Pdic Amla

I. PDIC v.
COA
II. PHILIPPINE DEPOSIT INSURANCE CORPORATION, petitioner, vs.
COMMISSION ON AUDIT, respondent.
III. TINGA, J.:
IV. TOPIC: Philippine Deposit Insurance System under Other Banking Laws
V. STATEMENT OF FACTS
The former Finance Secretary, Roberto de Ocampo, the ex-officio Chairman of PDIC Board
received P440,068.62 representing Business Policy Development and Enforcement Expenses
(BPDEE) and Christmas gift checks. The Auditor issued Notice of Disallowance disallowing in
audit the payment of said expenses on the ground that it is in the nature of additional
compensation in violation of the rule on multiple positions proscribed under Sec. 13, Art. VII of
the Philippine Constitution and Sec. 2(9), R.A. 3591.
PDIC sought reconsideration of the subject disallowance but the same was denied in a COA
decision and resolution. It appealed to the Supreme Court En Banc whereby the latter affirmed
with finality said decision and resolution. The Final Order of Adjudication was issued to PDIC.
However, PDIC condoned the amount of P413,866.62 invoking its power to condone under Sec.
8, par. 12 of its charter.
The COA Chairman referred the matter to the Office of the Solicitor General requesting
assistance in the filing of appropriate action agaist the PDIC officials.
In a letter, the PDIC seeks to have its right to appeal reinstated and sought reconsideration of the
action taken alleging that it did not receive any notice of disallowance of the condonation and
that its management was deprived of its right to be heard as it was never provided a copy of the
Resident Auditor's Memorandum.
COA denied PDIC's request. It ruled that PDIC cannot feign violation of its right to due process
because it fully participated in the appeals process. It cannot validly invoke its authority under its
charter because the same had already been affirmed by the Supreme Court. To allow PDIC to
condone the disallowance would be tantamount to sanctioning the indirect violation of the
prohibition against double compensation and the final Supreme Court decision.
VI. STATEMENT OF THE CASE

The PDIC seeks succor from the Court against an alleged infringement of its right to due process
on account of the decision of the COA which denied its request to permit the condonation of an
audit disallowance.
In its Memorandum, PDIC claims that the COA Decision was an arbitrary exercise of the
Commission's discretion because it deprived PDIC of its right to be heard on the validity of the
exercise of its right to condone a settled liability. The COA resident auditor allegedly failed to
furnish it with notice of the memorandum disallowing the condonation, and thereby deprived
PDIC of its right to appeal from the disallowance as provided under the COA Rules.
The OSG, on behalf of the Commission, asserts that PDIC's right to appeal from the
Memorandum dated is already barred by res judicata. Moreover, the resident auditor was not
under obligation to furnish PDIC with a copy of the Memorandum because the same did not
contain any ruling or order but merely informed COA that PDIC condoned the disallowance and
referred the matter to the Commission for appropriate action.
VII. ISSUE: Whether or not the COA committed grave abuse of discretion when it disallowed
the condonation of an audit disallowance.
VIII. RULING:
DISALLOWANCE OF THE AMOUNTS DISBURSED HAD BEEN AFFIRMED WITH
FINALITY
Being a final and executory judgment in the case of PDIC v. COA, there was nothing left to be
done but to execute the decision in accordance with its terms.
Under Rule XII of the COA Rules, execution shall issue upon a decision that finally disposes of
the case. The auditor is tasked to direct the persons liable to pay or refund the amount
disallowed, failing which, an auditor's order shall be issued directing the cashier, treasurer or
disbursing officer to withhold the payment of any money due such persons. The final order of
adjudication thus functions as the writ of execution in audit proceedings.
The Memorandum of COA Supervising Auditor Paz came in the heels of the PDIC Resolution
and referred the condonation to COA's Legal and Administration Office for appropriate action.
The COA Chairman ultimately referred the matter to the OSG for the filing of the appropriate
suit against responsible PDIC officials in accordance with the COA Rules. Such action taken by
the COA was merely an execution of the Court's final decision upholding the audit disallowance.
PDIC HAS NO RIGHT TO APPEAL THE MEMORANDUM OF THE SUPERVISING

AUDITOR UNDER THE COA RULES
To be subject to appeal, such an order, decision or ruling must contain a disposition of a case. A
memorandum, which does not contain a disposition but merely informs the Commission of the
condonation carried out by PDIC and refers the matter to the Commission for appropriate action,
is not such an order, decision or ruling that may be appealed under Rule V.
More importantly, Rule V cannot be presumed to apply when the question pertains to an incident
of execution of a final and executory judgment. To allow an appeal, as PDIC insists, on the issue
of the propriety of the condonation would also subject the propriety of the audit disallowance to
review.
THE AUDIT DISALLOWANCE IS NOT SUBJECT TO CONDONATION

Following the principle that what is prohibited directly is also prohibited indirectly. The audit
disallowance cannot be circumvented and legitimized by resorting to condonation.
The authority of PDIC to condone applies only to ordinary receivables, penalties and surcharges
and must be submitted to the Commission before it is implemented. PDIC's authority to condone
under its charter is circumscribed by the phrase "to protect the interest of the Corporation." This
authority does not include the power to condone a liability that arises from a violation of law. It
is not in the interest of PDIC to forego audit disallowances as it is neither its mandate nor its task
to perpetuate breaches of law.
PDIC WAS NOT DENIED DUE PROCESS

PDIC fully participated in the proceedings pertaining to the audit disallowance up until the same
was finally upheld by this Court. It was also given sufficient opportunity to defend the validity of
its exercise of its authority to condone.
In its letter to the COA, PDIC raised the issue of whether it had validly exercised its authority
under its charter to condone the disallowance of the BPDEE paid to Secretary De Ocampo.
The Commission resolved the issue in the negative. The fact that PDIC was heard on the issue of
the validity of the condonation already suffices. Denial of due process is the total lack of
opportunity to be heard. Such a situation does not obtain in this case.
IX. DISPOSITIVE PORTION

WHEREFORE, the petition is DISMISSED. No pronouncement as to costs.
X. PREPARED BY:
PERALTA, STEPHANIE T.
3A
PDIC vs. PCRB
PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC), Petitioner,

vs.
PHILIPPINE COUNTRYSIDE RURAL BANK, INC., RURAL BANK OF CARMEN
(CEBU), INC., BANK OF EAST ASIA (MINGLANILLA, CEBU), INC., and PILIPINO
RURAL BANK (CEBU), INC., Respondents.
G.R. No. 176438, January 24, 2011, MENDOZA, J.:
Statement of Facts:
The Board of Directors of the PDIC (PDIC Board) adopted a resolution which approved the
conduct of an investigation, in accordance with Section 9(b-1) of Republic Act (R.A.) No. 3591,
as amended, on the basis of the Reports of Examination of the Bangko Sentral ng
Pilipinas (BSP) on ten (10) banks, four (4) of which are respondents in this petition for review.
Another resolution was adopted, this time approving the conduct of an investigation on PCRBI
based on a Complaint-Affidavit filed by a corporate depositor, the Philippine School of
Entrepreneurship and Management (PSEMI) through its president, Jacinto L. Jamero.
According to PDIC, in the course of its investigation, PCRBI was found to have granted loans to
certain individuals, which were settled by way of dacion of properties. These properties,
however, had already been previously foreclosed and consolidated under the names of PRBI,
BEAI and RBCI.
The investigation was sought because the Banks were found to be among the ten (10) banks
collectively known as "Legacy Banks." The Reports of General and Special Examinations of the
BSP as of June 30, 2004, disclosed, among others, that the Legacy Banks were commonly owned
and/or controlled by Legacy Plans Inc. (now Legacy Consolidated Plans, Inc.), and Celso
Gancayco delos Angles, Jr. and his family.
Subsequently, PRBI and BEAI refused entry to their bank premises and access to their records
and documents by the PDIC Investigation Team, upon advice of their respective counsels.
On June 16 and 17, 2005, Atty. Victoria G. Noel (Atty. Noel) of the Tiongson & Antenor Cruz
Law Office sent letters to the PDIC16 informing it of her legal advice to PCRBI and BEAI not to
submit to PDIC investigation on the ground that its investigatory power pursuant to Section 9(b-
1) of R.A. No. 3591, as amended (An Act Establishing The Philippine Deposit Insurance
Corporation, Defining Its Powers And Duties And For Other Purposes), cannot be differentiated
from the examination powers accorded to PDIC under Section 8, paragraph 8 of the same law,
under which, prior approval from the Monetary Board is required.
PDIC General Counsel Romeo M. Mendoza sent a reply to Atty. Noel stating that "PDIC’s
investigation power, as distinguished from the examination power of the PDIC under Section 8
of the same law, does not need prior approval of the Monetary Board."17 PDIC then urged PRBI
and BEAI "not to impede the conduct of PDIC’s investigation" as the same "constitutes a
violation of the PDIC Charter for which PRBI and BEAI may be held criminally and/or
administratively liable."
Simultaneously, the Banks wrote to the Monetary Board requesting a clarification on the
parameters of PDIC’s power of investigation/examination over the Banks and for an issuance of
a directive to PDIC not to pursue the investigations pending the requested clarification.
PRBI and BEAI again received letters from PDIC, dated June 24, 2005, which appeared to be
final demands on them to allow its investigation. PRBI and BEAI replied that letters of
clarification had been sent to PDIC and the Monetary Board. Pending action on such requests,
PDIC was requested to refrain from proceeding with the investigation.
Notwithstanding, on July 11, 2005, the Banks received a letter, dated July 8, 2005, from the
PDIC General Counsel reiterating its position that prior Monetary Board approval was not a pre-
requisite to PDIC’s exercise of its investigative power.
Statement of the Case:
The Banks filed a Petition for Declaratory Relief with a Prayer for the Issuance of a TRO and/or
Writ of Preliminary Injunction (RTC Petition) before the Regional Trial Court of Makati
In the RTC Petition, the Banks prayed for a judgment interpreting Section 9(b-1) of the PDIC
Charter, as amended, to require prior Monetary Board approval before PDIC could exercise its
investigation/examination power over the Banks.
PDIC filed a motion to dismiss alleging that the RTC had no jurisdiction over the said petition
since a breach had already been committed by the Banks when they received the notices of
investigation, and because PDIC need not secure prior Monetary Board approval since
"examination" and "investigation" are two different terms.
Later, the Banks withdrew their application for a temporary restraining order (TRO) reasoning
that lower courts cannot issue injunctions against PDIC. Thus, the Banks instituted a petition for
injunction with application for TRO and/or Preliminary Injunction (CA-Manila petition) before
the Court of Appeals-Manila (CA-Manila).
Even before the CA-Manila could rule on the application for a TRO and/or writ of preliminary
injunction, the RTC-Makati dismissed the petition on the ground that there already existed a
breach of law that isolated the case from the jurisdiction of the trial court.
The Banks filed a motion for reconsideration but it was denied by the RTC for lack of merit. On
February 10, 2006, the Banks filed a notice of appeal31 which they later withdrew on February
28, 2006.
In view of the dismissal of the RTC-Makati petition, the CA-Manila dismissed the petition for
injunction for being moot and academic.
the Banks filed their Petition for Injunction with Prayer for Preliminary Injunction (CA-Cebu
Petition) with the CA-Cebu (CA-Cebu).
On March 15, 2006, the CA-Cebu issued a resolution granting the Bank’s application for a TRO.
This enjoined the PDIC, its representatives or agents or any other persons or agency assisting
them or acting for and in their behalf from conducting examinations/investigations on the Banks’
head and branch offices without securing the requisite approval from the Monetary Board of
BSP.
During the pendency of the CA-Cebu petition, PDIC filed with this Court a Petition for
Certiorari, Prohibition and Mandamus with Prayer for Issuance of Temporary Restraining
Order and/or Writ of Preliminary Injunction under Rule 65 docketed as G.R. No. 173370. It
alleged that the CA-Cebu committed grave abuse of discretion amounting to lack or excess of
jurisdiction in taking cognizance of the Banks’ petition, and in issuing a TRO and a writ of
preliminary injunction.
On July 31, 2006, this Court issued a resolution dismissing the petition for certiorari. It reasoned
that the petition is premature since no motion for reconsideration of the questioned resolution of
the Court of Appeals was filed prior to the availment of this special civil action and there are no
sufficient allegations to bring the case within the recognized exceptions to this rule.
[A]fter undergoing a series of amendments, the controlling law with respect to PDIC’s power to
conduct examination of banks is-prior approval of the Monetary Board is a condition sine qua
non for PDIC to exercise its power of examination. To rule otherwise would disregard the
amendatory law of the PDIC’s charter.
The Court is not also swayed by the contention of respondent that what it seeks to conduct is an
investigation and not an examination of petitioners’ transactions, hence prior approval of the
Monetary Board is a mere surplusage.
The ordinary definition of the words "examination" and "investigation" would lead one to
conclude that both pertain to the same thing and there seems to be no fine line differentiating one
from the other
In the realm of the PDIC rules, specifically under Section 3 of PDIC Regulatory Issuance No.
2205-0242"investigation" is defined as: Investigation shall refer to fact-
finding examination, study, inquiry, for determining whether the allegations in a complaint or
findings in a final report of examination may properly be the subject of an administrative,
criminal or civil action.
From the foregoing definition alone, it can be easily deduced that investigation and examination
are synonymous terms. Simply stated, investigation encompasses a fact-finding examination.
Thus, it is inconsistent with the rules if respondent PDIC be (sic) allowed to conduct an
investigation without the approval of the Monetary Board.
With the foregoing premises, this Court rules that a prior approval from the Monetary Board is
necessary before respondent PDIC can proceed with its investigations on petitioners-banks.
PDIC moved for reconsideration but it was denied in a resolution dated January 25, 2007.
Hence, this petition.
Issues:
1.) Whether or not prior approval of the monetary board is necessary to conduct
investigation
2.) Whether or not there is forum shopping
Held:
1.) NO.
PDIC is of the position that in order for it to exercise its power of investigation, the law requires
that:
(a) The investigation is based on a complaint of a depositor or any other government

