THIRD DIVISION

G.R. No. 224112, September 02, 2020

REPUBLIC OF THE PHILIPPINES REPRESENTED BY THE ANTI-MONEY

LAUNDERING COUNCIL (AMLC), PETITIONER, V. BLOOMBERRY RESORTS
AND HOTELS, INC. (SOLAIRE) AND BANCO DE ORO, RESPONDENTS.

DECISION

CARANDANG, J.:

Before this Court is a Petition for Review on Certiorari With Prayer for the Issuance
of a Temporary Restraining Order or Status Quo Ante Order1 under Rule 45 of the
Rules of Court, assailing the Resolution2 dated April 15, 2016 of the Court of
Appeals (CA) in CA-G.R. AMLA Case No. 00152 denying the Urgent Motion for
Additional Period of Freeze Order and Urgent Motion for Status Quo Order filed by
the Republic of the Philippines as represented by the Anti-Money Laundering
Council (AMLC) and granting the Urgent Motion to Lift Freeze Order 3 filed by
Bloomberry Resorts and Hotels, Inc. (BRHI).

Antecedents

In February 2016, news outlets and the media broke the story of the hacking of the
account of Bangladesh Bank with the Federal Reserve Bank of New York (New York
Fed) where somehow, US$81,000,000.00 found its way to the Philippine Banking
System.4

In a letter dated February 16, 2016, Bangladesh Bank Governor Atiur Rahman
(Governor Rahman) sought the assistance of Bangko Sentral ng Pilipinas Governor
Amando M. Tetangco, Jr. (Governor Tetangco) regarding the loss of millions of US
dollars from Bangladesh Bank's Account No. 021083190 with the New York Fed.
According to Governor Rahman, some fraudulent payment transactions were made
to the New York Fed in favour of Rizal Commercial Banking Corporation (RCBC)
involving US$81,000,000.00. Governor Rahman requested Governor Tetangco to
conduct an immediate inquiry into the matter and asked for help for the recovery of
the money.5

Based on the Incident Report6 prepared by the Bangladesh Bank, the beneficiaries

of the fraudulent transfer, having accounts with the RCBC are the following:

Beneficiary Name Amount (USD)

Michael F. Cruz 6,000,039.12

Jessie Christopher M. Lagrosas 30,000,039.12

 Alfred S. Vergara 20,000,000.00

Enrico T. Vasquez 25,001,583.88

Total 81,001,662.127

On February 16, 2016, Mohammad Abdur Rab and Mohammad Jaker Hossain, the
Joint Director of the Bangladesh Financial Intelligence Unit (BFIU) and the Deputy
General Manager, Accounts and Budgeting Department of Bangladesh Bank,
respectively, visited the AMLC Secretariat, presented the facts of their case and
sought for assistance.8 On investigation, it was found that the following events
transpired leading to the transfer of US$29,000,000.00 to the Banco de Oro (BDO)
Account No. 6280225150 of BRHI:

On February 4, 2016, an unauthorized user issued 35 SWIFT 9 payment instructions

to the New York Fed involving US$951,000,000.00. The New York Fed did not
execute 30 payment instructions for lack of beneficiary details. Five remaining
payment instructions, including the transfers to Michael F. Cruz, Jessie Christopher
M. Lagrosas, Alfred S. Vergara, and Enrico T. Vasquez, were cleared. 10 The other
one was put on hold because of the discrepancy in the beneficiary's name. On
February 8, 2016, a public non-working holiday in the Philippines because of the
Chinese New Year, Bangladesh Bank sent "stop payment" requests to RCBC.
However, RCBC was able to respond only on February 9, 2016 and placed on hold
the remaining proceeds amounting to just US$68,305.00. 11

The remittances to the four account holders of RCBC were either transferred or
withdrawn on the same day (February 5, 2016) or on the next working day
(February 9, 2016).12

Because of the huge amount of money transferred to the accounts of Michael F.

