ARBITRATION LITIGATION

Private and confidential proceeding; Public proceeding

attendance of other persons in the
discretion of the arbitrators (S12)
Parties choose arbitrator (S5, 8)
Parties pay arbitrators
Parties choose governing law
Arbitrators decide on procedure of
evidence
Claimant v. Respondent
Case is raffled to judge
State pays judges
Governing law is that of the
State
Rules of evidence governed by
ROC
Plaintiff v. Defendant

Adjudication: like arbitration, but decision may be appealed to an arbitral

panel; award is also binding to parties if no appeal is made
 Amicable Settlement > Adjudication > Arbitration

ADR:
1. Arbitration
2. Mediation
3. Early Neutral Evaluation – nonbinding assessment of a neutral third
party who has expertise in the subject matter (S3(n) 9285)
 Pre-trial: not pre-trial as defined in ROC
o Sir: ADR is outside the court system; pre-trial simply
means before litigation, otherwise ADR would have
been made a part of ROC
4. Mini-Trial – private meeting wherein senior decision-makers of each
party discuss the evidence and negotiate towards a settlement
(S3(u) 9285); parties are able to formulate an informed judgment
and would act accordingly

Q: Manufacturer terminated Distributorship Agreement because

distributor was overstocking. During mediation, manufacturer admitted
that there was an overpayment of 4M made by the distributor. Mediation
failed and distributor commenced court action. Is the admission of 4M
overpayment subject to discovery? Is it admissible in evidence?
A: No. Mediation proceedings are confidential. (S9 (a) and (c) 9285)

Parties bound by confidentiality (S9 (d) 9285):

1. parties to the dispute
2. mediator/s
3. counsel for parties
4. nonparty participants
5. secretary, stenographer, clerk, assistant
6. other persons who obtain information by reason of their profession

COURT-ANNEXED MEDIATION COURT-REFERRED MEDIATION

No pre-existing mediation clause; After acquiring jurisdiction, court
court is the one that orders as part discovers pre-existing mediation
of pre-trial clause
 Court can refer motu propio Party must invoke through motion,
otherwise waived
Court has acquired jurisdiction

Contempt proceedings may be commenced against a party who fails or

refuses to participate in court-annexed mediation. But this does not grant
contempt powers to the mediator. The other party must file a motion for
contempt with the court.

2 JULY 2010

ADR
 system for resolving disputes
 outside of or alternative to the usual court system
 neutral third party assists

ARBITRATION
 only ADR mode that results into a final, binding executory award, which
may be enforced as in a final executory court order
o confirmation of an arbitral award shall be enforced in the same
manner as final and executory RTC decisions (S40 9285)

MEDIATION
 Court-Referred: discovery of a pre-existing mediation agreement
o Art1159 CC: contracts have the force of law between the parties
o Waivable
 Court-Annexed: mandatory

Procedure to make mediation award binding (S17 9285):

1. petition-enforcement with the court
2. parties agree that mediator shall be considered arbitrator and that
the agreement be considered an arbitral award

DOMESTIC ARBITRATION (RA876)

Procedure:
Arbitration Agreement > Dispute > Selection of Arbitrators > Arbitration
Proceedings
Dispute > Submission Agreement
> Award > Confirmation/Enforcement

Q: What is the significance of making a distinction between a submission

and a contract?
A: If there is a contract to arbitrate, the party wishing to enforce the
agreement must invoke it not later than the pre-trial conference. In case
of a submission, the parties may agree to arbitrate and submit the dispute
to arbitration anytime.
o Exception: In case of a contract, the parties may still arbitrate even
 after the pre-trial conference via joint application. (S24 9285)

Two Ways of Commencing Arbitration:

1. Ad Hoc (876): by written demand for arbitration to the other party
containing (S5):
o Nature
o Amount
o Relief
o True copy of arbitration agreement
2. Institutional Arbitration: by a request for arbitration sent to the
institution

Appeal is not always available as a remedy under the SADR.

