[ G.R. No. 176944.

March 06, 2013 ]

RET. LT. GEN. JACINTO C. LIGOT, ERLINDA Y. LIGOT, PAULO Y. LIGOT, RIZA Y.
LIGOT, AND MIGUEL Y. LIGOT vs. REPUBLIC OF THE PHILIPPINES, AMLA

FACTS: This case involves General Jacinto Ligot and his family’s undeclared assets that
amounted to millions of pesos considered as disproportionate with his worth of income as a
member of AFP for at least 33 years, which prompted the Ombusdman to investigate over
their assets, properties, and significant savings accounts from various banks.

Bearing in mind that Lt. Gen. Ligot’s main source of income was his salary as an officer of the AFP, and
given his wife and children’s lack of any other substantial sources of income, the Ombudsman
declared the assets registered in Lt. Gen. Ligot’s name, as well as those in his wife’s and
children’s names, to be illegally obtained and unexplained wealth, pursuant to the
provisions of RA No. 1379. As a result of the Ombudsman’s complaint, the AMLC conducted a
financial investigation, which revealed the existence of the Ligots’ various bank accounts with several
financial institutions.

AMLC issued a Resolution, directing to file an application for a freeze order against the properties of Lt.
Gen. Ligot and the members of his family with the CA. Subsequently, Republic filed an Urgent Ex-
Parte Application with CA for the issuance of a Freeze Order against the properties of the Ligots.

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

On July 26, 2005, the Republic filed an Urgent Motion for Extension of Effectivity of Freeze Order,
arguing that if the bank accounts, web accounts and vehicles were not continuously frozen, they could
be placed beyond the reach of law enforcement authorities and the government’s efforts to recover the
proceeds of the Ligots’ unlawful activities would be frustrated. CA granted the motion extending
the freeze order until after all the appropriate proceedings and/or investigations have been
terminated.

Meanwhile, the “Rule in Civil Forfeiture Cases” took effect. Under this rule, a freeze order could be
extended for a maximum period of six months.

PETITIONERS’ ARGUMENTS: Lt. Gen. Ligot argues CA committed grave abuse of discretion
amounting to lack or excess of jurisdiction when it extended the freeze order issued against him and his
family even though no predicate crime had been duly proven or established to support the allegation of
money laundering. He also maintains that the freeze order issued against them ceased to be effective in
view of the 6-month extension limit of freeze orders provided under the Rule in Civil Forfeiture Cases.

ISSUE: Whether or not the validity of freeze order is only effective within six-months.

RULING: YES, a freeze order cannot be issued for an indefinite period . Under Section
53. Freeze order, before the expiration of twenty days from issuance of a freeze order, the court may
for good cause extend its effectivity for a period not exceeding six months. HOWEVER,
should it become completely necessary for the Republic to further extend the duration of the freeze
order, it should file the necessary motion before the expiration of the six-month period and explain the
reason or reasons for its failure to file an appropriate case and justify the period of extension sought.

The primary objective of a freeze order is to temporarily preserve monetary instruments or property
that are in any way related to an unlawful activity or money laundering, by preventing the owner from
utilizing them during the duration of the freeze order. The relief is pre-emptive in character, meant to
prevent the owner from disposing his property and thwarting the State’s effort in building its case and
eventually filing civil forfeiture proceedings and/or prosecuting the owner.
The freeze order over the Ligots’ properties has been in effect since 2005, while the civil forfeiture case
– per the Republic’s manifestation – was filed only in 2011 and the forfeiture case under RA No. 1379 –
per the petitioners’ manifestation – was filed only in 2012. This means that the Ligots have not been
able to access the properties subject of the freeze order for six years or so simply on the
basis of the existence of probable cause to issue a freeze order, which was intended mainly
as an interim preemptive remedy.

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.[47] Otherwise, the property owner
should already be able to fully enjoy his property without any legal process affecting it. However, should
it become completely necessary for the Republic to further extend the duration of the freeze order, it
should file the necessary motion before the expiration of the six-month period and explain the reason or
reasons for its failure to file an appropriate case and justify the period of extension sought . The freeze
order should remain effective prior to the resolution by the CA, which is hereby directed to resolve this
kind of motion for extension with reasonable dispatch.

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

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

xxxx

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

We find merit in this claim.

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

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

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

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

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

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

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

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

To stress, the evils caused by the law’s silence on the freeze order’s period of effectivity [46] compelled
this Court to issue the Rule in Civil Forfeiture Cases. Specifically, the Court fixed the maximum allowable
extension on the freeze order’s effectivity at six months. In doing so, the Court sought to balance the
State’s interest in going after suspected money launderers with an individual’s constitutionally-protected
right not to be deprived of his property without due process of law, as well as to be presumed innocent
until proven guilty.

To our mind, the six-month extension period is ordinarily sufficient for the government to act against
the suspected money launderer and to file the appropriate forfeiture case against him, and is a
reasonable period as well that recognizes the property owner’s right to due process. In this case, the
period of inaction of six years, under the circumstances, already far exceeded what is
reasonable.
We are not unmindful that the State itself is entitled to due process. As a due process concern, we do
not say that the six-month period is an inflexible rule that would result in the automatic lifting of
the freeze order upon its expiration in all instances. An inflexible rule may lend itself to abuse - to the
prejudice of the State’s legitimate interests - where the property owner would simply file numerous
suits, questioning the freeze order during the six-month extension period, to prevent the timely filing of
a money laundering or civil forfeiture case within this period. With the limited resources that our
government prosecutors and investigators have at their disposal, the end-result of an inflexible rule is
not difficult to see.

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

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

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

1. Applicability of 6-month extension

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

This reasoning fails to convince us.