agency, or on the report of examination of the Bangko Sentral ng Pilipinas (BSP) and/or
PDIC; and,
(b) The complaint alleges, or the BSP and/or PDIC Report of Examination contains
adverse findings of, fraud, irregularities or anomalies committed by the Bank and/or its
directors, officers, employees or agents; and,
(c) The investigation is upon the authority of the PDIC Board of Directors.
It argues that when it commenced its investigation on the Banks, all of the aforementioned
requirements were met. PDIC stresses that its power of examination is different from its power
of investigation, in such that the former requires prior approval of the Monetary Board while the
latter requires merely the approval of the PDIC Board.
It further claims that the power of examination cannot be exercised within twelve (12) months
from the last examination conducted, whereas the power of investigation is without limitation as
to the frequency of its conduct. It states that the purpose of the PDIC’s power of examination is
merely to look into the condition of the bank, whereas the power of investigation aims to address
fraud, irregularities and anomalies based on complaints from depositors and other government
agencies or upon reports of examinations conducted by the PDIC itself or by the BSP.67
The Banks, on the other hand, are of the opinion that a holistic reading of the PDIC charter
shows that petitioner’s power of examination is synonymous with its power of investigation.
the Court is of the view that the Monetary Board approval is not required for PDIC to conduct an
investigation on the Banks.
The confusion can be attributed to the fact that although "investigation" and "examination" are
two separate and distinct procedures under the charter of the PDIC and the BSP, the words seem
to be used loosely and interchangeably.
Under its charter, the PDIC is empowered to conduct examination of banks with prior approval
of the Monetary Board:
To conduct examination of banks with prior approval of the Monetary Board: Provided,
That no examination can be conducted within twelve (12) months from the
last examination date: Provided, however, That the Corporation may, in coordination
with the Bangko Sentral, conduct a special examination as the Board of Directors, by an
affirmative vote of a majority of all its members, if there is a threatened or impending
closure of a bank;
As stated above, the charter empowers the PDIC to conduct an investigation of a bank and to
appoint examiners who shall have the power to examine any insured bank. Such investigators are
authorized to conduct investigations on frauds, irregularities and anomalies committed in
banks, based on an examination conducted by the PDIC and the BSP or on complaints from
depositors or from other government agencies.
The distinction between the power to investigate and the power to examine is emphasized by the
existence of two separate sets of rules governing the procedure in the conduct of investigation
and examination.
In 2009, to clarify procedural matters, PDIC released RI No. 2009-05 or the Rules and
Regulations on Examination of Banks. Section 2 thereof differentiated between the two types of
examination as follows:
Section 2. Types of Examination
a. Regular Examination - An examination conducted independently or jointly with the

BSP. It requires the prior approval of the PDIC Board of Directors and the Monetary
Board (MB). It may be conducted only after an interval of at least twelve (12) months
from the closing date of the last Regular Examination.
b. Special Examination – An examination conducted at any time in coordination with the

BSP, by an affirmative vote of a majority of all the members of the PDIC Board of
Directors, without need of prior MB approval, if there is a threatened or impending bank
closure as determined by the PDIC Board of Directors. [Underscoring supplied]
Section 3 of RI No. 2009-05 provides for the general scope of the PDIC examination:
Section 3. Scope of Examination
The examination shall include, but need not be limited to, the following:
a. Determination of the bank’s solvency and liquidity position;
b. Evaluation of asset quality as well as determination of sufficiency of valuation reserves

on loans and other risk assets;
c. Review of all aspects of bank operations;
d. Assessment of risk management system, including the evaluation of the effectiveness

of the bank management’s oversight functions, policies, procedures, internal control and
audit;
e. Appraisal of overall management of the bank;
f. Review of compliance with applicable banking laws, and rules and regulations,
including PDIC issuances;
g. Follow-through of specific exceptions/ violations noted during a previous examination;

and
h. Any other activity relevant to the above.
Rule 2, Section 1 of PDIC RI No. 2005-02 or the PDIC Rules on Fact-Finding Investigation of
Fraud, Irregularities and Anomalies Committed in Banks provides for the scope of fact-finding
investigations as follows:
SECTION 1. Scope of the Investigation.
Fact-finding Investigations shall be limited to the particular acts or omissions subject of a

complaint or a Final Report of Examination.
From the above-cited provisions, it is clear that the process of examination covers a wider scope
than that of investigation.
Examination involves an evaluation of the current status of a bank and determines its compliance
with the set standards regarding solvency, liquidity, asset valuation, operations, systems,
management, and compliance with banking laws, rules and regulations.
Investigation, on the other hand, is conducted based on specific findings of certain acts or
omissions which are subject of a complaint or a Final Report of Examination.
Clearly, investigation does not involve a general evaluation of the status of a bank.1âwphi1 An
investigation zeroes in on specific acts and omissions uncovered via an examination, or which
are cited in a complaint.
An examination entails a review of essentially all the functions and facets of a bank and its
operation. It necessitates poring through voluminous documents, and requires a detailed
evaluation thereof. Such a process then involves an intrusion into a bank’s records.
In contrast, although it also involves a detailed evaluation, an investigation centers on specific

acts of omissions and, thus, requires a less invasive assessment.
The practical justification for not requiring the Monetary Board approval to conduct an
investigation of banks is the administrative hurdles and paperwork it entails, and the
correspondent time to complete those additional steps or requirements. As in other types of
investigation, time is always of essence, and it is prudent to expedite the proceedings if an
accurate conclusion is to be arrived at, as an investigation is only as precise as the evidence on
which it is based. The promptness with which such evidence is gathered is always of utmost
importance because evidence, documentary evidence in particular, is remarkably fungible. A
PDIC investigation is conducted to "determine[e] whether the allegations in a complaint or
findings in a final report of examination may properly be the subject of an administrative,
criminal or civil action."76 In other words, an investigation is based on reports of examination
and an examination is conducted with prior Monetary Board approval. Therefore, it would be
unnecessary to secure a separate approval for the conduct of an investigation. Such would merely
prolong the process and provide unscrupulous individuals the opportunity to cover their tracks.
Indeed, while in a literary sense, the two terms may be used interchangeably, under the PDIC
Charter, examination and investigation refer to two different processes. To reiterate, an
examination of banks requires the prior consent of the Monetary Board, whereas an investigation
based on an examination report, does not.
2.) NO.
Forum shopping is defined as an act of a party, against whom an adverse judgment or order has
been rendered in one forum, of seeking and possibly getting a favorable opinion in another
forum, other than by appeal or special civil action for certiorari. It may also be the institution of
two or more actions or proceedings grounded on the same cause on the supposition that one or
the other court would make a favorable disposition. There is forum shopping where the elements
of litis pendentiaare present, namely: (a) there is identity of parties, or at least such parties as
represent the same interest in both actions; (b) there is identity of rights asserted and relief
prayed for, the relief being founded on the same set of facts; and (c) the identity of the two
preceding particulars is such that any judgment rendered in the pending case, regardless of which
party is successful, would amount to res judicata in the other. It is expressly prohibited by this
Court because it trifles with and abuses court processes, degrades the administration of justice,
and congests court dockets. A willful and deliberate violation of the rule against forum shopping
is a ground for summary dismissal of the case, and may also constitute direct contempt.
The first element is clearly present as between the RTC-Makati petition and the CA-Cebu
petition. Both involved the Banks on one hand, and the PDIC on the other.
The second and third elements of litis pendentia, however, are patently wanting. The rights
asserted and reliefs prayed for were different, though founded on the same set of facts. The RTC-
Makati Petition was one for declaratory relief while the CA-Manila Petition was one for
injunction with a prayer for preliminary injunction.
As can be gleaned from the above-cited portions of the CA-Manila and CA-Cebu petitions, the
petitions seek different reliefs. Therefore, as between and among the RTC Makati, and the CA-
Manila and CA-Cebu petitions, there is no forum shopping.
In G.R. 173370, a petition for certiorari under Rule 65 of the Rules of Court, PDIC alleged that
the CA-Cebu committed grave abuse of discretion amounting to lack or excess of jurisdiction in
taking cognizance of the Bank’s petition, and in issuing a TRO and a writ of preliminary
injunction.64
In the case at bench, a petition for review under Rule 45, PDIC’s core contention is that the CA-
Cebu erred in finding that prior approval of the Monetary Board of the BSP is necessary before it
may conduct an investigation of the Banks.
Clearly then, the two petitions were of different nature raising different issues.
G.R. 173370 challenged the CA-Cebu’s having taken cognizance of the Bank’s petition and
interlocutory orders on the issuance of a TRO and a writ of preliminary injunction. This case,
however, strikes at the core of the final decision on the merits of the CA-Cebu, and not merely
the interlocutory orders. While both G.R. 173370 and the present case may have been anchored
on the same set of facts, that is, the refusal of the Banks to allow PDIC to conduct an
investigation without the prior consent of the Monetary Board, the issues raised in the two
petitions are not identical. Moreover, the disposal of the first case does not amount to res
judicata in this case.
WHEREFORE, the petition is GRANTED. The Decision and Resolution of the Court of
Appeals in CA G.R. CEB SP. No. 01550, dated September 18, 2006 and January 25, 2007
are REVERSED and SET ASIDE.
SO ORDERED.
Prepared by: Ej Corpuz

