Dawn Raids under A.M. No. 19-08-06-SC (Rules on Administrative Search and Inspection Under the Philippine Competition Act)

In Administrative Matter No. 19-08-06-SC, which became effective on 16 November 2019, the Supreme Court enacted the rules governing the application, issuance, and enforcement by the Philippine Competition Commission (“PCC”) of Inspection Orders.

The PCC may apply for an Inspection Order with a Special Commercial Court to search and inspect business premises and other offices, land and vehicles, in aid of administrative investigations on alleged violations of the Philippine Competition Act, its implementing rules and regulations, and other competition laws. The Inspection Order allows information to be examined, copied, photographed, recorded, or printed to prevent the removal, concealment, tampering with, or destruction of such information. Issuance of the Inspection Order is based on the Special Commercial Court’s determination if there is reasonable ground to suspect:

• that the information is kept, found, stored or accessible at the premises indicated in the application;
• the information relates to any matter relevant to the investigation; and
• the issuance of the order is necessary to prevent the removal, concealment, tampering with, or destruction of the books, records, or other documents to be inspected.

The application process is summary in nature, must be acted upon within twenty-four (24) hours from filing and shall be conducted ex parte. The Inspection Order shall be effective for the length of time as determined by the court but shall not exceed fourteen (14) days from issuance, unless extended for another period not exceeding fourteen (14) days from expiration of the original period. It may be served during business hours of the premises, or at any time on any day, as may be determined by the court for compelling reasons stated in the application.

The Inspection Order must be served in the presence of person designated by the subject entity (“Designated Person”), who shall be given the opportunity to read the Inspection Order before its enforcement. While the Rules require the presence of the Designated Person, his/her absence due to unreasonable delay, failure or refusal to designate shall not prevent the PCC from enforcing the Inspection Order.

Further, the PCC, if refused admission into the premises despite giving notice of their purpose and authority may use reasonable force to gain entry to enforce the inspection order or liberate themselves or any person lawfully aiding them when lawfully detained therein.

Manner of Inspection:

• PCC officers may enter, search and inspect the premises indicated in the order, and examine, copy, photograph, record or print information described therein.
• Electronically stored information, databases, and means of accessing information contained in such databases that are kept, found, stored or accessed in the premises indicated in the order may be examined and copied. The PCC Officers, deputies and agents may likewise require that such electronically stored information and databases be produced in a form that is visible and legible, and may be copied, photographed, recorded, or printed out – which shall be treated as original documents.
• The PCC may ask explanations on facts or documents. An individual may be assisted by counsel, must answer questions, although the answer may tend to establish a claim against him/her. Said individual has the right not to give an answer which will tend to subject him/her to a criminal penalty for an offense, unless otherwise provided by law.
• The PCC as may be reasonably necessary for the conduct of the inspection, may secure or seal the area or equipment, gadgets or devices where the information is located or stored, and attach to them a tag or label warning all persons from tampering with them, until the examination, copying photographing, recording or printing is completed, but in no case beyond the effectivity of the inspection order. Tampering with, breaking or removing the seal affixed shall subject the offender to contempt of court under Rule 71 of the Rules of Civil Procedure.
• The Designated Person shall disclose the location where the information subject of the Inspection Order is stored and provide them with all reasonable facilities and assistance. He shall be entitled to receive a copy of the list of the information copied, photographed, recorded, or printed by the PCC, and the former shall have the opportunity to check the information against those described in the list and shall acknowledge receipt by affixing his/her signature. He/she shall certify that the copies, photographs, recordings or printouts are faithful reproductions of their respective originals. These shall thereafter make them admissible as evidence for the purpose of administrative proceedings.
• In the absence of the Designated Person, the copies, photographs, recordings or printouts shall be certified by the highest-ranking officer or employee of the entity present in the premises.
• The “plain view” principle applies such that if the PCC believes on reasonable grounds that an information or document in plain view is evidence of a violation of the Philippine Competition Act, its implementing rules, or other competition laws, then they may examine, copy, photograph, record or print such information and use the same as evidence of said violation.

The entity subjected to an Inspection Order is not without remedy. If the entity/individual believes that the Inspection Order has been improperly issued or implemented, it may file a written motion with the issuing Special Commercial Court to quash the Inspection Order before the PCC files its return. The motion shall be resolved in a summary hearing after due notice to the PCC.

With these new Rules, entities are forewarned of the strict implementation of the Philippine Competition Act in the Philippines inasmuch as the Inspection Order may be enforced “at any time during the day as may be determined for compelling reasons stated in the application” via “dawn raids.” Notably, there are no guidelines on what may be considered as “compelling reasons.”

Click here to read the entire text of A.M. No. 19-08-06-SC.