2/28/25

Next meeting BANK SECRECY LAW

Section 1 , 2 , 3, ra 1405.

Deposit – creditor – debtor relationship between the depositor and bank

“deposit of whatever nature” include accounts that may be used by banks for authorized loans to third
persons.
- Anything you deposit to the bank is covered by confidentiality. But there’s exemption.

Bank secrecy law. I have an account with

Ejercito arroyo bank secrecy law. Helicopter, LIONAIR

 Subject of the inquiry. Qualified theft.

Theft qualifications –
Persons under section 2.

2. AMLC Covered institutions. Enumerate covered institutions that are prohibited from disclosing
The Anti-Money Laundering Act (AMLC) of the Philippines prohibits covered institutions and their
employees from communicating certain information about suspicious or covered transactions.
Prohibited communication
 Sharing the fact that a suspicious or covered transaction report was made
 Sharing the contents of a suspicious or covered transaction report
 Sharing any other information related to a suspicious or covered transaction report
 Publishing or airing information about a suspicious or covered transaction report
Who is prohibited? Covered institutions, Officers of covered institutions, and Employees of covered
institutions.? Tanong sa exam AMLC SECTION 3.
What is a covered institution?
 Securities dealers
 Brokers
 Investment houses
 Mutual funds
 Closed-end investment companies
 Foreign exchange corporations
 Money changers
 Money payment, remittance, and transfer companies
Penalty for violation
Officers, employees, and other associates of covered institutions who violate the AMLC may face
criminal liability.
AMLC Sec 3.
 COVERED TRANSACTIONS
 SUSPICIOUS TRANSACTIONS

SEC. 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.

(b) “Covered transaction” is a single, series, or combination of transactions involving a

total amount in excess of Four million Philippine pesos (Php4,000,000.00) or an
equivalent amount in foreign currency based on the prevailing exchange rate within five
(5) consecutive banking days except those between a covered institution and a person
who, at the time of the transaction was a properly identified client and the amount is
commensurate with the business or financial capacity of the client; or those with an
underlying legal or trade obligation, purpose, origin or economic justification.

It likewise refers to a single, series or combination or pattern of unusually large and

complex transactions in excess of Four million Philippine pesos (Php4,000,000.00)
especially cash deposits and investments having no credible purpose or origin,
underlying trade obligation or contract.

(c) “Monetary instrument” refers to:

(1) coins or currency of legal tender of the Philippines, or of any other country;

(2) drafts, checks and notes;

(3) securities or negotiable instruments, bonds, commercial papers, deposit certificates,
trust certificates, custodial receipts or deposit substitute instruments, trading orders,
transaction tickets and confirmations of sale or investments and money market
instruments; and

(4) other similar instruments where title thereto passes to another by endorsement,
assignment or delivery.

(d) “Offender” refers to any person who commits a money laundering offense.

(e) “Person” refers to any natural or juridical person.

(f) “Proceeds” refers to an amount derived or realized from an unlawful activity.

(g) “Supervising Authority” refers to the appropriate supervisory or regulatory agency,

department or office supervising or regulating the covered institutions enumerated in
Section 3(a).

(h) “Transaction” refers to any act establishing any right or obligation or giving rise to
any contractual or legal relationship between the parties thereto. It also includes any
movement of funds by any means with a covered institution.

(i) “Unlawful activity” refers to any act or omission or series or combination thereof
involving or having relation to the following:

(1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the
Revised Penal Code, as amended;

(2) Sections 3, 4, 5, 7, 8 and 9 of Article Two of Republic Act No. 6425, as amended,
otherwise known as the Dangerous Drugs Act of 1972;

CONSENT TO BE VALID. Voluntary, made knowingly, and with sufficient awareness of the relevant
circumstances and likely sonsequences.

6. SUBQUESTION EXAM . WHAT IS THE PURPOSE OF AMLC

The Anti-Money Laundering Council (AMLC) of the Philippines was created to prevent and prosecute
money laundering and other financial crimes. The AMLC is the Philippines' Financial Intelligence Unit
(FIU).
Purpose of the AMLC
 To protect the confidentiality and integrity of bank accounts
 To prevent the Philippines from being used as a money laundering site
 To investigate and prosecute money laundering and related violations
 To help establish and maintain an effective anti-money laundering regime
  To promote social justice, political stability, and sustainable economic growth
 To cooperate in transnational investigations and prosecutions of money laundering activities

LAUNDERING - Unlawful activities are acts or omissions that are prohibited by the law. Examples of
unlawful activities include kidnapping, drug trafficking, and terrorism.
Examples of unlawful activities
 Kidnapping for ransom
 Drug trafficking
 Robbery and extortion
 Piracy
 Qualified theft and swindling
 Smuggling
 Hijacking
 Terrorism and financing of terrorism
 Bribery and corruption of public officers
 Human trafficking
Anti-money laundering (AML) activities
The Anti-Money Laundering Act of 2001 (Republic Act No. 9160) was enacted to help prevent money
laundering in the Philippines. The law requires financial institutions to monitor and report suspicious
activities.
AML/CTF regime
The Anti-Money Laundering Council (AMLC) has outlined the following principles for an effective
AML/CTF regime:
 Strong compliance culture
 Good governance
 High ethical standards
 Sound risk management system
 Timely and effective domestic and international cooperation
 Implementation of AML laws, rules, and regulations

3. WHAT ARE THE ELEMENTS OF ILL GOTTEN WEALTH?

MELLOn bank vs magsino gr no 71479

q. Soriano vs. Gutierrez and manuzon gr 87634

review of records by a rehabilitation receiver under the financial rehabilitation and insolvency.

Section 2 of RA 1379 explicitly states that "whenever any public officer or employee has acquired during
his incumbency an amount of property which is manifestly out of proportion to his salary as such public
officer or employee and to his other lawful income and the income from legitimately acquired property,
said property shall be presumed prima facie to have been unlawfully acquired. x x x"

The elements which must concur for this prima facie presumption to apply are:

(1) the offender is a public officer or employee;

(2) he must have acquired a considerable amount of money or property during his incumbency;
and

(3) said amount is manifestly out of proportion to his salary as such public officer or employee
and to his other lawful income and the income from legitimately acquired property.
It is undisputed that spouses Ferdinand and Imelda Marcos were former public officers. Hence, the first
element is clearly extant.

The second element deals with the amount of money or property acquired by the public officer during
his incumbency. The Marcos couple indubitably acquired and owned properties during their term of
office. In fact, the five groups of Swiss accounts were admittedly owned by them. There is proof of the
existence and ownership of these assets and properties and it suffices to comply with the second
element.

The third requirement is met if it can be shown that such assets, money or property is manifestly out of
proportion to the public officer's salary and his other lawful income. It is the proof of this third element
that is crucial in determining whether a prima facie presumption has been established in this case.

4. a bank who is under the receivership is no longer performing a bank institution. Therefore the
disclosure of bank account is no longer prohibited. Is no longer a bank institution.
Bank is already in pasara na.

Absolute confidentiality in foreign currency

Exe-cemption.
1. Writtern permission. Corona signed a waiver. Then sc i

Exceptions given under the law. Foreign currency act.

 Jurisprudence
 Foreign deposit were allowed to be subpoenaed.
5. why and what is enacted. Salvacion vs central bank of the Philippines gr94723
Find out why?
Rule 39 of civil procedure.
G.R. No. 94723. August 21, 1997 (Case Brief / Digest) **Title:** Karen E. Salvacion, et al. vs. Central Bank
of the Philippines, et al.

**Facts:** On February 4, 1989, Greg Bartelli y Northcott, an American tourist, kidnapped and raped 12-
year-old Karen E. Salvacion multiple times over four days. After Karen was rescued and Bartelli was
arrested, he managed to escape from jail.
The Salvacion family filed both criminal charges against Bartelli and a civil case (No. 89-3214) for
damages with the Regional Trial Court of Makati. They obtained a favorable judgment, awarding them
over P1,000,000 in damages. However, when they tried to execute the judgment against Bartelli’s dollar
deposit in China Banking Corporation, the bank refused, citing Section 113 of Central Bank Circular No.
960, which exempts foreign currency deposits from attachment, garnishment, or any court order. The
Salvacions sought declaratory relief from the Supreme Court, challenging the constitutionality of Section
113 of Central Bank Circular No. 960 and Section 8 of R.A. 6426, as amended by P.D. 1246 (Foreign
Currency Deposit Act), for being violative of due process, equal protection of the laws, and for providing
a safe haven for criminals.

