of the freeze order for another four months, or resolution authorized the filing of a new petition for the issuance
until 20 December 2008. 33 The extension covered only 31 of a freeze order against 24 41 of the 31 accounts previously
accounts, 34 which showed an existing balance based on the frozen by the CA.
returns of the covered institutions.
Hence, the Republic filed an Urgent Ex Parte Petition42 docketed
In the meantime, the Republic filed an Ex as CA-G.R. AMLC No. 00024 before the CA seeking the
35
Parte Application docketed as AMLC Case No. 07-001 issuance of a freeze order against the 24 accounts.
before the RTC. Drawing on the authority provided by the
In the Resolution dated 4 February 2009,43 the CA issued a
AMLC through Resolution No. 90, the ex parte application
freeze order effective for 20 days. The freeze order required the
sought the issuance of an order allowing an inquiry into the 70
covered institutions of the 24 accounts to desist from and not
accounts.
allow any transaction involving the identified monetary
The RTC found probable cause and issued the Order prayed instruments. It also asked the covered institutions to submit a
for. 36 It allowed the AMLC to inquire into and examine the 70 detailed written return to the CA within 24 hours from receipt of
bank deposits or investments and the related web of accounts. the freeze order.
On 20 October 2008, this Court denied with finality the motion A summary hearing was conducted by the CA for the purpose of
for reconsideration filed by the Republic in Eugenio. 37 The determining whether to modify, lift or extend the freeze
Court reiterated that Section 11 38 of R.A. 9160, as then worded, order. 44 Thereafter, the parties were required to submit
did not allow a bank inquiry order to be issued ex parte; and that memoranda.
the concerns of the Republic about the consequences of this
THE CHALLENGED RESOLUTIONS
ruling could be more properly lodged in the legislature.
The assailed CA Resolution dated 27 February 200945 denied the
Thus, in order to comply with the ruling in Eugenio, the
application to extend the freeze order issued on 4 February 2009.
Republic filed an Amended and Supplemental Application 39 in
AMLC Case No. 07- 001 before the RTC. The Republic sought, The CA found that the Republic had committed forum
after notice to the account holders, the issuance of an order shopping.46 Specifically, the appellate court found that the
allowing an inquiry into the original 70 accounts plus the six parties in CA-G.R. AMLC No. 00024 were the same as those in
bank accounts that were the subject of AMLC SP Case No. 06- CA-G.R. AMLC No. 00014. The petition in CA-G.R. AMLC
003. A summary hearing thereon ensued. No. 00024 sought the issuance of a freeze order against the same
accounts covered by CA-G.R. AMLC No. 00014. Finally, the On 25 March 2009, this Court issued a Status Quo
rights asserted and reliefs prayed for in both petitions were Ante Order50 enjoining the implementation of the assailed CA
substantially founded on the same facts, thereby raising identical Resolution.
causes of action and issues.
At the time of the submission of respondents' Comment 51 and
The CA found no merit in the assertion of the Republic that the petitioner's Consolidated Reply52 in G.R. No. 186717, the RTC
ruling in Eugenio was a supervening event that prevented the issued the challenged Resolution dated 3 July 200953 in AMLC
latter from concluding its financial investigation into the Case No. 07-001. The trial court denied the Republic's
accounts covered by the freeze order in CA-G.R. AMLC No. application for an order allowing an inquiry into the total of 76
00014.47 The CA noted that Eugenio was promulgated on 14 bank deposits and investments of respondents.
February 2008, or almost five months before the Republic filed
The RTC found no probable cause to believe that the deposits
CA-G.R. AMLC No. 00014 before the CA and AMLC Case No.
and investments of respondents were related to an unlawful
07-001 before the RTC. According to the appellate court, since
activity. 54 It pointed out that the Republic, in support of the
the Republic was faced with the imminent finality of Eugenio, it
latter's application, relied merely on two pieces of evidence:
should have taken steps to expedite the conduct of the inquiry
Senate Committee Report No. 54 and the court testimony of
and the examination of the bank deposits or investments and the
witness Thelma Espina of the AMLC Secretariat. According to
related web of accounts.
the RTC, Senate Committee Report No. 54 cannot be taken
At any rate, the CA found that the petition in CA-G.R. AMLC "hook, line and sinker, "55 because the Senate only conducts
No. 00024 was effectively a prayer for the further extension of inquiries in aid of legislation.
the 5-month, 20- day freeze order already issued in CA-G.R.
Citing Neri v. Senate Committee on Accountability of Public
AMLC No. 00014.48 The extension sought is proscribed under
Officers and Investigations, 56 the trial court pronounced that the
Section 53 of Administrative Circular No. 05-11-04-
Senate cannot assume the power reposed in prosecutorial bodies
SC.49 According to this provision, the effectivity of a freeze
and the courts - the power to determine who are liable for a crime
order may be extended for good cause shown for a period not
or an illegal activity. 57 On the other hand, the trial court noted
exceeding six months.
that the testimony of the witness merely relied on Senate
Aggrieved, the Republic filed the instant petition for review Committee Report No. 54. The latter "admitted that the AMLC
on certiorari with an urgent prayer for the issuance of a did not bother to confirm the veracity of the statements
temporary restraining order and/or writ of preliminary contained therein." 58
injunction docketed as G.R. No. 186717.
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 In their compliance dated 14 March 2012,66 the AMLC and the
channeled or released to LIVECOR, Molugan or AGS.59 The Ombudsman manifested that the plunder case filed in connection
trial court also took note of the evidence presented by Bolante with the fertilizer fund scam included Bolante, but not the other
that he had ceased to be a member of the board of trustees of persons and entities whose bank accounts are now the subject of
LIVECOR on 1 February 2003, or more than 14 months before the instant petitions. That plunder case was docketed as SB-l 1-
the transfers were made by LIVECOR to Molugan as indicated CRM-0260 before the Second Division of the Sandiganbayan.
in the suspicious transaction reports submitted by
ISSUES
PNB.60 Furthermore, the RTC found that the transfers made by
LIVECOR to Molugan and AGS came from the P60 million The following are the issues for our resolution:
Priority Development Assistance Fund of Senator Joker
Arroyo.61 1. Whether the Republic committed forum shopping in filing
CA-G.R. AMLC No. 00024 before the CA
The Republic moved for reconsideration, but the motion was
denied by the RTC in the challenged Order dated 13 November 2. Whether the RTC committed grave abuse of discretion in
2009. 62 ruling that there exists no probable cause to ailow an inquiry into
the total of 76 deposits and investments of respondents
Hence, the Republic filed the instant petition
for certiorari docketed as G.R. No. 190357. OUR RULING

The Court resolved to consolidate G.R. No. 190357 with G.R. I.


No. 186717, considering that the issues raised in the petitions The Republic committed forum shopping.
were closely intertwined and related.63 On 6 December 2010,
these petitions were given due course, and all parties were As we ruled in Chua v. Metropolitan Bank and Trust
required to submit memoranda.64 Co., 67 forum shopping is committed in three ways: (1) filing
multiple cases based on the same cause of action and with the
Amid reports that the Office of the Ombudsman (Ombudsman) same prayer, where the previous case has not yet been resolved
had filed plunder cases against those involved in the fertilizer (the ground for dismissal is litis pendentia); (2) filing multiple
fund scam, the Court issued the Resolution dated 16 November cases based on the same cause of action and with the same
2011.65 We required the AMLC and the Ombudsman to move in prayer, where the previous case has finally been resolved (the
the premises and jointly manifest whether the accounts, subject ground for dismissal is res judicata); and (3) filing multiple
of the instant petitions, were in any way related to the plunder cases based on the same cause of action, but with different
cases already filed. 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 parties, or those that represent the same interests in both actions;
discussing why it did not commit forum shopping on the ground (2) identity of rights asserted and relief sought, with the relief
of litis pendentia. In its Memorandum, it argued: founded on the same facts; and (3) identity of the two preceding
particulars, such that any judgment rendered in one proceeding
While it is true that a previous freeze order was issued in CA-
will, regardless of which party is successful, amount to res
G.R. AMLC No. 00014 covering some of the accounts subject
judicata in the other. The CA only discussed how these elements
of CA-G.R. AMLC No. 00024, CA-G.R. AAILC No. 00014 had
were present in CA-G.R. AMLC No. 00024 and CA-G.R.
already attained finality when the second petition was filed,
AMLC No. 00014 in relation to each other. Nowhere did the CA
neither petitioner nor any of the respondents interposed an
make any categorical pronouncement that the Republic had
appeal therefrom, pursuant to Section 57 of the Rule of
committed forum shopping on the ground of litis pendentia.
Procedure in Cases of Civil F01feiture, etc .. The principle of lit
is pendentia presupposes the pendency of at least one case when With this clarification, we discuss how all the elements of litis
a second case is filed. Such situation does not exist in the present pendentia are present in the two petitions for the issuance of a
controversy since CA-G.R. AMLC No. 00014 was no longer freeze order.
pending but has attained finality when the second petition was
First, there is identity of parties. In both petitions, the Republic
filed. 68
is the petitioner seeking the issuance of a freeze order against the
In a clear illustration of the phrase, out of the frying pan and into bank deposits and investments. The 24 accounts sought to be
the fire, the Republic vigorously resisted the application of frozen in CA-G.R. AMLC No. 00024 were part of the 31
forum shopping on the ground of litis pendentia, only to accounts previously frozen in CA-G.R. AMLC No. 00014,72 and
unwittingly admit that it had possibly committed forum the holders of these accounts were once again named as
shopping on the ground of res judicata. respondents.
We are not even sure where the Republic got the notion that the Second, there is an identity of rights asserted and relief sought
CA found "that the filing of the second petition for freeze order based on the same facts. The AMLC filed both petitions in
constitutes forum shopping on the ground of litis pursuance of its function to investigate suspicious transactions,
pendentia."69 In its assailed Resolution, the appellate court aptly money laundering activities, and other violations of R.A. 9160
cited Quinsay v. CA,70 stating that "forum shopping concurs not as amended. 73 The law also granted the AMLC the authority to
only when a final judgment in one case will amount to res make an ex parte application before the CA for the freezing of
judicata in another, but also where the elements of litis any monetary instrument or property alleged to be the proceeds
pendentia are present."71 It then went on to enumerate the of any unlawful activity, as defined in Section 3(i) thereof.74
aforecited elements of litis pendentia, namely: (I) identity of
Both petitions sought the issuance of a freeze order against bank by the appellate court, which made a determination of the rights
deposits and investments believed to be related to the fertilizer and obligations of the parties with respect to the causes of action
fund scam. Notably, while the petition in CA-G.R. AMLC No. and the subject matter. 81 The determination was based on the
00014 narrated the facts smTounding the issuance of AMLC pleadings and evidence presented by the parties during the
Resolution Nos. 75 and 40,75 the petition in CA-G.R. AMLC No. summary hearing and their respective memoranda. Finally, there
00024 used as its foundation the previous grant of the freeze was - between CAG. R. AMLC No. 00014 and CA-G.R. AMLC
order in CA-G.R. AMLC No. 00014 and the extensions of its No. 00024 - identity of parties, subject matter and causes of
effectivity.76 Nevertheless, both petitions highlighted the role of action.
Senate Committee Report No. 54 in providing AMLC with the
The Republic's commission of forum shopping is further
alleged link between the fertilizer fund scam and the bank
illustrated by its awareness that the effectivity of the freeze order
deposits and investments sought to be frozen. 77
in CA-G.R. AMLC No. 00014 had already been extended to 5
Third, the judgment in CA-G.R. AMLC No. 00014 barred the months and 20 days. Under
proceedings in CA-G.R. AMLC No. 00024 by resjudicata.
Section 5382 of A.M. No. 05-11-04-SC,83 the original 20-day
Res judicata is defined as a matter adjudged, a thing judicially effectivity period of a freeze order may only be extended by the
acted upon or decided, or a thing or matter settled by CA for good cause for a period not exceeding six months.
judgment. 78 It operates as a bar to subsequent proceedings by Because of this predicament, the Republic sought to avoid
prior judgment when the following requisites concur: (1) the seeking a further extension that is clearly prohibited by the rules
former judgment is final; (2) it is rendered by a court having by allowing the extended freeze order in CA-G.R. AMLC No.
jurisdiction over the subject matter and the parties; (3) it is a 00014 to lapse on 20 December 2008. Instead, it filed the
judgment or an order on the merits; and (4) there is - between petition in CA-G.R. AMLC No. 00024 alluding to the exact
the first and the second actions - identity of parties, subject same facts and arguments but citing a special factual
matter, and causes of action. 79 circumstance that allegedly distinguished it from CA-G.R.
AMLC No. 00014.
Clearly, the resolution in CA-G.R. AMLC No. 00014 extending
the effectivity of the freeze order until 20 December 2008 The Republic argued that CA-G.R. AMLC No. 00024 was filed
attained finality upon the failure of the parties to assail it within at the advent of Eugenio. The ruling was a supervening event
15 days from notice. The that prevented the Republic from concluding its exhaustive
financial investigation within the auspices of the bank inquiry
Resolution was rendered by the CA, which had jurisdiction over
order granted by the RTC in AMLC Case No. 07-001 and the
applications for the issuance of a freeze order under Section
freeze order granted by the CA in CA-G.R. AMLC No. 00014.84
1080 of R.A. 9160 as amended. It was a judgment on the merits
We find no merit in this argument. The promulgation account holder will alert the latter that there is a plan to inspect
of Eugenio was not a supervening event under the his bank account on the belief that the funds therein are involved
circumstances. "Supervening events refer to facts which in an unlawful activity or money laundering offense."86 Alarmed
transpire after judgment has become final and executory or to by the implications of this ruling, the AMLC changed tack and
new circumstances which developed after the judgment has decided to pursue the only other remedy within its power to
acquired finality, including matters which the parties were not obtain ex parte at the time. Hence, it issued Resolution No. 40
aware of prior to or during the trial as they were not yet in authorizing the filing of CA-G.R. AMLC No. 00014 for the
existence at that time."85 issuance of a freeze order to preserve the 70 bank deposits and
investments and prevent the account holders from withdrawing
As aptly pointed out by the appellate court, Eugenio was
them. The pertinent portion of AMLC Resolution No. 40
promulgated five months before the filing of the petition in CA-
provides:
G .R. AMLC No. 00014.
In the Resolution No. 90, dated October 26, 2007, the Council
Indeed the Decision therein only attained finality upon the denial
found probable cause that the accounts of the subject individuals
of the motion for reconsideration on 20 October 2008, or before
and entities are related to the fertilizer fund scam and resolved
the filing of the petition in CA-G.R. AMLC No. 0002. The
to authorize the tiling of a petition for the issuance of a freeze
ruling, however, cannot be regarded as a matter that the parties
order allowing inquiry into the following accounts:
were not aware of prior to or during the trial of CA-G.R. AMLC
No. 00014. xxxx
In fact, it was because of Eugenio that CA-G.R. AMLC No. However, in Republic vs. Eugenio (G.R. No. 174629, February
00014 was filed in the first place. 14, 2008), the Supreme Court ruled that proceedings in
applications for issuance of an order allowing inquiry should be
We have not painstakingly narrated all the relevant facts of these
conducted after due notice to the respondents/account holders.
cases for nothing. It should be noted that before the ruling
in Eugenio, the AMLC commenced its investigations into the In the light of the aforesaid ruling of the Supreme Court, the
fertilizer fund scam by filing petitions for bank inquiry orders. Council resolved to:
Thus, it issued Resolutions No. 75 and 90, both authorizing the
1. Authorize the AMLC Secretariat to file with the Court of
filing of petitions for the issuance of orders allowing an inquiry
Appeals, through the Office of the Solicitor General, a petition
into the pertinent bank deposits and investments.
for freeze order against the following bank accounts and all
According to the Court in Eugenio, "a requirement that the related web of accounts wherever these may be found: 87
application for a bank inquiry order be done with notice to the
Notably, it was only after the freeze order had been issued that The Court of Appeals shall act on the application to inquire in lo
AMLC Case No. 07-001 was filed before the RTC to obtain a or examine any depositor or investment with any banking
bank inquiry order covering the same 70 accounts. institution or nonbank financial institution within twenty-four
(24) hours from filing of the application.
Presently, while Eugenio still provides much needed guidance
in the resolution of issues relating to the freeze and bank inquiry To ensure compliance with this Act, the Bangko Sentral ng
orders, the Decision in that case no longer applies insofar as it Pilipinas may, in the course of a periodic or special examination,
requires that notice be given to the account holders before a bank check the compliance of a Covered institution with the
inquiry order may be issued. Upon the enactment of R.A. 10167 requirements of the AMLA and its implementing rules and
on 18 June 2012, Section 11 of R.A. 9160 was further amended regulations.
to allow the AMLC to file an ex parte application for an order
For purposes of this section, related accounts' shall refer to
allowing an inquiry into bank deposits and investments. Section
accounts, the funds and sources of which originated from and/or
11 of R.A. 9160 now reads:
are materially linked to the monetary instrument(s) or
Section 11. Authority to Inquire into Bank Deposits. - property(ies) subject of the freeze order(s).
Notwithstanding the provisions of Republic Act No. 1405, as
A court order ex parte must first be obtained before the AMLC
amended, Republic Act No. 6426, as amended, Republic Act
can inquire into these related Accounts: Provided, That the
No. 8791, and other laws, the AMLC may inquire into or
procedure for the ex parte application of the ex parte court order
examine any particular deposit or investment, including related
for the principal account shall be the same with that of the related
accounts, with any banking institution or non-bank financial
accounts.
institution upon order of any competent court based on an ex
parte application in cases of violations of this Act, when it has The authority to inquire into or examine the main account and
been established that there is probable cause that the deposits or the related accounts shall comply with the requirements of
investments, including related accounts involved, are related to Article III, Sections 2 and 3 of the 1987 Constitution, which are
an unlawful activity as defined in Section 3(i) hereof or a money hereby incorporated by reference. (Emphasis supplied)
laundering offense under Section 4 hereof; except that no court
order shall be required in cases involving activities defined in The constitutionality of Section 11 of R.A. 9160, as presently
Section 3(i)(1 ), (2 ), and (12) hereof and felonies or offenses of worded, was upheld by the Court En Banc in the recently
a nature similar to those mentioned in Section 3(i)(l ), (2), and promulgated Subido Pagente Certeza Mendoza and Binay Law
(12), which are Punishable under the penal laws of other Offices v. CA. 88 The Court therein ruled that the AMLC's ex
countries, and terrorism and conspiracy to commit terrorism as parte application for a bank inquiry, which is allowed under
defined and penalized under Republic Act No. 9372. Section 11 of R.A. 9160, does not violate substantive due
process. There is no such violation, because the physical seizure Rule 10.2 of the Revised Rules and Regulations Implementing
of the targeted corporeal property is not contemplated in any Republic Act No. 9160, as Amended by Republic Act No. 9194,
form by the law.89 The AMLC may indeed be authorized to defined probable cause as "such facts and circumstances which
apply ex parte for an inquiry into bank accounts, but only in would lead a reasonably discreet, prudent or cautious man to
pursuance of its investigative functions akin to those of the believe that an unlawful activity and/or a money laundering
National Bureau of Investigation.90 As the AMLC does not offense is about to be, is being or has been committed and that
exercise quasi-judicial functions, its inquiry by court order into the account or any monetary instrument or property subject
bank deposits or investments cannot be said to violate any thereof sought to be frozen is in any way related to said unlawful
person's constitutional right to procedural due process.91 activity and/or money laundering offense." As we observed
in Subido,96 this definition refers to probable cause for the
As regards the purported violation of the right to privacy, the
issuance of a freeze order against an account or any monetary
Court recalled the pronouncement in Eugenio that the source of
instrument or property subject thereof. Nevertheless, we shall
the right to privacy governing bank deposits is statutory, not
likewise be guided by the pronouncement in Ligot v.
constitutional.92 The legislature may validly carve out
Republic97 that "probable cause refers to the sufficiency of the
exceptions to the rule on the secrecy of bank deposits, and one
relation between an unlawful activity and the property or
such legislation is Section 11 of R.A. 9160.93
monetary instrument."
The Comi in Subido emphasized that the holder of a bank
In the issuance of a bank inquiry order, the power to determine
account that is the subject of a bank inquiry order issued ex
the existence of probable cause is lodged in the trial court. As
parte has the opportunity to question the issuance of such an
we ruled in Eugenio:
order after a freeze order has been issued against the
account. 94 The account holder can then question not only the Section 11 itself requires that it be established that "there is
finding of probable cause for the issuance of the freeze order, probable cause that the deposits or investments are related to
but also the finding of probable cause for the issuance of the unlawful activities," and it obviously is the court which stands
bank inquiry order. 95 as arbiter whether there is indeed such probable cause. The
process of inquiring into the existence of probable cause would
II.
involve the function of determination reposed on the trial court.
The RTC's finding that there was no Determination clearly implies a function of adjudication on the
probable cause for the issuance of a part of the trial court, and not a mechanical application of a
bank inquiry order was not tainted standard predetermination by some other body. The word
with grave abuse of discretion. "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 Committee Report No. 54 and the testimony of witness Thelma
simply take the AMLC's word that probable cause exists that the Espina.
deposits or investments are related to an unlawful activity. It will
We have had occasion to rule that reports of the Senate stand on
have to exercise its own determinative function in order to be
the same level as other pieces of evidence submitted by the
convinced of such fact.98
parties, and that the facts and arguments presented therein
For the trial court to issue a bank inquiry order, it is necessary should undergo the same level of judicial scrutiny and analysis.
for the AMLC to be able to show specific facts and 101 As courts have the discretion to accept or reject them, 102
circumstances that provide a link between an unlawful activity no grave error can be ascribed to the RTC for rejecting and
or a money laundering offense, on the one hand, and the account refusing to give probative value to Senate Committee Report No.
or monetary instrument or property sought to be examined on 54.
the other hand. In this case, the R TC found the evidence
At any rate, Senate Committee Report No. 54 only provided the
presented by the AMLC wanting. For its part, the latter insists
AMLC with a description of the alleged unlawful activity, which
that the RTC's determination was tainted with grave abuse of
is the fertilizer fund scam. It also named the alleged mastermind
discretion for ignoring the glaring existence of probable cause
of the scam, who was respondent Bolante. The entire case of the
that the subject bank deposits and investments were related to an
AMLC, however, hinged on the following excerpt of Senate
unlawful activity.
Committee Report No. 54:
Grave abuse of discretion is present where power is exercised in
But Undersecretary Bolante's power over the agriculture
an arbitrary or despotic manner by reason of passion, prejudice
department was widely known. And it encompasses more than
or personal hostility, that is so patent and gross as to amount to
what the Administrative Code provided.
an evasion of a positive duty or to a virtual refusal to perform a
duty enjoined or to act at all in contemplation of In fact, at the time that he was Undersecretary, Jocelyn
law.99 For certiorari to lie, it must be shown that there was a Bolante was concurrently appointed by the President in other
capricious, arbitrary and whimsical exercise of power - the very powerful positions: as Acting Chairman of the National
antithesis of the judicial prerogative. 100 Irrigation Administration, as Acting Chairman of the
Livelihood Corporation x x x. 103 (Emphasis supplied)
We find no reason to conclude that the R TC determined the
existence of probable cause, or lack thereof, in an arbitrary and It was this excerpt that led the AMLC to connect the fertilizer
whimsical manner.1âwphi1 fund scam to the suspicious transaction reports earlier submitted
to it by PNB.
To repeat, the application for the issuance of a bank inquiry order
was supported by only two pieces of evidence: Senate
However, the R TC found during trial that respondent Bolante WHEREFORE, the petition in G.R. No. 186717 is DENIED.
had ceased to be a member of the board of trustees of LIVECOR The Court of Appeals Resolution dated 27 February 2009 in CA-
for 14 months before the latter even made the initial transaction, G.R. AMLC No. 00024 is AFFIRMED.
which was the subject of the suspicious transaction reports.
The petition in G.R. No. 190357 is DISMISSED. The
Furthermore, the RTC took note that according to the Audit
Resolution dated 3 July 2009 and Order dated 13 November
Report submitted by the Commission on Audit, no part of the
2009 issued by the Regional Trial Court of Makati, Branch 59,
P728 million fertilizer fund was ever released to LIVECOR.
in AMLC Case No. 07-001 are AFFIRMED.
We note that in the RTC Order dated 17 November 2006 in
The Status Quo Ante Order issued by this Court on 25 March
AMLC SP Case No. 06-003, the AMLC was already allowed ex
2009 is hereby LIFTED.
parte to inquire into and examine the six bank deposits or
investments and the related web of accounts of LIVECOR, SO ORDERED.
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 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.
EN BANC Ombudsman and the Senate conducted investigations2 and
inquiries3 thereon ostensibly based on their respective powers
G.R. No. 216914, December 06, 2016
delineated in the Constitution.
SUBIDO PAGENTE CERTEZA MENDOZA AND BINAY
From various news reports announcing the inquiry into then
LAW OFFICES, Petitioner, v. THE COURT OF
Vice President Binay's bank accounts, including accounts of
APPEALS, HON. ANDRES B. REYES, JR., IN HIS
members of his family, petitioner Subido Pagente Certeza
CAPACITY AS PRESIDING JUSTICE OF THE COURT
Mendoza & Binay Law Firm (SPCMB) was most concerned
OF APPEALS, AND THE ANTI-MONEY LAUNDERING
with the article published in the Manila Times on 25 February
COUNCIL, REPRESENTED BY ITS MEMBERS, HON.
2015 entitled "Inspect Binay Bank Accounts" which read, in
AMANDO M. TETANGCO, JR., GOVERNOR OF THE
pertinent part:
BANGKO SENTRAL NG PILIPINAS, HON. TERESITA
J. HERBOSA, CHAIRPERSON OF THE SECURITIES xxx The Anti-Money Laundering Council (AMLC) asked the
AND EXCHANGE COMMISSION, AND HON. Court of Appeals (CA) to allow the [C]ouncil to peek into the
EMMANUEL F. DOOC, INSURANCE COMMISSIONER bank accounts of the Binays, their corporations, and a law office
OF THE INSURANCE COMMISSION, Respondents. where a family member was once a partner.
DECISION xxxx
PEREZ, J.: Also the bank accounts of the law office linked to the family, the
Subido Pagente Certeza Mendoza & Binay Law Firm, where
Challenged in this petition for certiorari1 and prohibition under
the Vice President's daughter Abigail was a former partner.4
Rule 65 of the Rules of Court is the constitutionality of Section
11 of Republic Act (R.A.) No. 9160, the Anti-Money The following day, 26 February 2015, SPCMB wrote public
Laundering Act, as amended, specifically the Anti-Money respondent, Presiding Justice of the CA, Andres B. Reyes, Jr.:
Laundering Council's authority to file with the Court of Appeals
The law firm of Subido Pagente Certeza Mendoza and Binay
(CA) in this case, an ex-parte application for inquiry into certain
was surprised to receive a call from Manila Times requesting for
bank deposits and investments, including related accounts based
a comment regarding a [supposed petition] filed by the Republic
on probable cause.
of the Philippines represented by the Anti-Money Laundering
In 2015, a year before the 2016 presidential elections, reports Council before the Court of Appeals seeking to examine the law
abounded on the supposed disproportionate wealth of then Vice office's bank accounts.
President Jejomar Binay and the rest of his family, some of
whom were likewise elected public officers. The Office of the
To verify the said matter, the law office is authorizing its manner or by any means, the fact of the filing of any petition
associate Atty. Jose Julius R. Castro to inquire on the veracity of brought before this Court by the Anti-Money Laundering
said report with the Court of Appeals. He is likewise authorized Council, its contents and even its entry in the logbook.
to secure copies of the relevant documents of the case, such as
Trusting that you find satisfactory the foregoing explanation.6
the petition and orders issued, if such a case exists.
By 8 March 2015, the Manila Times published another article
As this is a matter demanding serious and immediate attention,
entitled, "CA orders probe of Binay's assets" reporting that the
the Firm respectfully manifests that if no written response is
appellate court had issued a Resolution granting the ex-
received within 24-hours from receipt of this letter, we shall be
parte application of the AMLC to examine the bank accounts of
at liberty to assume that such a case exists and we shall act
SPCMB:
accordingly.
The Court of Appeals (CA) has officially issued an order for
Hoping for your immediate action.
examination of Vice President Jejomar Binay's bank accounts.
Respectfully yours, In granting the petition of the Anti-Money Laundering Council
For the Firm (AMLC), the CA also ordered the inspection of the bank
deposits of Binay's wife, children, and a law office connected to
CLARO F. CERTEZA5
him.
Within twenty four (24) hours, Presiding Justice Reyes wrote xxx xxx xxx
SPCMB denying its request, thus:
The bank accounts of the law office linked to Binay - the Subido
Anent your request for a comment on a supposed petition to Pagente Certeza Mendoza & Binay where Binay's daughter,
inquire into your law office's bank accounts, please be informed Makati City (Metro Manila) Rep. Mar-len Abigail Binay was a
that a petition of this nature is strictly confidential in that when partner, are also included in the probe, the sources said.7
processing the same, not even the handling staff members of the
Forestalled in the CA thus alleging that it had no ordinary, plain,
Office of the Presiding Justice know or have any knowledge who
speedy, and adequate remedy to protect its rights and interests in
the subject bank account holders are, as well as the bank
the purported ongoing unconstitutional examination of its bank
accounts involved.
accounts by public respondent Anti-Money Laundering Council
Please be informed further that clearly under the rules, the Office (AMLC), SPCMB undertook direct resort to this Court via this
of the Presiding Justice is strictly mandated not to disclose, petition for certiorari and prohibition on the following grounds:
divulge, or communicate to anyone directly or indirectly, in any
A. THE ANTI-MONEY LAUNDERING ACT IS
APPEALS IN RELATION THERETO VIOLATES
UNCONSTITUTIONAL INSOFAR AS IT ALLOWS
PETITIONER'S RIGHT TO DUE PROCESS;
THE EXAMINATION OF A BANK ACCOUNT
WITHOUT ANY NOTICE TO THE AFFECTED
PARTY:cralawlawlibrary

