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Congress of the PhilippinesTwelfth Congress

REPUBLIC ACT NO. 9160 September 29, 2001

AN ACT DEFINING THE CRIME OF MONEY LAUNDERING, PROVIDINGPENALTIES THEREFOR AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines inCongress assembled:

Section 1. Short Title. ? This Act shall be known as the "Anti-Money Laundering Act of 2001."

Section 2. Declaration of Policy. ? It is hereby declared the policy of the State toprotect and preserve the integrity and confidentiality of bank accounts and to

ensure that the Philippines shall not be used as a money laundering site for theproceeds of any unlawful activity. Consistent with its foreign policy, the Stateshall extend cooperation in transnational investigations and prosecutions of persons involved in money laundering activities whenever committed.

Section 3. Definitions. For purposes of this Act, the following terms are herebydefined as follows:

(a) " Covered Institution " refers to:

(1) banks, non-banks, quasi-banks, trust entities, and all other

institutions and their subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP);

(2) Insurance companies and all other institutions supervised or regulated by the Insurance Commission; and

(3) (i) securities dealers, brokers, salesmen, investment housesand other similar entities managing securities or rendering servicesas investment agent, advisor, or consultant, (ii) mutual funds, closeand investment companies, common trust funds, pre-needcompanies and other similar entities, (iii) foreign exchange

corporations, money changers, money payment, remittance, andtransfer companies and other similar entities, and (iv) other entitiesadministering or otherwise dealing in currency, commodities or financial derivatives based thereon, valuable objects, cashsubstitutes and other similar monetary instruments or propertysupervised or regulated by Securities and Exchange Commission.

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(b) " Covered transaction " is a single, series, or combination of transactions involving a total amount in excess of Four million Philippinepesos (Php4,000,000.00) or an equivalent amount in foreign currencybased on the prevailing exchange rate within five (5) consecutive bankingdays except those between a covered institution and a person who, at the

time of the transaction was a properly identified client and the amount iscommensurate with the business or financial capacity of the client; or those with an underlying legal or trade obligation, purpose, origin or economic justification.

It likewise refers to a single, series or combination or pattern of unusuallylarge and complex transactions in excess of Four million Philippine pesos(Php4,000,000.00) especially cash deposits and investments having nocredible purpose or origin, underlying trade obligation or contract.

(c) " Monetary Instrument " refers to:

(1) coins or currency of legal tender of the Philippines, or of anyother country;

(2) drafts, checks and notes;

(3) securities or negotiable instruments, bonds, commercial papers,deposit certificates, trust certificates, custodial receipts or depositsubstitute instruments, trading orders, transaction tickets andconfirmations of sale or investments and money markedinstruments; and

(4) other similar instruments where title thereto passes to another by endorsement, assignment or delivery.

(d) " Offender " refers to any person who commits a money launderingoffense.

(e) " Person " refers to any natural or juridical person.

(f) "Proceeds " refers to an amount derived or realized from an unlawfulactivity.

(g) " Supervising Authority " refers to the appropriate supervisory or regulatory agency, department or office supervising or regulating thecovered institutions enumerated in Section 3(a).

(h) " Transaction " refers to any act establishing any right or obligation or giving rise to any contractual or legal relationship between the parties

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thereto. It also includes any movement of funds by any means with acovered institution.

(l) "Unlawful activity " refers to any act or omission or series or combination thereof involving or having relation to the following:

(1) Kidnapping for ransom under Article 267 of Act No. 3815,otherwise known as the Revised Penal Code, as amended;

(2) Sections 3, 4, 5, 7, 8 and 9 of Article Two of Republic Act No.6425, as amended, otherwise known as the Dangerous Drugs Actof 1972;

(3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No.3019, as amended; otherwise known as the Anti-Graft and CorruptPractices Act;

(4) Plunder under Republic Act No. 7080, as amended;

(5) Robbery and extortion under Articles 294, 295, 296, 299, 300,301 and 302 of the Revised Penal Code, as amended;

(6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. 1602;

(7) Piracy on the high seas under the Revised Penal Code, asamended and Presidential Decree No. 532;

(8) Qualified theft under, Article 310 of the Revised Penal Code, asamended;

(9) Swindling under Article 315 of the Revised Penal Code, asamended;

(10) Smuggling under Republic Act Nos. 455 and 1937;

(11) Violations under Republic Act No. 8792, otherwise known asthe Electronic Commerce Act of 2000;

(12) Hijacking and other violations under Republic Act No. 6235;destructive arson and murder, as defined under the Revised PenalCode, as amended, including those perpetrated by terroristsagainst non-combatant persons and similar targets;

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(13) Fraudulent practices and other violations under Republic ActNo. 8799, otherwise known as the Securities Regulation Code of 2000;

(14) Felonies or offenses of a similar nature that are punishable

under the penal laws of other countries.

Section 4. Money Laundering Offense. ? Money laundering is a crime wherebythe proceeds of an unlawful activity are transacted, thereby making them appear to have originated from legitimate sources. It is committed by the following:

(a) Any person knowing that any monetary instrument or propertyrepresents, involves, or relates to the proceeds of any unlawful activity,transacts or attempts to transact said monetary instrument or property.

(b) Any person knowing that any monetary instrument or property involves

the proceeds of any unlawful activity, performs or fails to perform any actas a result of which he facilitates the offense of money laundering referredto in paragraph (a) above.

(c) Any person knowing that any monetary instrument or property isrequired under this Act to be disclosed and filed with the Anti-MoneyLaundering Council (AMLC), fails to do so.

