Anti-Corruption In The Philippines

Legal News & Analysis - Asia Pacific - The Philippines - Regulatory & Compliance

25 July, 2018

 

1. Domestic bribery (private to public)

 

1.1       Legal framework

 

Bribery of public officials is penalized under Articles 210 to 212 of the Revised Penal Code.

 

There are other laws that penalize corrupt acts/practices and prohibit the giving of gifts to public officers under certain circumstances.

 

Republic Act No. 3019 (The Anti-Graft and Corrupt Practices Act) is the main anti-corruption law. It enumerates certain acts of public officers that constitute graft or corrupt practices, or which may lead thereto, as follows:

 

  • Persuading, inducing or influencing another public officer to perform an act constituting a violation of rules, or an offense in connection with official duties
  • Requesting or receiving any gift, present, share, percentage or benefit, for himself or for any other person, in connection with any contract or transaction between the government and any other party, wherein the public officer in his official capacity has to intervene under the law
  • Requesting or receiving any gift, present or other pecuniary or material benefit, from any person for whom the public officer has secured or obtained, or will secure or obtain, any government permit or license
  • Accepting or having any member of his family accept employment in a private enterprise that has pending official business with him, during the pendency thereof or within one year after its termination
  • Causing any undue injury to any party, including the government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his functions through manifest partiality, evident bad faith or gross inexcusable negligence
  • Neglecting or refusing to act within a reasonable time on any matter pending before him for the purpose of obtaining some pecuniary or material benefit or advantage, or for the purpose of favouring his own interest or giving undue advantage in favour of or discriminating against any other interested party
  • Entering, on behalf of the government, into any contract or transaction manifestly and grossly disadvantageous to the same, whether or not the public officer profited or will profit thereby
  • Having financial or pecuniary interest in any business, contract or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited from having any interest
  • Becoming interested, for personal gain, or having a material interest in any transaction or act requiring the approval of a board, panel or group of which he is a member, even if he votes against the same or does not participate in the action of the board, committee, panel or group
  • Knowingly approving or granting any license, permit, privilege or benefit in favour of any person not qualified
  • Divulging to unauthorized persons valuable information of a confidential character acquired by his office or by him on account of his official position, or releasing such information in advance of its authorized release date

 

Republic Act 6713 (The Code of Conduct and Ethical Standards for Public Officials and Employees) prohibits public officials and employees from soliciting or accepting, directly or indirectly, any gift, gratuity, favour, entertainment, loan or anything of monetary value from any person: (a) in the course of their official duties; or (b) in connection with any operation being regulated by, or any transaction which may be affected by, the functions of their office.

 

Presidential Decree No. 46 (Giving of Gifts on any Occasion) punishes the act of giving, or offering to give, to a public official or employee, a gift, present or other valuable thing on any occasion, including Christmas, when such gift, present or other valuable thing is given by reason of the public official/employee’s position, regardless of whether or not the same is for past favour or the giver hopes or expects to receive a favour or better treatment in the future from the public official or employee concerned, in the discharge of his official functions. Included within the prohibition is the throwing of parties or entertainment in honour of the public official or employee, or of his immediate relatives.

 

Republic Act 7080 (Plunder) penalizes a public officer who acquires ill-gotten wealth in the total of at least PHP 50 million through overt or criminal acts.

 

1.2      Definition of bribery

 

The Revised Penal Code penalizes three kinds of bribery: (a) direct bribery; (b) indirect bribery; and (c) qualified bribery.

 

Direct bribery is committed by a public officer who accepts an offer or promise or receives a gift or present, by himself or through another, with a view to committing a crime, or in consideration of the execution of an act that does not constitute a crime but is unjust, or to refrain from doing something that it is his official duty to do.

 

Indirect bribery is committed by a public officer who accepts a gift offered to him by reason of his office.

 

Qualified bribery is committed by a public officer entrusted with law enforcement, who refrains from arresting or prosecuting an offender who has committed a crime punishable by reclusion perpetua (imprisonment of 20 years to 40 years) and/or death, in consideration of any offer, promise, gift or present.

 

Corruption of public officials is the crime committed by the private person who shall have made the offers or promises or given the gifts or presents to the public officers, as described in the abovementioned crimes of bribery.

 

1.3       Definition of public official

 

The Revised Penal Code defines “public officer” as any person who, by direct provision of law, popular election or appointment by competent authority, shall take part in the performance of public functions in the government of the Philippine Islands, or shall perform in said government or in any of its branches public duties as an employee, agent or subordinate official, of any rank or class.