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

A review of the record reveals that after the CA issued its September 20, 2005 resolution extending the
freeze order, the Ligots filed a motion to lift the extended freeze order on September 28, 2005.
Significantly, the CA only acted upon this motion on January 4, 2006 , when it issued a
resolution denying it.
While denominated as a Motion to Lift Extended Freeze Order, this motion was actually a motion for
reconsideration, as it sought the reversal of the assailed CA resolution. Since the Ligots’ motion for
reconsideration was still pending resolution at the time the Rule in Civil Forfeiture Cases came
into effect on December 15, 2005, the Rule unquestionably applies to the present case.
1. Subsequent events
During the pendency of this case, the Republic manifested that on September 26, 2011, it filed a
Petition for Civil Forfeiture with the Regional Trial Court ( RTC) of Manila. On September 28, 2011, the
RTC, Branch 22, Manila, issued a Provisional Asset Preservation Order and on October 5, 2011, after
due hearing, it issued an Asset Preservation Order.

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

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

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

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

Additionally, we would be giving premium to the government’s failure to file an appropriate case until
only after six years (despite the clear provision of the Rule in Civil Forfeiture Cases) were we to dismiss
the petition because of the filing of the forfeiture case during the pendency of the case before the
Court. The sheer length of time and the constitutional violation involved, as will be discussed below,
strongly dissuade us from dismissing the petition on the basis of the “moot and academic” principle.
The Court should not allow the seeds of future violations to sprout by hiding under this principle even
when directly confronted with the glaring issue of the respondent’s violation of the petitioners’ due
process right[30] - an issue that the respondent itself chooses to ignore.

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

II. Substantive aspect

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

Section 10. Freezing of Monetary Instrument or Property. – The Court of Appeals,

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

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

We do not see any merit in this claim. The Ligots’ argument is founded on a flawed understanding of
probable cause in the context of a civil forfeiture proceeding [31] or freeze order application.[32]

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

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

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

SEC. 28. Precedence of proceedings. - Any criminal case relating to an unlawful

activity shall be given precedence over the prosecution of any offense or violation
under Republic Act No. 9160, as amended, without prejudice to the filing of a
separate petition for civil forfeiture or the issuance of an asset preservation order
or a freeze order. Such civil action shall proceed independently of the
criminal prosecution. [italics supplied; emphases ours]

Section 10 of RA No. 9160 (allowing the extension of the freeze order) and Section 28 (allowing a
separate petition for the issuance of a freeze order to proceed independently) of the Rule in Civil
Forfeiture Cases are only consistent with the very purpose of the freeze order, which specifically is to
give the government the necessary time to prepare its case and to file the appropriate charges without
having to worry about the possible dissipation of the assets that are in any way related to the suspected
illegal activity. Thus, contrary to the Ligots’ claim, a freeze order is not dependent on a separate
criminal charge, much less does it depend on a conviction.

That a freeze order can be issued upon the AMLC’s ex parte application further emphasizes the law’s
consideration of how critical time is in these proceedings. As we previously noted in Republic v.
Eugenio, Jr.,[36] “[t]o make such freeze order anteceded by a judicial proceeding with notice to the
account holder would allow for or lead to the dissipation of such funds even before the order could be
issued.”

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

From the ex parte application and the Ombudsman’s complaint, we glean that Lt. Gen. Ligot himself
admitted that his income came from his salary as an officer of the AFP. Yet, the Ombudsman’s
investigation revealed that the bank accounts, investments and properties in the name of Lt. Gen. Ligot
and his family amount to more than Fifty-Four Million Pesos (P54,000,000.00). Since these assets are
grossly disproportionate to Lt. Gen. Ligot’s income, as well as the lack of any evidence that the Ligots
have other sources of income, the CA properly found that probable cause exists that these funds have
been illegally acquired. On the other hand, the AMLC’s verified allegations in its ex parte application,
based on the complaint filed by the Ombudsman against Ligot and his family for violations of the Anti-
Graft and Corrupt Practices Act, clearly sustain the CA’s finding that probable cause exists that the
monetary instruments subject of the freeze order are related to, or are the product of, an unlawful
activity.
A freeze order, however, cannot be issued for an indefinite period
Assuming that the freeze order is substantively in legal order, the Ligots now assert that its
effectiveness ceased after January 25, 2006 (or six months after July 25, 2005 when the original freeze
order first expired), pursuant to Section 53(b) of the Rule in Civil Forfeiture Cases (A.M. No. 05-11-04-
SC). This section states:

Section 53. Freeze order. –

xxxx

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

We find merit in this claim.

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

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

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

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

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

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

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

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

To stress, the evils caused by the law’s silence on the freeze order’s period of effectivity [46] compelled
this Court to issue the Rule in Civil Forfeiture Cases. Specifically, the Court fixed the maximum allowable
extension on the freeze order’s effectivity at six months. In doing so, the Court sought to balance the
State’s interest in going after suspected money launderers with an individual’s constitutionally-protected
right not to be deprived of his property without due process of law, as well as to be presumed innocent
until proven guilty.

To our mind, the six-month extension period is ordinarily sufficient for the government to act against
the suspected money launderer and to file the appropriate forfeiture case against him, and is a
reasonable period as well that recognizes the property owner’s right to due process. In this case, the
period of inaction of six years, under the circumstances, already far exceeded what is
reasonable.

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

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

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

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

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

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

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

SO ORDERED.

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE ANTI-MONEY LAUNDERING

COUNCIL, PETITIONER, VS. THE SANDIGANBAYAN AND OFFICE OF THE OMBUDSMAN,
REPRESENTED BY THE OFFICE OF THE SPECIAL PROSECUTOR, RESPONDENTS.

DECISION

LEONEN, J.:

The Anti-Money Laundering Council is not merely a repository of reports and information on covered
and suspicious transactions. It was created precisely to investigate and institute charges against those
suspected to commit money laundering activities.

The criminal prosecution of such offenses would be unduly hampered if it were to be prohibited from
disclosing such information. For the Anti-Money Laundering Council to refuse disclosing the information
required of it would be to go against its own functions under the law.