Section 5. Jurisdiction of Money Laundering Cases. ? The regional trial courtsshall have jurisdiction to try all cases on money laundering. Those committed bypublic officers and private persons who are in conspiracy with such public officers

shall be under the jurisdiction of the Sandiganbayan.Section 6. Prosecution of Money Laundering. ?

(a) Any person may be charged with and convicted of both the offense of money laundering and the unlawful activity as herein defined.

(b) Any proceeding relating to the unlawful activity shall be givenprecedence over the prosecution of any offense or violation under this Actwithout prejudice to the freezing and other remedies provided.

Section 7. Creation of Anti-Money Laundering Council (AMLC). ? The Anti-Money Laundering Council is hereby created and shall be composed of theGovernor of the Bangko Sentral ng Pilipinas as chairman, the Commissioner of the Insurance Commission and the Chairman of the Securities and ExchangeCommission as members. The AMLC shall act unanimously in the discharge of its functions as defined hereunder:

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(1) to require and receive covered transaction reports from coveredinstitutions;

(2) to issue orders addressed to the appropriate Supervising Authority or the covered institution to determine the true identity of the owner of any

monetary instrument or property subject of a covered transaction report or request for assistance from a foreign State, or believed by the Council, onthe basis of substantial evidence to be in whole or in part, whenever located, representing, involving, or related to, directly or indirectly, in anymanner or by any means, the proceeds of an unlawful activity;

(3) to institute civil forfeiture proceedings and all other remedialproceedings through the Office of the Solicitor General;

(4) to cause the filing of complaints with the Department of Justice or theOmbudsman for the prosecution of money laundering offenses;

(5) to initiate investigations of covered transactions, money launderingactivities and other violations of this Act;

(6) to freeze any monetary instrument or property alleged to be proceed of any unlawful activity;

(7) to implement such measures as may be necessary and justified under this Act to counteract money laundering;

(8) to receive and take action in respect of, any request from foreign states

for assistance in their own anti-money laundering operations provided inthis Act;

(9) to develop educational programs on the pernicious effects of moneylaundering, the methods and techniques used in money laundering, theviable means of preventing money laundering and the effective ways of prosecuting and punishing offenders; and

(10) to enlist the assistance of any branch, department, bureau, office,agency or instrumentality of the government, including government-ownedand ?controlled corporations, in undertaking any and all anti-money

laundering operations, which may include the use of its personnel,facilities and resources for the more resolute prevention, detection andinvestigation of money laundering offenses and prosecution of offenders.

Section 8. Creation of a Secretariat. ? The AMLC is hereby authorized toestablish a secretariat to be headed by an Executive Director who shall beappointed by the Council for a term of five (5) years. He must be a member of thePhilippine Bar, at least thirty-five (35) years of age and of good moral character,

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unquestionable integrity and known probity. All members of the Secretariat musthave served for at least five (5) years either in the Insurance Commission, theSecurities and Exchange Commission or the Bangko Sentral ng Pilipinas (BSP)and shall hold full-time permanent positions within the BSP.

Section 9. Prevention of Money Laundering; Customer IdentificationRequirements and Record Keeping. ?

(a) Customer Identification , - Covered institutions shall establish andrecord the true identity of its clients based on official documents. Theyshall maintain a system of verifying the true identity of their clients and, incase of corporate clients, require a system of verifying their legalexistence and organizational structure, as well as the authority andidentification of all persons purporting to act on their behalf.

The provisions of existing laws to the contrary notwithstanding,

anonymous accounts, accounts under fictitious names, and all other similar accounts shall be absolutely prohibited. Peso and foreign currencynon-checking numbered accounts shall be allowed. The BSP may conductannual testing solely limited to the determination of the existence and trueidentity of the owners of such accounts.

(b) Record Keeping ? All records of all transactions of coveredinstitutions shall be maintained and safely stored for five (5) years from thedate of transactions. With respect to closed accounts, the records oncustomer identification, account files and business correspondence, shallbe preserved and safety stored for at least five (5) years from the dates

when they were closed.(c) Reporting of Covered Transactions . ? Covered institutions shallreport to the AMLC all covered transactions within five (5) working daysfrom occurrence thereof, unless the Supervising Authority concernedprescribes a longer period not exceeding ten (10) working days.

When reporting covered transactions to the AMLC, covered institutions and their officers, employees, representatives, agents, advisors, consultants or associatesshall not be deemed to have violated Republic Act No. 1405, as amended;Republic Act No. 6426, as amended; Republic Act No. 8791 and other similar

laws, but are prohibited from communicating, directly or indirectly, in any manner or by any means, to any person the fact that a covered transaction report wasmade, the contents thereof, or any other information in relation thereto. In case of violation thereof, the concerned officer, employee, representative, agent, advisor,consultant or associate of the covered institution, shall be criminally liable.However, no administrative, criminal or civil proceedings, shall lie against anyperson for having made a covered transaction report in the regular performance

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of his duties and in good faith, whether or not such reporting results in anycriminal prosecution under this Act or any other Philippine law.

When reporting covered transactions to the AMLC, covered institutions and their officers, employees, representatives, agents, advisors, consultants or associates

are prohibited from communicating, directly or indirectly, in any manner or by anymeans, to any person, entity, the media, the fact that a covered transactionreport was made, the contents thereof, or any other information in relationthereto. Neither may such reporting be published or aired in any manner or formby the mass media, electronic mail, or other similar devices. In case of violationthereof, the concerned officer, employee, representative, agent, advisor,consultant or associate of the covered institution, or media shall be heldcriminally liable.

