1. JOSE C. GO vs. BANGKO SENTRAL NG PILIPINASG.R. No. 178429 October 23, 2009 BRION, J.

Restrictions on director-F: here jose go director- umutang and nagging guarantor at same time sa banko nya- then claims
not liable sa GBA kasi not xceed limit: sc liable.

Jose Go, the Director and the President and Chief Executive Officer of the Orient Commercial Banking Corporation (Orient Bank)
was charged before the RTC for violation of Section 83 of RA 337 or the General Banking Act. Go allegedly borrowed the
deposits/funds of the Orient Bank and/or acting as guarantor, indorser of obligor for loans to other persons.

Go filed a motion toquash the Information. Goclaimed that the Information was defective, as the facts charged therein do not
constitute an offense under Section 83 of RA 337.

In support of his motion to quash, Go averred that based onthe facts alleged in the Information, he was being prosecuted for
borrowing the deposits of the Orient Bank and/or acting as a guarantor, indorser or obligor for the banks loans to otherpersons. The
use of the word and/or meant that he was charged for being either a borrower or a guarantor, or for being both a borrower and
guarantor. Go claimed that the charge was not only vague, butalso did not constitute an offense. He posited that Section 83 of
RA337 penalized only directors and officers of banking institutionswho acted either as borrower or as guarantor,but not as both
(go claims since borrower and guarantor ako at same time, im not liable)

Go further pointed out that the Information failed to state that his alleged act of borrowing and/or guarantying was not
among the exceptions provided for in the law. According to Go, the second paragraph of Section 83 allowed banks to extend credit
accommodations to their directors, officers, and stockholders, provided it is limited to an amount equivalent to the respective
outstanding deposits and book value of the paid-in capital contribution in the bank. Extending credit accommodations to bank
directors, officers, and stockholders is not per se prohibited, unless the amount exceeds the legal limit . Since the
Information failed to state that the amount he purportedly borrowed and/or guaranteed was beyond the limit set by law,
Go insisted that the acts so charged did not constitute an offense.

The RTC granted Go’s motion to quash the Information. The CA annulled and set aside the RTCs orders and ordered the
reinstatement of the criminal charge against Go.

ISSUEWhether or not Go violated Section 83 of RA 337

RULING: YES. Under Section 83, RA 337, the following elements must be present to constitute a violation of its first paragraph:

1. the offender is a director or officer of any banking institution;

2. the offender, either directly or indirectly, for himself or as representative or agent of another, performs any of the
following acts:
a. he borrows any of the deposits or funds of such bank; or
b. he becomes a guarantor, indorser, or surety for loans from such bank to others, or
c. he becomes in any manner an obligor for money borrowed from bank or loaned by it;
3. the offender has performed any of such acts without the written approval of the majority of the directors of the bank,
excluding the offender, as the director concerned.

Ratio: The language of the law is broad enough to encompass either act of borrowing or guaranteeing, or both. Banks were not
created for the benefit of their directors and officers; they cannot use the assets of the bank for their own benefit, except as may be
permitted by law

A simple reading of the above elements easily rejects Go’s contention that the law penalizes a bank director or officer only
either for borrowing the bank’s deposits or funds or for guarantying loans by the bank, but not for acting in both capacities . The
essence of the crime is becoming an obligor of the bank without securing the necessary written approval of the majority of
the banks directors.

The second element merely lists down the various modes of committing the offense. The third mode, by declaring that [no
director or officer of any banking institution shall xxx] in any manner be an obligor for money borrowed from the bank or loaned
by it, in fact serves a catch-all phrase that covers any situation when a director or officer of the bank becomes its obligor. The
prohibition is directed against a bank director or officer who becomes in any manner an obligor for money borrowed from or
loaned by the bank without the written approval of the majority of the bank’s board of directors. To make a distinction between the
act of borrowing and guarantying is therefore unnecessary because in either situation, the director or officer concerned becomes an
obligor of the bank against whom the obligation is judicially demandable.

Contrary to Go’s claims, the second paragraph of Section 83, RA 337 does not provide for an exception to a violation of the
first paragraph thereof, nor does it constitute as an element of the offense charged. Section 83 of RA 337 actually imposes three
restrictions: approval, reportorial, and ceiling requirements.
 The approval requirement (found in the first sentence of the first paragraph of the law refers to the written approval of the
majority of the bank’s board of directors required before bank directors and officers can in any manner be an obligor for money
borrowed from or loaned by the bank.

Failure to secure the approval renders the bank director or officer concerned liable for prosecution and, upon conviction,
subjects him to the penalty provided in the third sentence of first paragraph of Section 83 .===The office of any director or officer
of a bank who violates the provisions of this section shall immediately become vacant and the director or officer shall be punished
by imprisonment of not less than one year nor more than ten years and by a fine of not less than one thousand nor more than ten
thousand pesos.

The reportorial requirement, on the other hand, mandates that any such approval should be entered upon the records of the
corporation, and a copy of the entry be transmitted to the appropriate supervising department.

The reportorial requirement is addressed to the bank itself, which, upon its failure to do so, subjects it to quo warranto proceedings
under Section 87 of RA 337.

The ceiling requirement under the second paragraph of Section 83 regulates the amount of credit accommodations that banks
may extend to their directors or officers by limiting these to an amount equivalent to the respective outstanding deposits and book
value of the paid-in capital contribution in the bank.

Again, this is a requirement directed at the bank.

In this light, a prosecution for violation of the first paragraph of Section 83, such as the one involved here, does not
require an allegation that the loan exceeded the legal limit. Even if the loan involved is below the legal limit, a written
approval by the majority of the banks directors is still required; otherwise, the bank director or officer who becomes an
obligor of the bank is liable.

Compliance with the ceiling requirement does not dispense with the approval requirement.
2.HILARIO P. SORIANO v. PEOPLE OF THE PHILIPPINES, BANGKO SENTRAL NG PILIPINAS (BSP),
PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC), PUBLIC PROSECUTOR ANTONIO C. BUAN, and
STATE PROSECUTOR ALBERTO R. FONACIER

DOSRI: F: President of RBSM, Soriano indirectly secured an ₱8 million loan with RBSM-thru a name of depositor nila
w/o knowledge enrico: sc: still liable even indirect.

FACTS Acting on a letter transmitted by the BSP to the DOJ, two informations were filed against Soriano: one for estafa through
falsification of documents, and the other for violation of the DOSRI law under Sec. 83 of the General Banking Act.

The second information was for violation of Section 83 of RA 337, The said provision refers to the prohibition against the
so-called DOSRI loans. The information alleged that, in his capacity as President of RBSM, Soriano indirectly secured an ₱8
million loan with RBSM, for his personal use and benefit, --without the written consent and approval of the bank's Board of
Directors, ---without entering the said transaction in the bank's records, and without transmitting a copy of the transaction to the
supervising department of the bank. ---His ruse was facilitated by placing the loan in the name of an unsuspecting RBSM
depositor, one Enrico Carlos.

Petitioner theorized that he could not possibly be held liable for estafa in concurrence with the charge for DOSRI violation.
According to him, the DOSRI charge presupposes that he acquired a loan, which would make the loan proceeds his own money
and he could neither possibly misappropriate nor convert to the prejudice of another, as required by the statutory definition of
estafa. On the other hand, if Petitioner did not acquire any loan, there can be no DOSRI violation to speak of.

ISSUE Whether or not Soriano is guilty of violating the DOSRI Law?

RULING YES. For violation of DOSRI rules, the information alleged that petitioner Soriano was the president of RBSM; that he
was able to indirectly obtain a loan from RBSM by putting the loan in the name of depositor Enrico Carlos; and that he did this
without complying with the requisite board approval, reportorial, and ceiling requirements.

The bank money (amounting to ₱8 million) which came to the possession of petitioner was money held in trust or
administration by him for the bank, in his fiduciary capacity as the President of said bank.It is not accurate to say that petitioner
became the owner of the ₱8 million because it was the proceeds of a loan. That would have been correct if the bank knowingly
extended the loan to petitioner himself. But that is not the case here.

A charge for DOSRI violation in such a situation wherein the accused bank officer did not secure a loan in his own
name, but was alleged to have used the name of another person in order to indirectly secure a loan from the bank.

Section 83. No director or officer of any banking institution shall, either directly or indirectly, for himself or as the representative
or agent of others, borrow any of the deposits of funds of such bank, nor shall he become a guarantor, indorser, or surety for loans
from such bank to others, or in any manner be an obligor for moneys borrowed from the bank or loaned by it, except with the
written approval of the majority of the directors of the bank, excluding the director concerned.

Any such approval shall be entered upon the records of the corporation and a copy of such entry shall be transmitted forthwith to
the Superintendent of Banks.

The office of any director or officer of a bank who violates the provisions of this section shall immediately become vacant and the
director or officer shall be punished by imprisonment of not less than one year nor more than ten years and by a fine of not less
than one thousand nor more than ten thousand pesos. x x x

The prohibition in Section 83 is broad enough to cover various modes of borrowing.  It covers loans by a bank director or
officer (like herein petitioner) which are made either: (1) directly, (2)  indirectly, (3) for himself, (4) or as the representative or
agent of others.

Even ditto:

It applies even if the director or officer is a mere guarantor, indorser or surety for someone else's loan  or is in any manner
an obligor for money borrowed from the bank or loaned by it. The covered transactions are prohibited unless the approval,
reportorial and ceiling requirements under Section 83 are complied with.
 Ratio: The prohibition is intended to protect the public, especially the depositors, from the overborrowing of bank funds
by bank officers, directors, stockholders and related interests, as such overborrowing may lead to bank failures.  It has been said
that "banking institutions are not created for the benefit of the directors [or officers]. ---While directors have great powers as
directors, they have no special privileges as individuals. They cannot use the assets of the bank for their own benefit except as
permitted by law. Stringent restrictions are placed about them so that when acting both for the bank and for one of themselves at
the same time, they must keep within certain prescribed lines regarded by the legislature as essential to safety in the banking
business".

A direct borrowing is obviously one that is made in the name of the DOSRI himself or where the DOSRI is a named
party, while an indirect borrowing includes one that is made by a third party, but the DOSRI has a stake in the transaction. The
latter type – indirect borrowing – applies here.

The information in Criminal Case alleges that petitioner "in his capacity as President of Rural Bank of San Miguel – San
Ildefonso branch x x x indirectly borrow[ed] or secure[d] a loan with [RBSM] x x x knowing fully well that the same has been
done by him without the written consent and approval of the majority of the board of directors x x x, and which consent and
approval the said accused deliberately failed to obtain and enter the same upon the records of said banking institution and to
transmit a copy thereof to the supervising department of the said bank x x x by using the name of one depositor Enrico Carlos x x
x, the latter having no knowledge of the said loan, and once  in possession of the said amount of eight million pesos (₱8 million),
[petitioner] converted the same to his own personal use and benefit".

The foregoing information describes the manner of securing the loan as indirect; names petitioner as the benefactor of the
indirect loan; and states that the requirements of the law were not complied with. It contains all the required element,  for a
violation of Section 83, even if petitioner did not secure the loan in his own name.

The broad interpretation of the prohibition in Section 83 is justified by the fact that it even expressly covers loans to
third parties where the third parties are aware of the transaction (such as principals represented by the DOSRI),

Even nga ganto liable pa din:

and where the DOSRI’s interest does not appear to be beneficial but even burdensome (such as in cases when the DOSRI
acts as a mere guarantor or surety).

If the law finds it necessary to protect the bank and the banking system in such situations, it will surely be illogical for it
to exclude a case like this where the DOSRI acted for his own benefit, using the name of an unsuspecting person.

A contrary interpretation will effectively allow a DOSRI to use dummies to circumvent the requirements of the law.
3.BIBIANO O. REYNOSO, IV vs. HON. COURT OF APPEALS and GENERAL CREDIT CORPORATION G.R. Nos.
116124-25 November 22, 2000 J. Ynares-Santiago

DOSRI AND DOC OF CORPO FICTION: F: CCC-DOSRI PASSED-CIRCUMVENT--CCCQC-GCC: Liable and pierce
the veil.

FACTSSometime in the early 1960s, the Commercial Credit Corporation (hereinafter, "CCC"), a financing and investment
firm, decided to organize franchise companies in different parts of the country, wherein it shall hold thirty percent (30%) equity.
Petitioner was designated as the resident manager of the franchise company in Quezon City , known as the Commercial Credit
Corporation of Quezon City (hereinafter, "CCC-QC").

CCC-QC entered into an exclusive management contract with CCC whereby the latter was granted the management and
full control of the business activities of the former. Under the contract, CCC-QC shall sell, discount and/or assign its receivables to
CCC. Subsequently, however, this discounting arrangement was discontinued pursuant to the so-called "DOSRI Rule", prohibiting
the lending of funds by corporations to its directors, officers, stockholders and other persons with related interests therein.

On account of the new restrictions imposed by the Central Bank policy by virtue of the DOSRI Rule, CCC decided to
form CCC Equity Corporation, (hereinafter, "CCC-Equity"), a wholly-owned subsidiary, to which CCC transferred its thirty (30%)
percent equity in CCC-QC. While petitioner continued to be the Resident Manager of CCC-QC, he drew his salaries and
allowances from CCC-Equity. Petitioner, in order to boost the business activities of CCC-QC, deposited his personal funds in the
company. In return, CCC-QC issued to him its interest-bearing promissory notes.

On August 15, 1980, a complaint for sum of money with preliminary attachment, was instituted in the then Court of First
Instance of Rizal by CCC-QC against petitioner, who had in the meantime been dismissed from his employment by CCC-Equity.
The complaint alleged that petitioner embezzled the funds of CCC-QC amounting to P1,300,593.11.

In his amended Answer, petitioner denied having unlawfully used funds of CCC-QC and asserted that the sum of
P1,300,593.11 represented his money placements in CCC-QC, as shown by twenty-three (23) checks which he issued to the said
company. On January 14, 1985, the trial court dismissed the complaint. On the counterclaim, the Court ordered plaintiff
corporation to pay the defendant.

Meanwhile, in 1983, CCC became known as the General Credit Corporation.

The Regional Trial Court of Quezon City issued an Order directing General Credit Corporation to file its comment on
petitioner’s motion for alias writ of execution.  General Credit Corporation filed a Special Appearance and Opposition  alleging
that it was not a party to the case, and therefore petitioner should direct his claim against CCC-QC and not General Credit
Corporation.

ISSUE: Whether or not the judgment in favor of petitioner may be executed against respondent General Credit Corporation.

RULINGYES. The judgment in favor of the petitioner may be executed.

The circumstances which led to the filing of the aforesaid complaint are quite revealing. As narrated above, the discounting
agreements through which CCC controlled the finances of its subordinates became unlawful when Central Bank adopted the
DOSRI prohibitions.

The defense of separateness will be disregarded where the business affairs of a subsidiary corporation are so controlled by
the mother corporation to the extent that it becomes an instrument or agent of its parent. But even when there is
dominance over the affairs of the subsidiary, the doctrine of piercing the veil of corporate fiction applies only when such
fiction is used to defeat public convenience, justify wrong, protect fraud or defend crime.

Under this rule the directors, officers, and stockholders are prohibited from borrowing from their company. Instead of
adhering to the letter and spirit of the regulations by avoiding DOSRI loans altogether, CCC used the corporate device to
continue the prohibited practice. CCC organized still another corporation, the CCC-Equity Corporation.

However, as a wholly owned subsidiary, CCC-Equity was in fact only another name for CCC. Key officials of CCC,
including the resident managers of subsidiary corporations, were appointed to positions in CCC-Equity. Chanroblespu

In order to circumvent the Central Bank’s disapproval of CCC-QC’s mode of reducing its DOSRI lender accounts and its directive
to follow Central Bank requirements, resident managers, including petitioner, were told to observe a pseudo-compliance with the
phasing out orders. For his unwillingness to satisfactorily conform to these directives and his reluctance to resort to illegal
practices, petitioner earned the ire of his employers. Eventually, his services were terminated, and criminal and civil cases were
filed against him.

Petitioner issued twenty-three checks as money placements with CCC-QC because of difficulties faced by the firm in
implementing the required phase-out program. Funds from his current account in the Far East Bank and Trust Company were
transferred to CCC-QC. These monies were alleged in the criminal complaints against him as having been stolen. Complaints for
qualified theft and estafa were brought by CCC-QC against petitioner. These criminal cases were later dismissed. Similarly, the
civil complaint which was filed with the Court of First Instance of Pasig and later transferred to the Regional Trial Court of
Quezon City was dismissed, but his counterclaims were granted.

Faced with the financial obligations which CCC-QC had to satisfy, the mother firm closed CCC-QC, in obvious fraud of its
creditors. CCCQC, instead of opposing its closure, cooperated in its own demise. Conveniently, CCC-QC stated in its
opposition to the motion for alias writ of execution that all its properties and assets had been transferred and taken over by CCC.

Under the foregoing circumstances, the contention of respondent General Credit Corporation, the new name of CCC, that
the corporate fiction should be appreciated in its favor is without merit.

Paraphrasing the ruling in Claparols vs. Court of Industrial Relations,[28] reiterated in Concept Builders Inc. vs. National Labor
Relations,[29] it is very obvious that respondent “seeks the protective shield of a corporate fiction whose veil the present
case could, and should, be pierced as it was deliberately and maliciously designed to evade its financial obligation of its
employees.” Ch

If the corporate fiction is sustained, it becomes a handy deception to avoid a judgment debt and work an injustice . The
decision raised to us for review is an invitation to multiplicity of litigation. As we stated in Islamic Directorate vs. Court of
Appeals,[30] the ends of justice are not served if further litigation is encouraged when the issue is determinable based on the
records. Chanroblespublishingcompany
4.THE CENTRAL BANK OF THE PHILIPPINES and RAMON V. TIAOQUI v. COURT OF APPEALS and TRIUMPH
SAVINGS BANK
G.R. No. 76118, March 30, 1993 J. BELLOSILLO

S29 This "close now and hear later" scheme: F: MB Closes TSB thru resolution- TSB contends we demand notice and
hearing: SC: Not req. s29

FACTSBased on examination reports of Central Bank (CB) "that the financial condition of TSB is one of insolvency and its
continuance in business would involve probable loss to its depositors and creditors,"
the Mo3 netary Board (MB) issued on 31 May 1985 Resolution No. 596 ordering the closure of TSB, forbidding it from doing
business in the Philippines, placing it under receivership, and appointing Ramon V. Tiaoqui as receiver.

