Maximizing the use of our special commercial courts

In one of the major papers, the Securities and Exchange Commission (SEC) was reported to have proposed the creation of a special court to hear and decide cases involving investment scams that have victimized thousands of our citizenry.

There is a lot of wisdom in the proposal. We really need specialized courts to take charge of these cases. The sheer number of victims is mind boggling for our regular courts. For one, these courts will still have to hear and decide other cases that are presently under their jurisdiction in addition to these investment scams. To make matters worse, these cases not only involve complex and sophisticated methods but also present highly technical questions and complicated issues of law. Without meaning to demean our judicial system, our unsophisticated judicial system may not be ready to properly take on the cases. For the reality of the situation is that it takes courts specially trained in this area of law to properly handle these cases.

The problem, of course, is that the budgetary deficit of our country may not permit the creation of these special courts. A similar proposal has, in fact, been made before the Committee on Economic Affairs of the House of Representatives that is now studying the proposed Corporate Recovery and Insolvency Act. The principal issue raised against the proposal is the lack of funds to support the idea.

The SEC proposal may have not been farfetched if civil cases for damages arising from these investment scams were among the cases transferred by the Securities Regulation Code (SRC) to the Regional Trial Courts designated by the Supreme Court. There is a legal question on this matter, though. Some practitioners contend that such cases were transferred because they are devices or schemes amounting to fraud and misrepresentation which are detrimental to the interest of the public under Section 5 of P.D. 902-A, as amended. This school of thought then concludes that they were among the cases transferred pursuant to the SRC to the specially-designated Regional Trial Courts (Special Commercial Courts). Others contend otherwise. Rightly or wrongly, this school of thought argues, that there are Supreme Court decisions substantially holding that the SEC, being then an administrative body vested by law with limited quasi-judicial powers, did not have the power to award damages under Section 5 of P.D. 902-A, as amended. Therefore, civil actions for damages arising from these investment scams could not have been transferred to the Special Commercial Courts.

Whatever it is, one thing is sure. Criminal cases arising from these investment scams are not under the jurisdiction of the Special Commercial Courts because the SEC had no jurisdiction over them in the first place. Even at the time our SEC was vested with quasi-judicial powers, these criminal cases belonged to the jurisdiction of our courts of general jurisdiction.

Does this mean that the SEC proposal cannot be realized? Of course, not. The SEC dream may still see the light of day despite the country’s present budgetary problem. I have made a proposal to consolidate jurisdiction of these cases with our Special Commercial Courts. The proposal has been discussed at several fora, including a forum attended by business lawyers and judges. My proposal has been closely scrutinized by the Judicial Reforms Office of the Philippine Judicial Academy since October 2002.

My proposal is not limited to cases arising from the so-called investment scams. It extends to other high-impact commercial or business cases that require special competence and technical expertise. Other cases included, for example, are cases under our investment laws, insolvency cases, cases under the Anti-Money Laundering Act, receivership and liquidation of banks, insurance companies, quasi-banks and cooperatives.

The vision is to "create" highly competent and respected commercial courts from the present ranks of the Regional Trial Courts without additional budgetary burden on our government.

There is, of course, a legal issue as to whether the proposal is feasible without need of a new legislation. My research says that the Supreme Court has the statutory authority to "expand" the jurisdiction of the Special Commercial Courts to include cases other than the SEC cases. This authority is found in the "Judiciary Reorganization Act of 1980". Section 23 of the law gives the Supreme Court the power to "designate certain branches of Regional Trial Courts to handle exclusively x x x such other special cases as the Supreme Court may determine in the interest of a speedy and efficient administration of justice."

But how does the proposal improve the administration of justice in the business area? The plan calls for the unloading of non-commercial or business cases from the Special Commercial Courts. These courts will concentrate on designated commercial and business cases that will be transferred to their jurisdiction. If necessary, the Supreme Court will review the ranks of the judges presently assigned to these Special Commercial Courts (who have carefully been chosen in the first place) to ensure that only the fittest will remain. The Philippine Judicial Academy will subject the judges to rigorous training on the intricacies and special procedures for handling these cases. The Supreme Court may also want to adopt new rules of procedure specially designed for these cases in the same manner that it did for intra-corporate disputes when these cases were first transferred from the SEC to the Special Commercial Courts.

It is hoped that the Supreme Court will approve the proposal after it is presented to it for consideration. If we adopt it, we should be able to efficiently handle the high-impact business cases without necessarily incurring the gargantuan expense that goes with the statutory creation of a totally new set of special commercial courts.

(The author is a senior partner and the Co-Managing Partner of the Angara Abello Concepcion Regala & Cruz Law Offices or ACCRALAW. He is a professorial lecturer of the Philippine Judicial Academy. He can be contacted at 830-8000.)