 For domestic award, remedy is Petition to Vacate
 For international commercial award and foreign arbitral awards,
remedy is Petition to Set Aside or Refuse Recognition
 In the absence of Petition to Vacate or Set Aside, court has to enforce

16 JULY 2010

ARBITRATION

Step 1: Request/Demand for Arbitration

Q: When does arbitration commence?

A: If ad hoc, upon service of demand of arbitration to the other party. If
institutional, upon service of request for arbitration to the institution.

Q: Why is it important to determine the date of commencement of

arbitration?
A: GR is that interim measures of protection must be obtained from the
arbitral tribunal.
- Exception: Interim measures may be obtained from the court:
o before the commencement of arbitration
o before constitution of arbitral tribunal
o any time if arbitral tribunal has no power

Step 1.1: Petition for Enforcement of Arbitration Agreement

If other party refuses to arbitrate, a petition may be filed in court.

Q: Rule1.3 SADR says that the court must issue an order more or less
within 50 days from receipt of respondent (petition > receipt of
respondent > 15 days for respondent to comment > 1-day hearing after 5
days > submitted for resolution > 30 days to resolve). But RA876 S6 says
that all petitions, motions and applications filed under RA876 must be
decided within 10 days from hearing. Is this repealed? Can a procedural
law repeal a substantive law?
A: The 30-day rule under SADR controls. The 10-day rule under RA876 is a
procedural law, not substantive. Matters of procedure are under the
Supreme Court. (?)

Under RA876, there are 4 courses of action for the court in addressing a
Petition to Enforce Arbitration Agreement (w/n there is an arbitration
agreement + w/n there was default), which must be conducted
summarily:
1. if no arbitration agreement, dismiss
2. if no issue as to existence of agreement, court must determine w/n
there was default
3. if there was no default, dismiss
4. if there was default, order to proceed

Step 2: Appointment of Arbitrators

It is not a requirement for arbitrators to be lawyers. They can rule on the

admissibility of evidence.

Step 2.1: Preliminary Conference (International Commercial)

If parties fail to agree on the time to make an award, the arbitral tribunal
will set the period in this stage.

Step 3: Arbitration Proceedings

Step 3.1: Challenge to Arbitrator/s

Q: RA876 S11 says that while the challenge is before the court, the
arbitration proceedings shall be suspended. But under UNCITRAL Art13,
the tribunal may continue with the proceedings and make an award.
Which is controlling?
A: UNCITRAL Art13 through RA9285 repealed RA876 S11.

Step 4: Award

The time for rendering an award may be fixed by the parties. In the
absence of an agreement:
- if domestic: within 30 days
- if international commercial: as decided by the arbitral tribunal in
Step 2.1

Periods

Rule 1.3 SADR: petition > receipt of respondent > 15 days for respondent
to comment > 1-day hearing after 5 days > submitted for resolution > 30
days to resolve
- Exceptions:
1. Referral to ADR
 o setting of hearing depends on party because said party may
decide waive ADR if he fails to invoke the arbitration clause
before the pre-trial conference
2. Protection Order

QUIZ (23 July 2010): fundamental doctrines already taken up; closed
notes

30 JULY 2010

Not Summary under ADR Rules:

1. Recognition, Enforcement, Setting Aside of International Commercial
Arbitral Award
2. Recognition, Enforcement, Setting Aside of Foreign Arbitral Award
3. Confirmation, Vacation, Correction of Domestic Arbitral Award

Grounds for Challenge of Arbitrator: If he possesses any of the

disqualifications or if he does not possess the minimum qualifications.

CONFIDENTIALITY

Q: Why can we not read arbitral awards?

A: GR is that arbitral proceedings are confidential.
- Exceptions:
1. waiver
2. when there is a need to disclose in court for:
a. interim measures of protection
b. appointment of arbitrator
c. challenge of arbitrator
d. modification and vacation of award
e. enforcement of award

Q: What is the consequence for breach of confidentiality?

