14 JUL 2014

Ath Po.
SIXTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
‘Second Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

House Bill No, 4735

EXPLANATORY NOTE

One of the less visible yet very significant aspects of the justice system is the forfeiture of ill-
gotten wealth and the seizure ‘of proceeds and instruments of crime. In many cases, despite
securing the conviction of an accused, the State could not claim a complete and meaningful
Vietory because the oriminal had already spirited away or consumed the fruits of his/her
wrongdoing. Indeed, the interest ‘of the State lies not only in ensuring that those who
perpetrate unlawful activities will be punished accordingly. The State has an equally
Compelling interest in preventing criminals from profiting from the objects of their crime, and
recovering the said objects for the benefit of the offended parties and the public in general.

Currently, there exists a regime of asset forfeiture and seizure embedded in the justice
system. When violations of law and rules are committed, proceeds and instruments of
crimes can be seized and eventually forfeited in favor of the State in the course of criminal
and/or administrative proceedings. On the other hand, properties acquired by public officials
above and beyond their legitimate income can be recovered by way of a civil action for
forfeiture under Republic Act No. 1379.

This is, however, only the front end of the system. Even if there are sufficient legal provisions
{or forfeiting assets, if the State is ill-equipped to manage, preserve and administer them, it
cannot fully maximize the benefits of the laws. It is therefore imperative that the State devise
a mechanism to efficiently and economically manage or dispose of seized or forfeited assets
0 that their values can be optimized for the good of the public.

Under the present set-up, the management of assets under the custody of the government is
neither systematic nor rational. Asset management is considered a mere auxiliary function of
various government agencies; it is deemed merely incidental to said agencies’ primary legal
mandates, Being a highly technical and highly specialized independent field, asset
management should be handled by qualified professionals, not by law enforcers, lawyers,
prosecutors or judges,

This Bill seeks to fill this gap in the justice system by strengthening the back end of the
criminal prosecution process ~ the management, preservation, liquidation and disposition of
ill-gotten wealth and of instruments and proceeds of crimes. This Bill establishes the Public
‘Assets Management Corporation of the Philippines — a centralized and specialized state
corporation that will serve as custodian and administrator of seized or forfeited assets that
are the subject of criminal, administrative or civil actions. To preserve the value of seized
assets, the Corporation will also be given powers to sell or dispose of them with the authority
of the court, even prior to a final order of forfeiture, when it is in the best interests of justice to
do so. Agencies currently exercising administrative forfeiture powers may likewise choose to
turn over forfeited properties to the Corporation to produce better yields or returns.

The benefits of delegating the management of seized and forfeited assets to a state
corporation are four-fold: (1) it creates an independent revenue stream for the government


and facilitates the efficient, economical, transparent, centralized and optimal liquidation or
disposition of assets; (2) it eases the burdens of law enforcement agencies and the courts
regarding the preservation and management of seized or forfeited assets, thereby allowing
them to focus on their primary legal mandates and competencies; (3) it avoids conflicts of
interests by taking the asset management function out of the formal justice process being
handled by law enforcers, prosecutors and judges; and (4) it professionalizes the
management of seized or forfeited assets by letting independent and highly-qualified
industry practitioners handle the technical aspects of asset preservation, valuation,
liquidation and disposition, on behalf of the public.

The pursuit of justice against criminals and corrupt public officials must be done within a tight
and closed loop. The State should ensure the vigor not only of the law enforcement,
prosecution and judicial pillars, but also of the asset forfeiture and asset management
regimes so that ail crimes can truly be high-risk and low-reward activities.

Considering all the foregoing, approval of this bill is earnestly sought.

Vif fy =r
RUFUS 8. RODRIGUEZ
}

MAXIMO B, RODRIGUEZ, JR.



SIXTEENTH CONGRESS
REPUBLIC OF THE PHILIPPINES )
Second Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

House Bill No, _ 4735.

AN ACT
ESTABLISHING THE PUBLIC ASSETS MANAGEMENT CORPORATION OF THE
PHILIPPINES, PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Short Title, — This Act shall be known as the Charter of the Public Assets
Management Corporation of the Philippines.

SECTION 2. Declaration of Policy. - \t is hereby declared the policy of the State to ensure
the efficient, economical, systematic, transparent and optimal preservation, administration,
management, liquidation and disposition of all assets seized or forfeited in favor of the
government in the course or as a consequence of criminal, administrative and civil actions.

SECTION 3. Creation of the Public Assets Management Corporation of the Philippines. ~
There is hereby created an independent central public assets management authority, which
shall be a government-owned body corporate attached to the Department of Finance (DOF)
to be known as the Public Assets Management Corporation of the Philippines (the
Corporation). It shall have the primary responsibility and objective of administering the
country's asset management regime, ensuring the proper and prudent disposition of all
assets seized or forfeited in favor of the State.