IT VIOLATES THE PERSON'S RIGHT TO DUE 2. A CARTE BLANCHE AUTHORITY TO EXAMINE


1.
PROCESS; AND ANY AND ALL TRANSACTIONS PERTAINING TO
PETITIONER'S BANK ACCOUNTS VIOLATES THE
ATTORNEY-CLIENT PRIVILEGE WHICH IS
SACROSANCT IN THE LEGAL PROFESSION;
2. IT VIOLATES THE PERSON'S RIGHT TO PRIVACY.

B. EVEN ASSUMING ARGUENDO THAT THE ANTI-


MONEY LAUNDERING ACT IS 3. A BLANKET AUTHORITY TO EXAMINE
CONSTITUTIONAL, THE RESPONDENTS PETITIONER'S BANK ACCOUNTS, INCLUDING
COMMITTED GRAVE ABUSE OF DISCRETION ANY AND ALL TRANSACTIONS THEREIN FROM
AMOUNTING TO LACK OR EXCESS OF ITS OPENING UP TO THE PRESENT, PARTAKES
JURISDICTION CONSIDERING THE NATURE OF A GENERAL WARRANT THAT
THAT:cralawlawlibrary IS CLEARLY INTENDED TO AID A MERE FISHING
EXPEDITION;
1. THE REFUSAL OF RESPONDENT PRESIDING
JUSTICE TO PROVIDE PETITIONER WITH A COPY
OF THE EX-PARTE APPLICATION FOR BANK
EXAMINATION FILED BY RESPONDENT AMLC
4. THERE IS NOTHING IN THE ANTI-MONEY
AND ALL OTHER PLEADINGS, MOTIONS,
LAUNDERING ACT THAT ALLOWS OR JUSTIFIES
ORDERS, RESOLUTIONS, AND PROCESSES
THE WITHHOLDING OF INFORMATION AND/OR
ISSUED BY THE RESPONDENT COURT OF
ANY COURT RECORDS OR PROCEEDINGS
PERTAINING TO AN EXAMINATION OF A BANK
ACCOUNT, ESPECIALLY IF THE COURT HAS 2. The text of Section 11 itself provides safeguards and
ALREADY GRANTED THE AUTHORITY TO limitations on the allowance to the AMLC to inquire into bank
CONDUCT THE EXAMINATION; deposits: (a) issued by the CA based on probable cause; and (b)
specific compliance to the requirements of Sections 2 and 3,
Article III of the Constitution;
3. The ex-parte procedure for investigating bank accounts is
necessary to achieve a legitimate state objective;
5. THE PETITIONER DID NOT COMMIT, NOR HAS
THE PETITIONER BEEN IMPLEADED IN ANY 4. There is no legitimate expectation of privacy as to the bank
COMPLAINT INVOLVING ANY PREDICATE records of a depositor;
CRIME THAT WOULD JUSTIFY AN INQUIRY
INTO ITS BANK ACCOUNTS; AND 5. The examination of, and inquiry, into SPCMB's bank accounts
does not violate Attorney-Client Privilege; and
6. A criminal complaint is not a pre-requisite to a bank inquiry
order.
7. THE EXAMINATION OF THE PETITIONER'S BANK In their Reply, SPCMB maintains that the ex-parte proceedings
ACCOUNTS IS A FORM OF POLITICAL authorizing inquiry of the AMLC into certain bank deposits and
PERSECUTION OR HARASSMENT.8 investments is unconstitutional, violating its rights to due
process and privacy.
In their Comment, the AMLC, through the Office of the Solicitor
General (OSG), points out a supposed jurisdictional defect of the Before anything else, we here have an original action turning on
instant petition, i.e., SPCMB failed to implead the House of three crucial matters: (1) the petition reaches us from a letter of
Representatives which enacted the AMLA and its amendments. the Presiding Justice of the CA in response to a letter written by
In all, the OSG argues for the dismissal of the present petition, SPCMB; (2) SPCMB's bank account has been reported to be a
highlighting that the AMLC's inquiry into bank deposits does related account to Vice President Binay's investigated by the
not violate due process nor the right to privacy: AMLC for anti-money laundering activities; and (3) the
constitutionality of Section 11 of the AMLA at its recent
1. Section 11's allowance for AMLC's ex-parte application for amendment has not been squarely raised and addressed.
an inquiry into particular bank deposits and investments is
investigative, not adjudicatory; To obviate confusion, we act on this petition given that SPCMB
directly assails the constitutionality of Section 11 of the AMLA
where it has been widely reported that Vice President Binay's 2. The question of constitutionality must be raised by the proper
bank accounts and all related accounts therewith are subject of party;
an investigation by the AMLC. In fact, subsequent events from
3. The constitutional question must be raised at the earliest
the filing of this petition have shown that these same bank
possible opportunity; and
accounts (including related accounts) were investigated by the
Ombudsman and both Houses of the Legislature. However, at 4. The decision of the constitutional question must be necessary
the time of the filing of this petition, SPCMB alleged that its to the determination of the case itself.9
accounts have been inquired into but not subjected to a freeze
order under Section 10 of the AMLA. Thus, as previously noted, The complexity of the issues involved herein require us to
with its preclusion of legal remedies before the CA which under examine the assailed provision vis-a-vis the constitutional
the AMLA issues the ex-parte bank inquiry and freeze orders, proscription against violation of due process. The statute reads:
Sections 10 and 11, respectively, SPCMB establishes that it has SEC. 11. Authority to Inquire into Bank Deposits. -
no plain, speedy and adequate remedy in the ordinary course of Notwithstanding the provisions of Republic Act No. 1405, as
law to protect its rights and interests from the purported amended; Republic Act No. 6426, as amended; Republic Act
unconstitutional intrusion by the AMLC into its bank accounts. No. 8791; and other laws, the AMLC may inquire into or
The foregoing shall be addressed specifically and bears directly examine any particular deposit or investment, including related
on the disposition of the decision herein. accounts, with any banking institution or non-bank financial
institution upon order of any competent court based on an ex
Additionally, we note that the OSG did not question how this parte application in cases of violations of this Act, when it has
petition reaches us from a letter of the appellate court's Presiding been established that there is probable cause that the deposits or
Justice, only that, procedurally, SPCMB should have impleaded investments, including related accounts involved, are related to
Congress. an unlawful activity as defined in Section 3(i) hereof or a money
laundering offense under Section 4 hereof; except that no court
On the sole procedural issue of whether SPCMB ought to have
order shall be required in cases involving activities defined in
impleaded Congress, the contention of the OSG though novel is
Section 3(i)(1), (2), and (12) hereof, and felonies or offenses of
untenable. All cases questioning the constitutionality of a law
a nature similar to those mentioned in Section 3(i)(1), (2), and
does not require that Congress be impleaded for their resolution.
(12), which are punishable under the penal laws of other
The requisites of a judicial inquiry are elementary:
countries, and terrorism and conspiracy to commit terrorism as
1. There must be an actual case or controversy; party; defined and penalized under Republic Act No. 9372.
The Court of Appeals shall act on the application to inquire into The right to due process has two aspects: (1) substantive which
or examine any deposit or investment with any banking deals with the extrinsic and intrinsic validity of the law; and (2)
institution or non-bank financial institution within twenty-four procedural which delves into the rules government must follow
(24) hours from filing of the application. before it deprives a person of its life, liberty or property.12
To ensure compliance with this Act, the Bangko Sentral ng As presently worded, Section 11 of the AMLA has three
Pilipinas may, in the course of a periodic or special examination, elements: (1) ex-parte application by the AMLC; (2)
check the compliance of a covered institution with the determination of probable cause by the CA; and (3) exception of
requirements of the AMLA and its implementing rules and court order in cases involving unlawful activities defined in
regulations. Sections 3(i)(1), (2), and (12).
For purposes of this section, 'related accounts' shall refer to As a brief backgrounder to the amendment to Section 11 of the
accounts, the funds and sources of which originated from and/or AMLA, the text originally did not specify for an ex-
are materially linked to the monetary instrument(s) or parte application by the AMLC for authority to inquire into or
property(ies) subject of the freeze order(s). examine certain bank accounts or investments. The extent of this
authority was the topic of Rep. of the Phils. v. Hon. Judge
A court order ex parte must first be obtained before the AMLC
Eugenio, Jr., et al. (Eugenio)13 where the petitioner therein,
can inquire into these related Accounts: Provided, That the
Republic of the Philippines, asseverated that the application for
procedure for the ex parte application of the ex parte court order
that kind of order under the questioned section of the AMLA did
for the principal account shall be the same with that of the related
not require notice and hearing. Eugenio schooled us on the
accounts.
AMLA, specifically on the provisional remedies provided
The authority to inquire into or examine the main account and therein to aid the AMLC in enforcing the law:
the related accounts shall comply with the requirements of
It is evident that Section 11 does not specifically authorize, as a
Article III, Sections 2 and 3 of the 1987 Constitution, which are
general rule, the issuance ex-parte of the bank inquiry order. We
hereby incorporated by reference.10
quote the provision in full:
The due process clause of the Constitution reads:
SEC. 11. Authority to Inquire into Bank Deposits. —
SECTION 1. No person shall be deprived of life, liberty or Notwithstanding the provisions of Republic Act No. 1405, as
property without due process of law, nor shall any person be amended, Republic Act No. 6426, as amended, Republic Act
denied the equal protection of the laws. 11 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 parte issuance of the bank inquiry order since the same is not
been established that there is probable cause that the prohibited under Section 11. Yet this argument falls when the
deposits or investments are related to an unlawful activity as immediately preceding provision, Section 10, is examined.
defined in Section 3(i) hereof or a money laundering offense
SEC 10. Freezing of Monetary Instrument or Property. — The
under Section 4 hereof, except that no court order shall be
Court of Appeals, upon application ex parte by the AMLC and
required in cases involving unlawful activities defined in
after determination that probable cause exists that any monetary
Sections 3(i)1, (2) and (12).
instrument or property is in any way related to an unlawful
To ensure compliance with this Act, the Bangko Sentral ng activity as defined in Section 3(i) hereof, may issue a freeze
Pilipinas (BSP) may inquire into or examine any deposit of order which shall be effective immediately. The freeze order
investment with any banking institution or non bank financial shall be for a period of twenty (20) days unless extended by the
institution when the examination is made in the course of a court.
periodic or special examination, in accordance with the rules of
Although oriented towards different purposes, the freeze order
examination of the BSP. (Emphasis supplied)
under Section 10 and the bank inquiry order under Section 11
Of course, Section 11 also allows the AMLC to inquire into bank are similar in that they are extraordinary provisional reliefs
accounts without having to obtain a judicial order in cases where which the AMLC may avail of to effectively combat and
there is probable cause that the deposits or investments are prosecute money laundering offenses. Crucially, Section 10 uses
related to kidnapping for ransom, certain violations of the specific language to authorize an ex parte application for the
Comprehensive Dangerous Drugs Act of 2002, hijacking and provisional relief therein, a circumstance absent in Section 11. If
other violations under R.A. No. 6235, destructive arson and indeed the legislature had intended to authorize ex
murder. Since such special circumstances do not apply in this parte proceedings for the issuance of the bank inquiry order,
case, there is no need for us to pass comment on this proviso. then it could have easily expressed such intent in the law, as it
Suffice it to say, the proviso contemplates a situation distinct did with the freeze order under Section 10.
from that which presently confronts us, and for purposes of the
Even more tellingly, the current language of Sections 10 and 11
succeeding discussion, our reference to Section 11 of the AMLA
of the AMLA was crafted at the same time, through the passage
excludes said proviso.
of R.A. No. 9194. Prior to the amendatory law, it was the
In the instances where a court order is required for the issuance AMLC, not the Court of Appeals, which had authority to issue a
of the bank inquiry order, nothing in Section 11 specifically freeze order, whereas a bank inquiry order always then required,
authorizes that such court order may be issued ex parte. It might without exception, an order from a competent court. It was
be argued that this silence does not preclude the ex through the same enactment that ex parte proceedings were
introduced for the first time into the AMLA, in the case of the under Section 10 but make no similar authorization with respect
freeze order which now can only be issued by the Court of to bank inquiry orders under Section 11.
Appeals. It certainly would have been convenient, through the
The Court could divine the sense in allowing ex
same amendatory law, to allow a similar ex parte procedure in
parte proceedings under Section 10 and in proscribing the same
the case of a bank inquiry order had Congress been so minded.
under Section 11. A freeze order under Section 10 on the one
Yet nothing in the provision itself, or even the available
hand is aimed at preserving monetary instruments or property in
legislative record, explicitly points to an ex parte judicial
any way deemed related to unlawful activities as defined in
procedure in the application for a bank inquiry order, unlike in
Section 3(i) of the AMLA. The owner of such monetary
the case of the freeze order.
instruments or property would thus be inhibited from utilizing
That the AMLA does not contemplate ex parte proceedings in the same for the duration of the freeze order. To make such
applications for bank inquiry orders is confirmed by the present freeze order anteceded by a judicial proceeding with notice to
implementing rules and regulations of the AMLA, promulgated the account holder would allow for or lead to the dissipation of
upon the passage of R.A. No. 9194. With respect to freeze orders such funds even before the order could be issued. (Citations
under Section 10, the implementing rules do expressly provide omitted.)
that the applications for freeze orders be filed ex parte, but no
Quite apparent from the foregoing is that absent a specific
similar clearance is granted in the case of inquiry orders under
wording in the AMLA allowing for ex-parte proceedings in
Section 11. These implementing rules were promulgated by the
orders authorizing inquiry and examination by the AMLC into
Bangko Sentral ng Pilipinas, the Insurance Commission and the
certain bank deposits or investments, notice to the affected party
Securities and Exchange Commission, and if it was the true
is required.
belief of these institutions that inquiry orders could be issued ex
parte similar to freeze orders, language to that effect would have Heeding the Court's observance in Eugenio that the remedy of
been incorporated in the said Rules. This is stressed not because the Republic then lay with the legislative, Congress enacted
the implementing rules could authorize ex parte applications for Republic Act No. 10167 amending Section 11 of the AMLA and
inquiry orders despite the absence of statutory basis, but rather specifically inserted the word ex-parte appositive of the nature
because the framers of the law had no intention to allow such ex of this provisional remedy available to the AMLC thereunder.
parte applications.
It is this current wording of Section 11 which SPCMB posits as
Even the Rules of Procedure adopted by this Court in A.M. No. unconstitutional and purportedly actually proscribed in Eugenio.
05-11-04-SC to enforce the provisions of the AMLA specifically
authorize ex parte applications with respect to freeze orders We do not subscribe to SPCMB's position.
Succinctly, Section 11 of the AMLA providing for ex- examine whether Section 11 of the law violates procedural due
parte application and inquiry by the AMLC into certain bank process.
deposits and investments does not violate substantive due
As previously stated, the AMLA now specifically provides for
process, there being no physical seizure of property involved at
an ex-parte application for an order authorizing inquiry or
that stage. It is the preliminary and actual seizure of the bank
examination into bank deposits or investments which continues
deposits or investments in question which brings these within
to pass constitutional muster.
reach of the judicial process, specifically a determination that the
seizure violated due process.14 In fact, Eugenio delineates a Procedural due process is essentially the opportunity to be
bank inquiry order under Section 11 from a freeze order under heard.16 In this case, at the investigation stage by the AMLC into
Section 10 on both remedies' effect on the direct objects, i.e. the possible money laundering offenses, SPCMB demands that it
bank deposits and investments: have notice and hearing of AMLC's investigation into its bank
accounts.
On the other hand, a bank inquiry order under Section 11 does
not necessitate any form of physical seizure of property of the We are not unaware of the obiter in Eugenio17 and cited by
account holder. What the bank inquiry order authorizes is the SPCMB, voicing misgivings on an interpretation of the former
examination of the particular deposits or investments in banking Section 11 of the AMLA allowing for ex-parte proceedings in
institutions or non-bank financial institutions. The monetary bank inquiry orders, to wit:
instruments or property deposited with such banks or financial
institutions are not seized in a physical sense, but are examined There certainly is fertile ground to contest the issuance of an ex-
on particular details such as the account holder's record of parte order. Section 11 itself requires that it be established that
deposits and transactions. Unlike the assets subject of the freeze "there is probable cause that the deposits or investments are
order, the records to be inspected under a bank inquiry order related to unlawful activities," and it obviously is the court
cannot be physically seized or hidden by the account holder. which stands as arbiter whether there is indeed such probable
Said records are in the possession of the bank and therefore cause. The process of inquiring into the existence of probable
cannot be destroyed at the instance of the account holder alone cause would involve the function of determination reposed on
as that would require the extraordinary cooperation and devotion the trial court. Determination clearly implies a function of
of the bank.15 adjudication on the part of the trial court, and not a mechanical
application of a standard pre-determination by some other body.
At the stage in which the petition was filed before us, the inquiry The word "determination" implies deliberation and is, in normal
into certain bank deposits and investments by the AMLC still legal contemplation, equivalent to "the decision of a court of
does not contemplate any form of physical seizure of the justice."
targeted corporeal property. From this cite, we proceed to
The court receiving the application for inquiry order cannot Affairs on June 17, 1999, the following day or less than 24 hours
simply take the AMLC's word that probable cause exists that the later, the Department of Justice received the request, apparently
deposits or investments are related to an unlawful activity. It will without the Department of Foreign affairs discharging its duty
have to exercise its own determinative function in order to be thoroughly evaluating the same and its accompanying
convinced of such fact. The account holder would be certainly documents. xxx.
capable of contesting such probable cause if given the
xxxx
opportunity to be apprised of the pending application to
inquire into his account; hence a notice requirement would [T]he record cannot support the presumption of regularity that
not be an empty spectacle. It may be so that the process of the Department of Foreign Affairs thoroughly reviewed the
obtaining the inquiry order may become more cumbersome or extradition request and supporting documents and that it arrived
prolonged because of the notice requirement, yet we fail to see at a well-founded judgment that the request and its annexed
any unreasonable burden cast by such circumstance. After all, as documents satisfy the requirements of law. XXX.
earlier stated, requiring notice to the account holder should not,
in any way, compromise the integrity of the bank records subject The evaluation process, just like the extradition proceedings,
of the inquiry which remain in the possession and control of the proper belongs to a class by itself. It is sui generis. It is not a
bank. (Emphasis supplied) criminal investigation, but it is also erroneous to say that it
is purely an exercise of ministerial functions. At such stage,
On that score, the SPCMB points out that the AMLC 's bank the executive authority has the power: (a) to make a
inquiry is preliminary to the seizure and deprivation of its technical assessment of the completeness and sufficiency of
property as in a freeze order under Section 10 of the AMLA the extradition papers; (b) to outrightly deny the request if
which peculiarity lends itself to a sui generis proceeding akin to on its face and on the face of the supporting documents the
the evaluation process in extradition proceedings pronounced crimes indicated are not extraditable; and (c) to make a
in Secretary of Justice v. Hon. Lantion.18 Under the extradition determination whether or not the request is politically
law, the Secretary of Foreign Affairs is bound to make a finding motivated, or that the offense is a military one which is not
that the extradition request and its supporting documents are punishable under non-military penal legislation. Hence, said
sufficient and complete in form and substance before delivering process may be characterized as an investigative or
the same to the Secretary of Justice. We ruled: inquisitorial process in contrast to a proceeding conducted
in the exercise of an administrative body's quasi-judicial
[L]ooking at the factual milieu of the case before us, it would
power.
appear that there was failure to abide by the provisions of
Presidential Decree No. 1069. For while it is true that the In administrative law, a quasi-judicial proceeding involves: (a)
extradition request was delivered to the Department of Foreign taking and evaluation of evidence; (b) determining facts based
upon the evidence presented; and (c) rendering an order or 5 of the IRR is entitled Jurisdiction of Money Laundering
decision supported by the facts proved. Inquisitorial power, Cases and Money Laundering Investigation Procedures:
which is also known as examining or investigatory power, is one
Rule 5.a. Jurisdiction of Money Laundering Cases. The
of the determinative powers of an administrative body which
Regional Trial Courts shall have the jurisdiction to try all cases
better enables it to exercise its quasi-judicial authority. This
on money laundering. Those committed by public officers and
power allows the administrative body to inspect the records and
private persons who are in conspiracy with such public officers
premises, and investigate the activities, of persons or entities
shall be under the jurisdiction of the Sandiganbayan.
coming under its jurisdiction, or to require disclosure of
information by means of accounts, records, reports, testimony of Rule 5.b. Investigation of Money Laundering Offenses. - The
witnesses, production of documents, or otherwise. AMLC shall investigate:
The power of investigation consists in gathering, organizing, and (1) suspicious transactions;
analyzing evidence, which is a useful aid or tool in an (2) covered transactions deemed suspicious after an
administrative agency's performance of its rule-making or quasi- investigation conducted by the AMLC;
judicial functions. Notably, investigation is indispensable to (3) money laundering activities; and
prosecution.19 (Emphasis supplied, citations omitted) (4) other violations of the AMLA, as amended.
The submission of AMLC requires a determination whether the The confusion on the scope and parameters of the AMLC's
AMLC is an administrative body with quasi-judicial powers; investigatory powers and whether such seeps into and
corollary thereto, a determination of the jurisdiction of the approximates a quasi-judicial agency's inquisitorial powers lies
AMLC. in the AMLC's investigation and consequent initial
determination of whether certain activities are constitutive of
Lim v. Gamosa20 is enlightening on jurisdiction and the
anti-money laundering offenses.
requirement of a specific grant thereof in the enabling law. We
declared that the creation of the National Commission on The enabling law itself, the AMLA, specifies the jurisdiction of
Indigenous Peoples (NCIP) by the Indigenous Peoples Rights the trial courts, RTC and Sandiganbayan, over money
Act (IPRA) did not confer it exclusive and original, nor primary laundering cases, and delineates the investigative powers of the
jurisdiction, in all claims and disputes involving rights of IPs and AMLC.
ICCs where no such specific grant is bestowed.
Textually, the AMLA is the first line of defense against money
In this instance, the grant of jurisdiction over cases involving laundering in compliance with our international obligation.
money laundering offences is bestowed on the Regional Trial There are three (3) stages of determination, two (2) levels of
Courts and the Sandiganbayan as the case may be. In fact, Rule investigation, falling under three (3) jurisdictions:
1. The AMLC investigates possible money laundering offences investigation is to evaluate evidence submitted before it based
and initially determines whether there is probable cause to on the facts and Circumstances presented to it, and if the agency
charge any person with a money laundering offence under is not authorized to make a final pronouncement affecting the
