EIGHTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES.

_ Introduced by Representative Rufus B. Rodriguez

House Bill No. 2730
EXPLANATORY NOTE

Organized crime has become so pervasive in the country that law enforcement agencies
and the judiciary have been crippled by the degree of organization and diversification of these
syndicates.

Money obtained by these criminal organizations through murder, mayhem, kidnapping,
illegal drug, illegal gambling and other racketeering activities have been used to infiltrate
legitimate business ventures, labor unions and other democratic institutions and which as a
result, have fallen prey to the influence of organized crime. The economic stability of the country
is further weakened by reason of organized crime’s increasing influence in the nation’s trade
and commerce.

The purpose of this bill is to eliminate racketeering and criminal syndicates by imposing
stiffer penalties. It also includes provisions for the forfeiture of illegally acquired assets of
persons and entities engaged in illegal activities including money laundering.

With some modifications, this bill is similar to the Racketeer-influenced and Corrupt
Organizations (RICO) Statute of the United States which helped law enforces and prosecutors
in obtaining convictions and forfeiture of properties of crime jords in the country. Similar bills
have also been filed during the previous Congresses, which, unfortunately, failed to be enacted
into law due to lack of time.

As a consultant to the Presidential Anti-Crime Commission (PACC) headed by Vice
President Joseph “Erap” Estrada, | conducted a six-month research on the Racketeer
Influenced and Corrupt Organizations (RICO) law of the United States which was very
successful in breaking up organized crime syndicates in the US, such as the Mafia, and putting
these criminals behind bars.

This in-depth study, which brought me to Washington D.C. where | researched at the
US Department of Justice specifically its Organized Crime and Racketeering Section under
Paul E. Coffey, and The Library of Congress, expanded my paper on RICO which | submitted in
fuifiliment of the seminar-The Black Letter Law of White Collar Crime — which | took during my
Master of Laws studies at Columbia Law School in New York City under Professors John C.
Coffee, Jr and Jed S. Rakoff

The more | studied the U.S. RICO law, the more | am convinced that this is the law that
we need to be able to stop the rise of kidnapping for ransom and armed robberies of banks
committed by crime syndicates in our country.


A similar law which should be enacted in the Philippines will give our law enforcement
officers and prosecutors the much needed legal mechanisms to counter these crimes and
enable them to secure convictions against these syndicates.

The enactment of RICO Law in 1970 in the United States culminated four decades of
congressional efforts to combat organized crime. RICO was the end product of a long process
of legislative effort to develop new legal remedies to deal with an old problem: “organized
crime.”

In 1951, the Kefauver Committee in the U.S. Senate disclosed the problem of organized
crime infitration into legitimate business. By 1960. the criminal infiltration of labor unions had
been documented by the McClellan Committee. The McClellan Committee exposed the
structure of a national syndicate of organized crime known as the Mafia or La Cosa Nostra

Following televised congressional hearings in 1963 at which Mafia member Joseph
Valachi exposed the inner structure, rules, and history of La Cosa Nostra, President Lyndon
Johnson appointed a commission, headed by Attorney-General Nicholas Katzenback, to study
the “cancer of organized crime.” In its 1967 report, the Katzenback Commission proclaimed that
the “core” of organized crime was the Mafia or La Cosa Nostra, which consisted of "24 groups
‘operating as criminal cartels in large cities across the Nation.” To combat this hydra, the
commission recommended important new measures, and after substantial reworking and
broadening, RICO emerged in a new bill in 1969 and was enacted as part of the Organized
Crime Control Act of 1970.

In 1989, Justice Department came up with statistics on the kinds of criminal cases filed
under RICO. it also cited an American Bar Association study classifying the kinds of private civil
RICO cases filed.

RICO had achieved spectacular success in its assaults on organized crime, particularly
during the 1980s.Using RICO as their chief weapon, federal prosecutors have convicted more
than one thousand organized crime members and associates since 1981. it has been estimated
that of the fifty most powerful Mafia figures in the country, about half have been tried under
RICO in recent years. The following list of organized crime “bosses” convicted under RICO may
convey some sense of the law's effectiveness:

New York (Five “Families’)

Anthony Salerno, Genovese Family Boss

Carmine Persico, Jr., Colombo Family Boss

Philip Rastelli, Bonanno Family Boss

Anthony Corallo, Lucchese Family Boss

Paul Castellano, Gambino Family Boss

(indicted; murdered before trial)

