Financial Crime in The Philippines Overview

Financial crime in the Philippines: overview, Practical Law Country Q&A w-017-9057
Financial crime in the Philippines: overview

by Donemark L Calimon, Kenneth L Chua, Alain Charles J Veloso, Dranyl Jared P Amoroso, Patrick
Henry D Salazar and Alvin Tan, Quisumbing Torres, Member Firm of Baker & McKenzie International

Country Q&A | Law stated as at 01-Feb-2020 | Philippines

A Q&A guide to financial and business crime law in the Philippines.

The Q&A gives a high level overview of matters relating to corporate fraud, bribery and corruption, insider
dealing and market abuse, money laundering and terrorist financing, financial record keeping, due diligence,
corporate liability, immunity and leniency, and whistleblowing.

To compare answers across multiple jurisdictions, visit the Financial Crime Country Q&A tool.

This Q&A is part of the global guide to financial and business crime law. For a full list of jurisdictional Q&As
visit www.practicallaw.com/financialcrime-guide.

Fraud

Regulatory provisions and authorities

1. What are the main regulatory provisions and legislation relevant to corporate fraud?

In the Philippines, the main laws relevant to fraud/corporate fraud are contained in:

1• Article 315 on Swindling/Estafa of the Revised Penal Code (Penal Code).
1• Access Devices Law (Republic Act No 8484).
1• Civil Code of the Philippines (Civil Code).
1• National Internal Revenue Code (Tax Code).
1• Cybercrime Prevention Act (Cybercrime Act).
Doctrines/precedents established in cases of the Supreme Court of the Philippines also operate as law in the Philippines.

Offences
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2. What are the specific offences relevant to corporate fraud?

Swindling

The main crime involving fraud in the Philippines is “swindling” (estafa), which is punishable under Article 315 of the Penal
Code. This offence involves defrauding another through the means of (among others):

1• Misappropriating or converting to the prejudice of another, money, goods or other personal property received by the
offender in trust or commission, or for administration or under any other obligation involving the duty to deliver or
return such money/goods/property.
1• Taking undue advantage of the signature of the offended party in blank, and by writing any document above such
signature in blank, to the prejudice of another (forgery).
1• Using a fictitious name, or falsely pretending to possess qualifications, property, credit, agency, business or imaginary
transactions, or by means of other similar deceits.

Access Devices Law

The Access Devices Law prohibits fraud committed in relation to an “access device” or “any card, plate, code, account
number, electronic serial number, personal identification number, or other telecommunications service, equipment, or
instrumental identifier, or other means of account access that can be used to obtain money, good, services, or any other thing
of value or to initiate a transfer of funds (other than a transfer originated solely by paper instrument)”. The following are
prohibited:

1• Producing, using, trafficking in one or more counterfeit access devices.
1• Using, with intent to defraud, an unauthorised access device.
1• Inducing, enticing, permitting or in manner allowing another, to produce, use, traffic in counterfeit access devices or
unauthorised access devices.
1• Disclosing any information imprinted on the access device (such as the account number or name or address of the
device holder) without the latter’s authority or permission.
1• Obtaining money or anything of value through the use of an access device, with the intent to defraud or with intent to
gain and then fleeing thereafter.

Cybercrime Act

The Cybercrime Act punishes computer-related fraud, which is defined as any unauthorised input, alteration, or deletion of
computer data or programme or interference in the functioning of a computer system, which causes damage with fraudulent
intent (section 4b[2], Cybercrime Act).

Swindling under Article 315 of the Penal Code will be considered a cybercrime if the offence was committed by, through and

with the use of information and communications technologies (section, 6, Cybercrime Act).

Civil Code

The Civil Code also contains provisions declaring a person liable for fraud in a corporate/business setting, for example:

1• Parties who are guilty of fraud in the performance of their obligations are liable for damages (Article 1170).
1• Any waiver of an action for future fraud is void (Article 1171).
1• Creditors are protected where contracts are intended to defraud them (Article 1313).
1• Contracts are voidable where the consent of one of the parties is obtained by fraud (Article 1344).
Generally, and unless the relevant laws provide otherwise, a corporate entity is not subject to criminal liability, except for the
imposition of the fine and penalties imposed directly against the corporate entity (Ching v Secretary of Justice, GR No
164317, 6 February 2006). As a rule, the corporation’s employee/representative who performs the punishable act(s) are the
persons who are criminally liable.

Tax laws

Fraud is also prohibited under tax laws. A substantial under-declaration of taxable sales, receipts or income, or a substantial
overstatement of deductions (as determined by the Commissioner under the rules and regulations of the Secretary of
Finance), will constitute prima facie evidence of a false or fraudulent return.

Furthermore, a failure to report sales, receipts or income that exceeds 30% of the amount declared per return, and a claim of
deductions in an amount exceeding 30% of actual deductions, will render the taxpayer liable for substantial under-declaration
of sales, receipts or income or for overstatement of deductions.

There will be prima facie evidence of fraud if there is a substantial under-declaration of taxable sales, receipt or income. The
failure to report sales, receipts or income that exceeds 30% of what is declared in the returns constitute a “substantial under-
declaration”.

For corporations, the penalties for criminal violations of the Tax Code are imposed on the president, general manager, branch
manager, treasurer, officer-in-charge, and the employees responsible for the violation (section 253(d), Tax Code).

Enforcement

3. Which authorities have the powers of prosecution, investigation and enforcement in cases of
corporate or business fraud? What are these powers and what are the consequences of non-
compliance? Please identify any differences between criminal and regulatory investigations.

Prosecution authorities/powers

There are generally two stages to a criminal prosecution:


1• Preliminary investigation. This is an inquiry or proceeding to determine whether there is probable cause to engender a
well-founded belief that an offence has been committed and that the respondent is probably guilty of the offence and
should be held for trial.
1• Court proceedings. This occurs when the preliminary investigation results in a finding of probable cause and a formal
criminal indictment (called an “Information”) is filed in court. Here, the accused will undergo trial where the
prosecution is tasked to prove the accused’s guilt beyond reasonable doubt.
The main authorities are:

1• Various provincial, city, regional, and national prosecutors. The officers of these institutions are authorised to
conduct preliminary investigations of crimes cognisable by the proper court in their respective territorial jurisdictions.
2• These authorities will investigate and hear the case during the preliminary investigation. Once they find probable cause,
they will file the Information with the court. The Ombudsman or his deputies also conduct the preliminary investigation
with respect to offences cognisable by the Sandiganbayan (usually offences involving public officials in higher ranking
positions).
1• Prosecution Division of the Bureau of Internal Revenue (BIR). The BIR may also institute criminal actions against
persons violating internal revenue laws and other tax laws administered by the BIR.
1• National Bureau of Investigation (NBI) and Philippine National Police (PNP). These law enforcement agencies can
also assist in the investigation of alleged violations of the law.
Once the case is already filed in court, the public prosecutor may authorise a private prosecutor (counsel of the private
complainant/victim) to prosecute the case, insofar as the civil aspect of the criminal case is concerned.

Powers of interview

The prosecution authorities referred to above (and their deputies) can conduct interviews during the hearings of the case or
during the course of their investigations. They can receive the statements under oath or take oral evidence of witnesses.
Through subpoenas, the prosecuting authorities can also summon witnesses to appear and testify under oath, and the
attendance or evidence of an absent or recalcitrant witness can be enforced by application to any trial court (section 9[b],
Prosecution Service Act 2010).

For violations of the Tax Code, the Commissioner of Internal Revenue can summon those liable for tax or those required to
file a return (as well as other related officers/employees) to appear before the Commissioner or his representative at a time
and place specified in the summons and produce such books, papers, records, or other data, and give testimony (section 5(C),
Tax Code).

Powers of search/to compel disclosure/to obtain evidence

The prosecution authorities referred to above can invite/subpoena witnesses or respondents for interview/investigation, and
ask them to produce evidence. However, the prosecution authorities do not have powers of contempt and cannot compel such
persons to appear and/or to bring evidence.

A court may issue a search warrant, which can be enforced to legally search a certain place to look for personal property.
Such a warrant may be issued if there is probable cause in connection with a specific offence to be determined personally by
the judge after examination under oath or affirmation of the complainant and the witnesses that he/she may produce. The
search warrant should contain a description of the place to be searched and the things to be seized (which can be anywhere in
the Philippines) (Rule 126, Rules of Court).