Section 4 of the AMLA, resulting in the filing of a complaint parties, then there is an absence of judicial discretion and
with the Department of Justice or the Office of the judgment.
Ombudsman;21
adjudicate in regard to the rights and obligations of both the
2. The DOJ or the Ombudsman conducts the preliminary Requesting State and the prospective extraditee. Its only power
investigation proceeding and if after due notice and hearing finds is to determine whether the papers comply with the requirements
probable cause for money laundering offences, shall file the of the law and the treaty and, therefore, sufficient to be the basis
necessary information before the Regional Trial Courts or the of an extradition petition. Such finding is thus merely initial and
Sandiganbayan;22 not final. The body has no power to determine whether or not
the extradition should be effected. That is the role of the court.
3. The RTCs or the Sandiganbayan shall try all cases on money
The body's power is limited to an initial finding of whether or
laundering, as may be applicable.23
not the extradition petition can be filed in court.
Nowhere from the text of the law nor its Implementing Rules
It is to be noted, however, that in contrast to ordinary
and Regulations can we glean that the AMLC exercises quasi-
investigations, the evaluation procedure is characterized by
judicial functions whether the actual preliminary investigation is
certain peculiarities. Primarily, it sets into motion the wheels of
done simply at its behest or conducted by the Department of
the extradition process. Ultimately, it may result in the
Justice and the Ombudsman.
deprivation of liberty of the prospective extraditee. This
Again, we hark back to Lantion citing Ruperto v. Torres,23- deprivation can be effected at two stages: First, the provisional
a arrest of the prospective extraditee pending the submission of
where the Court had occasion to rule on the functions of an
investigatory body with the sole power of investigation: the request. This is so because the Treaty provides that in case
of urgency, a contracting party may request the provisional
[Such a body] does not exercise judicial functions and its power arrest of the person sought pending presentation of the request
is limited to investigating facts and making findings in respect (Paragraph [1], Article 9, RP-US Extradition Treaty), but he
thereto. The Court laid down the test of determining whether an shall be automatically discharged after 60 days if no request is
administrative body is exercising judicial functions or merely submitted (Paragraph 4). Presidential Decree No. 1069 provides
investigatory functions: Adjudication signifies the exercise of for a shorter period of 20 days after which the arrested person
power and authority to adjudicate upon the rights and obligations could be discharged (Section 20[d]). Logically, although the
of the parties before it. Hence, if the only purpose for Extradition Law is silent on this respect, the provisions only
mean that once a request is forwarded to the Requested State, the In contrast to the disposition in Lantion that the evaluation
prospective extraditee may be continuously detained, or if not, process before the Department of Foreign Affairs is akin to an
subsequently rearrested (Paragraph [5], Article 9, RP-US administrative agency conducting investigative proceedings
Extradition Treaty), for he will only be discharged if no request with implications on the consequences of criminal liability, i.e.,
is submitted. Practically, the purpose of this detention is to deprivation of liberty of a prospective extraditee, the sole
prevent his possible flight from the Requested State. Second, the investigative functions of the AMLC finds more resonance with
temporary arrest of the prospective extraditee during the the investigative functions of the National Bureau of
pendency of the extradition petition in court (Section 6, Investigation (NBI).
Presidential Decree No. 1069).
That the AMLC does not exercise quasi-judicial powers and is
Clearly, there is an impending threat to a prospective extraditee's simply an investigatory body finds support in our ruling in Shu
liberty as early as during the evaluation stage. It is not only an v. Dee.25 In that case, petitioner Shu had filed a complaint before
imagined threat to his liberty, but a very imminent one. the NBI charging respondents therein with falsification of two
(2) deeds of real estate mortgage submitted to the Metropolitan
Because of these possible consequences, we conclude that the
Bank and Trust Company (Metrobank). After its investigation,
evaluation process is akin to an administrative agency
the NBI came up with a Questioned Documents Report No. 746-
conducting an investigative proceeding, the consequences of
1098 finding that the signatures of petitioner therein which
which are essentially criminal since such technical assessment
appear on the questioned deeds are not the same as the standard
sets off or commences the procedure for, and ultimately, the
sample signatures he submitted to the NBI. Ruling on the
deprivation of liberty of a prospective extraditee, As described
specific issue raised by respondent therein that they had been
by petitioner himself, this is a "tool" for criminal law
denied due process during the NBI investigation, we stressed
enforcement. In essence, therefore, the evaluation process
that the functions of this agency are merely investigatory and
partakes of the nature of a criminal investigation. In a number of
informational in nature:
cases, we had occasion to make available to a respondent in an
administrative case or investigation certain constitutional rights [The NBI] has no judicial or quasi-judicial powers and is
that are ordinarily available only in criminal prosecutions. incapable of granting any relief to any party. It cannot even
Further, as pointed out by Mr. Justice Mendoza during the oral determine probable cause. The NBI is an investigative agency
arguments, there are rights formerly available only at the trial whose findings are merely recommendatory. It undertakes
stage that had been advanced to an earlier stage in the investigation of crimes upon its own initiative or as public
proceedings, such as the right to counsel and the right against welfare may require in accordance with its mandate. It also
self-incrimination.24 (Citations omitted) renders assistance when requested in the investigation or
detection of crimes in order to prosecute the persons responsible.
Since the NBI's findings were merely recommendatory, we find As carved out in Shu, the AMLC functions solely as an
that no denial of the respondent's due process right could have investigative body in the instances mentioned in Rule
taken place; the NBI's findings were still subject to the 5.b.26 Thereafter, the next step is for the AMLC to file a
prosecutor's and the Secretary of Justice's actions for purposes Complaint with either the DOJ or the Ombudsman pursuant to
of finding the existence of probable cause. We find it significant Rule 6.b.
that the specimen signatures in the possession of Metrobank
Even in the case of Estrada v. Office of the Ombudsman,27 where
were submitted by the respondents for the consideration of the
the conflict arose at the preliminary investigation stage by the
city prosecutor and eventually of the Secretary of Justice during
Ombudsman, we ruled that the Ombudsman's denial of Senator
the preliminary investigation proceedings. Thus, these officers
Estrada's Request to be furnished copies of the counter-affidavits
had the opportunity to examine these signatures.
of his co-respondents did not violate Estrada's constitutional
The respondents were not likewise denied their right to due right to due process where the sole issue is the existence of
process when the NBI issued the questioned documents report. probable cause for the purpose of determining whether an
We note that this report merely stated that the signatures information should be filed and does not prevent Estrada from
appearing on the two deeds and in the petitioner's submitted requesting a copy of the counter-affidavits of his co-respondents
sample signatures were not written by one and the same person. during the pre-trial or even during trial. We expounded on the
Notably, there was no categorical finding in the questioned nature of preliminary investigation proceedings, thus:
documents report that the respondents falsified the documents.
It should be underscored that the conduct of a preliminary
This report, too, was procured during the conduct of the NBI's
investigation is only for the determination of probable cause, and
investigation at the petitioner's request for assistance in the
"probable cause merely implies probability of guilt and should
investigation of the alleged crime of falsification. The report is
be determined in a summary manner. A preliminary
inconclusive and does not prevent the respondents from securing
investigation is not a part of the trial and it is only in a trial where
a separate documents examination by handwriting experts based
an accused can demand the full exercise of his rights, such as the
on their own evidence. On its own, the NBI's questioned
right to confront and cross-examine his accusers to establish his
documents report does not directly point to the respondents'
innocence." Thus, the rights of a respondent in a preliminary
involvement in the crime charged. Its significance is that, taken
investigation are limited to those granted by procedural law.
together with the other pieces of evidence submitted by the
parties during the preliminary investigation, these evidence A preliminary investigation is defined as an inquiry or
could be sufficient for purposes of finding probable cause — the proceeding for the purpose of determining whether there is
action that the Secretary of Justice undertook in the present case. sufficient ground to engender a well founded belief that a crime
cognizable by the Regional Trial Court has been committed and
that the respondent is probably guilty thereof, and should be held preliminary investigation precisely because such right was never
for trial. The quantum of evidence now required in preliminary available to him. The admissibility or inadmissibility of said
investigation is such evidence sufficient to "engender a well testimonies should be ventilated before the trial court during the
founded belief' as to the fact of the commission of a crime and trial proper and not in the preliminary investigation.
the respondent's probable guilt thereof A preliminary
Furthermore, the technical rules on evidence are not binding on
investigation is not the occasion for the full and exhaustive
the fiscal who has jurisdiction and control over the conduct of a
display of the parties' evidence; it is for the presentation of such
preliminary investigation. If by its very nature a preliminary
evidence only as may engender a well-grounded belief that an
investigation could be waived by the accused, we find no
offense has been committed and that the accused is probably
compelling justification for a strict application of the evidentiary
guilty thereof. We are in accord with the state prosecutor's
rules. In addition, considering that under Section 8, Rule 112 of
findings in the case at bar that there exists prima facie evidence
the Rules of Court, the record of the preliminary investigation
of petitioner's involvement in the commission of the crime, it
does not form part of the record of the case in the Regional Trial
being sufficiently supported by the evidence presented and the
Court, then the testimonies of Galarion and Hanopol may not be
facts obtaining therein.
admitted by the trial court if not presented in evidence by the
Likewise devoid of cogency is petitioner's argument that the prosecuting fiscal. And, even if the prosecution does present
testimonies of Galarion and Hanopol are inadmissible as to him such testimonies, petitioner can always object thereto and the
since he was not granted the opportunity of cross-examination. trial court can rule on the admissibility thereof; or the petitioner
can, during the trial, petition said court to compel the
It is a fundamental principle that the accused in a preliminary
presentation of Galarion and Hanopol for purposes of cross-
investigation has no right to cross-examine the witnesses which
examination. (Citations and emphasis omitted)
the complainant may present. Section 3, Rule 112 of the Rules
of Court expressly provides that the respondent shall only have Plainly, the AMLC's investigation of money laundering offenses
the right to submit a counter-affidavit, to examine all other and its determination of possible money laundering offenses,
evidence submitted by the complainant and, where the fiscal sets specifically its inquiry into certain bank accounts allowed by
a hearing to propound clarificatory questions to the parties or court order, does not transform it into an investigative body
their witnesses, to be afforded an opportunity to be present but exercising quasi-judicial powers. Hence, Section 11 of the
without the right to examine or cross-examine. Thus, even if AMLA, authorizing a bank inquiry court order, cannot be said
petitioner was not given the opportunity to cross-examine to violate SPCMB's constitutional right to procedural due
Galarion and Hanopol at the time they were presented to testify process.
during the separate trial of the case against Galarion and Roxas,
he cannot assert any legal right to cross-examine them at the
We now come to a determination of whether Section 11 is inviolable, and no search warrant or warrant of arrest shall issue
violative of the constitutional right to privacy enshrined in except upon probable cause to be determined personally by the
Section 2, Article III of the Constitution. SPCMB is adamant judge after examination under oath or affirmation of the
that the CA's denial of its request to be furnished copies of complainant and the witnesses he may produce, and particularly
AMLC's ex-parte application for a bank inquiry order and all describing the place to be searched and the person or things to
subsequent pleadings, documents and orders filed and issued in be seized.
relation thereto, constitutes grave abuse of discretion where the
SEC. 3. (1) The privacy of communication and correspondence
purported blanket authority under Section 11: (1) partakes of a
shall be inviolable except upon lawful order of the court, or
general warrant intended to aid a mere fishing expedition; (2)
when public policy or order requires otherwise as prescribed by
violates the attorney-client privilege; (3) is not preceded by
law.
predicate crime charging SPCMB of a money laundering
offense; and (4) is a form of political harassment [of SPCMB's] (2) Any evidence obtained in violation of this or the preceding
clientele. section shall be inadmissible for any purpose in any proceeding.
We shall discuss these issues jointly since the assailed Section Once again, Eugenio29 offers guidance:
11 incorporates by reference that "[t]he authority to inquire into
or examine the main and the related accounts shall comply with The Court's construction of Section 11 of the AMLA is
the requirements of Article III, Sections 2 and 3 of the 1987 undoubtedly influenced by right to privacy considerations. If
Constitution." On this point, SPCMB asseverates that "there is sustained, petitioner's argument that a bank account may be
nothing in the AMLA that allows or justifies the withholding of inspected by the government following an ex parte proceeding
information and/or any court records or proceedings pertaining about which the depositor would know nothing would have
to an examination of a bank account, especially if the court has significant implications on the right to privacy, a right innately
already granted the authority to conduct the examination." cherished by all notwithstanding the legally recognized
exceptions thereto. The notion that the government could be so
The theme of playing off privacy rights and interest against that empowered is cause for concern of any individual who values
of the state's interest in curbing money laundering offenses is the right to privacy which, after all, embodies even the right to
recurring.28 be "let alone," the most comprehensive of rights and the right
most valued by civilized people.
The invoked constitutional provisions read:
One might assume that the constitutional dimension of the right
SEC. 2. The right of the people to be secure in their persons,
to privacy, as applied to bank deposits, warrants our present
houses, papers, and effects against unreasonable searches and
inquiry. We decline to do so. Admittedly, that question has
seizures of whatever nature and for any purpose shall be
proved controversial in American jurisprudence. Notably, the Constitution likewise recognized that bank accounts are not
United States Supreme Court in U.S. v. Miller held that there covered by either the right to information under Section 7,
was no legitimate expectation of privacy as to the bank Article III or under the requirement of full public disclosure
records of a depositor. Moreover, the text of our under Section 28, Article II. Unless the Bank Secrecy Act is
Constitution has not bothered with the triviality of allocating repealed or amended, the legal order is obliged to conserve the
specific rights peculiar to bank deposits. absolutely confidential nature of Philippine bank deposits.
However, sufficient for our purposes, we can assert there is a Any exception to the rule of absolute confidentiality must be
right to privacy governing bank accounts in the Philippines, and specifically legislated. Section 2 of the Bank Secrecy Act itself
that such right finds application to the case at bar. The source of prescribes exceptions whereby these bank accounts may be
such right is statutory, expressed as it is in R.A. No. 1405 examined by "any person, government official, bureau or
otherwise known as the Bank Secrecy Act of 1955. The right to office"; namely when: (1) upon written permission of the
privacy is enshrined in Section 2 of that law, to wit: depositor; (2) in cases of impeachment; (3) the examination of
bank accounts is upon order of a competent court in cases of
SECTION 2. All deposits of whatever nature with banks or
bribery or dereliction of duty of public officials; and (4) the
banking institutions in the Philippines including investments
money deposited or invested is the subject matter of the
in bonds issued by the Government of the Philippines, its
litigation. Section 8 of R.A. Act No. 3019, the Anti-Graft and
political subdivisions and its instrumentalities, are hereby
Corrupt Practices Act, has been recognized by this Court as
considered as of an absolutely confidential nature and may
constituting an additional exception to the rule of absolute
not be examined, inquired or looked into by any person,
confidentiality, and there have been other similar recognitions as
government official, bureau or office, except upon written
well.
permission of the depositor, or in cases of impeachment, or upon
order of a competent court in cases of bribery or dereliction of The AMLA also provides exceptions to the Bank Secrecy Act.
duty of public officials, or in cases where the money deposited Under Section 11, the AMLC may inquire into a bank account
or invested is the subject matter of the litigation. upon order of any competent court in cases of violation of the
AMLA, it having been established that there is probable cause
Because of the Bank Secrecy Act, the confidentiality of bank
that the deposits or investments are related to unlawful activities
deposits remains a basic state policy in the Philippines.
as defined in Section 3(i) of the law, or a money laundering
Subsequent laws, including the AMLA, may have added
offense under Section 4 thereof. Further, in instances where
exceptions to the Bank Secrecy Act, yet the secrecy of bank
there is probable cause that the deposits or investments are
deposits still lies as the general rule. It falls within the zones of
related to kidnapping for ransom, certain violations of the
privacy recognized by our laws. The framers of the 1987
Comprehensive Dangerous Drugs Act of 2002, hijacking and
other violations under R.A. No. 6235, destructive arson and From the foregoing disquisition, we extract the following
murder, then there is no need for the AMLC to obtain a court principles:
order before it could inquire into such accounts.
1. The Constitution did not allocate specific rights peculiar to
It cannot be successfully argued the proceedings relating to the bank deposits;
bank inquiry order under Section 11 of the AMLA is a
2. The general rule of absolute confidentiality is simply
"litigation" encompassed in one of the exceptions to the Bank
statutory,30i.e. not specified in the Constitution, which has been
Secrecy Act which is when "the money deposited or invested is
affirmed in jurisprudence;31
the subject matter of the litigation." The orientation of the bank
inquiry order is simply to serve as a provisional relief or remedy. 3. Exceptions to the general rule of absolute confidentiality have
As earlier stated, the application for such does not entail a full- been carved out by the Legislature which legislation have been
blown trial. sustained, albeit subjected to heightened scrutiny by the
courts;32 and
Nevertheless, just because the AMLA establishes additional
exceptions to the Bank Secrecy Act it does not mean that the 4. One such legislated exception is Section 11 of the AMLA.
later law has dispensed with the general principle established in
the older law that "[a]ll deposits of whatever nature with banks The warning in Eugenio that an ex-parte proceeding authorizing
or banking institutions in the Philippines x x x are hereby the government to inspect certain bank accounts or investments
considered as of an absolutely confidential nature." Indeed, by without notice to the depositor would have significant
force of statute, all bank deposits are absolutely confidential, and implications on the right to privacy still does not preclude such
that nature is unaltered even by the legislated exceptions referred a bank inquiry order to be allowed by specific legislation as an
to above. There is disfavor towards construing these exceptions exception to the general rule of absolute confidentiality of bank
in such a manner that would authorize unlimited discretion on deposits.
the part of the government or of any party seeking to enforce We thus subjected Section 11 of the AMLA to heightened
those exceptions and inquire into bank deposits. If there are scrutiny and found nothing arbitrary in the allowance and
doubts in upholding the absolutely confidential nature of bank authorization to AMLC to undertake an inquiry into certain bank
deposits against affirming the authority to inquire into such accounts or deposits. Instead, we found that it provides
accounts, then such doubts must be resolved in favor of the safeguards before a bank inquiry order is issued, ensuring
former. Such a stance would persist unless Congress passes a adherence to the general state policy of preserving the absolutely
law reversing the general state policy of preserving the confidential nature of Philippine bank accounts:
absolutely confidential nature of Philippine bank accounts.
(Citations omitted, emphasis supplied)
(1) The AMLC is required to establish probable cause as basis with the adjunct provisional remedy of freeze order under
for its ex-parte application for bank inquiry order; Section 10 of the AMLA, defined probable cause, thus:
(2) The CA, independent of the AMLC's demonstration of The probable cause required for the issuance of a freeze order
probable cause, itself makes a finding of probable cause that the differs from the probable cause required for the institution of a
deposits or investments are related to an unlawful activity under criminal action, xxx.
Section 3(i) or a money laundering offense under Section 4 of
As defined in the law, the probable cause required for the
the AMLA;
issuance of a freeze order refers to "such facts and circumstances
(3) A bank inquiry court order ex-parte for related accounts is which would lead a reasonably discreet, prudent or cautious man
preceded by a bank inquiry court order ex-parte for the principal to believe that an unlawful activity and/or money laundering
account which court order ex-parte for related accounts is offence is about to be, is being or has been committed and
separately based on probable cause that such related account is that the account or any monetary instrument or property
materially linked to the principal account inquired into; and subject thereof sought to be frozen is in any way related
to said unlawful activity and/or money laundering offense."
(4) The authority to inquire into or examine the main or principal
account and the related accounts shall comply with the In other words, in resolving the issue of whether probable cause
requirements of Article III, Sections 2 and 3 of the Constitution. exits, the CA's statutorily-guided determination's focus is not on
the probable commissions of an unlawful activity (or money
The foregoing demonstrates that the inquiry and examination
laundering) that the office of the Ombudsman has already
into the bank account are not undertaken whimsically and solely
determined to exist, but on whether the bank accounts, assets, or
based on the investigative discretion of the AMLC. In particular,
other monetary instruments sought to be frozen are in any way
the requirement of demonstration by the AMLC, and
related to any of the illegal activities enumerated under R.A.
determination by the CA, of probable cause emphasizes the
9160, as amended. Otherwise stated, probable cause refers to the
limits of such governmental action. We will revert to these
sufficiency of the relation between an unlawful activity and the
safeguards under Section 11 as we specifically discuss the CA's
property or monetary instrument which is the focal point of
denial of SPCMB's letter request for information concerning the
Section 10 of RA No. 9160, as amended. xxx. (Emphasis
purported issuance of a bank inquiry order involving its
supplied)
accounts.
Second. As regards SPCMB's contention that the bank inquiry
First. The AMLC and the appellate court are respectively
order is in the nature of a general warrant, Eugenio already
required to demonstrate and ascertain probable cause. Ret. Lt.
declared that Section 11, even with the allowance of an ex
