3M Alternative Dispute Resolution TSN 2014

ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)
ATTY. CATHERINE BARRION- GUERZO |1

November 28, 2014
What is Alternative Dispute Resolution?
Alternative dispute resolution methods or ADRs
provide solutions that are less time-consuming, less
tedious, less confrontational, and more productive of
goodwill and lasting relationships. (Case: LM Power
Engg, 339 SCRA 562)
Student: this means maam that the parties resolve
their dispute not by court action but by themselves.
Who resolves the dispute among the parties?
Is there a third party involved?
Student: yes, mam, there are third parties in
alternative dispute resolution. This third party are
those to as the MEDIATOR or ARBITRATOR.
LM POWER ENGINEERING
HELD: Being an inexpensive, speedy and
amicable method of settling disputes,
arbitrationalong
with
mediation,
conciliation and negotiationis encouraged
by the Supreme Court. Aside from
unclogging judicial dockets, arbitration also
hastens the resolution of disputes, especially
of the commercial kind. It is thus regarded
as the wave of the future in international
civil and commercial disputes. Brushing
aside a contractual agreement calling for
arbitration between the parties would be a
step backward. Consistent with the
abovementioned policy of encouraging
alternative dispute resolution methods,
courts should liberally construe arbitration
clauses. Provided such clause is susceptible
of an interpretation that covers the asserted
dispute, an order to arbitrate should be
granted. Any doubt should be resolved in
favor of arbitration.
How should arbitration clauses construed?
In cases of doubt, arbitration clauses should
be resolved in favor of arbitration or
alternative dispute resolution method.
How is Alternative Dispute Resolution defined
under RA 9285(Alternative Dispute Resolution
Act)?
(a) "Alternative Dispute Resolution System"
means any process or procedure used to resolve
a dispute or controversy, other than by
adjudication of a presiding judge of a court or
an officer of a government agency, as defined in
this Act, in which a neutral third party
participates to assist in the resolution of issues,
which
includes
arbitration,
mediation,
conciliation, early neutral evaluation, mini-trial,
or any combination thereof;
Atty. Guerzo: So, by the definition given by law, in

alternative dispute resolution, the cases or dispute is
settled outside the court. Does it preclude court
intervention?
Student: No, maam it does not preclude court action
because if no resolution is reached between the
parties then the court will resolve the issue.
If the parties choose arbitration or meditation,
does it preclude court intervention? If not,
when can the court intervene?
Is it necessary that the arbitrators are lawyers
or judges?
No. they are actually chosen by the parties as long
as they are qualified.
What is the ultimate objective of ADR?
IRR of ADR Rules
Article 1.2. Declaration of Policy. It is the
policy of the State:
(a) To promote party autonomy in the resolution
of disputes or the freedom of the parties to make
their own arrangements to resolve their disputes;
(b) To encourage and actively promote the use of
Alternative Dispute Resolution ("ADR") as an
important means to achieve speedy and impartial
justice and to declog court dockets;
(c) To provide means for the use of ADR as an
efficient tool and an alternative procedure for the
resolution of appropriate cases; and
(d) To enlist active private sector participation in
the settlement of disputes through ADR.
It is by empowering the parties to resolve their case
and to DECLOG the court dockets.
It is also to change the litigious attitude of litigants in
resolving their dispute by directly resorting to judicial
action.
What are the different forms of ADR?
Mediation a voluntary process in which a
mediator, selected by the disputing parties,
facilitates communication and negotiation, and
assists the parties in reaching a voluntary agreement
regarding a dispute.
Evaluation of a third person ADR process
wherein the parties and their lawyers are brought
together early in 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 substance of this
dispute.
Mini-trial a structure 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 neutral third person after which

the parties seek a negotiated settlement. The neutral
third person may be asked to render a non-binding
adversary opinion.
Mediation-arbitration this is a two-step dispute
resolution process involving both mediation and
arbitration
Negotiation Collaborative negotiation proceeds
from the joint efforts of the parties in reaching an
acceptable settlement of all their concern.
Conciliation Section 7 of RA 9285: The term
"mediation' shall include conciliation.
Judicial dispute resolution- the third party who
assists in resolution of dispute is a judge.
When is JDR conducted? How do you reconcile
it with the fact that the ADR is conducted
outside the court?
Arbitration means a voluntary dispute resolution

process in which one or more arbitrators, appointed
in accordance with the agreement of the parties or
these Rules, resolve a dispute by rendering an
award. (IRR of ADR Rules)
Litigation is a lawsuit or legal action including all
proceedings therein. Contest in a court of law for all
purpose of enforcing a right or seeking a remedy. A
judicial contest, a judicial controversy, a suit at law.
(Blacks Dictionary)
What is more beneficial,
litigation?
Arbitration vs. Litigation
Perceived Benefits
Aspects
Finality
Litigation
Court decisions
are, as a general
rule, subject to
various appeals.
Internation
al
recognition
/Enforceabi
lity
in
Foreign
Jurisdiction
s
Usually difficult.
A
court
judgment will be
recognized
in
another country
generally
by
application of a
bilateral
treaty
or by virtue of
rather
strict
rules.
Neutrality
Although
national judges
may
be
impartial,
they
apply
the
language
and
procedural rules
of their country
and are often of
the
same
nationality
as
one
of
the
parties, thereby
giving rise to the
perceived
When court- annexed mediation ails, the case is

brought to the judge who acts as a conciliator, a
neutral evaluator and a mediator. The judge will try
to mediate the case. If the judges intervention as a
mediator succeeds, the case is concluded with a
judgment based on a compromise.
If the dispute is still unresolved, then the case is
referred to another judge for trial. Both parties must
now be prepared for litigation. (PMC Primer)
Atty. Guerzo: So if it is court- annexed, this
presupposes that the case is already filed in court.
Mediation happens in pre- trial stage of the case.
How do you differentiate court- annexed
mediation from court- referred mediation?
ADR IRR, Rule 2:
Court-Annexed
Mediation
means
any
mediation process conducted under the auspices
of the court and in accordance with Supreme
Court approved guidelines, after such court has
acquired jurisdiction of the dispute.
Court-Referred Mediation means mediation
ordered by a court to be conducted in accordance
with the agreement of the parties when an action
is prematurely commenced in violation of such
agreement.
Atty. Guerzo: Under court- annexed mediation, take
note, it takes place ones the court acquires
jurisdiction over the case. Meaning, may answer na
ang defendant.
How do you distinguish arbitration from
litigation?
arbitration
or
Arbitration
Most
arbitral
awards are not
subject to appeal.
They may be
challenged before
the court only on
very
limited
grounds. In any
case, most court
espouse a proarbitration bias
Yes.
Through
various
international
conventions, and
especially
the
New
York
Convention,
signed by some
120
countries
including
the
Philippines,
a
foreign
arbitral
award is typically
easier to enforce
than a foreign
judgment.
Parties can place
themselves on an
equal footing with
regard to: the
place
of
arbitration (in a
neutral country);
the
language
used;
the
procedural rules;
the nationality of
arbitrators; and
legal
representation.

home-court
advantage.
Specialized Not all judges
competenc are specialized.
e
and For example, in
personal
patent, banking
follow-up
disputes,
technical
expertise
is
necessary. The
duration of the
litigation
may
lead to several
judges hearing
one case.
Party
National courts
Participatio are
strictly
n
bound by their
national rules of
procedure. Thus,
procedures are
dictated by rules
of litigation.
Speed
Procedures may
be delayed and
lengthy.
Party
may
get
entangled in a
prolonged
and
costly series of
appeals.
Privacy/Con Court hearings
fidentiality
as well as the
judgments
are
public.
Moreover, under
Philippine
law,
rules
and
regulation,
all
documents,
pleadings
and
pieces
of
evidence
submitted
in
courts are a
matter of public
record, and as a
general
rule,
accessible to the
public.
Predictabilit
y
In the absence
of an agreement
of the parties
limiting
the
forum
for
Parties may select

highly specialized
arbitrators
of
their
choice,
provided they are
independent.
Usually,
the
arbitrators
will
follow the case
from the first day
to the last.
Most arbitral rules
allow for party
participation, and
thus
greater
flexibility,
in
defining
the
arbitral
procedures.
Arbitration
is
faster
than
litigation
especially where
the
right
to
appeal is not
unrestricted.
Arbitration
hearings are not
public and only
the
parties
receive copies of
the award, which
is
a
great
advantage where
trade secrets and
inventions are at
stake. In addition,
most arbitration
laws provide for
strict
confidentiality of
arbitration
proceedings.
Underlying
provisions in a
contract
containing
secrecy provisions
should hold for
the
arbitration
procedure.
The dispute will
be received in
one place and not
by a race to
judgment in the
litigation, partylitigants
may
obtain
judgments
in
their respective
national courts,
which may or
may
not
be
consistent with
one another.
Costs
(to Prolonged
some
litigation
and
extent)
extensive
discovery
processes drive
up the costs of
litigation.
courts of
nations.
two
Arbitration
proceedings
normally do not
involve extensive
discovery
processes
and
trial
settings.
Thus, costs are
reduced
somewhat.
Main Disadvantage: Absence of any precedence

that will guide the mediator or arbitrator since the
cases brought before them are based on agreements
of the parties.
In other words, it is a CASE TO CASE BASIS.
ASSET PRIVATIZATION v CA
13. ASSET PRIVATIZATION v. CA
ASSET PRIVATIZATION TRUST, petitioner,
vs., COURT OF APPEALS, JESUS S.
CABARRUS, SR., JESUS S. CABARRUS, JR.,
JAIME
T. CABARRUS,
JOSE MIGUEL
CABARRUS, ALEJANDRO S. PASTOR, JR.,
ANTONIO U. MIRANDA, and MIGUEL M.
ANTONIO, as Minority Stock Holders of
Marinduque
Mining
and
Industrial
Corporation, respondents.
FACTS:
On July 3, 1968, the Republic of the
Philippines thru the Surigao Mineral Reservation
Board, granted MMIC the exclusive right to
explore, develop and exploit nickel, cobalt and
other minerals in the Surigao mineral reservation.
The government undertook to support the
financing of MMIC by purchase of debenture and
extension of guarantees. It later obtained a firm,
commitment from the DBP and/or other
government financing institutions to subscribed in
MMIC and issue guarantee/s for foreign loans or
deferred payment arrangements.
On July 13, 1981, MMIC, PNB and DBP
executed a Mortgage Trust Agreement whereby
MMIC, as mortgagor, agreed to constitute a
mortgage in favor of PNB and DBP as mortgagees,
over all MMICs assets.
By 1984, MMIC was having a difficult time
meeting its financial obligations which totalled

P22,668,537,770.05. Thus,
a
financial
restructuring plan (FRP) designed to reduce
MMIC's interest expense through debt conversion
to equity was drafted.
As the various loans and advances made by
DBP and PNB to MMIC had become overdue and
since any restructuring program relative to the
loans was no longer feasible, DBP and PNB as
mortgagees of MMIC assets, extrajudicially
foreclosed the mortgages in accordance with the
Mortgage Trust Agreement.
The foreclosed assets were sold to PNB as the
lone bidder and were transferred to the Asset
Privatization Trust (APT).
On February 28, 1985, Jesus S. Cabarrus, Sr.
(President of MMIC), together with the other
stockholders of MMIC, filed a derivative suit
against DBP and PNB before the RTC of Makati,
Branch 62, for Annulment of Foreclosures, Specific
Performance and Damages.
In the course of the trial, private respondents
and petitioner APT, as successor of the DBP and
PNBs interest in MMIC, mutually agreed to submit
the case to arbitration by entering into a
Compromise and Arbitration Agreement, which
was approved by the TC.
On November 24, 1993, the Arbitration
Committee rendered a majority decision in favor of
MMIC. Thus, Cabarrus filed in the same Civil Case
No. 9900 an Application/Motion for Confirmation
of Arbitration Award.
Petitioner countered with an Opposition and
Motion to Vacate Judgment raising the following
grounds:
1. The plaintiffs Application/Motion is improperly
filed with this branch of the Court, considering
that the said motion is neither a part nor the
continuation of the proceedings in Civil Case No.
9900 which was dismissed upon motion of the
parties. In fact, the defendants in the said Civil
Case No. 9900 were the Development Bank of the
Philippines and the Philippine National Bank (PNB);
2. Under Section 22 of Rep. Act 876, an arbitration
under a contract or submission shall be deemed a
special proceedings and a party to the controversy
which was arbitrated may apply to the court
having jurisdiction, (not necessarily with this
Honorable Court) for an order confirming the
award;
3. The issues submitted for arbitration have been
limited to two: (1) propriety of the plaintiffs filing
the derivative suit and (2) the regularity of the
foreclosure proceedings. The arbitration award
sought to be confirmed herein far exceeded the
issues submitted and even granted moral damages
to one of the herein plaintiffs;

4. Under Section 24 of Rep. Act 876, the Court
must make an order vacating the award where the
arbitrators exceeded their powers, or so
imperfectly executed them, that a mutual final and
definite award upon the subject matter submitted
to them was not made.[17]
TC: confirmed the award of the Arbitration
Committee ordering APT to pay actual damages,
moral and exemplary damages to MMIC (except
the DBP) and Jesus S. Cabarrus, Sr.
MAIN ISSUE: WON the arbitrators exceeded

their powers.
HELD: YES! The decision of the Arbitration
Committee is hereby VACATED.
As a rule, the award of an arbitrator cannot
be set aside for mere errors of judgment either as
to the law or as to the facts. Courts are without
power to amend or overrule merely because of
disagreement with matters of law or facts
determined by the arbitrators.[30] They will not
review the findings of law and fact contained in an
award, and will not undertake to substitute their
judgment for that of the arbitrators, since any
other rule would make an award the
commencement,
not
the
end,
of
litigation.[31] Errors of law and fact, or an
erroneous decision of matters submitted to the
judgment of the arbitrators, are insufficient to
invalidate an award fairly and honestly
made.[32] Judicial review of an arbitration is, thus,
more limited than judicial review of a trial.[33]
Nonetheless, the arbitrators awards is not
absolute and without exceptions. The arbitrators
cannot resolve issues beyond the scope of the
submission agreement.[34] The parties to such an
agreement are bound by the arbitrators award
only to the extent and in the manner prescribed by
the contract and only if the award is rendered in
conformity thereto.[35] Thus, Sections 24 and 25 of
the Arbitration Law provide grounds for vacating,
rescinding
or
modifying
an
arbitration
award. Where the conditions described in Articles
2038,[36] 2039[37] and 2040[38] of the Civil Code
applicable to compromises and arbitration are
attendant, the arbitration award may also be
annulled.
In Chung Fu Industries (Phils.) vs. Court of
Appeals,[39] we held:
x x x. It is stated explicitly under Art. 2044 of the
Civil Code that the finality of the arbitrators
awards
is
not
absolute
and
without
exceptions. Where the conditions described in

