Law on Secrecy of Bank Deposits

Purpose

BSB GROUP, INC., represented by its President, Mr. RICARDO BANGAYAN,

vs, SALLY GO a.k.a. SALLY GO-BANGAYAN,.
G.R. No. 168644, February 16, 2010, PERALTA, J.

The inquiry into bank deposits allowable under R.A. No. 1405 must be premised on the fact that the money
deposited in the account is itself the subject of the action

Facts:

Sally was employed as a cashier by a company run by her husband, Ricardo. Ricardo charged Sally with
Estafa/ Qualified Theft due to the latter’s misappropriation of the company’s funds. Sally allegedly deposited
the checks issue by the customers to her personal bank account in Security Bank.

The prosecution presented the testimony of Marasigan, a representative of Security Bank. Marasigan
said that Sally credited the amounts to her personal deposit account. Sally moved to suppress the testimony of
Marasigan on the ground of confidentiality under R.A. 1405.

Issue:

Whether the admission of Marasigan’s testimony on the particulars of Sally’s account with Security
Bank, as well as of the corresponding evidence of the checks allegedly deposited in said account, constitutes an
unallowable inquiry under R.A. 1405.

Ruling:

YES.R.A. No. 1405 has two allied purposes. It hopes to discourage private hoarding and at the same
time encourage the people to deposit their money in banking institutions, so that it may be utilized by way of
authorized loans and thereby assist in economic development. Owing to this piece of legislation, the
confidentiality of bank deposits remains to be a basic state policy in the Philippines. Section 2 of the law
institutionalized this policy by characterizing as absolutely confidential in general all deposits of whatever
nature with banks and other financial institutions in the country.

In taking exclusion from the coverage of the confidentiality rule, petitioner in the instant case posits
that the account maintained by respondent with Security Bank contains the proceeds of the checks that she has
fraudulently appropriated to herself and, thus, falls under one of the exceptions in Section 2 of R.A. No. 1405,
that the money kept in said account is the subject matter in litigation.

What indeed constitutes the subject matter in litigation in relation to Section 2 of R.A. No. 1405 has
been pointedly and amply addressed in Union Bank of the Philippines v. Court of Appeals, in which the Court
noted that the inquiry into bank deposits allowable under R.A. No. 1405 must be premised on the fact that the
money deposited in the account is itself the subject of the action.

Given this perspective, we deduce that the subject matter of the action in the case at bar is to be
determined from the indictment that charges respondent with the offense, and not from the evidence sought
by the prosecution to be admitted into the records. In the criminal Information filed with the trial court,
respondent, unqualifiedly and in plain language, is charged with qualified theft by abusing petitioners trust and
confidence and stealing cash. The said Information makes no factual allegation that in some material way
involves the checks subject of the testimonial and documentary evidence sought to be suppressed. Neither do
the allegations in said Information make mention of the supposed bank account in which the funds represented
by the checks have allegedly been kept.
 Prohibited Acts

EMMANUEL C. OÑATE and ECON HOLDINGS CORPORATION, vs. HON. ZUES C. ABROGAR, as Presiding
Judge of Branch 150 of the Regional Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY OF
CANADA
G.R. No. 107303, February 23, 1995, NOCON, J.

Whether the transaction is considered a sale or money placement does not make the money the "subject
matter of litigation" within the meaning of Sec. 2 of Republic Act No. 1405 which prohibits the disclosure or inquiry
into bank deposits except "in cases where the money deposited or invested is the subject matter of litigation."

Facts:

Sun Life filed a complaint for sum of money against Onate, Econ Holdings and Brunner Development.
Sun Life alleges that Onate, as president of Econ, offered to sell 46 million worth of treasury bills at a discounted
price. Sun Life paid the price by means of a check payable to Brunner. Brunner, through its president Diño,
issued to it a receipt with undertaking to deliver the treasury bills to Sun Life. Brunner and Diño delivered
instead a promissory note, in which it was made to appear that the transaction was a money placement instead
of sale of treasury bills.

Sun Life moved to examine the accounts and ledgers of Brunner Development at Urban Bank and BPI.

Issue:

Whether the money paid can be considered as a subject matter of litigation within the meaning of RA
1405.

