The Supreme Court (SC) has upheld the Court of Appeals’ (CA) 2013 ruling that lifted the freeze orders on the bank accounts of businessman Roberto V. Ongpin, several officers of his real estate firm Deltaventure Resources, Inc., and officers of the Development Bank of the Philippines (DBP).
The freeze orders were issued by the CA on petitions filed by the Anti-Money Laundering Council (AMLC) on the P660 million alleged behest loans obtained by Deltaventure from DBP in 2009 for the purchase of 50 million shares of stocks in Philex Mining Corporation.
Upon purchase, the Philex shares were registered in the name of Goldenmedia Corporation (Goldenmedia), a firm also beneficially owned by Ongpin, a former commerce and industry minister. The shares, which were used as collateral for the loan, were later on sold to Two Rivers Pacific Holdings Corporation.
But the SC said that the lifting of the freeze order should not affect any criminal case filed against Ongpin and other individuals in connection with the transactions.
The SC decision, which was promulgated last June 22 and made public last July 29, was written by Senior Associate Justice Marvic Mario Victor F. Leonen. It denied the petition filed by AMLC.
It also ruled that the freeze order on the bank account of Boerstar Corporation, another Ongpin-affiliated firm, will still be enforced.
The SC said:
“Unfortunately, petitioner (AMLC) miserably failed to show that these accounts were related to the allegedly irregular loan transactions between Deltaventure and DBP, the predicate crime for which petitioner was authorized to commence freeze order and bank inquiry proceedings against respondents.
“We find no error on the Court of Appeals' part in unfreezing the accounts except for Boerstar Corporation's Bank of Commerce Account No. 900000028241, the only account proved to be probably related to the loan transactions between Deltaventure and DBP.
“This account served as the depository account of the balance of the sale proceeds between Goldenmedia, among others, and Two Rivers. “Nothing in this Decision should be read as affecting the criminal case filed against respondents (Ongpin and his group).
“Furthermore, better diligence is expected from petitioner for the Republic to put up a meaningful fight against money laundering and its pernicious effects.
“WHEREFORE, the Petition for Review on Certiorari is DENIED. The May 7, 2013 Resolution of the Court of Appeals in CA-G.R. AMLC No. 00066 is AFFIRMED. The Freeze Order, except as to Boerstar Corporation's Bank of Commerce Account No. 900000028241, is LIFTED. SO ORDERED.”
The SC said that the while there were accounts found to have been involved in covered or suspicious transactions, the council failed to show proof that these accounts were related to the alleged irregular loan transactions between Deltaventure and DBP.
It pointed out that under the AMLC law, transactions are considered suspicious if there is no underlying legal or trade obligation, purpose or economic justification; the client is not properly identifies; the amount involved is not commensurate with the business or financial capacity of the client; the client’s transaction is perceived to have been structured in order to avoid being the subject of reporting requirements under AMLA.
It stressed: “The remedies of freeze order and order of bank inquiry are extraordinary, issued only upon a finding of probable cause that the accounts sought to be frozen or inquired into are related to any of the predicate crimes under the Anti-Money Laundering Act. The burden of proving probable cause always rests with the Anti-Money Laundering Council, never with the account owners.”
Deltaventure, at the time of the transactions, had an authorized capital stock of P500,000 which was increased to P10 million, while its subscribed and paid-up capital amounted to P2.5 million and P625,000, respectively.
On April 7, 2009, Deltaventure applied for a P150-million credit line with the DBP and as security for the loan, it offered to pledge its shares in Philweb Corporation (Philweb), as well as those registered in several corporations' names such as Azurestar Corporation, Bacong Highland Realty Corporation, Beckel Realty Corporation, ltogon Realty Corporation, Labilab Corporation, Sunrise Sunset Island Corporation, and Tocmo Realty Corporation. At the time Delventure applied for the credit line, it was owned by Ongpin, a former member of the DBP Board of Directors.
The DBP Executive Credit Committee recommended the approval of the P150 million credit line application on April 8, 2009 and the members of the bank’s Board of Directors approved it a week thereafter.
On Nov. 4, 2009, Deltaventure applied for another credit line with DBP for P510 million for the purchase of DBP’s 50 million shares of stocks in Philex which were also used to back up the loan which was granted on the same day of the application.
The DBP board sold its 50 million Philex shares to Deltaventure at P12.75 per share or a total of P637.5 million.
Deltaventure paid a downpayment of P127.5 million and settled the balance through the P510-million credit line it obtained.
On Dec. 2, 2009, DBP sold all of its 59,339,000 Philex shares to Two Rivers Pacific Holdings Corporation. On the same day, Goldenmedia sold to Two Rivers 123,221,372 of its Philex shares, which included the 50,000,000 Philex shares Goldenmedia had earlier acquired using the proceeds of its loan from DBP.
Together with Boerstar Corporation (Boerstar), Elkhound Resources, Inc. (Elkhound), and Walter Brown, DBP and Goldenmedia sold their shares to Two Rivers for a negotiated price of P21 per share. This block sale resulted in Two Rivers acquiring controlling interest in Philex.
This block sale resulted in Two Rivers acquiring controlling interest in Philex.
Notably, Two Rivers is partly owned by First Pacific International, Ltd., which is in turn a wholly owned subsidiary of First Pacific Company, Ltd., headed by its managing director and chief executive officer, Manuel V. Pangilinan. Ongpin was Philex's vice chair.
The case started when DBP Chair Jose Nunez and President Francisco F. Del Rosario filed a complaint before the Office of the Ombudsman against Ongpin, 28 DBP officers, and others in Ongpin’s firm.
The complaint stated that the approval of the Pl50 million and P510 million loans to Deltaventure violated Republic Act No. 8791, the General Banking Law of 2000, in relation to RA 7653, the New Central Bank Act.
Specifically, the complaint stated that the loans granted to Deltaventure involved “behest loans.”
The Sandiganbayan, in a 2014 decision, dismissed the graft charges filed against Ongpin and former DBP officials involved in the grant of the loans.