SECRECY OF BANK DEPOSITS ACT

l
Act is the statutory enforcement of Government's policy to discourage hoarding and to encourage people to deposit their money in banking institutions, so that the same may properly be utilized by banking institutions in authorized loans to assist in the economic development of the country.
POLICY U N D E R REP. A C T 1405 -

IL

OPERATIVE PROVISIONS

1. SECI^CY OF BANK DEPOSITS - Under the Act, all deposits of whatever nature with banks or banking institutions, including investments in bonds issued by the Government, and its political subdivisions and instrumentalities, are absolutely confidential in nature and may not be examined, inquired or looked into by any person, government official, bureau or office.
EXCEPT:

(1) Upon the debtor's written permission; (2) In cases of impeachment; (3) Upon a competent court's order in cases of bribery of, or dereliction of duty by, public officials; or (4) In cases where money deposited or invested is the subject matter of litigation. 2, Prohibition on Disclosure - Other than above-enumerated cases, the Act declares it unlawful for any official or employee of a banking institution to disclose to any person any information concerning deposits. Other Statutory Provisions Cross-referring to the Secrecy of Bank Deposits Act: ^ ) Under the Foreign Currency Deposit Act (Rep. Act No. 6426, amended by PD 1034, 1035 and 1246): FCDU deposits "are hereby declared as and considered of an absolutely confidential nature, and ... in no instance shall foreign currency deposits be examined, inquired or looked into by any person, government official bureau or office whether judicial or administrative or legal, or any other entity whether public or private." ESSEEI : "[U]pon written permission of the depositor"
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FCDU accounts are "exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever." . Intengan v. Court of Appeals 377 SCRA 63 (2002)

When the accounts in question are U.S. dollar deposits, the applicable law is not the Secrecy of Bank Deposit Act, but the Foreign Currency Deposit Act (R.A. 6426), which contains only a single exception to the secrecy of foreign currency deposits, i.e., disclosure is allowed only upon the written permission of the depositor. The violation of the secrecy of foreign deposit is punishable as an act malum prohibitum. Violation of the FCDU Law (R.A. 6426) prescribes in eight (8) years, and the filing of the complaint or information for alleged violation of the Secretary of Bank Deposit Act (R.A. 1405) does not toll the running of the prescriptive period. [CLV: Despite the language in Sec. 8 of P.D. 1034 that "provisions of R.A. No. 1405 (Secrecy of Bank Deposits Law) shall apply to deposits in offshore banking units," Intengan would not extend the secrecy exceptions under R.A. 1405 to FCDU accounts under R.A. 6426.] (b) Under the General Banking Law of 2000, in line with the Secrecy of Bank Deposits Act, no bank shall employ casual or non-regular personnel or too lengthy probationary personnel in the conduct of its business involving bank deposits. (Sec. 55.4, Rep. Act 8791) 4. Jurisprudential Rulings: ^ China Banking Corp. v. Ortega 49 SCRA 355 (1973) The Secrecy of Bank Deposit Account does not prohibit attachment or garnishment of bank accounts. Onate v. Abrogar 230 SCRA 181 (1994) In a collection suit by an insurance company to determine how the defendant has applied the proceeds of a check paid to it, the grant by the trial court of examination of the pertinent records

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of the bank was allowed without need of notice to the depositor himself, pursuant to Sec. 10, Rule 57 of the Rules of Court covering examination of party whose property is attached and persons indebted to him or controlling his property; delivery of property to officer. The same is authorized under Sec. 2 of Rep. Act No. 1405, "in cases where the money deposited or invested is the subject matter of litigation." Marquez v. Desierto 359 SCRA 772 (2001) An examination of the Secrecy of Bank Deposits Law (R.A. 1405) would reveal the following exceptions: (a) Where the depositor consents in writing; (b) In impeachment cases; (c) By court order in bribery or dereliction of duty cases against public officials; (d) Deposit is subject of litigation; (e) Section 8, R.A. 3019, in cases of unexplained wealth as held in the case of PNB v. Gancayco. Marquez v. Desierto 359 SCRA 772 (2001) Outside of Section 8 of R.A. 3019 on unexplained wealth, before an in-camera inspection may be allowed of bank deposits, there must be a pending case before a court of competent jurisdiction. Further, the account must be clearly identified, the inspection limited to the subject matter of the pending case before the court of competent jurisdiction. The bank personnel and the account holder must be notified to be present during the inspection, and such inspection may cover only the account identified in the pending case. -^ Marquez v. Desierto 359 SCRA 772 (2001) An investigation [not specifically under Section 8 of the Anti-Graft and Corrupt Practices Law on unexplained wealth] by the Office of the Ombudsman is not a pending litigation to allow examination of the respondent's bank account.

