MEASURES TO FREEZE, CONFISCATE AND RECOVER PROCEEDSOF CORRUPTION INCLUDING PREVENTION OF MONEY
LAUNDERING IN THE PHILIPPINES
Roman G. Del Rosario*

I. INTRODUCTION
Money is the barometer of a society's virtue. When you see that trading isdone, not by consent, but by compulsion—when you see that in order to produce,
you need to obtain permission from men who produce nothing—when you seethat money is flowing to those who deal, not in goods, but in favors—when you
see that men get richer by graft and by pull than by work, and your laws don't
protect you against them, but protect them against you—when you see corruption
being rewarded and honesty becoming a self-sacrifice—you may know that yoursociety is doomed.
- Ayn Rand
A. Defining Graft and Corruption
The term “graft” means the “acquisition of gain or advantage by dishonest, unfair or sordid means,
especially through the abuse of his position or influence in politics, business, etc.,”1 while the term
“corruption” generally means “the misuse of entrusted power for private benefit.”2 In a bigger sense, bothterms are synonymous and interchangeable.3
In the Philippine setting, the term “graft” lacks an exact legal definition. The Anti-Graft and Corrupt
Practices Act,4 merely enumerates a number of punishable corrupt practices of public officers, while theCode of Conduct and Ethical Standards for Public Officials5 declares as unlawful certain prohibited acts
and transactions.
Generally, courts and laws do not give a clear-cut definition of the terms graft and corruption,
considering the extreme difficulty to “contain all the elements of the different types of ‘graft’ or ‘corruption’in one sweeping generalization.”6 Each case must be evaluated on the basis of its own facts.7
1.
(i)

Forms
Corruption takes a number of different forms and is found at different levels of government.
Corruption has been classified in various manners, according to:Place where corruption occurs8-a. Public-sector corruption is that which happens in the government offices.9b. On the other hand, private-sector corruption involves businesses and other non-state sectors --*	Assistant Solicitor General; Head of the Anti-Money Laundering Council Task Force of the Office of the Solicitor General; Executive
Director of the Special Committee on Naturalization. The author would like to acknowledge the major contributions of Atty. Melanie R.A.
Quimbo, Atty. Aristotle E.R. Mejia and Leah Theresa L. Labadan.
1.	Resolution No. 559, Amending the Existing Board Policy on Conferment of CES Eligibility to Applicants with Pending Cases.
2.	J.J. Senturia, Encyclopedia of Social Sciences, Vol. VI (1993).
3.	L.V. Carino. Ed., Bureaucratic Corruption in Asia: Causes, Consequences and Controls (Quezon City: CPA, University of the Philippines).
4.	Republic Act No. 3019 (1960).
5.	Republic Act No. 6713 (1989).
6.	Sofronio B. Urusal, Anti-Graft Guidebook 6, 2006, [hereinafter Urusal].
7. Ibid.
8. Investigating Corruption, A Do-It Yourself 10-12, 2002 [hereinafter Investigating Corruption].
9. Ibid.

− 39 −

churches, NGOs, foundations, and professional associations.10
c. B ureaucratic corruption occurs in the civil service, especially among state officials and employees
who run the day-to-day affairs of the government. It may involve low-level government
employees and/or higher-level officials. It happens when low-level government employees are
given small amounts as “grease” to speed up transactions for licenses, permits or other processes
in their offices. On the other hand, higher-level officials, such as district or provincial highways
engineers, or members of bid committees who get considerable amount of commissions forawarding government contracts to favored firms, commit this form of corruption.11
d. P
 olitical corruption, as the name implies, takes place among elected officials. It involves votebuying, corruption of the electoral system, the political harassment of opponents, and thepreferential treatment of friends and cronies. It also refers to the use of influence to obtain positions,
appointments, tax incentives, behest loans, and other special considerations from the government.
Illustrative examples include: 1) approval of hundred-million peso worth of preferential loans
from state banks to Former President Ferdinand Marcos’ cronies; and 2) acquisition of shares ofstock from favored companies using state pension funds upon instruction of Former President
Joseph Estrada.12(ii)“Scale and intensity”13a. R etail, petty or street-level corruption is what the general public encounters in their daily
activities. This form of corruption involves those who are providing frontline services14 or lowerlevel administrative bureaucrats who transact with the public on matters involving taxes, traffic
regulations, licensing requirements or the discretionary allocation of government benefits such as
subsidized food and fertilizer, disaster relief, or low-level jobs in state-funded projects. A motorist
paying a policeman to escape from a traffic violation; or a person availing the services of a fixer
to hasten the processing of a driver’s license or an NBI clearance, are illustrative examples of thistype. Petty corruption involves lower-level administrative bureaucrats, while grand corruption
involves big amounts.15
b. Isolated corruption occurs in bureaucracies or sectors that are normally honest. These corrupt acts
do not normally happen in such sectors.16
c. Systematic corruption is prevalent in almost all levels of a government agency. This is perceived tobe the case with the Department of Public Works and Highways (“DPWH”). Studies have shownthat corruption permeates the entire life of most DPWH projects --from bidding to completion.
Collusion among bidders for a project is a practice that cannot be discounted, resulting in the
rigging of bids.17(iii)“Types of corrupt action or behaviour”18
a. Bribery is the act of the “public officer who receives a gift, present, offer or promise by reason orin connection with the performance of his official duties.”19 It is probably the most common andvisible type of corruptionb. P atronage is also considered a form of corruption. It is a way of acquiring, maintaining, and

10. Ibid.
11. Ibid.
12. Ibid.
13. Id. at 12-14.
14.	"Frontline Service" refers to the process or transaction between clients and government offices or agencies involving applications for any
privilege, right, permit, reward, license, concession, or for any modification, renewal or extension of the enumerated applications and/or requests which are acted upon in the ordinary course of business of the agency or office concerned. (An Act to Improve Efficiency in
the Delivery of Government Service to the Public by Reducing Bureaucratic Red Tape, Preventing Graft and Corruption, and Providing
Penalties therefore [R.A. 9485], June 2, 2007).
15.	Investigating Corruption, supra 8 at 12.
16. Id. at 13.
17. Id. at 14.
18. Id. at 14-16.
19. Leonor D. Boado, Notes and Cases on the Revised Penal Code 535, 2004.

− 40 −

expanding political power by distributing economic benefits from the state and dispensing themto political allies, and cronies in exchange of the latter’s political support.20
c. Cronyism is present when personal relationships become a consideration in state policy-making
and the allocation of public resources.21(iv)“General Modes of Committing Graft”22a. Administrative grafts are those occurring in government agencies. It includes anomalies concerning
the receipt, custody, and expenditure of public funds, and in the “acquisition, procurement,utilization, and disposal of government property.”23
b. Policy-related grafts refer to irregularities committed by senior public officials who are vested withextensive discretionary authorities to determine public policies entailing financial implications.24
c. Grafts in arbitrations include “abuses committed by authorities imbued with judicial, quasijudicial, or prosecutory powers” regarding cases pending before them.25
d. Political grafts have two forms. “One form includes bribery and inducement of election officials
to alter election results, as well as vote-buying of the electorate by candidates during periods ofelections. The other form of political graft involves politicians who undertake to sponsor or toblock requests needing executive approval or requiring legislative authorization” with regard to
any past or political favors of the requesting party.26(v)“Based on rank and service of public officer committing the act”27
a. Graft in the career service may be committed by: “(i) clerical and custodial service personnel
involved in non-professional or sub-professional work; (ii) personnel involved in professionalor technical work, up to Division Chief level; (iii) Career Executive Service Officers; (iv) career
service heads of government agencies; and (v) members of the judiciary.”28b. Graft in the Non-career Service may be committed by: “(i) impeachable officials, such as
the President, the Vice President, the Members of the Supreme Court, the Members of theConstitutional Commission, and the Ombudsman; (ii) elective national and local officials, suchas members of Congress, Provincial Governors, and City and Municipal Mayors; (iii) Department
Secretaries and other officials of Cabinet rank; (iv) and the personal or confidential staff of theenumerated officials.”29

B. Root Causes
1.
Individual Causes
Individual causes are “attributed to weak moral fiber and distorted values among bureaucrats, suchas materialism, lack of integrity and nationalism.”30
2.

Organizational Causes
One of the major causes of corruption in many offices and organizations is office politics. In
particular, these causes refer to deficiencies in the bureaucratic apparatus such as low salary or inadequate
compensation levels of public servants, poor recruitment and selection procedures as well as red tape in

20. Supra 8 at 15.
21. Id. at 16.
22. Urusal, supra 6 at 93.
23. Ibid.
24. Ibid.
25. Ibid.
26. Ibid.
27. Id. at 94-95.
28. Ibid.
29. Ibid.
30.	Nelson Nogot Moratalla, Graft and Corruption: The Philippine Experience, available at
http://unpan1.un.org/intradoc/groups/public/documents/APCITY/UNPAN019122.pdf (last accessed 28 October 2009).

− 41 −

the government. It also includes poor working conditions and facilities in public offices and dependence of
employees on patronage with superiors and colleagues.31
It is not uncommon in government agencies for a superior to employ his or her own confidants andteam of advisers. The persons employed may be relatives, friends, classmates or associates. The appointee
expectedly becomes a loyal follower of the appointing official. The "padrino system" likewise occurs ingovernment offices. Instances abound where promotions are based on right connections rather than onseniority or merit. Equally rampant is the "compadre system" whereby a subordinate takes his superior tobe the godfather of his son expecting to reap benefits such as promotion or salary increase as a result of therelationship.32
3.

Societal Causes
Society may itself contribute to corruption as a norm in the workplace. These may include thedifficulty of proving cases of corruption in court and lack of political will to pursue a fight against graft
and corruption.33
C. Effects
Corruption has intense consequences on individuals, firms, social sectors, and the progress and safetyof the society. Experts find corruption to be damaging in various manners, such as the following:
1.

“Corruption impedes Economic Growth”34
The most significant impact of corruption on growth is the reduction of investments. Economists
have shown that improvements in the corruption index play a vital role in affecting the result of growth
rates.35
In the Philippines, the devastation brought by corruption on economic development is evident.
Exaction from corrupt officials is a major cause in raising the costs of business.36 As a result, businesses
lower the standards of production or increase the price of goods and services in order to compensate for theamount of money wasted on bribes.
2.

Corruption worsens Poverty37
To reiterate, the costs of corruption are borne by the less fortunate sectors of society. “Corruption in
textbook procurements means that poor students don’t have books; kickbacks from public works contracts
mean poor farmers will not have roads for transporting their produce; and under-the-table commissions
from the purchase of vaccines mean poor children becoming prone to disease.”38
Even if the less fortunate receive inadequate services, they remain obliged to contribute to government
funds thru indirect taxes. On the other hand, the rich who bribe revenue officials are able to evade income
taxes.39 When the budget for procuring goods and services is inflated by graft, and tax revenues are low
because of widespread corruption in the tax-collection system, the government has no choice but to raise
more taxes and cut spending.40
Social spending on services that benefit the poor is unduly lessened, so the poor are caught up deeper
in despair. Money that should be spent on more important projects, i.e. clinics or schools, are diverted to31.	Alan R. Cañares, CORRUPTION : THE PHILIPPINE EXPERIENCE, Office of the Deputy Ombudsman for the Military and Other Law
Enforcement Offices.
32.	Prevention of Graft and Corruption, available at
http://www.livinginthephilippines.com/prevention_of_graft_and_corruption.html (last accessed 28 October 2009).
33. Supra 31.
34. Investigating Corruption, supra 8 at 17.
35. Ibid.
36. Id. at 18.
37. Ibid.
38. Ibid.
39. Ibid.
40. Id. at 19.

