Philippines Has a Civil Legal Tradition

The Philippines is located between the South China Sea on the west and the Philippine Sea on the east. It is composed of more than 7,000 islands. Its land area measures 300,000 square kilometres and its coastline measures 36,289 kilometres. [1] The country has three major areas which is Luzon, Visayas and Mindanao. Luzon is the largest part of the Philippines and it is also considered as the most important part of the country. The capital of the country is Manila which is located in Luzon. Being the capital of the country most of big businesses are settling there and politically it is also the most important area of the country.

HISTORY

The culture of the Filipinos was shaped from a hundred ethnic groups but it is greatly influenced by Christian Malays. The history and development of the Philippine Government is divided into five categories: The Pre-Spanish Period, Spanish Period, American Period, Japanese Period, the Republic Period, Martial Law Period and Republic Revival. [2]

The Pre-Spanish Period is referring to the time before 1521. It was before Ferdinand Magellan came in the Philippines. Research suggests that Negritos, from Borneo, Sumatra and Malaya which is now known as Indonesia and Malaysia, came by sea to the Philippines 30,000 years ago. [3] They set up barangays or independent communities. It was the form of government then. The head of each barangay was called a Datu. Group of Barangays was under a higher chief who was called a rajah. Most of the laws that time was unwritten and was just passed from generation to generation by word of mouth. There were only two codes during the time. It was the Maragtas Code and the Code of Kalantiao. [4]

Also during the Pre-Spanish period Chinese traders who came in the Philippines began settling permanently in the country. In the late 14th century, Arab and Malay Muslims began arriving in the Philippines. First also as traders and then later on remained to establish sultanates, Muslim communities, mainly in Mindanao. Japanese immigrants also came to the Philippines during this period up to the 16th century. [5]

The Spanish Period is from the time Ferdinand Magellan discovered the island of the Philippines in 1521 up to the year 1898. During the time, Royal decrees, Spanish laws, and/or special issuance of special laws were extended from Spain to Philippines and during the last fifty years of this era several codes were enforced. In between the Spanish period and American period was the first Philippine Republic. It was when the first president of the Philippines, Emilio Aguinaldo, proclaimed Philippine Independence in Kawit, Cavite on June 12, 1898. [6]

The American Period started when Spain gave up the Philippines to the United States. It was formalized when the Treaty of Paris was signed on December 10, 1898. During the period several organic laws governed the Philippines but before the American period ended in 1946, Japanese occupied the Philippine from 1941 to 1944. It started when the Japanese military forces invaded the American military bases in the Philippines, in Clark Field Pampanga. From that on, Philippine was under the Japanese Republic. The period ended by the defeat of the Japanese forces [7]

On July 4, 1946 Philippine independence was inaugurated and a Philippine republic was born but in accordance with the 1935 Constitution, the power of the government was divided equally into three. The President has the executive power, the two Houses of Congress has the legislative power and the Supreme Court and the inferior courts have the judicial power.

Martial Law was declared by President Ferdinand Marcos in September 11, 1972 and the Congress of the Philippines was removed from existence. The government was turned into a parliamentary government where the Chief Executive was the Prime minister and the executive and legislative power is combined. Due to several amendments, the powers of the President and Prime Minister were given to the incumbent President Marcos and authorized to practice legislative power until martial law is in effect. On November 3, 1985 a Snap Election was called by President Marcos and it was held on February 7, 1986.The result of National Movement for Free Elections showed that Corazon Aquino led by over a million but Marcos was still declared winner for Presidency and it resulted to the People Power revolution. That event made Corazon Aquino President of the Philippine and Marcos expelled on February 25, 1986.

Republic revival started on the after the People Power revolution in 1986 and by virtue of the 1987 Constitution the Philippines became a Republic again under President Corazon Aquino. Just like the republic form of government before the establishment of Martial law. Up to the present Philippine still has the same form of government. [8]

LEGAL TRADITION

Legal tradition is referring to the culture’s attitude of a country towards the nature of its law and the role that it plays in the society. It determines how a law should be made, applied and completed and how the legal system should be organized and operated. It is rooted, formed and developed deeply from history. Legal system should not be confused with legal tradition because it is the legal tradition that puts the legal system into a cultural perspective. [9]

The Philippine legal system is a combination of Roman civil law, Anglo-American common law, Muslim Islamic law and Indigenous law. [10] Some areas wherein civil law functions are in property, contract, criminal law, family relations and succession. Common law, on the other hand, is evident in areas such as corporation law, constitutional law, procedure, taxation, insurance, labour relations, negotiable instruments, banking and currency. In the Southern areas of the Philippines, Muslim Islamic law or Shari’a is being practiced, [11] mainly in Mindanao, where Arab and Malay Muslims migrated starting in 14th century. One example of Indigenous law that is being observed in the country is the Indigenous Peoples Rights Act of 1997, which was passed in order to acknowledge, protect and promote the rights of indigenous people and their cultural communities. [12] Although Philippines have mixed legal system, it has a civil law tradition because it could be classified as a predominantly civil law country.