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III.

ADDITIONAL GROUNDS FOR EXAMINING BANK ACCOUNTS 1 . UNDER ANTI-GRAFT AND CORRUPT PRACTICES ACT -

PNB v. Gancayco
1 5 S C R A 91 (1965)

Although the Act does not include cases covered by the Anti-Graft and Corrupt Practices Act, the same has been included by the Supreme Court considering the mandatory terms of Sec. 8 of Rep. Act 3019, providing that bank deposits "shall be taken into consideration in the enforcement of this section, notwithstanding any provision of law to the contrary." Banco Filipino v. Purisima
161 S C R A 576 (1988)

The provisions of the Anti-Graft Law are quite categorical in their terms as to warrant examination of bank records not only in the name of the respondent's spouse, ascendant, descendants, relatives, but also other persons. 2. Pertaining to Monetary Board - In 1981, Pres. Decree 1792 added the following grounds when the bank can be compelled to reveal the amount of deposit of a depositor: (1) Monetary Board orders revelation when there is danger of bank fraud; and (2) When independent auditors audit banks. However, under Sec. 135 of the New Central Bank Act (Rep. Act 7653), there is an express repeal of Pres. Decree 1792, reverting the Secrecy of Bank Deposit Act to its original version under Rep. Act 1405 prior to the promulgation of the decree.
3.

Under the 1 9 9 7 N I R C - Section 6(F) of the National Internal Revenue Code of 1997 (Rep. Act 8424), authorizes the Commissioner of Internal Revenue to inquire into bank deposit accounts of: (1) A decedent to determine his gross estate; and (2) Any taxpayer who has filed an application for compromise of his tax liability by reason of financial incapacity to pay his tax liability, which application shall include a written waiver of his privilege under The Secrecy of Bank Deposits Act or under other general or special laws.

4. UNDER THE ANTI-MONEY LAUNDERING ACT OF 2 0 0 1 -

(a) Reporting on Account - Under Sec. 9(c) of Rep. Act 9160, banking and other covered institutions are required to report to the Anti-Money Laundering Council (AMLC):

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(i)

Any single, series or combination of transactions involving a total amount in excess of t*500,000 or an equivalent amount in foreign currency; or

(ii) Any suspicious transaction of any amount; within 5 working days from occurrence thereof (unless Supervising Authority concerned prescribes a longer period) WHICH : Shall not thereby be a violation of the Secrecy of Bank Deposit Act, FCDU Law, and the General Banking Law of 2000.

Examination Accounts - Notwithstanding provisions on secrecy of bank deposit accounts to the contrary, AMLC may seek court order to inquire into or examine a particular deposit or investment with a banking or non-bank financial institution. EXCEPT: NO court order required in cases involving kidnapping for ransom, drug trafficking, and terrorism Power ofBSP - To ensure compliance with the Act, BSP may inquire into or examine any deposit or investment with any banking institution on non-bank financial institution when the examination is made in the course of periodic or special examination.

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ANTI-MONEY LAUNDERING ACT OF 2 0 0 1

I.

I M P E T U S F O R P A S S A G E O F R E P . A C T 9 1 6 0 [Amended b y R.A.

9194] In June, 2000, Financial Action Task Force (FATF), the Paris-based money-laundering watchdog of the Group of 8 (OECD) placed the Philippines in the list of Non-Cooperative Countries and Territories (NCCT), and threatened to impose sanctions by: (a) Isolation of all incoming and outgoing Philippine transactions, including transfer of Philippine transactions from the computerized system to manual process; (b) Imposition of hefty documentary and regulatory requirements for investments into the Philippines.

