A dysfunctional court system Conclusion

Case #4: Temporary restraining order (TRO) on the travel ban on ex-President Gloria Macapagal-Arroyo. Eight Arroyo Supreme Court justices voted within a day for the issuance of the temporary restraining order (TRO) on the travel ban. They are: Corona, Velasco, Brion, Peralta, Bersamin, Abad, Villarama, and Perez. Dissenters were Carpio, Mendoza, Reyes, Bernabe, and Sereno.

As I said earlier, surely you listen to both sides before making a judgment. Otherwise anyone could come up with anything and get the justices’ nod. And why the rush, GMA’s life was not under threat, as Philippine Medical Association officials and those afflicted with the same bone disease have affirmed. A few days would have made no difference. The fact that it was so rushed raises deep suspicions.

I agree with those that say the courts, and especially the Supreme Court, are the final arbiters in any case, and must be absolutely obeyed. But—and this is the key—only if the court is acting correctly, independently and, fairly. I don’t believe it was, or is. So to censure it is perfectly reasonable. This is a court that is showing every evidence of being politicized, something a Supreme Court should never be.

The Philippines possibly has one of, if not the worst judicial systems in Southeast Asia (our comparable neighbors). The slowness, the inability to come to judgment, and some strange judgments that suggest political influences, even reports of corruption are too frequent to not have some credence. Before I’m haled to court for whatever, let me hasten to say I’m making no accusations, only reporting on what I hear.

It’s not an exaggeration to say that the Philippine court system is a major deterrent to doing business in the Philippines today. The Supreme Court is at the forefront of this deterrence. Just look at this list of business unfriendly decisions by the SC:

• It sustained Manila Council’s reclassification of Pandacan as a residential/commercial area and required the relocation of oil depot of Chevron, Petron and Shell despite they had been there first and could show the depot was perfectly safe even in case of a major accident.

• It nullified fiscal incentives granted to some 300 Clark ecozone locators, contending that the law that granted tax privileges to Subic did not “categorically and unmistakably” include Clark, even though it obviously and logically was meant to (Congress eventually passed a bill in mid-2007, which then President Arroyo signed later, allowing Clark and other former US military facilities to enjoy similar incentives as Subic, as was intended).

• It canceled a rate increase by Meralco as it was based on a formulation the court disallowed, although it was a formula previously agreed to and had undergone public scrutiny; also ordered retroactive refunds that impaired the creditworthiness of the distribution utility. The Court even claimed, incredibly, that income tax was not a business expense that could be passed on to consumers.

• It nullified provisions of the Mining Act allowing full foreign ownership in mining projects (The decision was reversed in 2004, allowing foreign investment in large scale mining via Financial and Technical Assistance Agreement or FTAA).

• It told the International School to uphold equality of pay between foreign-hired and locally-hired employees—something that is not done in any other sector, and is not done in most other developing countries—retroactively for five years. Five years during which the school was acting in good faith on existing law. It cost the school $4 million to settle the case.

• It rescinded an agreement between the Public Estates Authority and a Thailand-based development company to sell 592 hectares of reclaimed land to the latter, through a subsequent ruling that the reclaimed land was public land and hence could only be leased but not sold and owned by private entities.

• It declared local firm JG Summit as winner five years after Singapore-based Keppel Group won the Subic shipyard project, saying a shipyard is a public utility and hence should be at least 60 percent Filipino-owned (The SC later revised this decision in 2003, upholding that a shipyard is not a public utility, and reaffirmed this decision with finality in 2005—but the damage had been done).

• It overturned a competitive bid by Malaysian Renong group in the privatization of Manila Hotel, declaring that the hotel is part of Philippine heritage that must be protected and should be offered first to Filipinos – at lower cost (10 percent lower than the foreigner’s bid)

• It ruled that the naphtha cracker plant proposed by a Taiwanese trader should be built in Bataan, as petitioned by a politician who wanted to have the project in his hometown, not in Batangas as the proponent preferred based on their business assessment. They left.

As I’ve said on numerous occasions, the law is the servant of society and is obligated to act in a manner that is best for society. The split decisions on controversial cases (including those involving former president Arroyo) show that interpretation can be made. Add to that the time it takes to make those “incorrect” decisions and it’s abundantly clear that the Philippine Supreme Court is not a supporter of society as it should be.

The justices can get as angry with me as they like, but I can assure them this analysis and comment are not mine, it’s universal among businessmen. I’m but the messenger. And someone, finally, has to be.

The justices might want to think about this: no one, and I mean no one I talk to has even one good word to say about the Philippine justice system. Particularly of this Supreme Court “The worst in living memory” according to one senior person in the system who is intimately aware of the system he has operated in all his life.

The Philippines has to break out of the morass it’s now in but it won’t with the court system that now exists.

The President is trying to effect positive change, to establish a clean (non-corrupt) society where business can flourish. It won’t happen if the courts don’t support him.

The Supreme Court seems to have forgotten that its primary role is to decide on precedent-setting cases and cases requiring subjective judgment. Not just strict interpretation of the law, as a lower court judge is obliged to do. The last thing it should be doing is issuing TROs. A Supreme Court deciding if the spouse of a former government official should be allowed to travel overseas! That should be decided by a lower court judge while the court mediates (if it so wishes) on whether it is constitutional for a Justice Secretary to issue a hold-departure order on someone suspected of serious crime.