A: The claimant can file an action for damages with the RTC. Arbitral
tribunal only has jurisdiction over disputes contained in the arbitration
agreement.

COMPETENCE-COMPETENCE PRINCIPLE

Arbitral tribunal has power to rule on:

1. its own jurisdiction
2. validity of arbitration agreement
3. scope of issues presented by parties

Before the constitution of the arbitral tribunal, the court must exercise
judicial restraint and can only give prima facie decisions on the validity of
the arbitration agreement.
 - Q: Will a court finding that an arbitration agreement is void or
otherwise incapable of being enforced bar the constitution of the
tribunal?
A: No, it does not prevent the parties from commencing arbitration.
o Q: But how, when the other party has already obtained a
favorable ruling against the enforcement of the arbitration
agreement?
A: Follow the regular procedure provided when other party
refuses to arbitrate.
o Q: What can the party who refuses to arbitrate do?
A: Go to the arbitral tribunal to question its jurisdiction or get
an injunction. Another remedy is to file a motion for contempt.
 Sir: This does not constitute contempt because it is an
exercise of a legal right. SADR also provides that no
injunction shall be issued against arbitration.
- Q: Where does the prima facie nature come in?
A: The same issue may be resurrected in the arbitral forum and the
tribunal’s ruling will replace that of the court.

PRINCIPLE OF SEPARABILITY

A finding that the container contract is void does not invalidate the
arbitration clause and vice-versa. (UNICTRAL and SADR)

Q: What is the effect on the arbitral tribunal if the ruling of the court is
that the container contract and arbitration clause are both void?
A: This will not prevent commencement of arbitration. The court decision
on the validity of the arbitration clause is only prima facie.
Q: Can the court threaten the arbitrators with contempt of court if they
proceed?
A: No.

MULTIPLE PARTIES

Q: If there are multiple parties to a case, not all of which are bound by the
arbitration clause, will that prevent arbitration from going forward?
A: No.
Q: Will this result in a multiplicity of suits?
A: Yes, but under SADR, the fact that it will result in a multiplicity of suits
will not prevent arbitration.

6 AUGUST 2010

Q: What is confidential? What is the intent of the law in protecting

confidentiality?
A: Information involved in the arbitration. But the way it is stated in the
law, the whole concept of arbitration is protected so that sometimes it is
held that even disclosure of the fact of arbitration is a breach of
confidentiality.

Q: What is meant by judicial relief after commencement of arbitration (3

SADR)?
A: For the court to determine w/n the arbitral tribunal correctly ruled that
the arbitration agreement is valid.
Q: What is the prayer?
A: Wherefore, it is respectfully prayed that the arbitration agreement be
declared void/invalid/inexistent/unenforceable.
Q: Can the court do this despite the Competence-Competence and
Separability Doctrines?
A:

Example:

May 6: prima facie ruling of the court that arbitration clause is void
August 6: commencement of arbitration
- This is valid because the court’s ruling is only prima facie.

August 6: commencement of arbitration

November 6: ruling of the court that arbitration clause is void
- Remedy is MR. If denied, special civil action for certiorari within 15d.
(3.19, 19.28 SADR)
o Different from ROC (certiorari under 65 is 60d)
- Court’s ruling is not prima facie so arbitration will be enjoined.

Q: RA 9285 has provisions on confidentiality. Does RA 876 contain the

same?
A:

VEGA V. SAN CARLOS MILLING

Q: Is arbitration clause really a condition precedent (ground for MTD), as
held in the dissent of Malcolm? MTD = Referral to Arbitration?
A: Majority view: CP. Minority (and Sir’s) view: not CP. Because unlike
other CPs, arbitration is not a pre-requisite to court action, but it actually
supplants it. An MTD is not proper because the effect would be different
from that provided under R4.5 SADR that the court would stay the action
and refer the case to arbitration.