− 42 −

insignificant infrastructure projects where kickbacks are prevalent. Corruption undeniably drains resources
available for advancement, distorts access to services for poor communities, and weakens public confidence
in the government capacity to serve the poor.41
3.

“Corruption damages Political Legitimacy and stunts Democracy”42
Government officials may neglect their public duties to promote general welfare as they busy
themselves to their corrupt activities. Manifestations of prevalent corrupt practices in the bureaucracy are:“(1) below standard public infrastructures; (2) decreased business investments; (3) rising unemployment;(4) increased incidence of criminality; and (5) low morale of the civil service and the military.”43
As a result, corruption shatters the faith of citizens to their political leaders, government and even to
democracy. Citizens begin to be too inquisitive and mistrust the intentions of those in authority.44
4.

“Corruption endangers Public Order and Safety”
Corruption results in disregard of rules and subversion of formal processes For instance, corruption
in the judiciary suspends the rule of law, so that criminals and lawbreakers are free to operate with impunity.
Corruption in the police force facilitates the activities of syndicates involved in drugs, theft, gambling,
smuggling, prostitution and kidnapping, making cities and communities unsafe.45 Some police officers
have been providing “protection” to syndicates, thus making themselves part of these syndicates.46
Thai scholar Pasuk Phongpaichat’s description of the “syndication” of police corruption in Thailand
also applies in the Philippine setting, to wit:
Corruption within the police force is held to be sustained by regular redistribution ofrevenues from corruption widely through the police force itself and through other related
institutions. It is sustained also by a subculture which strengthens the group loyalty of those
involved, legitimizes the acceptance of revenues from corruption as supplementary income andbinds together vertical networks of bosses and subordinates who share the tasks of collecting
and redistributing revenue. The values of group loyalty and hierarchy which underlie thissubculture are first nurtured in the police cadet school. They are further reinforced at work by
the examples of other police officers and the pressure from superiors and peers involved in
the corruption networks. Not all policemen are involved in these networks. But the proportion
which is corrupt is large enough to maintain the syndicate.47
5.

“Corruption causes Bureaucratic Inefficiency and Demoralization”48
Corruption results in awful services. When government officials and personnel employ unreasonable
impediments in the completion of transactions for “grease” money, the delivery of services is delayed.
Bureaucratic red tape results and public service is gravely affected.49

D. Statistics
Aware of its duty to the public, the Philippine government continues to play an active role incombating the proliferation of corrupt practices.

41.	Ibid.
42. Ibid.
43. Urusal, supra 6 at 10.
44. Investigating Corruption supra 8 at 18.
45. Ibid.
46. Ibid.
47.	Id,(citing Phongpaichit, Pasuk and Sungsidh Piriyarangsan. 1994. Corruption and Democracy in Thailand. Chiang Mai: Silk-worm
Books).
48. Id. at 22.
49. Ibid.

− 43 −

The presentation below illustrates the number of responses from the government on corrupt
practices.
Table 1 50
Target (2006)

Actual (March 2009)

Ombudsman Conviction Rates

40%

73.42%

Ombudsman Cases Successfully Mediated

450

688

Revenue Integrity Protection Service or ‘Lifestyle
Checks” Cases Filed

116

140

Suspended by Ombudsman thru Revenue Integrity
Protection Service

35

38

Run After the Tax Evaders cases filed with Departmentof Justice (DOJ)

116

117

Run After The Smugglers cases filed with DOJ

61

95

Run After The Smugglers cases filed with the Court ofTax Appeals (CTA)

28

33

Table 2 51
Number of Complaints Received by the OMB, 2006 to 2008
No. of complaints received per calendar year

2008

2007

2006

Complaints received annually

13,225

10,824

13,602Monthly Average(annual no. of complaints divided by 12 months)

1,102

902

1,134

50

41

52

Daily Average(monthly ave. no. of complaints divided by 22 working days)

50.	Philippine-US Partnership in Fighting Corruption: Indicators from the Millennium Challenge Account- Philippine Threshold Program, 1June 2009, available at
http://www.philippineembassy-usa.org/UPDATE43.pdf (last accessed 27 October 2009).
51.	Marking Milestones, the 2008 Annual Report of the Office of the Ombudsman, available at
http://www.ombudsman.gov.ph/docs/statistics/Annual%20Report%202008.pdf (last accessed 29 October 2009).

− 44 −

Table 3 52
List of high ranking officials dismissed, suspended and prosecuted by
the OMB (as of March 2009) 53
Preventive
Suspension◦DPWH Asst.
Secretary◦Municipal Mayors◦City and Municipal
Treasurers◦BIR Regional
Director◦BIR Chief Revenue
Officer◦BOC Deputy
District Collector◦Register of Deeds◦Commanding
General, Infantry
Division,
Philippine Army
◦Army Brigadier
General◦Presidents ofState Colleges andUniversities

Suspendedwithout Pay◦Agriculture
Undersecretary/
Presidential
Assistant◦Municipal Mayor◦Navy Lt.
Commodore◦Presidents ofState Collegesand Universities◦DepEd District
Supervisor◦DPWH District
Engineers◦BOC Intelligence
Officers◦BIR Revenue
District Officers◦BIR Examiners◦State College
Administrator

Dismissed from
Public Service

Under
Prosecution◦Municipal Mayor◦DENR-LMB Asst.
Director◦Register of Deeds◦DA-Fisheries andAquatic
Resources
Bureau Regional
Director◦BIR Regional
Director◦BIR Revenue
District Officers◦DPWH Regional
Directors◦State College
President◦DepEd School
Principals◦DOJ Secretary◦DOTC Secretary◦DOF
Undersecretary◦Governors◦City and
Municipal
Mayors◦NHA Manager◦NEDA Regional
Director◦PNP Provincial
Directors◦DOJ
Prosecutors◦Philippine Navy
Flag Officers

E. Philippine Constitution and Laws
The Philippine legal system is replete with constitutional provisions and pertinent laws combating
graft and corruption. For easier reference, they shall be discussed in the following sequence:
1.
Pertinent provisions in the 1987 Philippine Constitution;2.
Provisions in the Revised Penal Code relating to crimes committed by public officers;
3.	Specific Anti-Graft Laws, namely: (i) the Anti-Graft and Corrupt Practices Act;54 (ii) the Codeof Conduct and Ethical Standards for Public Officials and Employees;55 (iii) the Civil Service
Law;56 (iv) the Forfeiture of Unlawfully Acquired Property;57 (v) the Anti-Money Laundering
Act;58 and, (vi) the Plunder Law.59

52.	Id.
53. Id.
54. Republic Act No. 3019 (1960).
55. Republic Act No. 6713 (1989).
56. Presidential Decree 807.
57. Republic Act 1379 (1955).
58. Republic Act 9160 (2001), as amended by Republic Act 9194 (2003).
59. Republic Act 7080 (1991).

− 45 −

1.

The 1987 Philippine Constitution
Significant constitutional provisions strengthening the government’s power to combat corruption arefound in Article XI “Accountability of Public Officials” vis-à-vis Article II “State Policies”. These include
the following:a. I t is a state policy to maintain honesty and integrity in the public service and to take positive andeffective measures against graft and corruption;60
b. I t is a state policy to adopt and implement a policy of full public disclosure of all its transactions
involving public interest, subject to reasonable conditions prescribed by law;61c. D
 eclaring that the anti-graft court, the Sandiganbayan, shall continue to function and exercise its
jurisdiction62 over civil and criminal cases involving graft and corruption;d. C reating the independent Office of the Ombudsman63 to investigate any public official or
government agency for acts or omissions which are illegal, unjust, improper or inefficient; todetermine the causes of such acts; to recommend the elimination; and to observe high standardsof ethics and efficiency;e. The State has the authority to recover unlawfully acquired properties;64f. The State requires public officers to declare under oath their assets, liabilities and net worth uponassumption of office, and as may be required by law;65
g. P
 rohibiting the President from appointing his/her spouse or relatives within the 4th civil
degree as members of the Constitutional Commissions, Ombudsman, Secretaries or underSecretaries, Chairmen or heads of bureaus or offices, including government corporation andtheir subsidiaries;66h. R
 equiring public officers and employees to lead modest lives and act with patriotism andjustice;67i. M
 aking “bribery,” “graft and corruption” and “betrayal of public trust” as grounds to impeach
the President, Vice-President, members of the Supreme Court, members of the Constitutional
Commissions and the Ombudsman;68
j. P
 rohibiting government-owned or controlled bank or financial institution from extending loans orother financial accommodations for any business purpose to the President, Vice-President, membersof the Supreme Court, members of the Constitutional Commissions, and the Ombudsman;69k. P
 rohibiting the enactment of a law that exempts any entity of government or its subsidiary, or any
investment of public funds, from the audit of the Commission on Audit.70 The COA examines
government income and expenditures.
l. C reating the Civil Service Commission that promotes responsive public service as a career. Its
anti-corruption function involves promoting public accountability, enforcing ethical standards
and behavior, and conducting values orientation workshops.
2.

The Revised Penal Code71 on Crimes Committed by Public Officers
The Revised Penal Code enumerates certain crimes that a public officer may commit.

60.	Sec. 27, Art. II, 1987 Constitution.
61. Sec. 28, ibid.
62. Sec. 4, Art. XI, 1987 Constitution.
63. Sec. 5, ibid.
64. Sec. 15, ibid.
65. Sec. 17, ibid.
66. Sec. 13, Art. VII, 1987 Constitution.
67. Sec. 1, supra 62.
68. Sec. 2, ibid.
69. Sec. 16, ibid.
70. Sec. 3, Art. IX-D, ibid.
71. The Revised Penal Code of the Philippines (Act No. 3815, as amended). It took effect on January 1, 1932.

− 46 −

a. Malfeasance and Misfeasance in Office are classified into:(i)	Dereliction of duty,72 which includes: knowingly rendering unjust judgment; judgment
rendered through negligence; unjust interlocutory order; malicious delay in theadministration of justice; negligence in prosecution of offenses; betrayal of trust by anattorney; and(ii)	Bribery,73 which includes direct bribery; indirect bribery; qualified bribery; and corruptionof public officials.
b. Frauds and Illegal Exactions and Transactions74 including frauds against the public treasury;
other frauds; prohibited transactions; and possession of prohibited interest by a public officer.
c. M
 alversation of Public Funds or Property75 including failure of accountable officer to renderaccounts; failure of a responsible public officer to render accounts before leaving the country;
illegal use of public funds or property; and failure to make delivery of public funds or property.
d. Infidelity of Public Officers is classified into:(i)	Infidelity of public officers76 including the crimes of conniving with or consenting toevasion; and evasion through negligence;(ii)	Infidelity in the custody of documents77 including the crimes of removal, concealment ordestruction of documents; officer breaking seal and opening of closed documents; and(iii)	Revelation of secrets78 including the crimes of revelation of secrets by an officer; andpublic officer revealing secrets of private individual.
e. Other Offenses or Irregularities by Public Officers are classified as follows:(i)	Disobedience, refusal of assistance and maltreatment of prisoners79 including the crimesof open disobedience; disobedience to order of superior officer when said officer wassuspended by inferior officer; refusal of assistance; refusal to discharge elective office; andmaltreatment of prisoners;(ii)	Anticipation, prolongation and abandonment of the duties and powers of public office80
including the crimes of anticipation of duties of a public office; prolonging performance of
duties and powers, and abandonment of office or position;(iii)	Usurpation of powers and unlawful appointment,81 including the crimes of usurpation oflegislative powers; usurpation of executive functions; usurpation of judicial functions;disobeying request for disqualification; orders or requests by executive officers to any
judicial authority; and unlawful appointments, and;(iv) Abuses against chastity.82

72. Arts. 204-209, Title Seven, ibid73 Arts 210-212, ibid.
74. Arts. 213-216, ibid.
75. Arts. 217-222, ibid.
76. Arts. 223-225, ibid.
77. Arts. 226-228, ibid.
78. Arts. 229-230, ibid.
79. Arts. 231-236, ibid.
80. Arts. 236-238, ibid.
81. Arts. 239-244, ibid.
82. Art. 245, ibid.

