Veronica Louise D.

Mandi
JD IV
September 11, 2017
Special Commercial Law: Assigned Case Digests

Allied Banking Corporation vs. Ordonez and Alfredo Ching, 192 SCRA 246 (1990)
Facts: Allied Banking Corporation filed a criminal case against Alfredo Ching for violation of P.D.
115. Accordingly, Ching executed Trust Receipt Agreements in favor of ABC acknowledging ABCs
ownership of the goods and its obligation to turn over the proceeds of the sale of the goods, if sold,
or to return the same, if unsold within the stated period, to secure payment of amounts covered by
letters of credit issued by ABC in his favor. Despite repeated demands, however, Ching failed and
refused to either turn over the proceeds of the sale of the goods or to return the same.
Ching was eventually charged by the prosecutor for violation of P.D. 115. He appealed contending
that the goods subject of the trust receipt agreements were dolomites which were specifically used for
patching purposes over the surface of furnaces and nozzle bricks which are insulating materials in the
lower portion of the ladle, which do not form part of the steel product itself.
Issue: Does the penal provision of P.D. 115 apply when the goods covered by a Trust Receipt do
not form part of the finished products which are ultimately sold but are instead utilized/used up in
the operation of the equipment and machineries?
Ruling: Yes. There is no reason why the law should not apply to all transactions covered by trust
receipts, except those expressly excluded. The Court takes judicial notice of customary banking and
business practices where trust receipts are used for importation of heavy equipment, machineries, and
supplies used in manufacturing operations. A construction should be avoided when it affords an
opportunity to defeat compliance with the terms of the statute. Clearly, penal provision of P.D. 115
encompasses any act violative of an obligation covered by the trust receipt; it is not limited to
transactions in goods which are to be sold, reshipped, stored, or processed as a component of a
product ultimately sold.

Republic [AMLC] vs. Hon. Eugenio, February 14, 2006

Facts: The Republic, through the AMLC, filed an application before the Manila RTC to inquire into
and/or examine several accounts alleged as having been used to facilitate corruption in the NAIA 3
Project. The AMLC invoked Sec. 11 of R.A. No. 9160 to obtain access via Bank Inquiry Orders. The
Manila RTC granted the Ex Parte Applications. The account holders voiced their opposition to the
order through the filing of injunctions and TROs to stay the enforcement of the Bank Inquiry Orders.
The Manila RTC granted these despite the vehement objections by the Republic which contended
that the BIOs are final and immediately executory orders and cannot be stayed by injunctions.
Respondent Lilia Cheng imputed grave abuse of discretion on the part of the Makati and Manila RTCs
in granting AMLCs ex parte applications for a bank inquiry order, arguing among others that the ex
parte applications violated her constitutional right to due process, that the bank inquiry order under
the AMLA can only be granted in connection with violations of the AMLA and that the AMLA cannot
apply to bank accounts opened and transactions entered into prior to the effectivity of the AMLA or
to bank accounts located outside the Philippines.
Issue/s:
(1) Is a prior existing case necessary to avail of a Bank Inquiry Order under Sec. 11 of R.A. No. 9160?
(2) May a BIO be issued ex parte?
(3) May a BIO be issued with respect to bank accounts opened and transactions entered into prior to
the effectivity of the AMLA?
(4) Can the enforcement of BIOs be stayed by injunction orders/TROs?
Ruling/s:
(1) No. the use of the phrase "in cases of" was unfortunate, yet submitted that it should be interpreted
to mean "in the event there are violations" of the AMLA, and not that there are already cases pending
in court concerning such violations. If the contrary position is adopted, then the bank inquiry order
would be limited in purpose as a tool in aid of litigation of live cases, and wholly inutile as a means for
the government to ascertain whether there is sufficient evidence to sustain an intended prosecution
of the account holder for violation of the AMLA. Should that be the situation, in all likelihood the
AMLC would be virtually deprived of its character as a discovery tool, and thus would become less
circumspect in filing complaints against suspect account holders. After all, under such set-up the
preferred strategy would be to allow or even encourage the indiscriminate filing of complaints under
the AMLA with the hope or expectation that the evidence of money laundering would somehow
surface during the trial. Since the AMLC could not make use of the bank inquiry order to determine
whether there is evidentiary basis to prosecute the suspected malefactors, not filing any case at all
would not be an alternative. Such unwholesome set-up should not come to pass. Thus Section 11
cannot be interpreted in a way that would emasculate the remedy it has established and encourage the
unfounded initiation of complaints for money laundering.
(2) No. Under the AMLA (at that time), ex parte proceedings, both in the law itself and its IRR, were
only allowed for the issuance of freeze orders under Section 10, no such proviso existed with respect
to Section 11. From this, the SC inferred that legislative policy indicates that BIOs cannot be applied
for and issued ex parte. (Nota Bene: current amendments to the AMLA already provide for ex parte
issuance of BIOs, see SPCMB vs. Court of Appeals, decided in December 2016)
(3) Yes. The Court recognizes that if Chengs argument were to be affirmed, it would create a horrible
loophole in the AMLA that would in turn supply the means to fearlessly engage in money laundering
in the Philippines; all that the criminal has to do is to make sure that the money laundering activity is
facilitated through a bank account opened prior to 2001. Due to the absence of cited authority from
the legislative record that unqualifiedly supports respondent Lilia Chengs thesis, there is no cause for
us to sustain her interpretation of the AMLA, fatal as it is to the anima of that law.
(4) Yes. Under the AMLA (at that time), there was still no prohibition against seeking injunctive relief
from Bank Inquiry Orders and Freeze Orders, thus the court can review the same when there is patent
invalidity. The SC ruled in this case that the prohibition against injunctions would only apply where
the orders were entirely valid and not when they suffered from defects. (Nota Bene: Congress, realizing
the gap in the law, enacted amendments to the AMLA that effectively prohibits injunction/TROs
regardless of any defect in the orders)