Ruling:

NO.Thus the issue is whether the money paid to Brunner was the consideration for the sale of treasury
bills, as Sun Life claims, or whether it was money intended for placement, as petitioners allege. Petitioners do
not deny receipt of P39,526,500.82 from Sun Life. Hence, whether the transaction is considered a sale or money
placement does not make the money the "subject matter of litigation" within the meaning of Sec. 2 of Republic
Act No. 1405 which prohibits the disclosure or inquiry into bank deposits except "in cases where the money
deposited or invested is the subject matter of litigation." Nor will it matter whether the money was "swindled"
as Sun Life contends.
______________________________________________________________________________________________________________________________

Deposits Covered

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

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

Facts:

Citibank filed a complaint against two of its officers, Santos and Genuino. The two appeared to have
been actively engaged in business endeavors that were in conflict with the business of the bank. They caused
existing clients/depositors to divert their money from Citibank to products offered by other companies.
Intengan, Neri and Brawner are some of clients who have long standing accounts with Citibank, N.A.
 As evidence, Lim, the Vice-President of Citibank, annexed bank records purporting to establish the
deception practiced by Santos and Genuino. Some of the documents pertained to the dollar deposits of the
petitioners.

The Court of Appeals held that the disclosure of deposits was necessary to establish the allegation that
Santos and Genuino had violated Section 31 of the Corporation Code in acquiring any interest adverse to the
corporation in respect of any matter which has been reposed in him in confidence. In assailing the appellate
courts findings, petitioners assert that the disclosure of their bank records was unwarranted and illegal.

Issue:

Whether the disclosure of the bank records was illegal.

Ruling:

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

Thus, under R.A. No. 6426 there is only a single exception to the secrecy of foreign currency deposits,
that is, disclosure is allowed only upon the written permission of the depositor. Incidentally, the acts of private
respondents complained of happened before the enactment on September 29, 2001 of R.A. No. 9160 otherwise
known as the Anti-Money Laundering Act of 2001.

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

JOSEPH VICTOR EJERCITO VS. SANDIGANBAYAN

G.R. Nos. 157294-95, November 30, 2006, CARPIO MORALES, J.

An examination of the law shows that the term deposits used therein is to be understood broadly and not
limited only to accounts which give rise to a creditor-debtor relationship between the depositor and the
bank.Moreover, the law applies not only to money which is deposited but also to those which are invested.

Facts:

The special prosecution panel filed a Request for Issuance of Subpoena Duces Tecum directing the
President of Export and Industry Bank (EIB, formerly Urban Bank) or his/her authorized representative to
produce the Trust Account No. 858 and Savings Account No. 0116-17345-9 of the petitioner. In his Motion to
Quash, petitioner claimed that his bank accounts are covered by R.A. No. 1405 (The Secrecy of Bank Deposits
Law) and do not fall under any of the exceptions stated therein. For, to respondent People, the law applies only
to deposits which strictly means the money delivered to the bank by which a creditor-debtor relationship is
created between the depositor and the bank. Thus, the Trust Account No. 858 should be inquired into, not
merely because it falls under the exceptions to the coverage of R.A. 1405, but because it is not even
contemplated therein.

Issue:

Whether a Trust Account is covered by the term “deposit” under R.A. 1405.

Ruling:
 YES. An examination of the law shows that the term deposits used therein is to be understood broadly
and not limited only to accounts which give rise to a creditor-debtor relationship between the depositor and
the bank.

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

Trust Account No. 858 is, without doubt, one such account. The Trust Agreement between petitioner
and Urban Bank provides that the trust account covers deposit, placement or investment of funds by Urban
Bank for and in behalf of petitioner. The money deposited under Trust Account No. 858, was, therefore,
intended not merely to remain with the bank but to be invested by it elsewhere. To hold that this type of account
is not protected by R.A. 1405 would encourage private hoarding of funds that could otherwise be invested by
banks in other ventures, contrary to the policy behind the law.

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

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

The phrase of whatever nature proscribes any restrictive interpretation of deposits. Moreover, it is
clear from the immediately quoted provision that, generally, the law applies not only to money which is
deposited but also to those which are invested. This further shows that the law was not intended to apply only
to deposits in the strict sense of the word. Otherwise, there would have been no need to add the phrase or
invested.

LOURDES T. MARQUEZ, in her capacity as Branch Manager, Union Bank of the Philippines, petitioners,
vs. HON. ANIANO A. DESIERTO
G.R. No. 135882. June 27, 2001, PARDO, J.

We rule that before an in camera inspection may be allowed, there must be a pending case before a court
of competent jurisdiction. Further, the account must be clearly identified, the inspection limited to the subject
matter of the pending case before the court of competent jurisdiction. The bank personnel and the account holder
must be notified to be present during the inspection, and such inspection may cover only the account identified in
the pending case.