On 11 June 1985, TSB filed a complaint with the Regional Trial Court of Quezon City , docketed as Civil Case No. Q-45139,
against Central Bank and Ramon V. Tiaoqui to annul MB Resolution No. 596, with prayer for injunction, challenging in the
process the constitutionality of Sec. 29 of R.A. 269, otherwise known as "The Central Bank Act," as amended, insofar as it
authorizes the Central Bank to take over a banking institution even if it is not charged with violation of any law or regulation,
much less found guilty thereof.

TSB posited that notice and hearing must took place prior to the implementation of the resolution.

ISSUE: Whether or not prior notice and hearing is required

RULING NO. Under Sec. 29 of R.A. 265,15 the Central Bank, through the Monetary Board , is vested with exclusive authority
to assess, evaluate and determine the condition of any bank, and finding such condition to be one of insolvency, or that its
continuance in business would involve probable loss to its depositors or creditors, forbid the bank or non-bank financial
institution to do business in the Philippines; and shall designate an official of the CB or other competent person as receiver to
immediately take charge of its assets and liabilities.

The fourth paragraph,16 which was then in effect at the time the action was commenced, allows the filing of a case to set aside the
actions of the Monetary Board which are tainted with arbitrariness and bad faith.

Contrary to the notion of private respondent, Sec. 29 does not contemplate prior notice and hearing before a bank may be directed
to stop operations and placed under receivership. When par. 4 (now par. 5, as amended by E.O. 289) provides for the filing of a
case within ten (10) days after the receiver takes charge of the assets of the bank, it is unmistakable that the assailed actions should
precede the filing of the case. Plainly, the legislature could not have intended to authorize "no prior notice and hearing" in the
closure of the bank and at the same time allow a suit to annul it on the basis of absence thereof.

In the early case of Rural Bank of Lucena, Inc. v. Arca [1965], 17 We held that a previous hearing is nowhere required in Sec. 29
nor does the constitutional requirement of due process demand that the correctness of the Monetary Board's resolution to stop
operation and proceed to liquidation be first adjudged before making the resolution effective. It is enough that a subsequent
judicial review be provided.

This "close now and hear later" scheme is grounded on practical and legal considerations to prevent unwarranted
dissipation of the bank's assets and as a valid exercise of police power to protect the depositors, creditors, stockholders and
the general public.

Remedy available to banks:

It may be emphasized that Sec. 29 does not altogether divest a bank or a non-bank financial institution placed under
receivership of the opportunity to be heard and present evidence on arbitrariness and bad faith because

within ten (10) days from the date the receiver takes charge of the assets of the bank, resort to judicial review may be had
by filing an appropriate pleading with the court.

Here, Respondent TSB did in fact avail of this remedy by filing a complaint with the RTC of Quezon City on the 8th day
following the takeover by the receiver of the bank's assets on 3 June 1985.
In Rural Bank of Buhi, Inc. v. Court of Appeals,19 We stated that —

Ratio: . One can just imagine the dire consequences of a prior hearing: bank. . . due process does not necessarily require a prior
hearing; a hearing or an opportunity to be heard may be subsequent to the closure runs would be the order of the day, resulting in
panic and hysteria. In the process, fortunes may be wiped out and disillusionment will run the gamut of the entire banking
community.
xxx
5.BANCO FILIPINO SAVINGS AND MORTGAGE BANK vs. THE MONETARY BOARD, CENTRAL BANK OF THE
PHILIPPINES, JOSE B. FERNANDEZ, CARLOTA P. VALENZUELA, ARNULFO B. AURELLANO and RAMON V.
TIAOQUI,

s29 power of rcvr and test of insolvency- here may power to do what was done and improper closure.

FACTS: Top Management and Pilar Development obtained several loans from Banco Filipino all secured by real estate
mortgage in their various properties in Cavite.

The Monetary Board by Ramon Tiaoqui , Special Assistant to the Governor and Head, SES Department III submitted a
report finding that the bank is insolvent and recommending the appointment of a receiver .    The Monetary Board, based on the
Tiaoqui report, issued a resolution finding Banco Filipino insolvent and placing it under receivership. Subsequently, the Monetary
Board issued another resolution placing the bank under liquidation and designated a liquidator.

By virtue of her authority as liquidator, Valenzuela appointed the law firm of Sycip, Salazar, et al. to represent
Banco Filipino in all litigations.

Banco Filipino filed the petition for certiorari questioning the validity of the resolutions issued by the Monetary Board
authorizing the receivership and liquidation of Banco Filipino

A temporary restraining order was issued enjoining the respondents from executing further acts of liquidation of
the bank.

However, acts and other transactions pertaining to normal operations of a bank are not enjoined . Subsequently,
Top Management and Pilar Development failed to pay their loans on the due date.

Hence, the law firm of Sycip, Salazar, et al. acting as counsel for Banco Filipino under authority of the liquidator,
applied for extra-judicial foreclosure of the mortgage over Top Management and Pilar Development’s properties. Thus,
the Ex-Officio Sheriff of the Regional Trial Court of Cavite issued a notice of extra-judicial foreclosure sale of the
properties.

Top Management and Pilar Development filed 2 separate petitions for injunction and prohibition with the respondent
appellate court seeking to enjoin the Regional Trial Court of Cavite, the ex-officio sheriff of said court and Sycip, Salazar, et al.
from proceeding with foreclosure sale which were subsequently dismissed by the court. Hence this petition

ISSUES

1. Whether or not the liquidator has the authority to prosecute as well as to defend suits and to foreclose mortgages for and
behalf of the bank while the issue on the validity of the receivership and liquidation is still pending resolution.

2. Whether or not the closure of the bank based on the Tiaoqui report is correct.

RULING

Yes:
1) Section 29 of the Republic Act No. 265, as amended known as the Central Bank Act, provides that when a bank is forbidden
to do business in the Philippines and placed under receivership, the person designated as receiver shall

1) immediately take charge of the bank’s assets and liabilities, as expeditiously as possible,

2) collect and gather all the assets and administer the same for the benefit of its creditors, and

3) represent the bank personally or through counsel as he may retain in all actions or proceedings for or against the
institution, exercising all the powers necessary for these purposes including, but not limited to,  bringing and foreclosing
mortgages in the name of the bank.

If the Monetary Board shall later determine and confirm that banking institution is insolvent or cannot resume business safety to
depositors, creditors and the general public, it shall, public interest requires, order its liquidation and appoint a liquidator who
shall take over and continue the functions of receiver previously appointed by Monetary Board. The liquid for may, in the name of
the bank and with the assistance counsel as he may retain, institute such actions as may necessary in the appropriate court to
collect and recover a counts and assets of such institution or defend any action ft against the institution.

Pendency of the case did not diminish the powers and authority of the designated liquidator to effectuate and carry on the
administration of the bank. The Court did not prohibit however acts a as receiving collectibles and receivables or paying off credits
claims and other transactions pertaining to normal operate of a bank. There is no doubt that the prosecution of suits collection
and the foreclosure of mortgages against debtors the bank by the liquidator are among the usual and ordinary transactions
pertaining to the administration of a bank.

2_ no.

The closure and receivership of Banco Filipino Savings and Mortgage Bank, which was ordered by the Monetary Board on
is null and void.

The Monetary Board may order the cessation of operations of a bank in the Philippine and place it under receivership upon a
finding of insolvency or when its continuance in business would involve probable loss its depositors or creditors.

Under Section 29 of the Central Bank Act, the following are the mandatory requirements to be complied with before a
bank found to be insolvent is ordered closed and forbidden to do business in the Philippines: (1)an examination shall be
conducted by the head of the appropriate supervising or examining department or his examiners or agents into the
condition of the bank; (2) it shall be disclosed in the examination that the condition of the bank is one of insolvency, or that
its continuance in business would involve probable loss to its depositors or creditors; (3) the department head concerned
shall inform the Monetary Board in writing, of the facts; and (4) the Monetary Board shall find the statements of the
department head to be true.

Clearly, Tiaoqui based his report on an incomplete examination of petitioner bank and outrightly concluded therein that the latter’s
financial status was one of insolvency or illiquidity. In the instant case, the basic standards of substantial due process were not
observed. Time and again, We have held in several cases, that the procedure of administrative tribunals must satisfy the
fundamentals of fair play and that their judgment should express a well-supported conclusion.

The test of insolvency laid down in Section 29 of the Central Bank Act is measured by determining whether the realizable
assets of a bank are leas than its liabilities.

Hence, a bank is solvent if the fair cash value of all its assets, realizable within a reasonable time by a reasonable prudent person,
would equal or exceed its total liabilities exclusive of stock liability; but if such fair cash value so realizable is not sufficient to pay
such liabilities within a reasonable time, the bank is insolvent. 

Examination appraises the soundness of the institution’s assets, the quality and character of management and determines the
institution’s compliance with laws, rules and regulations. Audit is a detailed inspection of the institution’s books, accounts,
vouchers, ledgers, etc. to determine the recording of all assets and liabilities. Hence, examination concerns itself with review and
appraisal, while audit concerns itself with verification. 

Likewise, the consolidated statement of condition of the bank prepared by the Central Bank Authorized Deputy Receiver
Artemio Cruz shows that total assets amounting to ₱4,981,522,996.22 even exceeds total liabilities amounting to
₱4,540,836,834.15. Based on the foregoing, there was no valid reason for the Valenzuela, Aurellano and Tiaoqui report to
finally recommend the liquidation of Banco Filipino instead of its rehabilitation.
6. CENTRAL BANK OF THE PHILIPPINES and HON. JOSE B. FERNANDEZ v. COURT OF APPEALS, RTC JUDGE
TEOFILO GUADIZ, JR., PRODUCERS BANK OF THE PHILIPPINES and PRODUCERS PROPERTIES, INC.G.R. No.
88353, May 8, 1992, J. DAVIDE, JR.

CONSERVATORSHIP-WHEN LIFTED- F: PBP is the bank-and put under conser of CB then files for it to lifted. SC:
HERE CANNOT ANYMORE.

FACTS During the regular examination of the Producers Bank of the Philippines (PBP), Central Bank (CB) examiners stumbled
upon some highly questionable loans which had been extended by the PBP management to several entities. Upon further
examination, it was discovered that these loans, totalling approximately P300 million, were "fictitious" as they were extended,
without collateral, to certain interests related to PBP owners themselves. Said loans were deemed to be anomalous because the
entire paid-in capital of the bank, together with some of depositors' money, was utilized by PBP management to fund these
unsecured loans.

Subsequently and during the same year, several blind items about a family-owned bank in Binondo which granted
fictitious loans to its stockholders appeared in major newspapers which triggered a bank-run in PBP and resulted in continuous
over-drawings on the bank’s demand deposit account with the Central Bank. Hence, on the basis of the report submitted by the
Monetary Board (MB), placed PBP under conservatorship.

PBP submitted a rehabilitation plan to the CB which proposed the transfer to PBP of 3 buildings owned by Producers
Properties, Inc. (PPI), its principal stockholder and the subsequent mortgage of said properties to the CB as collateral for the
bank’s overdraft obligation but which was not approved due to disagreements between the parties. Since no other
rehabilitation program was submitted by PBP for almost 3 years its overdrafts with the CB continued to accumulate.
Consequently, the CB Monetary Board decided to approve in principle what it considered a viable rehabilitation program
for PBP.

There being no response from both PBP and PPI on the proposed rehabilitation plan, the MB issued a resolution
instructing Central Bank management to advise the bank that the conservatorship may be lifted if PBP complies with
certain conditions.

Without responding to the communications of the CB, PBP filed a complaint with the Regional Trial Court of Makati
against the CB, the MB and CB Governor alleging that the resolutions issued were arbitrary and made in bad faith .
Respondent Judge issued a temporary restraining order and subsequently a writ of preliminary injunction. CB filed a motion to
dismiss but was denied and ruled that the MB resolutions were arbitrarily issued. CB filed a petition for certiorari before the Court
of Appeals seeking to annul the orders of the trial court but CA affirmed the said orders.

ISSUE WON PBP CAN STILL QUESTION THE CONSENVATORSHIP

RULING NO. The following requisites must be present before the order of conservatorship may be set aside by a court:

(1) The appropriate pleading must be filed by the stockholders of record representing the majority of the capital stock
of the bank in the proper court;
(2) **Said pleading must be filed within ten (10) days from receipt of notice by said majority stockholders of the order
placing the bank under conservatorship; and
(3) There must be convincing proof, after hearing, that the action is plainly arbitrary and made in bad faith.
In the instant case, PBP was placed under conservatorship on 20 January 1984. The original complaint was filed only on 27
August 1987, or three (3) years, seven (7) months and seven (7) days later, long after the expiration of the 10-day period deferred
to above.

It is also beyond question that the complaint and the amended complaint were not initiated by the stockholders of record
representing the majority of the capital stock.

Accordingly, the order placing PBP under conservatorship had long become final and its validity could no longer be
litigated upon before the trial court.
7 PHILIPPINE VETERANS BANK EMPLOYEES UNION-NUBE (Petitioners) vs. THE PHILIPPINE VETERANS
BANK Now renamed PHILIPPINE MILITARY AND VETERANS BANK (Respondents)

CB POWER TO LIQUIDATE GOVT BANK- F: IS SHITTY- SC: HAS POWER

FACTSThe trouble began when the Bank was placed under receivership by virtue of Resolution No. 334 of the Monetary Board
of the Central Bank. The reason was the precarious condition of the Bank. A year later, the Philippine Veterans Bank Employees
Union questioned the retrenchment and reorganization program of the Bank and, on the ground of security of tenure, prayed that
the said program be prohibited. In its petition, the Union also asked for a temporary restraining order, which was issued.

Subsequently, while the case was pending, the Monetary Board ordered the liquidation of the Bank by Resolution No.
612, after finding that the Bank had incurred an outstanding liability of P540,835,860.79.

This order was opposed by the Union in a supplemental petition for prohibition with preliminary injunction.

The Veterans Federation of the Philippines entered the picture and filed with leave of court a petition in
intervention which, besides echoing the original petition in opposing the liquidation, asserted the additional claim that it was
in the process of formulating plans for the rehabilitation and eventual expansion of the Bank.

The writ of preliminary injunction was amended "to exclude from its coverage the sale or disposal by the Central Bank or
the Bank Liquidator of the acquired assets of the PVB." This was done in response to petitions filed by several persons seeking to
redeem or repurchase the properties which had earlier been purchased by the Bank through foreclosure sales.

ISSUE WON the Central Bank has the power to liquidate the Philippine Veterans Bank.

RULINGYES. The Central Bank has the power to liquidate the Philippine Veterans Bank .

The mere fact that the Bank was created by special law does not confer upon it extraordinary privileges over and
above those granted similar charters like the Development Bank of the Philippines and the Land Bank of the Philippines. As a
lending institution, it is part of the banking system and therefore covered by the regulatory power exercised over such
entities by the Central Bank. Such authority is expressly provided for in the Central Bank Act.

It is stressed that in Section 25 of the said Act, the Department of Supervision and Examination is charged with the
supervision and periodic examination of all banking institutions operating in the Philippines, including all government credit
institutions.

Assuming for the moment that the Bank is owned or controlled by the government, it is nevertheless not exempt
from but in fact expressly placed under the jurisdiction of the Central Bank.

+ IF: More to the point, R.A. No. 3518 itself, which created the Philippine Veterans Bank, provides in its Section 14 that
the Bank shall be subject to the authority of the Department of Supervision and Examination.

The said Section 14 reads as follows:Sec. 14. Inspection by Department of Supervision and Examination of the Central Bank. —
The Veterans Bank shall be subject to inspection by the Department of Supervision and Examination of the Central Bank in
accordance with Republic Act Numbered Two hundred sixty-five and Republic Act Numbered Three hundred thirty-seven.

Ratio:
The purpose of these provisions is to enable the Central Bank, as the entity charged with the responsibility of maintaining
the stability of the banking and monetary systems of the country, to take the necessary steps against any banking institution whose
continued operation may cause prejudice to its depositors and creditors, and the general public as well.

Even if it be conceded that the charter of the Bank constitutes a contract between the Government and the stockholders of
the Bank, it would not follow that the relationship cannot be altered without violating the impairment clause. This is a too
simplistic conclusion that loses sight of the vulnerability of this "precious little clause," as it is called, to the inherent powers of the
State when the public interest demands their exercise. The clause, according to Corwin, "is lately of negligible importance, and
might well be stricken from the Constitution. For most practical purposes, in fact, it has been." 
8. RURAL BANK OF SAN MIGUEL INC. and HILARIO P. SORIANO, in his capacity as majority stockholder in the
Rural Bank of San Miguel, Inc. vs. MONETARY BOARD, BANGKO SENTRAL NG PILIPINAS and PHILIPPINE
DEPOSIT INSURANCE CORPORATION

G.R. No. 150886, February 16, 2007, CORONA, J.

FACTSPetitioner Rural Bank of San Miguel, Inc. (RBSM) was a domestic corporation engaged in banki ng. It started operations
in 1962 and by year 2000 had 15 branches in Bulacan. On January 21, 2000, respondent Monetary Board (MB), the governing
board of respondent Bangko Sentral ng Pilipinas (BSP), issued Resolution No. 105 prohibiting RBSM from doing business in
the Philippines, placing it under receivership and designating respondent Philippine Deposit Insurance Corporation (PDIC) as
receiver.