Philadeiphia/Atiantic City

Nicodemo Scarfo
Cleveland

James Licavoii
Los Angeles

Peter Milano

Dominic Brooklier
‘New Orleans

Carlos Marcello


Boston
Genarro Anguilo (ranking figure)

Sicily
Gaetano Badalementi (exiled head of Sicilian Mafia Commission)

RICO had also been used effectively against many other vicious criminal gangs,
including drug trafifickers and terrorists. RICO;s use, however, has extended beyond these
gangs. Justice Department statistics classifying RICO cases according to the principal
predicates alleged in the indictment show that the cases break down as follows: political
corruption (28%): narcotics (27%); fraud in the private sector (13%) labor racketeering (7%)
government procurement fraud (6%): gambling (5%); and securities violations (1%). Among
other things, these statistics show that while RICO cases involving securities violations and
‘other types of private sector fraud have attracted much publicity and criticism, such case form a
relatively small percentage of RICO prosecutions

Tuming to civil RICO suits, these suits begun by private parties began even more slowly
than criminal prosecutions, but grew exponentially in the 1980s, according to an American Bar
Association study. This study classified the essential allegations in private civil RICO cases as
follows: securities fraud (4%); bribery or commercial bribery (1%); and offenses associated with
professional criminal activity (8%). These statistics contrast sharply with those for criminal RICO
cases noted earlier

It is hoped that by having a proposed Philippine law on the Eradication of Racketeers
and Powerful Syndicates passed against racketeers and organized crime syndicates during this
Congress, we will contribute immensely to the eradication of syndicated/organized crime groups
in the Philippines not only by the actual busting of these crime groups but by giving the proper
legal infrastructure to put these criminals behind bars and to recover the proceeds of their
crimes in favor of the state and their victims

Due to the importance of this measure, immediate passage at this is earnestly sought

RU B. ROI EZ


EIGHTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez

House Bill No. 2730

AN ACT
TO ERADICATE RACKETEERS AND POWERFUL SYNDICATES IN THE PHILIPPINES

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

Section 1. Title of the Act. — This Act shall be known as the “Eradication of Racketeers and
Powerful Syndicates Law”

Section 2. Declaration of Policy. — The unabated rise in organized and syndicated crimes, and
the increasing invoivement of jaw enforcement officers and government officials in organized
crimes have seriously undermined the pursuit of the State to achieve the economic, social and
Political goals of Philippines. it is hereby deciared as the policy of the State to give priority in
enacting and enforcing new and stronger measures against organized criminality in order to
enhance the peace and order condition of the country.

Sec. 3. Liberal Construction. — The provisions of this Act shall be liberally construed to give
effect to the policy declared under Section 2 hereof. However, the constitutional rights of any
person accused under this Act shall not be impaired.

Sec. 4. Definitions. — As used in this Act

1. "Person” means any individual, association, partnership, corporation, entity or any
group of individuals, association, corporations or entities.

2. “Enterprise” includes any individual or association, partnership, corporation or other
legal entity or any union or group of individuals associated in fact whether for legitimate or
illegitimate purposes

3. “Racketeering activity” means any attempt or act involving kidnapping; murder, arson
robbery; illegal possession of firearm, ammunition or explosives: bribery: and other anti-graft
and corrupt practices; gambling; carnapping; fencing: gun running; illegal logging; white slavery,
illegal_recruitment; smuggling; piracy; illegal fishing: importation, manufacture, sale
administration, delivery, distribution and transportation of prohibited drugs and maintenance of a
drug den; squatting: swindling (estafa): film piracy: counterfeiting: violation of intellectual
property rights; monopolies and combinations in restraint of trade; falsification of land titles;
securities fraud, bank frauds, dealing in obscene matters and sexual exploitation of children
economic exploitation of children, the disabled and others (mendicancy), as defined under
existing criminal statutes:


4. “Patten” of racketeering activity requires at least two predicate acts of racketeering
activity, one of which occurred after the effective date of this Act and the other occurring either
within ten years before the one occurring after the affectivity of the act or within ten years after
the one occurring after the effectivity of this Act.

Sec. 5. Prohibited Activities

1, It shail be unlawful for any person to knowingly participate, either directty or indirectly
with or in an enterprise conducting a pattern of racketeering activity.

2. It shall be unlawful for any person through a pattern of racketeering activity to
acquire or maintain directly or indirectly any interest in or control of any business enterprise.
whether legitimate or illegitimate.