Section 10. Authority to Freeze. ? Upon determination that probable causeexists that any deposit or similar account is in any way related to an unlawful

activity, the AMLC may issue a freeze order, which shall be effectiveimmediately, on the account for a period not exceeding fifteen (15) days. Noticeto the depositor that his account has been frozen shall be issued simultaneouslywith the issuance of the freeze order. The depositor shall have seventy-two (72)hours upon receipt of the notice to explain why the freeze order should be lifted.The AMLC has seventy-two (72) hours to dispose of the depositor's explanation.If it falls to act within seventy-two (72) hours from receipt of the depositor'sexplanation, the freeze order shall automatically be dissolved. The fifteen (15)-day freeze order of the AMLC may be extended upon order of the court, providedthat the fifteen (15)-day period shall be tolled pending the court's decision toextend the period.

No court shall issue a temporary restraining order or writ of injunction against anyfreeze order issued by the AMLC except the Court of Appeals or the SupremeCourt.

Section 11. Authority to inquire into Bank Deposits. ? Notwithstanding theprovisions of Republic Act No. 1405, as amended; Republic Act No. 6426, asamended; Republic Act No. 8791, and other laws, the AMLC may inquire into or examine any particular deposit or investment with any banking institution or non-bank financial institution upon order of any competent court in cases of violationof this Act when it has been established that there is probable cause that thedeposits or investments involved are in any way related to a money launderingoffense: Provided , That this provision shall not apply to deposits and investmentsmade prior to the effectivity of this Act.

Section 12. Forfeiture Provisions. ?

(a) Civil Forfeiture . ? When there is a covered transaction report made,and the court has, in a petition filed for the purpose ordered seizure of any

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monetary instrument or property, in whole or in part, directly or indirectly,related to said report, the Revised Rules of Court on civil forfeiture shallapply.

(b) Claim on Forfeited Assets . ? Where the court has issued an order of

forfeiture of the monetary instrument or property in a criminal prosecutionfor any money laundering offense defined under Section 4 of this Act, theoffender or any other person claiming an interest therein may apply, byverified petition, for a declaration that the same legitimately belongs to himand for segregation or exclusion of the monetary instrument or propertycorresponding thereto. The verified petition shall be filed with the courtwhich rendered the judgment of conviction and order of forfeiture, withinfifteen (15) days from the date of the order or forfeiture, in default of whichthe said order shall become final and executory. This provision shall applyin both civil and criminal forfeiture.

(c) Payment in Lieu of Forfeiture . ? Where the court has issued an order of forfeiture of the monetary instrument or property subject of a moneylaundering offense defined under Section 4, and said order cannot beenforced because any particular monetary instrument or property cannot,with due diligence, be located, or it has been substantially altered,destroyed, diminished in value or otherwise rendered worthless by any actor omission, directly or indirectly, attributable to the offender, or it hasbeen concealed, removed, converted or otherwise transferred to preventthe same from being found or to avoid forfeiture thereof, or it is locatedoutside the Philippines or has been placed or brought outside the

jurisdiction of the court, or it has been commingled with other monetary

instruments or property belonging to either the offender himself or a thirdperson or entity, thereby rendering the same difficult to identify or besegregated for purposes of forfeiture, the court may, instead of enforcingthe order of forfeiture of the monetary instrument or property or partthereof or interest therein, accordingly order the convicted offender to payan amount equal to the value of said monetary instrument or property.This provision shall apply in both civil and criminal forfeiture.

Section 13. Mutual Assistance among States. ?

(a) Request for Assistance from a Foreign State . ? Where a foreignState makes a request for assistance in the investigation or prosecution of a money laundering offense, the AMLC may execute the request or refuseto execute the same and inform the foreign State of any valid reason for not executing the request or for delaying the execution thereof. Theprinciples of mutuality and reciprocity shall, for this purpose, be at all timesrecognized.

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(b) Power of the AMLC to Act on a Request for Assistance from aForeign State . ? The AMLC may execute a request for assistance from aforeign State by: (1) tracking down, freezing, restraining and seizingassets alleged to be proceeds of any unlawful activity under theprocedures laid down in this Act; (2) giving information needed by the

foreign State within the procedures laid down in this Act; and (3) applyingfor an order of forfeiture of any monetary instrument or property in thecourt: Provided , That the court shall not issue such an order unless theapplication is accompanied by an authenticated copy of the order of acourt in the requesting State ordering the forfeiture of said monetaryinstrument or properly of a person who has been convicted of a moneylaundering offense in the requesting State, and a certification of anaffidavit of a competent officer of the requesting State stating that theconviction and the order of forfeiture are final and then no further appeallies in respect or either.

(c) Obtaining Assistance from Foreign States . ? The AMLC may makea request to any foreign State for assistance in (1) tracking down, freezing,restraining and seizing assets alleged to be proceeds of any unlawfulactivity; (2) obtaining information that it needs relating to any coveredtransaction, money laundering offense or any other matter directly or indirectly, related thereto; (3) to the extent allowed by the law of theForeign State, applying with the proper court therein for an order to enter any 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 personsnamed therein and/or remove any document, material or object named insaid request: Provided , That the documents accompanying the request in

support of the application have been duly authenticated in accordancewith the applicable law or regulation of the foreign State; and (4) applyingfor an order of forfeiture of any monetary instrument or property in theproper court in the foreign State: Provided , That the request isaccompanied by an authenticated copy of the order of the regional trialcourt ordering the forfeiture of said monetary instrument or property of aconvicted offender and an affidavit of the clerk of court stating that theconviction and the order of forfeiture are final and that no further appeallies in respect of either.