Facts:

The present case originated from Fact-Finding and Intelligence Bureau (FFIB) v. Amado Lagdameo, et.
al. Petitioner Marquez, the manager of Union Bank of the Philippines, Vargas branch, received an Order from
the Ombudsman Aniano A. Desierto to produce several bank documents for purposes of inspection in
camerarelative to various accounts maintained at Union Bank of the Philippines. Later on, petitioner together
with Union Bank of the Philippines, filed a petition for declaratory relief, prohibition and injunction before the
RTC alleging that clear conflict between R. A. No. 6770, Section 15 and R. A. No. 1405, Sections 2 and 3.
 Petitioner prayed for a temporary restraining order (TRO) because the Ombudsman and other persons
acting under his authority were continuously harassing her to produce the bank documents relative to the
accounts in question.

Issue:

Whether the order of the Ombudsman to have an in camerainspection of the questioned account is
allowed as an exception to the law on secrecy of bank deposits (R. A. No. 1405).

Ruling:

NO. The order of the Ombudsman to produce for in camera inspection the subject accounts with the
Union Bank of the Philippines, Julia Vargas Branch, is based on a pending investigation at the Office of the
Ombudsman against Amado Lagdameo, et. al. for violation of R. A. No. 3019, Sec. 3 (e) and (g) relative to the
Joint Venture Agreement between the Public Estates Authority and AMARI.

In Union Bank of the Philippines v. Court of Appeals, we held that Section 2 of the Law on Secrecy of
Bank Deposits, as amended, declares bank deposits to be absolutely confidential except:

(1) In an examination made in the course of a special or general examination of a bank that is
specifically authorized by the Monetary Board after being satisfied that there is reasonable ground to believe
that a bank fraud or serious irregularity has been or is being committed and that it is necessary to look into the
deposit to establish such fraud or irregularity,

(2) In an examination made by an independent auditor hired by the bank to conduct its regular audit
provided that the examination is for audit purposes only and the results thereof shall be for the exclusive use
of the bank,

(3) Upon written permission of the depositor,

(4) In cases of impeachment,

(5) Upon order of a competent court in cases of bribery or dereliction of duty of public officials, or

(6) In cases where the money deposited or invested is the subject matter of the litigation

In the case at bar, there is yet no pending litigation before any court of competent authority. What is
existing is an investigation by the office of the Ombudsman. In short, what the Office of the Ombudsman would
wish to do is to fish for additional evidence to formally charge Amado Lagdameo, et. al., with the Sandiganbayan.
Clearly, there was no pending case in court which would warrant the opening of the bank account for
inspection.
______________________________________________________________________________________________________________________________

______________________________________________________________________________________________________________________________

BSB GROUP, INC., represented by its President, Mr. RICARDO BANGAYAN vs. SALLY GO a.k.a. SALLY
GO-BANGAYAN
G.R. No. 168644, February 16, 2010, PERALTA, J.

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

Facts:

Bangayan filed with the Manila Prosecutors Office a complaint for estafa and/or qualified theft against
respondent, alleging that several checks issued by the companys customers in payment of their obligation were,
instead of being turned over to the companys coffers, indorsed by respondent Sally Go who deposited the same
to her personal banking account maintained at Security Bank and Trust Company (Security Bank) in Divisoria,
Manila Branch.

The prosecution moved for the issuance of subpoena ducestecum /ad testificandum against the
respective managers or records custodians of Security Banks Divisoria Branch, as well as of the Asian Savings
Bank (now Metropolitan Bank & Trust Co. [Metrobank]). The trial court granted the motion and issued the
corresponding subpoena.

Meanwhile, the prosecution was able to present in court the testimony of ElenitaMarasigan
(Marasigan), the representative of Security Bank.But before the testimony could be completed, respondent filed
a Motion to Suppress, seeking the exclusion of Marasigans testimony and accompanying documents thus far
received, bearing on the subject Security Bank account. This time respondent invokes, in addition to
irrelevancy, the privilege of confidentiality under R.A. No. 1405.

Issue:

Whether or not the testimony of Marasigan would be a violation of confidentiality under R.A. No. 1405.

