Republic of the Philippines v. First Pacific Network Inc., G.R. No.

15664

Republic of the Philippines v. Glasgow Credit and Collection Services, Inc, G.R. No. 170281

This is a petition for review[1] of the order[2] dated October 27, 2005 of the Regional Trial Court (RTC) of

Manila, Branch 47, dismissing the complaint for forfeiture [3] filed by the Republic of the Philippines, represented by

the Anti-Money Laundering Council (AMLC) against respondents Glasgow Credit and Collection Services, Inc.

(Glasgow) and Citystate Savings Bank, Inc. (CSBI).

On July 18, 2003, the Republic filed a complaint in the RTC Manila for civil forfeiture of assets (with urgent

plea for issuance of temporary restraining order [TRO] and/or writ of preliminary injunction) against the bank deposits

in account number CA-005-10-000121-5 maintained by Glasgow in CSBI. The case, filed pursuant to RA 9160 (the

Anti-Money Laundering Act of 2001), as amended, was docketed as Civil Case No. 03-107319.

Acting on the Republics urgent plea for the issuance of a TRO, the executive judge [4] of RTC Manila issued

a 72-hour TRO dated July 21, 2003. The case was thereafter raffled to Branch 47 and the hearing on the application

for issuance of a writ of preliminary injunction was set on August 4, 2003.

After hearing, the trial court (through then Presiding Judge Marivic T. Balisi-Umali) issued an order granting

the issuance of a writ of preliminary injunction. The injunctive writ was issued on August 8, 2003.

Meanwhile, summons to Glasgow was returned unserved as it could no longer be found at its last known

address.

On October 8, 2003, the Republic filed a verified omnibus motion for (a) issuance of alias summons and (b)

leave of court to serve summons by publication. In an order dated October 15, 2003, the trial court directed the issuance

of alias summons. However, no mention was made of the motion for leave of court to serve summons by publication.
 In an order dated January 30, 2004, the trial court archived the case allegedly for failure of the Republic to

serve the alias summons. The Republic filed an ex parte omnibus motion to (a) reinstate the case and (b) resolve its

pending motion for leave of court to serve summons by publication.

In an order dated May 31, 2004, 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. However, it did not resolve the Republics motion

for leave of court to serve summons by publication declaring:

Until and unless a return is made on the alias summons, any action on [the Republics]
motion for leave of court to serve summons by publication would be untenable if not premature.

On July 12, 2004, the Republic (through the Office of the Solicitor General [OSG]) received a copy of the

sheriffs return dated June 30, 2004 stating that the alias summons was returned unserved as Glasgow was no longer

holding office at the given address since July 2002 and left no forwarding address.

Meanwhile, the Republics motion for leave of court to serve summons by publication remained unresolved.

Thus, on August 11, 2005, the Republic filed a manifestation and ex parte motion to resolve its motion for leave of

court to serve summons by publication.

On August 12, 2005, the OSG received a copy of Glasgows Motion to Dismiss (By Way of Special

Appearance) dated August 11, 2005. It alleged that (1) the court had no jurisdiction over its person as summons had

not yet been served on it; (2) the complaint was premature and stated no cause of action as there was still no conviction

for estafa or other criminal violations implicating Glasgow and (3) there was failure to prosecute on the part of the

Republic.

The Republic opposed Glasgows 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

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 denied that it failed to prosecute the

case.
 On October 27, 2005, the trial court issued the assailed order. It dismissed the case on the following grounds:

(1) improper venue as it should have been filed in the RTC of Pasig where CSBI, the depository bank of the account

sought to be forfeited, was located; (2) insufficiency of the complaint in form and substance and (3) failure to

prosecute. It lifted the writ of preliminary injunction and directed CSBI to release to Glasgow or its authorized

representative the funds in CA-005-10-000121-5.

Raising questions of law, the Republic filed this petition.

On November 23, 2005, this Court issued a TRO restraining Glasgow and CSBI, their agents, representatives

and/or persons acting upon their orders from implementing the assailed October 27, 2005 order. It restrained Glasgow

from removing, dissipating or disposing of the funds in account no. CA-005-10-000121-5 and CSBI from allowing

any transaction on the said account.

The petition essentially presents the following issue: whether the complaint for civil forfeiture was correctly

dismissed on grounds of improper venue, insufficiency in form and substance and failure to prosecute.

The Court agrees with the Republic.

THE COMPLAINT WAS FILED

IN THE PROPER VENUE

In its assailed order, the trial court cited the grounds raised by Glasgow in support of its motion to dismiss:

1. That this [c]ourt has no jurisdiction over the person of Glasgow considering that no
[s]ummons has been served upon it, and it has not entered its appearance voluntarily;

2. That the [c]omplaint for forfeiture is premature because of the absence of a prior
finding by any tribunal that Glasgow was engaged in unlawful activity: [i]n connection
therewith[,] Glasgow argues that the [c]omplaint states no cause of action; and

3. That there is failure to prosecute, in that, up to now, summons has yet to be served
upon Glasgow.[5]
 But inasmuch as Glasgow never questioned the venue of the Republics complaint for civil forfeiture against

it, how could the trial court have dismissed the complaint for improper venue? In Dacoycoy v. Intermediate Appellate

Court[6] (reiterated in Rudolf Lietz Holdings, Inc. v. Registry of Deeds of Paraaque City),[7]this Court ruled:

The motu proprio dismissal of petitioners complaint by [the] trial court on the ground of
improper venue is plain error. (emphasis supplied)

At any rate, the trial court was a proper venue.

On November 15, 2005, this Court issued A.M. No. 05-11-04-SC, the Rule of Procedure in Cases of Civil

Forfeiture, Asset Preservation, and Freezing of Monetary Instrument, Property, or Proceeds Representing, Involving,

or Relating to an Unlawful Activity or Money Laundering Offense under RA 9160, as amended (Rule of Procedure

in Cases of Civil Forfeiture). The order dismissing the Republics complaint

for civil forfeiture of Glasgows account in CSBI has not yet attained finality on account of the pendency of this

appeal. Thus, the Rule of Procedure in Cases of Civil Forfeiture applies to the Republics complaint. [8] Moreover,

Glasgow itself judicially admitted that the Rule of Procedure in Cases of Civil Forfeiture is applicable to the instant

case.[9]

Section 3, Title II (Civil Forfeiture in the Regional Trial Court) of the Rule of Procedure in Cases of Civil

Forfeiture provides:

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. (emphasis supplied)

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 Republics complaint for civil forfeiture of Glasgows account.