I. Short Title: PDIC vs. CA, Aquero et. al
II. Full Title: PHILIPPINE DEPOSIT INSURANCE CORPORATION, petitioner, vs.

COURT OF APPEALS, ROSA AQUERO, GERARD YU, ERIC YU, MINA YU,
ELIZABETH NGKAION, MERLY CUESCANO, LETICIA TAN, FELY RUMBANA,
LORNA ACUB, represented by their Attorney-in-Fact, JOHN FRANCIS COTAACO,
respondents.
III. Ponente: KAPUNAN, J.
IV. Topic: Other Banking Laws - Philippine Deposit Insurance System
Aquero et. al., plaintiffs-appellees, invested in money market placements with the
Premiere Financing Corporation (PFC) in the sum of P10,000.00 each for which they were
issued by the PFC corresponding promissory notes and checks. John Francis Cotaoco, for and in
behalf of plaintiffs-appellees, went to the PFC to encash the promissory notes and checks, but the
PFC referred him to the Regent Saving Bank (RSB). Instead of paying the promissory notes and
checks, the RSB, upon agreement of Cotaoco, issued the subject 13 certificates of time deposit,
inclusive, each stating, among others, that the same certifies that the bearer thereof has deposited
with the RSB the sum of P10,000.00; that the certificate shall bear 14% interest per annum; that
the certificate is insured up to P15,000.00 with the PDIC.
On the maturity date, Cotaoco went to the RSB to encash the said certificates. Thereat,
RSB Executive Vice President requested Cotaoco for a deferment or an extension of a few days
to enable the RSB to raise the amount to pay for the same to which Cotaoco agreed. Despite said
extension, the RSB still failed to pay the value of the certificates. Instead, RSB advised Cotaoco
to file a claim with the PDIC.
Meanwhile, the Monetary Board of the Central Bank issued a resolution suspending the
operations of the RSB. Eventually, the records of RSB were secured and its deposit liabilities
were eventually determined. Another resolution was then issued by the Monetary Board
liquidating the RSB. Subsequently, a masterlist or inventory of the RSB assets and liabilities was
prepared. However, the certificates of time deposit of plaintiffs-appellees were not included in
the list on the ground that the certificates were not funded by the PFC or duly recorded as
liabilities of RSB.
VI. STATEMENT OF CASE
Plaintiffs-appellees filed with the PDIC their respective claims for the amount of the
certificates and others who have similar claims on their certificates of time deposit with the RSB,
likewise filed their claims with the PDIC. To their dismay, PDIC refused the aforesaid claims on
the ground that the Traders Royal Bank Check No. 299255 dated September 22, 1983 for the
amount of P125,846.07 (Exh. B) issued by PFC for the aforementioned certificates was returned
by the drawee bank for having been drawn against insufficient funds; and said check was not
replaced by the PFC, resulting in the cancellation of the certificates as indebtedness or liabilities
of RSB.
Consequently, Aquero et. al., filed an action for collection against PDIC, RSB and the
Central Bank. Trial court rendered its decision ordering the defendants therein to pay plaintiffs,
jointly and severally, the amount corresponding to the latter’s certificates of time deposit.
Both PDIC and RSB appealed. The Central Bank, on the other hand, filed a petition for
certiorari, prohibition and mandamus before the CA praying that the writ of execution issued by
the trial court against it be set aside. CA granted Central Bank’s petition but dismissed the
appeals of PDIC and RSB. Hence, this petition.
VII. ISSUES
1. WON CA ERRED IN HOLDING THAT THE SUBJECT CTDS ARE NEGOTIABLE

INSTRUMENTS
2. WON CA ERRED INHOLDING THAT THE CTDS WERE ACQUIRED FOR
VALUE AND CONSIDERATION
3. WON CA ERRED WHEN IT HELD THAT BECAUSE THE CTDS STATE THAT
THESE WERE INSURED, PETITIONER SHOULD BE HELD LIABLE FOR THE
SAME.
VIII. RULING
1. CA concluded that the subject CTDs are negotiable. Petitioner, on the other hand,
contends that the CTDs are non-negotiable since they do not contain an unconditional
promise or order to pay a sum in money are they made payable to order or bearer, as
required by Section 1 of the Negotiable Instruments Law. Whether the CTDs in question
are negotiable or not is, however, immaterial in the present case. The Philippine Deposit
Insurance Corporation was created by law and, as such, is governed primarily by the
provisions of the special law creating it. The liability of the PDIC for insured deposits
therefore is statutory and, under Republic Act No. 3591,as amended, such liability rests
upon the existence of deposits with the insured bank, not on the negotiability or non-
negotiability of the certificates evidencing these deposits.
2. YES. In order that a claim for deposit insurance with the PDIC may prosper, the law
requires that a corresponding deposit be placed in the insured bank. This is implicit from
a reading of the following provisions of R.A. 3519 that, whenever an insured bank shall
have been closed on account of insolvency, payment of the insured deposits in such bank
shall be made by the Corporation as soon as possible.
A deposit as defined in Section 3(f) of R.A. No. 3591, may be constituted only if
money or the equivalent of money is received by a bank:
SEC. 3. As used in this Act-
(f) The term deposit means the unpaid balance of money or its equivalent
received by a bank in the usual course of business and for which it has given or
is obliged to give credit to a commercial, checking, savings, time or thrift
account or which is evidence by passbook, check and/or certificate of deposit
printed or issued in accordance with Central Bank rules and regulations and
other applicable laws, together with such other obligations of a bank which,
consistent with banking usage and practices, the Board of Directors shall
determine and prescribe by regulations to be deposit liabilities of the Bank xxx.
Such finding totally ignores the evidence presented by defendants. Cardola de Jesus,
RSB Deputy Liquidator, testified that RSB received three (3) checks in consideration for
the issuance of several CTDs, including the ones in dispute. In consideration of the third
check, private respondents received thirteen (13) certificates of deposit with a value of
P10,000.00 each or a total of P130,000.00. The first two checks made good in the
clearing while the third was returned for being drawn against insufficient funds. The
check in question described in RSBs offer of evidence as Traders Royal Bank Check
issued by Premiere Financing Corporation. At the back of said check are the words Refer
to Drawer, indicating that the drawee bank (Traders Royal Bank) refused to pay the
value represented by said check. By reason of the checks dishonor, RSB cancelled the
corresponding as evidenced by an RSB ticket. These pieces of evidence convincingly
show that the subject CTDs were indeed issued without RSB receiving any money
therefor. No deposit, as defined in Section 3 (f) of R.A. No. 3591, therefore came into
existence. Accordingly, petitioner PDIC cannot be held liable for value of the certificates
of time deposit held by private respondents.
3. YES. We disagree with respondent courts rationale. The fact that the certificates state
that the certificates are insured by PDIC does not ipso facto make the latter liable for the
same should the contingency insured against arise. As stated earlier, the deposit liability
of PDIC is determined by the provisions of R.A. No. 3519, and statements in the
certificates that the same are insured by PDIC are not binding upon the latter
ACCORDINGLY, the instant petition is hereby GRANTED and the decision of the Court of
Appeals REVERSED. Petitioner is absolved from any liability to private respondents.
SO ORDERED.
X. Prepared by: Butalid, Claudelle B.

I. PDIC vs CA and Abad
II. PHILIPPINE DEPOSIT INSURANCE CORPORATION VS. THE HONORABLE
COURT OF APPEALS AND JOSE ABAD, LEONOR ABAD, SABINA ABAD,
JOSEPHINE JOSIE BEATA ABAD-ORLINA, CECILIA ABAD, PIO ABAD, DOMINIC
ABAD, TEODORA ABAD
III. CARPIO-MORALES, J.
IV. PHILIPPINE DEPOSIT INSURANCE SYSTEM

The respondents had, individually or jointly with each other, 71 certificates of time
deposits denominated as Golden Time Deposits (GTD) with an aggregate face value of
P1,115,889.96 at the Manila Banking Corporation (MBC). Subsequently, the Monetary Board
(MB) of the Central Bank of the Philippines, now Bangko Sentral ng Pilipinas, issued Resolution
505 prohibiting MBC to do business in the Philippines, and placing its assets and affairs under
receivership. The Resolution, however, was not served on MBC until Tuesday the following
week, or on May 26, 1987, when the designated Receiver took over. Respondent Jose Abad went
to MBC for the purpose of pre-terminating the 71 aforementioned GTDs and re-depositing the
fund represented thereby into 28 new GTDs in denominations of P40,000.00 or less under the
names of herein respondents individually or jointly with each other. Of the 28 new GTDs, Jose
Abad pre-terminated 8 and withdrew the value thereof in the total amount of P320,000.00.
Respondents thereafter filed their claims with the PDIC for the payment of the remaining
20 insured GTDs. PDIC paid respondents the value of 3 claims in the total amount of
P120,000.00. PDIC, however, withheld payment of the 17 remaining claims after Washington
Solidum, Deputy Receiver of MBC-Iloilo, submitted a report to the PDIC that there was massive
conversion and substitution of trust and deposit accounts on May 25, 1987 at MBC-Iloilo.
Because of the report, PDIC entertained serious reservation in recognizing respondents GTDs as
deposit liabilities of MBC-Iloilo. Afterwards, it filed a petition for declaratory relief against
respondents with the Regional Trial Court (RTC) of Iloilo City, for a judicial declaration
determination of the insurability of respondents GTDs at MBC-Iloilo. The respondents set up a
counterclaim against PDIC whereby they asked for payment of their insured deposits.
The RTC declared the 20 GTDs of respondents to be deposit liabilities of MBC, hence,
are liabilities of PDIC as statutory insurer. It ordered PDIC to pay the Abads the value of said 20
GTDs less the value of 3 GTDs it paid. On appeal, the Court of Appeals affirmed the trial court’s
decision except as to the award of legal interest which it deleted.
PDIC (hereafter petitioner) contends it is liable only for deposits received by a bank in
the usual course of business. Being of the firm conviction that, as the reported May 25, 1987
bank transactions were so massive, hence, irregular, petitioner essentially seeks a judicial
declaration that such transactions were not made in the usual course of business and, therefore, it
cannot be made liable for deposits subject thereof. Petitioner points that as MBC was prohibited
from doing further business by MB Resolution 505 as of May 22, 1987, all transactions
subsequent to such date were not done in the usual course of business. Petitioner further posits
that there was no consideration for the 20 GTDs subject of respondents claim. In support of this
submission, it states that prior to March 25, 1987, when the 20 GTDs were made, MBC had been
experiencing liquidity problems, e.g., at the start of banking operations on March 25, 1987, it had
only P2,841,711.90 cash on hand and at the end of the day it was left with P27,805.81 consisting
mostly of mutilated bills and coins. Hence, even if respondents had wanted to convert the face
amounts of the GTDs to cash, MBC could not have complied with it. Petitioner concludes that
since no cash was given by respondents and none was received by MBC when the new GTDs
were transacted, there was no consideration therefor and, thus, they were not validly transacted
in the usual course of business and no liability for deposit insurance was created.
VII. ISSUE
1. Whether or not PDIC is liable to pay the respondents claim for payment of insured
deposits.
2. Whether or not only relief that should have been granted by the trial court is a
declaration of the parties rights and duties.
3. Whether or not the respondents are in bad faith.
VIII. RULING
I. Yes, Petitioners position does not persuade. While the MB issued Resolution 505 on May
22, 1987, a copy thereof was served on MBC only on May 26, 1987. MBC and its clients could
be given the benefit of the doubt that they were not aware that the MB resolution had been
passed, given the necessity of confidentiality of placing a banking institution under receivership.
The evident implication of the law, therefore, is that the appointment of a receiver may be made
by the Monetary Board without notice and hearing but its action is subject to judicial inquiry to
insure the protection of the banking institution. Stated otherwise, due process does not
necessarily require a prior hearing; a hearing or an opportunity to be heard may be subsequent to
the closure. Mere conjectures that MBC had actual knowledge of its impending closure do not
suffice. The MB resolution could not thus have nullified respondents transactions which
occurred prior to May 26, 1987.
That no actual money in bills and/or coins was handed by respondents to MBC does not
mean that the transactions on the new GTDs did not involve money and that there was no
consideration therefor. For the outstanding balance of respondents 71 GTDs in MBC prior to
May 26, 1987 in the amount of P1,115,889.15 as earlier mentioned was re-deposited by
respondents under 28 new GTDs. Admittedly, MBC had P2,841,711.90 cash on hand more than
double the outstanding balance of respondents 71 GTDs at the start of the banking day on May
25, 1987. Since respondent Jose Abad was at MBC soon after it opened at 9:00 a.m. of that day,
petitioner should not presume that MBC had no cash to cover the new GTDs of respondents and
conclude that there was no consideration for said GTDs.
Petitioner having failed to overcome the presumption that the ordinary course of business
was followed, this Court finds that the 28 new GTDs were deposited in the usual course of
business of MBC.
II. No, petitioner posits that the trial court erred in ordering it to pay the balance of the
deposit insurance to respondents, maintaining that the instant petition stemmed from a petition
for declaratory relief which does not essentially entail an executory process, and the only relief
that should have been granted by the trial court is a declaration of the parties rights and duties.
As such, petitioner continues, no order of payment may arise from the case as this is beyond the
office of declaratory relief proceedings. Without doubt, a petition for declaratory relief does not
essentially entail an executory process. There is nothing in its nature, however, that prohibits a
counterclaim from being set-up in the same action.
III. No, petitioner faults respondents for availing of the statutory limits of the PDIC law,
presupposing that, based on the conduct of respondent Jose Abad on March 25, 1987, he and his
co-respondents somehow knew of the impending closure of MBC. Petitioner ascribes bad faith to
respondent Jose Abad in transacting the questioned deposits, and seeks to disqualify him from
availing the benefits under the law. Good faith is presumed. This, petitioner failed to overcome
since it offered mere presumptions as evidence of bad faith.
IX. COMPLETE DISPOSITIVE PORTION
WHEREFORE, the assailed decision of the Court of Appeals is hereby AFFIRMED.