The decision of the MB was based on the submitted report of RBSMs designated comptroller, Ms. Zenaida Cabais.
Based on these comptrollership reports, the director of the Department of Rural Banks Supervision and Examination
Sector, Wilfredo B. Domo-ong, made a report to the MB dated January 20, 2000. The MB, after evaluating and deliberating on the
findings and recommendation of the Department of Rural Banks Supervision and Examination Sector, issued Resolution No. 105
on January 21, 2000. 

Thereafter, PDIC implemented the closure order and took over the management of  RBSMs assets and affairs

Petitioner argues that the receivership order was not valid because it was merely based on a Report and not examined.

ISSUE whether Section 30 of RA 7653 (also known as the New Central Bank Act) and applicable jurisprudence require a current
and complete examination of the bank before it can be closed and placed under receivership.

RULINGNO

PROV OF NCBA: NEW REQUIREMENT FOR CLOSURE VS CITED IN NO. 5 CASE:

Section 30 of RA 7653 provides:SECTION 30.  Proceedings in Receivership and Liquidation. - Whenever, upon report of the
head of the supervising or examining department, the Monetary Board finds that a bankor quasi-bank:

(a) is unable to pay its liabilities as they become due in the ordinary course of business: Provided, That this shall not include
inability to pay caused by extraordinary demands induced by financial panic in the banking community;

(b) has insufficient realizable assets, as determined by the [BSP] to meet its liabilities; or

(c) cannot continue in business without involving probable losses to its depositors or creditors; or

(d) has willfully violated a cease and desist order under Section 37 that has become final, involving acts or transactions which
amount to fraud or a dissipation of the assets of the institution; in which cases,  the Monetary Board may summarily and
without need for prior hearing forbid the institution from doing business in the Philippines and designate the Philippine
Deposit Insurance Corporation as receiver of the banking institution.

The actions of the Monetary Board taken under this section or under Section 29 of this Act shall be final and executory, and 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 of
jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction. The petition for  certiorari may
only be filed by the stockholders of record representing the majority of the capital stock within ten (10) days from receipt by the
board of directors of the institution of the order directing receivership, liquidation or conservatorship.

NO. It is well-settled that the closure of a bank may be considered as an exercise of police power.

The action of the MB on this matter is final and  executory. Such exercise may nonetheless be subject to judicial inquiry and
can be set aside if found to be in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess
of jurisdiction.
The word "report" has a definite and unambiguous meaning which is clearly different from "examination." A report, as a
noun, may be defined as "something that gives information" or "a usually detailed account or statement." 26 On the other
hand, an examination is "a search, investigation or scrutiny."27

This Court cannot look for or impose another meaning on the term "report" or to construe it as synonymous with
"examination.

From the words used in Section 30, it is clear that RA 7653 no longer requires that an examination be made before the MB
can issue a closure order. We cannot make it a requirement in the absence of legal basis.

In RA 7653, only a report of the head of the supervising or examining department is necessary.  It is an established
rule in statutory construction that where the words of a statute are clear, plain and free from ambiguity, it must be given
its literal meaning and applied without attempted interpretation.

IN THIS CASE: SC DISCUSSION ON AMENDMENTS AS COMPARED TO CASE NO. 5

According to the petitioners, it is clear from these provisions that the "report of the supervising or examining department" required
under Section 30 refers to the report on the examination of the bank which, under Section 28, must be made to the MB after the
supervising or examining head conducts an examination mandated by Sections 25 and 28. 18 They cite Banco Filipino Savings &
Mortgage Bank v. Monetary Board, Central Bank of the Philippines19 wherein the Court ruled:

There is no question that under Section 29 of the Central Bank Act, the following are the mandatory requirements to be
complied with before a bank found to be insolvent is ordered closed and forbidden to do business in the Philippines:  Firstly, an
examination shall be conducted by the head of the appropriate supervising or examining department or his examiners or
agents into the condition of the bank; secondly, it shall be disclosed in the examination that the condition of the bank is one of
insolvency, or that its continuance in business would involve probable loss to its depositors or creditors; thirdly, the department
head concerned shall inform the Monetary Board in writing, of the facts; and lastly, the Monetary Board shall find the statements
of the department head to be true.20 (Emphasis supplied)cralawlibrary

Petitioners assert that an examination is necessary and not a mere report, otherwise the decision to close a bank would be arbitrary.

Respondents counter that RA 7653 merely requires a report of the head of the supervising or examining department. They maintain
that the term "report" under Section 30 and the word "examination" used in Section 29 of the old law are not synonymous.
"Examination" connotes in-depth analysis, evaluation, inquiry or investigation while "report" connotes a simple disclosure or
narration of facts for informative purposes.21

Petitioners' contention has no merit. Banco Filipino and other cases petitioners cited22 were decided using Section 29 of the
old law (RA 265):

SECTION 29. Proceedings upon insolvency. - Whenever, upon examination by the head of the appropriate supervising or
examining department or his examiners or agents into the condition of any bank or non-bank financial intermediary
performing quasi-banking functions, it shall be disclosed that the condition of the same is one of insolvency, or that its continuance
in business would involve probable loss to its depositors or creditors, it shall be the duty of the department head concerned
forthwith, in writing, to inform the Monetary Board of the facts. The Board may, upon finding the statements of the department
head to be true, forbid the institution to do business in the Philippines and designate an official of the Central Bank or a person of
recognized competence in banking or finance, as receiver to immediately take charge of its assets and liabilities, as expeditiously
as possible collect and gather all the assets and administer the same for the benefits of its creditors, and represent the bank
personally or through counsel as he may retain in all actions or proceedings for or against the institution, exercising all the powers
necessary for these purposes including, but not limited to, bringing and foreclosing mortgages in the name of the bank or non-bank
financial intermediary performing quasi-banking functions. (Emphasis supplied)cralawlibrary

xxx

Thus in Banco Filipino, we ruled that an "examination [conducted] by the head of the appropriate supervising or
examining department or his examiners or agents into the condition of the bank" 23 is necessary before the MB can order its
closure.
However, RA 265, including Section 29 thereof, was expressly repealed by RA 7653 which took effect in 1993. Resolution
No. 105 was issued on January 21, 2000. Hence, petitioners' reliance on  Banco Filipino which was decided under RA 265
was misplaced.

9. ANA MARIA A. KORUGA vs. TEODORO O. ARCENAS, JR., ALBERT C. AGUIRRE, ET AL.
TEODORO O. ARCENAS, JR., ALBERT C. AGUIRRE, ET AL. vs. HON. SIXTO MARELLA, JR., Presiding Judge,
Branch 138, Regional Trial Court of Makati City, and ANA MARIA A. KORUGA

G.R. No. 168332/G.R. No. 169053, June 19, 2009, J. NACHURA

F: SEE NATURE NG KASO NI KORUGA- SC: BSP the supervision over operations and activities of banks
FACTSG.R. No. 168332Koruga is a minority stockholder of Banco Filipino. Sh e filed a complaint before the Makati RTC
which alleged:

10. 1 Violation of Sections 31 to 34 of the Corporation Code ("Code") which prohibit self-dealing and conflicts of
interest of directors and officers
10.2 Right of a stockholder to inspect the records of a corporation (including financial statements) under Sections 74
and 75 of the Code

10.3 Receivership and Creation of a Management Committee

Arcenas, et al. filed their Answer raising, among others, the trial court's lack of jurisdiction to take cognizance of the case.
The CA issued a 60-day TRO enjoining Judge Marella from conducting further proceedings in the case.

G.R. No. 169053In their Petition, Arcenas, et al . asked the Court to set aside the Decision of the CA in CA-G.R. SP No. 88422,
which denied their petition, having found no grave abuse of discretion on the part of the Makati RTC. The CA said that the RTC
Orders were interlocutory in nature and, thus, may be assailed by certiorari or prohibition only when it is shown that the court
acted without or in excess of jurisdiction or with grave abuse of discretion. That there is another case involving the same parties
for the same cause pending before the Monetary Board of the BSP, and this constituted forum-shopping; and that jurisdiction
over the subject matter of the case is vested by law in the BSP.

ISSUEWhich body has jurisdiction over the Koruga Complaint, the RTC or the BSP?

RULINGIt is the BSP that has jurisdiction over the case. A reexamination of the Complaint is in order.

Korugas Complaint charged defendants with violation of Sections 31 to 34 of the Corporation Code, prohibiting self-
dealing and conflict of interest of directors and officers; invoked her right to inspect the corporations records under Sections 74
and 75 of the Corporation Code; and prayed for Receivership and Creation of a Management Committee, pursuant to Rule 59 of
the Rules of Civil Procedure, the Securities Regulation Code, the Interim Rules of Procedure Governing Intra-Corporate
Controversies, the General Banking Law of 2000, and the New Central Bank Act. She accused the directors and officers of Banco
Filipino of engaging in unsafe, unsound, and fraudulent banking practices, more particularly, acts that violate the prohibition on
self-dealing.

It is clear that the acts complained of pertain to the conduct of Banco Filipinos banking business.  A bank, as defined in
the General Banking Law, refers to an entity engaged in the lending of funds obtained in the form of deposits. 

The banking business is properly subject to reasonable regulation under the police power of the state because of its nature
and relation to the fiscal affairs of the people and the revenues of the state. Banks are affected with public interest because they
receive funds from the general public in the form of deposits. It is the Governments responsibility to see to it that the financial
interests of those who deal with banks and banking institutions, as depositors or otherwise, are protected.

In this country, that task is delegated to the BSP, w hich pursuant to its Charter, is authorized to administer the
monetary, banking, and credit system of the Philippines. It is further authorized to take the necessary steps against any
banking institution if its continued operation would cause prejudice to its depositors, creditors and the general public as
wel

The law vests in the BSP the supervision over operations and activities of banks.  The New Central Bank
Act provides:
Section 25. Supervision and Examination. - The Bangko Sentral shall have supervision over, and conduct periodic or
special examinations of, banking institutions and quasi-banks, including their subsidiaries and affiliates engaged in allied
activities.  

Specifically, the BSPs supervisory and regulatory powers include:

4.1   The issuance of rules of conduct or the establishment of standards of operation for uniform application to all
institutions or functions covered, taking into consideration the distinctive character of the operations of
institutions and the substantive similarities of specific functions to which such rules, modes or standards
are to be applied;

4.2   The conduct of examination to determine compliance with laws and regulations if the circumstances
so warrant as determined by the Monetary Board;

4.3 Overseeing to ascertain that laws and Regulations are complied with;

4.4   Regular investigation which shall not  be oftener than once a year from the last   date of
examination to determine whether  an institution is conducting its business on  a safe or sound
basis: Provided, That the deficiencies/irregularities found by or dis covered by an audit shall be
immediately addressed;

4.5   Inquiring into the solvency and liquidity of the institution(2-D); or

4.6   Enforcing prompt corrective action.

Koruga alleges that the dispute in the trial court involves the manner with which the Directors (sic) have handled
the Banks affairs, specifically the fraudulent loans and dacion en pago authorized by the Directors in favor of several
dummy corporations known to have close ties and are indirectly controlled by the Directors. Her allegations, then, call
for the examination of the allegedly questionable loans.  Whether these loans are covered by the prohibition on self-
dealing is a matter for the BSP to determine. These are not ordinary intra-corporate matters; rather, they involve
banking activities which are, by law, regulated and supervised by the BSP. As the Court has previously held: 

It is well-settled in both law and jurisprudence that the Central Monetary Authority, through the Monetary
Board, is vested with exclusive authority to assess, evaluate and determine the condition of any bank, and finding such
condition to be one of insolvency, or that its continuance in business would involve a probable loss to its depositors or
creditors, forbid bank or non-bank financial institution to do business in the Philippines; and shall designate an official of
the BSP or other competent person as receiver to immediately take charge of its assets and liabilities.  

Correlatively, the General Banking Law of 2000 specifically deals with loans contracted by bank directors or
officers SECTION 36. Restriction on Bank Exposure to Directors, Officers, Stockholders and Their Related Interests. 
10CENTRAL BANK OF THE PHILIPPINES, VS DELA CRUZ and RURAL BANK OF LIBMANAN

QUESTIONING ORDER OF CENTRAL BANK LIQUIDATION: HERE JUDGE IS WRONG TO BY HIMSELF

IBALIK UNG CONTROL SA BANKO DIRECTORS

FACTS The Libmanan Bank started operations in 1965 under and by virtue of Republic Act No. 720, otherwise known as the
Rural Bank’s Act. Originally owned and managed by the Alba’s family. Libmanan Bank was later sold to Manuel M. Villar and
respondent Alex G. Durante, who commenced banking operations in January 1979.

the Central Bank of the Philippines conducted examinations of the books and affairs of Libmanan Bank and found
serious irregularities in its lending and deposit operations, including false entries and false statements in the bank’s record to give
it the appearance of solidity and soundness which it did not possess. As a result of its questionable transactions, the bank became
insolvent.

The Monetary Board placed Libmanan Bank under statutory receivership. Libmanan Bank was advised to submit to the
Monetary Board an acceptable reorganization program.

As Libmanan Bank failed to submit the required acceptable reorganization and rehabilitation plan, the Monetary
Board, Solicitor General, filed for its Liquidation.

The Judge issued the questioned order, restraining the respondent Central Bank from “closing the bank and from
performing its customary banking business ; to restore the control and management of the bank to its Board of Directors; and
to desist from liquidating its assets until ordered otherwise by this Court.”

ISSUE Can regular courts issue a restraining order against Central Bank in placing a bank under insolvency

RULING:”NO. GR: It is noteworthy that the actions of the Monetary Board in proceedings on insolvency are explicitly
declared by law to be “final and executory.”

XCN: They may not be set aside, or restrained, or enjoined by the courts, except upon “convincing proof that the
action is plainly arbitrary and made in bad faith.”

Respondent judge acted in plain disregard of the fourth paragraph in Section 29 of the Central Bank act, when he
restrained the petitioners from closing and liquidating the Rural Bank of Libmanan, prevented them from performing
their functions, and ordered them to return the management and control of the rural bank to its board of directors without
receiving convincing proof that the action of the CB was plainly arbitrary and made in bad faith.

By issuing his own standards, instead of the standards set forth in Sec. 29 of the law, as basis for issuing a restraining order against
the CB, respondent Judge committed a grave abuse of discretion tantamount to excess, or lack of jurisdiction.

Respondent Judge acted with grave abuse of discretion in issuing the contested order date January 15,1982 enjoining the CB
liquidator from closing the rural bank and requiring it to restore the management and control of the bank to its Board of Directors.

IF: It is a basic procedural postulate that a preliminary injunction should never be used to transfer the possession or control of a
thing to a party who did not have such possession or control at the inception of the case. Its proper function is simply to maintain
the status quo at the commencement of the action.

The status quo at the time of filing Civil Case No. 1309 was that Libmanan Bank was under the control of the DRBSLA
Director, with Consolacion V. Odra, as liquidator appointed by the Central Bank.

RATIO: Respondent Judge abused his discretion in authorizing the Libmanan Bank to withdraw funds from its deposits in other
banks. The Rural Bank had become insolvent as a result of mismanagement, frauds, irregularities and violations of banking laws,
rules, and regulations by its officers. Its remaining assets should therefore be conserved to pay its creditors. Allowing the Rural
Bank to withdraw its deposits in other banks would result in the further diminution and dissipation of its assets to the
prejudice of its depositors and creditors, and to the unlawful advantage of the very officers who brought about the bank’s
insolvency.

HOW FILE SUCH CLAIM?

This Court in the case of Rural Bank of Buhi, Inc. vs. Court of Appeals and Salud vs. Central Bank of the Phils., ruled that a
bank’s claim that the resolution of the Monetary Board under Section 29 is plainly arbitrary and done in bad faith should be
asserted as an affirmative defense or counter-claim in the proceedings for assistance in liquidation. It may be filed as a separate
action if no petition for assistance in liquidation has been instituted yet.

11 IS SAME AS 5 

12. LETICIA G. MIRANDA vs. PHILIPPINE DEPOSIT INSURANCE CORPORATION, BANGKO SENTRAL NG
PILIPINAS and PRIME SAVINGS BANK

G.R. No. 169334, 8 September 2006, YNARES-SANTIAGO, J.

LIQUIDATION COURT JURIS OVER DISPUTED CLAIMS- F: Si Miranda naissuehan ng cheke ng banko nya-later ung
bank nya nashit ng MB-rcvrship- then di sya nakaencash ng cheke-claims sa bank,rcvr, and even sa bsp: sc: juris sa liquid
court- liable lang ditto e si bank

Facts:Petitioner Leticia G. Miranda was a depositor of Prime Savings Ban. On June 3, 1999, she withdrew substantial amounts
from her account, but instead of cash she opted to be issued a crossed cashier's check. She was thus issued cashier's check no.
0000000518 in the sum of P2,500,000.00 and cashier's check no. 0000000514 in the amount of P3,002,000.00.

Petitioner deposited the two checks into her account in another bank on the same day, however, (BSP) suspended the clearing
privileges of Prime Savings Bank effective 2:00 p.m. of June 3, 1999. The two checks of petitioner were returned to her unpaid.

On June 4, 1999, Prime Savings Bank declared a bank holiday. On January 7, 2000, the BSP placed Prime Savings Bank under
the receivership of the Philippine Deposit Insurance Corporation (PDIC).

Petitioner filed a civil action for sum of money in the RTC to recover the funds from her unpaid checks against Prime Savings
Bank, PDIC and the BSP.

Petitioner next argues that the present claim is not a disputed claim in contemplation of Section 30 of the New Central
Bank Act. Since disputed claims refer to all claims, whether they be against the assets of the insolvent bank, for specific
performance, breach of contract, or damages, it is manifest that petitioner's claim cannot fall within the purview of a
disputed claim because she is recovering assigned funds which are segregated monies of Prime Savings Bank.