THE COMPLAINT WAS SUFFICIENT IN FORM

AND SUBSTANCE

In the assailed order, the trial court evaluated the Republics complaint to determine its sufficiency in form

and substance:

At the outset, this [c]ourt, before it proceeds, takes the opportunity to examine the
[c]omplaint and determine whether it is sufficient in form and substance.

Before this [c]ourt is a [c]omplaint for Civil Forfeiture of Assets filed by the [AMLC],
represented by the Office of the Solicitor General[,] against Glasgow and [CSBI] as necessary party.
The [c]omplaint principally alleges the following:

(a) Glasgow is a corporation existing under the laws of the Philippines, with principal
office address at Unit 703, 7th Floor, Citystate Center [Building], No. 709 Shaw
Boulevard[,] Pasig City;

(b) [CSBI] is a corporation existing under the laws of the Philippines, with principal office
at Citystate Center Building, No. 709 Shaw Boulevard, Pasig City;

(c) Glasgow has funds in the amount of P21,301,430.28 deposited with [CSBI], under CA
005-10-000121-5;

(d) As events have proved, aforestated bank account is related to the unlawful activities of
Estafa and violation of Securities Regulation Code;

(e) The deposit has been subject of Suspicious Transaction Reports;

(f) After appropriate investigation, the AMLC issued Resolutions No. 094 (dated July 10,
2002), 096 (dated July 12, 2002), 101 (dated July 23, 2002), and 108 (dated August 2,
2002), directing the issuance of freeze orders against the bank accounts of Glasgow;

(g) Pursuant to said AMLC Resolutions, Freeze Orders Nos. 008-010, 011 and 013 were
issued on different dates, addressed to the concerned banks;

(h) The facts and circumstances plainly showing that defendant Glasgows bank account
and deposit are related to the unlawful activities of Estafa and violation of Securities
Regulation Code, as well as to a money laundering offense [which] [has] been summarized
by the AMLC in its Resolution No. 094; and

(i) Because defendant Glasgows bank account and deposits are related to the unlawful
activities of Estafa and violation of Securities Regulation Code, as well as [to] money
laundering offense as aforestated, and being the subject of covered transaction reports and
eventual freeze orders, the same should properly be forfeited in favor of the government in
accordance with Section 12, R.A. 9160, as amended. [11]
 In a motion to dismiss for failure to state a cause of action, the focus is on the sufficiency, not the veracity,

of the material allegations.[12] The determination is confined to the four corners of the complaint and nowhere else. [13]

In a motion to dismiss a complaint based on lack of cause of action, the question submitted
to the court for determination is the sufficiency of the allegations made in the complaint to constitute
a cause of action and not whether those allegations of fact are true, for said motion must
hypothetically admit the truth of the facts alleged in the complaint.

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.[14] (emphasis ours)

In this connection, Section 4, Title II of the Rule of Procedure in Cases of Civil Forfeiture provides:

Sec. 4. Contents of the petition for civil forfeiture. - The petition for civil forfeiture shall be verified
and contain the following allegations:

(a) The name and address of the respondent;

(b) A description with reasonable particularity of the monetary instrument, property, or

proceeds, and their location; and

(c) The acts or omissions prohibited by and the specific provisions of the Anti-Money
Laundering Act, as amended, which are alleged to be the grounds relied upon for the
forfeiture of the monetary instrument, property, or proceeds; and

[(d)] The reliefs prayed for.

Here, the verified complaint of the Republic contained the following allegations:

(a) the name and address of the primary defendant therein, Glasgow; [15]

(b) a description of the proceeds of Glasgows 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;

(c) 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-005-10-000121-5 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

(d) 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 Republics complaint substantially conformed with Section 4, Title II of the

Rule of Procedure in Cases of Civil Forfeiture.

Moreover, Section 12(a) of RA 9160, as amended, provides:

SEC. 12. Forfeiture Provisions.

(a) Civil Forfeiture. When there is a covered transaction report made, and the court has, in a petition
filed for the purpose ordered seizure of any monetary instrument or property, in whole or in part,
directly or indirectly, related to said report, the Revised Rules of Court on civil forfeiture shall apply.

In relation thereto, Rule 12.2 of the Revised Implementing Rules and Regulations of RA 9160, as amended,

states:

RULE 12
Forfeiture Provisions
xxx xxx xxx
Rule 12.2. When Civil Forfeiture May be Applied. When there is a SUSPICIOUS TRANSACTION
REPORT OR A COVERED TRANSACTION REPORT DEEMED SUSPICIOUS AFTER
INVESTIGATION BY THE AMLC, and 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, the Revised Rules of Court on civil forfeiture shall apply.

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.

It is the preliminary seizure of the property in question which brings it within the reach of the judicial

process.[16] It is actually within the courts possession when it is submitted to the process of the court.[17] The injunctive

writ issued on August 8, 2003 removed account no. CA-005-10-000121-5 from the effective control of either Glasgow

or CSBI or their representatives or agents and subjected it to the process of the court.

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.
Section 6 of RA 9160, as amended, provides:

SEC. 6. Prosecution of Money Laundering.

(a) Any person may be charged with and convicted of both the offense of money
laundering and the unlawful activity as herein defined.

(b) Any proceeding relating to the unlawful activity shall be given precedence over the
prosecution of any offense or violation under this Act without prejudice to the freezing and other
remedies provided. (emphasis supplied)

Rule 6.1 of the Revised Implementing Rules and Regulations of RA 9160, as amended, states:

Rule 6.1. Prosecution of Money Laundering

 (a) Any person may be charged with and convicted of both the offense of money
laundering and the unlawful activity as defined under Rule 3(i) of the AMLA.

(b) Any proceeding relating to the unlawful activity shall be given precedence over the
prosecution of any offense or violation under the AMLA without prejudice to the application ex-
parte by the AMLC to the Court of Appeals for a freeze order with respect to the monetary
instrument or property involved therein and resort to other remedies provided under the AMLA,
the Rules of Court and other pertinent laws and rules. (emphasis supplied)

Finally, Section 27 of the Rule of Procedure in Cases of Civil Forfeiture provides:

Sec. 27. No prior charge, pendency or conviction necessary. No prior criminal charge, pendency
of or conviction for an unlawful activity or money laundering offense is necessary for the
commencement or the resolution of a petition for civil forfeiture. (emphasis supplied)

Thus, regardless of the absence, pendency or outcome of a criminal prosecution for the unlawful activity or

for money laundering, an action for civil forfeiture may be separately and independently prosecuted and resolved.

THERE WAS NO FAILURE

TO PROSECUTE

The trial court faulted the Republic for its alleged failure to prosecute the case. Nothing could be more

erroneous.

