Rule on Civil Forfeiture, Asset Preservation and Freeze

ALLAN JULIUS AZCUETA Legal Officer II Legal Services Group Anti-Money Laundering Council Secretariat

30 August 2012 Specially for: Philippine Drug Enforcement Agency

OBJECTIVES OF FORFEITURE
- To take the facilitating property that makes the crimes possible - To take the criminals profits

- To break the criminal organizations (criminals commit crime to gain profit) - To prevent reinvestment of proceeds of crime in other criminal activities

Forfeiture:
- a form of incapacitation - a form of deterrence - a means of recovering for the victims - a form of punishment

Kinds of Forfeiture
a) Criminal forfeiture
- Dependent on criminal conviction - Jurisdiction over the person of the accused is necessary (in personam) - Defendant typically must be present

b) Civil forfeiture

- Jurisdiction over the person not required (court must exercise some control over the property) - Criminal conviction not necessary, can forfeit property from dead criminals or fugitives

Criminal Forfeiture
Revised Penal Code
- Under Article 25, forfeiture or confiscation of instruments and proceeds of the offense is classified as an accessory penalty which may be imposed after conviction -Article 45 provides that every penalty imposed for the commission of a felony 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 the Government x x x but those articles which are not subject of lawful commerce shall be destroyed.

R.A. 9165 (The Comprehensive Dangerous Drugs Act of 2002)

Repealed R.A. 6425

Section 20 thereof provides for the

confiscation and forfeiture of the proceeds or instruments of the unlawful act, including the properties or proceeds derived from the illegal trafficking of dangerous drugs and/or precursors and essential elements.

R.A. 3019 (AGCPA)

Sec. 9. Penalties for violations. (a) Any public officer or private person committing any of the unlawful acts or omissions enumerated in Sections 3, 4, 5 and 6 of [the] Act shall be punished with imprisonment x x x confiscation or forfeiture in favor of the Government of any prohibited interest and unexplained wealth manifestly out of proportion to his salary and other lawful income.

R.A. 7080 (Plunder)

Sec. 2. Definition of the crime of plunder; penalties. x x x. 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 in favor of the State.

Civil Forfeiture
Republic Act No. 1379 Forfeiture of Unexplained Wealth
Republic Act No. 9160 Anti-Money Laundering Act of 2001, as amended

R.A. 1379
An Act Declaring Forfeiture in Favor of the State of Any Property Found to Have Been Unlawfully Acquired by Any Public Officer or Employee and Providing for the Proceedings Therefor

Enacted on 18 June 1955 Introduced the first civil forfeiture statute Civil forfeiture of unlawfully acquired wealth of a public officer or employee

R.A. 9160, otherwise known as the Anti-Money Laundering Act (AMLA) of 2001

17 October 2001
- effectivity of R.A. 9160

R.A. 9160, as amended

5 March 2003 - R.A. No. 9160 was amended by R.A. 9194 7 September 2003 - Revised Implementing Rules and Regulations (RIRRs) took effect. 6 July 2012 R.A. No. 10167

Salient Features of R.A. 9160, as amended

Criminalized money laundering in the Philippines Created the Philippines FIU (AMLC) Introduced civil forfeiture without the necessity of conviction or prosecution in a criminal case

Relevant Terms

Money Laundering
is a crime whereby the proceeds of an unlawful activity as defined in the AMLA are transacted thereby making them appear to have originated from legitimate sources (Sec. 4, AMLA, as amended)

Unlawful Activity--- is any act or omission or a series or combination thereof involving or having direct relation to any of the following offenses:
1. Kidnapping for ransom

Unlawful Activity-2. Sections 4, 5, 6, 8, 9, 10, 12, 13, 14, 15, and 16 of R.A. No. 9165, otherwise known as the Comprehensive Dangerous Drugs Act of 2002;
Importation of prohibited drugs; Sale of prohibited drugs; Administration of prohibited drugs; Delivery of prohibited drugs; Distribution of prohibited drugs; Transportation of prohibited drugs;

Unlawful Activity-Cont.

