THE Supreme Court (SC) has ruled that a freeze order the Court of Appeals (CA) issued for suspected money laundering may cover related accounts, but it also set safeguards to protect the rights of account owners.
In a decision promulgated on May 20, the Court en banc, through Associate Justice Japar Dimaampao, affirmed the legality of Section 10 of Republic Act 9160, or the Anti-Money Laundering Act, which allows the appellate court to freeze related and materially linked accounts, if they are included in the application for the freeze and the amount of funds of the property is identified in the freeze order.
The decision stemmed from the petition the Anti-Money Laundering Council (AMLC) filed in connection with the corruption cases filed against then Vice President Jejomar Binay and other officials of Makati City Hall over the alleged overpricing in the construction of the new Makati City parking II building.
In its petition, the AMLC asked the appellate court to freeze assets, including bank accounts, insurance policies, securities, and “related accounts” of Binay, family members, and close associates that seemed to be linked to unlawful activities and money laundering.
The appellate court granted the AMLC’s request and directed the banks to freeze, to identify the assets, including “all related accounts” wherever they may be found.
However, Manganip and several others challenged it before the High Court, claiming their accounts were frozen even though they were not included in the AMLC application for a freeze order.
Allowing this, they argued, went beyond the law by allowing related accounts to be frozen, violating their rights to privacy and protection from unreasonable searches.
But the SC disagreed, ruling that the law does allow related accounts to be frozen, even if the exact term “related accounts” is not stated in the AMLA.
The en banc explained that these accounts fall under the broader phrase “monetary instrument or property related to unlawful activity” under Section 10 of RA 9160, adding that money laundering activities more often involve a complex web of accounts used to hide or move money away from the prying eyes of the authorities and that freezing related accounts is “essential to prevent suspects from evading investigation.”
However, the en banc also set safeguards as it said that a freeze order can only be issued if the CA finds probable cause, meaning there must be enough reason to believe the assets are linked to illegal activity.
“This ensures that the rights to privacy and protection from unlawful searches remain respected,’ it said.
The en banc also laid down clear guidelines for how related accounts may be included in a freeze order to protect innocent account holders.
The safeguards laid down by the SC include the following:
1. The AMLC shall file a freeze order petition before the CA covering monetary instruments or properties related in any way to an unlawful activity. The petition shall state if it includes related and materially–linked accounts defined under the IRR, with a specific description of all stated accounts, including their amounts.
2. The CA shall make an independent finding of probable cause that a monetary instrument or property, including the related and materially linked accounts, are in any way related to an unlawful activity as defined under the AMLA.
3. The freeze order shall be limited to, and cannot go beyond, the amount of cash or monetary instrument or value of property that the court finds probable cause to be considered proceeds of a predicate offense.
4. The freeze order shall be effective immediately, for a period of 20 days. During this period, the CA must 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, which should not exceed six months.
5. 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.
6. If there is no case filed against a person whose account has been frozen within the period the CA determines, which in no case shall not exceed six months, the freeze order shall be deemed automatically lifted.
7. The person whose property or funds have been frozen may withdraw such sums as the AMLC determines reasonable monthly family needs and sustenance, including the services of counsel and medical needs.
The SC has yet to release the full copy of its decision as of press time.