II.

DECLARED

POLICIES

(a) Protect and preserve the integrity and confidentiality of bank accounts, to ensure that the Philippines shall not be used as site for unlawful money laundering activities; and (b) Pursue State's foreign policy to extend cooperation in transnational investigations and prosecutions on money laundering activities. >- Act seeks to prevent money-laundering activities by providing for more transparency in the Philippine financial system.

III. C O V E R E D

TRANSACTIONS

/ I . "Threshold Transactions" - Transaction in cash or other equivalent monetary instrument in excess of P500,000, within one banking day. ' 2. "Suspicious Transactions" - Transaction with "Covered Institutions," regardless of the amount involved, where any of the following circumstances exist: (a) No underlying legal or trade obligation, or no purpose or economic justification;

'Sec. 2, Anti-Money Laundering Act of 2001.

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ANTI-MONEY LAUNDERING ACT OF 2001

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(b) The Client is not properly identified; (c) The amount involved is not commensurate with client's business or financial capacity; (d) Based on all known circumstances, it may be perceived that client's transaction is structured in order to avoid being subject of reporting requirements; (e) Any circumstance relating to transaction observed to deviate from the client's profile and/or client's past transactions with the Covered Institution; (f) Transaction is in any way related to an unlawful activity or offense under the Act that is about to be, is being, or has been committed; or (g) Similar or analogous transactions. IV. C O V E R E D I N S T I T U T I O N S : 1. Banks and other entities, their subsidiaries and affiliates, supervised/ regulated by BSP; 2. Insurance companies and other entities, supervised/regulated by Insurance Commissioner; 3. SEC supervised/regulated: Securities dealers, brokers, salesmen, investment houses, and other entities managing securities or rendering services as investment agents, advisor, or consultants; Mutual funds, closed-end investment companies, common trust funds, pre-need companies, and other similar entities; Foreign exchange corporations, money changers, money payment, remittance, and transfer companies, and other similar entities; and

Other entities administering/dealing in currency, commodities or financial derivatives based thereon, valuable objects, cash substitutes and other similar monetary instruments or property. V. OBLIGATIONS OF C O V E R E D INSTITUTIONS (a) Establish and record, and maintain a system of verifying, the true identities of clients, including the legal existence and organizational structure of a corporate client, and their representatives, based on official documents; (b) Keep records for five (5) years;
2

Penalized with imprisonment from 6 months to 1 year, or a fine of not less than P100.000.00, but not more than P500.000.00, or both.

f^'^

tion

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(c) Report Covered Transactions and Suspicious Transactions to AMLC, within five (5) working days from occurrence," which shall not thereby in violation of the Secrecy of Bank Deposit Act, FCDU Law, and the General Banking Law of 2000;
5 6 7

BUT :

Cannot otherwise communicate to any person or media, fact of report of covered transaction, or the contents of report.
8 9

ALSO : Fact of reporting to AMLC cannot also be published/aired by mass media, electronic mail, or other similar devices. > In case of a breach of confidentiality that is published or reported by the media, the responsible reporter, writer, president, publisher, manager and editor-in-chief shall be liable under the Act. (d) Prohibited: Anonymous accounts, accounts under fictitious names, and all other similar accounts. HOWEVER: Numbered accounts allowed, except for checking account. (e) BSP may conduct an annual testing of banking institutions solely limited to the determination of the existence and true identity of the owners of such accounts.
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VI. M O N E Y - L A U N D E R I N G C R I M E

A " MONEY LAUNDERING CRIME " is committed when the proceeds of an "Unlawful Activity" are transacted to make them appear to have originated from legitimate sources, by the following acts: (a) Transacting or Attempting to Transact, with monetary instrument or property, knowing that it represents/involves/relates to the proceeds of any "unlawful activity";
11