This Court resolves a Petition for Certiorari1 assailing the Resolution2 and Order3 of the Sandiganbayan,
which denied the Anti-Money Laundering Council's Motion to Quash the Subpoena Duces Tecum and Ad
Testificandum and its subsequent Motion for Reconsideration.4
This Petition is an offshoot of a criminal case, People v. P/Dir. General Jesus Versoza. In Versoza, the
Office of the Special Prosecutor charged former First Gentleman Jose Miguel T. Arroyo (Arroyo) with,
among others, plunder for his involvement in the Philippine National Police's anomalous purchase of two
secondhand helicopters.5

The seller, Lionair, Inc. (Lionair), sold the helicopters as brand new, as required by law, even if they
were already used.6 Lionair's president Archibald L. Po (Po), however, testified that Arroyo was the
helicopters' real owner. He alleged that Lionair imported the helicopters from the United States and sold
it to Arroyo, who, in turn, deposited partial payment to Lionair's account with the Union Bank. 7

Lionair's savings account passbook reflected the following deposits:

Teller Date Transaction Amount (USD)

S733 02/27/04 Credit Memo 408,067.06

S733 02/27/04 Credit Memo 509,065.41

T731 03/01/04 Cash 148,217.538

To verify the source of the deposits, the Office of the Special Prosecutor presented Katrina Cruz-Dizon
(Cruz-Dizon), the manager of the Union Bank branch where the account was maintained. Cruz-Dizon
testified that the account was closed on March 6, 2006, and as five years had lapsed since, the bank
has already disposed the account records. She suggested that the Bangko Sentral ng Pilipinas or the
Anti-Money Laundering Council (Council) may have reports on the transactions, as banks are required to
report covered transactions.9

Thus, the Sandiganbayan, upon the Office of the Special Prosecutor's request, issued a Subpoena Duces
Tecum and Ad Testificandum directing Executive Director Julia C. Bacay-Abad, then Secretariat of the
Council, to testify and to produce Lionair's bank records. 10

The Council moved to quash the Subpoena, arguing that whatever information it has on Lionair's bank
account is confidential under Republic Act No. 9160, or the Anti-Money Laundering Act. 11 However, on
March 28, 2017, the Sandiganbayan issued a Resolution 12 denying the Motion to Quash, disposing thus:

WHEREFORE, in view of the foregoing, the AMLC's Motion to Quash

(Subpoena Duces Tecum and Ad Testificandum dated 10 October 2016)
is DENIED for lack of merit.

SO ORDERED.13

The Sandiganbayan ruled that the Council's misgivings on the disclosure of the bank records were
outweighed by the importance of these documents.14

The Council moved for reconsideration, but it was likewise denied. 15 The Sandiganbayan noted that the
Council was not present during the hearing of the Motion for Reconsideration, and that the accused and
their counsels were not furnished copies of the pleading.16

Thus, the Council, representing the Republic of the Philippines, filed this Petition for Certiorari.17 It
mainly argues that it is prohibited by law to disclose the relevant bank records of Lionair.

Petitioner argues that it cannot disclose Lionair's bank records because they are confidential. 18 It avers
that the disclosure of reports on covered and suspicious transactions is prohibited under Section 9(c) of
the Anti-Money Laundering Act.19 It explains that Section 9(c) adheres to international standards, which
recommend that financial institutions and their officers be prohibited from disclosing covered and
suspicious transaction reports, or "tipping-off" that a case is being filed. 20

Further, petitioner explains that the transactions are made confidential to encourage those persons
covered to report transactions "without fear of reprisal from their customers, or fear of losing the
confidence of their clientele[.]"21 It adds that the confidentiality requirement keeps "suspected money
launderers oblivious of the fact that their financial transactions are being monitored and reported by the
covered person to [petitioner]."22 If confidential reports were divulged, it says, money laundering
investigations and prevention would be impeded.23

Then, petitioner avers that Section 9(c) covers it, and not only financial institutions. To prohibit financial
institutions from disclosing reports but allow petitioner to divulge the same reports would be absurd, it
says, pointing out that such act would be indirectly doing what cannot be done directly. 24

Aside from the law, petitioner cites its Revised Implementing Rules and Regulations, which states that
petitioner and its secretariat are prohibited from revealing any information related to the transactions. 25

Petitioner likewise argues that respondent failed to reasonably describe the documents subpoenaed,
saying that the description falls short of the requirement under the Rules of Court because the
electronic database contains millions of reports from millions of entities. Without a specific description,
petitioner says it would be difficult to trace the records demanded. 26

Petitioner points out that it is not required to furnish the accused or their counsels a copy of its Motion
for Reconsideration, because it is only a nominal party. Thus, it argues that the Sandiganbayan
committed grave abuse of discretion in denying its Motion on this ground. 27

Lastly, petitioner prays for the issuance of a temporary restraining order and/or writ of preliminary
injunction, claiming that it is bound to suffer great and irreparable injury should respondent implement
the Subpoena.28

In its Comment,29 respondent Office of the Ombudsman argues that the Sandiganbayan did not abuse
its discretion when it denied petitioner's Motions. 30 It says the prohibition on disclosure under Section
9(c) of the Anti-Money Laundering Act only applies to covered persons-such as financial institutions,
dealers, and company service providers-which do not at all include petitioner. 31

Respondent avers that while the Anti-Money Laundering Act does intend to preserve the confidentiality
of bank transactions, its fundamental objective remains to prohibit money laundering through the
reporting of covered and suspicious transactions.32

Besides, respondent says that Lionair has waived its rights to confidentiality through a written
permission, and granted the prosecution access to its bank account under the Foreign Currency Deposit
Act.33 In any case, respondent asserts that petitioner's contentions are outweighed by the need to
materialize the objectives of the Anti-Money Laundering Act and to enforce the principles of public
accountability.34

Respondent further argues that the Subpoena complies with the requirements laid down by the Rules of
Court,35 as it readily identifies the documents requested from petitioner, namely: (1) the reports; (2)
identification documents; (3) statement of accounts; and (4) other transaction documents which pertain
to the three specific transactions of Lionair's Union Bank Account No. 13133-000119-3. 36

Contrary to petitioner's claim, respondent contends that it would be easy to retrieve the specific records
from their pool of transactions, as these are electronically processed and may be searched within
seconds or minutes.37

Moreover, respondent belies petitioner's claim that it was not required to furnish copies of the Motion
for Reconsideration for being a nominal party. Citing the Rules of Court, 38 respondent argues that proof
of service of the Motion is required, in line with the requirements of due process. 39