Respondents, on the other hand, state that the mere issuance of the cashier's checks did not operate as assignment of funds
in favor of the petitioner. They argue that even prior to the issuance of the cashier's checks, the bank was already cash-
strapped, which negates petitioner's claim that there was an assignment of funds in her favor. There can be no assignment
of funds when there is no funds to speak of in the first place.

Respondents argue that the instant case involves a disputed claim of sum of money against a closed financial institution.
Sections 30 and 31 of R.A. No. 7653, exclusively vests the authority to assess, evaluate and determine the condition of any
bank with the BSP, while the PDIC has the primary responsibility of acting as receiver or liquidator of the closed financial
institution.16

Since the relationship between petitioner and Prime Savings Bank is one of creditor and debtor, petitioner should file her claim
with the liquidation court constituted precisely for purposes of adjudicating claims against the bank in accordance with the rules on
concurrence and preference of credits

Issue:Whether the claim lodged by the petitioner is a disputed claim under Section 30 of R.A. No. 7653, otherwise known as the
New Central Bank Act, and therefore, under the jurisdiction of the liquidation court.

Ruling: Supreme Court ruled that the claim lodged by the petitioner qualifies as a disputed claim subject to the
jurisdiction of the liquidation court.

Regular courts do not have jurisdiction over actions filed by claimants against an insolvent bank, unless there is a clear
showing that the action taken by the BSP, through the Monetary Board in the closure of financial institutions was in excess
of jurisdiction, or with grave abuse of discretion.

The power and authority of the Monetary Board to close banks and liquidate them thereafter when public interest so requires is an
exercise of the police power of the State. Police power, however, is subject to judicial inquiry. It may not be exercised arbitrarily
or unreasonably and could be set aside if it is either capricious, discriminatory, whimsical, arbitrary, unjust, or is tantamount to a
denial of due process and equal protection clauses of the Constitution.
"Disputed claims" refer to all claims, whether they be against the assets of the insolvent bank, for specific performance,
breach of contract, damages, or whatever.

Petitioner's claim which involved the payment of the two cashier's checks that were not honored by Prime Savings Bank
due to its closure falls within the ambit of a claim against the assets of the insolvent bank. The issuance of the cashier's
checks by Prime Savings Bank to the petitioner created a debtor/creditor relationship between them.

This disputed claim should therefore be lodged in the liquidation proceedings by the petitioner as creditor, since the
closure of Prime Savings Bank has rendered all claims subsisting at that time moot which can best be threshed out by the
liquidation court and not the regular courts.

It is well-settled in both law and jurisprudence that the Central Monetary Authority, through the Monetary Board, is
vested with exclusive authority to assess, evaluate and determine the condition of any bank, and finding such condition to
be one of insolvency, or that its continuance in business would involve a probable loss to its depositors or creditors, forbid
bank or non-bank financial institution to do business in the Philippines; and shall designate an official of the BSP or other
competent person as receiver to immediately take charge of its assets and liabilities.

In Central Bank of the Philippines v. De la Cruz,24 we held that the actions of the Monetary Board in proceedings on insolvency
are explicitly declared by law to be "final and executory." They may not be set aside, or restrained, or enjoined by the courts,
except upon "convincing proof that the action is plainly arbitrary and made in bad faith.

AS TO LIABILITIES OF BSP AND PDIC- NONE

Regarding the third issue, it is only Prime Savings Bank that is liable to pay for the amount of the two cashier's checks. Solidary
liability cannot attach to the BSP, in its capacity as government regulator of banks, and the PDIC as statutory receiver under R.A.
No. 7653, because they are the principal government agencies mandated by law to determine the financial viability of banks and
quasi-banks, and facilitate receivership and liquidation of closed financial institutions, upon a factual determination of the latter's
insolvency.

As correctly pointed out by the Court of Appeals, the BSP should not be held liable on the crossed cashier's checks for it was not a
party to the issuance of the same; nor can it be held liable for imposing the sanctions on Prime Savings Bank which indirectly
affected Miranda, since it is mandated under Sec. 37 of R.A. No. 7653 to act accordingly. 26 The BSP, through the Monetary Board
was well within its discretion to exercise this power granted by law to issue a resolution suspending the interbank clearing
privileges of Prime Savings Bank, having made a factual determination that the bank had deficient cash reserves deposited before
the BSP. There is no showing that the BSP abused this discretionary power conferred upon it by law.

In addition, co-respondent PDIC was impleaded as a party-litigant only in its representative capacity as the receiver/liquidator of
Prime Savings Bank. Both BSP and PDIC cannot therefore be held directly and solidarily liable for the payment of the two
cashier's checks. Sole liability rests with Prime Savings Bank

ADDITIONAL NOTES: LIQUIDATION COURT

The petition for liquidation in insolvency should be filed in the regional trial courts. Specifically, when the debtor’s principal
office is stated to be in Metro Manila, the petition should be filed in the city or municipality where its head office is located
(Gonzales vs. GJH Land, Inc.,  G.R. No. 202664, November 20, 2015).

A liquidation case should be assigned or raffled to the trial court designated as a special commercial court by the SC.
13 is same as 4 

14. BANGKO SENTRAL NG PILIPINAS MONETARY BOARD and CHUCHI FONACIER v. HON. NINA
G. ANTONIO-VALENZUELA
G.R. No. 184778, October 2, 2009

Report of Examination (ROE) Shall it be given to banks as per A30? No.

Facts: In September of 2007, the Supervision and Examination Department (SED) of the BSP conducted
examinations of the books of the several banks: Rural Bank of Parañaque, Inc. (RBPI), Rural Bank of San Jose
(Batangas), Inc., Rural Bank of Carmen (Cebu), Inc., Pilipino Rural Bank, Inc., Philippine Countryside Rural Bank,
Inc., Rural Bank of Calatagan (Batangas), Inc. (now Dynamic Rural Bank), Rural Bank of Darbci, Inc., Rural Bank of
Kananga (Leyte), Inc. (now First Interstate Rural Bank), Rural Bank de Bisayas Minglanilla (now Bank of East Asia),
and San Pablo City Development Bank, Inc

In response, the banks requested that they be given time to obtain BSP approval to amend their Articles of
Incorporation, that they have an opportunity to seek investors. They requested as well that the basis for the capital
infusion figures be disclosed, and noted that none of them had received the Report of Examination (ROE) which
finalizes the audit findings. They also requested meetings with the BSP audit teams to reconcile audit figures. In
response, Fonacier reiterated the banks’ failure to comply with the directive for additional capital infusions.

Thereafter, RBPI (one of the banks) filed a complaint for nullification of the BSP ROE with application for a TRO
and writ of preliminary injunction before the RTC against Fonacier, the BSP, Et al. RBPI prayed that Fonacier, her
subordinates, agents, or any other person acting in her behalf be enjoined from submitting the ROE or any similar
report to the Monetary Board or if the ROE had already been submitted, the MB be enjoined from acting on the basis
of said ROE, on the allegation that the failure to furnish the bank with a copy of the ROE violated its right to
due process.

On May 13, 2008, the RTC denied the prayer for a TRO. The bank filed a motion for reconsideration the next day.

RTC ruled that the banks were entitled to the writs of preliminary injunction prayed for. It held that it had been the
practice of the SED to provide the ROEs to the banks before submission to the MB. It further held that as the banks are
the subjects of examinations, they are entitled to copies of the ROEs

Issue:WON BANKS ARE ENTITLED TO ROES IN THIS CASE: NO Report of Examination (ROE)

Ruling:In granting the writs of preliminary injunction, the trial court held that the submission of the ROEs to the MB
before the respondent banks would violate the right to due process of said banks. This is erroneous.

The respondent banks have failed to show that they are entitled to copies of the ROEs. They can point to no provision
of law, no section in the procedures of the BSP that shows that the BSP is required to give them copies of the ROEs.

Sec. 28 of RA 7653, or the New Central Bank Act, which governs examinations of banking institutions, provides that
the ROE shall be submitted to the MB; the bank examined is not mentioned as a recipient of the ROE.

The respondent banks cannot claim a violation of their right to due process if they are not provided with copies of the
ROEs. The same ROEs are based on the lists of findings/exceptions containing the deficiencies found by the SED
examiners when they examined the books of the respondent banks. As found by the RTC, these lists of
findings/exceptions were furnished to the officers or representatives of the respondent banks, and the respondent banks
were required to comment and to undertake remedial measures stated in said lists. Despite these instructions,
respondent banks failed to comply with the SED’s directive.
Respondent banks are already aware of what is required of them by the BSP, and cannot claim violation of their right
to due process simply because they are not furnished with copies of the ROEs. Respondent banks were held by the CA
to be entitled to copies of the ROEs prior to or simultaneously with their submission to the MB, on the principles of
fairness and transparency. Further, the CA held that if the contents of the ROEs are essentially the same as those of the
lists of findings/exceptions provided to said banks, there is no reason not to give copies of the ROEs to the banks. This
is a flawed conclusion, since if the banks are already aware of the contents of the ROEs, they cannot say that fairness
and transparency are not present. If sanctions are to be imposed upon the respondent banks, they are already well
aware of the reasons for the sanctions, having been informed via the lists of findings/exceptions, demolishing that
particular argument. The ROEs would then be superfluities to the respondent banks, and should not be the basis for a
writ of preliminary injunction.

Also,AS TO THE the reliance of the RTC on CASE 4 Banco Filipino v. Monetary Board is misplaced. The
petitioner in that case was held to be entitled to annexes of the Supervision and Examination Sector’s reports, as it
already had a copy of the reports themselves. It was not the subject of the case whether or not the petitioner was
entitled to a copy of the reports. And the ruling was made after the petitioner bank was ordered closed, and it was
allowed to be supplied with annexes of the reports in order to better prepare its defense.

In this instance, at the time the respondent banks requested copies of the ROEs, no action had yet been taken by the
MB with regard to imposing sanctions upon said banks.

The issuance by the RTC of writs of preliminary injunction is an unwarranted interference with the powers of the MB.
Secs. 29 and 30 of RA 765310 refer to the appointment of a conservator or a receiver for a bank, which is a power of
the MB for which they need the ROEs done by the supervising or examining department. The writs of preliminary
injunction issued by the trial court hinder the MB from fulfilling its function under the law. The actions of the
MB under Secs. 29 and 30 of RA 7653 "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 of jurisdiction or with such grave abuse of
discretion as to amount to lack or excess of jurisdiction." The writs of preliminary injunction order are
precisely what cannot be done under the law by preventing the MB from taking action under either Sec. 29 or
Sec. 30 of RA 7653.
15 LUCIA BARRAMEDA VDA. DE BALLESTEROS v. RURAL BANK OF CANAMAN INC., represented by
its Liquidator, THE PHILIPPINE DEPOSIT INSURANCE CORPORATION
G.R No. 176260 November 24, 2010 Mendoza J.

LIQUIDATION COURT JURIS OVER DISPUTED CLAIMS-HERE IT IS. THUS PROPER UNG ACTION
DITO NA SA RTC OF MAKATI NALANG LAAHT NG ACTION AS THE LIQUIDATION COURT (TAMA
NA NADISMISS UNG SA RTC ILIGAN)

FACTS: Lucia filed a complaint for Annulment of Deed of Extrajudicial Partition, Deed of Mortgage and Damages
with prayer for Preliminary Injunction against her children, Roy, Rito, Amy, Arabel, Rico, Abe, Ponce Rex and
Adden, all surnamed Ballesteros, and the Rural Bank of Canaman, Inc., Baao Branch (RBCI) before the RTC-Iriga.

In her complaint, Lucia alleged that her deceased husband, Eugenio, left two (2) parcels of land. Without her
knowledge and consent, her children executed a deed of extrajudicial partition and waiver of the estate of her husband
wherein all the heirs, including Lucia, agreed to allot the two parcels to Rico Ballesteros (Rico); that, still, without
her knowledge and consent, Rico mortgaged Parcel B of the estate in favor of RBCI which mortgage was being
foreclosed for failure to settle the loan secured by the lot.

During the pre-trial, RBCI’s counsel filed a motion to withdraw after being informed that Philippine
Deposit Insurance Corporation (PDIC) would handle the case as RBCI had already been closed and placed
under the receivership of the PDIC.

The PDIC filed a motion to dismiss on the ground that the RTC-Iriga has no jurisdiction over the subject
matter of the action.. RBCI stated that pursuant to Section 30, Republic Act No. 7653  (RA No. 7653), otherwise
known as the "New Central Bank Act," the RTC-Makati, already constituted itself, per its Order dated August 10,
2001, as the liquidation court to assist PDIC in undertaking the liquidation of RBCI.

Thus, the subject matter of Civil Case No. IR-3128 fell within the exclusive jurisdiction of such
liquidation court. The RTC of Iriga dismissed the case.

ISSUE Whether or not a liquidation court can take cognizance of a case wherein the main cause of action is not a
simple money claim against a bank ordered closed, placed under receivership of the PDIC, and undergoing a
liquidation proceeding.

RULINGYES. Lucia’s complaint involves an annulment of deed of mortgage and damages which falls within
the purview of a disputed claim in contemplation of Section 30 of R.A. 7653 (The New Central Bank Act). The
jurisdiction should be lodged with the liquidation court. Section 30 provides:

Sec. 30. Proceedings in Receivership and Liquidation. - Whenever, upon report of the head of the supervising or
examining department, the Monetary Board finds that a bank or quasi-bank:

(a) is unable to pay its liabilities as they become due in the ordinary course of business: Provided, That this shall not
include inability to pay caused by extraordinary demands induced by financial panic in the banking community;
(b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet its liabilities; or
(c) cannot continue in business without involving probable losses to its depositors or creditors; or
(d) has willfully violated a cease and desist order under Section 37 that has become final, involving acts or
transactions which amount to fraud or a dissipation of the assets of the institution; in which cases, the Monetary
 Board may summarily and without need for prior hearing forbid the institution from doing business in the
Philippines and designate the Philippine Deposit Insurance Corporation as receiver of the banking institution.

For a quasi-bank, any person of recognized competence in banking or finance may be designated as receiver.

Procedure taken:

If the receiver determines that the institution cannot be rehabilitated or permitted to resume business in accordance
with the next preceding paragraph, the Monetary Board shall notify in writing the board of directors of its findings and
direct the receiver to proceed with the liquidation of the institution. The receiver shall:

(1) file ex parte with the proper regional trial court, and without requirement of prior notice or any other action, a
petition for assistance in the liquidation of the institution pursuant to a liquidation plan adopted by the
Philippine Deposit Insurance Corporation for general application to all closed banks. In case of quasi-banks,
the liquidation plan shall be adopted by the Monetary Board. Upon acquiring jurisdiction, the court shall, upon
motion by the receiver after due notice, adjudicate disputed claims against the institution, assist the
enforcement of individual liabilities of the stockholders, directors and officers, and decide on other issues as
may be material to implement the liquidation plan adopted. The receiver shall pay the cost of the proceedings
from the assets of the institution.

(2) convert the assets of the institution to money, dispose of the same to creditors and other parties, for the
purpose of paying the debts of such institution in accordance with the rules on concurrence and preference of
credit under the Civil Code of the Philippines and he may, in the name of the institution, and with the
assistance of counsel as he may retain, institute such actions as may be necessary to collect and recover
accounts and assets of, or defend any action against, the institution. The assets of an institution under
receivership or liquidation shall be deemed in custodia legis in the hands of the receiver and shall, from the
moment the institution was placed under such receivership or liquidation, be exempt from any order of
garnishment, levy, attachment, or execution.

"Disputed claims" refers to all claims, whether they be against the assets of the insolvent bank, for specific
performance, breach of contract, damages, or whatever.  

Lucia’s action being a claim against RBCI can properly be consolidated with the liquidation proceedings
before the RTC-Makati.

It is clear, therefore, that the liquidation court has jurisdiction over all claims, including that of Lucia
against the insolvent bank.

As declared in Miranda v. Philippine Deposit Insurance Corporation , regular courts do not have jurisdiction
over actions filed by claimants against an insolvent bank, unless there is a clear showing that the action taken by
the BSP, through the Monetary Board, in the closure of financial institutions was in excess of jurisdiction, or with
grave abuse of discretion. The same is not obtaining in this present case.

The power and authority of the Monetary Board to close banks and liquidate them thereafter when public interest so
requires is an exercise of the police power of the State. Police power, however, is subject to judicial inquiry. It may not
be exercised arbitrarily or unreasonably and could be set aside if it is either capricious, discriminatory, whimsical,
arbitrary, unjust, or is tantamount to a denial of due process and equal protection clauses of the Constitution.

In sum, this Court holds that the consolidation is proper considering that the liquidation court has jurisdiction
over Lucia’s action. It would be more in keeping with law and equity if Lucia’s case is consolidated with the
liquidation case in order to expeditiously determine whether she is entitled to recover the property subject of
mortgage from RBCI and, if so, how much she is entitled to receive from the remaining assets of the bank.
16 IS SAME AS 12 

17. PHILIPPINE DEPOSIT INURANCE CORPORATION v. BUREAU OF INTERNAL REVENUE

G.R. No. 172892, June 13, 2013, J. LEONARDO-DE CASTRO

TAX CLEARANCE NOT REQ IN S30- F: BIR contends tax clearance muna bago liquidate ng bsp. SC no

FACTS: The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) prohibited the Rural Bank of Tuba (Benguet), Inc.
(RBTI) from doing business in the Philippines, placed it under receivership in accordance with Section 30 of Republic Act No.
7653, otherwise known as the "New Central Bank Act," and designated the Philippine Deposit Insurance Corporation (PDIC) as
receiver.

Subsequently, PDIC conducted an evaluation of RBTI’s financial condition and determined that RBTI remained
insolvent. Thus, the Monetary Board issued a resolution directing PDIC to proceed with the liquidation of RBTI. Accordingly and
pursuant to Section 30 of the New Central Bank Act, PDIC filed in the Regional Trial Court (RTC) of La Trinidad, Benguet a
petition for assistance in the liquidation of RBTI.