− 47 −

3.

Other Laws on Graft and Corruption(a) R epublic Act 3019 or the Anti-Graft and Corrupt Practices Act83 has the most comprehensive
enumeration of corrupt practices of public officers. These include the following:(i)	Persuading, inducing or influencing another public officer to perform an act constituting a
violation of rules and regulations duly promulgated by competent authority or an offense
in connection with the official duties of the latter, or allowing himself to be persuaded,induced, or influenced to commit such violation or offense;(ii)	Directly or indirectly requesting or receiving any gift, present, share, percentage, or benefit,
for himself or for any other person, in connection with any contract or transaction between
the Government and any other part, wherein the public officer in his official capacity has
to intervene under the law;(iii)	Directly or indirectly requesting or receiving any gift, present or other pecuniary or material
benefit, for himself or for another, from any person for whom the public officer, in any
manner or capacity, has secured or obtained, or will secure or obtain, any Government
permit or license, in consideration for the help given or to be given, without prejudice toSection thirteen of this Act;(iv)	Accepting or having any member of his family accept employment in a private enterprise
which has pending official business with him during the pendency thereof or within one
year after its termination;(v)	Causing any undue injury to any party, including the Government, or giving any private
party any unwarranted benefits, advantage or preference in the discharge of his official
administrative or judicial functions through manifest partiality, evident bad faith orgross inexcusable negligence. This provision shall apply to officers and employees ofoffices or government corporations charged with the grant of licenses or permits or otherconcessions;(vi)	Neglecting or refusing, after due demand or request, without sufficient justification, to act
within a reasonable time on any matter pending before him for the purpose of obtaining,
directly or indirectly, from any person interested in the matter some pecuniary or material
benefit or advantage, or for the purpose of favoring his own interest or giving undue
advantage in favor of or discriminating against any other interested party;(vii)	Entering, on behalf of the Government, into any contract or transaction manifestly andgrossly disadvantageous to the same, whether or not the public officer profited or willprofit thereby;(viii)	Directly or indirectly having financial or pecuniary interest in any business, contract ortransaction in connection with which he intervenes or takes part in his official capacity, orin which he is prohibited by the Constitution or by any law from having any interest;(ix)	Directly or indirectly becoming interested, for personal gain, or having a material interest
in any transaction or act requiring the approval of a board, panel or group of which he is amember, and which exercises discretion in such approval, even if he votes against the sameor does not participate in the action of the board, committee, panel or group;(x)	Knowingly approving or granting any license, permit, privilege or benefit in favor ofany person not qualified for or not legally entitled to such license, permit, privilege oradvantage, or of a mere representative or dummy of one who is not so qualified or entitled;and,(xi)	Divulging valuable information of a confidential character, acquired by his office or by him
on account of his official position to unauthorized persons, or releasing such informationin advance of its authorized release date.

83. Sec. 3, Republic Act No. 3019 (1960).

− 48 −

R.A. 3019 also contains provisions in reference to private individuals. The said law prohibits
persons who have family or close personal relations with a public official to take advantage thereofby requesting or receiving gifts or pecuniary advantage from persons who have business transactions
with such public official.84 It also prohibits the spouse or any relative within the 3rd civil degree of the
President, Vice-President, the Senate President and the Speaker of the House of Representatives tointervene in any business or transaction with the Government, subject to certain exceptions.85(b) Republic Act 6713 or the Code of Conduct and Ethical Standards for Public Officials andEmployees86 also declares the following as prohibited acts and transactions:(i)	Financial and material interest. — Public officials and employees shall not, directly or
indirectly, have any financial or material interest in any transaction requiring the approvalof their office.
(ii)	Outside employment and other activities related thereto. — Public officials and employees
during their incumbency shall not:1. Own, control, manage or accept employment as officer, employee, consultant, counsel,
broker, agent, trustee or nominee in any private enterprise regulated, supervised or
licensed by their office unless expressly allowed by law;
2. Engage in the private practice of their profession unless authorized by the Constitution
or law, provided, that such practice will not conflict or tend to conflict with theirofficial functions; or
3. Recommend any person to any position in a private enterprise which has a regular or
pending official transaction with their office.
(iii) D isclosure and/or misuse of confidential information. — Public officials and employees
shall not use or divulge, confidential or classified information officially known to them byreason of their office and not made available to the public, either:
1. To further their private interests, or give undue advantage to anyone; or
2. To prejudice the public interest.
(iv)	Solicitation or acceptance of gifts. — Public officials and employees shall not solicit oraccept, directly or indirectly, any gift, gratuity, favor, entertainment, loan or anything ofmonetary value from any person in the course of their official duties or in connection
with any operation being regulated by, or any transaction which may be affected by thefunctions of their office.
As to gifts or grants from foreign governments, the Congress consents to:
1. T he acceptance and retention by a public official or employee of a gift of nominal
value tendered and received as a souvenir or mark of courtesy;
2. The acceptance by a public official or employee of a gift in the nature of a scholarshipor fellowship grant or medical treatment; or
3. The acceptance by a public official or employee of travel grants/expenses for travel
taking place entirely outside the Philippines of more than nominal value if suchacceptance is appropriate or consistent with the interests of the Philippines andpermitted by the head office, branch or agency to which he belongs.
84. Sec. 4, ibid.
85. Sec. 5, ibid.
86. Became effective in 1989.

− 49 −

(c) T he Civil Service Law87 enumerates the grounds for disciplinary action of government personnel,
to wit:(i)	Dishonesty; Oppression; Neglect of duty; Misconduct; Disgraceful and immoral conduct;
Being notoriously undesirable; Discourtesy in the course of official duties; and Inefficiency
and incompetence in the performance of official duties;(ii)	Receiving for personal use of a fee, gift or other valuable thing in the course of official
duties or in connection therewith, when such are given in the hope or expectation offavorable or better treatment88; Conviction of a crime involving moral turpitude; Improperor unauthorized solicitation of contributions from subordinates and by teachers or school
officials from school children;(iii)	Violation of existing Civil Service Law or rules, or reasonable office regulations;
Falsification of official document; Frequent unauthorized absences or tardiness in reportingfor duty, loafing or frequently unauthorized absence during regular office hours; Habitual
drunkenness; and Gambling;(iv)	Refusal to perform official duty or render overtime service; Disgraceful, immoral or
dishonest conduct prior to entering service; Physical or mental incapacity or disability due
to immoral or vicious habits; Borrowing money by superior officers from subordinates or
lending by subordinates to superior officers; Lending money at usurious rates of interest;
Willful failure to pay just debts or willful failure to pay taxes due to the government;(v)	Contracting loans of money or other property from persons with whom the office ofthe employee concerned has business relations; Pursuit of private business, vocationor profession without the permission required by Civil Service rules; Insubordination;
Engaging directly or indirectly in partisan political activities by one holding a non-political
office;(vi)	Conduct prejudicial to the best interest of the service; Lobbying for personal interest or
gain in legislative halls and offices without authority; Promoting the sale of tickets inbehalf of private enterprises that are not intended for charitable or public welfare purposesand even in the latter cases if there is no prior authority; Nepotism.
(d) R epublic Act 1379 or the law on Forfeiture of Illegally Acquired Wealth89 declares as forfeitedany property found to have been unlawfully acquired by any public officer or employee after
appropriate judicial proceedings. The Ombudsman has the authority to investigate and initiate
the proper action for the recovery of ill-gotten and /or unexplained wealth of public officials or
employees.90(e) R epublic Act 9160, as amended, or the Anti-Money Laundering Act of 200191 (“AMLA”)
defines the term “money laundering” as a crime whereby the proceeds of an unlawful activity
are transacted, to make them appear as originating from legitimate sources. A crime under thislaw is committed by any person who knowingly transacts monetary instrument or property
from the proceeds of unlawful activities. Among the unlawful activities under the AMLA, as

87. Title I-A, Book V, Executive Order No. 292, Administrative Code of 1987.
88.	“Moral turpitude includes everything which is done contrary to justice, honesty, modesty, or good morals.” (In Re: Basa, 41 Phil 275, 7
December 1920).
89. Became effective in 1955.
90. Section 15, Republic Act 6770 or the Ombudsman Act.
91. Became effective in 2001.

− 50 −

amended, are the commission of the acts under Section 3, paragraphs b,92 c,93 e,94 g,95 h96 andi97 of Republic Act 3019 or the Anti-Graft and Corrupt Practices Act as well as Plunder underRepublic Act 7080, as amended.
(f) Republic Act 7080, as amended, or the Plunder Law98 punishes any public officer who, byhimself or in connivance with members of his family, relatives by affinity or consanguinity,
business associates, subordinates or other persons, amasses, accumulates or acquires ill-gotten
wealth through a combination or series of overt criminal acts as described in Sec. 1(d) of the law
in the aggregate amount of at least Seventy-Five Million Pesos (P75,000,000.00).
F. Remedies
There are a number of remedies available against abuses of public officials including the forfeitureof their unlawfully acquired property. These are: (a) impeachment; (b) recall; (c) civil action for damages;(d) administrative disciplinary action; (e) criminal complaint; (f) special civil action; (g) general election;99(h) forfeiture under RA 1379; and (i) civil forfeiture under RA 9160, as amended.
a. Impeachment
It is a procedure provided by the Constitution100 for removing the following government officials:
President, the Vice-President, the members of the Supreme Court, the members of the Constitutional
Commissions, and the Ombudsman. The grounds for impeachment are: culpable violation of theConstitution, treason, bribery, graft and corruption, other high crimes, and betrayal of public trust.
b. Recall of Local Elective Officials
Recall is a process whereby a registered voter removes an elective local official on the basis of lossof confidence.101
c. Civil Action to Claim Damages
Philippine laws incorporate provisions that make public officials liable for damages in instances
when they commit bad faith, malice or gross negligence. The Administrative Code of 1987 explicitly
provides that “a public officer shall not be civilly liable for acts done in the performance of his official
duties, unless there is a clear showing of bad faith, malice or gross negligence.”102 Also, “any public officer,
who, without just cause, neglects to perform a duty within a period fixed by law or regulation, or within92.	“Directly or indirectly requesting or receiving any gift, present, share, percentage, or benefit, for himself or for any other person, in
connection with any contract or transaction between the Government and any other party, wherein the public officer in his official capacity
has to intervene under the law.”93.	“Directly or indirectly requesting or receiving any gift, present or other pecuniary or material benefit for himself or for another, from any
person for whom the public officer, in any manner or capacity, has secured or obtained, or will secure or obtain, any Government permit orlicense, in consideration for the help given or to be given, without prejudice to Section thirteen of this Act.”94.	“Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage
or preference in the discharge of his official, administrative or judicial functions through manifest partiality, evident bad faith or grossinexcusable negligence. This provision shall apply to officers and employees of offices or government corporation charged with the grantof licenses or permits or other concessions.”
95.	“Entering, on behalf of the Government, into any contract or transaction manifestly and grossly disadvantageous to the same, whether or
not the public officer profited or will profit thereby.”96.	“Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with which he intervenes
or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest.”
97.	“Directly or indirectly becoming interest, for personal gain, or having a material interest in any transaction or act requiring the approval ofa board, panel or group of which he is a member, and which exercises discretion in such approval, even if he votes against the same or does
not participate in the action of the board; committee, panel or group.
	 Interest for personal gain shall be presumed against those public officers responsible for the approval of manifestly unlawful, inequitable,or irregular transactions or acts by the board, panel or group to which they belong.”
98. As amended by Republic Act 7659.
99. Ursal supra note 6 at 235.
100. Art. XI, 1987 Philippine Constitution.
101. Secs. 69-75, R.A. No. 7160 (1991)
102. Sec. 38, Book I, Chapter 9.

