The Clogged Philippine Courts

If justice delayed is justice denied, as the British Prime Minister William E. Gladstone once said, then the Philippine courts have been considerably denying justice for a long, long time, given understaffed courts, outmoded procedures and corruption. The Supreme Court is dissected in a new book, Our Rights, Our Victories, published this month in Manila and written by Marites Danguilan Vitug and Criselda Yabes and reviewed nearby. (Read our review of the book here.)

Investment disputes, for instance, can take years to resolve, “mainly because the courts are understaffed and have huge caseloads,” according to an Oct. 10 report by Pacific Strategies & Assessments, a Manila-based country risk firm. “In the Supreme Court alone, the latest estimate shows that approximately 7,000 cases are divided among its 15 members. The resolution of cases has also become more tedious because of delaying tactics employed by the parties involved, as well as the susceptibility of judges to corruption and political influence.”

Although the Philippines has procedures and systems for registering claims on property, including intellectual property and chattel/mortgages, delays and uncertainty associated with a cumbersome court system continue to concern investors, according to the 2011 Index of Economic Freedom. “Questions regarding the general sanctity of contracts and the property rights they support have also clouded the investment climate.”

Many of the rules governing court proceedings were put in place five decades ago and “need to be amended or thrown out altogether,” said the Freedom Fund for Filipino Journalists.

There is no better example of the cumbersome court system than the trial of the defendants in the infamous Maguindanao Massacre, in which 198 suspects, including Andal Ampatuan Jr. and Andal Ampatuan Sr. and several other members of the Ampatuan clan have been charged with the murders of 57 people including 32 journalists on the island of Mindanao in November 2009. It took 18 months until Andal Ampatuan Sr., the head of the clan, could just be be arraigned in a special court. Sen. Joker Arroyo has said that with nearly200 defendants and 300 witnesses, the trial could take 200 years. Other, more sobering estimates say the trial could last many years.

“A slew of technical complications has delayed the trial, among them the rules governing motions for bail, and six motions demanding that the presiding judge inhibit herself from trying the case,” according to a report by the Center for Media Freedom and Responsibility. “As of this December (2010), the trial of Unsay Ampatuan has been limited to hearings on his petition for bail after the court ordered the consolidation of his September motion for bail with his earlier petitions. His father Andal Ampatuan Sr., cousin Zaldy Ampatuan, and Sajid Islam Ampatuan have filed separate petitions for certiorari before the appellate court, and are yet to be arraigned at the local court.”

In commercial cases, legal battles start in the local courts before winding their way up through the higher courts including the Court of Appeals and the Supreme Court if the parties are not satisfied with the lower court rulings, and they often are not. Reversals are common and even the Supreme Court itself has often reversed itself on interpretations of the law.

These delays and reversals have had a negative effect on foreign direct investment as international businessmen become the targets of government investigations at the behest of vested interests or criminal charges by competitors.

PSA, in its Oct. 10 report, cites five Supreme Court cases in particular that have had a negative impact on the climate for foreign businessmen. The first was a 1997 decision in which the Supreme Court declared that the government-owned Manila Hotel, a national landmark, was part of a national patrimony, which led to the cancellation of a tender for privatization which had been won by a Malaysian company. Instead, the contract went to the lone domestic bidder.

Second was the notorious Terminal 3 at Benigno S. Aquino II Airport, in which the court in 2003 nullified a US$350 million contract with the German firm that had built the terminal. The nullification led to the finished terminal standing vacant for years while negotiations took place between the German contractor and the administration of Gloria Macapagal Arroyo.,

Third was a 2008 decision by the high court ordering the relocation of the Pandacan oil depot following a local government decision reclassifying the depot from an industrial to a commercial area.

Fourth was a 2010 decision by the high court halting the privatization and sale of the Angal Dam in Bulacan Province in response to a petition by a local NGO, despite the fact that a Koran company, Korean Water Resources Corp., had already won the bid.

Finally, earlier this year, the Supreme Court banned mining in Zamboanga Peninsula at the behest of environmentalists and religious organizations, ordering the Mines and Geosciences Bureau to stop issuing mining permits and applications in the area.

“In some cases, the legal battle becomes even more counterproductive, as there are instances in which the litigation causes a disruption in business operations and project implementation due to the issuance of cease and desist orders, temporary restraining orders and motions for reconsideration.”

Contracts in the Philippines “are at the mercy of the justice system and …inconsistent interpretation of the law at different levels within the court system create uncertainty in the business environment,” the PSA report said.

It cited the US State Department’s 2011 Investment Climate Statement for the Philippines, which it characterized as “complex and slow,” as well as riddled with “corruption, regulatory inconsistency and lack of transparency as factors that dampen the investment climate.”