(d) Limitations on Request for Mutual Assistance . ? The AMLC mayrefuse to comply with any request for assistance where the action soughtby the request contravenes any provision of the Constitution or theexecution of a request is likely to prejudice the national interest of thePhilippines unless there is a treaty between the Philippines and therequesting State relating to the provision of assistance in relation tomoney laundering offenses.

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(e) Requirements for Requests for Mutual Assistance from ForeignState . ? A request for mutual assistance from a foreign State must (1)confirm that an investigation or prosecution is being conducted in respectof a money launderer named therein or that he has been convicted of anymoney laundering offense; (2) state the grounds on which any person is

being investigated or prosecuted for money laundering or the details of hisconviction; (3) gives sufficient particulars as to the identity of said person;(4) give particulars sufficient to identity any covered institution believed tohave any information, document, material or object which may be of assistance to the investigation or prosecution; (5) ask from the coveredinstitution concerned any information, document, material or object whichmay be of assistance to the investigation or prosecution; (6) specify themanner in which and to whom said information, document, material or object detained pursuant to said request, is to be produced; (7) give all theparticulars necessary for the issuance by the court in the requested Stateof the writs, orders or processes needed by the requesting State; and (8)

contain such other information as may assist in the execution of therequest.

(f) Authentication of Documents . ? For purposes of this Section, adocument is authenticated if the same is signed or certified by a judge,magistrate or equivalent officer in or of, the requesting State, andauthenticated by the oath or affirmation of a witness or sealed with anofficial or public seal of a minister, secretary of State, or officer in or of, thegovernment of the requesting State, or of the person administering thegovernment or a department of the requesting territory, protectorate or colony. The certificate of authentication may also be made by a secretary

of the embassy or legation, consul general, consul, vice consul, consular agent or any officer in the foreign service of the Philippines stationed inthe foreign State in which the record is kept, and authenticated by the sealof his office.

(g) Extradition . ? The Philippines shall negotiate for the inclusion of money laundering offenses as herein defined among extraditable offensesin all future treaties.

Section 14. Penal Provisions. ?

(a) Penalties for the Crime of Money Laundering . The penalty of imprisonment ranging from seven (7) to fourteen (14) years and a fine of not less than Three million Philippine pesos (Php 3,000,000.00) but notmore than twice the value of the monetary instrument or property involvedin the offense, shall be imposed upon a person convicted under Section4(a) of this Act.

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The penalty of imprisonment from four (4) to seven (7) years and a fine of not less than One million five hundred thousand Philippine pesos (Php1,500,000.00) but not more than Three million Philippine pesos (Php3,000,000.00), shall be imposed upon a person convicted under Section4(b) of this Act.

The penalty of imprisonment from six (6) months to four (4) years or a fineof not less than One hundred thousand Philippine pesos (Php 100,000.00)but not more than Five hundred thousand Philippine pesos (Php500,000.00), or both, shall be imposed on a person convicted under Section 4(c) of this Act.

(b) Penalties for Failure to Keep Records . The penalty of imprisonmentfrom six (6) months to one (1) year or a fine of not less than One hundredthousand Philippine pesos (Php 100,000.00) but not more than Fivehundred thousand Philippine pesos (Php 500,000.00), or both, shall be

imposed on a person convicted under Section 9(b) of this Act.(c) Malicious Reporting . Any person who, with malice, or in bad faith,report or files a completely unwarranted or false information relative tomoney laundering transaction against any person shall be subject to apenalty of six (6) months to four (4) years imprisonment and a fine of notless than One hundred thousand Philippine pesos (Php 100,000.00) butnot more than Five hundred thousand Philippine pesos (Php 500,000.00),at the discretion of the court: Provided, That the offender is not entitled toavail the benefits of the Probation Law.

If the offender is a corporation, association, partnership or any juridicalperson, the penalty shall be imposed upon the responsible officers, as thecase may be, who participated in the commission of the crime or who shallhave knowingly permitted or failed to prevent its commission. If theoffender is a juridical person, the court may suspend or revoke its license.If the offender is an alien, he shall, in addition to the penalties hereinprescribed, be deported without further proceedings after serving thepenalties herein prescribed. If the offender is a public official or employee,he shall, in addition to the penalties prescribed herein, suffer perpetual or temporary absolute disqualification from office, as the case may be;

Any public official or employee who is called upon to testify and refuses todo the same or purposely fails to testify shall suffer the same penaltiesprescribed herein.

(d) Breach of Confidentiality . The punishment of imprisonment rangingfrom three (3) to eight (8) years and a fine of not less than Five hundredthousand Philippine pesos (Php 500,000.00) but not more than One

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million Philippine pesos (Php 1,000,000.00), shall be imposed on a personconvicted for a violation under Section 9(c).

Section 15. System of Incentives and Rewards. ? A system of special incentivesand rewards is hereby established to be given to the appropriate government

agency and its personnel that led and initiated an investigation, prosecution andconviction of persons involved in the offense penalized in Section 4 of this Act.

Section 16. Prohibitions Against Political Harassment. ? This Act shall not beused for political prosecution or harassment or as an instrument to hamper competition in trade and commerce.

No case for money laundering may be filed against and no assets shall befrozen, attached or forfeited to the prejudice of a candidate for an electoral officeduring an election period.

Section 17. Restitution. ? Restitution for any aggrieved party shall be governedby the provisions of the New Civil Code.