For violations of the Tax Code, the Commissioner of Internal Revenue can also issue subpoena and subpoena duces tecum
(for the provision of evidence), and can examine any book, paper, record, or other data which may be relevant or material in
determining the tax liability of a person. The Commissioner is empowered to obtain any information from any person other
than the person whose internal revenue tax liability is subject to audit or investigation, or from any office or officer of the
national and local governments, government agencies and instrumentalities (section 5(A) and section 5(B), Tax Code). The
Commissioner can also inquire into bank deposit accounts and other related information held by financial institutions.

Power of arrest

Arrests cannot be made for administrative sanctions. However, an arrest can be made where both:

1• A warrant of arrest has been issued, on the personal determination of a judge based on the evidence submitted.
1• It is a necessary to place the accused in custody in order to not frustrate the ends of justice.
The officers to whom the warrant of arrest was delivered for execution must ensure the warrant is executed within ten days of
receipt.

A peace officer or private person can also arrest a person without a warrant when either (among other things):

1• The person to be arrested, has committed, is actually committing, or is attempting to commit an offence.
1• An offence has just been committed, when the person arresting has probable cause to believe, based on personal
knowledge of facts or circumstances, that the person to be arrested has committed it.
The person arrested must be delivered to the nearest police station or jail.

Arrests can be made by both the PNP officers and NBI officer.

Court orders or injunctions

Provisional remedies can be used in a civil action that has been initiated in conjunction with a criminal action. These
remedies include:

1• Attachment.
1• Receivership.
1• Preliminary injunction.
For violations of the Tax Code, on the issuance of any ruling, order or decision by the Court of Tax Appeals (CTA)
favourable to the national government, the CTA will issue an order authorising the BIR to:

1• Seize and distraint any personal property or interests in/rights to personal property.
1• Levy the real property of such persons as sufficient to satisfy the tax or charge.
4. Which authority makes the decision to charge and on what basis is that decision made? Are
there any alternative methods of disposal and what are the conditions of such disposal?


For criminal offences, the details of the offences charged is indicated in the Information. The decision on whether to charge
an accused with an offence is recommended by the investigating prosecutor and approved by the provincial/city prosecutor or
chief state prosecutor.

Also, the Ombudsman or their deputy makes this determination for offences cognisable by the Sandiganbayan (usually for
offences involving public officials in higher ranking positions).

For violations of the Tax Code, the Commissioner of Internal Revenue is authorised to issue assessments for any deficiency
tax and has the power to decide on protests filed by taxpayers.

The CTA has exclusive appellate jurisdiction to review, on appeal, the decisions of the Commissioner of Internal Revenue in
cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, related penalties, or other
matters arising under the National Internal Revenue or other laws administered by the BIR, and over all criminal offences
arising from violations of the National Internal Revenue Code and other laws administered by the BIR.
5. What are the sanctions for participating in corporate fraud?

Civil/administrative proceedings or sanctions

Proceeds of the crime and the instruments or tools with which it was committed are subject to forfeiture by the government.

Criminal proceedings

Right to bail.Generally, the right to bail is only available post-detention/before conviction and will depend on the offence.
An accused has a right to bail unless the offence is punishable by more than 20 years imprisonment and the evidence of guilt
is strong.

Bail is discretionary when the accused has already been convicted by the Regional Trial Court of an offence not punishable
by death, or more than 20 years imprisonment, or when the accused is charged with an offence punishable by more than 20
years imprisonment.

Bail will be denied if an accused is charged with imprisonment for a term exceeding six years and any of the following
applies:

1• He/she is a repeat offender.
1• He/she has previously escaped from legal confinement, evaded sentence or violated condition of his/her bail without
justification.
1• He/she has committed the offence while under probation, parole or conditional pardon.
1• He/she is a flight risk.
1• He/she is likely to commit another crime during the pendency of the appeal.
Penalties. The following penalties apply:


1• For acts committed which constitute estafa: penalty depends on the amount involved and ranges from imprisonment of
one month and one day to 20 years.
1• For violations of the prohibited acts under the Access Devices Law: penalty depends on the actual act committed and
ranges from a fine of PHP10,000 or twice the value obtained from the offence (whichever is greater) and imprisonment
of ten to 20 years.
1• For computer-related fraud under the Cybercrime Act: penalty is imprisonment of six to 12 years and/or fine of at least
PHP200,000.
1• For swindling committed through the use of information and communications technologies under the Cybercrime Act:
penalty is one degree higher than the penalty prescribed under the Penal Code (and will depends on the amount
involved).
2• Under the Cybercrime Act, corporations are fined the equivalent of at least double the amount of fine imposed on
individuals, up to a maximum of PHP10 million, if
1• the act is knowingly committed on behalf of, or for the benefit of, the corporation by an individual who has a
leading position within the corporation; and
1• the act falls within the scope of authority of such individual.
1• For violations of the Tax Code in connection with fraud: penalty depends on the actual act committed and ranges from
a fine of PHP10,000 to PHP100,000 and imprisonment of one to ten years.
For corporations, the Tax Code provides that the penalties will apply to the corporation’s officers or employees who
committed the offence.

Civil suits

See Question 2, Civil Code.

Safeguards

6. Are there any measures in place to safeguard the conduct of investigations? Is there a
process of appeal? Is there a process of judicial review?

There are certain measures in place to safeguard the conduct of investigations. The following rights of the person being
investigated should be respected:

1• The right to be informed of his/her right to remain silent and to have competent and independent counsel preferably of
his own choice.
1• The right to counsel.
1• That if he/she cannot afford an attorney, one will be provided before any questioning, if he/she so desires.

1• The right to remain silent.
1• A right to exclude unlawfully-obtained evidence.
These rights cannot be waived except in writing and in the presence of counsel.

In relation to judicial review of the decision, the resolution charge the accused with an offence can be questioned by a Motion
for Reconsideration, which must be made within 15 days from notice of the resolution. The outcome of the Motion can be
further questioned by filing a Petition for Review with the Department of Justice within 15 days from notice. If the
prosecutor’s office which rendered the questioned resolution is outside the National Capital Region, the Petition for Review
should be filed with the Office of the Regional State Prosecutor within 15 days from notice.

Bribery and corruption


7. What are the main regulatory provisions and legislation relevant to bribery and corruption?

Bribery and corruption in the Philippines are governed by the following laws:

1• Penal Code.
1• Anti-graft and Corrupt Practices Act (Republic Act No 3019).
1• Code of Conduct and Ethical Standards for Public Officials and Employees (Republic Act No 6713) (Ethical Standards
Act).
1• Presidential Decree No. 46 (PD 46), which governs the giving of gifts to public officers.
1• Ease of Doing Business and Efficient Government Service Delivery Act (Republic Act No 11032) (Ease of Doing
Business Act).
8. What international anti-corruption conventions apply in your jurisdiction?

The Philippines adheres to the UN Convention against Corruption 2003 (Corruption Convention). Executive Order No. 171
was issued to create an inter-agency committee to oversee the review, implementation and monitoring of the Corruption
Convention.

Offences
9. What are the specific bribery and corruption offences in your jurisdiction?

The Penal Code prohibits the following offences:

1• Direct bribery. This is committed by a public officer who accepts an offer/promise, or receives a gift/present, in
consideration of either:
1• the performance of an act, which is either a crime or an unjust act; or
1• refraining from doing something that is in the public officer’s official duty to do.
1• Indirect bribery. This is committed by a public officer who accepts a gift given solely by reason of his/her office. The
private person who gives the gift or promise may be held liable for the crime of “corruption of public officials”.
The Anti-graft and Corrupt Practices Act prohibits certain offences that would not otherwise fall within the concept of
bribery under the Penal Code. This law prohibits public officers (regardless of criminal intent) for:

1• Taking advantage of their public positions for any personal benefit, whether directly or indirectly.
1• Taking actions that are prejudicial to the government (for example, by entering on the government’s behalf into any
transaction that is manifestly and grossly disadvantageous to the government).
However, the giving of “unsolicited gifts or presents of small or insignificant value offered or given as a mere ordinary token
of gratitude or friendship according to local customs or usage” are excluded from this law.

The Ethical Standards Act further expands the scope of Philippine corruption laws and covers other acts such as:

1• Disclosure and/or misuse of confidential information.
1• Engaging in the private practice of profession by certain public officials.
The giving of “unsolicited gifts of nominal or insignificant value not given in anticipation of, or in exchange for, a favour
from a public official or employee” are also excluded from the coverage of the law.

A much older law, PD 46, punishes the act of “giving, or offering to give, to a public official or employee, a gift or other
valuable thing on any occasion, when the gift is given by reason of the public official/employee’s position”. Unlike the Anti-
graft and Corrupt Practices Act and Ethical Standards Act, PD 46 does not provide any exception for low-value gifts.

The newly-enacted Ease of Doing Business Act also expressly prohibits the act of fixing and/or colluding with fixers in
consideration of economic and/or other gain or advantage.

