ADR Notes (Midterms-Finals 2018)

Alternative Dispute Resolution d.m.g. 2018 j.d.
Notes based on Judge J. Humiding’s Outline UC Law
I. Fundamentals of the ADR Law neutral third person after which the parties seek a
negotiated settlement.
RA 9285: AN ACT TO INSTITUTIONALIZE THE USE OF AN ALTERNATIVE
DISPUTE RESOLUTION SYSTEM IN THE PHILIPPINES AND TO ESTABLISH
THE OFFICE FOR ALTERNATIVE DISPUTE RESOLUTION AND FOR OTHER Application
PURPOSES.
Exceptions:
Definition of Terms
RA 9285 shall not apply to resolution or settlement of the
ADR System is any process of procedure used to resolve a following: LC-VAJ-FCC
dispute or controversy, other than by adjudication of a
presiding judge of a court or an officer of a government a. labor disputes covered by the Labor Code and its
agency, in which a neutral third party participates to assist IRR;
in the resolution of issues, which includes:
a. arbitration; b. civil status of persons;
b. mediation; c. validity of a marriage;
c. conciliation; d. any ground for legal separation;
d. early neutral evaluation; e. jurisdiction of courts;
e. mini-trial; f. future legitime;
f. or any combination thereof. g. criminal liability;
Arbitration is a voluntary dispute resolution process in h. disputes which by law cannot be compromised; and
which one or more arbitrators, appointed in accordance
with the agreement of the parties, or the rules, resolve a i. disputes referred to CAM.
dispute by rendering an award.
Robeniol Notes1
Court-Annexed Mediation is any mediation process
conducted under the auspices of the court, after such court Broad definition of ADR:
has acquired jurisdiction of the dispute.
(a) It is a system;
Court-Referred Mediation is mediation ordered by a court
to be conducted in accordance with the Agreement of the (b) Using means and methods allowed by law and
Parties when an action is prematurely commenced in approved by the parties;
violation of such agreement.
(c) For the purpose of resolving or facilitating the
Early Neutral Evaluation is an ADR process wherein resolution of disputes and controversies between
parties and their lawyers are brought together early in a them;
pre-trial phase to present summaries of their cases and
receive a nonbinding assessment by an experienced, (d) In an expeditious and speedy manner;
neutral person, with expertise in the subject in the
substance of the dispute. (e) Without resorting to court adjudication.
Mediation is a voluntary process in which a mediator, Principles of ADR

selected by the disputing parties, facilitates communication
and negotiation, and assists the parties in reaching a 1. Promotion of party autonomy and self-
voluntary agreement. determination
Mediation-Arbitration or Med-Arb is a two-step dispute The parties have the freedom to choose the form,
resolution process involving both mediation and arbitration. procedure, practitioner, venue, and other terms of
the proceedings.
Mini-trial is a structured dispute resolution method in which
the merits of a case are argued before a panel comprising
senior decision makers with or without the presence of a
1 Chapters 1 & 2, pp. 1-26
1
2. Recognition of ADR as an efficient tool and an Forms of ADR

alternative procedure
A. Arbitration - It is a voluntary dispute resolution process
As an alternative system, it does not altogether do in which one or more arbitrators, appointed in
away with the trial system. It is a different, accordance with the agreement of the parties resolve a
separate, and independent means of settling dispute by rendering an award.
disputes. B. Mediation - It is a voluntary process in which a
mediator, selected by the disputing parties, facilitates
3. Enlisting private sector participation communication and negotiation, and assists the parties
in reaching a voluntary agreement regarding a dispute.
ADR calls on the services of third parties who do Parties to a controversy are convinced by a mediator to
not necessarily dispense public service. settle through a voluntary agreement called “Mediated
Settlement Agreement”.
C. Conciliation - It is the adjustment and settlement of a
dispute in a friendly, unantagonistic manner.
Objectives and Benefits of the ADR D. Early Neutral Evaluation - It is an ADR process wherein
parties and their lawyers are brought together early in a
1. speedy and impartial justice pre-trial phase to present summaries of their cases and
receive a non-binding assessment by an experienced,
neutral person, with expertise in the subject in the
2. declogging of court dockets
substance of the dispute.
E. Mini-trial - It is a structured dispute resolution method
Features of the ADR
in which the merits of a case are argued before a panel
comprising senior decision makers with or without the
1. ADR is a means used to resolve a dispute or
presence of a neutral third party after which the parties
controversy.
seek negotiated settlement.
A procedure that doesn’t lead to a final conclusion
F. Other Forms of ADR - Any arrangement agreed upon
and only serves for a temporary cessation is not
by the parties that satisfies the requisites of ADR. It
ADR.
must comply with the essential requisites of a valid
2. ADR utilizes means and methods allowed by
contract and must not be contrary to law, morals, good
law.
customs, public order and public policy. Agreements to
The ADR Law doesn’t limit the allowable forms. Any
resolve disputes based on the outcome are equivalent
form may be recognized as long as it is not contrary
to gambling and considered void.
to law, morals, good customs, public order, and
public policy. Classification of Forms
3. ADR is contractual in nature.
The parties are free to agree on the procedure. But As to number of parties, it could be bilateral or multilateral
in order to be a valid form of ADR, the 3 essential
requisites of a contract (consent, object certain, and o Bilateral – when there are 2 contending parties
cause) should be satisfied. o Multilateral – when there are more than 2
a. Pre-causal consent – when the parties to contending parties
the contract stipulate that any dispute that
will arise from the contract shall be As to number of issues, it could be simple or complex
resolved by arbitration.
b. Present causal consent – when the parties o Simple – only one issue is involved
to an existing controversy voluntarily o Complex – two or more issues
submit themselves either to arbitration or
mediation. As to extent of the conclusion, it could be complete or
4. ADR avoids court trial. partial
5. ADR usually involves the participation of a
neutral third party. o Complete – all the issues involved are
resolved
Sources of ADR Rules o Partial – only one or some, but not all, are
resolved
1. domestic laws and rules o (But in no case should ADR merely suspend or
2. acts of the Executive Branch defer the resolution of the dispute.)
3. decisions of the Supreme Court
4. international laws As to the role of evidence in the proceedings, it could be
5. general principles of law and equity merit based or non-merit based
2
o Merit-based or evidentiary – when b. Validity of marriage or any ground for legal

presentation of evidence and evaluation of separation
merits are required. c. Jurisdiction of the courts
d. Future legitime
As to the pendency of a court case, it could be case related e. Criminal liability
or independent f. Those which, by law, cannot be compromised
(e.g., Art 2035 of NCC, those against public
o Case-related – conducted in connection with policy)
or as a prerequisite to trial (e.g., CAM, CRM)
o Independent – conducted irrespective of any Basic concepts
pending court case
A. Concluding Acts
As to the applicable law, it could be domestic, international,
or foreign ADR proceedings are completed upon the execution of a
concluding act or agreement:
o Domestic – if the parties’ place of business,
place of arbitration, and place of the  In mediation – a mediated settlement agreement or
performance of the obligation involved or a compromise agreement
subject matter of the dispute, are in the  In CAM – a judgment based on compromise
Philippines  In conciliation – a waiver and quitclaim
o International – any of the following:  In arbitration – arbitral award (arbitral decision),
a. When the parties’ place of business are award on agreed terms, consent award, award
in different states based on compromise
b. When the place of arbitration is outside
the Philippines B. ADR Providers or Practitioners
c. When the place where a substantial
part of the obligation is to be By nature of their functions, the ADR practitioners act in a
performed; or the place where subject quasi-judicial capacity.
matter of the dispute is most closely
Hence, as a general rule, their decisions are reviewable in
connected, is outside the Philippines
a special civil action for certiorari under Rule 65, on the
d. When the parties agreed that the
ground of grave abuse of discretion amounting to lack or
subject matter of the dispute relates to
excess of jurisdiction.
more than one country
o Foreign – when conducted outside the But in domestic arbitration, the arbitral tribunal’s decision to
Philippines defer the resolution of the issue of its jurisdiction cannot be
challenged by a MfR, appeal, or certiorari. The remedy of
As to permanence, it could be ad hoc or institutional the aggrieved party is to proceed with the arbitration, and
later on, once a final arbitral award has been rendered,
o Ad hoc – if the existence of the ADR provider
petition the court to set aside the award on the ground that
is only temporary, for a particular dispute or
the tribunal exceeded its powers.
controversy
o Institutional – if the ADR practitioner’s C. Preference for ADR
existence is permanent in character and not
dependent on any dispute Even before the enactment of RA 9285, there is a clear
preference for ADR as seen in Art 2030 of the NCC, which
Components of the ADR instructs the court to suspend the proceedings if it is
possible to settle the dispute using ADR.
1. contending parties
2. dispute or controversy Hence:
3. form of ADR
4. ADR provider or practitioner  Before or during pretrial, either party may file a
Motion to Refer the Parties to ADR.
Subject Matter of ADR  After pretrial, the parties may jointly file a Motion to
Suspend or Motion to Dismiss, to allow a
o General rule: All adversarial disputes and
compromise agreement.
controversies can be the subject matter
 In case a settlement agreement materializes, either
o Exceptions:
party may submit it to the court where the action is
a. Civil status of persons pending, and move for its approval. It will be
3
approved if the court finds that it is not contrary to

law, morals, public policy, or public order. D. Salient Features of the ADR Law
ADR in the Philippines: Wave of the Future or the Road 1. Jurisdiction

Less Traveled?
(Martha Lois V. Cordia)2 An arbitral body, once constituted, has the power to
examine the question of its own competence.
A. Problem Areas
2. Venue and Place
Clogged docket courts, expensive litigation fees, slow-
paced court proceedings and rigid and adversarial system As a general rule, parties are free to agree in the place or
of courts characterize the current justice system of the venue. In International Commercial Arbitration, parties could
Philippines. also choose the State where the arbitration will be
conducted. This is to avoid the adverse influence of each
Most recent statistics show that there are about 1.2 million other’s national laws. If the parties don’t choose, the
cases in the country and only 1,620 judges to resolve them. arbitrator tribunal will choose the venue. In the absence of
Minor cases take about 2-3 years to be resolved, whereas both, it will be in Metro Manila.
as major ones drag on up to 10 years.
3. Court Involvement
Per the Constitution, the collegiate courts are given 12
months to resolve its cases, while the Supreme Court has The courts generally have a limited role in arbitration.
24 months. The long, tedious delays are contrary to the Exceptions:
constitutional mandate to a speedy disposition and
a. Courts may grant interim and provisional reliefs
administration of justice. It has adversely affected the
during the pendency of arbitral proceedings before
lawyers, the litigants, and the justice system.
the arbitral is constituted or if the tribunal has no
B. ADR as a Better Alternative to Litigation power to act or is unable to act effectively.
1. party autonomy b. The RTC could decide whether the arbitral tribunal
2. speed and cost has jurisdiction after the arbitral tribunal has ruled
3. privacy and confidentiality against the plea.
4. awards are final and binding c. Recourse to a court against an arbitral award may be
made only by an application for setting aside an
C. Procedure in ADR Methods award.
d. Awards by foreign tribunals, must be filed in the RTC
1. The arbitration commences upon demand of one for recognition and enforcement thereof in
party to the other to submit a controversy to accordance with the rules to be promulgated by the
arbitration. If there is no arbitration clause in the Supreme Court. Once application is confirmed, it
contract, the parties may execute a submission shall be enforced in the same manner as final and
agreement to arbitrate. executory decisions of courts of law in the
2. The demand shall be served upon the other party in Philippines.
accordance with the contract.
4. Recognition and Enforcement of Awards
3. The parties will appoint the arbitrator tribunal in
accordance with the contract. If the contract Compared to foreign judgments, arbitral awards in
provides no guidance, each party will appoint an International Commercial Arbitration are readily enforced
arbitrator and the two appointed arbitrators will pursuant to the New York Convention of 1958.
select a third arbitrator. The chosen arbitrator must
disclose the circumstances that give justifiable Foreign judgments are generally not enforceable in other
doubts to his impartiality or the fact that he does not jurisdictions except in cases of reciprocity and comity.
possess the necessary qualities. Arbitral awards are more readily enforceable.
4. The time and place of the hearing will be set and
must cause a notice of it to be given to the parties The original or duly authenticated copy of the award and
5. The arbitrator shall act as the sole judge in the arbitration agreement must be filed in the RTC and
assessing the materiality and relevance of the approved for it to be enforceable in the country.
evidence offered. He is not bound to conform to the
rules of evidence but must observe the agreement E. Conclusion
among the parties
6. The arbitrator will render an award. The passing of RA 9285 signified the promotion of ADR, but
its implementation is still in its initial stage. ADR methods
2 Summary by Group 1 (Jura Obra, et al.)
4
are still considered as the road less traveled. (The article a. Giving legal or technical advise;
was published in 2007.)
b. Engaging in counseling advocacy;
The reasons are:
c. Expressing his personal opinion on the rights and
 In the domestic setting, there is a lack of duties of the parties, and the merits of any proposal
awareness. made.
 In the international setting, the Philippines is not yet
equipped to be an effective venue for international  Mediation may be:
commercial arbitration because:
(1) the centers for ADR are still young and yet to a. Ad hoc; or
gain a strong foothold in the field; and
(2) the courts’ unbridled intervention prevents the b. Institutional – when administered by and conducted
parties from choosing the Philippines as the venue under rules of a mediation institution
for arbitration.
Only when more parties support ADR and more courts  An Agreement to Submit a Dispute to Mediation By An
encourage its use can ADR be considered the “wave of the Institution should include:
future”.
a. To be bound by the institution’s internal mediation
II. Mediation in General and administrative policies; and
Definition b. To have such rules govern the mediation of the

dispute, and be followed by the mediator, the
It is a voluntary process in which a mediator, selected by parties and their counsels, non-party participants.
the disputing parties, facilitates communication and
negotiation, and assists the parties in reaching a voluntary Place of Mediation: The parties are free to agree on the
agreement. place of mediation. If they don’t have an agreement, the
default venue is any place convenient and appropriate for
Scope all parties.
Chapter 2 of RA 9285 (on Mediation) covers voluntary
Stages in Mediation
mediation, whether ad hoc or institutional, other than court-
annexed.
1. Opening statement of the mediator
“Mediation” shall include conciliation.
2. Individual narration by the parties
Exclusions – The ADR Law does not cover the following:
3. Exchange by the parties
1. CAM
4. Summary of the issues
2. CRM
5. Generalization and evaluation of options
3. Conciliation conducted by the Pangkat
Tagapagkasundo 6. Closure
4. JDR But this process is not obligatory. Pursuant to the principle

of party autonomy and self-determination, the parties may
Robeniol Notes3 choose the procedure that will govern their mediation.
 Mediation is non-evidentiary or non-merits based. The process shall be private unless the parties consent to
the presence of other persons.
 Mediation focuses on the facilitation of communication
and negotiation between parties in order to encourage It is concluded by the:
them to voluntarily settle their dispute.
a. Execution of a Settlement Agreement by the parties;
 A mediator must refrain from:
b. Withdrawal of any party from mediation; or
3 Chapter 3, pp. 27-42
5
c. Written Declaration of the mediator that any further 3. Pleadings, motions, manifestations, witness
effort at mediation would not be helpful. statements, reports filed or submitted in arbitration or
for expert evaluation.
Advantages of Mediation: Assurances under Section 8 of
the RA 9285: Legal effects of confidentiality:
a. Confidentiality in the mediation process; 1. A party, mediator, or non-party participant may refuse to
disclose or prevent another from disclosing the
b. Prompt, economical, and amicable resolution of information.
disputes; and
2. The information cannot be subject to discovery and
c. The decision-making authority rests in the parties. they are inadmissible in any adversarial proceeding.
How is mediation closed and concluded? 3. The following persons involved in mediation cannot be
compelled to disclose:
Three ways:
a. Parties to the dispute
a. By the parties’ execution of a settlement agreement or
compromise agreement; b. Mediator
b. By the withdrawal of any party from mediation; or c. Counsel for the parties
c. By the written declaration of the mediator that any d. Non-party participants

further effort at mediation would not be helpful.
e. Any person hired or engaged as secretary,
Confidential and privileged nature of Mediation stenographer, clerk, or assistant
communication
f. Any person who obtains or possesses confidential
 All information obtained through mediation proceedings information by reason of his profession.
is privileged and confidential in character.
4. The protection will continue to apply even if a mediator
 The ADR Act guarantees and enforces this privilege by: has failed to act impartially.
a. Declaring certain information confidential and 5. A mediator may not be called to testify to provide
therefore not capable of being disclosed; and information gathered in mediation.
b. Declaring the information inadmissible in evidence. What are the exceptions?
The ADR Act defines confidential information as: “any There is no privilege against disclosure if mediation
information, relative to the subject of mediation or communication is:
arbitration, expressly intended by the source not to be
disclosed (expressly confidential), or obtained under 1. in an agreement evidenced by a record
circumstances that would create a reasonable expectation authenticated by all parties to the agreement;
on behalf of the source that the information shall not be
disclosed (impliedly confidential).” 2. available to the public or that is made during a
session of a mediation which is open, or is required
They include, but are not limited to, the following: by law to be open, to the public;
1. Communication, oral or written, made in a dispute 3. a threat or statement of a plan to inflict bodily injury
resolution proceedings, including any memoranda, or commit a crime of violence;
notes or work product of the neutral party or non-party
participant; 4. intentionally used to plan a crime, attempt to commit,
or commit a crime, or conceal an ongoing crime or
2. An oral or written statement made or which occurs criminal activity;
during mediation or for purposes of considering,
conducting, participating, initiating, continuing of 5. sought or offered to prove or disprove abuse,
reconvening mediation or retaining a mediator; and neglect, abandonment, or exploitation in a
6
proceeding in which a public agency is protecting the participant; and

interest of an individual protected by law; but this
exception does not apply where a child protection 2. Disclose to the parties any such fact as soon as is
matter is referred to mediation by a court of a public practical before accepting a mediation.
agency participates in the child protection mediation;
If such fact is learned after accepting mediation, the
6. sought or offered to prove or disprove a claim or mediator shall disclose it as soon as practicable.
complaint of professional misconduct or malpractice
filed against mediator in a proceeding; or At the request of a party, an individual who is requested to
serve as mediator shall disclose his/her qualifications to
7. sought or offered to prove of disprove a claim or mediate a dispute.
complaint of professional misconduct or malpractice
filed against a party, nonparty participant, or What are the qualifications of a mediator?
representative of a party based on conduct occurring
during a mediation. The ADR Act does not require special qualifications by
background or profession, unless required in the mediation
Moreover, there are also exceptions based on public agreement or by the mediation parties.
policy, when the need for the evidence substantially
outweighs the need for confidentiality, and the mediation Duties and Functions of a Mediator
communication is offered in:
1. Prior to the mediation
1. a court proceeding involving a crime or felony; or
a. Competence – He should continually upgrade his
2. a proceeding to prove a claim or defense that is skills, make such skills and other qualifications
sufficient to reform or avoid a liability on a contract known to the parties. He should only mediate if he
arising out of the mediation. knows he truly can.
The Mediator b. Impartiality – Before accepting, he should make an

inquiry to make sure that he can mediate without
 He is required to keep in utmost confidence all any bias or conflict of interest.
confidential information, and to discuss its
confidentiality with the parties before the process. 2. During the mediation
 The mediator may not make a report, assessment, a. Confidentiality

evaluation, finding or other communication to a court,
agency or other authority making a ruling on a dispute b. Consent and self-determination – He should ensure
that is the subject of a mediation, except: that the parties know that they are free and able to
make whatever choices they desire.
a. where the mediation occurred or has
terminated, or where a settlement was c. Promotion of respect and control of abuse – He
reached; and should encourage mutual respect and take steps to
limit the abuses of the mediation process.
b. as permitted to be disclosed under the ADR
Law (Sec 13). 3. No mediator or any member of a mediator’s immediate
family or his/her agent shall request, solicit, receive or
Operative Principles in Mediation4 accept any gift or any type of compensation other than
the agreed fee and expenses in connection with any
Before accepting a request to serve as mediator, an matter coming before the mediator.
individual shall:
Mediated Settlement Agreement
1. Make a reasonable inquiry to determine whether
there are any known facts likely to affect his  It is the concluding document in a successful mediation.
impartiality of the mediator, including financial or
personal interest in the outcome, and any existing  It may also take the form of a Compromise Agreement.
or past relationship with a party or foreseeable
Operative principles under the Act:
4 ADR Act, Section 13. Mediator’s Disclosure and Conflict of
Interest.
7
1. The Mediated Settlement Agreement is prepared by the 1. Indigenous dispute resolution (IDR);
parties, with the assistance of their respective counsel,
and by the mediator. 2. Neighborhood justice system;
2. They shall endeavor to make the terms and conditions 3. CAM;

complete and make adequate provisions for the
contingency of breach to avoid conflicting interpretations 4. Administrative mediation; and
of the agreement.
5. Private mediation.
3. The parties and their respective counsel shall sign the
settlement agreement. In IDR, instead of a third-party stranger, an authoritative
elder usually oversees the process, and it is usually ended
4. The mediator shall certify that he/she explained its by a ritual.
contents in a language they know.
The neighborhood justice system was codified through the
5. If the parties so desire, they may deposit the settlement Katarungang Pambarangay under PD 1508 (1978).
agreement with the appropriate Clerk of the RTC where
one of the parties resides. The author emphasized the historical background of the
law, heavily implying that because it was crafted by a
6. Where there is a need to enforce the settlement dictator, the KP system was created “not by access to
agreement, a petition may be filed by any of the parties justice or self-determination, but by their polar opposites,
with the same RTC, in which case, the court shall repression and dictatorial control”, thereby strengthening
proceed summarily to hear the petition. the dictator’s centralized hold over the country.
7. The parties may agree that the mediator shall become a III. CAM & JDR
sole arbitrator for the dispute and shall treat the
settlement agreement as an arbitral award, subject to OCA Circular 51-2011
RA 876.
Through AM 11-1-6-SC-PHILJA, the Supreme Court
Role of Counsel in Mediation expanded CAM and JDR to cover the civil aspect of less
grave felonies punishable by correctional penalties not
In AM 11-1-SC-PHILJA (2011), the Supreme Court stated exceeding 6 years imprisonment, where the offended party
the role of lawyers in mediation as “adviser and consultant is a private person.
to their clients, dropping the combative role in the
adjudicative process, and giving up their dominant role in The expanded coverage also includes those cases
judicial trials. They must accept a less directive role in order enumerated in Admin Circular 20-2002, namely:
to allow the parties more opportunities to craft their own
a. All cases, settlement of estates, and cases covered
agreement.”
by the Rules of Summary Procedure except those,
which by law, cannot be compromised;
Mediation and the Neocolonial Legal Order: Access to b. Cases cognizable by the Lupong Tagapamayapa
Justice and Self-Determination in the Philippines under the KP Law;
(Eduardo R. C. Capulong)5 c. The civil aspect of BP 22; and
d. The civil aspect of quasi-offenses under Title 14 of
The article mentions two sides. On one hand, the author the RPC.
acknowledged that Mediation provides greater access to
justice and self-determination, more efficient and effective AM 10-4-16-SC
than the courts, less costly, more responsive to the poor,
and more culturally appropriate as it promotes social This covers (a) Court-Annexed Family Mediation, and (b)
harmony. On the other, he echoed the critics of US-style Code of Ethical Standards for Mediators.
mediation as promoting neocolonial hegemony. The critics
said that mediation has been used to expand the ambit of A. Family Mediation
state power, defeat democratic decision-making, and
preserve unequal relationships. They criticize mediation for The following cases will be referred to family mediation:
putting “peace” first over justice.
1. Settlement of estates
In the country, mediation is categorized into 5 areas: 2. All issues under the Family Code and other laws in
relation to support, custody, visitation, property relation,
5 Ohio State Journal on Dispute Resolution
8
guardianship of minor child, and other issues which can  Individual parties must personally appear for family
be subject of a compromise agreement, except: mediation.
a. Those covered by:
i. RA 9262 (VAWC) Conclusion of Family Mediation
ii. RA 7610 (Child Abuse)
iii. RA 8353 (New Rape Law) If the mediation is successful, the PMC unit will submit to
iv. RA 9208 (Anti-Trafficking Law) the court within 3 days after the termination of the
v. RA 9775 (Child Pornography) proceedings any of the following, as the case may be:
b. Civil status of persons
c. Validity of marriage a. Original Compromise Agreement entered into by the
d. Future support parties - this will be the basis of the rendition of a
e. Jurisdiction judgment by compromise, which may be enforced by
f. Grounds for legal separation execution;
g. Future legitime b. Withdrawal of the Complaint; or
c. Satisfaction of the claim.
PMC Units
If the mediation is a failure, the Family Mediator will prepare
The trial court may order the referral to a Philippine a Certificate of Failed Mediation, to be submitted to the
Mediation Center (PMC) Unit after determining the court also within 3 days from termination of the
possibility of an amicable settlement, or of a submission to proceedings.
ADR.
B. Code of Ethical Standards for Mediators
 There is a PMC unit in the courthouses or near the
premises of the court for CRM proceedings. Canon 1 – Responsibility to the Courts
 The PMC unit will assist the parties in selecting a
mutually acceptable Family Mediator from a list of duly A Family Mediator must be:
accredited ones. If they can’t agree, the unit will assign
one.  candid, accurate and fully responsible to the trial
 A Family Mediator is an officer of the court when court;
conducting mediation proceedings.
 Lawyers may be present and act as consultant or  observe all the applicable rules and the judicial
adviser of the parties, but may attend only upon the standards of fidelity and diligence;
request of the mediator.
 At the end of the period given by the court, if no  report and encourage the parties to report breaches
settlement is reached, the case will be returned to the of the Code of FMs to the proper authorities.
trial court for further proceedings, unless the parties
agree to continue and the court grants an extension. Canon 2 – Responsibility to the Parties
 All mediation proceedings and incidents must be kept
strictly confidential, unless specifically provided by law. i. Impartiality – freedom from favoritism and bias; a
 All admissions or statements made therein are Family Mediator must:
inadmissible for any purpose in any proceeding.
 The parties undertake to not rely or introduce as a. not meet one of the parties without the
evidence the following: consent or presence of the other(s);
a. Views or suggestions made by the other party
in respect to a possible settlement of the b. withdraw if he believes he can no longer be
dispute; impartial;
b. Admission made by wither party in the course
of the proceedings; c. remind parties of their right to terminate the
c. Proposal made by the Family Mediator; mediation;
d. The fact that the other party had indicated his
willingness to accept a proposal settlement d. not give or accept gifts in connection to the
made by the parties to the Family Mediator. mediation.
 Any transcript or minutes of the mediation proceedings
are inadmissible as evidence in any other proceeding. ii. Competence – A FM must serve in a conscientious,
 The period of mediation is excluded from the regular diligent, and efficient manner, and maintain
and mandatory periods for trial and rendition of competence in mediation skills.
judgment.
iii. Conflict of Interest – A FM must refrain from
9
participating if he perceives a clear conflict of 1. CHAN KENT v. DIONESIO C. MICAREZ7

interest.
(On attendance in Family Mediation)
a. He must not be involved in any relationship FACTS: Linda Chan Kent filed a complaint for recovery of
with the clients. real property and annulment of title against her parents and
brother (Dionesio Micarez). Chan Kent alleged that in 1982,
b. He must disclose any known, significant she purchased subject residential lot through her younger
current or past personal or professional sister, and authorized representative, Rosita Micarez-
relationship with any party or attorney Manalang.
involved in the mediation. After disclosing,
and the parties don’t seek inhibition, the However, it was named under her parents under an implied
mediation must continue. trust due to the difficulty in registering a real property in her
name, as she was married to an American citizen. She
c. He must not have any interest in any learned from her sister that their parents fraudulently
property, real or personal, that is the conveyed and transferred the subject lot to Dionesio.
subject matter of the case. After the issues had been joined, the RTC ordered
the referral of the case to the Philippine Mediation Center
iv. Avoidance of Delays - The FM must plan work (PMC). Conferences were then scheduled. Based on the
schedules to avoid delays. Report of Mediator Esmeraldo O. Padao, Sr. that
respondents’ counsel and representative did not appear on
v. Prohibition Against Solicitation or Advertising – A the conferences, the RTC issued an order, allowing Chan
FM shouldn’t use the mediation process to solicit, Kent to present her evidence ex parte. It was later clarified
encourage, or otherwise incur future professional by Padao that it was Chan Kent’s counsel and
services and financial gain from either or both representative who did not attend the mediation
parties. He must not exaggerate about his proceedings.
qualifications and the mediation process. Upon knowing this, the RTC issued an order
dismissing the case. Chan Kent filed a motion for
vi. Prohibition Against Coercion – A FM shouldn’t reconsideration to set aside the order, appealing the
unfairly influence a party into a settlement relaxation of the rule on non-appearance in the mediation
agreement. He must only facilitate in arriving at a proceedings but was denied. Petitioner invoked that the
decision. dismissal of the case was not in accordance with applicable
law and jurisprudence and claims that it was unjust
vii. Role in Settlement – A FM should see to it that the because her representative and counsel did not deliberately
parties consider and understand the terms of snub the mediation proceedings. They have attended twice
settlement. the mediation conferences and only left when respondent’s
counsel had not yet arrived. Moreover, she explained that
Canon 3 – Relationship with Other Professionals there were some urgent matters caused by the sudden
increase in prices of commodities, which did not allow her
 The FM should respect the relationship between representative to appear in the last hearing.
mediators and other professional disciplines. He
must promote harmony and cooperation. ISSUE: Whether dismissal is the proper sanction due to her
representative’s failure to attend the mediation process
 The FM must be knowledgeable and able to detect although the party have appeared for two times.
abuse or violence, and refer the parties to other
professionals for appropriate help, when needed. HELD: No. Dismissal was not the proper action. Although
the RTC had legal basis to order the dismissal of the civil
Canon 4 – Relationship to Society case, the SC finds this sanction too severe to be imposed
on the petitioner where the records of the case is devoid of
 The FM should support the advancement of evidence of wilful or flagrant disregard of the rules on
mediation by encouraging and participating in its mediation proceedings.
research, evaluation, professional development and A.M. No. 01-10-5-SC-PHILJA regards mediation as
public education. part of pre-trial where parties are encouraged to personally
attend the proceeding. To ensure attendance, it provides
Cases6 sanction including but not limited to censure, reprimand,
contempt and such other sanctions as are provided under
6 Digests by Group 2 (Steph Baucas, et al.) 7 G.R. No. 185758; March 9, 2011
10
the Rules of Court for failure to appear for pre-trial, in case alleges that he and A had entered into a compromise
any or both of the parties absent himself/themselves, or for agreement regarding the exercise of parental authority over,
abusive conduct during mediation proceedings. and support of their common children.
There is no clear demonstration that the absence of
petitioner’s representative during mediation proceedings A countered that B continuously violates the PPO. A alleged
was intended to perpetuate delay in the litigation of the that she signed the MOA while emotionally distressed and
case. Neither was it indicative of lack of interest to enter without the advice and guidance of counsel. A claims that B
into a possible amicable settlement. still verbally abuses her. B has not paid the fees and costs
The SC held that a mere censure or reprimand of litigation awarded to A. He does not provide support for
would have been sufficient for petitioner’s representative A’s child who, in the eyes of the law, is also among B’s
and her counsel so as to be informed of the court’s legitimated children. A also alleged that she left their
intolerance of tardiness and laxity in the observation of its common children under the care of B only because the
order. By failing to do so and refusing to resuscitate the circumstances forced her to do so, she could not depend
case, the RTC impetuously deprived petitioner of the for financial support from B, she was left with no choice but
opportunity to recover the land that she allegedly paid for. to yield custody over their common children even if the set-
Unless the conduct of the party is so negligent, up exposed the children to B’s illicit affairs.
irresponsible, contumacious, or dilatory as for non-
appearance to provide substantial grounds for dismissal, Issue: Whether the Memorandum of Agreement between
the courts should consider lesser sanctions that would still the parties over the PPO, and the support and custody of
achieve the desired end. their children should be honored by the court.
2. BBB v AAA Held: The permanent protection order and the custody and
(On what can and cannot be subjects of a Compromise support of their children are not proper subjects of a
Agreement) compromise agreement because it involves violence
against women and children.
Facts: While A was a medical student and a single mother
to one child, B borne with her two more children. A and B Alleging psychological violence and economic abuse, A
legalized their relationship and got married and legitimated anchored her application for the issuance of a TPO and a
their 2 common children. The marriage soon went sour PPO on the basis of the provisions of the Anti-Violence
because of constant fights over A’s allegations of B’s Against Women and their Children (RA 9262). The rules
womanizing and B’s verbal abuses against A. B left the intend that cases filed under said low cannot be subjects of
conjugal home alleging that A had fits of irrational jealousy. compromise agreements.
A also decided to leave the conjugal home because B
displayed acts of marital infidelity which exposed A to public Section 23(d) of A.M. No. 04-10-11-SC20 explicitly prohibits
ridicule causing her emotional and psychological distress. A compromise on any act constituting the crime of violence
also found out that B failed to pay the rental fee to their against women. Violence is not a subject for compromise. A
condominium unit, forcing her to be evicted. A decided to process that involves parties mediating the issue of
live in a friend’s house. A found out that B had been stalking violence implies that the victim is somehow at fault.
her and the kids through B’s friend who lived in the same
subdivision. B’s friend had been checking the guard’s AM No. 10-4-16-SC directs the referral to mediation of all
logbook and had been monitoring the activities of A and her issues under the Family Code and other laws in relation to
children in and out of the subdivision. For fear of her and support, custody, visitation, property relations and
her children’s safety, A filed for a Temporary Protection guardianship of minor children, excepting therefrom those
Order (TPO; and prayed for it to become permanent upon covered by R.A. No. 9262.
the findings of the RTC).
While A filed her application for a TPO and a PPO as an
The RTC ruled a permanent protection order in favor of A independent action and not as an incidental relief prayed
and granted A permanent sole custody over their common for in a criminal suit, the instant petition cannot be taken
children and B to provide support in the amount of Php outside cases falling under the provisions of R.A. No. 9262.
62,918.97 per month, requiring B to stay away from A at a Hence, the prohibition against subjecting it to compromise
distance of 100 meters, plus damages and the cost of suit. applies.
The CA affirmed the RTC’s decision but remanded the case The PPO issued is valid. Remanding the case to the trial
to determine who shall be awarded custody of the children. court is necessary to determine who shall exercise custody
over the children. However, the choices of the children as
B contends that the PPO issued against him is moot with whom they would prefer to stay would alter the effects
because he now has actual care and custody of their of the PPO. But as to who shall be granted custody over the
common children while A is working as a nurse abroad. B three children, how the spouses shall exercise visitation
11
rights, and the amount and manner of providing financial eyeing her killed. Things turned for the worse when Jesus
support shall be remanded to the RTC. had an affair with a bank manager. Jesus admitted it when
Rosalie confronted him. The infidelity spawned a series of
While B and A arrived at an amicable settlement as regards fights that left Rosalie physically and emotionally wounded.
the issues of custody, exercise of parental authority over, In one of their quarrels, Jesus grabbed Rosalie on both
and support of their common children, and while these arms and shook her with such force that caused bruises
matters can be lawful subjects of compromise, A’s and hematoma. At another time, Jesus hit Rosalie forcefully
contentions compels the Court to exercise prudence by on the lips that caused some bleeding. Jesus sometimes
directing the RTC to resolve with finality the said issues. turned his ire on their daughter, Jo-Ann, who had seen the
While the parties are not prohibited from entering into a text messages he sent to his paramour and whom he
compromise as regards the aforesaid issues, the Court now blamed for squealing on him. He beat Jo-Ann on the chest
requires the RTC’s direct supervision to put an end to their and slapped her many times. All the emotional and
bickering. psychological turmoil drove Rosalie to the brink of despair.
The case is remanded for the RTC to resolve the question At one point, she attempted suicide. She was found by her
of custody. Since the children are now all older than seven son bleeding on the floor. Jesus simply fled the house
years of age, they can choose for themselves whom they instead of taking her to the hospital. Rosalie was
want to stay with. If all the three children would manifest hospitalized for about 7 days in which time Jesus never
their choice to stay with A, then the PPO issued by RTC bothered to visit, nor apologized or showed pity on her.
shall continue to be executed in its entirety. However, if any
of the three children would choose to be under B’s care, the When Rosalie informed the management of Robinson's
PPO issued against B relative to them is to be modified. Bank that she intends to file charges against the bank
The PPO, in its entirety, would remain effective only as to A manager, Jesus got angry with her for jeopardizing the
and any of the children who opt to stay with her. The RTC manager's job. Jesus warned her that if she goes on a legal
may accordingly alter the manner and amount of financial battle with him, she would not get a single centavo.
support B should give depending on who shall finally be
awarded custody over the children. RTC of Bacolod City: Issued a TPO, after finding
reasonable ground to believe that an imminent danger of
3. Garcia v Drilon8 violence against the Rosalie and her children exists or is
(Cases involving Protection Orders) about to recur.
Facts: Rosalie Jaype-Garcia filed, for herself and in behalf Jesus’ Contention: By criminalizing run-of-the-mill
of her minor children, a verified petition before the RTC of arguments, instead of encouraging mediation and
Bacolod City for the issuance of a Temporary Protection counselling, the law has done violence to the avowed policy
Order against her husband, Jesus C. Garcia, pursuant to of the State to "protect and strengthen the family as a basic
R.A. 9262. She claimed to be a victim of physical abuse-- autonomous social institution."
emotional, psychological, and economic violence as a
result of marital infidelity on the part of petitioner, with Ruling of the Court: The non-referral of a VAWC case to a
threats of deprivation of custody of her children and of mediator is justified. Under Section 23(c) of A.M. No. 04-10-
financial support. 11-SC, the court shall not refer such a case to a mediator.
This section prohibits a court from ordering or referring
Rosalie married Jesus in 2002 when she was 34 years old parties to mediation in a proceeding for an order for
and he was eleven years her senior and had 3 children. protection. Mediation is a process by which parties in
Rosalie is a dutiful and faithful wife, whose life revolved equivalent bargaining positions voluntarily reach
around her husband. On the other hand, Jesus is dominant, consensual agreement about the issue at hand. Violence,
controlling, and demands absolute obedience from his wife however, is not a subject for compromise. A process that
and children. He forbade private respondent to pray, and involves parties mediating the issue of violence implies that
deliberately isolated her from her friends. When she took up the victim is somehow at fault. In addition, mediation of
law, and even when she was already working part time at a issues in a proceeding for an order of protection is
law office, Jesus trivialized her ambitions and prevailed problematic because the petitioner is frequently unable to
upon her to just stay at home. He was often jealous of the participate equally with the person against whom the
fact that his attractive wife still catches the eye of some protection order has been sought.
men; at one point threatening that he would have any man
4. Arroyo v Alcantara
8 JESUS C. GARCIA, vs. THE HONORABLE RAY ALAN T. DRILON, (Can clerks of court be mediators?)
Presiding Judge, Regional Trial Court-Branch 41, Bacolod City, and
ROSALIE JAYPE-GARCIA, for herself and in behalf of minor Facts: Antonio Arroyo filed an administrative complaint
against Sancho Alcantara for violations of RA 6713 (Code
children, namely: JO-ANN, JOSEPH EDUARD, JESSE ANTHONE, all
of Conduct and Ethical Standards for Public Officials and
surnamed GARCIA
12
Employees) and RA 3019. The complaint arose when nationwide.