Gen. Ligot, et al. v. Republic of the Philippines,33 which dealt
parte application therefor, "is not a search warrant or warrant of
arrest as it contemplates a direct object but not the seizure of that would emasculate the remedy it has established and
persons or property."34 It bears repeating that the ''bank inquiry encourage the unfounded initiation of complaints for money
order" under Section 11 is a provisional remedy to aid the laundering.35 (Citation omitted)
AMLC in the enforcement of the AMLA.
Guided as we are by prior holdings, and bound as we are by the
Third. Contrary to the stance of SPCMB, the bank inquiry order requirements for issuance of a bank inquiry order under Section
does not contemplate that SPCMB be first impleaded in a money 11 of the AMLA, we are hard pressed to declare that it violates
laundering case already filed before the courts: SPCMB's right to privacy.
We are unconvinced by this proposition, and agree instead with Nonetheless, although the bank inquiry order ex-parte passes
the then Solicitor General who conceded that the use of the constitutional muster, there is nothing in Section 11 nor the
phrase "in cases of' was unfortunate, yet submitted that it should implementing rules and regulations of the AMLA which
be interpreted to mean "in the event there are violations" of the prohibits the owner of the bank account, as in his instance
AMLA, and not that there are already cases pending in court SPCMB, to ascertain from the CA, post issuance of the bank
concerning such violations. If the contrary position is adopted, inquiry order ex-parte, if his account is indeed the subject of an
then the bank inquiry order would be limited in purpose as a tool examination. Emphasized by our discussion of the safeguards
in aid of litigation of live cases, and wholly inutile as a means under Section 11 preceding the issuance of such an order, we
for the government to ascertain whether there is sufficient find that there is nothing therein which precludes the owner of
evidence to sustain an intended prosecution of the account the account from challenging the basis for the issuance thereof.
holder for violation of the AMLA. Should that be the situation,
The present controversy revolves around the issue of whether or
in all likelihood the AMLC would be virtually deprived of its
not the appellate court, through the Presiding Justice, gravely
character as a discovery tool, and thus would become less
abused its discretion when it effectively denied SPCMB's letter-
circumspect in filing complaints against suspect account
request for confirmation that the AMLC had applied (ex-parte)
holders. After all, under such set-up the preferred strategy would
for, and was granted, a bank inquiry order to examine SPCMB's
be to allow or even encourage the indiscriminate filing of
bank accounts relative to the investigation conducted on Vice-
complaints under the AMLA with the hope or expectation that
President Binay's accounts.
the evidence of money laundering would somehow .surface
during the trial. Since the AMLC could not make use of the bank We recall the Presiding Justice's letter to SPCMB categorically
inquiry order to determine whether there is evidentiary basis to stating that "under the rules, the Office of the Presiding Justice
prosecute the suspected malefactors, not filing any case at all is strictly mandated not to disclose, divulge, or communicate to
would not be an alternative. Such unwholesome set-up should anyone directly or indirectly, in any manner or by any means,
not come to pass. Thus Section 11 cannot be interpreted in a way the fact of the filing of the petition brought before [the Court of
Appeals] by the [AMLC], its contents and even its entry in the monetary instrument or property subject of the freeze order; and
logbook." Note that the letter did not cite the aforementioned (f) the time when the freeze thereon took effect.
rules that were supposedly crystal clear to foreclose ambiguity.
Rule 10.d. Upon receipt of the freeze order issued by the Court
Note further that Rules 10.c.3 and 10.d of the IRR on Authority
of Appeals and upon verification by the covered institution that
to File Petitions for Freeze Order provides that:
the related accounts originated from and/or are materially linked
Rule 10.c. Duty of Covered Institutions upon receipt to the monetary instrument or property subject of the freeze
thereof. — order, the covered institution shall freeze these related accounts
wherever these may be found.
Rule 10.c.1. Upon receipt of the notice of the freeze order, the
covered institution concerned shall immediately freeze the The return of the covered institution as required under Rule
monetary instrument or property and related accounts subject 10.c.3 shall include the fact of such freezing and an explanation
thereof. as to the grounds for the identification of the related accounts.
Rule 10.c.2. The covered institution shall likewise immediately If the related accounts cannot be determined within twenty-four
furnish a copy of the notice of the freeze order upon the owner (24) hours from receipt of the freeze order due to the volume
or holder of the monetary instrument or property or related and/or complexity of the transactions or any other justifiable
accounts subject thereof. factor(s), the covered institution shall effect the freezing of the
related accounts, monetary instruments and properties as soon as
Rule 10.c.3. Within twenty-four (24) hours from receipt of the
practicable and shall submit a supplemental return thereof to the
freeze order, the covered institution concerned shall submit to
Court of Appeals and the AMLC within twenty-four (24) hours
the Court of Appeals and the AMLC, by personal delivery, a
from the freezing of said related accounts, monetary instruments
detailed written return on the freeze order, specifying all the
and properties.
pertinent and relevant information which shall include the
following: The foregoing rule, in relation to what Section 11 already
provides, signifies that ex-parte bank inquiry orders on related
(a) the account numbers;
accounts may be questioned alongside, albeit subsequent to, the
(b) the names of the account owners or holders;
issuance of the initial freeze order of the subject bank accounts.
(c) the amount of the monetary instrument, property or related
The requirements and procedure for the issuance of the order,
accounts as of the time they were frozen;
including the return to be made thereon lay the grounds for
(d) all relevant information as to the nature of the monetary
judicial review thereof. We expound.
instrument or property;
(e) any information on the related accounts pertaining to the
An act of a court or tribunal can only be considered tainted with Undeniably, there is probable and preliminary governmental
grave abuse of discretion when such act is done in a capricious action against SPCMB geared towards implementation of the
or whimsical exercise of judgment as is equivalent to lack of AMLA directed at SPCMB's property, although there is none, as
jurisdiction. It is well-settled that the abuse of discretion to be yet, physical seizure thereof, as in freezing of bank accounts
qualified as "grave" must be so patent or gross as to constitute under Section 10 of the AMLA.40 Note, however, that the
an evasion of a positive duty or a virtual refusal to perform the allowance to question the bank inquiry order we carve herein is
duty or to act at all in contemplation of law.36 In this relation, tied to the appellate court's issuance of a freeze order on the
case law states that not every error in the proceedings, or every principal accounts. Even in Eugenio, while declaring that the
erroneous conclusion of law or fact, constitutes grave abuse of bank inquiry order under Section II then required prior notice of
discretion.37 The degree of gravity, as above-described, must be such to the account owner, we recognized that the determination
met. of probable cause by the appellate court to issue the bank inquiry
order can be contested. As presently worded and how AMLC
That the propriety of the issuance of the bank inquiry order is a
functions are designed under the AMLA, the occasion for the
justiciable issue brooks no argument. A justiciable controversy
issuance of the freeze order upon the actual physical seizure of
refers to an existing case or controversy that is appropriate or
the investigated and inquired into bank account, calls into
ripe for judicial determination, not one that is conjectural or
motions the opportunity for the bank account owner to then
merely anticipatory.38
question, not just probable cause for the issuance of the freeze
As previously adverted to in our discussion on the right to order under Section I 0, but, to begin with, the determination of
privacy, the clash of privacy rights and interest against that of probable cause for an ex-parte bank inquiry order into a
the government's is readily apparent. However, the statutorily purported related account under Section II.
enshrined general rule on absolute confidentiality of bank
In enacting the amendment to Section II of the AMLC, the
accounts remains. Thus, the safeguards instituted in Section II of
legislature saw it fit to place requirements before a bank inquiry
the AMLA and heretofore discussed provide for certain well
order may be issued. We discussed these requirements as basis
defined limits, as in the language of Baker v. Carr, "judicially
for a valid exception to the general rule on absolute
discoverable standards" for determining the validity of the
confidentiality of bank accounts. However, these very safe
exercise of such discretion by the appellate court in denying the
guards allow SPCMB, post issuance of the ex-parte bank
letter-request of SPCMB.39 In short, Section II itself provides the
inquiry order, legal bases to question the propriety of such issued
basis for the judicial inquiry and which the owner of the bank
order, if any. To emphasize, this allowance to the owner of the
accounts subject of the AMLC inquiry may invoke.
bank account to question the bank inquiry order is granted only
after issuance of the freeze order physically seizing the subject
bank account. It cannot be undertaken prior to the issuance of are its accounts materially linked to the principal account being
the freeze order. investigated.41
While no grave abuse of discretion could be ascribed on the part In BSB Group, Inc. v. Go,42 we recounted the objective of the
of the appellate court when it explained in its letter that petitions absolute confidentiality rule which is protection from
of such nature "is strictly confidential in that when processing unwarranted inquiry or investigation if the purpose of such
the same, not even the handling staff members of the Office of inquiry or investigation is merely to determine the existence and
the Presiding Justice know or have any knowledge who the nature, as well as the amount of the deposit in any given bank
subject bank account holders are, as well as the bank accounts account:
involved," it was incorrect when it declared that "under the rules,
xxx. There is, in fact, much disfavor to construing these primary
the Office of the Presiding Justice is strictly mandated not to
and supplemental exceptions in a manner that would authorize
disclose, divulge, or communicate to anyone directly or
unbridled discretion, whether governmental or otherwise, in
indirectly, in any manner or by any means, the fact of the filing
utilizing these exceptions as authority for unwarranted inquiry
of any petition brought before [the Court of Appeals] by the
into bank accounts. It is then perceivable that the present legal
Anti-Money Laundering Council, its contents and even its entry
order is obliged to conserve the absolutely confidential nature of
in the logbook." As a result, the appellate court effectively
bank deposits.
precluded and prevented SPCMB of any recourse, amounting to
a denial of SPCMB's letter request. The measure of protection afforded by the law has been
explained in China Banking Corporation v. Ortega. That case
We cannot overemphasize that SPCMB, as the owner of the
principally addressed the issue of whether the prohibition
bank account which may be the subject of inquiry of the AMLC,
against an examination of bank deposits precludes garnishment
ought to have a legal remedy to question the validity and
in satisfaction of a judgment. Ruling on that issue in the
propriety of such an order by the appellate court under Section
negative, the Court found guidance in the relevant portions of
11 of the AMLA even if subsequent to the issuance of a freeze
the legislative deliberations on Senate Bill No. 351 and House
order. Moreover, given the scope of inquiry of the AMLC,
Bill No. 3977, which later became the Bank Secrecy Act, and it
reaching and including even related accounts, which inquiry into
held that the absolute confidentiality rule in R.A. No. 1405
specifies a proviso that: "[t]hat the procedure for the ex-
actually aims at protection from unwarranted inquiry or
parte application of the ex-parte court order for the principal
investigation if the purpose of such inquiry or investigation is
account shall be the same with that of the related accounts,"
merely to determine the existence and nature, as well as the
SPCMB should be allowed to question the government
amount of the deposit in any given bank account. Thus,
intrusion. Plainly, by implication, SPCMB can demonstrate the
absence of probable cause, i.e. that it is not a related account nor
x x x The lower court did not order an examination of or inquiry attachment or garnishment will bring out into the open the value
into the deposit of B&B Forest Development Corporation, as of such deposit. Is that prohibited by... the law?
contemplated in the law. It merely required Tan Kim Liong to
Mr. Ramos: It is only prohibited to the extent that the inquiry...
inform the court whether or not the defendant B&B Forest
is made only for the purpose of satisfying a tax liability already
Development Corporation had a deposit in the China Banking
declared for the protection of the right in favor of the
Corporation only for purposes of the garnishment issued by it,
government; but when the object is merely to inquire whether he
so that the bank would hold the same intact and not allow any
has a deposit or not for purposes of taxation, then this is fully
withdrawal until further order. It will be noted from the
covered by the law. x x x
discussion of the conference committee report on Senate Bill
No. 351 and House Bill No. 3977 which later became Republic Mr. Marcos: The law prohibits a mere investigation into the
Act No. 1405, that it was not the intention of the lawmakers to existence and the amount of the deposit.
place banks deposits beyond the reach of execution to satisfy a
final judgment Thus: Mr. Ramos: Into the very nature of such deposit. x x x (Citations
omitted)
x x x Mr. Marcos: Now, for purposes of the record, I should like
the Chairman of the Committee on Ways and Means to clarify What is reflected by the foregoing disquisition is that the law
this further. Suppose an individual has a tax case. He is being plainly prohibits a mere investigation into the existence and the
held liable by the Bureau of Internal Revenue [(BIR)] or, say, amount of the deposit. We relate the principle to SPCMB's
P1,000.00 worth of tax liability, and because of this the deposit relationship to the reported principal account under
of this individual [has been] attached by the [BIR]. investigation, one of its clients, former Vice President Binay.
SPCMB as the owner of one of the bank accounts reported to be
Mr. Ramos: The attachment will only apply after the court has investigated by the AMLC for probable money laundering
pronounced sentence declaring the liability of such person. But offenses should be allowed to pursue remedies therefrom where
where the primary aim is to determine whether he has a bank there are legal implications on the inquiry into its accounts as a
deposit in order to bring about a proper assessment by the [BIR], law firm. While we do not lapse into conjecture and cannot take
such inquiry is not allowed by this proposed law. up the lance for SPCMB on probable violation of the attorney-
client privilege based on pure speculation, the extent of
Mr. Marcos: But under our rules of procedure and under the
information obtained by the AMLC concerning the clients of
Civil Code, the attachment or garnishment of money deposited
SPCMB has not been fully drawn and sufficiently demonstrated.
is allowed. Let us assume for instance that there is a preliminary
At the same time, the owner of bank accounts that could be
attachment which is for garnishment or for holding liable all
potentially affected has the right to challenge whether the
moneys deposited belonging to a certain individual, but such
requirements for issuance of the bank inquiry order were indeed
complied with given that such has implications on its property SEC. 2. Action by the Presiding Justice or Executive
rights. In this regard, SPCMB's obeisance to promulgated rules Justice. — When a petition involves an urgent matter, such as
on the matter could have afforded it a remedy, even post issuance an application for writ of habeas corpus, amparo or habeas
of the bank inquiry order. data or for temporary restraining order, and there is no way of
convening the Raffle Committee or calling any of its members,
Rule 10.b. of the IRR defines probable cause as "such facts and
the Presiding Justice or the Executive Justice, as the case may
circumstances which would lead a reasonably discreet, prudent
be, or in his/her absence, the most senior Justice present, may
or cautious man to believe that an unlawful activity and/or a
conduct the raffle or act on the petition, subject to raffle in the
money laundering offense is about to be, is being or has been
latter case on the next working day in accordance with Rule III
committed and that the account or any monetary instrument or
hereof.
property sought to be frozen is in any way related to said
unlawful activity and/or money laundering offense." Evidently, (AMLA cases are limited to the first three most senior
the provision only refers to probable cause for freeze orders Justices as stated in the law and are raffled by the Chairmen
under Section 10 of the AMLA. From this we note that there is of the First, Second and Third Divisions to the members of
a glaring lacunae in our procedural rules concerning the bank their Divisions only.)
inquiry order under Section 11. Despite the advent of RA No.
Nothing in the IRCA justifies the disallowance to SPCMB of
10167, amending Section 11 of the AMLA, we have yet to draft
information and/or court records or proceedings pertaining to the
additional rules corresponding to the ex-parte bank inquiry
possible bank inquiry order covering its bank deposits or
order under Section 11. A.M. No. 05-11-04-SC entitled "Rule of
investment.
Procedure in Cases of Civil Forfeiture, Asset Preservation, and
Freezing of Monetary Instrument, Property, or Proceeds We note that the Presiding Justice's reply to the request for
Representing, Involving, or Relating to an Unlawful Activity or comment of SPCMB on the existence of a petition for bank
Money Laundering Offense Under Republic Act No. 9160, as inquiry order by the AMLC covering the latter's account only
Amended," only covers what is already provided in the title. As contemplates the provisions of Section 10 of the AMLA, its IRR
we have already noted, the bank inquiry order must likewise be and the promulgated rules thereon. Such immediate and
governed by rules specific to its issuance where the AMLC definitive foreclosure left SPCMB with no recourse on how to
regularly invokes this provision and which, expectedly clashes proceed from what it perceived to be violation of its rights as
with the rights of bank account holders. owner of the bank account examined. The reply of the Presiding
Justice failed to take into consideration Section 54 of A.M. No.
Apart from Section 2, Rule IV of the 2009 Internal Rules of the
05-11-04-SC on Notice of Freeze Order which reads:
CA (IRCA) reads:
SEC. 54. Notice of freeze order.- The Court shall order that demonstrating that the return of the Freeze Order must provide
notice of the freeze order be served personally, in the same an explanation as to the grounds for the identification of the
manner provided for the service of the asset preservation order related accounts, or the requirement of notice to a party in
in Section 14 of this Rule, upon the respondent or any person interest affected thereby whose bank accounts were examined.
acting in his behalf and such covered institution or government This necessarily contemplates the procedure for a prior bank
agency. The court shall notify also such party in interest as inquiry order which we ought to provide for.
may have appeared before the court. (Emphasis supplied)
For exact reference, we cite A.M. No. 05-11-04-SC, Title VIII
We relate this Section 54 to the already cited Rule 10.d of the on Petitions for Freeze Order in the CA which certain pertinent
IRR provisions we adopt and apply suppletorily as a separate Title on
Petitions for Bank Inquiry Order:
Rule 10.d. Upon receipt of the freeze order issued by the Court
of Appeals and upon verification by the covered institution that TITLE VIII
the related accounts originated from and/or are materially linked PETITIONS FOR FREEZE ORDER IN THE COURT OF
to the monetary instrument or property subject of the freeze APPEALS
order, the covered institution shall freeze these related accounts
SEC. 43. Applicability. - This Rule shall apply to petitions for
wherever these may be found.
freeze order in the Court of Appeals. The 2002 Internal Rules of
The return of the covered institution as required under Rule the Court of Appeals, as amended, shall apply suppletorily in all
10.c.3 shall include the fact of such freezing and an other aspects.
explanation as to the grounds for the identification of the
xxxx
related accounts.
SEC. 46. Contents of the petition. - The petition shall contain the
If the related accounts cannot be determined within twenty--
following allegations:
four (24) hours from receipt of the freeze order due to the
volume and/or complexity of the transactions or any other
(a) The name and address of the respondent;
justifiable factor(s), the covered institution shall effect the
freezing of the related accounts, monetary instruments and
properties as soon as practicable and shall submit a (b) A specific description with particularity of the monetary
supplemental return thereof to the Court of Appeals and the instrument, property or proceeds, their location, the
AMLC within twenty-four (24) hours from the freezing of name of the owner, holder, lienholder or possessor, if
said related accounts, monetary instruments and known;
properties. (Emphasis supplied)
(c) The grounds relied upon for the issuance of a freeze The action of the two justices or of the assigned justice alone, as
order; and the case may be, shall be forthwith promulgated and thereafter
submitted on the next working day to the absent member or
members of the Division for ratification, modification or recall.
(d) The supporting evidence showing that the subject
monetary instrument, property, or proceeds are in any If the Court is satisfied from the verified allegations of the
way related to or involved in an unlawful activity as petition that there exists probable cause that the monetary
defined under Section 3(i) of Republic Act No. 9160, as instrument, property, or proceeds are in any way related to or
amended by Republic Act No. 9194. involved in any unlawful activity as defined in Section 3(i) of
The petition shall be filed in seven clearly legible copies Republic Act No. 9160, as amended by Republic Act No. 9194,
and shall be accompanied by clearly legible copies of it shall issue ex parte a freeze order as hereinafter provided.
supporting documents duly subscribed under oath.
If the Court finds no substantial merit in the petition, it shall
dismiss the petition outright, stating the specific reasons for such
xxxx dismissal.
SEC. 49. Confidentiality; prohibited disclosure. - The logbook When the unanimous vote of the three justices of the Division
and the entries therein shall be kept strictly confidential and cannot be obtained, the Presiding Justice or the Executive Justice
maintained under the responsibility of the Presiding Justice or shall designate two justices by raffle from among the other
the Executive Justices, as the case may be. No person, including justices of the first three divisions to sit temporarily with them
Court personnel, shall disclose, divulge or communicate to forming a special division of five justices. The concurrence of a
anyone directly or indirectly, in any manner or by any means, majority of such special division shall be required for the
the fact of the filing of the petition for freeze order, its contents pronouncement of a judgment or resolution.
and its entry in the logbook except to those authorized by the
Court. Violation shall constitute contempt of court. SEC. 52. Issuance, form and contents of the freeze order - The
freeze order shall:
xxxx
SEC. 51. Action by the Court of Appeals.- All members of the (a) issue in the name of the Republic of the Philippines
Division of the Court to which the assigned justice belongs shall represented by the Anti-Money Laundering Council;
act on the petition within twenty-four hours after its filing.
However, if one member of the Division is not available, the
assigned justice and the other justice present shall act on the
petition. If only the assigned justice is present, he shall act alone.
(b) describe with particularity the monetary instrument, SEC. 55. Duty of respondent, covered institution or government
property or proceeds frozen, as well as the names of agency upon receipt of freeze order. - Upon receipt of a copy of
their owner or owners; and the freeze order, the respondent, covered institution or
government agency shall immediately desist from and not allow
any transaction, withdrawal, deposit, transfer, removal,
(c) direct the person or covered institution to immediately conversion, other movement or concealment the account
freeze the subject monetary instrument, property or representing, involving or relating to the subject monetary
proceeds or its related web of accounts. instrument, property, proceeds or its related web of accounts.