Section 18. Implementing Rules and Regulations. ? Within thirty (30) days fromthe effectivity of this Act, the Bangko Sentral ng Pilipinas, the InsuranceCommission and the Securities and Exchange Commission shall promulgate therules and regulations to implement effectivity the provisions of this Act. Said rulesand regulations shall be submitted to the Congressional Oversight Committee for approval.

Covered institutions shall formulate their respective money laundering prevention

programs in accordance with this Act including, but not limited to, informationdissemination on money laundering activities and its prevention, detection andreporting, and the training of responsible officers and personnel of coveredinstitutions.

Section 19. Congressional Oversight Committee. ? There is hereby created aCongressional Oversight Committee composed of seven (7) members from theSenate and seven (7) members from the House of Representatives. Themembers from the Senate shall be appointed by the Senate President based onthe proportional representation of the parties or coalitions therein with at leasttwo (2) Senators representing the minority. The members from the House of

Representatives shall be appointed by the Speaker also based on proportionalrepresentation of the parties or coalitions therein with at least two (2) membersrepresenting the minority.

The Oversight Committee shall have the power to promulgate its own rules, tooversee the implementation of this Act, and to review or revise the implementingrules issued by the Anti-Money Laundering Council within thirty (30) days fromthe promulgation of the said rules.

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Section 20. Appropriations Clause. ? The AMLC shall be provided with an initialappropriation of Twenty-five million Philippine pesos (Php 25,000,000.00) to bedrawn from the national government. Appropriations for the succeeding yearsshall be included in the General Appropriations Act.

Section 21. Separability Clause. ? If any provision or section of this Act or theapplication thereof to any person or circumstance is held to be invalid, the other provisions or sections of this Act, and the application of such provision or sectionto other persons or circumstances, shall not be affected thereby.

Section 22. Repealing Clause. ? All laws, decrees, executive orders, rules andregulations or parts thereof, including the relevant provisions of Republic Act No.1405, as amended; Republic Act No. 6426, as amended; Republic Act No. 8791,as amended and other similar laws, as are inconsistent with this Act, are herebyrepealed, amended or modified accordingly.

Section 23. Effectivity . ? This Act shall take effect fifteen (15) days after itscomplete publication in the Official Gazette or in at least two (2) nationalnewspapers of general circulation.

The provisions of this Act shall not apply to deposits and investments made prior to its effectivity.

Approved,

(Sgd)

FRANKLIN M. DRILONPresident of the Senate

(Sgd)

JOSE DE VENECIA, JR.Speaker of the House of Representatives

This Act which is a consolidation of House Bill No. 3083 and Senate Bill No. 1745was finally passed by the House of Representatives and the Senate onSeptember 29, 2001.

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(Sgd)

OSCAR G. YARES

Secretary of the Senate

(Sgd)

ROBERTO P. NAZARENOSecretary GeneralHouse of Representatives

Approved: September 29, 2001

(Sgd)

GLORIA MACAPAGAL-ARROYOPresident of the Philippines

RULES AND REGULATION "REPUBLIC ACT NO. 9160" ANTI-MONEY LAUNDERING ACT OF 2001

http://www.lawphil.net/statutes/repacts/ra2001/ra_9160irr_2001.htmlhttp://www.lawphil.net/statutes/repacts/ra2001/ra_9160irr_2001.htmlhttp://www.lawphil.net/statutes/repacts/ra2001/ra_9160irr_2001.htmlhttp://www.lawphil.net/statutes/repacts/ra2001/ra_9160irr_2001.html

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REPUBLIC ACT No. 7832

AN ACT PENALIZING THE PILFERAGE OF ELECTRICITY AND THEFT OFELECTRIC POWER TRANSMISSION LINES/MATERIALS, RATIONALIZING

SYSTEM LOSSES BY PHASING OUT PILFERAGE LOSSES AS ACOMPONENT THEREOF, AND FOR OTHER PURPOSES

Section 1. Short Title. - This Act shall be referred to as the "Anti-electricity andElectric Transmission Lines/Materials Pilferage Act of 1994."

Section 2. Illegal Use of Electricity. - It is hereby declared unlawful for anyperson, whether natural or juridical, public or private, to:

(a) Tap, make or cause to be made any connection with overhead lines,service drops, or other electric service wires, without previous authority or

consent of the private electric utility or rural electric cooperativeconcerned; 1awphil@alf

(b) Tap, make or cause to be made any connection to the existing electricservice facilities of any duly registered consumer without the latter's or theelectric utility's consent or authority;

(c) Tamper, install or use a tampered electrical meter, jumper, currentreversing transformer, shorting or shunting wire, loop connection or anyother device which interferes with the proper or accurate registry or metering of electric current or otherwise results in its diversion in a manner

whereby electricity is stolen or wasted;(d) Damage or destroy an electric meter, equipment, wire or conduit or allow any of them to be so damaged or destroyed as to interfere with theproper or accurate metering of electric current; and

(e) Knowingly use or receive the direct benefit of electric service obtainedthrough any of the acts mentioned in subsections (a), (b), (c), and (d)above. 1awphil@alf

Section 3. Theft of Electric Power Transmission Lines and Materials. - (a) It is

hereby declared unlawful for any person to:(1) Cut, saw, slice, separate, split, severe, smelt, or remove anyelectric power transmission line/material or meter from a tower,pole, or any other installation or place of installation or any other place or site where it may be rightfully or lawfully stored, deposited,kept, stocked, inventoried, situated or located, without the consentof the owner, whether or not the act is done for profit or gain;

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(2) Take, carry away or remove or transfer, with or without the useof a motor vehicle or other means of conveyance, any electricpower transmission line/material or meter from a tower, pole, anyother installation or place of installation, or any place or site whereit may be rightfully or lawfully stored, deposited, kept, stocked,

inventoried, situated or located without the consent of the owner,whether or not the act is done for profit or gain;

(3) Store, possess or otherwise keep in his premises, custody or control, any electric power transmission line/material or meter without the consent of the owner, whether or not the act is done for profit or gain; and

(4) Load, carry, ship or move from one place to another, whether byland, air or sea, any electrical power transmission line/material,whether or not the act is done for profit or gain, without first

securing a clearance/permit for the said purpose from its owner or the National Power Corporation (NPC) or its regional officeconcerned, as the case may be.