Foreign public officials

Philippine laws on bribery and corruption apply to public officers who take part in the performance of public functions in the
Philippine Government or any of its branches as an employee, agent or subordinate official of any rank or class. These laws

do not apply to foreign public officials who do not fall within this scope. Furthermore, crimes committed outside the
jurisdiction of the Philippines are generally not penalised in the Philippines, subject to limited exceptions.

Domestic public officials

The Philippine bribery laws discussed above and apply to the bribery of domestic public officials. Persons who bribe any
public officer may be charged with the applicable offence/s listed above.

Private commercial bribery

The Philippines does not have laws on private sector bribery.

Defences

10. What defences, safe harbours or exemptions are available and who can qualify?

A person will not be liable if not all elements of the offence are present.

Furthermore, it is possible for a person involved in an offence to be excluded from the charge if he/she will testify as a state
witness in accordance with the law. However, the accused who appears most guilty of the offence will be disqualified from
being a state witness.

There are no defences, safe harbours or exemptions available for crimes or offences involving bribery and anti-corruption
offences.

Facilitation or “grease” payments (for routine government actions) are not allowed under Philippine law.
11. Can associated persons (such as spouses) and agents be liable for these offences and in
what circumstances?

Associated persons (such as spouses) and agents can be held liable if they have directly or indirectly participated and/or
benefited, either as a principal, conspirator, accomplice, or accessory, in committing a bribery/corruption offence.

Enforcement


12. Which authorities have the powers of prosecution, investigation and enforcement in cases
of bribery and corruption? What are these powers and what are the consequences of non-

Authorities

The Ombudsman and/or his/her deputies have extensive powers to investigate allegations of bribery and corruption under the
Penal Code, Anti-Graft and Corrupt Practices Act, Ethical Standards Act and PD 46 against officers or employees of the
government (or any subdivision, agency or instrumentality of the government, including government-owned or controlled
corporations) and enforce their administrative, civil and criminal liability in every case where the evidence warrants.

The Ombudsman can and/or his deputies investigate and prosecute (on its own initiative or following a complaint from any
person), any act or omission of any public officer or employee, office or agency, when such act or omission appears to be
illegal, unjust, improper or inefficient.

Private persons may likewise be prosecuted or investigated by the Ombudsman, when there is conspiracy between the private
person and an officer of the government.

Private persons who are not charged together with a public officer or employee, may be investigated and charged by the
applicable prosecutor referred to in Question 3.

Prosecution powers

The Ombudsman and/or his deputies can investigate and prosecute (on its own initiative or following a complaint (which
may be anonymous)) a public officer or employee, including employees of government-owned or controlled corporations,
with an act or omission alleged to be illegal, unjust, improper or inefficient. The complaint may be the subject criminal or
administrative proceedings, or both.

Powers of interview

The Ombudsman and/or his deputies can interview the complainant, respondents, or their witnesses during hearings held
during the course of the investigation. They can also request any government agency for assistance and information necessary
for the discharge of its responsibilities, and to examine, if necessary, pertinent records and documents.

Powers of search/to compel disclosure/obtain evidence

The Ombudsman and/or his deputies have the power to (among other things):

1• Direct the officer concerned to furnish it with copies of documents relating to contracts or transactions entered into by
his office involving the disbursement or use of public funds or properties.
1• Request any government agency for assistance and information necessary in the discharge of its responsibilities, and to
examine, if necessary, pertinent records and documents.
1• Administer oaths, issue subpoena and subpoena duces tecum, and take testimony in any investigation or inquiry,
including the power to examine and have access to bank accounts and records.

Power of arrest

For the instances of when arrests can be made, see Question 3, Power of arrest.


An injunction writ cannot be issued by a court to delay an investigation being conducted by the Ombudsman, unless there is a
prima facie evidence that the subject matter of the investigation is outside the jurisdiction of the Office of the Ombudsman.
Furthermore, no court can hear an appeal or application for a remedy against the decision or findings of the Ombudsman,
except the Supreme Court, on a pure question of law.

Interim remedies, such as those referred to in Question 3 can also be used in offences of bribery and corruption.

See Question 4.

Convictions and sanctions

14. What are the sanctions for participating in bribery and corruption?

Criminal proceedings or penalties

Right to bail. See Question 5, Criminal proceedings.

Penalties. The following penalties apply to bribery and corruption:

1• For violations of the Penal Code (direct or indebt bribery), the private person who gave the gift or promise may be held
liable for the crime of “corruption of public officials”. The penalty imposed, which is imprisonment ranging from two
to 12 years, depends on the gravity of the offence or the value of the gift.
1• For violations of the Anti-graft and Corrupt Practices Act, the penalties are imprisonment of between one to ten years
for both the public officer and private individual, and a fine of between PHP100 to PHP1,000 for certain violations.
1• For violations of the Ethical Standards Act (disclosure and/or misuse of confidential information/engaging in the
private practice of profession by certain public officials), the penalties are either a fine not exceeding six months’ salary
of the public official or suspension not exceeding one year, or a fine not exceeding PHP5,000 and/or imprisonment not
exceeding five years.
1• For violations of PD 46, the penalties are imprisonment of between one to five years for the private individual and the

public officer, and perpetual disqualification from public office, suspension and/or removal for the public officer.
1• For violations of the Ease of Doing Business Act, the penalties are dismissal from service, perpetual disqualification
from holding public office and forfeiture of retirement benefits, and imprisonment of one to six years, and fine of
PHP500,000 to PHP2 million.

Safeguards


See Question 6.

Tax treatment

16.Are there any circumstances under which payments such as bribes, ransoms or other
payments arising from blackmail or extortion are tax-deductible as a business expense?

Bribes are not deductible as a business expense under Philippine tax laws. No deduction from gross income is allowed for
any payment made, directly or indirectly, to any of the following if the payment constitutes a bribe or kickback:

1• Official or employee of the national government.
1• Official or employee of any local government unit.
1• Official or employee of a government-owned or government-controlled corporation.
1• Official or employee or representative of a foreign government.
1• Private corporation, general professional partnership, or a similar entity.

Insider dealing and market abuse



17. What are the main regulatory provisions and legislation relevant to insider dealing and
market abuse?

The Securities Regulation Code (SRC) and its Revised Implementing Rules and Regulations (SRC IRR) are the governing
laws in the Philippines relevant to insider trading and market abuse.

Offences

18. What are the specific offences that can be used to prosecute insider dealing and market
abuse?

The buying or selling of shares/securities by an issuer of a company while in possession of material non-public information
(MNPI) with respect to the issuer or the security, is prohibited unless the insider can prove that either the:

1• Information was not gained from such relationship.
1• Other party selling to or buying from the insider (or his/her/its agent) can be identified, and the insider can prove that
the:
1• MNPI was disclosed to the other party; and
1• insider had reason to believe that the other party was also in possession of the same MNPI.
The following are considered as “insiders” of a public company (in this context, an issuer):

1• The issuer.
1• A director or officer (or any person performing similar functions) of, or a person controlling the issuer.
1• A person whose relationship or former relationship to the issuer gives or gave him/her/it access to material information
about the issuer or the security that is not generally available to the public.
1• A government employee, director, or officer of an exchange, clearing agency, and/or self-regulatory organisation who
has access to material information about an issuer or a security that is not generally available to the public.
1• Any person who learns such information by a communication from any of the foregoing insiders.
MNPI is defined as information that either:

1• Has not been generally disclosed to the public and would likely affect the market price of the security after being

disseminated to the public and the lapse of a reasonable time for the market to absorb the information.
1• Would be considered by a reasonable person as important under the circumstances in determining his course of action
whether to buy, sell or hold a security.
An insider is further prohibited from communicating MNPI about an issuer or its securities to any person who, by virtue of
the communication, becomes an insider, where the insider communicating the MNPI knows or has reason to believe that such
person will likely buy or sell a security of the issuer while in possession of such MNPI. A purchase or sale of a security of the
issuer made by an insider (or the insider’s spouse or relatives by affinity or consanguinity within the second degree,
legitimate or common law) will be presumed to have been effected while in possession of MNPI if transacted after such
information came into existence but prior to dissemination of such information to the public and the lapse of a reasonable
time for the market to absorb such information.

