Rules and Regulations Implementing Executive Orders No. 1 and No. 2 (11 April 1986)

Pursuant to the authority vested in the Commission under Executive Order No. 1, the following rules and regulations are hereby promulgated for the guidance of all concerned.

Sec. 1. Definition.

(A) “Ill-gotten wealth” is hereby defined as any asset, property, business enterprise or material possession of persons within the purview of Executive Orders Nos. 1 and 2, acquired by them directly, or indirectly thru dummies, nominees, agents, subordinates and/or business associates by any of the following means or similar schemes:

(1) Through misappropriation, conversion, misuse or malversation of public funds or raids on the public treasury;

(2) Through the receipt, directly or indirectly, of any commission, gift, share, percentage, kickbacks or any other form of pecuniary benefit from any person and/or entity in connection with any government contract or project or by reason of the office or position of the official concerned.

(3) By the illegal or fraudulent conveyance or disposition of assets belonging to the government or any of its subdivisions, agencies or instrumentalities or government-owned or controlled corporations;

(4) By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any other form of interest or participation in any business enterprise or undertaking;

(5) Through the establishment of agricultural, industrial or commercial monopolies or other combination and/or by the issuance, promulgation and/or implementation of decrees and orders intended to benefit particular persons or special interests; and

(6) By taking undue advantage of official position, authority, relationship or influence for personal gain or benefit.

(B) “Sequestration” means taking into custody or placing under the Commission’s control or possession any asset, fund or other property, as well as relevant records, papers and documents, in order to prevent their concealment, destruction, impairment or dissipation pending determination of the question whether the said asset, fund or property is ill-gotten wealth under Executive Orders Nos. 1 and 2.

In the sequestration of an on-going enterprise, the Commission shall appoint a fiscal agent therein to prevent the transfer, syphoning or dissipation of funds and assets and to audit transactions. Sequestration shall not result in the take-over of the operations of the business, unless otherwise warranted by the exigencies of the situation or required in the national interest.

(C) “Freeze order” is an order intended to stop or prevent any act or transaction which may affect the title, possession, status, condition, integrity or value of the asset or property which is or might be the object of any action or proceeding under Executive Orders Nos. 1 and 2, with a view to preserving and conserving the same or to preventing its transfer, concealment, disposition, destruction or dissipation.

(D) “Hold order” means an order to temporarily prevent a person from leaving the country where his departure will prejudice, hamper or otherwise obstruct the task of the Commission in the enforcement of Executive Orders Nos. 1 and 2, because such person is known or suspected to be involved in the properties or transactions covered by said Executive Orders. A “hold order” shall be valid only for a maximum period of six months, unless for good reasons extended by the Commission en banc.

Sec. 2. Writ of sequestration, freeze, and hold orders. To enable the Commission to accomplish its task of recovering ill-gotten wealth, it may issue writs of sequestration and freeze and/or hold orders.

Sec. 3. Who may issue. A writ of sequestration or a freeze or hold order may be issued by the Commission upon the authority of at least two Commissioners, based on the affirmation or complaint of an interested party or motu proprio when the Commission has reasonable grounds to believe that the issuance thereof is warranted.

Sec. 4. How service made. Service of the writ of sequestration or freeze order shall be made in the same manner as service of summons under the Revised Rules of Court. Refusal of the party concerned to accept service shall not prevent the enforcement of the writ of order. Whenever necessary in the public interest, the Commission may order or authorize the break-in or forcible entry into the premises to locate and secure the properties to be sequestered.

A hold order shall be communicated to the appropriate governmental authorities for implementation.

Sec. 5. Who may contest. The person against whom a writ of sequestration or freeze or hold order is directed may request the lifting thereof in writing, either personally or through counsel within five (5) days from receipt of the writ of order, or in case of a hold order, from date of knowledge thereof.

Sec. 6. Procedure for review of writ or order. After due hearing or motu proprio for good cause shown, the Commission may lift the writ of order unconditionally or subject to such conditions as it may deem necessary, taking into consideration the evidence and the circumstance of the case. The resolution of the Commission may be appealed by the party concerned to the Office of the President of the Philippines within fifteen (15) days from receipt thereof.

Sec. 7. Conduct of investigations. The Commission may conduct a hearing, after due notice to the party or parties concerned within the purview of Executive Orders Nos. 1 and 2, to ascertain whether any particular asset, property or enterprise constitutes ill-gotten wealth and to determine the appropriate action to be taken in order to carry out the purposes of said Executive Orders.

If the party concerned is in the Philippines, it will be sufficient to serve notice of the hearing on him personally or by registered mail.

In case the party concerned is abroad or his whereabouts are unknown, the notice shall be published in two newspapers of general circulation in the Philippines. The notice shall state the date, time and place of hearing, which shall not be earlier than ten (10) days from the date of publication. A copy of the notice shall also be sent by registered mail to the party concerned at his address abroad, if known.

Sec. 8. Hearing. The Commission, in the exercise of its powers to investigate or hear cases within its jurisdiction shall act according to the requirements of due process and fairness, and shall not be strictly bound by the technical rules of evidence. The hearing shall be open to the public.

Sec. 9. Prima facie evidence. Any accumulation of assets, properties and other material possessions of these persons covered by Executive Orders Nos. 1 and 2, whose value is out of proportion to their known lawful income is prima facie deemed ill-gotten wealth.

Sec. 10. Findings of the Commission. Based on the evidence adduced, the Commission shall determine whether there is reasonable ground to believe that the asset, property or business enterprise in question constitute ill-gotten wealth as described in Executive Orders Nos. 1 and 2. In the event of an affirmative finding, the Commission shall certify the case to the Solicitor General for appropriate action in accordance with law. Businesses, properties, funds and other assets found to be lawfully acquired shall be immediately released and the writ of sequestration, hold/or freeze orders lifted accordingly.

Sec. 11. Date of Effectivity. The provisions of these Rules and Regulations shall be effective immediately.

DONE in Pasig, Metro Manila, this 11th day of April, 1986.