Respondent points out that even the Office of the Solicitor General agrees that the bank documents
may be subpoenaed, and that Lionair has waived confidentiality through a Secretary's Certificate. 40

Lastly, respondent asserts that the temporary restraining order and/or writ of preliminary injunction
should not be issued considering that petitioner failed to prove having a clear and existing right
enforceable by law,41 and any material or substantial invasion of that right. 42
On June 19, 2018, absent a temporary restraining order or writ of preliminary injunction, petitioner,
through Jerry L. Leal, acting director of the Financial Analysis Group, testified. 43 Nevertheless, petitioner
still addressed respondent's contention in this case.44

In its Reply,45 petitioner reiterates that although Section 9(c) of the law does not explicitly say so, the
prohibition on disclosure extends to petitioner, it having been mandated to keep such reports
confidential. Otherwise, it says, the confidentiality requirement would be for naught. 46

Petitioner adds that the reports are pieces of financial intelligence information that should not be used
as evidence because they are merely leads in the investigation of money laundering activities. 47 To use
these reports as evidence, Section 11 of the Anti-Money Laundering Act authorizes petitioner to inquire
into the transaction but only upon the Court of Appeals' order. 48 Thus, petitioner says the disclosure of
reports directed by the Subpoena will only bypass the bank inquiry process laid down by law. 49

Moreover, petitioner argues that Lionair's written permission cannot allow the disclosure of the
transactions because the subpoena will necessarily include the counterpart transactions from which the
funds originated. In this case, petitioner notes, the originating account is owned by another person who
has not executed a similar waiver.50

The main issue for this Court's resolution is whether or not the Sandiganbayan gravely abused its
discretion in denying the Motion to Quash and Motion for Reconsideration of petitioner Anti-Money
Laundering Council. To answer this, the following issues must first be resolved:

First, whether or not petitioner Anti-Money Laundering Council is required to furnish the respondent a
copy of the Motion for Reconsideration;

Second, whether or not Section 9(c) of the Anti-Money Laundering Act prohibits petitioner Anti-Money
Laundering Council from disclosing confidential and suspicious transaction reports;

Third, whether or not the written permission of Lionair, Inc. is sufficient to disclose the transaction
reports; and

Finally, whether or not the Subpoena failed to reasonably describe the documents sought to be
produced.

Rule 15 of the Rules of Court lays down the basic rules on the filing and hearing of a motion:

SECTION 4. Hearing of motion. - Except for motions which the court may act upon without prejudicing
the rights of the adverse party, every written motion shall be set for hearing by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be served in such
a manner as to ensure its receipt by the other party at least three (3) days before the date of hearing,
unless the court for good cause sets the hearing on shorter notice.

SECTION 5. Notice of hearing. - The notice of hearing shall be addressed to all parties concerned, and
shall specify the time and date of the hearing which must not be later than ten (10) days after the filing
of the motion.

SECTION 6. Proof of service necessary. - No written motion set for hearing shall be acted upon by the
court without proof of service thereof.

Under Rule 15, Section 4, every written motion must be set for hearing by the applicant, except when
the court deems it prejudicial to the other party. The motion shall then be served together with its
notice of hearing in a manner that would ensure receipt by the other party at least three days before
the date of hearing, unless the court, for good cause, sets the hearing on shorter notice.
Sections 5 and 6 state that the notice of hearing shall be addressed to the parties concerned and shall
specify the time and date of the hearing. No motion shall be acted upon by the court without proof of
service of its notice, except when the court is satisfied that the adverse party's rights are not affected.

In Valderrama v. People,51 this Court emphasized that these requirements are mandatory. While there
may be motions which the court may resolve without prejudice to the opposing party, the general rule
holds that all motions must set a hearing, including motions for reconsideration. These rules are in place
to satisfy the requirements of due process:

The intention behind the notice requirements is to avoid surprises and to provide the adverse party a
chance to study the motion and to argue meaningfully against it before the court's resolution.

This Court has allowed exceptions to this rule when to do so would not cause prejudice to the other
party nor violate his or her due process rights.52 (Citations omitted)

Hence, the notice of hearing on the motion must be furnished to the adverse party, and the latter must
be informed of the time and date of the hearing. Failure to comply means the motion is defective,
reducing it to a mere scrap of paper.53

Jurisprudence amply supports this rule. In De la Peña v. De la Peña, 54 this Court cited a series of cases
where a motion for reconsideration was rendered defective due to a lack of notice of hearing:

In New Japan Motors, Inc. v. Perucho defendant filed a motion for reconsideration which did not
contain any notice of hearing. In a petition for certiorari, we affirmed the lower court in ruling that a
motion for reconsideration that did not contain a notice of hearing was a useless scrap of paper. We
held further -

Under Sections 4 and 5 of Rule 15 of the Rules of Court, ... a motion is required to accompanied by a
notice of hearing which must be served by the applicant on all parties concerned at least three (3) days
before the hearing thereof. Section 6 of the same rule commands that '(n)o motion shall acted upon by
the Court, without proof of service of the notice thereof....' It is therefore patent that the motion for
reconsideration in question is fatally defective for it did not contain any notice of hearing, We have
already consistently held in a number of cases that the requirements of Sections 4, 5 and 6 of Rule 15
of the Rules of Court are mandatory and that failure to comply with the same is fatal to movant's cause.

In Sembrano v. Ramirez we declared that -

(a) motion without notice of hearing is a mere scrap of paper. It does not toll the running of the period
of appeal. This requirement of notice of hearing equally applies to a motion for consideration. Without
such notice, the motion is pro forma. And a pro forma motion for reconsideration does not suspend the
running of the period to appeal.

In In re Almacen defendant lost his case in the lower court. His counsel then filed a motion for
reconsideration but did not notify the adverse counsel of the time and place of hearing of said motion.
The Court of Appeals dismissed the motion for reason that "the motion for reconsideration date July 5,
1966 does not contain a notice of time and place of hearing thereof and is, therefore a useless piece of
paper which did not interrupt the running of the period to appeal, and, consequently, the appeal was
perfected out of time." When the case was brought to us, we reminded counsel for the defendant that -

As a law practitioner who was admitted to the bar as far back as 1941, Atty. Almacen knew - or ought
to have known that a motion for reconsideration to stay the running of the period of (sic) appeal, the
movant must not only serve a copy of the motion upon the adverse party ... but also notify the adverse
party of the time and place of hearing...

