Republic vs. Ongpin

The burden of proving probable cause that a bank account is related to an unlawful activity, as required for the issuance and continued effect of a freeze order under the Anti-Money Laundering Act, always rests with the Anti-Money Laundering Council and does not shift to the account holder.

The case stems from two credit accommodations granted by the DBP to Deltaventure Resources, Inc., a corporation beneficially owned by Roberto V. Ongpin, a former DBP board member. The first was a ₱150 million credit line approved in April 2009. The second was a ₱510 million loan approved on November 4, 2009, to finance Deltaventure's purchase of 50 million Philex Mining Corporation shares from DBP. The shares were registered in the name of another Ongpin-owned corporation, Goldenmedia Corporation, which then pledged them back to DBP as security for the same loan. In December 2009, Goldenmedia, DBP, and other entities sold a controlling block of Philex shares to Two Rivers Pacific Holdings Corporation at ₱21 per share. The Office of the Ombudsman found probable cause to charge Ongpin, several DBP officers, and others with violation of Section 3(e) of the Anti-Graft and Corrupt Practices Act, alleging the loans were behest and caused undue injury to the government. The AMLC, upon investigation, authorized the filing of a petition for a freeze order and an application for a bank inquiry.

• Nature of the Transactions: Deltaventure Resources, Inc., beneficially owned by Roberto V. Ongpin, obtained two credit accommodations from DBP: a ₱150 million credit line (April 2009) and a ₱510 million loan (November 2009). The latter was used to purchase 50 million Philex Mining shares from DBP, which were registered in the name of another Ongpin company, Goldenmedia Corporation, and then pledged back to DBP as collateral.
• The Block Sale: In December 2009, Goldenmedia, DBP, and other entities sold a controlling block of Philex shares to Two Rivers Pacific Holdings Corporation at ₱21 per share. The AMLC alleged that DBP incurred an opportunity loss of ₱415 million by selling its shares to Deltaventure at ₱12.75 per share instead of waiting to sell them at ₱21 per share a month later.
• Ombudsman's Findings: The Office of the Ombudsman found probable cause to charge Ongpin, several DBP officers, and others with violation of Section 3(e) of the Anti-Graft and Corrupt Practices Act, deeming the loans behest and injurious to the government.
• AMLC Investigation and Freeze Order: The AMLC, finding probable cause that the funds in the accounts were related to unlawful activity, authorized the filing of a petition for a freeze order against 179 bank accounts of Ongpin, his associated corporations, and the involved DBP officers. The CA granted the ex parte petition on December 6, 2012.
• Account Status: Upon the issuance of the Freeze Order, most of the subject accounts were either already closed or had minimal balances. Only one account—Boerstar Corporation's Bank of Commerce Account No. 900000028241—was found to have received a substantial deposit (₱2.133 billion from Two Rivers) directly linked to the Philex share sale.

• Probable Cause and Burden of Proof: Petitioner AMLC argued that the issuance of the Freeze Order established probable cause, shifting the burden of evidence to respondents to prove the legitimacy of their funds. It contended the CA erred in requiring further evidence to justify the extension.
• Procedural Error: Petitioner asserted that the CA violated Section 10 of the AMLA (as amended by R.A. 10167) by not resolving the motions to lift the freeze order within the original 20-day period, thereby deeming them denied. The colatilla in the extension order was void.
• Improper Consolidation: Petitioner maintained that the proceedings for the freeze order and the bank inquiry should not have been jointly heard, as the bank inquiry is a purely ex parte discovery tool, and consolidation defeated its purpose.
• Merits: Petitioner insisted that probable cause existed to believe all frozen accounts were related to the anomalous loans, as the profit derived from the Philex share sale was "unmistakably related to an unlawful activity."

• Mootness: Respondents argued the petition was moot because the extended Freeze Order had already expired on June 26, 2013.
• No Probable Cause: They contended the AMLC presented no direct evidence linking their accounts to the alleged unlawful activity. The "recomputed cash and investment balance" method used by the AMLC was flawed and speculative.
• Legitimacy of Transactions: Respondents Ongpin, et al., argued the loans were not behest, were fully paid with interest, and caused no undue injury to DBP, which actually earned a profit from the sale.
• Burden of Proof: They asserted the burden of proving probable cause never shifts from the AMLC. The CA correctly required the AMLC to present further evidence to justify the continued freeze.
• Proper Procedure: Respondents argued the CA properly extended the Freeze Order within the 20-day period, effectively resolving the motions to lift. The colatilla was valid. Joint hearings were permissible and efficient.

• Mootness: Whether the case is moot due to the expiration of the Freeze Order.
• Procedural Compliance: Whether the Court of Appeals erred in extending the Freeze Order without first resolving the motions to lift within the original 20-day period.
• Consolidation: Whether the Court of Appeals erred in jointly hearing the proceedings for the freeze order and the application for bank inquiry.
• Burden of Proof: Whether the Court of Appeals erred in requiring the AMLC to present further evidence to justify the continued freeze despite an initial finding of probable cause.
• Probable Cause: Whether there was probable cause to believe the frozen accounts were related to an unlawful activity.