13 AUGUST

CALIFORNIA V. PIONEER
Q: Can you be bound by arbitration through subrogation?
A: The court did not make a pronouncement. It only held that the basis of
the CA ruling was incorrect when it used Pan Malayan. Pan Malayan did
not discuss the issue of arbitration but was about the consequences of
subrogation and the rights that the insurer acquires.
Q: If a subrogee is bound, what about the issue of consent of the parties?
A:
Q: What is the implication of Art 1311 CC (Contracts take effect only
between the parties, their assigns and heirs, except in case where the
rights and obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law. The heir is not liable
beyond the value of the property he received from the decedent. If a
contract should contain some stipulation in favor of a third person, he may
demand its fulfillment provided he communicated his acceptance to the
obligor before its revocation. A mere incidental benefit or interest of a
person is not sufficient. The contracting parties must have clearly and
deliberately conferred a favor upon a third person.)
A:
Q: Assignment = subrogation?
A:

BLOOMFIELD V. CA
Q: Can a party be bound by an arbitration clause by statutory condition?
A: Yes. SC held that parties should have resorted to arbitration provided
in the RA.
Q: But is the legal provision the court cited an arbitration clause
(arbitrator shall be the alumni association)?
A: The mechanism of appointment of arbitrator does not matter because
the court may fix under S8 876.
- issues: consent and vagueness

MINDANAO PORTLAND CEMENT V. MCDONOUGH CONSTRUCTION

Q: In an arbitrable dispute, can the court decide on the merits in the
interest of justice?
A: No.
Q: What is the role of the court if the dispute is arbitrable?
A: Enforcement.
Pathological Arbitration Clause: unclear or vague (e.g. some disputes
arbitrable, some disputes referable to the engineer)

ASSOCIATED BANK V. CA
Q: According to SC, what was the significance of a bank participating with
the operations of PCHC?
A: Participation to PCHC clearing is tantamount to written and subscribed
consent.

LUZON DEVELOPMENT BANK V. ALDBE

SC held that arbitrator is in the same level as quasi-judicial agencies and
awards are in the same level as that of the RTC.
Q: Is this in conflict with the rule that RTC can confirm, vacate, modify an
arbitral award?
A: RTC only rules on the validity of the arbitration clause and not on the
merits. Although a judge can rule on the validity of an award, it cannot
replace it with its own judgment.
Q: But how can a judge rule that an arbitral panel does not have
jurisdiction over a dispute?
A:

20 AUGUST

The fact that an arbitrator rules against the interest of a party is not equal
to partiality.

Q: What if one of three arbitrators is always absent?

A: All of the arbitrators appointed in any controversy must attend all the
hearings in that matter and hear all the allegations and proofs of the
parties. (S14 876) This might give the judge a leeway not to confirm the
award. This may also amount to the termination of the mandate of the
arbitrator upon proper application by a party.
- If International Commercial Arbitration, this may be a ground for
setting aside as the procedure was not conducted according to the
agreement.

GONZALES V. CLIMAX
- Doctrine of Separability
- Arbitration clause is independent from the container contract and unless
the validity of the arbitration clause is also questioned, the court has no
jurisdiction. (Art16 UNCITRAL)

OIL AND NATURAL GAS V. CA

Q: The arbitration clause provides that Member of the Commission (ONG)
shall choose a sole arbitrator and it is of no moment that the arbitrator
appointed is a Commission employer. Under the present state of the law,
how would you assess the arbitration clause (considering it is a contract of
adhesion) and in light of Art 2045 CC?
A: In the instant case, the applicable law was Indian law. If the applicable
law was Philippine law, the arbitral clause may have been declared void.

Art 2045 CC: Any clause giving one of the parties power to choose more
arbitrators than the other is void and of no effect.

Grounds to set aside: Art 34 UNCITRAL

1. against public policy
2. composition of arbitral tribunal not in accordance to the agreement

Petition for Setting Aside v. Refusal to Recognize

Q: What if the place of arbitration is India but the applicable law is

Philippine law, how will you enforce the award?
A: Enforcement of a foreign arbitral award under S42 9285.

