Evolution of the freeze order under the Anti-Money Laundering Act. – “Section 10 of the Anti-Money Laundering Act has governed the issuance of freeze orders since the statute’s enactment in 2001. Section 10 has since been amended four times: Republic Act No. 9194, enacted in 2003; Republic Act No. 10167, enacted in 2012; Republic Act No. 10365, enacted in 2013; and Republic Act No. 10927, enacted in 2017.
Section 10, as originally worded in Republic Act No. 9160, provided:
SECTION 10. Authority to Freeze. — Upon determination that probable cause exists that any deposit or similar account is in any way related to an unlawful activity, the AMLC may issue a freeze order, which shall be effective immediately, on the account for a period not exceeding fifteen (15) days. Notice to the depositor that his account has been frozen shall be issued simultaneously with the issuance of the freeze order. The depositor shall have seventy-two (72) hours upon receipt of the notice to explain why the freeze order should be lifted. The AMLC has seventy-two (72) hours to dispose of the depositor’s explanation. If it fails to act within seventy-two (72) hours from receipt of the depositor’s explanation, the freeze order shall automatically be dissolved. The fifteen (15)-day freeze order of the AMLC may be extended upon order of the court, provided that the fifteen (15)-day period shall be tolled pending the court’s decision to extend the period.
No court shall issue a temporary restraining order or writ of injunction against any freeze order issued by the AMLC except the Court of Appeals or the Supreme Court.
The original Section 10 vested the Anti-Money Laundering Council with the power to issue freeze orders. Once issued, the freeze order is effective immediately, and the account holder, who is notified of the freeze order, is given 72 hours to move for the freeze order’s lifting. The motion to lift must be resolved within 72 hours from its filing. Unless extended by the court, the freeze order is effective for 15 days. Only the Court of Appeals and this Court may issue a temporary restraining order or writ of preliminary injunction against the freeze order.
Republic Act No. 9194, enacted in 2003, amended Section 10 to read as follows:
SECTION 10. Freezing of Monetary Instrument or Property. — The Court of Appeals, upon application ex parte 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 as defined in Section 3(i) hereof, may issue a freeze order which shall be effective immediately. The freeze order shall be for a period of twenty (20) days unless extended by the court.
Republic Act No. 9194 transferred the jurisdiction to issue freeze orders from the Anti-Money Laundering Council to the Court of Appeals. This exclusive original jurisdiction has remained with the Court of Appeals since then. For a freeze order under Republic Act No. 9194 to be issued, the Anti-Money Laundering Council must file an ex parte application (meaning, without notice to the account holder) before the Court of Appeals. Once it determines that the accounts sought to be frozen are probably related to any of the predicate crimes under the Anti-Money Laundering Act, the Court of Appeals may issue a freeze order, which shall be effective for 20 days.
Notably, Republic Act No. 9194 removed the provision on the filing of a motion to lift the freeze order and the issuance of a temporary restraining order and/or writ of preliminary injunction.
Section 10, as amended by Republic Act No. 9194, remained effective for about nine years until Republic Act No. 10167 amended it in 2012 to read as follows:
SECTION 10. Freezing of Monetary Instrument or Property. — 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 as defined in Section 3(i) hereof, the Court of Appeals may issue a freeze order, which shall be effective immediately. The freeze order shall be for a period of twenty (20) days unless extended by the court. In any case, the court should act on the petition to freeze within twenty-four (24) hours from filing of the petition. If the application is filed a day before a nonworking day, the computation of the twenty-four (24)-hour period shall exclude the nonworking days.
A person whose account has been frozen may file a motion to lift the freeze order and the court must resolve this motion before the expiration of the twenty (20)-day original freeze order.
No court shall issue a temporary restraining order or a writ of injunction against any freeze order, except the Supreme Court.
Republic Act No. 10167 retained the ex parte nature of the application for a freeze order. However, it further required that the application must be verified; that is, accompanied by an affidavit where the Anti-Money Laundering Council attests to reading the application and that, to its knowledge and belief, the allegations in the application are true and correct.178 The Court of Appeals was also explicitly required to determine within 24 hours from the application’s filing if probable cause exists. Once issued, the freeze order is effective immediately and for 20 days, unless extended by the court. The remedies of a motion to lift the freeze order before the Court of Appeals and for the issuance of a temporary restraining order and/or writ of preliminary injunction before this Court were reinstated.