Immediately after the complaint was filed, the trial court ordered its deputy sheriff/process server to serve

summons and notice of the hearing on the application for issuance of TRO and/or writ of preliminary injunction. The

subpoena to Glasgow was, however, returned unserved as Glasgow could no longer be found at its given address and

had moved out of the building since August 1, 2002.

Meanwhile, after due hearing, the trial court issued a writ of preliminary injunction enjoining Glasgow from

removing, dissipating or disposing of the subject bank deposits and CSBI from allowing any transaction on,

withdrawal, transfer, removal, dissipation or disposition thereof.

As the summons on Glasgow was returned unserved, and considering that its whereabouts could not be

ascertained despite diligent inquiry, the Republic filed a verified omnibus motion for (a) issuance of alias summons
and (b) leave of court to serve summons by publication on October 8, 2003. While the trial court issued

an alias summons in its order dated October 15, 2003, it kept quiet on the prayer for leave of court to serve summons

by publication.

Subsequently, in an order dated January 30, 2004, the trial court archived the case for failure of the Republic

to cause the service of alias summons. The Republic filed an ex parte omnibus motion to (a) reinstate the case and (b)

resolve its pending motion for leave of court to serve summons by publication.

In an order dated May 31, 2004, the trial court ordered the reinstatement of the case and directed the Republic

to cause the service of the alias summons on Glasgow and CSBI within 15 days. However, it deferred its action on

the Republics motion for leave of court to serve summons by publication until a return was made on

the alias summons.

Meanwhile, the Republic continued to exert efforts to obtain information from other government agencies on

the whereabouts or current status of respondent Glasgow if only to save on expenses of publication of summons. Its

efforts, however, proved futile. The records on file with the Securities and Exchange Commission provided no

information. Other inquiries yielded negative results.

On July 12, 2004, the Republic received a copy of the sheriffs return dated June 30, 2004 stating that

the alias summons had been returned unserved as Glasgow was no longer holding office at the given address since

July 2002 and left no forwarding address. Still, no action was taken by the trial court on the Republics motion for

leave of court to serve summons by publication. Thus, on August 11, 2005, the Republic filed a manifestation and ex

parte motion to resolve its motion for leave of court to serve summons by publication.

It was at that point that Glasgow filed a motion to dismiss by way of special appearance which the Republic

vigorously opposed. Strangely, to say the least, the trial court issued the assailed order granting Glasgows motion.

Given these circumstances, how could the Republic be faulted for failure to prosecute the complaint for civil

forfeiture? While there was admittedly a delay in the proceeding, it could not be entirely or primarily ascribed to the

Republic. That Glasgows whereabouts could not be ascertained was not only beyond the Republics 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.

In Marahay v. Melicor,[18] this Court ruled:

While a court can dismiss a case on the ground of non prosequitur, the real test for the exercise of
such power is whether, under the circumstances, plaintiff is chargeable with want of due diligence
in failing to proceed with reasonable promptitude. In the absence of a pattern or scheme to delay
the disposition of the case or a wanton failure to observe the mandatory requirement of the
rules on the part of the plaintiff, as in the case at bar, courts should decide to dispense with
rather than wield their authority to dismiss. (emphasis supplied)

We see 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 Republics complaint.

SERVICE OF SUMMONS
MAY BE BY PUBLICATION

In Republic v. Sandiganbayan,[19] this Court declared that the rule is settled that forfeiture proceedings are

actions in rem. While that case involved forfeiture proceedings under RA 1379, the same principle applies in cases

for civil forfeiture under RA 9160, as amended, since both cases do not terminate in the imposition of a penalty but

merely in the forfeiture of the properties either acquired illegally or related to unlawful activities in favor of the State.

As an action in rem, it is a proceeding against the thing itself instead of against the person. [20] In actions in

rem or quasi in rem, jurisdiction over the person of the defendant is not a prerequisite to conferring jurisdiction on the

court, provided that the court acquires jurisdiction over the res.[21] Nonetheless, summons must be served upon the

defendant in order to satisfy the requirements of due process.[22] For this purpose, service may be made by publication

as such mode of service is allowed in actions in rem and quasi in rem.[23]

In this connection, Section 8, Title II of the Rule of Procedure in Cases of Civil Forfeiture provides:
 Sec. 8. Notice and manner of service. - (a) The respondent shall be given notice of the petition in
the same manner as service of summons under Rule 14 of the Rules of Court and the following
rules:
1. The notice shall be served on respondent personally, or by any other means prescribed
in Rule 14 of the Rules of Court;

2. The notice shall contain: (i) the title of the case; (ii) the docket number; (iii) the cause
of action; and (iv) the relief prayed for; and

3. The notice shall likewise contain a proviso that, if no comment or opposition is filed
within the reglementary period, the court shall hear the case ex parte and render such judgment as
may be warranted by the facts alleged in the petition and its supporting evidence.
(b) Where the respondent is designated as an unknown owner or whenever his
whereabouts are unknown and cannot be ascertained by diligent inquiry, service
may, by leave of court, be effected upon him by publication of the notice of the
petition in a newspaper of general circulation in such places and for such time as the
court may order. In the event that the cost of publication exceeds the value or amount of
the property to be forfeited by ten percent, publication shall not be required. (emphasis
supplied)

WHEREFORE, the petition is hereby GRANTED. The October 27, 2005 order of the Regional Trial Court

of Manila, Branch 47, in Civil Case No. 03-107319 is SET ASIDE. The August 11, 2005 motion to dismiss of

Glasgow Credit and Collection Services, Inc. is DENIED. And the complaint for forfeiture of the Republic of the

Philippines, represented by the Anti-Money Laundering Council, is REINSTATED.

The case is hereby REMANDED to the Regional Trial Court of Manila, Branch 47 which shall forthwith

proceed with the case pursuant to the provisions of A.M. No. 05-11-04-SC. Pending final determination of the case,

the November 23, 2005 temporary restraining order issued by this Court is hereby MAINTAINED.

SO ORDERED.

Ret. Lt. Ligot v. Republic of the Philippines, G.R. No. 176944

G.R. No. 176944 March 6, 2013

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

DECISION

BRION, J.:

In this petition for certiorari,1 retired Lieutenant General (Lt. Gen.) Jacinto C. Ligot, Erlinda Y. Ligot (Mrs. Ligot),
Paulo Y. Ligot, Riza Y. Ligot, and Miguel Y. Ligot (petitioners) claim that the Court of Appeals (CA) acted with
grave abuse of discretion amounting to lack or excess of jurisdiction when it issued its January 12, 2007
resolution2 in CA G.R. SP No. 90238. This assailed resolution affirmed in toto the CA’s earlier January 4, 2006
resolution3 extending the freeze order issued against the Ligot’s properties for an indefinite period of time.