**Procedural Posture:**
Upon denial by lower courts based on the mentioned laws and circular, the Salvacions filed a petition
directly to the Supreme Court for declaratory relief, effectively bypassing the traditional legal process
due to the exceptional and significant implications of their case for justice and public interest.

**Issues:**
1. Whether the Supreme Court has jurisdiction to entertain a petition for declaratory relief which
traditionally falls under the jurisdiction of lower courts.
2. Whether Section 113 of Central Bank Circular No. 960 and Section 8 of R.A. 6426, as amended, applies
to a foreign transient such as Bartelli, and if they violate the Constitution.

**Court’s Decision:**
The Supreme Court treated the petition for declaratory relief as a petition for mandamus, directing
respondents to honor the writ of execution issued against Bartelli’s dollar deposit. It ruled that Sections
113 of CB Circular No. 960 and Section 8 of R.A. 6426, as amended by P.D. 1246, are inapplicable to this
unique case due to its peculiar circumstances. The Court © 2024 - batas.org | 1G.R. No. 94723. August
21, 1997 (Case Brief / Digest) emphasized that the laws and circular were intended to protect and
encourage foreign investments, not to serve as a shield for wrongdoers against civil liabilities, especially
in heinous crimes.

**Doctrine:**
The Supreme Court established that the law’s blanket protection of foreign currency deposits could not
be used to unjustly prevent victims of crimes from obtaining rightful damages from foreign transients.
The decision highlighted the principle of justice and equity over rigid application of laws when they lead
to unjust and unreasonable conclusions.
**Class Notes:**–
Jurisdiction: The Supreme Court can exercise original jurisdiction in exceptional cases where significant
public interest is involved, treating declaratory relief as mandamus when justice demands.–
Constitutional Law: Laws and regulations must not only comply with constitutional provisions such as
due process and equal protection but also must be interpreted and applied in the context of fairness
and justice.– Legal Interpretation: When a law or statute is silent, ambiguous, or leads to an unjust
outcome, courts may interpret it in a manner that promotes justice and equity.

**Historical Background:**
This case emerged during a period when the Philippine economy was recovering, and laws like R.A. 6426
aimed at encouraging foreign investments by offering protection to foreign currency deposits were
enacted. However, this case underscores the unintended consequence of such laws when applied
without considering the societal and moral implications, especially when justice for victims of heinous
crimes is at stake. The Supreme Court’s decision reflects its role in adapting the law to contemporary
values and ensuring that legal mechanisms do not inadvertently shield criminal behavior.
The primary exception to the Foreign Currency Deposit Act (Republic Act No. 6426) in the Philippines is
that a depositor's foreign currency deposits can only be examined, inquired into, or disclosed with their
express written permission; meaning, no government official or entity can access the information
without the depositor's consent, except in specific cases related to anti-money laundering laws where
prior court approval is required.

Key points about the exception:

Written consent needed:

The only way to access information about a foreign currency deposit is through the depositor's written
permission.

Anti-money laundering exception:

While not explicitly stated in the act, the Anti-Money Laundering Act (AMLA) allows authorities to
investigate suspicious transactions in foreign currency deposits with proper court orders.

Purpose of the law:

The Foreign Currency Deposit Act aims to encourage foreign investments by providing confidentiality to
foreign currency deposits.

China banking corporation vs ca gr140687

Case Digest (G.R. No. 140687)
Legal Reasoning Model
Facts:
Background of the Case
 A complaint for the recovery of sums of money and the annulment of sales of real
properties and shares of stock (docketed as CEB-21445) was filed by Jose "Joseph"
Gotianuy.
 The complaint was directed against his daughter, Mary Margaret Dee, and his son-in-
law, George Dee.
 Jose Gotianuy accused Mary Margaret Dee of unlawfully withdrawing US dollar deposits
with Citibank N.A. amounting to not less than P35,000,000.00 and US$864,000.00.
 He further alleged that George Dee transferred his real properties and shares of stock
without any consideration.
Nature and Details of the Deposits
 Mary Margaret Dee received the funds through Citibank checks, which were drawn in
both the names of Jose Gotianuy and/or Mary Margaret Dee.
 The checks involved included:
 Check No. 69003194405412 dated September 29, 1997 for US$5,937.52
 Check No. 69003194405296 dated September 29, 1997 for US$7,197.59
 Check No. 69003194405414 dated September 29, 1997 for US$1,198.94
 Check No. 69003194405413 dated September 29, 1997 for US$989.04
 Check No. 69003194405297 dated October 01, 1997 for US$766,011.97
 Check No. 69003194405339 dated October 09, 1997 for US$83,053.10
 The checks, once issued by Citibank, were deposited into an account with China Banking
Corporation (China Bank).
Development of the Proceedings
 During the pendency of the case before the Regional Trial Court (RTC) of Cebu City,
Branch 58, Jose Gotianuy died.
 His daughter, Elizabeth Gotianuy Lo, substituted as the plaintiff.
 Elizabeth presented the Citibank checks as evidence to support the claim that the funds
withdrawn by Mary Margaret Dee belonged to her father.
Subpoena and Trial Court’s Order
 Acting on a motion by Elizabeth Gotianuy Lo, the trial court issued a subpoena to two
China Bank employees, Cristota Labios and Isabel Yap, to testify regarding:
 The details of the Citibank checks (labeled as Exhibits “AAA” to “AAA-5”).
 Other matters material and relevant to the issues in the case.
 China Bank moved for a reconsideration of the subpoena.
 On April 16, 1999, the RTC modified its February 23, 1999 order, directing the
employees to appear only to disclose the name or names in whose name the foreign
currency fund (pertaining to the said exhibits) was deposited, without delving into other
matters.
Appeal to the Court of Appeals
 China Bank filed a Petition for Certiorari with the Court of Appeals challenging the RTC’s
modified order.
  On October 29, 1999, the Court of Appeals denied the petition and affirmed the RTC’s
order.
 The appellate court articulated that under the applicable law, namely Section 8 of
Republic Act (RA) 6426 as amended by Presidential Decree (PD) No. 1246, secrecy only
extends to the deposit funds and not necessarily to the identity of the depositor.
Underlying Controversies and Contentions
 The principal dispute centered on the interpretation of the foreign currency deposit
secrecy provision in RA 6426.
 Petitioner (China Bank) contended that disclosure of any information, including the
depositor’s name, would contravene the absolute confidentiality provided by law.
 The respondents, on the other hand, argued that:
 Jose Gotianuy, as a co-payee of the Citibank checks, had an inherent right to be treated
as a co-depositor.
 This status entitled him (or his estate) to seek an inquiry regarding the foreign currency
deposits.
 The RTC and the Court of Appeals held that the disclosure demanded was limited—
restricted only to the identification of the account holder (or holders) linked to the funds
—and did not extend to other details about the deposits.
Issue:
Whether the disclosure of the name or names in whose name the foreign currency deposits were held
violates the confidentiality rule under Section 8 of RA 6426, as amended by PD No. 1246.
 The petitioner argued that any disclosure, even of the depositor’s name, breaches the
absolute nature of confidentiality.
 The respondents contended that the law protects solely the funds, not the identity of
the depositor.
Whether Jose Gotianuy, as a co-payee of the Citibank checks, can be considered a depositor who is
entitled to inquire about the status of the foreign currency deposits.
 The issue revolves around whether his co-depositor status automatically confers the
right to compel disclosure without the consent of the other payee (Mary Margaret Dee).
 Whether the limited inquiry—restricted to disclosing the depositor’s name—reaches the proper
balance between statutory confidentiality and protecting the rights of a depositor in asserting
his claim.