X. Prepared by: Pamela Nicole N. Manalo
I. TAMBUNTING v. BIR
II. H. TAMBUNTING PAWNSHOP, INC. v. COMMISSIONER OF INTERNAL
REVENUE
III. Quisumbing, J.
IV. Topic: Miscellaneous under Other Banking Laws
The case stemmed from a Pre-Assessment Notice issued by the CIR against Tambunting for
deficiency documentary stamp tax (DST) of P50,910. The CIR issued an assessment notice with
demand letters for the payment of the DST and the compromise penalty for taxable year 1997.
Tambunting filed its written protest alleging that it was not subject to DST under Sec. 195 the
NIRC because DSTs were applicable only to pledge contracts and the pawnshop business did not
involve contracts of pledge. Since the CIR did not act upon the protest, Tambunting filed a
petition with the CTA appealing the assessments issued by the CIR.
CTA partially granted the petition. It ordered Tambunting to pay deficiency VAT assessment.
However it found that Tambunting is not subject to the DST.
CA granted the Petition for Partial Review by the CIR. Tambunting was ordered to pay CIR the
deficiency DST assessment, plus 25% surcharge, 20% deficiency interest, and 20% delinquency
interest thereon from May 11, 2001 until fully paid.

This Petition for Review assails the Decision dated June 30, 2005 of the Court of Appeals in CA-
G.R.-SP No. 79116 and its Resolution dated January 10, 2006, denying the motion for
reconsideration. The appellate court had modified the Decision dated March 18, 2003 of the
Court of Tax Appeals.
Tambunting contends that it is the document evidencing a pledge of personal property which is
subject to the DST. A pawn ticket is defined under Sec. 3 of PD No. 114 as “the pawnbroker’s
receipt for a pawn.” Since the document taxable under Sec. 195 must show the existence of a
debt, a pawn ticket which is merely a receipt for a pawn is not subject to DST. It also contends
that the DST is imposed on the documents issued, not the "transactions so had or accomplished."
It insists that the document to be taxed under the transaction contemplated should be the pledge
agreement, if any is issued, not the pawn ticket.
On the other hand, the CIR contends that Sec. 195 of the NIRC provides that a DST shall be
collected on every pledge of personal property as a security for the fulfillment of the contract of
loan. Since the transactions in a pawnshop business partake of the nature of pledge transactions,
then pawn transactions evidenced by pawn tickets, are subject to documentary stamp taxes. It
further argues that the pawn ticket is the pledge contract itself and is subject to documentary
stamp tax.
VII. ISSUE: Whether or not Tambunting is liable for documentary stamp taxes based on the
pawn tickets that it issued?
VIII. RULING:
On the subject of pawn tickets
The pawn ticket is required to contain the same essential information that would be found in a
pledge agreement. Only the nomenclature of the requirements in the pawn ticket is changed to
refer to the specific kind of pledge transactions undertaken by pawnshops.
The property or thing pledged is referred to as the pawn, the creditor (pledgee) is referred to as
the pawnee and the debtor (pledgor) is referred to as the pawner. The pawn ticket being a receipt
for a pawn, it documents the pledge.
A pledge is a real contract, it is necessary in order to constitute the contract of pledge, that the
thing pledged be placed in the possession of the creditor, or of a third person by common
agreement. The issuance of the pawn ticket by the pawnshop means that the thing pledged has
already been placed in its possession and that the pledge has been constituted.
On the subject of documentary stamp tax

The NIRC provides under SEC. 173 that “Upon documents, instruments, loan agreements
and papers, and upon acceptances, assignments, sales and transfers of the obligation, right
or property incident thereto, there shall be levied, collected and paid for, and in respect of the
transaction so hador accomplished, the corresponding documentary stamp taxes prescribed in
the following Sections.”
SEC. 195 of the same law also provides that “On every mortgage or pledge of lands, estate, or
property, real or personal, heritable or movable, whatsoever, where the same shall be made as a
security for the payment of any definite and certain sum of money lent at the time or previously
due and owing or forborne to be paid, being payable, and on any conveyance of land, estate, or
property whatsoever, in trust or to be sold, or otherwise converted into money which shall be and
intended only as security, either by express stipulation or otherwise, there shall be collected a
documentary stamp tax.”
On the question of whether pawnshop transactions evidenced by pawn tickets are subject to
documentary stamp taxes
The question has already been answered in the affirmative in Michel J. Lhuillier Pawnshop, Inc.
v. Commissioner of Internal Revenue:
Sec. 195 of the NIRC imposes a DST on every pledge regardless of whether the same is a
conventional pledge governed by the Civil Code or one that is governed by the provisions of
P.D. No. 114. All pledges are subject to DST, unless there is a law exempting them in clear and
categorical language.'
No law on legal hermeneutics could change the fact that the entries contained in a pawnshop
ticket spell out a contract of pledge and that the exercise of the privilege to conclude such a
contract is taxable under Section 195 of the NIRC.
Even so, we note that the present case was filed with the Supreme Court before September 11,
2006, when the Court resolved for the first time the matter of surcharges and interest for failure
to pay documentary stamp taxes on pledge transactions in Michel J. Lhuillier Pawnshop, Inc. v.
Commissioner of Internal Revenue. Hence, as in the said case, we can still ascribe good faith to
petitioner. Consequently, the imposition of surcharges and interest in the present case must also
be deleted.
IX. WHEREFORE, the petition is PARTLY GRANTED. The Decision dated June 30, 2005 of
the Court of Appeals in CA-G.R.-SP No. 79116 is AFFIRMED with the MODIFICATION that
surcharges and interest imposed on the deficiency documentary stamp tax assessment are
DELETED.
X. PREPARED BY:
PERALTA, STEPHANIE T.
3A
I. Short Title: Sicam vs Jorge
II. Full Title: ROBERTO C. SICAM and AGENCIA de R.C. SICAM, INC., Petitioners, vs.
LULU V. JORGE and CESAR JORGE
III. Ponente: AUSTRIA-MARTINEZ, J.:
IV. Topic: Other Banking Laws- Miscellaneous
V. Statement of Facts
Lulu V. Jorge (respondent Lulu) pawned several pieces of jewelry with Agencia de R. C.
Sicam located at No. 17 Aguirre Ave., BF Homes Paraaque, Metro Manila, to secure a loan in
the total amount of P59,500.00. On October 19, 1987, two armed men entered the pawnshop and
took away whatever cash and jewelry were found inside the pawnshop vault.
Petitioner Sicam sent respondent Lulu a letter dated October 19, 1987 informing her of
the loss of her jewelry due to the robbery incident in the pawnshop. On November 2, 1987,
respondent Lulu then wrote a letter to petitioner Sicam expressing disbelief stating that when the
robbery happened, all jewelry pawned were deposited with Far East Bank near the pawnshop
since it had been the practice that before they could withdraw, advance notice must be given to
the pawnshop so it could withdraw the jewelry from the bank. Respondent Lulu then requested
petitioner Sicam to prepare the pawned jewelry for withdrawal on November 6, 1987 but
petitioner Sicam failed to return the jewelry.
VI. Statement of Case

On September 28, 1988, respondent Lulu joined by her husband, Cesar Jorge, filed a
complaint against petitioner Sicam with the RTC of Makati seeking indemnification for the loss
of pawned jewelry and payment of actual, moral and exemplary damages as well as attorney's
fees.
Petitioner Sicam filed his Answer contending that he is not the real party-in-interest as
the pawnshop was incorporated on April 20, 1987 and known as Agencia de R.C. Sicam, Inc;
that petitioner corporation had exercised due care and diligence in the safekeeping of the articles
pledged with it and could not be made liable for an event that is fortuitous. Respondents
subsequently filed an Amended Complaint to include petitioner corporation.
Thereafter, petitioner Sicam filed a Motion to Dismiss as far as he is concerned