− 51 −

a reasonable period if none is fixed, shall be liable for damages to the private party concerned without
prejudice to such other liability as may be prescribed by law.”103
Heads of departments or superior public officers, however, shall not be civilly liable for the wrongful
acts, omissions of duty, negligence, or misfeasance of their subordinates, unless they have actuallyauthorized by written order the specific act or misconduct complained of.104
On the other hand, subordinate public officers or employees shall be civilly liable for acts done bythem in good faith in the performance of their duties. But they shall be liable for willful or negligent acts
done by them which are contrary to law, morals, public policy and good customs even if they acted underorders or instructions of their superiors.
The Civil Code of the Philippines also provides recourse against abuses or neglect of duty of public
officials or employees. Under the Civil Code, any person suffering material or moral loss because a public
servant or employee refuses or neglects, without just cause, to perform his official duty may file an action
for damages and other relief against the latter, without prejudice to any disciplinary administrative actionthat may be taken.105 Moreover, a violation by any public officer or employee of the constitutional rights
and liberties of another person, shall entitle the latter to damages.106
d. Administrative Disciplinary Action
An administrative action against a public officer or employee is the common and most frequently
used remedy resorted to by an aggrieved party.107
To avail of this remedy, a complaint may be initiated with the Civil Service Commission or with
the Department Secretaries and heads of agencies, instrumentalities, provinces, cities and municipalities
which have jurisdiction to investigate and decide on the disciplinary action against the subject officers andemployees.108
With regard to elective and appointive government officials, except those removable only by
impeachment, an administrative complaint may also be filed against them with the Ombudsman.
Another remedy is to file a complaint with the Presidential Anti-Graft Commission. The latter has
the authority to investigate administrative complaints against presidential appointees in the government
occupying the positions of assistant regional director, or equivalent rank and higher, as well as thoseclassified as Salary Grade “26” and higher109
e. Criminal Complaint
A criminal complaint may be brought for an offense in violation of R.A. 3019 (Anti-Graft and Corrupt
Practices Act), as amended; R.A. 6713 (Code of Conduct and Ethical Standards for Public Officials andEmployees); Title VII Chapter II, Section 2110 of the Revised Penal Code (Act No. 3815 [1932]); R.A. 7080
(Plunder), as amended, and for other offenses committed by public officers and employees in relation totheir office.111
f. Special Civil Action
Special Civil Actions like certiorari, prohibition and mandamus may be invoked by victims of grave
abuse of discretion amounting to lack or in excess of jurisdiction; and unlawful neglect to perform a duty
by any government official or body exercising judicial, quasi-judicial or ministerial function.112

103. Ibid.
104. Ibid.
105. Section 27, Civil Code.
106. Section 32, Ibid.
107. Id. at 253.
08. Ibid.
109. Sec. 4, Executive Order No. 12 (2001), as amended.
110. Bribery.
111. Ursal supra note 6 at 260.
112. Id. at 262.

− 52 −

g. Election
Citizens may not be aware that during elections, the fate of the elective officials is in their hands. The
citizenry has the capacity to evict from power abusive politicians whom they perceive can no longer serve
the common good.113
h. Forfeiture under RA 1379
Ill-gotten, unexplained and unlawfully acquired wealth of public officers and employees shall be
forfeited in favor of the State after appropriate judicial proceedings. The proper action for the recovery
of such ill-gotten, unexplained or unlawfully acquired wealth shall be initiated by the Office of the
Ombudsman.114
i. Civil Forfeiture under RA 9160, as amended
Property, monetary instrument and or proceeds representing, involving, or relating to an unlawful
activity or a money laundering offense under RA 9160, as amended, shall be forfeited in favor of the Stateafter appropriate judicial proceedings. Among the unlawful activities provided in the law are RA 3019
(Anti-Graft and Corrupt Practices Act) and RA 7080 (Plunder Law). The petition for civil forfeiture shallbe initiated by the Anti-Money Laundering Council through the Office of the Solicitor General.
G. Challenges115
Despite the passage of numerous anti-graft laws in the Philippines and ratification of the UN
Convention Against Corruption,116 the perception that cases filed against corrupt officials and employees do
not succeed still persists.117 There are also numerous reports that graft and corruption are highly pervasivein this country.
The Philippine government must maintain both long-term and short-term resolutions on the issue of
corruption. Values formation is the key to a long-term victory. It develops citizens and public officials to
become honest and trustworthy individuals. The government must also seek short term solutions to lessen,
if not to eradicate, the effects of graft and corruption.118“Short Term: Demonstrate Crime Doesn’t Pay”119
Anti-graft and corruption laws must be strictly implemented and task force and agencies madeto defeat graft and corruption must efficiently function in order to win the battle against theft in thegovernment.120“Strict Accountability and Oversight”121
The Commission on Audit, being the entity in charge of financial accountability and legality of
government operations, must expose graft and corruption by all means. Individuals composing the said
commission must be able to reveal the cause and the persons behind the diminishing funds of the government.
Notably, it is their duty to endure pressure from individuals or syndicates protecting or conducting activities
detrimental to the government.122

1113. Id. at 264.
114. Supra 90.
115. Gary W. Elliott, Antidote for Philippine Corruption, Philippine Anti-Graft Institution, But Integrity is Lacking, available at
http://philippines.suite101.com/article.cfm/antidote_for_philippine_corruption, (last accessed 28 October 2009).
116. Convention Against Corruption, December 14, 2005.
117. Llanesca T. Panti, Ira Karen Apanay, Crisis, elections feed graft: Corruption’ brutal’ to poor - UN, available at
http://www.undp.org.ph/?link=news&news_id=171&fa=2 (last accessed 29 October 2009).
118. Ibid.
119. Ibid.
120. Ibid.
121. Ibid.
122. Ibid.

− 53 −

“Prosecution and Punishment”123
The Ombudsman must work hand in hand with the Commission on Audit in investigating officials
and employees. Furthermore, the Sandiganbayan124 should grant clemency under very strict guidelines.
The government must sustain its zeal in prosecuting offenders.125
While “asset forfeiture can be an effective tool to recover assets connected to crime, it should not be
used as an alternative to criminal prosecution when a jurisdiction has the ability to prosecute the violator.
In other words, criminals should not be allowed to avoid prosecution by pointing to the asset forfeiture
regime as the mechanism for seeking redress for crimes that have been committed. Forgoing a criminal
prosecution, when available, in return for asset forfeiture has the appearance of a violator buying his or
her way out of prosecutions, convictions, and forfeiture. Thus, criminal prosecutions should be pursued
whenever possible to avoid the risk that prosecutors, courts and the public would view disgorgement ofassets as a sufficient sanction when criminal laws have been violated.”126“Restoring Stolen Assets”127
One of the biggest challenges in fighting corruption is the recovery of public properties or moneys
unlawfully acquired. As reported by the Philippine National Police, authorities are having a difficult time
retrieving properties or moneys which were obtained thru corruption.
In relation to this concern, it is important to note that the anti-graft law provides for confiscationof unexplained wealth. Now, to resolve the issue, the Philippine government must aggressively pursue
recovery of public funds, whether within the country or not.128“Long Term: Values Formation”129
The most effective means of defeating corruption is probably the values formation. However, themetamorphosis does not happen in a short period of time. This long-term solution works by changing
socio-cultural norms thru instilling new values. The problem with this though is that there “exists a conflict
between traditional values relating to ‘obligation toward kinship, friendship, and primary groups,’ common
in the rural and tribal contexts, and values necessary for nation building.” Values formation, or reformation,must engender a view of government posts as positions to serve the public, and not as a means for personal
profit.130
After all, “public office is a public trust;” and public officers -- who are not at all times accountable to thepeople -- are called upon to “serve them with utmost responsibility, integrity, loyalty, and efficiency.”131

123. Ibid.
124.	A special court in the Philippines created under Presidential Decree 1606. Its jurisdiction covers cases involving public officials occupying
positions classified as salary grade “27” and higher. It is presently composed of a Presiding Justice and fourteen (14) Associate Justices who sit
in five (5) Divisions of three (3) Justices each in the trial and determination of cases. Its rank is equivalent to the Court of Appeals.
125. Ibid.
126.	Greenberg, et al., Stolen Asset Recovery: A Good Practices Guide for Non-Conviction Based Asset Forfeiture, The International Bank for
Reconstruction and Development/The World Bank 2009, p. 29.
127. Ibid.
128. Ibid
129. Ibid.
130. Ibid.
131. Section 1, Article XI, 1987 Philippine Constitution..

− 54 −

II. CIVIL FORFEITURE AS A REMEDY
A. Defining Civil Forfeiture under the AMLA132
Forfeiture is defined as the “divestiture of property without compensation. It is the loss of a right,
privilege, or property because of a crime, breach of obligation, or neglect of duty. In contrast to seizure
which is merely an act or an instance of taking possession of a person or property by legal right or process,forfeiture entails the instantaneous transfer of title to another, such as the government, a corporation, or a
private person.133
Civil forfeiture, in the context of the AMLA, may be defined as the divestiture in favor of the State ofmonetary instrument, property and/or proceeds representing, involving, or relating to an unlawful activity
or a money laundering offense under the said Act.
In enacting the AMLA, the Philippine Congress declared money laundering as a criminal offense andprovided for civil forfeiture as an “appropriate remedy for the seizure and forfeiture to the State, without thenecessity of conviction or prosecution in a criminal offense, of monetary instrument, property or proceeds
involved in or related to unlawful activity or money laundering offense as defined in the law.”134
B. Philippine Constitution and Other Laws
There are constitutional and other legal provisions relating to seizure and forfeiture of property:
1.

The 1987 Philippine Constitution
The Philippine Constitution provides that “no person shall be deprived of life, liberty or property
without due process of law.”135 “Due process has both a procedural and a substantive aspect. As asubstantive requirement, it is a prohibition of arbitrary laws; because if all that the due process clauserequired were proper procedure, then life, liberty or property could be destroyed arbitrarily provided
proper formalities are observed. As a procedural requirement, it relates chiefly to the mode of procedure
which government agencies must follow in the enforcement and application of laws. It is a guarantee ofprocedural fairness.”136
2.