Articles 2038, 2039, and 2040 applicable to both
compromises and arbitration are obtaining, the
arbitrators' award may be annulled or
rescinded. Additionally, under Sections 24 and 25,
of the Arbitration Law, there are grounds for
vacating, modifying or rescinding an arbitrators
award. Thus, if and
when the factual
circumstances referred to in the above-cited
provisions are present, judicial review of the
award is properly warranted.
Accordingly, Section 20 of R.A. 876 provides:
SEC. 20. Form and contents of award. The
award must be made in writing and signed and
acknowledged by a majority of the arbitrators, if
more than one; and by the sole arbitrator, if there
is only one. Each party shall be furnished with a
copy of the award. The arbitrators in their award
may grant any remedy or relief which they deem
just and equitable and within the scope of the
agreement of the parties, which shall include, but
not be limited to, the specific performance of a
contract.
xxx
The arbitrators shall have the power to decide only
those matters which have been submitted to
them. The terms of the award shall be confined to
such disputes. (Underscoring ours).
xxx.
Section 24 of the same law enumerating the
grounds for vacating an award states:
SEC. 24. Grounds for vacating award. In any
one of the following cases, the court must make
an order vacating the award upon the petition of
any party to the controversy when such party
proves affirmatively that in the arbitration
proceedings:
(a) The award was procured by corruption, fraud,
or other undue means; or
(b) That there was evident partiality or corruption
in arbitrators or any of them; or
(c) That the arbitrators were guilty of misconduct
in refusing to postpone the hearing upon sufficient
cause shown, or in refusing to hear evidence
pertinent and material to the controversy; that one
or more of the arbitrators was disqualified to act
as such under section nine hereof, and willfully
refrained from disclosing such disqualifications or
any other misbehavior by which the rights of any
party have been materially prejudiced; or
(d) That the arbitrators exceeded their powers, or
so imperfectly executed them, that a mutual, final
and definite award upon the subject matter
submitted to them was not made. (Underscoring

ours).
xxx.
Section 25 which enumerates the grounds for
modifying the award provides:
SEC. 25. Grounds for modifying or correcting
award In anyone of the following cases, the
court must make an order modifying or correcting
the award, upon the application of any party to
the controversy which was arbitrated:
(a) Where there was an evident miscalculation of
figures, or an evident mistake in the description of
any person, thing or property referred to in the
award; or
(b) Where the arbitrators have awarded upon a
matter not submitted to them, not affecting the
merits of the decision upon the matter submitted;
or
(c) Where the award is imperfect in a matter of
form not affecting the merits of the controversy,
and if it had been a commissioners report, the
defect could have been amended or disregarded
by the court.
x x x.
Finally, it should be stressed that while a
court is precluded from overturning an
award for errors in determination of factual
issues, nevertheless, if an examination of
the record reveals no support whatever for
the arbitrators determinations, their award
must be vacated. In the same manner, an
award must be vacated if it was made in
manifest disregard of the law.
Against the backdrop of the foregoing
provisions and principles, we find that the
arbitrators came out with an award in
excess of their powers and palpably devoid
of factual and legal basis.
GENERAL RULE: The arbiters decision cant be set

aside for mere error of judgment, error of law or
facts.
EXCEPTIONS: if there is grave abuse of discretion
on the part of the arbitrator amounting to
jeopardizing the rights of the parties in arbitration.
What are the salient features of our
Arbitration Law?
Salient Features of RA 9285:
a) It prescribes rules on mediation;
b) It incorporates, as part of the law, the Model
Law on International Commercial Arbitration

c)
d)
e)
f)
g)
adopted by the United National Commission

on International Trade Law;
It makes the Model Law applicable to
international commercial arbitration and
strengthening it thru specific provisions of RA
9285;
It strengthens domestic arbitration by making
specific provisions of the Model Law and RA
9285 pertaining to international commercial
arbitration;
It designates an appointing authority with the
power to designate an arbitrator for the
parties in default situations;
Provides a broad and uniform scope of
interim or provisional relief in international
commercial
arbitration
and
domestic
arbitration;
Sets the basic principles in the enforcement
of foreign arbitral award, whether or not they
fall within the coverage of the New York
Convention
What are the different kinds of arbitration

under RA 9285?
A: The different kinds of arbitration under RA 9285:
1. Domestic arbitration (governed by
Chapter 5)
2. International
commercial
arbitration
(governed by Chapter 4)
3. Individual arbitration
4. Institutional arbitration
5. Arbitration of construction disputes
6. Court-referred arbitration (provided under
Section 24 of RA 9285)
Take note of the different kinds of arbitration under
RA 9285.
DOMESTIC ARBITRAL AWARDS
It is said that RA 9285, it cover two general types
of arbitration taking place in the Philippines:
1. Domestic Arbitration
2. International commercial arbitration
In domestic arbitration and international
commercial arbitration, where is the seat of
arbitration?
The seat of arbitration is in the Philippines.
Both domestic arbitration and international
commercial arbitration refer to DOMESTIC ARBITRAL
AWARDS. These are those rendered in domestic
arbitration or international commercial arbitration
which are Philippine arbitral awards since they are
the result of arbitral proceedings that are held in the
Philippines.
How do you define Domestic Arbitration?
RA 9285, SEC. 32. Law Governing Domestic
Arbitration.- Domestic arbitration shall continue to
be governed by Republic Act No. 876, otherwise
known as "The Arbitration Law" as amended by

this Chapter.
The term "domestic arbitration" as used herein
shall mean an arbitration that is not international
as defined in Article (3) of the Model Law.
Atty. Guerzo: Meaning, a domestic arbitration is an
arbitration that is not international.
How do you define International Commercial
Arbitration?
IRR definition of terms:
Commercial Arbitration means an arbitration
that covers matters arising from all relationships of
a commercial nature, whether contractual or not.
Relationships of a commercial nature include, but
are not limited to, the following commercial
transactions: any trade transaction for the supply
or exchange of goods or services; distribution
agreements; construction of works; commercial
representation or agency; factoring; leasing;
consulting; engineering; licensing; investment;
financing; banking; insurance; joint venture and
other forms of industrial or business cooperation;
carriage of goods or passengers by air, sea, rail or
road.
International Arbitration means an arbitration
where:
(a) the parties to an arbitration agreement have,
at the time of the conclusion of that agreement,
their places of business in different states; or
(b) one of the following places is situated outside
the Philippines in which the parties have their
places of business:
(i) the place of arbitration if determined in, or
pursuant to, the arbitration agreement;
(ii) any place where a substantial part of the
obligations of the commercial relationship is to be
performed or the place with which the subject
matter of the dispute is most closely
connected; or
(c) the parties have expressly agreed that the
subject matter of the arbitration agreement relates
to more than one country.
For this purpose:
(a) if a party has more than one place of business,
the place of business is that which. has the closest
relationship to the
arbitration agreement;
(b) if a party does not have a place of business,
reference is to be made to his/her habitual
residence.
(Article 1(3) of the Model Law)

a. If the parties to an arbitration agreement
have, at the time of the conclusion of that
agreement, their place of business in
different States; or
b. Where either the place of arbitration as
determined under that agreement or the
place where a substantial part of the
obligations of the commercial relationship is
to be performed or with which the subject
matter of the dispute is most closely
connected, is situated outside of the State
where the parties have their places of
business; or
c. The parties have expressly agreed that the
subject matter of the arbitration agreement is
international.
Atty. Guerzo: Basically, both domestic arbitration and
international commercial arbitration are covered by
RA 9285. For emphasis, both types of arbitration are
held here in the Philippines.
What law should govern in domestic
arbitration?
RA 9285, SEC. 32.Law Governing Domestic
Arbitration - Domestic arbitration shall continue to
be governed by Republic Act No. 876, otherwise
known as "The Arbitration Law" as amended by
this Chapter. The term "domestic arbitration" as
used herein shall mean an arbitration that is not
international as defined in Article (3) of the Model
Law.
SEC.
33.Applicability
to
Domestic
Arbitration.- Article 8, 10, 11, 12, 13, 14, 18 and
19 and 29 to 32 of the Model Law and Section
22to 31 of the preceding Chapter 4 shall apply to
domestic arbitration.
How about if it is international commercial

arbitration, what law governs?
SEC. 19. Adoption of the Model Law on
International Commercial Arbitration International commercial arbitration shall be
governed by the Model Law on International
Commercial Arbitration (the "Model Law") adopted
by the United Nations Commission on International
Trade Law on June 21, 1985 (United Nations
Document A/40/17) and recommended approved
on December 11, 1985, copy of which is hereto
attached as Appendix "A".
SEC. 20. Interpretation of Model Law.- In
interpreting the Model Law, regard shall be had to
its international origin and to the need for
uniformity in its interpretation and resort may be
made to the travaux preparatories and the report
of the Secretary General of the United Nations
Commission on International Trade Law dated
March
25,
1985
entitled,
"International
Commercial Arbitration: Analytical Commentary on
Draft Trade identified by reference number A/CN.
9/264."
SEC. 21.Commercial Arbitration- An arbitration
is "commercial" if it covers matters arising from all
relationships of a commercial nature, whether
contractual or not.
Relationships of a transactions: any trade trans
action for the supply or exchange of goods or
services; distribution agreements; construction of
works; commercial representation or agency;
factoring;
leasing,
consulting;
engineering;
licensing;
investment;
financing;
banking;
insurance; joint venture and other forms of
industrial or business cooperation; carriage of
goods or passengers by air, sea, rail or road.
SEC.
22.Legal
Representation
in
International Arbitration- In international
arbitration conducted in the Philippines, a party
may be presented by any person of his choice.
Provided, that such representative, unless
admitted to the practice of law in the Philippines,
shall not be authorized to appear as counsel in any
Philippine court, or any other quasi-judicial body
whether or not such appearance is in relation to
the arbitration in which he appears.
Atty. Guerzo: So it means that if it is a domestic
arbitration, it is RA 9287 or the Arbitration Law shall
govern. If it is an international commercial
arbitration, it is the Model Law or the UNICTRAL that
shall govern.
FOREIGN ARBITRAL AWARDS
Foreign arbitral award, refers to convention
award and non-convention award.
These are those rendered abroad in arbitration
proceedings that take place outside the Philippines.
The seat of arbitration is a FOREIGN STATE, not in
the Philippines.
RA 9285, definition of terms
Convention Award" means a foreign arbitral
award made in a Convention State;
"Non-Convention Award" means a foreign
arbitral award made in a State which is not a
Convention State;
Convention State means a state that is a
member of the New York
Convention.

If it is a convention award under RA 9285, the

action for recommission and enforcement of the
awards shall be filed with the RTC.
If it is a non-convention award, on grounds of
comity and reciprocity with states not signatory to
the convention may be enforced in the Philippines as
a convention award under Section 43 of RA 9285.
What is arbitration?
Arbitration means a voluntary dispute resolution
process in which one or more arbitrators,
appointed in accordance with the agreement of
the parties or these Rules, resolve a dispute by
rendering an award. (ADR Law IRR)
Arbitration is from the Latin term arbitrario. It is a
process of dispute resolution in which a neutral
third-party or arbitrator renders a decision after a
hearing at which both parties had an opportunity to
be heard.
So take note here there is a neutral third party who
is known as the arbitrator.
Q: So what is the essential concept of arbitration
under RA 9285 as it is defined?
A: As to its concept, it is said that arbitration is
merely following a trend towards privatization of
public service. It is nothing more than a decision of a
private judge. It utilizes the same method of
adjudication as the judiciary which is adversarial.
Take note that it is merely a shift from public judging
to private judging.
What are the exceptions to the application of
the ADR Law?
RA 9285, SEC. 6.Exception to the Application
of this Act.- The provisions of this Act shall not
apply to resolution or settlement of the following:
(a) labor disputes covered by Presidential Decree
No. 442, otherwise known as the Labor Code of
the Philippines, as
amended and its Implementing Rules and
Regulations; (b) the civil status of persons; (c)
the validity of a marriage; (d) any ground for legal
separation; (e) the jurisdiction of courts; (f) future
legitime; (g) criminal liability; and (h) those which
by law cannot be compromised.
ADR IRR, Article 1.3. Exception to the
Application of the ADR Act. The provisions of
the ADR Act shall not apply to the resolution or
settlement of the following:
(a) labor disputes covered by Presidential Decree
No. 442, otherwise known as the "Labor Code of
the
Philippines,
as
amended",
and
its
Implementing Rules and Regulations;
(b) the civil status of persons;
(c) the validity of marriage;
(d) any ground for legal separation;