BACKGROUND FACTS

On June 27, 2005, the Republic of the Philippines (Republic), represented by the Anti-Money Laundering Council
(AMLC), filed an Urgent Ex-Parte Application for the issuance of a freeze order with the CA against certain
monetary instruments and properties of the petitioners, pursuant to Section 10 4 of Republic Act (RA) No. 9160, as
amended (otherwise known as the Anti-Money Laundering Act of 2001). This application was based on the
February 1, 2005 letter of the Office of the Ombudsman to the AMLC, recommending that the latter conduct an
investigation on Lt. Gen. Ligot and his family for possible violation of RA No. 9160.5

In support of this recommendation, the Ombudsman attached the Complaint 6 it filed against the Ligots for perjury
under Article 183 of the Revised Penal Code, and for violations of Section 8 7 of RA No. 67138 and RA No. 3019
(Anti-Graft and Corrupt Practices Act).

The Ombudsman’s Complaint

a. Lt. Gen. Ligot and immediate family

The Ombudsman’s complaint alleges that Lt. Gen. Ligot served in the Armed Forces of the Philippines (AFP) for 33
years and 2 months, from April 1, 1966 as a cadet until his retirement on August 17, 2004. 9 He and Mrs. Ligot have
four children, namely: Paulo Y. Ligot, Riza Y. Ligot,

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

Lt. Gen. Ligot declared in his Statement of Assets, Liabilities, and Net Worth (SALN) that as of December 31, 2003,
he had assets in the total amount of Three Million Eight Hundred Forty-Eight Thousand and Three Pesos
(₱3,848,003.00).11 In contrast, his declared assets in his 1982 SALN amounted to only One Hundred Five Thousand
Pesos (₱105,000.00).12

Aside from these declared assets, the Ombudsman’s investigation revealed that Lt. Gen. Ligot and his family had
other properties and bank accounts, not declared in his SALN, amounting to at least Fifty Four Million One
Thousand Two Hundred Seventeen Pesos (₱54,001,217.00). These undeclared assets consisted of the following:

Undeclared Assets Amount

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

Bearing in mind that Lt. Gen. Ligot’s main source of income was his salary as an officer of the AFP, 17 and given his
wife and children’s lack of any other substantial sources of income, 18 the Ombudsman declared the assets registered
in Lt. Gen. Ligot’s name, as well as those in his wife’s and children’s names, to be illegally obtained and
unexplained wealth, pursuant to the provisions of RA No. 1379 (An Act Declaring Forfeiture in Favor of the State
Any Property Found to Have Been Unlawfully Acquired by Any Public Officer or Employee and Providing for the
Proceedings Therefor).

b. Edgardo Tecson Yambao

The Ombudsman’s investigation also looked into Mrs. Ligot’s younger brother, Edgardo Tecson Yambao. The
records of the Social Security System (SSS) revealed that Yambao had been employed in the private sector from
1977 to 1994. Based on his contributions to the SSS, Yambao did not have a substantial salary during his
employment. While Yambao had an investment with Mabelline Foods, Inc., the Ombudsman noted that this
company only had a net income of ₱5,062.96 in 2002 and ₱693.67 in 2003. 19 Moreover, the certification from the
Bureau of Internal Revenue stated that Yambao had no record of any annual Individual Income

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

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

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

Urgent Ex-Parte Freeze Order Application

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

On May 25, 2005, the AMLC issued Resolution No. 52, Series of 2005, directing the Executive Director of the
AMLC Secretariat to file an application for a freeze order against the properties of Lt. Gen. Ligot and the members
of his family with the CA.22 Subsequently, on June 27, 2005, the Republic filed an Urgent Ex-Parte Application with
the appellate court for the issuance of a Freeze Order against the properties of the Ligots and Yambao.

The appellate court granted the application in its July 5, 2005 resolution, ruling that probable cause existed that an
unlawful activity and/or money laundering offense had been committed by Lt. Gen. Ligot and his family, including
Yambao, and that the properties sought to be frozen are related to the unlawful activity or money laundering offense.
Accordingly, the CA issued a freeze order against the Ligots’ and Yambao’s various bank accounts, web accounts
and vehicles, valid for a period of 20 days from the date of issuance.

On July 26, 2005, the Republic filed an Urgent Motion for Extension of Effectivity of Freeze Order, arguing that if
the bank accounts, web accounts and vehicles were not continuously frozen, they could be placed beyond the reach
of law enforcement authorities and the government’s efforts to recover the proceeds of the Ligots’ unlawful
activities would be frustrated. In support of its motion, it informed the CA that the Ombudsman was presently
investigating the following cases involving the Ligots:
 Case Number Complainant(s) Nature
OMB-P-C-05- 0523 Wilfredo Garrido Plunder
OMB-P-C-05- 0003 AGIO Gina Villamor, et al. Perjury
OMB-P-C-05- 0184 Field Investigation Office Violation of RA No. 3019, Section 3(b);
Perjury under Article 183, Revised Penal
Code in relation to Section 11 of RA No.
6713; Forfeiture Proceedings in Relation to
RA No. 1379
OMB-P-C-05-0352 David Odilao Malicious Mischief; Violation of Section
20, RA No. 7856

Finding merit in the Republic’s arguments, the CA granted the motion in its September 20, 2005 resolution,
extending the freeze order until after all the appropriate proceedings and/or investigations have been terminated.

On September 28, 2005, the Ligots filed a motion to lift the extended freeze order, principally arguing that there was
no evidence to support the extension of the freeze order. They further argued that the extension not only deprived
them of their property without due process; it also punished them before their guilt could be proven. The appellate
court subsequently denied this motion in its January 4, 2006 resolution.

Meanwhile, on November 15, 2005, the "Rule of Procedure in Cases of Civil Forfeiture, Asset Preservation, and
Freezing of Monetary Instrument, Property, or Proceeds Representing, Involving, or Relating to an Unlawful
Activity or Money Laundering Offense under Republic Act No. 9160, as Amended" 23 (Rule in Civil Forfeiture
Cases) took effect. Under this rule, a freeze order could be extended for a maximum period of six months.

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

THE PETITIONERS’ ARGUMENTS

Lt. Gen. Ligot argues that the appellate court committed grave abuse of discretion amounting to lack or excess of
jurisdiction when it extended the freeze order issued against him and his family even though no predicate crime had
been duly proven or established to support the allegation of money laundering. He also maintains that the freeze
order issued against them ceased to be effective in view of the 6-month extension limit of freeze orders provided
under the Rule in Civil Forfeiture Cases. The CA, in extending the freeze order, not only unduly deprived him and
his family of their property, in violation of due process, but also penalized them before they had been convicted of
the crimes they stand accused of.