WHEREFORE, premises considered, the Petition is DENIED. The Decision of the Court of Appeals dated 29 October 1999 affirming the
Order of the RTC, Branch 58, Cebu City dated 16 April 1999 is AFFIRMED and this case is ordered REMANDED to the trial court for
continuation of hearing with utmost dispatch consistent with the above disquisition. No costs.

SO ORDERED.
General banking law (Tuesday)

Herman limbo vs people.

(Friday) examination

3/4/25

BANK SECRECY LAW EXCEPTIONS.

2. Emphasis on jurisprudence of the law.

5. whereas clauses in bank secrecy law.

MEMORIZE COVERED TRANSACTION, EJERCITO VS SANDIGANBAYAN

Castañeda case.

Tuesday cases on general banking law. Recitation

Discussion;

CASE. ANTI MONEY LAUNDERING

Ejercito vs. sandiganbayan

Case Digest (G.R. No. 157294-95)

Legal Reasoning Model
Play Digest Audio
Facts:
Background of the Case
 The petitioner, Joseph Victor G. Ejercito, is the owner of two bank accounts—a Trust
Account No. 858 and a Savings Account No. 0116-17345-9—which were originally
opened at Urban Bank and are now maintained by Export and Industry Bank.
 The case arises in connection with criminal proceedings for plunder filed against former
President Joseph Estrada and others, wherein questions about the source and
destination of funds are central.
Procedural History and Subpoena Issuance
 The Special Prosecution Panel filed several requests for the issuance of subpoenas duces
tecum/ad testificandum directed to the bank officers of Export and Industry Bank and
representatives from the Philippine Deposit Insurance Corporation (PDIC).
 Specific documents sought included account opening documents, trading orders,
confirmation advices, trust agreements, ledger entries, specimen signature cards,
 statement of accounts, and copies of manager’s checks with precise details such as
dates and amounts.
 Initial subpoenas were issued in January 2003 (e.g., January 21 and 24) following the
petitioner’s discovery from the media that his bank accounts were the subject of the
inquiry.
 On learning of the subpoenas, the petitioner, unassisted by counsel at first, filed
motions to quash these subpoenas and later an urgent motion and a motion for
reconsideration as additional requests for subpoenas were granted by the
Sandiganbayan later (e.g., January 31, February 7, and February 12, 2003).
Allegations by the Petitioner
 The petitioner claimed that his bank accounts are protected by Republic Act (RA) 1405
(the Secrecy of Bank Deposits Act) and do not fall under any of its exceptions.
 He alleged that the detailed information contained in the subpoenas could have been
obtained only through an earlier illegal disclosure, thereby invoking the “fruit of the
poisonous tree” doctrine.
 The petitioner further contended that his right to privacy and due process was violated
because he was not notified about the issuance of the subpoenas in a timely manner,
thus denying him the opportunity to secure legal counsel or challenge the process
adequately.
Relevant Investigative Background
 Prior to the Sandiganbayan’s subpoenas in 2003, the Office of the Ombudsman had
issued subpoenas in February and March 2001 requesting similar bank documents
regarding accounts numbered 727, 737, 747, 757, 777, and 858.
 The PDIC, as the receiver of Urban Bank, supplied certified copies and lists of documents
in compliance with those earlier subpoenas.
 Information from multiple sources—including media reports and investigative materials
from the impeachment proceedings against former President Estrada—played a role in
the compilation of the detailed account information later used as the basis for the
subpoenas.
Issue:
Coverage of the Term “Deposit” under RA 1405
 Whether the petitioner’s Trust Account No. 858 and Savings Account No. 0116-17345-9,
which are trust and savings accounts respectively, fall within the ambit of the term
“deposit” as defined by RA 1405.
Applicability of the Exceptions in the Secrecy of Bank Deposits Act
 Whether the accounts are excepted from confidentiality under the provisions of RA
1405, particularly in light of the exceptions permitting disclosure:
 When an examination is ordered by a competent court in cases of bribery or dereliction
of duty of public officials, and by extension, in cases of unexplained wealth and plunder.
 When the money deposited or invested is the subject matter of litigation.
Legality and Effect of the Detailed Disclosure of Bank Information
  Whether the “extremely-detailed” information contained in the subpoenas, allegedly
obtained through prior disclosure by bank officials or through earlier Ombudsman
inquiries, renders the subsequent evidence inadmissible by invoking the “fruit of the
poisonous tree” doctrine.
Due Process and Notice Requirements
 Whether the manner of issuance of the subpoenas—without timely notice to the
petitioner—violated his constitutional rights to due process and privacy, thereby
affecting his ability to contest or protect his interests.

Facts:
In lieu of the Criminal Case “People v. Estrada” for plunder, the Special Prosecution Panel filed before
the Sandiganbayan a request for issuance of Subpoena Duces Tecum directing the President of Export
and Industry Bank or his/her authorized representative to produce documents namely, Trust Account
and Savings Account belonging to petitioner and statement of accounts of one named “Jose Velarde”
and to testify thereon during the hearings. Sandiganbayan granted both requests and subpoenas were
accordingly issued. Sandiganbayan also granted and issued subpoenas prayed for by the Prosecution
Panel in another later date. Petitioner now assisted by his counsel filed two separate motions to quash
the two subpoenas issued. Sandiganbayan denied both motions and the consequent motions for
reconsideration of petitioner.

Issues:
(1) Whether or not the trust accounts of petitioner are covered by the term “deposits” as used in R.A.
No. 1405
(2) Whether or not plunder is neither bribery nor dereliction of duty not exempted from protection of
R.A. No. 1405
(3) Whether or not the unlawful examination of bank accounts shall render the evidence obtained
therefrom inadmissible in evidence.

Ruling:

(1) YES. An examination of the law shows that the term “deposits” used therein is to be understood
broadly and not limited only to accounts which give rise to a creditor-debtor relationship between the
depositor and the bank.
The policy behind the law is laid down in Section 1. If the money deposited under an account may be
used by banks for authorized loans to third persons, then such account, regardless of whether it creates
a creditor-debtor relationship between the depositor and the bank, falls under the category of accounts
which the law precisely seeks to protect for the purpose of boosting the economic development of the
country.
Trust Account No. 858 is, without doubt, one such account. The Trust Agreement between petitioner
and Urban Bank provides that the trust account covers “deposit, placement or investment of funds” by
Urban Bank for and in behalf of petitioner. The money deposited under Trust Account No. 858, was,
therefore, intended not merely to remain with the bank but to be invested by it elsewhere. To hold that
this type of account is not protected by R.A. 1405 would encourage private hoarding of funds that could
otherwise be invested by banks in other ventures, contrary to the policy behind the law.
Section 2 of the same law in fact even more clearly shows that the term “deposits” was intended to be
understood broadly. The phrase “of whatever nature” proscribes any restrictive interpretation of
“deposits.” Moreover, it is clear from the immediately quoted provision that, generally, the law applies
not only to money which is deposited but also to those which are invested. This further shows that the
law was not intended to apply only to “deposits” in the strict sense of the word. Otherwise, there would
have been no need to add the phrase “or invested.”
Clearly, therefore, R.A. 1405 is broad enough to cover Trust Account No. 858.
(2) NO. Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason
is seen why these two classes of cases cannot be excepted from the rule making bank deposits
confidential. The policy as to one cannot be different from the policy as to the other. This policy
expresses the notion that a public office is a public trust and any person who enters upon its discharge
does so with the full knowledge that his life, so far as relevant to his duty, is open to public scrutiny.
The crime of bribery and the overt acts constitutive of plunder are crimes committed by public officers,
and in either case the noble idea that “a public office is a public trust and any person who enters upon
its discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to public
scrutiny” applies with equal force.
Plunder being thus analogous to bribery, the exception to R.A. 1405 applicable in cases of bribery must
also apply to cases of plunder.
(3) NO. Petitioner’s attempt to make the exclusionary rule applicable to the instant case fails. R.A. 1405,
it bears noting, nowhere provides that an unlawful examination of bank accounts shall render the
evidence obtained therefrom inadmissible in evidence. Section 5 of R.A. 1405 only states that “[a]ny
violation of this law will subject the offender upon conviction, to an imprisonment of not more than five
years or a fine of not more than twenty thousand pesos or both, in the discretion of the court.”
Even assuming arguendo, however, that the exclusionary rule applies in principle to cases involving R.A.
1405, the Court finds no reason to apply the same in this particular case. Clearly, the “fruit of the
poisonous tree” doctrine presupposes a violation of law. If there was no violation of R.A. 1405 in the
instant case, then there would be no “poisonous tree” to begin with, and, thus, no reason to apply the
doctrine.
Additional Note: (This case is to be contrasted with Marquez v. Desierto)
The Marquez ruling notwithstanding, the above-described examination by the Ombudsman of
petitioner’s bank accounts, conducted before a case was filed with a court of competent jurisdiction,
was lawful.
For the Ombudsman issued the subpoenas bearing on the bank accounts of petitioner about four
months before Marquez was promulgated on June 27, 2001.
When this Court construed the Ombudsman Act of 1989, in light of the Secrecy of Bank Deposits Law in
Marquez, that “before an in camera inspection may be allowed there must be a pending case before a
court of competent jurisdiction”, it was, in fact, reversing an earlier doctrine found in Banco Filipino
Savings and Mortgage Bank v. Purisima.
Banco Filipino involved subpoenas duces tecum issued by the Office of the Ombudsman, then known as
the Tanodbayan, in the course of its preliminary investigation of a charge of violation of the Anti-Graft
and Corrupt Practices Act. As the subpoenas subject of Banco Filipino were issued during a preliminary
investigation, in effect this Court upheld the power of the Tandobayan under P.D. 1630 to issue
subpoenas duces tecum for bank documents prior to the filing of a case before a court of competent
jurisdiction.
Marquez, on the other hand, practically reversed this ruling in Banco Filipino despite the fact that the
subpoena power of the Ombudsman under R.A. 6770 was essentially the same as that under P.D. 1630.
The Marquez ruling that there must be a pending case in order for the Ombudsman to validly inspect
bank records in camera thus reversed a prevailing doctrine. Hence, it may not be retroactively applied.
The Ombudsman’s inquiry into the subject bank accounts prior to the filing of any case before a court of
competent jurisdiction was therefore valid at the time it was conducted. In fine, the subpoenas issued
by the Ombudsman in this case were legal, hence, invocation of the “fruit of the poisonous tree”
doctrine is misplaced