considering that he is not the real party-in-interest. Respondents opposed the same and RTC
denied the motion. After trial on the merits, the RTC dismissed the respondents complaint as
well as petitioners counterclaim. The RTC held that petitioner Sicam could not be made
personally liable for a claim arising out of a corporate transaction since as a consequence of the
separate juridical personality of a corporation, the corporate debt or credit is not the debt or
credit of a stockholder. The RTC further ruled that petitioner corporation could not be held liable
for the loss of the pawned jewelry since it had not been rebutted by respondents that the loss of
the pledged pieces of jewelry in the possession of the corporation was occasioned by armed
robbery; that robbery is a fortuitous event which exempts the victim from liability for the loss;
and that the parties transaction was that of a pledgor and pledgee and under Art. 1174 of the
Civil Code, the pawnshop as a pledgee is not responsible for those events which could not be
foreseen.
Respondents appealed to the CA and the latter reversed. In finding petitioner Sicam liable
together with petitioner corporation, the CA applied the doctrine of piercing the veil of corporate
entity reasoning that respondents were misled into thinking that they were dealing with the
pawnshop owned by petitioner Sicam as all the pawnshop tickets issued to them bear the words
Agencia de R.C. Sicam; and that there was no indication on the pawnshop tickets that it was the
petitioner corporation that owned the pawnshop which explained why respondents had to amend
their complaint impleading petitioner corporation. CA further held that the corresponding
diligence required of a pawnshop is that it should take steps to secure and protect the pledged
items and should take steps to insure itself against the loss of articles which are entrusted to its
custody as it derives earnings from the pawnshop trade which petitioners failed to do; that they
are at least guilty of contributory negligence and should be held liable for the loss of jewelries;
and that robberies and hold-ups are foreseeable risks in that those engaged in the pawnshop
business are expected to foresee. The CA concluded that both petitioners should be jointly and
severally held liable to respondents for the loss of the pawned jewelry.Petitioners motion for
reconsideration was denied. Hence, the instant petition for review
VII. Issues
1. Whether or not CA correctly applied the doctrine of piercing the veil of corporate entity.
2. Whether petitioners are liable for the loss of the pawned articles in their possession.
3. Whether or not petitioners are negligent for not taking steps to insure themselves against loss
of pawned jewelries
VIII. Ruling
1. CA correctly pierced the veil of the corporate fiction and adjudged petitioner Sicam liable
together with petitioner corporation. The rule is that the veil of corporate fiction may be
pierced when made as a shield to perpetrate fraud and/or confuse legitimate issues. The
theory of corporate entity was not meant to promote unfair objectives or otherwise to shield
them. Notably, the evidence on record shows that at the time respondent Lulu pawned her
jewelry, the pawnshop was owned by petitioner Sicam himself. As correctly observed by the
CA, in all the pawnshop receipts issued to respondent Lulu in September 1987, all bear the
words Agencia de R. C. Sicam, notwithstanding that the pawnshop was allegedly
incorporated in April 1987. The receipts issued after such alleged incorporation were still in
the name of Agencia de R. C. Sicam, thus inevitably misleading, or at the very least, creating
the wrong impression to respondents and the public as well, that the pawnshop was owned
solely by petitioner Sicam and not by a corporation.
2. Yes. Petitioners insist that they are not liable since robbery is a fortuitous event and they are
not negligent at all. Fortuitous events by definition are extraordinary events not foreseeable
or avoidable. It is therefore, not enough that the event should not have been foreseen or
anticipated, as is commonly believed but it must be one impossible to foresee or to avoid.
The mere difficulty to foresee the happening is not impossibility to foresee the same.
To constitute a fortuitous event, the following elements must concur: (a) the cause of the
unforeseen and unexpected occurrence or of the failure of the debtor to comply with obligations
must be independent of human will; (b) it must be impossible to foresee the event that constitutes
the caso fortuito or, if it can be foreseen, it must be impossible to avoid; (c) the occurrence must
be such as to render it impossible for the debtor to fulfill obligations in a normal manner; and, (d)
the obligor must be free from any participation in the aggravation of the injury or loss.
The burden of proving that the loss was due to a fortuitous event rests on him who
invokes it. And, in order for a fortuitous event to exempt one from liability, it is necessary that
one has committed no negligence or misconduct that may have occasioned the loss. Petitioners
failed to show that they were free from any negligence by which the loss of the pawned jewelry
may have been occasioned. Robbery per se, just like carnapping, is not a fortuitous event. It does
not foreclose the possibility of negligence on the part of herein petitioners. There was no clear
showing that there was any security guard at all. Or if there was one, that he had sufficient
training in securing a pawnshop. Further, there is no showing that the alleged security guard
exercised all that was necessary to prevent any untoward incident or to ensure that no suspicious
individuals were allowed to enter the premises. In fact, it is even doubtful that there was a
security guard, since it is quite impossible that he would not have noticed that the robbers were
armed with caliber .45 pistols each, which were allegedly poked at the employees. Significantly,
the alleged security guard was not presented at all to corroborate petitioner Sicam's claim; not
one of petitioners' employees who were present during the robbery incident testified in court.
Furthermore, petitioner Sicam's admission that the vault was open at the time of robbery
is clearly a proof of petitioners' failure to observe the care, precaution and vigilance that the
circumstances justly demanded. Petitioner Sicam testified that once the pawnshop was open, the
combination was already off. Considering petitioner Sicam's testimony that the robbery took
place on a Saturday afternoon and the area in BF Homes Paraaque at that time was quiet, there
was more reason for petitioners to have exercised reasonable foresight and diligence in
protecting the pawned jewelries. Instead of taking the precaution to protect them, they let open
the vault, providing no difficulty for the robbers to cart away the pawned articles.
3. We, however, do not agree with the CA when it found petitioners negligent for not taking
steps to insure themselves against loss of the pawned jewelries.
CB Circular No. 764 took effect on October 1, 1980 where the requirement that insurance
against burglary was deleted. Obviously, the Central Bank considered it not feasible to require
insurance of pawned articles against burglary.
The robbery in the pawnshop happened in 1987, and considering the above-quoted
amendment, there is no statutory duty imposed on petitioners to insure the pawned jewelry in
which case it was error for the CA to consider it as a factor in concluding that petitioners were
negligent.
Nevertheless, the preponderance of evidence shows that petitioners failed to exercise the
diligence required of them under the Civil Code. The diligence with which the law requires the
individual at all times to govern his conduct varies with the nature of the situation in which he is
placed and the importance of the act which he is to perform. The robbery in this case happened
in petitioners' pawnshop and they were negligent in not exercising the precautions justly
demanded of a pawnshop.
IX. Dispositive Portion
WHEREFORE, except for the insurance aspect, the Decision of the Court of Appeals dated
March 31, 2003 and its Resolution dated August 8, 2003, are AFFIRMED.
Costs against petitioners.
SO ORDERED
X. Prepared by: Butalid, Claudelle B.
I. PONCE VS CA
II. NELIA G. PONCE and VICENTE C. PONCE vs. THE HONORABLE COURT OF
APPEALS, and JESUSA B. AFABLE
III. MELENCIO-HERRERA, J.
IV. OTHER BANKING LAWS ( REPUBLIC ACT No. 529)
On June 3, 1969, private respondent Jesusa B. Afable, together with Felisa L. Mendoza
and Ma. Aurora C. Diño executed a promissory note in favor of petitioner Nelia G. Ponce in the
sum of P814,868.42, payable on or before July 31, 1969. In the event of failure to pay the
indebtedness plus interest in accordance with its terms, the debtors shall execute a first mortgage
in favor of the creditor over their properties or of the Carmen Planas Memorial, Inc. Upon the
failure of the debtors to comply with the terms of the promissory note, petitioners, a Complaint
against them with the Court of First Instance of Manila for the recovery of the principal sum of
P814,868.42, plus interest and damages. Defendant Ma. Aurora C. Diño contended that she did
not borrow any amount from plaintiffs and that her signature on the promissory note was
obtained by plaintiffs on their assurance that the same was for " formality only." Defendant
Jesusa B. Afable, for her part, asserted in her Answer that the promissory note failed to express
the true intent and agreement of the parties, the true agreement being that the obligation therein
mentioned would be assumed and paid entirely by defendant Felisa L. Mendoza; that she had
signed said document only as President of the Carmen Planas Memorial, Inc., and that she was
not to incur any personal obligation as to the payment thereof because the same would be repaid
by defendant Mendoza and/or Carmen Planas Memorial, Inc. Defendant Felisa L. Mendoza
admitted the authenticity and due execution of the promissory note, but averred that it was a
recapitulation of a series of transactions between her and the plaintiffs, "with defendant Ma.
Aurora C. Diño and Jesusa B. Afable coming only as accomodation parties." As affirmative
defense, defendant Mendoza contended that the promissory note was the result of usurious
transactions, and, as counterclaim, she prayed that plaintiffs be ordered to account for all the
interests paid.
The trial Court rendered judgment ordering respondent Afable and her co-debtors, Felisa
L. Mendoza and Ma. Aurora C. Diño , to pay petitioners, jointly and severally, the sum of
P814,868.42, plus 12% interest per annum from July 31, 1969 until full payment, and a sum
equivalent to 10% of the total amount due as attorney's fees and costs.
Afable appealed to the Court of Appeals. She argued that the contract under consideration
involved the payment of US dollars and was, therefore, illegal; and that under the in pari
delicto rule, since both parties are guilty of violating the law, neither one can recover. It is to be
noted that said defense was not raised in her Answer. The Court of Appeals reversed its
December 13, 1977 decision. While it is true that the promissory note does not mention any
obligation to pay in dollars, plaintiff-appellee Ponce himself admitted that there was an
agreement that he would be paid in dollars by the defendants. The promissory note is payable in
U.S. dollars. The intent of the parties prevails over the bare words of the written contracts. The
agreement is null and void and of no effect under Republic Act No. 529. Under the doctrine of
pari delicto, no recovery can be made in favor of the plaintiffs for being themselves guilty of
violating the law.
VII. ISSUE
Whether or not the Republic Act 529 covers the parties transaction.
VIII. RULING
Yes, it is to be noted that while an agreement to pay in dollars is declared as null and void
and of no effect, what the law specifically prohibits is payment in currency other than legal
tender. It does not defeat a creditor's claim for payment, as it specifically provides that "every
other domestic obligation ... whether or not any such provision as to payment is contained therein
or made with respect thereto, shall be discharged upon payment in any coin or currency which at
the time of payment is legal tender for public and private debts." A contrary rule would allow a
person to profit or enrich himself inequitably at another's expense.
As the Court of Appeals itself found, the promissory note in question provided on its face
for payment of the obligation in Philippine currency, i.e., P814,868.42. So that, while the
agreement between the parties originally involved a dollar transaction and that petitioners
expected to be paid in the amount of US$194,016.29, petitioners are not now insisting on their
agreement with respondent Afable for the payment of the obligation in dollars. On the contrary,
they are suing on the basis of the promissory note whereby the parties have already agreed to
convert the dollar loan into Philippine currency at the rate of P4.20 to $1.00. It may likewise be
pointed out that the Promissory Note contains no provision "giving the obligee the right to
require payment in a particular kind of currency other than Philippine currency, " which is what
is specifically prohibited by RA No. 529.
At any rate, even if we were to disregard the promissory note providing for the payment
of the obligation in Philippine currency and consider that the intention of the parties was really to
provide for payment of the obligation would be made in dollars, petitioners can still recover the
amount of US$194,016.29, which respondent Afable and her co-debtors do not deny having
received, in its peso equivalent. The foregoing premises considered, we deem it unnecessary to
discuss the other errors assigned by petitioners.
IX. COMPLETE DISPOSITIVE PORTION
WHEREFORE, the Resolutions of the Court of Appeals dated June 8, 1978, July 6, 1978 and
November 27, 1978 are hereby set aside, and judgment is hereby rendered reinstating the
Decision of the Court of First Instance of Manila.
X. PREPARED BY: Pamela Nicole N. Manalo

I. Short Title: Ligot v. Republic
II. Full Title: RET. LT. GEN. JACINTO C. LIGOT, ERLINDA Y. LIGOT,
PAULO Y. LIGOT, RIZA Y. LIGOT, and MIGUEL Y. LIGOT, Petitioners,
vs. REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEY
LAUNDERING COUNCIL, Respondent. - G.R. No. 176944 - March 6, 2013 -
III. Ponente: BRION, J.

IV. Topic: Anti-Money Laundering Act
V. Statement of Facts:
Republic of the Philippines represented by Anti-Money Laundering Council (AMLC) filed an