Alcantara, a clerk of court, issued a subpoena to Joaquin
Opiana, Sr. 2. It approved the second Revised Guidelines in the
Joaquin is Arroyo’s father-in-law and the subpoena Implementation of Mediation Proceedings. The
required him to appear before the court. Ruben Olayres, following cases may be referred to mediation:
the barangay captain, was the one who served the
subpoena. Nine days after the service of the subpoena, a. All civil cases, settlement of estates, and cases
Antonio wrote the office of Alcantara, requesting for a copy covered by the Rules of Summary Procedure,
of the alleged subpoena and a certification as to the facts except those that cannot be compromised by
surrounding the issuance of the same. A month later, he law;
wrote again to follow up his first request even to the point of
requesting to examine the records of the court, but his b. Cases cognizable by the Lupong
efforts proved futile. Hence, this complaint was filed, Tagapamayapa under the KP Law;
seeking the preventive suspension of Alcantara pending
investigation of the charges against him. c. The civil aspect of BP 22; and
On the other hand, Alcantara claims that Antonio
mistook the document as a subpoena when in fact it was d. Civil of quasi-offenses.
just a letter, typed on an ordinary bondpaper and addressed
to Joaquin Opiana, Sr., requesting him to attend a meeting 3. It also issued the Standards and Procedure for
at the office of the MTC of Guinobatan, Albay. Alcantara Accreditation of Mediators and Code of Ethical
further explains that he made the request in his personal Standards for Mediators.
capacity upon the insistence of Olayres, who thought that
Alcantara’s position as a clerk of court could be used to Mediation in the Court of Appeals
amicably settle the dispute concerning a real property,
among the heirs of Opina. Per Resolution No. 04-04 (2005), the following cases can
be mediated in the CA:
Issue: Is a clerk of court authorized to mediate in a
dispute? 1. Civil cases brought on ordinary appeal or petition for
review;
Ruling: No. Alcantara as a clerk of court had no authority to
mediate among the constituents of Isaac Olayres. Although 2. Appeals from final orders, awards, judgments,
he claims that it was done in a personal capacity, his claim resolution of quasi-judicial agencies in the exercise
is belied by the fact that Antonio was given the impression of their quasi-judicial functions through petition for
that the intended meeting involving his father-in-law was review or certiorari;
court-related. His acts exceeded his authority as a clerk of
court. In effect, he had, wittingly allowed his position to be
3. Special civil actions for certiorari, except those
used to exercise his moral ascendancy over the Opiana
involving pure questions of law;
family, whom he summoned to his office for mediation.
4. Habeas corpus cases involving custody of minors,
with the parties’ consent, as long as the minor is not
IV. Court Annexed Mediation (CAM)
detained for a crime;
CAM: Summing Up The Past ad Charting The Future
(Carolyn Mercado & Damcelle Torres)9 5. Criminal cases cognizable by the KP involving
offenses punishable by imprisonment not exceeding
Pilot tests: Between 1999-2001, The Philippine Judicial 1 year or a fine not exceeding 5,000.
Academy (PhilJA) conducted tests—first in selected cities
in Manila (which only had a 40% settlement rate), second in Qualification in CA Mediation
Metro Manila, and third in Cebu and Davao. The success
rate in the latter tests was much higher: 87%. Mediators in the CA are limited to:
AM 01-10-5-SC-PHILJA (2001) 1. retired judges and judges;
1. It established the Philippine Mediation Center – with a 2. senior members of the Bar; and
goal to set up units in the 13 judicial regions
3. senior law professors, trained and accredited by the
SC.
9 Sourcebook on Alternatives to Formal Dispute Resolution
Mechanisms (2008)
13
CAM’s success rate d. Clarity about what is most important to both

parties;
 From 2002-2007: 70%
e. A more unfettered conversation between the
 36,155 cases were cleared from the court dockets parties;
through mediation.
f. A better understanding of those involved and
 22% of the successfully mediated cases involved their situations;
violations of BP 22.
g. Restoration of good faith;
Stakeholders’ Attitudes (Challenges)
h. Strengthened reputation and stature; and
 Lawyers: Most are straight-up hostile, having been
schooled in adversarial tradition. Some also see i. Agreements based on genuine terms created
mediation as a threat to their source of income. by the parties themselves.
 Solution: Lawyers will eventually mature and realize Future Prospects for CAM
that their role is not to litigate, but to be problem-
solvers—“reconcilers of divisions, pursuers of just 1. Multi-Door Courthouse – After being screened in a
solutions”. Dispute Resolution Center, certain cases would be
assigned to (or matched with) an apt ADR process
 Judges: They assume that non-lawyer mediators or series of processes. The “doors” can be
will not be able to dispense justice properly. They mediation, arbitration, case evaluation, or
also dread public ridicule of being called “juezes de conciliation, among others.
areglo”, which means that of they permit out-of-
court settlement, the public will see them as “lazy 2. Online Dispute Resolution – A virtual or online
and incompetent”. extension of ADR can be used for disputes with low
economic value, or with parties who are
geographically segregated.
 Public: More awareness and appreciation of CAM
through continuous education, information drives,
etc, are needed. 3. Multi-Step Negotiation – A dispute not resolved at
one level moves progressively to higher levels, with
different mediators at each step.
 Coverage: CAM only covers a select list of cases.
4. CAM could be used in small claims courts.
 Solution: CAM could be extended to cover minor
crimes such as grave threats, slander, libel, and
5. The term “mediation” as it is currently used should
slight physical injuries.
be clarified. Settlement should be seen as only one
of the many successful outcomes of CAM. (See
Mediation Core Values – “Voice and Choice” Mediation Core Values)
 Even when mediation doesn’t produce a 6. CAM could be used to address procedural and
settlement, it doesn’t necessarily mean it is a failed case management issues, resulting in better quality
mediation. of briefs and oral arguments, which will expedite
the trial and decisions on the case.
 A compromise agreement is not the only positive
outcome that parties can get out of mediation. 7. Instead of an “opt-out” approach, an “opt-in”
approach could be better as it will ensure that those
 Other positive outcomes that the parties could who want to mediate their case, even if it is not one
anticipate are: of the court-mandated cases for mediation, will be
allowed to do so.
a. The ability to speak and be heard;
Conclusion
b. The chance to talk about what might be
irrelevant to lawyers, but very important to the The usage of CAM will steadily increase through the
parties; strengthening of mediators’ groups, rise in popularity of
ADR, and rise in litigation costs.
c. The narrowing of important issues;
14
US Justice Sandra Day O-Connor: “Courts shouldn’t be the JDR As An Innovative Mode of Dispute Resolution
place where resolution of disputes begin. They should be (Salvador S. Panga, Jr.)11
the places where the disputes end after alternative methods
of resolving disputes have been considered and tried.” JDR is a process by which a judge attempts to facilitate a
settlement between parties undergoing litigation after a
Collaborative Law similar effort by a court-appointed mediator has failed.
(Patrick H. M. Wiedmer)10
The JDR recasts judges from magistrates to mediators. In
The article mentioned the disadvantages of CAM: (1) court, the emphasis is on the assertion and ascertainment
neutrality of the mediator; and (2) qualifications of the of rights and obligations.
mediator. Both cannot always be guaranteed.
In JDR, there is greater emphasis placed on:
Stuart Webb pioneered “Collaboration Law” which stemmed
from this simple idea: to formulate a new type of ADR that a. value creation;
puts more pressure on parties and their counsel to agree to
an out-of-court agreement. b. joint problem solving;
Chief Justice Burger: Lawyers are reminded of their duty to c. option generation; and
act as “healers of conflict”.
d. the improvement of the parties’ relationships.
Key features and Advantages
JDR was introduced in 2004, as one of the initiatives of the
1. Disqualification agreement – This prohibits a Justice Reform Initiative Support (JURIS) Project.
counsel from continuing as such if the negotiations
fail and litigation is required in the next step. The AM No. 04-1-12-SC0PHILJA (Process)
parties will have to get another counsel to represent
them in a judicial resolution. This is an incentive for The Guidelines divide the judicial proceedings into 2
the lawyer to facilitate the negotiation in good faith. stages:
2. Full and voluntary discovery disclosures  First Stage
3. Avoidance of a even a threat to litigation throughout a. Filing of the Complaint

the negotiation process
b. CAM
4. Commissioning of neutral experts to participate in
the discussions c. JDR
5. Process – “four-way meetings” where the parties  Second Stage

negotiate face-to-face. The focus is the clients’
needs in a non-adversarial manner. a. Pretrial
6. It seeks a win-win result. b. Trial
7. Unlike CAM, the parties don’t need to wait for the c. Judgment
court to dictate when to begin negotiations. The
meetings may begin immediately if the parties Some rules:
desire, at a mutually agreed pace.
1. The JDR judge is not permitted to preside over the
Collaboration Law could be good for family disputes that trial of the same case if mediation doesn’t succeed,
are highly sensitive in nature. Couples are given the chance unless the parties specifically ask him to continue as
to settle at the earliest possible stage, even without court the trial judge.
order or mandate.
2. A judge is perfectly free to adopt any approach or
V. Judicial Dispute Resolution (JDR) settlement technique he may deem appropriate, in
10 Collab Law and the Rules on Court Annexed Family 11 Sourcebook on Alternatives to Formal Dispute Resolution
Mediation; 55 Ateneo L.J. 938 (2011) Mechanisms (2008)
15
order to encourage the parties to settle. able to explain

the mechanics of
3. JDR judges undergo training to prepare them for the JDR
conducting JDR. 3. The judges are
helpful in the
The Current Status of JDR: The Research Project12 processs of
reaching a
In 2007, JURIS PROJECT commissioned a research team settlement
to evaluate the current state of the JDR program. It had the ( using their own
following goals: standard of
fairness)
1. Identify the factors that would make the program more
effective
2. Ascertain the effectiveness of the program Can a judge use his own standard of fairness in helping the
3. Determine the possibility of extending the program to parties reach a settlement?
other areas
4. Determine the rate of approval or disapproval of the 61% of the judges said that the parties should be given a
end users in terms of value, fairness and acceptability free had in deciding the terms of the settlement.
of the program.
Some judges from Pampanga believe that it is appropriate
Indicators used: for judges to tell a party what he thinks the result will be if
the case went through trial, in order to encourage the
1. Efficiency parties to settle.
2. Effectiveness
3. Satisfaction of stakeholders Judges Lawyers Litigant
4. Program organization Satisfaction with 96% 88% 85%
5. Service delivery the outcomes agree agree agree
6. Program quality
The Findings
However a significant portion of the litigants in Baguio and
I. Case disposition rate Bacolod expressed their dissatisfaction. Popular Reasons:
It is uneven among the pilot areas but the overall rate is 1. Mistrust with the courts
47%. In the 3500 cases that went through ADR, almost half 2. Pragmatism
were successfully settled. This is a good indicator, 3. Unfavorable decision
considering the fact that JDR is a second tier ADR process 4. Rights based expectations
which involves more difficult and complex disputes which
already went through CAM.
Judges Lawyers Litigants
II. Satisfaction of stakeholders Improved Yes Yes. Yes
Relationship However
s some
Judges Lawyers Litigants lawyers are
In terms of Perceived as useful in 1st level concerned
usefulness in courts but not so much in 2nd about the
resolving court level courts possible
disputes reduction of
Role of Judges Judges can be mediators. lawyer’s
However some say that the fees as
precious time of Judges should occasioned
be spent in deciding cases not by the early
in mediation. settlement
Fairness of the Yes. Yes. of cases.
Process 1. It is fair for both There will
parties be a
2. The judges are decrease
on their
12 Summary by Group 5 (Jeslyn Apolonio, et al.) income so
16
they are With specialized JDR courts, those who possess the
pointing out personality and the innate ability to facilitate interest-based
to settlement discussions will not have to conduct trial and
adjustment write decisions, but just perform JDR on a full-time basis.
s of the fee
structure. The creation of specialized second-level JDR courts will
Time and Yes. open a career advancement opportunity for first-level court
Cost JDR involves no fees judges who display outstanding JDR skills because they
efficiency It accelerates dispute resolution can be considered prime candidates for these specialized
It frees up court resources courts. This career opportunity will further motivate first-
level judges to improve their performance.
III. Program Organization 3. A simple reversal of the order of CAM and JDR, with
JDR as the first-tier process and CAM as the second,
The respondents generally agreed that the program is well will address numerous stakeholder concerns about
designed with its adequate standards and that it has having redundant processes.
achieved its most important goal of reducing the court’s
case loads. However the respondents from Bacolod and Reason: The main reason is financial, that is, to avoid the
Pampanga expressed their disagreement, stating that there filing of CAM fees. Indeed, from an access to justice
are sufficient existing procedures in place to guide the standpoint, this is one of the weak points of CAM. But other
participants in reaching settlement. Also some respondents reasons for preferring JDR over CAM were repeated in
believe that the program still needs further modifications. many focus group discussions, as follows:
IV. Qualities of Lawyers (i) the CAM program has been losing its good mediators by
reason of low compensation;
Many judges are not convinced that lawyers are able to
reach out to the other party in a manner that encouraged (ii) CAM mediators lack the authority and moral ascendancy
the latter to reciprocate and be reasonable. of a judge which is helpful in facilitating settlement;
Program Observations and Recommendations (iii) many CAM mediators are not lawyers and this hinders
their understanding of disputes; and (iv) non-lawyer
1. JDR generated positive outcomes in so far as first level mediators cannot command the respect of lawyers and
courts are concerned. However, the impact of JDR litigants.
before the 2nd level courts is still unclear.
4. The possibility of expanding the coverage of JDR
Reason: The parties have much greater incentive to settle should be studied.
early before the first level courts because of the limited
penalty or amounts that 1st level courts are legally allowed Reason: The suggestion merits some study because
to impose or award. In addition to this, because of the expansion of coverage will likely increase JDR case
tougher penalties and higher cost of preparation before the disposals, but attention must be devoted to determining
2nd level courts, the parties may be more willing to go to where to draw the line, that is, in what types of cases will
trial. the public be better served by allowing submission to JDR.
Recommendation: There is a need for further training of 5. Clarification of the judges’ role in JDR
judges especially 2nd level court judges. For JDR to achieve
same level of success in 2nd level courts, the judges may Reason: There is an existing stakeholder preference for a
have to attain a higher level of competence in JDR. judge who actively guides the parties towards settlement.
Despite the choice of some judges to withhold commenting
2. There is a limited amount of judicial resources for on the merits of the case, a large percentage of judges
trainings of judges actually inform the parties in JDR of their opinions about the
merits of the parties’ respective positions. Not only do the
Reason: The trainings will require considerable financial stakeholders prefer active guidance, but also failure to
investment provide such is viewed as resulting in unfairness or unfair
outcomes.
Recommendations: The creation of Specialized JDR courts
will allow the use of financial resources for training to be There is nothing that prevents judges from combining
focused on a smaller group of judges, thus allowing the facilitative and evaluative techniques. The researched
advanced and in-depth training needed for effective JDR for emphasized the following:
complex disputes.
17
(i) the usefulness and propriety of the application of various and management provided by the JURIS Project and
techniques, including facilitative mediation that incorporates PHILJA.
the use evaluative and fact-finding techniques such as
evaluation and mini-trial; VI. Other Forms of ADR
(ii) storytelling as a condition precedent to option RA 9285, Chapter 3: “SEC. 18. Referral of Dispute
generation; and to Other ADR Forms – The parties may agree to refer
one or more or all issues arising in a dispute or during its
(iii) issues pertaining to power imbalance identification and pendency to other forms of ADR such as but not limited to
correction. (a) the evaluation of a third person or (b) a mini-trial, (c)
mediation-arbitration, or a combination thereof.”
6. Initiatives for enhancing awareness of lawyers and
litigants on JDR should be adopted. IRR, Chapter 7: The other forms include:
Reason: The team noted that while the lawyers play a 1. Early Neutral Evaluation
critical role in any settlement, as the litigants would not
normally enter into any compromise without the favorable 2. Neutral Evaluation
endorsement of their lawyer, many lawyers are not fully
aware of the role they ought to play during JDR, particularly 3. Mini-trial
with regard to their overall attitude towards settlement,
option-generation, evaluation of options and alternatives, 4. Mediation-Arbitration
and similar issues.
Recommendation: Introduction to ADR concepts should be 5. Combination of the forms

done as early as law school to impart the advantages of
ADR upon future lawyers, and train them in essential ADR 6. Any other ADR form
skills, such as client counseling and negotiation
If the form is akin to mediation or arbitration, the respective
7. Litigants should be informed of the nature and purpose rules on Mediation and Domestic Arbitration in the IRR will
of JDR before conducting JDR hearings to allow them have suppletory application, as long as it will not be in
to craft settlement proposals, with the assistance of conflict with the agreement of the parties.
their lawyers, to bring to the JDR hearings.
If a dispute is already before a court, either party may,
Recommendations: Give emphasis on informing the parties before and during pretrial, file a motion for the court to
of their rights to settle or not to settle. refer the parties to other ADR processes. However, at
any time during court proceedings, even after pretrial, the
While the issuance of subpoenas will almost certainly parties may jointly move for suspension/dismissal of the
ensure the parties’ presence, less coercive and threatening action pursuant to Article 2030 of the Civil Code of the
measures may certainly be taken to achieve the same Philippines13.
result.
Following a neutral or an early neutral evaluation, minitrial
The courts may perhaps consider sending invitations or mediation arbitration, either party may submit any
instead of subpoenas, explaining the nature of the settlement agreement to the court where the case is
proceedings, discussing the requirements of the process, pending.
requesting the parties to be prepared beforehand with
settlement options, and generally asking the parties and A. Neutral or Early Neutral Evaluation
counsel to come to the proceedings as thoroughly prepared
for negotiations as possible. What rule governs: (1) agreement by parties; or (2) in the
absence of an agreement, Rule 2 of Chapter 7 of the IRR.
Conclusion
The three-year JDR experiment has clearly yielded Role of Default Appointing Authority
extremely encouraging results. While certain program
modifications are in order, the basic concept of judge- 13 “Art. 2030. Every civil action or proceeding shall be
facilitated settlement is one that appears to have been fully suspended:
accepted by all sectors despite initial apprehensions. The (1) If willingness to discuss a possible compromise is expressed
success of the experiment is due mainly to the readiness of by one or both parties; or
the judges themselves to take on the role of dispute (2) If it appears that one of the parties, before the
facilitators, and the training, monitoring, program support commencement of the action or proceeding, offered to discuss a
possible compromise but the other party refused the offer. xxx"
18
Either party may request the Appointing Authority to make 4. The neutral third person shall issue a written evaluation
the appointment: or assessment within 30 days from the conclusion of
the evaluation process.
1. If the parties cannot agree on, or fail to provide for the
following: Nature & Contents of Written Evaluation
a. The desired qualification of the neutral third person; The opinion shall be nonbinding and shall set forth how the
b. The manner of his/her selection; neutral third person would have ruled had the matter been
c. The appointing authority (not IBP) who shall have the subject to a binding process.
authority to make the appointment of a neutral third person;
or The evaluation or assessment shall indicate the relative
2. If despite an agreement and the lapse of the period for strengths and weakness of the positions of the parties, the
the appointment, the parties are unable to select a neutral basis for the evaluation or assessment, and an estimate,
third person or appointing authority. when feasible, of the amount for which a party may be
liable to the other.
Who is the Appointing Authority?
Other Rules
The IRR14 mentions the following:
 There shall be no exparte communication between
1. The person or institution named in the arbitration the neutral third person and any party to dispute
agreement as the appointing authority; or without the consent of all parties.
2. The regular arbitration institution under whose rules the  All papers and written presentations communicated
arbitration is agreed to be conducted. to the neutral third person, and the written non-
binding evaluation, shall be treated as confidential.
3. In ad hoc arbitration, the default appointment shall be
made by the National President of the Integrated Bar of B. MiniTrial
the Philippines (IBP) or his/her duly authorized
representative. What rule governs: (1) agreement by parties; or (2) in the
absence of an agreement, Rule 3 of Chapter 7 of the IRR.
Factors in appointing a NTP:
How conducted: It shall be conducted either as:
1. nature of the dispute; and
1. a separate dispute resolution process; or
2. experience and expertise of the neutral third person.
2. a continuation of mediation, neutral or early neutral
Process evaluation or any other ADR process.
1. The parties shall submit and exchange position papers Appointment of a Third Person/Panel
containing the issues and statement of the relevant
facts and appending supporting documents and The parties may agree that a minitrial be conducted with or
affidavits of witnesses to assist the neutral third person without the presence and participation of a neutral third
in evaluating or assessing the dispute. person.
2. The neutral third person may request either party to If a neutral third person is agreed upon and chosen, he/she
address additional issues that he/she may consider shall preside over the mini trial. The parties may agree to
necessary for a complete evaluation/assessment of the appoint one or more (but equal in number per party) senior
dispute. executive/s, on its behalf, to sit as minitrial panel members.
3. The neutral third person may structure the evaluation Qualification: The senior executive/s chosen to sit as mini-
process in any manner he/she deems appropriate. In trial panel members must be duly authorized to negotiate
the course thereof, the neutral third person may identify and settle the dispute with the other party.
areas of agreement, clarify the issues, define those that
are contentious, and encourage the parties to agree on The appointment of a panel shall be communicated to the
a definition of issues and stipulate on facts or admit the other party. This appointment shall mean that the panel has
genuineness and due execution of documents. the authority to enter into a settlement agreement binding
upon the principal without any further action or ratification
14 IRR, Chapter 1, Rule 2, Definition of Terms, C.1
19
by the latter.  The OADR is an agency attached to the

Department of Justice.
Process
 It is headed by an Executive Director, who is
1. Each party shall submit a brief executive summary of appointed by the President, after taking into
the dispute in sufficient copies as to provide one copy consideration the DOJ Secretary’s
to each panel member and to the adverse party. The recommendation.
summary shall identify the specific factual or legal issue
or issues. Powers:
2. At the date time and place agreed upon, the parties 1. Appointing authority of mediators and arbitrators, if
shall appear before the panel members. the parties agree in writing that the OADR is
empowered to do so.
3. Each party’s lawyer or authorized representative shall
present his/her case starting with the claimant followed 2. Information dissemination – Conduct seminars,
by the respondent. The lawyer or representative may symposia, conferences, and public fora. Publish the
thereafter offer rebuttal or surrebuttal arguments. proceedings and other relevant material to promote,
develop, and expand the use of ADR.
Duration: Unless the parties agree on a shorter or longer
period, the presentationinchief shall be made, without 3. Resource Center – Establish an ADR library or
interruption, for one hour and the rebuttal or surrebuttal resource center.
shall be 30 minutes.
4. Training – Establish programs for ADR providers or
4. At the end of each presentation, rebuttal or surrebuttal, practitioners.
the panel may ask clarificatory questions.
5. Certification – Certify those who have completed the
5. After the minitrial, the panel members shall negotiate a professional training programs by the OADR.
settlement of the dispute by themselves.
6. Collection of Fees – Charge for services rendered.
In cases where a neutral third person is appointed, the
neutral third person shall assist the proceedings. The rules 7. Accept donations, grants, and other assistances
on Mediation will apply. from local and foreign sources.
C. MediationArbitration 8. Exercise such other powers, as may be necessary

and proper to carry into effect the provisions of the
What rule governs: (1) agreement by parties; or (2) in the ADR Act.
absence of an agreement, the rules on Mediation shall first
apply and thereafter, the rules on Domestic Arbitration. Functions:
Rules: 1. Promote, develop and expand the use of ADR in the

public and private sectors through information,
1. No person who has engaged and acted as mediator of education, and communication.
a dispute between the parties, following a failed
mediation, act as arbitrator of the same dispute, unless 2. Monitor, study, and evaluate the use of ADR for
the parties, in a written agreement, expressly authorize policy formulation and other purposes.
such person to hear and decide the case as an
arbitrator. 3. Recommend statutory changes to Congress in order
to develop, strengthen, and improve ADR, in
2. The mediator who becomes an arbitrator shall make a accordance with international standards.
disclosure that the arbitration will proceed as a new
dispute resolution process, and shall, before entering 4. Make studies on and provide links for the
upon his/her duties, execute the appropriate oath or development, implementation, monitoring, and
affirmation of office as arbitrator in accordance with the evaluation of ADR programs.
IRR.
5. Compile and publish a list or roster of ADR providers
Office for Alternative Dispute Resolution15 or practitioners who have undergone training, or
have been certified by the OADR.
15 IRR Chapter 2
20
6. Perform such other functions as may be assigned to There has been a growing dissatisfaction among the
it. Filipinos when it comes to the use of courts. Among the
reasons are costliness, slowness, rigidity of procedures, the
The Four Divisions: adversarial nature of the system, inadequacy of solutions in
actually settling disputes.
1. Secretariat – provides support and other functions
as may be directed by the Executive Director; Hence, the SC through the Davide Watch imposed the
following goals: (1) dispose backlogs, (2) study and
2. Public information and Promotion Division – address the causes of failure to observe the periods
disseminates information, promotes public prescribed; and (3) promote ADR.
acceptance and importance of ADR modes.
Filipinos also have “a culture that strongly values the
3. Training Division – formulates the standards for preservation of amicable relationships especially between
ADR providers, conducts their training, and issues parties with a history of kinship and community ties”.
certifications.
Factors that delay disposition of cases:
4. Records and Library Division – establishes and
maintains a central repository of ADR laws, rules, 1. The due process mechanics take up a lot of time.
jurisprudence, books, articles, and other information
about ADR in the Philippines and elsewhere. 2. An open-ended appellate system further encourages
litigants to pursue their appeals and not surrender.
Advisory Council
3. BP 22 cases are clogging the first level courts.
The Council advises the Executive Director on policy,
operational, and other relevant matters. 4. Automatic appeals to the SC are adding up to the
number of appeals the high court must resolve.
The DOJ Secretary, upon the OADR Executive Director’s
recommendation, appoints the members. 5. Apart from reviewing the lower courts, the SC is also
reviewing other constitutional bodies’ decisions (e.g.,
They are composed of a representative from each of the COMELEC).
following:
Judicial Reforms
1. mediation profession;
ADR has emerged as the ley to decongesting the courts.
2. arbitration profession; The most popular modes are mediation and arbitration. Of
the two, it is mediation that holds greater promise for
3. ADR organizations; concrete and immediate gains.
4. IBP; and In 2001, the SC designated the PhilJA as its component

unit for court-referred and court-related mediation. The
5. Academe. PMC was established for this purpose.
Dispute Resolution Mechanisms in the Philippines Under the Second Revised Guidelines on Mediation (2001),
(Prof. Domingo Disini, et al.)16 the trial court is now mandated to issue an Order for
Mediation after determining the possibility of amicable
Current situation and viewpoints settlement. The mediation becomes a part of the pretrial.
The courts exercise their traditional duty to settle Mediation produces a two-fold advantage: (1) It declogs the
controversies through a hierarchical organization. In the court dockets; and (2) It restores the traditional Filipino spirit
Philippines, we have a four-level structure. The SC has that highly values unity, solidarity, and cooperation.
enforced a strict policy of strict observance of the structure.
12 Agencies that use ADR in the Philippines
Filipinos also seem to be litigious people, as seen by the
heavy case inflow in the first and second level courts, as 1. Katarungang Pambarangay, where the Lupong
well as in the clogged dockets of review courts. Tagapamayapa headed by the Barangay Captain
facilitates a two-step resolution. They go into
16 Institute of Developing Economies, Asian Law Series No. 18, mediation first where there is a face-to-face
March 2002
21
confrontation of the parties with the Barangay 9. Commission on the Settlement of Land Problems
Chairman who serves as mediator. If it succeeds, (COSLAP), under the DOJ, created in 1979 through
they enter into an amicable settlement. If it fails, they EO 561, is mandated to settle all disputes involving
resort to conciliation which will be conducted by the land, whether urban or rural, involving squatters,
Pangkat Tagapagkasundo. If it succeeds, an arbitral classification, release or subdivision of lands, and
award will be granted. other land problems of grave importance like
demolition. The dispute is referred to a mediation
2. Cooperative Development Authority (CDA) where committee. If that fails, trial ensues for arbitration.
a legal officer is appointed to undertake the
resolution of disputes concerning cooperatives and 10. Insurance Commission is an independent quasi-
their activities. judicial body tasked with resolving disputes in the
insurance industry, like settlement of claims.
3. Philippine Construction Industry Arbitration
Commission (CIAC), which handles cases involving 11. Bureau of Trade Regulation and Consumer
contractual claims within the construction industry. Protection (BTRCP) is a quasi-judicial agency under
the DTI tasked to investigate, arbitrate, and resolve
4. Department of Agrarian Reform Adjudication complaints from consumers involving violations of
Board (DARAB), which provides a forum for the the Consumer Act, like fraudulent advertising,
settlement of agrarian disputes. The case first goes mislabeling, etc.
through mediation in the Barangay Agrarian Reform
Committee (BARC). If that fails, the case is brought 12. Court Annexed Pilot Mediation Project where the
before the Provincial Adjudicator (PARAD) for courts to encourage litigants at the pretrial stage to
arbitration. The agreement entered into with the submit their dispute to mediation/conciliation. Any
BARC, or the award by the PARAD will be entered as agreement reached therein would be the basis of the
an Order by the DARAB. court decision.
5. Philippine Dispute Resolution Center, Inc. VII. History of Arbitration

(PDRCI), which was organized in 1996, is a private
non-stock, non-profit corporation, open to the public Roots17
at large, especially to those engaged in business.
Here, an accredited arbitrator or arbitrator chosen by a. Roman Empire
the parties conducts the arbitration. All awards are
final and executor. Delay in compliance with the Arbitration was used as a means of resolving private
award is cognizable by the courts. disputes. An arbiter was synonymous to a “judge” or
“judex”. These are persons not specially trained but in
whose morality, probity, and good sense the parties
6. National Conciliation and Mediation Board
reposed full trust. Private conflicts were referred primarily to
(NCMB) created in 1987 through EO 126, is an
them.
agency under DOLE, tasked to resolve certain labor
disputes involving unionized workers, such as lock- How was the arbiter chosen?
outs and strikes, CBA deadlock, and company policy (a) designated by the parties by common agreement;
interpretation. The process starts with a conference. (b) selected by the parties from the “album judicium” or a
If the dispute isn’t settled there, conciliation is listing of those persons qualified; or
conducted. If it fails again voluntary arbitration is (c) chosen by lot.
encouraged. If the parties don’t choose arbitration,
then it becomes cognizable by the NLRC. The NCMB b. Lex Mercatoria
enforces its award via a writ of execution if voluntary
compliance is breached, but it doesn’t really have a Arbitration can also trace its roots to Lex Mercatoria, which
mechanism to compel compliance. was influenced by Roman Law, based on maritime custom
as well as Medieval European fairs. This was a combination
7. National Labor Relations Commission (NLRC), of customary rules and principles relating to merchants and
under the DOLE, tasked to settle disputes mercantile transactions, adopted by merchants themselves,
concerning unfair labor practice, termination, breach to regulate their dealings with each other.
of labor standards, and others.
c. England – ADR’s “Checkered Career in Law”
8. Bureau of Labor Relations (BLR), also under the
DOLE, concerned with resolving inter-union and
intra-union disputes, disputes in union
representation, cancellation of union registration, etc. 17 Parlade (2011) pp. 1-13.
22
Arbitration developed as a distinct and separate private The laws we were subjected to at the time of Spanish
institution for the resolution of disputes, which were mostly colonization recognized friendly adjusters called “juicio de
commercial. But it had a checkered career, in the sense amigables componedores”. This is a person appointed by
that one moment it is accepted, but in the next, it is the parties for the settlement of their differences.
completely set aside.
When the Americans came, their Code of Civil Procedure
The English courts firmly disapproved of arbitration impliedly repealed the provisions on the appointment of a
agreements as a vehicle for settling disputes, mainly friendly adjuster. Therefore, arbitral awards then could no
because of compensation-related reasons—Judges did not longer be enforced, as there was no legal basis for them.
have fixed salaries at the time; they mainly depended on
court fees. Wahl v. Donaldson (1903)
The courts had “great jealousy” of arbitrations because they Following US jurisprudence, our Supreme Court declared:
were “robbed of cases”. They brought this jealousy out by “Agreements to refer matters in dispute to arbitration have
denying the enforceability of arbitration agreements, been regarded generally as attempts to oust the jurisdiction
thereby nullifying the very value of arbitration. of the court, and are not enforced.”
d. America It cited the Clark on Contracts, which stated: “A condition in

a contract that disputes arising out of it shall be referred to
The American courts were on the same antagonizing mood. arbitration is good where the amount of damages sustained
They also denied judicial enforcement of arbitration by a breach of the contract is to be ascertained by specified
agreements. arbitration before any right of action arises, but that it is
illegal where all the matters in dispute of whatever sort may
The general rule in common law was that an arbitration be referred to arbitrators and to them alone. In the first case
agreement was revocable even after proceedings had a condition precedent to the accrual of a right of action is
already begun up to the time of the award. The award imposed, while in the second it is attempted to prevent any
would be recognized as valid, but it would not be right of action accruing at all, and this cannot be permitted.”
enforceable. The successful party would still have to go to
court to litigate on it. Only after a successful litigation would b. Contrary to Public Policy
the court consider its enforcement.
In many cases, the Court upheld the rule under civil law that
But there was also a general exception. The arbitration where there is a stipulation that all matters in dispute are to
agreement would be enforceable if the following conditions be referred to arbitrators and to them alone, such stipulation
were met: is contrary to public policy.
(a) if it did not decide on the general question of liability Allen v. Province of Tayabas (1918)
and reserved it for judicial decision;
(b) if it is confined to determining the amount payable or to Following the change in the judicial perception of arbitration
furnishing essential evidence only; and in the US, which would later on flourish to create the New
(c) if arbitration was made a condition precedent to the York Arbitration Act of 1920, our Supreme Court softened its
cause of action. attitude towards arbitration, holding that:
Source: Red Cross Line v Atlantic Fruit Co., as cited in Chang v “It would be highly improper, for courts out of untoward
Royal Exchange Assurance Corp. (1907) and Chan Linte v Law jealousy to annul laws or agreements which seek to oust
Union & Rock Insurance Co. (1921)
the courts of their jurisdiction. Unless the agreement is such
as absolutely to close the doors of the courts against the
However, America’s view took a 180 turn in 1854. In the
parties, which agreement would be void, courts will look
case of Burchell vs Marsh, their Supreme Court held:
with favor upon such amicable arrangements and will only
“Arbitrators are judges chosen by the parties to decide the
with great reluctance interfere to anticipate or nullify the
matters submitted to them, finally and without appeal, and
action of the arbitrator.”
that if an award is within the submission and it contains the
honest decision of the arbitrators, after a full and fair c. Civil Code (1950)
hearing of the parties, a court of equity will not set it aside
for error either in law or in fact.” In a 1924 case, Justice Malcolm said that the attitude of the
courts toward arbitration agreement is slowly crystallizing
Philippines – Then into definite and workable form.
a. Under Colonial Rule True enough, the issue was finally settled and crystallized
through the enactment of the 1950 Civil Code, which
23
contained a separate chapter on Arbitration with five Evolution of Arbitration in the Philippines
provisions: (Arthur Autea)18
Art. 2042. The same persons who may enter into a Tilting the Balance in Favor of ADR)
compromise may submit their controversies to one or more
arbitrators for decision. (1820a) Statutory Recognition
Art. 2043. The provisions of the preceding Chapter upon As we have heard in the previous reports, ADR has been
compromises shall also be applicable to arbitrations. finding a steadier and stronger place in the legal landscape
(1821a) of our country.
Art. 2044. Any stipulation that the arbitrators' award or This was largely due to the enactment of RA 9285, or the
decision shall be final, is valid, without prejudice to Articles ADR Act of 2004. It gave a more comprehensive and
2038, 2039, and 2040. (n)** updated set of rules to govern the various forms of
alternative dispute resolution, including arbitration.
Art. 2045. Any clause giving one of the parties power to
choose more arbitrators than the other is void and of no Problem area: Mindset of the majority
effect. (n)
The passing of the ADR Law was a big step. But until now,
Art. 2046. The appointment of arbitrators and the procedure ADR is not regarded as a primary means of dispute
for arbitration shall be governed by the provisions of such resolution in the Philippines. Why? It is primarily due to our
rules of court as the Supreme Court shall promulgate. (n) litigious culture.
**Arts. 2038, 2039, and 2040 allow that arbitration If you would ask a Filipino the question, “If you were in a
agreements be set aside based on grounds similar to those serious legal conflict right now, where would you go?”
that call for the annulment of contracts. there’s a big chance that the first image that pops in his
head is that of a courtroom or a judge.
d. RA 876 (1953)
We usually associate a judge or an administrative officer in
Despite being embedded in the law of the land thru the Civil the government—persons with an official title or badge—as
Code, arbitration had not yet been painted as a complete the only official authorities that can put an end to a dispute.
picture in the Philippines. We lacked a law that provides a
step-by-step guide on how to conduct arbitrations. Solution: More information and encouragement
But finally, in 1953, in accordance with the prevailing The executive and the judiciary should put more efforts in
positive view on arbitration in America, the Legislature informing the masses about ADR and encouraging its use,
enacted the first Arbitration Law. It did not repeal the Civil as stated in the Law’s declaration of state policy.
Code provisions, but rather bolstered them by providing a
fuller and clearer picture on how to resolve disputes The goal is to add a third person in the minds of the
through arbitration. Filipinos for when they would be asked that question—a
private person or entity who would act as a neutral third
However, this law was criticized for the following reasons: party. He is neither a court judge nor a public officer.
(a) Its provisions were too broad and failed to satisfy the Policy of Judicial Restraint
standards of arbitration systems elsewhere.
(b) The only type of arbitration it covered was domestic Before the ADR Law: It was not difficult to prevent
arbitration. arbitration from proceeding. Courts could easily intervene.
(c) There was no complementary statute for the conduct of
international arbitration in the Philippines. Now: The Special ADR Rules promulgated by the Supreme
Court in 2009 promoted the policy of judicial restraint. It
Moreover, even after the passage of the first Arbitration states:
Law, court litigation continued to be the primary choice for
the majority, as indicated by the growing number of cases “Rule 2.4. Policy implementing competence-competence
filed daily. principle. - The arbitral tribunal shall be accorded the first
opportunity or competence to rule on the issue of whether
Philippines – Now or not it has the competence or jurisdiction to decide a
dispute submitted to it for decision, including any objection
with respect to the existence or validity of the arbitration
18 Ateneo LJ 288, Evolution of Arbitration (2016)

