5. Authority to Inquire, Freeze, and Forfeit

Authority to Inquire into Banks

General Rule: The AMLC may inquire into or examine any particular deposit or investment, including related accounts, with any banking institution or non-bank financial institution upon order of any competent court in cases of violation of this Act when it has been established that there is probable cause that the deposits or investments involved are related:

• To an unlawful activity as defined in Sec. 3(i)¹; or
• To any money laundering offense under Sec. 4²

Related Accounts refers to accounts, funds and sources of which originated from and/or are materially linked to the monetary instrument(s) or property(ies) subject of the freeze order(s).

Exception: No court order shall be required in the following cases –

• Kidnapping for ransom under Article 267 of the RPC³
• Sections 4, 5, 7, 8, 9, 10, 12, 13, 14, 15, and 16 of RA No. 9165⁴
• Hijacking and other violations under RA No. 6235⁵; destructive arson and murder as defined under the RPC⁶
• Felonies or offenses of a nature similar to those mentioned in Section 3(i) (1), (2), and (12)⁷ which are punishable under the penal laws of other countries;
• Terrorism and conspiracy to commit terrorism under RA No. 11479, subject to the terms of the bank-inquiry exception in Sec. 11 of RA 9160, as amended⁸.

The authority of AMLC to inquire into or examine the main account and the related accounts shall comply with the requirements of Article III, Sections 2 and 3 of the 1987 Constitution, which protect against unreasonable searches and seizures and protect the privacy of communication, respectively⁹. Likewise, the constitutional injunction against ex post facto laws and bills of attainder shall be respected [Sec. 21], as amended by RA 10365]¹⁰.

A bank inquiry order may be availed of without need of a pre-existing case under the AMLA. If the contrary position is adopted, 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. Under Sec. 11 of RA 9160, as amended by RA 10167, the AMLC may apply ex parte for a bank inquiry order, subject to the court's determination of probable cause. The contrary notice ruling in Republic v. Eugenio is historical [Republic v. Eugenio, G.R. No. 174629, 14 February 2008]¹¹.

Who may apply

Upon verified ex parte petition by the AMLC and after determination that probable cause exists that any monetary instrument or property is in any way related to an unlawful activity, the Court of Appeals may issue a freeze order, which shall be effective immediately, directing the concerned covered persons and government agency to desist from allowing any transaction, withdrawal, transfer, removal, conversion, concealment, or other disposition of the subject monetary instrument or property [Rule 10(a), Revised IRR¹²].

Effectivity

The freeze order shall be effective immediately and shall not exceed six (6) months depending upon the circumstances of the case.

On motion of the AMLC filed before the expiration of the original period of the freeze order, the court may, for good cause shown, extend its effectivity. Upon the timely filing of such motion and pending resolution by the Court of Appeals, the freeze order shall remain effective [Rule 10(a)(3), Revised IRR]¹³.

Duties of covered institutions

• Implement Freeze Order. Upon receipt of the notice of the freeze order, the covered person and government agency concerned shall immediately freeze the monetary instrument or property subject thereof and shall immediately desist from and not allow any transaction, withdrawal, transfer, removal, conversion, other movement or concealment thereof.
• Freeze Related Accounts. - Upon receipt of the freeze order and upon verification by the covered person that there are accounts related to the monetary instrument or property subject of the freeze order, the covered person shall immediately freeze these related accounts wherever these may be found. If the related accounts cannot be determined within 24 hours from receipt of the freeze order due to the volume and/or complexity of the transactions, or any other justifiable factors, the covered person shall effect the freezing of the related accounts within a reasonable period and shall submit a supplemental return thereof to the Court of Appeals and the AMLC within 24 hours from the freezing of said related accounts.
• Furnish Copy of Freeze Order to Owner or Holder. The covered person and government agency concerned shall likewise immediately furnish a copy of the notice of the freeze order upon the owner or holder of the monetary instrument or property or related accounts subject thereof.
• Submit Detailed Return. - Within 24 hours from receipt of the freeze order, the covered person and government agency concerned shall submit, by personal delivery, to the Court of Appeals and to the AMLC, a written detailed return on the freeze order.
• The covered person shall also submit to the AMLC, through the internet, an electronic detailed return in a format to be prescribed by the latter [Rule 10(e), Revised IRR]¹⁴.

Civil Forfeiture

Upon determination by the AMLC that probable cause exists that any monetary instrument or property is in any way related to an unlawful activity or a money laundering offense, the AMLC shall file with the appropriate court (through the OSG) a verified petition for forfeiture [Sec. 12(a), as amended by RA 10365]¹⁵.

Procedural rule applicable: The Rules of Court on Civil Forfeiture.

What is covered by the forfeiture

The forfeiture shall include those other monetary instrument or property having an equivalent value to that of the monetary instrument or property found to be related in any way to an unlawful activity or a money laundering offense, when:

• With due diligence, the former cannot be located, or
• It has been substantially altered, destroyed, diminished in value or otherwise rendered worthless by any act or omission, or
• It has been concealed, removed, converted, or otherwise transferred, or
• It is located outside the Philippines or has been placed or brought outside the jurisdiction of the court, or
• It has been commingled with other monetary instrument or property belonging to either the offender himself or a third person or entity, thereby rendering the same difficult to identify or be segregated for purposes of forfeiture [Sec. 12(a), as amended by RA 10365]¹⁶.

Claim on Forfeited Assets

Where the court has issued an order of forfeiture of the monetary instrument or property in a criminal prosecution for any money laundering offense defined under Section 4 of this Act¹⁷, the offender or any other person claiming an interest therein may apply, by verified petition, for a declaration that the same legitimately belongs to him and for segregation or exclusion of the monetary instrument or property corresponding thereto.

Where filed: With the court which rendered the judgment of forfeiture.

When filed: Within 15 days from the date of the order of forfeiture, in default of which the said order shall become final and executory [Sec. 12(b)]¹⁸.

Note: This provision shall apply in both civil and criminal forfeiture.

Payment in Lieu of Forfeiture

The court may, instead of enforcing the order of forfeiture of the monetary instrument or property or part thereof or interest therein, accordingly order the convicted offender to pay an amount equal to the value of said monetary instrument or property, where:

• The court has issued an order of forfeiture of the monetary instrument or property subject of a money laundering offense (defined under Section 4¹⁹), and
• Said order cannot be enforced because:
• Any particular monetary instrument or property cannot, with due diligence, be located, or
• It has been substantially altered, destroyed, diminished in value or otherwise rendered worthless by any act or omission, directly or indirectly, attributable to the offender, or
• It has been concealed, removed, converted, or otherwise transferred to prevent the same from being found or to avoid forfeiture thereof, or
• It is located outside the Philippines or has been placed or brought outside the jurisdiction of the court, or
• It has been commingled with other monetary instruments or property belonging to either the offender himself or a third person or entity, thereby rendering the same difficult to identify or be segregated for purposes of forfeiture [Sec. 12(c)]²⁰.

Note: This provision shall apply in both civil and criminal forfeiture.