Ruling:

YES. What indeed constitutes the subject matter in litigation in relation to Section 2 of R.A. No. 1405
has been pointedly and amply addressed in Union Bank of the Philippines v. Court of Appeals, in which the
Court noted that the inquiry into bank deposits allowable under R.A. No. 1405 must be premised on the fact
that the money deposited in the account is itself the subject of the action. Given this perspective, we deduce
that the subject matter of the action in the case at bar is to be determined from the indictment that charges
respondent with the offense, and not from the evidence sought by the prosecution to be admitted into the
records. In the criminal Information filed with the trial court, respondent, unqualifiedly and in plain language,
is charged with qualified theft by abusing petitioners trust and confidence and stealing cash. The said
Information makes no factual allegation that in some material way involves the checks subject of the
testimonial and documentary evidence sought to be suppressed. Neither do the allegations in said Information
make mention of the supposed bank account in which the funds represented by the checks have allegedly been
kept.
______________________________________________________________________________________________________________________________

DOÑA ADELA EXPORT INTERNATIONAL, INC. vs. TRADE AND INVESTMENT DEVELOPMENT
CORPORATION (TIDCORP), AND THE BANK OF THE PHILIPPINE ISLANDS (BPI)
G.R. No.201931, February 11, 2015, VILLARAMA, JR., J.

Corollarily, the stipulation in the Joint Motion to Approve Compromise Agreement that petitioner waives
its right to confidentiality of its bank deposits requires the approval and conformity of Atty. Gonzales as receiver
since all the property, money, estate and effects of petitioner have been assigned and conveyed to her and she has
the right to recover all the estate, assets, debts and claims belonging to or due to the insolvent debtor.

Facts:
 Petitioner was declared insolvent. The petitioner agreed to enter into a compromise agreement with
its creditors. TIDCORP and BPI agreed to approve the Dacion En Pago by Compromise Agreement with the
following terms:

WAIVER OF CONFIDENTIALITY. – The petitioner and the members of its Board of Directors shall waive
all rights to confidentiality provided under the provisions of Republic Act No. 1405, as amended, otherwise
known as the Law on Secrecy of Bank Deposits, and Republic Act No. 8791, otherwise known as The General
Banking Law of 2000.

Petitioner asserts that express and written waiver from the depositor concerned is required by law
before any third person or entity is allowed to examine bank deposits or bank records. According to petitioner,
it is not a party to the compromise agreement between BPI and TIDCORP and its silence or acquiescence is not
tantamount to an admission that binds it to the compromise agreement of the creditors especially the waiver
of confidentiality of bank deposits. While Respondent TIDCORP contends that the waiver of confidentiality
under Republic Act (R.A.) Nos. 1405 and 8791 does not require the express or written consent of the depositor.
It is TIDCORP’s position that upon declaration of insolvency, the insolvency court obtains complete jurisdiction
over the insolvent’s property which includes the authority to issue orders to look into the insolvent’s bank
deposits. Since bank deposits are considered debts owed by the banks to the petitioner, the receiver is
empowered to recover them even without petitioner’s express or written consent, said TIDCORP.

Issue:

Whether the compromise agreement is binding on the petitioner.

Ruling:

NO. In this case, the Joint Motion to Approve Agreement was executed by BPI and TIDCORP only. There
was no written consent given by petitioner or its representative, Epifanio Ramos, Jr., that petitioner is waiving
the confidentiality of its bank deposits. Neither can petitioner be deemed to have given its permission by failure
to interpose its objection during the proceedings. The norm is that a waiver must not only be voluntary, but
must have been made knowingly, intelligently, and with sufficient awareness of the relevant circumstances and
likely consequences. There must be persuasive evidence to show an actual intention to relinquish the right.
Mere silence on the part of the holder of the right should not be construed as a surrender thereof; the courts
must indulge every reasonable presumption against the existence and validity of such waiver.

GOVERNMENT SERVICE INSURANCE SYSTEM, vs. THE HONORABLE 15th DIVISION OF THE COURT OF
APPEALS and INDUSTRIAL BANK OF KOREA, TONG YANG MERCHANT BANK, HANAREUM BANKING
CORP., LAND BANK OF THE PHILIPPINES, WESTMONT BANK and DOMSAT HOLDINGS, INC.
G.R. No. 189206, June 8, 2011, PEREZ, J.

The lone exception to the non-disclosure of foreign currency deposits, under Republic Act No. 6426, is
disclosure upon the written permission of the depositor.