24
agreement. When a court is asked to rule upon issue/s In the first case, the plaintiff owned a warehouse in Samar,
affecting the competence or jurisdiction of an arbitral where he stored almost 31,000 kilos of hemp. He availed of
tribunal in a dispute brought before it, either before or after fire insurance policies from 3 different companies—Law
the arbitral tribunal is constituted, the court must exercise Union and Rock Insurance, Tokyo Marine Insurance, and
judicial restraint and defer to the competence or jurisdiction Chine Fire Insurance.
of the arbitral tribunal by allowing the arbitral tribunal the
first opportunity to rule upon such issues. Later on, the warehouse caught fire and Chan declared
having lost P21,300. The insurance companies refused to
Where the court is asked to make a determination of pay. They requested that their liability be submitted to
whether the arbitration agreement is null and void, arbitration, in accordance with the policies’ provisions.
inoperative or incapable of being performed, under this
Both parties, by agreement, named Frank Ingersoll as the
policy of judicial restraint, the court must make no more
sole arbitrator. After presenting of evidence by both parties,
than a prima facie determination of that issue.
Ingersoll found that there were only seven bales of hemp
destroyed by the fire, with value at P608.34.
Unless the court, pursuant to such prima facie
determination, concludes that the arbitration agreement is The issue in this case is whether the arbitration clauses
null and void, inoperative or incapable of being performed, were null and void for being contrary to public policy.
the court must suspend the action before it and refer the
parties to arbitration pursuant to the arbitration agreement.” Said clauses stated that:
The law now favors arbitration, as seen in the provisions (a) any questions as to differences that shall arise as to the
that protect arbitral proceedings from undue court amount of loss or damage shall be referred to an
intervention. The Special Rules provide: arbitrator;
(b) the arbitration process shall be a condition precedent to
any right of action or suit upon the policies; and
“Rule 2.1. General policies. - It is the policy of the State to
(c) the award of the arbitrator shall be conclusive.
actively promote the use of various modes of ADR and to
respect party autonomy or the freedom of the parties to The lower court ruled in favor of Chan and but ordered each
make their own arrangements in the resolution of disputes of the defendants to pay only P202.78, pursuant to the
with the greatest cooperation of and the least intervention arbitrator’s award.
from the courts. To this end, the objectives of the Special
ADR Rules are to encourage and promote the use of ADR, Chan then appealed to the Supreme Court, claiming that
particularly arbitration and mediation, as an important the court was wrong in holding that the arbitrator’s decision
means to achieve speedy and efficient resolution of is conclusive or in any way binding on him.
disputes, impartial justice, curb a litigious culture and to de-
clog court dockets. The Supreme Court denied Chan’s petition and ruled that
the arbitration clauses were valid.
The court shall exercise the power of judicial review as
provided by these Special ADR Rules. Courts shall After the action was commenced and upon the request of
intervene only in the cases allowed by law or these Special the insurance companies, Chan agreed to arbitrate under
ADR Rules.” the terms and provisions of the policies. The parties
mutually agreed upon an arbitrator. Each party appeared
before him and offered evidence.
However, we should also take note that the word used was
“restraint” and not complete blockage. The courts are not Although the Court alluded to the possibility that the
shut out completely. proceedings were not honestly and fairly conducted, it
ultimately held that the findings of the arbitrator are
Arbitral Awards
conclusive upon the parties. The plaintiff, having agreed to
One of the important rules in arbitration is that if the parties arbitration and submitting his proof to the arbitrator, in the
mutually agree that the arbitrator’s decision is final and absence of fraud or mistake, is estopped and bound by the
appealable, there shall be no further judicial recourse if any award.
of the parties later on disagree with the arbitrator’s award,
The second case has a very similar issue, but the decision
unless their situation falls under the circumstances that
of the Supreme Court here had more layers.
merit the annulment of contracts.
These have been illustrated in the cases of (1) Chan Linte In 1989, Chung Fu and Roblecor Incorporated entered into
vs Law Union (1921); and (2) Chung Fu Industries v CA a construction agreement. Roblecor would undertake to
(1992). construct Chung Fu’s industrial complex in Cavite for a
25
consideration of P42 million. The agreement contained a the arbitration award is beyond the ambit of the court’s
clause saying that in the event of disputes arising from the power of judicial review.
performance of subject contract, the issue(s) shall be
submitted for resolution before a single arbitrator chosen by The SC first emphasized the following rules:
both parties.
(a) Absent an agreement of the parties to resolve their
disputes via a particular mode, it is the regular courts
In the next months, they entered into 2 more ancillary
that remain the fora to resolve such matters.
contracts: one for the construction of dorm and support
(b) The parties may opt for recourse to third parties, like
facilities, and another for the installation of electrical, water
through arbitration, by either spelling it out in the
and hydrant systems.
contract itself in anticipation of a future dispute, OR
stipulating in a submission agreement later on when
Roblecor failed to complete the project. They were granted they are actually facing a dispute.
an extension, but nevertheless failed to fulfil their obligation. (c) An extrajudicial means of settlement is not intended to
So Chung Fu took over the construction. completely deprive the courts of their jurisdiction.
(d) But a stipulation to refer all future disputes to an
In 1990, Roblecor filed a petition for compulsory arbitration arbitrator or to submit an ongoing dispute to one is
with prayer for TRO in the RTC. The company claimed that valid. Being part of a contract between the parties, it is
it be paid P10.5 million and that it had progress billings of binding and enforceable in court in case one of them
P2.37 million. neglects, fails or refuses to arbitrate.
(e) Going a step further, in the event that they declare
Before the court would decide on the petition, the parties their intention to refer their differences to arbitration
had negotiations, the two parties entered into an arbitration first before taking court action, this constitutes a
agreement (AA), which provided that: condition precedent, such that where a suit has been
instituted prematurely, the court shall suspend the
(a) They will abide by the decision of the arbitrator including same and the parties shall be directed forthwith to
any amount that may be awarded to either party as proceed to arbitration.
compensation, consequential damage and/or interest;
The answer to the main issue is no. An arbitration award is
(b) The decision of the arbitrator shall be final and
not completely outside of the court’s jurisdiction. The rule
unappealable. Therefore, there shall be no further judicial
on finality of awards is not absolute. The Civil Code itself
recourse if either party disagrees with the whole or any part
provides for the exceptions under Arts 2038-2040.
of the arbitrator's award; and
(c) Either party is entitled to seek judicial assistance for The Arbitration Law also enumerates other exceptions to
purposes of enforcing the arbitrator's award. the finality rule:
The RTC approved the AA. Engr. Willardo Asuncion was (a) corruption, fraud, or other undue means;
appointed as sole arbitrator. (b) evident partiality or corruption in the arbitrators or any
of them; or
A month later, Asuncion ordered Chung Fu to immediately (c) the arbitrators were guilty of misconduct in refusing to
pay Roblecor P16.11 million and declared his award final postpone the hearing upon sufficient cause shown, or
and unappealable. in refusing to hear evidence pertinent and material to
the controversy; that one or more of the arbitrators was
Chung Fu filed a motion to remand the case for further disqualified to act and wilfully refrained from disclosing
hearing and reconsideration of the award, claiming that such disqualifications or of any other misbehavior by
Asuncion exceeded his powers by going beyond the terms which the rights of any party have been materially
in the construction agreement, and even granting extra prejudiced; or
compensation to Roblecor. (d) the arbitrators exceeded their powers, or so imperfectly
executed them, that a mutual, final and definite award
Roblecor, on the other hand, filed a motion for confirmation upon the subject matter submitted to them was not
of award. The RTC granted Roblecor’s motion. Chung Fu made.”
then elevated the case via a petition for certiorari in the CA.
In the case of Chung Fu and Roblecor, the SC found that
The CA affirmed the RTC and held that as signatories to the the arbitrator committed a grave abuse of discretion by
AA, Chung Fu and its officers are bound to observe the failing to apply the terms of the original contract between
stipulation saying that the award is final and unappealable. the parties, and in granting unjustified extra compensation.
After their Motion for Reconsideration was denied, Chung
Fu elevated the case to the SC. The main issue is whether
26
Section 24(d) is therefore present here, and as stated in the qualification of the arbitrators, the terms of the agreement,
law, the court has the power to order that such award be and the capacity of the parties.
vacated.
The Special ADR Rules also recognize the principle of
Hence, the SC remanded the case back to the RTC for competence-competence, which means that the arbitral
further hearing. tribunal may initially rule on its own jurisdiction, including
any objections with respect to the existence or validity of
It should be noted, however, that the Special Rules now the arbitration agreement or any condition precedent to the
provide protection over arbitral awards from court filing of a request for arbitration.
intervention.
It is clear that the arbitral tribunal now has full autonomy in
The court’s power of judicial review is now limited by this deciding the merits of the award. Absent any of the seven
rule: grounds, the courts cannot touch their decision.
“No appeal or certiorari on the merits of an arbitral award. - VIII. Nature of Arbitration: Contractual in Nature
An agreement to refer a dispute to arbitration shall mean
that the arbitral award shall be final and binding. 1. La Naval Drug Corp vs CA19
Consequently, a party to an arbitration is precluded from
filing an appeal or a petition for certiorari questioning the (On the nature of Arbitration in relation to jurisdiction
merits of an arbitral award.” of courts)
Before: Awards rendered by arbitrators may be appealed to In 1989, a conflict between La Naval Drug Corporation and
the CA through a petition for review. Questions of fact, law, a certain Wilson Yao arose regarding a lease contract. Yao
or a mix of both may be raised. invoked a provision in the contract whereby pursuant to
R.A. 876 (Arbitration Law), they should refer the matter to
Now: The merits of an arbitral award could not longer be arbitration. Hence, the parties agreed to refer the issue to
altered by certiorari. The courts cannot disturb the arbitral three arbitrators. However, certain complications arose
tribunal’s determination of facts and interpretation of law. when they were choosing a third arbitrator. This prompted
Yao to go to court to demand the arbitrators to proceed with
But we have to remember that this doesn’t again the arbitration. Yao went to the RTC of Angeles City and the
completely deprive the court of its power to review. The case was filed as a summary proceeding case. Yao also
Rules on Domestic Arbitration enumerates seven grounds prayed for an award for damages in his favor.
to vacate an arbitral award:
In its Answer, La Naval asserted that the case should be
1. award was procured through corruption, fraud or other dismissed as it was filed prematurely; La Naval questioned
undue means; Yao’s claim for damages as it averred that the same should
2. evident partiality or corruption in the arbitral tribunal or be litigated independently and not in the same summary
any of its members; proceeding case. However, La Naval also posed a
3. arbitral tribunal’s misconduct or any form of counterclaim.
misbehaviour that has materially prejudiced the rights The RTC resolved the matter regarding the arbitrators by
of any party such as refusing to postpone a hearing appointing a third arbitrator. The RTC also ruled that La
upon sufficient cause shown or to hear evidence Naval is estopped from questioning Yao’s claim for
pertinent and material to the controversy; damages for being out of jurisdiction as La Naval itself filed
4. one or more of the arbitrators was disqualified to act as a counterclaim for damages.
such under the law and wilfully refrained from
disclosing such disqualification; or Issue: Whether or not the RTC has jurisdiction over the
5. arbitral tribunal exceeded its powers, or so imperfectly claims for damages between parties.
executed them, such that a complete, final and definite Held: No. RA 876 is clear that summary proceedings under
award upon the subject matter submitted to them was said law shall only involve the matter of arbitration. The
not made. parties’ claims for damages must be litigated in another civil
6. arbitration agreement did not exist, or is invalid for any case.
ground for the revocation of a contract or is otherwise
unenforceable; or Where the court clearly has no jurisdiction over the subject
7. a party to arbitration is a minor or a person judicially matter, in this case the claim and counterclaim for
declared to be incompetent. damages, the court must dismiss the case (in this case, the
claim and counterclaim for damages). Lack of jurisdiction
It is important to point out that none of these grounds over the subject matter as a defense may be raised at any
actually refer to the merits of the award, but rather the
means on how it was procured, the character and 19 GR No. 103200, Aug 31, 1994 (Digest by Diane Pena, et al.)
27
time. Failure to raise such defense shall not estop the relating to the Agreement or the parties relationship,
defendant from raising it later on. including the termination thereof, shall be resolved by
arbitration, they insist on the suspension of the proceedings
“The want of jurisdiction by the court is indisputable, given
the nature of the controversy. The arbitration law explicitly
Private respondents claim, on the other hand, that their
confines the court’s authority only to pass upon the issue of
causes of action are rooted in Arts. 20, 21 and 23 of the
whether there is or there is no agreement in writing
Civil Code, the determination of which demands a full blown
providing for arbitration. In the affirmative, the statute
trial, as correctly held by the Court of Appeals. They further
ordains that the court shall issue an order “summarily
contend that the arbitration clause centers more on venue
directing the parties to proceed with the arbitration in
rather than on arbitration.
accordance with the terms thereof.” If the court, upon the
other hand, finds that no such agreement exists, “the
Issue: Whether the court has jurisdiction over the case.
proceeding shall be dismissed.” The proceedings are
summary in nature.
Held: NO. There is no doubt that arbitration is valid and
All considered, the court a quo must then refrain from constitutional in our jurisdiction.
taking up the claims of the contending parties for damages,
which, upon the other hand, may be ventilated in separate A careful examination of the instant case shows that the
regular proceedings at an opportune time and venue. The arbitration clause in the Distributorship Agreement between
circumstances obtaining in this case are far, we hold, from petitioner DMC-USA and private respondent MMI is valid
justifying the application of estoppel against either party.” and the dispute between the parties is arbitrable.
The Agreement between petitioner DMC-USA and private

2. Del Monte Corp (DMC) USA vs CA20 respondent MMI is a contract. The provision to submit to
arbitration any dispute arising therefrom and the
(On the validity of Arbitration Agreements)
relationship of the parties is part of that contract and is itself
a contract.
On 3 October 1996, private respondents MMI, SFI and
MMIs Managing Director Liong Liong C. Sy filed a
3. Gilat vs UCPB General Insurance Co.21
Complaint against petitioners DMC-USA, Paul E. Derby, Jr.,
Daniel Collins and Luis Hidalgo, and Dewey Ltd. before the (On the contractual nature of arbitration)
RTC of Malabon, Metro Manila. Private respondents
predicated their complaint on the alleged violations by
On September 15, 1999, One Virtual placed with GILAT a
petitioners of Arts. 20, 21 and 23 of the Civil Code.
purchase order for various telecommunications equipment,
accessories, spares, services and software, at a total
According to private respondents, DMC-USA products purchase price of Two Million One Hundred Twenty Eight
continued to be brought into the country by parallel Thousand Two Hundred Fifty Dollars (US$2,128,250.00).
importers despite the appointment of private respondent Of the said purchase price for the goods delivered, One
MMI as the sole and exclusive distributor of Del Monte Virtual promised to pay a portion thereof totalling US$1.2
products thereby causing them great embarrassment and Million in accordance with the payment schedule dated 22
substantial damage. November 1999. To ensure the prompt payment of this
amount, it obtained defendant UCPB General Insurance
They alleged that the products brought into the country by Co., Inc.s surety bond dated 3 December 1999, in favor of
these importers were aged, damaged, fake or counterfeit GILAT.
Private respondents claimed that they had exhausted all GILAT shipped and delivered to One Virtual the purchased
possible avenues for an amicable resolution and settlement products and equipment. All of the equipment including the
of their grievances; that as a result of the fraud, bad faith, software components for which payment was secured by
malice and wanton attitude of petitioners, they should be the surety bond, was shipped by GILAT and duly received
held responsible for all the actual expenses incurred by by One Virtual.
private respondents.
One Virtual failed to pay GILAT the amount of Four
Petitioners contend that the subject matter of private Hundred Thousand Dollars (US$400,000.00) in accordance
respondents causes of action arises out of or relates to the with the payment schedule to the surety bond, prompting
Agreement between petitioners and private respondents. GILAT to write the surety defendant UCPB a demand letter
Thus, considering that the arbitration clause of the for payment of the said amount of US$400,000.00. No part
Agreement provides that all disputes arising out of or of the amount set forth in this demand has been paid to
20 GR No. 136154, Feb 7, 2001 (Digest by Diane Pena, et al.) 21 GR No. 189563, April 7, 2014 (Digest by Diane Pena, et al.)
28
date by either One Virtual or defendant UCPB. One Virtual the officers as parties because of their bad faith coming
likewise failed to pay on the succeeding payment from their misrepresentations.
installment of the surety bond, prompting GILAT to send a
second demand letter, for the payment of the full amount of Issue: Whether the officers should still be included as
US$1,200,000.00 guaranteed under the surety bond, plus “parties” considering that they already resigned from
interests and expenses However, defendant UCPB failed to Shangri-La Corporation.
settle the amount of US$1,200,000.00 or a part thereof,
hence, the instant complaint. Held: YES. The officers should be included as parties.
True, a corporation has a separate and distinct personality
Respondent appealed to the CA. The CA dismissed the from its owners, but this assumption admits of several
case for lack of jurisdiction. exceptions, we call this the “Piercing the veil of Corporate
Fiction”. Because of the alleged bad faith on the part of the
Issue: Whether CA erred in dismissing the case and officers, they should be included as parties to the complaint.
ordering petitioner and One Virtual to arbitrate. This is to determine whether there are sufficient grounds to
hold that there is indeed bad faith. And in case there really
Held: YES. The existence of a suretyship agreement does is, to hold them solidarily liable.
not give the surety the right to intervene in the principal
contract, nor can an arbitration clause between the buyer As a general rule, a corporation’s representative who did
and the seller be invoked by a non-party such as the surety. not personally bind himself or herself to an arbitration
agreement cannot be forced to participate in arbitration
Petitioner alleges that arbitration laws mandate that no proceedings made pursuant to an agreement entered into
court can compel arbitration, unless a party entitled to it by the corporation. He or she is generally not considered a
applies for this relief. This referral, however, can only be party to that agreement.
demanded by one who is a party to the arbitration
agreement. Considering that neither petitioner nor One However, there are instances when the distinction between
Virtual has asked for a referral, there is no basis for the CAs personalities of directors, officers, and representatives, and
order to arbitrate. of the corporation, are disregarded. We call this piercing
the veil of corporate fiction.
3. Lanuza et al vs BR Corp22
Piercing the corporate veil is warranted when "[the separate
(On Corporate Representatives; Piercing the Veil of personality of a corporation] is used as a means to
Corporate Fiction) perpetrate fraud or an illegal act, or as a vehicle for the
evasion of an existing obligation, the circumvention of
BF Corporation and Shari-La Properties entered into a statutes, or to confuse legitimate issues."
contract for the construction of a Shangri-La mall and a
multilevel parking structure along EDSA. During the When corporate veil is pierced, the corporation and persons
construction, Shangri-La defaulted in the payments but BF who are normally treated as distinct from the corporation
Corporation nonetheless continued. According to BF are treated as one person, such that when the corporation
Corporation, Shangri-La misrepresented that it had funds to is adjudged liable, these persons, too, become liable as if
pay for its obligations with BF Corporation, and the delay in they were the corporation.
payment was simply a matter of delayed processing of BF
Corporation’s progress billing statements. BF Corporation When there are allegations of bad faith or malice against
alleged that the officers of Shangri-La were in bad faith corporate directors or representatives, it becomes the duty
because of this misrepresentation. of courts or tribunals to determine if these persons and the
corporation should be treated as one. Without a trial, courts
After the construction, Shangri-La took possession of the and tribunals have no basis for determining whether the veil
buildings. BF Corporation demanded for the payment but of corporate fiction should be pierced. Courts or tribunals do
Shangri-La ignored the repeated demands. BF Corporation not have such prior knowledge.
filed an action in court for the collection of the outstanding
balance. The officers of Shangri-La filed a motion to The determination of these circumstances must be made by
suspend the proceedings. They said that the contract one tribunal or court in a proceeding participated in by all
contains an arbitration clause and BF Corporation’s failure parties involved, including current representatives of the
to submit the dispute to arbitration is sufficient ground to corporation, and those persons whose personalities are
dismiss their complaint. impliedly the sameas the corporation.
In the proceedings filed by BF Corporation, they included This is because when the court or tribunal finds that
circumstances exist warranting the piercing of the corporate
22 GR No. 174938, Oct 1, 2014 (Digest by Diane Pena, et al.) veil, the corporate representatives are treated as the
29
corporation itself and should be held liable for corporate in the lease contracts. Makati Rotary Club questions the
acts. validity of the contract and consequently the arbitration
clause.
5. Koppel Inc vs Makati Rotary Club23
Issues:
(May arbitration be compelled even if the issue pertains
to the validity of a contract?) 1. Whether the validity of the contract could be subject
to arbitration.
Fedders Koppel, Incorporated (FKI) has a registered parcel
of land located in Paranaque. In 1975, FKI bequeathed the 2. Whether the arbitration clause in the contract could
said land to Makati Rotary Club, by way of a conditional still be invoked notwithstanding that contract’s
donation. Makati Rotary Club accepted the donation with all possible nullity.
of its conditions. Among the conditions was to rent back the
land to FKI for a period of 25 years at a rate of P40,126 per 3. Whether the arbitration clause could still operate
annum. It is subject to renewal at conditions based on the considering that there is no request filed in the MeTC
mutual agreement of the parties. to arbitrate.
The parties executed another lease contract covering the 4. Whether the fact that the case was already submitted
same land. FKI and respondent agreed on a new five-year for JDR resolution makes arbitration unnecessary
lease to take effect on the 26th of May 2000, with annual and circuitous.
rents ranging from 4,000,000 for the first year up to
4,900,000 for the fifth year. The 2000 Lease Contract also Held:
contained an arbitration clause enforceable in the event the
parties come to disagreement about the" interpretation, 1. Arbitration is not proper when one of the parties
application and execution" of the lease. repudiates the existence or validity of such contract
or agreement on the ground of fraud or oppression
After the 2000 Lease Contract expired, FKI and respondent as in this case. The validity of the contract cannot be
agreed to renew their lease for another five (5) years. FKI subject of arbitration proceedings. Allegations of
faithfully paid the rentals and " donations "due it per the fraud and duress in the execution of a contract are
2005 Lease Contract. matters within the jurisdiction of the ordinary courts
of law. These questions are legal in nature and
But in June of 2008, FKI sold all its rights and properties require the application and interpretation of laws and
relative to its business in favor of herein petitioner Koppel, jurisprudence which is necessarily a judicial function.
Incorporated. The following year, petitioner discontinued the
payment of the rent and " donation " Their refusal to pay 2. Yes, the arbitration clause remains to be valid
such rent and "donation " emanated from its belief that the because of the doctrine of separability. Under the
rental stipulations of the 2005 Lease Contract, and even of doctrine of separability, an arbitration agreement is
the 2000 Lease Contract, violated one of the" material considered as independent of the main contract.
conditions " of the donation of the subject land. Being a separate contract in itself, the arbitration
agreement may thus be invoked regardless of the
Makati Rotary Club sent a demand letter to Koppel because possible nullity or invalidity of the main contract.
of its default in payment. Koppel gave a reply stating that
the rentals are "severely disproportionate," 3. The arbitration clause could still be invoked. The
"unconscionable" and "in clear violation to the nominal filing of a "request" pursuant to Section 24 of R.A.
rentals mandated by the Amended Deed of Donation." No. 9285 is not the sole means by which an
arbitration clause may be validly invoked in a
Makati Rotary Club sent a 2nd demand letter in September pending suit. In this case, it is conceded that
2009, demanding the payment of the obligation and an petitioner was not able to file a separate " request "
order to vacate the premises should it fail to pay the of arbitration before the MeTC. However, it is equally
obligations within 7 days from receipt of the letter. Koppel conceded that the petitioner, as early as in its Answer
failed to comply with both demands, prompting Makati with Counterclaim, had already apprised the MeTC
Rotary Club to file a recission or cancelation of the Deed of of the existence of the arbitration clause in the 2005
Donation and an Unlawful Detainer suit against Koppel. Lease Contract and, more significantly, of its desire
to have the same enforced in this case. This act of
Koppel questions the legality of the proceedings petitioner is enough valid invocation of his right to
commenced considering that there is an arbitration clause arbitrate.
23 GR No. 198075, Sept 4, 2014 (Digest by Diane Pena, et al.) 4. No, the has not become unnecessary and circuitous
30
by virtue of the JDR Resolution. The JDR framework held that where there is an arbitral agreement and one
is based on the processes of mediation, conciliation party puts up a claim which the other party disputes, the
or early neutral evaluation which entails the need to arbitrate is imperative. The duty of the court in a
submission of a dispute before a "JDR judge" who case like this is not to resolve the merits of the claims, but
shall merely "facilitate settlement" between the only to determine if they should proceed to arbitration or
parties in conflict or make a "non-binding evaluation not.
or assessment of the chances of each party’s case."
Thus in JDR, the JDR judge lacks the authority to The following US cases were cited:
render a resolution of the dispute that is binding upon
the parties in conflict. In arbitration, on the other  In Prima Paint vs Flood & Conklin (1967), it was
hand, the dispute is submitted to an arbitrator/s —a held that a claim of fraud in the inducement of an
neutral third person or a group of thereof— who shall arbitration agreement itself is cognizable by the
have the authority to render a resolution binding courts, but not as to claims of fraud in the
upon the parties. inducement of the principal contract. The latter is
resolved by means of arbitration.
Arbitral Autonomy Principle in Philippine
Jurisprudence  In Par-knit Mills vs Stockbridge (1980), it was held
(Kristoffer James E. Purisima)24 that the determination of whether an arbitral
agreement had in fact been executed by the
Much of the discussion was around the PIATCO case contracting parties was an issue cognizable by
(Agan vs PIATCO, 2003), where the Court held the judicial proceedings.
following:
 In Three Valleys vs Hutton (1991), it was held that:
 Arbitral proceedings can only be applied to the If the dispute is within the scope of an arbitration
contracting parties. agreement, an arbitrator may properly decide
whether a contract is "voidable" because the
 If the dispute involves non-parties to the contract, parties have agreed to arbitrate the dispute. But,
splitting the proceedings in order to have arbitration because an "arbitrator's jurisdiction is rooted in the
for the parties and trial for the non-contracting agreement of the parties”, a party who contests the
parties would result in multiplicity of suits, making of a contract containing an arbitration
duplicitous proceedings, and unnecessary delay. provision cannot be compelled to arbitrate the
Thus, the interest of justice would be best served if threshold issue of the existence of an agreement to
the court hears and adjudicates the case in a arbitrate. Only a court can make that decision.
single, complete proceeding.
Hence, the arbitral autonomy principle entails that
In that case, the court also rationed that since the principal questions as to the validity or invalidity of the principal
contracts were void, then the arbitral agreement is also contract is cognizable by an arbitrator or arbitral tribunal for
without legal existence. as long as there is a valid and binding arbitral agreement.
But the author noted that the ruling in the PIATCO case However, where the legal existence of the arbitral
betrays the principle of arbitral autonomy. agreement is itself disputed, such question is properly
cognizable by the courts.
This principle provides that an arbitral clause is considered
separate or independent from the main contract. The Absent any allegation whatsoever that the arbitral
validity of the arbitral agreement doesn’t rest upon the agreement was procured through fraud such that there was
validity of the principal agreement. This is embodied in no meeting of the minds with respect to the arbitral clause,
Sections 24-25 of the ADR Law. arbitration proceedings should be allowed to take due
course.
Section 6 of the Old Arbitration Law also provides that if the
making of the agreement or the failure to comply with it is But everything would still depend on what is stated on the
not raised as an issue in the proceedings, the court where contract in each case. In Bay View Hotel vs Ker & Co
the action is pending shall make an order directing the (1982), where the clause only mentioned, “if dispute should
parties to proceed to arbitration in accordance with the arise as to the amount of company’s liability”, it was
terms of the agreement. construed as to exclude the issue of total negation of
liability. This means that only disputes regarding the
In General Insurance vs Union Insurance (1989), the court amount of liability could be arbitrated, such that when the
party completely denies any liability, arbitration cannot be
24 50 Ateneo LJ 1091 (2006) invoked.
31
In Toyota Motor vs CA (1992), it was held that the presence Arbiter vs Arbitrator: An arbiter is bound by rules of law
of third persons doesn’t render the arbitration clause and equity in rendering an award. An arbitrator may use his
disfunctional. own discretion in the performance of his functions.
The author slammed that SC’s ruling in the PIATCO case, Voluntary arbitrators act in a quasi-judicial capacity, such
where it held that a speedy and decisive resolution of all the that their decisions are within the scope of judicial review.
critical issues couldn’t be made before an arbitral tribunal.
Arbitration agreement: It is the agreement by the parties
In the author’s opinion, this means that the Court is to submit to arbitration all or certain disputes which have
essentially saying that an arbitral tribunal is incapable of arisen or which may arise between them in respect of a
reaching a credible conclusion. But the Court is totally defined legal relationship, whether contractual or not.
mistaken in this regard, according to Purisima. Arbitral
tribunals are triers of fact. When an arbitrable dispute is Two modes of submitting a dispute to arbitration
submitted before it, the tribunal is precisely tasked to
determine and investigate the factual and circumstantial 1. Agreement to submit to arbitration – an
antecedents of the dispute and, based on such agreement to submit some future dispute, usually
investigation, reach as conclusion as to the legal liability of stipulated upon in a civil contract between the
any or both parties. parties; made in anticipation of a dispute that might
arise between the parties after the contracts
Moreover, by brushing aside arbitration as a means of execution.
resolving contractual disputes, the Court manifestly
expressed its distrust towards arbitral proceedings. The
author found it ironic and regressive that a Court who has
historically relied on American jurisprudence would now 2. Submission agreement – an agreement
make a decision that is not in accord with the US courts’ submitting an existing matter of difference to
favourable treatment of arbitration. arbitrators.
In the PIATCO case, the SC took cognizance relying on the Form: Since an arbitration agreement is a formal contract,
“transcendental importance” doctrine, which expands the its validity is dependent on the contract being executed in a
Court’s power of judicial review. particular form. It should be in writing and subscribed by the
parties.
The author noted that this doctrine has been an instrument
of jurisprudential regression. He further said, “It is The agreement to arbitrate may be:
unfortunate that the concept of transcendental importance
has made the Court envision itself as a governmental 1. Through an arbitration clause or compromissiore,
messiah.” which is included in the container contract; or
IX. Arbitration in General 2. Constituted in a separate contract; or

Robeniol Notes25 3. In the form of a reference in a written contract to a
document containing an arbitration clause such as
Arbitration distinguished from mediation:
to make that clause part of the contract.
 In arbitration, it is the arbitrator who decides the Concept of Arbitration
dispute and renders an arbitral award to conclude
the proceeding. In mediation, it is the parties Uniwide Sales Realty and Resources Corp. vs Titan-
themselves who enter into and execute a mediated Ikeda Construction26
settlement agreement to conclude the proceeding.
Arbitration as distinguished from the court trial system:
 Arbitration is merit/evidence-based. Mediation is
not necessarily evidence-based. “An arrangement for taking and abiding by the judgment of
selected persons in some disputed matter, instead of
Arbitrator: He/she is the person appointed to render an carrying it to established tribunals of justice, and is intended
award, alone or with others, in a dispute that is the subject to avoid the formalities, the delay, the expense, and
matter of an arbitration agreement. vexation of ordinary litigation.”
25 Robeniol, pp. 43-58 26 511 SCRA 335 (2006)

32
In this case, the question raised was, what if the award by members of such body, and the parties freely consent in
the arbitrator (the CIAC in this case) is not the same as the advance to abide by its award. This award will be issued
findings of the courts? Are the CIAC bound by the Rules of after the proceedings where both sides have the
Court? opportunity to be heard. Compulsory arbitration is the
process of settling disputes by a government agency that
Held: No. The Rules governing Construction Arbitration has the authority to investigate and to make an award,
promulgated by the CIAC contains no provision on the which is binding on all parties. The parties are compelled to
application of the Rules of Court to arbitration proceedings, accept the resolution of the dispute.
even in a suppletory capacity.
Domestic vs International
Such importation of the Rules of Court provision on
amendment to conform to evidence would contravene the It is international if any of the following instances occur:
spirit, if not the letter of the CIAC rules. This is for the
reason that the formulation of the Terms of Reference is 1. The parties’ place of business, at the time of the
done with the active participation of the parties and their conclusion of their arbitration agreement, are in
counsel themselves. different states;
EO 1008 created an arbitration facility to which the 2. The place of arbitration provided in the arbitration
construction industry in the Philippines can have agreement and the parties’ places of business is
recourse. It was enacted to encourage the early and outside the Philippines;
expeditious settlement of disputes in the construction
industry, a public policy the implementation of which is
necessary and important for the realization of national 3. The place where a substantial part of the obligation is
development goals. to be performed or the place with the subject matter of
the dispute is most closely connected is outside the
Philippines; or
Aware of the objective of voluntary arbitration in the labor
field, in the construction industry, and in any other area for
that matter, the Court will not assist one or the other or 4. The parties have expressly agreed that the subject
even both parties in any effort to subvert or defeat that matter of the arbitration agreement relates to more than
objective for their private purposes. The Court will not one country.
review the factual findings of an arbitral tribunal upon the
artful allegation that such body had "misapprehended facts" It is domestic if it is not international in character, that is, if
and will not pass upon issues which are, at bottom, issues the components (places of business, of arbitration, of
of fact, no matter how cleverly disguised they might be as substantial performance, and where subject matter is most
"legal questions." The parties here had recourse to closely connected) are all in the Philippines.
arbitration and chose the arbitrators themselves; they must
have had confidence in such arbitrators. The Court will not, Domestic vs Foreign
therefore, permit the parties to relitigate before it the issues
of facts previously presented and argued before the Arbitral It is foreign if conducted outside the Philippines. It is
Tribunal, save only where a clear showing is made that, in domestic of it is conducted in the Philippines, irrespective of
reaching its factual conclusions, the Arbitral Tribunal the presence or absence of foreign elements.
committed an error so egregious and hurtful to one party as
to constitute a grave abuse of discretion resulting in lack or Commercial Arbitration
loss of jurisdiction. Prototypical examples would be factual
conclusions of the Tribunal which resulted in deprivation of It is commercial if it covers matters arising from all
one or the other party of a fair opportunity to present its relationships of a commercial nature, whether contractual or
position before the Arbitral Tribunal, and an award obtained not. An international commercial arbitration proceeding
through fraud or the corruption of arbitrators. Any other, conducted in the Philippines under the ADR Act is domestic
more relaxed rule would result in setting at naught the basic and international in character, while that conducted outside
objective of a voluntary arbitration and would reduce the Philippines is foreign.
arbitration to a largely inutile institution.
Policy on Arbitration
Kinds of Arbitration
Korea Technologies vs Lerma27
Voluntary vs Compulsory
Voluntary arbitration involves the reference of a dispute to

an impartial body. The parties themselves choose the 27 542 SCRA 1 (2008)
33
“Being an inexpensive, speedy and amicable method of Components of arbitration:

settling disputes, arbitration––along with mediation,
conciliation and negotiation––is encouraged by the 1. Arbitration is contractual; and
Supreme Court. Aside from unclogging judicial dockets,
arbitration also hastens the resolution of disputes, 2. It may either be adjudicative or judicial.
especially of the commercial kind. It is thus regarded as the
"wave of the future" in international civil and commercial Characteristics of arbitration:
disputes. Brushing aside a contractual agreement calling
for arbitration between the parties would be a step 1. It is parties-specific and case-specific.
backward.”
The arbitration and the award (collectively known as arbitral
Hence, arbitration clauses must be liberally construed decision) are binding on the parties and in respect of the
consistent with that policy. As long as the clause is particular dispute involved in the arbitration.
susceptible to interpretation that covers the dispute
asserted, an order to arbitrate should be granted. Any doubt Generally, only the signatories to the arbitration agreement
must be resolved in favour of arbitration. are bound. But non-signatories may be bound, too, like the
following:
Moreover, the Court reiterated the following pertinent a. Principal represented by an agent;
features of the ADR Law, which incorporated the b. Alter ego of a signatory using piercing of veil;
UNCITRAL Model Law: c. Assignees or transferees; and
1. The RTC must refer to arbitration in the proper cases. d. Successors-in-interest including those resulting
2. Foreign arbitral awards must be confirmed by the RTC from mergers and business combinations
(for recognition and enforcement). A party may also be bound as a result of waiver or estoppel.
3. The RTC has jurisdiction to review foreign arbitral
awards. 2. It is a private dispute resolution process.
4. The grounds for judicial review in domestic and foreign
It is an extrajudicial mode of resolving disputes. There
awards are different. For foreign awards, the grounds
should be minimal interference from the courts and the
are under Article 34(2) of the UNCITRAL Model Law.
government.
For final domestic awards, the grounds are under
Section 25 of RA 876. 3. The arbitral tribunal is an instrumentality of the
5. The decision of the RTC regarding an assailed foreign parties.
award is appealable to the CA via a petition for review
under Rule 45. As creators, they own the tribunal and they can shape it to
what they want it to be.
Comprehending Arbitration
(Mario E. Valderrama)28 4. It is evidentiary.
The term “arbitration” is used loosely in many processes in The tribunal will decide based on the evidence presented
the Philippines (labor arbitration, consumer arbitration, by the parties.
barangay arbitration). This has led to confusion. They use
similar words but they are not conceptually the same The tribunal cannot use its expertise in settling the dispute.
because they are governed by different rules. It cannot use “secret evidence” or evidence known only to
the tribunal, as basis for the award.
From the definitions in the Model Law, and the New York
Convention, we can say that arbitration is a contractual 5. It is a mandatory procedure that will culminate to a
method of resolving disputes, whereby the disputants have final and binding decision or award.
an opportunity to present their positions before an impartial
tribunal or person, whose judgment and expertise they Entering into an arbitration agreement is voluntary. But
trust. once they enter into it, they are bound to comply with the
stipulation to resolve their dispute through arbitration and
It is a device whereby the settlement of a question that’s of not go to litigation.
interest to two or more persons is entrusted to the
arbitrator/s who derive their powers from a private The parties may both withdraw from their agreement to
agreement, not from the authorities of a State, and who are arbitrate, but they cannot do so unilaterally.
to proceed and decide the case on the basis of such
agreement. 6. The principle of finality of arbitral awards or
decisions is based on contract and is a core
28 61 Ateneo LJ 608 (2016)
34
component of the process. freedom to contract.
The arbitration agreement represents the parties’ 2. Agreement between the parties – The law between
acceptance to abide by the tribunal’s decision. the parties.
Any appeal based on errors of fact, law, or both, can be 3. Default rules – These are the law provisions
ruled out. Attacks against an award shouldn’t focus on the applicable in the absence or deficiency of
merits, but rather on the procedure. agreement.
7. The award is part of the agreement of the parties 4. Arbitrator discretion – This is added by arbitration
and has the same standing as a contractual laws. It is only possible if there are no mandatory,
stipulation. agreement, or default rules.
The validity and enforceability of the award is subject to the The seat of arbitration (place of arbitration) determines
same rules in contracts. which law should apply. But it is not necessarily where the
proceedings occur. It is a legal construct, not a
8. The arbitral tribunal has no imperium. geographical location. The arbitral seat is the nation where
an international arbitration has its legal domicile or juridical
The tribunal doesn’t have the power to enforce its orders home.
and decision.
As a general rule, the arbitration law of the seat will be the
In post award proceedings, courts may exercise its governing law of the arbitration.
supervisory and enforcement jurisdictions.
X. Domestic Arbitration
For an award to be enforceable, it must be integrated into
the legal system by way of a: RA 876, Sec 1-7
1. Petition for Confirmation, for local awards; or Persons and matters subject to arbitration
2. Petition for Recognition, for foreign awards. Two or more persons or parties may submit to the
arbitration of one or more arbitrators any controversy
Ad hoc vs Institutional existing between them at the time of the submission and
which may be the subject of an action, or the parties to any
 Ad hoc arbitration is a DIY arbitration. It is subject contract may in such contract agree to settle by arbitration a
only to the parties’ agreement and the applicable controversy thereafter arising between them.
national arbitration legislation. The parties
themselves, together with the tribunal, will lay down Such submission or contract shall be valid, enforceable and
the rules. irrevocable, save upon such grounds as exist at law for the
revocation of any contract.
 Institutional arbitration is administered by an arbitral
institution that decides according to its own rules. In Limitations
practice, it is almost always overseen by an
appointing authority.
A controversy cannot be arbitrated where one of the parties
to the controversy is an infant, or a person judicially
Arbitral institution: It is an organization that provides
declared to be incompetent, unless the appropriate court
arbitration services. Per the IRR and in relation to domestic
having jurisdiction approve a petition for permission to
arbitration, it is an entity, registered as a domestic
submit such controversy to arbitration made by the general
corporation with the SEC, and engaged in arbitration of
guardian or guardian ad litem of the infant or of the
disputes in the Philippines on a regular and permanent
incompetent.
basis.
Rule of preference (based on the premise that arbitration But where a person capable of entering into a submission
is contractual) or contract has knowingly entered into the same with a
person incapable of so doing, the objection on the ground
1. Mandatory rules – These are the public policy of incapacity can be taken only in behalf of the person so
safeguards, and thus, rules that the parties cannot incapacitated.
derogate. These refer to the limitations on the
35
Controversies not subject to RA 876 2. In the case of the submission of an existing controversy,
it Is instituted by the filing with the Clerk of the RTC having
This Act shall not apply to controversies and to cases which jurisdiction, of the submission agreement, setting forth the
are subject to the jurisdiction of the Court of Industrial nature of the controversy, and the amount involved, if any.
Relations (now NLRC) or which have been submitted to it. Such submission may be filed by any party and shall be
duly executed by both parties.
Form of arbitration agreement
In the event that one party neglects, fails or refuses to
arbitrate under a submission agreement, the aggrieved
A contract to arbitrate a controversy thereafter arising
party shall follow the same procedure above.
between the parties, as well as a submission to arbitrate an
existing controversy shall be in writing and subscribed by
the party sought to be charged, or by his lawful agent. Hearing by court: A party aggrieved by the failure, neglect
or refusal of another to perform under an arbitration
agreement may petition the court for an order directing that
The making of a contract or submission for arbitration shall
such arbitration proceed. Five days notice in writing of the
be deemed as consent of the parties to the jurisdiction of
hearing of such application shall be served either
the RTC of the province or city where any of the parties
personally or by registered mail upon the party in default.
resides, to enforce such contract or submission.
The court shall hear the parties, and upon being satisfied
that the making of the agreement or such failure to comply
Preliminary procedure therewith is not in issue, shall make an order directing the
parties to proceed to arbitration in accordance with the
1. In the case of a contract to arbitrate future controversies, terms of the agreement.
it is instituted by the service by either party of a demand for
arbitration in accordance with the contract upon the other. If the making of the agreement or default be in issue the
court shall proceed to summarily hear such issue. If the
Such demand shall be set forth the nature of the finding be that no agreement in writing providing for
controversy, the amount involved, if any, and the relief arbitration was made, or that there is no default in the
sought, together with a true copy of the contract providing proceeding thereunder, the proceeding shall be dismissed.
for arbitration. The demand shall be served upon any party If the finding be that a written provision for arbitration was
either in person or by registered mail. made and there is a default in proceeding thereunder, an
order shall be made summarily directing the parties to
In the event that the contract between the parties provides proceed with the arbitration in accordance with the terms
for the appointment of a single arbitrator, the demand shall thereof.
be set forth a specific time within which the parties shall
agree upon such arbitrator. If the contract between the The court shall decide all motions, petitions or applications
parties provides for the appointment of three arbitrators, filed under the provisions of this Act, within 10 days after
one to be selected by each party, the demand shall name such motions, petitions, or applications have been heard by
the arbitrator appointed by the party making the demand; it.
and shall require that the party upon whom the demand is
made shall within 15 days, advise in writing the first party of Stay of civil action: If any suit or proceeding be brought
the name of the person appointed by the second party; upon an issue arising out of an agreement which has an
such notice shall require that the two arbitrators so arbitration clause, the court in which such suit or
appointed must agree upon the third arbitrator within ten proceeding is pending, upon being satisfied that the issue
days from the date of such notice. involved is referable to arbitration, shall stay the action or
proceeding until an arbitration has been had in accordance
In the event that one party defaults in answering the with the terms of the agreement: Provided, That the
demand, the aggrieved party may file with the Clerk of the applicant, for the stay is not in default in proceeding with
RTC having jurisdiction over the parties, a copy of the such arbitration.
demand for arbitration under the contract to arbitrate, with a
notice that the original demand was sent by registered mail (Also read IRR, Chapter 5, Rules 1-2)
or delivered in person to the party against whom the claim
is asserted. Such demand shall set forth the nature of the Appointment of Domestic Arbitrators, Jurisdiction and
controversy, the amount involved, if any, and the relief Conduct of Domestic Arbitration29
sought, and shall be accompanied by a true copy of the
contract providing for arbitration.
29 RA 876, Sec 8-18; IRR Chapter 5, Rule 3-5; Parlade, pp. 327-
501
36
Appointment of arbitrators No person shall serve as an arbitrator in any proceeding if

he has or has had financial, fiduciary or other interest in the
If, in the contract for arbitration or submission agreement, controversy or cause to be decided or in the result of the
provision is made for a method of naming or appointing an proceeding, or has any personal bias, which might
arbitrator or arbitrators, such method shall be followed. prejudice the right of any party to a fair and impartial award.
But if no method is provided, the RTC shall designate an No party shall select as an arbitrator any person to act as
arbitrator or arbitrators. his champion or to advocate his cause.
The RTC shall appoint an arbitrator or arbitrators in the Disclosure after appointment
following instances:
If, after appointment but before or during hearing, the
(a) If the parties to the contract or submission are unable to appointed person discovers any circumstances likely to
agree upon a single arbitrator; or create a presumption of bias, or which he believes might
disqualify him as an impartial arbitrator, he shall
immediately disclose such information to the parties.
(b) If an arbitrator appointed by the parties is unwilling or
Thereafter, the parties may agree in writing:
unable to serve, and his successor has not been appointed
in the manner in which he was appointed; or
1. to waive the presumptive disqualifying circumstances;
or
(c) If either party to the contract fails or refuses to name his
arbitrator within 15 days after receipt of the demand for
arbitration; or 2. to declare the office of such arbitrator vacant. Any such
vacancy shall be filled in the same manner as the
original appointment was made.
(d) If the arbitrators appointed by each party to the contract,
or appointed by one party to the contract and by the proper
Court, shall fail to agree upon or to select the third Challenge of arbitrators
arbitrator.
The arbitrators may be challenged only for the reasons
Arbitrators appointed shall either accept or decline within 7 mentioned in the preceding section (qualifications and
days of the receipt of their appointments. limitations) which may have arisen after the arbitration
agreement or were unknown at the time of arbitration.
In case of declination or failure of an arbitrator to duly
accept, the parties or the court, shall proceed to appoint a If they do not yield to the challenge, the challenging party
substitute or substitutes for the arbitrator or arbitrators who may renew the challenge before the RTC of the province or
decline or failed to accept his or their appointments. city in which the challenged arbitrator or any of the parties
resides.
Number of Arbitrators: The parties are free to determine
the number of arbitrators. Failing such determination, the Procedure for challenge
default number of arbitrators shall be 3.
1. The party will write a challenge.
Qualifications of arbitrators: Any person appointed as an
arbitrator must be: 2. Within 15 days, the challenged arbitrator must accept
or deny. If he accepts, he withdraws as arbitrator.
1. of legal age;
3. If he rejects the challenge, he shall communicate such
2. in full-enjoyment of his civil rights; and rejection and state the facts and arguments relied upon.
3. know how to read and write. 4. The arbitral tribunal shall decide on the challenge within
30 days.
Limitations
5. If the challenge procedure is unsuccessful, the party
who made the challenge may request the appointing
No person appointed to served as an arbitrator shall be
authority in writing to decide on the challenge.
related by blood or marriage within the sixth degree to
either party to the controversy.
37
6. The appointing authority shall decide on it within 15 4. the appointing authority decides the challenge and
days. declares the office of the challenged arbitrator vacant;
7. If the appointing authority fails to act, the requesting 5. in default of the appointing authority, the court decides
party may renew the request with the court. the challenge and declares the office of the challenged
arbitrator vacant.
Grounds for Challenge:
Procedure by arbitrators
1. If circumstances exist that give rise to justifiable doubts
as to his/her impartiality or independence; 1. Setting of hearing: The arbitrator, within 5 days after
appointment if the parties to the controversy reside
2. If he/she does not possess qualifications as provided within the same city or province, or within 15 days after
for in the IRR or those agreed to by the parties; appointment if the parties reside in different provinces,
set a time and place for the hearing of the matters
3. If he/she is disqualified to act as arbitration under these submitted to them, and must cause notice thereof to be
given to each of the parties.
Rules;
4. If he refuses to respond to questions by a party 2. Postponement/Adjournment: The hearing can be

