This document summarizes a Supreme Court case regarding an Anti-Money Laundering Act investigation. The Philippine National Bank submitted suspicious transaction reports involving accounts that received large transfers. The Senate issued a report finding irregularities in a fertilizer fund program overseen by Jocelyn Bolante. The AMLC sought a court order to inquire into 76 accounts related to the transactions. The trial court denied the order, finding no probable cause. The Supreme Court upheld the trial court's ruling, finding it did not abuse its discretion given weaknesses in the evidence presented by the AMLC linking the accounts to unlawful activity.
This document summarizes a Supreme Court case regarding an Anti-Money Laundering Act investigation. The Philippine National Bank submitted suspicious transaction reports involving accounts that received large transfers. The Senate issued a report finding irregularities in a fertilizer fund program overseen by Jocelyn Bolante. The AMLC sought a court order to inquire into 76 accounts related to the transactions. The trial court denied the order, finding no probable cause. The Supreme Court upheld the trial court's ruling, finding it did not abuse its discretion given weaknesses in the evidence presented by the AMLC linking the accounts to unlawful activity.
This document summarizes a Supreme Court case regarding an Anti-Money Laundering Act investigation. The Philippine National Bank submitted suspicious transaction reports involving accounts that received large transfers. The Senate issued a report finding irregularities in a fertilizer fund program overseen by Jocelyn Bolante. The AMLC sought a court order to inquire into 76 accounts related to the transactions. The trial court denied the order, finding no probable cause. The Supreme Court upheld the trial court's ruling, finding it did not abuse its discretion given weaknesses in the evidence presented by the AMLC linking the accounts to unlawful activity.
This document summarizes a Supreme Court case regarding an Anti-Money Laundering Act investigation. The Philippine National Bank submitted suspicious transaction reports involving accounts that received large transfers. The Senate issued a report finding irregularities in a fertilizer fund program overseen by Jocelyn Bolante. The AMLC sought a court order to inquire into 76 accounts related to the transactions. The trial court denied the order, finding no probable cause. The Supreme Court upheld the trial court's ruling, finding it did not abuse its discretion given weaknesses in the evidence presented by the AMLC linking the accounts to unlawful activity.
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I. SHORT TITLE: REPUBLIC V.
BOLANTE II. FULL TITLE: Republic v. Bolante, G.R. No. 186717, 17 April 2017, (822 SCRA 526) III. TOPIC: Anti- Money Laundering Act
IV. STATEMENT OF FACTS:
In April 2005, the Philippine National Bank (PNB) submitted to the Anti-Money Laundering Council (AMLC) a series of suspicious transaction reports involving the accounts of Livelihood Corporation (LIVECOR), Molugan Foundation (Molugan), and Assembly of Gracious Samaritans, Inc. According to the reports, LIVECOR transferred to Molugan a total amount of' ₱172.6 million in a span of 15 months from 2004 to 2005. On 30 April 2004, LIVECOR transferred ₱40 million to AGS, which received another P38 million from Molugan on the same day. Curiously, AGS returned the P38 million to Molugan also on the same day. The transactions were reported '"suspicious" because they had no underlying legal or trade obligation, purpose or economic justification; nor were they commensurate to the business or financial capacity of Molugan and AGS, which were both lowly capitalized at P50,000 each. In the case of Molugan, Samuel S. Bombeo, who holds the position of president, secretary and treasurer, is the lone signatory to the account. In the case of AGS, Samuel S. Bombeo shares this responsibility with Ariel Panganiban. The Senate furnished the AMLC a copy of its Committee Report No. 54 prepared by the Committee on Agriculture and Food and the Committee on Accountability of Public Officers and Investigations. Committee Report No. 54 narrated that former Undersecretary of Agriculture Jocelyn I. Bolante (Bolante) requested the Department of Budget and Management to release to the Department of Agriculture the amount of ₱728 million for the purchase of farm inputs under the Ginintuang Masaganang Ani Program. This amount was used to purchase liquid fertilizers from Freshan Philippines, Inc., which were then distributed to local government units and congressional districts beginning January 2004. Based on the Audit Report prepared by the Commission on Audit (COA), the use of the funds was characterized by massive irregularities, overpricing, violations of the procurement law and wanton wastage of scarce government resources. Committee Report No. 54 also stated that at the time that he served as Undersecretary of Agriculture, Bolante was also appointed by President Gloria Macapagal Arroyo as acting Chairman of LIVECOR. The AMLC issued Resolution No. 75 finding probable cause to believe that the accounts of LIVECOR, Molugan and AGS - the subjects of the suspicious transaction reports submitted by PNB - were related to what became known as the "fertilizer fund scam." The acts involved in the "fertilizer scam" may constitute violation of Anti- Graft and Corrupt Practices Act, as well as violation of Plunder.