Urgent Ex-Parte Application for the issuance of a freeze order with the Court of Appeals against
certain monetary and instruments and properties of the petitioners, pursuant to Section 10 of
Republic Act No. 9160, as amended otherwise known as Anti-Money Laundering Act of 2001
based on the letter sent by the Ombudsman to the AMLC recommending the latter to conduct
investigation on Lt. Gen. Ligot and his family for possible violation of RA. 9160.
Ombudsman’s complaint alleges that Lt. Ligot who served the Armed Forces of the Philippines
for 33 years and 2 months, 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). In contrast, his declared assets
in his 1982 SALN amounted only to One Hundred Five Thousand Pesos (₱ 105,000.00). Aside
from these, the Ombudsman’s investigation found that the petitioner and his family have assets
and properties that were not declared in the SALN amounting to at least Fifty-Four Million One
Thousand Two Hundred Seventeen Pesos (₱54,001,217.00). Considering the source of income of
the petitioner and assets in the name of his wife and children, the ombudsman declared the said
assets to be illegally obtained and unexplained wealth pursuant to RA 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).
Ombudsman also investigated the records of the Social Security System of Yambao, petitioner’s
brother. It revealed that he had been employed in private sector. Based on his contributions, he
does not have a substantial salary. Also, they found that he had an investment in Mabelline Food
Inc. but the company only had a net income of ₱5,062.96 in 2002 and ₱693.67 in 2003. But
despite Yambao’s lack of substantial income, the records show that he has a 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.
VI. Statement of the Case:
Because of the Ombudsman’s complaint, the Compliance and investigation staff of AMLC
conducted an investigation which revealed the various bank account of Lt Ligot in different
institutions. Ombudsman for the Military and Other Law Enforcement Officers issued a
resolution holding a probable cause exist that Lt. Gen. Ligot violated the section 8, in relation to
section 11 of RA No. 1673 as well as Article 183 of the Revised Penal Code. AMLC then issued
a resolution directing the Executive Director of AMLC Secretariat to file an application for a
freeze order against the properties of Lt. Ligot and his Family with the CA. Subsequently,
Republic filed an Urgent Ex-Parte Apllicaiton with the appellate court for the issuance of Freeze
order against the properties of Ligot and Yambao which the Apellate Court granted. The
Appellate Court ruled that there is a probablt cause that an unlawful activity and/or money
laundering offense had been committed. The CA issued a freeze order against the various bank
accounts, web accounts and vehicles of Ligot and Yambao. Republic, thereafter, filed an Urgent
Motion for Extension of the Effectivity of the Freeze order arguing tha the previously mentioned
accounts were not continuously frozen to which the CA granted.
Petitioner filed a motion to lif the said Extended Freeze Order arguing that there is no evidence
to support the said extension, that they are deprived of their properties without due of process of
law and punished them before a guilt which is not proven.
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. Ligots Filed a motion for
reconsideration but the same was denied by the CA. hence this petition.
VII. Issues
1. Whether or not the CA erred in finding that probable cause exists to support the issuance of
freeze order.
2. Whether or not CA erred in extending the freeze order for an indefinite period
VIII. Ruling
1. NO, Ca did not err in finding that there is a probable cause to support the issuance of 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.
Ligot’s claim that the CA erred in extending the effectivity period of the freeze order because
they have not yet been convicted of any of the offenses enumerated in RA 9160 that would
support the AMLC’s accusation of money-laundering activity it not tenable. Based o section 10,
there are two requisites for the issuance of the freeze order (1) the application ex parte by the
AMLC and (2) the determination of probable cause by CA. The probable cause required for the
issuance of freeze order is different from the probable cause required for the institution of a
criminal action. As defined in the law, the probable cause required for the issuance of a freeze
order refers to "such facts and circumstances which would lead a reasonably discreet, prudent or
cautious man to believe that an unlawful activity and/or a money laundering offense is about to
be, is being or has been committed and that the account or any monetary instrument or property
subject thereof sought to be frozen is in any way related to said unlawful activity and/or money
laundering offense. In other words, in resolving the issue of whether probable cause exists, the
CA’s statutorily-guided determination’s focus is not on the probable commission of an unlawful
activity (or money laundering) that the Office of the Ombudsman has already determined to
exist, but on whether the bank accounts, assets, or other monetary instruments sought to be
frozen are in any way related to any of the illegal activities enumerated under RA No. 9160, as
amended. 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.
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. Lt. Ligot himself
admitted that his income came from his salary as an officer of AFP. Yet, the Ombudsman’s
investigation revealed that the bank accounts, investments and properties of Ligot amount to
more than Fifty-Four Million Pesos which are grossly disproportionate to Lt. Ligot’s income. For
failure of the petitioner to provide evidence showing that he has other sources of income, the CA
properly found a probable cause that these funds have been illegally acquired.
2. Yes. CA erred in issuing the freeze order for indefinite period.
The petitioners claim that the effectiveness of the freeze order ceased to be effective six months
after the original freeze order first expired, the claim is with merit.
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. Upon examination of the
Anti-Money Laundering Act of 2001, it was found that the law is silent as to 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.
The court observed in 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. 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." 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.
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.
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. These periods of extension are way beyond the intent and purposes of a freeze order
which is intended solely as an interim relief. 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 the court’s 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.
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.
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.
X. Dispositive Portion
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.
X. Prepared by: France Jacob R. Samson

I. Short Title: Republic v. Cabrini Green Ross, Inc.
II. Full Title: REPUBLIC OF THE PHILIPPINES, Represented by the ANTI-
MONEY LAUNDERING COUNCIL, Petitioner, vs. CABRINI GREEN &
ROSS, INC., MICHAEL J. FINDLAY and JANE GELBERG, Respondents,
- G.R. No. 154522 - May 5, 2006
x----------------------------------x
REPUBLIC OF THE PHILIPPINES, Represented by the ANTI-MONEY
LAUNDERING COUNCIL, Petitioner, vs. R.A.B. REALTY, INC.,
MULTINATIONAL TELECOM INVESTORS CORPORATION,
ROSARIO A. BALADJAY and SATURNINO M. BALADJAY,
Respondents, - G.R. No. 154694 - May 5, 2006
x----------------------------------x
LAUNDERING COUNCIL, Petitioner, vs. MARIO N. MISA, MICHAEL Z.
LAFUENTE, JESUS SILVERIO, REYNALDO NICHOLAS and REX D.
JAO, Respondents, - G.R. No. 155554 - May 5, 2006
x----------------------------------x
LAUNDERING COUNCIL, Petitioner, vs. ALBERTO DE LOS REYES,
LORENZO CASTRO, HERMIE DE VERA, EDUARDO LAZO and
DANILO LIWAG, Respondents. - G.R. No. 155711 - May 5, 2006
III. Ponente: CORONA, J.
IV. Topic: Anti-Money Laundering Act
V. Statement of Facts:
Anti-Money Laundering Council issued a freeze order in various bank accounts found to be
related to the unlawful activities of the respondents. Under RA 9160, the freeze order shall be
effective for 15 days “unless extended by the court”. Before the expiration of the said freeze
order, AMCL filed a various petitions for the extension of the freeze orders to the Court of
Appeals with the belief that the power of the Court of Appeals to issue Temporary Restraining
Order (TRO) and Writ of Injunction against freeze orders carries with it the power to extend the
effectivity of the same.
The Court of appeals dismissed the said petitions. It uniformly ruled that it was not vested by RA
9160 the authority to extend the effectivity of freeze orders.
VI. State of the Case:

Because of the said dismissal by the CA, consolidated petitions were filed by the AMLC to the
Supreme Court.
VII. Issue:
Whether or not the Court of Appeals has the authority to extend the effectivity of freeze orders
issued by the AMLC.
VII. Ruling
Yes. During the pendency of the case a Congress enacted RA 9194 An Act Amending Republic
Act No. 9160, Otherwise Known as the "Anti-Money Laundering Act of 2001").6 It amended
Section 10 of RA 9160 as follows:
SEC. 7. Section 10 of [RA 9160] is hereby amended to read as follows:
SEC. 10. Freezing of Monetary Instrument or Property. – The Court of Appeals, upon
application ex parte by the AMLC and after determination that probable cause exists that any
monetary instrument or property is in any way related to an unlawful activity as defined in Sec.
3(i) hereof, may issue a freeze order which shall be effective immediately. The freeze order shall
be for a period of twenty (20) days unless extended by the court.7 (emphasis supplied)
Section 12 of RA 9194 further provides:
SEC 12. Transitory Provision. – Existing freeze orders issued by the AMLC shall remain in force
for a period of thirty (30) days after the effectivity of this Act, unless extended by the Court of
Appeals. (emphasis supplied)
On April 3, 2003, the Office of the Solicitor General filed a Very Urgent Motion to Remand the
Cases to the Honorable Court of Appeals (with Prayer for Issuance of Temporary Restraining
Order and/or Writ of Preliminary Injunction). The OSG prayed to remand the cases to CA
pursuant to RA 9194. It also prayed for the issuance of TRO on 29 pending cases in the CA
involving the same issue. On April 21, 2003, the CA issued TRO in the said cases. Respondents,
the concerned banks, and all persons acting in their behalf were directed to give full force and
effect to existing freeze orders until further orders from this Court. Furthermore, on May 5, 2003,
OSG informed the court that CA issued a resolution granting extension of freeze order which is
the subject of GR. No. 154694. Hence, the OSG prayed for the dismissal of the said case and the
remand of GR. Nos. G.R. Nos. 154522, 155554 and 155711 to the CA.
The amendment by RA 9194 of RA 9160 erased any doubt on the jurisdiction of the CA over the
extension of freeze orders. As the law now stands, it is solely the CA which has the authority to
issue a freeze order as well as to extend its effectivity. It also has the exclusive jurisdiction to
extend existing freeze orders previously issued by the AMLC vis-à-vis accounts and deposits
related to money-laundering activities.
IX. Dispositive Portion
WHEREFORE, G.R. No. 154694 is hereby DISMISSED for being moot while G.R. Nos.
154522, 155554 and 155711 are REMANDED to the Court of Appeals for appropriate action.
Pending resolution by the Court of Appeals of these cases, the April 21, 2003 temporary
restraining order is hereby MAINTAINED.
XI. Prepared by: France Jacob R. Samson

REPUBLIC OF THE PHILIPPINES vs. EUGENIO
REPUBLIC OF THE PHILIPPINES, Represented by THE ANTI-MONEY
LAUNDERING COUNCIL (AMLC),petitioner,
vs.
HON. ANTONIO M. EUGENIO, JR., AS PRESIDING JUDGE OF RTC, MANILA,
BRANCH 34, PANTALEON ALVAREZ and LILIA CHENG, respondents.
G.R. No. 174629, February 14, 2008, TINGA, J.:
Statement of Facts:
A series of investigations concerning the award of the NAIA 3 contracts to PIATCO were
undertaken by the Ombudsman and the Compliance and Investigation Staff (CIS) of petitioner
Anti-Money Laundering Council (AMLC). The Office of the Solicitor General (OSG) wrote the
AMLC requesting the latter’s assistance "in obtaining more evidence to completely reveal the
financial trail of corruption surrounding the NAIA 3 Project.
The CIS conducted an intelligence database search on the financial transactions of certain
individuals involved in the award, including respondent Pantaleon Alvarez (Alvarez) who had
been the Chairman of the NAIA 3 Project. By this time, Alvarez had already been charged by the
Ombudsman with violation of Section 3(j) of R.A. No. 3019. The search revealed that Alvarez
maintained eight (8) bank accounts with six (6) different banks.
The AMLC issued a resolution whereby the Council authorized the Executive Director of the
AMLC to sign and verify an application to inquire into and/or examine the deposits or
investments of Pantaleon Alvarez, Wilfredo Trinidad, Alfredo Liongson, and Cheng Yong. The
rationale for the said resolution was founded on the cited findings of the CIS that amounts were
transferred from a Hong Kong bank account owned by Jetstream Pacific Ltd. Account to bank
accounts in the Philippines maintained by Liongson and Cheng Yong.
Under the authority granted by the Resolution, the AMLC filed an application to inquire into or
examine the deposits or investments of Alvarez, Trinidad, Liongson and Cheng Yong before the
RTC of Makati. Thereafter, the Makati RTC rendered a bank inquiry order granting the AMLC
the authority to inquire and examine the subject bank accounts of Alvarez, Trinidad, Liongson
and Cheng Yong, the trial court being satisfied that there existed "probable cause to believe that
the deposits in various bank accounts, details of which appear in paragraph 1 of the Application,
are related to the offense of violation of Anti-Graft and Corrupt Practices Act. Pursuant to the
Makati RTC bank inquiry order, the CIS proceeded to inquire and examine the deposits,
investments and related web accounts of the four.
Statement of the Case:
The Republic, through the AMLC, filed an application before the Manila RTC to inquire into
and/or examine accounts of Alvarez and the Metrobank accounts of Cheng Yong. The case was
raffled to Manila RTC, Branch 24, presided by respondent Judge Antonio Eugenio, Jr.
the Manila RTC issued an Order (Manila RTC bank inquiry order) granting the Ex Parte
Application expressing therein "[that] the allegations in said application to be impressed with
merit, and in conformity with Section 11 of R.A. No. 9160, as amended, otherwise known as the
Anti-Money Laundering Act (AMLA) of 2001. Authority was thus granted to the AMLC to
inquire into the bank accounts listed therein.
Alvarez, through counsel, entered his appearance23 before the Manila RTC in SP Case No. 06-
114200 and filed an Urgent Motion to Stay Enforcement of Order of January 12, 2006.24 Alvarez
alleged that he fortuitously learned of the bank inquiry order, which was issued following an ex
parte application, and he argued that nothing in R.A. No. 9160 authorized the AMLC to seek the
authority to inquire into bank accounts ex parte. The day after Alvarez filed his motion, 26
January 2006, the Manila RTC issued an Order staying the enforcement of its bank inquiry order
and giving the Republic five (5) days to respond to Alvarez’s motion.
The Republic filed an Omnibus Motion for Reconsideration. Thereafter, the Manila RTC issued
an Omnibus Order granting the Republic’s Motion for Reconsideration, denying Alvarez’s
motion to dismiss and reinstating "in full force and effect" the Order dated 12 January 2006. In
the omnibus order, the Manila RTC reiterated that the material allegations in the application for
bank inquiry order filed by the Republic stood as "the probable cause for the investigation and
examination of the bank accounts and investments of the respondents."
Alvarez filed an Urgent Motion and Manifestation wherein he manifested having received
reliable information that the AMLC was about to implement the Manila RTC bank inquiry order
even though he was intending to appeal from it. On the premise that only a final and executory
judgment or order could be executed or implemented, Alvarez sought that the AMLC be
immediately ordered to refrain from enforcing the Manila RTC bank inquiry order.
The Manila RTC, acting on Alvarez’s latest motion, issued an Order directing the AMLC "to
refrain from enforcing the order dated January 12, 2006 until the expiration of the period to
appeal, without any appeal having been filed." On the same day, Alvarez filed a Notice of
Appeal with the Manila RTC.
Alvarez filed an Urgent Ex Parte Motion for Clarification. Therein, he alleged having learned
that the AMLC had began to inquire into the bank accounts of the other persons mentioned in the
application for bank inquiry order filed by the Republic. Considering that the Manila RTC bank
inquiry order was issued ex parte, without notice to those other persons, Alvarez prayed that the
AMLC be ordered to refrain from inquiring into any of the other bank deposits and alleged web
of accounts enumerated in AMLC’s application with the RTC;
One day after Alvarez filed his motion, the Manila RTC issued an Order wherein it clarified that
"the Ex Parte Order of this Court dated January 12, 2006 can not be implemented against the
deposits or accounts of any of the persons enumerated in the AMLC Application until the appeal
of movant Alvarez is finally resolved, otherwise, the appeal would be rendered moot and
academic or even nugatory."42 In addition, the AMLC was ordered "not to disclose or publish
any information or document found or obtained in [v]iolation of the May 11, 2006 Order of this
Court." The Manila RTC reasoned that the other persons mentioned in AMLC’s application were
not served with the court’s 12 January 2006 Order.
In response, the Republic filed an Urgent Omnibus Motion for Reconsideration dated 27 July
2006, urging that it be allowed to immediately enforce the bank inquiry order against Alvarez
and that Alvarez’s notice of appeal be expunged from the records since appeal from an order of
inquiry is disallowed under the Anti money Laundering Act (AMLA).
Meanwhile, respondent Lilia Cheng filed with the Court of Appeals a Petition for Certiorari,
Prohibition and Mandamus with Application for TRO and/or Writ of Preliminary Injunction
directed against the Republic of the Philippines through the AMLC, Manila RTC Judge Eugenio,
Jr. and Makati RTC Judge Marella, Jr.. She identified herself as the wife of Cheng Yong with
whom she jointly owns a conjugal bank account with Citibank that is covered by the Makati
RTC bank inquiry order, and two conjugal bank accounts with Metrobank that are covered by the
Manila RTC bank inquiry order.
Lilia Cheng imputed grave abuse of discretion on the part of the Makati and Manila RTCs in
granting AMLC’s ex parte applications for a bank inquiry order, arguing among others that
the ex parte applications violated her constitutional right to due process, that the bank inquiry
order under the AMLA can only be granted in connection with violations of the AMLA and that
the AMLA can not apply to bank accounts opened and transactions entered into prior to the
effectivity of the AMLA or to bank accounts located outside the Philippines.
The Court of Appeals issued a Temporary Restraining Order48enjoining the Manila and Makati
trial courts from implementing, enforcing or executing the respective bank inquiry orders
previously issued, and the AMLC from enforcing and implementing such orders.
Issues:
1.) Whether or not the bank accounts of respondents can be examined.
2.) Whether or not the AMLA has retroactive effect
3.) Whether or not bank inquiry order can be issued upon ex parte application
Held:
1.) NO.
R.A. No. 1405 otherwise known as the Bank Secrecy Act of 1955. The right to privacy is
enshrined in Section 2 of that law, to wit:
SECTION 2. All deposits of whatever nature with banks or banking institutions in