Maintenance of a Den, Dive or Resort for prohibited users; Manufacture of prohibited drugs; Possession of prohibited drugs; Use of prohibited drugs; Cultivation of plants which are sources of prohibited drugs; and Culture of plants which are sources of prohibited drugs;

Unlawful activity
3. Graft and Corruption under R.A. No. 3019, as amended 4. Plunder (R.A. 7080, as amended) 5. Robbery and Extortion 6. Jueteng and Masiao (P.D. 1602) 7. Piracy (RPC & PD 532) 8. Qualified Theft under Art. 310, RPC

Unlawful activity
9. Swindling under Art. 315, RPC
10. Smuggling under RA 455 & 1937 11. Violations of the Electronic Commerce Act of 2000 12. Hijacking, destructive arson and murder, including those perpetrated by terrorists against non-combatant persons and similar targets

Unlawful activity
13. Fraudulent practices and other violations of the Securities Regulation Code of 2000 (RA 8799)
14. Felonies or offenses of a similar nature that are punishable under the penal laws of other countries

Civil Forfeiture under the AMLA, as amended

Sec. 7. Creation of Anti-Money Laundering Council. x x x. The AMLC shall act unanimously in the discharge of its functions as defined hereunder:
xxx xxx xxx (3) to institute civil forfeiture proceedings and all other remedial proceedings through the Office of the Solicitor General; xxx xxx xxx (6) to apply before the Court of Appeals, ex parte, for the freezing of any monetary instrument or property alleged to be proceeds of any unlawful activity as defined in Section 3(i) of the AMLA

Section 12 of the AMLA, as amended

Sec. 12. Forfeiture Provisions. (a) 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, the Revised Rules of Court on civil forfeiture shall apply.

Supreme Court action

January 2005 - upon the request of the Anti-Money Laundering Council, the Supreme Court tasked the Committee on the Revision of the Rules of Court chaired by Justice Reynato S. Puno to draft the Rule of Procedure in Cases of Civil Forfeiture.

15 November 2005 - the Supreme Court adopted the Rule prescribing the procedure in cases of civil forfeiture. A.M. No. 05-11-04-SC, otherwise known as 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 R.A. No. 9160, as Amended 15 December 2005 - effectivity of the Rule, following its publication in a newspaper of general circulation.

Suppletory Application of the Revised Rules of Court

- When not inconsistent with the provisions of the special Rule on Civil Forfeiture, the Revised Rules of Court shall apply suppletorily.

Rule on Civil Forfeiture

2 Parts:

1. Petition for Civil Forfeiture 2. Petition for Freeze Order

Definition
Civil forfeiture may be defined as
the seizure and confiscation of any monetary instrument or property, in whole or in part, directly or indirectly, involved in or related to an unlawful activity under Section 3(i) or a money laundering offense under Section 4, Republic Act No. 9160, as amended.

Assets that may be forfeited

Any monetary instrument, property, or proceeds representing, involving, or relating to an unlawful activity or a money laundering offense under R.A. 9160, as amended. (Sec. 1)

Petition for Civil Forfeiture

Sec. 2. Party to institute proceedings.

Action in the name of the Republic of the Philippines (RP) Represented by the Anti-Money Laundering Council (AMLC) Through the Office of the Solicitor General (OSG)

Venue of Civil Forfeiture

Sec. 3. A petition for civil forfeiture shall i) in any RTC of the judicial region where the monetary instrument, property, or proceeds are located; ii) if all or any portion of the monetary instrument, property, or proceeds is located outside the Philippines, the petition may be filed in the RTC in Manila or of the judicial region where any portion of the monetary instrument, property, etc. is located, at the option of the petitioner.

be filed:

Direct Filing
Sec. 5. Direct Filing; Action on the

petition

- The petition shall be filed directly with the Executive Judge of the RTC, or, in his absence, the viceexecutive judge, or, in their absence, any judge of the same station; - The judge shall act on the petition within 24 hours after its filing.