In the context of a potential or on-going tender offer, the following are also prohibited:

1• Any person who becomes aware of a potential tender offer before the tender offer has been publicly announced may
not buy or sell, directly or indirectly, the securities of the target public company (including any securities convertible or
exchangeable into such securities, or any options or rights in any of the foregoing) until the tender offer has been
publicly announced.
1• Any person (other than the offeror) in possession of information relating to the tender offer, must not buy or sell the
securities of the issuer that are sought or to be sought by such tender offer (including any securities convertible or
exchangeable into such securities, or any options or rights in any of the foregoing) if he/she knows, or has reason to
believe, that the information is non-public and has been acquired, directly or indirectly, from the offeror, those acting
on its behalf, the issuer of securities sought or to be sought by such tender offer, or any insider of such issuer.
1• The offeror, persons acting on its behalf, the issuer of the securities sought or to be sought by such tender offer
(including any securities convertible or exchangeable into such securities, or any options or rights in any of the
foregoing), and any insider of such issuer, must not communicate any MNPI relating to the tender offer to any other
person where such communication is likely to result in a violation of the rules and regulations on insider trading or
trading on the basis of MNPI.

Defences


An insider may be exempt from being made liable for insider trading where either:

1• He/she can prove that the information was not gained from such relationship with the issuer.
1• The other party selling to or buying from the insider (or his/her agent) can be identified, and the insider can prove that
the:
1• MNPI was disclosed to the other party; and
1• insider had reason to believe that the other party was also in possession of the same MNPI.


Enforcement

of insider dealing and market abuse? What are these powers and what are the consequences of
non-compliance? Please identify any differences between criminal and regulatory
investigations.

Authorities

For administrative sanctions, the courts of general jurisdiction or the appropriate regional trial court has jurisdiction over all
cases covered by section 5 of the SRC IRR, including cases involving insider trading or violation of laws and rules,
regulations and orders issued pursuant thereto. The SEC has the power to impose administrative sanctions.

For non-administrative sanctions, the courts of general jurisdiction or the appropriate regional trial court has jurisdiction over
all cases involving insider trading or violation of laws and rules, regulations and orders issued in relation to such matters.

The SEC has the power to impose administrative sanctions.

For details of criminal charges, see Question 3.

Prosecution powers

See Question 3, Prosecution authorities/powers.

Powers of interview

For administrative sanctions, the SEC has the power to regulate, investigate or supervise the activities of persons to ensure
compliance with the SRC and SRC IRR, including the power to interview persons.


Powers of search/to compel disclosure

For administrative sanctions, the SEC has the power to regulate, investigate or supervise activities of persons to ensure
compliance with the SRC and SRC IRR, including the power to search and/or to compel disclosure.

The SEC can issue subpoena duces tecum and summon witnesses to appear in any proceedings of the SEC and, in appropriate
cases, can order the examination, search and seizure of all documents, papers, files and records, tax returns, and books of
accounts of any entity or person under investigation as necessary for the proper disposition of the cases before it, subject to
the provisions of existing laws.


Powers to obtain evidence


Under the SRC IRR, the SEC can issue subpoena duces tecum and can summon witnesses to appear in any proceedings of the
SEC and in appropriate cases, order the examination, search and seizure of all documents, papers, files and records, tax
returns, and books of accounts of any entity or person under investigation as necessary for the proper disposition of the cases
before it, subject to the provisions of existing laws.


Power of arrest

The SEC does not have powers to arrest persons for violations of the SRC or the SRC IRR.

For details of the instances of when an arrest can be made, see Question 3, Power of arrest.


See Question 3, Court orders or injunctions.

For administrative sanctions, the SEC can regulate, investigate, or supervise the activities of persons to ensure compliance
with the SRC and the SRC IRR. In light of this, the SEC can enlist the aid and support of and/or deputise any and all
enforcement agencies of the government, in the implementation of its powers and functions under the SRC and the SRC IRR.
Therefore, the SEC can enlist the assistance of the prosecutor’s office for charging persons for violations of the SRC and the
SRC IRR.



22. What are the sanctions for participating in insider trading and market abuse?

Civil/administrative proceedings or penalties

Any insider who commits insider trading, or any rule or regulation under the SRC, by purchasing or selling a security while
in possession of material information not generally available to the public, will be liable in a lawsuit brought by any investor
who, contemporaneously with the purchase or sale of securities that are the subject of the violation, purchased or sold
securities of the same class unless such insider, or such person in the case of a tender offer, proves that such investor knew
the information or would have purchased or sold at the same price regardless of disclosure of the information to him.


Furthermore, an insider who communicates MNPI to any person, who, by virtue of such information, becomes an insider, or
any rule or regulation under the SRC, will be jointly and severally liable with, and to the same extent as, the insider, or
person in the case of a tender offer, to whom the communication was directed and who is liable by reason of his purchase or
sale of a security.

In addition to the above, under Rule 54 of the SRC IRR the SEC can impose administrative sanctions including:

1• Suspension or revocation of any registration for the offering of securities.
1• A fine of no less than PHP10,000 nor more than PHP1 million plus not more than PHP2,000 for each day of continuing
violation.
1• Disqualification from being an officer, member of the corporation’s board of directors (board) or performing similar
functions.
1• Other penalties within the SEC’s powers to impose.

Criminal proceedings


Penalties. The criminal penalties of a fine of not less than PHP50,000 to PHP5 million or imprisonment of seven to 21 years
(or both) at the discretion of the court, for any violation of the SRC, or rules promulgated by the SEC, which includes the
offences referred to above (see above, Civil/administrative proceedings or penalties).

Civil suits

All cases involving insider trading must be brought before the regional trial court, which will have exclusive jurisdiction to
hear the lawsuit. The regional court is authorised to award damages up to three times the amount of the transaction plus
actual damages.

Exemplary damages can be also awarded in cases of bad faith, fraud, malevolence, or wantonness in violation of the SRC or
the SRC IRR, or any other rules or regulations issued pursuant to these laws.

Safeguards


For administrative sanctions, during the initial investigation, the SEC’s operating department (that is, a specific department of
the SEC tasked with handling investigations) must establish sufficient grounds that warrant the commencement of an
administrative action. Any information, documents or records obtained by the SEC during its investigation or examination
are generally be deemed non-public.

The SEC may terminate its investigation under any of the following grounds:


1• The operating department or the SEC does not have jurisdiction to act over the subject matter of the investigation.
1• The operating department finds no sufficient ground to warrant the commencement of an administrative action.
If no appeal or motion for reconsideration is filed within the period fixed, the sanctions will become final and executory.


Money laundering, terrorist financing and financial/trade sanctions


24. What is the main legislation and regulatory provisions relevant to money laundering,
terrorist financing and/or breach of financial/trade sanctions?

Money laundering

The laws relevant to money laundering are the:

1• Anti-money Laundering Act (Republic Act 9160 as amended by Republic Acts 9194, 10167 and 10365) (AMLA).
The AMA was enacted to ensure the Philippines is not be used as a location for money laundering.
1• 2018 Implementing Rules and Regulations of AMLA (AMLA Rules). The AMLA Rules provide for the rules and
regulations implementing the AMLA.

Terrorist financing

The laws relevant to terrorist financing are the:

1• Terrorism Financing Prevention and Suppression Act (Republic Act 10168) (TF Suppression Act). The TF
Suppression Act was enacted to reinforce the Philippines’ fight against terrorism by criminalising the financing of
terrorism and related offences, and by preventing and suppressing the commission of terrorist offences through freezing
and forfeiture of properties or funds while protecting human rights.
1• Implementing Rules and Regulations of the TF Suppression Act (TF Suppression Rules). These prescribe the
procedures and guidelines for the implementation of the TF Suppression Act.

Financial/trade sanctions

There are no specific laws in relation to the breach of financial/trade sanctions.

Offences


25.What are the specific offences that can be used to prosecute money laundering, terrorist
financing and breach of financial/trade sanctions?

Money laundering

The offence of money laundering will be committed by:

1• Any person who, knowing that any monetary instrument or property represents, involves, or relates to the proceeds of
any unlawful activity:
1• transacts the monetary instrument or property;
1• converts, transfers, disposes of, moves, acquires, possesses or uses the monetary instrument or property;
1• conceals or disguises the true nature, source, location, disposition, movement or ownership of or rights with
respect to the monetary instrument or property;
1• attempts or conspires to commit money laundering offences;
1• aids, abets, assists in or counsels the commission of the money laundering offences; and
1• performs or fails to perform any act as a result of which he facilitates the offence of money laundering.
1• Any covered person (such a bank, trust entity, insurance company, securities dealer, fund management company,
broker and so on) who, knowing that a covered or suspicious transaction must be reported to the Anti-Money
Laundering Council (AMLC) under the AMLA, fails to do so. A “covered transaction” is a monetary transaction
involving a total of more than PHP500,000 within one banking day, or with respect to casino transactions, an amount of
more than PHP5 million or its equivalent in any other currency.