In 2013, Republic Act No. 10365 amended Section 10 to read as follows:
SECTION 10. Freezing of Monetary Instrument or Property. — Upon a 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 as defined in Section 3(i) hereof, the Court of Appeals may issue a freeze order which shall be effective immediately, and which shall not exceed six (6) months depending upon the circumstances of the case: Provided, That if there is no case filed against a person whose account has been frozen within the period determined by the court, the freeze order shall be deemed ipso facto lifted: Provided, further, That this new rule shall not apply to pending cases in the courts. In any case, the court should act on the petition to freeze within twenty-four (24) hours from filing of the petition. If the application is filed a day before a nonworking day, the computation of the twenty-four (24)-hour period shall exclude the nonworking days.
A person whose account has been frozen may file a motion to lift the freeze order and the court must resolve this motion before the expiration of the freeze order.
No court shall issue a temporary restraining order or a writ of injunction against any freeze order, except the Supreme Court.
Republic Act No. 10365 greatly extended the effectivity of a freeze order. From the relatively short 20 days, a freeze order lasted up to six months depending on the circumstances of the case. When no case against the account holder is filed within the six-month period, the freeze order is deemed automatically lifted.
Section 10 was last amended by Republic Act No. 10927 in 2017. It now reads:
SECTION 10. Freezing of Monetary Instrument or Property. — Upon a 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 as defined in Section 3(i) hereof, the Court of Appeals may issue a freeze order which shall be effective immediately, for a period of twenty (20) days. Within the twenty (20)-day period, the Court of Appeals shall conduct a summary hearing, with notice to the parties, to determine whether or not to modify or lift the freeze order, or extend its effectivity. The total period of the freeze order issued by the Court of Appeals under this provision shall not exceed six (6) months. This is without prejudice to an asset preservation order that the Regional Trial Court having jurisdiction over the appropriate anti-money laundering case or civil forfeiture case may issue on the same account depending upon the circumstances of the case, where the Court of Appeals will remand the case and its records: Provided, That if there is no case filed against a person whose account has been frozen within the period determined by the Court of Appeals, not exceeding six (6) months, the freeze order shall be deemed ipso facto lifted: Provided, further, That this new rule shall not apply to pending cases in the courts. In any case, the court should act on the petition to freeze within twenty-four (24) hours from filing of the petition. If the application is filed a day before a nonworking day, the computation of the twenty-four (24)-hour period shall exclude the nonworking days.
The freeze order or asset preservation order issued under this Act shall be limited only to the amount of cash or monetary instrument or value of property that the court finds there is probable cause to be considered as proceeds of a predicate offense, and the freeze order or asset preservation order shall not apply to amounts in the same account in excess of the amount or value of the proceeds of the predicate offense.
A person whose account has been frozen may file a motion to lift the freeze order and the court must resolve this motion before the expiration of the freeze order.
No court shall issue a temporary restraining order or a writ of injunction against any freeze order, except the Supreme Court.