THE REPUBLIC’S ARGUMENTS

In opposition, the Republic claims that the CA can issue a freeze order upon a determination that probable cause
exists, showing that the monetary instruments or properties subject of the freeze order are related to the unlawful
activity enumerated in RA No. 9160. Contrary to the petitioners’ claims, it is not necessary that a formal criminal
charge must have been previously filed against them before the freeze order can be issued.

The Republic further claims that the CA’s September 20, 2005 resolution, granting the Republic’s motion to extend
the effectivity of the freeze order, had already become final and executory, and could no longer be challenged. The
Republic notes that the Ligots erred when they filed what is effectively a second motion for reconsideration in
response to the CA’s January 4, 2006 resolution, instead of filing a petition for review on certiorari via Rule 45 with
this Court. Under these circumstances, the assailed January 4, 2006 resolution granting the freeze order had already
attained finality when the Ligots filed the present petition before this Court.

THE COURT’S RULING

We find merit in the petition.

I. Procedural aspect

a. Certiorari not proper remedy to assail freeze order; exception

Section 57 of the Rule in Civil Forfeiture Cases explicitly provides the remedy available in cases involving freeze
orders issued by the CA:

Section 57. Appeal. - Any party aggrieved by the decision or ruling of the court may appeal to the Supreme Court by
petition for review on certiorari under Rule 45 of the Rules of Court. The appeal shall not stay the enforcement of
the subject decision or final order unless the Supreme Court directs otherwise. [italics supplied]

From this provision, it is apparent that the petitioners should have filed a petition for review on certiorari, and not a
petition for certiorari, to assail the CA resolution which extended the effectivity period of the freeze order over their
properties.

Even assuming that a petition for certiorari is available to the petitioners, a review of their petition shows that the
issues they raise (i.e., existence of probable cause to support the freeze order; the applicability of the 6-month limit
to the extension of freeze orders embodied in the Rule of Procedure in Cases of Civil Forfeiture) pertain to errors of
judgment allegedly committed by the CA, which fall outside the Court’s limited jurisdiction when resolving
certiorari petitions. As held in People v. Court of Appeals:24

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

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

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

b. Applicability of 6-month extension period under the Rule in Civil Forfeiture Cases
Without challenging the validity of the fixed 6-month extension period, the Republic nonetheless asserts that the
Rule in Civil Forfeiture Cases does not apply to the present case because the CA had already resolved the issues
regarding the extension of the freeze order before the

Rule in Civil Forfeiture Cases came into effect.

This reasoning fails to convince us.

Notably, the Rule in Civil Forfeiture Cases came into effect on December 15, 2005. Section 59 provides that it shall
"apply to all pending civil forfeiture cases or petitions for freeze order" at the time of its effectivity.

A review of the record reveals that after the CA issued its September 20, 2005 resolution extending the freeze order,
the Ligots filed a motion to lift the extended freeze order on September 28, 2005. Significantly, the CA only acted
upon this motion on January 4, 2006, when it issued a resolution denying it.

While denominated as a Motion to Lift Extended Freeze Order, this motion was actually a motion for
reconsideration, as it sought the reversal of the assailed CA resolution. Since the Ligots’ motion for reconsideration
was still pending resolution at the time the Rule in Civil Forfeiture Cases came into effect on December 15, 2005,
the Rule unquestionably applies to the present case.

c. Subsequent events

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

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

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

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

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

Additionally, we would be giving premium to the government’s failure to file an appropriate case until only after six
years (despite the clear provision of the Rule in Civil Forfeiture Cases) were we to dismiss the petition because of
the filing of the forfeiture case during the pendency of the case before the Court. The sheer length of time and the
constitutional violation involved, as will be discussed below, strongly dissuade us from dismissing the petition on
the basis of the "moot and academic" principle. The Court should not allow the seeds of future violations to sprout
by hiding under this principle even when directly confronted with the glaring issue of the respondent’s violation of
the petitioners’ due process right30 - an issue that the respondent itself chooses to ignore.

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

II. Substantive aspect

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

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

Section 10. Freezing of Monetary Instrument or Property. – The Court of Appeals, upon application ex parte by the
AMLC and after determination that probable cause exists that any monetary instrument or property is in any way
related to an unlawful activity as defined in Section

3(i) hereof, may issue a freeze order which shall be effective immediately. The freeze order shall be for a period of
twenty (20) days unless extended by the court. [italics supplied]

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

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

Based on Section 10 quoted above, there are only two requisites for the issuance of a freeze order: (1) the
application ex parte by the AMLC and (2) the determination of probable cause by the CA. 33 The probable cause
required for the issuance of a freeze order differs from the probable cause required for the institution of a criminal
action, and the latter was not an issue before the CA nor is it an issue before us in this case.

As defined in the law, the probable cause required for the issuance of a freeze order refers to "such facts and
circumstances which would lead a reasonably discreet, prudent or cautious man to believe that an unlawful activity
and/or a money laundering offense is about to be, is being or has been committed and that the account or any
monetary instrument or property subject thereof sought to be frozen is in any way related to said unlawful activity
and/or money laundering offense." 34

In other words, in resolving the issue of whether probable cause exists, the CA’s statutorily-guided determination’s
focus is not on the probable commission of an unlawful activity (or money laundering) that the Office of the
Ombudsman has already determined to exist, but on whether the bank accounts, assets, or other monetary
instruments sought to be frozen are in any way related to any of the illegal activities enumerated under RA No.
9160, as amended.35 Otherwise stated, probable cause refers to the sufficiency of the relation between an unlawful
activity and the property or monetary instrument which is the focal point of Section 10 of RA No. 9160, as amended.
To differentiate this from any criminal case that may thereafter be instituted against the same respondent, the Rule in
Civil Forfeiture Cases expressly provides –

SEC. 28. Precedence of proceedings. - Any criminal case relating to an unlawful activity shall be given precedence
over the prosecution of any offense or violation under Republic Act No. 9160, as amended, without prejudice to the
filing of a separate petition for civil forfeiture or the issuance of an asset preservation order or a freeze order. Such
civil action shall proceed independently of the criminal prosecution. [italics supplied; emphases ours]
Section 10 of RA No. 9160 (allowing the extension of the freeze order) and Section 28 (allowing a separate petition
for the issuance of a freeze order to proceed independently) of the Rule in Civil Forfeiture Cases are only consistent
with the very purpose of the freeze order, which specifically is to give the government the necessary time to prepare
its case and to file the appropriate charges without having to worry about the possible dissipation of the assets that
are in any way related to the suspected illegal activity. Thus, contrary to the Ligots’ claim, a freeze order is not
dependent on a separate criminal charge, much less does it depend on a conviction.