Cruz, Jessie Christopher M. Lagrosas, Alfred S. Vergara, and Enrico T. Vasquez
originating from the same payment instructions, the AMLC conducted initial
investigations including the account of a certain William So Go (Go) and Kam Sin
Wong.13 It was found that the withdrawals from the four RCBC bank accounts were
eventually transferred to Go's account amounting to US$65,668,664.37. This
amount was credited to PhilRem Service Corporation's account (PhilRem), a
remittance company, upon Go's instructions. The other US$15,215,977.26 was also
credited to PhilRem's account on the same day. In other words, the
US$81,000,000.00 was transferred from the four account holders of RCBC, to Go's
account and eventually to PhilRem.14

PhilRem was informed by Go that he intended to take advantage of the influx of

Chinese casino players for the Chinese New Year. Hence, upon Go's instructions,
PhilRem delivered: (1) US$29,000,000.00 to Bloomberry Resorts and Hotels, Inc.'s
(BRHI) BDO Account No. 6280225150; (2) US$21,245,500.00 to Eastern Hawaii
Leisure Company; and (3) US$30,639,141.63 to Weikang Xu. 15
Upon finding of probable cause that BRHI's BDO Account No. 6280225150 was
related to the unlawful activity of hacking, the AMLC issued a
resolution16 authorizing the AMLC Secretariat to file, through the Office of the
Solicitor General (OSG), an ex parte petition for the issuance of a freeze order
against the subject account.17 On March 15, 2016, the CA issued the freeze order
effective for 30 days. At that time, the BRHI's BDO Account contained
P1,377,354,671.23.18 In its Resolution, the CA was convinced that there was ample
basis to believe that the bank account in the name of BRHI with BDO was related to
or involved in unlawful activities or offenses of money laundering under Republic
Act No. (R.A.) 9160, as amended.19 However, considering that BRHI is widely
regarded as a legitimate business entity that caters to the needs of the public
concerning leisure and entertainment, the CA limited the duration of the Freeze
Order to 30 days only.20

On March 17, 2016, the AMLC also filed an application for bank inquiry with the CA
which was granted in a Resolution21 dated March 18, 2016. The CA held that based
on the totality of the facts and circumstances surrounding BDO Account No.
6280225150 in the name of BRHI, there is at least a prima facie ground to believe
that the BDO account is related to an unlawful activity such as hacking or cracking
within the purview of R.A. 9160, as amended.22 Hence, the CA granted the
application for bank inquiry to enable the AMLC to obtain material relevant
information on the transactions involving BDO Account No. 6280225150.23

The Senate Committee on Accountability of Public Officers and Investigations (Blue

Ribbon Committee) hearings also yielded the same finding that BRHI received fund
transfers from PhilRem in the total amount of P1,365,000,000.00 (equivalent to
US$29,000,000.00).24 This amount was traced as having been sourced from the
stolen funds of Bangladesh Bank.25

For its part, BRHI claims that it is the casino operator of Solaire Resort and Casino
(Solaire) located at the Entertainment City in Parañaque. As a casino operator, it is
not a covered institution under the Anti-Money Laundering Act of 2001 (AMLA) at
the time the incident happened.26

BRHI explained that the subject BDO account is a bank account for peso payments
or deposits/remittances to BRHI. The details of the bank account are given to
junket operators, premium players or high rollers to enable them to deposit money
that they will use to engage in gaming in Solaire. A junket operator is a person or
entity that markets and arranges casino games to foreign casino players providing
them with credits and other services, and bringing them to Solaire to play casino
games, and in return, they receive commissions. 27

Premium players are high rollers or very important customers who play on a rolling
chip program or higher limit games. Premium players are required to put up "front
money" before they can play in Solaire. Front money is the capital that the
premium player deposits in an account with the casino. This front money is
exchanged with non-negotiable chips which can only be played and cannot be
encashed. Premium players are required to play and roll their front money in order
to earn rebates or commissions from the casino. The funds that a premium player
deposits into the bank account of the casino become payment to the casino for
purchase of non-negotiable chips; hence, owned by the casino. 28

On February 5, 2016, a Chinese national from Macau named Ding Zhize (Ding)
advised BRHI that he and his companions will remit millions of dollars to Solaire to
be used by a group of Chinese players who intended to play during the Chinese
New Year. Ding was introduced to BRHI by Wang Xin (Wang) and Gao Shuhua
(Gao) who were known high rollers and who had previously played in
Solaire.29 Hence, on February 5 and 10, 2016, BRHI received from the BDO account
of PhilRem the total amount of P1,365,000,000.00. This amount was used by the
group of Ding as front money to play in Solaire.30