SEC. 53. Freeze order. SEC. 56. Consolidation with the pending civil forfeiture
proceedings - After the post-issuance hearing required in
(a) Effectivity; post issuance hearing. - The freeze order Section 53, the Court shall forthwith remand the case and
shall be effective immediately for a period of twenty transmit the records to the regional trial court for consolidation
days. Within the twenty-day period, the court shall with the pending civil forfeiture proceeding.
conduct a summary hearing, with notice to the parties, SEC. 57. Appeal.- Any party aggrieved by the decision or ruling
to determine whether or not to modify or lift the freeze of the court may appeal to the Supreme Court by petition for
order, or extend its effectivity as hereinafter provided. review on certiorari under Rule 45 of the Rules of Court. The
appeal shall not stay the enforcement of the subject decision or
(b) Extension. - On motion of the petitioner filed before the final order unless the Supreme Court directs otherwise.
expiration of twenty days from issuance of a freeze
A reverse situation affords us a clearer picture of the arbitrary
order, the court may for good cause extend its effectivity
and total preclusion of SPCMB to question the bank inquiry
for a period not exceeding six months.
order of the appellate court. In particular, in an occasion where
the appellate court denies the AMLC's ex-parte application for a
SEC. 54. Notice of freeze order.- The Court shall order that
bank inquiry order under Section 11, the AMLC can question
notice of the freeze order be served personally, in the same
this denial and assail such an order by the appellate court before
manner provided for the service of the asset preservation order
us on grave abuse of discretion. Among others, the AMLC can
in Section 14 of this Rule, upon the respondent or any person
demonstrate that it has established probable cause for its
acting in his behalf and such covered institution or government
issuance, or if the situation contemplates a denial of an
agency. The court shall notify also such party in interest as may
application for a bank inquiry order into a related account, the
have appeared before the court.
AMLC can establish that the account targeted is indeed a related
account. The resolution on these factual and legal issues ought activities and/or money laundering offense. Thus, the specific
to be reviewable, albeit post issuance of the Freeze Order, akin applicability of Sections 52, 53, 54 and 57 Title VIII of A.M.
to the provision of an Appeal to the Supreme Court under No. 05-11-04-SC covering the following: (1) Issuance, Form
Section 57 of A.M. No. 05-11-04-SC. and Content of the Freeze Order; (2) Effectivity of the Freeze
Order and Post Issuance Hearing thereon; (3) Notice of the
Palpably, the requirement to establish probable cause is not a
Freeze Order; and (4) Appeal from the Freeze Order as separate
useless supposition. To establish and demonstrate the required
Rules for Petitions to Question the Bank Inquiry Order. And as
probable cause before issuance of the bank inquiry and the
held in Eugenio which now applies to the present Section 11 of
freeze orders is a screw on which the AMLC's intrusive
the AMLA:
functions turns. We are hard pressed to justify a disallowance to
an aggrieved owner of a bank account to avail of remedies. Although oriented towards different purposes, the freeze order
under Section 10 and the bank inquiry order under Section 11
That there are no specific rules governing the bank inquiry order
are similar in that they are extraordinary provisional reliefs
does not signify that the CA cannot confirm to the actual owner
which the AMLC may avail of to effectively combat and
of the bank account reportedly being investigated whether it had
prosecute money laundering offenses. Crucially, Section 10 uses
in fact issued a bank inquiry order for covering its accounts, of
specific language to authorize an ex parte application for the
course after the issuance of the Freeze Order. Even
provisional relief therein, a circumstance absent in Section 11.
in Ligot,43 we held that by implication, where the law did not
xxx.44
specify, the owner of the "frozen" property may move to lift the
freeze order issued under Section 10 of the AMLA if he can The cited rules cover and approximate the distinction made
show that no probable cause exists or the 20-day period of the by Eugenio in declaring that the bank inquiry order is not a
freeze order has already lapsed without any extension being search warrant, and yet there are instituted requirements for the
requested from and granted by the CA. Drawing a parallel, such issuance of these orders given that such is now allowed ex-parte:
a showing of the absence of probable cause ought to be afforded
The Constitution and the Rules of Court prescribe particular
SPCMB.
requirements attaching to search warrants that are not imposed
Ligot clarifies that "probable cause refers to the sufficiency of by the AMLA with respect to bank inquiry orders. A
the relation between an unlawful activity and the property or constitutional warrant requires that the judge personally
monetary instrument which is the focal point of Section 10 of examine under oath or affirmation the complainant and the
the AMLA, as amended." This same probable cause is likewise witnesses he may produce, such examination being in the form
the focal point in a bank inquiry order to further determine of searching questions and answers. Those are impositions
whether the account under investigation is linked to unlawful which the legislative did not specifically prescribe as to the bank
inquiry order under the AMLA and we cannot find sufficient not denote that it cannot be questioned. The opportunity is still
legal basis to apply them to Section 11 of the AMLA. Simply rife for the owner of a bank account to question the basis for its
put, a bank inquiry order is not a search warrant or warrant of very inclusion into the investigation and the corresponding
arrest as it contemplates a direct object but not the seizure of freezing of its account in the process.
persons or property.
As noted in Eugenio, such an allowance accorded the account
Even as the Constitution and the Rules of Court impose a high holder who wants to contest the issuance of the order and the
procedural standard for the determination of probable cause for actual investigation by the AMLC, does not cast an unreasonable
the issuance of search warrants which Congress chose not to burden since the bank inquiry order has already been issued.
prescribe for the bank inquiry order under the AMLA, Congress Further, allowing for notice to the account holder should not, in
nonetheless disallowed ex parte applications for the inquiry any way, compromise the integrity of the bank records subject
order. We can discern that in exchange for these procedural of the inquiry which remain in the possession and control of the
standards normally applied to search warrants, Congress chose bank. The account holder so notified remains unable to do
instead to legislate a right to notice and a right to be heard — anything to conceal or cleanse his bank account records of
characteristics of judicial proceedings which are not ex parte. suspicious or anomalous transactions, at least not without the
Absent any demonstrable constitutional infirmity, there is no whole hearted cooperation of the bank, which inherently has no
reason for us to dispute such legislative policy choices.45 vested interest to aid the account holder in such manner. Rule
10.c.46 of the IRR provides for Duty of the Covered Institution
Thus, as an ex-parte bank inquiry order which Congress has now
receiving the Freeze Order. Such can likewise be made
specifically allowed, the owner of a bank account post issuance
applicable to covered institutions notified of a bank inquiry
of the freeze order has an opportunity under the Rules to contest
order.
the establishment of probable cause.
On the other hand, a scenario where SPCMB or any account
Again, we cannot avoid the requirement-limitation nexus in
holder under examination later shows that the bank inquiry order
Section 11. As it affords the government authority to pursue a
was without the required probable cause, the information
legitimate state interest to investigate money laundering
obtained through the account reverts to, and maintains, its
offenses, such likewise provides the limits for the authority
confidentiality. In short, any and all information obtained therein
given. Moreover, allowance to the owner of the bank account,
by the AMLC remains confidential, as if no examination or
post issuance of the bank inquiry order and the corresponding
inquiry on the bank account or investments was undertaken. The
freeze order, of remedies to question the order, will not forestall
foregoing consequence can be added as a Section in the Rules
and waylay the government's pursuit of money launderers. That
entitled "Effect of absence of probable cause."
the bank inquiry order is a separate from the freeze order does
All told, we affirm the constitutionality of Section 11 of the existing A.M. No. 05-11-04-SC Rule of Procedure in Cases
AMLA allowing the ex-parte application by the AMLC for of Civil Forfeiture, Asset Preservation, and Freezing of
authority to inquire into, and examine, certain bank deposits and Monetary Instrument, Property, or Proceeds Representing,
investments. Involving, or Relating to an Unlawful Activity or Money
Laundering Offense under Republic Act No. 9160, as Amended
Section 11 of the AMLA providing for the ex-parte bank deposit
for submission to the Committee on the Revision of the Rules of
inquiry is constitutionally firm for the reasons already discussed.
Court and eventual approval and promulgation of the Court en
The ex-parte inquiry shall be upon probable cause that the
banc.
deposits or investments are related to an unlawful activity as
defined in Section 3(i) of the law or a money laundering offense WHEREFORE, the petition is DENIED. Section 11 of Republic
under Section 4 of the same law. To effect the limit on the ex- Act No. 9160, as amended, is
parte inquiry, the petition under oath for authority to inquire, declared VALID and CONSTITUTIONAL.
must, akin to the requirement of a petition for freeze order
SO ORDERED.
enumerated in Title VIII of A.M. No. 05-11-04-SC, contain the
name and address of the respondent; the grounds relied upon for Sereno, C.J., Carpio, Velasco, Jr., Leonardo-De Castro, Brion,
the issuance of the order of inquiry; and the supporting evidence Bersamin, Del Castillo, Mendoza, Reyes, Perlas-Bernabe,
that the subject bank deposit are in any way related to or and Jardeleza, JJ., concur.
involved in an unlawful activity. Peralta, J., no part.
Leonen, J., see separate concurring opinion.
If the CA finds no substantial merit in the petition, it shall
Caguioa, J., on leave.
dismiss the petition outright stating the specific reasons for such
denial. If found meritorious and there is a subsequent petition for
freeze order, the proceedings shall be governed by the existing
Rules on Petitions for Freeze Order in the CA. From the issuance
of a freeze order, the party aggrieved by the ruling of the court
may appeal to the Supreme Court by petition for review
on certiorari under Rule 45 of the Rules of Court raising all
pertinent questions of law and issues, including the propriety of
the issuance of a bank inquiry order. The appeal shall not stay
the enforcement of the subject decision or final order unless the
Supreme Court directs otherwise. The CA is directed to draft
rules based on the foregoing discussions to complement the
EN BANC details of the Pork Barrel Scam that involved the misuse or
illegal diversion by certain legislators of their allocations from
G.R. No. 217682, July 17, 2018
the Priority Development Assistance Fund (PDAF) in
JOSE "JINGGOY" P. EJERCITO ESTRADA AND MA. connivance with Janet Lim Napoles (Napoles), the
PRESENTACION VITUG whistleblowers' former employer.3
EJERCITO, Petitioners, v. SANDIGANBAYAN (FIFTH
DIVISION); ANTI-MONEY LAUNDERING COUNCIL, The National Bureau of Investigation (NBI) conducted its
REPRESENTED BY ITS EXECUTIVE DIRECTOR, investigation, and on September 16, 2013 resolved to file in the
JULIA C. BACAY-ABAD; AND PEOPLE OF THE Office of the Ombudsman verified criminal complaints for
PHILIPPINES, REPRESENTED BY THE OFFICE OF plunder, malversation, direct bribery, and graft and corrupt
THE SPECIAL PROSECUTOR, Respondents. practices against the persons involved in the Pork Barrel Scam,
including petitioner Senator Jose "Jinggoy" P. Ejercito Estrada
RESOLUTION (Estrada).
BERSAMIN, J.:
Acting on the criminal complaints, the Office of the
By petition for certiorari, prohibition and mandamus, the Ombudsman requested the Anti-Money Laundering Council
petitioners seek to annul and set aside the resolution (AMLC) on October 11, 2013 to conduct a financial
promulgated on February 2, 2015,1 whereby the Sandiganbayan investigation of the bank accounts of the petitioners and others.4
denied their Urgent Motion to Suppress/Exclude (The Inquiry
Report on the Bank Transactions Related to the Alleged On March 28, 2014, the Office of the Ombudsman issued a joint
Involvement of Senator Jose P. "Jinggoy" Ejercito Estrada in resolution finding probable cause to indict Estrada and other
the PDAF Scam, and the Testimony of Witness Atty. Orlando C. persons for plunder and for violation of Republic Act No. 3019
Negradas, Jr. Thereon) (motion to suppress) filed in Criminal (The Anti-Graft and Corrupt Practices Act).5
Case No. SB-14-CRM-0239, a prosecution for plunder.2
Antecedents Meanwhile, the AMLC, determining that Estrada's accounts
were probably related to the charge of plunder and the violation
of R.A. No. 3019 charged against him and others, authorized its
On September 11, 2013, Benhur K. Luy, Merlina P. Sunas, secretariat to file in the Court of Appeals (CA) an ex
Gertrudes K. Luy, Nova Kay Batal-Macalintal, Elena S. Abundo parte application for bank inquiry pursuant to R.A. No. 9160, as
and Avelina C. Lingo (whistleblowers) executed their amended (The Anti-Money Laundering Act).
Pinagsamang Sinumpaang Salaysay in which they revealed the
In the resolution promulgated on May 28, 2014, the CA granted
directly or through LABAYEN, to the appropriate
the ex parte application.6
government agencies, of NAPOLES' non-government
organizations which became the recipients and/or target
In the information dated June 5, 2014 filed in the
implementors of ESTRADA'S PDAF projects, which
Sandiganbayan, the Office of the Ombudsman charged Estrada
duly-funded projects turned out to be ghosts or fictitious,
and others with plunder, the accusatory portion of which was as
thus enabling NAPOLES to misappropriate the PDAF
follows:
proceeds for her personal gain;
In 2004 to 2012, or thereabout, in the Philippines, and within this
Honorable Court's jurisdiction, above-named accused JOSE P.
EJERCITO ESTRADA, then a Philippine Senator, b) by taking undue advantage, on several occasions, of their
and PAULINE THERESE MARY C. LABAYEN, then official positions, authority, relationships, connections,
Deputy Chief of Staff of Sen. Estrada's Office, both public and influence to unjustly enrich themselves at the
officers, committing the offense in relation to their respective expense and to the damage and prejudice, of the Filipino
offices, conspiring with one another and with JANET LIM people and the Republic of the Philippines.
NAPOLES, and JOHN RAYMUND DE ASIS, did then and
there willfully, unlawfully, and criminally amass, accumulate
and/or acquire ill-gotten wealth amounting to at least ONE CONTRARY TO LAW.7
HUNDRED EIGHTY THREE MILLION SEVEN HUNDRED
In the process of inquiring into Estrada's accounts, the AMLC
NINETY THREE THOUSAND SEVEN HUNDRED FIFTY
discovered that Estrada had transferred substantial sums of
PESOS (Php183,793,750.00) through a combination or series of
money to the accounts of his wife, co-petitioner Ma.
overt criminal acts, as follows:
Presentacion Vitug Ejercito (Ejercito), on the dates relevant to
the Pork Barrel Scam. Considering that the transfers lacked
a) by repeatedly receiving from NAPOLES and/or her
apparent legal or economic justifications, the AMLC concluded
representative DE ASIS, and others, kickbacks or
that the accounts were linked to a predicate crime of plunder.
commissions under the following circumstances: before,
Hence, the AMLC filed in the CA a supplemental ex
during and/or after the project identification, NAPOLES
parte application for the bank inquiry to be conducted on
gave, and ESTRADA and/or LABAYEN received, a
Ejercito's accounts, among others.
percentage of the cost of a project to be funded from
ESTRADA'S Priority Development Assistance Fund
On August 15, 2014, the CA granted the supplemental ex
(PDAF), in consideration of ESTRADA'S endorsement,
parte application.8
ACTION OPENED THE GATE TO THE
The results of the AMLC's bank inquiry into Estrada's accounts INTRODUCTION OF EVIDENCE OBTAINED BY A
were contained in the so-called Inquiry Report on the Bank 'FISHING EXPEDITION' PROHIBITED BY THE
Transactions Related to the Alleged Involvement of Senator Jose CONSTITUTION;
"Jinggoy" P. Ejercito Estrada in the PDAF Scam (Inquiry
2. THAT THE AMENDMENT TO SECTION 11 OF R.A.
Report). On December 19, 2014, the AMLC furnished the Office
9160 SHOULD BE APPLIED RETROACTIVELY IN
of the Ombudsman a copy of the Inquiry Report. During
THIS CASE, WITHOUT CONSIDERING THAT
Estrada's bail hearings in the Sandiganbayan, the Prosecution
APPLICATION OF SECTION 11 IN THIS CASE
presented Atty. Orlando C. Negradas, Jr., an AMLC financial
VIOLATES THE RIGHT TO PRIVACY DERIVED
investigator, who testified on the Inquiry Report.9
FROM THE DUE PROCESS CLAUSE; AND THAT
SECTION 11, INSOFAR AS IT DISPENSES WITH
On January 23, 2015, Estrada filed the motion to suppress.10
THE 'NOTICE' REQUIREMENT TO HOLDERS OF
RELATED ACCOUNTS, IS UNCONSTITUTIONAL;
On February 2, 2015, the Sandiganbayan issued the assailed
resolution denying the motion to suppress. 3. THAT THE CONTENTS OF THE AMLC INQUIRY
REPORT IS ADMISSIBLE EVIDENCE IN THIS
Estrada moved for reconsideration, but the Sandiganbayan CASE, CONSIDERING THAT IT WAS OBTAINED
denied his motion on March 2, 2015.11 IN VIOLATION OF THE CONSTITUTIONAL RIGHT
TO PRIVACY;
Hence, the petitioners have come to the Court by petition
for certiorari, prohibition and mandamus, submitting that: 4. IN FAILING TO APPLY THE STANDARD OF
'STRICT SCRUTINY' IN DETERMINING WHETHER
THE RESPONDENT TRIBUNAL COMMITTED GRAVE PETITIONER MA. PRESENTACION EJERCITO
ABUSE OF DISCRETION AMOUNTING TO LACK OR WAS DEPRIVED OF HER RIGHT TO PRIVACY.12
EXCESS OF JURISDICITON IN RULING THAT:
The Office of the Special Prosecutor (OSP), in representation of
1. IN THIS CONTEXT, THE CONSTITUTIONAL the State, counters that the petition has not laid the foundation
RIGHTS AGAINST UNREASONABLE SEARCH for a finding of grave abuse of discretion on the part of the
AND SEIZURE AND ARREST AND THE RIGHT TO Sandiganbayan; that the Sandiganbayan correctly held that the
PRIVACY OF COMMUNICATION AND right to privacy was not an illimitable right but one necessarily
CORRESPONDENCE SHOULD ONLY YIELD TO circumscribed by the exceptions embedded in both the 1987
THE MANDATE OF THE AMLC, SINCE SUCH Constitution and the laws; that the constitutionality of R.A. No.
10167 could not be attacked collaterally; that, in any event, the 1.
Sandiganbayan properly ruled that the amendment under R.A. Section 11 of R.A. No. 9160, as amended, is constitutional
No. 10167 applied to Estrada; that the "heightened/strict
scrutiny" test was inapplicable because the extent and
We restate the relevant legal and jurisprudential milieu
delimitation of Estrada's privacy rights were specifically laid
expounded on in Subido Pagente Certeza Mendoza and Binay
down in laws and jurisprudence, and were matters of judicial
Law Offices v. Court of Appeals15 (Subido), viz.:
application, not interpretation; and that the petition has not
established grounds that would entitle the petitioners to the As a brief backgrounder to the amendment to Section 11 of the
provisional remedy of a temporary restraining order or writ of AMLA, the text originally did not specify for an ex
preliminary injunction.13 parte application by the AMLC for authority to inquire into or
examine certain bank accounts or investments. The extent of this
In its comment, the AMLC posits that Ejercito is not a proper authority was the topic of Rep. of the Phils. v. Hon. Judge
party; that R.A. No. 10167 does not violate the constitutional Eugenio, Jr., et al. (Eugenio) where the petitioner therein,
rights to privacy and to due process; that R.A. No. 10167 is not Republic of the Philippines, asseverated that the application for
an ex post facto law; that the Congress has the power to enact that kind of order under the questioned section of the AMLA did
R.A. No. 10167; and that the Inquiry Report did not emanate not require notice and hearing. Eugenio schooled us on the
from a fishing expedition, and, as such, the Inquiry Report and AMLA, specifically on the provisional remedies provided
the testimony of Atty. Negradas were admissible as evidence therein to aid the AMLC in enforcing the law.
against Estrada.14
x x x x