Facts:

A collection of sum of money with damages filed by Industrial Bank of Korea, Tong Yang Merchant
Bank, First Merchant Banking Corporation, Land Bank of the Philippines, and Westmont Bank (Banks) against
Domsat Holdings, Inc. and the GSIS. Said case stemmed from a Loan Agreement, whereby the said banks agreed
to lend United States (U.S.) $11 Million to Domsat for the purpose of financing the lease and/or purchase of a
Gorizon Satellite from the International Organization of Space Communications (Intersputnik).Domsat
obtained a surety bond from GSIS to secure the payment of the loan from the Banks. When Domsat failed to pay
the loan, GSIS refused to comply with its obligation reasoning that Domsat, with Westmont Bank as the conduit,
transferred the U.S. $11 Million loan proceeds from the Industrial Bank of Korea to Citibank New York account
of Westmont Bank and from there to the Binondo Branch of Westmont Bank. In the course of the hearing, GSIS
requested for the issuance of a subpoena duces tecum to the custodian of records of Westmont Bank. A motion
to quash was filed by the said banks on the ground that request for the documents will violate the Law on
Secrecy of Bank Deposits. RTC denied the motion to quash. However, Court of Appeals declared that Domsat’s
deposit in Westmont Bank is covered by Republic Act No. 6426 or the Bank Secrecy Law. GSIS insists that
Domsat’s deposit with Westmont Bank can be examined based on Republic Act No. 1405 or the "Law on Secrecy
of Bank Deposits," which allows the disclosure of bank deposits in cases where the money deposited is the
subject matter of the litigation.

Issue:

Whether the US$11,000,000.00 deposit in the account of respondent Domsat in Westmont Bank is
covered by the secrecy of bank deposit.

Ruling:

Yes.Presidential Decree No. 1246, provides, Section 8. Secrecy of Foreign Currency Deposits. States
that All foreign currency deposits authorized under this Act, as amended by Presidential Decree No. 1035, as
well as foreign currency deposits authorized under Presidential Decree No. 1034, are hereby declared as and
considered of an absolutely confidential nature and, except upon the written permission of the depositor, in no
instance shall foreign currency deposits be examined, inquired or looked into by any person, government
official, bureau or office whether judicial or administrative or legislative or any other entity whether public or
private.

Applying the said provision, absent the written permission from Domsat, Westmont Bank cannot be
legally compelled to disclose the bank deposits of Domsat, otherwise, it might expose itself to criminal liability
under the same act.

Anti-Money Laundering Act

Unlawful Activities or Predicate Crimes

REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEYLAUNDERING COUNCIL VS.

GLASGOW CREDIT ANDCOLLECTION SERVICES, INC. and CITYSTATE SAVINGS BANK, INC.
G.R. No. 170281, January 18, 2008, CORONA, J.

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.

Facts:

Republic of the Philippines filed a complaint for civil forfeiture of assets with the RTC of Manila against
the bank deposits maintained by GLASGOW in CSBI pursuant to RA 9160 or the Anti-Money Laundering Act of
2001. Meanwhile, summons to GLASGOW was returned “unserved” as it could no longer be found at its last
known address.Trial court archived the case for failure of the Republic to serve alias summons. GLASGOW’s
motion to dismiss by way of special appearance alleging that the complaint was premature and stated no cause
of action.

Issue:

Whether a criminal conviction is necessary for the institution of a civil forfeiture proceeding.

Ruling:

NO.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.

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

(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.
______________________________________________________________________________________________________________________________

______________________________________________________________________________________________________________________________

RET. LT. GEN. JACINTO C. LIGOT, ERLINDA Y. LIGOT, PAULO Y. LIGOT, RIZA Y. LIGOT, and MIGUEL Y.
LIGOT, v. REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEY LAUNDERING COUNCIL
G.R. No. 176944, March 6, 2013, BRION, J.

Based on Section 10 of R.A 9160, 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.

Facts:

Republic of the Philippines, 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 Ret. Lt. Gen Ligot, pursuant to Anti-Money Laundering Act of 2001based on the February
1, 2005 letter of the Office of the Ombudsman for possible violation ofAnti-Graft and Corrupt Practices Act.
AMLC issued Resolution No. 52, Series of 2005, directing 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 and the appellate court
granted the application ruling that probable cause existed that an unlawful activity and/or money laundering
offense had been committed by Lt. Gen. Ligot and his family, and that the properties sought to be frozen are
related to the unlawful activity or money laundering offense. Ligots filed a motion to lift the extended freeze
order, principally arguing that it deprived them of their property without due process and it also punished
them before their guilt could be proven.
Issue:

Whether the freeze order deprived them of their property and due process since it was issued even
before their guilt was proven.

Ruling:

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

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.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.