REGIONALISATION

Regionalisation is evident in the Philippines in different manners. In my search for a definition for the word regionalisation, I have read many definitions and ideas about it but those were in different prospective. It made me come up with a concept of regionalisation as putting or organizing something above a national level and below global level. This concept of regionalisation is evident through the struggle of the Philippine to establish its own legal system. The nation had managed to establish its own legal system despite the globalization of other legal systems. Although these other legal system influenced the legal system of the Philippines, the state was able to create, maintain and develop its own.

By being a member of the Association of Southeast Asian Nation and the Asia Pacific Economic Cooperation, regionalisation again is evident in the Philippines. Through sharing of some fundamental principles members of these organisations will have a harmonious relationship or union with each other and will achieve their goal of improving their respective economies.

Another concept of regionalisation that I have come up to is putting or organizing something below a national level. This sense of regionalisation is evident in the Philippines through the grouping of the 80 provinces of the state into 17 regions in order to manage it in a more convenient way. It is also evident through the existence of several different dialects in the country. Although Filipino and English are the official language used in the country, dialects or regional language is still used in their respective areas of origin. The establishment of the Autonomous Region of Muslim Mindanao is another example. By establishing the region, the Muslims were given their rights to practice their own law as long as it is not conflicting with the law of the state.

There may be more aspect where regionalisation is evident in the Philippines, in whatever level, which I have not mentioned but through those that I have mentioned I have sited up to what extent regionalisation is evident in my chosen jurisdiction.

DIASPORAS

My understanding of the word diasporas is the migration and settling of people from their own country or homeland to another country and still maintaining and practicing their own culture, values and tradition. Diasporas does not just refer for the people itself but also the people maintaining their culture, values and tradition even if they have already migrated to another place. In the Philippines there are different diasporas and it is evident in several aspects.

Spanish diasporas, although the people itself are already not that much evident in the Philippines today, had a great impact in the Philippines when it comes to religion. Although the number Spanish people residing in the country is not that much today, their influence in the culture of the Filipinos are very much evident. When the Spaniards came in 1521 they introduced Christianity and that makes majority of the Filipinos Christians and Catholics. [13] As it was mentioned in the earlier part of this essay Spanish greatly influenced the legal system of the Philippines through Roman Civil law.

Spanish language as well had been taught to some Filipinos and up to present some of Spanish words are being used in the Philippines, specially their counting system which had been taught and passed through generations. They have also introduced some kinds of clothing to the Philippines like coat and tie and some accessories for women like veil and peineta, a kind of decorative comb. Their cuisine also had been adopted in some areas. There have been Filipinos with Spanish blood also in some areas although it is not that much.

Chinese diasporas, which is most evident in the Philippines today, has a lasting influence in Philippine commerce and trade and is very visible in numbers of Chinese nationals in the Philippines. They have already established their own community in the country. There is a place called Chinatown located in Manila. Chinatowns are all over the world but the one in the Manila is said to be the oldest but Chinese people are not just located in Manila but they are mostly residing and trading there. They have contributed much in the business aspect, considering that they first came in the Philippines as traders. Up to now there is a large number of Chinese investor in the Philippines. Chinese diasporas is also evident in Filipino culture. Some influences of Chinese to Filipinos are the traits of close family ties and custom of respect to elderly and ancestors. They have also influenced Filipino when it comes to food and gambling. Aside from that, Filipinos with Chinese blood is also increasing in the country.

Arabs and Malay Muslims also is one of the diasporas that is evident in the Philippines. They were able to establish their system. Philippine is recognizing their law through the Code of Muslim Personal Law of the Philippines. Muslim laws were codified through this code and made part of the law of the land. It states that Muslim laws administration and other purposes will be provided. [14] They have also established a bigger community which is recognized by the Philippine law through the Republic Act no. 6734. In Article 1, Section 2 of this Act it is stated the establishment of the Autonomous Region of Muslim Mindanao or ARMM. [15] Muslim dominated provinces composed the said region. Though Muslims established their law in the country, they are still under the law of the Philippines. Muslims also contribute to trade system but not as visible as the Chinese.

TARGET MARKET

I chose Hong Kong to be my target market. Just like the Philippines it has a mixed source of laws but it has a common law tradition which is in contrast with the civil law tradition of my chosen jurisdiction, Philippines.

