Liability for Unknowingly Receiving Stolen Money in the Philippines

This overview is for general information only and does not constitute legal advice. Facts matter a lot in these cases; consult a Philippine lawyer for advice on your specific situation.

The Core Idea

In Philippine law, criminal liability generally requires knowledge (or at least willful blindness) that the property you received came from a crime. If you truly lacked knowledge and acted with ordinary prudence, criminal liability is unlikely. Civil liability is different: even a good-faith recipient can be compelled to return money that isn’t rightfully theirs (e.g., because it was stolen or paid by mistake). Banking/AMLA procedures may also result in freezes or forfeiture proceedings against the funds themselves, regardless of the recipient’s personal fault.

Criminal Exposure

1) “Fencing” (Presidential Decree No. 1612)

What it punishes: Buying, receiving, possessing, keeping, acquiring, concealing, selling, or disposing of items derived from theft or robbery, with intent to gain and knowing or having reason to know of their illicit origin.
Key feature: The law creates a prima facie presumption of fencing from the unexplained possession of property that is the subject of theft/robbery.
- For money, this can apply when authorities trace specific proceeds into your possession (e.g., serial-numbered bills, marked money, traceable transfers).
Good-faith defense: You can rebut the presumption by showing credible evidence of lawful acquisition and ordinary prudence (e.g., identity of payer, legitimate transaction, supporting documents, immediate cooperation when notified).

Practical takeaway: If you received money under circumstances that would make a reasonable person suspicious, failing to inquire may be treated as willful blindness, which undermines a good-faith defense.

2) Accessory Liability (Revised Penal Code)

A person who profits from the effects of a crime or assists the offender to profit may be an accessory, but knowledge of the prior crime is required.
If you only later discover the funds were stolen, promptly reporting and returning them helps negate any inference that you intended to help the offender profit.

3) Money Laundering (Anti-Money Laundering Act, as amended)

Money laundering penalizes persons who transact, convert, transfer, conceal, or possess proceeds of “unlawful activities,” typically requiring that they knew, should have known, or were willfully blind to the illicit source.
Unknowing receipt ordinarily does not satisfy the knowledge element.
However, once you learn the funds are illicit, continuing to move, spend, or conceal them can create exposure.

Civil Liability and Private Claims

1) Restitution / Unjust Enrichment / Solutio Indebiti

If money was stolen from A and ends up with B, B can be compelled to return it to A (or to the true owner) even if B acted in good faith.
If money was paid by mistake (e.g., duplicate bank transfer, payroll error), solutio indebiti applies: the receiver must return the undue payment.

2) Possession of Movables and Good Faith

As a rule, the owner of a lost or stolen movable may recover it. There are protections for good-faith purchases in merchants’ stores/markets, but these doctrines do not allow anyone to keep stolen money merely because they were unaware.
Good faith limits liability for damages/fruits, but not the primary duty to return.

3) Damages

A good-faith recipient who cooperates and promptly tenders return generally avoids moral/exemplary damages or interest beyond what the law imposes after demand.
Bad faith (e.g., refusal after notice) can trigger interest from demand, litigation costs, and damages.

Administrative/Banking Consequences

1) Freezes and Forfeiture

Authorities (through AMLC/freeze orders or court processes) may freeze accounts and initiate civil forfeiture against the funds themselves.
Civil forfeiture is in rem (against the property), so even an innocent holder may face temporary loss of access while the proceedings determine if the funds are illicit.

2) Bank Reversals and Holds

Banks and e-money issuers may place holds when notified of fraud, theft, or mistaken credit, especially upon law-enforcement request or AML alerts.
Recipients can contest, but cooperation and documentation are usually the fastest path to resolution.

When “Not Knowing” Isn’t Enough

Courts and regulators look at red flags that a reasonable person would notice:

Unusual speed/pressure to move the funds, or instructions to split or layer transfers.
Payments unrelated to any known transaction, especially from unknown senders.
Use of mules or requests to cash out immediately for a “fee.”
Inconsistent explanations, fake invoices, or unverifiable counterparties.