Should a transaction be determined to be both a covered transaction and a suspicious transaction, the Covered Institution shall be required to report the same as a Suspicious Transactions. Unless the Supervising Authority prescribes a longer period not exceeding ten (10) working days. Reporting or filing of completely unwarranted or false information relative to money laundering transactions is penalized by imprisonment from 6 months to 4 years and fine of not less than P100,000.00, but not more than P500.000.00. Reporting to AMLC shall not be considered to be a violation of the Secrecy of Bank Deposit Act (R.A. 1405), Foreign Currency Deposit Act (R.A. 6426), nor of The General Banking Law of 2000 (R.A. 8791). Rep. Act No. 6426. Rep. Act No. 8791. 'Punishable by imprisonment from 3 to 8 years and fine of not less than P500.000.00, but not more than P1.0 Million.
4 6 7

*lbid.

Sec. 9(a), Anti-Money Laundering Act of 2001. "Penalized with imprisonment of 7 to 14 years, and fine of not less than P3.0 Million, but not more than twice the value of the monetary instrument or property involved in the offense.

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ANTI-MONEY LAUNDERING ACT OF 2001

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(b) Facilitating money-laundering referred to in item (a) above, by knowingly performing or failing to perform an act; or
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(c) Failing to Disclose and File Report with AMLC of any monetary instrument or property as required under the Law.
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VII. U N L A W F U L A C T I V I T I E S

Act or omission or series or combination thereof, involving or having relation to the following: 1. Kidnapping for ransom 2. Drug trafficking
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3. Graft and corrupt practices 4. Plunder

7

16

5. Robbery and extortion 6. Jueteng and masiao

19

16

7. Piracy on the high seas 8. Qualified theft 9. Swindling

22 21

20

10. Smuggling

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11. Violations of the E-Commerce Act of 2000

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24

12. Hijacking, destructive arson and murder, including acts of terrorism against non-combatant persons and similar targets
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13. Fraudulent practices under the Securities Regulation Code of 2000

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"Penalized with imprisonment of from 4 to 7 years and fine of not less than P1.5 Million but no more than P3.0 Million. "Penalized with imprisonment of from 6 months to 4 years, and fine of not less than P100,000.00, but not more than P500.000.00. "Art. 267, Revised Penal Code. Secs. 4, 5, 7, 8, 9, 10, 12, 13, 14, 15 and 16, Republic Act No. 9164, otherwise known as the Comprehensive Dangerous Drugs Act of 2002. Sec. 3, pars. B, C. E, G, H and I of the Anti-Graft and Corrupt Practices Act. "Rep. Act No. 7080, as amended. "Arts. 294, 295. 296, 299, 300, 301 and 302, Revised Penal Code. "Pres. Decree No. 1602. "Under the Revised Penal Code, and Pres. Decree No. 532. Art. 310, Revised Penal Code. "Art. 315, Revised Penal Code. R e p . Act Nos. 455 and 1937 Rep. Act No. 8792. "And other violations under Rep. Act No. 6235. As defined under the Revised Penal Code. "Rep. Act No. 8799
15 16 21 a M

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14. Felonies or offenses of similar nature that are punishable under the penal laws of other countries.
NOTE:

(a) (b)

There can be separate convictions for money laundering offense and unlawful activity constituting it. But unlawful activity shall be given precedence over money laundering charge, without prejudice to freezing and other remedies provided by Act.

VIII. J U R I S D I C T I O N

(a) "[A]ll cases on money laundering" shall be within the jurisdiction of Regional Trial Courts (RTC); (b) But those committed by public officers, and private persons in conspiracy with such public officers, shall be within the jurisdiction of Sandiganbayan. Policy Against Political Harassment - No money-laundering case can be filed, nor can there be a freeze of an account, against any candidate for public office during an election campaign.
IX. P E N A L T I E S A N D O T H E R C O N S E Q U E N C E S

(a) Fines and imprisonment for conviction of money laundering offenses; (b) Civil and criminal forfeiture of monetary instrument or property for any money laundering offense.
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(c) Convicted offender to pay an amount equal to the value of monetary instrument or property ordered forfeited when order of forfeiture cannot be effected. > Offender or third-party claiming legitimate title to the property must file a verified petition with the court within 15 days from date or order of forfeiture, in default of which the order shall become final and executory.