(b) For purposes of this section, "electrical power transmissionline/material" refers to electric power transmission steel towers,woodpoles, cables, wires, insulators, line hardwares, electrical conductorsand other related items with a minimum voltage of sixty-nine kilovolts (69kv), such as the following:

(1) Steel transmission line towers made of galvanized steel angular

members and plates or creosoted and/or lannelized woodpoles/concrete poles and designed to carry and support the conductors;

(2) Aluminum conductor steel reinforced (ACSR) in excess of onehundred (100) MCM;

(3) Overhead ground wires made of 7 strands of galvanized steelwires, 3.08 millimeters in diameter and designed to protect theelectrical conductors from lightning strikes;

(4) Insulators made of porcelain or glass shell and designed to

insulate the electrical conductors from steel towers or woodpoles;and

(5) Various transmission line hardwares and materials made of aluminum alloy or malleable steel and designed to interconnect thetowers, conductors, ground wires, and insulators mentioned insubparagraphs (1), (2), (3), and (4) above for the safe and reliableoperation of the transmission lines. 1awphil

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Section 4. Prima Facie Evidence. - (a) The presence of any of the followingcircumstances shall constitute prima facie evidence of illegal use of electricity, asdefined in this Act, by the person benefitted thereby, and shall be the basis for:(1) the immediate disconnection by the electric utility to such person after duenotice, (2) the holding of a preliminary investigation by the prosecutor and the

subsequent filing in court of the pertinent information, and (3) the lifting of anytemporary restraining order or injunction which may have been issued against aprivate electric utility or rural electric cooperative:

(i) The presence of a bored hole on the glass cover of the electricmeter, or at the back or any other part of said meter;

(ii) The presence inside the electric meter of salt, sugar and other elements that could result in the inaccurate registration of themeter's internal parts to prevent its accurate registration of consumption of electricity;

(iii) The existence of any wiring connection which affects the normaloperation or registration of the electric meter;

(iv) The presence of a tampered, broken, or fake seal on the meter,or mutilated, altered or tampered meter recording chart or graph, or computerized chart, graph, or log;

(v) The presence in any part of the building or its premises which issubject to the control of the consumer or on the electric meter, of acurrent reversing transformer, jumper, shorting and/or shunting

wire, and/or loop connection or any other similar device;(vi) The mutilation, alteration, reconnection, disconnection,bypassing or tampering of instruments, transformers, andaccessories;

(vii) The destruction of, or attempt to destroy, any integralaccessory of the metering device box which encases an electricmeter, or its metering accessories; and

(viii) The acceptance of money and/or other valuable consideration

by any officer of employee of the electric utility concerned or themaking of such an offer to any such officer or employee for notreporting the presence of any of the circumstances enumerated insubparagraphs (i), (ii), (iii), (iv), (v), (vi), or (vii) hereof: Provided,however, That the discovery of any of the foregoing circumstances,in order to constitute prima facie evidence, must be personallywitnessed and attested to by an officer of the law or a dulyauthorized representative of the Energy Regulatory Board (ERB).

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(b) The possession or custody of electric power transmission line/materialby any person, natural or juridical, not engaged in the transformation,transmission or distribution of electric power, or in the manufacture of suchelectric power transmission line/material shall be prima facie evidence thatsuch line/material is the fruit of the offense defined in Section 3 hereof and

therefore such line/material may be confiscated from the person inpossession, control or custody thereof.

Section 5. Incentives. - An incentive scheme by way of a monetary reward in theminimum amount of Five thousand pesos (P5,000) shall be given to any personwho shall report to the NPC or police authorities any act which may constitute aviolation of Section 3 hereof. The Department of Energy (DOE), in consultationwith the NPC, shall issue the necessary guidelines for the proper implementationof this incentive scheme within thirty (30) days from the effectivity of this Act.

Section 6. Disconnection of Electric Service. - The private electric utility or rural

electric cooperative concerned shall have the right and authority to disconnectimmediately the electric service after serving a written notice or warning to thateffect, without the need of a court or administrative order, and deny restoration of the same, when the owner of the house or establishment concerned or someoneacting in his behalf shall have been caught en flagrante delicto doing any of theacts enumerated in Section 4(a) hereof, or when any of the circumstances soenumerated shall have been discovered for the second time: Provided, That inthe second case, a written notice or warning shall have been issued upon thefirst discovery: Provided, further, That the electric service shall not beimmediately disconnected or shall be immediately restored upon the deposit of the amount representing the differential billing by the person denied the service,

with the private electric utility or rural electric cooperative concerned or with thecompetent court, as the case may be: Provided, furthermore, That if the courtfinds that illegal use of electricity has not been committed by the same person,the amount deposited shall be credited against future billings, with legal interestthereon chargeable against the private utility or rural electric cooperative, and theutility or cooperative shall be made to immediately pay such person double thevalue of the payment or deposit with legal interest, which amount shall likewisebe creditable against immediate future billings, without prejudice to any criminal,civil or administrative action that such person may be entitled to file under existing laws, rules and regulations: Provided, finally, That if the court finds thesame person guilty of such illegal use of electricity, he shall, upon final judgment,be made to pay the electric utility or rural electric cooperative concerned doublethe value of the estimated electricity illegally used which is referred to in thissection as differential billing.