That a freeze order can be issued upon the AMLC’s ex parte application further emphasizes the law’s consideration
of how critical time is in these proceedings. As we previously noted in Republic v. Eugenio, Jr., 36 "to make such
freeze order anteceded by a judicial proceeding with notice to the account holder would allow for or lead to the
dissipation of such funds even before the order could be issued."

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

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

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

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

Section 53. Freeze order. –

xxxx

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

We find merit in this claim.

A freeze order is an extraordinary and interim relief37 issued by the CA to prevent the dissipation, removal, or
disposal of properties that are suspected to be the proceeds of, or related to, unlawful activities as defined in Section
3(i) of RA No. 9160, as amended.38 The primary objective of a freeze order is to temporarily preserve monetary
instruments or property that are in any way related to an unlawful activity or money laundering, by preventing the
owner from utilizing them during the duration of the freeze order. 39 The relief is pre-emptive in character, meant to
prevent the owner from disposing his property and thwarting the State’s effort in building its case and eventually
filing civil forfeiture proceedings and/or prosecuting the owner.

Our examination of the Anti-Money Laundering Act of 2001, as amended, from the point of view of the freeze order
that it authorizes, shows that the law is silent on the maximum period of time that the freeze order can be extended
by the CA. The final sentence of Section 10 of the Anti-Money Laundering Act of 2001 provides, "the freeze order
shall be for a period of twenty (20) days unless extended by the court." In contrast, Section 55 of the Rule in Civil
Forfeiture Cases qualifies the grant of extension "for a period not exceeding six months" "for good cause" shown.

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

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

In this case, the law has left to the CA the authority to resolve the issue of extending the freeze order it issued.
Without doubt, the CA followed the law to the letter, but it did so by avoiding the fundamental law’s command
under its Section 1, Article III. This command, the Court – under its constitutional rule-making power – sought to
implement through Section 53(b) of the Rule in Civil Forfeiture Cases which the CA erroneously assumed does not
apply.

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

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

As correctly noted by the petitioners, a freeze order is meant to have a temporary effect; it was never intended to
supplant or replace the actual forfeiture cases where the provisional remedy - which means, the remedy is an adjunct
of or an incident to the main action – of asking for the issuance of an asset preservation order from the court where
the petition is filed is precisely available. For emphasis, a freeze order is both a preservatory and preemptive
remedy.

To stress, the evils caused by the law’s silence on the freeze order’s period of effectivity46 compelled this Court to
issue the Rule in Civil Forfeiture Cases. Specifically, the Court fixed the maximum allowable extension on the
freeze order’s effectivity at six months. In doing so, the Court sought to balance the State’s interest in going after
suspected money launderers with an individual’s constitutionally-protected right not to be deprived of his property
without due process of law, as well as to be presumed innocent until proven guilty.
To our mind, the six-month extension period is ordinarily sufficient for the government to act against the suspected
money launderer and to file the appropriate forfeiture case against him, and is a reasonable period as well that
recognizes the property owner’s right to due process. In this case, the period of inaction of six years, under the
circumstances, already far exceeded what is reasonable.

We are not unmindful that the State itself is entitled to due process.1âwphi1 As a due process concern, we do not say
that the six-month period is an inflexible rule that would result in the automatic lifting of the freeze order upon its
expiration in all instances. An inflexible rule may lend itself to abuse - to the prejudice of the State’s legitimate
interests - where the property owner would simply file numerous suits, questioning the freeze order during the six-
month extension period, to prevent the timely filing of a money laundering or civil forfeiture case within this period.
With the limited resources that our government prosecutors and investigators have at their disposal, the end-result of
an inflexible rule is not difficult to see.

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

Thus, as a rule, the effectivity of a freeze order may be extended by the CA for a period not exceeding six months.
Before or upon the lapse of this period, ideally, the Republic should have already filed a case for civil forfeiture
against the property owner with the proper courts and accordingly secure an asset preservation order or it should
have filed the necessary information.47 Otherwise, the property owner should already be able to fully enjoy his
property without any legal process affecting it. However, should it become completely necessary for the Republic to
further extend the duration of the freeze order, it should file the necessary motion before the expiration of the six-
month period and explain the reason or reasons for its failure to file an appropriate case and justify the period of
extension sought. The freeze order should remain effective prior to the resolution by the CA, which is hereby
directed to resolve this kind of motion for extension with reasonable dispatch.

In the present case, we note that the Republic has not offered any explanation why it took six years (from the time it
secured a freeze order) before a civil forfeiture case was filed in court, despite the clear tenor of the Rule in Civil
Forfeiture Cases allowing the extension of a freeze order for only a period of six months. All the Republic could
proffer is its temporal argument on the inapplicability of the Rule in Civil Forfeiture Cases; in effect, it glossed over
the squarely-raised issue of due process. Under these circumstances, we cannot but conclude that the continued
extension of the freeze order beyond the six-month period violated the Ligot’s right to due process; thus, the CA
decision should be reversed.

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

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

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

SO ORDERED.

Republic v. Bolante, GR No. 186717, 17 April 2017

G.R. No. 186717

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

COUNCIL, Petitioners
vs.
JOCELYN I. BOLANTE, OWEN VINCENT D. BOLANTE, MA. CAROL D. BOLANTE, ALEJO
LAMERA, CARMEN LAMERA, EDNA CONSTANTINO, ARIEL C. PANGANIBAN, KATHERINE G.
BOMBEO, SAMUEL S. BOMBEO, MOLUGAN FOUNDATION, SAMUEL G. BOMBEO, JR., and
NATIONAL LIVELIHOOD DEVELOPMENT CORPORATION (Formerly Livelihood
Corporation), Respondents

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

G.R. No. 190357

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

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

DECISION

SERENO, J.:

G.R. No. 186717 is a petition for review on certiorari under Rule 45 of the Rules of Court, with an urgent prayer for
the issuance of a temporary restraining order and/or writ of preliminary injunction.1âwphi1 The petition seeks to
nullify the Court of Appeals (CA) Resolution 1 in CA-G.R. AMLC No. 00024. The CA Resolution denied
petitioner's application to extend the freeze order issued on 4 Fehruary 2009 2 over the bank deposits and investments
of respondents.