X.

FREEZING OF ACCOUNT

Original power of the AMLC to Freeze Accounts has been deleted under R.A. 9194.
1. COURT OF APPEALS M AY ISSUE A FREEZE ORDERONLY:

*- Upon ex parte application of AMLC.

Sec. 12(a) of the Act allows the court to order forfeiture only "[w]hen there is a covered transaction report made," in civil forfeiture.

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ANTI-MONEY LAUNDERING ACT OF 2001

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>- After determination that probable cause exists that any monetary instrument or property is in any way related to an "unlawful activity." which shall be effective immediately, and for a period of twenty (20) days, unless extended by the Court. Republic v. Cabrini Green and Ross, Inc. 489 SCRA 644 (2006) Amendment of AMLA by Rep. Act 9194 has erased any doubt on the jurisdiction of the Court of Appeals overall extension of freeze orders. As the law now stands, it is solely the Court of Appeals which has the authority to issue a freeze order as well as to extend its effectivity. It also has the exclusive jurisdiction to extend existing freeze orders previously issued the AMLC vis-a-vis accounts and deposits related to money-laundering activities.
XI. EXAMINATION OF ACCOUNTS

1. Notwithstanding provisions on secrecy of bank deposit accounts to the contrary, AMLC may seek a court order to inquire into or examine a particular deposit or investment with a banking or non-bank financial institution. EXCEPT: AMLC on its own, and no court order required, to inquire or examine bank accounts in cases involving: kidnapping for ransom drug trafficking terrorism 2. Basis of Order: Upon probable cause that the deposits or investments are in any way related to an Unlawful Activity or Money-Laundering Offense. 3. There can be no examination of deposits or investments made prior to the Act's effectivity. 4. Power of BSP: To ensure compliance with the Act, the BSP may inquire into or examine any deposit or investment with any banking institution on non-bank financial institution when the examination is made in the course of periodic or special examination. Republic v. Eugenio, Jr. 545 SCRA 384 (2008) While Section 10 of the Anti-Money Laundering Act uses specific language to authorize an ex parte application for the provisional relief for a freeze order, nothing in Section 11 similarly

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authorizes an ex parte application for the issuance of an order to examine bank accounts. Consequently, courts receiving the application for inquiry order cannot simply take the AMLC's word that probable cause exists that the deposits or investments are related to an unlawful activity. There is a right to privacy governing bank accounts in the Philippines, and unless the Bank Secrecy Act is repealed or amended, the legal order is obliged to conserve the absolutely confidential nature of Philippine bank deposits.

XII. A N T I - M O N E Y L A U N D E R I N G C O U N C I L (AMLC)
1 . COM POSITION OF A M L C

BSP Governor, as AMLC Chairman Insurance Commission Chairman SEC Chairman

AMLC:

2. Powers of the

Require and receive Covered Transactions and Suspicious Transactions reports from Covered Institutions;

Order appropriate Supervising Authority or Covered Institutions, to determine the true identity of the owner of the money instrument or property subject of a Covered Transaction or Suspicious Transaction, when on basis of substantial evidence, to be the proceeds of unlawful activity; Institute forfeiture and other remedial proceedings through the Solicitor General; File complaints with Department of Justice or Ombudsman for prosecution of money-laundering offenses; Investigate Suspicious Transactions, and Covered Transactions deemed suspicious, money laundering activities and other violations of the Act;

Apply ex parte before the Court of Appeals, for the freezing of any monetary instrument or property alleged to be proceeds of any Unlawful Activity; Seek court order to inquire into or examine any particular deposit with any banking or non-bank financial institution;
29

"The original provision in Section 23 of the Act which provided that "The provisions of this Act shaH not apply to deposits and investments made prior to its effectivity," has been deleted by R.A. 9194.