3/11/2025

Money laundering section 4 memorize.

Unlawful activity.

What are the elements of anti money laundering?

The elements of money laundering in the Philippines include the act of concealing the origin of illegally
obtained funds. This is done by moving the money through a series of transactions and bookkeeping
tricks.
Elements of money laundering
 Placement: Moving the funds away from their direct association with the crime
 Layering: Disguising the trail to make it harder to follow
 Integration: Making the money available to the criminal again from what appear to be
legitimate sources
Common money laundering techniques cash smuggling, shell companies, and real estate investments.
Money laundering in the Philippines
 In the Philippines, money laundering is the act of disguising the source of funds from criminal
activities.
 The Anti Money Laundering Act (AMLA) criminalizes money laundering.
 The AMLA also requires customer identification, record keeping, and reporting of suspicious
transactions.
Warning signs of money laundering:
 Suspicious behavior by the client
 Formation of a shell company without a legitimate commercial purpose
 Unnecessarily complex corporate structures
SECTION 4. Money Laundering Offense. — Money laundering is a crime whereby the
proceeds of an unlawful activity as herein defined are transacted, thereby making them
appear to have originated from legitimate sources. It is committed by the following:

(a) Any person knowing that any monetary instrument or property represents, involves, or
relates to, the proceeds of any unlawful activity, transacts or attempts to transact said
monetary instrument or property.

(b) Any person knowing that any monetary instrument or property involves the proceeds of any
unlawful activity, performs or fails to perform any act as a result of which he facilitates the
offense of money laundering referred to in paragraph (a) above.

(c) Any person knowing that any monetary instrument or property is required under this Act to
be disclosed and filed with the Anti-Money Laundering Council (AMLC), fails to do so.
Thus, under Republic Act No. 9194, the following were the elements of money
laundering: (1) there is an unlawful activity—any act or omission, or a series or
combination of acts or omissions, involving or directly related to offenses
enumerated under Section 3 of the law; (2) the proceeds of the unlawful activity are
transacted by the accused; (3) the accused knows that the proceeds involve or
relate to the unlawful activity; and (4) the proceeds are made to appear to have
originated from legitimate sources.

Under Section 3 of the Anti-Money Laundering Act,[68] qualified theft is one of the
unlawful activities from which proceeds could be derived. Article 310 of the Revised
Penal Code, in relation to Article 308, defines and punishes qualified theft:

UNLAWFUL ACTIVITY, SIMPLE THEFT IS NOT A VALID MONEY LAUNDERING.

REPUBLIC VS. SANDIGANGBAYAN, EJERCITO VS. SANDIGANGBAYAN.
LINGAD VS. PEOPLE

GENERAL BANKING 5 CASES.

WHAT ARE THE KINDS OF BANKS.

Standard of diligence required on banking

DISTINGUISH UNIVERSAL BANK FROM COMMERCIAL BANKS.

PROHIBITED TRANSACTIONS UNDER THE GENERAL BANKING LAW.

DUE DILIGENCE CASES in COMMERCIAL LAW.

**Title:**
Philippine National Bank vs. Santos et al.
**Facts:**
Respondents, children of Angel C. Santos, discovered in 1996 that their deceased father had deposits in
Philippine National Bank (PNB). The deposits included a premium savings account and a time deposit
account. On April 26, 1998, when respondents attempted to withdraw the funds after presenting the
necessary documents, PNB’s branch manager, Lina B. Aguilar, informed them that the funds had been
released to Bernardito Manimbo on April 1, 1997. Manimbo had submitted fraudulent documentation,
including an affidavit of self-adjudication falsely attributed to one of the respondents, which led to the
withdrawal of the funds. Respondents filed a suit for a sum of money and damages against PNB and
Aguilar.

**Procedural Posture:**
The Regional Trial Court (RTC) ruled in favor of respondents, finding PNB and Aguilar jointly and
severally liable for the release of the deposit funds and awarding damages. Both PNB and Aguilar filed
separate motions for reconsideration, which were denied by the RTC. They then appealed to the Court
of Appeals (CA), which upheld the RTC’s decision but deleted the award of exemplary damages and
modified the interest rate to 12% per annum. PNB and Aguilar subsequently filed petitions for review
with the Supreme Court (SC).

**Issues:**
1. Whether PNB was negligent in releasing the deposit to Bernardito Manimbo.
2. Whether Lina B. Aguilar is jointly and severally liable with PNB for the release of the deposit to
Manimbo.
3. Whether respondents were properly awarded damages.

**Court’s Decision:**
1. **PNB’s Negligence (Issue 1)**:
– The SC affirmed that PNB was negligent. The bank accepted inadequate documentation from
Manimbo, disregarding its own procedural requirements without due investigation. This failure
breached the high standard of care and diligence banks owe to their depositors, given the fiduciary
nature of banking relationships as prescribed by law.

2. **Liability of Lina B. Aguilar (Issue 2)**:

– Aguilar, as the branch manager, was found jointly and severally liable with PNB. She had approved the
fraudulent withdrawal without thorough verification, which facilitated the unauthorized release of
funds. The SC held that Aguilar’s actions implicated her in the bank’s negligence despite her claim that
she was merely following directives from PNB’s Legal Department.

3. **Damages Awarded to Respondents (Issue 3)**:

– The SC confirmed the awards for moral damages due to significant emotional suffering caused by the
negligence. Additionally, the SC reinstated the award for exemplary damages to set a public example
and ensure high standards of diligence by banks. The SC also upheld the award of attorney’s fees given
the respondents’ necessity to go to court to recover the funds.

**Doctrine:**
– The standard of diligence required of banks is higher than the degree of diligence of a good father of a
family.
– Banks are fiduciaries of their depositors and must treat deposit accounts with utmost care, adhering to
high standards of diligence and integrity.
– A bank’s negligence resulting in unauthorized withdrawal from an account holds both the institution
and its officers liable for damages.