The Revised Penal Code137
The Revised Penal Code (“RPC”) provides that “every penalty imposed for the commission of afelony shall carry with it the forfeiture of the proceeds of the crime and the instruments or tools with which
it was committed. Such proceeds and instruments or tools shall be confiscated and forfeited in favor of theGovernment, unless they be the property of a third person not liable for the offense, but those articles which
are not subject of lawful commerce shall be destroyed.”138
3.

Republic Act 3019 or the Anti-Graft and Corrupt Practices Act
RA 3019 provides that any public officer or private person committing any of the unlawful acts
or omissions enumerated in Sections 3 (Corrupt Practices of Public Officers), 4 (Prohibition on Private
Individuals), 5 (Prohibition on Certain Relatives) and 6 (Prohibition on Members of Congress) thereof shall132. Supra 92.
133. Black’s Law Dictionary, West Publishing Company, 8th Ed., 1999.
134.	Justice Jose C. Vitug, et al., A Summary of Notes and Views on the Rule of Procedure in Cases of Civil Forfeiture, Asset Preservation
and Freezing of Monetary Instrument, Property, or Proceeds Representing, Involving, or Relating to an Unlawful Activity or Money
Laundering Offense under Republic Act no. 9160, as amended, Central Book Supply, Inc., Quezon City, Philippines, 2006, [hereinafter“Rule of Procedure, etc.”).
135. Section 1, Article III.
136. Joaquin G. Bernas, S.J., The 1987 Philippine Constitution A Reviewer-Primer, 4th Edition, 2002
137. Supra 70.
138. Revised Penal Code, Article 45, Section III, Chapter III..

− 55 −

be “punished with imprisonment for not less than one year nor more than ten years, perpetual disqualificationfrom public office, and confiscation or forfeiture in favor of the Government of any prohibited interest andunexplained wealth manifestly out of proportion to his salary and other lawful income.”139
4.

Republic Act 1379 or the Law on Forfeiture of Illegally Acquired Wealth
Under this law, “whenever any public officer or employee has acquired during his incumbency anamount of property which is manifestly out of proportion to his salary as such public officer or employee
and to his other lawful income and the income from legitimately acquired property, said property shall be
presumed prima facie to have been unlawfully acquired.140“If the respondent is unable to show to the satisfaction of the court that he has lawfully acquired theproperty in question, then the court shall declare such property, forfeited in favor of the State, and by virtueof such judgment the property aforesaid shall become property of the State.”141
5.

Republic Act 7080 or the Plunder Law
As discussed, this involves “any public officer who, by himself or in connivance with membersof his family, relatives by affinity or consanguinity, business associates, subordinates or other persons,amasses, accumulates or acquires ill-gotten wealth through a combination or series of overt or criminal
acts as described in the law, in the aggregate amount or total value of at least Seventy-five million pesos(P75,000,000.00).”142“The court shall declare any and all ill-gotten wealth and their interests and other incomes and assets
including the properties and shares of stock derived from the deposit or investment thereof forfeited infavor of the State.”143
6.

The Civil Code of the Philippines144
a. Unjust Enrichment
Article 22 of the Civil Code provides that “every person who through an act of performance byanother, or any other means, acquires or comes into possession of something at the expense of the latterwithout just or legal ground, shall return the same to him.” This is the principle of unjust enrichment which
requires two conditions: (i) that a person is benefited without a valid basis or justification, and (ii) that such
benefit is derived at another’s expense or damage.145
The principle of unjust enrichment, which involves the acquisition of any material possession or
benefit by a person who is not entitled thereto, differs from the concept of civil forfeiture under the AMLA
as the latter involves the forfeiture of monetary instrument, property or proceeds representing, involving,or relating to an unlawful activity or a money laundering offense.
b. Implied Trust“Trusts are either express or implied. While express trusts are created by the intention of the trustor
or of the parties, implied trusts come into being by operation of law. Implied trusts are those which,without being expressed, are deducible from the nature of the transaction as matters of intent or which aresuperinduced on the transaction by operation of law as matters of equity, independently of the particularintention of the parties.”146“Implied trusts may either be resulting or constructive trusts, both coming into being by operation

139. RA 3019, Section 9; Emphasis supplied.
140. RA 1379, Section 2.
141. Id, Section 6.
142. RA 7080, Section 2, as amended.
143. Ibid.
144. Republic Act 386 (1949).
145.	Privatization and Management Office v. Legaspi Towers 300, Inc., G.R. No. 147957, 22 July 2009, citing Car Cool Philippines, Inc. v.
Ushio Realty and Development Corporation, G.R. No. 138088, January 23, 2006.
146. Philippine National Bank v. Court of Appeals, G.R. No. 97995, 21 January 1993.

− 56 −

of law. xxx Resulting trusts are based on the equitable doctrine that valuable consideration and not legal
title determines the equitable title or interest and are presumed always to have been contemplated by theparties. They arise from the nature or circumstances of the consideration involved in a transaction whereby
one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the
benefit of another. On the other hand, constructive trusts are created by the construction of equity in orderto satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against
one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which heought not, in equity and good conscience, to hold.”147
Title V, Chapter III of the Civil Code enumerates instances when an implied trust is created, viz:(i)	There is an implied trust when property is sold, and the legal estate is granted to one
party but the price is paid by another for the purpose of having the beneficial interestof the property. The former is the trustee, while the latter is the beneficiary. However,if the person to whom the title is conveyed is a child, legitimate or illegitimate, ofthe one paying the price of the sale, no trust is implied by law, it being disputably
presumed that there is a gift in favor of the child.148(ii)	There is also an implied trust when a donation is made to a person but it appears that
although the legal estate is transmitted to the donee, he nevertheless is either to haveno beneficial interest or only a part thereof.149(iii)	If the price of a sale of property is loaned or paid by one person for the benefit ofanother and the conveyance is made to the lender or payor to secure the payment of
the debt, a trust arises by operation of law in favor of the person to whom the money
is loaned or for whom its is paid. The latter may redeem the property and compel a
conveyance thereof to him.150(iv)	When land passes by succession to any person and he causes the legal title to be put inthe name of another, a trust is established by implication of law for the benefit of thetrue owner.151(v)	If two or more persons agree to purchase property and by common consent the legal
title is taken in the name of one of them for the benefit of all, a trust is created by forceof law in favor of the others in proportion to the interest of each.152(vi)	When property is conveyed to a person in reliance upon his declared intention to holdit for, or transfer it to another or the grantor, there is an implied trust in favor of theperson whose benefit is contemplated.153(vii)	If an absolute conveyance of property is made in order to secure the performance ofan obligation of the grantor toward the grantee, a trust by virtue of law is established.
If the fulfillment of the obligation is offered by the grantor when it becomes due, hemay demand the reconveyance of the property to him.154(viii)	When any trustee, guardian or other person holding a fiduciary relationship uses trust
funds for the purchase of property and causes the conveyance to be made to him or toa third person, a trust is established by operation of law in favor of the person to whom
the funds belong.155

147. O’Laco v. Co Cho Chit, G.R. No. 58010, 31 March 1993; emphasis supplied.
148. Article 1448.
149. Article 1449.
150. Article 1450.
151. Article 1451.
152. Article 1452.
153. Article 1453.
154. Article 1454.
155. Article 1455.

− 57 −

(ix)	If property is acquired through mistake or fraud, the person obtaining it is, by force oflaw, considered a trustee of an implied trust for the benefit of the person from whom
the property comes.156
The powers of public officers occupying a position akin to corporate directors are power in trust.
“He who is in such fiduciary position cannot serve himself first and his cestuis second. xxx He cannot
manipulate the affairs of his corporation to their detriment and in disregard of the standards of common
decency. He cannot, by the intervention of a corporate entity violate ancient precept against serving two
masters. xxx He cannot utilize his inside information and strategic position for his own preferment. He
cannot violate rules of fair play by doing indirectly through the corporation what he could not do so
directly. He cannot use his power for his personal advantage and to the detriment of the stockholders
and the creditors no matter how absolute in terms that power may be and no matter how meticulous he is
to satisfy technical requirements. For that power is at all times subject to the equitable limitation that it
may not be exercised for the aggrandizement, preference, or advantage of the fiduciary to the exclusion or
detriment of the cestuis.”157
7.

Uniform Rules on Administrative Cases in the Civil Service158
The rules shall be applicable to all cases brought before the Civil Service Commission and othergovernment agencies, except where a special law provides otherwise.159
The penalty of forfeiture of retirement benefits is provided as an accessory to administrative
penalties.160 For example, the penalty of dismissal shall carry with it that of cancellation of eligibility,
forfeiture of retirement benefits, and the perpetual disqualification from reemployment in the government
service, unless otherwise provided in the decision.161
C. Ancillary Remedies
The AMLA provides for other remedies ancillary to a civil forfeiture. These are the remedies of: (i)Freeze Order; and, (ii) Bank Inquiry.
1.

Freeze Order
Under Section 10 of the AMLA, as amended, the Court of Appeals, upon application ex parte by
the Anti-Money Laundering Council (“AMLC”) through the Office of the Solicitor General, and after
determination that probable cause exists that any monetary instrument or property is in any way related
to an unlawful activity, may issue a freeze order which shall be effective for twenty (20) days. The freeze
order may be extended for a maximum period of six (6) months.162

2.

Bank Inquiry
Section 11 of the AMLA authorizes the AMLC to inquire into or examine any particular deposit
or investment with any banking institution or non-bank financial institution upon order of any competentcourt in cases of violation of the AMLA, when it has been established that there is probable cause that thedeposits or investments are related to an unlawful activity or a money laundering offense. No court orderis required in cases involving the unlawful activities of Kidnapping for Ransom under Article 267 of the
Revised Penal Code, as amended, Violations under Republic Act 9165 or the Comprehensive Drugs Act
of 2002, and Hijacking and other violations under Republic Act 6235, destructive arson and murder as156. Article 1456.
157. Gokongwei v. Securities and Exchange Commission, G.R. No. L-45911, 11 April 1979.
158. Resolution 99-1936, published in The Manila Standard, 11 September 1999.
159. Id, Section 2.
160. Id, Section 57.
161. Id, Section 58.
162. Supra 133, Section 53 (b).

− 58 −

defined under the Revised Penal Code, as amended, including those perpetrated by terrorists against noncombatant persons and similar targets.
An application for bank inquiry is filed with the regional trial court which has jurisdiction over thecase. In Republic of the Philippines v. Eugenio, et al,163 the Supreme Court declared that bank inquiry
proceedings may not be done ex parte; hence, prior notice and hearing are required.
D. Procedure
1.
Venue
An action for civil forfeiture may be instituted by the Republic of the Philippines, through the AMLC,
represented by the Office of the Solicitor General (“OSG”), by filing a petition164 in any regional trial courtof the judicial region where the monetary instrument, property, or proceeds representing, involving, or
relating to an unlawful activity or to a money laundering are located. If, however, all or any portion of themonetary instrument, property, or proceeds is located outside the Philippines, the petition may be filed in
the regional trial court in Manila or of the judicial region where any portion of the monetary instrument,
property, or proceeds is located, at the option of the petitioner.165
The petition shall be filed directly with 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 of the same
station. He shall act on the petition within twenty-four (24) hours after its filing.166
2.