Failing to ask basic questions or keep records in such scenarios can be treated as willful blindness (which satisfies knowledge under many statutes).

What To Do If You Receive Suspicious Funds

Do not spend or transfer the money. Treat it as contested.
Document everything: screenshots of the credit, sender details, messages, invoices, IDs.
Notify your bank/e-wallet in writing (and get an acknowledgment ticket number).
Inform authorities if there’s credible indication of theft/fraud (e.g., police blotter, AMLC tipline).
Contact the apparent owner (if known) through traceable channels; avoid private “cash handbacks” without bank documentation.
If you’ve already spent part of it, offer partial return immediately and propose a plan for the balance.
Get legal advice before signing releases or affidavits; ensure any return is properly receipted to protect you from repeat claims.

Business Recipients (Extra Duties)

Covered persons (banks, MSBs, e-money issuers, casinos, certain DNFBPs) have KYC, record-keeping, and reporting duties; failures can trigger administrative/criminal exposure even if a specific employee had no criminal intent.
Internal controls: hold-release protocols, escalation matrices, and suspicious transaction reporting (STR) are essential.
Staff liability: Employees who override red flags or facilitate cash-outs can face administrative sanctions and potential criminal exposure.

Cryptocurrency & Digital Wallets

Virtual asset service providers and major e-wallets are subject to AML obligations.
Traceability on public ledgers means illicit inflows can still be flagged and frozen, and off-ramps may require proof of lawful source.
As with fiat, innocent recipients can be required to return assets or face forfeiture proceedings against the tokens/fiat surrogates.

Typical Scenarios and Likely Outcomes

Mistaken bank transfer from a stranger: Expect a bank hold and a demand to return. Civil restitution applies; criminal liability only if you refuse after notice or conceal.
Payment for an online sale; later flagged as stolen funds/card: If you were a bona fide seller with proper records, criminal liability is unlikely. Funds can still be reversed/frozen, and the buyer/victim may pursue civil recovery.
Employer overpayment: This is an undue payment; you must return the excess.
Friend asks you to “park” money for a fee: Classic money-mule pattern; potential fencing/money-laundering liability if you proceed.

Evidence That Helps Prove Good Faith

Pre-existing transaction trail: contracts, purchase orders, chats, emails, receipts.
KYC of payer: ID, company details, proof of funds source.
Timing and conduct: immediate inquiry or report upon noticing anomalies; voluntary freeze/return.
Accounting records: invoices, VAT/ORs, ledgers.
No benefit kept: quick return or escrow; no attempt to cash out or layer.

Penalties Snapshot (Conceptual)

Fencing: Imprisonment and fines scaled to the value of the property; conviction also entails confiscation and civil liability for restitution.
Accessory liability: Lower penalties than principals, but still includes imprisonment and civil liability.
Money laundering: Imprisonment and fines, plus forfeiture of the proceeds/instrumentalities.
Civil remedies: Restitution (return of funds), interest (often from demand), costs, and possible damages for bad faith.

(Exact penalty ranges depend on the statute violated, the value involved, and any amendments in force at the time of prosecution.)

Compliance Checklist (Individuals)

Keep evidence of why you received the funds.
If the payer is unfamiliar or the amount is unusual, ask for justification and delay spending.
Report and cooperate quickly if concerns arise.
Never split, cash out, or on-forward suspect funds.
When returning money, route through the bank and obtain official receipts/acknowledgments.

Compliance Checklist (Businesses)

Maintain KYC/EDD procedures and sanctions screening.
Implement automated alerts and manual review for unusual inflows.
Train staff on red flags and STR filing.
Use escrow or hold policies for high-risk credits until provenance is verified.

Bottom Line

Criminal liability usually hinges on knowledge or willful blindness.
Civil liability to return the money can exist even in good faith.
Banking/AMLA actions can affect the funds regardless of your personal fault.
Speed, transparency, and documentation are your best defenses the moment you discover (or suspect) that money you received may be stolen.