**Class Notes:**
1. **Fiduciary Duty of Banks**: Banks must treat deposit accounts with the highest standard of care due
to their fiduciary relationship with depositors.
2. **Negligence and Liability**: Negligence that fails the “good father of a family” standard can hold
both the financial institution and its officers jointly and severally liable.
3. **Documentation Requirements**: Fulfilling all legal and procedural requirements is mandatory
before releasing deposits of a deceased person.
4. **Compensation for Damages**: Emotional suffering resulting from a breach of duty warrants moral
damages; exemplary damages may be awarded for gross negligence to set a precedent.

**Historical Background:**
This case underscores the importance of banking scrutiny and adherence to procedural regulations in
the Philippines, within the broader context of fiduciary obligations of financial institutions. It also
highlights the protections afforded to depositors against negligence and establishes stricter standards of
care expected from banks. The doctrines established reinforce the critical oversight role of banks in
ensuring the security of depositor funds, and the severe consequences they can face for lapses in these
duties, in a historically trust-dependent banking system.

TACITE RECONDUCTION

Court’s Decision:**
1. **PNB’s Negligence (Issue 1)**:
– The SC affirmed that PNB was negligent. The bank accepted inadequate documentation from
Manimbo, disregarding its own procedural requirements without due investigation. This failure
breached the high standard of care and diligence banks owe to their depositors, given the fiduciary
nature of banking relationships as prescribed by law.

Declaration of policy from general banking.

Section 2 of general banking.
Good faith.
The declaration of policy for the General Banking Law of 2000 (Republic Act No. 8791) recognizes the
importance of banks in the Philippines. The policy also states the government's commitment to
protecting the financial system and preventing money laundering.
Policy highlights
 The state will protect the confidentiality and integrity of bank accounts
 The Philippines will not be used as a money laundering site
 The Philippines will cooperate with other countries in investigating and prosecuting money
laundering
 The Bangko Sentral of the Philippines has the authority to administer oaths and compel the
production of documents related to bank operations
 Banks must be open for business on working days for at least six hours
 Banks may open on weekends or holidays for at least three hours
Bank policy
Bank policy and procedures are a systematic approach to managing a bank's operations. They ensure
that the bank is aligned with its business objectives and promotes a culture of compliance, risk
management, and customer-centricity.

Whether it is negligence of the bank

What is cheque kiting
Check kiting is a fraudulent practice that involves using checks to cover insufficient funds in a bank
account. It's a type of check fraud that takes advantage of the time it takes to process checks.
How it works
1. A person opens multiple accounts at different banks
2. They withdraw money from an account that doesn't have enough funds
3. They deposit the money into another account
4. They use the deposit to cover the insufficient funds in the first account
Signs of check kiting
 Frequent deposits, check writing, and balance inquiries
 Escalating balances
 Short average time money remains in account
 Frequent nonsufficient funds
 Signature and payee on check are the same
How to prevent check kiting
 Banks can place restrictions on deposits
 Financial institutions can have a waiting period before checks are deposited
 Banks can carefully scrutinize and monitor new accounts
 Banks can carefully verify identification and address information

LINGAD VS. PEOPLE

G.R. No. 224945
Facts:
Background of Employment and Access
 Petitioner Girlie J. Lingad was employed at the Olongapo City Branch of United Coconut
Planters Bank (UCPB) from January 1, 1994 until April 19, 2004.
 She held positions as a marketing associate and branch marketing officer trainee, which
provided her with access to sensitive bank systems including a dedicated User ID
("oloma01") and Teller ID (2840).
Anomalous Transactions and Initial Discovery
 Prior to her departure, Lingad processed four anomalous transactions involving
unauthorized account terminations and fund withdrawals from clients’ accounts.
 The transactions included pretermination of money market placements and
unauthorized withdrawals that subsequently were used to credit funds into fictitious
client accounts and to fund maturing placements.
 The Anti-Money Laundering Council’s fact-finding investigation, prompted by UCPB,
discovered these irregularities soon after Lingad went on unauthorized leave and
eventually left for the United States.
Specific Details of the Transactions
 The first anomalous transaction involved a money market placement belonging to
William Chieng and pretermination of accounts under the name of Vittsi G. Tanjuakio
with manager’s check endorsements showing discrepancies such as missing payment
slips and unexplained credits.
 Subsequent anomalous transactions continued to exhibit unauthorized withdrawals,
preterminations, and fund transfers using Lingad’s Teller and User IDs—including
transactions on November 4, 2002; April 9, 2003; and multiple transactions in August
and December 2003.
 Detailed amounts were recorded, involving sums ranging from a few million pesos to a
total overall damage to UCPB of over Php22 million, while the alleged proceeds from
qualifying theft reached approximately Php83 million.
Filing of Charges and Trial Proceedings
 An Information was filed on October 5, 2006 charging Lingad with violation of Section
4(a) of Republic Act No. 9160 (the Anti-Money Laundering Act), with allegations citing
qualified theft as the predicate unlawful activity.
 Upon extradition from the United States, Lingad entered her plea of not guilty.
 Trial proceedings ensued wherein the prosecution presented documentary evidence
(manager’s checks, computer transaction logs marked with her IDs, withdrawal records,
etc.) and witness testimonies that indicated her involvement in the unauthorized
transactions.
Evidence and Prosecution’s Case
 Documents and digital records unequivocally linked the anomalous transactions to
Lingad’s unique Teller and User IDs, thereby establishing her role in processing the
irregular withdrawals.
  The prosecution contended that through these transactions she converted proceeds
from qualified theft—an offense explicitly linked to the proceeds of an unlawful activity
—into funds that appeared to come from legitimate sources, thus committing money
laundering.
 The evidence included the absence of client payment slips, irregularities in account
terminations, and discrepancies in the issuance of receipts and manager’s checks.
Defense Claims and Counterarguments
 Lingad claimed she did not recall processing the transactions or that they might have
been executed by an unauthorized person utilizing her credentials.
 She argued that all of her transactions were subject to supervision and approval by bank
officers, and that her limited authority and the requirement for co-signatures under
normal procedures should exonerate her.
 Additionally, her defense pointed to the absence of any internal audit findings or
infractions against her prior to her unauthorized leave, suggesting she was potentially
being used as a scapegoat.
Lower Court Decisions and Sentencing
 The Regional Trial Court (RTC) found overwhelming evidence of Lingad’s involvement,
convicting her for money laundering based on her processing of the anomalous
transactions.
 On August 8, 2013, the RTC rendered a guilty verdict, and later, the Court of Appeals
(CA) affirmed this decision in decisions rendered on December 11, 2015, and
subsequent resolutions on June 2, 2016.
 The sentencing imposed was indeterminate imprisonment (seven to thirteen years), a
fine of Php34,099,195.85, and other accessory penalties, with orders noting that she
had served the maximum penalty and was due for release unless detained on other
grounds.
Clarification of Legal Framework and Subsequent Orders
 The appellate rulings reiterated that the money laundering offense, as defined under
Section 4(a) of the Anti-Money Laundering Act, did not require proof of the
perpetrator’s direct participation in the predicate crime (qualified theft), but only that
the proceeds from such crime had been transacted.
 The legal debates centered on the independent prosecution of the money laundering
offense vis-à-vis the underlying unlawful activity, a point underscored by both statutory
amendments and international best practices.
 Ultimately, the en banc decision denied Lingad’s petition for review on certiorari,
affirming her conviction and order of release given the completion of her maximum
sentence.
Issue:
Sufficiency of Evidence
 Whether the prosecution proved beyond reasonable doubt that Lingad processed the
anomalous transactions using her personal credentials.
 Whether the documentary evidence (manager’s checks, digital logs, and absence of
client signatures) conclusively linked the transactions to her.
Element of Unlawful Activity
 Whether it was established that the proceeds transacted derived from an unlawful
activity, specifically qualified theft, as required under the AMLA.
 Whether the prosecution needed to prove all elements of the predicate crime beyond a
reasonable doubt or only the unlawfulness of the proceeds.
Independent Prosecution of Money Laundering
 Whether the money laundering charge could proceed independently of the separate
prosecution for the predicate unlawful activity.
 The issue of whether the independent proceeding requires the predicate crime’s
elements to be established beyond reasonable doubt within the money laundering case
itself.
Adequacy of the Defense
 Whether Lingad’s claims regarding her limited authority, supervisory checks by bank
officers, and the possibility of misuse of her credentials had any merit.
 Whether her flight and lack of proper turnover substantiated an intent to evade
investigation rather than a mere administrative lapse.
Interpretation of Statutory Elements
 Whether “making proceeds appear as having originated from legitimate sources”
constitutes an independent element of money laundering or merely describes the
outcome of the illicit transaction.
 The implications of statutory amendments (e.g., RA 9194 and RA 10365) on the required
proof in money laundering cases.