As an incident of the proceedings, the Bureau of Internal Revenue (BIR) intervened as one of the creditors of
RBTI. The BIR prayed that the proceedings be suspended until PDIC has secured a tax clearance. The trial court found
merit in the BIR’s motion and granted it.

PDIC moved for partial reconsideration of the Order dated February 14, 2003 with respect to the directive for it to secure
a tax clearance. It argued that Section 52(C) of the Tax Code of 1997 does not cover closed banking institutions as the
liquidation of closed banks is governed by Section 30 of the New Central Bank Act.

PDIC insists that Section 52(C) of the Tax Code of 1997 is not applicable to banks ordered placed under
liquidation by the Monetary Board of the BSP. It argues that closed banks placed under liquidation pursuant to Section 30
of the New Central Bank Act are not "corporations contemplating liquidation" within the purview of Section 52(C) of the
Tax Code of 1997. As opposed to the liquidation of all other corporations, the Monetary Board, not the Securities and Exchange
Commission (SEC), has the power to order or approve the closure and liquidation of banks. Section 52(C) of the Tax Code of
1997 applies only to corporations under the supervision of the SEC.

ISSUE:” Whether or not Section 52(C) of the Tax Code of 1997 applies to banks ordered placed under liquidation by the
Monetary Board or whether a bank placed under liquidation has to secure a tax clearance from the BIR before the project
of distribution of the assets of the bank can be approved by the liquidation court.

RULING NO. In Re: Petition for Assistance in the Liquidation of the Rural Bank of Bokod (Benguet), Inc., Philippine Deposit
Insurance Corporation v. Bureau of Internal Revenue ruled that Section 52(C) of the Tax Code of 1997 is not applicable to
banks ordered placed under liquidation by the Monetary Board,  and a tax clearance is not a prerequisite to the approval of
the project of distribution of the assets of a bank under liquidation by the PDIC.

Thus, this Court has held that the RTC, acting as liquidation court under Section 30 of the New Central Bank Act,
commits grave abuse of discretion in ordering the PDIC, as liquidator of a bank ordered closed by the Monetary Board, to first
secure a tax clearance from the appropriate BIR Regional Office, and holding in abeyance the approval of the project of
distribution of the assets of the closed bank by virtue thereof. Three reasons have been given.

First, Section 52(C) of the Tax Code of 1997 pertains only to a regulation of the relationship between the SEC and
the BIR with respect to corporations contemplating dissolution or reorganization. On the other hand, banks under
liquidation by the PDIC as ordered by the Monetary Board constitute a special case governed by the special rules and
procedures provided under Section 30 of the New Central Bank Act, which does not require that a tax clearance be secured
from the BIR. As explained in In Re: Petition for Assistance for Assistance in the Liquidation of the Rural Bank of Bokod
(Benguet), Inc.:
 Section 52(C) of the Tax Code of 1997 and the BIR-SEC Regulations No. 1  regulate the relations only as between the
SEC and the BIR, making a certificate of tax clearance a prior requirement before the SEC could approve the dissolution of a
corporation.

Section 30 of the New Central Bank Act lays down the proceedings for receivership and liquidation of a bank. The
said provision is silent as regards the securing of a tax clearance from the BIR. The omission, nonetheless, cannot compel this
Court to apply by analogy the tax clearance requirement of the SEC, as stated in Section 52(C) of the Tax Code of 1997 and
BIR-SEC Regulations No. 1, since, again, the dissolution of a corporation by the SEC is a totally different proceeding from
the receivership and liquidation of a bank by the BSP. This Court cannot simply replace any reference by Section 52(C) of
the Tax Code of 1997 and the provisions of the BIR-SEC Regulations No. 1 to the "SEC" with the "BSP." To do so would
be to read into the law and the regulations something that is simply not there, and would be tantamount to judicial
legislation.

Second, only a final tax return is required to satisfy the interest of the BIR in the liquidation of a closed bank, which is the
determination of the tax liabilities of a bank under liquidation by the PDIC. In view of the timeline of the liquidation proceedings
under Section 30 of the New Central Bank Act, it is unreasonable for the liquidation court to require that a tax clearance be first
secured as a condition for the approval of project of distribution of a bank under liquidation.

Third, it is not for this Court to fill in any gap, whether perceived or evident, in current statutes and regulations as to the
relations among the BIR, as tax collector of the National Government; the BSP, as regulator of the banks; and the PDIC, as the
receiver and liquidator of banks ordered closed by the BSP. It is up to the legislature to address the matter through appropriate
legislation, and to the executive to provide the regulations for its implementation.

There is another reason. The position of the BIR, insisting on prior compliance with the tax clearance requirement as a
condition for the approval of the project of distribution of the assets of a bank under liquidation, is contrary to both the letter and
intent of the law on liquidation of banks by the PDIC. In this connection, the relevant portion of Section 30 of the New Central
Bank Act provides:

Section 30. Proceedings in Receivership and Liquidation. – x x x.

If the receiver determines that the institution cannot be rehabilitated or permitted to resume business in accordance with
the next preceding paragraph, the Monetary Board shall notify in writing the board of directors of its findings and direct
the receiver to proceed with the liquidation of the institution. The receiver shall:

(1) file ex parte with the proper regional trial court, and without requirement of prior notice or any other action,
a petition for assistance in the liquidation of the institution pursuant to a liquidation plan adopted by the
Philippine Deposit Insurance Corporation for general application to all closed banks. In case of quasi-banks,
the liquidation plan shall be adopted by the Monetary Board. Upon acquiring jurisdiction, the court shall,
upon motion by the receiver after due notice, adjudicate disputed claims against the institution, assist the
enforcement of individual liabilities of the stockholders, directors and officers, and decide on other issues as
may be material to implement the liquidation plan adopted. The receiver shall pay the cost of the
proceedings from the assets of the institution.

(2) convert the assets of the institution to money, dispose of the same to creditors and other parties, for the
purpose of paying the debts of such institution in accordance with the rules on concurrence and preference
of credit under the Civil Code of the Philippines and he may, in the name of the institution, and with the
assistance of counsel as he may retain, institute such actions as may be necessary to collect and recover
accounts and assets of, or defend any action against, the institution. The assets of an institution under
receivership or liquidation shall be deemed in custodia legis in the hands of the receiver and shall, from the
moment the institution was placed under such receivership or liquidation, be exempt from any order of
garnishment, levy, attachment, or execution. 

The law expressly provides that debts and liabilities of the bank under liquidation are to be paid in accordance with the
rules on concurrence and preference of credit under the Civil Code. Duties, taxes, and fees due the Government enjoy priority only
when they are with reference to a specific movable property, under Article 2241(1) of the Civil Code, or immovable property,
under Article 2242(1) of the same Code.

However, with reference to the other real and personal property of the debtor, sometimes referred to as "free property,"
the taxes and assessments due the National Government, other than those in Articles 2241(1) and 2242(1) of the Civil Code, such
as the corporate income tax, will come only in ninth place in the order of preference. On the other hand, if the BIR’s contention
that a tax clearance be secured first before the project of distribution of the assets of a bank under liquidation may be approved,
then the tax liabilities will be given absolute preference in all instances, including those that do not fall under Articles 2241(1) and
2242(1) of the Civil Code.
 In order to secure a tax clearance which will serve as proof that the taxpayer had completely paid off his tax liabilities,
PDIC will be compelled to settle and pay first all tax liabilities and deficiencies of the bank, regardless of the order of preference
under the pertinent provisions of the Civil Code. Following the BIR’s stance, therefore, only then may the project of distribution of
the bank’s assets be approved and the other debts and claims thereafter settled, even though under Article 2244 of the Civil Code
such debts and claims enjoy preference over taxes and assessments due the National Government. The BIR effectively wants this
Court to ignore Section 30 of the New Central Bank Act and disregard Article 2244 of the Civil Code. However, as a court of law,
this Court has the solemn duty to apply the law. It cannot and will not give its imprimatur to a violation of the laws

REPUBLIC ACT No. 6426

AN ACT INSTITUTING A FOREIGN CURRENCY DEPOSIT SYSTEM IN THE PHILIPPINES, AND FOR OTHER
PURPOSES.

Section 1. Title.– This act shall be known as the "Foreign Currency Deposit Act of the Philippines."

Section 2. Authority to deposit foreign currencies. – Any person, natural or juridical, may, in accordance with the provisions of
this Act, deposit with such Philippine banks in good standing, as may, upon application, be designated by the Central Bank for the
purpose, foreign currencies which are acceptable as part of the international reserve, except those which are required by the
Central Bank to be surrendered in accordance with the provisions of Republic Act Numbered two hundred sixty-five (Now  Rep.
Act No. 7653).

Section 3. Authority of banks to accept foreign currency deposits. – The banks designated by the Central Bank under Section two
hereof shall have the authority:

(1) To accept deposits and to accept foreign currencies in trust Provided, That numbered accounts for recording and
servicing of said deposits shall be allowed;

(2) To issue certificates to evidence such deposits;

(3) To discount said certificates;

(4) To accept said deposits as collateral for loans subject to such rules and regulations as may be promulgated by the
Central Bank from time to time; and

(5) To pay interest in foreign currency on such deposits.

Section 4. Foreign currency cover requirements. – Except as the Monetary Board may otherwise prescribe or allow, the depository
banks shall maintain at all times a one hundred percent foreign currency cover for their liabilities, of which cover at least fifteen
percent shall be in the form of foreign currency deposit with the Central Bank, and the balance in the form of foreign currency
loans or securities, which loans or securities shall be of short term maturities and readily marketable. Such foreign currency loans
may include loans to domestic enterprises which are export-oriented or registered with the Board of Investments, subject to the
limitations to be prescribed by the Monetary Board on such loans. Except as the Monetary Board may otherwise prescribe or
allow, the foreign currency cover shall be in the same currency as that of the corresponding foreign currency deposit liability. The
Central Bank may pay interest on the foreign currency deposit, and if requested shall exchange the foreign currency notes and
coins into foreign currency instruments drawn on its depository banks. (As amended by PD No. 1453, June 11, 1978.)

Depository banks which, on account of networth, resources, past performance, or other pertinent criteria, have been qualified by
the Monetary Board to function under an expanded foreign currency deposit system, shall be exempt from the requirements in the
preceding paragraph of maintaining fifteen percent (15%) of the cover in the form of foreign currency deposit with the Central
Bank. Subject to prior Central Bank approval when required by Central Bank regulations, said depository banks may extend
foreign currency loans to any domestic enterprise, without the limitations prescribed in the preceding paragraph regarding maturity
and marketability, and such loans shall be eligible for purposes of the 100% foreign currency cover prescribed in the preceding
paragraph. (As added by PD No. 1035.)

Section 5. Withdrawability and transferability of deposits. – There shall be no restriction on the withdrawal by the depositor of his
deposit or on the transferability of the same abroad except those arising from the contract between the depositor and the bank.
Section 6. Tax exemption. – All foreign currency deposits made under this Act, as amended by PD No. 1035, as well as foreign
currency deposits authorized under PD No. 1034, including interest and all other income or earnings of such deposits, are hereby
exempted from any and all taxes whatsoever irrespective of whether or not these deposits are made by residents or nonresidents so
long as the deposits are eligible or allowed under aforementioned laws and, in the case of nonresidents, irrespective of whether or
not they are engaged in trade or business in the Philippines. (As amended by PD No. 1246, prom. Nov. 21, 1977.)

Section 7. Rules and regulations. – The Monetary Board of the Central Bank shall promulgate such rules and regulations as may
be necessary to carry out the provisions of this Act which shall take effect after the publications in the Official Gazette and in a
newspaper of national circulation for at least once a week for three consecutive weeks. In case the Central Bank promulgates new
rules and regulations decreasing the rights of depositors, rules and regulations at the time the deposit was made shall govern.

Section 8. Secrecy of foreign currency deposits. – All foreign currency deposits authorized under this Act, as amended by PD No.
1035, as well as foreign currency deposits authorized under PD No. 1034, are hereby declared as and considered of an absolutely
confidential nature and, except upon the written permission of the depositor, in no instance shall foreign currency deposits be
examined, inquired or looked into by any person, government official, bureau or office whether judicial or administrative or
legislative, or any other entity whether public or private; Provided, however, That said foreign currency deposits shall be exempt
from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any
administrative body whatsoever. (As amended by PD No. 1035, and further amended by PD No. 1246, prom. Nov. 21, 1977.)

Section 9. Deposit insurance coverage. – The deposits under this Act shall be insured under the provisions of Republic Act No.
3591, as amended (Philippine Deposit Insurance Corporation), as well as its implementing rules and regulations: Provided, That
insurance payment shall be in the same currency in which the insured deposits are denominated.

Section 10. Penal provisions. – Any willful violation of this Act or any regulation duly promulgated by the Monetary Board
pursuant hereto shall subject the offender upon conviction to an imprisonment of not less than one year nor more than five years or
a fine of not less than five thousand pesos nor more than twenty-five thousand pesos, or both such fine and imprisonment at the
discretion of the court.

Section 11. Separability clause. – The provisions of this Act are hereby declared to be separable and in the event one or more of
such provisions are held unconstitutional, the validity of other provisions shall not be affected thereby.

Section 12. Repealing clause. – All acts, executive orders, rules and regulations, or parts thereof, which are inconsistent with any
provisions of this Act are hereby repealed, amended or modified accordingly, without prejudice, however, to deposits made
thereunder.

Section 12-A. Amendatory enactments and regulations. – In the event a new enactment or regulation is issued decreasing the
rights hereunder granted, such new enactment or regulation shall not apply to foreign currency deposits already made or existing at
the time of issuance of such new enactment or regulation, but such new enactment or regulation shall apply only to foreign
currency deposits made after its issuance. (As added by PD No. 1246, prom. Nov. 21, 1977.)

Section 13. Effectivity. – This Act shall take effect upon its approval.

Approved, April 4, 1974

18. GSIS vs. 5th Division CA
G.R. No. 189206, June 08, 2011 J. Perez

DOMSAT (FOREIGN SHIT) may kontrata with GSIS- nagkashit- GSIS seeks to see acct of domsat in PH-
domsat says no foreign shit kami so apply e ung 6426 only 1 xcn: SC: 6426 apply

Facts:Several banks filed a case for collection of sum of money with damages against Domsat Holdings Inc.
(Domsat) and GSIS. Said case stemmed from a Loan Agreement, whereby the Banks agreed to lend U.S. $ 11 Million
to Domsat for the purpose of financing the lease and/or purchase of a Gorizon Satellite from the International
Organization of Space Communications (Intersputnik). The controversy originated from a surety agreement by
which Domsat obtained a surety bond from GSIS to secure the payment of the loan from the Banks.

When Domsat failed to pay the loan, GSIS refused to comply with its obligation reasoning that Domsat did not use the
loan proceeds for the payment of rental for the satellite. GSIS alleged that Domsat, with Westmont Bank as the
conduit, transferred the U.S. $11 Million loan proceeds from the Industrial Bank of Korea to Citibank New York
account of Westmont Bank and from there to the Binondo Branch of Westmont Bank. The Banks filed a complaint
before the RTC of Makati against Domsat and GSIS.

In the course of the hearing, GSIS requested for the issuance of a subpoena duces tecum to the custodian of records of
Westmont Bank to produce the ledger covering the account of Domsat with Westmont, the applications for cashier's/
manager's checks and bank transfers funded by the account of DOMSAT with or through Westmont, the ledger
covering the account of Philippine Agila Satellite, Inc. with Westmont Bank and applications for cashier's/manager's
checks funded by the account of Philippine Agila Satellite, Inc. with or through the Westmont Bank.

GSIS anchored its argument on Republic Act No. 1405 or the "Law on Secrecy of Bank Deposits," which allows
the disclosure of bank deposits in cases where the money deposited is the subject matter of the litigation. GSIS
asserts that the subject matter of the litigation is the U.S. $11 Million obtained by Domsat from the Banks to
supposedly finance the lease of a Russian satellite from Intersputnik .

Domsat denies the allegations of GSIS and reiterates that it did not give a categorical or affirmative written consent or
permission to GSIS to examine its bank statements with Westmont Bank. The Banks maintain that Republic Act
No. 1405 is not the applicable law in the instant case because the Domsat deposit is a foreign currency deposit,
thus covered by Republic Act No. 6426. Under said law, only the consent of the depositor shall serve as the
exception for the disclosure of his/her deposit.

Issue: GSIS invokes Republic Act No. 1405 to justify the issuance of the subpoena sa bank acct while the banks cite
Republic Act No. 6426 to oppose it. The core issue is which of the two laws should apply in the instant case.

Ruling:
Republic Act No. 6426 applies in this case.
Republic Act No. 1405 was enacted in 1955. Section 2 thereof was first amended by Presidential Decree No. 1792 in
1981 and further amended by Republic Act No. 7653 in 1993. It now reads:

GR: Section 2. All deposits of whatever nature with banks or banking institutions in the Philippines including
investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities,
are hereby considered as of an absolutely confidential nature and may not be examined, inquired or looked into by any
person, government official, bureau or office,

except upon written permission of the depositor, or in cases of impeachment, or upon order of a competent court in
cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or invested is the
subject matter of the litigation.

= On the one hand, Republic Act No. 1405 provides for four (4) exceptions when records of deposits may be
disclosed. These are under any of the following instances: a) upon written permission of the depositor, (b) in
cases of impeachment, (c) upon order of a competent court in the case of bribery or dereliction of duty of public
officials or, (d) when the money deposited or invested is the subject matter of the litigation, and e) in cases of
violation of the Anti-Money Laundering Act (AMLA), the Anti-Money Laundering Council (AMLC) may
inquire into a bank account upon order of any competent court. On the other hand, the lone exception to the
non-disclosure of foreign currency deposits, under Republic Act No. 6426, is disclosure upon the written
permission of the depositor.

