House~Bi||~No.  53 5 3
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.
Vvith  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  lords  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,   I   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  I  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 I submitted jn
fulfillment of the seminar-The  Black Letter Law of Vvhite Collar Crime - which  I 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 I studied the U.S.  RICO law, the more I 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  mechanjsms  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  infiltration  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." ln 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 Salemo, Genovese Family Boss
Carmine Persico, Jr., Colombo Family Boss
Philip Rastelli,  Bonanno Familly Boss
Anthony Corallo, Lucchese Family Boss
Paul Castellano, Gambino Family Boss
(indicted; murdered before trial)
Philadelphia/AIlantic City
Nicodemo Scarfo
cleveland
James Licavoli
Los Angeles
Peter Milano
Dominic Brooklier
New Orieans
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  jn  the  indictment  show  that  the  cases  break  down  as  follows:   political
corruption  (28%);  narcotics  (27%);  fraud  in  the  private  sector  (13%)  labor  racketeering  (7°/o);
government  procurement  fraud  (6°/o);  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.
Turning 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.


NINETEENTH CONGRESS                 )
REPUBLIC OF THE PHILIPPINES    )
First Regular session                          )
HOUSE OF REPRESENTATIVES
!n_troduced by Representative Rufus a. Rodrigpe¥
House EiTl _No.   5353
AN ACT
TO ERADICATE RACKETEERS AND POWERFUL SYNDICATES IN THE PHILIPPINES
B_e__PP_aL4_e.P  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  involvement  of law 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 declared  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.
See.  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,
See. 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-graf(
and corrupt practices; gambling; carnapping; fencing; gun running;  illegal [ogging; 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,  "Pattern"  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.
See. 5. Prohibited Activities.
1.  It shall be unlawiul for any person to knowingly participate, either directly 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 unlawful for any person to propose or conspire to violate any of the unlawful
acts provides herein.
See. 6. Criminal Penalties.
a.  Imprisonment  or fine  or  both.  Vvhoever 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 Phpl00,000.00 to Phpl ,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;
c.   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: 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.
e. Jurisdiction. Any of the Regional Trial Courts of the place where any element of any of
the  racketeering  activity   constituting  the  pattern  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
regard 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   government
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.  Vvithin  twenty  days  after the  issuance  of a temporary
restraining order, the court shall conduct a hearing with notice to all parties concerned. 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 result in the
property being destroyed,  removed, disposed or otheiwise 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. -ln 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;   Provt.ded,  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; Provr'ded, further, That the evidence was taken without violating the constitutional rights of
the accused.
9.   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 -
a)   intervene jn 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 value of the right,
title 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).
See. 7. Civil Remedies.
A. \/\/ho can bring civil suit -
1. The Philippine government.
a)  Any  of  the  Regional  Trial  Courts  of the  place  where  any  element  of  any
racketeering  activity constituting  a  pattern  of racketeering  activity  has been  committed
shall have jurisdiction to prevent or restrain violations of Section 4 irrespective 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:
(1)                 ordering any person to divest himself of any interest, direct or
indirect in any enterprise.
(2)
(3)
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
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.
a.  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.
C. 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 to 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.
(c)  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   certify   under  oath  that  the  copies  are  true
reproduction  of  the  original,  which  certified  copies  shall   be  admissible  in  court  as
Originals.
(d)  \/\/hile  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.
See.  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 shall
remain in full force and effect.
See.10. Repealing clause. All laws, presidential decrees, rules and regulations or parts thereof
inconsistent with this act are deemed amended, repealed, 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,