As a side issue, I’ve argued frequently that a “court of last appeal” should not be the Supreme Court, unless it changes interpretation of law. Last appeal on a specific case should stop at the Court of Appeals. The SC has 8,400 cases before it, many of them to rule on specific cases lower courts, or the court of Appeals have already ruled on. While only some involved interpretation of the law or questions as to constitutionality of a decision. Consequently it is so overworked it has cases going back many, many years. That is not justice.

The Supreme Court is Supreme; it must ensure the stability of society, that people in society can lead a peaceful, safe life in a dynamic economy that provides a good quality of life. It should be working hand-in-hand with the administration to achieve this.

So when it makes decisions that don’t seem to be what is best for society, I have to wonder. The one in much contention in the past year was the declaration that EO 1 Creating a Truth Commission was unconstitutional because it “clearly singles out the previous administration as the Truth Commission’s sole subject of investigation.”

Then there’s the recent decision reversing 75 years of accepted law on foreign ownership and saying companies in violation of the new ruling will be penalized—despite they invested in good faith under what they were told was the law. Goodbye to the foreign investment that could have created the poverty-eliminating jobs society needs. As I pointed out a couple of weeks ago, the Philippines gets the lowest level of foreign investment into Southeast Asia—by a factor of 3 to 4 times less. The dysfunctional court system in the Philippines is a reason.

I’ll remind the SC if I might be so bold: That where the law can be interpreted one way or another (and any SC decision that isn’t unanimous indicates it can be interpreted in different ways) then the SC should decide in a way that is best for society. It serves what is best for society. And in deciding that it should bring in the stakeholders and independent experts, it should conduct public hearings to determine what is best for the society it serves. It should ask experts to advise them on the technical issues.

The one that blew my mind was that tax was not an expense that could be passed onto the customer—retroactively. I know of no company that doesn’t include taxes due in its costing of a product or service. Yet that’s what they ruled for Meralco. It nearly destroyed Meralco. And to make it retroactive is unconscionable, you can’t operate in a system like that.

Then there’s time: “Justice delayed is justice denied” says it all.

The lower courts have between 200 and 1,300 cases before each of them, while the collegiate courts have between 150 and 300. And in the Court of Appeals 17,571 cases sit, some for over 3 years. In the lower courts there are cases that have been there for 10 years (average) to 24 years (extreme cases). It’s the same with the Supreme Court, it has 8,400 cases before it, some of them as “court of last appeal” cases, and therefore taking away the time of justices from pondering the more important national issue cases. Reinforcing my suggestion to no longer accept “last appeal” cases.

Let me give you just one example of how disastrously badly the Philippine legal system has failed. On November 23, 2009, 58 people were mercilessly, brutally murdered allegedly (my lawyers tell me I must say this) by the Ampatuans. From 18 December 2009 to December 15 2011 is 727 days. In those 727 days the case has not progressed at all. I don’t care what the judge says as an excuse, 24 months to get nowhere (so far only 70 suspects of the 196 accused have been arraigned; of the 70 only 2 were from the Ampatuan clan with Zaldy yet to be arraigned; some 120 accused are still at large) in a crime that is the worst in Philippine history is just absolutely, totally unacceptable. I cannot, and will not accept the disgraceful actions of the defense counsel raising technicality after technicality, they become, in my view accomplices to the massacre of 57 (or 58) people and the dastardly attempt to bulldoze their bodies into the ground. Why aren’t the other cases assigned to this judge re-assigned elsewhere so she can focus on just this one horrific case.

The judge should accept none of this nonsense and demand that only the facts of the case be discussed and resolved. The monsters that did this cannot be allowed to be protected by legal shenanigans and claims of need for hospitalization for imagined illnesses. Let them suffer in jail, the only place they belong. A doctor—of the court’s choice to ensure medical integrity—can visit the jail.

That massacre was the worst election-related violence in post-Spanish occupation Philippine history, 113 years of history. Yet instead of what so clearly is an open and shut case nothing has happened. Worse, it seems no one cares. Where’s the public anger? Where’s the public demand for justice? If it was your husband, or wife, or child would you accept it so unconcernedly?

In fairness, judges are grossly underpaid and overworked, so they are not the problem, the system is. There just aren’t enough courts (or, alternatively, there are too many suspected criminals. Police please note). Judges get paid a monthly pay of P25,000-P45,000.

Makati Medical was a mess when doctors ran it. It’s now one of the top hospitals, now it’s managed by professional managers. Doctors keep bodies running efficiently, managers keep organizations running efficiently. You should stick to the profession you’re trained for, and presumably have an aptitude for. Judges are trained to judge, not manage. Put managers into running the court system and watch it dramatically improve—just like MMC. As a start, you wouldn’t have suspects languishing in jail longer than the penalty if they were found guilty. What a criminal (yes, right word) aberration that is. Why aren’t they released. And I venture to suggest the horrendous unmanageable backlog of cases would become manageable. And jails would be at least half-way human versus the sub, sub human things they are today.

The Supreme Court is not the place from which to run a bureaucracy. Or make judgments on specific legal cases. But it is the place to make judgments that support a decent society. –Peter Wallace, Manila Standard Today