 

Republic Act 3019 defines “public officers” as including elective and appointive officials and employees, permanent or temporary, whether in the classified or unclassified or exempt service receiving compensation, even nominal, from the government as defined in the preceding subparagraph. Government includes the national government, the local governments, the government-owned and government-controlled corporations, and all other instrumentalities or agencies of the Republic of the Philippines and their branches.

 

Republic Act 6713 defines “public officers” as including elective and appointive officials and employees, permanent or temporary, whether in the career or non-career service, including military and police personnel, whether or not they receive compensation, regardless of amount.

 

These definitions are comprehensive enough to embrace every public servant from the lowest to the highest rank.

 

1.4       Consequences of bribery

 

(a)        For the individuals involved

 

Direct Bribery

 

The penalty for direct bribery is determined by the manner in which it is committed.

 

Manner of Commission  Penalties
 1) With a view to committing a crime
  • Prision mayor in its medium and maximum periods (8 years and 1 day to 12 years’ imprisonment)
  • Fine of not less than three times the value of the gift
  • The penalty corresponding to the crime agreed upon, if the crime shall have been committed
 2) In consideration of the execution of an act that does not constitute a crime, but is unjust If the public officer executed the act:

 

Same penalties as above

If the act was not accomplished:

  • Prision correccional in its medium period (2 years, 4 months and 1 day, to 4 years and 2 months’ imprisonment)
  • Fine of not less than two times the value of the gift
 3) To refrain from doing something that is his official duty to do
  •  Prision correccional in its maximum period to prision mayor in its minimum period (4 years, 2 months and 1 day, to 10 years’ imprisonment)
  • Fine of not less than three times the value of the gift
  •  

Indirect Bribery

 

The penalties for indirect bribery are as follows:

 

  • Prision correccional in its medium and maximum periods (imprisonment for 2 years, 4 months and 1 day up to 6 years)
  • Suspension
  • Public censure
  • Qualified Bribery

 

The penalty for qualified bribery is the penalty for the offense that was not prosecuted.

 

Corruption of public officials

 

The same penalties imposed upon the officer corrupted, except those of disqualification and

suspension, shall be imposed upon the private person who shall have made the offers or promises or given the gifts or presents to the public officers under the different forms of bribery.

 

(b)      For the company/legal entity

 

The laws that penalize bribery do not apply to juridical / legal entities. The penalties are imposed against the individual corporate officers / employees who authorized or performed the prohibited acts.

 

Note, however, that the primary registration or license to do business of a Philippine corporation or a foreign corporation doing business in the Philippines may be revoked if it is shown that such corporation committed serious violations of Philippine law or otherwise performed acts that would render it unfit to transact business in the Philippines.

 

1.5     Political contributions

 

Batas Pambansa Bilang 881 (The Omnibus Election Code of the Philippines) regulates political contributions. It prohibits the following contributions for purposes of partisan political activity, directly or indirectly, by any of the following:

 

(a) Public or private financial institutions (except loans to a candidate or political party)

 

(b) Persons operating a public utility or in possession of or exploiting any natural resources of the nation

 

(c) Persons who hold contracts or sub-contracts to supply the government with goods or services, or to perform construction or other works

 

(d) Persons who have been granted franchises, incentives, exemptions, allocations or similar privileges or concessions by the government

 

(e) Persons who, within one year prior to the date of the election, have been granted loans or other accommodations in excess of PHP 100,000 by the government

 

(f) Educational institutions that have received grants of public funds amounting to no less than PHP 100,000

 

(g) Officials or employees in the Civil Service, or members of the Armed Forces of the Philippines

 

(h) Foreigners and foreign corporations

 

The Omnibus Election Code also makes it unlawful for any person, including a political party or public or private entity, to solicit or receive any aid or contribution of whatever form or nature from any foreign national, government or entity for the purpose of influencing the results of an election.

 

1.6     Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

 

Philippine bribery laws do not provide quantitative limitations.

 

Republic Act 3019 and Republic Act 6713 provide exceptions for unsolicited gifts of “small or insignificant value” under certain circumstances. However, such exceptions are not recognized under other laws and may not be invoked as a defence in a prosecution under such cases.

 

It must also be noted that in a prosecution for violation of special laws on anti-corruption, the motive or intent of the person committing the crime is generally not considered. The mere performance of the prohibited act is considered a violation of the law.