For purposes of this Act, "differential billing" shall refer to the amount to becharged to the person concerned for the unbilled electricity illegally consumed byhim as determined through the use of methodologies which utilize, among others,as basis for determining the amount of monthly electric consumption in kilowatt-

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hours to be billed, either: (a) the highest recorded monthly consumption withinthe five-year billing period preceding the time of the discovery, (b) the estimatedmonthly consumption as per the report of load inspection conducted during thetime of discovery, (c) the higher consumption between the average consumptionsbefore or after the highest drastic drop in consumption within the five-year billing

period preceding the discovery, (d) the highest recorded monthly consumptionwithin four (4) months after the time of discovery, or (e) the result of the ERB testduring the time of discovery and, as basis for determining the period to berecovered by the differential billing either: (1) the time when the electric service of the person concerned recorded an abrupt or abnormal drop in consumption, or (2) when there was a change in his service connection such as a change of meter, change of seal or reconnection, or in the absence thereof, a maximum of sixty (60) billing months up to the time of discovery: Provided, however, Thatsuch period shall, in no case, be less than one (1) year preceding the date of discovery of the illegal use of electricity.

Section 7. Penalties. - (a) Violation of Section 2. - The penalty of prision mayor or a fine ranging from Ten thousand pesos (P10,000) to Twenty thousand pesos(P20,000) or both, at the discretion of the court, shall be imposed on any personfound guilty of violating Section 2 hereof.

(b) Violation of Section 3. - The penalty of reclusion temporal or a fineranging from Fifty thousand pesos (P50,000) to One hundred thousandpesos (P100,000) or both at the discretion of the court, shall be imposedon any person found guilty of violating Section 3 hereof.

(c) Provision common to violations of Section 2 and Section 3 hereof. - If

the offense is committed by, or in connivance with, an officer or employeeof the power company, private electric utility or rural electric cooperativeconcerned, such officer or employee shall, upon conviction, be punishedwith a penalty one (1) degree higher than the penalty provided herein, andforthwith be dismissed and perpetually disqualified from employment inany public or private utility or service company and from holding any publicoffice.

If, in committing any of the acts enumerated in Section 4 hereof, any of the other acts as enumerated is also committed, then the penalty next higher in degree asprovided herein shall be imposed.

If the offense is committed by, or in connivance with an officer or employee of theelectric utility concerned, such officer or employee shall, upon conviction, bepunished with a penalty one (1) degree higher than the penalty provided herein,and forthwith be dismissed and perpetually disqualified from employment in anypublic or private utility or service company. Likewise, the electric utility concernedwhich shall have knowingly permitted or having knowledge of its commissionshall have failed to prevent the same, or was otherwise guilty of negligence in

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connection with the commission thereof, shall be made to pay a fine notexceeding triple the amount of the 'differential billing' subject to the discretion of the courts.

If the violation is committed by a partnership, firm, corporation, association or any

other legal entity, including a government-owned or -controlled corporation, thepenalty shall be imposed on the president, manager and each of the officersthereof who shall have knowingly permitted, failed to prevent or was otherwiseresponsible for the commission of the offense.

Section 8. Authority to Impose Violation of Contract Surcharges. - A privateelectric utility or rural electric cooperative may impose surcharges, in addition tothe value of the electricity pilfered, on the bills of any consumer apprehended for tampering with his electric meter/metering facility installed on his premises, aswell as other violations of contract like direct connection, use of jumper, andother means of illicit usage of electricity found installed in the premises of the

consumer. The surcharge for the violation of contract shall be collected from andpaid by the consumer concerned as follows:

(a) First apprehension. - Twenty five percent (25%) of the current bill assurcharge;

(b) Second apprehension. - Fifty percent (50%) of the current bill assurcharge; and

(c) Third and subsequent apprehensions. - One hundred percent (100%)of the current bill as surcharge.

The private electric utility or rural electric cooperative is authorized to discontinuethe electric service in case the consumer is in arrears in the payment of theabove imposed surcharges.

The term 'apprehension' as used herein shall be understood to mean thediscovery of the presence of any of the circumstances enumerated in Section 4hereof in the establishment or outfit of the consumer concerned.

Section 9. Restriction on the Issuance of Restraining Orders or Writs of Injunction. - No writ of injunction or restraining order shall be used by any court

against any private electric utility or rural electric cooperative exercising the rightand authority to disconnect electric service as provided in this Act, unless there isprima facie evidence that the disconnection was made with evident bad faith or grave abuse of authority.

If, notwithstanding the provisions of this section, a court issues an injunction or restraining order, such injunction or restraining order shall be effective only uponthe filing of a bond with the court, which shall be in the form of cash or cashier's

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check equivalent to the "differential billing," penalties and other charges, or to thetotal value of the subject matter of the action: Provided, however, That suchinjunction or restraining order shall automatically be refused or, if granted, shallbe dissolved upon filing by the public utility of a counterbond similar in form andamount as that above required: Provided, finally, That whenever such injunction

is granted, the court issuing it shall, within ten (10) days from its issuance, submita report to the Supreme Court setting forth in detail the grounds or reason for itsorder.