Quite apparent from the foregoing is that absent a specific


In other words, the issues are restated as follows:
wording in the AMLA allowing for ex parte proceedings in
a. Does Section 11 of R.A. No. 9160, as amended, violate orders authorizing inquiry and examination by the AMLC into
the constitutionally mandated right to due process and certain bank deposits or investments, notice to the affected party
right to privacy? is required.
b. Should the ex parte application for a bank inquiry order
Heeding the Court's observance in Eugenio that the remedy of
provided for in Section 11 of R.A. No. 9160, as amended,
the Republic then lay with the legislative, Congress enacted
be applied retroactively?
Republic Act No. 10167 amending Section 11 of the AMLA and
Ruling of the Court
specifically inserted the word ex parte appositive of the nature 9160 is not permissible. Unless a law or rule is annulled by a
of this provisional remedy available to the AMLC thereunder. direct proceeding, the legal presumption of its validity stands.19
Like the petitioners in Subido, the petitioners herein contend that
It is relevant to remind, however, that the constitutionality of
Section 11 of R.A. No. 9160, as amended, is unconstitutional
Section 11 of R.A. No. 9160, as amended, has been dealt with
insofar as it allows the filing of an ex parte application for an
and upheld in Subido, where we ruled that the AMLC's ex
order to inquire into bank deposits and investments for violating
parte application for the bank inquiry order based on Section 11
the constitutionally-mandated right to due process and right to
of R.A. No. 9160, as amended by R.A. No. 10167, did not violate
privacy; that Section 11 of R.A. No. 9160 is being used for a
substantive due process because the physical seizure of the
"fishing expedition;" that the disclosure of "related accounts"
targeted corporeal property was not contemplated by the law.
imposed by the amendment to Section 11 of R.A. No. 9160 is
clearly a "fruit of the poisonous tree;" and that the Inquiry Report
We clarify that the AMLC, in investigating probable money
should consequently be declared inadmissible as evidence.16
laundering activities, does not exercise quasi-judicial powers,
but merely acts as an investigatory body with the sole power of
The petitioners' contentions have no merit.
investigation similar to the functions of the National Bureau of
Investigation (NBI). Hence, the ex parte application for the bank
To start with, the procedural rules under Rule 65 of the Rules of
inquiry order cannot be said to violate any person's
Court governing the special civil actions for certiorari,
constitutional right to procedural due process.20 Also, the source
prohibition and mandamus limit the remedy to a person
of the right to privacy respecting bank deposits is statutory, not
aggrieved by the assailed decision, resolution, order or act.17 For
constitutional; hence, the Congress may validly carve out
purposes of the rule, a person aggrieved is one who was a party
exceptions to the rule on the secrecy of bank deposits, as
in the original proceedings before the respondent officer,
illustrated in Section 11 of R.A. No. 9160.21
tribunal or agency.18 As such, Ejercito cannot seek the
annulment of the assailed resolutions of the Sandiganbayan
With the consistency of the assailed provision of R.A. No. 9160
because she was not a party in the original proceeding pending
with the Constitution, the petitioners' argument that the Inquiry
thereat involving Estrada, her husband.
Report was the fruit of a poisonous tree and, therefore,
inadmissible in evidence remains unsubstantiated.
And, secondly, the petitioners' assailing herein the
constitutionality of Section 11 of R.A. No. 9160, as amended, 2.
constitutes a collateral attack against such legal provision. A The amendment to Section 11 of R.A. 9160 allowing an ex
collateral attack against a presumably valid law like R.A. No.
parte application for the bank inquiry does not violate the legal rules of evidence, and authorizes conviction upon less or
proscription against ex post facto laws different testimony than the law required at the time of the
commission of the offense; or (5) assumes to regulate civil rights
and remedies only, but in effect imposes a penalty or deprivation
The petitioners insist that R.A. No. 10167, which amended
of a right for an act that was lawful when done; or (6) deprives
Section 11 of R.A. No. 9160, is an ex post facto legislation
a person accused of a crime of some lawful protection to which
because it applies retroactively to bank transactions made prior
he has become entitled, such as the protection of a former
to the effectivity of the amendment and imposes new legal
conviction or acquittal, or a proclamation of amnesty.23
burdens to already-completed transactions; that R.A. No. 10167
should only be prospective; that in Republic v. Eugenio, Jr. (545
The petitioners rely on Republic v. Eugenio, Jr., wherein the
SCRA 384), the application for the bank inquiry order issued on
Court declared that the proscription against ex post facto laws
July 4, 2005 as a means of inquiring into the records of
should be applied to the interpretation of the original text of
transactions entered into prior to the passage of R.A. No. 9160
Section 11 of R.A. No. 9160 because the passage of said law
would be constitutionally infirm and offensive to the ex post
"stripped another layer off the rule on absolute confidentiality
facto clause; that the present case involves transactions and
that provided a measure of lawful protection to the account
deposits made by the petitioners in the period from 2005 up to
holder." Accordingly, we held therein that the application for the
2012, or prior to the amendment of Section 11 of R.A. No. 9160
bank inquiry order as the means of inquiring into records of
that took effect on June 18, 2012; that by analogy the authority
transactions entered into prior to thepassage of R.A. No. 9160
given through the order issued upon ex parte application under
would be constitutionally infirm, offensive as it was to the ex
R.A. No. 10167 cannot be made to apply to deposits and
post facto clause of the Constitution.24
transactions of the petitioners prior to June 18, 2012.22
The petitioners' reliance on Republic v. Eugenio, Jr. is
The insistence of the petitioners is unfounded and bereft of
misplaced. Unlike the passage of R.A. No. 9160 in order to allow
substance.
an exception to the general rule on bank secrecy, the amendment
introduced by R.A. No. 10167 does away with the notice to the
An ex post facto law is a law that either: (1) makes criminal an
account holder at the time when the bank inquiry order is applied
act done before the passage of the law that was innocent when
for. The elimination of the requirement of notice, by itself, is not
done, and punishes such act; or (2) aggravates a crime, or makes
a removal of any lawful protection to the account holder because
the crime greater than it was when committed; or (3) changes the
the AMLC is only exercising its investigative powers at this
punishment and inflicts a greater punishment than the law
stage. Indeed, R.A. No. 10167, in recognition of the ex post
annexed to the crime when it was committed; or (4) alters the
facto clause of the Constitution, explicitly provides that "the
penal provisions shall not apply to acts done prior to the WHEREFORE, in view of the foregoing, the Court
effectivity of the AMLA on October 17, 2001." hereby RESOLVES to:

Furthermore, the AMLC's inquiry and examination into bank (1) DENY accused Estrada's Motion to Dismiss the case for lack
accounts are not undertaken whimsically based on its of merit; and
investigative discretion. The AMLC and the CA are respectively
required to ascertain the existence of probable cause before any (2) RECONSIDER and SET ASIDE the Resolution dated
bank inquiry order is issued. Section 11 of R.A. 9160, even with January 7, 2016 as to accused Estrada, and hereby GRANTS bail
the allowance of an ex parte application therefor, cannot be to accused Estrada, upon the submission and approval of bail in
categorized as authorizing the issuance of a general warrant. the amount of One Million Pesos (P1,000,000.00), to be posted
This is because a search warrant or warrant of arrest in cash.
contemplates a direct object but the bank inquiry order does not
involve the seizure of persons or property.25 SO ORDERED.27
On November 10, 2017, the Sandiganbayan denied the People's
Lastly, the holder of a bank account subject of a bank inquiry
motion for reconsideration and upheld the grant of bail to
order issued ex parte is not without recourse. He has the
Estrada.28
opportunity to question the issuance of the bank inquiry order
after a freeze order is issued against the account. He can then
Considering that the resolutions being assailed trace their roots
assail not only the finding of probable cause for the issuance of
to the bail hearing of Estrada, the aforementioned conclusions of
the freeze order, but also the finding of probable cause for the
the Sandiganbayan relevant to his bail application, and the
issuance of the bank inquiry order.26
eventual grant of bail to him have rendered his petition
3. for certiorari, prohibition and mandamus moot and academic.
The petition has been rendered moot and academic by There is no question that whenever the issues have become moot
supervening events and academic, there ceases to be any justiciable controversy,
such that the resolution of the issues no longer have any practical
value.29 In effect, the Court can no longer grant any substantial
The foregoing discussion notwithstanding, the Court takes
relief to which the petitioner may be entitled. Hence, the Court
cognizance of the fact that Estrada has already been granted bail
should abstain from expressing its opinion in a case where no
by the Sandiganbayan on September 15, 2017, the resolution for
legal relief is needed or called for.30
which disposed:
WHEREFORE, the Court DISMISSES the petition
for certiorari, prohibition and mandamus for being moot and
academic, without pronouncement on costs of suit.