Terrorist financing

The offence of terrorist financing will be committed by any person who, directly or indirectly, wilfully and without lawful
excuse, possesses, provides, collects, or uses property or funds or makes available property, funds or financial service or
other related services, by any means, with the unlawful and wilful intention that they should be used or with the knowledge
that they are to be used, in full or in part:

1• To carry out or facilitate the commission of any terrorist act.
1• By a terrorist organisation, association, or group.
1• By an individual terrorist.
In addition, any person who organises or directs others to commit financing of terrorism under the immediately preceding
paragraph will likewise be guilty of an offence. The TF Suppression Act also penalises attempted or conspiracy to commit
financing of terrorism and prohibited dealings with property or funds of designated persons.



Defences


Money laundering

No administrative, criminal or civil proceedings will be filed against any person where they have made a covered transaction
report or suspicious transaction report in the regular performance of his/her duties and in good faith, regardless of whether the
reporting results in any criminal prosecution under the AMLA or other Philippine law.

Terrorist financing

If a freezing order is effected based on mistaken identity, no administrative, criminal or civil proceedings will lie against that
person or entity, including covered institutions and relevant government agencies, for effecting a freeze on the property or
funds in the absence of bad faith, gross negligence or malice.



Enforcement

of money laundering? What are these powers and what are the consequences of non-

Authorities

The AMLC is the government agency responsible for implementing compliance with the AMLA and TF Suppression Act to
prevent and suppress money laundering and terrorism financing in the Philippines.

If a foreign state makes a request for assistance in the investigation or prosecution of a money laundering offence, the AMLC
may execute the request or refuse the request and inform the foreign state of any valid reason for not executing the request or
for delaying the execution.

Similarly, the AMLC may, subject to certain conditions, make a request to any foreign state for assistance in:

1• Tracking down, freezing, restraining and seizing assets alleged to be proceeds of any unlawful activity.
1• Obtaining pertinent information and documents that it needs relating to any money laundering offence or any other
matter directly or indirectly related to the offence.
1• To the extent allowed by the law of the foreign state, make an application to the appropriate foreign court for an order
to enter the premises belonging to or in the possession or control of, any or all of the persons named in said request,
and/or search any or all such persons named in the request and/or remove any document, material or object named in
the request.
1• Applying for an order of forfeiture of any monetary instrument or property in the proper court in the foreign state.
For details of criminal charges, see also Question 3.

Prosecution powers

The AMLC can institute civil forfeiture proceedings and all other remedial proceedings in relation to violations of the AMLA
through the Office of the Solicitor General.


Powers of interview

The AMLC can investigate suspicious transactions and covered transactions deemed suspicious, money laundering activities
and other violations of the AMLA, AMLA RIRR and other AMLC issuances. In this regard, the AMLC may require
responsible officers and employees of covered persons and pertinent government agencies to give statements pertinent to the
transaction, person or violation being investigated.


Powers of search/to compel disclosure

Subject to certain conditions, the AMLC may inquire into or examine any particular deposit or investment account, including
related accounts, with any banking institution or non-bank financial institution in cases of violation of the AMLA when it has
been established that probable cause exists that the deposits or investments involved, including related accounts, are in any
way related to an unlawful activity or a money laundering offence.


Powers to obtain evidence

The AMLC can direct covered persons to produce information, documents and object necessary to determine the true identity
of persons subject of investigation. It can also request information, documents and objects from domestic government
agencies, foreign states, including its financial intelligence units, law enforcement agencies, and financial regulators, or the
UN and other international organisations or entities.


Power of arrest

The AMLC is not authorised to arrest persons for violations of the AMLA. Arrests can be conducted by officers of the PBP
and the NBI.


For details of the instances of when arrests can be made, see Question 3.


Upon verified petition by the AMLC and after determination that probable cause exists that any monetary instrument or
property is in any way related to an unlawful activity, the Court of Appeals can issue a freezing order, which will be effective
immediately, directing the concerned covered persons and government agency to desist from allowing any transaction,
withdrawal, transfer, removal, conversion, concealment, or other disposition of the subject monetary instrument or property.

The Court of Appeals must resolve the petition to freeze within 24 hours from filing.

See also Question 3.

Protections available

See Question 3.

Under the AMLA RIRR, the AMLC can (among other things):

1• Institute civil forfeiture proceedings and all other remedial proceedings through the Office of the Solicitor General.
1• File complaints with the Department of Justice or the Office of the Ombudsman for the prosecution of money
laundering offences and other violations under the AMLA.
1• File with the Court of Appeals, through the Office of the Solicitor General:
1• a petition for the freezing of any monetary instrument or property that is in any way related to an unlawful
activity; or
1• an application for authority to inquire into or examine any particular deposit or investment, including related
accounts, with any banking institution or non-bank financial institution.


29. What are the sanctions for participating in money laundering, terrorist financing offences
and/or for breaches of financial/trade sanctions?


Money laundering


Penalties. The penalty for money laundering varies depending on the way in which the offence is committed.

For a person convicted of money laundering under the AMLA, the penalties are imprisonment ranging from six months to 14
years and fines of PHP100,000 to PHP3 million.

Without prejudice to the filing of criminal charges, the AMLC can also impose administrative sanctions, including monetary
penalties (which must not be more than PHP500,000), a warning or reprimand, upon any covered person, its directors,
officers, employees or any other person for violations of the AMLA or for failure or refusal to comply with AMLC orders,
resolutions and other issuances.

Terrorist financing


Penalties. The penalties for the financing of terrorism are imprisonment of 12 years or more and fines PHP500,000 to PHP1
million.



Safeguards


See Question 6.

Financial record keeping

31. What are the general requirements for financial record keeping and disclosure?

Under the SRC IRR, every issuer must keep books, records and accounts which, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of its assets. The SRC IRR does not provide for a period within which such financial
records must be kept.

In relation to financial disclosure requirements, the SRC IRR requires all issuers to disclose the following financial reports to
the public:

1• SEC Form 17-A. This must be submitted within 105 calendar days after the end of the fiscal year.
1• SEC Form 17-Q. This must to be disclosed within 45 calendar days after the end of each of the first three quarters of
each fiscal year.
Under the Revenue Regulations No 17-2003, all taxpayers must retain their books of accounts, including subsidiary books,
and other accounting records, for a period of ten years.

The term “other accounting records” includes the corresponding invoices, receipts, vouchers and returns, and other source
documents supporting the entries in the books of accounts. Such books/records should also be retained for a period of ten
years counted from the date of last entry in the books to which they relate. The books and records are subject to examination
and inspection by internal revenue officers (provided for income tax purposes, any examination and inspection is made no
more than once per taxable year), except in the following cases:

1• Fraud, irregularity or mistakes, as determined by the Commissioner.
1• The taxpayer requests reinvestigation.
0• Verification of compliance with withholding tax laws and regulations.
1• Verification of capital gains tax liabilities.
In the exercise of the Commissioner’s powers under to obtain information from other persons section 5(B) of the SRC IRR, a
further or separate examination and inspection may be made.

The examination and inspection of books of accounts and other accounting records must be carried out in the taxpayer’s
office/place of business or in the office of the BIR (section 235, Tax Code).
32. What are the penalties for failure to keep or disclose accurate financial records?

Every issuer of securities listed for trading must file with the SEC and the Philippine Stock Exchange (PSE) a copy of
reports, including financial reports, for the securities.

Any person who violates any of its provisions, including the failure to keep or disclose financial reports, will be subject to a
fine of PHP50,000 to PHP5 million. Furthermore, failure to disclose financial reports to the PSE will result in the imposition
of a fine of PHP5,000 to PHP50,000, plus a penalty of PHP500 to PHP5,000 for each day of delay.

The Tax Code also punishes any persons summoned to appear to testify, or to appear and produce books of accounts, records,
memoranda or other papers, or to furnish information as required under the pertinent provisions of the Tax Code. If such a
person neglects to appear or to produce such books of accounts/records/memoranda/other papers, or furnish such
information, they will, on conviction, be subject to a fine of PHP5,000 to PHP10,000 and/or imprisonment of one to two
years.
33. Are the financial record keeping rules used to prosecute white-collar crimes?

Any registration which makes any untrue statements of a material fact or omits any misstatement of a material fact in its
reports, applications, accounts, records, or other documents, including financial documents, may be subject to the following
administrative sanctions (among others):

1• A fine of PHP10,000 to PHP1 million plus PHP2,000 for each day of continuing violation.
1• Other penalties within the power of the SEC.
The imposition of these administrative penalties is without prejudice to any criminal charges against filed against the
individuals responsible for the violation.