(e) the jurisdiction of courts;
(f) future legitime;
(g) criminal liability;
(h) those disputes which by law cannot be
compromised; and
(i) disputes referred to court-annexed mediation.
Why do you think these are excluded from the
coverage of the ADR Law?
These are excluded because they are covered by
other laws such as the Civil Code.
What are the Primary Sources/Laws in ADR?
1. RA 9285 (The ADR Law) and the Model Law,
which governs international commercial
arbitration and partially to domestic
arbitration;
2. RA 876 (The Arbitration Law approved on
June 19, 1953). Take note this is still a good
law. It still applies. It is to the extent that it is
not superseded by RA 9285 and the Model
Law.
3. Executive Order No. 1008 effective February
4, 1985 which governs construction disputes;
4. Articles 2042-2046 (Arbitration) in relation to
Articles 2028-2041 (Compromises) of the Civil
Code which refer to arbitration and
compromise under the New Civil Code;
5. The pertinent provisions of the Labor Code of
the Philippines, rules and regulations relating
to the resolution of grievances arising from
interpretation and implementation of CBA;
6. The provisions on arbitration in the Clearing
House Rules and Regulations of the Philippine
Clearing
House
Corporation
and
its
Arbitration Rules and Procedure;
7. Doctrines or law principles dealing with
arbitration established by the Supreme Court;
8. Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (New
York Convention of 1958) adhered to by the
Philippines in 1965; and
9. World Bank Convention creating the
International Center for the Settlement of
Investment Disputes.
So we said that the main law is RA 9285. So
regarding the history of arbitration in the Philippines,
take note, it has a common law origin. It is of
common law origin that is initially found in the
Spanish Civil Code and later on enshrined in our
Philippine Civil Code.
So in 1953 we have RA 876 or the Arbitration Law
which regulated arbitration in general.
In April 2, 2004, RA 9285 or the ADR Law was
signed into law. Take note, it was signed in April 2,
2004 and took effect 15 days after its publication. So

that is the history of the Arbitration Law of the
Philippines.
How about the areas of operation?
a) Labor-Management disputes
1. voluntary arbitration
2. compulsory arbitration
3. preventive arbitration;
b) Construction contracts
c) Check clearing disputes
We said that labor disputes are not covered by
RA 9285. What then governs LaborManagement Disputes?
Labor-Management disputes is governed by Articles
260 and 261 of the Labor Code.
Take note that the GENERAL RULE is that, it is the
Labor Arbiter who hears labor disputes.
So important terms or definitions that you must
know, voluntary arbitration in relation to labor
cases, compulsory arbitration and preventive
arbitration.
VOLUNTARY ARBITRATION
Article.
260. Grievance
machinery
and
voluntary arbitration. - The parties to a Collective
Bargaining Agreement shall include therein
provisions that will ensure the mutual observance of
its terms and conditions. They shall establish a
machinery for the adjustment and resolution of
grievances arising from the interpretation or
implementation of their Collective Bargaining
Agreement and those arising from the interpretation
or enforcement of company personnel policies.
All grievances submitted to the grievance machinery
which are not settled within seven (7) calendar days
from the date of its submission shall automatically be
referred to voluntary arbitration prescribed in the
Collective Bargaining Agreement.
For this purpose, parties to a Collective Bargaining
Agreement shall name and designate in advance a
Voluntary Arbitrator or panel of Voluntary
Arbitrators, or include in the agreement a procedure
for the selection of such Voluntary Arbitrator or
panel of Voluntary Arbitrators, preferably from the
listing of qualified Voluntary Arbitrators duly
accredited by the Board (National Conciliation and
Mediation Board). In case the parties fail to select a
Voluntary Arbitrator or panel of Voluntary
Arbitrators, the Board shall designate the Voluntary
Arbitrator or panel of Voluntary Arbitrators, as may
be necessary, pursuant to the selection procedure
agreed upon in the Collective Bargaining Agreement,
which shall act with the same force and effect as if
the Arbitrator or panel of Arbitrators has been
selected by the parties as described above.
261. Jurisdiction
of
Voluntary
Arbitrators or panel of Voluntary Arbitrators. Article.
The Voluntary Arbitrator or panel of Voluntary

Arbitrators shall have original and exclusive
jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or
implementation of the Collective Bargaining
Agreement and those arising from the interpretation
or enforcement of company personnel policies
referred to in the immediately preceding article.
Accordingly, violations of a Collective Bargaining
Agreement, except those which are gross in
character, shall no longer be treated as
unfair labor practice and shall be resolved as
grievances
under
the
Collective
Bargaining
Agreement. For purposes of this article, gross
violations of Collective Bargaining Agreement shall
mean flagrant and/or malicious refusal to comply
with the economic provisions of such agreement.
Art. 262. Jurisdiction over other labor
disputes. The Voluntary Arbitrator or panel of
Voluntary Arbitrators, upon agreement of the parties,
shall also hear and decide all other labor disputes
including unfair labor practices and bargaining
deadlocks.
Please be familiar of Articles 260 and 261 of the
Labor Code.
Both management and labor may by mutual
agreement as in their CBA- vest voluntary arbitrators
with jurisdiction over cases that without such
agreement would fall within the original and
exclusive jurisdiction of the labor arbiters.
Even if it is a ground for compulsory arbitration, if it
is stipulated in the CBA, the parties may resort to
voluntary arbitration.
What are the exclusive jurisdiction of the
Labor Arbiter? (COMPULSORY ARBITRATION)
Art. 217. Jurisdiction of the Labor Arbiters
and the Commission.
a. Except as otherwise provided under this
Code, the Labor Arbiters shall have original
and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days
after the submission of the case by the
parties for decision without extension, even
in the absence of stenographic notes, the
following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair
labor
2. Termination
practice
cases;
disputes;
3. If accompanied with a claim for

reinstatement, those cases that

A T T Y . C A T H E R I N E B A R R I O N - G U E R Z O | 10
workers may file involving wages,
rates of pay, hours of work and
other terms and conditions of
employment;
4. Claims for actual, moral, exemplary
and other forms of damages arising
from
the
employer-employee
relations;
and all disputes between an employer and a

union and/or individual worker which include
disputes mentioned in Article 217 of the
Labor Code over which the Labor Arbiter has
original and exclusive jurisdiction as may be
agreed upon by both labor and management.
DECEMBER 12
5. Cases arising from any violation of

Article 264 of this Code, including
questions involving the legality of
strikes
and
lockouts;
and
DECEMBER 12
6. Except claims for Employees

Compensation,
Social
Security,
Medicare and maternity benefits, all
other claims arising from employeremployee relations, including those
of
persons
in
domestic
or
household service, involving an
amount exceeding five thousand
pesos (P5,000.00) regardless of
whether accompanied with a claim
for
reinstatement.
Article 217 of the labor code does not refer to

compulsory arbitration. Compulsory arbitration is
covered under article 263(g) of the labor code.
b. The Commission shall have exclusive

appellate jurisdiction over all cases decided
by
Labor
Arbiters.
c. Cases arising from the interpretation or
implementation of collective bargaining
agreements and those arising from the
interpretation or enforcement of company
personnel policies shall be disposed of by
the Labor Arbiter by referring the same to
the grievance machinery and voluntary
arbitration as may be provided in said
agreements. (As amended by Section 9,
Republic Act No. 6715, March 21, 1989)
In the case of San Jose vs. NLRC 294 S 336. The

SC said that:
1. The jurisdiction of the labor arbiter and the
voluntary arbitrator or panel over cases under
Articles 217, 261 and 262 can possibly
include money claims in one form or another.
2. The exclusive and original jurisdiction of the
Labor Arbiter under Art. 217 over monetary
claims is limited only to those arising from
statutes or contracts other than a CBA,
whereas the Voluntary Arbitrator or panel
have original and exclusive jurisdiction over
money claims arising from the interpretation
or implementation of CBA and those arising
from the interpretation or implementation of
company personnel policies under Art. 261
3. The voluntary arbitrators or panel of
arbitrators can exercise jurisdiction over any
Voluntary arbitration; jurisdiction of labor

arbiter; coverage
What is the exclusive and original jurisdiction of the

labor code? read 224 [217 LC.
Art. 217. Jurisdiction of Labor Arbiter and the

Commission. (a) Except as otherwise provided
under this Code the Labor Arbiter shall have original
and exclusive jurisdiction to hear and decide, within
thirty (30) calendar days after the submission of the
case by the parties for decision without extension,
even in the absence of stenographic notes, the
following cases involving all workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement,
those cases that workers may file involving wages,
rates of pay, hours of work and other terms and
conditions of employment;
4. claims for actual, moral, exemplary and other
forms of damages arising from the employeremployee relations;
5. Cases arising from any violation of Article 264 of
this Code, including questions involving the legality
of strikes and lockouts; and,
6. Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other
claims, arising from employer-employee relations,
including those of persons in domestic or household
service, involving an amount exceeding five
thousand pesos (P5,000) regardless of whether
accompanied with a claim for reinstatement.
xxx xxx xxx
(c) Cases arising from the interpretation or
implementation of collective bargaining agreement
and those arising from the interpretation or

enforcement of company procedure/policies shall be

disposed of by the Labor Arbiter by referring the
same to the grievance machinery and voluntary
arbitrator so maybe provided in said agreement.
SAN JOSE V. NLRC
What can be the subject of voluntary arbitration?

read art 273 [261 LC].
1. The jurisdiction of the Labor Arbiter and

Voluntary Arbitrator or Panel of Voluntary
Arbitrators over the cases enumerated in
Articles 217, 261 and 262, can possibly include
money claims in one form or another.
Art. 261. Jurisdiction of Voluntary Arbitrators or

panel of Voluntary Arbitrators. The Voluntary
Arbitrator or panel of Voluntary Arbitrators shall have
original and exclusive jurisdiction to hear and decide
all unresolved grievances arising from the
interpretation or implementation of the Collective
Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel
policies referred to in the immediately preceding
article. Accordingly, violations of a Collective
Bargaining Agreement, except those which are gross
in character, shall no longer be treated as unfair
labor practice and shall be resolved as grievances
under the collective bargaining agreement. For
purposes of this Article, gross violations of Collective
Bargaining Agreement shall mean flagrant and/or
malicious refusal to comply with the economic
provisions of such agreement.
The Commission, its Regional Offices and the
Regional Directors of the Department of Labor and
Employment shall not entertain disputes, grievances
or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of
Voluntary Arbitrators and shall immediately dispose
and refer the same to the Grievance Machinery or
Voluntary Arbitration provided in the Collective
Bargaining Agreement.
What are the disputes that can be the subject of
arbitration under the labor code? Read 274 [262
LC].
Art. 262. Jurisdiction over other labor disputes.

The Voluntary Arbitrator or panel of Voluntary
Arbitrators, upon agreement of the parties, shall also
hear and decide all other labor disputes including
unfair labor practices and bargaining deadlocks.
Article 224 [217] speaks of original jurisdiction.

Remember under your rules of court the basic
principle is that parties cannot agree on the
jurisdiction of the court. Isnt article 274[262] LC
contrary to that principle that jurisdiction cannot be
agreed upon by the parties. It is the policy of law
to favor voluntary arbitration than to submit
the dispute to the labor arbiter.
The labor arbiter cannot automatically assume

jurisdiction over a dispute. :
An analysis of the provisions of Articles 217, 261,
and 262 indicates, that:
Parenthetically, the original and exclusive

jurisdiction of the Labor Arbiter under Article
217 (c), for money claims is limited only to
those arising from statutes or contracts other
than a Collective Bargaining Agreement.
It must be emphasized that the jurisdiction of the
Arbitrators under Article 262 must be
voluntarily conferred upon by both labor and
management. The labor disputes referred to in the
same Article 262 can include all those disputes
mentioned in Article 217 over which the Labor
Arbiter has original and exclusive jurisdiction.
The Voluntary Arbitrator or Panel of Voluntary
Arbitrators has original and exclusive jurisdiction
over the controversy under Article 261 of the Labor
Code, and not the Labor Arbiter.
Submission agreement
Submission agreement a provision in the
collective bargaining agreement whereby the parties
submit a particular issue to the voluntary arbitrator
SAN MIGUEL V. NLRC
The collective bargaining agreement must state in
unequivocal language that the parties conform to the
submission of termination disputes and unfair labor
practices to voluntary arbitration. A proviso stating
that wages, hours of work, conditions of
employment and/or ER-EE relations shall be settled
by arbitration is not sufficient to remove termination
disputes and unfair labor practice disputes from the
jurisdiction of the LA to the VA.
So in order to remove these disputes from the

jurisdiction of the LA the provision must state it
specifically and there has to be a submission
agreement in the CBA.
We find no agreement between SMC and the
respondent union that would state in unequivocal
language that petitioners and the respondent
union conform to the submission of

termination disputes and unfair labor

practices to voluntary arbitration. Section 1,
Article V of the CBA, cited by the herein petitioners,
certainly does not provide so. Hence, consistent with
the general rule under Article 217 (a) of the Labor
Code, the Labor Arbiter properly has jurisdiction over
the for illegal dismissal and unfair labor practice.
In the same manner, petitioners cannot arrogate
into the powers of voluntary arbitrators the
original and exclusive jurisdiction of Labor
Arbiters
over
unfair
labor
practices,
termination disputes, and claims for damages,
in the absence of an express agreement
between the parties in order for Article 262 15 of
the Labor Law to apply in the case at bar. 16
APALISOK V. RPN
Voluntary arbitration as a mode of settling the
dispute was not forced upon respondents. Both
parties indeed agreed to submit the issue of validity
of the dismissal of petitioner to the jurisdiction of the
voluntary arbitrator by the Submission Agreement
duly signed by their respective counsels.
Article 262 of the Labor Code provides that upon
agreement of the parties, the voluntary arbitrator
can hear and decide all other labor disputes. The
voluntary arbitrator had jurisdiction over the parties'
controversy
LUDO AND LYM CORP V. SAORNIDO
The VA can rule upon issue even if it is not part of

the submission agreement.
Generally, the arbitrator is expected to decide only
those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator
can assume that he has the necessary power to
make a final settlement since arbitration is the final
resort for the adjudication of disputes.13
In the earlier case of ASSET PRIVATIZATION v.

CA, the SC ruled that arbitrators cannot resolve
issues beyond the scope of the submission
agreement. Parties to such agreement are bound by
the arbitrators award only to the extent and in the
manner prescribed by the contract only if the award
is rendered in conformity thereto.
However, in the case of LUDO v. SAORNIDO, the VA
has plenary powers. That is why he can resolve a
dispute even if it is not part of the submission
agreement.
Remember that the policy of law is to favor voluntary
arbitration.
VIVERO V. CA
So here the illegal termination dispute is under the

jurisdiction of the labor arbiter. Can the parties
submit this dispute to voluntary arbitration if there is
an agreement in the CBA to that effect? No, such
submission remains discretionary upon the parties.
It is not sufficient to merely say that parties to the
CBA agree on the principle that "all disputes" should
first be submitted to a Voluntary Arbitrator. There is
a need for an express stipulation in the CBA that
illegal termination disputes should be resolved by a
Arbitrators, since the same fall within a special class
of disputes that are generally within the exclusive
original jurisdiction of Labor Arbiters by express
provision of law. Absent such express stipulation, the
phrase "all disputes" should be construed as limited
to the areas of conflict traditionally within the
jurisdiction of Voluntary Arbitrators, i.e., disputes
relating
to
contract-interpretation,
contractimplementation, or interpretation or enforcement of
company personnel policies. Illegal termination
disputes - not falling within any of these categories should then be considered as a special area of
interest governed by a specific provision of law.
In this case, however, while the parties did agree to
make termination disputes the proper subject of
voluntary arbitration, such submission remains
discretionary upon the parties.
The use of the word "may" shows the intention of
the parties to reserve the right to submit the illegal
termination dispute to the jurisdiction of the Labor
Arbiter, rather than to a Voluntary Arbitrator.
Petitioner validly exercised his option to submit his
case to a Labor Arbiter when he filed
his Complaint before the proper government agency.
MERALCO v. QUISUMBING
What is the reckoning point of an arbitral award?