the Philippines including investments in bonds issued by the Government of the
Philippines, its political subdivisions and its instrumentalities, are hereby considered
as of an absolutely confidential nature
Because of the Bank Secrecy Act, the confidentiality of bank deposits remains a basic
state policy in the Philippines.87 Subsequent laws, including the AMLA, may have added
exceptions to the Bank Secrecy Act, yet the secrecy of bank deposits still lies as the
general rule.
Any exception to the rule of absolute confidentiality must be specifically legislated. Section 2 of
the Bank Secrecy Act itself prescribes exceptions whereby these bank accounts may be
examined by "any person, government official, bureau or office"; namely when: (1) upon written
permission of the depositor; (2) in cases of impeachment; (3) the examination of bank accounts
is upon order of a competent court in cases of bribery or dereliction of duty of public officials;
and (4) the money deposited or invested is the subject matter of the litigation. Section 8 of R.A.
Act No. 3019, the Anti-Graft and Corrupt Practices Act, has been recognized by this Court as
constituting an additional exception to the rule of absolute confidentiality,92 and there have been
other similar recognitions as well.93
The AMLA also provides exceptions to the Bank Secrecy Act. Under Section 11, the AMLC
may inquire into a bank account upon order of any competent court in cases of violation of the
AMLA, it having been established that there is probable cause that the deposits or investments
are related to unlawful activities as defined in Section 3(i) of the law, or a money laundering
offense under Section 4 thereof. Further, in instances where there is probable cause that the
deposits or investments are related to kidnapping for ransom,94 certain violations of the
Comprehensive Dangerous Drugs Act of 2002,95 hijacking and other violations under R.A. No.
6235, destructive arson and murder, then there is no need for the AMLC to obtain a court order
before it could inquire into such accounts.
It cannot be successfully argued the proceedings relating to the bank inquiry order under Section
11 of the AMLA is a "litigation" encompassed in one of the exceptions to the Bank Secrecy Act
which is when "the money deposited or invested is the subject matter of the litigation." The
orientation of the bank inquiry order is simply to serve as a provisional relief or remedy. As
earlier stated, the application for such does not entail a full-blown trial.
Nevertheless, just because the AMLA establishes additional exceptions to the Bank Secrecy Act
it does not mean that the later law has dispensed with the general principle established in the
older law that "[a]ll deposits of whatever nature with banks or banking institutions in the
Philippines x x x are hereby considered as of an absolutely confidential nature."
The presence of this statutory right to privacy addresses at least one of the arguments raised by
petitioner, that Lilia Cheng had no personality to assail the inquiry orders before the Court of
Appeals because she was not the subject of said orders.
We are reasonably convinced that Lilia Cheng has sufficiently demonstrated her joint ownership
of the three accounts, and such conclusion leads us to acknowledge that she has the standing to
assail via certiorari the inquiry orders authorizing the examination of her bank accounts as the
orders interfere with her statutory right to maintain the secrecy of said accounts.
While petitioner would premise that the inquiry into Lilia Cheng’s accounts finds root in Section
11 of the AMLA, it cannot be denied that the authority to inquire under Section 11 is only
exceptional in character, contrary as it is to the general rule preserving the secrecy of bank
deposits. Even though she may not have been the subject of the inquiry orders, her bank accounts
nevertheless were, and she thus has the standing to vindicate the right to secrecy that attaches to
said accounts and their owners. This statutory right to privacy will not prevent the courts from
authorizing the inquiry anyway upon the fulfillment of the requirements set forth under Section
11 of the AMLA or Section 2 of the Bank Secrecy Act; at the same time, the owner of the
accounts have the right to challenge whether the requirements were indeed complied with.
2.) NO
There is a point of concern which needs to be addressed. Lilia Cheng argues that the AMLA,
being a substantive penal statute, has no retroactive effect and the bank inquiry order could not
apply to deposits or investments opened prior to the effectivity of Rep. Act No. 9164, or on 17
October 2001. Thus, she concludes, her subject bank accounts, opened between 1989 to 1990,
could not be the subject of the bank inquiry order lest there be a violation of the constitutional
prohibition against ex post facto laws.
No ex post facto law may be enacted,99 and no law may be construed in such fashion as to permit
a criminal prosecution offensive to the ex post facto clause. As applied to the AMLA, it is plain
that no person may be prosecuted under the penal provisions of the AMLA for acts committed
prior to the enactment of the law on 17 October 2001. As much was understood by the
lawmakers since they deliberated upon the AMLA, and indeed there is no serious dispute on that
point.
3.) NO.
Money laundering has been generally defined as any act or attempted act to conceal or disguise
the identity of illegally obtained proceeds so that they appear to have originated from legitimate
sources.
Section 4 of the AMLA states that "[m]oney laundering is a crime whereby the proceeds of an
unlawful activity as [defined in the law] are transacted, thereby making them appear to have
originated from legitimate sources."
The AMLA also authorizes certain provisional remedies that would aid the AMLC in the
enforcement of the AMLA. These are the "freeze order" authorized under Section 10, and the
"bank inquiry order" authorized under Section 11
Respondents posit that a bank inquiry order under Section 11 may be obtained only upon the pre-
existence of a money laundering offense case already filed before the courts.68 The conclusion is
based on the phrase "upon order of any competent court in cases of violation of this Act," the
word "cases" generally understood as referring to actual cases pending with the courts.
We are unconvinced by this proposition, and agree instead with the then Solicitor General who
conceded that the use of the phrase "in cases of" was unfortunate, yet submitted that it should be
interpreted to mean "in the event there are violations" of the AMLA, and not that there are
already cases pending in court concerning such violations.69 If the contrary position is adopted,
then the bank inquiry order would be limited in purpose as a tool in aid of litigation of live cases,
and wholly inutile as a means for the government to ascertain whether there is sufficient
evidence to sustain an intended prosecution of the account holder for violation of the AMLA.
Should that be the situation, in all likelihood the AMLC would be virtually deprived of its
character as a discovery tool, and thus would become less circumspect in filing complaints
against suspect account holders
Still, even if the bank inquiry order may be availed of without need of a pre-existing case under
the AMLA, it does not follow that such order may be availed of ex parte. There are several
reasons why the AMLA does not generally sanction ex parte applications and issuances of the
bank inquiry order.
SEC. 11. Authority to Inquire into Bank Deposits - the AMLC may inquire into or examine any
particular deposit or investment with any banking institution or non bank financial institution
upon order of any competent court in cases of violation of this Act, when it has been
established that there is probable cause that the deposits or investments are related to an
unlawful activity as defined in Section 3(i) hereof or a money laundering offense under
Section 4 hereof, except that no court order shall be required in cases involving unlawful
activities defined in Sections 3(i)1, (2) and (12).
Of course, Section 11 also allows the AMLC to inquire into bank accounts without having to
obtain a judicial order in cases where there is probable cause that the deposits or investments are
related to kidnapping for ransom,71certain violations of the Comprehensive Dangerous Drugs Act
of 2002,72 hijacking and other violations under R.A. No. 6235, destructive arson and murder.
Since such special circumstances do not apply in this case, there is no need for us to pass
comment on this proviso.
In the instances where a court order is required for the issuance of the bank inquiry order,
nothing in Section 11 specifically authorizes that such court order may be issued ex parte.
Meanwhile in freeze orders:
SEC. 10. Freezing of Monetary Instrument or Property. ― The Court of Appeals,
upon application ex parte by the AMLC and after determination that probable cause exists that
any monetary instrument or property is in any way related to an unlawful activity as defined in
Section 3(i) hereof, may issue a freeze order which shall be effective immediately. The freeze
order shall be for a period of twenty (20) days unless extended by the court.
Although oriented towards different purposes, the freeze order under Section 10 and the bank
inquiry order under Section 11 are similar in that they are extraordinary provisional reliefs which
the AMLC may avail of to effectively combat and prosecute money laundering offenses.
Crucially, Section 10 uses specific language to authorize an ex parte application for the
provisional relief therein, a circumstance absent in Section 11.
If indeed the legislature had intended to authorize ex parte proceedings for the issuance of the
bank inquiry order, then it could have easily expressed such intent in the law, as it did with the
freeze order under Section 10
The Court could divine the sense in allowing ex parte proceedings under Section 10 and in
proscribing the same under Section 11. A freeze order under Section 10 on the one hand is aimed
at preserving monetary instruments or property in any way deemed related to unlawful activities
as defined in Section 3(i) of the AMLA. The owner of such monetary instruments or property
would thus be inhibited from utilizing the same for the duration of the freeze order. To make
such freeze order anteceded by a judicial proceeding with notice to the account holder would
allow for or lead to the dissipation of such funds even before the order could be issued.
On the other hand, a bank inquiry order under Section 11 does not necessitate any form of
physical seizure of property of the account holder. What the bank inquiry order authorizes is the
examination of the particular deposits or investments in banking institutions or non-bank
financial institutions. The monetary instruments or property deposited with such banks or
financial institutions are not seized in a physical sense, but are examined on particular details
such as the account holder’s record of deposits and transactions. Unlike the assets subject of the
freeze order, the records to be inspected under a bank inquiry order cannot be physically seized
or hidden by the account holder. Said records are in the possession of the bank and therefore
cannot be destroyed at the instance of the account holder alone as that would require the
extraordinary cooperation and devotion of the bank.
The necessary implication of this finding that Section 11 of the AMLA does not generally
authorize the issuance ex parte of the bank inquiry order would be that such orders cannot be
issued unless notice is given to the owners of the account, allowing them the opportunity to
contest the issuance of the order. Without such a consequence, the legislated distinction
between ex parte proceedings under Section 10 and those which are not ex parte under Section
11 would be lost and rendered useless.
The court receiving the application for inquiry order cannot simply take the AMLC’s word that
probable cause exists that the deposits or investments are related to an unlawful activity. It will
have to exercise its own determinative function in order to be convinced of such fact. The
account holder would be certainly capable of contesting such probable cause if given the
opportunity to be apprised of the pending application to inquire into his account; hence a notice
requirement would not be an empty spectacle. It may be so that the process of obtaining the
inquiry order may become more cumbersome or prolonged because of the notice requirement,
yet we fail to see any unreasonable burden cast by such circumstance. After all, as earlier stated,
requiring notice to the account holder should not, in any way, compromise the integrity of the
bank records subject of the inquiry which remain in the possession and control of the bank.
WHEREFORE, the PETITION is DISMISSED. No pronouncement as to costs.
SO ORDERED.
Prepared by: Ej Corpuz