SECTION 4. Corporate Governance. - The Corporation shall be governed by a Board of
Directors composed of the following:

(a) The Secretary of Finance, as ex officio Chair;

(b) The Secretary of Budget and Management as ex officio Vice Chair;

(c) Three (3) members with backgrounds in banking and financial services,
insurance, real estate, property appraisal, engineering and other technical fields,
to be appointed by the President of the Philippines and to serve for a term of five
(6) years; and

(d) Two (2) members with backgrounds in general business or other similar areas, to
be appointed by the President of the Philippines and to serve for a term of five (5)
years.

The operations and management of the Corporation shall be conducted by an
Executive Committee composed of the following:

(a) A President;

(b) An Executive Vice President;

(c) A Senior Vice President for Operations;

(d) A Senior Vice President for Finance;

(e) A General Counsel and Corporate Secretary; and


(f) Three (3) Vice Presidents in charge of Asset Management, Asset Valuation and
Asset Liquidation/Disposition; all of whom shall be appointed by the Chair upon
endorsement by the Board of Directors.

SECTION 5. Corporate Powers. - The Corporation shall have the following corporate

powers:

(a) Accept and take title to, custody over and possession of such assets and other
properties seized and/or forfeited by law enforcement, judicial and other
governmental entities in favor of the State in the course of criminal, civil,

administrative, ant

orruption, anti-money laundering or similar proceedings,

subject to the following rules:

1

Assets seized by administrative agencies. In cases of administrative
forfeiture, the forfeiting agency has the option of either:

4.1. disposing of forfeited assets in accordance with the authority
inherent in their law enforcement mandates and pursuant to their
established systems and procedures, or

4.2, tuning over the same to the Corporation, especially in cases where
the optimal management or disposition of assets require technical
expertise and competence;

Assets forfeited in favor of the State. In cases where assets have been
forfeited in favor of the State by virtue of a final and executory order of a
court, the Corporation shall automatically take custody over the same for
proper administration and/or disposition; and

Assets seized and subject of ongoing litigation. In cases where assets are
seized in connection with an ongoing criminal or forfeiture litigation, said
assets shall be considered in custodia legis and may be placed under the
physical custody of the Corporation, the agency which seized the same, or
such other person or office as the court may designate, in which case, the
designated custodian is deemed constituted as an agent of the court.

3.1. Prior to an official designation of a custodian by the court, seized
assets are deemed ipso jure under the accountability and fiduciary
responsibility of the agency which seized the same, or the agency with
the duty to take possession thereof in accordance with existing laws and
rules.

3.2. Upon motion by any interested party, including the Corporation, the
court shall conduct a summary hearing, to be concluded within twenty
(20) days from the filing of such motion, to determine whether seized
assets should be sold or disposed of, if doing so would best serve the
interests of justice. The court must render a ruling on the motion no later
than ten (10) days from the conclusion of the summary hearing.

3.3. In the event that the seized assets are liable to progressive wasting,
dissipation, devaluation, depreciation or deterioration, or cannot
reasonably be conserved in a cost-efficient manner, the court shall order
a disposition pendente lite unless it is established by competent
evidence during the summary hearing that such disposition will cause
undue injury or will adversely affect the substantive rights of the parties


or any third party, Provided, that an order of the court to sell or dispose
of seized assets pendente lite shall not affect the trial of the case or be
construed as an adjudication of the merits of the parties’ claims and
defenses.

3.4. The proceeds of the sale of seized assets disposed of
pendente lite shall be kept in a separate account and turned over to the
custody of the court, for eventual release to the prevailing party or to
whoever may be adjudged as lawfully entitled thereto,

(b) Enter into contracts and/or execute any deed or act in furtherance of its mandate
to efficiently, economically and prudently manage, administer, preserve,
appraise, liquidate and/or dispose of assets under its custody;

(c) Execute and deliver, on behalf of the Government, the deeds of sale, contracts
and other instruments as may be necessary or appropriate to convey title to such
assets;

(d) Sell or dispose of seized or forfeited assets, subject to the rules provided in
paragraph (a) of this Section, without need of securing prior clearances from
other governmental entities, provided, that all such transactions shall be subject
to subsequent review under existing audit rules and regulations, and shall be
guided by principles of fairness, prudence, accountability and transparency;

(e) Construct, own, lease, operate and maintain various forms of properties as well
as infrastructure facilities;

(f) Receive donations, grants, bequests and assistance of all kinds from local and
foreign governments and private sectors and utilize the same;

(g) Hire and retain such personnel complement as may be necessary for the
‘execution of its mandate; engage external services as the exigencies of particular
cases may require, including, but not limited to, technical consultants,
accountants, auditors, counsels, appraisers, risk managers, curators,
conservationists and others;

(h) Adopt, amend, or change its by-laws; to adopt, alter and use a seal; to sue; and
to exercise the general powers of a corporation mentioned in the Corporation
Code of the Philippines, insofar as such powers are not inconsistent or
incompatible with the provisions of this Charter; and

(i) Conduct any such act, consistent with law, for the preservation of any seized or
forfeited asset, consistent with the professional and economic management of
the same.