Labor laws are silent as to when an arbitral award in
a labor dispute where the Secretary had assumed
jurisdiction by virtue of Article 263 (g) of the Labor
Code shall retroact. In general, a CBA negotiated
within six months after the expiration of the existing
CBA retroacts to the day immediately following such
date and if agreed thereafter, the effectivity depends
on the agreement of the parties.18 On the other
hand, the law is silent as to the retroactivity of a CBA
arbitral award or that granted not by virtue of the
mutual agreement of the parties but by intervention
of the government. Despite the silence of the law,

the Court rules herein that CBA arbitral awards

granted after six months from the expiration of the
last CBA shall retroact to such time agreed upon by
both employer and the employees or their union.
Absent such an agreement as to retroactivity, the
award shall retroact to the first day after the sixmonth period following the expiration of the last day
of the CBA should there be one. In the absence of a
CBA, the Secretary's determination of the date of
retroactivity as part of his discretionary powers over
arbitral awards shall control.
SAN MIGUEL V. NLRC 2003

In the case at bar, petitioner sought a permanent
injunction to enjoin the respondents strike. A strike
is considered as the most effective weapon in
protecting the rights of the employees to improve
the terms and conditions of their employment.
However, to be valid, a strike must be pursued
within legal bounds.28 One of the procedural
requisites that Article 263 of the Labor Code and its
Implementing Rules prescribe is the filing of a valid
notice of strike with the NCMB. Imposed for the
purpose of encouraging the voluntary settlement of
disputes,29 this requirement has been held to be
mandatory, the lack of which shall render a strike
illegal.30
Such disregard of the mediation proceedings was
a blatant violation of the Implementing Rules, which
explicitly oblige the parties to bargain collectively in
good faith and prohibit them from impeding or
disrupting the proceedings.36
BENGUET CORPORATION V. DENR
Here, the SC applied the doctrine of estoppel to

question the jurisdiction of the POAO.
First Issue: The case should have first been
brought to voluntary arbitration before the
POAO
in the event a case that should properly be the
subject of voluntary arbitration is erroneously filed
with the courts or quasi-judicial agencies, on motion
of the defendant, the court or quasi-judicial agency
shall determine whether such contractual provision
for arbitration is sufficient and effective. If in
affirmative, the court or quasi-judicial agency shall
then order the enforcement of said provision.
There is a clear distinction between compulsory and
voluntary arbitration. The arbitration provided by the
POA is compulsory, while the nature of the
arbitration provision in the RAWOP is voluntary, not
involving any government agency
There can be no quibbling that POA is a quasijudicial body which forms part of the DENR, an
administrative agency. Hence, the provision on
mandatory resort to arbitration, freely entered into
by the parties, must be held binding against them.25
In sum, on the issue of whether POA should have
referred the case to voluntary arbitration, we find
that, indeed, POA has no jurisdiction over the
dispute which is governed by RA 876, the arbitration
law.
However, we find that Benguet is already estopped
from questioning the POAs jurisdiction. What
Benguet should have done was to immediately
challenge the POAs jurisdiction by a special civil
action for certiorari when POA ruled that it has
jurisdiction over the dispute. To redo the
proceedings fully participated in by the parties after
the lapse of seven years from date of institution of
the original action with the POA would be anathema
to the speedy and efficient administration of justice.
Assume that the parties agree to submit the dispute
to voluntary arbitration. Instead of submitting to the
VA, they submitted the case to the labor arbiter.
What is your remedy? MOTION TO DISMISS. The
labor arbiter has no jurisdiction, so you must raise
the issue that the labor arbiter has no jurisdiction in
the preliminary conference. What if ayaw pa rin
nyang(Labor arbiter) bitawan ang case, proceed pa
rin sya?
Effect of the ADR LAW on the LABOR CODE
provisions on VA
The ADR law did not amend the provisions of the

labor code grievance machinery and procedure and
on arbitration. In fact the ADR law expressly
excluded these disputes from its application.
236 (g) compulsory arbitration
(g) When, in his opinion, there exists a labor dispute
causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, the
Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify
the same to the Commission for compulsory
arbitration. Such assumption or certification shall
have the effect of automatically enjoining the
intended or impending strike or lockout as specified
in the assumption or certification order. If one has
already taken place at the time of assumption or
certification, all striking or locked out employees
shall immediately return-to-work and the employer
shall immediately resume operations and readmit all
workers under the same terms and conditions
prevailing before the strike or lockout. The Secretary

of Labor and Employment or the Commission may
seek the assistance of law enforcement agencies to
ensure compliance with this provision as well as with
such orders as he may issue to enforce the same.
Preventive mediation
This is submitted to the NCMB. These labor disputes
which are the subject of a formal or informal request
for conciliation and mediation assistance sought by
either or both parties or upon the initiative of the
board.
Among the procedural requirements for a valid strike
is the filing of a notice of strike with the NCMB. The
purpose of this requirement is to encourage
voluntary settlement of disputes. That is why strike
is subject of arbitration
Construction contract
It is the CIAC (Construction industry arbitration
commission) that has the original and exclusive
jurisdiction over construction contracts (Section 35,
RA 9285)
EO 1008, section 4.
Sec. 4. Jurisdiction. The CIAC shall have original and
exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by parties
involved in construction in the Philippines, whether
the dispute arises before or after the completion of
the contract, or after the abandonment or breach
thereof. These disputes may involve government or
private contracts. For the Board to acquire
jurisdiction, the parties to a dispute must agree to
submit the same to voluntary arbitration.
The jurisdiction of the CIAC may include but is not
limited to violation of specifications for materials and
workmanship; violation of the terms of agreement;
interpretation and/or application of contractual time
and delays; maintenance and defects; payment,
default of employer or contractor and changes in
contract cost.
disputes shall be governed by Executive Order No.

1008, otherwise known as the Constitution Industry
Arbitration Law.
Does it include only private contracts? No. it also
includes government contracts.
The seat of the arbitration should be in the
Philippines.
What is the condition sine qua non for the CIAC to
acquire jurisdiction over the construction dispute?
Submission agreement or arbitration clause. For the
board to acquire jurisdiction, the parties to a dispute
must agree to submit the same to VA.
Submission agreement v. arbitration clause
Submission agreement an agreement referring a
present or existing dispute to arbitration
Arbitration clause an agreement referring a future
disputes to arbitration
When you go to CIAC, can an issue be resolved
other than arbitration? Yes, thru it can be resolve
through other forms of ADR e.g. mediation. Read
section 17 (d)
(d) The parties may agree in the settlement
agreement that the mediator shall become a sole
arbitrator for the dispute and shall treat the
settlement agreement as an arbitral award which
shall be subject to enforcement under Republic Act
No. 876, otherwise known as the Arbitration Law,
notwithstanding the provisions of Executive Order
No. 1008 for mediated dispute outside of the CIAC.
China Chang v. Rosal Infrastructure
Remember that this case was decided in 1996. Now
under RA 9285, Special ADR rule and A.M. 07-11-08,
if it involves a construction dispute, the courts are
mandated to dismiss the case. This is because it is
the CIAC that has the original and exclusive
jurisdiction to hear the case
What is the law that primarily governs construction

contracts? EO 1008 (Section 34 RA 9285)
What the law merely requires for a particular

construction contract to fall within the jurisdiction of
CIAC is for the parties to agree to submit the same
to voluntary arbitration. It is plain and clear that as
long as the parties agree to submit to voluntary
arbitration, regardless of what forum they may
choose, their agreement will fall within the
jurisdiction of the CIAC, such that, even if they
specifically choose another forum, the parties will not
be precluded from electing to submit their dispute
before the CIAC because this right has been vested
upon each party by law, i.e. E.O. No. 1008.
SEC. 34. Arbitration of Construction Disputes:

Governing Law. - The arbitration of construction
Parties may continue to stipulate as regards their

preferred forum in case of voluntary arbitration, but
Excluded from the coverage of this law are disputes

arising from employer-employee relationships which
shall continue to be covered by the Labor Code of
the Philippines.

in so doing, they may not divest the CIAC of
jurisdiction as provided by law. Under the
elementary principle on the law on contracts that
laws obtaining in a jurisdiction form part of all
agreements, when the law provides that the Board
acquires jurisdiction when the parties to the contract
agree to submit the same to voluntary arbitration,
the law in effect, automatically gives the parties an
alternative forum before whom they may submit
their disputes. That alternative forum is the CIAC.
This, to the mind of the Court, is the real spirit of
E.O. No. 1008, as implemented by Section 1, Article
III of the CIAC Rules.
NIA v. CA
Executive Order No. 1008, vests upon CIAC original
and exclusive jurisdiction over disputes arising from,
or connected with contracts entered into by parties
thereof. The disputes may involve government
or private contracts. For the Board to acquire
jurisdiction, the parties to a dispute must agree to
submit the same to voluntary arbitration.28
Under the present Rules of Procedure, for a
particular construction contract to fall within the
jurisdiction of CIAC, it is merely required that the
parties agree to submit the same to voluntary
arbitration.
An allegation of prescription can effectively be used
in a motion to dismiss only when the complaint on its
face shows that indeed the action has already
prescribed. 35 The court may either grant the
motion to dismiss, deny it, or order the amendment
of the pleading.
the CIAC had jurisdiction over the dispute, and not
the contract. Therefore, even if the contract
preceded the existence of the CIAC, since the
dispute arose when the CIAC had already been
constituted, the arbitral board was exercising
current, and not retroactive, jurisdiction. As long as
the parties agree to submit to voluntary arbitration,
regardless of what forum they may choose, their
agreement will fall within the jurisdiction of the
CIAC, such that, even if they specifically choose
another forum, the parties will not be precluded from
electing to submit their dispute to the CIAC because
this right has been vested upon each party by law.
PCIB v. CA
It is the parties who are to be notified of the "text"
of the CIAC decision.PCIBs counsel cannot assail the
validity of such service by now claiming that the
same was ineffective as it was not served on him
(counsel) as the duly authorized representative of
PCIB.
FF Cruz v. HR Construction
Generally, the arbitral award of CIAC is final and may
not be appealed except on questions of law.
in cases assailing the arbitral award rendered by the
CIAC, this Court may only pass upon questions of
law. Factual findings of construction arbitrators are
final and conclusive and not reviewable by this Court
on appeal. This rule, however, admits of certain
exceptions.
In Spouses David v. Construction Industry and
Arbitration Commission,26 we laid down the instances
when this Court may pass upon the factual findings
of the CIAC, thus:
We reiterate the rule that factual findings of
construction arbitrators are final and conclusive and
not reviewable by this Court on appeal, except when
the petitioner proves affirmatively that: (1) the
award was procured by corruption, fraud or other
undue means; (2) there was evident partiality or
corruption of the arbitrators or of any of them; (3)
the arbitrators were guilty of misconduct in refusing
to postpone the hearing upon sufficient cause
shown, or in refusing to hear evidence pertinent and
material to the controversy; (4) one or more of the
arbitrators were disqualified to act as such under
section nine of Republic Act No. 876 and willfully
refrained from disclosing such disqualifications or of
party have been materially prejudiced; or (5) the
arbitrators exceeded their powers, or so imperfectly
executed them, that a mutual, final and definite
award upon the subject matter submitted to them
was not made. x x x27 (Citation omitted)
Metro construction v. Chatham

If you want the CA to review the case, what is your
remedy? Di the rule is it is not subject to judicial
review kasi it is immediately executory? Rule 43.
EO. No. 1008 vest upon the CIAC original and
exclusive jurisdiction over disputes arising from, or

thereof.19 By express provision of Section 19 thereof,
the arbitral award of the CIAC is final and
unappealable, except on questions of law, which are
appealable to the Supreme Court.
In sum, from the arbitral awards of the CIAC may be
brought to the Court of Appeals, and not to the
Supreme Court alone. The grounds for the appeal
are likewise broadened to include appeals on
questions of facts and appeals involving mixed
questions of fact and law. Administrative Circular No.
1-95 and the 1997 Rules of Civil Procedure
indisputably say that, the review of the CIAC award
may involve either questions of fact, of law, or of
fact and law.
Hi-Precision v. Lim Kim Builders
Voluntary arbitration involves the reference of a
dispute to an impartial body, the members of which
are chosen by the parties themselves, which parties
freely consent in advance to abide by the arbitral
award issued after proceedings where both parties
had the opportunity to be heard. The basic objective
is to provide a speedy and inexpensive method of
settling disputes by allowing the parties to avoid the
formalities, delay, expense and aggravation which
commonly accompany ordinary litigation, especially
litigation which goes through the entire hierarchy of
courts. Executive Order No. 1008 created an
arbitration facility to which the construction industry
in the Philippines can have recourse. The Executive
Order was enacted to encourage the early and
expeditious settlement of disputes in the
construction industry, a public policy the
implementation of which is necessary and important
for the realization of national development goals. 21
The Court will not, therefore, permit the parties to
relitigate before it the issues of facts previously
presented and argued before the Arbitral Tribunal,
save only where a very clear showing is made that,
in reaching its factual conclusions, the Arbitral
Tribunal committed an error so egregious and hurtful
to one party as to constitute a grave abuse of
discretion resulting in lack or loss of jurisdiction. 22
Cargill v. San Fernando