Contents of the Petition, Notice and Service
The petition for civil forfeiture shall be verified and shall contain: (a) the name and address of
the respondent; (b) a description with reasonable particularity of the monetary instrument, property, or
proceeds, and their location; (c) the acts or omissions prohibited by and the specific provisions of theAMLA, as amended, which are alleged to be the grounds relied upon for the forfeiture of the monetary
instrument, property, or proceeds; and, (d) the reliefs prayed for167 including the issuance of a provisional
asset preservation order and an asset preservation order.
Notice of the petition shall be given to respondents in the same manner as service of summons under
the Rules of Court.168 Where the respondent is an unknown owner or his whereabouts are unknown andcannot be ascertained by diligent inquiry, service may, by leave of court, be effected by publication of thenotice of the petition in a newspaper of general circulation in such places and for such time as the court mayorder. Should the cost of publication exceed the value or amount of the property to be forfeited by ten (10)percent, publication shall not be required.169
3.

Confidentiality
The logbook where the petition is entered shall be kept strictly confidential and maintained under
the responsibility of the executive judge. Contempt of court shall be imposed on any person, including
court personnel, who discloses, divulges or communicates to anyone, directly or indirectly, in any manneror by any means, the fact of the filing of the petition, its contents and its entry in the logbook except thoseauthorized by the court.170
4.

Comment or Opposition
The respondent shall file a verified comment or opposition, not a motion to dismiss the petition,

163. G.R. No. 174629, 14 February 2008.
164. Rule of Procedure, etc., Section 2, Title II.
165. Id, Section 3, Title II.
166. Id, Section 5, Title II.
167. Id, Section 4, Title II.
168. Id, Section 8, Title II.
169. Ibid.
170. Id, Section 7, Title II.

− 59 −

within fifteen (15) days from service of notice or within thirty days from publication.171 Failure to do soshall authorize the court to hear the case ex parte and render such judgment as may be warranted by thefacts alleged in the petition and its supporting evidence.172
5.

Provisional Asset Preservation Order (“PAPO”)
Where the judge 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 of the same station has determined thatprobable cause exists on the basis of the allegations of a verified petition sufficient in form and substance,with a prayer for the issuance of an asset preservation order, the court may issue ex parte a PAPO effective
immediately and for a period of twenty (20) days from service to the concerned parties, forbidding any
transaction, withdrawal, deposit, transfer, removal, conversion, concealment or other disposition of thesubject monetary instrument, property, or proceeds.173
6.

Asset Preservation Order (“APO”)
Within the twenty-day period of effectivity of the PAPO, the court shall conduct a summary hearing
at which the respondent may for good cause show why the PAPO should be lifted. The court shall determine
within the same period whether the PAPO should be modified or lifted or an APO should issue, and act
accordingly.174
The APO shall: (a) issue in the name of the Republic of the Philippines represented by the AMLC;(b) state the name of the court, the case number and title, and the subject order; and (c) require the sheriff
or any proper officer to serve a copy thereof upon the respondent or any person acting on his behalf, andupon the covered institution or government agency.175
The asset preservation order shall be served personally by the sheriff or other proper officer designatedby the court in the manner set forth in the rules. If personal service is not practicable, the order shall beserved in any other manner which the court may deem expedient.176
When authorized by the court, service 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 thecovered government agency, by facsimile transmission (fax) or electronic mail (e-mail). In such cases, thedate of transmission shall be deemed to be prima facie the date of service. The asset preservation ordershall be enforceable anywhere in the Philippines.177
Should the court issue an APO, the respondent may raise in a motion or in the comment or opposition
grounds for its discharge. The following grounds for discharge of the APO may be raised: (a) the order was
improperly or irregularly issued or enforced; (b) any of the material allegations in the petition, or any of thecontents of any attachment to the petition thereto, or its verification, is false; and (c) the specific personalor real property ordered preserved is not in any manner connected with the alleged unlawful activity.178(i)Guidelines in Serving the APO
For perishable property, the petitioner may file a verified motion praying for the sale at public auctionof said perishable property. If the court grants the motion, the sale shall be conducted in the manner as
property sold under execution.179 Written notice must be given, before the sale, by posting of the time andplace of the sale in three (3) public places, preferably in conspicuous areas of the municipal or city hall,post office and public market in the municipality or city where the perishable property is located and where

171. Id, Section 9, Title II.
172. Id, Section 10, Title II.
173. Id, Section 11, Title III.
174. Id, Section 12, Title III.
175. Id, Section 13, Title III.
176. Id, Section 14, Title III.
177. Ibid.
178. Id, Section 17, Title III
179. Id, Section 19, Title IV..

− 60 −

the sale is to take place, for such time as may be reasonable, considering the character and condition of theproperty. The proceeds shall be deposited with the Clerk of Court to be disposed of according to the final
judgment of the court.180
For real property, there shall be: (a) no physical seizure thereof; (b) no eviction of the owner thereof
and/or occupants therein; (c) notice of the APO to the owner/s thereof, if known, and the occupant/s therein;and (d) posting of a copy of the APO in a conspicuous place on the real property.181
Upon verified motion, a receiver may be appointed by the court under such terms and conditions as
the court may deem proper in the following instances:(a) W hen it appears that the party applying for the appointment of a receiver has an interest in theproperty or fund and that such property or fund is in danger of being lost, removed or materiallyinjured;(b) When it appears that the property is in danger of being wasted or dissipated or materiallyinjured;(c) After judgment, to preserve the property during the pendency of an appeal, or to dispose of it
according to the judgment or to aid execution when the execution has been returned unsatisfied
or the judgment obligor refuses to apply his property in satisfaction of the judgment, or otherwise
to carry the judgment into effect; and(d) Whenever in other cases it appears that the appointment of a receiver is the most convenient andfeasible means of administering or disposing of the property in litigation.182
7.

Pre-trial and Trial
Pre-trial is mandatory.183 It is a procedural device intended to clarify and limit the basic issues
between the parties. Failure of the petitioner or counsel to appear at the pre-trial conference shall be cause
for dismissal of the petition. The dismissal shall be with prejudice, unless otherwise ordered by the court.
A similar failure on the part of the respondent or counsel shall be cause to allow the petitioner to present its
evidence ex parte and the court to render judgment on the basis thereof.184
The rules on amicable settlement, mediation and other alternative mode of dispute resolution shallnot apply.185
No prior criminal charge, pendency of or conviction for an unlawful activity or money laundering
offense is necessary for the commencement or the resolution of a petition for civil forfeiture.186
Any criminal case relating to an unlawful activity shall be given precedence over the prosecution of
any offense or violation under the AMLA, as amended, without prejudice to the filing of a separate petition
for civil forfeiture or the issuance of an asset preservation order or a freeze order. Such civil action shallproceed independently of the criminal prosecution.187
The trial shall proceed in accordance with the applicable provisions of the Rules of Court.188
8.

Factors in determining Preponderance of Evidence
In rendering judgment, the court may consider the following factors to determine where lies the
preponderance of evidence:(a) T hat the monetary instrument, property, or proceeds are represented, involved, or related to an
unlawful activity or a money laundering offense:

180. Ibid.
181. Id, Section 20, Title IV.
182. Id, Section 21, Title IV.
183. Id, Section 22, Title V.
184. Id, Section 24, Title V.
185. Id, Section 26, Title V.
186. Id, Section 27, Title VI.
187. Id, Section 28, Title VI.
188. Id, Section 29, Title VI.

− 61 −

(1) I f the value or amount involved is not commensurate with the business, financial or earning
capacity of the person;(2) I f any transaction indicates a clear deviation from the profile or previous transactions of
the person;(3) I f a 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;(4) I f a person has structured transactions in order to avoid being the subject of reporting
requirements under Republic Act No. 9160, as amended; or(5) I f any transaction exists that has no apparent underlying legal or trade obligation, purpose
or economic justification;or(b) T hat the monetary instrument, property, or proceeds, the sources of which originated from or
are materially linked to monetary instruments, properties, or proceeds used in the commissionof an unlawful activity or money laundering offense, are related to the said unlawful activity or
money laundering offense.189
9.

Judgment and Appeal
The court shall render judgment within thirty (30) days from submission of the case for resolution.
It shall grant the petition if there is preponderance of evidence in favor of the petitioner and declarethe monetary instrument, property, or proceeds forfeited to the State or, in appropriate cases, order the
respondent to pay an amount equal to the value of the monetary instrument or property and adjudge suchother reliefs as may be warranted.190
An aggrieved party may appeal the judgment to the Court of Appeals by filing within fifteen (15)days from its receipt a notice of appeal with the court which rendered the judgment and serving a copy
upon the adverse party.191
10.

Claims against Forfeited Assets
Where the court has issued an order of forfeiture of the monetary instrument or property in a civil
forfeiture petition for any money laundering offense defined under the AMLA, as amended, any person
who has not been impleaded nor intervened claiming an interest therein may apply, by verified petition, fora declaration that the same legitimately belongs to him and for segregation or exclusion of the monetary
instrument or property corresponding thereto. The verified petition shall be filed with the court which
rendered the order of forfeiture within fifteen (15) days from the date of finality of the order of forfeiture,
in default of which the said order shall be executory and bar all other claims.192
Within fifteen (15) days after notice, petitioner shall file a comment admitting or denying the claim
specifically, and setting forth the substance of the matters which are relied upon to support the admission ordenial. If the petitioner has no knowledge sufficient to enable it to admit or deny specifically, it shall statesuch want of knowledge. The petitioner in its comment shall allege in offset any fees, charges, taxes andexpenses due to it. A copy of the comment shall be served on the claimant.193
The court may, without hearing, issue an appropriate order approving any claim admitted or notcontested by the petitioner.194
Upon the filing of a comment contesting the claim, the court shall set the claim for hearing within
thirty (30) days with notice to all parties.195

189. Id, Section 31, Title VI.
190. Id, Section 32, Title VI.
191. Id, Section 34, Title VI.
192. Id, Section 34, Title VII b.
193. Id, Section 38, Title VII.
194. Id, Section 39, Title VII.
195. Id, Section 40, Title VII.

− 62 −

The court shall issue a final order on the contested claim within thirty (30) days from submission.196
An appeal to the Court of Appeals may be taken by filing within fifteen (15) days from receipt of the ordera notice of appeal with the court which rendered the order and serving a copy upon the adverse party.197
E. Statistics
The following shows the number of civil forfeiture cases filed in court relative to the unlawful
activities involving graft and corruption as well as the amount of money or property subject of forfeiture:
Table 4198
List of Civil Forfeiture Cases filed based on Unlawful Activity related to Graft and Corruption
As of October 2009
Unlawful Activity or Violation under the AMLA

Number of Civil Forfeiture
Cases filed in Court

Violation of Republic Act 3019 or the Anti-Graft and Corrupt Practices
Act

8

Violation of Republic Act 6713 or Conduct and Ethical Standard for
Public Officials and Employees

3

Violation of Republic Act 7080 or the Plunder Law

1

F. Strengths and Challenges
In Jeffrey Simser’s article on Civil Forfeiture Practices in Other Common Law Jurisdictions,199
citing an article by Anthony Kennedy, he posed this question: Is the legislative response of civil forfeitureproportional to an existing societal problem? To this protean question, the response was: Civil forfeitureis a proportional and necessary response to a societal problem. Much is true in the Philippine anti-money
laundering regime. The non-conviction based forfeiture is a response to a compelling state interest --- thatof removing illicit assets from circulation and taking away from the criminal the benefits of his crime.
Section 12 of the AMLA contains provisions for the recovery of proceeds of crime. This can occur
as a result of the conviction of a person for a criminal offense or as a result of a civil forfeiture order. In
relation to civil forfeiture, paragraph 12(a) of the AMLA states:
Civil forfeiture. – When there is a covered transaction report made, and the court
has, in a petition filed for the purpose ordered seizure of any monetary instrument,or property, in whole or in part, directly or indirectly, related to said report, theRevised Rules of Court on civil forfeiture shall apply.
The procedure in the prosecution of civil forfeiture made reference to the Revised Rules of Courton civil forfeiture. At the time of the enactment of AMLA in 2003, however, there was no specific rule on
civil forfeiture. The Office of the Solicitor General was then constrained to utilized relevant provisions

196. Id, Section 41, Title VII.
197. Id, Section 42, Title VII.
198. Case Records, Lorenzo Tanada Division, Office of the Solicitor General.
199.	Paper presented as background to a Best Practices Roundtable discussion at the Court Procedures in Money Laundering and Civil
Forfeiture Conference in Manila on April 28, 2005.