Unless you have a ground to vacate a domestic award or to set aside a

foreign arbitral award, the court has no choice but to confirm or enforce
and recognize.

MAGELLAN V. ZOSA

BF V. CA
The reference in a contract to a document containing an arbitration clause
constitutes an arbitration agreement provided that the contract is in
writing and the reference is such as to make that clause part of the
contract. (Art 7 UNCITRAL)

27 AUGUST 2010

Q: What is the remedy if the arbitrator refuses termination of mandate?

CLIMAX MINING: concept of separability

OIL AND NATURAL GAS: enforce judgment of foreign country

Q: How do you assess arb clause?

Q: What is the difference of judicial relief before and judicial relief after?

Q: What if the court already declared the arb clause void? Try to factor in
Art 5 CC?

Arbitral award cannot be questioned on the grounds of fact and law. It

cannot be assailed for the merit.

Rule 19.7: No appeal or certiorari on the merits of the award.

KOREA TECHNOLOGIES: A party may not unilaterally rescind or terminate

the contract for whatever reason without first resorting to arbitration.
- New doctrine? What is the basis?

SALAS: Are not the buyers successors-in-interest

DEL MONTE: bad rule

3 SEPTEMBER

MULTIPLE PARTIES
o Toyota: Arb agreement should be upheld despite presence of third
parties.
o Salas: Arb agreement binds only parties, assigns and heirs. Lot buyers
are not bound.
o Del Monte: Presence of multiple (third) parties removes the dispute
 from arbitration when there is already a pending case involving third
parties.
o SC held that arb clause is valid and dispute is arbitrable.
However, it would defeat the purpose of expeditious
determination of the case if arbitration would commence in lieu
of the court action.
o Q: How do you address the argument that the ground for the civil
action is Art 21 CC?
 A: The acts complained of fall under the contractual
relationship. Art 21 speaks of damage or loss. The alleged
damage arose from the transaction contemplated by the
distributorship agreement. The agreement established
their legal relationship.
o Sir: Bad precedent because the third parties are not even real
parties in interest, yet the court opted to disregard the
arbitration clause. This is why S25 RA 9285 was created.
o RA 9285 S25: Civil action continues as to those not bound by
arbitration agreement.

KOREA V. LERMA: Art 1191 CC states that if a party wants to rescind and
the other party does not oppose, then the contract is rescinded. SC
however held that a party cannot unilaterally rescind a contract because
of the presence of an arbitration clause. The underlying basis is the
doctrine of separability. If the container contract is rescinded for being
void, it does not mean that the arbitration clause is also void.
- Q: Is this judicial legislation since SC declared that Art 1191 does
not apply if there is an arbitration clause?
o A: Only gives effect to UNCITRAL and Civil Code.

HOME BANKERS V. CA: S14 of RA876 states that a party has the right to
petition the court to take measures to safeguard and/or conserve any
matter subject of the arbitration.

ASSAILING THE ARBITRAL AWARD

Grounds for Vacating Domestic Award:

1. procured by corruption, fraud, other undue means
2. evident partiality or corruption of arbitrator
3. misconduct of arbitrator
4. arbitrator exceed or so imperfectly executed powers
5. disqualified arbitrator willfully refrained from disclosing
6. arbitration agreement does not exist or invalid for any ground for
the revocation of a contract or otherwise unenforceable
7. party is a minor or incompetent
• Q: Are these exclusive grounds to assail?
o Exclusive.
 11.4 SADR: Court shall disregard any other ground than
those enumerated above.
APT V. CA: RTC confirmed arbitral award. APT filed a petition for certiorari.
o Q: Under the present state of the law, is certiorari the correct remedy?
Under 19.26 SADR certiorari with the CA is available when there is “no
appeal or plain, speedy and adequate remedy.” However, appeal with
the CA is also available under 19.12. When can you resort to 19.26?
o 19.9 provides that where the remedies of appeal and certiorari
are specifically made available to a party under SADR, recourse
to one remedy shall preclude recourse to the other.
o 19.12 includes granting a motion to modify. If it is denied, it is
not appealable.