Also, in Manila Surety and Fidelity Co., Inc. v. Bath Construction and Company we ruled -

The written notice referred to evidently is that prescribed for motions in general by Rule 15, Sections 4
and 5 (formerly Rule 26), which provide that such notice shall state the time and place of hearing and
shall be served upon all the parties concerned at least three days in advance. And according to Section
6 of the same Rule no motion shall be acted upon by the court without proof of such notice. Indeed it
has been held that in such a case the motion if nothing but a useless piece of paper. The reason is
obvious; unless the movant sets the time and place of hearing the court would have no way to
determine whether that party agrees to or objects to the motion, and if he objects, to hear him on his
objection, since the Rules themselves do not fix any period within which he may file his reply or
opposition.

In fine, the abovecited cases confirm that the requirements laid down in Sec. 5 Rule 15 of the Rules of
Court that the notice shall be directed to the parties concerned, and shall state the time and place for
the hearing of the motion, are mandatory. If not religiously complied with, they render the motion pro
forma. As such the motion is a useless piece of paper that will not toll the running of the prescriptive
period.55 (Citations omitted)

In this case, petitioner does not deny that it failed to furnish the accused or their counsels their copies
of the Motion for Reconsideration. However, it contends that it is not required to follow this rule
because it is merely a nominal party.

We do not agree.

First, petitioner cannot claim that it is merely a nominal party.

A nominal or pro forma party is a person "who is joined as a plaintiff or defendant, not because such
party has any real interest in the subject matter or because any relief is demanded, but merely because
the technical rules of pleadings require the presence of such party on the record." 56 On the other hand,
an indispensable party is "a party in interest without whom no final determination can be had of an
action without that party being impleaded." 57 They are parties with "such an interest in the controversy
that a final decree would necessarily affect their rights, so that the court cannot proceed without their
presence."58

Petitioner is not a nominal party as it claims to be. It has an interest in this case, and the relief
respondent prays for is exactly directed at it. This makes petitioner an indispensable party. As petitioner
alleged in its pleadings, it is the agency directed to act, and it claims that it will suffer injury if the
Subpoena will be implemented. Without petitioner, there can be no relief accorded. It was also
petitioner that filed the Motion to Quash and the Motion for Reconsideration.

Even if petitioner were just a nominal party, it is still required to comply with the requirements under
the Rules of Court. Courts only dispense with the requirement of notice when it will not prejudice the
adverse party or violate their right to due process.

Here, the lack of notice of the Motion for Reconsideration will clearly violate respondent's due process
rights. The character and tenor of the Motions filed by petitioner precisely demand respondent's
participation. If respondent was not informed of their contents and did not appear during the hearing, it
will be robbed of the opportunity to oppose them.

II

The Anti-Money Laundering Act was passed "to protect and preserve the integrity and confidentiality of
bank accounts and to ensure that the Philippines shall not be used as a money laundering site for the
proceeds of any unlawful activity."59

Section 7 of the law creates the Anti-Money Laundering Council, which is mandated "to require and
receive covered transaction reports from covered institutions[,]" as well as "to issue orders ... to
determine the true identity of the owner of any monetary instrument or property subject of a covered
transaction report ... on the basis of substantial evidence, ... involving, or related to, directly or
indirectly, in any manner or by any means, the proceeds of an unlawful activity[.]" 60

A covered transaction refers to "a single, series, or combination of transactions involving a total amount
in excess of [P4,000,000.00 or an equivalent amount in foreign currency" which has no credible
purpose, origin, or underlying trade obligation or contract. 61
Covered transactions also include: (1) transactions in cash or other equivalent monetary instrument
exceeding P500,000.00; (2) transaction with or involving jewelry or precious stone dealers in cash or
other equivalent monetary instrument exceeding P1,000,000.00; and (3) casino cash transaction
exceeding P5,000,000.00 or its equivalent are also deemed covered transactions. 62

On the other hand, suspicious transactions are transactions with covered institutions, regardless of the
amounts involved, where any of the following circumstances exists:

1. there is no underlying legal or trade obligation, purpose or economic justification;

2. the client is not properly identified;

3. the amount involved is not commensurate with the business or financial capacity of the client;

4. taking into account all known circumstances, it may be perceived that the client's transaction is
structured in order to avoid being the subject of reporting requirements under the Act;

5. any circumstance relating to the transaction which is observed to deviate from the profile of the client
and/or the client's past transactions with the covered institution;

6. the transaction is in any way related to an unlawful activity or offense under this Act that is about to
be, is being or has been committed; or

7. any transaction that is similar or analogous to any of the foregoing. 63

Section 9(c) of the Anti-Money Laundering Act further details how the covered and suspicious
transactions will be reported. Under this provision, covered institutions and their officers and employees
are prohibited from communicating that a covered or suspicious transaction report was made, its
contents, or any information related to the reports. Section 9(c) states:

SECTION 9. Prevention of Money Laundering; Customer Identification Requirements and Record

Keeping. -

....

(c) Reporting of Covered and Suspicious Transactions. Covered institutions shall report to the AMLC all
covered transactions and suspicious transactions within five (5) working days from occurrence thereof,
unless the Supervising Authority prescribes a longer period not exceeding ten (10) working days.

Should a transaction be determined to be both a covered transaction and a suspicious transaction, the
covered institution shall be required to report the same as a suspicious transaction.

When reporting covered or suspicious transactions to the AMLC, covered institutions and their officers
and employees shall not be deemed to have violated Republic Act No. 1405, as amended, Republic Act
No. 6426, as amended, Republic Act No. 8791 and other similar laws, but are prohibited from
communicating, directly or indirectly, in any manner or by any means, to any person, the fact that a
covered or suspicious transaction report was made, the contents thereof, or any other information in
relation thereto. In case of violation thereof, the concerned officer and employee of the covered
institution shall be criminally liable. However, no administrative, criminal or civil proceedings, shall lie
against any person for having made a covered or suspicious transaction report in the regular
performance of his duties in good faith, whether or not such reporting results in any criminal
prosecution under this Act or any other law.