− 63 −

and remedies to ensure that civil forfeiture cases may nonetheless be prosecuted. Temporary restraining
orders and writs of preliminary injunction were resorted to in order that property or monetary instruments
may not be disposed, removed or dissipated during the pendency of the proceedings. Eventually, theAMLC, the OSG and representatives of the Supreme Court Committee on Revision of Rules drafted rules
for consideration by the Supreme Court. The draft rules became the working draft for the Rules of Civil
Procedure in Cases of Civil Forfeiture, Asset Preservation and Freezing of Monetary Instrument, Property,
or Proceeds Representing, Involving, or Relating to an Unlawful Activity or Money Laundering Offense
Under Republic Act No. 9160, as Amended, which was adopted by the Supreme Court as A.M. No. 05-1104-SC. The Rules on Civil Procedure, etc. took effect on 15 December 2006.
The salient features of the rules are:(a) The proceeding for civil forfeiture is sui generis200
Explaining the nature of civil forfeiture in the Philippines, the Committee on the Revisionof the Rules of Court adopted the best aspects of actions in personam, in rem and quasi in rem,and integrated them into the rule to ensure compliance with the Constitutional provision that no
person shall be deprived of property without due process of law in both substantive and procedural
aspects.201
As an action in personam, the rules require that notice shall be served on respondent personally.
But, where the respondent is designated as an unknown owner or his whereabouts are unknown,
service of notice may be by publication (action in rem). While at the first instance, it appears that theaction is directed against specific persons (by personal service of notice to them), it actually seeks
judgment against the thing or property (petition can proceed against the property of an unknown
owner).
For practical purposes, however, publication is not required when “the cost of publication
exceeds the value or amount of the property to be forfeited by ten percent (10%).”202(b) Petition for civil forfeiture is filed directly with the executive judge of the Regional
Trial Court to ensure confidentiality of the proceeding in the meantime that a PAPO has not been
issued.203
The petition may be filed in any regional trial court of the judicial region where the monetary
instrument, property, or proceeds representing, involving, or relating to an unlawful activity or to amoney laundering offense are located. In the event that all or any portion of the monetary instrument,
property, or proceeds is located outside the Philippines, the petition may be filed in the regional trial
court in Manila or of the judicial region where any portion of the monetary instrument, property, or
proceeds is located, at the option of the petitioner.204(c) PAPO is issued ex-parte upon determination that probable cause exists that the monetary
instrument, property, or proceeds are in any way related to an unlawful activity under the AMLA.205(d) The PAPO, which is effective immediately, forbids the property owner or any covered
institution or government agency from making any transaction, withdrawal, deposit, transfer, removal,
conversion, concealment or other disposition of the monetary instrument, property or proceeds
subject of the petition. This also insures that the monetary instrument, property or proceeds will not
be concealed, altered, destroyed or will not diminish in value or rendered worthless by persons incontrol of such monetary instrument, property or proceeds.206

200. Vitug, supra 124.
201. Id. at pp. 6-7.
202. Rules on Civil Forfeiture, etc., Section 8.
203. Id, Sections 5, 6 and 7.
204. Id, Section 3.
205. Id, Section 11.
206. Vitug, Supra 124 at 39.

− 64 −

(e) Respondent has the burden to show cause why the PAPO should be lifted; otherwise, an
APO is issued.207(f) A PAPO is valid only for twenty (20) days. Within the twenty-day period, the court shallconduct summary hearing. At this point since the court has issued a PAPO ex parte on the findingof the existence of probable cause, the burden of evidence is shifted to the respondent to show why
it should be modified or lifted.208(g) No prior charge, pendency or conviction for an unlawful activity or money laundering
offense is necessary for civil forfeiture.209 Section 27 of the Rules explicitly provides that there isno need of a prior charge or conviction for any predicate crime or money laundering offense under
AMLA. The monetary instrument, property or proceeds shall be forfeited in favor of the State if
there is preponderance of evidence showing that these are involved in or related to an unlawful
activity or a money laundering offense as defined in the law.210(h) Specific factors have been enumerated which the court may consider in determining
where lies preponderance of evidence.211(i) Procedure on claims against forfeited assets has been incorporated.212
The provisions on claims against forfeited assets are designed to give an opportunity to a bonafide claimant, not a party to nor an intervenor in the case, to claim an interest in the forfeited asset or
property if the same “legitimately belongs” to him. Section 35 of the Rules provide that such claim
can be filed only after an order of forfeiture has already been issued.
The Rules provide:
Sec. 35. Notice to file claims. – Where the court has issued an order of
forfeiture of the monetary instrument or property in a civil forfeiture petition forany money laundering offense defined under Section 4 of Republic Act No. 9160,
as amended, any person who has not been impleaded nor intervened claiming aninterest therein may apply, by verified petition, for a declaration that the same
legitimately belongs to him and for segregation or exclusion of the monetary
instrument or property corresponding thereto. The verified petition shall be filedwith the court which rendered the order of forfeiture within fifteen days from thedate of finality of the order of forfeiture, in default of which the said order shallbe executory and bar all other claims.
That indeed, an order of forfeiture is a condition sine qua non before a claim can be made has been
confirmed in Bedayo, et al. v. Court of Appeals:213
Intervention before Order of Forfeiture, Improper:
To begin with, RTC, Manila, Branch 32, in its assailed April 20, 2004
Order, granted petitioners’ Petition and Motion for the Release of Funds by

207. Id, Section 12.
208. Supra 40 at p. 40-41.
209. Id, Section 27.
210. Vitug, Supra 124 at 63.
211. Id, Section 31; As discussed under D (vii) herein.
212. Id, Sections 35-42, Title VII.
213. G.R. 169031-32, 26 September 2005.

− 65 −

treating the same as a “third party claim that should be categorized under Rule
60 of the Revised Rules of Court on Replevin,” specifically Section 7 thereof.
The rules on replevin, however, require the posting of a bond to answer
for whatever damage that may be incurred by the adverse party in the event theorder of release or delivery is adjudged erroneous. Issuing an order of replevindespite absence of a bond is perilous as it might render nugatory the judgment in
the civil forfeiture proceeding.
On a more crucial point, Civil Case No. 03-107306 of RTC, Manila,
Branch 32, from whence the assailed orders sprung, is an action for “Forfeitureof Assets” filed by the Republic of the Philippines, through the Anti-Money
Laundering Council. The complaint was anchored on the civil forfeitureprovision of Republic Act 9160, as amended, which makes no categorical, muchless a fleeting reference to the rules on replevin. On this score alone, the Orders
assailed in the consolidated petitions for certiorari in CA-G.R. SP. Nos. 87159
and 87406 must be struck down.
Section 12 (b) of RA 9160 provides the proper procedure for claims on
forfeited assets:“Sec.12. Forfeiture Provisions. –(b) Claim on Forfeited Assets .- Where the court has issued
an order of forfeiture of the monetary instrument or property ina criminal prosecution for any money laundering offense defined
under Section 4 of this Act, the offender or any other person claiming
an interest therein may apply, by verified petition, for a declarationthat the same legitimately belongs to him and for segregation or
exclusion of the monetary instrument or property corresponding
there to . The verified petition shall be filed with the court which
rendered the judgment of conviction and order of forfeiture, within
fifteen (15) days from the date of the order of forfeiture, in defaultof which the said order shall become final and executory. This
provision shall apply in both civil and criminal forfeiture.”
The quoted provision recites in detail what must be followed by any
person who may have a legitimate claim over monetary instrument or property
forfeited. The procedure applies to criminal, as well as civil forfeiture. As it is,petitioners did not even attempt to comply with Sec. 12 (b), supra, of Ra 9160.
Worse, and as borne by the records, there is not even an order of forfeiture
yet, which is a condition sine qua non before a petition for segregation offunds may be filed. To say the least, it is beyond the court’s comprehension why
the Manila RTC failed to appreciate the clear and unmistakable mandate of Sec.
12 (b) of Ra 9160. In fine, the appellate court correctly nullified the Order dated
20 April 2004 and all other subsequent challenged Orders issued by the Manila
RTC, Branch 32, in its Civil Case No. 03-107306.
(j) The ancillary remedy of Freeze Order is made effective for a maximum period of six (6)months. The said period is intended to provide the AMLC the opportunity to finish its investigation
and when evidence so warrant, file the necessary forfeiture proceedings. Experience, however,teaches that in complex and intricate cases, the six (6) month period is insufficient to conclude
an extensive investigation more so, as instances abound where the related order of bank inquiry is
obtained by AMLC only a few days before or even beyond the effectivity of a freeze order.
(k) Relatedly, the notice and hearing requirement in the ancillary remedy of bank inquiry pose

− 66 −

a difficulty in the expeditious completion of financial investigations. In cases where there are several
respondents, the bank inquiry proceedings become protracted thereby setting a drawback in terms of
the sufficiency of evidence for the filing of a civil forfeiture case.
(l) A freeze order granted by the Court of Appeals may be appealed. Such an appeal, however,does not stay the enforcement of a decision or ruling on the freeze order.214
G. Recent Supreme Court Doctrines involving the AMLA
1.
Republic v. Glasgow, et al., (G.R. No. 170281, January 18, 2008)
Venue for Complaint of Civil Forfeiture:
On November 15, 2005, this Court issued A.M. No. 05-11-04-SC, the Ruleof Procedure in Cases of Civil Forfeiture, Asset Preservation, and Freezing ofMonetary Instrument, Property, or Proceeds Representing, Involving, or Relating
to an Unlawful Activity or Money Laundering Offense under RA 9160, as
amended (Rule of Procedure in Cases of Civil Forfeiture). The order dismissing
the Republic's complaint for civil forfeiture of Glasgow's account in CSBI has
not yet attained finality on account of the pendency of this appeal. Thus, the Ruleof Procedure in Cases of Civil Forfeiture applies to the Republic's complaint.
Moreover, Glasgow itself judicially admitted that the Rule of Procedure in Casesof Civil Forfeiture is "applicable to the instant case." ection 3, Title II (Civil Forfeiture in the Regional Trial Court) of the Rule ofS
Procedure in Cases of Civil Forfeiture provides:
Sec. 3. Venue of cases cognizable by the regional trial court. — A
petition for civil forfeiture shall be filed in any regional trial courtof the judicial region where the monetary instrument, property orproceeds representing, involving, or relating to an unlawful activity
or to a money laundering offense are located; provided, however,that where all or any portion of the monetary instrument, property
or proceeds is located outside the Philippines, the petition may be
filed in the regional trial court in Manila or of the judicial region
where any portion of the monetary instrument, property, or proceeds
is located, at the option of the petitioner. (emphasis supplied)
Under Section 3, Title II of the Rule of Procedure in Cases of Civil
Forfeiture, therefore, the venue of civil forfeiture cases is any RTC of the 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. Pasig City, where the account sought to be forfeited in this case issituated, is within the National Capital Judicial Region (NCJR). Clearly, thecomplaint for civil forfeiture of the account may be filed in any RTC of the NCJR.
Since the RTC Manila is one of the RTCs of the NCJR, it was a proper venue of
the Republic's complaint for civil forfeiture of Glasgow's account.