Hong Kong is a Chinese territory located at the southern east coast. It is composed of 235 islands, with the size of 422 square miles and based on its geography although it has no states or provinces the territory can be divided into three main regions. Hong Kong islands which is the original settlement and the nearby islets, the Kowloon peninsula in the mainland and Stonecutters islands and the New territories which is made up by a large area on the mainland, Lantau island and may smaller islands. [16]

Hong Kong was a territory under the jurisdiction of United Kingdom from 1843 to 1997. At present it is an administrative region of China. Its legal system and legal tradition are both the contrast of the Philippines’. [17] It is open to international trade and investment. The country has a very open market that reflects a pro-trade attitude and they depend highly on product importing and exporting. It does not apply tariffs on imported products. [18]

CONTRACT GOVERNANCE

In Article 1305 of Obligation and contracts of the Philippines, a contract was defined as a meeting of minds between two or more person where each party bind themselves with respect with each other, to give something or render some service. [19] In article 1318 of the said code it is said that no contract shall be formed without the consent of the contracting parties, the subject matter or the object of the contract and the established cause of obligation. [20]

According to Article 17 of the Civil Code of the Philippines, the structure and formality of a contract shall be governed by the laws of the country where the contract is executed. The solemnities established by the Philippine laws shall be observed in the execution when the contract was executed before the diplomatic or consular officials of the Republic of the Philippines in other country. [21]

According to the Unconscionable Contract Ordinance of Hong Kong Chapter 458 Section 7, the proper law of a contract is by choice of the contracting parties. A contract can only be governed by Hong Kong law when the contracting parties agreed to execute the contract under the law of Hong Kong and if it is not agreed the law governing the contract would be the law of the jurisdiction of the contracting party other than Hong Kong. [22]

If a Philippine corporation contracted with Hong Kong, the law of the Philippines shall govern the contract according to section 7 of the civil code of the Philippines but considering the law of Hong Kong with regards to choice of law in contracting, specially based on their Unconscionable Contract Ordinance, it must be agreed by both parties to have the contract governed by the law of the Philippines.

CONFLICT OF LAWS

Conflict of law means contradiction or opposition between the laws of different countries regarding a certain subject matter that has to be decided. [23] When dispute arises between countries with different laws the most important thing to decide on first is what law should be applied and whose court laws shall deal with the resolution of legal disputes that might arise in the future.

Having conflicts between laws of different counties is not avoidable. Considering that every nation has its own different legal tradition, legal system and laws regarding every subject matter. I think conflict of law is the main thing that should be given consideration when dealing or contracting with other nations. It is important for both the parties to recognize which law shall govern the contract that they will form because it will determine their compliance with the said contract.

DISPUTES RESOLUTION

Disputes are being resolved in the Philippines through court litigation but the process of litigation in the country is not satisfactory because of expensive cost of court litigation, obstructed court dockets, slow paced court proceedings and stiff and adversarial court system. Parties to litigation are encouraged by the Supreme Court to consider several forms of alternative dispute resolution. Those alternative methods of dispute resolution are encouraged by the Philippine Supreme Court and have been held valid and constitutional even before the law was passed to establish the regulation of these procedures. [24]

Alternative Resolution Act of the Philippines was approved in 2004. [25] The commonly used methods of Alternative Dispute Resolution in the country are arbitration, mediation and conciliation. Arbitration is a voluntary dispute resolution process where in the parties will compose a tribunal and freely chose the arbitrators who will decide what procedure to be followed in the proceedings, what law should govern the proceedings and where the proceedings will be held. On the other hand, mediation which includes conciliation is also a voluntary process where in the disputing parties selects a mediator that will facilitate the communication and negotiation between them to reach a voluntary agreement that will resolve the dispute. Unlike the process of arbitration, in mediation the mediator does not have the power to coerce any of the party to agree on a recommended solution. Certain subject matters that are not subject to compromise, which are provided by the law, cannot be resolved through these methods. [26]

These are the exceptions mentioned in Section 6 of the Alternative Resolution Act of the Philippines: labour disputes covered by the Labor Code of the Philippines; the civil status of persons; the validity of a marriage; any ground for legal separation; the jurisdiction of courts; future legitime; criminal liability; and those which by law cannot be compromised. [27]

Same as the Philippines alternative dispute resolutions are also recognized in Hong Kong. In 1985, Hong Kong International Arbitration Centre or HKIAC was established to assist disputing parties. There are four dispute resolutions that this organisation suggests. First is through negotiation, second is through conciliation and mediation, third is through arbitration and the last one is through litigation. Negotiation which is the most common form of dispute resolution because by negotiation alone a dispute can be solved but if there was no agreement made through negotiation it is needed to seek for a mutual third party that will facilitate the process of their resolution by means of conciliation and mediation or arbitration. Conciliation and mediation are often used interchangeably but these terms, together, are referred to as mediation. In the process of mediation a mediator, who is appointed by both parties to break any impasse between them. A mediator does not have the power to establish any settlement. In order to take the legal process of arbitration, the parties must both agree. The process will be heard by a private individual, panel or several private individuals. Arbitration results to giving of award by the arbitrator or arbitrators, it is enforceable just like the judgement of a court. Lastly is Litigation, which is done if there is an absence of arbitration or any of the other mentioned alternative dispute resolution. The parties may begin proceedings in the court. In Hong Kong, litigations are handled very competently by the court. [28]