The rules on preservation of accounting records can also be used to prosecute persons who evade tax. Failure to appear and
produce books of accounts, records, memoranda or other papers, or to furnish information as required under the pertinent
provisions of the Tax Code, will, on conviction, be subject to a fine of PHP5,000 to PHP10,000 and/or imprisonment of one
to two years.

Due diligence

34. What are the general due diligence requirements and procedures in relation to corruption,
fraud or money laundering when contracting with external parties?

Every broker dealer must act with due skill, care, and diligence, in the best interest of his/her clients and for the integrity of
the market. In so doing, every registered person must:

1• Take all reasonable steps to promptly execute client orders in a way that conforms with the client’s instructions.
1• Execute client orders on the best available terms.
1• Ensure that transactions executed on behalf of clients are promptly and fairly allocated on whose behalf the transactions
were executed.
The SRC IRR provides that a registrar (for example, banks, brokers, dealers, investment houses, investment company
advisers, and issuer companies with respect to offerings of own securities) must establish their own internal procedures for
guiding their personnel in relation to evaluating whether a buyer of securities has the necessary qualifications to satisfy a
“qualified buyer” status, provided only registered persons (salesman, fixed income market salesman, certified investor
solicitor and associated person) will conduct such evaluation.


In conducting the evaluation, the registrar must act with due diligence in the conduct of the evaluation and ensure that the
required supporting documents are submitted to it at the time of registration. Such documents will be considered and treated
as records of the registrar in accordance with the applicable provisions of the SRC.

In relation to money laundering, covered persons must:

1• Establish and record the true identities of their clients (based on official documents, as defined under the AMLA
RIRR).
1• Maintain a system of verifying the true identity of their clients based on reliable, independent source data, documents
of information and, in the case of corporate clients, require a system of verifying their legal existence and
organisational structure, as well as the authority and identification of all persons purporting to act on their behalf.
1• Establish appropriate systems and methods and adequate internal controls that comply with the AMLA, AMLA RIRR,
other AMLC issuances, the guidelines issued by other supervising authorities and all internationally accepted anti-
money laundering standards, for verifying and recording the true and full identity of their customers.
In conducting customer due diligence, a risk-based approach may be undertaken depending on the type of customer, business
relationship or nature of the product, transaction or activity.

Corporate liability

35. Under what circumstances can a corporate body itself be subject to criminal liability?

Generally, and unless the relevant laws provide otherwise, a corporate entity is not subject to criminal liability, except for the
imposition of the fine and penalties imposed directly against the corporate entity (Ching v Secretary of Justice).

The corporation’s employees/representatives who perform or are responsible for the punishable acts will be subject to
criminal liability.

Cartels

36. Are cartels prohibited in your jurisdiction? How are cartel offences defined? Under what
circumstances can a corporate body be subject to criminal liability for cartel offences?

The main regulatory provisions relevant to cartels are set out in the Competition Act (Republic Act No 10667). The term
“cartel” is not specifically referred to or defined, but the Competition Act prohibits anti-competitive agreements.

The following agreements between or among competitors are considered anti-competitive and are generally prohibited:

1• Restricting competition as to price, the price of components, or other terms of trade.

1• Fixing price at an auction or in any form of bidding including cover bidding, bid suppression, bid rotation and market
allocation and other analogous practices of bid manipulation.
(Section 14, Competition Act.)

In addition, the following agreements between or among competitors are prohibited for having the object or effect of
substantially preventing, restricting or lessening competition:

1• Setting, making, or controlling production, markets, technical development, or investment.
1• Dividing or sharing the market, whether by volume of sales or purchases, territory, type of goods or services, buyers or
sellers or any other means.
Other agreements which have the object or effect of substantially preventing, restricting or lessening competition are also be
prohibited (section 14, Competition Act).

The Office for Competition under the Department of Justice (DOJ-OFC) is tasked with conducting preliminary investigations
into cartel behaviour and the prosecution of all criminal offences covered by the Competition Act and other competition-
related laws (section 13, Competition Act).

In the enforcement of the competition law, the Competition Commission, on its own, or on the filing of a verified complaint
has the sole and exclusive authority to initiate and conduct a fact-finding or preliminary inquiry. After the Competition
Commission considers the statements, documents or articles produced during the fact-finding or preliminary inquiry, it will
conclude its investigation by either:

1• Issuing a resolution ordering closure of the investigation, if no violation is found.
1• Issuing a resolution to proceed to the conduct of a full administrative investigation.
(Section 31, Competition Act).

The Competition Commission can issue an order for the respondent entity to cease and desist the carrying out of acts of cartel
behaviour, the continued performance of which would result in a material and adverse effect on consumers or competition in
the relevant market. The issuance of the order must be done following due notice and hearing, and on the basis of facts and
evidence presented (section 31, Competition Act).

The Competition Commission can file criminal complaints to the Department of Justice (DOJ) for violations of the
Competition Act or relevant laws for preliminary investigation and prosecution before the proper court if the evidence so
warrants. The DOJ will then conduct the preliminary investigation in accordance with the Revised Rules of Criminal
Procedure (section 31, Competition Act).

The Competition Commission can conduct inquiries by:

1• Administering oaths.
1• Issuing subpoena duces tecum.
1• Summoning witnesses.
1• Commissioning consultants or experts.
The Commission is responsible for determining whether any provision of the Competition Act has been violated. The
Commission is empowered to enforce its orders and carry out its resolutions by making use of any available means,
provisional or otherwise, under existing laws and procedures including the power to punish for contempt and to impose fines
(section 33, Competition Act).

Entities participating in cartels which may qualify as anti-competitive agreements under the Competition Act can be
subjected to administrative and criminal penalties. The Commission can impose administrative fines on any entity found to
have violated the provision on anti-competitive agreement. The range of administrative penalties is as follows:

1• For the first offence: a fine of up to PHP100 million.
1• For the second offence: a fine of PHP100 million to PHP250 million.
(Section 29, Competition Act).

With respect to criminal liability, an entity that enters into any anti-competitive agreement will be subject to imprisonment of
two to seven years, and a fine of PHP50 million to PHP250 million. The law imposes the penalty of imprisonment on the
company’s officers, directors, or employees holding managerial positions, who are knowingly and wilfully responsible for
the violation when juridical entities are involved (section 30, Competition Act).

Immunity and leniency

37. In what circumstances it possible to obtain immunity/leniency for co-operation with the
authorities?

The Competition Commission may grant immunity from the lawsuit or a reduction to the fine which would otherwise be
imposed on a participant in an anti-competitive agreement. Immunity would be granted in exchange for the voluntary
disclosure of information regarding the agreement if it satisfies specific criteria prior to or during the fact-finding or
preliminary investigation stage. Immunity from a lawsuit will be granted to the entity if all of the following conditions are
met:

1• At the time the entity comes forward, the Competition Commission has not received information about the activity
from any other source.
1• Upon the entity’s discovery of illegal activity, the entity took prompt and effective action to terminate its participation
in the agreement.
1• The entity reports the wrongdoing with candor and completeness and provides full, continuing, and complete co-
operation throughout the investigation.
1• The entity did not coerce another party to participate in the activity and clearly was not the leader in, or the originator
of, the activity.
Even where the Competition Commission has received information about the illegal activity after commencing a fact-finding
or preliminary inquiry, the reporting entity will be granted leniency, provided the second and third conditions listed above
and the following additional requirements are complied with:

1• The entity is the first to come forward and qualify for leniency.
1• At the time the entity comes forward, the Commission does not have evidence against the entity that is likely to result
in a sustainable conviction.
1• The Commission determines that granting leniency would not be unfair to others.
The DOJ-OFC may also grant leniency or immunity when there is already a preliminary investigation pending before it
(section 35, Competition Act).

Cross-border co-operation

38. What international agreements and legal instruments are available for local authorities?

Obtaining evidence

The Corruption Convention mandates for international co-operation, requiring member state parties to co-operate in criminal
matters in accordance with the Convention. The Convention provides that states must consider assisting each other in
investigations and proceedings on civil and administrative matters relating to corruption where appropriate and consistent
with their domestic legal system.