Section 8 of Republic Act No. 6426, which was enacted in 1974, and amended by Presidential Decree No. 1035 and
later by Presidential Decree No. 1246, provides:

Section 8. Secrecy of Foreign Currency Deposits. - All foreign currency deposits authorized under this Act, as
amended by Presidential Decree No. 1035, as well as foreign currency deposits authorized under Presidential Decree
No. 1034, are hereby declared as and considered of an absolutely confidential nature and,

except upon the written permission of the depositor, in no instance shall foreign currency deposits be examined,
inquired or looked into by any person, government official, bureau or office whether judicial or administrative or
legislative or any other entity whether public or private; Provided, however, That said foreign currency deposits shall
be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government
agency or any administrative body whatsoever. (As amended by PD No. 1035, and further amended by PD No. 1246,
prom. Nov. 21, 1977.)

These two laws both support the confidentiality of bank deposits. There is no conflict between them. Republic
Act No. 1405 was enacted for the purpose of giving encouragement to the people to deposit their money in banking
institutions and to discourage private hoarding so that the same may be properly utilized by banks in authorized loans
to assist in the economic development of the country. It covers all bank deposits in the Philippines and no
distinction was made between domestic and foreign deposits. Thus, Republic Act No. 1405 is considered a law
of general application.

On the other hand, Republic Act No. 6426 was intended to encourage deposits from foreign lenders and
investors. It is a special law designed especially for foreign currency deposits in the Philippines . A general law
does not nullify a specific or special law. Generalia specialibus non derogant. Therefore, it is beyond cavil that
Republic Act No. 6426 applies in this case.
Applying Section 8 of Republic Act No. 6426, absent the written permission from Domsat, Westmont Bank
cannot be legally compelled to disclose the bank deposits of Domsat, otherwise, it might expose itself to criminal
liability under the same act.

19. China Banking Corp. vs. Court of Appeals

G.R. No. 140687  Dec. 18, 2006

Jose + substi by anak nya- then dahil naloko sila they seek to see account nung nangloko (foreign acct) – bank ayaw pakita
saying na bawal- SC: not bawal kasi in this case owner din si Jose thus depositor din –passed to his anak

Facts: Jose Gotianuy accused his daughter Mary Margaret Dee of stealing, among his other properties, US dollar deposits with
Citibank N.A. amounting to not less than P35,000,000.00 and US$864,000.00.

Mary Margaret Dee received these amounts from Citibank N.A. through checks which she allegedly deposited at China Banking
Corporation (China Bank). He likewise accused his son-in-law, George Dee, husband of his daughter, Mary Margaret, of
transferring his real properties and shares of stock in George Dees name without any consideration. Jose Gotianuy, died during
the pendency of the case before the trial court. He was substituted by his daughter, Elizabeth Gotianuy Lo. The latter
presented the US Dollar checks withdrawn by Mary Margaret Dee from his US dollar placement with Citibank.

petitioner China Bank that the Citibank dollar checks with both Jose Gotianuy and/or Mary Margaret Dee as payees, deposited
with China Bank, may not be looked into under the law on secrecy of foreign currency deposits.

Issue: Whether or not the petitioner China Bank can validly invoke the bank secrecy law to prevent the disclosure. 

RULING NO. The law provides that all foreign currency deposits authorized under R.A. No. 6426, as amended by Sec. 8, P.D.
No. 1246, P.D. No. 1035, as well as foreign currency deposits authorized under P.D. No. 1034 are considered absolutely
confidential in nature and may not be inquired into. There is only one exception to the secrecy of foreign currency deposits, that is,
disclosure is allowed upon the written permission of the depositor.

In the case at bar, Jose Gotianuy is a co-payee of the checks deposited in China Bank hence, he is deemed also a
depositor. A depositor is one who pays money into the bank in the usual course of business to be placed to his credit and
subject to his check of the beneficiary of the funds held by the bank as trustee. As such, no  written consent from Margaret
Dee is needed in order to inquire into the said deposits. 

Furthermore, there is no issue as to the source of the funds. Mary Margaret Dee declared the source to be Jose Gotianuy.
There is likewise no dispute that these funds in the form of Citibank US dollar checks are now deposited with China Bank. As the
owner of the funds unlawfully taken and which are undisputably now deposited with China Bank, Jose Gotianuy has the
right to inquire into the said deposits.

On this score, the observations of the Court of Appeals are worth reiterating:  Being a co-payee thereof, then he or
his estate can be considered as a co-depositor of said checks. Ergo, since the late Jose Gotianuy is a co-depositor of the CBC
account, then his request for the assailed subpoena is tantamount to an express permission of a depositor for the disclosure
of the name of the account holder
his fortifies our conclusion that an inquiry into the said deposit at China Bank is justified. At the very least, Jose Gotianuy as the
owner of these funds is entitled to a hearing on the whereabouts of these funds.

All things considered and in view of the distinctive circumstances attendant to the present case, we are constrained to render a
limited pro hac vice ruling.21 Clearly it was not the intent of the legislature when it enacted the law on secrecy on foreign currency
deposits to perpetuate injustice. This Court is of the view that the allowance of the inquiry would be in accord with the rudiments
of fair play,22 the upholding of fairness in our judicial system and would be an avoidance of delay and time-wasteful and circuitous
way of administering justice

20. CARMEN LL. INTENGAN, ROSARIO LL. NERI, and RITA P. BRAWNER vs. COURT OF APPEALS,
DEPARTMENT OF JUSTICE, AZIZ RAJKOTWALA, WILLIAM FERGUSON, JOVEN REYES, and VIC LIM
G.R. No. 128996 February 15, 2002 J. DE LEON, JR.

R.A. No. 6426 APPLIES- HERE, there is only a single exception to the secrecy of foreign currency deposits, that is,
disclosure is allowed only upon the written permission of the depositor.

FACTS Citibank filed a complaint for violation of section 31, in relation to section 144 of the Corporation Code against two (2)
of its officers, Dante L. Santos and Marilou Genuino. Attached to the complaint was an affidavit executed by private respondent
Vic Lim, a vice-president of Citibank evidencing the commission of the alleged violations of the two employees.

As evidence, Lim annexed bank records purporting to establish the deception practiced by Santos and Genuino. Some
of the documents pertained to the dollar deposits of petitioners Carmen Ll. Intengan, Rosario Ll. Neri, and Rita P.
Brawner.

Petitioners filed respective motions for the exclusion and physical withdrawal of their bank records that were
attached to Lim’s affidavit but were dismissed by the Court of Appeals declaring that disclosure of petitioners’ deposits
was necessary to establish the allegation that Santos and Genuino had violated Section 31 of the Corporation Code in acquiring
"any interest adverse to the corporation in respect of any matter which has been reposed in him in confidence.".

ISSUE: Whether or not the disclosure falls under the exception under R.A. No. 1405.

RULING NO. The accounts in question are U.S. dollar deposits; consequently, the applicable law is not Republic Act No.
1405 but Republic Act (RA) No. 6426, known as the Foreign Currency Deposit Act of the Philippines, section 8 of which
provides:

Sec. 8. Secrecy of Foreign Currency Deposits.- All foreign currency deposits authorized under this Act, as amended by
Presidential Decree No. 1035, as well as foreign currency deposits authorized under Presidential Decree No. 1034, are
hereby declared as and considered of an absolutely confidential nature and, except upon the written permission of the
depositor, in no instance shall such foreign currency deposits be examined, inquired or looked into by any person,
government official bureau or office whether judicial or administrative or legislative or any other entity whether public or
private: Provided, however, that said foreign currency deposits shall be exempt from attachment, garnishment, or any
other order or process of any court, legislative body, government agency or any administrative body whatsoever.

Under R.A. No. 6426 there is only a single exception to the secrecy of foreign currency deposits, that is, disclosure
is allowed only upon the written permission of the depositor.

Incidentally, the acts of private respondents complained of happened before the enactment on September 29, 2001 of
R.A. No. 9160 otherwise known as the Anti-Money Laundering Act of 2001.

A case for violation of Republic Act No. 6426 should have been the proper case brought against private respondents.
Private respondents Lim and Reyes admitted that they had disclosed details of petitioners’ dollar deposits without the latters’
written permission. It does not matter if that such disclosure was necessary to establish Citibank’s case against Dante L. Santos and
Marilou Genuino. Lim’s act of disclosing details of petitioners’ bank records regarding their foreign currency deposits, with the
authority of Reyes, would appear to belong to that species of criminal acts punishable by special laws, called malum prohibitum.

Penalty for A violation of Republic Act No. 6426

 shall subject the offender to imprisonment of not less than one year nor more than five years, or by a fine of not less than
five thousand pesos nor more than twenty-five thousand pesos, or both. Applying Act No. 3326, the offense prescribes in eight
years. Per available records, private respondents may no longer be haled before the courts for violation of Republic Act No. 6426.

We point out, however, that the confidentiality of foreign currency deposits mandated by Republic Act No. 6426, as amended by
Presidential Decree No. 1246, came into effect as far back as 1977. Hence, ignorance thereof cannot be pretended. On one hand,
the existence of laws is a matter of mandatory judicial notice; on the other, ignorantia legis non excusat. Even during the pendency
of this appeal, nothing prevented the petitioners from filing a complaint charging the correct offense against private respondents.
This was not done, as everyone involved was content to submit the case on the basis of an alleged violation of Republic Act No.
1405 (Bank Secrecy Law), however, incorrectly invoked.

21 CHINA BANKING CORPORATION and TAN KIM LIONG, petitioners-appellants, vs. HON.

WENCESLAO ORTEGA, as Presiding Judge of the Court of First Instance of Manila, Branch VIII, and
VICENTE G. ACABAN, respondents-appellees.

FACTS On December 17, 1968 Vicente Acaban filed a complaint in the court  a quo against Bautista Logging Co.,
Inc., B & B Forest Development Corporation and Marino Bautista for the collection of a sum of money.

To satisfy the judgment, the plaintiff sought the garnishment of the bank deposit of the defendant B & B
Forest Development Corporation with the China Banking Corporation.

Accordingly, a notice of garnishment was issued by the Deputy Sheriff of the trial court and served on
said bank through its cashier, Tan Kim Liong.

In reply, the bank' cashier invited the attention of the Deputy Sheriff to the provisions of Republic Act
No. 1405 which, it was alleged, prohibit the disclosure of any information relative to bank deposits. 

Thereupon the plaintiff filed a motion to cite Tan Kim Liong for contempt of court.

The petitioner bank argue that the disclosure of the information required by the court does not fall within any
of the four (4) exceptions enumerated in Section 2, and that if the questioned orders are complied with Tan Kim
Liong may be criminally liable under Section 5 and the bank exposed to a possible damage suit by B & B Forest
Development Corporation.

ISSUE: Whether or not a banking institution may validly refuse to comply with a court process garnishing the bank
deposit of a judgment debtor, by invoking the provisions of Republic Act No. 1405

RULING The lower court did not order an examination of or inquiry into the deposit of B & B Forest
Development Corporation, as contemplated in the law.

It merely required Tan Kim Liong to inform the court whether or not the defendant B & B Forest Development
Corporation had a deposit in the China Banking Corporation only for purposes of the garnishment issued by it, so that
the bank would hold the same intact and not allow any withdrawal until further order. 

Republic Act 1405, that it was not the intention of the lawmakers to place bank deposits beyond the reach of
execution to satisfy a final judgment. It is sufficiently clear from the foregoing discussion of the conference
committee report of the two houses of Congress that the prohibition against examination of or inquiry into a
bank deposit under Republic Act 1405 does not preclude its being garnished to insure satisfaction of a
judgment. Indeed, there is no real inquiry in such a case, and if the existence of the deposit is disclosed the
disclosure is purely incidental to the execution process.
22 LOURDES T. MARQUEZ, in her capacity as Branch Manager, Union Bank of the Philippines,  petitioners, vs. HON.
ANIANO A. DESIERTO, (in his capacity as OMBUDSMAN, Evaluation and Preliminary Investigation Bureau, Office of
the Ombudsman, ANGEL C. MAYOR-ALGO, JR., MARY ANN CORPUZ-MANALAC and JOSE T. DE JESUS, JR., in
their capacities as Chairman and Members of the Panel, respectively, respondentsG.R. No. 135882. June 27, 2001, J.
PARDO

FACTS  Marquez, branch manager of Union Bank Julia Vargas, received an Order from Ombudsman to produce several
bank documents for purposes of inspection in camera.

The Ombudsman wanted to conduct (investigation palang to!!!!!) such in camera inspection on the accounts based on a
trail of manager’s checks by a certain Trivinio who purchased 51 managers checks for a total amount of P272M. Marquez
agreed to the inspection.

Marquez wrote to the Ombudsman saying that the accounts in question cannot readily be identified and asked for time to respond
to the order. The Ombudsman replied that the Bank should have preserved records despite the accounts being dormant.

Ombudsman issued order to direct Marquez to produce the bank documents due to the unjustified delay by the Bank since the in
camera inspection had already been extended twice.

Marquez filed for declaratory relief to clear the rights of petitioners under the bank secrecy law

ISSUE  whether the in camera inspection orders are allowed as an exception to the bank secrecy law

RULINGNO. The in camera inspection is not allowed. There being no pending case before a court of competent jurisdiction.

An exception to the bank secrecy law is when the money deposited is the subject matter of a litigation.

Therefore, it may be allowed on the ground of a pending case when:

 The case is pending in court of competent jurisdiction

 The account must be clearly identified
 Inspection is limited to the subject matter of the pending case
 The Bank personnel and account holder must be notified to be present during the inspection
 Such inspection may cover only the account identified in the pending case
The order for in camera inspection is based on a pending investigation of the Ombudsman for violations of RA
3019, Sec 3(e)(g). Clearly, there is no pending litigation yet before a court of competent authority. It is only an investigation
by the Ombudsman.

23 Karen E. Salvacion, et. al vs. Central Bank, et. al,

G.R. No. 94723, Aug. 21, 1997, J. Torres, Jr.

FACTS Karen Salvacion, 12-year old girl was raped 10 times in the span of 4 days by an American tourist Greg Bartelli.
 Bartelli was able to escape from the jail and avoid punishment. Salvacion, having received a favorable judgment in the
Civil Case for damages, tried to execute judgment on Bartelli's dollar deposit with China Banking Corporation.

The bank invoked Section 113 of Central Bank Circular No. 960 to the effect that the dollar deposits or defendant
Greg Bartelli are exempt from attachment, garnishment, or any other order or process of any court, legislative body,
government agency or any administrative body, whatsoever.
ISSUE won bank is correct?

RULING NO. Respondents China Banking Corporation and Central Bank of the Philippines refused to honor the writ of
execution issued in Civil Case No. 89-3214 on the strength of the following provision of Central Bank Circular No. 960:

Sec. 113. Exemption from attachment. — Foreign currency deposits shall be exempt from attachment, garnishment, or any other
order or process of any court, legislative body, government agency or any administrative body whatsoever.

Central Bank Circular No. 960 was issued pursuant to Section 7 of Republic Act No. 6426:

Sec. 7. Rules and Regulations. The Monetary Board of the Central Bank shall promulgate such rules and regulations as may be
necessary to carry out the provisions of this Act which shall take effect after the publication of such rules and regulations in the
Official Gazette and in a newspaper of national circulation for at least once a week for three consecutive weeks. In case the Central
Bank promulgates new rules and regulations decreasing the rights of depositors, the rules and regulations at the time the deposit
was made shall govern.

The aforecited Section 113 was copied from Section 8 of Republic Act NO. 6426, as amended by P.D. 1246, thus:

Sec. 8. Secrecy of Foreign Currency Deposits. — All foreign currency deposits authorized under this Act, as amended by
Presidential Decree No. 1035, as well as foreign currency deposits authorized under Presidential Decree No. 1034, are hereby
declared as and considered of an absolutely confidential nature and, except upon the written permission of the depositor, in no
instance shall such foreign currency deposits be examined, inquired or looked into by any person, government official, bureau or
office whether judicial or administrative or legislative or any other entity whether public or private: Provided, however, that said
foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative
body, government agency or any administrative body whatsoever.

It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the country's economy was in a
shambles; when foreign investments were minimal and presumably, this was the reason why said statute was enacted. But the
realities of the present times show that the country has recovered economically; and even if not, the questioned law still denies
those entitled to due process of law for being unreasonable and oppressive. The intention of the questioned law may be good when
enacted. The law failed to anticipate the iniquitous effects producing outright injustice and inequality such as the case before us.

SC ruled that the questioned law makes futile the favorable judgment and award of damages that Salvacion and
her parents fully deserve.

Obviously, the foreign currency deposit made by a transient or a tourist is not the kind of deposit encouraged by
PD Nos. 1034 and 1035 and given incentives and protection by said laws because such depositor stays only for a few days in
the country and, therefore, will maintain his deposit in the bank only for a short time.

Respondent Greg Bartelli, as stated, is just a tourist or a transient. He deposited his dollars with respondent China
Banking Corporation only for safekeeping during his temporary stay in the Philippines.

In fine, the application of the law depends on the extent of its justice. Eventually, if we rule that the questioned
Section 113 of Central Bank Circular No. 960 which exempts from attachment, garnishment, or any other order or process
of any court, 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 Civil Code which provides that "in case of doubt in the interpretation or
application of laws, it is presumed that the lawmaking body intended right and justice to prevail. "Ninguno non deue
enriquecerse tortizeramente con dano de otro." Simply stated, when the statute is silent or ambiguous, this is one of those
fundamental solutions that would respond to the vehement urge of conscience. (Padilla vs. Padilla, 74 Phil. 377).

It would be unthinkable, that the questioned Section 113 of 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.
24. BSB GROUP, INC., represented by its President, Mr. RICARDO BANGAYAN vs. SALLY GO a.k.a.
SALLY GO-BANGAYAN
G.R. No. 168644 February 16, 2010 J.PERALTA

BSB GROUP EMPLOYS BANGAYAN AND GO. GO IS THE SECRETARY WHO WAS CHARGED NG
THEFT,- basta ang main issue dito e kung allowed ba ung pagsubpoena ng prosec sa account ni Go. SC: No.
kasi pera ung issue di ung cheke.

