Criminal Law, Remedial Law

Republic v. Bolante et al. G.R. No. 186717 & 190357, April 17, 2017 R.A. 9160 (Anti Money Laundering Act of 2001), The “Fertilizer Fund Scam”, Forum Shopping, Res Judicata

FACTS:

In April 2005, PNB submitted to the Anti-Money Laundering Council (AMLC) a series of suspicious transaction reports involving  the transfer by Livelihood Corporation (LIVECOR) to Molugan Foundation (Molugan) a total amount of ₱172.6 million in a span of 15 months from 2004 to 2005; the transfer by LIVECOR of ₱40 million to Assembly of Gracious Samaritans, Inc. (AGS), which received another P38 million from Molugan on the same day. AGS returned the P38 million to Molugan also on the same day.

The transactions were reported ‘”suspicious” because they had no underlying economic justification; nor were they commensurate to the business or financial capacity of Molugan and AGS, which were both lowly capitalized at P50,000 each. 

According to Committee Report No. 54 submitted by the Senate to the AMLC, former Undersecretary of Agriculture Jocelyn I. Bolante requested the Department of Budget and Management to release to the Department of Agriculture the amount of ₱728 million for the purchase of farm inputs under the Ginintuang Masaganang Ani Program, and that at the time that he served as Undersecretary of Agriculture, Bolante was also appointed by President Gloria Macapagal Arroyo as acting Chairman of LIVECOR.

The AMLC found probable cause to believe that the accounts of LIVECOR, Molugan and AGS were related to what became known as the “fertilizer fund scam.”

Thus, a petition was filed for the issuance of an order allowing an inquiry into the six accounts of LIVECOR, Molugan, AGS, Samuel S. Bombeo and Ariel Panganiban of AGS, and for all covered institutions to submit reports of covered transactions and/or suspicious transactions of these entities and individuals, including all the related web of accounts.

The RTC allowed the AMLC to inquire into and examine the six bank deposits or investments and the related web of accounts.

A total of 70 bank accounts or investments were found to be part of the related web of accounts involved in the fertilizer fund scam.

On 14 February 2008, this Court promulgated Republic v. Eugenio. We ruled that a bank inquiry order cannot be issued unless notice is given to the account holders to allow them the opportunity to contest the issuance of the order.

In view of this development, the Republic filed an Ex Parte Petition docketed as CA-G.R. AMLC No. 00014 before the CA, seeking the issuance of a freeze order against the 70 accounts.

The CA issued a freeze order which required the covered institutions of the 70 accounts to desist from and not allow any transaction involving the identified monetary instruments, effective for 20 days.

The freeze order was later extended for a period of 30 days, and for another four months, or until 20 December 2008. 

In order to comply with the ruling in Eugenio, the Republic sought, after notice to the account holders, the issuance of an order allowing an inquiry into the subject bank accounts.

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

The CA issued a freeze order effective for 20 days, but denied the application to extend the same.

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

Meanwhile, the RTC found no probable cause to believe that the deposits and investments of respondents were related to an unlawful activity.

The Republic’s motion for reconsideration was denied.

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

The Court resolved to consolidate G.R. No. 190357 with G.R. No. 186717, considering that the issues raised in the petitions were closely intertwined and related.

ISSUES:

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

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

RULING:

1.

The Republic committed forum shopping. 

As we ruled in Chua v. Metropolitan Bank and Trust Co.,  forum shopping is committed in three ways: 

(1) filing multiple cases based on the same cause of action and with the same prayer, where the previous case has not yet been resolved (the ground for dismissal is litis pendentia); 

(2) filing multiple cases based on the same cause of action and with the same prayer, where the previous case has finally been resolved (the ground for dismissal is res judicata); and 

(3) filing multiple cases based on the same cause of action, but with different prayers (splitting of causes of action, where the ground for dismissal is also either litis pendentia or res judicata).

All the elements of litis pendentia are present in the two petitions for the issuance of a freeze order.

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

Second, there is an identity of rights asserted and relief sought based on the same facts. Both petitions sought the issuance of a freeze order against bank deposits and investments believed to be related to the fertilizer fund scam. 

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

Res judicata is defined as a matter adjudged, a thing judicially acted upon or decided, or a thing or matter settled by judgment.  

It operates as a bar to subsequent proceedings by prior judgment when the following requisites concur: 

(1) the former judgment is final; 

(2) it is rendered by a court having jurisdiction over the subject matter and the parties; 

(3) it is a judgment or an order on the merits; and 

(4) there is – between the first and the second actions – identity of parties, subject matter, and causes of action. 

2.

Rule 10.2 of the Revised Rules and Regulations Implementing Republic Act No. 9160, as Amended by Republic Act No. 9194, defined probable cause as “such facts and circumstances which would lead a reasonably discreet, prudent or cautious man to believe that an unlawful activity and/or a money laundering offense is about to be, is being or has been committed and that the account or any monetary instrument or property subject thereof sought to be frozen is in any way related to said unlawful activity and/or money laundering offense.” 

As we observed in Subido Pagente Certeza Mendoza and Binay Law Offices v. CA, this definition refers to probable cause for the issuance of a freeze order against an account or any monetary instrument or property subject thereof. 

Nevertheless, we shall likewise be guided by the pronouncement in Ligot v. Republic that “probable cause refers to the sufficiency of the relation between an unlawful activity and the property or monetary instrument.”

In the issuance of a bank inquiry order, the power to determine the existence of probable cause is lodged in the trial court. As we ruled in Eugenio:

Section 11 of RA 9160 itself requires that it be established that “there is probable cause that the deposits or investments are related to unlawful activities,” and it obviously is the court which stands as arbiter whether there is indeed such probable cause. The process of inquiring into the existence of probable cause would involve the function of determination reposed on the trial court.

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.

For the trial court to issue a bank inquiry order, it is necessary for the AMLC to be able to show specific facts and circumstances that provide a link between an unlawful activity or a money laundering offense, on the one hand, and the account or monetary instrument or property sought to be examined on the other hand. 

In this case, the RTC found the evidence presented by the AMLC wanting. 

As it stands, the evidence relied upon by the AMLC in 2006 was still the same evidence it used to apply for a bank inquiry order in 2008. Regrettably, this evidence proved to be insufficient when weighed against that presented by the respondents, who were given notice and the opportunity to contest the issuance of the bank inquiry order pursuant to Eugenio. 

In fine, the RTC did not commit grave abuse of discretion in denying the application.

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