R.A. No. 876 explicitly confines the courts authority
only to the determination of whether or not there is
an agreement in writing providing for arbitration. In
the affirmative, the statute ordains that the court
shall issue an order summarily directing the parties
to proceed with the arbitration in accordance with
the terms thereof. If the court, upon the other hand,
finds that no such agreement exists, the proceedings

shall be dismissed.
In issuing the Order which denied petitioner's Motion
to Dismiss/Suspend Proceedings and to Refer
Controversy to Voluntary Arbitration, the RTC went
beyond its authority of determining only the issue of
whether or not there is an agreement in writing
providing for arbitration by directing petitioner to file
an answer, instead of ordering the parties to proceed
to arbitration. In so doing, it acted in excess of its
jurisdiction and since there is no plain, speedy, and
adequate remedy in the ordinary course of law,
petitioners resort to a petition for certiorari is the
proper remedy.
the validity of the contract containing the
agreement to submit to arbitration does not
affect the applicability of the arbitration
clause itself. A contrary ruling would suggest
that a party's mere repudiation of the main
contract is sufficient to avoid arbitration. That
is exactly the situation that the separability
doctrine, as well as jurisprudence applying it,
seeks to avoid.
The doctrine of separability, or severability as other
writers call it, enunciates that an arbitration
agreement is independent of the main contract. The
arbitration agreement is to be treated as a separate
agreement and the arbitration agreement does not
automatically terminate when the contract of which
it is a part comes to an end.
The separability of the arbitration agreement is
especially significant to the determination of whether
the invalidity of the main contract also nullifies the
arbitration clause. Indeed, the doctrine denotes that
the invalidity of the main contract, also referred to as
the "container" contract, does not affect the validity
of the arbitration agreement. Irrespective of the fact
that the main contract is invalid, the arbitration
clause/agreement
still
remains
valid
and
enforceable.27
Thus, we find that even the party who has
repudiated the main contract is not prevented from
enforcing its arbitration clause.
Arbitration before the Panel of Arbitrators is proper
only when there is a disagreement between the
parties as to some provisions of the contract
between them, which needs the interpretation and
the application of that particular knowledge and
expertise possessed by members of that Panel. It is
not proper when one of the parties repudiates the
existence or validity of such contract or agreement
on the ground of fraud or oppression as in this case.
The validity of the contract cannot be subject of
arbitration proceedings. Allegations of fraud and

duress in the execution of a contract are matters
within the jurisdiction of the ordinary courts of law.
These questions are legal in nature and require the
application and interpretation of laws and
jurisprudence which is necessarily a judicial
function.29
Lincomcem v. Foundation Specialists

The CIAC was created through Executive Order No.
1008 (E.O. 1008), in recognition of the need to
establish an arbitral machinery that would
expeditiously settle construction industry disputes.
The jurisdiction of the CIAC may include but is not
limited to violation of specifications for materials and
workmanship; violation of the terms of agreement;
interpretation and/or application of contractual time
and delays; maintenance and defects; payment,
default of employer or contractor and changes in
contract cost. Excluded from the coverage of this law
are disputes arising from employer-employee
relationships which shall continue to be covered by
the Labor Code of the Philippines.
The CIACs jurisdiction cannot be limited by the
parties stipulation that only disputes in connection
with or arising out of the physical construction
activities (execution of the works) are arbitrable
before it.
In fact, all that is required for the CIAC to acquire
jurisdiction is for the parties to a construction
contract to agree to submit their dispute to
arbitration.
The CIAC is given the original and exclusive
jurisdiction over disputes arising from, or connected
with, contracts entered into by parties involved in
construction in the Philippines.49 This jurisdiction
cannot be altered by stipulations restricting the
nature of construction disputes, appointing another
arbitral body, or making that bodys decision final
and binding.
MCWD v. Mactan Rock Industries

The jurisdiction of the CIAC as a quasi-judicial body
is confined to construction disputes,32 that is, those
arising from, or connected to, contracts involving "all
on-site works on buildings or altering structures from
land clearance through completion including
excavation, erection and assembly and installation of
components and equipment."33The CIAC has
jurisdiction over all such disputes whether the
dispute arises before or after the completion of the
contract.34
Whether the CIAC had jurisdiction to order the

reformation of the Water Supply Contract
The text of Section 4 of E.O. No. 1008 is broad
enough to cover any dispute arising from, or
connected with, construction contracts, whether
these involve mere contractual money claims or
execution of the works. This jurisdiction cannot be
altered by stipulations restricting the nature of
construction disputes, appointing another arbitral
body, or making that bodys decision final and
binding.52
Thus, unless specifically excluded, all incidents and
matters relating to construction contracts are
deemed to be within the jurisdiction of the CIAC.
Based on the previously cited provision outlining the
CIACs jurisdiction, it is clear that with regard to
contracts over which it has jurisdiction, the only
matters that have been excluded by law are disputes
arising from employer-employee relationships, which
continue to be governed by the Labor Code of the
Philippines. Moreover, this is consistent with the
policy against split jurisdiction.
Where the law does not delineate, neither should
we. Neither the provisions of the Civil Code on
reformation of contracts nor the law creating the
CIAC exclude the reformation of contracts from its
jurisdiction. Jurisprudence further dictates that the
grant of jurisdiction over related and incidental
matters is implied by law. Therefore, because the
CIAC has been held to have jurisdiction over the
Contract, it follows that it has jurisdiction to order
the reformation of the Contract as well.
Though one party can refuse to participate in the
arbitration proceedings, this cannot prevent the CIAC
from proceeding with the case and issuing an award
in favor of one of the parties.
Thus, under the CIAC Rules, even without the
participation of one of the parties in the proceedings,
the CIAC is still required to proceed with the hearing
of the construction dispute.61
This Court has held that the CIAC has jurisdiction
over a dispute arising from a construction contract
even though only one of the parties requested for
arbitration
Allied insurance v. CA
Clearly therefore, petitioner Associated Bank, by its
voluntary participation and its consent to the
arbitration rules cannot go directly to the Regional
Trial Court when it finds it convenient to do so. The
jurisdiction of the PCHC under the rules and
regulations is clear, undeniable and is particularly

applicable to all the parties in the third party
complaint under their obligation to first seek redress
of their disputes and grievances [from] the PCHC
before going to the trial court.
By participating in the clearing operations of the
PCHC, petitioner agreed to submit disputes of this
nature to arbitration. Accordingly, it cannot invoke
the jurisdiction of the trial courts without a prior
recourse to the PCHC Arbitration Committee. Having
given its free and voluntary consent to the
arbitration clause, petitioner cannot unilaterally take
it back according to its whim. In the world of
commerce, especially in the field of banking, the
promised word is crucial. Once given, it may no
longer be broken.
Upon the other hand, arbitration as an alternative
method of dispute resolution is encouraged by this
Court. Aside from unclogging judicial dockets, it also
hastens solutions especially of commercial disputes.
JANUARY 9, 2015
CHINA
CHANG
JIANG
ENERGY
CORPORATION (PHILIPPINES) vs ROSAL
INFRASTRUCTURE BUILDERS and the
COURT OF APPEALS
DOCTRINE: Voluntary arbitration involves the
reference of a dispute to an impartial body, the
members of which are chosen by the parties
themselves which parties freely consent in
advance to abide by the arbitral award issued after
proceedings where both parties had the
opportunity to be heard. The basic objective is to
provide a speedy and inexpensive method of
settling disputes by allowing the parties to avoid
the formalities, delay, expenses and aggravation
which commonly accompany ordinary litigation,
especially litigation which goes through the entire
hierarchy of courts. Executive Order No. 1008
created an arbitration facility to which the
construction industry in the Philippines can have
recourse. The executive order was enacted to
encourage the early and expeditious settlement of
disputes in the construction industry, a public
policy the implementation of which is necessary
and important for the realization of national
development goals.
FACTS: China Chang is the operator of the Binga
Hydroelectric Plant in Itogon, Benguet, which is
under a Rehabilitate Operate and Leaseback
Contract (ROL Contract) with the National Power
Corporation and mandated to engage in the
rehabilitation of the power plant, including the
construction of check dams.
On February 21, 1994, China Chang engaged
the services of respondent Rosal Infrustructure

Builders (RIB) as sub-contractor, executing a
contract for the construction of Check Dam No. 1
along Sadyo River, Binga, Itogon, Benguet.
o In this contract the parties agreed to submit
disputes arising therefrom to arbitration before the
Arbitration of the International Chamber of
Commerce.
When a dispute arose between the parties,
respondent RIB filed a complaint before
respondent CIAC for arbitration.
China Chang filed its answer with compulsory
counterclaim and raised therein the issue of lack
of jurisdiction on the part of CIAC.
In its order dated August 1, 1995, respondent
CIAC considered the question of jurisdiction
merely as a special defense which can be included
as part of the issues of the Terms of Reference.
China Chang filed a motion for reconsideration
which was denied by respondent CIAC in its order
dated October 4, 1995.
China Chang raised the sole issue of lack of
jurisdiction in a petition for certiorari and
prohibition, with a prayer for a temporary
restraining order and writ of preliminary injunction
with respondent Court of Appeals.
In a decision dated February 27, 1996,
respondent court dismissed the petition.
China Chang filed a motion for reconsideration
but the same was denied by respondent court in a
resolution dated July 22, 1996.
China Chang questions the validity of
Construction Industry Arbitration Commission
(CIAC) Resolution 3- 93 amending Section 1,
Article III of CIAC Rules of Procedure Governing
Construction Arbitration promulgated by the CIAC
pursuant to its rule-making power granted under
Section 21 of Executive Order No. 1008, which
pertinently provides as follows: Article III Effect of
the Agreement to Arbitrate Section 1. Submission
to CIAC Jurisdiction An arbitration clause in a
construction contract or a submission to
arbitration of a construction dispute shall be
deemed an agreement to submit an existing or
future controversy to the CIAC jurisdiction,
notwithstanding the reference to a different
arbitral institution or arbitral body in such contract
or submission
ISSUE: W/N the CIAC can acquire jurisdiction
over the dispute only when the parties have
agreed to submit their dispute to [voluntary
arbitration before] the CIAC itself
HELD: NO. We find no meritorious basis in the
petition to sustain a reversal of the ruling of
respondent court upholding the jurisdiction of the
CIAC in this case, Executive Order No. 1008,
otherwise known as the Construction Industry
Arbitration Law defines the jurisdiction of the
CIAC thusly: Section 4. Jurisdiciton The CIAC

shall have original and exclusive jurisdiction over
disputes arising from, or connected with contracts
entered into by parties involved in construction in
the Philippines, whether the dispute arises before
or after the completion of the contract, or after
the abandonment or breach thereof. These
disputes may involve government or private
contracts. For the Board to acquire jurisdiction, the
parties to a dispute must agree to submit the
same to voluntary arbitration A mere cursory
reading of Section 1, Article III, of the CIAC Rules,
as amended by Resolution No. 3-93 reveals no
restriction whatsoever on any party from
submitting a dispute for arbitration to an arbitral
body other than the CIAC. On the contrary, the
new rule, as amended merely implements the
letter and the spirit of its enabling law, E.O. No.
1008, which vests jurisdiction upon the CIAC.
What the law merely requires for a particular
construction contract to fall within the jurisdiction
of CIAC is for the parties to agree to submit the
same to voluntary arbitration. Unlike in the original
version of Section 1, as applied in the Tesco case,
the law does not mention that the parties should
agree to submit disputes arising from their
agreement specifically to the CIAC for the latter to
acquire jurisdiction over such disputes. Rather, it
is plain and clear that as long s the parties agree
to submit to voluntary arbitration, regardless of
what forum they may choose, their agreement will
fall within the jurisdiction of the CIAC, such that,
even if they specifically choose another forum, the
parties will not be precluded from electing to
submit their dispute before the CIAC because this
right has been vested upon each party by law, i.e.
E.O. No. 1008. Now that Section 1, Article III, as
amended, is submitted to test in the present
petition, we rule to uphold its validity with full
certainty. However, this should not be understood
to mean that the parties may no longer stipulate
to submit their disputes to a different forum or
arbitral boy. Parties may continue to stipulate as
regards their preferred forum in case of voluntary
arbitration, but in so doing, they may not divest
the CIAC of jurisdiction as provided by law. Under
the elementary principle on the law on contracts
that laws obtaining in a jurisdiction form part of all
agreements, when the law provides that the Board
acquires jurisdiction when the parties to the
contract agree to submit the same to voluntary
arbitration, the law in effect, automatically gives
the parties an alternative forum before whom they
may submit their disputes. That alternative forum
is the CIAC. This, to the mind of the Court, is the
real spirit of E.O. No. 1008, as implemented by
Section 1, Article III of the CIAC Rules. The herein
interpretation is not, in its strict sense, a reversal
of a previous pronouncement in the Tesco case
necessitating a ruling by the Court En Banc
considering the variance in the factual
circumstances, as well as the governing procedural
rules applicable to the two distinct cases. The

Court also takes this opportunity to dispel any
mistaken notion that substantial rights were
created or modified by the CIAC in its Resolution
No. 2-91 and 3-93, as regards matters of
jurisdiction. We would also like to clarify that such
rights were vested as early as of the time E.O. No.
1008 which took effect February 1985. However,
said provision had not been properly implemented
in the original version of Section 1 of the CIAC
Rules. Thus, amendments through Resolutions No.
2-91 and 3-93 were called for.
What was the ruling by the SC in the case of
China?
Atty. Guerzo: The ruling simply recognizes the
principle under the contract law on party autonomy.
That the parties can agree on the terms and
conditions of the contract provided that it is not
contrary to law, orders, public policy or morals.
Take note that this was the ruling decided BEFORE
the effectivity of RA 9285. If the parties agree to
submit to arbitration their construction dispute under
the CIAC, pwede yun pursuant to the case of China.
However, if we cross refer this to Section 39 of RA
9285.
SEC. 39. Court to Dismiss Case Involving a
Construction Dispute. - A regional trial court
which a construction dispute is filed shall, upon
becoming aware, not later than the pretrial
conference, that the parties had entered into an
arbitration to be conducted by the CIAC, unless
both parties, assisted by their respective counsel,
shall submit to the regional trial court a written
agreement exclusive for the Court, rather than the
CIAC, to resolve the dispute.
Based on Section 39, if the parties to a construction

dispute files a case immediately in court, the court is
mandated to outrightly or automatically dismiss the
case.
WHY?
Because the court has no jurisdiction over
construction disputes. Because jurisdiction is vested
to the CIAC. So the general rule is dismissal of the
construction arbitration case subject to what
exception?
Except when the parties in a mutual agreement and
through the assistance of their counsels, submit a
written agreement submitting the construction
dispute to the exclusive jurisdiction of the court

instead of the CIAC. Again, the principle of party
autonomy is applied.
SEC. 40. Confirmation of Award. - The

confirmation of a domestic arbitral award shall be
governed by Section 23 of R.A. 876. A domestic
arbitral award when confirmed shall be enforced in
the same manner as final and executory decisions
of the Regional Trial Court. The confirmation of a
domestic award shall be made by the regional trial
court in accordance with the Rules of Procedure to
be promulgated by the Supreme Court. A CIAC
arbitral award need not be confirmed by the
regional trial court to be executory as provided
under E.O. No. 1008.
As a general rule, all awards made by an arbitrator
or the arbitral tribunal requires judicial confirmation
by a court of law to be enforceable. EXCEPT awards
rendered by the CIAC. It need not be confirmed by
the RTC to be executory.
Under RA 9285, it takes any arbitration involving
dispute arising out of a contract of construction in
the Philippines as a DOMESTIC ARBITRATION. Diba
sabi natin, ang CIAC magkaroon lang siya ng
jurisdiction if the seat of arbitration is in the RP
subject to the jurisdiction of the CIAC even if one of
the parties is a foreign entity or an international
party. Usually, in construction contracts, hindi naman
palagi na puro Filipinos, if they deal with a foreign or
an international party,
CIAC may still take
cognizance of the case provided that the seat of the
arbitration is in the RP.
So again, the general premise is that even if one of
the parties to the construction contract is an
international party, the CIAC may take cognizance of
the case.
The only concession provided by RA 9285 to the
international character of such arbitration is that the
CIAC may appoint a foreign arbitrator as coarbitrator or chairman of the arbitral tribunal.
When can a foreign arbitrator be appointed?
A: If one of the parties to the construction contract
is an international party.
37. Appointment
of
Foreign
The
Construction
Industry
Arbitration Commission (CIAC) shall promulgate
rules to allow for the appointment of a foreign
arbitrator or coarbitrator or chairman of a tribunal
a person who has not been previously accredited
by CIAC: Provided, That:
SEC.
Arbitrator. -
(a) the dispute is a construction dispute in
which one party is an international party