V. STATEMENT OF THE CASE:
The AMLC authorized the filing of a petition for the issuance of an order allowing an inquiry into the six accounts of LIVECOR, Molugan, AGS, Samuel S. Bombeo and Ariel Panganiban. The AMLC also required all covered institutions to submit reports of covered transactions and/or suspicious transactions of these entities and individuals, including all the related web of accounts. The Republic filed an Ex Parte Application docketed as AMLC Case No. 07-001 before the RTC. Drawing on the authority provided by the AMLC through Resolution No. 90, the ex parte application sought the issuance of an order allowing an inquiry into the 70 accounts. The RTC found probable cause and issued the Order prayed for. It allowed the AMLC to inquire into and examine the 70 bank deposits or investments and the related web of accounts. On 20 October 2008, this Court denied with finality the motion for reconsideration filed by the Republic in Eugenio. In the case of Republic V. Eugenio, the Court ruled that when the legislature crafted Section 11 of R.A. 9160 (Anti Money Laundering Act of 2001), it did not intend to authorize ex parte proceedings for the issuance of a bank inquiry order by the CA. Thus, a bank inquiry order cannot be issued unless notice is given to the account holders. That notice would allow them the opportunity to contest the issuance of the order. Thus, in order to comply with the ruling in Eugenio, the Republic filed an Amended and Supplemental Application in AMLC Case No. 07- 001 before the RTC. The Republic sought, after notice to the account holders, the issuance of an order allowing an inquiry into the original 70 accounts plus the six bank accounts. A summary hearing thereon ensued. The RTC issued the challenged Resolution dated 3 July 200953 in AMLC Case No. 07-001. The trial court denied the Republic's application for an order allowing an inquiry into the total of 76 bank deposits and investments of respondents. The RTC found no probable cause to believe that the deposits and investments of respondents were related to an unlawful activity. It pointed out that the Republic, in support of the latter's application, relied merely on two pieces of evidence: Senate Committee Report No. 54 and the court testimony of witness Thelma Espina of the AMLC Secretariat. According to the RTC, Senate Committee Report No. 54 cannot be taken "hook, line and sinker, "55 because the Senate only conducts inquiries in aid of legislation. The trial court pronounced that the Senate cannot assume the power reposed in prosecutorial bodies and the courts - the power to determine who are liable for a crime or an illegal activity. On the other hand, the trial court noted that the testimony of the witness merely relied on Senate Committee Report No. 54. The latter "admitted that the AMLC did not bother to confirm the veracity of the statements contained therein." The RTC instead gave credence to the Audit Report prepared by COA. While outlining the irregularities that attended the use of the fertilizer fund, COA also showed that none of the funds were channeled or released to LIVECOR, Molugan or AGS. The trial court also took note of the evidence presented by Bolante that he had ceased to be a member of the board of trustees of LIVECOR on 1 February 2003, or more than 14 months before the transfers were made by LIVECOR to Molugan as indicated in the suspicious transaction reports submitted by PNB. Furthermore, the RTC found that the transfers made by LIVECOR to Molugan and AGS came from the P60 million Priority Development Assistance Fund of Senator Joker Arroyo.
VI. ISSUE: Whether or not the RTC committed grave abuse of discretion in ruling that there exists no probable cause to allow an inquiry into the total of 76 deposits and investments of respondents.
VII. RULING: NO. The RTC's finding that there was no probable cause for the issuance of a bank inquiry order was not tainted with grave abuse of discretion. According to Ligot v. Republic, "probable cause” refers to the sufficiency of the relation between an unlawful activity and the property or monetary instrument." In the issuance of a bank inquiry order, the power to determine the existence of probable cause is lodged in the trial court. As we ruled in Eugenio: The process of inquiring into the existence of probable cause would involve the function of determination reposed on the trial court. Determination clearly implies a function of adjudication on the part of the trial court, and not a mechanical application of a standard predetermination by some other body. The court receiving the application for inquiry order cannot simply take the AMLC's word that probable cause exists that the deposits or investments are related to an unlawful activity. It will have to exercise its own determinative function in order to be convinced of such fact. For the trial court to issue a bank inquiry order, it is necessary for the AMLC to be able to show specific facts and circumstances that provide a link between an unlawful activity or a money laundering offense, on the one hand, and the account or monetary instrument or property sought to be examined on the other hand. In this case, the R TC found the evidence presented by the AMLC wanting. For its part, the latter insists that the RTC's determination was tainted with grave abuse of discretion for ignoring the glaring existence of probable cause that the subject bank deposits and investments were related to an unlawful activity. We find no reason to conclude that the R TC determined the existence of probable cause, or lack thereof, in an arbitrary and whimsical manner. To repeat, the application for the issuance of a bank inquiry order was supported by only two pieces of evidence: Senate Committee Report No. 54 and the testimony of witness Thelma Espina. We have had occasion to rule that reports of the Senate stand on the same level as other pieces of evidence submitted by the parties, and that the facts and arguments presented therein should undergo the same level of judicial scrutiny and analysis. As courts have the discretion to accept or reject them, no grave error can be ascribed to the RTC for rejecting and refusing to give probative value to Senate Committee Report No. 54. At any rate, Senate Committee Report No. 54 only provided the AMLC with a description of the alleged unlawful activity, which is the fertilizer fund scam. It also named the alleged mastermind of the scam, who was respondent Bolante. But Undersecretary Bolante's power over the agriculture department was widely known. And it encompasses more than what the Administrative Code provided. In fact, at the time that he was Undersecretary, Jocelyn Bolante was concurrently appointed by the President in other powerful positions: as Acting Chairman of the National Irrigation Administration, as Acting Chairman of the Livelihood Corporation x x x. However, the R TC found during trial that respondent Bolante had ceased to be a member of the board of trustees of LIVECOR for 14 months before the latter even made the initial transaction, which was the subject of the suspicious transaction reports. Furthermore, the RTC took note that according to the Audit Report submitted by the Commission on Audit, no part of the P728 million fertilizer fund was ever released to LIVECOR. The evidence relied upon by ALMC proved to be insufficient when weighed against that presented by the respondents, who were given notice and the opportunity to contest the issuance of the bank inquiry order pursuant to Eugenio. In fine, the RTC did not commit grave abuse of discretion in denying the application.
VIII. DISPOSITIVE PORTION:
The petition in G.R. No. 190357 is DISMISSED. The Resolution dated 3 July 2009 and Order dated 13 November 2009 issued by the Regional Trial Court of Makati, Branch 59, in AMLC Case No. 07-001 are AFFIRMED.