BRHI claims that at the time of the remittance, there was no reason for it to
suspect that the amount could be related to any unlawful activity as the same was
received and deposited in the account of BRHI in the regular course of business.
The deposit of P1,365,000,000.00 was not unusual because being a casino, BRHI
regularly deals with large amounts of money. Also, the deposit coincided with the
Chinese New Year which is a known season for Chinese high rollers to splurge. 31

When the amount of money was deposited in the account of BRHI, it was
exchanged for value – the non-negotiable chips. By February 29, 2016, the whole
amount was fully used to play and had been converted to non-negotiable chips. 32

On February 29, 2016, news articles broke out about the hacking of the Bangladesh
Bank account and mentioned Solaire. On March 10, 2016, BRHI deemed it prudent
to take reasonable measures to curtail any damage that said allegations, if the
same turned out to be true, would cause. Hence, BRHI froze whatever remaining
balance the Ding group had in their accounts and their members were barred from
playing in Solaire. However, all that remained from the accounts of the Ding group
amounted to P107,350,602.00 plus cash in various currencies amounting to
P1,347,069.00.33

Upon receipt of the freeze order issued by the CA, BRHI filed an Urgent Motion to
Lift Freeze Order34 while the AMLC filed an Urgent Motion for Additional Period of
Freeze Order.35

On April 15, 2016, the CA issued the assailed Resolution 36 granting the Urgent
Motion to Lift Freeze Order filed by BRHI and directing the BDO to unfreeze Account
No. 628022510 in the name of BRHI. The disquisition of the CA is reproduced
below, to wit:

xxxx

Our initial findings that there exists probable cause to justify the issuance of an Ex
Parte Freeze Order against Solaire would no longer hold in view of the AMLC's
failure to establish within the period given that the Subject Account was acquired
through unlawful means or illegal activity. Its argument that the proceeds of the
Subject Account form part of the funds stolen from Bangladesh Bank remains within
the realms of speculation. Even now, the AMLC could not give a link, direct or
indirect, that would connect to the proposition, nay suspicion, that the proceeds of
the Subject Account form part of the funds stolen from the Bangladesh Bank.
Worse, it miserably failed to demonstrate that the circumstances surrounding the
funding of the said account. Although the AMLC admitted that the Subject Account
was in the name of Solaire, a legitimate casino operator, it sic adamandly
characterized the frozen funds as proceeds of an unlawful activity. Again, this
argument, bordering on mere insinuation, does not convincingly shed light on the
alleged illegal character of the Subject Account. Thus, absent a clear and more
definite showing that the Subject Account which was initially frozen contains the
same funds stolen from Bangladesh Bank, We cannot accede to AMLC's request for
an extension of the effectivity of the  Ex Parte Freeze Order.

Solaire, on the other hand, persuasively explained that the monies, initially frozen,
already form part of its corporate funds, inclusive of payments and deposits of
other junket and premium clients and not the money purportedly taken from
Bangladesh Bank. The funds in the Subject Account were already 'converted or
used' by a certain Ding to purchase non-negotiable chips in Solaire which in turn
were played in the latter's various playing programs and in the process, were
eventually transferred to other junket operators/players under the auspices of Ding
even prior to the issuance of the Freeze Order. This may appear self-serving and
complex even to those unfamiliar with how a casino operation works, but We accord
probative merit to this claim given movant AMLC's abject failure, thus far, to rise
above the speculative nature of its submission against Solaire. Thus, Solaire's
assertion that the funds in the Subject Account were utilized in the normal and
regular operation of its casino business, thus, not tainted with irregularity nor
illegality, which is contrary to the AMLC's claim, has to be accorded due credence.

x x x x37

Aggrieved, the AMLC filed its Petition for Review on Certiorari With Prayer for the
Issuance of a Temporary Restraining Order or Status Quo Ante Order dated May 3,
2016.38 We issued a Temporary Restraining Order on May 19, 2016 and directed
BRHI to Comment on the Petition. BRHI filed its Comment39 and thereafter, the
AMLC filed its Reply.40 BDO also filed a manifestation that in compliance with the
CA's Resolution, it has already lifted the Freeze Order over the account even before
receiving the TRO issued by the Court. The parties were directed to file their
respective memoranda.41