postponed or adjourned by the arbitrators only by
regarding the nature and extent of his professional
agreement of the parties; otherwise, adjournment may
dealings with a party or its counsel.
be ordered by the arbitrators upon their own motion
only at the hearing and for good and sufficient cause.
Suspension of arbitration No adjournment shall extend the hearing beyond the
day fixed in the submission or contract for rendering the
RA 876: While the challenging incident is discussed before award, unless the time so fixed is extended by the
the court, the hearing or arbitration shall be suspended, and written agreement of the parties to the submission or
it shall be continued immediately after the court has contract or their attorneys, or unless the parties have
delivered an order on the challenging incident. continued with the arbitration without objection to such
adjournment.
IRR: Until a decision is made to replace the arbitrator, the
arbitration proceeding shall continue notwithstanding the 3. Hearing in absentia: The hearing may proceed in the
challenge. Rhe challenged arbitrator shall continue to absence of any party who, after due notice, fails to be
participate therein as an arbitrator. present at such hearing or fails to obtain an
adjournment thereof. An award shall not be made solely
However, if the challenge incident is raised before the court, on the default of a party. The arbitrators shall require
the arbitration proceeding shall be suspended until the the other party to submit such evidence as they may
court decides the incident. require for making an award.
The arbitration shall be continued immediately after the 4. Legal representation: No one other than a party to said
court has delivered an order. If the court agrees that the arbitration, or a person in the regular employ of such
challenged arbitrator shall be replaced, the parties shall party duly authorized in writing by said party, or a
immediately replace the arbitrator concerned. practicing attorney-at-law, shall be permitted by the
arbitrators to represent before him or them any party to
When can a challenged arbitrator be replaced? the arbitration. Any party desiring to be represented by
counsel shall notify the other party or parties of such
A challenged arbitrator shall be replaced if: intention at least 5 days prior to the hearing.
1. he/she withdraws as arbitrator; 5. The arbitrators shall arrange for the taking of a
stenographic record of the testimony when such a
record is requested by one or more parties, and when
2. the parties agree in writing to declare the office of payment of the cost is assumed by such party or
arbitrator vacant; parties.
3. the arbitral tribunal decides the challenge and declares

the office of the challenged arbitrator vacant;
38
6. Persons having a direct interest in the controversy notice thereof fails to appear, in which event such
which is the subject of arbitration shall have the right to inspection shall be made in the absence of such party.
attend any hearing; but the attendance of any other
person shall be at the discretion of the arbitrators. Briefs and Closing: At the close of the hearings, the
arbitrators shall specifically inquire of all parties whether
Oath of arbitrators: Before hearing any testimony, they have any further proof or witnesses to present; upon
arbitrators must be sworn, by any officer authorized by law the receipt of a negative reply from all parties, the
to administer an oath, faithfully and fairly to hear and arbitrators shall declare the hearing closed unless the
examine the matters in controversy and to make a just parties have signified an intention to file briefs. Then the
award according to the best of their ability and hearing shall be closed by the arbitrations after the receipt
understanding. of briefs and/or reply briefs.
Arbitrators shall have the power to administer the oaths to Definite time limit for the filing of such briefs must be fixed
all witnesses requiring them to tell the whole truth and by the arbitrators at the close of the hearing. Briefs may
nothing but the truth in any testimony which they may give filed by the parties within 15 days after the close of the oral
in any arbitration hearing. This oath shall be required of hearings; the reply briefs, if any, shall be filed within 5 days
every witness before any of his testimony is heard. following such 15-day period.
Subpoena and subpoena duces tecum: Arbitrators shall Reopening of hearing: The hearing may be reopened by
have the power to require any person to attend a hearing the arbitrators on their own motion or upon the request of
as a witness. They shall have the power to subpoena any party, upon good cause, shown at any time before the
witnesses and documents when the relevancy of the award is rendered.
testimony and the materiality has been demonstrated.
Proceeding in lieu of hearing: The parties to a submission
Attendance of arbitrators: All of the arbitrators appointed or contract to arbitrate may, by written agreement, submit
in any controversy must attend all the hearings in that their dispute to arbitration by other than oral hearing. The
matter and hear all the allegations and proofs of the parties; parties may submit an agreed statement of facts. They may
but an award by the majority of them is valid unless the also submit their respective contentions to the duly
concurrence of all of them is expressly required in the appointed arbitrators in writing; this shall include a
submission or contract to arbitrate. statement of facts, together with all documentary proof.
Parties may also submit a written argument.
The arbitrator or arbitrators shall have the power at any
time, before rendering the award, without prejudice to the Each party shall provide all other parties to the dispute with
rights of any party to petition the court to take measures to a copy of all statements and documents submitted to the
safeguard and/or conserve any matter which is the subject arbitrators.
of the dispute in arbitration.
Each party shall have an opportunity to reply in writing to
Hearing by arbitrators: Arbitrators may, at the any other party's statements and proofs; but if such party
commencement of the hearing, ask both parties for brief fails to do so within 7 days after receipt of such statements
statements of the issues in controversy and/or an agreed and proofs, he shall be deemed to have waived his right to
statement of facts. reply.
Thereafter, the parties may offer such evidence as they Upon the delivery to the arbitrators of all statements and
desire, and shall produce such additional evidence as the documents, together with any reply statements, the
arbitrators shall require or deem necessary to an arbitrators shall declare the proceedings in lieu of hearing
understanding and determination of the dispute. closed.
The arbitrators shall be the sole judge of the relevancy and The Arbitral Tribunal has competence to rule on its own
materiality of the evidence offered or produced, and shall jurisdiction: When a demand for arbitration is objected to
not be bound to conform to the Rules of Court pertaining to by the adverse party, the arbitral tribunal shall, in the first
evidence. instance, resolve the objection when made on any of the
following grounds:
The arbitrators may make an ocular inspection of any
matter or premises which are in dispute, but such
inspection shall be made only in the presence of all parties
to the arbitration, unless any party who shall have received
39
1. The arbitration agreement is in existent, void, period may be further extended by mutual consent of the
unenforceable or not binding upon a person for any parties.
reason, including the fact that the adverse party is not
privy to said agreement; Settlement: If the parties settle the dispute, the arbitral
tribunal shall record the settlement in the form of an arbitral
2. The dispute is not arbitrable or is outside the scope of award on agreed terms, consent award or award based on
the arbitration agreement; or compromise.
3. The dispute is under the original and exclusive Form and Contents of Award: The award shall be made
jurisdiction of a court or quasijudicial body. in writing and shall be signed by the arbitral tribunal
(majority).
Conduct of Arbitral Proceedings: The parties shall be
treated with equally and each party shall be given a full The award shall state the reasons upon which is based,
opportunity of presenting his/her/its case. unless the parties have agreed that no reasons are to be
given or the award on agreed terms, consent award based
Place of Arbitration: The parties are free to agree on the on compromise.
place of arbitration. Failing such agreement, the place of
arbitration shall be in Metro Manila unless the arbitral The award shall state its date and the placed of arbitration.
tribunal, having regard to the circumstances of the case, The award shall be deemed to have made at that place.
including the convenience of the parties, shall decide on a
different place of arbitration. After the award is made, a copy signed by the arbitrators
shall be delivered to each party.
The arbitral tribunal may, unless otherwise agreed by the
parties, meet at any place it considers appropriate for The award of the arbitral tribunal need not be
consultation among its members, for hearing witnesses, acknowledged, sworn to under oath, or affirmed by the
experts or the parties, or for inspection of goods, other arbitral tribunal unless so required on writing by the parties.
property or documents.
Termination of Proceedings: The arbitration proceedings
Default of a Party are terminated by the final award or by an order of the
arbitral tribunal.
Unless otherwise agreed by the parties, if, without showing
sufficient causes: The arbitral tribunal shall issue an order for the termination
of the arbitration proceedings when:
1. the claimant fails to communicate his/her/its statement
of claim within the period of time agreed by the parties 1. The claimant withdraws his claim, unless the
or determined by the arbitral tribunal, the arbitral respondents objects thereto for the purpose of
tribunal shall terminate the proceedings; prosecuting his counterclaims in the same proceedings
of the arbitral tribunal recognizes a legitimate interest
2. the respondent fails to communicate his/her/its on his part in obtaining a final settlement of the dispute;
statement of defense, the arbitral tribunal shall continue
the proceedings without treating such failure in itself as 2. The parties agree on the termination of the
an admission of the claimant’s allegations; proceedings;
3. any party fails to appear at a hearing or to produce 3. The arbitral tribunal finds that the continuation of the
documentary evidence, the arbitral tribunal may proceedings has for any other reason before
continue the proceedings and make the award based unnecessary or impossible; or
on the evidence before it.
4. The required deposits are not paid in full.
Decision Making by the Arbitral Tribunal: Any decision of
the arbitral tribunal shall be made, unless otherwise agreed Except as otherwise provided in the arbitration agreement,
by the parties, by a majority of all its members. no motion for reconsideration correction and interpretation
of award or additional award shall be with the arbitral
Unless otherwise agreed upon by the parties, the arbitral tribunal.
tribunal shall render its written award within 30 days after
the closing of all hearings and/or submission of the parties’ The arbitral tribunal, by releasing its final award, loses
respective briefs or if the oral hearings shall have been jurisdiction over the dispute and the parties.
waived, within 30 days after the arbitral tribunal shall have
declared such proceedings in lieu of hearing closed. This
40
Grounds to Vacate an Arbitral Award: The arbitral award

may be questioned, vacated or set aside by the appropriate An arbitration agreement which forms part of the main
court in accordance with the Special ADR Rules only on the contract shall not be regarded as invalid or non-existent just
following grounds: because the main contract is invalid or did not come into
existence, since the arbitration agreement shall be treated
1. The arbitral award was procured by corruption, fraud or as a separate agreement independent of the main contract.
other undue means; A contrary ruling would suggest that a party's mere
repudiation of the main contract is sufficient to avoid
2. There was evident partially or corruption in the arbitral arbitration and that is exactly the situation that the
tribunal or any of its members; separability doctrine sought to avoid. Thus, we find that
even the party who has repudiated the main contract is not
3. The arbitral tribunal was guilty of misconduct or any prevented from enforcing its arbitration clause.
form of misbehavior that has materially prejudiced the
rights of any party such as refusing to postpone the c. Insular Savings Bank vs FEBATC32
hearing upon sufficient cause shown or to hear
evidence pertinent and material to the controversy; The RTC dismissed the Petition of Insular for lack of
jurisdiction on the ground that it should have been docketed
4. One or more of the arbitrators was disqualified to act as as a separate case.
such under this Chapter and willfully refrained from
disclosing such disqualification ; or The SC ruled that the RTC erred in doing so. As provided in
the PCHC Rules, the findings of facts of the decision or
5. The arbitral tribunal exceeded its powers, or so award rendered by the Arbitration Committee shall be final
imperfectly executed them, such that a complete, final and conclusive upon all the parties in said arbitration
and definite award upon the subject matter submitted to dispute. Under Article 2044 of the New Civil Code, the
it was not made. validity of any stipulation on the finality of the arbitrators’
award or decision is recognized. However, where the
This is an exclusive list. Any other ground raised to conditions described in Articles 2038, 2039 and 2040
question, vacate or set aside the arbitral award shall be applicable to both compromises and arbitrations are
disregarded by the court. obtaining, the arbitrators’ award may be annulled or
rescinded. Consequently, the decision of the Arbitration
Arbitration Agreements Committee is subject to judicial review.
a. Ormoc Sugarcane Planters vs CA30 The petitioner had several judicial remedies available at its
disposal after the Arbitration Committee denied its Motion
Except where a compulsory arbitration is provided by for Reconsideration:
statute, the first step toward the settlement of a difference
by arbitration is the entry by the parties into a valid a. It may petition the proper RTC to issue an order
agreement to arbitrate. An agreement to arbitrate is a vacating the award, invoking the grounds provided
contract, the relation of the parties is contractual, and the for under Section 24 of the Arbitration Law.
law of contract controls the rights and liabilities of the b. It may file a petition for review under Rule 43 with
parties. In an agreement for arbitration, the ordinary the Court of Appeals on questions of fact, of law, or
elements of a valid contract must appear, including an mixed questions of fact and law; or
agreement to arbitrate some specific thing, and an c. It may file a petition for certiorari under Rule 65 on
agreement to abide by the award, either in express the ground that the Arbitrator Committee acted
language or by implication. without or in excess of its jurisdiction or with grave
abuse of discretion amounting to lack or excess of
b. Cargill Phils. vs San Fernando Regala Trading Inc. 31 jurisdiction.
A contract is required for arbitration to take place and to be Since this case involves acts or omissions of a quasi-
binding. Submission to arbitration is a contract and a clause judicial agency, the petition should be filed in and
in a contract providing that all matters in dispute between cognizable only by the Court of Appeals.
the parties shall be referred to arbitration is a contract. The
provision to submit to arbitration any dispute arising In this instance, petitioner did not avail of any of the
therefrom and the relationship of the parties is part of the abovementioned remedies available. Instead it filed a
contract and is itself a contract. petition for review with the RTC where Civil Case No. 92-
145 is pending pursuant to Section 13 of the PCHC Rules
30 596 SCRA 630 (2009)
31 641 SCRA 21 (2011) 32 492 SCRA 146 (2006)
41
to sustain its action. Clearly, it erred in the procedure it interpretation of laws and jurisprudence which is
chose for judicial review of the arbitral award. necessarily a judicial function.
Jurisdiction over the subject matter is conferred by law and We agree that the case should not be brought under
not by the consent or acquiescence of any or all of the the ambit of the Arbitration Law, but for a different reason.
parties or by erroneous belief of the court that it exists. The question of validity of the contract containing the
agreement to submit to arbitration will affect the applicability
In the instant case, petitioner and respondent have agreed of the arbitration clause itself. A party cannot rely on the
that the PCHC Rules would govern in case of controversy. contract and claim rights or obligations under it and at the
However, since the PCHC Rules came about only as a same time impugn its existence or validity. Indeed, litigants
result of an agreement between and among member banks are enjoined from taking inconsistent positions. As
of PCHC and not by law, it cannot confer jurisdiction to the previously discussed, the complaint should have been filed
RTC. Thus, the portion of the PCHC Rules granting before the regular courts as it involved issues which are
jurisdiction to the RTC to review arbitral awards, only on judicial in nature.
questions of law, cannot be given effect. b. Gonzales vs Climax Mining (2007)34
Consequently, the proper recourse of petitioner from the The doctrine of separability, or severability as other writers
denial of its motion for reconsideration by the Arbitration call it, enunciates that an arbitration agreement is
Committee is to file either a motion to vacate the arbitral independent of the main contract. The arbitration
award with the RTC, a petition for review with the Court of agreement is to be treated as a separate agreement and
Appeals under Rule 43 or a petition for certiorari under Rule the arbitration agreement does not automatically terminate
65. when the contract of which it is part comes to an end.
The Supreme Court encourages alternative dispute The separability of the arbitration agreement is especially
resolution methods or ADRs – like arbitration, mediation, significant to the determination of whether the invalidity of
negotiation and conciliation. By enabling parties to resolve the main contract also nullifies the arbitration clause.
their disputes amicably, they provide solutions that are less
time-consuming, less tedious, less confrontational, and Indeed, the doctrine denotes that the invalidity of the main
more productive of goodwill and lasting relationships. It contract, also referred to as the container contract,
must be borne in mind that arbitration proceedings are does not affect the validity of the arbitration
mainly governed by the Arbitration Law and suppletorily by agreement. Irrespective of the fact that the main contract is
the Rules of Court. invalid, the arbitration clause or agreement still remains
valid and enforceable.
Doctrine of Separability
The separability of the arbitration clause is confirmed in Art.
Also known as the doctrine of severability, it states that an 16(1) of the UNCITRAL Model Law and Art. 21(2) of the
arbitration agreement is independent of the main contract UNCITRAL Arbitration Rules. xxx
even if it is contained in an arbitration clause. Such is to be
treated as a separate agreement. Even if the validity of the This brings us back to G.R. No. 161957 (the 2005
main contract is challenged, the arbitration agreement or case). The adjudication of the petition in G.R. No. 167994
clause remains valid and enforceable. effectively modifies part of the Decision dated 28 February
2005 in G.R. No. 161957. Hence, we now hold that the
a. Gonzales vs Climax Mining (2005)33 validity of the contract containing the agreement to submit
to arbitration does not affect the applicability of the
Arbitration before the Panel of Arbitrators is proper only
arbitration clause itself. A contrary ruling would suggest that
when there is a disagreement between the parties as to
a party’s mere repudiation of the main contract is sufficient
some provisions of the contract between them, which
to avoid arbitration. That is exactly the situation that the
needs the interpretation and the application of that
separability doctrine, as well as jurisprudence applying it,
particular knowledge and expertise possessed by members
seeks to avoid.
of that Panel. It is not proper when one of the parties
repudiates the existence or validity of such contract or
We add that when it was declared in G.R. No. 161957 that
agreement on the ground of fraud or oppression as in this
the case should not be brought for arbitration, it should be
case. The validity of the contract cannot be subject of
clarified that the case referred to is the case actually filed by
arbitration proceedings. Allegations of fraud and duress in
Gonzales before the DENR Panel of Arbitrators, which was
the execution of a contract are matters within the
for the nullification of the main contract on the ground of
jurisdiction of the ordinary courts of law. These questions
fraud, as it had already been determined that the case
are legal in nature and require the application and
33 452 SCRA 607 (2005) 34 512 SCRA 148 (2007)

42
should have been brought before the regular courts In a catena of cases, we have ruled that "the essence of
involving as it did judicial issues. due process is the opportunity to be heard. What the law
prohibits is not the absence of previous notice but the
Due Process in Arbitral Proceedings absolute absence thereof and the lack of opportunity to be
heard."31
Equitable PCI Banking Corp vs RCBC35
We also explained in Lastimoso v. Asayo that "due process
The principles of administrative due process apply to in an administrative context does not require trial type
arbitral proceedings, that is, the parties must be given proceedings similar to those in courts of justice. Where an
ample opportunity to be heard. opportunity to be heard either through oral arguments or
through pleadings is accorded, there is no denial of
Issue: Whether the trial court acted contrary to law and procedural due process."
judicial authority in refusing to vacate and in confirming the
arbitral award, notwithstanding that the arbitrators had
Were petitioners afforded the opportunity to refute the
plainly and admittedly failed to accord petitioners’ due
summaries and pieces of evidence submitted by RCBC
process by denying them a hearing on the basic factual
which became the bases of the experts’ opinion? The
matter upon which their liability is predicated.
answer is in the affirmative.
In this case, the SC ruled that the petitioners were not
denied due process. Judicial Review and Court Intervention
Sec. 19-31, RA 876

SC: Petitioners impute on RCBC the act of creating
summaries of the accounts of Bankard which "in turn were
Section 19. Time for rendering award.- Unless the parties
used by its experts to conclude that Bankard improperly
shall have stipulated by written agreement the time within
recorded its receivables and committed material deviations
which the arbitrators must render their award, the written
from GAAP requirements."
award of the arbitrators shall be rendered within thirty days
after the closing of the hearings or if the oral hearings shall
Later, petitioners would assert that "the arbitrators’ partial have been waived, within thirty days after the arbitrators
award admitted and used the Summaries as evidence, and shall have declared such proceedings in lieu of hearing
held on the basis of the ‘information’ contained in them that closed. This period may be extended by mutual consent of
petitioners were in breach of their warranty in GAAP the parties.
compliance."
Section 20. Form and contents of award.- The award
To petitioners, the ICC-ICA’s use of such summaries but must be made in writing and signed and acknowledged by
without presenting the source documents violates their right a majority of the arbitrators, if more than one; and by the
to due process. Pressing the point, petitioners had moved, sole arbitrator, if there is only one. Each party shall be
but to no avail, for the exclusion of the said summaries. furnished with a copy of the award. The arbitrators in their
Petitioners allege that they had reserved the right to cross- award may grant any remedy or relief which they deem just
examine the witnesses of RCBC who testified on the and equitable and within the scope of the agreement of the
summaries, pending the resolution of their motion to parties, which shall include, but not be limited to, the
exclude. But, according to them, they were effectively specific performance of a contract.
denied the right to cross-examine RCBC’s witnesses when
the ICC-ICA admitted the summaries of RCBC as evidence. In the event that the parties to an arbitration have, during
the course of such arbitration, settled their dispute, they
Petitioners’ position is bereft of merit. may request of the arbitrators that such settlement be
embodied in an award which shall be signed by the
Anent the use but non-presentation of the source arbitrators. No arbitrator shall act as a mediator in any
documents as the jumping board for a claim of denial of proceeding in which he is acting as arbitrator; and all
due process, petitioners cite Compania Maritima v. Allied negotiations towards settlement of the dispute must take
Free Worker’s Union. It may be stated, however, that such place without the presence of the arbitrators.
case is not on all fours with the instant case and, therefore,
cannot be applied here considering that it does not involve The arbitrators shall have the power to decide only those
an administrative body exercising quasi-judicial function but matters which have been submitted to them. The terms of
rather the regular court. the award shall be confined to such disputes.
The arbitrators shall have the power to assess in their

award the expenses of any party against another party,
35 574 SCRA 858 (2008)
43
when such assessment shall be deemed necessary. order.
Section 21. Fees of arbitration. - The fees of the Where the court vacates an award, costs, not exceeding
arbitrators shall be fifty pesos per day unless the parties fifty pesos and disbursements may be awarded to the
agree otherwise in writing prior to the arbitration. prevailing party and the payment thereof may be enforced
in like manner as the payment of costs upon the motion in
Section 22. Arbitration deemed a special proceeding. - an action.
Arbitration under a contract or submission shall be deemed
a special proceeding, of which the court specified in the Section 25. Grounds for modifying or correcting award.
contract or submission, or if none be specified, the Court of - In any one of the following cases, the court must make an
First Instance for the province or city in which one of the order modifying or correcting the award, upon the
parties resides or is doing business, or in which the application of any party to the controversy which was
arbitration was held, shall have jurisdiction. Any application arbitrated:
to the court, or a judge thereof, hereunder shall be made in
manner provided for the making and hearing of motions, (a) Where there was an evident miscalculation of
except as otherwise herein expressly provided. figures, or an evident mistake in the description of any
person, thing or property referred to in the award; or
Section 23. Confirmation of award. - At any time within (b) Where the arbitrators have awarded upon a matter
one month after the award is made, any party to the not submitted to them, not affecting the merits of the
controversy which was arbitrated may apply to the court decision upon the matter submitted; or
having jurisdiction, as provided in section twenty-eight, for (c) Where the award is imperfect in a matter of form
an order confirming the award; and thereupon the court not affecting the merits of the controversy, and if it had
must grant such order unless the award is vacated, been a commissioner's report, the defect could have
modified or corrected, as prescribed herein. Notice of such been amended or disregarded by the court.
motion must be served upon the adverse party or his The order may modify and correct the award so as to effect
attorney as prescribed by law for the service of such notice the intent thereof and promote justice between the parties.
upon an attorney in action in the same court.
Section 26. Motion to vacate, modify or correct award:
Section 24. Grounds for vacating award. - In any one of when made. - Notice of a motion to vacate, modify or
the following cases, the court must make an order vacating correct the award must be served upon the adverse party or
the award upon the petition of any party to the controversy his counsel within thirty days after award is filed or
when such party proves affirmatively that in the arbitration delivered, as prescribed by law for the service upon an
proceedings: attorney in an action.
(a) The award was procured by corruption, fraud, or Section 27. Judgment. - Upon the granting of an order
other undue means; or confirming, modifying or correcting an award, judgment may
(b) That there was evident partiality or corruption in the be entered in conformity therewith in the court wherein said
arbitrators or any of them; or application was filed. Costs of the application and the
(c) That the arbitrators were guilty of misconduct in proceedings subsequent thereto may be awarded by the
refusing to postpone the hearing upon sufficient cause court in its discretion. If awarded, the amount thereof must
shown, or in refusing to hear evidence pertinent and be included in the judgment.
material to the controversy; that one or more of the
arbitrators was disqualified to act as such under section Section 28. Papers to accompany motion to confirm,
nine hereof, and wilfully refrained from disclosing such modify, correct, or vacate award. - The party moving for
disqualifications or of any other misbehavior by which the an order confirming, modifying, correcting, or vacating an
rights of any party have been materially prejudiced; or award, shall at the time that such motion is filed with the
(d) That the arbitrators exceeded their powers, or so court for the entry of judgment thereon also file the following
imperfectly executed them, that a mutual, final and papers with the Clerk of Court;
definite award upon the subject matter submitted to them
was not made (a) The submission, or contract to arbitrate; the
Where an award is vacated, the court, in its discretion, may appointment of the arbitrator or arbitrators; and each
direct a new hearing either before the same arbitrators or written extension of the time, if any, within which to make
before a new arbitrator or arbitrators to be chosen in the the award.
manner provided in the submission or contract for the (b) A verified of the award.
selection of the original arbitrator or arbitrators, and any (c) Each notice, affidavit, or other paper used upon the
provision limiting the time in which the arbitrators may make application to confirm, modify, correct or vacate such
a decision shall be deemed applicable to the new award, and a copy of each of the court upon such
arbitration and to commence from the date of the court's application.
44
The judgment shall be docketed as if it were rendered in an  Was the broadcast of WINS WEEKLY by the
action. claimant duly authorized by ABS-CBN
The judgment so entered shall have the same force and  Did such broadcast constitute a material breach of
effect in all respects, as, and be subject to all the provisions the agreement that is a ground for termination of
relating to, a judgment in an action; and it may be enforced the agreement in accordance with Section 13 (a)
as if it had been rendered in the court in which it is entered. thereof?
Section 29. Appeals. - An appeal may be taken from an  If so, was the breach seasonably cured under the
order made in a proceeding under this Act, or from a same contractual provision of Section 13 (a)?
judgment entered upon an award through certiorari
proceedings, but such appeals shall be limited to questions  Which party is entitled to the payment of damages
of law. The proceedings upon such an appeal, including the they claim and to the other reliefs prayed for?
judgment thereon shall be governed by the Rules of Court
in so far as they are applicable. The arbitrator ruled in favor of WINS.
Section 30. Death of party. - Where a party dies after He held that petitioner gave its approval to respondent for
making a submission or a contract to arbitrate as the airing of WINS WEEKLY as shown by a series of written
prescribed in this Act, the proceedings may be begun or exchanges between the parties.
continued upon the application of, or notice to, his executor
or administrator, or temporary administrator of his estate. In He also ruled that, had there really been a material breach
any such case, the court may issue an order extending the of the agreement, petitioner should have terminated the
time within which notice of a motion to confirm, vacate, same instead of sending a mere notice to terminate said
modify or correct an award must be served. Upon agreement.
confirming an award, where a party has died since it was
filed or delivered, the court must enter judgment in the The arbitrator found that petitioner threatened to terminate
name of the original party; and the proceedings thereupon the agreement due to its desire to compel respondent to re-
are the same as where a party dies after a verdict. negotiate the terms thereof for higher fees.
Section 31. Repealing clause. - The provisions of He further stated that even if respondent committed a
chapters one and two, Title XIV, of the Civil Code shall breach of the agreement, the same was seasonably cured.
remain in force. All other laws and parts of laws inconsistent He then allowed respondent to recover temperate
with this Act are hereby repealed. If any provision of this Act damages, attorney's fees and one-half of the amount it paid
shall be held invalid the remainder that shall not be affected as arbitrator's fee.
thereby.
ABS-CBN filed in the CA a petition for review under Rule 43
Cases36 of the Rules of Court or, in the alternative, a petition for
certiorari under Rule 65 of the same Rules, with application
ABS-CBN v. World Interactive Network Systems (WINS) for temporary restraining order and writ of preliminary
injunction.
ABS-CBN entered into a licensing agreement with World
Interactive Network Systems (WINS) granting WINS the WINS, on the other hand, filed a petition for confirmation of
exclusive license to distribute and sublicense the arbitral award before the Regional Trial Court (RTC) of
distribution of the television service known as The Filipino Quezon City.
Channel (TFC) in Japan.
The CA dismissed ABS-CBNs petition for lack of
However, dispute arose when WINS allegedly aired nine jurisdiction.
episodes of WINS WEEKLY, a weekly 35-minute
community news program for Filipinos in Japan, into the The CA ruled that TOR itself provided that the arbitrator's
TFC programming from March to May 2002 without the decision shall be final and unappealable and that no motion
knowledge and permission of ABS-CBN. for reconsideration shall be filed, then the petition for review
must fail.
Thereafter, WINS filed an arbitration suit pursuant to the
arbitration clause of its agreement with ABS-CBN both It also ruled that it is the RTC which has jurisdiction over
parties appointed Professor Alfredo F. Tadiar to act as sole questions relating to arbitration. It held that the only
arbitrator. The following issues were raised : instance it can exercise jurisdiction over an arbitral award is
through an appeal from the trial court's decision confirming,
36 Digests by Group 6 – Rica Dino, et al.
45
vacating or modifying the arbitral award. J.G. Realty of its intention to develop the mining claims.
ISSUE: WON an aggrieved party in a voluntary arbitration However, on February 9, 1999, J.G. Realty sent a letter to
dispute may avail of, directly in the CA, a petition for review the President of Benguet Corp informing the latter that it
under Rule 43 or a petition for certiorari under Rule 65 of was terminating the RAWOP. Among the grounds raised
the Rules of Court, instead of filing a petition to vacate the was Benguet Corp’s failed to perform the obligations set
award in the RTC when the grounds invoked are other than forth in the RAWOP and non-payment of the royalties
those for a petition to vacate an arbitral award enumerated thereon as provided in the RAWOP
under RA 876.
In response, Benguets Corp, wrote J.G. Realty a letter
RULING: YES. A petition for review under Rule 43 or a dated March 8, 1999, therein alleging that Benguet
petition for certiorari under Rule 65 may be availed of in the complied with its obligations under the RAWOP by investing
CA. Which one would depend on the grounds relied upon PhP 42.4 million to rehabilitate the mines
by petitioner.
Benguet then argued that the royalties due to J.G. Realty
Furthermore in case, the court the judicial remedies an were in fact in its office and ready to be picked up at any
aggrieved party to an arbitral award may undertake: time. It appeared that, previously, the practice by J.G.
Realty was to pick-up checks from Benguet representing
(1) a petition in the proper RTC to issue an order to such royalties. However, starting August 1994, J.G. Realty
vacate the award on the grounds provided for in Section allegedly refused to collect such checks from Benguet.
24 of RA 876; Thus, Benguet posited that there was no valid ground for
(2) a petition for review in the CA under Rule 43 of the the termination of the RAWOP. It also reminded J.G. Realty
Rules of Court on questions of fact, of law, or mixed that it should submit the disagreement to arbitration rather
questions of fact and law; and than unilaterally terminating the RAWOP.
(3) a petition for certiorari under Rule 65 of the Rules of
Court should the arbitrator have acted without or in On June 7, 2000, J.G. Realty filed a Petition for Declaration
excess of his jurisdiction or with grave abuse of of Nullity/Cancellation of the RAWOP with DENR – Mines
discretion amounting to lack or excess of jurisdiction. Adjudication Board of Legaspi City.
The Panel of Arbitrators of the MAB declared the