When reporting covered or suspicious transactions to the AMLC, covered institutions and their officers
and employees are prohibited from communicating directly or indirectly, in any manner or by any
means, to any person or entity, the media, the fact that a covered or suspicious transaction report was
made, the contents thereof or any other information in relation thereto. Neither may such reporting be
published or aired in any manner or form by the mass media, electronic mail, or other similar devices.
In case of violation thereof, the concerned officer and employee of the covered institution and media
shall be held criminally liable.64 (Emphasis supplied)

Section 3 enumerates the covered institutions required to report to the Anti-Money Laundering Council:

SECTION 3. Definitions. - For purposes of this Act, the following terms are hereby defined as follows:

(a) "Covered institution" refers to:

(1) banks, non-banks, quasi-banks, trust entities, and all other institutions and their subsidiaries and
affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP);

(2) insurance companies and all other institutions supervised or regulated by the Insurance
Commission; and

(3) (i) securities dealers, brokers, salesmen, investment houses and other similar entities managing
securities or rendering services as investment agent, advisor, or consultant, (ii) mutual funds, closed-
end investment companies, common trust funds, pre-need companies and other similar entities, (iii)
foreign exchange corporations, money changers, money payment, remittance, and transfer companies
and other similar entities, and (iv) other entities administering or otherwise dealing in currency,
commodities or financial derivatives based thereon, valuable objects, cash substitutes and other similar
monetary instruments or property supervised or regulated by Securities and Exchange Commission.

The prohibition applies to institutions and persons that, under the law and by reason of their business,
possess information on covered and suspicious transactions. It supports the functions of the Anti-Money
Laundering Council and other prosecuting agencies. If these institutions were allowed to disclose
information to anyone, especially to persons subject of the report, their investigatory functions will be
rendered ineffective.

Meanwhile, the Anti-Money Laundering Council is the financial intelligence unit tasked to analyze the
covered transaction reports and suspicious transaction reports submitted to it. It "shall require and
receive [covered transaction reports] and [suspicious transaction reports] from covered persons";
"formulate guidelines and develop protocols necessary to require covered persons to submit relevant
information"; and "access all relevant financial, administrative and law enforcement information for a
holistic financial intelligence analysis of [covered transaction reports] and [suspicious transaction
reports]."65

Aside from collecting and analyzing reports of covered and suspicious transactions, the Anti-Money
Laundering Council is also tasked to be the investigator and complainant in money laundering or money
terrorism finance cases. Section 7 of the Anti-Money Laundering Act states in part:

(3) to institute civil forfeiture proceedings and all other remedial proceedings through the Office of the
Solicitor General;

(4) to cause the filing of complaints with the Department of Justice or the Ombudsman for the
prosecution of money laundering offenses;

(5) to initiate investigations of covered transactions, money laundering activities and other violations of
this Act;

(6) to freeze any monetary instrument or property alleged to be proceeds of any unlawful activity[.] 66

To perform these functions, the Anti-Money Laundering Council is authorized to "issue orders addressed
to the appropriate [supervising authority] or the covered person to determine the true identity of the
owner of any monetary instrument or property: (a) subject of [covered transaction report] or
[suspicious transaction report]; (b) subject of request for assistance from a foreign State or jurisdiction;
or (c) believed by the Council, on the basis of substantial evidence, to be, in whole or in part, wherever
located, representing, involving, or related to, directly or indirectly, in any manner or by any means, the
proceeds of any unlawful activity."67
Here, petitioner Anti-Money Laundering Council argues that the prohibition extends to it. It claims that
as a covered institution, it cannot be forced to disclose such prohibited information.

This argument is untenable.

First, as the text of the Anti-Money Laundering Act reveals, petitioner is not one of the covered
institutions prohibited from disclosing information on covered and suspicious transactions. Section 3(a)
enumerates those that are prohibited from disclosing such information, and petitioner is not one of
them.

Second, contrary to petitioner's claim, the rationale behind the prohibition does not extend and apply to
it To reiterate, covered institutions are precluded from disclosing the reports or the fact they are
reported to petitioner, because it will impede the possible investigation on the covered and suspicious
transactions. Unlike covered institutions, petitioner is mandated to investigate and use the information it
has to institute cases against violators.

The international standards that petitioner cites, which advocate confidentiality of the transaction
reports and prohibits their disclosure, only apply to covered institutions. As the wording of the standards
shows, the prohibition avoids "tipping-off" or situations where covered transactions will warn depositors
and possible violators that they are being reported to petitioner.

Third, the prohibition and confidentiality provisions cannot apply to petitioner; otherwise, it would
contravene its direct mandate under Section 7 of the Anti-Money Laundering Act.

Petitioner is not merely a repository of reports and information on covered and suspicious transactions.
It is created precisely to investigate and institute charges against the offenders. Section 7 clearly states
that it is tasked to institute civil forfeiture proceedings and other remedial proceedings, and to file
complaints with the Department of Justice or the Office of the Ombudsman for anti-money laundering
offenses.

In addition, the criminal prosecution of anti-money laundering offenses would be unduly hampered if
petitioner were prohibited from disclosing information regarding covered and suspicious transactions. It
would be antithetical to its own functions if petitioner were to refuse to participate in prosecuting anti-
money laundering offenses by taking shelter in the confidentiality provisions of the Anti-Money
Laundering Act.

This is not the first time that petitioner was called to participate in the investigation and prosecution of
cases involving banking transactions.