SO ORDERED.

Carpio, (Acting C. J.), Velasco, Jr., Leonardo-De Castro,


Peralta, Del Castillo, Leonen, Martires, Tijam, and A. Reyes,
Jr., JJ., concur.
Perlas-Bernabe, J., on official business.
Jardeleza,** and Gesmundo,**** JJ., no part.
Caguioa, J., on leave.
G.R. No. 184778 October 2, 2009 Nos. 08-119243, 08-119244, 08-119245, 08-119246, 08-
119247, 08-119248, 08-119249, 08-119250, 08-119251, and 08-
BANGKO SENTRAL NG PILIPINAS MONETARY
119273, and the Order dated May 21, 2008 that consolidated the
BOARD and CHUCHI FONACIER, Petitioners,
civil cases.
vs.
HON. NINA G. ANTONIO-VALENZUELA, in her The Facts
capacity as Regional Trial Court Judge of Manila, Branch
In September of 2007, the Supervision and Examination
28; RURAL BANK OF PARAÑAQUE, INC.; RURAL
Department (SED) of the Bangko Sentral ng Pilipinas (BSP)
BANK OF SAN JOSE (BATANGAS), INC.; RURAL
conducted examinations of the books of the following banks:
BANK OF CARMEN (CEBU), INC.; PILIPINO RURAL
Rural Bank of Parañaque, Inc. (RBPI), Rural Bank of San Jose
BANK, INC.; PHILIPPINE COUNTRYSIDE RURAL
(Batangas), Inc., Rural Bank of Carmen (Cebu), Inc., Pilipino
BANK, INC.; RURAL BANK OF CALATAGAN
Rural Bank, Inc., Philippine Countryside Rural Bank, Inc., Rural
(BATANGAS), INC. (now DYNAMIC RURAL BANK);
Bank of Calatagan (Batangas), Inc. (now Dynamic Rural Bank),
RURAL BANK OF DARBCI, INC.; RURAL BANK OF
Rural Bank of Darbci, Inc., Rural Bank of Kananga (Leyte), Inc.
KANANGA (LEYTE), INC. (now FIRST INTERSTATE
(now First Interstate Rural Bank), Rural Bank de Bisayas
RURAL BANK); RURAL BANK OF BISAYAS
Minglanilla (now Bank of East Asia), and San Pablo City
MINGLANILLA (now BANK OF EAST ASIA); and SAN
Development Bank, Inc.
PABLO CITY DEVELOPMENT BANK,
INC., Respondents. After the examinations, exit conferences were held with the
officers or representatives of the banks wherein the SED
DECISION
examiners provided them with copies of Lists of
VELASCO, JR., J.: Findings/Exceptions containing the deficiencies discovered
during the examinations. These banks were then required to
The Case
comment and to undertake the remedial measures stated in these
This is a Petition for Review on Certiorari under Rule 45 with lists within 30 days from their receipt of the lists, which remedial
Prayer for Issuance of a Temporary Restraining Order measures included the infusion of additional capital. Though the
(TRO)/Writ of Preliminary Injunction, questioning the Decision banks claimed that they made the additional capital infusions,
dated September 30, 20081 of the Court of Appeals (CA) in CA- petitioner Chuchi Fonacier, officer-in-charge of the SED, sent
G.R. SP No. 103935. The CA Decision upheld the Order2 dated separate letters to the Board of Directors of each bank, informing
June 4, 2008 of the Regional Trial Court (RTC), Branch 28 in them that the SED found that the banks failed to carry out the
Manila, issuing writs of preliminary injunction in Civil Case required remedial measures. In response, the banks requested
that they be given time to obtain BSP approval to amend their Nos. 08-119244, 08-119245, 08-119246, 08-119247, 08-
Articles of Incorporation, that they have an opportunity to seek 119248, 08-119249, 08-119250, and 08-119251, respectively.
investors. They requested as well that the basis for the capital
On May 13, 2008, the RTC denied the prayer for a TRO of
infusion figures be disclosed, and noted that none of them had
Pilipino Rural Bank, Inc. The bank filed a motion for
received the Report of Examination (ROE) which finalizes the
reconsideration the next day.
audit findings. They also requested meetings with the BSP audit
teams to reconcile audit figures. In response, Fonacier reiterated On May 14, 2008, Fonacier and the BSP filed their opposition
the banks’ failure to comply with the directive for additional to the application for a TRO and writ of preliminary injunction
capital infusions. in Civil Case No. 08-119243 with the RTC. Respondent Judge
Nina Antonio-Valenzuela of Branch 28 granted RBPI’s prayer
On May 12, 2008, the RBPI filed a complaint for nullification
for the issuance of a TRO.
of the BSP ROE with application for a TRO and writ of
preliminary injunction before the RTC docketed as Civil Case The other banks separately filed motions for consolidation of
No. 08-119243 against Fonacier, the BSP, Amado M. Tetangco, their cases in Branch 28, which motions were granted. Judge
Jr., Romulo L. Neri, Vicente B. Valdepenas, Jr., Raul A. Valenzuela set the complaint of Rural Bank of San Jose
Boncan, Juanita D. Amatong, Alfredo C. Antonio, and Nelly F. (Batangas), Inc. for hearing on May 15, 2008. Petitioners
Villafuerte. RBPI prayed that Fonacier, her subordinates, agents, assailed the validity of the consolidation of the nine cases before
or any other person acting in her behalf be enjoined from the RTC, alleging that the court had already prejudged the case
submitting the ROE or any similar report to the Monetary Board by the earlier issuance of a TRO in Civil Case No. 08-119243,
(MB), or if the ROE had already been submitted, the MB be and moved for the inhibition of respondent judge. Petitioners
enjoined from acting on the basis of said ROE, on the allegation filed a motion for reconsideration regarding the consolidation of
that the failure to furnish the bank with a copy of the ROE the subject cases.
violated its right to due process.
On May 16, 2008, San Pablo City Development Bank, Inc. filed
The Rural Bank of San Jose (Batangas), Inc., Rural Bank of a similar complaint against the same defendants with the RTC,
Carmen (Cebu), Inc., Pilipino Rural Bank, Inc., Philippine and this was docketed as Civil Case No. 08-119273 that was
Countryside Rural Bank, Inc., Rural Bank of Calatagan later on consolidated with Civil Case No. 08-119243. Petitioners
(Batangas), Inc., Rural Bank of Darbci, Inc., Rural Bank of filed an Urgent Motion to Lift/Dissolve the TRO and an
Kananga (Leyte), Inc., and Rural Bank de Bisayas Minglanilla Opposition to the earlier motion for reconsideration of Pilipino
followed suit, filing complaints with the RTC substantially Rural Bank, Inc.
similar to that of RBPI, including the reliefs prayed for, which
were raffled to different branches and docketed as Civil Cases
On May 19, 2008, Judge Valenzuela issued an Order granting 1) Re: Civil Case No. 08-119243. Pursuant to Rule 58, Section
the prayer for the issuance of TROs for the other seven cases 4(b) of the Revised Rules of Court, plaintiff Rural Bank of
consolidated with Civil Case No. 08-119243. On May 21, 2008, Paranaque Inc. is directed to post a bond executed to the
Judge Valenzuela issued an Order denying petitioners’ motion defendants, in the amount of P500,000.00 to the effect that the
for reconsideration regarding the consolidation of cases in plaintiff will pay to the defendants all damages which they may
Branch 28. On May 22, 2008, Judge Valenzuela granted the sustain by reason of the injunction if the Court should finally
urgent motion for reconsideration of Pilipino Rural Bank, Inc. decide that the plaintiff was not entitled thereto. After posting of
and issued a TRO similar to the ones earlier issued. the bond and approval thereof, let a writ of preliminary
injunction be issued to enjoin and restrain the defendants from
On May 26, 2008, petitioners filed a Motion to Dismiss against
submitting the Report of Examination or any other similar report
all the complaints (except that of the San Pablo City
prepared in connection with the examination conducted on the
Development Bank, Inc.), on the grounds that the complaints
plaintiff, to the Monetary Board. In case such a Report on
stated no cause of action and that a condition precedent for filing
Examination [sic] or any other similar report prepared in
the cases had not been complied with. On May 29, 2008, a
connection with the examination conducted on the plaintiff has
hearing was conducted on the application for a TRO and for a
been submitted to the Monetary Board, the latter and its
writ of preliminary injunction of San Pablo City Development
members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan,
Bank, Inc.
Amatong, Antonio, and Villafuerte) are enjoined and restrained
The Ruling of the RTC from acting on the basis of said report.

After the parties filed their respective memoranda, the RTC, on 2) Re: Civil Case No. 08-119244. Pursuant to Rule 58, Section
June 4, 2008, ruled that the banks were entitled to the writs of 4(b) of the Revised Rules of Court, plaintiff Rural Bank of San
preliminary injunction prayed for. It held that it had been the Jose (Batangas), Inc. is directed to post a bond executed to the
practice of the SED to provide the ROEs to the banks before defendants, in the amount of P500,000.00 to the effect that the
submission to the MB. It further held that as the banks are the plaintiff will pay to the defendants all damages which they may
subjects of examinations, they are entitled to copies of the ROEs. sustain by reason of the injunction if the Court should finally
The denial by petitioners of the banks’ requests for copies of the decide that the plaintiff was not entitled thereto. After posting of
ROEs was held to be a denial of the banks’ right to due process. the bond and approval thereof, let a writ of preliminary
injunction be issued to enjoin and restrain the defendants from
The dispositive portion of the RTC’s order reads: submitting the Report of Examination or any other similar report
WHEREFORE, the Court rules as follows: prepared in connection with the examination conducted on the
plaintiff, to the Monetary Board. In case such a Report on
Examination [sic] or any other similar report prepared in was not entitled thereto. After posting of the bond and approval
connection with the examination conducted on the plaintiff has thereof, let a writ of preliminary injunction be issued to enjoin
been submitted to the Monetary Board, the latter and its and restrain the defendants from submitting the Report of
members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Examination or any other similar report prepared in connection
Amatong, Antonio, and Villafuerte) are enjoined and restrained with the examination conducted on the plaintiff, to the Monetary
from acting on the basis of said report. Board. In case such a Report on Examination [sic] or any other
similar report prepared in connection with the examination
3) Re: Civil Case No. 08-119245. Pursuant to Rule 58, Section
conducted on the plaintiff has been submitted to the Monetary
4(b) of the Revised Rules of Court, plaintiff Rural Bank of
Board, the latter and its members (i.e. defendants Tetangco,
Carmen (Cebu), Inc. is directed to post a bond executed to the
Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte)
defendants, in the amount of P500,000.00 to the effect that the
are enjoined and restrained from acting on the basis of said
plaintiff will pay to the defendants all damages which they may
report.
sustain by reason of the injunction if the Court should finally
decide that the plaintiff was not entitled thereto. After posting of 5) Re: Civil Case No. 08-119247. Pursuant to Rule 58, Section
the bond and approval thereof, let a writ of preliminary 4(b) of the Revised Rules of Court, plaintiff Philippine
injunction be issued to enjoin and restrain the defendants from Countryside Rural Bank Inc. is directed to post a bond executed
submitting the Report of Examination or any other similar report to the defendants, in the amount of P500,000.00 to the effect that
prepared in connection with the examination conducted on the the plaintiff will pay to the defendants all damages which they
plaintiff, to the Monetary Board. In case such a Report on may sustain by reason of the injunction if the Court should
Examination [sic] or any other similar report prepared in finally decide that the plaintiff was not entitled thereto. After
connection with the examination conducted on the plaintiff has posting of the bond and approval thereof, let a writ of
been submitted to the Monetary Board, the latter and its preliminary injunction be issued to enjoin and restrain the
members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, defendants from submitting the Report of Examination or any
Amatong, Antonio, and Villafuerte) are enjoined and restrained other similar report prepared in connection with the examination
from acting on the basis of said report. conducted on the plaintiff, to the Monetary Board. In case such
a Report on Examination [sic] or any other similar report
4) Re: Civil Case No. 08-119246. Pursuant to Rule 58, Section
prepared in connection with the examination conducted on the
4(b) of the Revised Rules of Court, plaintiff Pilipino Rural Bank
plaintiff has been submitted to the Monetary Board, the latter
Inc. is directed to post a bond executed to the defendants, in the
and its members (i.e. defendants Tetangco, Neri, Valdepenas,
amount of P500,000.00 to the effect that the plaintiff will pay to
Boncan, Amatong, Antonio, and Villafuerte) are enjoined and
the defendants all damages which they may sustain by reason of
restrained from acting on the basis of said report.
the injunction if the Court should finally decide that the plaintiff
6) Re: Civil Case No. 08-119248. Pursuant to Rule 58, Section Examination [sic] or any other similar report prepared in
4(b) of the Revised Rules of Court, plaintiff Dynamic Bank Inc. connection with the examination conducted on the plaintiff has
(Rural Bank of Calatagan) is directed to post a bond executed to been submitted to the Monetary Board, the latter and its
the defendants, in the amount of P500,000.00 to the effect that members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan,
the plaintiff will pay to the defendants all damages which they Amatong, Antonio, and Villafuerte) are enjoined and restrained
may sustain by reason of the injunction if the Court should from acting on the basis of said report.
finally decide that the plaintiff was not entitled thereto. After
8) Re: Civil Case No. 08-119250. Pursuant to Rule 58, Section
posting of the bond and approval thereof, let a writ of
4(b) of the Revised Rules of Court, plaintiff Rural Bank of
preliminary injunction be issued to enjoin and restrain the
Kananga Inc. (First Intestate Bank), is directed to post a bond
defendants from submitting the Report of Examination or any
executed to the defendants, in the amount of P500,000.00 to the
other similar report prepared in connection with the examination
effect that the plaintiff will pay to the defendants all damages
conducted on the plaintiff, to the Monetary Board. In case such
which they may sustain by reason of the injunction if the Court
a Report on Examination [sic] or any other similar report
should finally decide that the plaintiff was not entitled thereto.
prepared in connection with the examination conducted on the
After posting of the bond and approval thereof, let a writ of
plaintiff has been submitted to the Monetary Board, the latter
preliminary injunction be issued to enjoin and restrain the
and its members (i.e. defendants Tetangco, Neri, Valdepenas,
defendants from submitting the Report of Examination or any
Boncan, Amatong, Antonio, and Villafuerte) are enjoined and
other similar report prepared in connection with the examination
restrained from acting on the basis of said report.
conducted on the plaintiff, to the Monetary Board. In case such
7) Re: Civil Case No. 08-119249. Pursuant to Rule 58, Section a Report on Examination [sic] or any other similar report
4(b) of the Revised Rules of Court, plaintiff Rural Bank of prepared in connection with the examination conducted on the
DARBCI, Inc. is directed to post a bond executed to the plaintiff has been submitted to the Monetary Board, the latter
defendants, in the amount of P500,000.00 to the effect that the and its members (i.e. defendants Tetangco, Neri, Valdepenas,
plaintiff will pay to the defendants all damages which they may Boncan, Amatong, Antonio, and Villafuerte) are enjoined and
sustain by reason of the injunction if the Court should finally restrained from acting on the basis of said report.
decide that the plaintiff was not entitled thereto. After posting of
9) Re: Civil Case No. 08-119251. Pursuant to Rule 58, Section
the bond and approval thereof, let a writ of preliminary
4(b) of the Revised Rules of Court, plaintiff Banco Rural De
injunction be issued to enjoin and restrain the defendants from
Bisayas Minglanilla (Cebu) Inc. (Bank of East Asia) is directed
submitting the Report of Examination or any other similar report
to post a bond executed to the defendants, in the amount of
prepared in connection with the examination conducted on the
P500,000.00 to the effect that the plaintiff will pay to the
plaintiff, to the Monetary Board. In case such a Report on
defendants all damages which they may sustain by reason of the
injunction if the Court should finally decide that the plaintiff was Boncan, Amatong, Antonio, and Villafuerte) are enjoined and
not entitled thereto. After posting of the bond and approval restrained from acting on the basis of said report.3
thereof, let a writ of preliminary injunction be issued to enjoin
The Ruling of the CA
and restrain the defendants from submitting the Report of
Examination or any other similar report prepared in connection Petitioners then brought the matter to the CA via a petition for
with the examination conducted on the plaintiff, to the Monetary certiorari under Rule 65 claiming grave abuse of discretion on
Board. In case such a Report on Examination [sic] or any other the part of Judge Valenzuela when she issued the orders dated
similar report prepared in connection with the examination May 21, 2008 and June 4, 2008.
conducted on the plaintiff has been submitted to the Monetary
Board, the latter and its members (i.e. defendants Tetangco, The CA ruled that the RTC committed no grave abuse of
Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) discretion when it ordered the issuance of a writ of preliminary
are enjoined and restrained from acting on the basis of said injunction and when it ordered the consolidation of the 10 cases.
report. It held that petitioners should have first filed a motion for
10) Re: Civil Case No. 08-119273. Pursuant to Rule 58, Section reconsideration of the assailed orders, and failed to justify why
4(b) of the Revised Rules of Court, plaintiff San Pablo City they resorted to a special civil action of certiorari instead.
Development Bank, Inc. is directed to post a bond executed to The CA also found that aside from the technical aspect, there
the defendants, in the amount of P500,000.00 to the effect that was no grave abuse of discretion on the part of the RTC, and if
the plaintiff will pay to the defendants all damages which they there was a mistake in the assessment of evidence by the trial
may sustain by reason of the injunction if the Court should court, that should be characterized as an error of judgment, and
finally decide that the plaintiff was not entitled thereto. After should be correctable via appeal.
posting of the bond and approval thereof, let a writ of
preliminary injunction be issued to enjoin and restrain the The CA held that the principles of fairness and transparency
defendants from submitting the Report of Examination or any dictate that the respondent banks are entitled to copies of the
other similar report prepared in connection with the examination ROE.
conducted on the plaintiff, to the Monetary Board. In case such Regarding the consolidation of the 10 cases, the CA found that
a Report on Examination [sic] or any other similar report there was a similarity of facts, reliefs sought, issues raised,
prepared in connection with the examination conducted on the defendants, and that plaintiffs and defendants were represented
plaintiff has been submitted to the Monetary Board, the latter by the same sets of counsels. It found that the joint trial of these
and its members (i.e. defendants Tetangco, Neri, Valdepenas, cases would prejudice any substantial right of petitioners.
Finding that no grave abuse of discretion attended the issuance II. THE HONORABLE COURT OF APPEALS GRAVELY
of the orders by the RTC, the CA denied the petition. ERRED IN FINDING THAT RESPONDENTS ARE
ENTITLED TO BE FURNISHED COPIES OF THEIR
On November 24, 2008, a TRO was issued by this Court,
RESPECTIVE ROEs BEFORE THE SAME IS SUBMITTED
restraining the CA, RTC, and respondents from implementing
TO THE MONETARY BOARD IN VIEW OF THE
and enforcing the CA Decision dated September 30, 2008 in CA-
PRINCIPLES OF FAIRNESS AND TRANSPARENCY
G.R. SP No. 103935.4
DESPITE LACK OF EXPRESS PROVISION IN THE NEW
By reason of the TRO issued by this Court, the SED was able to CENTRAL BANK ACT REQUIRING BSP TO DO THE
submit their ROEs to the MB. The MB then prohibited the SAME
respondent banks from transacting business and placed them
III. THE HONORABLE COURT OF APPEALS GRAVELY
under receivership under Section 53 of Republic Act No. (RA)
ERRED IN DEPARTING FROM WELL-ESTABLISHED
87915 and Sec. 30 of RA
PRECEPTS OF LAW AND JURISPRUDENCE
76536 through MB Resolution No. 1616 dated December 9,
A. THE EXCEPTIONS CITED BY PETITIONER JUSTIFIED
2008; Resolution Nos. 1637 and 1638 dated December 11, 2008;
RESORT TO PETITION FOR CERTIORARI UNDER RULE
Resolution Nos. 1647, 1648, and 1649 dated December 12,
65 INSTEAD OF FIRST FILING A MOTION FOR
2008; Resolution Nos. 1652 and 1653 dated December 16, 2008;
RECONSIDERATION
and Resolution Nos. 1692 and 1695 dated December 19, 2008,
with the Philippine Deposit Insurance Corporation as the B. RESPONDENT BANKS’ ACT OF RESORTING
appointed receiver. IMMEDIATELY TO THE COURT WAS PREMATURE
SINCE IT WAS MADE IN UTTER DISREGARD OF THE
Now we resolve the main petition.
PRINCIPLE OF PRIMARY JURISDICTION AND
Grounds in Support of Petition EXHAUSTION OF ADMINISTRATIVE REMEDY