Section 10. Rationalization of System Losses by Phasing out Pilferage Lossesas a Component Thereof . - There is hereby established a cap on therecoverable rate of system losses as follows:

(a) For private electric utilities:

(i) Fourteen and a half percent (14 1/2%) at the end of the first year

following the effectivity of this Act;(ii) Thirteen and one-fourth percent (13 1/4%) at the end of thesecond year following the effectivity of this Act;

(iii) Eleven and three-fourths (11 3/4%) at the end of the third year following the effectivity of this Act; and

(iv) Nine and a half-percent (9 1/2%) at the end of the fourth year following the effectivity of this Act.

Provided, That the ERB is hereby authorized to determine at the end of the fourth year following the effectivity of this Act, and as often asnecessary taking into account the viability of private electric utilities andthe interest of the consumers, whether the caps herein or theretoforeestablished shall be reduced further which shall, in no case, be lower thannine percent (9%) and accordingly fix the date of the effectivity of the newcaps: Provided, further, That in the calculation of the system loss, power sold by the NPC or any other entity that supplies power directly to aconsumer and not through the distribution system of the private electricutility shall not be counted even if the billing for the said power used isthrough the private electric utility.

The term "power sold by NPC or any other entity that supplies power directly to a consumer" as used in the preceding paragraph shall for purposes of this section be deemed to be a sale directly to the consumer if: (1) the point of metering by the NPC or any other utility is less than onethousand (1,000) meters from the consumer, or (2) the consumer's electricconsumption is three percent (3%) or more of the total load consumptionof all the customers of the utility, or (3) there is no other consumer

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connected to the distribution line of the utility which connects to the NPCor any other utility point of metering to the consumer meter.

(b) For rural electric cooperatives:

(i) Twenty-two percent (22%) at the end of the first year followingthe effectivity of this Act;

(ii) Twenty percent (20%) at the end of the second year followingthe effectivity of this Act;

(iii) Eighteen percent (18%) at the end of the third year following theeffectivity of this Act;

(iv) Sixteen percent (16%) at the end at the fourth year following theeffectivity of this Act; and

(v) Fourteen percent (14%) at the end of the fifth year following theeffectivity of this Act.

Provided, That the ERB is hereby authorized to determine at the end of the fifth year following the effectivity of this Act, and as often as isnecessary, taking into account the viability of rural electric cooperativesand the interest of the consumers, whether the caps herein or theretoforeestablished shall be reduced further which shall, in no case, be lower thannine percent (9%) and accordingly fix the date of the effectivity of the newcaps.

Provided, finally, That in any case nothing in this Act shall impair theauthority of the ERB to reduce or phase out technical or design losses asa component of system losses.

Section 11. Area of Coverage. - The caps provided in Section 10 of this Act shallapply only to the area of coverage of private electric utilities and rural electriccooperatives as of the date of the effectivity of this Act.

The permissible levels of recovery for system losses in areas of coverage thatmay be added on by either a private electric utility or a rural electric cooperative

shall be determined by the ERB.Section 12. Recovery of Pilferage Losses. - Any private electric utility or ruralelectric cooperative which recovers any amount of pilferage losses shall, withinthirty (30) days from said recovery, report in writing and under oath to the ERB:(a) the fact of recovery, (b) the date thereof; (c) the name of the consumer concerned, (d) the amount recovered, (e) the amount of pilferage loss claimed,(f) the explanation for the failure to recover the whole amount claimed, and (g)

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such other particulars as may be required by the ERB. If there is a case pendingin court for the recovery of a pilferage loss, no private electric utility or ruralelectric cooperative shall accept payment from the consumer unless so providedin a compromise agreement duly executed by the parties and approved by thecourt.

Section 13. Information Dissemination. - The private electric utilities, the ruralelectric cooperatives, the NPC, and the National Electrification Administration(NEA) shall, in cooperation with each other, undertake a vigorous campaign toinform their consumers of the provisions of this Act especially Sections 2, 3, 4, 5,6, 7, and 8 hereof, within sixty (60) days from the effectivity of this Act and atleast once a year thereafter, and to incorporate a faithful condensation of saidprovisions in the contracts with new consumers.

Section 14. Rules and Regulations. - The ERB shall, within thirty (30) workingdays after the conduct of due hearings which must commence within thirty (30)

working days upon the effectivity of this Act, issue the rules and regulations asmay be necessary to ensure the efficient and effective implementation of theprovisions of this Act, to include but not limited to, the development of methodologies for computing the amount of electricity illegally used and theamount of payment or deposit contemplated in Section 7 hereof, as a result of the presence of the prima facie evidence discovered.

The ERB shall, within the same period, also issue rules and regulations on thesubmission of the reports required under Section 12 hereof and the procedure for the distribution to or crediting of consumers for recovered pilferage losses.

Section 15. Separability Clause. - Any portion or provision of this Act which maybe declared unconstitutional or invalid shall not have the effect of nullifying other portions or provisions hereof.

Section 16. Repealing Clauses. - The provisions in Presidential Decree No. 401,as amended by Batas Pambansa Blg. 876, penalizing the unauthorizedinstallation of electrical connections, tampering and/or knowing use of tamperedelectrical meters or other devices, and the theft of electricity are hereby expresslyrepealed. All other laws, ordinances, rules, regulations, and other issuances or parts thereof, which are inconsistent with this Act, are hereby repealed or modified accordingly.

Section 17. Effectivity Clause. - This Act shall take effect thirty (30) days after itspublication in the Official Gazette or in any two (2) national newspapers of general circulation.

Approved: December 8, 1994