For instance, in Revilla v. Sandiganbayan,68 the Anti-Money Laundering Council was presented as a
witness during the Sandiganbayan trials in the plunder cases involving the pork barrel scam. In one of
the cases, the Council reported that several investment and bank accounts of accused Ramon Revilla,
Jr. were terminated immediately before and after the PDAF scandal leaked to the public. 69

The Anti-Money Laundering Council testified to bank transaction records showing that the accounts of
the involved nongovernment organizations with the Land Bank of the Philippines and Metropolitan Bank
and Trust Company were only temporary repositories of money, and that the withdrawals were done
only after the approval of accused Janet Napoles (Napoles). ℒ αwρhi ৷ The Council also testified that the
bank accounts were opened using the identification cards of Napoles's corporations, consistent with the
other accused's testimonies.70

The Sandiganbayan used the Council's report as basis to issue a writ of preliminary attachment. This
Court affirmed the writ's validity, citing the Council's report as strong evidence against the accused. 71

Thus, in this case, petitioner's reliance on the confidentiality provision is misplaced. It was specifically
created as the country's financial intelligence unit to ensure that our financial institutions are not used
as conduits to perpetuate unlawful activities.

III
Republic Act No. 6426, or the Foreign Currency Deposit Act, provides the rule on secrecy of foreign
currency deposits. Section 8 states:

SECTION 8. Secrecy of foreign currency deposits. - All foreign currency deposits authorized under this
Act, as amended by PD No. 1035, as well as foreign currency deposits authorized under PD No. 1034,
are hereby declared as and considered of an absolutely confidential nature and, except upon the written
permission of the depositor, in no instance shall foreign currency deposits be examined, inquired or
looked into by any person, government official, bureau or office whether judicial or administrative or
legislative, or any other entity whether public or private; Provided, however, that said foreign currency
deposits shall be exempt from attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body whatsoever. 72

As a rule, foreign currency deposits are absolutely confidential, and thus, are not susceptible to
examination and inquiry by any person. The law further mandates that foreign currency deposits are
exempt from attachment, garnishment, or any other order or process of any court or government
agency.

Nevertheless, this rule admits an exception. Section 8 itself states that a foreign currency deposit may
be inquired into and examined if there is a written permission from the depositor. 73

In China Banking Corporation v. Court of Appeals, 74 complainant Jose Gotianuy accused his daughter
Margaret Dee and his son-in-law of stealing huge sums of money from his US dollar deposit account
with Citibank. Allegedly, his daughter received the money from Citibank through checks she deposited
with the China Banking Corporation (Chinabank).

To prove his theory, the complainant presented the US dollar checks withdrawn by his daughter from
his US dollar placement with Citibank. The trial court then subpoenaed employees of Chinabank to
testify on the case. The Court of Appeals affirmed the trial court's order. 75

Ultimately, this Court agreed with the lower courts. It ruled that the complainant, as the owner of the
funds, had the right to inquire into the deposits. 76 This is the exception to the secrecy of foreign
currency deposits under Section 8 of Republic Act No. 6426. Thus:

[T]he law provides that all foreign currency deposits authorized under Republic Act No. 6426, as
amended by Sec. 8, Presidential Decree No. 1246, Presidential Decree No. 1035, as well as foreign
currency deposits authorized under Presidential Decree No. 1034 are considered absolutely confidential
in nature and may not be inquired into. There is only one exception to the secrecy of foreign currency
deposits, that is, disclosure is allowed upon the written permission of the depositor.

....

... As a corollary issue, sought to be resolved is whether Jose Gotianuy may be considered a depositor
who is entitled to seek an inquiry over the said deposits. The Court of Appeals, in allowing the inquiry,
considered Jose Gotianuy, a co-depositor of Mary Margaret Dee. It reasoned that since Jose Gotianuy is
the named co-payee of the latter in the subject checks, which checks were deposited in China Bank,
then, Jose Gotianuy is likewise a depositor thereof. On that basis, no written consent from Mary
Margaret Dee is necessitated.

We agree in the conclusion arrived at by the Court of Appeals.

The following facts are established: (1) Jose Gotianuy and Mary Margaret Dee are co-payees of various
Citibank checks; (2) Mary Margaret Dee withdrew these checks from Citibank; (3) Mary Margaret Dee
admitted in her Answer to the Request for Admissions by the Adverse Party sent to her by Jose
Gotianuy that she withdrew the funds from Citibank upon the instruction of her father Jose Gotianuy
and that the funds belonged exclusively to the latter; (4) these checks were endorsed by Mary Margaret
Dee at the dorsal portion; and (5) Jose Gotianuy discovered that these checks were deposited with
China Bank as shown by the stamp of China Bank at the dorsal side of the checks.
Thus, with this, there is no issue as to the source of the funds. Mary Margaret Dee declared the source
to be Jose Gotianuy. There is likewise no dispute that these funds in the form of Citibank US dollar
Checks are now deposited with China Bank.

As the owner of the funds unlawfully taken and which are undisputably now deposited with China Bank,
Jose Gotianuy has the right to inquire into the said deposits.

A depositor, in cases of bank deposits, is one who pays money into the bank in the usual course of
business, to be placed to his credit and subject to his check or the beneficiary of the funds held by the
bank as trustee.77 (Citations omitted)

Here, there is no question that the owner of the bank account submitted its written permission to allow
the inquiry and examination of its accounts. Lionair, the owner of the dollar account subject of the
Subpoena, waived its rights under the Foreign Currency Deposit Act and granted the prosecution access
to its account. It issued a Board Resolution reflecting this waiver:

RESOLVED, as it is hereby resolved, to approve the waiver by the Company of its rights under the Bank
Secrecy Law and grant the Special Prosecutors, access to LIONAIR INCORPORATED's bank account No.
13133-000199-3 with Union Bank Philippines, Richville Tower Branch, Madrigal Business Park, Alabang,
Muntinlupa City;

RESOLVED FURTHER, as it is hereby resolved, to authorize and direct the Union Bank of the Philippines
and its duly authorized representatives to allow access to the Special Prosecutors to examine, look into
and obtain copies of the records of the Company's bank account No. 13133-000119-3[.] 78

Thus, petitioner's arguments invoking confidentiality should not be an issue, because the owner and
depositor of the bank account itself has already waived its rights. Lionair, as the owner of the account
and its funds, has the right to inquire into the deposits and its records. Its written permission is
sufficient basis for petitioner to disclose the records.