SECTION 6. Personnel. - The Board of Directors shall provide for an organization and staff
of officers and employees of the Corporation and, upon recommendation of the President,
fix their remunerations and other emoluments. All positions in the Corporation, including
consultancies, shall be governed by the compensation, position classification system and
qualification standards approved by the Board of Directors based on a comprehensive job
analysis of actual duties and responsibilities. The compensation plan shall be comparable to
the prevailing compensation plans in the private sector and shall be subject to periodic
review by the Board of Directors once every two (2) years, without prejudice to yearly merit
reviews or increases based on the Corporation's productivity and_ profitability.


The Corporation shall, therefore, be exempt from existing laws, rules, and regulations on
compensation, position classification and qualification standards. The Corporation shall,
however, endeavor to make its system conform as possible to the principles under the
Compensation and Position Classification Act of 1989.

No officer or employee of the Corporation subject to Civil Service Law shall be dismissed
except for cause as provided by law.

SECTION 7. Proceeds of Operations. - Proceeds derived from the management or
disposition of seized or forfeited assets shall be remitted by the Corporation to the National
Treasury or to the proper governmental office or agency as may be required by law,
provided, the Corporation shall be entitled to deduct therefrom the following: (1) actual
expenses incurred in the conservation, administration and disposition of said assets, and (2)
an amount equivalent to ten per cent (10%) of the net proceeds as management fees.

Management fees may be adjusted based on relevant industry and market standards and
considerations, provided, that any adjustment must be subject to a detailed study and
approved by the Board of Directors. All earings retained by the Corporation shall be
properly and prudently administered with a view to preserving its viability

SECTION 8. Reimbursements for Expenses. - The Corporation shall be entitled to
reimbursement of actual and necessary costs for the maintenance, preservation and
conservation of seized assets in the event that a court of law adjudicates the same against
the State, provided, such costs shall be reimbursed by the prevailing party in an amount to
be equitably fixed by the court, provided further, the Corporation shall render periodic reports
to the proper courts regarding the status of assets under its custody and the costs incurred
for their maintenance, preservation and conservation, the same to be considered by the said
courts for purposes of fixing the amount of reimbursements due the Corporation at the
conclusion of trial

SECTION 9. Relations with Forfeiting Agencies. - The Corporation may enter into
Memoranda of Agreement with relevant forfeiting agencies to define their respective roles,
functions and financial responsibilities relative to the management, administration, liquidation
and disposition of seized or forfeited assets, and the transfer and payment of the proceeds
of disposition.

SECTION 10. Immunity from Suit, - The Corporation shall not be subject to criminal, civil or
administrative suits in connection with any act done or omitted by it in the regular exercise of
its functions and powers, Provided, it acts in good faith and in consonance with the State
policy herein set forth.

SECTION 114. Third Party Claims. Any and all third party claims arising from any seized or
forfeited asset under the Corporation's custody shall be directed to, and resolved by, such
agency, tribunal or court hearing the case.

SECTION 42. Capitalization and Initial Funding. ~ The capital of the Corporation shall be
Five Hundred Million Pesos (PhP 500,000,000.00), to be fully subscribed by the
Government of the Republic of the Philippines, One Hundred Million Pesos (PhP
100,000,000.00) of which shall be fully paid for by the Government within three (3) years
upon the effectivity of this Charter and the balance to be paid for within a period of three (3)
years thereafter, in such manner and form as the Government, through the Secretary of
Finance and Secretary of Budget and Management, may thereafter determine. The initial
funding for the operations of the Corporation for the first year following the effectivity of this
Charter shall be advanced by the DOF. Thereafter, the capitalization of the Corporation
shall be paid for by the Government by way of appropriations from Congress.


SECTION 13. By-Laws and Rules. — The Corporation shall adopt its by-Laws, rules of
procedure and other regulatory issuances within ninety (90) days from the effectivity of this
Charter, and as often thereafter as exigencies may require.

SECTION 14. Transitory Provision. — Upon the enactment of this Charter, the Privatization
and Management Office (PMO) shall wind up its affairs and be dissolved pursuant to
applicable laws and rules, The existing staff of the PMO, however, shall be absorbed by the
Corporation and converted ipso jure as its core unit, provided, all PMO officers and
employees who transition into the Corporation's staff shall not suffer any diminution of
benefits or disturbance of tenure, provided further, all PMO officers and employees who
choose not to be part of the Corporation shall be entitled to separation benefits as provided
by law. For the purpose of this Section, the Corporation shall not be regarded as a
continuation of the corporate personality of the PMO.

SECTION 15. Separability Clause, — If any provision of this Charter shall be declared
unconstitutional, any other provision not affected thereby shall remain in full force and effect.

SECTION 16, Repealing Clause. -All laws, decrees, orders, rules and regulations or parts
thereof inconsistent with this Charter are hereby repealed or modified accordingly,

SECTION 17, Effectivity. ~ This Charter shall take effect within fifteen (15) days after its
publication in at least two (2) newspapers of general circulation.

Approved,