Case Digest (A.M. No. P-17-3652)
Facts:
BCD Foreign Exchange Corp. (BCD), a registered foreign exchange corporation, had its Metrobank accounts placed under the effects of a Freeze Order issued in an Ex-Parte Petition filed by Republic of the Philippines, through AMLC, pursuant to Section 10 of the Anti-Money Laundering Act (RA) 9160, in relation to Section 44 of A.M. No. 05-11-04-SC. The Freeze Order arose from drug cases and AMLC’s findings that certain accounts and their related web were linked to unlawful activity, including Powleean Electronics Marketing, Inc., Chen Jiali, and others, after buy-bust operations and related seizures.Metrobank, after receiving the Freeze Order, submitted returns that identified an Old BCD Account and a Subject BCD Account (Account No. 7-285-51261-8) as materially linked recipients of funds from an account covered by the Freeze Order. BCD moved to lift the Freeze Order as to its Subject BCD Account, arguing that Metrobank lacked authority to determine related accounts and that free
Case Digest (A.M. No. P-17-3652)
Facts:
- Parties and capacities
- BCD Foreign Exchange Corp. (BCD) was a domestic corporation duly registered with the Securities and Exchange Commission (SEC) to engage in the foreign exchange business.
- Anti-Money Laundering Council (AMLC) represented the Republic of the Philippines and was tasked to implement the provisions of Republic Act No. 9160 (Anti-Money Laundering Act of 2001), as amended.
- Metrobank was a private domestic banking corporation duly registered with the SEC and other banking regulatory agencies.
- Antecedent criminal events and AMLC’s ex parte request
- On 28 September 2016, the Republic of the Philippines, through AMLC, filed an Ex-Parte Petition for the issuance of a Freeze Order, pursuant to Section 10 of the AMLA, in relation to Section 44 of A.M. No. 05-11-04-SC, against bank accounts and deposits in the names of:
- Powleean Electronics Marketing, Inc. (Powleean)
- Chen Jiali
- Elsa Alasad (also known as Elsa Alasad Wu)
- Lianggun Wu (also known as Liang Gun Wu)
- Aileen Burgos Dilema
- Jenelyn Devillires Punay
- Anselma Q. Llego
- Cristy Arreza Castro
- Marephine Cagalitan Martizano
- Raquel P. Magitra
- and their related web of accounts.
- The Ex-Parte Petition followed separate buy-bust operations that led to the arrest of Claudio Branzuela Bontilao, Jr. (Claudio) and Jovannie Quirante Llego (Jovannie).
- Claudio and Jovannie were subsequently charged with violation of Section 5, Article II of RA 9165 (Comprehensive Dangerous Drugs Act of 2002).
- Seizures, AMLC findings, and allegations supporting probable cause
- During the arrests, numerous items were seized from Claudio and Jovannie, including deposit slips in the names of:
- Powleean
- Aileen Burgos Dilema
- Jenelyn Devillires Punay
- Anselma Q. Llego
- Cristy Arreza Castro
- Marephine Cagalitan Martizano
- and Raquel P. Magitra.
- AMLC found the legitimacy of Powleean’s operations doubtful because there were no regular business activities conducted in its declared addresses.
- AMLC noted Powleean’s paid-up capital was P31,250.00, yet from 2015 to 2016 it allegedly had transactions amounting to billions of pesos, with:
- cash deposits totaling P1,844,516,398.00
- withdrawals amounting to P2,269,661,751.44
- AMLC investigated the accounts of Chen Jiali, Elsa Alasad, and Lianggun Wu as incorporators and directors of Powleean.
- AMLC alleged that investigation on Chen Jiali showed that from 2005 to 2016, his over-the-counter withdrawals amounted to P7,171,790,903.62, an amount AMLC alleged was unlikely generated from Powleean Inc., his sole declared source of income.
- AMLC alleged Chen Jiali was also involved in CA-G.R. AMLA Case No. 00151 as one of the persons who allegedly received funds from drug trafficking.
- Issuance of the Freeze Order and compliance by Metrobank
- The Court of Appeals (CA), on 29 September 2016, issued a Freeze Order effective immediately for six (6) months from notice to the impleaded banks, finding the facts demonstrated a well-founded belief that the bank accounts of the mentioned parties were related to or involved in an unlawful activity.
- The CA ordered the banks, including Metrobank, to submit a return indicating the details of the specified accounts or related web of accounts.
- The CA required the banks, within twenty-four (24) hours from receipt of the resolution, to submit a detailed return to the CA and AMLC, specifying all pertinent and relevant information on all frozen accounts subject of the Freeze Order.
- Metrobank submitted detailed returns.
- On 26 October 2016, Metrobank filed its Fourth Supplemental Return, including accounts under the name of BCD as recipients of funds from accounts subject of the Freeze Order:
- Account No. 7-285-51225-1 (closed account, referred to as Old BCD Account)
- Account No. 7-285-51261-8 containing PhP 48,539,839.65 (referred to as Subject BCD Account).
- On the following day, Metrobank sent a letter to BCD notifying it that the said accounts were identified as related to and/or materially linked to one of the accounts in the Freeze Order.
- BCD’s motion to lift the freeze effects and the CA rulings
- On 15 February 2017, BCD filed a Motion praying for the lifting and setting aside of the Freeze Order and all effects over the Subject BCD Account.
- BCD argued:
- Metrobank, as a private entity, had no legal right to freeze BCD’s accounts.
- Metrobank could not determine whether the accounts were part of the related web covered by the Freeze Order.
- Freezing occurred in violation of the Bank Secrecy Law.
- On 21 March 2017, the CA issued the assailed resolution denying BCD’s Motion to Lift Freeze Order.
- The CA held that although BCD was not one of the respondents in AMLC’s Ex-Parte Petition, Metrobank identified BCD’s accounts as related in accordance with Paragraph R, Rule III of the 2016 Revised Implementing Rules and Regulations (RIRR) of the AMLA.
- The CA found that from March to November 2013, the Old BCD Account directly received 36 deposit transactions totaling P48,262,720.00 from Chen Jiali’s Metrobank Savings Account No. 30115279290, an account subject of the Freeze Order.
- The CA noted the Old BCD Account was closed on 06 December 2013, while the Subject BCD Account ...(Subscriber-Only)
Issues:
- Procedural and justiciability issue
- Whether the petition should be dismissed for being moot and academic due to expiration of the Freeze Order and the subsequent civil forfeiture case and issuance of APO covering the Subject BCD Account.
- Substantive issues on the Freeze Order’s effects over BCD’s account
- Whether the CA erred in maintaining the effects of the Freeze Order over the Subject BCD Account.
- Whether Metrobank had legal authority to freeze the Subject BCD Account and to determine that it was a “materially linked account” or part of the “related web ...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)