Yet, petitioner cites Section 11 of the Anti-Money Laundering Act, arguing that before the bank records
are disclosed, the Court of Appeals must have first issued an order upon finding probable cause. Section
11 states:

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

To ensure compliance with this Act, the Bangko Sentral ng Pilipinas (BSP) may inquire into or examine
any deposit or investment with any banking institution or non-bank financial institution when the
examination is made in the course of a periodic or special examination, in accordance with the rules of
examination of the BSP.79

Petitioner's reliance on Section 11 is misplaced. It is not this provision of the Anti-Money Laundering Act
that applies here, but Republic Act No. 6426.

As the provision reads, Section 11 of the Anti-Money Laundering Act is only an exception to Republic Act
No. 6426, as well as Republic Act Nos. 1405 and 8791. Section 11 applies to situations where there is
no written permission from the depositor and owner of the bank account. Thus, in Section 11, there is a
need for a finding of probable cause and a court order.

Here, the order to produce Lionair's records is not anchored on Section 11 of the Anti-Money
Laundering Act, but on the written permission of Lionair, satisfying the requirement under Republic Act
No. 6426. Hence, there is no need to require an inquiry order from the Court of Appeals. As shown
in China Banking Corporation and Government Service Insurance System, a subpoena on the disclosure
of bank transactions and accounts under Republic Act No. 6426 only requires the depositor's written
permission.

IV

Petitioner argues that the description provided in the Subpoena falls short of the requirement under the
Rules of Court.

Rule 21 states the requirements of a subpoena. For a subpoena duces tecum, Section 3 demands a
reasonable description of the books, documents, or things demanded, and these must appear to be
relevant. Per Section 4, a party may move to quash the subpoena if it is unreasonable and oppressive,
or if the books, documents, or things are not relevant:

SECTION 3. Form and Contents. - A subpoena shall state the name of the court and the title of the
action or investigation, shall be directed to the person whose attendance is required, and in the case of
a subpoena duces tecum, it shall also contain a reasonable description of the books, documents or
things demanded which must appear to the court prima facie relevant.

SECTION 4. Quashing a Subpoena. The court may quash a subpoena duces tecum upon motion
promptly made and, in any event, at or before the time specified therein if it is unreasonable and
oppressive, or the relevancy of the books, documents or things does not appear, or if the person in
whose behalf the subpoena is issued fails to advance the reasonable cost of the production thereof.

The court may quash a subpoena ad testificandum on the ground that the witness is not bound thereby.
In either case, the subpoena may be quashed on the ground that the witness fees and kilometrage
allowed by these Rules were not tendered when the subpoena was served. 80

A subpoena duces tecum may be issued if the tests of relevancy and definiteness are satisfied. The
court must ensure that "(1) the books, documents or other things requested must appear prima
facie relevant to the issue subject of the controversy (test of relevancy); and (2) such books must be
reasonably described by the parties to be readily identified (test of definiteness)." 81

In Presidential Commission on Good Government v. Sandiganbayan, 82 a petition was filed assailing

sequestration order involving the shares of stock of Lucio C. Tan, among others. Upon motion, the
Sandiganbayan then issued a subpoena ad testificandum and duces tecum, requiring the Presidential
Commission on Good Government's records officer to produce the following documents:

1. The documents, records and other evidence considered by the PCGG and on the basis of which the
PCGG issued the Sequestration Order dated June 19, 1986 (Annex "A," hereof) and the Writ of
Sequestration dated June 19, 1986 (Annex "B," hereof); and

2. The minutes of the meeting(s) of the PCGG at which the Sequestration Order dated June 19, 1986
(Annex "A" hereof) and Writ of Sequestration dated June 19, 1986 (Annex "B" hereof) was authorized
to be issued and which chronicles the discussion (if any) and the decision (of the PCGG Chairman and
Commissioners) to issue the Sequestration Order dated June 19, 1986 (Annex "A," hereof) and the Writ
of Sequestration dated June 19, 1986 (Annex "hereof). 83

The Presidential Commission on Good Government moved to quash the subpoena, but when this was
denied, it petitioned the case to this Court, arguing that the subpoena was unreasonable and
oppressive.84

In dismissing the petition, this Court ruled that the subpoena passed the test of definiteness. It gave
credence to respondents' argument that "the documents sought are material and relevant to the issues
and are properly described and identified[.]"85 Thus, the Sandiganbayan did not commit grave abuse of
discretion in issuing the subpoena.86

In this case, petitioner assails the validity of the Subpoena Duces Tecum for failing to reasonably
describe the documents sought to be produced. We disagree.
The Subpoena Duces Tecum issued by the Sandiganbayan satisfies the test of definiteness. Its simple
reading clearly shows which specific reports and transactions are being requested. The contested
paragraph of the Subpoena reads:

"Documents to be produced:

The original or certified copies of any and all reports, identification documents, statement of accounts
and other transaction documents obtained by the said office from any and all banking institutions, non-
bank financial institutions and other covered institutions, in connection with the above-specified
transactions reflected in the savings passbook of Lionair under Union Bank Savings Account No. 13133-
000119-3. Copy of said passbook is hereby attached for easy reference." 87

The documents requested are readily and reasonably identifiable: (1) the reports; (2) identification
documents; (3) statement of accounts; and (4) other transaction documents particularly pertaining to
the specific account number and three specific bank transactions.

Finally, petitioner cannot excuse itself from complying with the Subpoena by raising the difficulty of
retrieving the records. As petitioner itself admitted, the transactions are done electronically, and this
Court is well aware that the advancement in technology with our banking system allows for easier
retrieval of these records. In any case, petitioner failed to show how it would be impossible for it to
retrieve the reports from its system.

In sum, there was no showing that the Sandiganbayan gravely abused its discretion in issuing the
Subpoena Duces Tecum and Ad Testificandum and denying petitioner's Motion to Quash and Motion for
Reconsideration. Instead of avoiding compliance with the Subpoena, petitioner must firmly perform its
mandate as an investigatory body and independent financial intelligence unit.

WHEREFORE, the Petition for Certiorari is DISMISSED. The March 28, 2017 Resolution and May 12,
2017 Order of the Sandiganbayan in Criminal Case Nos. SB-12-CRM-0164 to 0167 are AFFIRMED.

SO ORDERED.