Nevertheless, although ABS-CBN’s position on the judicial cancellation of the Royalty Agreement with Option to
remedies available to it was correct, the SC sustained the Purchase (RAWOP) between Benguet Corporation and
dismissal the petitioner because the petitioner availed of J.G. Realty.
the remedies in the alternative.
Benguet Corp appealed the decision with Mines
ABS-CBN cleverly crafted its assignment of errors in such a Adjudication Board but was denied thus the corporation
way as to straddle both judicial remedies, that is, by filed a petition with the Supreme Court.
alleging serious errors of fact and law (in which case a
petition for review under Rule 43 would be proper) and ISSUE: Should the controversy have first been submitted to
grave abuse of discretion (because of which a petition for arbitration before the POA took cognizance of the case?
certiorari under Rule 65 would be permissible).
CONTENTIONS
BENGUET CORPORATION v. DENR MINES
ADJUDICATION BOARD BENGUET CORP: There is a stipulation in the RAWOP that
any disputes, differences or disagreements that cannot be
Benguet Corporation entered into a Royalty Agreement with amicably settled by the parties, thus shall, upon notice of
Option to Purchase (RAWOP) with J.G. Realty who is the one party to the other, be referred to a Board of Arbitrators
owner of four mining claims located in a barangay in consisting of three (3) members.
Camarines Norte.
Thus, POA should have first referred the case to voluntary
Under the agreement, Benguet was to determine whether arbitration before taking cognizance of the case.
the mining claims were worth developing with reasonable
probability of profitable production, furnish J.G. Realty with JG Realty: It argued that RA 7942 or the Philippine Mining
the results of the studies and if the mining claims were Act of 1995 is a special law which should prevail over the
placed in commercial production by Benguet, J.G. Realty stipulations of the parties and over a general law, such as
should be entitled to a royalty. RA 876. It also argued that the POA cannot be considered
as a court under the contemplation of RA 876 and that
On August 9, 1989, Benguet Corp, issued a letter informing jurisprudence saying that there must be prior resort to
46
arbitration before filing a case with the courts is inapplicable award, shall, at the time that such motion is filled with the
to the instant case as the POA is itself already engaged in court for the entry of judgment thereon, also file the original
arbitration. or verified copy of the award, the arbitration or settlement
agreement, and such papers as may be required by the
RULING: The court sided with Benguet Corp. Special ADR Rules.
Yes, the matter should have been submitted to arbitration Article 5.37. Judgment. Upon the grant of an order
before the POA took cognizance of the case. confirming, modifying or correcting an award, judgment may
be entered in conformity therewith in the court where said
Availment of voluntary arbitration before resort is made to application is filed. Costs of the application and the
the courts or quasi-judicial agencies of the government is a proceedings subsequent thereto may be awarded by the
valid contractual stipulation that must be adhered to by the court In its discretion. If awarded, the amount thereof must
parties. be included in the judgment. Judgment will be enforced like
court judgments.
In the event a case that should properly be the subject of
voluntary arbitration is erroneously filed with the courts or Article 5.38. Appeal. A decision of the court confirming,
quasi-judicial agencies, on motion of the defendant, the vacating, setting aside, modifying or correcting an arbitral
court or quasi-judicial agency shall determine whether such award may be appealed to the Court of Appeals in
contractual provision for arbitration is sufficient and accordance with Special ADR Rules.
effective. If in affirmative, the court or quasi-judicial agency
shall then order the enforcement of said provision The losing party who appeals from the judgment of the
Court confirming an arbitral award shall be required by the
J.G. Realtys contention, that prior resort to arbitration is Court of Appeals to post a counter-bond executed in favor
ineffective in the instant case because the POAs mandate of the prevailing party equal to the amount of the award in
is to arbitrate disputes involving mineral agreements, is accordance with the Special ADR Rules.
misplaced.
Article 5.39. Venue and Jurisdiction. Proceedings for
A distinction must be made between voluntary and recognition and enforcement of an arbitration agreement or
compulsory arbitration. for vacation or setting aside of an arbitral award, and any
application with a court for arbitration assistance and
Compulsory arbitration has been defined both as the supervision, except appeal, shall be deemed as special
process of settlement of labor disputes by a government proceedings and shall be filed with the court
agency which has the authority to investigate and to make
an award while (a) where the arbitration proceedings are conducted;
A voluntary arbitration is not part of the governmental unit (b) where the asset to be attached or levied upon, or the act
or labor departments personnel, a voluntary arbitrator to be enjoined is located;
renders arbitration services provided for under labor laws.
(c) where any of the parties to the dispute resides or has its
There is a clear distinction between compulsory and place of business; or
voluntary arbitration. The arbitration provided by the POA is
compulsory, while the nature of the arbitration provision in (d) in the National Capital Judicial Region at the option of
the RAWOP is voluntary, not involving any government the applicant.
agency.
Article 5.40. Notice of Proceedings to Parties. In a
In sum, on the issue of whether POA should have referred special proceeding for recognition and enforcement of an
the case to voluntary arbitration, we find that, indeed, POA arbitral award, the court shall send notice to the parties at
has no jurisdiction over the dispute which is governed by their address of record in the arbitration, or if any party
RA 876, the arbitration law. cannot be served notice at such address, at such party’s
last known address. The notice shall be sent in at least
(Also read Parlade pp. 502-593) fifteen (15) days before the date set for the initial hearing of
the application.
Recognition & Enforcement of Domestic Awards
Article 5.41. Legal Representation in Domestic
Rule 6, Arts. 5.36-5.46, IRR Arbitration. (a) In domestic arbitration conducted in the
Philippines, a party may be represented by any person of
Article 5.36. Confirmation of Award. The party moving for his/her/its choice: Provided, that such representative,
an order confirming, modifying, correcting, or vacating an unless admitted to the practice of law in the Philippines,
47
shall not be authorized to appear as counsel in any additional respondents shall be deemed to have consented
Philippine Court, or any other quasi-judicial body whether or to their inclusion in the arbitration unless, not later than the
such appearance is in relation to the arbitration in which date of communicating their answer to the request for
he/she appears. arbitration, wither by motion or a special defense in their
answer, they object, on jurisdictional grounds, to their
(b) No arbitrator shall act as mediator in any proceeding in inclusion.
which he/she is acting as arbitrator and all negotiations
towards settlement of the dispute must take without the Article 5.45. Consolidation of Proceedings and
presence of the arbitrators. Concurrent Hearings. The parties may agree that-
Article 5.42. Confidentially of Arbitration Proceedings. (a) the arbitration proceedings shall be consolidated with
The arbitration proceedings, including the records, other arbitration proceedings; or
evidence and the arbitral award and other confidential
information, shall be considered privileged and confidential (b) that concurrent hearings shall be held, on such terms as
and shall not be published except – may be agreed.
(1) with consent of the parties; or Unless the parties agree to confer such power on the
arbitral tribunal, the tribunal has no power to order
(2) for the limited purpose of disclosing to the court relevant consolidation of arbitration proceedings or concurrent
documents in cases where resort to the court is allowed hearings.
herein:
Article 5.46. Fees and Costs. (a) The fees of the
Provided, however, that the court in which the action or the arbitrators shall be agreed upon by the parties and the
appeal is pending may issue a protective order to prevent arbitrator/s in writing prior to the arbitration.
or prohibit disclosure of documents or information
containing secret processes, developments, research and In default of agreement of the parties as to the amount and
other information where it is shown that the applicant shall manner of payment of arbitrator’s fees, the arbitrator’s fees
be materially prejudiced by an authorized disclosure shall be determined in accordance with the applicable
thereof. internal rules of the regular arbitration institution under
whose rules he arbitration is conducted; or in ad hoc
Article 5.43. Death of a Party. Where a party dies after arbitration, the Schedule of Fees approved by the IBP, If
making a submission or a contact to arbitrate as prescribed any, or in default thereof, the Schedule of Fees that may be
in these Rules, the proceeding may be begun or continued approved by the OADR.
upon the application of, or notice to, his/her executor or
administrator, or to temporary administrator of his/her (b) In addition to arbitrator’s fees, the parties shall be
estate. In any such case, the court may issue an order responsible for the payment of the administrative fees of an
extending the time within which notice of a motion to arbitration institution administering an arbitration and cost of
recognize or vacate an award must be served. Upon arbitration. The latter shall include, as appropriate, the fees
recognizing an award, where a party has died since it was of an expert appointed by the arbitral tribunal, the expenses
filed or delivered, the court must enter judgment in the for conducting a site inspection, the use of a room where
name of the original party; and the proceedings thereupon arbitration proceedings shall be or have been conducted,
are the same as where a party dies after a verdict. the expenses for the recording and transcription of the
arbitration proceedings.
Article 5.44. Multi-Party Arbitration. (a)When a single
arbitration involves more than two parties, these Rules, to (c) The arbitral tribunal shall fix the costs of arbitration in its
the extent possible, shall be used subject to such award. The term "costs" include only:
modifications consistent with Articles 5.17 (Equal Treatment
of Parties) and 5.18 (Determination of Rules of Procedure) (i) The fees of the arbitral tribunal to be stated separately as
as the arbitral tribunal shall deem appropriate to address to each arbitrator and to be fixed by the arbitral tribunal
possible complexities of a multi-party arbitration. (b) When itself in accordance with this Article;
a claimant includes persons who are not parties to or
otherwise bound by the arbitration agreement , directly or (ii) The travel and other expenses incurred by the
by reference, between him/her and the respondent as arbitrators;
additional claimants or the additional respondents unless
not later than the date communicating his/her answer to the (iii) The costs of expert advice and of other assistance
request for arbitration, either by motion or by a special required by the arbitral tribunal, such as site inspection and
defense in his answer, he objects, on jurisdictional grounds, expenses for the recording and transcription of the
to the inclusion of such additional respondents. The arbitration proceedings;
48
(iv) The travel and other expenses of witnesses to the on agreed terms, it shall fix the costs of arbitration referred
extent such expenses are provided by the arbitral tribunal; to in paragraph (a) of this Article in the context of that order
or award.
(v) The costs for legal representation and assistance of the
successful party if such costs were claimed during the (e) Except as otherwise agreed by the parties, no additional
arbitral proceedings, and only to the extent that the arbitral fees may be charged by the arbitral tribunal for
tribunal determines that the amount of such costs is interpretation or correction or completion of its award under
reasonable; these Rules.
(vi) Any fees and expenses of the appointing authority. (f) The arbitral tribunal, on its establishment, may request
each party to deposit an equal amount as an advance for
(d) The fees of the arbitral tribunal shall be reasonable in the costs referred to in paragraphs (i), (ii) and (iii) of
amount, taking into account the amount in dispute, the paragraph (c) of this Article.
complexity of the subject matter, the time spent by the
arbitrators and any other relevant circumstances of the During the course of the arbitral proceedings, the arbitral
case. tribunal may request supplementary deposits from the
parties.
If an appointing authority has been agreed upon by the
parties and if such appointing authority has issued a If an appointing authority has been agreed upon by the
schedule of fees for arbitrators in domestic cases which it parties, and when a party so requests and the appointing
administers, the arbitral tribunal, in fixing its fees shall take authority consents to perform the function, the arbitral
that schedule of fees into account to the extent that it tribunal shall fix the amounts of any deposits or
considers appropriate in the circumstances of the case. supplementary deposits only after consultation with the
appointing authority which may make any comments to the
If such appointing authority has not issued a schedule of arbitral tribunal which it deems appropriate concerning the
fees for arbitrators in international cases, any party may, at amount of such deposits and supplementary deposits.
any time request the appointing authority to furnish a
statement setting forth the basis for establishing fees which If the required deposits are not paid in full within thirty (30)
is customarily followed in international cases in which the days after receipt of the request, the arbitral tribunal shall
authority appoints arbitrators. If the appointing authority so inform the parties in order that one of them may make
consents to provide such a statement, the arbitral tribunal, the required payment within such a period or reasonable
in fixing its fees shall take such information into account to extension thereof as may be determined by the arbitral
the extent that it considers appropriate in the circumstances tribunal. If such payment is not made, the arbitral tribunal
of the case. may order the termination of the arbitral proceedings.
In cases referred to in paragraph (d) of this Article, when a After the award has been made, the arbitral tribunal shall
party so requests and the appointing authority consents to render an accounting to the parties of the deposits received
perform the function, the arbitral tribunal shall fix its fees and return any unexpended balance to the parties
only after consultation with the appointing authority which
may make any comment it deems appropriate to the arbitral Case: Freuhauf vs TEAMPC37
tribunal concerning the fees.
(On the extent of permissible judicial review over
(e) Except as provided in the next paragraph, the costs of arbitral awards)
arbitration shall, in principle, be borne by the unsuccessful
party. However, the arbitral tribunal may apportion each of The Parties
such costs between the parties if it determines that
apportionment is reasonable, taking into account the Petitioner: Fruehauf Electronics Philippines Corporation
circumstances of the case. (FEPC) – Lessor
With respect to the costs of legal representation and Respondent: Technology Electronics Assembly and
assistance referred to in paragraph (c) (iii) of this Article, the Management Pacific Corporation (TEAMPC) – Lessee
arbitral tribunal, taking into account the circumstances of
the case, shall be free to determine which party shall bear The Story
such costs or may apportion such costs between the
parties if it determines that appointment is reasonable. 1978: Lease Agreement between FEPC and Signetics
Corp, which was good for 25 years (until May 2003)
When the arbitral tribunal issues an order for the
termination of the arbitral proceedings or makes an award 37 GR No. 204197, Nov. 23, 2016
49
1986: TEAMPC bought Signetics 6. Did TEAMPC have the obligation to return the
premises to FEPC as a "complete, rentable, and
1987: FEPC filed an unlawful detainer case vs TEAMPC. fully facilitized electronic plant”?
But they entered into a MOA in 1988. TEAMPC promised to
pay FEPC Php14.7M of unpaid rent The arbitral tribunal awarded Fruehauf:
1988: Lease Agreement between FEPC and TEAMPC  Php 8.2 million as unpaid rent from June 9, 2003
until March 5, 2005; Rationale: Despite the
 15 years (until June 2003); renewable expiration of the lease in 2003, TEAMPC remained
liable for rentals because it failed to return the
 This contract contained an AA. property to FEPC.
 It also authorized TEAMPC to sublease the  Php 46.8 million as damages. Rationale: TEAMPC
property, which it did, after notice to FEPC, in 1996, was negligent with the maintenance of the
to Capitol Publishing. equipment in the premises, thus, liable for repairs.
2003: TEAMPC said they won't renew lease anymore. But RTC (2009)
Capitol only vacated the premises in March 2005 entered
into a MOA in 1988. FEPC filed a petition to partially vacate or modify the
arbitral award.
RTC (2004)
Ground: The tribunal failed to properly appreciate the facts
Fruehauf instituted a special proceeding "Submission of an and the terms of the lease contract.
Existing Controversy for Arbitration”, alleging that:
Decision: RTC found insufficient legal grounds under
a. when the lease expired, property suffered from Sections 24 and 25 of the Arbitration Law to modify or
damage that required extensive renovation; vacate the award. It denied the petition and confirmed the
arbitral award.
b. TEAMPC failed to turn over the premises and
pay rent; and TEAM filed a Notice of Appeal. RTC refused to give due
course an ordinary appeal under Rule 41 is not the proper
c. TEAMPC did not restore the property to its mode of appeal against an order confirming an arbitral
original condition as required in the contract. award. (Section 29)
The RTC granted the petition and directed the parties to Appeal to CA
comply with the arbitration clause of the contract.
After their MR was denied by the RTC, TEAMPC filed a
Arbitral Tribunal was formed: 2 retired CA justices, one petition for certiorari before the CA arguing that the RTC
lawyer. gravely abused its discretion in: (1) denying due course to
its notice of appeal; and (2) denying the motion to partially
Arbitration Proceeding (2008): Issues vacate and/or modify the arbitral award.
1. Did TEAMPC comply with its obligation to return The CA initially denied the petition.
the leased premises to FEPC in 2003? In what
condition? But upon a MR in 2012, the CA amended its Decision and
ruled in favor of TEAMPC.
2. Is TEAMPC liable for payment of rentals after
2003? How much and for what period? It also revisited the merits of the arbitral award and found
several errors in law and in fact, holding that TEAMPC was
3. Is TEAM liable real estate taxes, insurance, and not obliged to pay rent because it was Capitol that stayed
other expenses after 2003? and that FEPC was not entitled to repairs on the buildings.
4. Who is liable for payment of damages and Arbitral award—reversed and set aside.
attorney's fees and how much?
From CA to SC
5. Who is liable for the expenses of arbitration,
including arbitration fees? Hence, FEPC filed a petition for certiorari under Rule 65
50
before the SC. arbitrate their future disputes.
Ultimately, the SC granted the petition, ruling in favor of But is this absolute? No. See (B).
FEPC. The CA's Decision was set aside and the RTC's
Decision of confirmation was reinstated. A. Is an arbitral tribunal a quasi-judicial body?
SC: The CA breached the bounds of its jurisdiction when it No. A quasi-judicial body or agency is a creature of law. An
reviewed the substance of the arbitral award outside of the arbitral tribunal is a creature of contract.
permitted grounds under the Arbitration Law.
(Significance: Quasi-judicial bodies are co-equal with the
Main Takeaways RTCs in terms of rank and stature. Thus, appeals go to the
CA via petition for certiorari under Rule 65)
A. Is an arbitral tribunal a quasi-judicial body?
B. What are the remedies or the modes of appeal
B. What are the remedies or the modes of appeal against an unfavorable arbitral award?
against an unfavorable arbitral award?
Take note of the following rules:
C. What are the available remedies from an RTC
decision confirming, vacating, modifying, or 1. There can be no appeal (Rule 43) or petition for
correcting an arbitral award? certiorari (Rule 65) questioning the merits of the award.
Quick review: Important concepts in Arbitration Why? (1) No statutory basis for an appeal, (2) Arbitrators
are not quasi-judicial bodies, and (3) Section 41 of the
Arbitration is consensual and contractual in character. It is a Special ADR Rules expressly prohibit it.
purely private mode of dispute resolution. The proceedings,
testimonies, and other records are confidential. 2. Remedy: petition to vacate or set aside an arbitral
award under RA 876
This character of arbitration also gives the parties
substantial autonomy over the proceedings. They may The RTC can only vacate or set aside the decision of an
stipulate any procedure and choose their arbitral tribunal on the 4 grounds under RA 876, or if the
arbitrators/tribunal. They can tailor-fit the composition of the arbitrator was disqualified and wilfully refrained from
tribunal to the nature of the case. (e.g. Chung Fu case, disclosing such disqualification to the parties.
where the arbitrator appointed was an engineer on account
of the nature of the case, which involved a construction Note: The grounds to vacate an arbitral award do not
dispute) pertain to the correctness of an award, but rather speak of
the conduct and qualifications of the arbitrators.
And so special dispute can be resolved by experts on the
subject. RA 876, Section 24. Grounds for vacating award. xxx
But because arbitrators need not be lawyers, they cannot (a) The award was procured by corruption, fraud, or other
be expected to have the same level of legal mastery as that undue means; or
of a judge.
(b) That there was evident partiality or corruption in the
Hence, there is greater risk that an arbitrator may misapply arbitrators or any of them; or
law or misappreciate facts, which could then lead to an
erroneous decision. (c) That the arbitrators were guilty of misconduct in refusing
to postpone the hearing upon sufficient cause shown, or in
This risk of error is made larger by the absence of an refusing to hear evidence pertinent and material to the
effective appeal mechanism. controversy; that one or more of the arbitrators was
disqualified to act as such under section nine hereof, and
Generally, the errors of an arbitral tribunal cannot be wilfully refrained from disclosing such disqualifications or of
corrected by the judiciary. any other misbehavior by which the rights of any party have
been materially prejudiced; or
As an ADR, arbitration is meant to end, not begin litigation.
(d) That the arbitrators exceeded their powers, or so
Hence, an arbitral award is generally final and binding imperfectly executed them, that a mutual, final and definite
between the parties who, in the first place, agreed to award upon the subject matter submitted to them was not
51
made. grounds under RA 876 and the IRR.
3. Remedy: petition to set aside an arbitral award under Note: This authority granted to the RTC cannot be
the IRR and SADR interpreted as jurisdiction to “review” the award.
The RTC can also set aside an arbitral award based on the RA 876, Section 25. Grounds for modifying or
6 grounds under Article 34 of the UNCITRAL Model Law correcting award. xxx
(as restated in Chapter 4 of the IRR of the ADR Act).
(a) Where there was an evident miscalculation of
Note: These grounds also don't pertain to the correctness figures, or an evident mistake in the description of any
of the award, but rather the validity of the arbitration person, thing or property referred to in the award; or
agreement and the regularity of the proceedings.
(b) Where the arbitrators have awarded upon a matter
IRR, Chapter 4, Article 4.34. Aplication for Setting Aside not submitted to them, not affecting the merits of the
an Exclusive Recourse against Arbitral Award. xxx decision upon the matter submitted; or
(b) An arbitral award may be set aside by the Regional Trial (c) Where the award is imperfect in a matter of form
Court only If: not affecting the merits of the controversy, and if it had been
a commissioner's report, the defect could have been
(i) the party making the application furnishes proof that: amended or disregarded by the court
(aa) a party to the arbitration agreement was under some
incapacity; or the said agreement is not valid under the law IRR, Article 4.33. Correction and Interpretation of
to which the parties have subjected it or, failing any Award, Additional Award. (a) Within thirty (30) days from
indication thereon, under the law of the Philippines; or receipt of the award, unless another period of time has
been agreed upon by the parties:
(bb) the party making the application was not given proper
notice of the appointment of an arbitrator or of the arbitral (i) A party may, with notice to the other party, request the
proceedings or was otherwise unable to present his case; arbitral tribunal to correct in the award any errors in
or computation, any clerical or typographical errors or any
errors of similar nature;
(cc) the award deals with a dispute not contemplated by or
not failing within the terms of the submission to arbitration, (ii) A party may, it so agreed by the parties and with notice
or contains, decisions on matters beyond the scope of the to the other party, request the arbitral tribunal to give an
submission to arbitration, provided that, if the decisions on interpretation of a specific point or part of the award. xxx
matters submitted to arbitration can be separated from
those not so submitted, only the part of the award which C. Appeal: What are the available remedies from
contains decisions on matters not submitted to arbitration an RTC decision confirming, vacating,
may be set aside; or modifying, or correcting an arbitral award?
(dd) the composition of the arbitral tribunal or the arbitral 1. Motion for Reconsideration (RTC who made the
procedure was not in accordance with the agreement of the decision) within 15 days from receipt of order.
parties, unless such agreement was in conflict with a
provision of ADR Act from which the parties cannot 2. Appeal from the RTC's ruling.
derogate, or, falling such agreement, was not in accordance
with ADR Act; or Before, the basis was RA 876 (Arbitration Law): Petition for
Review on Certiorari under Rule 45, limited to questions of
(ii) the Court finds that: law, with the SC.
(aa) the subject-matter of the dispute is not capable of Now, pursuant to the Special ADR Rules (2009): Petition for
settlement by arbitration under the law of the Philippines; or Review, with the CA.
(bb) the award is in conflict with the public policy of the Statutory basis: Special ADR Rules (2009)
Philippines.
Rule 19.1. Motion for reconsideration, when allowed. - A
4. Remedy: petition for correction/modification of an
party may ask the Regional Trial Court to reconsider its
arbitral award under RA 876
ruling on the following: xxx
The RTC can correct or modify an award based on the
52
(h) Confirming, vacating or correcting a domestic arbitral The court shall not set aside or vacate the award of the
award; xxx arbitral tribunal merely on the ground that the arbitral
tribunal committed errors of fact, or of law, or of fact and
Rule 19.12. Appeal to the Court of Appeals. - An appeal law, as the court cannot substitute its judgment for that of
to the Court of Appeals through a petition for review under the arbitral tribunal.
this Special Rule shall only be allowed from the following
final orders of the Regional Trial Court: xxx In other words, simple errors of fact, of law, or of fact and
law committed by the arbitral tribunal are not justiciable
(e) Confirming, vacating or correcting/modifying a domestic errors in the Philippines.
arbitral award; xxx
TEAMPC agreed to submit their disputes to an arbitral
Rule 19.26. Certiorari to the Court of Appeals. - When tribunal. It understood all the risks - including the absence
the Regional Trial Court, in making a ruling under the of an appeal mechanism and found that its benefits (both
Special ADR Rules, has acted without or in excess of its legal and economic) outweighed the disadvantages.
jurisdiction, or with grave abuse of discretion amounting to
lack or excess of jurisdiction, and there is no appeal or any Without a showing that any of the grounds to vacate the
plain, speedy, and adequate remedy in the ordinary course award exists or that the same amounts to a violation of an
of law, a party may file a special civil action for certiorari to overriding public policy, the award is subject to confirmation
annul or set aside a ruling of the Regional Trial Court. as a matter of course.
A special civil action for certiorari may be filed against the XI. International Arbitration
following orders of the court: xxx
Sec. 19, RA 9285
(f) Confirming, vacating or correcting a domestic arbitral
award; xxx SEC. 19. Adoption of the Model Law on International
Commercial Arbitration. – International commercial
Final Notes arbitration shall be governed by the Model Law onwith the
RTC International Commercial Arbitration (the “Model Law”)
If the RTC is asked to set aside an arbitral award on any adopted by the United Nations Commission on International
ground other than those provided in the Special ADR Rules, Trade Law on 21 June 1985 (United Nations Document
the court shall entertain such ground for the setting aside or A/40/17) and recommended for enactment by the General
non-recognition of the arbitral award only if the same Assembly in Resolution No. 40/72 approved on 11
amounts to a violation of public policy. December 1985.
Rule 19.10. Rule on judicial review on arbitration in the Evolution of International Arbitration in the Phils
Philippines. - As a general rule, the court can only vacate (Fidel Maximo Diego III)38
or set aside the decision of an arbitral tribunal upon a clear
showing that the award suffers from any of the infirmities or Notes:
grounds for vacating an arbitral award under Section 24 of
Republic Act No. 876 or under Rule 34 of the Model Law in “Law is a living organism. It is based on a factual and social
a domestic arbitration, or for setting aside an award in an reality that has its foundation in the type of behavior that is
international arbitration under Article 34 of the Model Law, deemed acceptable and desirable to society. Law is a
or for such other grounds provided under these Special discourse and its connection to this fluid reality implies that
Rules. it is too must change. The change can be drastic and easily
identifiable or it can be gradual and cannot sometimes be
If the Regional Trial Court is asked to set aside an arbitral seen without the proper distance and perspective. Either
award in a domestic or international arbitration on any way, the law must be flexible enough to reflect and change
ground other than those provided in the Special ADR Rules, in society without actually creating a gap between it and
the court shall entertain such ground for the setting aside or reality.”
non-recognition of the arbitral award only if the same
amounts to a violation of public policy. On gaps: Every so often, gaps between reality and the law
will be created. Thus, the law must not just be “logic and
The court shall not set aside or vacate the award of the experience” but a renewal which adapts law to the new
arbitral tribunal merely on the ground that the arbitral social reality.
tribunal committed errors of fact, or of law, or of fact and
law, as the court cannot substitute its judgment for that of
the arbitral tribunal.
38 59 Ateneo LJ 297 (2014)
53
On international arbitration being the preferred method The SADR provides that a petitioner seeking enforcement
for transnational commercial disputes and international of foreign arbitral awards is required to pay the minimal
disputes: filing fee payable in “all other actions not involving
a. Foreign investors who are not familiar with local property”.
court procedures may prefer a more neutral
process where that can control the rules; On the court’s power to refuse to recognize and
b. Disputes submitted for arbitration are more speedily enforce foreign arbitral awards: Rule 13.4 of the SADR
resolved; states that a Philippine court shall not set aside a foreign
c. Parties can appoint someone who is an expert on arbitral award. It may only refuse to recognize and enforce
the subject matter; and it on the following grounds:
d. Arbitration proceedings are confidential. a. The party making the application to refuse
recognition and enforcement proves that:
On the nature of Special ADR Rules (SADR) i. A party to the arbitration agreement was
proceedings: All proceedings under the SADR are special under some incapacity; or the agreement is
proceedings. A special proceeding is one where a party not valid under the law;
seeks to establish or declare a status or right of a party, or a ii. The party asking for refusal was not given
particular fact. (In comparison, an ordinary civil action is proper notice of the appointment of an
one where a party seeks protection and enforcement of a arbitrator or of the proceedings; or he was
right, or for the prevention or redress of a wrong.) unable to present his case;
iii. The award deals with a dispute not
SADR proceedings are non-litigious and summary in contemplated by the terms of the
nature. Included in this nature is the separability of the submission to arbitration; or is beyond its
arbitration clause, that is, it remains valid even if the scope;
contract to which it is a part of ends or is rendered void. iv. The composition of the tribunal or the
procedure was not in accordance with the
On venue: The petition to recognize and enforce a foreign agreement, or failing such agreement—of
arbitral award is filed with: the law where the arbitration took place; or
a. RTC where the assets to be attached or levied v. The award has not yet become binding on
upon is located; the parties or has been set aside or
b. RTC where the act to be enjoined is being suspended by a court of the country in
performed; which the award was made; or
c. RTC of the principal place of business (of either b. The court finds that:
party) in the Philippine; i. The subject matter of the dispute is not
d. RTC where any of the parties reside (if individuals); capable of settlement or resolution by
or arbitration under Philippine laws; or
e. RTC in the National Capital Judicial Region. ii. The recognition or enforcement of the
award would be contrary to public policy.
On ‘filing fees’ in connection with the case of Mijares vs
Ranada (2005): Here, victims of human rights violations Which rule governs the enforcement of foreign
asked the RTC of Makati for the enforcement of a foreign awards?
award (2.25 billion dollars) rendered by the US District
Court of Hawaii. It is the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (June 7, 1959). The SADR has
The defendant in this case was the Marcos Estate. They merely adopted and reiterated the rules of said Convention.
moved for the dismissal of the case, arguing that the Hence, the RTC cannot entertain any other ground that is
petitioners only paid the minimal filing fee of Php 410. not in the list above.
Based on the amount of award, the filing fees should’ve
been Php 472,000,000, they said. This is in application of It is also important to point out that local courts cannot
the rule on actions capable of pecuniary estimation. annul foreign arbitral awards. Local courts can only refuse
their recognition and enforcement. Hence, even if a foreign
The SC ruled in favor of the petitioners, holding that award is not recognized in the Philippines, it remains to be
although the judgment was indeed capable of pecuniary valid.
estimation, it is also an action based on a judgment against
an estate. Therefore, it is included in the scope of “other The issue of the validity of a foreign arbitral award remains
actions not involving property” which only required the within the exclusive jurisdiction of the foreign tribunal.
minimal filing fee.
May a foreign arbitral award made in a country that is
not a party to the Convention still be recognized?
54
Yes. The SADR provides that the court can recognize and
enforce a foreign arbitral award made in a country not a
signatory to the Convention when such country extends
comity and reciprocity to awards made in the Philippines.
These awards are “presumptively valid”.
If the country doesn’t extend comity and reciprocity, the

local courts may nevertheless treat such award as a foreign
judgment enforceable as such under Section 48, Rule 39 of
the Rules of Court.
The decision of the RTC to recognize and enforce an award

is immediately executory (because it is summary in nature).
Are appeals allowed for decisions concerning foreign

arbitral awards?
Yes, but only on the following instances:
a. Orders of the RTC recognizing and enforcing This addresses the shortcomings of the SADR and the ADR
foreign arbitral award; and Law. It will “clear the cloud on whether foreign arbitral
b. Orders of the RTC refusing to recognize and awards are conclusively binding or only presumptively valid
enforce a foreign arbitral award. against the parties.”
The SADR prohibits the parties from filing an appeal to Conclusion

question the merits of a foreign arbitral award. The RTC International arbitration law in the Philippines is almost 100
cannot review the findings of the arbitrator nor substitute its years old. The past, present and future evolution of such
own findings. law can be divided into 4 stages:
1. When the courts disfavored it;
Moreover, even if an appeal based on the allowable 2. When the courts favored it;
grounds is perfected, it will not stay the award. 3. When it is treated as presumptively valid; and
4. When it will be treated as conclusively binding.
On the gaps that are still left unfilled by the local laws:
Both the SADR and the ADR Law do not have provisions Today, Singapore and Hongkong are considered as the
which categorically state that foreign arbitral awards are world’s arbitration hubs. With “the imminent revision of the
conclusively binding in the Philippines. Rules of Civil Procedure and the acruity of the Filipinos to
the English language”, the Philippines could easily become
In the case of National Power Corporation vs Alonzo- an important venue for the settlement of international
Legasto (2004), the SC held that an arbitration award is disputes.
not absolute. If the conditions under Arts. 2038, 2039, and
2040 of the NCC (these are the instances where contracts Commercial Arbitration in the Phils.
may be annulled) are present, the award may be annulled. (Francisco Lim)39 & Parlade notes40
So what’s next?
In December 2012, the SC, together with UP Law Center Calvo Doctrine (1868): “Disputes involving foreign
and the IBP, launched a project to overhaul the current investments must be resolved using the legal processes of
Rules of Civil Procedure. Many provisions have been the place where the investment is located.”
regarded as “antiquated” and no longer relevant to our
needs. Chan Linte vs Law Union and Rock Insurance: The first
case where the Supreme Court of the Philippines
In May 2013, the SC released the First Draft of the Revised recognized the validity and potential relevance of arbitration
Rules of Civil Procedure. This Draft adds a new provision as a mode of dispute resolution
specifically for the recognition and confirmation of foreign
arbitral awards: New Civil Code (1950)
Art. 2042: “Same persons who may enter into a
39 46 Ateneo LJ 394 (2001)

40 Summary by Group 1 (Stephen Saavedra, et al.)
55
compromise may submit their controversies to one or more An arbitration is "commercial" if it covers matters arising
arbitrators for decision.” from all relationships of a commercial nature, whether
contractual or not.
Art. 2046: The procedure will be contained in the ROC
Relationships of transactions: any trade transaction for
Republic Act 876 (1953) the supply or exchange of goods or services; distribution
agreements; construction of works; commercial
Arbitration Law supplemented the provisions of the NCC on representation or agency; factoring; leasing, consulting;
arbitration and provided its procedure. engineering; licensing; investment; financing; banking;
insurance; joint venture and other forms of industrial or
Problem Area: Lack of Provision on Enforcement of business cooperation; carriage of goods or passengers by
Foreign Award air, sea, rail or road.
Solution: Apply the Rules of Court UNCITRAL
Did this do the trick? No. Under Rule 39, Section 48 of In 1985, the UNCITRAL adopted the MODEL LAW, short for
the Rules on Civil Procedure (1997), foreign arbitral awards the UNCITRAL Model Law on International Commercial
were not automatically binding, but merely presumptive Arbitration.
evidence.
We adhere to it as the law governing the procedure of
Ratification of the New York Convention (1967) international commercial arbitration.
Each Contracting State shall recognize arbitral awards as The reason? Because of the ADR Law. (Sec 19)
binding and enforce them in accordance with the rules of
procedure of the territory where the award is relied upon, RATIONALE: Because, we, like the rest of the world, desire
under the conditions laid down in the following articles. uniformity of the law of arbitral procedures.
There shall not be imposed substantially more onerous
conditions or higher fees or charges on the recognition or The model law is said to reflect a world-wide consensus on
enforcement of arbitral awards to which this Convention the principles and important issues of international
applies than are imposed on the recognition or enforcement arbitration practice.
of domestic arbitral awards.41
The arbitration law that may be adopted by the state that
Alternative Dispute Resolution Law (2004) follows the model law applies as lex specialis.
 Strengthened the provision of the Civil Code and (Example: It works to the exclusion of all other non-treaty
RA 876 on International Arbitration laws wherever they may be contained)
 Korea Technologies case was decided where the Nonetheless, it is subject to other treaties on arbitration
Supreme Court stressed that domestic and (i.e.: UN Convention on Carriage of Goods by the Sea, New
international arbitration must have different York Convention).
procedures in terms of recognition of awards
Matters not covered:
 Gave way to the creation of the SADR
 Arbitrability of the SM of the dispute
Special Rules of Court on ADR or SADR (2009)
 Capacity of the parties to enter into arbitration
 Promulgated by the Supreme Court agreement
 SADR proceedings are special proceedings  State immunity from suit
 The RTC’s inquiry is only limited on WON the  Enforcement by national courts of interim measures
foreign arbitral award should be recognized of protection granted by an arbitrator
International Commercial Arbitration  Competence of an arbitrator to reform the contract
41 Article III, Convention on the Recognition and Enforcement of  Fixing of arbitration fees
Foreign Arbitral Awards or the NY Convention
56
 Request for and making a deposit for fees According to the model law, where does the arbitration
proceedings take place? Stipulation in the agreement.
 Time limit of an award
Model law adopts the territorial criterion over the autonomy
 Consolidation of arbitral proceedings criterion for these reasons:
 Contractual relations between arbitrators and  Widely accepted by national laws of majority of the
parties states.
 Security for fees or costs or period of time for the  Avoid conflicts/ Takes away the burden from the
enforcement of arbitral awards parties or the foreign court in choosing where to
arbitrate
 The enforcement of interim measures of protection
granted by arbitrators Exceptions:
 The manner of enforcing arbitral awards a. A national court is required to refer parties to
arbitration
 Definition of arbitration
b. Interim measure of protection
 Interpretation of arbitration agreements
c. Recognition and enforcement of the foreign award
 Duties and liability of arbitrators
d. A national court may refuse an application for
recognition and enforcement of foreign award
 Remuneration of arbitrators
ADR Law applies, even if the arbitration proceedings is held
 Prescription in a foreign country.
 Res Judicata When is a dispute international?
 Costs, interest 1. The parties to an arbitration agreement have, at the time

of the conclusion of that agreement, their places of
 Capacity business in different States; or
 Discharge of arbitration agreement 2. One of the following places is situated outside the State
in which the parties have their places of business:
 Multi-partite proceedings
(a) the place of arbitration if determined in, or
 Court assistance in appointing arbitrators pursuant to, the arbitration agreement;
 Dispute as to venue if not indicated (b) any place where a substantial part of the
obligations of the commercial relationship is to be
They are covered by the arbitration law of the State. Take performed or the place with which the subject-
note however, that the states, under Art. 2 (d) of the model matter of the dispute is most closely connected; or
law, may appoint a third person to resolve the
abovementioned issues. (c) the parties have expressly agreed that the
subject matter of the arbitration agreement relates
In enacting the ADR Law, the Congress made no attempt to to more than one country.
fill in gaps because of the difficulty of doing so.
Art. 1, Sec. 4 of the Model Law provides:
They also viewed the modification as not contributing to
uniformity of the proceedings. For the purposes of paragraph (3) of this article:
Territorial Scope (a) if a party has more than one place of business, the
place of business is that which has the closest relationship
According to the model law, whose arbitration laws should to the arbitration agreement;
be followed? Territory of the investment. (b) if a party does not have a place of business, reference is
57
to be made to his habitual residence the day it is so delivered.
Test of internationality Exceptions: communications in court proceedings.
1. Place of business – Are the places of business of the Waiver of Objections

parties in different states?
A party who knows that any provision of this Law from
2. Place of arbitration – Is the stipulated venue in a foreign which the parties may derogate or any requirement under
state? the arbitration agreement has not been complied with and
yet proceeds with the arbitration without stating his
3. Place of performance – Is the obligation to be performed objection to such non-compliance without undue delay or, if
outside the place of business of the parties? a time-limit is provided therefor, within such period of time,
shall be deemed to have waived his right to object.
4. Place of Subject Matter of Arbitration Agreement – Is the
subject matter of the arbitration agreement related to more A party deems to waive his right to object if all these
than one state? requisites are met:
Art. 1, Sec. 5 of the Model Law provides: A. There is a procedural requirement that has not been
complied with which is non-mandatory under the Model
“This Law shall not affect any other law of this State by Law
virtue of which certain disputes may not be submitted to B. The party knew of such compliance
arbitration or may be submitted to arbitration only according C. The party proceeds with arbitration without objections
to provisions other than those of this Law.” D. The party failed to state his objection within a
reasonable period of time and in the manner provided in the
Section 20 of the ADR Law mandates our courts that in law or arbitration agreement
deciding the interpretation of the model law, it must
consider the interpretation of the foreign courts as well as Court Intervention
the travaux preparatoires of the UNCITRAL.
“In matters governed by this Law, no court shall intervene
The model law recognizes both Institutional Arbitration and except where so provided in this Law.”
Ad Hoc Arbitration.
General Rule: “Courts must yield to the primary jurisdiction
Because of the generality of the definition provided by the of the Arbitral Tribunal”
model court, it is as if it lets the party-states decide as to
which court would have jurisdiction over arbitration. Exception (When can the RTC intervene): SADR,
following Section 6 of the Model Law, provides the
In the Philippines, the court refers to the Regional Trial following:
Court.
 Relief on the issue of Existence, Validity, or
Written Communications Enforceability of the Arbitration Agreement;
Unless otherwise agreed by the parties:  Referral to Alternative Dispute Resolution ("ADR");
a. any written communication is deemed to have been  Interim Measures of Protection;

received if it is delivered to the addressee
personally or if it is delivered at his place of  Appointment of Arbitrator;
business, habitual residence or mailing address;
 Challenge to Appointment of Arbitrator;
b. if none of these can be found after making a
reasonable inquiry, a written communication is  Termination of Mandate of Arbitrator;
deemed to have been received if it is sent to the
addressee’s last-known place of business, habitual
 Confirmation, Correction or Vacation of Award in
residence or mailing address by registered letter or
Domestic Arbitration;
any other means which provides a record of the
attempt to deliver it
 Recognition and Enforcement or Setting Aside of
an Award in International Commercial Arbitration;
The communication is deemed to have been received on
58
 Recognition and Enforcement of a Foreign Arbitral UNCITRAL Secretary General’s report on Settlement of
Award; Commercial Disputes:
 Confidentiality/Protective Orders; and A. Stipulation pour autrui;

B. Third party rights and obligations under arb.
 Deposit and Enforcement of Mediated Settlement Agreements following assignment or novation underlying
Agreements. contract to the third party;
C. Third party rights and obligations under arb.
 Assistance in Taking Evidence; Agreements where the third party exercises subrogated
rights;
D. Rights and obligations under arbitration agreements
 Confirmation, Correction or Vacation of Award in
where interests in contracts are asserted by successors
Domestic Arbitration;
to parties, following merger or demerger of companies,
so that corporate entity is no longer the same.
 Recognition and Enforcement or Setting Aside of
an Award in International Commercial Arbitration; Issues Concerning Arbitration Agreements
 Recognition and Enforcement of a Foreign Arbitral When an agreement exists but the parties did not sign to it
Award;
Answer:
 Confidentiality/Protective Orders; and
 Partial performance of the contract
 Deposit and Enforcement of Mediated Settlement
Agreements.  By reason of custom, it is valid;
Arbitration Agreement
 Failure to object within a period of time and in the
required form
They may be found in an arbitration clause within the
contract of the parties, or in a separate document.
Exception: When the contract is entered into by a broker or
agent. In cases when the principal is unaware or did not
Forms: consent thereto, there is a void arbitration agreement
a. In a document duly signed by the parties; When there is incorporation by reference: It may be valid if
it is such as to make the subsequent document a part of the
b. In an exchange of letters, telegrams, telexes, or former document.
other means of telecommunications that provide a
record of the agreement; What if it were in bills of lading?: Yes, they are binding
because they are part of customary practice. Even if the
c. In an exchange of statements of claims and parties’ names are not specified therein.
defenses in which the existence of an arbitration
agreement is alleged by one party and not denied Agreement is found in the rules of an association: It binds
by another; the members.
d. In a document supplementing the original contract Exceptions: The member was not shown a copy, or the
rules were amended to include the arbitration agreement
Are third parties bound to an Arbitration Agreement? and the member who is a party to the case dissents to such
amendment
Arbitration is a contractual relation.
Agreement requires a condition precedent
Hence, as a general Rule: No. Those who are bound are
the parties, their heirs, and their assigns.
But, in the Philippines, there is an exception provided in the

ADR Act of 2004. The third party would refer to the court in
cases where two parties to a civil action agreed beforehand
in writing to settle the dispute via arbitration.
Other notable exceptions are those laid down in the

59
Mia and Stephanie, the parties to a conflict, were Chapter 4, Rule 3, IRR
employees working at Xian Corporation. Under their sub-
contract, they had to refer the issue to Atty. Masedman, and Article 4.10 Number of Arbitrators. The parties are free to
later to arbitration if they both disagreed with Atty. determine the number of arbitrators Failing such
Masedman’s conclusion. But Mia commenced an action determination, the number of arbitrators shall be three (3).
against Stephanie, asking for an order of reference for
arbitration, because the arbitration agreement was void for Article 4.11. Appointment of Arbitrators. (a) No person
containing a condition precedent. shall be produced by reason of his/her nationality from
acting as an arbitrator, unless otherwise agreed by the
Is Mia correct? parties.
In Westco Air vs Sui Chong, it was held that such a (b) The parties are free to agree on a procedure of
contention was wrong. The prior referral was only a first appointing the arbitrator or arbitrators, subject to provisions
instance procedure, and was not inconsistent with of paragraphs (d) and (e) of this Article.
arbitration. Therefore, arbitration can be had.
(c) Failing such agreement:
What if the contract containing the arbitration agreement is
terminated? (i) in an arbitration with three (3 ) arbitrators, each party
shall appoint one arbitrator, and the two (2) arbitrators thus
Danielle entered into a contract of sale with Danice for two appointed shall appoint the third arbitrator; if any party fails
tractors. The contract contained an arbitration agreement if to appoint the arbitrator within thirty (30) days of receipt of a
there are issues that will arise. The money was paid and request to do so from the other party, or if the two (2)
the tractors delivered. Then, for some reason Danice arbitrators fail to agree on the third arbitrator within thirty
wanted to file a case against Danielle in connection with the days (30) days of their appointment shall be made, upon
transacion. Danielle invokes the arbitration agreement. request of a party, by the appointing authority;
Danice disagrees, saying that the contract of sale was
already extinguished. (ii) in an arbitration with a sole arbitrator, if the parties are
unable to agree on the arbitrator, he/she shall be appointed,
Is Danice correct? upon request of a party, by the appointing authority.
No. In Jiangxi Metal vs Sulanser, it was ruled that the (d) Where, under an appointment procedure agreed upon
agreement is still binding despite the termination of the the parties,
original contract, following the doctrine of separability of the
Arbitration Agreement. (i) a party fails to act as required under such procedure, or
Substantive Claims before the Court (ii) the parties , or two arbitrators, are unable to reach an
agreement expected of them under such procedure, or
Article 8 of the Model Law provides that the court, to which
a dispute with an arbitration agreement is submitted to, (iii) a third party, including an institution, fails to perform any
must refer that dispute to arbitration unless it is void, function entrusted to it under such procedure,
inoperative or incapable of performance.
Any party may request the appointing authority to take the
Arbitration may still continue or commence and an award necessary measure to appoint an arbitrator, unless the
be made while the issue is pending in court. agreement on the appointment procedure provides other
means for securing the appointment.
Presumption of arbitrability
(e) A decision on a matter entrusted by paragraphs (c) and
A court is called to resolve the doubt in favor of arbitration. (d) of this to the appointing authority shall be immediate
executory and not be subject to a motion for
Exception: If, upon looking into the facts and jurisprudence reconsideration or appeal. The appointing authority shall
relating to the model law, the court can easily rule that it is have in appointing an arbitrator, due regard to any
void, inoperative, or incapable of performance qualifications required of the arbitrator by the agreement of
(unenforceable). the parties and to such considerations as are likely to
secure the appointment of an independent and impartial
(Also read Parlade pp. 15-102) arbitrator and, in the case of a sole or third arbitrator , shall
take into account as well the advisability of appointing an
Composition of Arbitral Tribunal arbitrator of a nationality other than the Rules of Court of
the Special ADR Rules.
60
Article 4.12 Grounds for Challenge. (a) When a person is (b) If, under this Article or paragraph (b) of Article 4.13
approached in connection with his/her possible (Challenge Procedure), an arbitrator withdraws from his/her
appointment as an arbitrator, he/she impartiality or office or a party agrees for termination of the mandate of an
independence. An arbitrator, from the time of his/her arbitrator, this does not imply acceptance of the validity of
appointment and throughout the arbitral proceedings shall, any ground referred to in this Article or in paragraph (b) of
without delay, disclose any such circumstance to the parties Article 4.12 (Grounds for Challenge).
unless they have already been informed of them him/her.
Article 4.15. Appointment of Substitute Arbitrator.
(b) An arbitrator may be challenged only if circumstances Where the mandate of an arbitrator terminates under
exist that give rise to justifiable doubts as to his/her Articles 4.13 (Challenge Procedure) and 4.14 (Failure or
impartiality or independence, or if he/she does not possess Impossibility to Act) or because of his/her withdrawal from
qualifications agreed to by the parties. A party may office for any other reason or because of the revocation of
challenge an arbitrator appointed by him/her, or in whose his/her mandate, a substitute arbitrator shall be appointed
appointment he/she has participated, only for reasons of according to the rules that were applicable to the
which he/she becomes aware after the appointment has appointment of the arbitrator being replaced.
been made.
(Also read Parlade pp. 103-150)
Article 4.13. Challenge Procedure. (a) The parties are
free to agree on a procedure for challenging an arbitrator, Setting aside of Arbitral Award Due to Improper
subject to the provisions of this Article. Constitution of Tribunal
(Susanne Heck & Niharika Dhall)42
(b) Failing such agreement, a party who intends to
challenge an arbitrator shall, within fifteen (15) days after Antecendents: The case involved a dispute in relation to a
becoming aware of the constitution of the arbitral tribunal or 1986 lease agreement for a thermal bath. The agreement
after becoming aware of any circumstances referred to in contained an arbitration clause for settlement of disputes by
paragraph (b) of Article 4.12 (Grounds for Challenge,) send a three-member Tribunal seated in Germany.
a written statement of the reasons for the challenge to the
arbitral tribunal. Unless the challenged arbitrator withdraws 2010: When disputes arose between the parties, the matter
from his/her office or the other party agrees to the was referred to ad hoc arbitration in accordance with the
challenged arbitrator withdraws from his/her office or the agreement. Each Party appointed an arbitrator, and the two
party agrees to the challenge, the arbitral tribunal shall arbitrators appointed the Chairperson.
decide on the challenge.
One of the Parties (later, the Complainant) lodged a petition
(c) If a challenge under any procedure agreed upon by the to challenge the appointment of the chairperson, asking that
parties or under the procedure of paragraph (b) of this he be disqualified on the ground of bias.
Article is not successful, the challenging party may request
the appointing authority, within thirty (30) days after having The application was heard by the Tribunal but the challenge
received notice of the decision rejecting the challenge, to was dismissed. Subsequently, the Complainant appealed
decide on the challenge, which decision shall be the decision of the Tribunal in the Higher Regional Court
immediately executory and not subject to motion for (HRC) of Munich (equivalent to our RTC).
reconsideration or appeal. While such a request is pending,
the arbitral tribunal, including the challenged arbitrator, may While that appeal was pending, the arbitral tribunal
continue the arbitral proceedings and make an award. continued with the arbitration proceedings.
A party may bring a petition under this Article before the April 2013: The Tribunal rendered an award against the
court in accordance with the Rules of Court or the Special Complainant.
ADR Rules.
January 2014: The appeal was decided by the HRC and
Article 4.14. Failure or Impossibility to Act. (a) If an this time, it was in decided favor of the Complainant.
arbitrator becomes de jure or de facto unable to perform
his/her functions or for other reasons fails to act without The Court found the challenge justified because the
undue delay, his/her mandate terminates if he/she chairperson was not able to thoroughly destroy the lodged
withdraws from his/her office or if the parties agree on the reasonable doubts regarding his independence and
termination. Otherwise, if the controversy remains impartiality in a responding statement. Irrespective of an
concerning any of these grounds, any party may request actual existence of bias, the Court found these
the appointing authority to decide on the termination of the circumstances to constitute objective reasons for a justified
mandate, which decision shall be immediately executory
and not subject for motion for reconsideration or appeal. 42 Kluwer Arbitration Blog; August 27, 2015
61
disqualification of the Chairperson since objectively mere presence on the Tribunal presumably affected the
incorrect statements as the one given by the Chairperson award, it was not necessary to substantiate with evidence
are also apt to raise doubts regarding an arbitrator’s due or a specific finding the causal link between the improper
diligence. constitution of the Tribunal and the impugned award.
Petition to Set Aside the Award: The Complainant then On a side-note, the Court emphasized that the statement
filed an application to set aside the award rendered by the given by the two arbitrators even worsened the situation, by
Tribunal on the ground that because the Chairperson was raising doubts regarding their impartiality and the
found to be biased, the constitution of the Tribunal was not qualification, too.
in accordance with law or the agreement of the Parties.
This judgement of the Court is a well-reasoned decision
Issue: Whether a unanimous award could be set aside if and reflects upon an important aspect, the inter-
the appointment of one of the three arbitrators was dependence of arbitral proceedings on the Courts of the lex
successfully challenged. arbitri.
In other words, if an award had already been rendered in Had the decision of the Court been handed down in time,
favor of one party. May it be set aside because of a the Chairperson would have had to recuse himself and the
subsequent decision approving the disqualification of one of Tribunal may have reached a different decision. The fact
the arbitrators? that the Court reached a decision regarding the challenge
of the Chairperson after a unanimous award had been
Contention of adverse party: They argued the decision of rendered, cannot lead to a situation wherein the protection
the Tribunal had been unanimous and therefore, the bias of of Section 1059(2)(d) is nullified.
the Chairperson had no impact on the award.
However, it would be interesting to see how this matter
The two other arbitrators also submitted a statement, proceeds now since the German law is silent on whether
arguing that the award was valid as the bias of the the re-constituted Tribunal shall commence proceedings
Chairperson had no impact on the decision of the Tribunal. from the beginning.
Even if the Tribunal were to be re-constituted, the same
award would be rendered as the two arbitrators would In this regard, even the UNCITRAL Model law does not
retain the majority vote. provide any guidance on whether the arbitral tribunal, on re-
constitution, shall determine if and to what extent the
German Court: The Court did not accept this line of proceedings shall be repeated.
reasoning. It rendered a decision to set aside the award.
Ultimately, the parties will have to reach an agreement on
In examining the degree to which the bias of one arbitrator how to proceed in this matter. Ideally, the two arbitrators
affected a unanimous award, the Court opined that the should recuse themselves altogether from the proceedings
standard for determining the same should not be very high. in the light of the statement submitted by them since that
In fact, whether or not the award was unanimous has no raised doubts regarding the arbitrators’ impartiality.
bearing on a finding under the German laws.
Failing this, the Complainant may attempt to challenge the
The German Arbitration Law is based on the UNCITRAL two based on their statement.
Model Law and provides that an arbitral award may be set
aside in the Courts of the lex arbitri (where the arbitration If the parties have not agreed on a procedure for the
took place) if the composition of the arbitral tribunal or the recusal, the legal obstacle for the Complainant the two-
arbitral procedure was not in accordance with the German week time limit for an application for recusal which is
Code or the agreement of the parties, and this presumably provided in Section 1037 (2) in the German Code of Civil
affected the award (Section 1059(2)(d) of the German Procedure.
Code of Civil Procedure, Zivilprozessordnung).
In favor of the Complainant, it can be argued that the two
Similarly, the Court held that the statement given by the two week time limit would start from the date of composition of
party-appointed arbitrators that a re-constituted Tribunal the new Tribunal, i.e. the appointment of the new
would also reach the same decision, had no probative Chairperson by the two arbitrators. Because only then
value. would the Complainant gain knowledge of the actual
composition of the new Tribunal.
The biased arbitrator was an inherent part of the Tribunal
and participated in the arbitral proceedings. His bias could
potentially have influenced the other arbitrators through his
participation in meetings and deliberations. Thus, as his
62
If the Tribunal again rejects the application, the arbitral tribunal may, at the request of the party, order any
Complainant can again approach the Court. It is clear that party to take such interim measures of protection as the
this last step would most certainly destroy the remaining arbitral tribunal may consider necessary in respect of the
credibility of the two arbitrators. subject to matter of the dispute following paragraph (c) of
this Article. Such interim measures may include, but shall
The decision of this case is an explicit advice to future not be limited to, preliminary injunction directed against a
arbitrators in a similar situation to desist from giving such a party, appointment of receivers, or detention, preservation,
statement in view of the principle of confidentiality of inspection of property that is the subject of the dispute in
deliberation. arbitration.
Furthermore, this case is also an example of instances (b) After constitution of the arbitral tribunal, and during
where it can be argued that the Tribunal should have arbitral proceeding, a request for interim measures of
suspended the proceedings till the Court decided on the protection, or modification thereof shall be made with the
Complainant’s appeal. arbitral tribunal. The arbitral tribunal is deemed constituted
when the sole arbitrator or the third arbitrator, who has been
Either way, this judgement is relevant for all jurisdictions nominated, has accepted the nomination and written
which follow the UNCITRAL Model Law. communication of said nomination and acceptance has
been received by the party making the request.
Jurisdiction of Arbitral Tribunal
(c) The following rules on interim or provisional relief shall
Rule 4, IRR be observed:
Article 4.16. Competence of Arbitral Tribunal to Rule on (i) Any party may request that the interim or provisional
its Jurisdiction. (a) The arbitral tribunal may rule on its relief shall be observed:
own jurisdiction, including any objections with respect to the
existence or validity of the arbitration agreement or any (ii) Such relief may be granted:
condition precedent to the filing of the request for (aa) To prevent irreparable loss or injury;
arbitration. For that purpose, an arbitration clause, which (bb) To provide security for the performance of an
forms part of a contract shall be treated as an agreement obligation;
independent of the other terms of the contract. A decision (cc) To produce or preserve evidence
by the arbitral tribunal that the contract is null and void shall (dd) To compel any other appropriate acts or omissions.
not entail ipso jure the invalidity of the arbitration clause.
(iii) The order granting provisional relief may be conditioned
(b) A plea that the arbitral tribunal does not have jurisdiction upon the provision of security or any act or omission
shall be raised not later than the submission of the specified in order.
statement of defense (I.e., in an Answer or Motion to
Dismiss). A party is not precluded from raising such plea by (iv) Interim or provisional relief is requested by written
the fact that he/she has appointed, or participated in the application transmitted by reasonable means to the arbitral
appointment of, an arbitrator. A plea that the arbitral tribunal tribunal and the party against whom relief is sought,
is exceeding the scope of its authority shall be raised as describing in appropriate details of the precise relief, the
soon as the matter alleged to be beyond the scope of its party against whom the relief is requested, the ground for
authority is raised during the arbitral proceedings. The the relief, and the evidence, supporting the request.
arbitral tribunal may, in either case, admit a later plea if it
considers the delay justified. (v) The order granting or denying an application for the
interim relief shall be binding upon the parties.
(c) The arbitral tribunal may rule on a plea referred to in
paragraph (b) of this Article either as a preliminary question (vi) Either party may apply with the court for assistance in
or in an award on the merits. If the arbitral tribunal rules as implementing or enforcing an interim measure ordered by
a preliminary question that it has jurisdiction, any party may an arbitral tribunal.
request, within thirty (30) days after having received notice
of that ruling, the Regional Trial Court to decide the matter, (vii) A party who does not comply with the order shall be
which decision shall be immediately executory and not liable for all damages, resulting from noncompliance,
subject to motion for reconsideration or appeal. While such including all expenses, and reasonable attorney's fees, paid
a request is pending, the arbitral tribunal may contribute the in obtaining the order's judicial enforcement
arbitral proceedings and make an award.
(Also read Parlade pp. 151-180)
Article 4.17. Power of Arbitral Tribunal to Order Interim
Measures. (a) Unless otherwise agreed by the parties, the
63
Jurisdiction of the Arbitral Tribunal: Current terminated