FACTS- Petitioner, the BSB Group, Inc., presided by its herein representative, Ricardo Bangayan (Bangayan).

Respondent Sally Go, is Bangayan's wife, who was employed in the company as a cashier, and was
engaged, among others, to receive and account for the payments made by the various customers of the company.

In 2002, Bangayan filed with the Manila Prosecutor's Office a complaint for estafa and/or qualified theft
against respondent sally go, alleging that several checks representing the aggregate amount of P1,534,135.50 issued
by the company's customers in payment of their obligation were, instead of being turned over to the company's
coffers, indorsed by respondent who deposited the same to her personal banking account maintained at Security
Bank and Trust Company (Security Bank) in Divisoria, Manila Branch. Upon a finding that the
evidence adduced was uncontroverted, the assistant city prosecutor recommended the filing of the
Information for qualified theft against respondent.

Accordingly, respondent was charged before the Regional Trial Court of Manila. She was found guilty; that in
the commission of the said offense, said accused acted with grave abuse of confidence, being then employed as cashier
by said complainant at the time of the commission of the said offense and as such she was entrusted with the said
amount of money.

The prosecution moved for the issuance of subpoena duces tecum /ad testificandum against the
respective managers or records custodians of Security Bank’s Divisoria Branch, as well as of the Asian Savings
Bank (now Metrobank])

Respondent filed a motion to quash the subpoena, addressed to Metrobank . Respondent characterized
the Metrobank account as irrelevant to the case

Petitioner, , argued for the relevancy of the Metrobank account on the ground that the complaint-
affidavit showed that there were two checks which respondent allegedly deposited in an account with the said
bank.

To this, respondent sally filed a supplemental motion to quash, invoking the absolutely
confidential nature of the Metrobank account under the provisions of Republic Act No. 1405. The trial
court did not sustain respondent; hence, it denied the motion to quash for lack of merit.
 Meanwhile, the prosecution was able to present in court the testimony of Elenita Marasigan (Marasigan), the
representative of Security Bank. In a nutshell, Marasigan’s testimony sought to prove that between 1988
and 1989, respondent, while engaged as cashier at the BSB Group, Inc., was able to run away with the checks
issued to the company by its customers, endorse the same, and credit the corresponding amounts to her
personal deposit account with Security Bank. In the course of the testimony, the subject checks were
presented to Marasigan for identification and marking as the same checks received by respondent,
endorsed, and then deposited in her personal account with Security Bank. CA affirmed RTC’s decision. (to push
na ipakita nyo)

ISSUEWhether or not the testimony on the particulars of respondent’s account with Security Bank, as well as of the
corresponding evidence of the checks allegedly deposited in said account, constitutes an unallowable inquiry under
R.A. 1405.

RULING: YES. Inquiry not allowed mainly because not the subject matter of the action. The Court found
guidance in the relevant portions of the legislative deliberations on Senate Bill No. 351 and House Bill No. 3977,
which later became the Bank Secrecy Act, and it held that the absolute confidentiality rule in R.A. No. 1405
actually aims at protection from unwarranted inquiry or investigation if the purpose of such inquiry or
investigation is merely to determine the existence and nature, as well as the amount of the deposit in any given
bank account.

What indeed constitutes the subject matter in litigation in relation to Section 2 of R.A. No. 1405 has
been pointedly and amply addressed in Union Bank of the Philippines v. Court of Appeals , in which the Court
noted that the inquiry into bank deposits allowable under R.A. No. 1405 must be premised on the fact that the
money deposited in the account is itself the subject of the action. (HERE NOT!)

Given this perspective, we deduce that the subject matter of the action in the case at bar is to be determined
from the indictment that charges respondent with the offense, and not from the evidence sought by the prosecution to
be admitted into the records.

In the criminal Information filed with the trial court, respondent, unqualifiedly and in plain language, is
charged with qualified theft by abusing petitioner’s trust and confidence and stealing cash. The said
Information makes no factual allegation that in some material way involves the checks subject of the testimonial
and documentary evidence sought to be suppressed. Neither do the allegations in said Information make
mention of the supposed bank account in which the funds represented by the checks have allegedly been kept.

In other words, it can hardly be inferred from the indictment itself that the Security Bank account is the
ostensible subject of the prosecution’s inquiry. Without needlessly expanding the scope of what is plainly alleged in
the Information, the subject matter of the action in this case is the money alleged to have been stolen by
respondent, and not the money equivalent of the checks, which are sought to be admitted in evidence. Thus, it is
that, which the prosecution is bound to prove with its evidence, and no other.

It comes clear that the admission of testimonial and documentary evidence relative to respondent’s Security
Bank account serves no other purpose than to establish the existence of such account, its nature and the amount kept in
it. It constitutes an attempt by the prosecution at an impermissible inquiry into a bank deposit account the
privacy and confidentiality of which is protected by law. On this score alone, the objection posed by respondent in
her motion to suppress should have indeed put an end to the controversy at the very first instance it was raised before
the trial court.

In sum, we hold that the testimony of Marasigan on the particulars of respondent’s supposed bank account with
Security Bank and the documentary evidence represented by the checks adduced in support thereof, are not only
incompetent for being excluded by operation of R.A. No. 1405. They are likewise irrelevant to the case,
inasmuch as they do not appear to have any logical and reasonable connection to the prosecution of respondent
for qualified theft.

25. JOSEPH VICTOR G. EJERCITO vs. SANDIGANBAYAN (Special Division) and PEOPLE OF THE
PHILIPPINES
G.R. Nos. 157294-95 November 30, 2006 J. CARPIO MORALES

If the money deposited under an account may be used by banks for authorized loans to third persons, then such
account, regardless of whether it creates a creditor-debtor relationship between the depositor and the bank, falls under
the category of accounts which the law precisely seeks to protect for the purpose of boosting the economic
development of the country.

FACTS

In above-stated case of People v. Estrada, et al., the Special Prosecution Panel filed on January 20, 2003
before the Sandiganbayan a Request for Issuance of Subpoena Duces Tecum for the issuance of a subpoena directing
the President of Export and Industry Bank (EIB, formerly Urban Bank) or his/her authorized representative to
produce documents during the hearings scheduled on January 22 and 27, 2003 relating to Trust Account No. 858,
Savings Account No. 0116-17345-9, and several Urban Bank Manager’s Checks along with their corresponding
Urban Bank Manager’s Check Application Forms.

The Special Prosecution Panel also filed a Request for Issuance of Subpoena Duces Tecum/Ad Testificandum
directed to the authorized representative of Equitable-PCI Bank to produce statements of account pertaining to certain
accounts in the name of "Jose Velarde" and to testify thereon, and to the President of EIB or his/her authorized
representative to produce the same documents and to testify thereon. The Sandiganbayan granted the requests and
subpoenas were accordingly issued.

In his Motion to Quash, petitioner claimed that his bank accounts are covered by R.A. No. 1405 (The
Secrecy of Bank Deposits Law) and do not fall under any of the exceptions stated therein.

He further claimed that the specific identification of documents in the questioned subpoenas, including
details on dates and amounts, could only have been made possible by an earlier illegal disclosure thereof by the
EIB and the Philippine Deposit Insurance Corporation (PDIC) in its capacity as receiver of the then Urban
Bank. 

The disclosure being illegal, petitioner concluded, the prosecution in the case may not be allowed to make use
of the information. 

ISSUES

1. Whether or not petitioner’s Trust Account No. 858 is covered by the term "deposit" as used in R.A. 1405;
2. Whether or not petitioner’s Trust Account No. 858 and Savings Account No. 0116-17345-9 are excepted from
the protection of R.A. 1405; and
 3. Whether or not the "extremely-detailed" information contained in the Special Prosecution Panel’s requests for
subpoena was obtained through a prior illegal disclosure of petitioner’s bank accounts, in violation of the "fruit
of the poisonous tree" doctrine.

RULING : here covered but not covered kasi xcns sya.

1. YES. An examination of the law shows that the term "deposits" used therein is to be understood broadly and
not limited only to accounts which give rise to a creditor-debtor relationship between the depositor and the
bank. The policy behind the law is laid down in Section 1:

SECTION 1. It is hereby declared to be the policy of the Government to give encouragement to the
people to deposit their money in banking institutions and  to discourage private hoarding so that the
same may be properly utilized by banks in authorized loans to assist in the economic development of
the country.

Section 2 of the same law in fact even more clearly shows that the term "deposits" was intended to be
understood broadly:

SECTION 2. All deposits of whatever nature with banks or banking institutions in the Philippines including

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

Moreover, Section 2 used the term “of whatever nature” which proscribes any restrictive interpretation of
"deposits." Moreover, it is clear from the immediately quoted provision that, generally, the law applies not only
to money which is deposited but also to those which are invested. 

This further shows that the law was not intended to apply only to "deposits" in the strict sense of the word. Otherwise,
there would have been no need to add the phrase "or invested."

2. YES. In the present case, two exceptions apply, to wit: (1) the examination of bank accounts is upon order of a
competent court in cases of bribery or dereliction of duty of 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 dereliction of duty, his accounts are not excepted from
the protection of R.A. 1405. Philippine National Bank v. Gancayco7 holds otherwise:

Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason is seen why
these two classes of cases cannot be excepted from the rule making bank deposits confidential . The policy as to
one cannot be different from the policy as to the other. This policy expresses the notion that a public office is a public
trust and any person who enters upon its discharge does so with the full knowledge that his life, so far as relevant to his
duty, is open to public scrutiny.

Undoubtedly, cases for plunder involve unexplained wealth. Section 2 of R.A. No. 7080 states so.

The subject matter of the litigation cannot be limited to bank accounts under the name of President Estrada alone, but
must include those accounts to which the money purportedly acquired illegally or a portion thereof was alleged to have
been transferred.

3. NO. R.A. 1405, it bears noting, nowhere provides that an unlawful examination of bank accounts shall render
the evidence obtained therefrom inadmissible in evidence. Section 5 of R.A. 1405 only states that "[a]ny
 violation of this law will subject the offender upon conviction, to an imprisonment of not more than five years
or a fine of not more than twenty thousand pesos or both, in the discretion of the court."

Clearly, the "fruit of the poisonous tree" doctrine 1 presupposes a violation of law. If there was no
violation of R.A. 1405 in the instant case, then there would be no "poisonous tree" to begin with, and, thus, no
reason to apply the doctrine.

26 REPUBLIC OF THE PHILIPPINES, represented by THE ANTI-MONEY LAUNDERING COUNCIL (AMLC) v.

HON. ANTONIO M. EUGENIO, JR., as Presiding Judge of RTC Manila Branch 34, PANTALEON ALVAREZ and
LILIA CHENG
G.R. No. 174629, February 14, 2008 J. TINGA

FACTS: A series of investigations concerning the award of the NAIA 3 contracts to PIATCO were undertaken by the
Ombudsman and the Compliance and Investigation Staff (CIS) of petitioner Anti-Money Laundering Council (AMLC).

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

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

Under the authority granted by the Resolution, the AMLC filed an application to inquire into or examine the
deposits or investments of Alvarez,  Trinidad, Liongson and Cheng Yong before the RTC of Makati, Branch 138. The same
was granted by the Court. Pursuant to the Makati RTC bank inquiry order, the CIS proceeded to inquire and examine the
deposits, investments and related web accounts of the four.

Alvarez argued that nothing in R.A. No. 9160 authorized the AMLC to seek the authority to inquire into bank
accounts ex parte.

1 ISSUE: Whether or not the AMLC has the authority to inquire into their respective bank accounts without a case pending in
court
RULING :YES IN SOME INSTANCES. It is evident that Section 11 does not specifically authorize, as a general rule, the
issuance ex parte of the bank inquiry order. We quote the provision in full:

SEC. 11. Authority to Inquire into Bank Deposits. ― Notwithstanding the provisions of Republic Act No. 1405, as
amended, Republic Act No. 6426, as amended, Republic Act No. 8791, and other laws, the AMLC may inquire into or
examine any particular deposit or investment with any banking institution or non bank financial institution upon order of
any competent court in cases of violation of this Act, when it has been established that there is probable cause that the
deposits or investments are related to an unlawful activity as defined in Section 3(i) hereof or a money laundering offense
under Section 4 hereof, except that no court order shall be required in cases involving unlawful activities defined in
Sections 3(i)1, (2) and (12). 

To ensure compliance with this Act, the Bangko Sentral ng Pilipinas (BSP) may inquire into or examine any deposit of
investment with any banking institution or non bank financial institution when the examination is made in the course of a
periodic or special examination, in accordance with the rules of examination of the BSP. (Emphasis supplied)

Of course, Section 11 also allows the AMLC to inquire into bank accounts without having to obtain a judicial order in cases
where there is probable cause that the deposits or investments are related to kidnapping for ransom,  certain violations of
the Comprehensive Dangerous Drugs Act of 2002, hijacking and other violations under R.A. No. 6235, destructive arson
and murder.

RATIO: Since such special circumstances do not apply in this case, there is no need for us to pass comment on this proviso.
Suffice it to say, the proviso contemplates a situation distinct from that which presently confronts us, and for purposes of the
succeeding discussion, our reference to Section 11 of the AMLA excludes said proviso. 

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

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

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

2 Issue: Whether or not the bank accounts of respondents can be examined.? NO! KASI DITO WALA NAMAN SA XCNS
SA AMLA NA MATIC AND UN NGA ND NAMAN UNDER LITIGATION KASI BANK INQUIRY PALANG

BANK SECRECY AND EFFECTS OF LAWS PASSED LIKE AMLA AS XCNS:

Because of the Bank Secrecy Act, the confidentiality of bank deposits remains a basic state policy in the Philippines. 87 Subsequent
laws, including the AMLA, may have added exceptions to the Bank Secrecy Act, yet the secrecy of bank deposits still lies as the
general rule.

Any exception to the rule of absolute confidentiality must be specifically legislated. Section 2 of the Bank Secrecy Act itself
prescribes exceptions whereby these bank accounts may be examined by "any person, government official, bureau or office";
namely when: (1) upon written permission of the depositor; (2) in cases of impeachment; (3) the examination of bank accounts is
upon order of a competent court in cases of bribery or dereliction of duty of public officials; and (4) the money deposited or
invested is the subject matter of the litigation. Section 8 of R.A. Act No. 3019, the Anti-Graft and Corrupt Practices Act, has been
recognized by this Court as constituting an additional exception to the rule of absolute confidentiality, 92 and there have been other
similar recognitions as well.93
The AMLA also provides exceptions to the Bank Secrecy Act.

under Section 11, the AMLC may inquire into a bank account upon order of any competent court in cases of violation of the
AMLA, it having been established that there is probable cause that the deposits or investments are related to unlawful activities as
defined in Section 3(i) of the law, or a money laundering offense under Section 4 thereof. Further, in instances where there is
probable cause that the deposits or investments are related to kidnapping for ransom, 94 certain violations of the Comprehensive
Dangerous Drugs Act of 2002,95 hijacking and other violations under R.A. No. 6235, destructive arson and murder, then there is no
need for the AMLC to obtain a court order before it could inquire into such accounts.

It cannot be successfully argued the proceedings relating to the bank inquiry order under Section 11 of the AMLA is a
"litigation" encompassed in one of the exceptions to the Bank Secrecy Act which is when "the money deposited or invested
is the subject matter of the litigation." The orientation of the bank inquiry order is simply to serve as a provisional relief or
remedy. As earlier stated, the application for such does not entail a full-blown trial.

Nevertheless, just because the AMLA establishes additional exceptions to the Bank Secrecy Act it does not mean that the later law
has dispensed with the general principle established in the older law that "[a]ll deposits of whatever nature with banks or banking
institutions in the Philippines x x x are hereby considered as of an absolutely confidential nature." 96 Indeed, by force of statute, all
bank deposits are absolutely confidential, and that nature is unaltered even by the legislated exceptions referred to above.

YET IN THIS CASE RULED IN FAVOR OF CHENG BECAUSE:- ON EX POST FACTO ISSUE

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

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

VII.

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

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

Does the proscription against ex post facto laws apply to the interpretation of Section 11, a provision which does not provide for a
penal sanction but which merely authorizes the inspection of suspect accounts and deposits? The answer is in the affirmative.

BUT NOT TO ALL

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

27. Republic vs. Glasgow Credit and Collection Services, Inc.,G.R. No. 170281. January 18, 2008.

CIVIL FORFEITURE 2 REQ: HERE PROPER

Facts: The Republic filed a complaint in the RTC for civil forfeiture of assets against the bank deposits maintained by Glasgow
in CSBI. The case was filed pursuant to RA 9160 (AMLA 2001 ). Acting on the Republic’s urgent plea for the issuance of TRO,
the executive judge of RTC issued a 72-hour of a writ of preliminary injunction. Subsequently, the trial court issued an order
granting the issuance of a writ of preliminary injuction. In the order, the trial court directed the issuance of alias summons, but no
mention was made of the motion for leave of court to serve summons by publication. In an order, the trial court archived the case
allegedly for failure of the Republic to serve the motion for leave of court to serve summons by publication.

The trial court ordered the reinstatement of the case and directed the Republic to serve the alias summons on Glasgow and CSBI
within 15 days, without resolving the Republic’s motion for leave of court to serve summons by publication. Because the
Republic’s motion for leave of court to serve summons by publication remain unresolved, the Republic filed a manifestation and
ex parte motion to resolve its motion for leave of court to serve summons by publication.

Glasgow filed for motion to dismiss. It alleged that the court had no jurisdiction over its person as summons had not yet
been served on it; and that the complaint was premature and stated no cause of action; and there was failure to prosecute
on the part of the Republic.

The Republic opposed Glasgow’s motion to dismiss. It contended that its suit was an action quasi in rem where jurisdiction
over the person of the defendant was not a prerequisite to confer jurisdiction on the court.