17 SEPTEMBER

Q: What is the present rule for interim measures of protection?

A: Before the constitution of the arbitral tribunal, the court is allowed to
issue orders of protection. After the constitution, the party may seek
protection from the court provided that the tribunal has no power to act or
cannot act effectively.

Q: What happens to the interim relief granted by the court after the
constitution of the tribunal? Does the tribunal have any power over the
interim relief granted by the court?
A: 5.13 SADR: Interim order by the court is issued without prejudice to a
subsequent grant, modification, amendment, revocation or revision by the
tribunal.

Q: Can non-parties to the agreement join the arbitration?

A: Yes, upon consent of the parties and approval of the tribunal.

Motion to Vacate v. Petition to Vacate

M: when court already acquired jurisdiction, but stayed the action because
of arbitration
P: court has no jurisdiction yet

Petition to Vacate: not a summary proceeding, must be verified

Any pleading filed under SADR must be supported by a verification, even

a motion for extension. (1.4)

Q: Can counsel sign the verification?

A: Yes, under 1.11 (f).

Q: One party appointed an arbitrator. Second party did not. What must be
done in order to proceed?
A: In ad hoc arbitration, party must first ask IBP president or his duly
authorized representative to appoint. If the latter fails, neglects or refuses
within 30d, file Petition for Appointment with the court. (6.1.b SADR)
- S26 9285: in ad hoc arbitration, default appointment shall be made
 by IBP president
- Q: Can IBP president appoint the third arbitrator?
A:

Q: Can respondent ask for an injunction to prevent arbitration from

proceeding on the ground that he did not appoint an arbitrator?
A:

Challenge v. Termination of Mandate of Arbitrator

C: There is a ground to assail qualification or independence and
impartiality.
T: Arbitrator is unable to perform his functions.

CHUNG FU V. CA: SC held that arbitral award is not beyond the power of
judicial review.

ADAMSON V. CA:

Q: Can a court, after vacating an award, reverse the arbitral award? What
action should a court take after vacating an award?
A: The court can only set aside. In referring the case back to the tribunal
or a new tribunal, the court may not direct it to revise its award in a
particular way or otherwise encroach upon the independence of the
tribunal (11.9 SADR).

Q: May a party appeal an order denying a decision to vacate?

A:

ICC RULES

Procedure:
1. Arbitration Clause
2. Dispute
3. Request for arbitration to the ICA
4. Claimant deposits non-refundable amount ($2500)
5. Notice to respondent
6. ICC computes sum in dispute to get arbitration cost
7. Parties pay arbitration cost
a. If one party refuses to pay, claimant shoulders
i. If claimant refuses to shoulder, proceedings would be
suspended
ii. If claimant cannot shoulder
8. Constitution of Arbitral Tribunal (number and manner of
appointment agreed by parties; only when there is no agreement
will the ICC rules be followed)
a. Sole arbitrator > ICC appoints
b. Three > each party nominates one, ICC appoints Chair
c. No agreement as to number > ICC appoints one, unless
complexities of the case require three
9. ICC confirms nomination of arbitrators
10. Parties notified by Sec of composition
a. If there is challenge > written statement and reasons
b. ICC decides challenge
11. Terms of Reference
a. Must be confirmed by the ICC
12. Hearing
13. Award
a. Must be confirmed by ICC
 Q: May the award be appealed after confirmation despite
Art 28.6 (deemed to have waived their right to any form of
recourse insofar as such waiver can validly be made)?
A: Under SADR, no appeal. But without SADR, Sir still thinks
right to appeal is waived under ICC rules. Arb clause is a
contract in itself under Art1159 CC (contractual obligations
= force of law). ICC Rules becomes part of the contract.
“Any form of recourse” includes appeal.
Q: Is this contrary to public policy?
A: Sir thinks no, as appeal may be waived because it is a
statutory privilege.