Jurisprudence and Problem Areas under UNCITRAL
Model Law Doctrine of separability (or severability): reflected in the
(Prof. Dr. Alan Uzelac)43 last two sentences of Art.16(1), is now also a part of the
universal consensus among arbitration practitioners,
This article deals with: (a) the procedural issues of the accepted by most legal systems of the world.
determination of the jurisdiction (or lack of the jurisdiction)
of the arbitral tribunal; (b) the consequences of the arbitral Courts have widely recognized that arbitral agreements are
jurisdiction, such as its impact on the court proceedings independent from the main contract, so that invalidity of the
regarding the same claims; and (c) the authority of the latter does not necessarily affect binding force of the former.
arbitrators to issue interim measures of protection.
For example, even if arbitrators find that the main contract
These issues regard the following provisions of the is null and void ab initio, even owing to fraudulent behavior
UNCITRAL Model Law on International Commercial of a party or the parties, but that arbitral clause continues to
Arbitration (MAL) be operative, providing arbitrators with authority to decide
on the consequences of the nullity of the main contract.
1. Art.8 (Arbitration and substantive claim before
court) Is the arbitrator/tribunal’s ruling on their jurisdiction
separate from, or part of, the final award?
2. Art.16 (Competence of arbitral tribunal to rule on its
jurisdiction) One court held that decision to postpone the ruling on
jurisdiction until the rendition of the final award, cannot be
3. Art.17 (Power of arbitral tribunal to order interim attacked, but only setting-aside proceedings could review
measures) whether the arbitrators erred in finding that they are
competent to decide.
4. Art.34(2)(a)(i) (Application for setting aside due to
lack of jurisdiction—incapacity of the parties or If the arbitral tribunal decides on the issue of jurisdiction as
invalidity of the agreement) a preliminary question, and concludes that it has
jurisdiction, this ruling may be subject to challenge under
5. Art.36(1)(a)(i) (Refusal of recognition and MAL Art. 16(3).
enforcement of the award due to lack of jurisdiction)
Regularly, the competent authority will be a state court.
On Article 16 However, in some jurisdictions that is not necessarily so.
Doctrine of Kompetenz Kompetenz: the right of the In Croatia—whose Law on Arbitration departs slightly from
arbitrators to rule on their own jurisdiction the text of the MAL—parties may transfer the authority to
control separate decisions on jurisdiction to some other
Practically all countries recognize this doctrine, subject to authority. Thus, Croatian courts have already confirmed that
the subsequent court control. the arbitration rules of an arbitration institution may replace
court control.
There is now a ‘‘wide consensus that the arbitral tribunal
has the power to rule on all aspects of its own jurisdiction’’. On Article 8: submitting substantive claim to the court
Reported decisions have showed that the courts recognize Just the same as the arbitrators cannot rule on their
the right of the arbitral tribunal to determine: jurisdiction unless an objection was raised by the
respondent in the arbitral proceedings, the court to which a
a. whether arbitration agreement exists between the substantive claim for which arbitration was agreed upon
parties cannot consider this fact on its own initiative.
b. whether the matter in dispute comes within the A plea as to the lack of jurisdiction in the court proceedings
scope of the arbitration agreement has to be submitted by the respondent in due time—under
Art 8(1) MAL—not later than when submitting the first
c. what is the proper interpretation of the arbitration statement on substance of the dispute. Belated objections
agreement regularly cannot be taken into account, as the lack of
objection has to be construed as the waiver of the right to
d. whether the arbitration agreement is valid or was request referral to arbitration.
43 International Arbitration Law Review Issue No. 5 (2005) Moreover, the lack of timely objections in the court
64
proceedings may be construed as termination of the protection that could be taken by courts included the interim
arbitration agreement: regularly, by submitting the order granted in that case or whether such an order could
statement of claim to the court the plaintiff expresses his be granted only by the arbitral tribunal dealing with the
wish to abandon the arbitration agreement; or by submitting substance of the dispute.
his statement of defense, the defendant accepts the offer to
amend their dispute resolution mechanism by agreeing on The court referred to travaux préparatoires regarding Art. 9
court litigation instead of arbitration. and quoted ‘‘dual principles that, first, a party does not
waive its right to go to arbitration by requesting (or
Articles 34 and 36: Court Review of the Decisions on obtaining) interim measures of protection from a national
the Jurisdiction of the Tribunal court, and, second, that a national court is not prevented
from granting such measures by the existence of an
If the arbitrators decide that they have jurisdiction, there are arbitration agreement’’.
two ways of attacking their decision:
However, in another court decision, without special
1. setting aside procedure, under Article 34 reference to authorities and UNCITRAL documents,
another court had seemingly come to the opposite
2. procedure of recognition and enforcement, under conclusion, namely that, if arbitrators may order themselves
Article 36 interim measures that are enforceable in court, a direct
application to the court for interim measures should be
Under the first: a court should set aside an award if the dismissed.
arbitration agreement ‘‘is not valid under the law to which
the parties have subjected it’’ or the lex fori of the setting Conclusions: Open Issues and Problem Areas
aside court.
1. Dual jurisdiction (between the arbitrator/tribunal
The same reason is contained in the second: in respect to and the court) regarding evaluation of validity
refusal of recognition of the award. Lack of valid and of the arbitration agreement
binding arbitration agreement obviously also covers the
cases when no arbitration agreement was concluded at all. Although there is no doubt that arbitrators are empowered
Lack of an appropriate agreement in respect of the subject- to rule in their own jurisdiction upon timely objections raised
matter of the dispute partly overlaps with the reasons for in the arbitral proceedings, virtually the same authority is
setting aside, i.e. with the situations in which the award also given to the court if the claim is raised in a court action,
deals with a dispute ‘‘not contemplated by or not falling and the other party objects on the ground that this claim
within the terms of the submissions to arbitration, or was covered by an arbitration agreement.
contains decisions on matters beyond the scope of the
submission to arbitration’’. This parallel regime raises a number of questions regarding
the division of labor between arbitrators and the courts;
Article 17: Jurisdiction of the Tribunal to Issue Interim regarding potential duplication of work; regarding the
Measures of Protection possibility of incompatible decisions; regarding the effects
of the arbitral and/or court’s final determination, etc.
There is a scarcity of reported case law. Unlike Articles 8
and 16, the provision of MAL 17 is among the least well- In the reported case law, the courts had differently
covered: precisely there is only one case in the CLOUT interpreted their authority to refuse referring the case to
database that would point to MAL 17 in the search engine arbitration if the agreement is null and void, inoperative or
of the UNCITRAL. incapable of being performed.
Even this single case mentioned interim measures of Under MAL Art. 8(1) the courts clearly have the right and
protection ordered by the tribunal only obiter dicta, duty to evaluate independently the validity and practicability
asserting that, once arbitration was commenced, the of the arbitration agreement; however, it would be wise both
arbitral tribunal sitting in Switzerland could order interim for the courts and for the arbitrators to have an eye on the
measures that would be enforceable in Canada. process conducted before the other tribunal, perhaps
suspending the proceedings until the decision in the other
Despite the scarcity of reported cases, some ambiguities process is being made—but only if this would not cause
with regard to parallel jurisdiction of both the arbitrators and undue hardship to parties in the proceedings.
the court to order interim measures in the same matter
have already surfaced. 2. The form of the arbitral decision on jurisdiction
as a preliminary question under MAL 16(3) and
In one case connected with the application of Article 9, a its effects
court had to resolve the issue whether interim measures of
65
Another problem area deals with the form of the separate arbitration or to the competent state court. Arbitrators that
decision on jurisdiction in the arbitral process, if such a were reluctant to rule on the substance of the dispute in the
decision is made prior to the award on the merits, based on first round will, most likely, remain to be reluctant even if a
the discretionary right of arbitrators to resolve the court authority strikes down their decision.
jurisdictional challenge as a preliminary matter.
4. Scope of arbitral authority: do allegations of
The MAL does not provide clear guidance, and basically fraud fall within the scope of submission to
leaves the determination to national procedural laws and/or arbitration
practices. Apparently, there is a trend in international
arbitration to expand the circle of decisions that are entitled When the courts had to evaluate the validity and scope of
‘‘arbitral awards’’ from decisions on the substance of the the arbitral agreement, they were usually expressing
dispute to procedural matters, usually those that end the favorable views about the use of arbitration, and interpreted
proceedings, but sometimes also to those that are regarded broadly the authority of arbitrators. One eminent exception
to be of any greater importance. Proper or improper naming in some jurisdictions relates to the cases in which one party
of decisions should not affect the procedural fate of the accused the other of fraudulent behavior.
decision—falsa nominatio non nocet. Yet, in reported cases
from various part of the globe, the courts also went into a Some courts alluded to the fact that conspiracy, deceit and
different directions, drawing from the name ‘‘award on fraud are not matters that can be covered by the arbitration
jurisdiction’’ inferences as to the admissibility of setting agreement.
aside of such ‘‘awards’’.
Yet, in commercial reality, mutual allegations of immoral,
This only contributes to confusion, as the original concept illegal or fraudulent actions happen often, and excluding
of the MAL 16(3) certainly did not envisage multiple (double them from the scope of arbitral agreements may effectively
or even triple) court proceedings controlling one and the cripple their effectiveness. Therefore, for the sake of
same arbitral decision on jurisdiction as the main matter— harmonization of the global practice, it would be good to
one under Art. 16; the other, independent setting aside of take a uniform position on such objections.
the award on jurisdiction; and, eventually, another setting
aside of the award on the merits for the reasons stated in 5. Meaning of ‘‘inoperative’’ agreements
Art. 34. If such practice would develop, it could have a
discouraging effect on the arbitrators that would like to There are also certain divergences in the interpretation of
resolve jurisdictional issues in their preliminary decisions. the meaning of ‘‘inoperative arbitration agreements’’.
3. Availability of the remedies against negative Some courts attempted to demonstrate such radical pro-
arbitral decisions on jurisdiction arbitration agreement that they declared agreements that
were rightfully abandoned as operative, by forcing a party to
Another area of ambiguities is concerned with the arbitrate, although that party had expressed the wish to use
availability of remedies in cases in which the arbitrators its right to opt for litigation provided in the dispute resolution
have issued decisions rejecting their jurisdiction. clause.
One classic approach would consider these decisions as In one German case, it was approved that lack of financial
irrefutable because no one can force the arbitrators to resources makes the arbitration agreement ‘‘inoperative’’. If
arbitrate if they are convinced that they have no jurisdiction. this became a general rule, it would lead to abuses,
opening ample opportunities to evade a dispute resolution
However, as this is a final decision, the pressure of mechanism on the sheer ground of financial weakness.
dissatisfied parties led to emergence of court decisions that
expressed the opposite view—once relying on the formal 6. Should the court make substantive inquiries as
reasons, another time relying on alleged procedural rights to whether ‘‘a dispute’’ exists?
to seek court review at least in respect of the procedural
correctness of the arbitral decision-making. Requirement that only ‘‘disputes’’ can be referred to
arbitration has also proven to be ambiguous.
Although one can well understand the dissatisfaction of the
parties who were convinced that they had right to arbitrate Some courts have posed too high a threshold for the
their disputes, this additional controllability is not necessary, existence of disputes, considering that the evaluation of
and may ultimately prolong and complicate the process. differences that exist between the parties should be left to
arbitrators.
If arbitrators pronounced that they are not competent to
arbitrate, the most efficient and logical next step is to turn The right approach is to consider that a dispute should be
immediately to the second closest match—to another presumed to exist in every case in which the claimant’s
66
claims were not clearly and unequivocally admitted. said nomination and acceptance has been received by the
party making the request.
7. Dual jurisdiction regarding interim measures
The following rules on interim or provisional relief shall be
The original ideas behind the MAL clearly envisaged dual observed:
jurisdiction regarding interim measures. Recent work of
UNCITRAL on the revision of provisions on interim (1) Any party may request that provisional relief be granted
measures may, once it is completed, contribute to against the adverse party.
resolution of such issues by additions and clarifications.
(2) Such relief may be granted:
8. Residual procedural differences between
common and civil law countries (i) to prevent irreparable loss or injury; (ii) to provide
security for the performance of any obligation; (iii) to
Some discrepancies in court reasoning can be attributed to produce or preserve any evidence; or (iv) to compel any
the procedural differences and even different procedural other appropriate act or omission.
cultures in common law and civil law countries.
(3) The order granting provisional relief may be conditioned
In common law jurisdictions, if a plea as to the lack of upon the provision of security or any act or omission
jurisdiction (owing to the existence of the arbitration specified in the order.
agreement in the same matter) is successfully raised, the
court will stay the proceedings. (4) Interim or provisional relief is requested by written
application transmitted by reasonable means to the Court or
In civil law, the court will not stay the proceedings, but arbitral tribunal as the case may be and the party against
dismiss the claims regarding which the arbitration was whom the relief is sought, describing in appropriate detail
agreed upon as inadmissible. the precise relief, the party against whom the relief is
requested, the grounds for the relief, and the evidence
Such differences in approach may sometimes have far- supporting the request.
reaching effects on the case law and even some
substantive reasoning of the courts. (5) The order shall be binding upon the parties.
A well-covered debate in Canadian courts regarding (6) Either party may apply with the Court for assistance in
whether stay of proceedings should be mandatory, or implementing or enforcing an interim measure ordered by
whether it should be granted under a residual discretion an arbitral tribunal.
that is enjoyed by the courts is imaginable only in a
common law jurisdiction. Only gradually, by slow (7) A party who does not comply with the order shall be
approximation of laws and practices, can we expect that liable for all damages resulting from noncompliance,
these differences will become less marked, and only then including all expenses, and reasonable attorney’s fees, paid
can we fully expect that a sufficiently high level of in obtaining the order’s judicial enforcement.
harmonization in the application of the basic rules of
international commercial arbitration will be achieved. SEC. 29. Further Authority for Arbitrator to Grant
Interim Measure of Protection. – Unless otherwise agreed
Interim Measures of Protection by the parties, the arbitral tribunal may, at the request of a
party, order any party to take such interim measures of
Sec 28-29, RA 9285 protection as the arbitral tribunal may consider necessary in
respect of the subject-matter of the dispute following the
SEC. 28. Grant of Interim Measure of Protection. – (a) It rules in Section 28, paragraph 2. Such interim measures
is not incompatible with an arbitration agreement for a party may include but shall not be limited to preliminary injunction
to request, before constitution of the tribunal, from a Court directed against a party, appointment of receivers or
an interim measure of protection and for the Court to grant detention, preservation, inspection of property that is the
such measure. After constitution of the arbitral tribunal and subject of the dispute in arbitration. Either party may apply
during arbitral proceedings, a request for an interim with the Court for assistance in implementing or enforcing
measure of protection, or modification thereof, may be an interim measure ordered by an arbitral tribunal.
made with the arbitral tribunal or to the extent that the
arbitral tribunal has no power to act or is unable to act Summary44
effectively, the request may be made with the Court. The
arbitral tribunal is deemed constituted when the sole Definition – They are issued to prevent or minimize any
arbitrator or the third arbitrator, who has been nominated,
has accepted the nomination and written communication of 44 By Group 4 (Jam Flora, et al.)
67
disadvantage resulting from delay in the hearing and petition

determination of the dispute and the implementation or
enforcement of the award. Type of Interim Measure of Protection the Court may
Grant - Classified into three groups:
Power of Arbitral Tribunal
a. Those which are aimed at facilitating the conduct of
Subject to contrary agreement of the parties, at the request the arbitral proceedings;
of a party an arbitral tribunal has inherent power to take b. Those which are aimed at avoiding losses or damages
such interim measures of protection as the arbitral tribunal and measures aimed at preserving the status quo; or
may consider necessary in respect of the subject matter of c. Those which are aimed at facilitating the enforcement
the dispute. of the award
Court Jurisdiction to Grant Interim Relief The court may grant, among others:
Rule: the submission of a dispute to arbitration does not a. Preliminary injunction directed against a party to
exclude the exercise of jurisdiction of the court to grant arbitration;
interim measures of protection in aid of arbitration b. Preliminary attachment against property or
garnishment in the custody of a third person;
It is clear that there must first be an order of the arbitral c. Appointment of receiver;
tribunal granting interim relief. The court’s assistance is d. Detention, preservation, delivery or inspection of
invoked for the purpose of implementing or enforcing an property; or
interim measure ordered by the arbitral tribunal. e. Assistance in the enforcement of an interim measure
or protection granted by the arbitral tribunal
When and Where to File Petition for the Issuance of
Interim Measures of Protection Grounds for granting interim relief
WHEN: Under Rule 5 of the Special ADR Rules, an a. The need to prevent irreparable loss or injury
application for relief shall be made in the form of petition b. The need to provide security for the performance of
filed with the court: any obligation
c. The need to produce or preserve evidence or
a. Before arbitration is commenced; d. The need to compel any appropriate act or omission.
b. After arbitration is commenced but before the
constitution of the arbitral tribunal; ISSUE: Whether the relief granted by the court before an
c. After the constitution of the arbitral tribunal; or arbitral tribunal is constituted may be set aside or modified
d. Any time during arbitral proceedings by the arbitral tribunal
WHERE: An application for interim relief under Rule 5, may It is clear in section 28 of the ADR Act that an application to
be filed with any RTC which has jurisdiction over any of the modify the measure granted by the court may be made with
following places: the arbitral tribunal., because by their very nature, interim
measures are temporary and may be modified or
a. Where the principal place of business of any of the terminated during the arbitral proceedings
parties to the arbitration is located;
b. Where any of the parties resides; In case of a possible conflict between an interim measure
c. Where any of the acts sought to be enjoined are being issued by the court and that is issued by the tribunal , the
performed, threatened to be performed or not being court shall refer the matter to the arbitral tribunal which shall
performed; or have the authority to decide such question.
d. Where the real property subject to the arbitration or a
portion is situated Cross Border Enforcement
Form and contents of petition - The petition must be A Philippine Court may have no legal obligation to enforce
verified and it must state the following: an interim order issued by a foreign arbitral tribunal unless
it is made in the form of an arbitral award
a. The fact that there is an arbitration agreement;
b. The fact that the arbitral tribunal has not been Arts. 4.5-4.6, Special ADR Rules
constituted or if constituted, has no power to act or would
be unable to act effectively; Extent of Court Intervention
c. A detailed description of the relief sought; and
d. The grounds relied upon for the allowance of the In matters governed by this Chapter, no court shall
68
intervene except where so provided in the ADR Act. Resort and for a court to grant such measure.
to Philippine courts for matters within the scope of the ADR
Act shall be governed by the Special ADR Rules. It makes such a request to the state courts compatible with
the agreement to arbitrate.
Court or Other Authority for Certain Functions of
Arbitration Assistance and Supervision But this provision leaves out some important aspects out of
its purview. For instance, it does not say anything about the
The functions of Appointing Authority: scope of the interim measures that the courts can order.
1. Appointment of Arbitrators; Article 17 of the Model Law that deals with the interim
measures arbitrators may order limits the scope to matters
2. Challenge Procedure; and relating to the subject matter of the dispute. The question
now is whether such limitation is necessary for the courts.
3. Failure or Impossibility to Act
Also, questions involving the preconditions for interim
The functions of the RTC: measures, the types of interim measures, etc., are not
answered.
1. Competence of Arbitral Tribunal to Rule on its
Jurisdiction; Even the provision dealing with power of arbitrators to order
interim measures, is short and does not cover the basic
2. Application for Setting Aside an Exclusive Recourse issues relating to it. Except for a limitation restricting such
Against Arbitral Award; interim measures of protection to matters relating to the
subject matter of the dispute and providing discretionary
3. Recognition and Enforcement); and authority to order security for such measures, the provision
is threadbare.
4. Venue and Jurisdiction
Another important issue that is missing is the status of ex-
parte orders. Specifically, this issue becomes a problem at
Rule: A Court may not refuse to grant, implement or
the time of enforcement of such orders. Courts can refuse
enforce a petition for an interim measure, including those
to recognize such orders using Article 34, which provides
provided for in the following, on the sole ground that the
for refusal if the party has not been given notice of the
Petition is merely an ancillary relief and the principal action
arbitral proceedings.
is pending with the arbitral tribunal:
Also, the Model Law has no provision regarding the
a. Arbitration Agreement and Interim Measures by
enforcement of interim orders made by the tribunal.
Court;
The UNCITRAL Rules contains provisions regarding interim
b. Appointment of Arbitrators; measures from arbitrators and as in the case of Model Law,
it expressly makes the request to judicial authorities for
c. Challenge Procedure; interim
measures compatible with the arbitration agreement.
d. Court Assistance in Taking Evidence
The provision contained in Article 26 of the Rules, authorize
(Also read Parlade pp. 181-207) the arbitrators to order interim measures of protection in
matters concerning the subject matter of dispute. The
Interim Measures in International Commercial Article specifically includes orders for conservation of
Arbitration: Past, Present and Future property by way of ordering its deposit with third persons,
(Sandeep Adhipathi)45 sale of perishable goods, etc.
The Model Law has a simple one-line provision regarding There is doubt whether the reference to the conservation of
the rights of the parties to approach a state court for interim property is just an example or a limit to the scope of the
measures: interim measures. But, the plain reading suggests that it
was intended as just an example.
Article 9. Arbitration agreement and interim measures
by court: It is not incompatible with an arbitration
Even the Rules restrict the powers by limiting the orders to
agreement for a party to request, before or during arbitral
matters concerning the subject matter of the dispute. Many
proceedings, from a court an interim measure of protection
have interpreted the reference to ‘matters concerning the
45 Digitalcommons.law.uga; 2003 subject matter of the dispute’ and ‘conservation of property’
69
as severely limiting the section. providing a comprehensive coverage of all the issues
concerned.
Further, it does not provide for any preconditions that need
to be met in order for the arbitrators to issue the interim Both the English courts and the legislations have supported
measures. The Article also authorizes the arbitrators to the provision of interim measures from the courts and the
require security for granting such orders. arbitrators.
The English have been favorable to the availability of
The Rules are also silent regarding the enforceability of interim measures over the years. But even in the English
interim measures ordered by the tribunal. legislation, there is some doubt regarding the enforcement
of provisional orders by the arbitrators themselves and the
When seen in light of Article 26(2) of the Rules, which power to approach the courts for enforcement. This position
provides for the interim measures to be in the format of holds good for most of the countries that are civil and
awards, the applicability of the New York Convention to the common law based. Hence, the need for a more
interim awards granted by the tribunal becomes important. harmonized international setup to address this issue.
The general consensus so far has been that award
enforcement provisions of the Convention do not apply for The work of UNCITRAL to amend the Model Law, so as to
interim measures. provide for issues involved in the interim measures of
arbitration is really important. Many nations both developed
In light of the shortcomings, UNCITRAL is at present and developing, are considering the UNCITRAL Model Law
discussing the possibility of amending the Model Law so as as a basis for drafting their own legislations. So a
to facilitate the harmonization of the national legislations comprehensive Model Law would definitely go a long way
relating to the interim measure. in setting up a more harmonized view on this issue.
Conclusion Most of the international institutions have adapted their

rules to provide interim measures of protection from the
The current position on interim measures available in tribunals. However, each rule has shortcomings of varying
international arbitration in different legal systems, including degrees. WIPO, AAA and ICC have provided the parties
the national legislations, court ruling, international with the choice of incorporating their Optional Rules, which
institutions and international conventions have been has been designed specifically to meet the need for
analyzed in the paper. emergent interim relief pending arbitration.
Though the conditions more or less seem to be favorable The international institutions may consider amending their
for interim measures of protection, it is felt that there is a lot Rules by providing a more elaborate structure for the
of confusion surrounding this issue. tribunals to work with. Since issues like the preconditions
necessary for
In spite of the criticism for court intervention and specific providing interim relief, the scope of the relief that the
legislations regulating tribunal ordered interim measure, arbitrators can grant, etc., are not contained in most of the
there is an urgent need for a more favorable and rules, the arbitrators may have difficulty in deciding whether
harmonized international structure to support arbitration, for an interim measure is necessary and whether they have the
arbitration to adapt itself to the changing circumstances and authority to grant such order.
remain as an alternative dispute resolution method in
international commerce. The author suggested that the UNCITRAL working group
should also work on the UNCITRAL Arbitration Rules to
For example, the position on interim measures in United make it in consonance with the amendment to the Model
States is still in great confusion. A party before agreeing to Law, so parties using the Rules for ad-hoc arbitration and
arbitration has to know the exact position of different circuits also other institutions can take advantage.
on this important issue. The courts have taken differing
views in both their authority to grant interim measures and Conduct of Arbitral Proceedings
that of the arbitrators. So when a party signs an arbitration
agreement involving a United States party, it has a daunting Sec 30-31, RA 9285
task of finding out the circuit court that they will have to
approach and the position that the court is most likely to SEC. 30. Place of Arbitration. – The parties are free to
take in enforcing the interim measures. Probably the time agree on the place of arbitration. Failing such agreement,
has come for the Federal Arbitration Act to be amended to the place of arbitration shall be in Metro Manila, unless the
meet the realities of the current international setup. arbitral tribunal, having regard to the circumstances of the
case, including the convenience of the parties shall decide
As far as the present system goes, English Arbitration Act on a different place of arbitration. The arbitral tribunal may,
probably is the only national legislation that comes close to unless otherwise agreed by the parties, meet at any place it
70
considers appropriate for consultation among its members, so he suggested for both AID and SPT to make capital
for hearing witnesses, experts or the parties, or for contributions to the partnership.
inspection of goods, other property or documents.
A confidant from SPT recommended an end to the
SEC. 31. Language of the Arbitration. – The parties are partnership with AID to save SPT because all the
free to agree on the language or languages to be used in equipment and SPT’s people have the skills to handle
the arbitral proceedings. Failing such agreement, the things on their own, and they don’t need that much control
language to be used shall be English in international and involvement from a third party anymore.
arbitration, and English or Filipino for domestic arbitration,
unless the arbitral tribunal shall determine a different or The heads of both parties then met at a bar in hotel. There,
another language or languages to be used in the SPT’s representative finally decided to end the partnership.
proceedings. This agreement or determination, unless Dr. Asamura protested, saying that SPT has no right to
otherwise specified therein, shall apply to any written terminate the agreement.
statement by a party, any hearing and any award, decision
or other communication by the arbitral tribunal. The arbitral They further argued over the ownership of the machineries,
tribunal may order that any documentary evidence shall be and most importantly, the special software they created for
accompanied by a translation into the language or their operations (JADEYE).
languages agreed upon by the parties or determined in
accordance with paragraph 1 of this Section. SPT claimed ownership over both, saying that they were
the ones who actually procured the permits, and thus, they
(Also read Parlade pp. 208-239) were the ones recorded as the owner and operator of such
machineries.
Moot Problem46
(Asamura vs.Shwe Pwint Thone) Since they were unable to settle their differences, they
sought the opinion of a mutual party – Atty. Farid Zakwan, a
The Parties lawyer based in Myanmar.
Claimant: Asamura International Development Co. Ltd. Atty. Zakwan recommended that the parties go for
(AID); a private international development company arbitration at the Kuala Lumpur Regional Centre for
specializing in crisis relief and development, assisting Arbitration (KLRCA) in Malaysia.
bilateral donors and the private sector to manage projects
in developing countries Dr. Asamura expressed his wish to have the arbitration in
Japan, toconfer upon him some sense of familiarity.
Respondent: Shew Pwint Thone Co., Ltd (SPT); local
Myanmar company teashops, jade carving and polishing The parties agreed to attend arbitration in Tokyo, but using
studios, and training centres the KLRCA Rules.
The agreement: They entered into a jade venture, which The issues: Parties agreed that the issues to be decided in
involved 4 main business activities: the arbitration are as follows:
(i) The validity of the termination of the agreement by
(i) exploration and extraction; SPT;
(ii) breaking and cutting; (ii) The ownership of the jade-mining machinery and
(iii) processing and production; equipment; and
(iv) distribution and sales. (iii) Subsistence and ownership of rights in the JADEYE
software.
AID sourced for second hand machinery and equipment
from Japan, purchased them, and reconditioned them. They The determination of damages, if any, will be done in a
imported into Myanmar where the jade extraction and separate hearing.
production business officially began. AID also imparted
technical knowledge to SPT’s employees and students. The arbitration clause:
SPT’s employees and students were trained on how to “9. If there is any disagreement to this agreement in the
operate and maintain the jade-mining equipment and future, as gentlemen of Japan and Myanmar, we will try to
machinery. solve everything in a polite manner.
10. Everything will be in accordance with and interpreted
The conflict: The head of AID, Dr. Asamura, started to feel under the law of the Golden Land of Myanmar.
the burden of the operational costs borne by his company, 11. To show respect towards the Golden Land, AID cannot
do or say anything harmful to the national interest and
solidarity of Myanmar, and vice versa.”
46 Law Asia Moot Problem 2017; Asamura vs Shwe Pwint Thone
71
Notwithstanding any legitimate interest, they might have the

