Businessmen, entrepreneurs and any person already know that collecting unpaid accounts or obligations, simply called debts, is not really easy at times even if there are co-guarantors. Maybe the debtor in a valid contract simply doesn’t want to pay. Maybe the debtor is in a terrible financial condition, specially at this time where there are talks of recession or economic depression. Worse, the cost in pursuing small amounts in court usually hinder the collection effort. Maybe that would change with a new twist in procedure.

Under the new procedure on small claims (full text here; primer here), claims that don’t exceed P100,000, exclusive of interest and costs, must be heard within 5 days and must be decided in just 1 day. Of course, there are preliminaries like the filing of a response and the possible judicial mediation, just to see if the parties are willing to talk and come to an agreement. If the parties fail to agree and the court renders a decision, it’s final and no longer subject to appeal.

That’s fast, no doubt about it. The clear purpose is to expedite the resolution of small claims. According to the explanatory note: “The purpose of a small claims process is to provide an inexpensive and expeditious means to settle disputes over small amounts.” In fact, lawyers are not allowed to appear in the case, except when they themselves are the parties involved.

Whether the new process will work, we’ll know soon enough, as this now applied in pilot courts. Of course, it’s clear that this would benefit those who seek to collect legitimate debts. On the other hand, the fast process may not be a good news for debtors who, for one reason or another, can’t pay. Take for example credit card debts. We know of so many complaints concerning unfair collection practices, but this may no longer be the case because collection will be through the regular courts. The decision will be fast and the collection will be implemented by the sheriff. Courts could officially garnish or levy the bank accounts and other properties of the debtor, remedies that an ordinary collection agent can’t do.

You think this new procedure is good for business and for everyone? Please use the comment section below.

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