I. THE HONORABLE COURT OF APPEALS GRAVELY C. THE ISSUANCE OF A WRIT OF PRELIMINARY


ERRED IN NOT FINDING THAT THE INJUNCTION INJUNCTION BY THE REGIONAL TRIAL COURT WAS
ISSUED BY THE REGIONAL TRIAL COURT VIOLATED NOT ONLY IMPROPER BUT AMOUNTED TO GRAVE
SECTION 25 OF THE NEW CENTRAL BANK ACT AND ABUSE OF DISCRETION7
EFFECTIVELY HANDCUFFED THE BANGKO SENTRAL
Our Ruling
FROM DISCHARGING ITS FUNCTIONS TO THE GREAT
AND IRREPARABLE DAMAGE OF THE COUNTRY’S The petition is meritorious.
BANKING SYSTEM;
In Lim v. Court of Appeals it was stated: The respondent banks cannot claim a violation of their right to
due process if they are not provided with copies of the ROEs.
The requisites for preliminary injunctive relief are: (a) the
The same ROEs are based on the lists of findings/exceptions
invasion of right sought to be protected is material and
containing the deficiencies found by the SED examiners when
substantial; (b) the right of the complainant is clear and
they examined the books of the respondent banks. As found by
unmistakable; and (c) there is an urgent and paramount necessity
the RTC, these lists of findings/exceptions were furnished to the
for the writ to prevent serious damage.
officers or representatives of the respondent banks, and the
As such, a writ of preliminary injunction may be issued only respondent banks were required to comment and to undertake
upon clear showing of an actual existing right to be protected remedial measures stated in said lists. Despite these instructions,
during the pendency of the principal action. The twin respondent banks failed to comply with the SED’s directive.
requirements of a valid injunction are the existence of a right and
Respondent banks are already aware of what is required of them
its actual or threatened violations. Thus, to be entitled to an
by the BSP, and cannot claim violation of their right to due
injunctive writ, the right to be protected and the violation against
process simply because they are not furnished with copies of the
that right must be shown.8
ROEs. Respondent banks were held by the CA to be entitled to
These requirements are absent in the present case. copies of the ROEs prior to or simultaneously with their
submission to the MB, on the principles of fairness and
In granting the writs of preliminary injunction, the trial court transparency. Further, the CA held that if the contents of the
held that the submission of the ROEs to the MB before the ROEs are essentially the same as those of the lists of
respondent banks would violate the right to due process of said findings/exceptions provided to said banks, there is no reason
banks. not to give copies of the ROEs to the banks. This is a flawed
This is erroneous. conclusion, since if the banks are already aware of the contents
of the ROEs, they cannot say that fairness and transparency are
The respondent banks have failed to show that they are entitled not present. If sanctions are to be imposed upon the respondent
to copies of the ROEs. They can point to no provision of law, no banks, they are already well aware of the reasons for the
section in the procedures of the BSP that shows that the BSP is sanctions, having been informed via the lists of
required to give them copies of the ROEs. Sec. 28 of RA 7653, findings/exceptions, demolishing that particular argument. The
or the New Central Bank Act, which governs examinations of ROEs would then be superfluities to the respondent banks, and
banking institutions, provides that the ROE shall be submitted to should not be the basis for a writ of preliminary injunction. Also,
the MB; the bank examined is not mentioned as a recipient of the reliance of the RTC on Banco Filipino v. Monetary Board9 is
the ROE. misplaced. The petitioner in that case was held to be entitled to
annexes of the Supervision and Examination Sector’s reports, as even without notice and hearing. The apparent lack of
it already had a copy of the reports themselves. It was not the procedural due process would not result in the invalidity of
subject of the case whether or not the petitioner was entitled to a action by the MB. This was the ruling in Central Bank of the
copy of the reports. And the ruling was made after the petitioner Philippines v. Court of Appeals.11 This "close now, hear later"
bank was ordered closed, and it was allowed to be supplied with scheme is grounded on practical and legal considerations to
annexes of the reports in order to better prepare its defense. In prevent unwarranted dissipation of the bank’s assets and as a
this instance, at the time the respondent banks requested copies valid exercise of police power to protect the depositors,
of the ROEs, no action had yet been taken by the MB with regard creditors, stockholders, and the general public. The writ of
to imposing sanctions upon said banks. preliminary injunction cannot, thus, prevent the MB from taking
action, by preventing the submission of the ROEs and worse, by
The issuance by the RTC of writs of preliminary injunction is an
preventing the MB from acting on such ROEs.
unwarranted interference with the powers of the MB. Secs. 29
and 30 of RA 765310 refer to the appointment of a conservator The trial court required the MB to respect the respondent banks’
or a receiver for a bank, which is a power of the MB for which right to due process by allowing the respondent banks to view
they need the ROEs done by the supervising or examining the ROEs and act upon them to forestall any sanctions the MB
department. The writs of preliminary injunction issued by the might impose. Such procedure has no basis in law and does in
trial court hinder the MB from fulfilling its function under the fact violate the "close now, hear later" doctrine. We held in Rural
law. The actions of the MB under Secs. 29 and 30 of RA 7653 Bank of San Miguel, Inc. v. Monetary Board, Bangko Sentral ng
"may not be restrained or set aside by the court except on petition Pilipinas:
for certiorari on the ground that the action taken was in excess
It is well-settled that the closure of a bank may be considered as
of jurisdiction or with such grave abuse of discretion as to
an exercise of police power. The action of the MB on this matter
amount to lack or excess of jurisdiction." The writs of
is final and executory. Such exercise may nonetheless be subject
preliminary injunction order are precisely what cannot be done
to judicial inquiry and can be set aside if found to be in excess
under the law by preventing the MB from taking action under
of jurisdiction or with such grave abuse of discretion as to
either Sec. 29 or Sec. 30 of RA 7653.
amount to lack or excess of jurisdiction.12
As to the third requirement, the respondent banks have shown
The respondent banks cannot—through seeking a writ of
no necessity for the writ of preliminary injunction to prevent
preliminary injunction by appealing to lack of due process, in a
serious damage. The serious damage contemplated by the trial
roundabout manner— prevent their closure by the MB. Their
court was the possibility of the imposition of sanctions upon
remedy, as stated, is a subsequent one, which will determine
respondent banks, even the sanction of closure. Under the law,
whether the closure of the bank was attended by grave abuse of
the sanction of closure could be imposed upon a bank by the BSP
discretion. Judicial review enters the picture only after the MB proof of a legal right and the injury sustained by the plaintiff, an
has taken action; it cannot prevent such action by the MB. The order for the issuance of a writ of preliminary injunction will be
threat of the imposition of sanctions, even that of closure, does nullified.16
not violate their right to due process, and cannot be the basis for
Courts are hereby reminded to take greater care in issuing
a writ of preliminary injunction.
injunctive relief to litigants, that it would not violate any law.
The "close now, hear later" doctrine has already been justified The grant of a preliminary injunction in a case rests on the sound
as a measure for the protection of the public interest. Swift action discretion of the court with the caveat that it should be made with
is called for on the part of the BSP when it finds that a bank is great caution.17 Thus, the issuance of the writ of preliminary
in dire straits. Unless adequate and determined efforts are taken injunction must have basis in and be in accordance with law. All
by the government against distressed and mismanaged banks, told, while the grant or denial of an injunction generally rests on
public faith in the banking system is certain to deteriorate to the the sound discretion of the lower court, this Court may and
prejudice of the national economy itself, not to mention the should intervene in a clear case of abuse.18
losses suffered by the bank depositors, creditors, and
WHEREFORE, the petition is hereby GRANTED. The assailed
stockholders, who all deserve the protection of the
CA Decision dated September 30, 2008 in CA-G.R. SP No.
government.13
103935 is hereby REVERSED. The assailed order and writ of
The respondent banks have failed to show their entitlement to preliminary injunction of respondent Judge Valenzuela in Civil
the writ of preliminary injunction. It must be emphasized that an Case Nos. 08-119243, 08-119244, 08-119245, 08-119246, 08-
application for injunctive relief is construed strictly against the 119247, 08-119248, 08-119249, 08-119250, 08-119251, and 08-
pleader.14 The respondent banks cannot rely on a simple appeal 119273 are hereby declared NULL and VOID.
to procedural due process to prove entitlement. The
SO ORDERED.
requirements for the issuance of the writ have not been proved.
No invasion of the rights of respondent banks has been shown,
nor is their right to copies of the ROEs clear and unmistakable.
There is also no necessity for the writ to prevent serious damage.
Indeed the issuance of the writ of preliminary injunction
tramples upon the powers of the MB and prevents it from
fulfilling its functions. There is no right that the writ of
preliminary injunction would protect in this particular case. In
the absence of a clear legal right, the issuance of the injunctive
writ constitutes grave abuse of discretion.15 In the absence of
FIRST DIVISION Petitioners then opened Time Deposit Accounts with RBMI
through inter-branch deposits to the accounts of RBMI
G.R. No. 230037, March 19, 2018
maintained in Metrobank and China Bank- Tagum, Davao
SPOUSES KISHORE LADHO CHUGANI AND PRISHA Branches. Thereafter, Certificates of Time Deposits (CTDs) and
KISHORE CHUGANI, ET Official Receipts were issued to petitioners.5
AL., Petitioners, v. PHILIPPINE DEPOSIT INSURANCE
Sometime in September 2011, petitioners came to know that the
CORPORATION, Respondent.
Monetary Board of the Bangko Sentral ng Pilipinas placed
DECISION RBMI under receivership and thereafter closed the latter.
Petitioners, then filed claims for insurance of their time
TIJAM, J.: deposits.6
Before Us is a Petition for Review on Certiorari filed by the Respondent Philippine Deposit Insurance Corporation (PDIC)
petitioners assailing the Decision1 dated June 29, 2016 of the denied the claims on the following grounds: 1.) based on bank
Court of Appeals (CA) in CA-G.R. SP No. 141770 dismissing records submitted by RBMI, petitioners' deposit accounts are not
the appeal of the petitioners and affirming the Consolidated part of RBMI's outstanding deposit liabilities; 2.) the time
Order2 dated December 27, 2013 of the Regional Trial Court deposits of petitioners are fraudulent and their CTDs were not
(RTC), Branch 62 of Makati City in SCA Nos. 13-763, 13-764, duly issued by RBMI, but were mere replicas of unissued CTD's
13-765, 13-801, 13-802, 13-803, 13-807, 13-1049, and 13-1050, in the inventory submitted by RBMI to PDIC; and 3.) the
which dismissed the Petition for Certiorari for lack of amounts purportedly deposited by the petitioners were credited
jurisdiction. to the personal account of Garan, hence, they could not be
The factual antecedents of the case are as follows: construed as valid liabilities of RBMI.7

Petitioners, upon the invitation of Raymundo Garan (Garan), the Petitioners filed a request for reconsideration of PDIC's denial
President of Rural Bank of Mawab (Davao), Inc., (RBMI), of their claim. PDIC however rejected the same in its
signified their intention to open Time Deposits with RBMI.3 Letter8 dated May 22, 2013.

RBMI then sent to petitioners, through courier, the Time Deposit Hence, petitioners filed a Petition for Certiorari under Rule 65
Specimen Signature Cards and Personal Information Sheet with of the Rules of Court with the Regional Trial Court (RTC).
the instruction that petitioners send them back, through mail, to On December 27, 2013, the RTC issued a Consolidated
RBMI.4 Order9 dismissing the Petition for Certiorari filed by the
petitioners, to wit:
WHEREFORE, the instant petitions docketed as SCA Nos. 13- Based on its charter, the PDIC has the duty to grant or deny
763, 13-764, 13-765, 13-801, 13-802, 13-803, 13-807, 13-1049, claims for deposit insurance. Specifically, under Section 4(f) of
and 13-1050 are all DISMISSED for lack of jurisdiction R.A. No. 3591, as amended by R.A. No. 9576,14 provides that:
SO ORDERED. "(f) The term "deposit" means the unpaid balance of money or
its equivalent received by a bank in the usual course of business
Aggrieved, the petitioners appealed the RTC's Decision to the
and for which it has given or is obliged to give credit to a
CA.
commercial, checking, savings, time or thrift account, or issued
The CA in its Decision10 dated June 29, 2016, denied the appeal in accordance with Bangko Sentral rules and regulations and
of the petitioners, thus: other applicable laws, together with such other obligations of a
bank, which, consistent with banking usage and practices, the
WHEREFORE, premises considered, the appeal is hereby Board of Directors shall determine and prescribe by regulations
DISMISSED, and the Consolidated Order dated December 27, to be deposit liabilities of the bank: Provided, That any
2013 of the Regional Trial Court of Makati City, Branch 62 in obligation of a bank which is payable at the office of the bank
SCA Nos. 13-763, 13-764, 13-765, 13-801, 13-802, 13-803, 13- located outside of the Philippines shall not be a deposit for any
807, 13-1049, and 13-1050 is AFFIRMED. of the purposes of this Act or included as part of the total
SO ORDERED.11 deposits or of insured deposits: Provided, further, That, subject
to the approval of the Board of Directors, any insured bank
Petitioners now come before Us raising the issues of 1) Whether which is incorporated under the laws of the Philippines which
the CA is correct in ruling that the RTC has no jurisdiction over maintains a branch outside the Philippines may elect to include
the Petitions for Certiorari filed by the petitioners; and 2) for insurance its deposit obligations payable only at such branch.
Whether the PDIC committed grave abuse of discretion in
denying petitioners claim for deposit insurance. The corporation shall not pay deposit insurance for the following
accounts or transactions, whether denominated, documented,
The petition has no merit. recorded or booked as deposit by the bank:
The PDIC was created by Republic Act (R.A.) No. 359112 on "(1) investment products such as bonds and securities, trust
June 22, 1963 as an insurer of deposits in all banks entitled to accounts, and other similar instruments;
the benefits of insurance under the PDIC Charter to promote and "(2) Deposit accounts or transactions which are unfunded, or that
safeguard the interests of the depositing public by way of are fictitious or fraudulent;
providing permanent and continuing insurance coverage of all "(3) Deposits accounts or transactions constituting, and/or
insured deposits.13 emanating from, unsage and unsound banking practice/s, as
determined by the Corporation, in consultation with the BSP, etc. of public administrative officers or bodies, who are
after due notice and hearing, and publication of a cease and required to investigate facts, or ascertain the existence of
desist order issued by the Corporation against such deposit facts, hold hearings, and draw conclusions from them, as a
accounts or transactions; and basis for their official action and to exercise discretion of a
"(4) Deposits that are determined to be the proceeds of an judicial nature.16
unlawful activity as defined under republic act 9160, as
In the instant case, the PDIC has the power to prepare and issue
amended.
rules and regulations to effectively discharge its
"The actions of the Corporation taken under this section shall be responsibilities.17 The power of the PDIC as to whether it will
final and executory, and may not be restrained or set aside by the deny or grant the claim for deposit insurance based on its rules
court, except on appropriate petition for certiorari on the ground and regulations partakes of a quasi-judicial function. Also, the
that the action was taken in excess of jurisdiction or with such fact that decisions of the PDIC as to deposit insurance shall be
grave abuse of discretion as to amount to a lack or excess of final and executory, such that it can only be set aside by a
jurisdiction. The petition for certiorari may only be filed within petition for certiorari evinces the intention of the Congress to
thirty (30) days from notice of denial of claim for deposit make PDIC as a quasi-judicial agency.
insurance."
Consistent with Section 4,18 Rule 65, the CA has the jurisdiction
As held in the case of Monetary Board, et. al., v. Philippine to rule on the alleged grave abuse of discretion of the PDIC.
Veterans Bank,15 this Court defined a quasi-judicial agency, to Therefore, the CA is correct when it held that the RTC has no
wit: jurisdiction over the Petitions for Certiorari filed by the
petitioners questioning the PDIC's denial of their claim for
A quasi-judicial agency or body is an organ of government
deposit insurance. Nevertheless, any question as to where the
other than a court and other than a legislature, which affects
petition for certiorari should be filed to question PDIC's
the rights of private parties through either adjudication or
decision on claims for deposit insurance has been put to rest by
rule-making. The very definition of an administrative agency
R.A. No. 10846.19 Section 7 therein provides:
includes its being vested with quasi-judicial powers. The ever
increasing variety of powers and functions given to xxxx
administrative agencies recognizes the need for the active
"The actions of the Corporation taken under Section 5(g) shall
intervention of administrative agencies in matters calling for
be final and executory, and may only be restrained or set aside
technical knowledge and speed in countless controversies which
by the Court of Appeals, upon appropriate petition
cannot possibly be handled by regular courts. A "quasi-judicial
for certiorari on the ground that the action was taken in excess
function" is a term which applies to the action, discretion,
of jurisdiction or with such grave abuse of discretion as to
amount to a lack or excess of jurisdiction. The petition accordance with established forms and requirements of the BSP
for certiorari may only be filed within thirty (30) days from and/or the PDIC.
notice of denial of claim for deposit insurance. (Emphasis ours)
Further, in Phil. Deposit Insurance Corp. v. CA,22 this Court
As it now stands, the remedy to question the decisions of the held that in order for the claim for deposit insurance with the
PDIC is through a Petition for Certiorari under Rule 65 and filed PDIC may prosper, it is necessary that the corresponding deposit
before the CA. must be placed in the insured bank.
Nevertheless, even if We treat the appeal filed by the petitioners Here, upon investigation by the PDIC, it was discovered that 1)
to the CA as a Petition for Certiorari, the same is still without the money allegedly placed by the petitioners in RBMI was in
merit. fact credited to the personal account of Garan, hence, they could
not be construed as valid liabilities of RBMI to petitioners; 2)
Grave abuse of discretion is the capricious and whimsical
based on bank records and the certified list of the bank's
exercise of the judgment of a court, tribunal or quasi-judicial
outstanding deposit liabilities, the alleged deposits of petitioners
agency that is equivalent to lack of jurisdiction. It must be so
are not part of RBMI's outstanding liabilities; and 3) the CTDs
grave such that the power was exercised in an arbitrary or
are not validly issued by RBMI, but were mere replicas of the
despotic manner by reason of passion or personal hostility.20
unissued and unused CTDs still included in the inventory of
In this case, it cannot be said that PDIC committed grave abuse RBMI. Further, the act of petitioners in opening Time Deposits
of discretion in denying petitioners claim for deposit insurance. and thereafter depositing several amounts of money through
inter-branch deposits with Metrobank and China Bank for the
Section 4(f) of R.A. No. 3591, as amended by R.A. No. 9576 account of RBMI can hardly be considered as in the ordinary
states that deposit means the unpaid balance of money or its course of business.
equivalent received by a bank in the usual course of business
and for which it has given or is obliged to give credit to a Considering the above disquisitions, it is sufficiently established
commercial, checking, savings, time or thrift account, or issued that the PDIC, did not commit any grave abuse of discretion in
in accordance with Bangko Sentral rules and regulations and denying petitioners' claim for deposit insurance as the same were
other applicable laws, together with such other obligations of a validly grounded on the facts, law and regulations issued by the
bank, which, consistent with banking usage and practices. PDIC.

Section 2(d) of PDIC Regulatory Issuance No. 2011-0221 states WHEREFORE, the petition is DENIED. The Decision dated
that for deposit to be considered as legitimate, it should be 1) June 29, 2016 of the Court of Appeals in CA-G.R. SP No.
received by a bank as a deposit in the usual course of business; 141770 is hereby AFFIRMED.
2) recorded in the books of the bank as such; 3) opened in
SO ORDERED.