PH court proceedings in the Asean context

In this column published on Nov. 13, 2013, I talked about the 30-notch quantum leap in the overall rating of the Philippines in the 2014 Doing Business Report.

The Report is an annual project of the World Bank and International Finance Corp. and attracts much attention around the world.

The latest edition received nearly 6,000 media citations within two weeks of its publication. The coverage spanned major global, regional and local media outlets, from print and broadcast to the web.

The Doing Business website had more than half a million page views in the first 10 days after the launch of the Report.

Governments worldwide read the Report with interest every year as a high ranking means that the regulatory environment is more conducive to doing business in the country.

The annual report continues to inspire reform efforts on the part of governments, which aim to improve their country’s competitiveness to attract more investments.

For example, 114 economies implemented 238 regulatory reforms in 2012-2013 to make doing business easier in their jurisdiction, an increase of 18 percent from the previous year.

The survey benchmarks business regulations in economies worldwide based on 11 indicators.

The indicators include opening a business, registering property, getting credit, employing workers, paying taxes, investor protection, trading across borders, enforcing contracts and dealing with an insolvency situation.

The indicator on Enforcing Contracts measures the efficiency of the local judicial system in resolving a commercial dispute. The hypothetical case used is a standardized commercial dispute between two local businesses in the first-instance court.

The case involves a breach of sales contract worth twice the per capita income of the country. The seller files a case against the buyer, which refused to pay for the delivered goods on the ground that the goods were not of adequate quality.

Before the court decides the case, the court hears the merits and receives the testimony of an expert on the quality of the goods in question.

The indicator measures the time, cost, and procedures assumed by a plaintiff (seller) from the time he files the case to the time he is able to enforce the judgment.

In 2014, the Philippines was ranked 114th out of 189 economies in Enforcing Contracts.

In the Association of Southeast Asian Nations, Singapore, Indonesia, Malaysia, Thailand, Vietnam and Laos have outranked the Philippines in terms of the time required to resolve the commercial lawsuit.

Singapore courts take only 150 days to decide the case while Philippine courts take 842 days to decide the same case.

Even more telling is that Vietnam and Laos take less than half the time taken by Philippine courts to decide the same case. Unlike the Philippine courts that need 842 days, courts in Vietnam and Laos need only 400 and 443 days, respectively, to decide the same case.

Sadly, the Philippines has not made much reform in this indicator.

We have remained stagnant since 2012 on time, procedures and cost of litigation with 842 days, 37 procedures and 26 percent of the claim as cost, respectively, while other countries have introduced reforms.

As a result, the Philippines went down from rank 111 in 2013 to rank 114 in 2014. Worse, we went down 5 notches from 109 to 114 since 2012.

So what do we have to do to improve our ranking on Enforcing Contracts? Well, that’s a subject that deserves a separate coverage in this column.

(The author is a senior partner of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW) and a law professor in the Ateneo Law School. The views expressed in this column are solely his and should in no way be attributed to ACCRALAW or Ateneo Law School. He may be contacted at [email protected].)