Looking at the process of dispute resolution in Philippines and Hong Kong it is noticeable that it is likely the same and that will make it easier to apply any of the said alternative dispute resolution in the event any legal dispute arises between the parties. The said alternative dispute resolutions are also widely recognized and advised in both countries.

Having these alternative dispute resolutions process makes it easier to solve disputes between parties. It is a good thing that both Philippines and Hong Kong recognizes the methods because in case any disputes occur in relation to contracting between the two countries, it will be easier and faster to solve the dispute. It will also lessen the cost of money and time that is supposed to be spent in seeking for solution. I think these alternative resolutions are more advisable today when it comes to legal disputes concerning corporate entities.

Regarding which law shall govern, in case any legal disputes arises, between the laws of my chosen jurisdiction or the laws of my target market, it is said in the Article 17 of the Civil Code of the Philippines that the law of the jurisdiction where a contract is enacted shall govern the contract, but on the other hand, in accordance to the contract law of Hong Kong the choice of law of the contracting parties shall govern the contract. In order to make the law of the Philippine govern the contract, the corporation should only make the counter party in Hong Kong agree to choose the law of the Philippine as the governing law of the contract. Philippine law being the governing law of the contract gives the courts of the Philippine the power to deal with the dispute resolution, if it arises.

Philippine corporations are being governed by the Corporation Code of the Philippines which was approved in May 1, 1980.

CORPORATE PERSONALITY

According to the Corporation Code of the Philippines Section 2, a corporation is given an individual personality by the law, and as an individual being, it has a right of succession and the powers, attributes and properties definitely accredited by law. [29] A Philippine corporation has legal powers and capacity. The corporation, having own identity, can sue and can be sued. It can acquire, sell, lease, pledge and mortgage real and personal properties. [30] Just like an individual person, it shall be given a registered name not identical to others. [31] It also has a life span of fifty years but can be extended or shortened provided it is done in accordance to the corporation code. [32]

CORPORATE LIABILITY

Corporations established in the Philippines have limited liability. In the event that a corporation is appropriately formed in accordance to the corporation code, the government gives the corporation a separate personality from its investors. [33] To have a limited liability is actually an outstanding characteristic of Philippine corporations. For the part of the investors it is an advantage because they are financially liable only up to the amount of their investment in the corporation because in the event of bankruptcy, creditors cannot run after the personal money of the investors.

According to Section 31 of the Philippine Corporation Code, Directors, Trustees and Officers of corporations who evidently agree on unlawful act of the corporation or who are guilty of negligence or bad faith in leading the corporation or gain personal or monetary interests that violates their duty shall be jointly liable for all the damages resulted to the corporation, its members and other persons. [34] In addition to that, when a director, trustee or officer violated his duty in the event he attempt to obtain or obtains any interest unfavourable to the corporation. He shall be liable as a trustee to the corporation and shall deal with it in his own behalf. [35]

Criminal liability among different countries varies. Most country that embraces a common law tradition is subjected to criminal law liability while on the other hand countries with civil law tradition are not covered by criminal laws, instead, consideration should be given. Criminal sanctions or civil remedies should be applied. [36]

The Financial Action Task Force (FATF), an international group that aims to develop and promote national and international policies to fight money laundering and terrorist financing, [37] recommends that in a case when criminal liability is not enforceable, civil or administrative liability should apply. That with respect to a legal person in which criminal liability is recognize, in the event of criminal liability of a legal person who is from a jurisdiction that doesn’t recognize criminal liability, effective corresponding sanctions should be applied, without prejudice to the individual’s criminal liability. [38]

The legal system of the Philippines is a combination of several legal systems but its corporate law is derived from the American corporate law which is a common law system. [39] Hence, it is subjected to corporate law liability.

CONCLUSION

After the readings that I have done, I have come up with the conclusion that establishing a corporation in the Philippines and doing business with Hong Kong through importation of products may have some conflicts in contracting but it can be resolved through the guidance of the law and in the event of a dispute arises between the two contracting parties, it will not be that hard for the parties to solve the problems if they will agree on applying any of the alternative disputes resolution which is recognized and practiced by both countries. In addition to that, doing business in Hong Kong is must be given a great consideration because the country is very open to trade and investment and their market reflect a pro-trade attitude.