SECTION 1 AND SECTION 52 OF NEGOTIABLE INSTRUMENTS.

ELEMENTS OF VIOLATION OF SEC 3E OF RA3019

Anti-Graft and Corrupt Practices Act, RA 3019: Explainer

Updated onMay 11, 2024

“Government” – includes the national government, the local governments, the government-owned and government-
controlled corporations, and all other instrumentalities or agencies of the Republic of the Philippines and their
branches. (Section 2[a], R.A. 3019, Anti-Graft and Corrupt Practices Act, as amended)

“Public officer” – includes elective and appointive officials and employees, permanent or temporary, whether in the
classified or unclassified or exempt service receiving compensation, even nominal, from the government as defined in
the preceding subparagraph. (Section 2[b], Ibid.)

“Person” – includes natural and juridical persons, unless the context indicates otherwise. (Section 2[d], Ibid.)
 “Receiving any gift” – includes the act of accepting directly or indirectly a gift from a person other than a member of
the public officer’s immediate family, in behalf of himself or of any member of his family or relative within the fourth
civil degree, either by consanguinity or affinity, even on the occasion of a family celebration or national festivity like
Christmas, if the value of the gift is under the circumstances manifestly excessive. (Section 2[c], Ibid.)

1. Crimes

a. Corrupt practices of public officers

In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute
corrupt practices of any public officer and are hereby declared to be unlawful:

1) Persuading, inducing or influencing another public officer to perform an act constituting a violation of
rules and regulations duly promulgated by competent authority or an offense in connection with the official
duties of the latter, or allowing himself to be persuaded, induced, or influenced to commit such violation or
offense. (Section 3[a], Ibid.)

Elements:

1) The offender is a public officer;

2) The offender persuades, induces, or influences another public officer to perform an act or the offender allows
himself to be persuaded, induced, or influenced to commit an act; and,

3) The act performed by the other public officer or committed by the offender constitutes a violation of rules and
regulations duly promulgated by competent authority or an offense in connection with the official duty of the latter.
(Ampil v. Office of the Ombudsman, G.R. No. 192685, 31 July 2013)

2) Directly or indirectly requesting or receiving any gift, present, share, percentage, or benefit, for himself or
for any other person, in connection with any contract or transaction between the Government and any other
part, wherein the public officer in his official capacity has to intervene under the law. (Section 3[b], Ibid.)

Elements:

1) The offender is a public officer;

2) He requested or received a gift, present, share, percentage or benefit;

3) He made the request or receipt on behalf of the offender or any other person;

4) The request or receipt was made in connection with a contract or transaction with the government and,

5) He has the right to intervene, in an official capacity under the law, in connection with a contract or transaction has
the right to intervene. (Merencillo v. People, G.R. Nos. 142369-70, 13 April 2007)

3 Modes:

1) Demanding or requesting;

2) Receiving; or,

3) Demanding, requesting and receiving

– any gift, present, share, percentage, or benefit for oneself or for any other person, in connection with any contract
or transaction between the government and any other party, wherein a public officer in an official capacity has to
intervene under the law. Each of these modes of committing the offense is distinct and different from one another.
Proof of existence of any of them suffices to warrant conviction. (Cadiao-Palacios v. People, G.R. No. 168544, 31
March 2009)

Concept of transaction: A transaction like a contract, is one which involves some consideration as in credit
transactions. (People v. Sandiganbayan, G.R. No. 188165, 11 December 2013)

Specific contracts or transactions: Section 3 (b) of RA 3019 is specific. It is limited only to contracts or transaction
involving monetary consideration where the public officer has authority to intervene under the law. Thus, the
requesting or demanding of any gift, present, share, percentage, or benefit covered by said Section 3(b) must be in
connection with a “contract or transaction” involving “monetary consideration” with the government wherein the public
officer in his official capacity has to intervene under the law. (Ibid.)

Clear intent to receive: There must be a clear intention on the part of the public officer to take the gift so offered and
consider it as his or her own property from then on. Mere physical receipt unaccompanied by any other sign,
circumstance or act to show acceptance is not sufficient to lead the court to conclude that the crime has been
committed. To hold otherwise would encourage unscrupulous individuals to frame up public officers by simply putting
within their physical custody some gift, money or other property. (Peligrino v. People, G.R. No. 136266, 13 August
2001)

a) Contrasted with Bribery

Bribery – Elements:

1) The offender is a public officer;

2) The offender accepts an offer or promise or receives a gift or present by himself or through another;

3) Such offer or promise be accepted or gift or present be received by the public officer with a view to committing
some crime, or in consideration of the execution of an act which does not constitute a crime but the act must be
unjust, or to refrain from doing something which it is his official duty to do; and,

4) The act which the offender agrees to perform or which he executes is connected with the performance of his
official duties. (Ibid.)

Contrasting Section 3(b) with Bribery: The violation of Section 3(b) of RA 3019 is neither identical nor necessarily
inclusive of direct bribery. While they have common elements, not all the essential elements of one offense are
included among or form part of those enumerated in the other. Whereas the mere request or demand of a gift,
present, share, percentage or benefit is enough to constitute a violation of Section 3(b) of RA 3019, acceptance of a
promise or offer or receipt of a gift or present is required in direct bribery. Moreover, the ambit of Section 3(b) of RA
3019 is specific. It is limited only to contracts or transactions involving monetary consideration where the public officer
has the authority to intervene under the law. Direct bribery, on the other hand, has a wider and more general scope:
(a) performance of an act constituting a crime; (b) execution of an unjust act which does not constitute a crime and (c)
agreeing to refrain or refraining from doing an act which is his official duty to do.

Same; One act/transaction, two offenses: The same act/transaction may gave rise to two separate and distinct
offenses. (Ibid.)

Same; Same; No double jeopardy: No double jeopardy attached since there is a variance between the elements of
the offenses charged. The constitutional protection against double jeopardy proceeds from a second prosecution for
the same offense, not for a different one. (Ibid.)

3) Directly or indirectly requesting or receiving any gift, present or other pecuniary or material benefit, for
himself or for another, from any person for whom the public officer, in any manner or capacity, has secured
or obtained, or will secure or obtain, any Government permit or license, in consideration for the help given or
to be given, without prejudice to Section thirteen of R.A. 3019. (Section 3[c], Ibid.)
Elements:

1) The offender is a public officer;

2) He has secured or obtained, or would secure or obtain, for a person any government permit or license;

3) He directly or indirectly requested or received from said person any gift, present or other pecuniary or material
benefit for himself or for another; and,

4) He requested or received the gift, present or other pecuniary or material benefit in consideration for help given or
to be given. (Mendoza-Ong v. Sandiganbayan, G.R. Nos. 146368-69, 23 October 2003)

Gift’s value – irrelevant: Section 3 (c) applies regardless of whether the gift’s value is manifestly excessive or not, and
regardless of the occasion. What is important here is whether the gift is received in consideration for help given or to
be given by the public officer. The value of the gift is not mentioned at all as an essential element of the offense
charged under Section 3 (c), and there appears no need to require the prosecution to specify such value in order to
comply with the requirements of showing a prima facie case. (Ibid.)

4) Accepting or having any member of his family accept employment in a private enterprise which has
pending official business with him during the pendency thereof or within one year after its termination.
(Section 3[d], Ibid.)