 

2. Domestic bribery (private to private)

 

Philippine laws currently do not regulate/penalize private bribery.

 

3. Corruption of foreign public officials

 

Philippine laws currently do not penalize the corruption of foreign public officials.

 

4. Facilitation payments

 

Facilitation payments are not allowed under Philippine anti-bribery and anti-corruption laws, as payments to public officials by reason of their official position are penalized.

 

Republic Act 9485 (The Anti-Red Tape Act of 2007) specifically prohibits facilitation payments. The Anti-Red Tape Act prohibits a public officer from fixing and/or colluding with fixers in consideration of economic and/or other gain or advantage.

 

The term “fixer” refers to any individual, whether or not officially involved in the operation of a government office, who has access to people working therein and facilitates the speedy completion of transactions for any advantage or consideration.

 

The Anti-Red Tape Act applies to all government offices and agencies, including local government units and government-owned or -controlled corporations that provide frontline services. Excluded from the coverage are those performing judicial, quasi-judicial and legislative functions.

 

“Frontline service” refers to transactions between clients and government offices involving applications for any privilege, right, permit, reward, license, concession, or for any modification, renewal or extension of the enumerated applications and/or requests that are acted upon in the ordinary course of business of the office concerned.

 

5. Compliance programs
 

5.1       Value of a compliance program to mitigate/eliminate the criminal liability for legal entities

 

Generally, Philippine laws do not require persons or companies to adopt a compliance program. The presence of a compliance program does not mitigate or eliminate a person’s criminal liability.

 

As an exception, prescription pharmaceutical products and medical devices (PPMD) companies are required to establish a written compliance program, approved and signed by the company head, to ensure compliance with Department of Health Administrative Order No. 2015-0053 (“DOH AO 2015-0053”), or the Implementing Guidelines on the Promotion and Marketing of Prescription Pharmaceutical Products and Medical Devices, which regulates, among others, the promotion to and sponsorship of, healthcare professionals of prescription pharmaceutical products and medical devices.

 

5.2       Absence of a compliance program as a crime

 

Philippine law does not penalize the absence of a compliance program as a crime.

 

Although DOH-AO 2015-0053 requires a compliance program to be in place for PPMD companies, no specific sanction or penalty is provided for its absence. The Food and Drug Administration is, however, given the authority to recommend the filing of appropriate charges with the concerned government agency or appropriate court for violations of DOH-AO 2015-0053, including the absence of a compliance program.

 

5.3       Elements of compliance program

 

(a)        Legal framework

 

DOH-AO 2015-0053 requires PPMD companies to observe the seven elements of effective compliance programs:

 

  • Implementing written policies and procedure
  • Designating compliance offices and compliance committee
  • Conducting effective training and education
  • Developing effective lines of communication
  • Conducting internal monitoring and auditing
  • Enforcing standards through well-publicized disciplinary guidelines
  • Responding promptly to detected problems and undertaking corrective action

 

(b)       Recommended practice

 

Formation of compliance team – It is recommended that companies form a compliance team to monitor observance of the company’s compliance policies, code of conduct, etc.; answer questions and provide guidance to employees; and investigate and impose sanctions on erring employees.

 

Education of employees – It is important to educate company employees regarding the prohibited activities that may result to liability for themselves and others. The adoption of a company code of conduct for compliance purposes is also recommended to provide guidance to the employees.

 

Reporting mechanism – The company should have mechanisms through which employees may report acts of bribery and corruption (i.e., anonymous hotline, drop-box, etc.).
Enforcement – The company must impose appropriate sanctions on employees who commit bribery and corruption in violation of compliance policies and the code of conduct, to serve as a lesson and deterrent to other employees.

 

6. Regulator with jurisdiction to prosecute corruption

 

The Office of the Ombudsman is tasked with the investigation and prosecution of 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. Bribery and corruption cases fall under the prosecutorial jurisdiction of the Office of the Ombudsman.

 

The Philippine Department of Justice (DOJ), which serves as the government’s prosecution arm, leads the investigation and prosecution of all criminal cases, including anti-bribery and anti-corruption laws. For public officials, the Office of the Ombudsman has concurrent jurisdiction with the DOJ to investigate and prosecute cases against public officials

 

Baker McKenzie

 

For further information, please contact: 

 

Rodrigo Quimbo, Partner, Baker & McKenzie

rodrigo.quimbo@quisumbingtorres.com