Investment News Analysis Reforms

Unenforced error

Doing Business 2017_Enforcing Contracts in the Philippines and in other ASEAN countries
Doing Business 2017_Enforcing Contracts in the Philippines and in other ASEAN countries

Worldwide out of 190 countries evaluated in the World Bank’s 2017 Doing Business report, for the category, “Enforcing Contracts,” the Philippines is ranked 136 – while within the 10 states of the Association of Southeast Asian Nations (Asean), it places 7th. The Asean scores are as follows: Singapore, 83.61%; Malaysia, 66.61%; Thailand, 64.54%; Vietnam. 60.22%; Laos, 58.07%; Brunei, 57.25%; Philippines, 49.24%; Indonesia, 38.15%; Cambodia, 32.67%; Myanmar, 24.53%.

Less than impressive. And one major reason for that is the time it takes to enforce a contract through the Philippines courts – in other words, the sum of the time required to file and serve a case, trial-time, the time it takes to obtain a judgement from the court and the time to enforce the judgement.

To get that done through a Philippine court will take 2 years, 3 months, three weeks and one day – though sometimes it never gets done; companies can go out of business while they’re waiting for their case to be resolved. Some companies just walk away while others seek redress outside the Philippines through international arbitration courts – Lessons from Laguna Lake.

Among Asean member states, the Philippine figure for how long it takes to resolve a contract is startling: Singapore, 164 days; Vietnam, 400; Malaysia, 425; Thailand, 440; Laos, 443; Indonesia, 460 (Jakarta), 510 (Surabaya); Cambodia, 483; Brunei, 540; Philippines, 842 days; Myanmar, 1,160.

This is yet another glaring example of the inefficiencies of the Philippines ‘stone age’ judicial system – a system that’s been choked by bureaucracy, corruption, indolence and lacking technology. The courts don’t know how to work smart; often they don’t seem to work at all.

In the context of ‘enforcing contracts’, there is no court or division of a court in the Philippines that’s dedicated to commercial cases – they get rammed in the queue with everything else; there are no electronic management tools for filing cases – everything’s done manually; there’s no law to regulate the number of adjournments for a case – delays to proceedings are standard and regular. It’s like most of the region is using scientific calculators while the Philippines is counting beans. And none of that is going to give foreign investors much comfort.

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  • R u sure the president can do it in just span of time he was in the position? It is the work of the previous admin that is being felt by us today. If after 2 to 3 yers, the situation and result is just the same, then it is duterte’s admin to be blame. Not for this time.

    • The problem is that the government will soon be entering into various contracts following those loans from China. Seemingly, either he is unaware or nagbulag-bulagan lang re contract implementation. It does not make sense to continue blaming the previous admin because of the huge amounts of the loans. Those kinks must be resolved first before the availment of the loans. Talk about corruption. He doesn’t got an inkling what forms it comes. Bara-bara.

  • I think the factual basis of these unenforced local and foreign contracts are from previous administration because of TRO’s issued by courts.These result to pending of projects. I heard PRRD said to courts during his term do not issue TRO to projects specially done in due process or else diyan tayo mag away. A clear reminder. PEOPLE are waiting for a long time on projects they supposed to enjoy.