3. It shall be uniawful for any person to propose or conspire to violate any of the unlawful
acts provides herein

Sec. 6. Criminal Penalties.
a. Imprisonment or fine or both. Whoever violates any provision of Section 4 shall be
imprisoned for a period from ten years to twenty years and if the violation is based on a
racketeering activity for which the maximum penalty includes life imprisonment, the penalty
shall be life imprisonment and a fine from Php 100,000.00 to Php1,000,000.00;
b. Consolidation of cases. The trial for criminal liability for each predicate act of
racketeering activity shall be consolidated with the court hearing the RICO case:
. Forfeiture. In addition to imprisonment and fine, the violator shall forfeit to the
Philippine government
1. any interest the person has acquired or maintained in violation of Section 4;
2. any
interest in:
security of,
claim against: or
property or contractual right of any kind affording a source of influence
over

aoge

any enterprise which the person has established, operated, controlled,
conducted, or participated in, in violation of Section 4; and
3. any property constituting or derived from any proceeds which the person
obtained directly or indirectly, from racketeering activities in violation of Section 4

d. Vesting of right in property. All rights, titles and interests in property described in
preceding paragraph vests in the Philippine government upon the commission of the act giving
rise to forfeiture under this section.

€. Jurisdiction. Any of the Regional Trial Courts of the place where any element of any of
the racketeering activity constituting the pattem of racketeering activity has been committed
shall have jurisdiction over prosecutions under this act and applications for forfeiture including
petitions for temporary restraining order or injunction under the next succeeding section without
Tegard to the location of any property subject to forfeiture or where the person resides or where
the enterprise is located.

1. Temporary Restraining Order. A temporary restraining order effective for
twenty days may be issued upon application by the Philippine Government without
notice or opportunity for a hearing before, during or after the filing of the information
directing the defendant or any person acting on his behalf to desist from disposing and
to preserve the availability of property for forfeiture, if the Philippine govemment
demonstrates that there is probable cause to believe that the property would be subject


to forfeiture and that the provision of notice will jeopardize the availability of the property
for forfeiture.

2, Preliminary injunction. Within twenty days after the issuance of a temporary
restraining order, the court shail conduct a hearing with notice to all parties concemed. A
writ of injunction shall be issued if the court determines that

a) There is substantial probability that the Philippine government will
prevail on the issue of forfeiture and that failure to issue the writ will resuit in the
property being destroyed, removed, disposed or otherwise made unavailable for
forfeiture; and

b) The need to preserve the availability of the property
through the writ outweighs the hardship on any party against whom it is directed,

f Evidence Required. — In the hearing for the prosecution of cases filed under this Act,
the sole testimony of a participant or conspirator, if credible, can be the basis for conviction of
the other accused; Provided, That, for purpose of the hearing for the writ of preliminary
injunction, the court shall not be bound by the technical rules on evidence under the rules of
court; Provided, further, That the evidence was taken without violating the constitutional rights of
the accused.

g. Judgment for forfeiture. Upon conviction of person under this section, the court shall
enter a judgment of forfeiture of the property to the Philippine government and shall authorize
the Secretary of Justice to seize all property ordered forfeiture

h. Disposition of forfeited property. (a) Following the seizure of the property, the
Secretary of Justice shall direct the disposition of the property by sale or any other commercially
feasible means. Any property right or interest not exercisable by or transferable for value to the
Philippine government shall expire and shall not revert to the defendant, nor shall the defendant
or any person acting on his behalf be eligible to purchase forfeited property at any sale held by
the Philippine government. (b) The proceeds of any sale or other disposition of property shall be
deposited in the National Treasury under a special account and shall not be used until the
defendant's appeal, if any. has finally been decided. If the defendant's conviction is reversed,
the amount shall be returned to the defendant.

i. Restitution of property to victims. The court entering the judgment of correction and
forfeiture, upon finality of the decision, shall hear petitions by victims of racketeering activity for
restitution of property or compensation. The court may order portions of the proceeds of the sale
of forfeited property deposited with the National Treasury to be paid to the victims.

j. Rights of Third parties. 1) No party claiming an interest in property subject to forfeiture
may -

) intervene in a trial or appeal of a criminal case involving the forfeiture of such
property; or

b) commence an action at law or equity nor may any court lower than the
Supreme Court issue a restraining order or injunction against the Philippine
Government concerning the validity of his alleged interest in the property
subject to forfeiture,