I. SHORT TITLE: REPUBLIC VS. GLASGLOW
II. FULL TITLE: REPUBLIC OF THE PHILIPPINES, represented by the ANTI-
MONEY LAUNDERING COUNCIL, petitioner,
vs.
GLASGOW CREDIT AND COLLECTION SERVICES, INC. and
CITYSTATE SAVINGS BANK, INC., respondents.
III. PONENTE: CORONA, J.:
IV. TOPIC: Civil Forfeiture under The Anti-Money Laundering Act (RA 9160)
V. STATEMENT OF FACTS:
Glasgow has funds in the amount of P21,301,430.28 deposited with Citystate Bank under
Account No. CA 005-10-000121-5. The said bank account is related to unlawful activities of
Estafa and violation of Securities Regulation Code committed by Glasglow. The deposit has
been a subject of Suspicious Transaction Reports and after appropriate investigation, the Anti-
Money Laundering Council issued Resolutions directing the issuance of freeze orders against the
bank accounts of Glasgow. Pursuant to said AMLC Resolutions, Freeze Orders were issued on
different dates addressed to the concerned bank.
On July 18, 2003, the Republic filed a complaint in the Regional Trial Court of Manila
for civil forfeiture of assets with urgent plea for issuance of temporary restraining order and/or
writ of preliminary injunction against the bank deposits in the account number maintained by
Glasgow in Citystate Savings Bank, Inc. (CBSI). The case, filed pursuant to RA 9160 or Anti-
Money Laundering Act of 2001, as amended, was docketed as Civil Case No. 03-107319.
VI. STATEMENT OF THE CASE:
This is a petition for review of the order dated October 27, 2005 of the RTC of Manila,
Branch 47, dismissing the complaint for forfeiture filed by the Republic of the Philippines,
represented by the Anti-Money Laundering Council against respondents Glasgow Credit and
Collection Services, Inc. (Glasgow) and Citystate Savings Bank, Inc. (CSBI).
Acting on the Republic’s urgent plea for the issuance of a TRO, the executive judge of
RTC Manila issued a 72-hour TRO. After hearing, the trial court issued an order granting the
issuance of 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.
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. 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 January 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.
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
Republic’s motion for leave of court to serve summons by publication declaring that until and
unless a return is made on the alias summons, any action on Republic’s motion for leave of court
to serve summons by publication would be untenable if not premature.
In July 2004, the Republic, through the OSG, received a copy of the sheriff’s return
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 Republic’s motion for leave of court to serve summons by publication
remained unresolved. Thus, 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 Glasgow’s "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 Glasgow’s motion to dismiss. It contended that its suit was an
action quasi in rem where jurisdiction over the person of the defendant was not a
prerequisite to confer jurisdiction on the court. It 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 the bank account.
Raising questions of law, the Republic filed this petition.
On November 23, 2005, the Supreme Court issued a TRO restraining Glasgow and CSBI
from implementing the assailed RTC order. It restrained Glasgow from removing, dissipating or
disposing of the funds in the bank account and CSBI from allowing any transaction on the said
account.
VII. ISSUE: WON the complaint for civil forfeiture was correctly dismissed on grounds
of improper venue, insufficiency in form and substance and failure to prosecute.
VIII. RULING: NO. The Court agrees with the Republic.
The Complaint Was Filed in The Proper Venue
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, it was a proper venue of the Republic’s
complaint for civil forfeiture of Glasgow’s account.
The Complaint Was Sufficient In Form And Substance
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.
In this connection, Section 4, Title II of the Rule of Procedure in Cases of Civil Forfeiture
provides that 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.
The form and substance of the Republic’s complaint substantially conformed with
Section 4, Title II of the Rule of Procedure in Cases of Civil Forfeiture. The verified
complaint of the Republic contained the following allegations:
(a) the name and address of the primary defendant therein, Glasgow;
(b) a description of the proceeds of Glasgow’s unlawful activities with particularity, as
well as the location thereof, account no. CA-005-10-000121-5 in the amount
of P21,301,430.28 maintained with CSBI;
(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; the proceeds of the unlawful activities were
transacted and deposited with CSBI account thereby making them appear to have
originated from legitimate sources; as such, Glasgow engaged in money laundering; 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.
Moreover, RA 9160, as amended, and its implementing rules and regulations lay down
two conditions when applying the rules for civil forfeiture:
(1) when there is a suspicious transaction report or a covered transaction report

deemed suspicious after investigation by the AMLC and
(2) the court has, in a petition filed for the purpose, ordered the seizure of any
monetary instrument or property, in whole or in part, directly or indirectly, related to said
report.
Since account no. CA-005-10-000121-5 of Glasgow in CSBI was (1) covered by several
suspicious transaction reports and (2) placed under the control of the trial court upon the issuance
of the writ of preliminary injunction, the conditions provided in Section 12(a) of RA 9160, as
amended, were satisfied. Hence, the Republic, represented by the AMLC, properly instituted the
complaint for civil forfeiture.
Whether or not there is truth in the allegation that account no. CA-005-10-000121-5
contains the proceeds of unlawful activities is an evidentiary matter that may be proven during
trial. The complaint, however, did not even have to show or allege that Glasgow had been
implicated in a conviction for, or the commission of, the unlawful activities of estafa and
violation of the Securities Regulation Code.
A criminal conviction for an unlawful activity is not a prerequisite for the institution of a
civil forfeiture proceeding. Stated otherwise, a finding of guilt for an unlawful activity is not an
essential element of civil forfeiture.
Section 6 of RA 9160 and its IRR amended, states that:
(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 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.
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)
There Was No Failure

To Prosecute
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 Glasgow’s whereabouts could not be ascertained was
not only beyond the Republic’s control, it was also attributable to Glasgow which left its
principal office address without informing the Securities and Exchange Commission or any
official regulatory body of its new address. Moreover, as early as October 8, 2003, the Republic
was already seeking leave of court to serve summons by publication.
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 (Marahay v. Melicor).
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 Republic’s complaint.
Service Of Summons
May Be By Publication
Civil Forfeiture under RA 9160 is an action in rem. 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. Nonetheless, summons must be
served upon the defendant in order to satisfy the requirements of due process. For this purpose,
service may be made by publication as such mode of service is allowed in actions in
rem and quasi in rem.
In this connection, Section 8, Title II of the Rule of Procedure in Cases of Civil Forfeiture
provides that 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 ROC provides:
(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.
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.
X. PREPARED BY:
Ascotia, Kimberly Ruth F.
3A

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I. PDIC v.

VI. STATEMENT OF THE CASE

PDIC HAS NO RIGHT TO APPEAL THE MEMORANDUM OF THE SUPERVISING

THE AUDIT DISALLOWANCE IS NOT SUBJECT TO CONDONATION

PDIC WAS NOT DENIED DUE PROCESS

IX. DISPOSITIVE PORTION

PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC), Petitioner,

G.R. No. 176438, January 24, 2011, MENDOZA, J.:

Statement of the Case:

Hence, this petition.

(a) The investigation is based on a complaint of a depositor or any other government

Section 2. Types of Examination

a. Regular Examination - An examination conducted independently or jointly with the

b. Special Examination – An examination conducted at any time in coordination with the

Section 3. Scope of Examination

a. Determination of the bank’s solvency and liquidity position;

b. Evaluation of asset quality as well as determination of sufficiency of valuation reserves

c. Review of all aspects of bank operations;

d. Assessment of risk management system, including the evaluation of the effectiveness

e. Appraisal of overall management of the bank;

g. Follow-through of specific exceptions/ violations noted during a previous examination;

h. Any other activity relevant to the above.

SECTION 1. Scope of the Investigation.

Fact-finding Investigations shall be limited to the particular acts or omissions subject of a

In contrast, although it also involves a detailed evaluation, an investigation centers on specific

Prepared by: Ej Corpuz

II. Full Title: PHILIPPINE DEPOSIT INSURANCE CORPORATION, petitioner, vs.

III. Ponente: KAPUNAN, J.

IV. Topic: Other Banking Laws - Philippine Deposit Insurance System

1. WON CA ERRED IN HOLDING THAT THE SUBJECT CTDS ARE NEGOTIABLE

IX. DISPOSITIVE PORTION

X. Prepared by: Butalid, Claudelle B.

IV. PHILIPPINE DEPOSIT INSURANCE SYSTEM

IX. COMPLETE DISPOSITIVE PORTION

WHEREFORE, the assailed decision of the Court of Appeals is hereby AFFIRMED.

VI. STATEMENT OF THE CASE

On the subject of documentary stamp tax

III. Ponente: AUSTRIA-MARTINEZ, J.:

IV. Topic: Other Banking Laws- Miscellaneous

VI. Statement of Case

Thereafter, petitioner Sicam filed a Motion to Dismiss as far as he is concerned

IX. Dispositive Portion

Costs against petitioners.

IV. OTHER BANKING LAWS ( REPUBLIC ACT No. 529)

VI. STATEMENT OF THE CASE

IX. COMPLETE DISPOSITIVE PORTION

X. PREPARED BY: Pamela Nicole N. Manalo

III. Ponente: BRION, J.

Republic of the Philippines represented by Anti-Money Laundering Council (AMLC) filed an

X. Prepared by: France Jacob R. Samson

VI. State of the Case:

IX. Dispositive Portion

XI. Prepared by: France Jacob R. Samson

Statement of the Case:

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

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

Prepared by: Ej Corpuz

VI. STATEMENT OF THE CASE:

Raising questions of law, the Republic filed this petition.

The Complaint Was Filed in The Proper Venue

The Complaint Was Sufficient In Form And Substance

In a motion to dismiss a complaint based on lack of cause of action, the question