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Implement measures to counteract money laundering; Develop educational programs on pernicious effects of money launderings;

Assist foreign governments, and itself seek such assistance in antimoney laundering operations; and Issue implementing rules and regulations, subject to the review of a Congressional Oversight Committee; Enlist assistance of government agencies and corporations in undertaking anti-money laundering operations; Impose administrative sanctions for the violation of laws, rules, regulations, orders and resolutions issued pursuant thereto. >> Congressional Oversight Committee has power to promulgate its own rules, to oversee the Act's implementation, and review/ revise implementing rules issued by AMLC within 30 days from said promulgation.

XIII. M U T U A L A S S I S T A N C E A M O N G S T A T E S

a. AMLC shall be guided by principles of mutuality and reciprocity in addressing requests by foreign states for assistance in investigation or prosecution of money laundering offenses; b. Compliance with request for foreign assistance must not contravene the Constitution nor prejudice national interests, unless the Philippines is bound by a treaty with the requesting State; c. Local courts shall not issue forfeiture order unless the application is accompanied by authenticated copy of the order of a court in the requesting State ordering the forfeiture, accompanied with affidavit of finality of said foreign order; and d. The Philippines shall negotiate in all future treaties, for the inclusion of money laundering offenses among extraditable offenses. - In November, 2005, Supreme Court promulgated the "Rule of Procedure in Cases of Civil Forfeiture, Asset Preservation, and Freezing of Money Instrument, Property, or Proceeds Representing, Involving, or Relating to an Unlawful Activity or Money Laundering Offense under Republic Act No. 9160, as Amended." (Rule on Civil Forfeiture).
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XIV. C I V I L F O R F E I T U R E P R O C E E D I N G S

1. C I V I L F O R F E I T U R E R U L E S :

a.

Party Who Can Institute Proceedings - Only the AMLC, through the OSG, may institute actions for civil forfeiture and all other remedial proceedings in favor of the State. Venue - Petition must be filed in the RTC of judicial region "where the monetary instrument, property or proceeds representing, involving, or relating to an unlawful activity or to a money laundering offense are located." HOWEVER: Where all or any portion of the items is located outside the Philippines, the petition may be filed in the RTC of Manila or the judicial region where any such portion is located.

b.

NOTE:

Petition must be filed directly with Executive Judge, or in his absence, Vice-Executive Judge, or in their absence, any judge of the RTC of the same station, with the following conditions: Petition must be acted upon with 24 hours; Logbook and entries shall be kept strictly confidential and maintained under responsibility of executive judge; and No person, including court personnel, shall disclose, divulge or communicate to anyone directly or indirectly, in any manner or by any means, fact of the filing of the petition, under pains of being in contempt of court.

c.

Notice and Service - Notice to the respondent shall contain a proviso that if no comment/opposition is filed within the reglementary period, the court shall hear the case ex parte and render such judgment as may be warranted by facts alleged in petition and its supporting evidence.
NOTE:

With leave of court, service by publication can be effected on a respondent designated as "an unknown owner or whenever his whereabouts are unknown and cannot be ascertained by diligent inquiry."

d.

Comment/Opposition - Respondent must file a comment/opposition, and not a motion to dismiss, within 15 days from service of notice, or within 30 days from service by publication.
NOTE:

If no comment/opposition is filed within reglementary period, the court shall hear the case ex parte and render judgment as may be warranted by the facts alleged in the petition and its supporting evidence.

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e.

Pre-Trial - Pre-trial is mandatory and failure of the petitioner to appear shall be cause for dismissal of petition with prejudice, unless otherwise order by the court.
NOTE:

(a) Failure on part of respondent or counsel to appear at pre-trial conference shall be cause to allow petitioner to present evidence ex parte and court to render judgment on basis thereof. (b) Rules on amicable settlement, mediation and other alternative modes of dispute resolution are expressly not made to apply to the proceedings.

f.

Trial and Judgment - No prior criminal charge, pendency of or conviction for any unlawful activity or money laundering offense is necessary for commencement or resolution of petition for civil forfeiture. NOTE: Any criminal case relating to an unlawful activity shall be given precedence over prosecution of any offense or violation under AMLA, without prejudice to the filing of a separate petition for civil forfeiture or the issuance of an assets preservation order or a free order. Such civil action shall proceed independently of criminal prosecution.

g.

