PHILIPPINES Law and Practice Contributed by: Elaine A. Atienza and Bianca Georgia T. Paloma, Villaraza & Angangco
2. Litigation 2.1 Limitation Periods
sits at the apex of the judicial hierarchy. It reviews decisions of the Court of Appeals and other appellate tribunals primarily on questions of law, through a peti- tion for review on certiorari under Rule 45 of the Rules of Court. The Supreme Court’s decisions are binding on all lower courts and carry doctrinal authority. In addition to the regular courts, quasi-judicial bodies play an important role in commercial dispute resolu- tion. 2.3 Pre-Action Conduct For actions involving the right to inspect corporate books and records under Section 73 of the RCC, the courts have consistently required that the stockholder first make a prior written demand to the corporation before filing a court action. Without proof of such demand and refusal, the complaint may be dismissed for prematurity. In derivative suits brought by stock- holders on behalf of a corporation, the Interim Rules of Procedure Governing Intra-Corporate Controversies require that the plaintiff first makes a demand on the board of directors to bring the action, and that the board refuses or fails to act within a reasonable time, or that such demand is futile. 2.4 Stages of Court Proceedings The main stages of court proceedings or a trial last around two to three years. A civil or commercial case commences with the filing of a complaint and the payment of filing fees. The defendant is served with summons and has a prescribed period to file an answer. Following the answer, the court schedules a court-supervised mediation session where a media- tor attempts to facilitate a settlement. If mediation fails, the case is referred to judicial dispute resolu- tion before a judge for further settlement attempts. If the case is not settled at the pre-trial stage, it pro- ceeds to pre-trial proper, where the parties define the issues, mark exhibits, identify witnesses, and submit their respective pre-trial briefs. The court then issues a pre-trial order summarising the agreements and contentions of the parties. Under the Judicial Affida- vit Rule, direct testimony of witnesses is submitted through judicial affidavits filed before trial. The trial proper involves cross-examination of witnesses, re- direct and re-cross examination, and the formal offer of evidence. After trial, the court renders its decision. Decisions of the trial court may be appealed to the
Limitation periods vary by type of claim and are gov- erned by the Civil Code and special laws. The appli- cable prescriptive period depends on the nature of the dispute and the cause of action asserted. For instance, for election contests involving the election of a director or officer of a corporation, the period to file is 15 days from the date of the election, as provided under the Interim Rules of Procedure Gov- erning Intra-Corporate Controversies. For other intra- corporate controversies, such as claims for damages, enforcement of rights, rescission, or annulment of cor- porate acts, the prescriptive period is governed by the relevant provisions of the Civil Code: • ten years for actions based on a written contract, an obligation created by law, or a judgment; • six years for actions based on an oral contract or quasi-contract; and • four years for actions based on injury to rights or a quasi-delict. For criminal violations of the RCC which prescribes the penalty of a fine, in accordance with RA No 3326, the prescriptive period is one year from the day of the commission or discovery thereof. In arbitration, parties are free to agree on limitation periods. In the absence of an agreement, disputes arising from writ- ten contracts must generally be filed within ten years, consistent with Article 1144 of the Civil Code. The commencement of arbitration interrupts the running of the prescription period. 2.2 Court Structure The Philippine judiciary is structured in three tiers: the trial courts, the intermediate appellate court, and the Supreme Court. At the trial level, regional trial courts are the courts of general jurisdiction for civil and crimi- nal matters. For commercial disputes, the Supreme Court has designated specific RTCs as Special Com- mercial Courts, which have exclusive jurisdiction over intra-corporate controversies, corporate rehabilitation, insolvency, securities regulation, and related commer- cial matters. The Court of Appeals is the intermediate appellate court. It reviews decisions of the RTCs on questions of both law and fact. The Supreme Court
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