In its Memorandum42 dated April 6, 2017, the AMLC insists that contrary to HRBI
and BDO's assertions, the assailed Resolution is not a fait acompli.43 Upon receipt of
BDO of the TRO, it should have re-froze BRHI’s subject account. 44 The AMLC
maintains that the initial finding of probable cause should stand because the
verified petition for freeze order and its supporting documents were unrebutted by
BRHI.45 According to the AMLC, it had sufficiently demonstrated that the amount
totalling to P1,365,000,000.00 that was deposited by PhilRem to BRHI’s BDO
account came from the unauthorized international inward remittances from the
account of Bangladesh Bank in the New York Fed.46 The AMLC chronologically
presented every transfer of funds starting from the unauthorized payment
instructions that triggered the remittance of the US$81,000,000.00 to the four
spurious accounts in RCBC which was consolidated in similar spurious account of
Go. The entire amount was credited to PhilRem's account which transferred
P1,365,000,000.00 to BRHI's account. This trail leads to no other conclusion but the
fact that the subject account is related to an unlawful activity. 47 Since money is
essentially fungible and can easily be commingled with other moneys, a deposit
that can be traced to an unlawful activity is considered tainted and despite the
passage of time or further commingling with other funds, it remains tainted. 48 The
AMLC also countered that BRHI failed to present any evidence that would support
its claim that a certain Ding owned the money deposited in the subject account as
front money.49 The AMLC also faulted BRHI in failing to exercise due diligence and
sound business practice because it did not take necessary steps to scrutinize the
money deposited in its account. It should have confirmed the legitimacy and
accuracy of transactions coming in.50

On the other hand, BRHI, in its Memorandum51 dated March 3, 2017, submitted

that the petition is moot because a freeze order cannot be issued or extended for a
period longer than six months.52 BRHI argues that since the Freeze Order was
issued on March 15,2016, more than six months has elapsed counting from its
issuance. Hence, a disquisition on the merits of the petition serves no practical or
legal purpose.53 BRHI insists that the AMLC failed to establish the existence of
probable cause to extend the freeze order.54 According to BRHI, the AMLC failed to
proffer proofs supporting its allegations. In fact, what the AMLC submitted was only
a supposed letter from the Governor of the Central Bank of Bangladesh asking for
assistance from Governor Tetangco. However, the AMLC did not even present
testimony from the persons from Bangladesh Bank who allegedly met with the
AMLC Secretariat and presented the facts of their case.55 BRHI also countered that
it has not committed any blunder in not knowing that the money received from
PhilRem was illicit. Being a non-covered entity under the AMLA, BRHI is not
required to inquire as to the source of its customer's funds. The law forces BRHI to
rely upon the integrity of the banking system that is supposed to release only clean
money into the economy.56

Finally, the BRHI argues that assuming that the amounts received by BRHI from
PhilRem are laundered money, the same is no longer with BRHI. 57 As demonstrated
by BRHI, the money was used by the Ding group to purchase non-negotiable chips
which have been transferred to junket operators or played in Solaire's premium
program.58 The P1,365,000,000.00 were used by the Ding group as follows: (1)
P331,270,000.00 was played under the chip sharing program that the various
members of the Ding group had opened; (2) upon instructions of Ding and the
authorized members of his group, non-negotiable chips amounting to
P903,730,000.00 were transferred to Sun City, a fixed-room junket operator which
were exchanged for Sun City non-negotiable chips; (3) non-negotiable chips
amounting to P100,000,000.00 were transferred to Gold Moon, another fixed-
junket operator; and (4) non-negotiable chips in the net amount of P31,195,000.00
were transferred to Lau Ka Wai, a casual junket operator. 59
 Issue

The issue in this case is whether the CA erred in lifting the freeze order earlier
issued against BRHI.

Ruling of the Court

A freeze order may only be effective for a maximum period of six months;
hence, even assuming that the Urgent Motion for Additional Period of
Freeze Order should have been granted, the six-month maximum period
has elapsed.