Currently, Section 10 provides an initial 20-day period for the effectivity of the freeze order. Within this period, the Court of Appeals should conduct a summary hearing, with notice to the parties, to determine whether to lift the freeze order. Should it decide to extend the freeze order, the extended period may not exceed six months. Further, Section 10, as it now reads, specifies that the freeze order shall be limited to the value of the money or property found to be related to a predicate crime and shall not apply to amounts in the same account in excess of the value of the proceeds of the predicate crime.[1]
Probable cause for issuance of freeze order. – “Before a freeze order is issued, the Anti-Money Laundering Council must put forward evidence of probable cause, or “such facts and circumstances which would lead a reasonably discreet, prudent or cautious [person] to believe that an unlawful activity and/or a money laundering offense is about to be, is being or has been committed and that the account or any monetary instrument or property subject thereof sought to be frozen is in any way related to said unlawful activity and/or money laundering offense.” This requirement is consistent with the prohibition on unreasonable searches and seizure, our bank accounts and information about them being properties and effects within the meaning of the Constitution.[2]
Nature of probable cause in freeze orders. – the probable cause required to issue a freeze order is different from the probable cause determined in a preliminary investigation. The former is judicial in nature, focusing on whether the bank accounts, assets, or other money instruments sought to be frozen are related to the predicate crimes under the Anti-Money Laundering Act, not whether there is probable cause to believe that a predicate crime was committed. Meanwhile, the latter sense of probable cause belongs to the government’s prosecution arm.[3]
Burden of proving probable cause in freeze orders. – The remedies of freeze order and order of bank inquiry are extraordinary, issued only upon a finding of probable cause that the accounts sought to be frozen or inquired into are related to any of the predicate crimes under the Anti-Money Laundering Act. The burden of proving probable cause always rests with the Anti-Money Laundering Council, never with the account owners.[4]
A freeze order cannot be issued for an indefinite period. – “a freeze order is meant to have a temporary effect; it was never intended to supplant or replace the actual forfeiture cases where the provisional remedy – which means, the remedy is an adjunct of or an incident to the main action – of asking for the issuance of an asset preservation order from the court where the petition is filed is precisely available. For emphasis, a freeze order is both a preservatory and preemptive remedy.
To stress, the evils caused by the law’s silence on the freeze order’s period of effectivity compelled this Court to issue the Rule in Civil Forfeiture Cases. Specifically, the Court fixed the maximum allowable extension on the freeze order’s effectivity at six months. In doing so, the Court sought to balance the State’s interest in going after suspected money launderers with an individual’s constitutionally-protected right not to be deprived of his property without due process of law, as well as to be presumed innocent until proven guilty.
To our mind, the six-month extension period is ordinarily sufficient for the government to act against the suspected money launderer and to file the appropriate forfeiture case against him, and is a reasonable period as well that recognizes the property owner’s right to due process. In this case, the period of inaction of six years, under the circumstances, already far exceeded what is reasonable.[5]
“It is clear from the foregoing amendments to Republic Act 9160 that, at present, the Court of Appeals has been given sole authority and discretion to issue a freeze order as well as to extend its effectivity, It is likewise apparent that a freeze order is meant to be a temporary legal remedy in order to facilitate the attainment of the purpose if the Anti-Money Laundering Law.[6]
Asset preservation order. – “Section 10 now also mentions “asset preservation order.” Although appearing for the first time in statute in 2017, the remedy has been provided as early as 2005 in A.M. No. 05-11-04-SC. Akin to a freeze order, the remedy of an asset preservation order is provisional, issued upon probable cause to “[forbid] any transaction, withdrawal, deposit, transfer, removal, conversion, concealment or other disposition of the subject monetary instrument, property, or proceeds.” However, unlike a freeze order, it is issued by the executive judge of the regional trial court or, in their absence, the vice executive judge. If ever the vice executive judge is absent, any regional trial court judge available in the same station may do so.”[7]
While the RTC has discretion whether to lift a provisional asset preservation order or to issue an asset preservation order, the discretion must not be exercised arbitrarily. “The RTC must conform with the procedure set forth under Sections 11 and 12 of A.M. No. 05-11-04-SC, which provide:
Section 11. Ex Parte Issuance of Provisional Asset Preservation Order. — Where the executive judge of the regional trial court or, in his absence, the vice-executive judge or, in their absence, any judge of the regional trial court available in the same station, has determined that probable cause exists on the basis of allegations of a verified petition sufficient in form and substance, with, a prayer for the issuance of an asset preservation order, that the monetary instrument, property, or proceeds subject of the petition are in any way related to an unlawful activity as defined in Section 3(i) of Republic Act No. 9160, as amended by Repubhc Act No. 9194, the court may issue ex parte a provisional asset preservation order effective immediately forbidding any transaction, withdrawal, deposit, transfer, removal, conversion, concealment or other disposition of the subject monetary instrument, property, or proceeds. Such order shall be effective for a period of twenty days from the respective dates of service to respondent or any person acting in his behalf, and upon each covered institution or government agency in accordance with Section 14 of this Rule.