It also asserted that prior conviction for unlawful activity was not a precondition to the filing of a civil forfeiture case and
that its complaint alleged ultimate facts sufficient to establish a cause of action. It didn’t agree that it failed to prosecute the
case.

The trial court issued the assailed order. It dismissed the case on the grounds of improper venue; insufficiency of the complaint in
form and substance; and failure to prosecute. It lifted the writ of preliminary injunction and directed CSBI to release to Glasgow
the funds.

Issue:IF: Whether or not the complaint for civil forfeiture was correctly dismissed on grounds of (a) improper venue, (b)
insufficiency in form and substance; and (c) failure to prosecute.

WON CIVIL FORFEITURE PROPER? YES

Ruling: NOThe Supreme Court remanded the case to the RTC.

(a) THE TRIAL COURT WAS THE PROPER VENUE

Sec. 3. Venue of cases cognizable by the regional trial court. – A petition for civil forfeiture shall be filed in any regional trial
court of the judicial region where the monetary instrument, property or proceeds representing, involving, or relating to an unlawful
activity or to a money laundering offense are located; provided, however, that where all or any portion of the monetary instrument,
property or proceeds is located outside the Philippines, the petition may be filed in the regional trial court in Manila or of the
judicial region where any portion of the monetary instrument, property, or proceeds is located, at the option of the petitioner.
Under Section 3, Title II of the Rule of Procedure in Cases of Civil Forfeiture, therefore, the venue of civil forfeiture cases is any
RTC of the judicial region where the monetary instrument, property or proceeds representing, involving, or relating to an unlawful
activity or to a money laundering offense are located. Pasig City, where the account sought to be forfeited in this case is situated, is
within the National Capital Judicial Region (NCJR). Clearly, the complaint for civil forfeiture of the account may be filed in any
RTC of the NCJR. Since the RTC Manila is one of the RTCs of the NCJR,10 it was a proper venue of the Republic’s complaint for
civil forfeiture of Glasgow’s account.

(b) THE TEST OF SUFFICIENCY- HER ESUFFICIENT

The test of the sufficiency of the facts alleged in the complaint is whether or not, admitting the facts alleged, the court could
render a valid judgment upon the same in accordance with the prayer of the complaint.

The verified complaint of the Republic contained the following allegations:

1. the name and address of the primary defendant therein, Glasgow;

2. a description of the proceeds of Glasgow’s unlawful activities with particularity, as well as the location thereof, account
no. CA-005-10-000121-5 in the amount of P21,301,430.28 maintained with CSBI;

3. the acts prohibited by and the specific provisions of RA 9160, as amended, constituting the grounds for the forfeiture of
the said proceeds. In particular, suspicious transaction reports showed that Glasgow engaged in unlawful activities of
estafa and violation of the Securities Regulation Code (under Section 3(i)(9) and (13), RA 9160, as amended); the
proceeds of the unlawful activities were transacted and deposited with CSBI in account no. CA-005-10000121-5 thereby
making them appear to have originated from legitimate sources; as such, Glasgow engaged in money laundering (under
Section 4, RA 9160, as amended); and the AMLC subjected the account to freeze order and

4. the reliefs prayed for, namely, the issuance of a TRO or writ of preliminary injunction and the forfeiture of the account in
favor of the government as well as other reliefs just and equitable under the premises.

The form and substance of the Republic’s complaint substantially conformed with Section 4, Title II of the Rule of Procedure in
Cases of Civil Forfeiture.

RA 9160, as amended, and its implementing rules and regulations lay down two conditions when applying for civil
forfeiture:

1. when there is a suspicious transaction report or a covered transaction report deemed suspicious after investigation
by the AMLC and

2. the court has, in a petition filed for the purpose, ordered the seizure of any monetary instrument or property, in
whole or in part, directly or indirectly, related to said report.

Since account no. CA-005-10-000121-5 of Glasgow in CSBI was (1) covered by several suspicious transaction reports and
(2) placed under the control of the trial court upon the issuance of the writ of preliminary injunction, the conditions
provided in Section 12(a) of RA 9160, as amended, were satisfied. Hence, the Republic, represented by the AMLC,
properly instituted the complaint for civil forfeiture.

Whether or not there is truth in the allegation that account no. CA-005-10-000121-5 contains the proceeds of unlawful
activities is an evidentiary matter that may be proven during trial. The complaint, however, did not even have to show or
allege that Glasgow had been implicated in a conviction for, or the commission of, the unlawful activities of estafa and
violation of the Securities Regulation Code.

A criminal conviction for an unlawful activity is not a prerequisite for the institution of a civil forfeiture proceeding. Stated
otherwise, a finding of guilt for an unlawful activity is not an essential element of civil forfeiture.
(C) NO FAILURE TO PROSECUTE

While there was admittedly a delay in the proceeding, it could not be entirely or primarily ascribed to the Republic. That
Glasgow’s whereabouts could not be ascertained was not only beyond the Republic’s control, it was also attributable to Glasgow
which left its principal office address without informing the Securities and Exchange Commission or any official regulatory body
(like the Bureau of Internal Revenue or the Department of Trade and Industry) of its new address. Moreover, as early as October 8,
2003, the Republic was already seeking leave of court to serve summons by publication.

The Court saw no pattern or scheme on the part of the Republic to delay the disposition of the case or a wanton failure to observe
the mandatory requirement of the rules. The trial court should not have so eagerly wielded its power to dismiss the Republic’s
complaint.

28. REPUBLIC OF THE PHILIPPINES, Represented by the ANTI-MONEY LAUNDERING

COUNCIL,  vs.. CABRINI GREEN & ROSS, INC., MICHAEL J. FINDLAY and JANE GELBERG G.R. NO.
154522 : May 5, 2006

CA- SOLE AUTHORITY TO ISSUE FREEZE ORDER: F: IS SHT- JUST SEE RULING

Facts: In the exercise of its power under Section 10 of RA 9160, 1 the Anti-Money Laundering Council (AMLC)
issued freeze orders against various bank accounts of respondents . The frozen bank accounts were previously
found prima facie to be related to the unlawful activities of respondents .

Under RA 9160, a freeze order issued by the AMLC is effective for a period not exceeding 15 days unless extended
"upon order of the court." Accordingly, before the lapse of the period of effectivity of its freeze orders, the AMLC
filed with the Court of Appeals (CA)3 various petitions for extension of effectivity of its freeze orders.

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

However, the CA disagreed with the AMLC and dismissed the petitions. It uniformly ruled that it was not
vested by RA 9160 with the power to extend a freeze order issued by the AMLC.

Issue: Which court has jurisdiction to extend the effectivity of a freeze order?

Ruling: The Court of Appeals.

RA 9194 (An Act Amending Republic Act No. 9160, Otherwise Known as the "Anti-Money Laundering Act of
2001"). It amended Section 10 of RA 9160 as follows:

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

The amendment by RA 9194 of RA 9160 erased any doubt on the jurisdiction of the CA over the extension of
freeze orders. As the law now stands, it is solely the CA which has the authority to issue a freeze order as well as
to extend its effectivity. It also has the exclusive jurisdiction to extend existing freeze orders previously issued by the
AMLC vis-à- vis accounts and deposits related to money-laundering activities
29. RET. LT. GEN. JACINTO C. LIGOT, ERLINDA Y. LIGOT, PAULO Y. LIGOT, RIZA Y. LIGOT, and MIGUEL Y.
LIGOT (Petitioners) vs. REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEY LAUNDERING
COUNCIL (Respondent)
G.R. No. 176944, March 6, 2013, Brion, J.

FREEZE ORDER-SC 2 ISSUES ANSWERED HERE.

FACTSThe Republic of the Philippines (Republic), represented by the AMLC, filed an Urgent Ex-Parte Application for the
issuance of a freeze order with the CA against certain monetary instruments and properties of the petitioners, pursuant to Section
10 of Republic Act (RA) No. 9160, as amended (the Anti-Money Laundering Act of 2001). This application was based on a letter
of the Office of the Ombudsman to the AMLC, recommending that the latter conduct an investigation on Lt. Gen. Ligot and his
family for possible violation of RA No. 9160.

In support of this recommendation, the Ombudsman attached the Complaint it filed against the Ligots.

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

The AMLC issued Resolution No. 52, Series of 2005, directing the Executive Director of the AMLC Secretariat to
file an application for a freeze order against the properties of Lt. Gen. Ligot and the members of his family with the CA.

Subsequently, the Republic filed an Urgent Ex-Parte Application with the appellate court for the issuance of a
Freeze Order against the properties of the Ligots and Yambao which the CA granted, that was valid for a period of 20 days
from the date of issuance.

***The Republic filed an Urgent Motion for Extension of Effectivity of Freeze Order, arguing that if the bank
accounts, web accounts and vehicles were not continuously frozen, they could be placed beyond the reach of law
enforcement authorities and the government’s efforts to recover the proceeds of the Ligots’ unlawful activities would be
frustrated, which again was granted by the CA.

The Ligots filed a motion to lift the extended freeze order, principally arguing that there was no evidence to
support the extension of the freeze order.  They further argued that the extension not only deprived them of their property
without due process; it also punished them before their guilt could be proven. The appellate court subsequently denied said
motion. The Ligots filed for a Motion for Reconsideration, which was denied. Hence, the present petition.

ISSUEs (2)

1 WON the CA erred in issuing the freeze order.

RULING

NO. The legal basis for the issuance of a freeze order is Section 10 of RA No. 9160, as amended by RA No. 9194, which
states:
 Section 10. Freezing of Monetary Instrument or Property. – The Court of Appeals, upon application ex parte by the
AMLC and after determination that probable cause exists that any monetary instrument or property is in any way related
to an unlawful activity as defined in Section 3(i) hereof, may issue a freeze order which shall be effective immediately.
The freeze order shall be for a period of twenty (20) days unless extended by the court. [italics supplied]

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

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

Based on Section 10 quoted above, there are only two requisites for the issuance of a freeze order: (1) the
application ex parte by the AMLC and (2) the determination of probable cause by the CA. The probable cause required for
the issuance of a freeze order differs from the probable cause required for the institution of a criminal action, and the latter was not
an issue before the CA nor is it an issue before us in this case.

As defined in the law, the probable cause required for the issuance of a freeze order refers to "such facts and
circumstances which would lead a reasonably discreet, prudent or cautious man to believe that -----an unlawful activity
and/or a money laundering offense is about to be, is being or has been committed and that the account or any monetary
instrument or property subject thereof sought to be frozen is in any way related to said unlawful activity and/or money
laundering offense."

In other words, in resolving the issue of whether probable cause exists, the CA’s statutorily-guided determination’s focus
is not on the probable commission of an unlawful activity (or money laundering) that the Office of the Ombudsman has already
determined to exist, but on whether the bank accounts, assets, or other monetary instruments sought to be frozen are in any way
related to any of the illegal activities enumerated under RA No. 9160, as amended.  Otherwise stated, probable cause refers to the
sufficiency of the relation between an unlawful activity and the property or monetary instrument which is the focal point of Section
10 of RA No. 9160, as amended.

2nd issue:
Whether or not a freeze order may be issued for an indefinite period?

Ruling: no. The court fixed the maximum allowable extension on the freeze order’s effectivity at six months.

In doing so, the Court sought to balance the State’s interest in going after suspected money launderers with an individual’s
constitutionally protected right not to be deprived of his property without due process of law, as well as to be presumed innocent
until proven guilty.

The effectivity of a freeze order may be extended by the CA for a period not exceeding six months. Before or upon the lapse
of this period, ideally, the Republic should have already filed a case for civil forfeiture against the property owner with the
proper courts and accordingly secure an asset preservation order or it should have filed the necessary information.
Otherwise, the property owner should already be able to fully enjoy his property without any legal process affecting.

The court grants the petition and lift the freeze order issued by the CA. this lifting is without prejudice to and shall not affect the
preservation orders that the lower courts have ordered on the same properties in the cases pending before them. Pursuant to Section
56 of A.M. NO. 05-11-04-SC, the CA is hereby ordered to remand the case and to transmit the records to RTC of Manila, where
the civil forfeiture proceeding is pending for consolidation therewith as may be appropriate.

Nothing in the law grants the owner of the “frozen” property any substantive right to demand the freeze order be lifted,
except by implication i.e. if he can show that no probable cause exists of if the 20-day period has already lapsed without any
extension being requested from and granted by the CA. As a rule, the effectivity of a freeze order may be extended by the CA for a
period not exceeding six months. Before or upon the lapse of this period, ideally, the Republic should have already filed a case for
civil forfeiture against the property owner with the proper courts and accordingly secure an asset preservation order or it should
have filed the necessary information. Otherwise, the property owner should already be able to fully enjoy his property without any
legal process affecting. However, should it become completely necessary for the Republic to further extend the duration of the
freeze order, it should file the necessary motion before the expiration of the six-month period and explain the reason or reasons for
its failure to file an appropriate case and justify the period of extension sought. The freeze order should remain effective prior to
the resolution by the CA, which is hereby directed to resolve this kind or motion for extension with reasonable dispatch.

30. Republic of the Philippines vs. First Pacific Network Inc.

GR No. 156646, November 19, 2014

F: NAKULANGAN SA INALLOW NG CA NA EXTENSION-SEEKS NA UNTIL MAKAFILE KAMI: SC:

NO. BAWAL INDEFINITE

Facts: The Anti-Money Laundering Council (AMLC for brevity) received a report from a certain Reynaldo
Geronimo, who claims to have personal knowledge that respondent FPN [ First Pacific Network, Inc.] is involved in
illegal securities trading and maintains a bank account at the main Branch of Standard Chartered Bank at
Ayala Avenue, Makati City.

On 24 January 2002, the RTC-Makati, issued three search Warrants against several persons for Illegal Trading
of Securities without the necessary license issued by the Securities and Exchange Commission. On 25 January 2002,
the raiding teams composed of agents of the NBI and the SEC served the search warrants and seized several
documents belonging to First Pacific. Upon Further investigation, it was discovered that First Pacific was not
registered with the SEC to engage in the buying and selling of securities and was engaged in illegal trading of
securities.

After evaluating the documents seized, the AMLC found reasonable grounds to believe that the money
deposited by First Pacific with Standard Chartered was related to an illegal activity. It thus issued Resolution
No. 041 directing the immediate issuance and service of the freeze order upon First Pacific’s account.

Before the lapse of the freeze order, AMLC requested the Court of Appeals to extend the effectivity of
the freeze order against respondent First Pacific Network, Inc.’s (FPN) bank account.

The Court of Appeals gave the AMLC an extension of not more than 30 days in its assailed September 5, 2002
Decision.

Dissatisfied with the ruling of the Court of Appeals, AMLC filed, on September 30, 2002, a Motion for
Clarification and/or Partial Reconsideration. (NAKULANGAN SA EXTENSION NG FREEZE ORDER) This
motion was denied by the Court of Appeals in the assailed January 7, 2003 Resolution. Hence, AMLC filed the present
petition

Issue: Whether or not the freeze order issued against respondent’s bank account should be further extended beyond
thirty (30) day period granted by the Court of Appeals and until the appropriate case has been filed against
respondent. (UNTIL UNTIL!!! SO INDEFINIT? NO!!!) NOT MORE THAN 6 MOS)
Ruling:
No. SEC. 8. Section 10 of [R.A. 9160], as amended by Republic Act No. 10167, is hereby amended to read as follows:

“SEC. 10. Freezing of Monetary Instrument or Property. – Upon a verified ex parte petition by the AMLC and
after determination that probable cause exists that any monetary instrument or property is in any way related to an
unlawful activity as defined in Section 3(i) hereof, the Court of Appeals may issue a freeze order which shall be
effective immediately, and which shall not exceed six (6) months depending upon the circumstances of the case:
Provided, That if there is no case filed against a person whose account has been frozen within the period
determined by the court, the freeze order shall be deemed ipso facto lifted: Provided, further, That this new rule
shall not apply to pending cases in the courts. In any case, the court should act on the petition to freeze within twenty-
four (24) hours from filing of the petition. If the application is filed a day before a nonworking day, the computation of
the twenty-four (24) hour period shall exclude the nonworking days.

It is clear from the foregoing amendments to Republic Act No. 9160 that, at present, the Court of Appeals has
been given sole authority and discretion to issue a freeze order as well as to extent its effectivity. It is likewise apparent
that a freeze order is meant to be a temporary legal remedy in order to facilitate the attainment of the purpose of the
Anti-Money Laundering Law.

In the case at bar, there was no error in the decision of the Court of Appeals to extend Freeze Order No.
FO-003 to a definite period of thirty (30) days. The state of law and jurisprudence at the time of the issuance of
the assailed ruling of the Court of Appeals gave the appellate court discretion to extend a freeze order only for a
reasonable period of time which was later clarified by A.M. No. 05-11-04-SC as not exceeding more than six (6)
months.

In Ligot v. Republic, 7 we discussed the finite nature and objective of a freeze order in this manner: A
freeze order is an extraordinary and interim relief issued by the CA to prevent the dissipation, removal, or
disposal of properties that are suspected to be the proceeds of, or related to, unlawful activities as defined in
Section 3(i) of RA No. 9160, as amended. It is likewise apparent that a freeze order is meant to be a temporary legal
remedy in order to facilitate the attainment of the purpose of the Anti-Money Laundering Law.

The primary objective of a freeze order is to temporarily preserve monetary instruments or property that are in
any way related to an unlawful activity or money laundering, by preventing the owner from utilizing them during the
duration of the freeze order. The relief is pre-emptive in character, meant to prevent the owner from disposing his
property and thwarting the State's effort in building its case and eventually filing civil forfeiture proceedings and/or
prosecuting the owner.

AMLC’s prayer that the freeze order at issue be extended until proper legal actions allowed under
Republic Act No. 9160 shall have been taken against respondent cannot be therefore accommodated considering
that both Congress and the Supreme Court have decreed, in no vague terms, that a freeze order cannot be
issued or extended for an indefinite period of time.