Factors to Determine Preponderance of Evidence - In rendering judgment, the court may consider the following factors to determine where lies the preponderance of evidence that monetary instrument: (1) Is related to an unlawful activity or money laundering offense: If the value or amount involved is not commensurate with the business, financial or earning capacity of the person; If any transaction indicates a clear deviation from the profile or previous transactions of the person; If the person opens, maintains or controls an account with a covered institution not in his own name or registered business name, unless authorized under existing law; If a person has structured transactions in order to avoid being the subject of reporting requirement under AMLA; or If any transaction exists that has no apparent underlying legal or trade obligation, purpose or economic justification. (2) Sources which originated from or are materially linked to monetary instruments used in the commission of an unlawful activity or money laundering offense.

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NOTE:

Court must render the judgment within 30 days from submission for resolution and shall grant the petition if there is preponderance of evidence in favor of the petitioner and declare the monetary instrument, property or proceeds forfeited to State or, in appropriate cases, order respondent to pay an amount equal to value of the monetary instrument, and adjudge such other reliefs as may be warranted.

NOTE ALSO: Appeal of the aggrieved party shall be to the Court of Appeals, by filing within 15 days a notice of appeal with the court which rendered the judgment and serving a copy upon the adverse party. In lieu of briefs, the parties shall file their respective memoranda within a non-extendible period of 30 days from receipt of the notice issued by the clerk of court that all the evidence, are attached to the record. h. Claims Against Forfeited Assets - Any person who has not been impleaded nor intervened claiming an interest in the forfeited monetary instrument or property, may apply by a verified petition for a declaration that the same legitimately belongs to him and for segregation or exclusion thereof. NOTE: Petition must be filed within 15 days from date of finality of the order of forfeiture, otherwise the order shall be executory and bar all other claims.

Republic v. Glasgow Credit and Collection Services, Inc. 542 SCRA 95 (2008) AMLA and its IRR had laid down two conditions when applying for civil forfeiture: (a) when there is a suspicious transaction report or a covered transaction report deemed suspicious after investigation by the AMLC; and (b) the court has, in a petition filed for the purpose, ordered the seizure of any monetary instrument or property, in whole or in part, directly or indirectly, related to said report. The venue of civil forfeiture cases in any RTC of the judicial region where the money instrument, property or proceeds representing, involving, or relating to an unlawful activity or to a money laundering offense is located. It is the preliminary seizure which brings property within the reach of judicial process.

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Republic v. Glasgow Credit and Collection Services, Inc. 542 SCRA 95 (2008) A criminal conviction for an unlawful activity is not a prerequisite for the institution of a civil forfeiture proceeding - a finding of guilt for an unlawful activity is not an essential element of civil forfeiture. Forfeiture proceedings are actions in rem - service may be made by publication. The same principle in forfeiture proceedings under R.A. 1379 applies in cases for civil forfeiture under RA 9160. Since both cases do not terminate in the imposition of a penalty but merely in the forfeiture of the properties either acquired illegally or related to unlawful activities in favor of the State.

2. ASSET PRESERVATION RULES a. Ex Parte Issuance of Provisional Order - Upon petition with prayer for issuance of asset preservation order, and finding of probable cause, RTC executive judge (in his absence, vice-executive judge, or in their absence, any judge available in station), 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. NOTE: Such order shall be effective for a 20-day period from day of service to the respondent or any person acting in his behalf, and upon each covered institution or government agency. b. Summary Hearing - Court will schedule a summary hearing date within 20 day period at which respondent may for good cause show why provisional asset preservation order should be lifted. NOTE: Court shall also determine within same period whether provisional asset preservation order should be modified or lifted or asset preservation order should issue and act accordingly.

c.

Service and Enforcement of Order - When so authorized by the court, service of order may be effected upon the respondent or any person acting in his behalf and upon the treasurer or other responsible officer of the covered institution or the head of the covered government agency, by facsimile transmission (fax) or electronic mail (e-mail). In such cases, the date of transmission shall be deemed to be prima facie the date of service. NOTE: Asset preservation order enforceable anywhere in Philippines.