Elements:

1) That the accused is a public officer;

2) He or she accepted or has a member of his or her family who accepted employment in a private enterprise; and,

3) Such private enterprise has a pending official business with the public officer during the pendency of official
business or qithin one year from its termination. (Villanueva v. People, G.R. No. 237864, 08 July 2020)

Family – include consanguinity or affinity: Family relation is defined under Section 4 of R.A. No. 301923 which,
according to the said section, “shall include the spouse or relatives by consanguinity or affinity in the third civil
degree.” Thus, we need not look beyond the provisions of R.A. No. 3019 to hold that a brother-in-law falls within the
definition of family under Section 3(d) thereof. (Valera v. Ombudsman, G.R. No. 167278, 27 February 2008)

Regardless if for-profit or non-profit, stock or non-stock: The section applies regardless if the enterprise is for profit or
not, stock or non-stock, the law does not distinguish. (Villanueva v. People, supra.)

5) Causing any undue injury to any party, including the Government, or giving any private party any
unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial
functions through manifest partiality, evident bad faith or gross inexcusable negligence. This provision shall
apply to officers and employees of offices or government corporations charged with the grant of licenses or
permits or other concessions. (Section 3[e], Ibid.)

Elements:

1) The offender is a public officer;

2) The act was done in the discharge of the public officer’s official, administrative or judicial functions;

3) The act was done through manifest partiality, evident bad faith, or gross inexcusable negligence; and,

4) The public officer caused any undue injury to any party, including the Government, or gave any unwarranted
benefits, advantage or preference. (Ampil v. Office of the Ombudsman, supra.)
Modes:

1) “manifest partiality”;

2) “evident bad faith”; and/or,

3) “gross negligence.” (Fuentes v. People, G.R. No. 186421, 17 April 2017)

Partiality: “Partiality” is synonymous with “bias” which “excites a disposition to see and report matters as they are
wished for rather than as they are.” ” (Coloma, Jr. v. Sandiganbayan, G.R. No. 205561, 24 September 2014)

Bad faith: Bad faith does not simply connote bad judgment or negligence; it imputes a dishonest purpose or some
moral obliquity and conscious doing of a wrong; a breach of sworn duty through some motive or intent or ill will; it
partakes of the nature of fraud. (Ibid.)

Gross negligence: Gross negligence has been so defined as negligence characterized by the want of even slight
care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but wilfully and intentionally
with a conscious indifference to consequences in so far as other persons may be affected. It is the omission of that
care which even inattentive and thoughtless men never fail to take on their own property. (Ibid.)

Consummated only – no attempted nor frustrated: There are two principal reasons why Section 3(e) of R.A. No.
3019, as amended, can be said to penalize only consummated offenses. Firstly, the penalty imposed therefor per
Section 9 is “imprisonment for not less than six years and one month nor more than fifteen years, perpetual
disqualification from office, and confiscation or forfeiture in favor of the Government of any prohibited interest and
unexplained wealth manifestly out of proportion to his salary and other lawful income.” The imposable imprisonment
penalty does not have the nomenclature and duration of any specific penalty in the Revised Penal Code. Accordingly,
there can be no valid basis for the application of, inter alia, Articles 50 and 51 on the penalty to be imposed on the
principal of a frustrated and attempted felony. The penalty of perpetual disqualification is only from office, unlike either
the perpetual absolute and perpetual special disqualifications under Articles 30 and 31 of the Revised Penal Code.
Secondly, the third requisite of Section 3(e), viz., “causing undue injury to any party, including the government,” could
only mean actual injury or damage which must be established by evidence. The word causing is the present participle
of the word cause. As a verb, the latter means “to be the cause or occasion of; to effect as an agent; to bring about;
to bring into existence; to make to induce; to compel.” The word undue means “more than necessary; not proper;
illegal.” And the word injury means “any wrong or damage done to another, either in his person, rights, reputation or
property. The invasion of any legally protected interest of another.” Taken together, proof of actual injury or damage
is required. (Pecho v. Sandiganbayan, G.R. No. 111399, 14 November 1994)

6) Neglecting or refusing, after due demand or request, without sufficient justification, to act within a
reasonable time on any matter pending before him for the purpose of obtaining, directly or indirectly, from
any person interested in the matter some pecuniary or material benefit or advantage, or for the purpose of
favoring his own interest or giving undue advantage in favor of or discriminating against any other interested
party. (Section 3[f], Ibid.)

Elements:

1) The offender is a public officer;

2) The said officer has neglected or has refused to act without sufficient justification after due demand or request has
been made on him;

3) Reasonable time has elapsed from such demand or request without the public officer having acted on the matter
pending before him; and,

4) Such failure to so act is for the purpose of obtaining, directly or indirectly, from any person interested in the matter
some pecuniary or material benefit or advantage in favor of an interested party, or discriminating against another.
(Lacap v. Sandiganbayan, G.R. No. 198162, 21 June 2017)
Unlawful purpose: To warrant conviction for a violation of Section 3 (f) of the Anti-Graft and Corrupt Practices Act, the
law itself additionally requires that the accused’s dereliction, besides being without justification, must be for the
purpose of (a) obtaining, directly or indirectly, from any person interested in the matter some pecuniary or material
benefit or advantage in favor of an interested party or (b) discriminating against another interested party. The severity
of the penalty imposed by the law leaves no doubt that the legislative intent is to consider this element to be
indispensable. (Conrado v. Sandiganbayan, En Banc, G.R. No. 94955, 18 August 1993)

7) Entering, on behalf of the Government, into any contract or transaction manifestly and grossly
disadvantageous to the same, whether or not the public officer profited or will profit thereby. (Section
3[g], Ibid.)

Elements:

1) That the accused is a public officer;

2) That he entered into a contract or transaction on behalf of the government; and,

3) That such contract or transaction is grossly and manifestly disadvantageous to the government. (Go v.
Sandiganbayan, G.R. No. 172602, 13 April 2007)

Private individuals – included: Section 3(g) applies to both public officers and private persons. (Ibid.)

Same; Via conspiracy: If two or more persons enter into a conspiracy, any act done by any of them pursuant to the
agreement is, in contemplation of law, the act of each of them and they are jointly responsible therefor. (People v.
Go, En Banc, G.R. No. 168539, 25 March 2014)

a) Criminal liability of private person

GENERAL RULE: Before a private person may be indicted for violation of Section 3(g) of R.A. 3019, such private
person must be alleged to have acted in conspiracy with a public officer. (Ibid.)

EXCEPTION: The law, however, does not require that such person must, in all instances, be indicted together with
the public officer. If circumstances exist where the public officer may no longer be charged in court, as the public
officer has already died, the private person may be indicted alone. (Ibid.)

8) Directly or indirectly having financing or pecuniary interest in any business, contract or transaction in
connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the
Constitution or by any law from having any interest. (Section 3[h], Ibid.)

9) Directly or indirectly becoming interested, for personal gain, or having a material interest in any
transaction or act requiring the approval of a board, panel or group of which he is a member, and which
exercises discretion in such approval, even if he votes against the same or does not participate in the action
of the board, committee, panel or group. (Section 3[i], Ibid.)

Elements:

1) The accused is a public officer;

2) He has a direct or indirect financial or pecuniary interest in any business, contract, or transaction; and,

3) He either (a) intervenes or takes part in his official capacity in connection with such interest, or (b) is prohibited
from having such interest by the Constitution or by any law. (Caballero v. Sandiganbayan, G.R. Nos. 137355-58, 25
September 2007)

2 Modes:
1) When the public officer intervenes or takes part in his official capacity in connection with his financial or pecuniary
interest in any business, contract or transaction; or,

2) When he is prohibited from having such an interest by the Constitution or by law. (Ibid.)

Presumption of interest for personal gain: Interest for personal gain shall be presumed against those public officers
responsible for the approval of manifestly unlawful, inequitable, or irregular transaction or acts by the board, panel or
group to which they belong. (Paragraph 2, Section 3[i], Ibid.)

10) Knowingly approving or granting any license, permit, privilege or benefit in favor of any person not
qualified for or not legally entitled to such license, permit, privilege or advantage, or of a mere representative
or dummy of one who is not so qualified or entitled. (Section 3[j], Ibid.)