(b) the person to be appointed agreed to
abide by the arbitration rules and policies
of CIAC;
(c) he/she is either coarbitrator upon the
nomination of the international party; or
he/she is the common choice of the two
CIAC-accredited arbitrators first appointed
one of whom was nominated by the
international party; and
(d) the foreign arbitrator shall be of
different nationality from the international
party.
The conclusion there is if one of the parties to the

construction dispute is an international party, a
foreign arbitrator can be appointed pursuant to
Section 37 of RA 9285.
Going back to arbitral awards. Again, we said that
arbitral awards rendered by the CIAC are
IMMEDIATELY ENFORCEABLE without need of court
action.
In the leading case of FF CRUZ vs HR
CONSTRUCTION decided on March 14, 2012.
The rule is that arbitral awards are also final and
unappeleable kasi nga immediately enforceable, it is
executory, so meaning it is already final and not
appealable.
FF CRUZ & CO., INC. v HR CONSTRUCTION
CORP.,(March 14, 2012)
FACTS: in 2004, FFCCI entered into a contract
with DPWH for a construction of the Magsaysay
Viaduct, known as the Lower Agusan Development
Project. In turn, FFCCI entered into a Subcontract
agreement with the HR Construction for the supply
of materials, labor, equipment and etc. Pursuant
to the Subcontract Agreement, HRCC would
submit to FFCCI a monthly progress billing which
the latter would then pay, subject to stipulated
deductions, within 30 days from receipt thereof.
The parties agreed that the requests of HRCC for
payment should include progress accomplishment
of its completed works as approved by FFCCI.
HRCC was able to submit 4 progress billing,
however said billing amount were reduced by
FFCCI. HRCC pursuant to the arbitration clause,
filed with re CIAC a complaint against the FFCCI.
The CIAC held that the payment method adopted
by FFCCI is actually what is known as the backto-back payment scheme which was not agreed
upon under the Subcontract Agreement. As such,
the CIAC ruled that FFCCI could not impose upon
HRCC its valuation of the works completed by the
latter. It also held that the nonpayment of FFCCI

gave HRCC the right to rescind the Subcontract
and work stoppage. Thus, this petition.
ISSUE: W/N the Factual finding of CIAC are final
and conclusive.
HELD: Generally, the arbitral award of CIAC is
final and may not be appealed except on
questions of law. Executive Order (E.O.) No.
10081vests upon the CIAC original and exclusive
jurisdiction over disputes arising from, or
involved in construction in the Philippines. Under
Section 19 of E.O. No. 1008, the arbitral award of
CIAC "shall be final and inappealable except on
questions of law which shall be appealable to the
Supreme Court." In Hi-Precision Steel Center, Inc.
v. Lim Kim Steel Builders, Inc., we explained
raison d etre for the rule on finality of the CIACs
arbitral award in this wise: Voluntary arbitration
involves the reference of a dispute to an impartial
body, the members of which are chosen by the
parties themselves, which parties freely consent in
advance to abide by the arbitral award issued after
proceedings where both parties had the
opportunity to be heard. The basic objective is to
provide a speedy and inexpensive method of
settling disputes by allowing the parties to avoid
the formalities, delay, expense and aggravation
which commonly accompany ordinary litigation,
especially litigation which goes through the entire
hierarchy of courts. Executive Order No. 1008
created an arbitration facility to which the
construction industry in the Philippines can have
recourse. The Executive Order was enacted to
encourage the early and expeditious settlement of
disputes in the construction industry, a public
policy the implementation of which is necessary
and important for the realization of national
development goals. 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 even both parties in any effort to subvert
or defeat that objective for their private purposes.
The Court will not review the factual findings of an
arbitral tribunal upon the artful allegation that
such body had "misapprehended the facts" and
will not pass upon issues which are, at bottom,
issues of fact, no matter how cleverly disguised
they might be as "legal questions." The parties
here had recourse to arbitration and chose the
arbitrators themselves; they must have had
confidence in such arbitrators. x x x (Citation
omitted) Thus, in cases assailing the arbitral
award rendered by the CIAC, this Court may only
pass upon questions of law. Factual findings of
construction arbitrators are final and conclusive
and not reviewable by this Court on appeal. This
rule, however, admits of certain exceptions. In
Spouses David v. Construction Industry and
Arbitration Commission, we laid down the

instances when this Court may pass upon the
factual findings of the CIAC, thus: We reiterate the
rule that factual findings of construction arbitrators
are final and conclusive and not reviewable by this
Court on appeal, except when the petitioner
proves affirmatively that: (1) the award was
procured by corruption, fraud or other undue
means; (2) there was evident partiality or
corruption of the arbitrators or of any of them; (3)
the arbitrators were guilty of misconduct in
refusing to postpone the hearing upon sufficient
pertinent and material to the controversy; (4) one
or more of the arbitrators were disqualified to act
as such under section nine of Republic Act No. 876
and willfully refrained from disclosing such
disqualifications or of any other misbehavior by
which the rights of any party have been materially
prejudiced; or (5) the arbitrators exceeded their
powers, or so imperfectly executed them, that a
mutual, final and definite award upon the subject
matter submitted to them was not made. In this
case, what was raised by FFCCI is actually
questions of law in interpreting the Subcontract
agreement.
(NB: in case i-ask ni mam about the costs of
arbitration. Here man gud HRCC waived its right to
rescind contract since it actually continued its
obligation despite the dispute, contrary to the
stipulation in the subcontract agreement) The
costs of arbitration should be shared by the parties
equally. Section 1, Rule 142 of the Rules of Court
provides: Section 1. Costs ordinarily follow results
of suit. Unless otherwise provided in these rules,
costs shall be allowed to the prevailing party as a
matter of course, but the court shall have power,
for special reasons, to adjudge that either party
shall pay the costs of an action, or that the same
be divided, as may be equitable. No costs shall be
allowed against the Republic of the Philippines
unless otherwise provided by law. (Emphasis
supplied) Although, generally, costs are adjudged
against the losing party, courts nevertheless have
discretion, for special reasons, to decree
otherwise. Here, considering that the work
stoppage of HRCC is not justified, it is only fitting
that both parties should share in the burden of the
cost of arbitration equally. HRCC had a valid
reason to institute the complaint against FFCCI in
view of the latters failure to pay the full amount of
its monthly progress billings. However, we
disagree with the CIAC and the CA that only FFCCI
should shoulder the arbitration costs. The
arbitration costs should be shared equally by
FFCCI and HRCC in view of the latters unjustified
work stoppage.
Does this simply mean that wala talagang
court intervention? Bawal ba any court
intervention if is an award rendered by the

CIAC?
Based on this case, the SC ruled that while it is true
that arbitral awards in construction disputes are final
and not subject to appeal, in this case, the SC
clarified that the interpretation of the terms of the
contract agreement is a question of law that may be
raised on appeal from a final award in construction
arbitration.
So even if it is already final, you can raise an issue
on appeal. The mode of appeal is under what rule?
Pwede ka mag appeal form the decision of the CIAC
provided that it is a question of law.
What rule will govern that mode of appeal?
A: RULE 43 of RULES OF PROCEDURE
We are talking about construction disputed before
the CIAC.
How is arbitration before the CIAC conducted?
Before the CIAC, it is the parties and not the lawyers
of record who are notified of the text of the decision.
How about the proceedings?
Paano hine-hear ang arbitration?
Arbitration before the CIAC is conducted before a
SINGLE arbitrator or a panel of arbitrators who are
chosen from a list of arbitrators accredited by the
CIAC for the latter's appointment and confirmation.
If the parties fail to agree on the sole arbitrator or if
they decide on a arbitral tribunal, and the two
arbitrators chosen cannot agree on a third arbitrator,
then the CIAC shall appoint the sole or third
arbitrator.
Who can be an arbitrator before the CIAC?
When we say arbitrator, he is akin to a judge
diva? Because he will decide on a case. So he
decides on construction disputes. How about a
lawyer? Can he become an arbitrator before
the CIAC? Kelangan ba expert ka in that field?
A: Under Rule 8 Section 8.1, the general
qualifications of arbitrators under the CIAC are those
who are accredited and men of distinction in whom
the various business sectors of the government can
have confidence with. They shall be technically
qualified
to
resolve
construction
disputes
expeditiously and equitably. The arbitrators shall
come from different professions. They may include
engineers,
architects,
contraction
managers,
engineering consultants and businessmen familiar
with the construction industry and lawyers
experienced in the construction disputes.
So, arbitrators provided they are accredited by the

CIAC can be lawyers or non- lawyers. They are to
perform the function of a judge. Basic requirement
aside from that is they must be competent,
impartial, persons with proven probity and
integrity. So basic requirement, if you are a judge
or an arbitrator, you should possess those four
values or characteristics.
Before the CIAC, magkaroon ng hearing. So
what type of evidence is required in order for
the sole or panel arbitartor/s to arrive in
rendering a decision? Should it be proof
beyond
reasonable
doubt,
substantial
evidence, preponderance of evidence or what
kind of evidence?
A: Substantial evidence is required before the
CIAC. Because it is akin to an administrative body.
Factual findings of CIAC just like decisions of
specialized administrative bodies who have acquired
jurisdiction are generally accorded great respect and
even finality if they are supported by substantial
evidence.
CHECK CLEARING DISPUTES
This is the third kind of dispute under the auspices of
the Philippine Clearing House Corporation(PCHC
ArbiCom).
Take note that the PCHC was organized in May 19,
1977 principally to provide a means of clearing
checks and other items pursuant to Section 102 of
the New Central Bank Act.
When we say check- clearing disputes, what
kind of arbitration is the hearing?
A: INSTITUTIONAL ARBITRATION because it is
heard specifically by the PCHC. It is the ArbiCOm,
the body that investigates, hears the disputes and
decides the disputes.
What is the condition sine qua non before the
dispute be a subject to arbitration before the
PCHC ArbiCom?
1. It must be authorized.
2. It must be banking institution.
3. It must be a member of PCHC.
4. The participation of the said banks in the clearing
operations in the PCHC is a manifestation of its
submission to its jurisdiction so that a mere fact that
it is a banking institution, would not automatically
subject issues to the PCHC.
You said that it is limited to banking
institutions. How do you define a banking
institution?

Specifically pursuant to RA 791 or the General

Banking Act of 2000, a bank is defined as an entity
engaged in the lending of funds obtained in the form
of deposits.
What are the different kinds of banks?
Under the General Banking Act:
1. Universal Bank
2. Commercial Banks
3. Thrift Banks
4. Rural Banks
5. Cooperative Banks
6. Islamic Banks
What is the procedure if there is a check
clearing dispute?
1. Any dispute or controversy between two or more
clearing participants involving any check or item
cleared through the PCHC shall be submitted to the
ArbiCom through a written complaint of any
participant in the controversy.
2. Five copies of the complaint shall be filed with the
ArbiCom copy furnish the respondent who shall have
30 non-extendible days to file his answer.
3. Upon the filing of the complaint by a member
bank, the PCHC shall create an ArbiCom consisting of
four members, three of whom are incumbent or
retired senior officers of participating banks not
involved in the dispute and a fourth member who
shall be an attorney at law with at least five years
experience as a bank lawyer without any previous or
present relation with any of the participating bans
involved and who shall only have advisory function
without any right to vote.
The Chariman and any member shall be sufficient to
constitute a quorum for the purpose of conducting
conferences or hearings or trials before the ArbiCom
but a vote of any two members of the ArbiCom shall
be necessary to render and promulgate an order,
resolution, award or decision of the case presented
for arbitration except if it involves or the principal
amount is 300,000 or less, then the arbitration shall
be heard by a sole arbitrator and his vote shall be
sufficient to render and promulgate the said
decision.
4. The hearing shall not last for more than 30 days
after which the parties shall have a non- extendible
period of 30 days to file their memoranda. The
decision of the sole arbitrator or the ArbiCom shall
be made within 45 days from the preliminary
conference or
the submission of the parties
respective memoranda.
The law provides that a preliminary conference
should be conducted before the ArbiCom. It is

