The Supreme Court (SC) has sustained the decision of the Court of Appeals (CA) in 2013 which ordered the unfreezing of the bank accounts of business tycoon Roberto Ongpin and several officers of his real estate firm Deltaventure Resources, Inc. (DVRI), in connection with the P660 million behest loan that the latter obtained from the Development Bank of the Philippines (DBP) to purchase shares in Philex Mining Corp. in 2009.
In an 80-page decision penned by Associate Justice Marvic Leonen, the SC’s Second Division also affirmed the lifting of the freeze order on the bank account of former officials of the DBP.
This came as the SC denied the petition filed by the Anti-Money Laundering Council seeking the reversal of the appellate court’s decision issued on May 7, 2013, ordering the lifting of the freeze order.
But the SC stressed that the freeze order will remain on Boerstar’s Bank of Commerce Account No. 900000028241 as the CA earlier held that it “was probably related to an unlawful activity” as the account was used by Two Rivers Pacific Holdings Corporations to transfer the P2.1 billion balance of the purchase price for the 452,058,160 Philex shares it had bought from Goldenmedia and DBP on December 2, 2009.
“For these reasons, we find no error on the Court of Appeals’ part in unfreezing the accounts except for Boerstar Corporation’s Bank of Commerce Account No. 90000002824, 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,” the SC ruled.
The SC also pointed out that the lifting of the freeze order should not affect any criminal case filed against Ongpin and other individuals, in connection with the transactions.
While there were accounts found to have been involved in covered or suspicious transactions, the high tribunal said the AMLC failed to show proof that these accounts were related to the alleged irregular loan transactions between DVRI and DBP.
The SC noted that a covered transaction involves cash or other equivalent monetary instrument valued at more than P500,000 in one banking day.
On the other hand, based on Section 3 (B-1) of the Anti-Money Laundering Act 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.
“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,” the SC held.
Unfortunately, the SC said, the petitioner 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.
Because of this, the high court reminded AMLC that it is expected to exercise diligence in order to have “a meaningful fight against money laundering and its pernicious effects.”
Court records show that DVRI 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, DVRI applied for a P 150 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 DVRI applied for the credit line, it was owned by Ongpin, a former member of the DBP Board of Directors.
On April 8, 2009, the DBP Executive Credit Committee recommended approving the P 150 million credit line application which was approved by DBP Board of Directors a week after. On November 4, 2009, DVRI applied for another credit line with DBP , this time for P510 million.
Its stated purpose was to acquire from DBP’s 50,000,000 shares of stock in Philex, to be registered directly in the name of Goldenmedia Corporation.
As security, Goldenmedia pledged back to DBP the Philex shares that would be registered in its name. Like DVRI , Goldenmedia was beneficially owned by Ongpin.
That same day, per the DBP Executive Credit Committee’s recommendation, the DBP Board of Directors approved DVRI’s application for the P510,000,000.00 credit line.
A day after, the DBP board sold 50,000,000 of its Philex shares to DVRI at P12. 75 per share, totaling P637, 500,000.00.
DVRI paid P127,500,000.00 in cash as down payment, and paid the remaining P5I0,000,000.00 in full through the credit line granted by DBP a day before.
As DVRI had requested, the shares were registered directly in
Goldenmedia’s name and in turn, Goldenmedia pledged the Philex shares
in favor of DBP.
On December 2, 2009, DBP sold all of its 59,339,000 Philex shares to Two Rivers and on the same day, Goldenmedia sold to Two Rivers 123,221,372 of its Philex shares, which included the 50,000,000 Philex shares it had earlier acquired using the proceeds of DVRI loan from DBP.
Together with Boerstar, Elkhound Resources, Inc. and Walter Brown, DBP and Goldenmedia sold their shares to Two Rivers for a negotiated price of P21.00 per share.
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, headed by its managing director and chief executive officer, Manuel V . Pangilinan.
Records showed that Ongpin served as Philex’s vice chair.
The transactions led to the filing of graft charges against Ongpin after it was found out that the credit accommodations granted to DVRI were behest loans and in violation of several banking laws and regulations.
It held that the credit accommodations granted to Deltaventure were behest loans and in violation of several banking laws and regulations.
The AMLC also moved for the freezing of the subject bank accounts on suspicion that the funds released to DVRI were related to unlawful activity.
In 2014, the Sandiganbayan dismissed the graft charges against Ongpin and former DBP officials led by former president Reynaldo David.