Section 12. Summary Hearing. — The court shall schedule a hearing at a date and time within the twenty-day period at which the respondent may for good cause show why the provisional asset preservation order should be lifted. The court shall determine within the same period whether the provisional asset preservation order should be modified or lifted or an asset preservation order should issue and act accordingly.
It is clear from Section 12 of A.M. No. 05-11-04-SC that after the issuance of the PAPO, the burden is shifted to respondent who “may for good cause show why the provisional asset preservation order should be lifted.” It is imperative upon the respondent to prove that the monetary instrument, property or proceeds subject of the petition are not related to an unlawful activity as defined in Section 3(i)59 of RA 9160, as amended by RA 9194.”[8]
Bank inquiry Order– Another remedy under the Anti-Money Laundering Act is an ex parte application for a bank inquiry order. A bank inquiry order authorizes the examination of particular deposits or investments in banks or non-bank financial institutions.182 “The monetary instruments or property deposited with such banks or financial institutions are not seized in a physical sense, but are examined on particular details such as the account holder’s record of deposits and transactions.”183 Moreover, records that are to be inspected “cannot be physically seized or hidden by the account holder.”184
The remedy of bank inquiry order is provided in Section 11 of the Anti-Money Laundering Act. Section 11, as originally worded in Republic Act No. 9160, provided:
SECTION 11. Authority to Inquire into Bank Deposits. — Notwithstanding the provisions of Republic Act No. 1405, as amended; Republic Act No. 6426, as amended; Republic Act No. 8791, and other laws, the AMLC may inquire into or examine any particular deposit or investment 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 in any way related to a money laundering offense: Provided, That this provision shall not apply to deposits and investments made prior to the effectivity of this Act.
In 2003, Section 11 was amended by Republic Act No. 9194 to read:
SECTION 11. Authority to Inquire into Bank Deposits. — Notwithstanding the provisions of Republic Act No. 1405, as amended, Republic Act No. 6426, as amended, Republic Act No. 8791, and other laws, the AMLC may inquire into or examine any particular deposit or investment 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 are related to an unlawful activity as defined in Section 3(i) hereof or a money laundering offense under Section 4 hereof; except that no court order shall be required in cases involving unlawful activities defined in Sections 3(i)(1), (2) and (12).
To ensure compliance with this Act, the Bangko Sentral ng Pilipinas (BSP) may inquire into or examine any deposit or investment with any banking institution or non-bank financial institution when the examination is made in the course of a periodic or special examination, in accordance with the rules of examination of the BSP.
Like a freeze order, a bank inquiry order is issued upon a finding of probable cause that the deposits or investments sought to be inquired into are in any way related to a predicate crime or money laundering offense. However, at least under Republic Act No. 9194, it was generally not issued ex parte.[9]
[1] Republic of the Philippines v. Ongpin, et al. G.R. No. 207078, June 20, 2022
[2] Republic of the Philippines v. Ongpin, et al. G.R. No. 207078, June 20, 2022
[2] Republic of the Philippines v. Ongpin, et al. G.R. No. 207078, June 20, 2022, citing Ligot v. Republic, 705 Phil. 477 (2013, and Concurring Opinion of J. Leonen in Subido Pagente Certeza Mendoza and Binay Law Offices v. Ca, 802 Phil. 314 (2016)
[3] Ligot v. Republic, 705 Phil. 477 (2013, cited in Republic of the Philippines v. Ongpin, et al. G.R. No. 207078, June 20, 20
[4] Republic of the Philippines v. Ongpin, et al. G.R. No. 207078, June 20, 2022
[5] Ligot v. Republic, G.R. No. 176944, March 6, 2013
[6] Republic v. First Pacific Network, Inc. G.R. No. 156646, November 19, 2014
[7] Republic of the Philippines v. Ongpin, et al. G.R. No. 207078, June 20, 2022
[8] Republic of the Philippines v. Ng and Metroploitan Bank and Trust Company, G.R. No. 239047, June 16, 2021
[9] Republic of the Philippines v. Ongpin, et al. G.R. No. 207078, June 20, 2022