mandatory.
What if any of the parties to the case fails to
appear at the preliminary conference? Para
syang default diba, kapag pre-trial? Can he be
declared in default before the ArbiCom?
A: YES.
If a party is not satisfied with the decision of
the ArbiCom, what is his remedy?
Take note that within a non-extendible period of 15
days after receipt of the decision, a party may file a
motion for reconsideration and the other party may
also file his respective opposition within the same
period. After lapse of the 15-day period, the motion
shall be resolved by a majority vote of the ArbiCom.
The decision made by the sole or panel arbitrator/s,
or the resolution for the MR shall be immediately
executory without the necessity of judicial
confirmation of the award and such executory
decision shall be a sufficient basis of the automatic
debit of the amount awarded therein from the
clearing account of the losing party and crediting
thereof of the account of the winning party.
CASE: ALLIED BANKING CORPORATION
As a general rule, a trial court that has established
jurisdiction over the main action also acquires
jurisdiction over a third-party complaint, even if it
could not have done so had the latter been filed as
an independent action. This rule, however, does not
apply to banks that have agreed to submit their
disputes over check clearings to arbitration under the
rules of the Philippine Clearing House Corporation. In
that event, primary recourse should be to the PCHC
Arbitration Committee, without prejudice to an
appeal to the trial courts. In other words, without
first resorting to the PCHC, the third-party complaint
would be premature.
FACTS: Hyatt Terraces Baguio issued two
crossed checks drawn against Allied Banking Corp.
(hereinafter, ALLIED) in favor of appellee
Meszellen Commodities Services, Inc. (hereinafter,
MESZELLEN). Said checks were deposited on
August 5, 1980 and August 18, 1980, respectively,
with the now defunct Commercial Bank and Trust
Company (hereinafter, COMTRUST). Upon receipt
of the above checks, COMTRUST stamped at the
back
thereof
the
warranty
All
prior
endorsements and/or lack of endorsements
guaranteed. After the checks were cleared
through the Philippine Clearing House Corporation
(hereinafter, PCHC), ALLIED BANK paid the
proceeds of said checks to COMTRUST as the
collecting bank. On March 17, 1981, the payee,
MESZELLEN, sued the drawee, ALLIED BANK, for
damages which it allegedly suffered when the
value[s] of the checks were paid not to it but to

some other person. Almost ten years later, or on
January 10, 1991, before defendant ALLIED BANK
could finish presenting its evidence, it filed a third
party complaint against Bank of the Philippine
Islands (hereinafter, BPI, appellee herein) as
successor-ininterest
of
COMTRUST,
for
reimbursement in the event that it would be
adjudged liable in the main case to pay plaintiff,
MESZELLEN. The third party complaint was
admitted [in] an Order dated May 16, 1991 issued
by the Regional Trial Court of Pasig, Branch 162.
On July 16, 1991, BPI filed a motion to dismiss
said third party complaint grounded on the
following: 1) that the court ha[d] no jurisdiction
over the nature of the action; and 2) that the
cause of action of the third party plaintiff ha[d]
already prescribed. On September 16, 1991, the
trial court issued an order dismissing the third
party complaint. PR contends that petitioners
remedy rests with the PCHC, of which both Allied
and BPI are members, in consonance with the
Clearing House Rules and Regulations which, in
part, states: Sec. 38 Arbitration. Any dispute
or controversy between two or more clearing
participants involving any check/item cleared thru
PCHC shall be submitted to the Arbitration
Committee, upon written complaint of any
involved participant by filing the same with the
PCHC serving the same upon the other party or
parties, who shall within fifteen (15) days after
receipt thereof file with the Arbitration Committee
its written answer to such written complaint and
also within the same period serve the same upon
the complaining participant, xxx.
ISSUE: WON the filing of the 3rd party complaint
was proper? NO
RULING: Associated Bank, by its voluntary
participation and its consent to the arbitration
rules cannot go directly to the Regional Trial Court
when it finds it convenient to do so. The
jurisdiction of the PCHC under the rules and
regulations is clear, undeniable and is particularly
applicable to all the parties in the third party
complaint under their obligation to first seek
redress of their disputes and grievances [from] the
PCHC before going to the trial court. The
contention that the third party complaint should
not have been dismissed for being a necessary
and inseparable offshoot of the main case over
which the court a quo had already exercised
jurisdiction misses the fundamental point about
such pleading. A third party complaint is a mere
procedural device which under the Rules of Court
is allowed only with the courts permission. It is an
action actually independent of, separate and
distinct from the plaintiffs complaint (s)uch that,
were it not for the Rules of Court, it would be
necessary to file the action separately from the
original complaint by the defendant against the
third party. Banco de Oro and Associated Bank

are clear and unequivocal: a third-party complaint
of one bank against another involving a check
cleared through the PCHC is unavailing, unless the
third-party claimant has first exhausted the arbitral
authority of the PCHC Arbitration Committee and
obtained a decision from said body adverse to its
claim. Recognizing the role of the PCHC in the
arbitration of disputes between participating
banks, the Court in Associated Bank further held:
Pursuant to its function involving the clearing of
checks and other clearing items, the PCHC has
adopted rules and regulations designed to provide
member banks with a procedure whereby disputes
involving the clearance of checks and other
negotiable instruments undergo a process of
arbitration prior to submission to the courts below.
This procedure not only ensures a uniformity of
rulings relating to factual disputes involving checks
and other negotiable instruments but also provides
a mechanism for settling minor disputes among
participating and member banks which would
otherwise go directly to the trial courts. By
participating in the clearing operations of the
PCHC, petitioner agreed to submit disputes of this
nature to arbitration. Accordingly, it cannot invoke
the jurisdiction of the trial courts without a prior
recourse to the PCHC Arbitration Committee.
Having given its free and voluntary consent to the
arbitration clause, petitioner cannot unilaterally
take it back according to its whim. In the world of
commerce, especially in the field of banking, the
promised word is crucial. Once given, it may no
longer be broken. Upon the other hand, arbitration
as an alternative method of dispute-resolution is
encouraged by this Court. Aside from unclogging
judicial dockets, it also hastens solutions especially
of commercial disputes.
What happened to the third party complaint? It was
properly dismissed since the trial court has no
jurisdiction.
CASE: HOME BANKERS AND TRUST COMPANY
vs. COURT OF APPEALS
FACTS: Victor Tancuan, one of the defendants in
Civil Case No. 92- 145, issued HBSTC check No.
193498 for P25,250,000.00. Eugene Arriesgado
issued FEBTC check Nos. 464264, 464272 and
464271 for P8,600,000.00, P8,500,000.00 and
P8,100,000.00, respectively, the three checks
amounting to P25,200,000.00. They exchanged
each other's checks and deposited them with their
respective banks for collection. When FEBTC
presented Tancuan's check for clearing, HBSTC
dishonored it for being "Drawn Against Insufficient
Funds." On October 15, 1991, HBSTC sent
Arriesgado's three (3) FEBTC checks through the
Philippine Clearing House Corporation (PCHC) to
FEBTC but was returned on October 18, 1991 as

"Drawn Against Insufficient Funds." HBSTC
received the notice of dishonor on October 21,
1991 but refused to accept the checks and on
October 22, 1991, returned them to FEBTC
through the PCHC for the reason "Beyond
Reglementary Period," implying that HBSTC
already treated the three (3) FEBTC checks as
cleared and allowed the proceeds thereof to be
withdrawn. FEBTC demanded reimbursement for
the returned checks and inquired from HBSTC
whether it had permitted any withdrawal of funds
against the unfunded checks and if so, on what
date. HBSTC, however, refused to make any
reimbursement and to provide FEBTC with the
needed information. On December 12, 1991,
FEBTC submitted the dispute for arbitration before
the PCHC Arbitration Committee under the PCHC's
Supplementary Rules on Regional Clearing to
which FEBTC and HBSTC are bound as participants
in the regional clearing operations administered by
the PCHC. On January 17, 1992, while the
arbitration proceeding was still pending, FEBTC
filed an action for sum of money and damages
with preliminary attachment against HBSTC,
Robert Young, Victor Tancuan and Eugene
Arriesgado with the Regional Trial Court of Makati,
Branch 133.
ISSUE:
WHETHER
OR
NOT
PRIVATE
RESPONDENT MAY SUBSEQUENTLY FILE A
SEPARATE CASE IN COURT OVER THE SAME
SUBJECT MATTER OF ARBITRATION DESPITE THE
PENDENCY OF ARBITRATION PROCEEDINGS
UNDER THE AUSPICES OF THE PHILIPPINE
CLEARING HOUSE CORPORATION SIMPLY TO
OBTAIN THE PROVISIONAL REMEDY OF
ATTACHMENT AGAINST THE BANK THE ADVERSE
PARTY IN THE ARBITRATION PROCEEDING.
RULING: YES. Section 14 of Republic Act 876,
otherwise known as the Arbitration Law, allows
any party to the arbitration proceeding to petition
the court to take measures to safeguard and/or
conserve any matter which is the subject of the
dispute in arbitration, thus: Sec. 14. Subpoena and
subpoena duces tecum. Arbitrators shall have
the power to require any person to attend a
hearing as a witness. They shall have the power to
subpoena witnesses and documents when the
relevancy of the testimony and the materiality
thereof has been demonstrated to the arbitrators.
Arbitrators may also require the retirement of any
witness during the testimony of any other witness.
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;
but an award by the majority of them is valid
unless the concurrence of all of them is expressly
required in the submission or contract to arbitrate.
The arbitrator or arbitrators shall have the power
at any time, before rendering the award, without
prejudice to the rights of any party to petition the

court to take measures to safeguard and/or
dispute in arbitration. Section 14 simply grants an
arbitrator the power to issue subpoena and
subpoena duces tecum at any time before
rendering the award. The exercise of such power
is without prejudice to the right of a party to file a
petition in court to safeguard any matter which is
the subject of the dispute in arbitration. In the
case at bar, private respondent filed an action for
a sum of money with prayer for a writ of
preliminary attachment. Undoubtedly, such action
involved the same subject matter as that in
arbitration, i.e., the sum of P25,200,000.00 which
was allegedly deprived from private respondent in
what is known in banking as a "kiting scheme."
However, the civil action was not a simple case of
a money claim since private respondent has
included a prayer for a writ of preliminary
attachment, which is sanctioned by section 14 of
the Arbitration Law. Participants in the regional
clearing operations of the Philippine Clearing
House Corporation cannot bypass the arbitration
process laid out by the body and seek relief
directly from the courts. In the case at bar,
undeniably, private respondent has initiated
arbitration proceedings as required by the PCHC
rules and regulations, and pending arbitration has
sought relief from the trial court for measures to
safeguard and/or conserve the subject of the
dispute under arbitration, as sanctioned by section
14 of the Arbitration Law, and otherwise not
shown to be contrary to the PCHC rules and
regulations.
The provisional remedy was properly filed before the
RTC. It is also sanctioned by the Special ADR Rules.
INSULAR SAVINGS BANK
INSULAR SAVINGS BANK v. FAR EAST BANK
June 22, 2006
FACTS: On December 11, 1991, Far East Bank
and Trust Company (Respondent) filed a
complaint against Home Bankers Trust and
Company (HBTC)[4] with the Philippine Clearing
House Corporations (PCHC) Arbitration Committee
docketed as Arbicom Case No. 91-069.[5]
Respondent sought to recover from the petitioner,
the sum of P25,200,000.00 representing the total
amount of the three checks drawn and debited
against its clearing account. HBTC sent these
checks to respondent for clearing by operation of
the PCHC clearing system. Thereafter, respondent
dishonored the checks for insufficiency of funds
and returned the checks to HBTC. However, the
latter refused to accept them since the checks
were returned by respondent after the
reglementary
regional
clearing
period.[6]
Meanwhile, on January 17, 1992, before the

termination of the arbitration proceedings,
respondent filed another complaint but this time
with the Regional Trial Court (RTC) in Makati City
docketed as Civil Case No. 92-145 for Sum of
Money and Damages with Preliminary Attachment.
The complaint was filed not only against HBTC but
also against Robert Young, Eugene Arriesgado and
Victor
Tancuan
(collectively
known
as
Defendants), who were the president and
depositors of HBTC respectively.[7] Aware of the
arbitration proceedings between respondent and
petitioner, the RTC, in an Omnibus Order dated
April 30, 1992,[8] suspended the proceedings in
the case against all the defendants pending the
decision of the Arbitration Committee, to wit: xxx
(c) Proceedings in this case against all defendants
be suspended pending award/decision in the
arbitration proceedings against Home Bankers and
Trust Co. On February 2, 1998, the PCHC
Arbitration Committee rendered its decision in
favor
of
respondent.
The
motion
for
reconsideration filed by petitioner was denied by
the Arbitration Committee.[14] Consequently, to
appeal the decision of the Arbitration Committee in
Arbicom Case No. 91-069, petitioner filed a
petition for review in the earlier case filed by
respondent in Branch 135 of the RTC of Makati
and docketed as Civil Case No. 92- 145. [15] In an
order dated January 20, 1999, the RTC directed
both petitioner and respondent to file their
respective memoranda, after which, said petition
would be deemed submitted for resolution.[16]
Both parties filed several pleadings. On February
8, 1999, respondent filed a Motion to Dismiss
Petition for Review for Lack of Jurisdiction,[17]
which was opposed by the petitioner.[18]
Respondent then filed its Reply to the
opposition,[19] to which petitioner filed a
Rejoinder.[20] On August 16, 1999, respondent
submitted its Surrejoinder.[21] RTC petition for
review is dismissed.
ISSUE: W/N the RTC erred in dismissing the
petition of petitioner for lack of jurisdiction on the
ground that it should have been docketed as a
separate case. Petitioners contention: Civil Case
No. 92-145 was merely suspended to await the
outcome of the arbitration case pending before
the PCHC. Thus, any petition questioning the
decision of the Arbitration Committee must be filed
in Civil Case No. 92-145 and should not be
docketed as a separate action. Likewise, petitioner
avers that had it filed a separate action, this
would have resulted in a multiplicity of suits, which
is
abhorred
in
procedure.
Respondents
contention: RTC correctly dismissed the appeal
from the award of private arbitrators since there is
no statutory basis for such appeal. Respondent
argues that petitioners claim that the parties by
agreement had conferred on the RTC appellate
jurisdiction over decisions of private arbitrators is
erroneous because they cannot confer a

nonexistent jurisdiction on the RTC or any court.
Furthermore, the petition for review filed by
petitioner violated the rule on commencing an
original action under Section 5, Rule 1.
RULING: The Philippine Clearing House
Corporation was created to facilitate the clearing
of checks of member banks. Among these member
banks exists a compromissoire, or an arbitration
agreement embedded in their contract wherein
they consent that any future dispute or
controversy between its PCHC participants
involving any check would be submitted to the
Arbitration Committee for arbitration. Petitioner
and respondent are members of PCHC, thus they
underwent arbitration proceedings. The PCHC has
its own Rules of Procedure for Arbitration (PCHC
Rules). However, this is governed by Republic Act
No. 876, also known as The Arbitration Law and
supplemented by the Rules of Court. Thus, we first
thresh out the remedy of petition for review
availed of by the petitioner to appeal the order of
the Arbitration Committee. Sections 23, 24 and 29
of The Arbitration Law (please refer to your codal).
AMENDED
ARBITRATION
RULES
OF
PROCEDURE OF PCHC Sec. 13. The findings
of facts of the decision or award rendered by the
Arbitration Committee or by the sole Arbitrator as
the case may be shall be final and conclusive upon
all the parties in said arbitration dispute. The
decision or award of the Arbitration Committee or
of the Sole Arbitrator or of the Board of Directors,
as the case may be, shall be appealable only on
questions of law to any of the Regional Trial
Courts in the National Capital Region where the
Head Office of any of the parties is located. The
appellant shall perfect his appeal by filing a notice
of appeal to the Arbitration Secretariat and filing a
Petition with the Regional Trial Court of the
National Capital Region for the review of the
decision or award of the committee or sole
arbitrator or of the Board of Directors, as the case
may be, within a non-extendible period of fifteen
(15) days from and after its receipt of the order
denying
or
granting
said
motion
for
reconsideration or new trial had been filed, within
a non-extendible period of fifteen (15) days from
and after its receipt of the order denying or
granting said motion for reconsideration or of the
decision rendered after the new trial if one had
been granted. xxx As provided in the PCHC Rules,
the findings of facts of the decision or award
rendered by the Arbitration Committee shall be
final and conclusive upon all the parties in said
arbitration dispute. Under Article 2044[29] of the
New Civil Code, the validity of any stipulation on
the finality of the arbitrators award or decision is
recognized. However, where the conditions
described in Articles 2038,[30] 2039[31] and