214. Supra 186, Section 57.

− 67 −

Summons by Publication Proper in Civil Forfeiture case:
In Republic v. Sandiganbayan, this Court declared that the rule is settled
that forfeiture proceedings are actions in rem. While that case involved forfeitureproceedings under RA 1379, the same principle applies in cases for civil forfeiture
under RA 9160, as amended, since both cases do not terminate in the impositionof a penalty but merely in the forfeiture of the properties either acquired illegallyor related to unlawful activities in favor of the State.
As an action in rem, it is a proceeding against the thing itself insteadof against the person. In actions in rem or quasi in rem, jurisdiction over the
person of the defendant is not a prerequisite to conferring jurisdiction on the
court, provided that the court acquires jurisdiction over the res. Nonetheless,summons must be served upon the defendant in order to satisfy the requirementsof due process. For this purpose, service may be made by publication as suchmode of service is allowed in actions in rem and quasi in rem.
In this connection, Section 8, Title II of the Rule of Procedure in Cases of Civil
Forfeiture provides:
Sec. 8. Notice and manner of service. — (a) The respondent shallbe given notice of the petition in the same manner as service ofsummons under Rule 14 of the Rules of Court and the following
rules:
1.
The notice shall be served on respondent personally, or by
any other means prescribed in Rule 14 of the Rules of Court;
2.
The notice shall contain: (i) the title of the case; (ii) the
docket number; (iii) the cause of action; and (iv) the relief prayed
for; and3.
The notice shall likewise contain a proviso that, if nocomment or opposition is filed within the regulatory period, thecourt shall hear the case ex parte and render such judgment as may
be warranted by the facts alleged in the petition and its supporting
evidence.
(b) Where the respondent is designated as an unknown owner orwhenever his whereabouts are unknown and cannot be ascertainedby diligent inquiry, service may, by leave of court, be effected upon
him by publication of the notice of the petition in a newspaper ofgeneral circulation in such places and for such time as the court
may order. In the event that the cost of publication exceeds the value
or amount of the property to be forfeited by ten percent, publication
shall not be required. (emphasis supplied)2.

Republic v. Eugenio, et al., (G.R. No. 174629, February 14, 2008)
Bank inquiry proceedings not ex-parte:That the AMLA does not contemplate ex parte proceedings in applications− 68 −

for bank inquiry orders is confirmed by the present implementing rules andregulations of the AMLA, promulgated upon the passage of R.A. No. 9194. With
respect to freeze orders under Section 10, the implementing rules do expressly
provide that the applications for freeze orders be filed ex parte, but no similar
clearance is granted in the case of inquiry orders under Section 11. These
implementing rules were promulgated by the Bangko Sentral ng Pilipinas, theInsurance Commission and the Securities and Exchange Commission, and if it
was the true belief of these institutions that inquiry orders could be issued ex partesimilar to freeze orders, language to that effect would have been incorporated in
the said Rules. This is stressed not because the implementing rules could
authorize ex parte applications for inquiry orders despite the absence ofstatutory basis, but rather because the framers of the law had no intention
to allow such ex parte applications.
xxx
Without doubt, a requirement that the application for a bank inquiry order
be done with notice to the account holder will alert the latter that there is a plan
to inspect his bank account on the belief that the funds therein are involvedin an unlawful activity or money laundering offense. Still, the account holder
so alerted will in fact be unable to do anything to conceal or cleanse his bankaccount records of suspicious or anomalous transactions, at least not without thewhole-hearted cooperation of the bank, which inherently has no vested interest
to aid the account holder in such manner.
Accounts prior to AMLA, Open for Inquiry:
Prior to the enactment of the AMLA, the fact that bank accounts or deposits
were involved in activities later on enumerated in Section 3 of the law did not, byitself, remove such accounts from the shelter of absolute confidentiality. Prior to theAMLA, in order that bank accounts could be examined, there was need to secure
either the written permission of the depositor or a court order authorizing suchexamination, assuming that they were involved in cases of bribery or derelictionof duty of public officials, or in a case where the money deposited or invested
was itself the subject matter of the litigation. The passage of the AMLA stripped
another layer off the rule on absolute confidentiality that provided a measureof lawful protection to the account holder. For that reason, the application of
the bank inquiry order as a means of inquiring into records of transactions
entered into prior to the passage of the AMLA would be constitutionallyinfirm, offensive as it is to the ex post facto clause.
Still, we must note that the position submitted by Lilia Cheng is muchbroader than what we are willing to affirm. She argues that the proscription
against ex post facto laws goes as far as to prohibit any inquiry into deposits
or investments included in bank accounts opened prior to the effectivity of the
AMLA even if the suspect transactions were entered into when the law had alreadytaken effect. The Court recognizes that if this argument were to be affirmed, itwould create a horrible loophole in the AMLA that would in turn supply themeans to fearlessly engage in money laundering in the Philippines; all that thecriminal has to do is to make sure that the money laundering activity is facilitated− 69 −

through a bank account opened prior to 2001. Lilia Cheng admits that "actual
money launderers could utilize the ex post facto provision of the Constitution asa shield" but that the remedy lay with Congress to amend the law. We can hardly
presume that Congress intended to enact a self-defeating law in the first place,and the courts are inhibited from such a construction by the cardinal rule that "alaw should be interpreted with a view to upholding rather than destroying it.
H. Case Studies
Several cases have been filed against erring public officials and employees seeking to forfeit theirbank deposits and other real and personal properties which are believed to be materially linked to thepredicate offenses of violation of RA 3019, RA 7080 and RA 1379.
1.

The Airport Controversy
Respondents are government officials and other individuals who facilitated the awarding of a
US$350M government contract involving the construction of an international airport. The contract
was eventually nullified by the Supreme Court for being anomalous.
Finding probable cause that there was a violation of R.A. 3019, the AMLC filed an application
to inquire into or examine the bank deposits of the respondents.
The RTC initially granted the application for inquiry, but later ordered its suspension when oneof the respondents appeared and questioned the inquiry on several constitutional grounds. Hearings
were thereafter conducted.
In particular, said respondent averred that before an inquiry may be allowed, the person/s
subject of the inquiry must be convicted of the predicate crime alleged. Also, respondent invoked
the right to privacy and due process.
The Supreme Court ruled that Notice and Hearing are pre-requisites in a Petition for Bank
Inquiry.

2.

The Stealing Soldiers
Respondents are military officials charged under R.A. 3019 and R.A. 1379.
The assets of respondents were garnished pursuant to R.A. 1379. The AMLC proceeded with
its own investigation and acquired a Bank Inquiry Order. Thereafter, the AMLC proceeded with thefiling of a Petition for Freeze Order which was subsequently granted by the Court of Appeals.
The respondents questioned before the Supreme Court the Republic’s motion for an extensionof the freeze order, arguing, among others, that there is no necessity for a freeze order consideringthat an Order of garnishment was already issued by the Sandiganbayan.
The Supreme Court denied the petition.
The AMLC, through the OSG, proceeded with the filing of a civil forfeiture case before theappropriate regional trial court which eventually issued a PAPO and APO.
The bottom line is that remedies under RA 1379 are mutually exclusive to the remedies
provided under the AMLA.

3.

The Embattled Prosecutor
Respondent is a State Prosecutor charged with violation of Section 5, in relation to Sections
3(ee) and 92 of R.A. 9165,215 as well as, Section 3(b) and (e) of R.A. 3019.
Finding probable cause that violations under R.A. 9165 and R.A. 9160, as amended, werecommitted, the AMLC filed a petition for the issuance of a freeze order which was granted by the
Court of Appeals.
On the basis of Section 11 of R.A. 9160, as amended, the AMLC conducted a bank inquiry

215. Comprehensive Drugs Act of 2002.

− 70 −

sans a court authority.
Accordingly, a petition for civil forfeiture was filed with R.A. 3019 as the predicate offense.
The same is pending before the regional trial court. A PAPO and APO were eventually issued.
The bottom line is that no court order for bank inquiry is required in cases involving theunlawful activities of Violations under Republic Act 9165 or the Comprehensive Drugs Act of
2002.
4.

The Syndicated Schemes
During the last quarter of 2008, a group of companies composed of, among others, ruralbanks, pre-need companies and real estate companies abruptly closed down and ceased operations.
In the aftermath, allegations abounded that illicit activities and fraudulent transactions -- ranging
from misappropriation of funds, misrepresentation, and falsification of documents -- amounting to
syndicated estafa and violations of the Securities Regulation Code (“SRC”), had been egregiously
carried out by respondents (the aforesaid group of companies and their officers and directors) against
unsuspecting depositors, investors, policy holders and other credulous individuals.
The AMLC conducted an independent investigation and discovered that respondents
committed: (i) the crime of syndicated estafa by employing various fraudulent and devious schemes(Double-Your-Money Scheme, Motor Cycle Loan and Investment Loan Program); (ii) violations ofSections 8 and 26 of the SRC; and (iii) violation of Section 16 of the SRC in relation to Pre-Need
Rules 34.1 and 35.5 of the New Rules on the Registration and Sale of Pre-Need Plans.
Four (4) Ex-Parte Petitions for the Issuance of a Freeze Order covering numerous bankaccounts, insurance policies and vehicles were filed before the Court of Appeals. Accordingly, theCourt of Appeals issued several freeze orders over the aforementioned bank accounts, assets andproperties, which all expired on 13 October 2009.
Before the expiration of the freeze orders or on 20 April 2009, an Application for Bank Inquiry
and/or Examination was filed before the appropriate regional trial court. It was only on 10 November
2009 that the RTC released an Order allowing the inquiry and/or examination of the bank accounts.
Meanwhile, on 26 October 2009, a petition for civil forfeiture was filed before the appropriate
regional trial court and a Provisional Asset Preservation Order was subsequently issued. No Asset
Preservation Order has yet been issued.
Notably, the application for bank inquiry was granted and issued after the expiration of thefreeze orders. Hence, the petitioner was constrained to file a petition for civil forfeiture based on
available evidence and before the bank inquiry could be completed.

I. Conclusion
The Philippines has put forward anti-money laundering provisions which, though still imperfect, show
great potential for success. The law may have been enacted with idealism as stimulant, the implementation
thereof puts into proper perspective the positive direction being taken by the Philippines in the global fightagainst money laundering. Indeed, the challenges are enormous yet the hurdles are met with enthusiasm
and ingenuity. The subsequent issuance of the Rules on Civil Forfeiture, etc., while demanding, is likewise
motivating. The bottom line therefore is that the issues are diverse as they are sometimes complicated.
The cases pending before the trial courts will be the source of emerging jurisprudence on thePhilippine anti-money laundering regime and non-conviction based civil forfeiture. Although developing
jurisprudence may take time, the Philippines can learn from the experiences of other non-conviction based
civil forfeiture regimes.

− 71 −