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

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

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

The transactions were reported '"suspicious" because they had no underlying legal or trade obligation, purpose or
economic justification; nor were they commensurate to the business or financial capacity of Molugan and AGS,
which were both lowly capitalized at P50,000 each.9 In the case of Molugan, Samuel S. Bombeo, who holds the
position of president, secretary and treasurer, is the lone signatory to the account. 10 In the case of AGS, Samuel S.
Bombeo shares this responsibility with Ariel Panganiban. 11

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

Committee Report No. 54 14 narrated that former Undersecretary of Agriculture Jocelyn I. Bolante (Bolante)
requested the Department of Budget and Management to release to the Department of Agriculture the amount of
₱728 million for the purchase of farm inputs under the Ginintuang Masaganang Ani Program. This amount was
used to purchase liquid fertilizers from Freshan Philippines, Inc., which were then distributed to local government
units and congressional districts beginning January 2004. Based on the Audit Report prepared by the Commission
on Audit (COA), 15 the use of the funds was characterized by massive irregularities, overpricing, violations of the
procurement law and wanton wastage of scarce government resources.

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

The AMLC issued Resolution No. 75 16 finding probable cause to believe that the accounts of LIVECOR, Molugan
and AGS - the subjects of the suspicious transaction reports submitted by PNB - were related to what became known
as the "fertilizer fund scam." The pertinent portion of Resolution No. 75 provides:

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

The acts involved in the "fertilizer scam" may constitute violation of Section 3(e) of Republic Act No. 3019, x x x as
well as violation or Republic Act No. 7080 (Plunder). 17

Thus, the AMLC authorized the filing of a petition for the issuance of an order allowing an inquiry into the six
accounts 18 of LIVECOR, Molugan, AGS, Samuel S. Bombeo and Ariel Panganiban. The AMLC also required all
covered institutions to submit reports of covered transactions and/or suspicious transactions of these entities and
individuals, including all the related web of accounts.
The petition was filed ex parte before the R TC and docketed as AMLC SP Case No. 06-003. On 17 November
2006, the trial court found probable cause and issued the Order prayed for. 19 It allowed the AMLC to inquire into
and examine the six bank deposits or investments and the related web of accounts.

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

Accordingly, the AMLC issued Resolution No. 90 21 finding probable cause to believe that these 70 accounts were
related to the fertilizer fund scam. It said that the scam may constitute violations of Section 3(e) 22 of Republic Act
No. (R.A.) 3019 (Anti-Graft and Corrupt Practices Act) and R.A. 7080 (An Act Defining and Penalizing the Crime
of Plunder). The AMLC therefore authorized the filing of a petition for the issuance of an order allowing an inquiry
into these 70 accounts.23

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

In view of this development, the AMLC issued Resolution No. 40.27 It authorized the filing of a petition for the
issuance of a freeze order against the 70 accounts found to be related to the fertilizer fund scam.

Hence, the Republic filed an Ex Parte Petition28 docketed as CA-G.R. AMLC No. 00014 before the CA, seeking the
issuance of a freeze order against the 70 accounts.

The CA issued a freeze order effective for 20 days.29 The freeze order required the covered institutions of the 70
accounts to desist from and not allow any transaction involving the identified monetary instruments. It also asked
the covered institutions to submit a detailed written return to the CA within 24 hours from receipt of the freeze
order.

The CA conducted a summary hearing of the application, 30 after which the parties were ordered to submit their
memoranda, manifestations and comments/oppositions. 31 The freeze order was later extended for a period of 30
days until 19 August 2008. 32

Finding that there existed probable cause that the funds transferred to and juggled by LIVECOR, Molugan, and AGS
formed pati of the ₱728 million fertilizer fund, the CA extended the effectivity of the freeze order for another four
months, or until 20 December 2008. 33 The extension covered only 31 accounts, 34 which showed an existing balance
based on the returns of the covered institutions.

In the meantime, the Republic filed an Ex Parte Application 35 docketed as AMLC Case No. 07-001 before the
RTC. Drawing on the authority provided by the AMLC through Resolution No. 90, the ex parte application sought
the issuance of an order allowing an inquiry into the 70 accounts.

The RTC found probable cause and issued the Order prayed for. 36 It allowed the AMLC to inquire into and examine
the 70 bank deposits or investments and the related web of accounts.

On 20 October 2008, this Court denied with finality the motion for reconsideration filed by the Republic
in Eugenio. 37The Court reiterated that Section 11 38 of R.A. 9160, as then worded, did not allow a bank inquiry
order to be issued ex parte; and that the concerns of the Republic about the consequences of this ruling could be
more properly lodged in the legislature.
Thus, in order to comply with the ruling in Eugenio, the Republic filed an Amended and Supplemental
Application 39in AMLC Case No. 07- 001 before the RTC. The Republic sought, after notice to the account holders,
the issuance of an order allowing an inquiry into the original 70 accounts plus the six bank accounts that were the
subject of AMLC SP Case No. 06-003. A summary hearing thereon ensued.

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

Hence, the Republic filed an Urgent Ex Parte Petition42 docketed as CA-G.R. AMLC No. 00024 before the CA
seeking the issuance of a freeze order against the 24 accounts.

In the Resolution dated 4 February 2009,43 the CA issued a freeze order effective for 20 days. The freeze order
required the covered institutions of the 24 accounts to desist from and not allow any transaction involving the
identified monetary instruments. It also asked the covered institutions to submit a detailed written return to the CA
within 24 hours from receipt of the freeze order.

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

THE CHALLENGED RESOLUTIONS

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

The CA found that the Republic had committed forum shopping. 46 Specifically, the appellate court found that the
parties in CA-G.R. AMLC No. 00024 were the same as those in CA-G.R. AMLC No. 00014. The petition in CA-
G.R. AMLC No. 00024 sought the issuance of a freeze order against the same accounts covered by CA-G.R. AMLC
No. 00014. Finally, the rights asserted and reliefs prayed for in both petitions were substantially founded on the
same facts, thereby raising identical causes of action and issues.

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

At any rate, the CA found that the petition in CA-G.R. AMLC No. 00024 was effectively a prayer for the further
extension of the 5-month, 20- day freeze order already issued in CA-G.R. AMLC No. 00014.48 The extension sought
is proscribed under Section 53 of Administrative Circular No. 05-11-04-SC.49 According to this provision, the
effectivity of a freeze order may be extended for good cause shown for a period not exceeding six months.

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

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

At the time of the submission of respondents' Comment 51 and petitioner's Consolidated Reply52 in G.R. No. 186717,
the RTC issued the challenged Resolution dated 3 July 2009 53 in AMLC Case No. 07-001. The trial court denied the
Republic's application for an order allowing an inquiry into the total of 76 bank deposits and investments of
respondents.