Mock Arbitration script by Group 6&7 (download here: outcome of the dispute; these parties will remain alien both
https://1drv.ms/w/s!AjgHSho4K72Tjmgqp0cvEY43odmj) to the arbitration proceedings and an arbitral award. Their
interests are not taken into consideration and left
Rendition of Award and Termination of Proceedings unprotected. Arbitration proceedings, unlike litigation,
usually do not bear any intervention or joinder of parties,
Article 4.32, IRR which is explained by the contractual nature of arbitration.
Article 4.32. Termination of Proceedings. (a) The arbitral Meanwhile, an arbitral award can affect interests of third
proceedings are terminated by the final award or by an parties.
order of the arbitral tribunal in accordance with paragraph
(b) of this Article. (b) The arbitral tribunal shall issue an Question: How can these parties defend their interests in
order for the termination of the arbitral proceedings when: arbitration proceedings and during recognition and
enforcement proceedings in national courts?
(i) The claimant withdraws his/her/its claim, unless the
respondent objects thereto and the arbitral tribunal Answer: There are two ways of resolving such problem in
recognized a legitimate interest on his/her/its part in state court litigation:
obtaining a final settlement of the dispute;
a. COMPULSORY PARTICIPATION of any third party with
(ii) The parties agree the termination of the proceedings; any legitimate interest in litigation through intervention,
joinder of parties, and consolidation of cases. A court ex
(iii) The arbitral tribunal finds that the continuation of the officio has to gather all parties that can have any
proceedings has for any other reason become unnecessary legitimate interest in resolving the dispute. If judgment
or impossible. affects any interest of a party that was not involved in
the proceedings judgment should be reversed in
(c) The mandate of the arbitral tribunal ends with appellate court.
termination of the arbitral proceedings subject to the b. The second way is also the SOLUTION AGAINST
provisions of Articles 4.33 (Correction and Interpretation of PARALLEL PROCEEDINGS. This way is to harmonize
Award, Additional Award) and paragraph (d) of Articles 4.34 the outcome of parallel proceedings by the principle of
(Application for Setting Aside an Exclusive Recourse lis pendens and res judicata.
against Arbitral Award).
Lis pendens Res Judicata
(d) Notwithstanding the foregoing, the arbitral tribunal may, The first way is preferable The second way is to extend
for special reasons, reserve in the final award or order, a and national civil res judicata effect of the
hearing to quantity costs and determine which party shall proceedings give arbitral award to the third
bear the costs or the division thereof as may be determined precedence to it. party.
to be equitable. Pending determination of this issue, the First of all, because it
award shall not be deemed final for purposes of appeal, more ensures rights of
vacation, correction, or any post-award proceedings. such nonparticipating
third parties.
(Also read Parlade pp. 240-263) It does not work in This, first of all, violates the
arbitration. fundamental right to be
The Scope of the Arbitral Award, Binding Effect The third party is meant heard. Secondly, it does
(Natalia Bocharova)47 to go to the court to ask not resolve the problem
to set the award aside. In because the understanding
Modern business international transactions are multi-party some countries, state of the res judicata effect of
and complicated. Such contracts are usually composed of court applies lis pendens an
several contracts which can contain bilateral dispute principle when two arbitral award is not clear
resolution arrangements. According to the principle of parties are in arbitration even for the participated
parties autonomy dispute arising between two persons proceedings, and one parties.
bound by an arbitration agreement in connection with a party and the third party Res judicata is not only
multi-party project will be resolved by arbitration exclusively are in litigation in a state about binding effect. It also
between these two parties. Other parties cannot participate court. In this case, court prohibits reassertion; it has
in the resolution of the dispute through arbitration, even if suspends proceedings, enforcement effect and
they have played an active role in the actual project. but it happens quite rare. evidentiary presumption
effect.
47 Russian Law Journal, Vol. V (2017) Issue 2; Summary by
Group 1 (Ericha Gonadan, et al.) It is possible in some arbitration institution to bring to trial a
72
third party, but national legislation limits this possibility. The should have conclusive and preclusive effects in further
consent of both parties, of one party and the third party, arbitral proceedings. The conclusive and preclusive effects
both parties and the third party are required. of arbitral awards in further arbitral proceedings need not
necessarily be governed by national law and may be
The general rule is that only the party of the agreement can governed by transnational rules applicable to international
be in arbitration. Exclusions from this rule are quite rare. commercial arbitration.
The participation of a third party is not usual. An arbitration
tribunal could not ex officio bring any party to the action. An arbitral award has conclusive and preclusive effects in
And it is proved to be effective. The third party can further arbitral proceedings if:
participate if it wants to defend his rights and suffer or enjoy a) it has become final and binding in the country of origin,
the effect of the arbitral award. and there is no impediment to recognition in the country
of the place of the subsequent arbitration;
The doctrine of res judicata is well established in the b) it has decided on or disposed of a claim for relief
common law jurisdictions of England, Ireland, Canada, which is sought or is being reargued in the further
India, Australia and New Zealand. arbitration proceedings;
c) it is based upon a cause of action which is invoked in
In common law civil procedure the category of “privies” is the further arbitration proceedings or which forms the
used to identify all persons, who have community or privity basis for the subsequent arbitral proceedings; and
of interest with the participating party. d) it has been rendered between the same parties.
A privy is a person who has right to participate in the An arbitral award has conclusive and preclusive effects in
proceedings and who has some interest in its outcome. the further arbitral proceedings as to:
Usually, such persons should be noticed about a) determinations and relief contained in its dispositive
proceedings. part as well as in all reasoning necessary thereto;
But their nonparticipation does not exclude the effects of b) issues of fact or law which have actually been
res judicata towards them. arbitrated and determined by it, provided any such
determination was essential or fundamental to the
The following persons can be considered as privies of the dispositive part of the arbitral award.
parties in the case law of common law countries:
1) a director of the company and company; Both res judicata and legal effect doctrines give us a variety
2) individuals who own or control the company and the of situations when the judicial decision would affect the right
company; of the third party even in the case when such party did not
3) one company being alter ego of another company; participate in the proceedings. It is supposed that such
4) a bank solicitor and a bank; different cases need different approach how the state court,
5) an insured and the insurer; arbitral tribunal or such third party should consider the
6) a wife and a husband; arbitral award which affects the rights or interests of the
7) a stockbroker and a client etc. non-participating party.
Also, the doctrine of judgment in rem should be mentioned. The following cases can be listed.
The doctrines of issue estoppel and cause of action relate 1. An arbitral award in it’s the operative part directly
to judgment in personam or inter partes, that is, they relate stated the rights and obligation of the third party. This is
to judgment between parties. the gross violation of the principle to be heard, the idea of
adversarial proceedings and the party autonomy
A judgment in rem results from an action in rem. An action principle. This part of the arbitral award that violates the
in rem is proceedings to determine the status or condition core principles of arbitration should be considered as
of the rem itself. A judgment in rem is conclusive against all void. There is no need of any special proceedings to
persons, not only against the parties to the proceeding. As annul such award. The third party, parties, arbitral
an example of judgment in rem the following judicial tribunals and state court should ignore such part of the
decisions can be named: the ownership of land, a lawful arbitral award.
non-conforming use of property; an abatement of rent order 2. An arbitral award indirectly affect the rights and obligation
under rent control legislation; an adoption; the validity of of the third party in case when
treaty and others. a) the third party is a privy of one of the party;
b) the arbitral award is an award in rem;
ILA recommendations concern only the arbitral awards of c) the arbitral award has another effect on the rights of
the international commercial arbitration and do not touch the third party, resulted from any substantive legal
the effect of the arbitral award to the proceedings in the connection (including contractual one) between party of
state court. ILA admits that to promote efficiency and finality arbitration and the third party.
of international commercial arbitration, arbitral awards
73
In these cases, to guarantee the stability of arbitral award, we should presume that an arbitral award can affect rights
the authority of arbitration itself, the balance of the rights of and obligations of third parties even if they do not
parties and non-parties in arbitration the arbitral award participate in the arbitral proceedings.
should have some limited effect towards non-parties.
Judicial Review of International Commercial Arbitral
It is reasonable to quote here the main reasoning of the Awards
opponents of the theory of the binding effect of an arbitral
award: Article 4.33-4.34, IRR
1) arbitration proceedings are only possible between the
parties involved in arbitration agreement; Article 4.33. Correction and Interpretation of Award,
2) the withdrawal of arbitration tribunal beyond the limits Additional Award. (a) Within thirty (30) days from receipt
of the arbitration agreement is a ground reason for of the award, unless another period of time has been
canceling the arbitration award; agreed upon by the parties:
3) arbitration awards do not prevent third parties to bring
claims on the same subject or on the same and cause of (i) A party may, with notice to the other party, request
action to the state courts; the arbitral tribunal to correct in the award anyerrors in
4) arbitration awards do not have a collateral estoppel computation, any clerical or typographical errors or any
effect for subsequent judicial proceedings, so the third errors of similar nature;
party do not constrain by the arbitral award;
5) the core of arbitration is the consent of all parties to (ii) A party may, it so agreed by the parties and with
the arbitration proceedings. This principle of arbitration, notice to the other party, request the arbitraltribunal to give
in particular, implies that the intervention of a third party an interpretation of a specific point or part of the award.
is possible only with the consent of both the disputing
parties and this person involved. (b) If the arbitral tribunal considers the request to be
justified, It shall make the correction or give the
If a third party did not participate in arbitration proceedings, interpretation within thirty (30) days from receipt of the
it can in no way be connected with the rendered award. request. The interpretation shall form part of the award.
Such criticism of the idea of the binding effect of the arbitral (c) The arbitral tribunal may correct any error of the
award for the third parties do not take into consideration the type referred to in paragraph (a) of this Article on its
following: owninitiative within thirty (30) day from the date of the
1) the idea of the respect to the arbitral award: the same award
substantive effect to the rights of all parties and
nonparties should be given to the arbitral award as (d) Unless otherwise agreed by the parties, a party
judicial decision has; may, with notice to the other party, request, within thirty(30)
2) the principle of procedure economy should prevent the days receipt of the award, the arbitral tribunal to make an
third party from the re-litigation of the same issues; additional award as to claims presented in the arbitral
3) the possibility of parallel proceedings and other abuse proceedings but omitted from the award. If the arbitral
should be excluded. It is also worth to be mention that tribunal considers the request to be justified, it shall make
the idea of only procedural nature of the judicial decision the additional award within sixty (60) days
and arbitral award is peculiar to the modern German
legal science (as the judicial decision could not have any (e) The arbitral tribunal may extend, if necessary, the
substantive effect on the third party and such party could period of time within which it shall make a
not have any right to challenge this decision by any correctioninterpretation or an additional award under
means but by bringing separate special claim (Art. 772 of paragraphs (a) and (b) of this Article.
the German Civil Procedure Code40)).
(f) The provisions of Article 4.31 (Form and Contents of
Conclusion Award) shall apply to a correction or interpretation ofthe
award or to an additional award.
The development of private commercial relations could lead
to the situation that it will be impossible to deliver an arbitral Article 4.34. Aplication for Setting Aside an Exclusive
award that does not affect any third party. The complexity of Recourse against Arbitral Award.
the legal relations can result in the disability of arbitration
itself as far as the arbitration does not have the same (a) Recourse to a court against an arbitral award may
mechanisms of involvement of third parties. be made only by application for setting aside inaccordance
with second and third paragraphs of this Article.
It means that with the purpose of the possibility of
arbitration, the stability of arbitral awards and legal certainty (b) An arbitral award may be set aside by the Regional
74
Trial Court only If: UNCITRAL 2012 Digest of Case Law on the Model Law
of International Commercial Arbitration48
(i) the party making the application furnishes proof that:
History
(aa) a party to the arbitration agreement was under
some incapacity ; or the said agreement isnot valid under The UNCITRAL Model Law on International Commercial
the law to which the parties have subjected it or, failing any Arbitration (“the Model Law”) was adopted by the United
indication thereon, under the law of the Philippines; or Nations Commission on International Trade Law
(UNCITRAL) on 21 June 1985, at the end of the 18th
(bb) the party making the application was not given session of the Commission.
proper notice of the appointment of anarbitrator or of the
arbitral proceedings or was otherwise unable to present his The UN General Assembly (through Resolution 40/72 on
case; or December 11, 1985) recommended “that all States give due
consideration to the Model Law on International
(cc) the award deals with a dispute not contemplated by Commercial Arbitration, in view of the desirability of
or not failing within the terms of thesubmission to uniformity of the law of arbitral procedures and the specific
arbitration, or contains, decisions on matters beyond the needs of international commercial arbitration practice”.
scope of the submission to arbitration, provided that, if the
decisions on matters submitted to arbitration can be The Model Law was amended by UNCITRAL on 7 July
separated from those not so submitted, only the part of the 2006, at its 39th session.
award which contains decisions on matters not submitted to
arbitration may be set aside; or Purpose
(dd) the composition of the arbitral tribunal or the arbitral The Model Law was developed to address considerable
procedure was not in accordance withthe agreement of the disparities in national laws on arbitration.
parties, unless such agreement was in conflict with a
provision of ADR Act from which the parties cannot National laws were often particularly inappropriate for
derogate, or, falling such agreement, was not in accordance international cases, hence the need for improvement and
with ADR Act; or harmonization.
(ii) the Court finds that: The Model Law constitutes a sound basis for the desired
harmonization and improvement of national laws.
(aa) the subjectmatter of the dispute is not capable of
settlement by arbitration under the law ofthe Philippines; or Scope/Coverage
(bb) the award is in conflict with the public policy of the It covers all stages of the arbitral process from the
Philippines. arbitration agreement to the recognition and enforcement of
the arbitral award.
(c) An application for setting aside may not be made
after three months have elapsed from the date on whichthe It reflects a worldwide consensus on the principles and
party making that application had received the award or, If a important issues of international arbitration practice. It is
request had been made under Article 4.33 (Correction and acceptable to States of all regions and the different legal or
Interpretation of Award, Additional Award) from the date on economic systems of the world.
which that request has been disposed of by the Arbitral
tribunal Since its adoption by UNCITRAL, the Model Law has come
to represent the accepted international legislative standard
for a modern arbitration law. A significant number of
(d) The court, when asked to set aside an award, may,
jurisdictions (90 countries since 2012, including ours) have
where appropriate and so requested by a party,suspend the
enacted arbitration legislation based on the Model Law.
setting aside proceedings for a period of time determined
by it in order to give the arbitral tribunal an opportunity
States are encouraged to make as few changes as possible
resume the arbitral proceedings or take such other action
when incorporating the Model Law into their legal systems.
as in the arbitral tribunal's opinion will eliminate the grounds
for setting aside.
The CLOUT
(e) A party may bring a petition under this Article before
UNCITRAL has established a reporting system for Case
the court in accordance with the Special ADR Rules.
(Also read Parlade pp. 264-251) 48 Uncitral.org

75
Law on UNCITRAL Texts (CLOUT). than one country.
CLOUT was established in order to assist judges, If a party has more than one place of business, the place of
arbitrators, lawyers, and parties to business transactions, business is that which has the closest relationship to the
by making available decisions of courts and arbitral arbitration agreement.
tribunals interpreting
UNCITRAL texts. If a party does not have a place of business, reference is to
be made to his habitual residence.
Majority of its cases refers to the United Nations
Convention on Contracts for the International\ Sale of Full copy: http://www.uncitral.org/pdf/english/clout/MAL-
Goods (Vienna, 1980), and to the Model Law. digest-2012-e.pdf
General Provisions Case law on Art. 36: Grounds for refusing enforcement
Scope of Application: It applies to international commercial Courts construing Article 36 found that the list of grounds
arbitration. for refusing recognition and enforcement of an arbitral
award in paragraph (1) was exclusive and should be
The term “commercial” should be given a wide construed narrowly.
interpretation to cover matters arising from all relationships
of a commercial nature, whether contractual or not. On Due Process: Art. 36, par. (1)(a)(ii) of Model Law
Relationships of a commercial nature include, but are not The concept of “unable to present his case”: It is sometimes
limited to: suggested that this provision only covers general violations
a. any trade transaction for the supply or exchange of of the right to present one’s case and not issues pertaining
goods or services; to evidence. However, certain courts have dealt with
b. distribution agreement; rejections by arbitral tribunals of evidence.
c. commercial representation or agency;
d. factoring; leasing; One German court treated the refusal of the arbitrator to
e. construction of works; hear witnesses to be primarily a question of the violation of
f. consulting; the right to be heard.
g. engineering; Other issues that have been raised in case law include:
h. licensing; a. refusals to take evidence;
i. investment; b. absence of consideration by the arbitral tribunal of
j. financing; evidence presented; and
k. banking; c. the language of the proceedings.
l. insurance;
m. exploitation agreement or concession; Courts in various jurisdictions also ruled that:
n. Joint venture and other forms of industrial or
business cooperation; and a. A party cannot invoke a lack of proper participation
o. carriage of goods or passengersby air, sea, rail or or proper representation in the arbitral proceedings
road. as a ground to resist enforcement if that is not due
to circumstances attributable to the arbitral tribunal
An arbitration is international if: or extraneous events beyond the parties’ control.
a. the parties to an arbitration agreement have, at the
time of the conclusion of that agreement, their places b. A lack of participation by the legal representatives
of business in different States; or which is due to unclear instructions by the parties is
b. one of the following places is situated outside the not sufficient to constitute violation of due process.
State in which the parties have their places of
business: c. The right to due process was not violated where
i. the place of arbitration if determined in, or one party was unable to attend the hearing,
pursuant to, the arbitration agreement; allegedly since it was not granted a visa for the
ii. any place where a substantial part of the country where the hearing took place. Such party
obligations of the commercial relationship is had been notified of the arbitral proceedings and
to be performed or the place with which the had the opportunity to participate in the
subject matter of the dispute is most closely proceedings.
connected; or
c. the parties have expressly agreed that the subject d. The lack of participation due to insufficient funding
matter of the arbitration agreement relates to more or because the hearing was not held at the place of
76
arbitration were not considered sufficient to justify Other courts held that an award was binding under the law
an assumption of a violation of the right to be of the country in which it was made if there was no statutory
heard. remedy against the award providing for a review of its
merits.
e. A party can only present its case properly if the
relevant documents are served upon it. It sufficient The arbitral award has been set aside or suspended:
that the arbitral tribunal served the relevant
document to the respondent’s last known address. After an arbitral award is made, the claimant may seek
enforcement either before the courts in the State where the
f. The arbitral tribunal is under no obligation to award was made or before the courts in another State (ex:
discuss with the parties the case or its preliminary where the defendant has assets).
legal view on the facts. The arbitral tribunal should
inform the parties in instances where it would But if the award is set aside or vacated by the court in the
decide to deviate from a legal position previously State of origin, the enforcement of the award in that State
communicated to the parties or where its decision will not be possible. The party seeking enforcement may
would for other reasons come as a surprise to the then try to have the award enforced by a court in another
parties. State.
Courts in that other State (the State of enforcement) usually

g. Arbitral tribunals are not under an obligation to face the issue of whether to allow enforcement of the
address all details of the arguments raised and the award, even if it had been set aside in the State of origin.
evidence offered by the parties in the reasoning of
their decisions. Those that are irrelevant need not In one decision, it was found that if the arbitral award had
be mentioned. been set aside at the place of arbitration, the award was no
longer binding. Thus, the enforcement court had no power
to recognize or enforce such arbitral award. This would be
h. There is a presumption that the tribunal has the case even though there was a possibility that the
complied with its obligation to take the parties’ decision setting aside the award would be revised in further
submissions into account. The mere silence of the proceedings which were pending at the place of arbitration.
decision on certain points raised by the defendant
does not mean that the arbitral tribunal has not Canadian courts have confirmed at least obiter dicta that
considered the argument. they have discretion to enforce awards which have been set
aside in their countries of origin.
i. The defense of lack of understanding of language Another court held that the suspension of the arbitral award
will not be successful if the language of the arbitral at the place of arbitration had no bearing on the court’s
proceedings had explicitly been agreed upon or discretion to refuse enforcement.
was determined in line with the chosen arbitration
rule. A party who is unable to understand the Case: RCBC Capital Corp vs BDO49
language should arrange for the necessary
translations. It is sufficient that a party is (May an international arbitral award be set aside by the
represented by a lawyer who speaks the language. courts?)
That the arbitral award has not become binding, has This case emanated from arbitration proceedings
been set aside or suspended—Art. 36, par. (1)(a)(v) commenced by RCBC pursuant to the arbitration clause
under its Share Purchase Agreement (SPA) with EPCIB.
The arbitral award has not yet become binding upon the
parties: The parties agreed on the following:
a. Laws to be Applied - The Tribunal shall determine the
In the absence of a definition of when an award becomes issues to be resolved in accordance with the laws of
binding, courts in several jurisdictions had to address that the Republic of the Philippines.
matter. b. Procedure to be Applied - The proceedings before
the Tribunal shall be governed by the ICC Rules of
A Canadian court found that an arbitral award was binding Arbitration and the law currently applicable to
and could be enforced irrespective of any confirmation of arbitration in the Republic of the Philippines.
the arbitral award by a court in the jurisdiction where the
award was made.
49 GR No. 196171; Dec. 10, 2012
77
While the Tribunal constituted by the International Chamber to the arbitration.

of Commerce-International Commercial Arbitration (ICC-
ICA) was conducting the arbitration proceedings, EPCIB In this case, BDO claimed that the Arbitration Tribunal
merged with BDO. BDO assumed all its liabilities and exceeded its powers in deciding the issue of advance cost
obligations. not contemplated in the TOR, and that Chairman Barker
acted with evident partiality in making such award.
The Tribunal issued an award in favor of RCBC, ordering
BDO to pay RCBC. The RTC of Makati confirmed this The RTC held that BDO failed to substantiate these
decision. allegations. On appeal, the CA likewise found that the
Arbitration Tribunal did not go beyond the submission of the
RCBC filed an urgent motion for the issuance of a writ of parties.
execution, to implement the award, and the RTC granted
this. However, on appeal, the CA reversed the RTC’s However, the CA found factual support in BDO’s charge of
confirmation of the award. partiality.
RCBC filed a petition to set aside CA’s decision of reversing The ICC Rules require that an arbitral tribunal should act
of the award. fairly and impartially. Hence, an arbitrator’s conduct should
be beyond reproach and suspicion. His acts should be free
Issue: Whether there was legal ground to vacate the award from the appearances of impropriety.
by the Tribunal from the ICC-ICA.
An examination of the circumstances claimed to be
SC’s decision: Yes, on the ground of evident partiality of illustrative of Chairman Barker’s partiality is indicative of
the Tribunal/arbitrator, under Rule 11.4 of the Special ADR bias.
Rules.
Chairman Barker gave the parties a copy of an article by
Evident partiality is not defined in our arbitration laws. The Matthew Secomb entitled "Awards and Orders Dealing With
SC then looked at international court decisions. the Advance on Costs in ICC Arbitration: Theoretical
Questions and Practical Problems". His act established that
In the Federal Arbitration Act of the US, evident partiality he had pre-formed opinions—that he had prejudged the
was defined as both: (a) an arbitrator’s explicit bias toward matter before him.
one party; and (b) an arbitrator’s inferred bias when an
arbitrator fails to disclose relevant information to the parties. Chairman Barker’s act of furnishing the parties with copies
of Matthew Secomb’s article is indicative of partiality such
In Commonwealth Coatings Corp. v. Continental that a reasonable man would have to conclude that he was
Casualty Co. (1968), the US SC laid down the rule that the favoring the Claimant, RCBC.
arbitrators must disclose to the parties "any dealings that
might create an impression of possible bias," and that Mr. Secomb’s article specifically dealt with the situation
underlying such standard is "the premise that any tribunal when one of the parties to international commercial
permitted by law to try cases and controversies not only arbitration refuses to pay its share on the advance on costs.
must be unbiased but also must avoid even the appearance
of bias." Arbitrators should not automatically be disqualified By furnishing the parties with a copy of this article,
from an arbitration proceeding because of a business Chairman Barker practically armed RCBC with supporting
relationship where both parties are aware of the legal arguments under the "contractual approach"
relationship in advance, or where the parties are unaware discussed by Secomb.
of the circumstances but the relationship is trivial. However,
in the event that the arbitrator has a "substantial interest" in It may also be mentioned that Matthew Secomb is a
the transaction at hand, such information must be member of the ICC Secretariat and the "Counsel in charge
disclosed. of the file". This bolstered the impression that Chairman
Barker was predisposed to grant relief to RCBC by issuing
In Morelite Construction Corp. v. New York District a partial award.
Council Carpenters Benefit Funds, the court ordered for
the vacation of the arbitrator’s award, there being a father- Indeed, fairness dictates that Chairman Barker refrain from
son relationship between the arbitrator and the president of suggesting to or directing RCBC towards a course of action
appellee union. This provided strong evidence of partiality to advance the latter’s cause.
and was unfair to appellant construction contractor.
Though done purportedly to assist both parties, Chairman
There is evident partiality when a reasonable person would Barker’s act clearly violated Article 15 of the ICC Rules
have to conclude that an arbitrator was partial to one party declaring that “in all cases, the Arbitral Tribunal shall act
78
fairly and impartially and ensure that each party has a 6. Thus, the parties have reached a complete, absolute and
reasonable opportunity to present its case." final settlement of their claims, demands, counterclaims and
causes of action arising, directly or indirectly, from the facts
The actuations of arbitrators "must be guarded and and circumstances giving rise to, surrounding or arising
measured lest the best of intentions be misconstrued." from both Petitions, and have agreed to jointly terminate
and dismiss the same in accordance with their agreement.
The SC then adopts the CA’s standard for evident partiality:
the reasonable impression of partiality standard, which 7. In view of the foregoing compromise between the
requires a showing that a reasonable person would have to Parties, BDO, RCBC Capital and Go/Shareholders, with the
conclude that an arbitrator was partial to the other party to assistance of their respective counsels, have decided to
the arbitration. jointly move for the termination and dismissal of the above-
captioned cases with prejudice.”
Such interest or bias "must be direct, definite and capable
of demonstration rather than remote, uncertain, or The parties asked for the termination and dismissal of the
speculative." cases, with prejudice.
The SC clarified, however, that the merits of the parties’ Hence, the SC ordered that the cases be “dismissed with
arguments as to the propriety of the issuance of the Second prejudice and deemed closed and terminated”.
Partial Award are not in issue here. Courts are generally
without power to amend or overrule merely because of Judicial Review of Arbitral Awards in the Philippines:
disagreement with matters of law or facts determined by the A Look into the Application of the Public Policy
arbitrators. They will not review the findings of law and fact Exception Under the NY Convention Applying United
contained in an award, and will not undertake to substitute States Precedents
their judgment for that of the arbitrators. A contrary rule (Mary Jude Cantorias)50
would make an arbitration award the commencement, not
the end, of litigation. It is the finding of evident partiality As commercial transactions become increasingly complex
which constitutes legal ground for vacating the award and with the expansion of international trade, it became
not the Arbitration Tribunal’s application of the ICC Rules practical to include dispute resolution mechanisms in
adopting the "contractual approach" tackled in Secomb’s contracts. Arbitration is one such mechanism.
article.
Parties to international trade need their transactions to be
Alternative dispute resolution methods or ADRs are unhampered by disputes. Should a dispute arise, they want
encouraged. By enabling parties to resolve their disputes such to be resolved speedily, with outcomes that are
amicably, they provide solutions that are less time- predictable and certain.
consuming, less tedious, less confrontational, and more
productive of goodwill and lasting relationship. Resorting to the national courts of one country or another
may defeat speed, predictability and certainty as parties
The most important feature of arbitration, and indeed, the may be unfamiliar with the vagaries of the rules of domestic
key to its success, is the public’s confidence and trust in the court systems.
integrity of the process. For this reason, the law authorizes
vacating an arbitral award when there is evident partiality in By utilizing the autonomous process of international
the arbitrators. arbitration, the uncertainty brought on by a foreign law and
forum to resolve disputes may be lessened if not
Hence, in 2012, the SC denied BDO’s petition and affirmed altogether avoided.
the CA’s decision to have the award vacated.
Enforcement of an arbitral award is greatly facilitated by the
----(separate case)---- 1958 United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (New York
However, in 2014, the parties submitted to the SC a Joint Convention), with the growing liberality of judicial
Motion and Manifestation, submitting and praying that: interpretation favoring enforcement.
“5. After negotiations, the Parties have mutually agreed that An arbitral award is generally easier to enforce than a court
it is in their best interest and general benefit to settle their judgment, largely due to most states’ accession to the New
differences with respect to their respective causes of action, York Convention.
claims or counterclaims in the RCBC Capital Petition and
the BDO Petition, with a view to a renewal of their business 50Arellano Law and Policy Review Vol. II, No. 1; Presented at a
relations.
Conference at the University of Massachusetts Boston, “Conflict
Studies: The New Generation of Ideas,” Oct. 22-23, 2010
79
the public policy “straw”.

As of 2010, the New York Convention is in force in 143
countries, including the Philippines. Finally, it may be an interesting innovation to have specific
Supreme Court justices tasked to oversee the development
However, to protect “fundamental interests of the parties, of Philippine jurisprudence in the arbitration field. Such
society and the rule of law,” the Convention recognizes expertise will help in the speedy disposition of arbitration
certain grounds that may be raised before the courts to matters brought to court, helping the Philippines emerge as
oppose enforcement of an arbitral award. a sophisticated international arbitration hub.
This paper focuses on the “public policy” exception under Judicial Review of International Arbitral Awards:
ArticleV (2)(b) of the Convention. Preserving Independence in International Commercial
Arbitrations
Public policy here is said to be that which reflects “the (Jessica L. Gelander)51
fundamental economic, legal, moral, political, religious and
social standards of every state” where enforcement is The resolution of potential disputes is of great concern to
sought. parties involved in international business transactions. Due
to the high cost of overseas litigation and the uncertainty of
To date (2010 when this was written), there is no Philippine relying upon a foreign legal system, such disputes are often
Supreme Court case law that specifically refers to non- difficult to resolve.
enforcement of foreign arbitral awards on grounds of
violation of public policy. This scarcity of case law in the It is essential to the maintenance of international trade
Supreme Court adds to the difficulty for lower courts in relationships that businesses feel confident in the methods
finding guidance when faced with the public policy defense by which they resolve commercial disputes.
against enforcement, especially so that adherence to
judicial precedents is embodied in Article 8 of the Philippine Arbitration agreements allay many of the concerns relating
Civil Code;28 hence, the need to develop an arbitration to international business by ensuring a degree of
civilization by looking to well-evolved jurisdictions like the organization and predictability in the process through which
US. disputes are resolved.
In Parsons vs RAKTA, the US court held that the public Accordingly, international businesses frequently enter into
policy defense is not meant to merely protect national arbitration agreements that pre-arrange the procedures to
interests; an action that violates local public policy may not be followed in the event that a dispute arises. Establishing a
necessarily violate international public policy. A distinction process of dispute resolution in advance helps to create a
must still be made where public policy is invoked in the field "neutral playing field," increasing the parties' comfort level
of international commercial arbitration, i.e. beyond mere and promoting future involvement in international
contravention of domestic law. commercial transactions.
The public policy contemplated under Article V (2) (b) are In long-term commercial relationships, the details of an
those which essentially pertains to matters that have agreement to arbitrate are generally established in the
international connection or application. initial contract between the parties.
The public policy defense should be narrowly construed, Ironically, the contractual nature of international arbitration
especially so where the public policy allegedly violated is brings about many drawbacks. Although the possibility of an
not well defined and dominant. The court concluded that arbitrator abusing an unchecked process may jeopardize its
refusal to enforce a foreign arbitral award should only be integrity, interference in a private agreement is contrary to
premised on violation of the enforcing state's “most basic the fundamental goals of international arbitration.
notions of morality and justice.”
As noted by one commentator, "the effectiveness of
The approach of Philippine court decisions interpreting international commercial arbitration depends on the
national public policies should be consistent with the predictable enforcement of arbitral agreements and
objectives of the Convention and the public policy interests awards."
of other Contracting States, not merely advancing
“parochial, local interests.” International arbitration policies are founded upon two basic
interests:
Philippine court decisions should add to the growing a. preserving the finality of arbitral awards; and
development of an “arbitration civilization” in the Philippines b. maintaining a just system. 6
by providing guidance in defining this area of law and
recognizing what is merely frivolous opposition clutching at
51Marquette Law Review, Vol. 80, Issue No. 2, Winter, 1997
80
Arbitration is a consensual process. The contractual nature provisions of the agreement, the arbitrator has exceeded
of an arbitration permits international companies to pre- the scope of authority, rendering the award unenforceable.
arrange a predictable system of dispute resolution which
preserves the privacy of their business relationship. However, it is often difficult to distinguish between a mere
error of law and an action which wholly exceeds arbitral
Judicial review undermines the fundamental benefits of authority.
submitting to commercial arbitration. The very reasons
parties enter into international arbitration agreements (to Thus, a court risks imposing its own substantive evaluation
increase speed, neutrality, efficiency, privacy, and finality, of a dispute in reviewing the scope of an arbitrator's
and to reduce costs of dispute resolution) are rendered void authority. The burden of showing an arbitral tribunal has
if a national court is permitted to reexamine the decision of exceeded its contractual authority falls on the party
an arbitral panel. challenging confirmation of the award.
Under a judicial system of control, increased costs in time The strength of the public policy favoring international
and money are passed onto parties who selected arbitration renders this burden difficult to overcome.
arbitration as a way to protect their rights. Ultimately, such
parties are denied the protections they sought through 2. Public Policy
arbitration and possibly priced out of the system altogether.
A reviewing court may also vacate an award that it finds
Nevertheless, there are dangers inherent in the complete contrary to domestic public policy.
independence of arbitral forums. A forum with no system of
review is more susceptible to abuse. Review under this "catch-all" standard is somewhat
troublesome. The court in Fotochrome Inc. v Copal Co.
If the system of international arbitration is to continue to limited its application of this provision to circumstances in
meet the needs of international business, it is necessary to which recognizing the award would violate fundamental
reach a balance between the conflicting goals of justice and conceptions of "morality and justice”.
finality in commercial arbitration.
In W.R. Grace v. Local 759, the court explained that under
Current Status of Judicial Review of Arbitral Awards this test, the policy must be "well defined and dominant"
and derive from "reference to the laws and legal precedents
The primary issue facing the system of international and not from general consideration of supposed public
arbitration concerns the review of arbitral awards. Since interests."
there is no institutional system of review, aggrieved parties
are forced to appeal arbitrators' decisions in national courts. One commentator characterized the public policy exception
to enforcement as an "escape hatch," under which a court
The role of domestic judicial systems is limited. There is no may interject "national bias and political undertones" into its
review of an arbitrator's substantive conclusions in
rendering an award. assessment of the award.
Notwithstanding the parties' intent to provide for a final Consideration of policy issues could threaten the viability of
decision, an arbitral award is subject to statutory defenses international arbitration as a mechanism for commercial
regarding enforcement. Unfortunately, questions submitted dispute resolution. At a minimum, it would compromise the
for review are frequently intertwined with the substantive neutrality of the proceeding, frustrating the fundamental
issues of a dispute. goals and intentions of the parties.
Parties to an arbitration agreement are faced with Common Law Standard of Manifest Disregard
considerable uncertainty. Ironically, uncertainty is one of the
problems parties seek to avoid through the execution of an Many courts have adopted the common law standard of
arbitration agreement. "manifest disregard."
1. Excess of Authority The standard derives from dicta contained in the 1953 US
Supreme Court case of Wilko v. Swann. Here, the Court
Due to the contractual nature of arbitration, an award must invalidated an arbitration agreement on the grounds that
be based on the provisions of the agreement, rather than the dispute arose under the Securities Act and that
an arbitrator's personal interpretation of legislative congressional intent was better served by prohibiting
requirements. arbitration of a securities issue.
If an arbitrator fails to confine his or her decision to the

81
Several courts have either declined to apply the doctrine of of review to disappear altogether. Consequently, it is crucial
manifest disregard or criticized its appropriateness. that the standards be clarified and narrowed such that
parties to arbitration are afforded a reasonable level of
In discussing its reluctance to apply the standard, one court certainty in their expectations.
noted that, "indeed, we have expressed some doubt as to
whether it should be adopted since the standard would In assessing the problems surrounding the grounds for
likely never be met when the arbitrator provides no reasons vacating arbitral awards, courts have considered the
for its award (which is typically the case). following issues:
Bernhardt v. Polygraphic Company of America, Inc., 1. the absence of a complete record upon which to
suggests that application of a non-statutory standard of apply the standards;
manifest disregard to an arbitral award would be
inappropriate. The Court stated that “whether the arbitrators 2. the interconnection of arbitral procedure with the
misconstrued a contract is not open to judicial review," and merits of the dispute; and
that arbitrators may draw on their personal knowledge in
making an award. 3. the possible misapplication of the standards due to
the lack of clarity in their scope.
The fact that the manifest disregard doctrine has existed
since 1953, but was never incorporated into the New York Conclusion
Convention or the Federal Arbitration Act, suggests that
Congress intended to exclude it as a standard of review for The strong policy supporting international arbitration
arbitral awards. dictates that courts preserve the independence of arbitral
tribunals and effectuate the intent of parties to finalize their
Balancing the Interests of Review and Independence disputes through arbitration.
The uncertainties of litigation are precisely what parties to Although there are dangers inherent in an unchecked
an arbitration agreement seek to avoid by establishing a system of dispute resolution, parties to an arbitration
procedure for non-judicial dispute resolution. agreement are free to balance the costs and benefits of
arbitration and overseas litigation.
The resolution of international commercial disputes is
complicated and expensive. Parties to an arbitration The advantages of arbitration in an international
agreement attempt to minimize the disadvantages inherent commercial context are strong, eliminating a great deal of
to potential disputes involving international business cost and uncertainty. Parties involved in international trade
transactions through arbitration, which carries with it the realize the benefit of arranging a neutral, efficient, and final
benefits of speed and cost efficiency. method of resolving commercial disputes. Accordingly, they
voluntarily submit to the arbitral process.
The pressure that national judicial review places upon the
system of arbitration eliminates these advantages, and the It is imperative that both domestic and foreign parties
consequence may be a reduction in international trade as remain confident in the predictability and autonomy of
businesses become discouraged with the system." international arbitration.
In the commercial context, time is often a key concern Imposing national review onto international arbitral awards
when a dispute arises. Thus, the finality of a decision is one will only produce skepticism and reluctance to submit to
of the most attractive features of the arbitration procedure. international commercial arbitration.
Although judicial review may increase the accuracy of Recognition & Enforcement of Foreign Arbitral Awards
arbitration decisions, the costs of such review is passed on
to the parties submitting to arbitration, thereby negating the 1958 New York Convention on the Recognition and
benefits of arbitration and undermining the system Enforcement of Foreign Arbitral Awards
altogether.
The Convention entered into force on 7 June 1959.
Due to the negative impact that a system of review has on
international commercial arbitration, review acts as a How to become a party: The Convention is closed for
"roadblock" to its effectiveness. signature. It is subject to ratification, and is open to
accession by any Member State of the United Nations, any
Notwithstanding the negative effect judicial review has on other State which is a member of any specialized agency of
the viability of international commercial arbitration, it is the United Nations, or is a Party to the Statute of the
unrealistic to presume that courts will permit the standards International Court of Justice
82
settlement by arbitration under the law of that country; or

Optional and/or mandatory declarations and
notifications: When signing, ratifying or acceding to the (b) The recognition or enforcement of the award would be
Convention, any State may on the basis of reciprocity contrary to the public policy of that country.
declare that it will apply the Convention to the recognition
and enforcement of awards made only in the territory of Article 4.35-4.46, IRR
another Party to the Convention.
Article 4.35. Recognition and Enforcement. (a) A foreign
Denunciation/Withdrawal: Any Party may denounce this arbitral award shall be recognized as binding and, upon
Convention by a written notification to the Secretary- petition in writing to the regional trial Court, shall be
General of the United Nations. Denunciation shall take enforced subject to the provisions of this Article and of
effect one year after the date of the receipt of the Article 4.36 (Grounds for Refusing Recognition or
notification by the Secretary-General. Enforcement).
Article V – Grounds for Refusing Recognition (b) The petition for recognition and enforcement of
such arbitral awards shall be filled with the Regional Trial
1. Recognition and enforcement of the award may be Court In accordance with Special ADR Rules.
refused, at the request of the party against whom it is
invoked, only if that party furnishes to the competent (i) Convention Award The New York Convention shall
authority where the recognition and enforcement is sought, govern the recognition and enforcement of arbitral awards
proof that: covered by said Convention. The petitioner shall establish
that the country in which the foreign arbitration award was
(a) The parties to the agreement referred to in article II made is a party to the New York Convention
were, under the law applicable to them, under some
incapacity, or the said agreement is not valid under the law (ii) NonConvention Award – The recognition and
to which the parties have subjected it or, failing any enforcement of foreign arbitral awards not covered by the
indication thereon, under the law of the country where the New York Convention shall be done in accordance with
award was made; procedural rules to be promulgated by the Supreme Court.
The court may, on grounds of comity and reciprocity,
(b) The party against whom the award is invoked was not recognize and enforce a nonconvention award as a
given proper notice of the appointment of the arbitrator or of convention award.
the arbitration proceedings or was otherwise unable to
present his case; (c) The party relying on an award or applying for its
enforcement shall file with the Regional Trial Court the
(c) The award deals with a difference not contemplated by original or duly authenticated copy of the award and the
or not falling within the terms of the submission to original arbitration agreement or a duly authenticated copy
arbitration, or it contains decisions on matters beyond the thereof. If the award or agreement is not made in an official
scope of the submission to arbitration, provided that, if the language of the Philippines, the party shall supply a duly
decisions on matters submitted to arbitration can be certified translation thereof into such language.
separated from those not so submitted, that part of the
award which contains decisions on matters submitted to (d) A foreign arbitral award when confirmed by a court
arbitration may be recognized and enforced; of a foreign country, shall be recognized and enforced as a
foreign arbitral award and not as a judgment of a foreign
(d) The composition of the arbitral authority or the arbitral court.
procedure was not in accordance with the agreement of the
parties, or, failing such agreement, was not in accordance (e) A foreign arbitral award when confirmed by the
with the law of the country where the arbitration took place; Regional Trial Court, shall be enforced in the same manner
as final and executory decisions of courts of law of the
(e) The award has not yet become binding on the parties, or Philippines.
has been set aside or suspended by a competent authority
of the country in which, or under the law of which, that (f) If the Regional Trial Court has recognized the arbitral
award was made. award but an application for rejection and/or) suspension of
enforcement of that award is subsequently made, the
2. Recognition and enforcement of an arbitral award may Regional Trial Court may, if it considers the application to
also be refused if the competent authority in the country be proper, vacate or suspend the decision to enforce that
where recognition and enforcement is sought finds that: award and may also, on the application of the party
claiming recognition or enforcement of that award, order the
(a) The subject matter of the difference is not capable of other party seeking rejection or suspension to provide
83
appropriate security. ground raised shall be disregarded by the Regional Trial