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d.

Duties of Covered Institutions and Government Agencies - Upon receipt of notice of asset preservation order, not only is it a covered institution or government agency bound to immediately preserve subject monetary instrument, but within 24 hours from receipt, it must submit by personal delivery to the RTC a detailed written return specifying all the relevant information regarding monetary instrument. NOTE: Assets subject to an asset preservation order includes personal property used as instrumentalities in the commission of any unlawful activity, like computers, servers and other electronic information and communication system, any conveyance, including any vehicle, vessel and aircraft. Included also are real estate, improvements or crops growing thereon, or any interest therein, standing upon the registry records in the name of the party against whom asset preservation order is issued, which are derived from, or traceable to, any unlawful activity or used as an instrumentality in the commission of such unlawful activity. NOTE ALSO: When property perishable, and same is liable to deteriorate in value and price by reason of delay in its disposition or is disproportionately expensive to keep, it may be sold at a public auction, and proceeds deposited with clerk of court to be disposed of according to final judgment. Court may also, upon motion, order any person in control or possession of monetary instrument, property or proceeds to turn over the same to a receiver appointed.

e.

Grounds for Discharge of Order: (1) Order was improperly or irregularly issued or enforced; (2) Any of the material allegations in petition, or any of contents of any attachment thereto, or its verification, is false; and (3) Specific personal or real property ordered preserved is not in any manner connected with the alleged unlawful activity. NOTE: No counterbond to discharge an asset preservation order shall be allowed, except for compelling reasons.

3. FREEZING RULES a. Party Entitled to File - AMLC, through OSG, may file ex parte with Court of Appeals verified petition for a freeze order on any monetary instrument, property or proceeds relating to or involving an unlawful activity.

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Direct Filing and Docketing - To ensure confidentiality of application for freeze order, petition shall be filed directly with Presiding Justice in Manila, or Executive Justices in Cebu City or Cagayan de Oro City, who shall enter the same in the logbook specifically designed for the purpose, and assign a docket number. In the absence of any of the aforenamed justices, petition may the be filed with the next available senior justice.
NOTE:

Petition must be raffled immediately on the day it is filed.

Confidentiality; Prohibited Disclosure - Same confidentiality rules for forfeiture proceedings apply also to freeze order proceedings. Action by Court of Appeals - All members of the division of Court of Appeals to which the assigned justice belongs, shall act on the petition within 24 hours after filing. HOWEVER: If a member of the division is not available, the assigned justice and other justice present shall act on the petition. If only the assigned justice is present, he shall act alone. Issuance of Freeze Order - If the Court satisfied that there exists probable cause that monetary instrument, is property or proceeds are in any way related to or involved in unlawful activity, it shall issue ex parte a freeze order. EFFECTIVITY: Freeze order shall be effective immediately for a 20-day period, within which court shall conduct a summary hearing, with notice to parties, to determine whether or not to modify or lift the freeze order, or extend its effectivity. EXTENSION: On motion of petitioner filed before expiration of 20 day period, court may for good cause extend its effectivity for a period not exceeding 6 months. Notice of Freeze Order - Court shall order that notice of freeze order be served personally upon the respondent or any person acting in his behalf and such covered institution or government agency concerned. Duty of Respondent, Covered Institutions and Government Agency - U p o n receipt of copy of freeze order, respondent, covered institution or government agency shall immediately desist from and not allow any transaction, withdrawal, deposit, or transfer, removal, conversion, other movement or concealment of the account representing, involving or relating to the subject monetary instrument, property, proceeds, or its related web of accounts.

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h.

Consolidation with Pending Civil Forfeiture Proceedings - After post-issuance hearing required, the court shall forthwith remand the case and transmit the records to RTC for consolidation with the pending civil forfeiture proceedings. Appeal - Any party aggrieved by decision or ruling may appeal to the Supreme Court by petition for review on certiorari under Rule 45 of Rules of Court. Appeal shall not stay enforcement of subject decision or final order unless Supreme Court directs otherwise.

i.

NOTE:

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