• Mootness: The petition is not dismissed on mootness grounds. Despite the expiration of the Freeze Order, the case involves a situation of exceptional character and paramount public interest, warranting a resolution on the merits to provide guidance on the application of the AMLA.
• Procedural Compliance: The Court of Appeals did not err. By issuing the December 26, 2012 Resolution extending the Freeze Order, it effectively denied the motions to lift. The colatilla was not void but preserved the respondents' right to seek reconsideration of the extension.
• Consolidation: The Court of Appeals did not err in jointly hearing the cases. While the remedies are distinct, they involved the same parties, facts, and legal questions. Consolidation was within the court's discretion to avoid multiplicity of suits and unnecessary delay.
• Burden of Proof: The Court of Appeals did not err. The burden of proving probable cause always remains with the AMLC. The issuance of a freeze order establishes a prima facie case, shifting only the burden of evidence to the respondent. When respondents present counterevidence, the burden of evidence shifts back to the AMLC to justify the continued freeze.
• Probable Cause: The Court of Appeals correctly lifted the Freeze Order for all but one account. The AMLC failed to present sufficient evidence linking the majority of the frozen accounts to the alleged unlawful activity. Most accounts were closed or had minimal balances. Only Boerstar's Account No. 900000028241, which received the ₱2.133 billion balance from the Philex share sale, was probably related to the transaction.

• Probable Cause for Freeze Orders — Probable cause for a freeze order under the AMLA is judicial in nature and requires "such facts and circumstances which would lead a reasonably discreet, prudent or cautious person to believe that an unlawful activity... is about to be, is being or has been committed and that the account... is in any way related to said unlawful activity." This is distinct from the probable cause determined in a preliminary investigation.
• Burden of Proof in Freeze Order Proceedings — The burden of proving probable cause for the issuance and continued effect of a freeze order always rests with the AMLC. This burden does not shift to the account holder. The issuance of a freeze order creates a prima facie case, shifting only the burden of evidence to the respondent to present counterevidence. If the respondent's evidence rebuts the prima facie case, the burden of evidence shifts back to the AMLC.
• Nature of Freeze Order and Bank Inquiry — A freeze order is an extraordinary, interim, and preemptive remedy to preserve assets suspected to be proceeds of crime. A bank inquiry order is a discovery tool to examine account records. While distinct, proceedings for both may be consolidated if they involve common questions of fact and law.

• "The burden of proving probable cause always rests with the Anti-Money Laundering Council, never with the account owners."
• "A freeze order is an extraordinary and interim relief issued by the [Court of Appeals] to prevent the dissipation, removal, or disposal of properties that are suspected to be the proceeds of, or related to, unlawful activities... Its primary objective is to temporarily preserve monetary instruments or property."
• "The burden of proof has never shifted to respondents. It confused 'burden of proof' with 'burden of evidence.'... In actions for the issuance of a freeze order, the burden of proving probable cause always rests with the Anti-Money Laundering Council."

• Republic v. Eugenio, 569 Phil. 98 (2008) — Discussed the non-ex parte nature of bank inquiry proceedings under the original AMLA, which was later amended. Distinguished from the current case.
• Subido Pagente Certeza Mendoza and Binay Law Offices v. Court of Appeals, 802 Phil. 314 (2016) — Upheld the constitutionality of the ex parte bank inquiry under the amended AMLA, citing safeguards like the requirement of probable cause.
• Ligot v. Republic, 705 Phil. 477 (2013) — Clarified that probable cause for a freeze order focuses on the link between the account and the unlawful activity, not the commission of the crime itself. Applied where a gross discrepancy between a public officer's income and assets showed the relation.

• Section 10, Republic Act No. 9160 (as amended by R.A. 10167) — Governs the issuance of freeze orders. Provides for an ex parte petition, a 20-day effectivity period (extendible by the court), and requires a motion to lift to be resolved before the original period expires.
• Section 11, Republic Act No. 9160 (as amended by R.A. 10167) — Governs the issuance of bank inquiry orders. Authorizes an ex parte application and court order to inquire into deposits or investments probably related to an unlawful activity.
• Section 3(i), Republic Act No. 9160 — Defines "unlawful activity" to include violations of the Anti-Graft and Corrupt Practices Act (R.A. 3019).
• Section 53, A.M. No. 05-11-04-SC (Rules of Procedure in Cases of Civil Forfeiture, etc.) — Provides that within the 20-day freeze order period, the court shall conduct a summary hearing to determine whether to modify, lift, or extend the order.

• Associate Justice Henri Jean Paul B. Inting
• Associate Justice Alfredo Benjamin S. Caguioa
• Associate Justice Jhosep Y. Lopez
• Associate Justice Antonio T. Kho, Jr.

N/A — The decision was unanimous.