The Corruption Convention requires states to provide each other with the widest possible mutual legal assistance in
investigations, prosecutions and judicial proceedings in relation to the offences covered under the Convention. Mutual legal
assistance to be afforded may be requested for the purpose of (among other things):

1• Taking evidence or statements of persons.
1• Effecting service of judicial documents.
1• Executing searches and seizures, and freezing orders.
1• Examining objects and sites.
1• Providing information, evidentiary items and expert evaluations.
1• Providing originals or certified copies of relevant documents.
The parties (both prosecution and defence) may likewise obtain evidence abroad through discovery procedures or the modes
of discovery sanctioned by the Rules of Court. These discovery procedures include the taking of depositions. The Rules of
Court provide that depositions can be taken outside of the Philippines before:

1• A secretary of embassy or legation, consul general, consul, vice-consul, or consular agent of the Republic of the
Philippines.
1• A person or officer as may be appointed by commission or under letters rogatory.
1• A person authorised to administer oaths by written stipulation of the parties.
With respect to money-laundering, the AMLA provides for mutual assistance among states. The Anti-Money Laundering
Council (AMLC) can obtain assistance from a foreign country. The AMLA provides that the AMLC may make a request to

any foreign state for assistance in:

1• Tracking down, freezing, restraining and seizing assets alleged to be proceeds of any unlawful activity.
1• Obtaining information needed in relation to any covered transaction, money laundering offence or any other matter
directly or indirectly related to such offence.
1• To the extent allowed by the laws of the foreign state, applying with the proper court of the foreign jurisdiction for an
order to enter any premises belonging to or in the possession or control of, any or all of the persons named in the
request, and/or search any or all such persons named in the request and/or remove any document, material or object
named in the request.

Seizing assets

The Corruption Convention requires states to provide each other with the widest possible measures of mutual legal assistance
in investigations, prosecutions and judicial proceedings in relation to offences covered under the Convention. The mutual
legal assistance to be afforded can be requested for the purpose of executing searches and seizures, and freezing orders
(among others).

The Corruption Convention provides for measures for the direct recovery of property. For example, the Convention requires
parties to take such measures as necessary to permit another state party to initiate a civil action in its courts to establish title
to or ownership of property acquired through the commission of an offence established in accordance with this Convention,
in accordance with its domestic law. The Corruption Convention provides that it will apply to the prevention, investigation
and prosecution of corruption and to the freezing, seizure, confiscation and return of any proceeds of offences established in
accordance with the Convention.

The proceeds of the crime, as well as the instruments or tools with which it was committed, can also be seized under local
laws.

Sharing information

As to the sharing of information, the AMLA provides for mutual assistance among states. The AMLC may execute the
request where a foreign state makes a request for assistance in the investigation or prosecution of a money laundering
offence. The AMLC may also refuse to execute the request and will inform the foreign state of any valid reason for not
executing the request or for delaying its execution. The AMLC may execute a request for assistance from a foreign state by
providing the state with information requested through the procedures set out in the AMLA.
39. In what circumstances will domestic criminal courts assert extra-territorial jurisdiction?

Under the Penal Code, domestic criminal courts can assert extra-territorial jurisdiction for crimes committed by those who:

1• Commit an offence while on a Philippine ship or airship.
1• Forge or counterfeit any coin or currency note of the Philippines Government or obligations and securities issued by the
government.
1• Are liable for introducing forged or counterfeit obligations and securities into the Philippines.

1• While being public officers or employees, commit offences in the exercise of their functions.
1• Commit any of the crimes against national security and the law of nations.
Furthermore, the Competition Act is enforceable against any person or entity engaged in any trade, industry and commerce in
the Philippines. The Competition Act also applies to international trade that has direct, substantial, and reasonably
foreseeable effects in trade, industry, or commerce in the Philippines, including acts done outside the Philippines.
40. Does your jurisdiction have any statutes aimed at blocking the assertion of foreign
jurisdictions within your territory? Are there statutes aimed at blocking the assertion of foreign
jurisdictions within their territory?

The Constitution will take precedence if a conflict with international law arises. If the international law conflicts with
domestic law, both will be given effect, but if they are inconsistent, the law which is later in date will prevail.

Furthermore, even if the parties agree that laws other than Philippine laws will govern their contracts/transactions, the Civil
Code limits the applicability of the stipulated foreign law if any provision conflicts with the prohibitive laws of the
Philippines, public order, public policy or good customs.

The Philippines also adheres to the principles of conflict of laws in cases involving parties or acts belonging to different
jurisdictions. For example, a stipulation on the choice of forum is generally recognised and respected under Philippine law.
However, such stipulation may be set aside and the parties may be compelled to litigate before a court other than the one
specified, based on the principle of forum non-conveniens. Under this principle, a Philippine court may assume jurisdiction
over a dispute if the following requisites are met:

1• The court is one to which the parties may conveniently resort to.
1• The court is in a position to make an intelligent decision as to the law and the facts.
1• The court has, or is likely to have, power to enforce its decision.
(Bank of America NT v Court of Appeals, GR No 120135, 31 March 2003).

The Philippines also adheres to the territoriality principle (where the penal laws punish crimes committed within Philippine
territory). Crimes committed outside the Philippines are not within the country’s jurisdiction to be penalised, except only for
certain crimes.

Whistleblowing

41. Are whistleblowers given statutory protection?

There is no Philippine employment law dealing specifically with whistleblowers within private business establishments.
There is also no statutory definition of a whistleblower or a statutory comparison between a whistleblower and a leaker.

Issues relating to whistleblower protection within private employers are subject to general Philippine employment and
contract laws.

To illustrate, an employer can only dismiss an employee if both:

1• There is a legal (that is, a just or authorised) cause for the dismissal as defined in the Labour Code of the Philippines
(Labour Code).
1• The employer has observed the procedures required for the cause of the termination.
”Just” causes are those arising from wrongful acts or omissions of the employee, while “authorised” causes are based on
economic considerations of the employer or health condition of the employee.

Whistleblowing made in good faith should not be considered as a ground to discipline an employee. However, malicious
and/or baseless accusations may constitute misconduct, which may merit the imposition of disciplinary sanctions up to and
including dismissal, depending on the gravity of the offence and other circumstances surrounding the malicious and/or
baseless accusations.

Other broad protections arising from Philippine employment laws include rules against discrimination of employees and non-
diminution of benefits. For example, it is “unlawful for an employer to refuse to pay or to reduce wages and benefits,
discharge or in any manner discriminate against any employee who has filed any complaint or instituted any proceeding
under [the Labor Code, Title on Wages] or has testified or is about to testify in such proceedings.” Moreover, it is considered
unfair labour practice for an employer to “dismiss, discharge, or otherwise prejudice or discriminate against an employee for
having given or being about to give testimony under [the Labour] Code.”

Under the general laws on contract, the employer and employee may agree on the type of rights and protections afforded to
whistleblowers through their employment agreement and company policies or practices on whistleblowing, provided such
rights and protections are not contrary to law, morals, good customs, public order, or public policy.

From a criminal law perspective, a person involved in an offence may be excluded from a criminal charge if he/she becomes
a state witness in accordance with the law. However, the accused who appears the most guilty will be disqualified from being
a state witness.

Reform, trends and developments

42. Are there any impending developments or proposals for reform?

There are movements to amend the SRC to gain full membership status in the global associations of securities exchange
organisations. The proposed amendments to the SRC seek to protect investors, timely detect fraud or scams, and provide
greater participation in cross-border financial incentives.

Market practice


43. What are the main steps foreign and local companies are taking to manage their exposure to
corruption/corporate crime?

Foreign and local companies usually manage their exposure to corruption/corporate crime by:

1• Adopting internal compliance manuals.
1• Appointing internal compliance officers.
1• Briefing their employees or representatives on compliance laws and regulations.

Contributor profiles

Donemark L Calimon, Partner and Head, Dispute Resolution Practice Group

Quisumbing Torres, Member Firm of Baker & McKenzie International
T +63 2 8819 4920
F +63 2 8816 0080
E [email protected]
W www.bakermckenzie.com/en/locations/asia-pacific/philippines

Professional qualifications. Philippine Bar, 2001

Areas of practice. Commercial litigation and arbitration; dispute resolution; industrials; manufacturing and transportation

Non-professional qualifications. AB Philosophy, Immaculate Conception Major Seminary, 1995

Recent transactions

1• Assisting the Philippine subsidiary of one of the world’s leading suppliers of cement and aggregates in a commercial
arbitration under the Rules of the PDRCI. The case involved the termination of a Port Services Agreement by the
client. The value of the dispute: about PHP1.8 billion.
1• Representing an information technology company in a dispute involving services rendered under a contract to supply
the SEA Games Information System, worth around USD3 million.
1• Advising a subsidiary of a multinational oil and gas company in connection with its issues relating or arising from its
International Centre for Settlement of Investment Disputes (ICSID) Arbitration against the Republic of the
Philippines.
Languages. English, Filipino

Professional associations/memberships


1• Integrated Bar of the Philippines Arbitration Center – Executive Director (July 2017 to July 2019).
1• Integrated Bar of the Philippines - Presidential Assistant on Alternative Dispute Resolution (July 2015 to June 2017).
1• Philippine Institute of Arbitrators – President.
1• Philippine Dispute Resolution Center, Inc - Accredited Arbitrator.
1• Philippine International Center for Conflict Resolution (PICCR) - Secretary General.
1• Asia-Pacific Forum for International Arbitration (AFIA).
1• Construction Industry Arbitration Commission (CIAC). Accredited Arbitrator.
1• Wholesale Electricity Spot Market, Accredited Arbitrator.
1• Philippine Intellectual Property Office, Accredited Arbitrator.
1• Legal Management Council of the Philippines (LMCP).
1• The Chartered Institute of Arbitrators (East Asia Branch), Philippine Chapter - Member (MCIArb).
1• Singapore International Arbitration Centre (SIAC) - User’s Council Member.
1• Singapore International Arbitration Centre (SIAC) - Member, Panel of Arbitrators.
1• Office for Alternative Dispute Resolution (OADR) - Technical Working Group on Amendments to Philippine
Arbitration Law.
1• International Council for Commercial Arbitration.
1• International Bar Association.
1• Inter-Pacific Bar Association.

