This Supreme Court decision clarifies the extent of government power to freeze bank accounts suspected of being related to unlawful activity, stressing the importance of probable cause. The ruling underscores that while the Anti-Money Laundering Council (AMLC) has the authority to seek freeze orders and bank inquiry orders, these measures are extraordinary and require a solid foundation of evidence. It affirms that the burden of proving probable cause remains with the AMLC, ensuring that individuals and entities are protected from arbitrary intrusion into their financial affairs. This decision emphasizes the judiciary’s role in balancing the state’s interest in combating money laundering with the constitutional rights to privacy and due process.

Following the Money: When Must a Freeze Order Be Lifted?

In Republic of the Philippines vs. Roberto V. Ongpin, G.R. No. 207078, the Supreme Court addressed the lifting of a freeze order on several bank accounts linked to Roberto V. Ongpin and former officers of the Development Bank of the Philippines (DBP). The Anti-Money Laundering Council (AMLC) sought the freeze order, arguing that loans granted to Deltaventure Resources, Inc., were anomalous and related to unlawful activity. The Court of Appeals (CA) initially granted the freeze order but later lifted it for most accounts, except for one account belonging to Boerstar Corporation. The Supreme Court then took up the case to determine whether the CA erred in lifting the freeze order and whether the AMLC had sufficiently demonstrated probable cause to keep the accounts frozen.

The case centered on the implementation and interpretation of Section 10 of the Anti-Money Laundering Act (AMLA), as amended by Republic Act No. 10167, which allows the Court of Appeals to issue a freeze order upon a verified ex parte petition by the AMLC. The core issue was whether the AMLC had presented sufficient evidence to establish probable cause that the accounts were related to unlawful activity, justifying the continued freezing of the accounts. The respondents argued that the AMLC’s evidence was insufficient and that the CA correctly lifted the freeze order, protecting their right to privacy and due process.

A critical aspect of this case involves the confidentiality of bank accounts in the Philippines, as protected by Republic Act No. 1405, also known as the Bank Secrecy Law. This law generally prohibits the examination of bank deposits. However, there are exceptions, including cases of impeachment, bribery, or dereliction of duty of public officials, and cases where the money deposited is the subject matter of litigation. The AMLA introduces further exceptions to combat money laundering, allowing for remedies such as freeze orders and bank inquiry orders to investigate accounts potentially linked to unlawful activities.

The Supreme Court discussed the procedural and substantive requirements for issuing and maintaining a freeze order. It reiterated that a freeze order is an extraordinary remedy intended to preserve monetary instruments or property related to unlawful activity. It is a preemptive measure to prevent the dissipation of assets while the state builds its case for civil forfeiture or criminal prosecution. However, this power is not without limits. It requires a delicate balance between protecting individual rights and combating financial crimes. The burden of proving probable cause rests squarely on the AMLC.

The Court clarified that although the CA had initially extended the freeze order, it retained the power to reconsider its decision based on further evidence. It rejected the AMLC’s argument that extending the freeze order automatically denied the motions to lift it. This interpretation acknowledges the importance of ongoing judicial review to ensure that freeze orders are not maintained without sufficient justification.

Furthermore, the Supreme Court addressed the AMLC’s claim that the burden of evidence shifted to the respondents once probable cause was established. The Court clarified the distinction between the **burden of proof** and the **burden of evidence**. While the ultimate burden of proving probable cause remains with the AMLC, the burden of evidence may shift to the account owners to present counterevidence showing that their accounts are funded by legitimate sources. However, if the counterevidence balances the evidence of probable cause, the burden of evidence shifts back to the AMLC to justify the continued freezing of the accounts.

The Court highlighted that probable cause in the context of freeze orders differs from probable cause in preliminary investigations. A freeze order requires demonstrating a link between the bank accounts and the alleged predicate crimes under the AMLA. It focuses on whether the accounts are related to the unlawful activity, not on proving that the unlawful activity itself occurred. This distinction is essential to avoid unduly infringing on individuals’ financial privacy.

Examining the evidence, the Court noted that most of the frozen accounts either had minimal deposits or were already closed. While some accounts showed suspicious transactions, such as large deposits, the AMLC failed to establish a direct link between these transactions and the alleged anomalous loan transactions between Deltaventure and DBP. Consequently, the Court agreed with the CA in lifting the freeze order on most accounts, except for the one account of Boerstar Corporation, which was directly linked to the proceeds of the sale of Philex shares.

The Court also addressed the issue of jointly hearing the proceedings for the freeze order and the ex parte application for a bank inquiry order. The Court acknowledged that the bank inquiry proceedings should be confidential and ex parte to maintain their effectiveness as a discovery tool. However, it also recognized that the CA has the discretion to jointly hear actions involving common questions of law or fact, especially if it avoids unnecessary costs or delay. In this case, the Court found that the joint hearing, while potentially compromising the ex parte nature of the bank inquiry, did not constitute reversible error because both proceedings stemmed from the same set of facts and legal questions.

This decision emphasizes the importance of the AMLC’s role in combating money laundering. However, it also underscores the need for strict adherence to procedural and evidentiary requirements to protect individual rights. The ruling serves as a reminder that freeze orders and bank inquiry orders are extraordinary remedies that must be exercised with caution and restraint, ensuring that they are based on solid evidence of probable cause rather than mere suspicion.

FAQs

What is a freeze order?	A freeze order is a legal order issued by the Court of Appeals that temporarily prevents individuals or entities from accessing or transferring funds in their bank accounts suspected of being related to unlawful activities.
What is probable cause in relation to a freeze order?	Probable cause, in this context, refers to a reasonable belief, based on facts and circumstances, that a bank account is connected to an unlawful activity or money laundering offense, justifying its freezing.
Who has the burden of proving probable cause for a freeze order?	The Anti-Money Laundering Council (AMLC) has the burden of proving probable cause to justify the issuance and maintenance of a freeze order on a bank account.
What is a bank inquiry order?	A bank inquiry order is a court order that allows the AMLC to examine specific deposits or investments in banking institutions or non-bank financial institutions to gather information about potential money laundering activities.
Can proceedings for freeze orders and bank inquiry orders be heard jointly?	Yes, the Court of Appeals has the discretion to jointly hear proceedings for freeze orders and bank inquiry orders, especially if they involve common questions of law or fact, to avoid unnecessary costs or delays.
What happens if a motion to lift a freeze order is filed?	If a motion to lift a freeze order is filed, the court must resolve the motion, considering whether the AMLC has sufficiently proven probable cause to maintain the freeze order, or if the account owner has presented sufficient evidence to warrant its lifting.
What is the difference between the burden of proof and the burden of evidence?	The burden of proof is the duty to establish a claim with the required amount of evidence, while the burden of evidence refers to the responsibility to present evidence to counter or support a claim.
What was the final outcome of the Ongpin case?	The Supreme Court affirmed the Court of Appeals’ decision, lifting the freeze order on most of the bank accounts but maintaining it on one account of Boerstar Corporation, which was directly linked to the proceeds of the sale of Philex shares.

In conclusion, the Republic v. Ongpin case underscores the importance of upholding individual rights while combating money laundering. The decision provides valuable guidance on the procedural and evidentiary requirements for freeze orders and bank inquiry orders under the AMLA, ensuring a balanced approach that respects financial privacy and promotes transparency.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Republic of the Philippines vs. Roberto V. Ongpin, G.R. No. 207078, June 20, 2022