2) However, any person, other than the defendant asserting a legal interest in
property ordered forfeited may, within thirty days from publication by the Secretary of
Justice, of the judgment forfeiture in two national papers of general circulation in the
Philippines, petition the court for a hearing to adjudicate the validity of his alleged
interest in the property. If, after the hearing, the court determines that the petitioner has
established by preponderance of evidence that — a) the petitioner has legal right, or
interest in the property: or b) the petitioner is a bonafide purchaser for vaiue of the right,


{itle or interest in the property and was at the time of purchase reasonably without cause
to believe that the property was acquired through a racketeering act or otherwise subject
to forfeiture the court shall amend the order of forfeiture in accordance with its
determination.

k. Substitution of other properties. If any of the properties described in Section 5(c) as a
result of any act or omission of the defendant -

(1) cannot be located upon the exercise of due diligence

(2) has been transferred or sold to, or deposited with, a third party.

(3) has been placed beyond the jurisdiction of the courts;

(4) has been substantially diminished in value; or

(5) has been commingled with or other property which cannot be divided without
difficulty.

The court shall order the forfeiture of any other property of the defendant up to the value
of any property described in Section 5(c)

Remedies
a. Who can bring civil suit —

Sec. 7.

1. The Philippine government.

a) Any of the Regional Trial Courts of the place where any element of any
racketeering activity constituting a pattem of racketeering activity has been committed
shall have jurisdiction to prevent or restrain violations of Section 4 irespective of where
the person resides or is found or where the enterprise or property is located by issuing
appropriate orders, including but not limited to:

() ‘ordering any person to divest himself of any interest, direct or
indirect in any enterprise

(2) imposing reasonable restriction on the future activities or
investments of any person including but not limited to,
prohibiting any person from engaging in the same type of
endeavor as the enterprise engaged in; or

(3) ordering dissolution or reorganization of any enterprise,
making due provision for the rights of innocent persons

b) The Secretary of Justice may institute proceedings under this section.

c) A Final judgment rendered in favor of the Philippine government in any
criminal proceeding shall estop the defendant from denying the essential allegations of
the criminal offense in any subsequent civil proceedings brought by the Philippine
government

2. By private plaintiffs. Any person injured in his person, business or property by
reason on violation of Section 4 or his heirs, may sue therefor in the appropriate
Regional Trial Court mentioned in the preceding paragraph and shall recover threefold
the damages he sustains and the cost of the suit, including reasonable attorney's fees


b. Expedited Action. in any civil action instituted under this section, the Regional Trial
Court shall expeditiously hear the case by giving it preference over all other civil cases

¢. Civil Investigative Demand. A) Whenever the Secretary of Justice has reason to
believe that any person or enterprise may be in possession or control of any documentary
materials relevant fo a racketeering investigation, he may, prior to the institution of a criminal or
civil proceeding, thereon, issue in writing and caused to be served upon such person. a civil
investigative demand requiring such person to produce such material for examination

b) The Secretary of Justice shall designate a racketeering investigator to serve
as racketeer document custodian.

) Any person who has duly been served by the civil investigative demand shall
make available for inspection and copying or reproduction to the custodian
designated therein at any place agreed upon and shall cerfify under oath that
the copies are true reproduction of the original, which certified copies shall be
admissible in court as originals.

d) While in the possession of the custodian, no material so reproduced shall be
available for examination, without the consent of the person who produced
‘such material or by any individual other than the Secretary of Justice.

‘e) Whenever any person fails to comply with any civil investigative demand, the
Secretary of Justice may file in the appropriate Regional Trial Court having
jurisdiction a petition for an order of such court for the enforcement of the civil
investigative demand: if the person disobeys the order of the court, he shall
be liable for contempt of court

Sec, 8. Statute of limitations. One of the predicate acts of racketeering must have been
committed within ten years of the date of the information; otherwise, violations of this act shall
be deemed to have prescribed

Sec. 9. Separability clause. If for any reason, any section or provision of this Act is declared
null and void, no other section. provision or part thereof shall be affected and the same shail
remain in full force and effect.

Sec. 10. Repealing clause. All laws, presidential decrees, rules and regulations or parts thereof
inconsistent with this act are deemed amended, repeaied or modified accordingly.

Sec. 11. Effectivity. This act shall take effect fifteen (15) days after its publication in at least
two (2) newspaper of general circulation

Approved