Kenneth L Chua, Partner and Head, Employment Practice Group

T +63 2 8819 4940
F +63 2 8816 0080
E [email protected]


Areas of practice. Employment and compensation; employment litigation; business change and restructuring; global
equity services.

Non-professional qualifications. BS Hons, Ateneo de Manila University, 1989

Recent transactions

1• Successfully defended a multinational tire manufacturing company against its former employees that sued the client

to ask the court to declare invalid the post-employment non-compete agreements that they signed.
1• Successfully assisted a wireless enterprise and broadband connectivity company with the Department (Ministry) of
Labor and Employment (DOLE)’s surprise inspection of the client in May 2017, including remedial measures that
the inspector required. The DOLE eventually issued an order clearing the client of any violations.
1• Assist a multinational corporation that provides insurance, reinsurance, employment benefits advice and brokerage
services, in connection with the exit of its second most senior employee in the Philippines by reason of redundancy.
Languages. English; Filipino; Fookien; Mandarin


1• Integrated Bar of the Philippines.
1• Philippine Department (Ministry) of Labor and Employment - Member of Tripartite Executive Committee.
1• Employers Confederation of the Philippines.
1• Global In-House Centre Council Philippines.

Alain Charles J Veloso, Partner, Corporate & Commercial Practice Group

T +63 2 8819 4954
F +63 2 8816 0080
E [email protected]


Areas of practice. Mergers and acquisitions; public M&A; capital markets; private equity, anti-trust and competition;
trade and commerce, fintech.

Non-professional qualifications. EU Competition Law, London School of Economics and Political Science, 2017; BS
Accountancy, University of the Philippines, 2001

Recent transactions

1• Advising a Taiwan-listed company on issues relating to the re-development of the assets of a Philippine Stock
Exchange (PSE)-listed corporation.
1• Assisting an international development finance institution in a disaster risk financing project in the Philippines that
involves the creation of a parametric insurance pool for cities, which is the first of its kind in the world.
1• Assisting a technology-led business process services company headquartered in the US with regard to the Philippine
aspects of its internal global restructuring.



1• Integrated Bar of the Philippines, Member.
1• Philippine Institute of Certified Public Accountants.

Dranyl Jared P Amoroso, Senior Associate, Dispute Resolution Practice Group

T +63 2 8819 4971
F +63 2 8816 0080
E [email protected]


Areas of practice. Commercial litigation; criminal litigation; arbitration.

Non-professional qualifications. AB Economics, Ateneo de Manila University, 2006

Recent transactions

1• Advising and representing a financial services company in a raid conducted by the NBI, acting as defence counsel
for the company’s employees which were arrested and detained by the NBI, resulting in the release of such
employees and dismissal of the cases.
1• Advising and representing a multinational engineering firm in defence of its officers arrested and detained by the
NBI, resulting in the officers’ release.
1• Advising and representing a financial services company in prosecuting employees engaged in cyber fraud activities,
resulting in several arrests and a conviction.
1• Advising and representing a pharmaceutical company in prosecuting a multimillion estafa case against a former
broker resulting in the latter’s conviction.


1• Philippine Institute of Arbitrators (PIArb) - Trustee and Senior Vice-President for Advocacies.
1• Philippine Dispute Resolution Center Inc (PDRCI) - Trained Arbitrator.
1• Chartered Institute of Arbitrators (CIArb) (East Asia Branch) - Member (MCIArb).
1• Wholesale Electricity Spot Market (WESM) - Accredited Arbitrator.
1• International Bar Association (IBA) – Member.

1• Integrated Bar of the Philippines (IBP) – Member.
1• Joint Cyber Security Working Group (JCSWG) – Member.
1• Ateneo Legal Services Center - Supervising Lawyer.
1• Far Eastern University Institute of Law – Lecturer.

Patrick Henry D Salazar, Senior Associate, Employment Practice Group

T +63 2 8819 4932
F +63 2 8816 0080
E [email protected]


Areas of practice. Employment and compensation; managing business change and disruption; employment litigation;
consumer goods and retail; healthcare and life sciences.

Non-professional qualifications. AB Legal Management, University of Santo Tomas, 2008

Recent transactions

1• Assisting a mixed-signal and digital signal processing technology company in the disciplinary investigation of a
high-ranking officer, who is privy to human resources processes and policies.
1• Assisting an American multinational entertainment company that specialises in streaming media and video-on-
demand online platform, on Philippine employment laws on hiring and various employment-related issues, including
corporate and employment tax obligations, in relation to the establishment and/or management of outsourcing
operations in the Philippines.
1• Assisting a company that operates as an online casino portal in relation to a labour dispute between the client and an
independent contractor. We have represented the client during conciliation-mediation conferences and submitted
pleadings before the labour court to defend the client’s position.



Alvin Tan, Associate, Corporate and Commercial Practice Group

T +63 2 8819 4941

F +63 2 8816 0080

E [email protected]


Areas of practice. Anti-trust and competition; corporate governance; corporate reorganisations; mergers and acquisitions.

Non-professional qualifications. BS Management Major in Legal Management, Ateneo de Manila University, 2014;
Exchange Student Programme, Singapore Management University, 2012

Recent transactions

1• Preparing advice to a Chinese investment company that operates in real estate, mining and energy, biomedicine, new
materials, and venture capital investment sectors on Philippine anti-trust and competition law in connection with the
proposed mixed-use development in Bonifacio Global City, to be built on land leased from the Bases Conversion and
Development Authority.
1• Preparing advice to a European company on its participation in bidding for a government contract and entry into joint
venture with a Philippine company.
1• Providing legal services for a major downstream oil and gas company in relation to the turnover and disposition of an
oil depot.


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Financial crime in the Philippines: overview, Practical Law Country Q&A w-017-9057

Financial crime in the Philippines: overview

1• Access Devices Law (Republic Act No 8484).

1• Civil Code of the Philippines (Civil Code).

1• National Internal Revenue Code (Tax Code).

1• Cybercrime Prevention Act (Cybercrime Act).

2. What are the specific offences relevant to corporate fraud?

1• Using, with intent to defraud, an unauthorised access device.

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1• Any waiver of an action for future fraud is void (Article 1171).

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The main authorities are:

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5. What are the sanctions for participating in corporate fraud?

1• He/she is a flight risk.

Penalties. The following penalties apply:

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1• the act falls within the scope of authority of such individual.

1• The right to counsel.

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1• The right to remain silent.

1• A right to exclude unlawfully-obtained evidence.

1• Anti-graft and Corrupt Practices Act (Republic Act No 3019).

8. What international anti-corruption conventions apply in your jurisdiction?

1• the performance of an act, which is either a crime or an unjust act; or

1• Engaging in the private practice of profession by certain public officials.

© 2020 Thomson Reuters. All rights reserved.

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1• Official or employee of any local government unit.

1• Official or employee of a government-owned or government-controlled corporation.

1• Official or employee or representative of a foreign government.

1• Private corporation, general professional partnership, or a similar entity.

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1• MNPI was disclosed to the other party; and

MNPI is defined as information that either:

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1• MNPI was disclosed to the other party; and

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1• Other penalties within the SEC’s powers to impose.

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1• transacts the monetary instrument or property;

1• attempts or conspires to commit money laundering offences;

1• By a terrorist organisation, association, or group.

For details of criminal charges, see also Question 3.

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For details of criminal charges, see also Question 4.

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1• The taxpayer requests reinvestigation.

0• Verification of compliance with withholding tax laws and regulations.

1• Verification of capital gains tax liabilities.

1• Other penalties within the power of the SEC.

1• Execute client orders on the best available terms.

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