We agree with BRHI that the petition has become moot and academic. In the case
of Osmeña, III v. SSS,60 We defined a moot and academic case, to wit:

A case or issue is considered moot and academic when it ceases to present a

justiciable controversy by virtue of supervening events, so that an adjudication of
the case or a declaration on the issue would be of no practical value or use. In such
instance, there is no actual substantial relief which a petitioner would be entitled to,
and which would be negated by the dismissal of the petition. Courts generally
decline jurisdiction over such case or dismiss it on the ground of mootness – save
when, among others, a compelling constitutional issue raised requires the
formulation of controlling principles to guide the bench, the bar and the public; or
when the case is capable of repetition yet evading judicial review.61 (Citations
omitted)

The case of David v. Macapagal-Arroyo62 earlier gave the two other exceptions to

the moot and academic principle: (a) if there is grave violation of the Constitution;
and (b) the exceptional character of the situation and the paramount public interest
is involved.63

R.A. 9160, otherwise known as the AMLA, as amended by R.A. 10365, provides
that:

Section 10. Freezing of Monetary Instrument or Property. – Upon a verified ex parte

petition 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, the Court of Appeals may issue a freeze order which
shall be effective immediately, and which shall not exceed six (6)
months depending upon the circumstances of the case: Provided, That if there is
no case filed against a person whose account has been frozen within the period
determined by the court, the freeze order shall be deemed ipso facto lifted:
Provided, further, That this new rule shall not apply to pending cases in the courts.
In any case, the court should act on the petition to freeze within twenty-four (24)
hours from filing of the petition. If the application is filed a day before a nonworking
day, the computation of the twenty-four (24)-hour period shall exclude the
nonworking days.
A person whose account has been frozen may file a motion to lift the freeze order
and the court must resolve this motion before the expiration of the freeze order.

No court shall issue a temporary restraining order or a writ of injunction against any
freeze order, except the Supreme Court. (Emphasis supplied)

The previous versions of Section 10 of the AMLA before the current amendment do
not specify the maximum period within which a Freeze Order may be effective.
However, as early as 2005, A.M. No. 05-11-04-SC or the Rules of Procedure in
Cases of Civil Forfeiture, Asset Preservation, and Freezing of Monetary Instrument,
Property, Or Proceeds Representing, Involving, or Relating to an Unlawful Activity
or Money Laundering Offense Under R.A. 9160, as amended has already specified
that any extension for the issuance of a freeze order should not exceed six months.
The rationale for giving a maximum period for the effectivity of a freeze order is
aptly explained by the Court in Ligot v. Republic,64viz.:

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. (Emphasis in the original)65

xxxx

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." 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.

x x x x66
Clearly, a Freeze Order may not be issued indefinitely, lest the same be
characterized as a violation of the person's right to due process and to be presumed
innocent of a charge. In this case, the Freeze Order was issued by the CA on March
15, 2016. Even assuming that the CA erred in failing to issue an extension of the
Freeze Order, nevertheless, a period of more than six months has already elapsed.
If we grant the petition now, it has been more than four years from the issuance of
the Freeze Order. This development squarely falls under the principle of a moot and
academic issue as We have earlier defined. The adjudication of this case has no
practical use and value owing also to the fact that as manifested by the BDO, upon
receipt of the CA Resolution dated March 15, 2016 granting BRHI's motion to lift the
freeze order, BDO has complied with the order to unfreeze BRHI's Account No.
6280225150.

The argument of the AMLC that the case is not yet fait acompli because the BDO
may just re-freeze Account No. 6280225150 upon granting of the petition is
specious. Assuming that the petition is meritorious, We cannot order the re-freezing
of the subject account for to do so would be to put BRHI in an unfair situation
where its bank account is being frozen for a transaction that has happened four
years ago and where it was not yet proven that it indeed participated in money
laundering activities.

WHEREFORE, the Petition for Review on Certiorari is DENIED for being moot and

academic. The temporary restraining order issued by the Court dated May 19, 2016
is hereby LIFTED.

SO ORDERED.

Leonen (Chairperson), Gesmundo, Zalameda, and Gaerlan, JJ., concur.