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

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

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

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

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

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

Amid reports that the Office of the Ombudsman (Ombudsman) had filed plunder cases against those involved in the
fertilizer fund scam, the Court issued the Resolution dated 16 November 2011. 65 We required the AMLC and the
Ombudsman to move in the premises and jointly manifest whether the accounts, subject of the instant petitions, were
in any way related to the plunder cases already filed.

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

ISSUES

The following are the issues for our resolution:

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

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

OUR RULING
 I.

The Republic committed forum shopping.

As we ruled in Chua v. Metropolitan Bank and Trust Co., 67 forum shopping is committed in three ways: (1) filing
multiple cases based on the same cause of action and with the same prayer, where the previous case has not yet been
resolved (the ground for dismissal is litis pendentia); (2) filing multiple cases based on the same cause of action and
with the same prayer, where the previous case has finally been resolved (the ground for dismissal is res
judicata); and (3) filing multiple cases based on the same cause of action, but with different prayers (splitting of
causes of action, where the ground for dismissal is also either litis pendentia or res judicata).

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

While it is true that a previous freeze order was issued in CA-G.R. AMLC No. 00014 covering some of the accounts
subject of CA-G.R. AMLC No. 00024, CA-G.R. AAILC No. 00014 had already attained finality when the second
petition was filed, neither petitioner nor any of the respondents interposed an appeal therefrom, pursuant to Section
57 of the Rule of Procedure in Cases of Civil F01feiture, etc .. The principle of lit is pendentia presupposes the
pendency of at least one case when a second case is filed. Such situation does not exist in the present controversy
since CA-G.R. AMLC No. 00014 was no longer pending but has attained finality when the second petition was
filed. 68

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

We are not even sure where the Republic got the notion that the CA found "that the filing of the second petition for
freeze order constitutes forum shopping on the ground of litis pendentia."69 In its assailed Resolution, the appellate
court aptly cited Quinsay v. CA,70 stating that "forum shopping concurs not only when a final judgment in one case
will amount to res judicata in another, but also where the elements of litis pendentia are present."71 It then went on
to enumerate the aforecited elements of litis pendentia, namely: (I) identity of parties, or those that represent the
same interests in both actions; (2) identity of rights asserted and relief sought, with the relief founded on the same
facts; and (3) identity of the two preceding particulars, such that any judgment rendered in one proceeding will,
regardless of which party is successful, amount to res judicata in the other. The CA only discussed how these
elements were present in CA-G.R. AMLC No. 00024 and CA-G.R. AMLC No. 00014 in relation to each other.
Nowhere did the CA make any categorical pronouncement that the Republic had committed forum shopping on the
ground of litis pendentia.

With this clarification, we discuss how all the elements of litis pendentia are present in the two petitions for the
issuance of a freeze order.

First, there is identity of parties. In both petitions, the Republic is the petitioner seeking the issuance of a freeze
order against the bank deposits and investments. The 24 accounts sought to be frozen in CA-G.R. AMLC No. 00024
were part of the 31 accounts previously frozen in CA-G.R. AMLC No. 00014,72 and the holders of these accounts
were once again named as respondents.

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

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

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

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

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

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

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

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

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

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

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

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

In fact, it was because of Eugenio that CA-G.R. AMLC No. 00014 was filed in the first place.
We have not painstakingly narrated all the relevant facts of these cases for nothing. It should be noted that before the
ruling in Eugenio, the AMLC commenced its investigations into the fertilizer fund scam by filing petitions for bank
inquiry orders. Thus, it issued Resolutions No. 75 and 90, both authorizing the filing of petitions for the issuance of
orders allowing an inquiry into the pertinent bank deposits and investments.

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

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

xxxx

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

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

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

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

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

Section 11. Authority to Inquire into Bank Deposits. - Notwithstanding the provisions of Republic Act No. 1405, as
amended, Republic Act No. 6426, as amended, Republic Act No. 8791, and other laws, the AMLC may inquire into
or examine any particular deposit or investment, including related accounts, with any banking institution or non-
bank financial institution upon order of any competent court based on an ex parte application in cases of violations
of this Act, when it has been established that there is probable cause that the deposits or investments, including
related accounts involved, are related to an unlawful activity as defined in Section 3(i) hereof or a money laundering
offense under Section 4 hereof; except that no court order shall be required in cases involving activities defined in
Section 3(i)(1 ), (2 ), and (12) hereof and felonies or offenses of a nature similar to those mentioned in Section 3(i)(l
), (2), and (12), which are Punishable under the penal laws of other countries, and terrorism and conspiracy to
commit terrorism as defined and penalized under Republic Act No. 9372.

The Court of Appeals shall act on the application to inquire in lo or examine any depositor or investment with any
banking institution or nonbank financial institution within twenty-four (24) hours from filing of the application.
To ensure compliance with this Act, the Bangko Sentral ng Pilipinas may, in the course of a periodic or special
examination, check the compliance of a Covered institution with the requirements of the AMLA and its
implementing rules and regulations.

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

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

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

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

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

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

II.

The RTC's finding that there was no

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

Rule 10.2 of the Revised Rules and Regulations Implementing Republic Act No. 9160, as Amended by Republic
Act No. 9194, defined probable cause as "such facts and circumstances which would lead a reasonably discreet,
prudent or cautious man to believe that an unlawful activity and/or a money laundering offense is about to be, is
being or has been committed and that the account or any monetary instrument or property subject thereof sought to
be frozen is in any way related to said unlawful activity and/or money laundering offense." As we observed
in Subido,96 this definition refers to probable cause for the issuance of a freeze order against an account or any
monetary instrument or property subject thereof. Nevertheless, we shall likewise be guided by the pronouncement
in Ligot v. Republic97 that "probable cause refers to the sufficiency of the relation between an unlawful activity and
the property or monetary instrument."

In the issuance of a bank inquiry order, the power to determine the existence of probable cause is lodged in the trial
court. As we ruled in Eugenio:
Section 11 itself requires that it be established that "there is probable cause that the deposits or investments are
related to unlawful activities," and it obviously is the court which stands as arbiter whether there is indeed such
probable cause. The process of inquiring into the existence of probable cause would involve the function of
determination reposed on the trial court. Determination clearly implies a function of adjudication on the part of the
trial court, and not a mechanical application of a standard predetermination by some other body. The word
"determination'' implies deliberation and is, in normal legal contemplation, equivalent to ''the decision of a court of
justice."

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

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

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

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

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

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

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

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

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

It was this excerpt that led the AMLC to connect the fertilizer fund scam to the suspicious transaction reports earlier
submitted to it by PNB.

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

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

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

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

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

The Status Quo Ante Order issued by this Court on 25 March 2009 is hereby LIFTED.

SO ORDERED.