Separate logbook; confidentiality

Secs. 6 & 7: - The executive judge shall enter the petition in a logbook specifically designed for the purpose; assign docket number
- The logbook and the entries therein shall be kept strictly confidential; violation shall constitute contempt of court.

Prohibited Pleading
- Respondent shall file verified Comment or Opposition; - NOT a Motion to Dismiss.

Provisional Remedies
Sec. 11. Ex-parte issuance of Provisional

Asset Preservation Order (PAPO)

-PAPO

is issued upon determination of probable cause that the monetary instrument or property is related to an unlawful activity; - based on the allegations of the verified petition; - effective immediately for 20 days (from date of service to respondents)

Provisional Asset Preservation Order (PAPO)

-Order forbidding any transaction, withdrawal, deposit, transfer, removal, conversion, concealment or other disposition of the subject M/I, property or proceeds

Asset Preservation Order (APO)

- within the 20-day period of PAPO, summary hearing shall be conducted; - Respondent may show good cause why PAPO should be lifted;

- Court may modify or lift PAPO; otherwise, shall issue APO.

Service of APO
- Personal service;
- in any manner deemed expedient by the court, if personal service not practicable; - When authorized by the court, through facsimile (fax) or electronic mail (e-mail) - APO is enforceable anywhere in the Philippines

Order of Trial
Pre-Trial (Mandatory)
Trial Judgment (Order of Forfeiture) (Appeal)

Prohibited Procedures
Not allowed:
- amicable settlement - mediation - other alternative mode of dispute resolution (Sec. 26)

Important!
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. (Sec. 27)

Judgment
Sec. 32. The court shall render
judgment within thirty (30) days from submission of the case for resolution.

- Preponderance of evidence

Appeal
- Notice of appeal within 15 days - Memoranda, in lieu of briefs, within a non-extendible period of 30 days from notice that all evidence are attached to the record.

Claims against forfeited assets

Within 15 days from date of finality of order of forfeiture

Any party who has not been impleaded nor intervened, claiming an interest in the property Shall file verified petition for declaration that the property legitimately belongs to him Otherwise, order of forfeiture becomes executory

SC Ruling
Bedayo, et al vs. Sps. Vicente, et al. G.R. No. 169031-32; 26 Sept. 2005

An order of forfeiture is a condition sine qua non before a petition for segregation of funds (third party claim) may be filed.

Petition for Freeze Order

Sec. 44.
- Verified petition; RP, rep. by AMLC; thru OSG - Filed before the Court of Appeals

- Ex parte

Direct Filing; Confidentiality

with the Presiding Justice in Manila, or the Executive Justices in Cebu City or Cagayan de Oro City
Docketed in a separate logbook Strictly confidential Raffled on the same day; among members of first three (3) Div. only

Action by the CA
- Within 24 hours after filing; - Issue freeze order upon determination of probable cause, based on allegations of the petition, that M/I, property or proceeds are in any way related to an unlawful activity.

Freeze order

Effective immediately for 20 days On motion by petitioner, may be extended for a period not exceeding 6 months

SC Ruling
M/Gen. Carlos Garcia vs. CA, G.R. No. 165800; 27 Nov. 2007
Nothing in RA 9160 requires that a case for violation of anti-money laundering laws must be filed before the issuance of a freeze order. X x x. There are only two requisites under the law for the issuance of the freeze order: (1) the application ex parte by the AMLC; and (2) the determination of probable cause by the CA.

SC Ruling
Republic vs. Glasgow Credit & Collection Services, Inc., et al. G.R. No. 170281; 18 Jan. 2008
Forfeiture proceedings are actions in rem. x x x. As an action in rem, it is a proceeding against the thing itself instead of 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. x x x.

Thank you!