Court.
Article 4.36. Grounds for Refusing Recognition or
Enforcement. B. NONCONVENTION AWARD.
A CONVENTION AWARD. (a) A foreign arbitral award rendered in a state which is

not a party to the New York Convention will berecognized
Recognition or enforcement of an arbitral award, made in a upon proof of the existence of comity and reciprocity and
state, which is a party to the New York Convention, may be may be treated as a convention award. If not so treated and
refused, at the request of the party against whom it is if no comity or reciprocity exists, the nonconvention award
provoked, only if the party furnishes to the Regional Trial cannot be recognized and/or enforced but may be deemed
Court proof that: as presumptive evidence of a right as between the parties
in accordance with Section 48 of the Rules of Court.
(a) The parties to the arbitration agreement are, under
the law applicable to them, under some incapacity; or the (b) If the Regional Trial Court has recognized the
said agreement is not valid under the law to which the arbitral award but a petition for suspension of
parties have subjected it or; failing any indication thereon, enforcementof that award is subsequently made, the
under the law of the country where the award was made; or Regional Trial Court may, if it considers the petition to be
proper, suspend the proceedings to enforce the award, and
(b) the party against whom the award is invoked was may also, on the application of the party claiming
not given proper notice of the appointment of an arbitrator recognition or enforcement of that award, order the other
or of the arbitral proceedings or was otherwise in able to party seeking suspension to provide appropriate security.
present his case; or
(c) If the petition for recognition or enforcement of the
(c) the award deals with dispute not contemplated by arbitral award is filed by a party and a counterpetitionfor the
or not failing within the terms of the submission to rejection of the arbitral award is filed by the other party, the
arbitration, or it contains decisions on matters beyond the Regional Trial Court may, if it considers the counterpetition
scope of the submission to arbitration; provided that, if the to be proper but the objections thereto may be rectified or
decisions on matters submitted to arbitration can be cured, remit the award to the arbitral tribunal for appropriate
separated from those not so submitted, that part of the action and in the meantime suspend the recognition and
award which contains decisions on matters submitted to enforcement proceedings and may also on the application
arbitration may be recognized and enforced; or of the petitioner order the counterpetitioner to provide
appropriate security.
(d) the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement of the Article 4.37. Appeal from Court Decision on Arbitral Awards.
parties or, failing such agreement, was not in accordance A decision of the Regional Trial Court recognizing,
with the law of the country where the arbitration too place; enforcing, vacating or setting aside an arbitral award may
or be appealed to the Court of Appeals in accordance with the
rules of procedure to be promulgated by the Supreme
(e) the award has not become binding on the parties or Court.
has been set aside or suspended by a court of the country
in which, or under the law of which, that award was made. The losing party who appeals from the judgment of the
court recognizing and enforcing an arbitral award shall be
Recognition and enforcement of an arbitral award may also required by the Court of Appeals to post a counterbond
be refused if the Regional Trial Court where recognition and executed if favor of the prevailing party equal to the amount
enforcement is sought finds that: of the award in accordance with the Special ADR Rules.
(a) the subjectmatter of the dispute is not capable of Any stipulation by the parties that the arbitral tribunal’s
settlement by arbitration under the law of Philippines; or award or decision shall be final, and therefore not
appealable, is valid. Such stipulation carries with it a waiver
(b) the recognition or enforcement of the award would be of the right to appeal from an arbitral award but without
contrary to the public policy of the Philippines. prejudice to judicial review by way of certiorari under Rule
65 of the Rules of Court.
A party to a foreign arbitration proceeding may oppose an
application for recognition and enforcement of the arbitral Article 4.38. Venue and Jurisdiction. Proceedings for
award in accordance with the Special ADR Rules only on recognition and enforcement of an arbitration agreement or
the grounds enumerated under paragraph (a) and (c) of for vacation or setting aside of an arbitral award, and any
Article 4.35 (Recognition and Enforcement). Any other application with a court for arbitration assistance and
84
supervision, except appeal, shall be deemed as special his/her estate. In any such case, the court may issue an
proceedings and shall be filed with the Regional Trial Court order extending the time within which notice of a motion to
where: recognize or vacate an award must be served. Upon
recognizing an award, where a party has died since it was
(a) the arbitration proceedings are conducted; filed or delivered, the court must enter judgement in the
(b) where the asset to be attached or levied upon, or name of the original party; and the proceedings thereupon
the act to be enjoined is located; are the same as where a party dies after a verdict.
(c) where any of the parties to the dispute resides or
has its place of business; or(d) in the National Capital Article 4.44. MultiParty Arbitration. When a single
Judicial Region at the option of the applicant. arbitration involves more than two parties, the foregoing
rules, to the extent possible, shall be used, subject to such
Article 4.39. Notice of Proceedings to Parties. In a modifications consistent with this Chapter as the arbitral
special proceeding for recognition and enforcement of an tribunal shall deem appropriate to address possible
arbitral award, the court shall send notice to the parties at complexities of a multiparty arbitration.
their address of record in the arbitration, or if any party
cannot be served notice at such address, at such party’s Article 4.45. Consolidation of Proceedings and
last known address. The notice shall be sent at least fifteen Concurrent Hearings. – The parties and the arbitral
(15) days before the date set for the initial hearing of the tribunal may agree –
application.
(a) that the arbitration proceedings shall be
Article 4.40. Legal Representation in International consolidated with other arbitration proceedings; or(b) that
Commercial Arbitration. In international commercial concurrent hearings shall be held, on such terms as may be
arbitration conducted in the Philippines, a party may be agreed.
represented by any person of his/her choice: Provided, that
such representative, unless admitted to the practice of law Unless the parties agree to confer such power on the
in the Philippines, shall not be authorized to appear as arbitral tribunal, the tribunal has no power to order
counsel in any Philippine court or any other quasijudicial consolidation of arbitration proceedings or concurrent
body whether or not such appearance is in relation to the hearings.
arbitration in which he/she appears.
Article 4.46. Costs. (a) The arbitral tribunal shall fix the
Article 4.41. Confidentially of Arbitration Proceedings. costs of arbitration in its award. The term "costs" include
The arbitration proceedings, including the records, only:
evidence and the arbitral award, shall be considered
confidential and shall not be poolside except: (i) The fees of the arbitral tribunal to be stated separately as
to each arbitrator and to be fixed by the tribunal itself in
(a) with the consent of the parties; or accordance with the paragraph (b) of this Article;
(b) for the limited purpose of disclosing to the court
relevant documents in cases where resort to the court (ii) The travel and other expenses incurred by the
isallowed herein. arbitrators;
Provided, however, that the court in which the action or the (iii) The costs of expert advice and of other assistance
appeal is pending may issue a protective order to prevent required by the arbitral tribunal;
or prohibit disclosure of documents or information
containing secret processes, developments, research and (iv) The travel and other expenses of witnesses to the
other information where it is shown that the applicant shall extent such expenses are approved by the arbitral tribunal;
be materially prejudiced by an authorized disclosure
thereof. (v) The costs for legal representation and assistance of
the successful party if such costs were claimed during the
Article 4.42. Summary nature of proceedings before the arbitral proceedings, and only to the extent that the arbitral
court. A petition for recognition and enforcement of awards tribunal determines that the amount of such costs is
brought before the court shall be heard and dealt with reasonable;
summarily in accordance with the Special ADR Rules.
(v1) Any fees and expenses of the appointing authority.
Article 4.43. Death of a Party. Where a party dies after
making a submission or a contract to arbitrate as (b) The fees of the arbitral tribunal shall be reasonable
prescribed in these Rules, the proceedings may be begun in amount, taking into account the amount in dispute, the
or continued upon the application of, or notice to, his/her complexity of the subject matter, the time spent by the
executor or administrator, or temporary administrator of arbitrators and any other relevant circumstances of the
85
case. If an appointing authority has been agreed upon by the

parties and when a party so requests and the appointing
If an appointing authority has been agreed upon by the authority consents to perform the function, the arbitral
parties and if such authority has issued a schedule of fees tribunal shall fix the amounts of any deposits or
for arbitrators in international cases which it administers, supplementary deposits only after consultation with the
the arbitral tribunal in fixing its fees shall take that schedule appointing authority which may make any comments to the
of fees into account to the extent that it considers arbitral tribunal which it deems appropriate concerning the
appropriate in the circumstances of the case. amount of such deposits and supplementary deposits.
If such appointing authority has not issued a schedule of If the required deposits are not paid in full within thirty (30)
fees for arbitrators in international cases, any party may, at days after receipt of the request, the arbitral tribunal shall
any time request the appointing authority to furnish a so inform the parties in order that the required payment
statement setting forth the basis for establishing fees which may be made. If such payment is not made, the arbitral
is customarily followed in international cases in which the tribunal may order the suspension or termination of the
authority appoints arbitrators. If the appointing authority arbitral proceedings.
consents to provide such a statement, the arbitral tribunal,
in fixing its fees, shall take such information into account to After the award has been made, the arbitral tribunal shall
the extent that it considers appropriate in the circumstances render an accounting to the parties of the deposits received
of the case. and return any unexpended balance to the parties.
(c) In cases referred to in the second and third sub- (Also read Parlade pp. 282-325)
paragraphs of paragraph (b) of this Article, when a party so
requests and the appointing authority consents to perform Taming the Unruly Horse: Philippine Public Policy and
the function, the arbitral tribunal shall fix its fees only after the New York Convention
consultation with the appointing authority which may make (Donemark J.L. Calimon)52
any comment it deems appropriate to the arbitral tribunal
concerning the fees. This article proposes that Philippine courts be guided by a
policy of “judicial restraint” in applying the Public Policy
(d) Except as provided in the next subparagraph of this exception under Art V of the NY Convention.
paragraph, the costs of arbitration shall, in principle, be
borne by the unsuccessful party. However, the arbitral Such exception should be construed in a narrow sense.
tribunal may apportion each of such costs between the
parties if it determines that apportionment is reasonable, In order to fully embrace the pro-enforcement principle
taking into account the circumstances of the case. under the Convention, the Philippine courts should be
guided by the following considerations:
With respect to the costs of legal representation and 1. Courts should initially consult the following
assistance referred to in paragraph (c) of paragraph (a) (iii) evidence of public policy:
of this Article, the arbitral tribunal, taking into account the a. Public policy under the Constitution –
circumstances of the case, shall be free to determine which provisions of the Constitution should be
party shall bear such costs or may apportion such costs upheld by the courts over n arbitral award
between the parties if it determines that appointment is violating it.
reasonable. b. Public policy based on states –but mindful
that not all violations will trigger the
When the arbitral tribunal issues an order for the application of the Public Policy Exception.
termination of the arbitral proceedings or makes an award Only provisions of the law dealing with the
on agreed terms, it shall fix the costs of arbitration referred fundamental rule of overriding importance
to in paragraphs (b), (c) and (d) of this Article in the context may result to non-enforcement.
of that order or award. c. Public policy as declared by judicial
decision – based on stare decisis, previous
(e) The arbitral tribunal, on its establishment, may SC decisions are authoritative on future
request each party to deposit an equal amount as an cases where the facts are substantially the
advance for the costs referred to in paragraphs (i), (ii) and same.
(iii) of paragraph (a) of this Article. 2. If the court is presented with a situation potentially
involving the Public Policy exception, the court
During the course of the arbitral proceedings, the arbitral should exercise judicial restraint and construe the
tribunal may request supplementary deposits from the provision narrowly. Foreign arbitral awards should
parties.
52 61 Ateneo L.J. 635 (2016)
86
be refused to be enforced only if: which has original and exclusive jurisdiction over arbitration
a. there is a flagrant, effective, and concrete of construction disputes pursuant to Executive Order No.
violation of an overriding public policy of 1008, s. 1985, otherwise known as the "Construction
the State; and Industry Arbitration Law", shall promulgate the
b. provided that the public policy Implementing Rules and Regulations governing arbitration
consideration involves international and of construction disputes, incorporating therein the pertinent
transnational, not merely domestic, public provisions of the ADR Act.
policy of the State.
3. As a general proposition, courts should be guided EO 1008 – Construction Industry Arbitration Law
by how the public policy exception under the
Convention has been applied in other jurisdictions. February 4, 1985
The following are universally or generally-accepted
violations of public policy in the context of the CREATING AN ARBITRATION MACHINERY IN THE
Convention: CONSTRUCTION INDUSTRY OF THE PHILIPPINES
a. Violation of the right to be heard; or of due xxx
process;
b. Violation of equal opportunity to present WHEREAS, there is a need to establish an arbitral
one’s case; machinery to settle to such disputes expeditiously in order
c. Award obtained by fraud or based on to maintain and promote a healthy partnership between the
falsified documents; government and the private sector in the furtherance of
d. Award obtained following bribery of or national development goals;
threats to an arbitrator; xxx
e. Violation of res judicata; Sec. 1. Title. This Executive Order shall be known as the
f. Lack of independence and impartiality of "Construction Industry Arbitration Law".
the arbitrators; and
g. Awards giving effect to illegal activities Sec. 2. Declaration of Policy. It is hereby declared to be
which are universally condemned, such as the policy of the State to encourage the early and
terrorism, drug trafficking, prostitution, expeditious settlement of disputes in the Philippine
pedophilia, corruption, or fraud in construction industry.
international commerce. xxx
Sec. 4. Jurisdiction. The CIAC shall have original and
The Enforcement of International Arbitral Awards exclusive jurisdiction over disputes arising from, or
(Jacinto D. Jimenez)53 connected with, contracts entered into by parties involved in
construction in the Philippines, whether the dispute arises
The promulgation of an arbitral award doesn’t put an end to before or after the completion of the contract, or after the
the dispute. It opens the gate for the next sequence of abandonment or breach thereof. These disputes may
controversies – the enforcement of the award. The arbitral involve government or private contracts. For the Board to
tribunal doesn’t have the power to enforce the award. acquire jurisdiction, the parties to a dispute must agree to
Hence, the winning party must file a case with a national submit the same to voluntary arbitration.
court.
The jurisdiction of the CIAC may include but is not limited to
While far from perfect, international arbitration is, rightly, violation of specifications for materials and workmanship;
regarded as generally suffering fewer ills than litigation of violation of the terms of agreement; interpretation and/or
international disputes in national courts and as offering application of contractual time and delays; maintenance
more workable and effective opportunities for remedying or and defects; payment, default of employer or contractor and
avoiding those ills which do exist. changes in contract cost.
Excluded from the coverage of this law are disputes arising

from employer-employee relationships which shall continue
XII. Construction Industry Arbitration Commission to be covered by the Labor Code of the Philippines.
(CIAC) xxx
Sec. 6. Functions of the Commission. The Commission
Chapter 6, IRR shall perform, among others that may be conferred by law,
the following functions:
ARBITRATION OF CONSTRUCTION DISPUTES 1) To formulate and adopt an arbitration program for the
The Construction Industry Arbitration Commission (CIAC), construction industry;
2) To enunciate policies and prescribe rules and procedures
for construction arbitration;
53 Ateneo LJ (March 2017)
87
3) To supervise the arbitration program, and exercise such Sec. 21. Rule-Making Power. The CIAC shall formulate
authority related thereto as regards the appointment, and adopt necessary rules and procedures for construction
replacement or challenging of arbitrators; and arbitration. xxx
4) To direct its officers and employees to perform such
functions as may be assigned to them from time to time. Revised Rules of Procedure Governing Construction
xxx Arbitration
Sec. 14. Arbitrators. A sole arbitrator or three arbitrators
may settle a dispute. Issued: January 28, 2011
Copy at:
Where the parties agree that the dispute shall be settled by http://www.philconstruct.com/docs/downloads/CIAP
a sole arbitrator, they may, by agreement, nominate him %20DOCS/CIAC%20ARBITRATION
from the list of arbitrators accredited by the CIAC for %20GUIDELINES/CIAC%20Revised%20Rules%20of
appointment and confirmation. If the parties fail to agree as %20Procedure%20Governing%20Construction
to the arbitrator, the CIAC taking into consideration the %20Arbitration.pdf
complexities and intricacies of the dispute/s has the option
to appoint a single arbitrator or an Arbitral Tribunal. As amended by CIAC Resolution Nos. 15-2006, 16-2006,
18-2006, 19-2006, 02-2007, 07-2007, 13-2007, 02-2008,
If the CIAC decides to appoint an Arbitral Tribunal, each and 03-2008
party may nominate one (1) arbitrator from the list of
arbitrators accredited by the CIAC for appointment and for Cases
confirmation. The third arbitrator who is acceptable to both
parties confirmed in writing shall be appointed by the CIAC National Irrigation Administration vs CA54
and shall preside over the Tribunal.
(On the jurisdiction of the CIAC)
Arbitration shall be men of distinction in whom the business
sector and the government can have confidence. They shall In this special civil action for certiorari under Rule 65 of the
not be permanently employed with the CIAC. Instead, they Rules of Court, the National Irrigation Administration (NIA),
shall render services only when called to arbitrate. For each seeks to annul and set aside the Resolutions of the Court of
dispute they settle, they shall be given fees. Appeals which dismissed NIA’s petition for certiorari and
prohibition against CIAC.
Sec. 15. Appointment of Experts. The services of
technical or legal experts may be utilized in the settlement Antecedents
of disputes if requested by any of the parties or by the
Arbitral Tribunal. If the request for an expert is done by Aug 1978: In a competitive bidding held by NIA, Hydro
either or by both of the parties, it is necessary that the Resources Contractors Corporation (HYDRO) was awarded
appointment of the expert be confirmed by the Arbitral a Contract for the construction of the main civil works of the
Tribunal. Magat River Multi-Purpose Project. HYDRO would be paid
partly in Philippine pesos and partly in U.S. dollars.
Whenever the parties request for the services of an expert,
they shall equally shoulder the expert's fees and expenses, HYDRO substantially completed the works under the
half of which shall be deposited with the Secretariat before contract in 1982 and final acceptance by NIA was made in
the expert renders service. When only one party makes the 1984. HYDRO thereafter determined that it still had an
request, it shall deposit the whole amount required. account receivable from NIA representing the dollar rate
xxx differential of the price escalation for the contract.
Sec. 19. Finality of Awards. The arbitral award shall be Dec 1994: After unsuccessfully pursuing its case with NIA,
binding upon the parties. It shall be final and inappealable HYDRO, filed with the CIAC a Request for Adjudication of
except on questions of law which shall be appealable to the the aforesaid claim.
Supreme Court.
Jan 1995: NIA filed its Answer, questioning the jurisdiction
Sec. 20. Execution and Enforcement of Awards. As soon of the CIAC alleging lack of cause of action, laches and
as a decision, order to award has become final and estoppel in view of HYDRO’s alleged failure to avail of its
executory, the Arbitral Tribunal or the single arbitrator with right to submit the dispute to arbitration within the
the occurrence of the CIAC shall motu propio, or on motion prescribed period as provided in the contract
of any interested party, issue a writ of execution requiring
any sheriff or other proper officer to execute said decision, After reaching an accord on the issues to be considered by
order or award.
54 318 SCRA 255, Nov. 17, 1999
88
the arbitration panel, the parties scheduled the dates of the dispute arises before or after the completion of the
hearings and of submission of simultaneous memoranda. contract, or after the abandonment or breach thereof. The
disputes may involve government or private contracts.
Mar 1995: NIA filed a Motion to Dismiss alleging lack of
jurisdiction over the disputes. NIA contended that there was For the Board to acquire jurisdiction, the parties to a dispute
no agreement with HYDRO to submit the dispute to CIAC must agree to submit the same to voluntary arbitration.
for arbitration considering that the construction contract was The complaint of HYDRO against NIA on the basis of the
executed in 1978 and the project completed in 1982, contract executed between them was filed on December 7,
whereas EO 1008 was signed only in 1985; and that while 1994, during the effectivity of E.O. No. 1008. Hence, it is
they have agreed to arbitration as a mode of settlement of well within the jurisdiction of CIAC. The jurisdiction of a
disputes, they could not have contemplated submission of court is determined by the law in force at the time of the
their disputes to CIAC. commencement of the action.
April 1995: CIAC issued an order which deferred the Moreover, it is undeniable that NIA agreed to submit the
determination of the motion to dismiss and resolved to dispute for arbitration to the CIAC. NIA through its counsel
proceed with the hearing of the case on the merits. Acting actively participated in the arbitration proceedings.
on NIA’s MfR, CIAC ruled that it has jurisdiction over the
HYDRO’s claim over NIA pursuant to EO 1008. J Plus Asia Development Corporation vs Utility
Assurance Corp.55
May 1996: NIA filed with the Court of Appeals an original
action of certiorari and prohibition with prayer for restraining (Did RA 9285 divest the CA of its power to review
order and/or injunction, seeking to annul the Orders of the decisions of the CIAC?)
CIAC for having been issued without or in excess of
jurisdiction. No. CIAC decisions are appealable to the CA via petition for
review under Rule 43.
Contention of NIA: CIAC has no authority or jurisdiction to
hear and try this dispute between the herein parties as EO The SC found no merit in petitioner’s contention that with
1008 had no retroactive effect. the institutionalization of alternative dispute resolution
under RA 9285, the CA was divested of jurisdiction to
CA, Jun 1996: Finding that there was no grave abuse of review the decisions or awards of the CIAC. Petitioner
discretion, it dismissed the petition. erroneously relied on the provision in said law allowing any
party to a domestic arbitration to file in the RTC a petition
Jun 1997: NIA filed before the SC an original action for either to confirm, correct or vacate a domestic arbitral
certiorari and prohibition with urgent prayer for temporary award.
restraining order and writ of preliminary injunction, praying
for the annulment of the CA’s decision. RA 9285 did not confer jurisdiction on RTCs to review
awards or decisions of the CIAC in construction disputes.
SC: The petition suffers from a procedural defect that On the contrary, Section 40 expressly declares that
warrants its outright dismissal. The questioned resolutions confirmation by the RTC is not required, thus:
of the CA have already become final and executory by
reason of NIA’s failure to appeal. Instead of filing this SEC. 40. Confirmation of Award. – The confirmation of a
petition for certiorari under Rule 65 of the Rules of Court, domestic arbitral award shall be governed by Section 23 of
NIA should have filed a timely petition for review under Rule R.A. 876.
45.
A domestic arbitral award when confirmed shall be
In any case, even if the issue of technicality is disregarded enforced in the same manner as final and executory
and recourse under Rule 65 is allowed, the same result decisions of the Regional Trial Court.
would be reached since a review of the questioned
resolutions of the CIAC shows that it committed no grave The confirmation of a domestic award shall be made by the
abuse of discretion. regional trial court in accordance with the Rules of
Procedure to be promulgated by the Supreme Court.
Contrary to the claim of NIA, the CIAC has jurisdiction over
the controversy. A CIAC arbitral award need not be confirmed by the
regional trial court to be executory as provided under EO
EO 1008 was promulgated on February 4, 1985. It vests 1008.
upon CIAC original and exclusive jurisdiction over disputes
arising from, or connected with contracts entered into by
parties involved in construction in the Philippines, whether
55 GR No. 199650, June 26, 2013
89
Executive Order (EO) No. 1008 vests upon the CIAC their lot.
original and exclusive jurisdiction over disputes arising
from, or connected with, contracts entered into by parties Asis-Leif secured Performance Bond in the amount of
involved in construction in the Philippines, whether the ₱4,500,000.00 from Stronghold Insurance Company, Inc.
dispute arises before or after the completion of the contract, Stronghold and Asis-Leif bound themselves jointly and
or after the abandonment or breach thereof. severally to pay the Sps Stroem the agreed amount in the
event that the construction project is not completed.
By express provision of Section 19 thereof, the arbitral
award of the CIAC is final and unappealable, except on Asis-Leif failed to finish the projecton time despite repeated
questions of law, which are appealable to the Supreme demands of the Sps Stroem.
Court.
Sps Stroem subsequently rescinded the agreement. They
With the amendments introduced by RA 7902 and filed a Complaint (with Prayer for Preliminary Attachment)
promulgation of the 1997 Rules of Civil Procedure, as for breach of contract and for sum of money with a claim for
amended, the CIAC was included in the enumeration of damages against Asis-Leif and Stronghold. Only Stronghold
quasi-judicial agencies whose decisions or awards may be was served summons. Ms. Cynthia Asis-Leif allegedly
appealed to the CA in a petition for review under Rule 43. absconded and moved out of the country.
Such review of the CIAC award may involve either
questions of fact, of law, or of fact and law. On July 13, 2010, the RTC rendered a judgment in favor of
the Sps Stroem. The court ordered Stronghold to pay the
Petitioner misread the provisions of SADR which took effect Sps Stroem ₱4,500,000.00 with 6% legal interest from the
on October 30, 2009. Since RA 9285 explicitly excluded time of first demand.
CIAC awards from domestic arbitration awards that need to
be confirmed to be executory, said awards are therefore not Stronghold appealed to the CA. Appeal was denied.
covered by Rule 11 of the Special ADR Rules, as they
continue to be governed by EO 1008, as amended and the Hence, this appeal to the SC.
rules of procedure of the CIAC.
Issue: Whether the CIAC has exclusive jurisdiction over the
The CIAC Revised Rules of Procedure Governing controversy between the parties.
Construction Arbitration provide for the manner and mode
of appeal from CIAC decisions or awards in Section 18: SC: When a dispute arises from a construction contract, the
CIAC has exclusive and original jurisdiction. Construction
SECTION 18.2 Petition for review. – A petition for review has been defined as referring to "all on-site works on
from a final award may be taken by any of the parties within buildings or altering structures, from land clearance through
fifteen (15) days from receipt thereof in accordance with the completion including excavation, erection and assembly
provisions of Rule 43 of the Rules of Court. and installation of components and equipment."
Stronghold Insurance vs Sps Stroem56 In this case, there is no dispute as to whether the Owners-
Contractor Agreement between Asis-Leif and Sps Stroem is
(Is a dispute involving the liability of a surety under a a construction contract. Stronghold and Sps Stroem
performance bond connected to a construction recognize that CIAC has jurisdiction over disputes arising
contract within the exclusive jurisdiction of the CIAC?) from the agreement.
This case involves the proper invocation of the Construction What is at issue in this case is the parties’ agreement, or
Industry Arbitration Committee's (CIAC) jurisdiction through lack thereof, to submit the case to arbitration. Respondents
an arbitration clause in a construction contract. The main argue that Stronghold is not a party to the arbitration
issue here is whether the dispute — liability of a surety agreement. It did not consent to arbitration. It is only Sps
under a performance bond — is connected to a Stroem and Asis-Leif that may invoke the arbitration clause
construction contract and, therefore, falls under the in the contract.
exclusive jurisdiction of the CIAC.
This court has previously held in Prudential vs Anscor
Antecendents Land that a performance bond, which is meant "to
guarantee the supply of labor, materials, tools, equipment,
Spouses Rune and Lea Stroem (Spss Stroem) entered into and necessary supervision to complete the project" is
an Owners-Contractor Agreement with Asis-Leif & significantly and substantially connected to the construction
Company, Inc. for the construction of a two-storey house on contract and, therefore, falls under the jurisdiction of the
CIAC.However, in the Prudential case, the performance
bond was included in the main contract.
56 GR No. 204689, Jan 21, 2015
90
procedure for the execution of a confirmed arbitral award,

In this case, the suretyship agreement was made the Rules’ procedural mechanisms cover not only aspects
separately. it is in the Owners-Contractor Agreement that of confirmation but necessarily extend to a confirmed
the arbitration clause is found. The construction agreement award’s execution. In light of the doctrine of necessary
was signed only by Sps Stroem and the contractor, Asis- implication which states that every statutory grant of power,
Leif. It is basic that contracts take effect only between the right or privilege is deemed to include all incidental power,
parties, their assigns and heirs. right or privilege.
Not being a party to the construction agreement, Execution is but a necessary incident to the Court’s
Stronghold, the surety, cannot invoke the arbitration clause. confirmation of an arbitral award. To construe it otherwise
It thus cannot invoke the jurisdiction of the CIAC. would result in an absurd situation whereby the confirming
court previously applying the SADR in its confirmation of
Moreover, petitioner’s invocation of the arbitration clause the arbitral award would later shift to the regular Rules of
defeats the purpose of arbitration in relation to the Procedure come execution. A court’s power to confirm a
construction business. judgment award under the SADR should be deemed to
include the power to order its execution for such is but a
Where a surety in a construction contract actively collateral and subsidiary consequence that may be fairly
participates in a collection suit, it is estopped from raising and logically inferred from the statutory grant to regional
jurisdiction later. Assuming that petitioner is privy to the trial courts of the power to confirm domestic arbitral awards.
construction agreement, we cannot allow petitioner to
invoke arbitration at this late stage of the proceedings since XIV. Philippine Dispute Resolution Center, Inc.
to do so would go against the law's goal of prompt
resolution of cases in the construction industry. Arbitration Rules of the Philippine Dispute Resolution
Center, Inc. 58
XIII. Special Rules of Court on ADR
Copy at: http://www.pdrci.org/web/wp-
AM No. 07-11-08-SC content/uploads/2015/03/2015-PDRCI-ARBITRATION-
Issued on: September 1, 2009 RULES-031915.pdf
Copy at: Model Arbitration Clause:

https://www.lawphil.net/courts/supreme/am/am_07-11-08- "Any dispute, controversy or claim arising out of or
sc_2009.html relating to this contract, or the breach, termination or
invalidity thereof shall be settled by arbitration in
DENR vs UPCI57 accordance with the PDRCI Arbitration Rules in force at
the time of the commencement of the arbitration."
(Does the power to confirm an arbitral award include
the power to order its execution notwithstanding a lack Parties may consider adding:
of provision in the Special ADR Rules?) “The number of arbitrators shall be ... (one or three);
The place of arbitration shall be ... (city or country);
Yes. The language(s)to be used in the arbitral proceedings
shall be...(language)"
In this case, petitioner asserts that its petition is not covered
by the Special ADR Rules (particularly, Rule 19.28 on the Where parties have agreed that disputes, controversies or
15-day reglementary period to file a petition for certiorari) claims between them shall be referred to arbitration under
but by Rule 65 of the Rules of Court (particularly, Section 4 the Rules, then such Disputes shall be settled in
thereof on the 60-day reglementary period to file a petition accordance with the Rules, subject to such modification as
for certiorari), which it claimed to have suppletory the parties may agree in writing.
application in arbitration proceedings since the Special ADR
Rules do not explicitly provide for a procedure on The Rules shall apply to arbitrations commenced on or after
execution. The position is untenable. 1 January 2015, unless the parties have expressly agreed
to apply a particular version of the Rules.
Execution is fittingly called the fruit and end of suit and the
life of the law. A judgment, if left unexecuted, would be Where any of the Rules is in conflict with a provision of the
nothing but an empty victory for the prevailing party. law applicable to the arbitration from which the parties
cannot derogate, that provision of the law shall prevail.
While it appears that the SADR remain silent on the
57 GR No. 212081; Feb. 23, 2015 58 PDRCI Website

91
XV. Emerging Issues and the Future of Arbitration A doctor brought a sex discrimination claim against the
medical group that had dismissed her. She had a stack of
Should forced arbitration be banned? glowing evaluations, and evidence that the group had a
pattern of denying women partnerships.
1. Arbitration Everywhere: Stacking the Deck of
Justice (Jessica Silver-Greenberg & Robert However, she was blocked from bringing it to court, and
Gebeloff)59 forced into arbitration.
By inserting individual arbitration clauses into a soaring During the hearing, she noticed that the presiding arbitrator
number of consumer and employment contracts, was having friendly coffee with the head of the group she
companies like American Express devised a way to was suing. During the proceedings, crucial evidence was
circumvent the courts and bar people from joining together withheld, audiotapes were destroyed, and testimonies flip-
in class-action lawsuits, realistically the only tool citizens flopped. The arbitrator ultimately ruled against her, and his
have to fight illegal or deceitful business practices. decision contained passages pulled, verbatim, from legal
briefs prepared by lawyers for the medical practice.
Over the last few years, it has become increasingly difficult
to apply for a credit card, use a cellphone, get cable or The incident took away the doctor’s faith in a fair and
Internet service, or shop online without agreeing to private honorable legal system.
arbitration. The same applies to getting a job, renting a car
or placing a relative in a nursing home. If the case had been brought in civil court, she would have
been able to appeal, raising questions about testimony,
Some state judges have called the class-action bans a “get destruction of evidence, and potential conflicts of interest.
out of jail free” card, because it is nearly impossible for one
individual to take on a corporation with vast resources. But arbitration often bears little resemblance to court.
“This is among the most profound shifts in our legal history,” Thousands of business have used arbitration to create an
William G. Young, a federal judge in Boston who was alternate system of justice. There, rules tend to favor
appointed by President Ronald Reagan, said in an businesses, and judges and juries have been replaced by
interview. “Ominously, business has a good chance of arbitrators who commonly consider the companies their
opting out of the legal system altogether and misbehaving clients.
without reproach.”
This amounts to the whole-scale privatization of the justice
Corporations said that class actions were not needed system, one law professor said. People are actively being
because arbitration enabled individuals to resolve their deprived of their rights.
grievances easily. But court and arbitration records show
the opposite has happened: Once blocked from going to All it took was adding simple arbitration clauses to contracts
court as a group, most people dropped their claims entirely. that most employees and consumers don’t even read.
The Times investigation was based on thousands of court Little is known about arbitration because proceedings are
records and interviews with hundreds of lawyers, corporate confidential and the government doesn’t require cases to
executives, judges, arbitrators and plaintiffs in 35 states be reported.
(Class actions usually get favorable results, due to the This secretive nature makes it hard to ascertain whether the
collective aspect. It is easier to fight as a group than alone.) proceedings were fairly conducted.
Civil rights experts worry that discriminatory labor practices The doctor in this story lost her case and has been, up to
will go unchecked as class actions disappear. now, paying the legal costs to a system that was, in theory,
supposed to give her a speedy and inexpensive way of
2. In Arbitration, a Privatization of the Justice asserting her claims.
System (Jessica Silver-Greenberg & Michael
Corkerynov)60 3. In Religious Arbitration, Scripture is the Rule of
Law (Michael Corkery & Jessica Silver-
Greenberg)61
59 Oct. 31, 2015;
https://www.nytimes.com/2015/11/01/business/dealbook/arbitr 60 Nov. 1, 2015;
ation-everywhere-stacking-the-deck-of-justice.html https://www.nytimes.com/2015/11/02/business/dealbook/in-
arbitration-a-privatization-of-the-justice-system.html
92
In 2012, Nick Ellison, a 20-year-old, instead of going to jail,

was sent by a judge to ‘Teen Challenge’. It is a place that Forced-arbitration clauses, found in the fine print of
gives substance abuse programs in Florida, run by contracts, bar aggrieved parties from pressing their claims
Christians. as a group in a class action, often the only practical way for
individuals to challenge corporations.
He had a drug and alcohol problem, but what the program
did to him, according to a letter he wrote before taking a Corporations effectively control the arbitration process,
toxic mix of drugs which kills him later on, was “de-gay” including the selection of the arbitrator and the rules of
him. It would also be discovered later on that the program evidence, a stacked deck if ever there was one.
included “free labor” which tasked them to work odd jobs,
instead of being given treatment. They were also barred As if that is not troubling enough, it is extremely difficult to
from communicating with their families and friends. avoid or get out of forced-arbitration clauses and class-
action bans, particularly since they were upheld by two
His family sued Teen Challenge, hoping to uncover what misguided Supreme Court decisions in 2011 and in 2013.
really happened. But they hit a wall because when Ellison
was admitted, he signed a contract that now his family from People who were blocked from going to court as a group
taking the Christian group to court. usually dropped their claims entirely, in part because class
actions are often the only affordable way to file lawsuits.
His claim had to be resolved through mediation or
arbitration that would not be bound by state law, but by the Indeed, faced with arbitration, it appears that most people
Bible. do not pursue remedies to their grievances at all.
The Holy Scripture will be the supreme authority, the Even more disturbing, the shift away from the civil justice
contract said. system has gone beyond disputes about money. Nursing
homes, obstetrics practices and private schools
Some lawyers and plaintiffs said that for some groups, increasingly use forced-arbitration clauses to shield
religious arbitration may have less to do with honoring a set themselves from being taken to court over alleged
of beliefs than with controlling legal outcomes. discrimination, elder abuse, fraud, hate crimes, medical
malpractice and wrongful death.
Few courts have intervened, saying that the terms of
arbitration are detailed in binding contracts signed by both Reversing the broader trend of forced arbitration, however,
sides. will require public outcry loud and long enough to stir the
White House and Congress to action. Many people
Some judges are also reluctant to risk infringing the rights interviewed in The Times’s series did not realize that their
of religious groups. right to sue had been lost until they needed it. A common
refrain was the disbelief that this could happen in America.
One Scientologist protested that she was being forced to go But it is happening, and it needs to stop.
to arbitration run by a religion she no longer believed in.
5. Treasury Faults Arbitration Rule Aimed at
Ellison’s mother went through the religious group’s Protecting Consumers (Jessica Silver-
arbitration, which droned on for more than 2 years. She Greenberg)63
finally agreed to settle when she felt like she had been
neglecting her other children in the process.
The Treasury Department took aim at a rule that would
Without a court trial, she was never able to learn what allow millions of Americans to band together in class action
happened to her son, not just on the night he died, but lawsuits against Wall Street firms, saying it could trigger
during his stay at Teen Challenge. frivolous lawsuits and drive up the cost of credit.
4. Arbitrating Disputes, Denying Justice (The In an 18-page report, the department said the Consumer
Editorial Board of NY Times)62 Financial Protection Bureau, which adopted the rule this
summer, did not adequately evaluate the harm it could
cause to consumers.
61 Nov. 2, 2015;
https://www.nytimes.com/2015/11/03/business/dealbook/in- The report arrived amid a broader push by the Trump
religious-arbitration-scripture-is-the-rule-of-law.html
62 Nov. 7, 2015; 63 Oct. 23, 2017;
https://www.nytimes.com/2015/11/08/opinion/sunday/arbitrati https://www.nytimes.com/2017/10/23/business/treasury-faults-
ng-disputes-denying-justice.html arbitration-rule-aimed-at-protecting-consumers.html
93
administration to relax or repeal regulations, including those doing business with consumers may require arbitration and
that affect financial institutions. Treasury has published two forbid class actions in their contracts, which are often of the
reports recommending a series of changes to financial rules take-it-or-leave-it variety. Such contracts typically require
put in place after the 2008 financial crisis. two things: that disputes be resolved by arbitration and that
claims be brought one by one. That makes it hard to pursue
The arbitration rule, which is set to take effect in 2019, will minor claims that affect many people, whether in class
prevent credit card companies and other financial actions or in mass arbitration.
institutions from using the fine print of contracts to ban
class action lawsuits or force consumers into arbitration, a Justice Ruth Bader Ginsburg said there was often no point
private system where an individual has to go up alone in pursuing individual arbitration because the sums at issue
against a deep-pocketed corporation. were too small.
Treasury said the rule could deal an expensive blow to “There is strength in numbers,” she said. “We have to
financial institutions, costing them more than $500 million in protect the individual worker from being in a situation where
legal defense fees. The real winner, the report says, are he can’t protect his rights.”
class action lawyers. At its center, the report questions the
very analysis the consumer agency used to create its Jeffrey B. Wall, a deputy solicitor general who argued in
signature rule. favor of the employers, acknowledged that it was
sometimes a consequence of arbitration agreements “that
“The bureau failed to meaningfully evaluate whether the employees would be practically unable to vindicate their
prohibiting mandatory arbitration clauses in consumer claims.” He added that the Supreme Court had said as
financial contracts would serve either consumer protection much about arbitration clauses generally in a 2013 decision
or the public interest,” the report said. concerning an agreement among businesses.
The rule does not explicitly ban mandatory arbitration. Still, Arbitration clauses with class-action waivers are now
critics of the rule say it will effectively kill mandatory commonplace in contracts for things like cellphones, credit
arbitration. cards, rental cars and nursing home care.
“The report by the Treasury Department rehashes industry In a 2015 dissent, Justice Ginsburg, citing a New York
arguments that were analyzed in depth and solidly refuted Times article examining arbitration agreements, wrote that
in the final rule,” said Samuel Gilford, a spokesman for the court’s decisions favoring arbitration “have predictably
Consumer Financial Protection Bureau. He added that the resulted in the deprivation of consumers’ rights to seek
bureau’s analysis “found that mandatory arbitration clauses redress for losses, and, turning the coin, they have
allow companies to avoid accountability for breaking the insulated powerful economic interests from liability for
law and cost consumers billions of dollars by blocking violations of consumer protection laws.”
group lawsuits.”
The court’s earlier arbitration decisions were closely
Across the country, judges, prosecutors and some divided, with its conservative members in the majority.
regulators have forcefully echoed those complaints, faulting
arbitration clauses for enabling corporations to opt out of Workers seeking to sue their employers for overtime pay
the court system and depriving Americans of one of the few and the like say the second law prohibits arbitration clauses
ways to fight abusive business practices. that require class-action waivers.
6. Supreme Court Divided on Arbitration for Justice Anthony M. Kennedy seemed to be ready to side
Workplace Cases (Adam Liptak)64 with employers. Justice Neil M. Gorsuch, the court’s newest
The Supreme Court (US) considered whether to give member, asked no questions.
employers a powerful tool to bar class actions over
workplace issues. Paul D. Clement, a lawyer for the employers, said the labor
law was “directed to the workplace, not the courthouse.”
The case is the court’s latest attempt to determine how far
companies can go in insisting that disputes be resolved in Justice Ginsburg said the arbitration law was concerned
individual arbitrations rather than in court. with agreements between merchants of relatively equal
bargaining power. The employment contracts at issue in the
The Supreme Court ruled in earlier cases that companies case, she said, have been forced on workers.
64 Oct. 2, 2017; “There was no true liberty of contract,” she said.

https://www.nytimes.com/2017/10/02/us/politics/supreme-
The cases, which were consolidated for a single hour of
court-workplace-arbitration.html
94
argument, featured an unusual element: Lawyers for the

federal government appeared on both sides.
The Obama administration had filed a brief supporting the

workers on behalf of the National Labor Relations Board.
The Trump administration reversed course, and Mr. Wall
argued on behalf of the employers.
The labor board’s general counsel, Richard F. Griffin Jr.,

argued for the workers. He made a concession at odds with
the position of another lawyer on his side.
Mr. Griffin said that employment contracts could not require

workers to give up collective action in arbitration but that
the private entities that conduct arbitration could require
that cases be pursued one by one.
If that is so, Justice Samuel A. Alito Jr. responded, “you

have not achieved very much because, instead of having
an agreement that says no class arbitration, you have an
agreement requiring arbitration before the XYZ arbitration
association, which has rules that don’t allow class
arbitration.”
Daniel R. Ortiz, a law professor at the University of Virginia

who also argued for the workers, took a different approach.
“When an employer tries to coerce by making it a condition

of continued employment that employees agree to a set of
arbitral rules that make collective action impossible,” he
said, that would be unlawful.
Some justices suggested that workers could band together

in a limited sense by hiring the same lawyer and filing
individual arbitration cases.
Justice Elena Kagan said that was not good enough.
“The fact that there is one way to exercise a right left over
does not make it O.K. if we’ve taken away another 25 ways
of exercising the right,” she said. “You know, when we think
about the First Amendment, we don’t say we can ban
leafleting because you can always write an op-ed.”
95

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Alternative Dispute Resolution d.m.g. 2018 j.d.

Notes based on Judge J. Humiding’s Outline UC Law

b. mediation; c. validity of a marriage;

c. conciliation; d. any ground for legal separation;

d. early neutral evaluation; e. jurisdiction of courts;

e. mini-trial; f. future legitime;

f. or any combination thereof. g. criminal liability;

Mediation is a voluntary process in which a mediator, Principles of ADR

2. Recognition of ADR as an efficient tool and an Forms of ADR

o Merit-based or evidentiary – when b. Validity of marriage or any ground for legal

approved if the court finds that it is not contrary to

ADR in the Philippines: Wave of the Future or the Road 1. Jurisdiction

Definition b. To have such rules govern the mediation of the

4. JDR But this process is not obligatory. Pursuant to the principle

c. By the written declaration of the mediator that any d. Non-party participants

b. Declaring the information inadmissible in evidence. What are the exceptions?

proceeding in which a public agency is protecting the participant; and

The Mediator b. Impartiality – Before accepting, he should make an

 The mediator may not make a report, assessment, a. Confidentiality

2. They shall endeavor to make the terms and conditions 3. CAM;

participating if he perceives a clear conflict of 1. CHAN KENT v. DIONESIO C. MICAREZ7

Employees) and RA 3019. The complaint arose when nationwide.

AM 01-10-5-SC-PHILJA (2001) 1. retired judges and judges;

CAM’s success rate d. Clarity about what is most important to both

2. Full and voluntary discovery disclosures  First Stage

3. Avoidance of a even a threat to litigation throughout a. Filing of the Complaint

5. Process – “four-way meetings” where the parties  Second Stage

order to encourage the parties to settle. able to explain

Recommendation: Introduction to ADR concepts should be 5. Combination of the forms

by the latter.  The OADR is an agency attached to the

C. MediationArbitration 8. Exercise such other powers, as may be necessary

Rules: 1. Promote, develop and expand the use of ADR in the

4. IBP; and In 2001, the SC designated the PhilJA as its component

5. Philippine Dispute Resolution Center, Inc. VII. History of Arbitration

d. America It cited the Clark on Contracts, which stated: “A condition in

18 Ateneo LJ 288, Evolution of Arbitration (2016)

The Agreement between petitioner DMC-USA and private

IX. Arbitration in General 2. Constituted in a separate contract; or

25 Robeniol, pp. 43-58 26 511 SCRA 335 (2006)

Voluntary arbitration involves the reference of a dispute to

“Being an inexpensive, speedy and amicable method of Components of arbitration:

component of the process. freedom to contract.

Appointment of arbitrators No person shall serve as an arbitrator in any proceeding if

4. If he refuses to respond to questions by a party 2. Postponement/Adjournment: The hearing can be

3. the arbitral tribunal decides the challenge and declares

Grounds to Vacate an Arbitral Award: The arbitral award

33 452 SCRA 607 (2005) 34 512 SCRA 148 (2007)

Sec. 19-31, RA 876

The arbitrators shall have the power to assess in their

when such assessment shall be deemed necessary. order.

The Panel of Arbitrators of the MAB declared the

before the SC. arbitrate their future disputes.

made. grounds under RA 876 and the IRR.

If the country doesn’t extend comity and reciprocity, the

The decision of the RTC to recognize and enforce an award

Are appeals allowed for decisions concerning foreign

The SADR prohibits the parties from filing an appeal to Conclusion

Art. 2042: “Same persons who may enter into a

39 46 Ateneo LJ 394 (2001)

Solution: Apply the Rules of Court UNCITRAL

 SADR proceedings are special proceedings  State immunity from suit

International Commercial Arbitration  Competence of an arbitrator to reform the contract

 Res Judicata When is a dispute international?

 Costs, interest 1. The parties to an arbitration agreement have, at the time