11) Divulging valuable information of a confidential character, acquired by his office or by him on account of
his official position to unauthorized persons, or releasing such information in advance of its authorized
release date. (Section 3[k], Ibid.)

b. Gift-giver’s joint liability

The person giving the gift, present, share, percentage or benefit referred to in Nos. 2 and 3; or offering or giving to the
public officer the employment mentioned in No. 4; or urging the divulging or untimely release of the confidential
information referred to in No. 11 of this section shall, together with the offending public officer, be punished under
Section nine of R.A. 3019 and shall be permanently or temporarily disqualified in the discretion of the Court, from
transacting business in any form with the Government. (Section 3, Ibid.)

2. Prohibitions

a. Prohibition on private individuals

1st Mode

It shall be unlawful for any person having family or close personal relation with any public official to capitalize or
exploit or take advantage of such family or close personal relation by directly or indirectly requesting or receiving any
present, gift or material or pecuniary advantage from any other person having some business, transaction,
application, request or contract with the government, in which such public official has to intervene. Family relation
shall include the spouse or relatives by consanguinity or affinity in the third civil degree. The word “close personal
relation” shall include close personal friendship, social and fraternal connections, and professional employment all
giving rise to intimacy which assures free access to such public officer. (Section 4[a], Ibid.)

Elements:

1) That the offender has family or close personal relation with a public official;

2) That he capitalizes or exploits or takes advantage of such family or close personal relation by directly or indirectly
requesting or receiving any present, gift, material or pecuniary advantage from any person having some business,
transaction, application, request or contract with the government; and,

3) That the public official with whom the offender has family or close personal relation has to intervene in the
business transaction, application, request, or contract with the government. (Disini v. Sandiganbayan, G.R. Nos.
169823-24, 174764-65, 11 September 2013)

2nd Mode

It shall be unlawful for any person knowingly to induce or cause any public official to commit any of the offenses
defined in Section 3 hereof. (Section 4[b], Ibid.)
b. Prohibition on certain relatives

It shall be unlawful for the spouse or for any relative, by consanguinity or affinity, within the third civil degree, of the
President of the Philippines, the Vice-President of the Philippines, the President of the Senate, or the Speaker of the
House of Representatives, to intervene, directly or indirectly, in any business, transaction, contract or application with
the Government: Provided, That this section shall not apply to any person who, prior to the assumption of office of
any of the above officials to whom he is related, has been already dealing with the Government along the same line
of business, nor to any transaction, contract or application already existing or pending at the time of such assumption
of public office, nor to any application filed by him the approval of which is not discretionary on the part of the official
or officials concerned but depends upon compliance with requisites provided by law, or rules or regulations issued
pursuant to law, nor to any act lawfully performed in an official capacity or in the exercise of a profession. (Section
5, Ibid.)

c. Prohibition on Members of Congress

It shall be unlawful hereafter for any Member of the Congress during the term for which he has been elected, to
acquire or receive any personal pecuniary interest in any specific business enterprise which will be directly and
particularly favored or benefited by any law or resolution authored by him previously approved or adopted by the
Congress during the same term. (Section 6, Ibid.)

The provision of this section shall apply to any other public officer who recommended the initiation in Congress of the
enactment or adoption of any law or resolution, and acquires or receives any such interest during his incumbency.
(Paragraph 2, Section 6, Ibid.)

It shall likewise be unlawful for such member of Congress or other public officer, who, having such interest prior to the
approval of such law or resolution authored or recommended by him, continues for thirty days after such approval to
retain such interest. (Paragraph 3, Section 6, Ibid.)

3. Unexplained wealth

Ground for dismissal or removal: If in accordance with the provisions of R.A. 1379, a public official has been found to
have acquired during his incumbency, whether in his name or in the name of other persons, an amount of property
and/or money manifestly out of proportion to his salary and to his other lawful income, that fact shall be a ground for
dismissal or removal. (Section 8, Ibid.)

Same; Properties: Properties in the name of the spouse and dependents of such public official may be taken into
consideration, when their acquisition through legitimate means cannot be satisfactorily shown. (Ibid.)

Same; Bank deposits: Bank deposits in the name of or manifestly excessive expenditures incurred by the public
official, his spouse or any of their dependents including but not limited to activities in any club or association or any
ostentatious display of wealth including frequent travel abroad of a non-official character by any public official when
such activities entail expenses evidently our of proportion to legitimate income, shall likewise be taken into
consideration in the enforcement of this section, notwithstanding any provision of law to the contrary. (Ibid.)

Administrative liability: The circumstances hereinabove mentioned shall constitute valid ground for the administrative
suspension of the public official concerned for an indefinite period until the investigation of the unexplained wealth is
completed. (Ibid.)

4. Penalties

1) Any public officer or private person committing any of the unlawful acts or omissions enumerated in Sections 3, 4,
5 and 6 of R.A. 3019 shall be punished with imprisonment for not less than six years and one month nor more than
fifteen years, perpetual disqualification from public office, and confiscation or forfeiture in favor of the Government of
any prohibited interest and unexplained wealth manifestly out of proportion to his salary and other lawful income.
(Section 9[a], Ibid.)

Any complaining party at whose complaint the criminal prosecution was initiated shall, in case of conviction of the
accused, be entitled to recover in the criminal action with priority over the forfeiture in favor of the Government, the
amount of money or the thing he may have given to the accused, or the fair value of such thing. (Paragraph 2,
Section 9[a], Ibid.)

2) Any public officer violating any of the provisions of Section 7 of R.A. 3019 shall be punished by a fine of not less
than one thousand pesos nor more than five thousand pesos, or by imprisonment not exceeding one year six months,
or by both such fine and imprisonment, at the discretion of the Court.1âwphi1(Section 9[b], Ibid.)

The violation of said section proven in a proper administrative proceeding shall be sufficient cause for removal or
dismissal of a public officer, even if no criminal prosecution is instituted against him. (Paragraph 2, Section 9[b], Ibid.)

Termination of office: No public officer shall be allowed to resign or retire pending an investigation, criminal or
administrative, or pending a prosecution against him, for any offense under R.A. 3019 or under the provisions of the
Revised Penal Code on bribery. (Section 12, Ibid.)

Suspension and loss of benefits for incumbents: Any incumbent public officer against whom any criminal prosecution
under a valid information under R.A. 3019 or under Title 7, Book II of the Revised Penal Code or for any offense
involving fraud upon government or public funds or property whether as a simple or as complex offense and in
whether stage of execution and mode of participation, is pending in court, shall be suspended from office. Should he
be convicted by final judgment, he shall lose all retirement or gratuity benefits under any law, but if he is acquitted, he
shall be entitled to reinstatement and to the salaries and benefits which he failed to receive during suspension, unless
in the meantime administrative proceedings have been filed against him. (Section 15, Ibid.)

In the event that such convicted officer, who may have already been separated from the service, has already
received such benefits he shall be liable to restitute the same to the Government. (Paragraph 2, Section 15, Ibid.)

Exempted – gifts of small or insignificant value: Unsolicited gifts or presents of small or insignificant value offered or
given as a mere ordinary token of gratitude or friendship according to local customs or usage, shall be excepted from
the provisions of R.A. 3019. (Section 14, Ibid.)

Private practice – when allowed: Nothing in R.A. 3019 shall be interpreted to prejudice or prohibit the practice of any
profession, lawful trade or occupation by any private person or by any public officer who under the law may
legitimately practice his profession, trade or occupation, during his incumbency, except where the practice of such
profession, trade or occupation involves conspiracy with any other person or public official to commit any of the
violations penalized in R.A. 3019. (Paragraph 2, Section 14, Ibid.)

BRIZ CASE RECITATION

https://sc.judiciary.gov.ph/185110-premiere-development-bank-vs-spouse-engracio-t-castaneda-and-
lourdes-e-castaneda/

Premiere Development Bank vs. Spouses Engracio T. Castañeda ;

PRINCIPLE OF THE PDIC.

WHAT ARE THE main FUNCTION OF THE PDIC.

Money market.

Certificate of time deposits.