Legal System

The legal system of the Philippines is a combination of continental civil law and the Anglo-American common law system. The Philippines gained autonomous status from the US in 1935 when the first Philippine constitution was implemented. The present constitution originates from 1987 and is similar to the US constitution.

The Philippine justice system is composed of the Supreme Court, the Court of Appeals, the regional trial courts, the Court of Tax Appeals and the metropolitan and municipal trial courts.

The high level of criminality and disorder can be partly blamed for the country's instability, but on the other hand these problems occur from the structure of the society in general. As an attempt to increase the stability of the society the government restored the death penalty in 1993. Although around 40 prisoners have been condemned to death since then, none of these sentences has been executed.

It is very important to find a reliable local lawyer. It's worth putting some effort this recruitment, because there are also some unskilled and even fraudulent lawyers catching new clients. Making a mistake here might cost you a huge amount of money. Consultations with other Finnish companies present in the country could help in finding a reliable lawyer. Unlike lawyers in Finland, some are eager to present their clients as reference. This might also give some idea of the lawyer's reputation, but one should always remember that business cards can't be trusted as a reference and as an indication of factual clientship.

Commercial Law

The commercial law in the Philippines is westernlike when compared with the surrounding countries. For example, the Philippine Code of Commerce is based on the old Spanish Code of Commerce. This continental influence is evident, especially when it comes to the structure and sources of the law. The sources of commercial law are very occidental paying attention to the legislation, contracts made, commercial usages and practices, etc.

Another important law in the field of commercial law is the Code of Corporations.

Contracts and other arrangements are to be executed and complied within good faith, that is, according to the terms in which they were made with the usual meaning of spoken or written words. Also, the will of the parties is to be served. The time of performance of obligations is fixed in the Code of Commerce. However, the observation of the contracts does not always meet western standards. The execution of contracts through the legal system can be ineffective and take even years. The civil procedure law of the Philippines allows means to delay the procedure, even to such an extent that voluntary settlements are often made.

There are many other relevant laws, too. For example, laws and regulations concerning antitrust and securities issues, banking and finance, product safety and quality requirements, advertizing and sales practices are worth noting. For example, in marketing, the state of Philippine society should be carefully observed. Even the simplest consumer goods can be dangerous when they are bought by people who have never used any similar product before.

The Labor Code of the Philippines sets an 8-hour working day and a 48-hour working week. Employees are granted at least an hour for meals. Minimum wages are defined regionally in order to adjust the disparities in the cost of living in different regions. Women who have been employed for at least six months have the right to have an 8-week maternity leave with full pay. The minimum age limit for employees is mainly 15 years although minors be tween 15 and 18 years are not allowed in hazardous work. Every employer is obligated to cover his employees with the Social Security System -program.

Further, the law also includes the prohibitation of discrimination based on sex (e.g. favoring a male employee in promotion, studies, education, scholarships etc. and payment of lesser compensation solely on account of gender). However, in practice the implementation of the provisions is poor. For example, it's very common that in job advertizing the job is offered only to one sex.

Investment Law

Since the Ramos administration took over the reins of government, the Philippine economy has opened itself to foreign investors in order to strengthen its competitiveness. Many government operated companies, monopolies and other arrangements that have restricted competition have been removed. Furthermore, the capital market has been liberalized. This privatization program has already achieved success: the amount of foreign investments has multiplied recently. However, the Philippines has not quite been as attractive for foreign investors as some of its neighboring countries.

The legal framework for foreign investments is the Foreign Investments Act of 1991 and the Omnibus Investments Code of 1987. These laws regulate the processes by and conditions under which non-Philippine nationals may invest and operate in the country, The major government body dealing with foreign investors is the Board of Investments (BOI). On the other hand, the authority to register and supervise all corporations and partnerships doing business in the Philippines is held by the Securities and Exchange Commission (SEC). The recent Investments Act allows as a main rule 100% foreign participation. Exceptions to this rule are dependent on the type of the activity. The division related to domestic market and export enterprises also has importance when examining the restrictions or incentives foreign corporations meet.

At the international level, the Philippines has signed the Convention establishing the Multilateral Investment Guarantee Agency (MIGA), the Settlement of Investment Disputes Between States and Nationals of Other States, and the New York Convention on Recognition of Foreign Arbitral Awards. In the cooperation with the ASEAN countries, several conventions regarding investments have been signed. However, these conventions have not proven influential in affecting the content of everyday business. The Paris Convention for the Protection of Industrial Property is of more use. The protection of intellectual rights in the Philippines is more effective than in most countries in the area. The tradition in the protection of intellectual property rights originates from the US rule. Therefore, the legal framework is based on the US laws, regulations and practices. One player in the fight against intellectual property rights violators is the Delegation of the European Communities. The delegation keeps an eye on the protection of these rights and can take actions against the violator. However, some problems with trademarks can be seen, e.g. T-shirts of Saab-Scania brand are sold.


The Philippine Code of Commerce includes provisions e.g. on

The Philippine Code of Corporations includes provisions e.g. on


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