2040[32] applicable to both compromises and
arbitrations are obtaining, the arbitrators award
may be annulled or rescinded.[33] Consequently,
the decision of the Arbitration Committee is
subject to judicial review. Furthermore, petitioner
had several judicial remedies available at its
disposal after the Arbitration Committee denied its
Motion for Reconsideration. It may petition the
proper RTC to issue an order vacating the award
on the grounds provided for under Section 24 of
the Arbitration Law.[34] Petitioner likewise has the
option to file a petition for review under Rule 43 of
the Rules of Court with the Court of Appeals on
questions of fact, of law, or mixed questions of
fact and law.[35] Lastly, petitioner may file a
petition for certiorari under Rule 65 of the Rules of
Court on the ground that the Arbitrator Committee
acted without or in excess of its jurisdiction or with
grave abuse of discretion amounting to lack or
excess of jurisdiction. Since this case involves acts
or omissions of a quasi-judicial agency, the
petition should be filed in and cognizable only by
the Court of Appeals.[36] In this instance,
petitioner did not avail of any of the
abovementioned remedies available to it. Instead
it filed a petition for review with the RTC where
Civil Case No. 92-145 is pending pursuant to
Section 13 of the PCHC Rules to sustain its action.
Clearly, it erred in the procedure it chose for
judicial review of the arbitral award. Having
established that petitioner failed to avail of the
abovementioned remedies, we now discuss the
issue of the jurisdiction of the trial court with
respect to the petition for review filed by
petitioner. Jurisdiction is the authority to hear and
determine a cause - the right to act in a case.[37]
Jurisdiction over the subject matter is the power
to hear and determine the general class to which
the proceedings in question belong. Jurisdiction
over the subject matter is conferred by law and
not by the consent or acquiescence of any or all of
the parties or by erroneous belief of the court that
it exists.[38] In the instant case, petitioner and
respondent have agreed that the PCHC Rules
would govern in case of controversy. However,
since the PCHC Rules came about only as a result
of an agreement between and among member
banks of PCHC and not by law, it cannot confer
jurisdiction to the RTC. Thus, the portion of the
PCHC Rules granting jurisdiction to the RTC to
review arbitral awards, only on questions of law,
cannot be given effect. Consequently, the proper
recourse of petitioner from the denial of its motion
for reconsideration by the Arbitration Committee is
to file either a motion to vacate the arbitral award
with the RTC, a petition for review with the Court
of Appeals under Rule 43 of the Rules of Court, or
a petition for certiorari under Rule 65 of the Rules
of Court. In the case at bar, petitioner filed a
petition for review with the RTC when the same
should have been filed with the Court of Appeals
under Rule 43 of the Rules of Court. Thus, the

RTC of Makati did not err in dismissing the petition
for review for lack of jurisdiction but not on the
ground that petitioner should have filed a separate
case from Civil Case No. 92-145 but on the
necessity of filing the correct petition in the proper
court. It is immaterial whether petitioner filed the
petition for review in Civil Case No. 92-145 as an
appeal of the arbitral award or whether it filed a
separate case in the RTC, considering that the
RTC will only have jurisdiction over an arbitral
award in cases of motions to vacate the same.
Otherwise, as elucidated herein, the Court of
Appeals retains jurisdiction in petitions for review
or in petitions for certiorari. Consequently,
petitioners arguments, with respect to the filing of
separate action from Civil Case No. 92-145
resulting in a multiplicity of suits, cannot be given
due course. Alternative dispute resolution methods
or ADRs like arbitration, mediation, negotiation
and conciliation are encouraged by the Supreme
Court. By enabling parties to resolve their disputes
amicably, they provide solutions that are less timeconsuming, less tedious, less confrontational, and
more productive of goodwill and lasting
relationships. It must be borne in mind that
arbitration proceedings are mainly governed by
the Arbitration Law and suppletorily by the Rules
of Court.
ARBITRATION AS A CONTRACT
Why is an arbitration deemed as a contract?
In the case of Gonzales vs. Climax Mining, the SC
ruled that an arbitration agreement is contractual in
nature. Necessarily, a contract is required for
arbitration to take place and to be binding.
What are the essential elements of a contract?
Consent, Object and Consideration or Cause
Arbitration as a contract. The specific issues
involved in this matter are:
1. Whether the arbitration agreement relied upon by
the party is in existence and
2. If so, whether it is valid and enforceable.
What are the two general categories of
arbitration that may be held in the
Philippines?
1. Domestic Arbitration
- an arbitration that is not international where the
proceedings are held or the award is rendered or the
seat of arbitration in the Philippines and does not
have any of the characteristics that make it

international.
2. International Commercial Arbitration
-Under the Model Law, it is international if the
parties made an agreement at the time of the
conclusion of that agreement their place of business
in the different states or where the place of
arbitration as determined under the agreement of
the place where the substantial part of the
obligations of the commercial relationships is to be
performed or with which the subject matter of the
dispute is most closely connected and situated
outside the state where the parties have their places
of business or that the parties had expressly agreed
that the subject matter of the arbitration agreement
is international.
Take note that in both domestic and international
commercial arbitration, the seat of arbitration is in
the Philippines. Both give rise to awards rendered in
the Philippines or the Philippine Arbitral awards.
It is said that ICA also involves dispute arising form
the commercial relationship that possesses any of
the characteristics that make it international.
When is arbitration commercial?
SEC.
21. Commercial
Arbitration. An
arbitration is "commercial" if it covers matters
arising from all relationships of a commercial
nature, whether contractual or not. Relationships
of a transactions: any trade transaction for the
supply or exchange of goods or services;
distribution agreements; construction of works;
commercial representation or agency; factoring;
leasing,
consulting;
engineering;
licensing;
investment; financing; banking; insurance; joint
venture and other forms of industrial or business
cooperation; carriage of goods or passengers by
air, sea, rail or road.
A: It is governed by the agreement of the parties.

Is there any distinction between domestic and
international commercial arbitration with
regard to the validity of the agreement?
A: If an international commercial arbitration is
conducted in the Philippines, the validity of the
agreement is to be determined under the law agreed
upon by the parties to the said agreement.
If it is a domestic arbitration, the same law
applies.
How about if there is no law agreed by the
parties as to what law will govern the validity
of the agreement? What is the applicable rule?
A: The Philippine law shall govern.
The law governing the arbitration agreement NEED
NOT be the same law as applicable to the main or
principal contract.
What are the conditions
arbitration to proceed?
necessary
for
A: There must be an arbitration clause of a valid and

enforceable arbitration agreement in the contract for
future disputes or a submission agreement for
arbitration of present dispute.
FORM AND CONTENT OF AN ARBITRATION
AGREEMENT
What is the freedom of contract principle?
A: Parties are free to stipulate as to what will govern
their agreement as long as it is not contrary to law,
morals, public policy or public order.
CASE: SALAS
When is arbitration ad hoc?

A: The adopted procedure is set by the agreement
of the parties, as they deem applicable, without
necessarily conducting arbitration within the auspices
of any arbitral body. It is only among the parties
themselves.
When is arbitration institutional?
A: When it involves an institutional body like in the
case of labor disputes and check-clearing disputes.
What is the rule that will govern the validity of
an arbitration agreement?
HEIRS OF AUGUSTO L. SALAS, JR v.

LAPERAL REALTY CORPORATION
FACTS: Salas, Jr. was the registered owner of a
vast tract of land in Lipa City, Batangas spanning
1,484,354 square meters. On May 15, 1987, he
entered into an Owner-Contractor Agreement[4]
(hereinafter referred to as the Agreement) with
respondent Laperal Realty Corporation (hereinafter
referred to as Laperal Realty) to render and
provide complete (horizontal) construction services
on his land. On September 23, 1988, Salas, Jr.
executed a Special Power of Attorney in favor of
respondent Laperal Realty to exercise general
control, supervision and management of the sale
of his land, for cash or on installment basis. On
June 10, 1989, Salas, Jr. left his home in the

morning for a business trip to Nueva Ecija. He
never returned. On August 6, 1996, Teresita Diaz
Salas filed with the Regional Trial Court of Makati
City a verified petition for the declaration of
presumptive death of her husband, Salas, Jr., who
had then been missing for more than seven (7)
years. It was granted on December 12, 1996.[5]
Meantime, respondent Laperal Realty subdivided
the land of Salas, Jr. and sold subdivided portions
thereof to respondents Rockway Real Estate
Corporation and South Ridge Village, Inc. on
February 22, 1990; to respondent spouses
Abrajano and Lava and Oscar Dacillo on June 27,
1991; and to respondents Eduardo Vacuna,
Florante de la Cruz and Jesus Vicente Capalan on
June 4, 1996 (all of whom are hereinafter referred
to as respondent lot buyers). Petitioners as heirs
of Salas, Jr. filed in the Regional Trial Court of Lipa
City a Complaint[6] for declaration of nullity of
sale, reconveyance, cancellation of contract,
accounting
and
damages
against
herein
respondents which was docketed as Civil Case No.
98-0047. Laperal Realty filed a Motion to
Dismiss[7]on the ground that petitioners failed to
submit their grievance to arbitration as required
under Article VI of the Agreement which provides:
ARTICLE VI. ARBITRATION. All cases of dispute
between
CONTRACTOR
and
OWNERS
representative shall be referred to the committee
represented by: a. One representative of the
OWNER; b. One representative of the
CONTRACTOR; c. One representative acceptable
to both OWNER and CONTRACTOR.[8] RTC dismissed petitioners Complaint for noncompliance with the foregoing arbitration clause.
ISSUE: W/N petitioners complaint should be
dismissed.
Petitioners arguments: - The petitioners causes of
action did not emanate from the Owner-Contractor
Agreement. - Petitioners causes of action for
cancellation of contract and accounting are
covered by the exception under the Arbitration
Law. - Failure to arbitrate is not a ground for
dismissal.
RULING: In a catena of cases[11] inspired by
Justice Malcolms provocative dissent in Vega v.
San Carlos Milling Co. [12], this Court has
recognized arbitration agreements as valid,
binding, enforceable and not contrary to public
policy so much so that when there obtains a
written provision for arbitration which is not
complied with, the trial court should suspend the
proceedings and order the parties to proceed to
arbitration in accordance with the terms of their
agreement[13] Arbitration is the wave of the
future in dispute resolution.[14] To brush aside a
contractual agreement calling for arbitration in
case of disagreement between parties would be a
step backward.[15] Nonetheless, we grant the

petition. A submission to arbitration is a
contract.[16] As such, the Agreement, containing
the stipulation on arbitration, binds the parties
thereto, as well as their assigns and heirs.[17] But
only they. Petitioners, as heirs of Salas, Jr., and
respondent Laperal Realty are certainly bound by
the Agreement. If respondent Laperal Realty, had
assigned its rights under the Agreement to a third
party, making the former, the assignor, and the
latter, the assignee, such assignee would also be
bound by the arbitration provision since
assignment involves such transfer of rights as to
vest in the assignee the power to enforce them to
the same extent as the assignor could have
enforced them against the debtor[18] or in this
case, against the heirs of the original party to the
Agreement. However, respondents Rockway Real
Estate Corporation, South Ridge Village, Inc.,
Maharami Development Corporation, spouses
Abrajano, spouses Lava, Oscar Dacillo, Eduardo
Vacuna, Florante de la Cruz and Jesus Vicente
Capellan are not assignees of the rights of
respondent Laperal Realty under the Agreement to
develop Salas, Jr.s land and sell the same. They
are, rather, buyers of the land that respondent
Laperal Realty was given the authority to develop
and sell under the Agreement. As such, they are
not assigns contemplated in Art. 1311 of the
New Civil Code which provides that contracts
take effect only between the parties, their assigns
and heirs. Petitioners claim that they suffered
lesion of more than one-fourth (1/4) of the value
of Salas, Jr.s land when respondent Laperal Realty
subdivided it and sold portions thereof to
respondent lot buyers. Thus, they instituted
action[19]against both respondent Laperal Realty
and respondent lot buyers for rescission of the
sale transactions and reconveyance to them of the
subdivided lots. They argue that rescission, being
their cause of action, falls under the exception
clause in Sec. 2 of Republic Act No. 876 which
provides that such submission [to] or contract
[of arbitration] shall be valid, enforceable and
irrevocable, save upon such grounds as exist at
law for the revocation of any contract. The
petitioners contention is without merit. For while
rescission, as a general rule, is an arbitrable
issue,[20] they impleaded in the suit for rescission
the respondent lot buyers who are neither parties
to the Agreement nor the latters assigns or heirs.
Consequently, the right to arbitrate as provided in
Article VI of the Agreement was never vested in
respondent lot buyers. Respondent Laperal Realty,
as a contracting party to the Agreement, has the
right to compel petitioners to first arbitrate before
seeking judicial relief. However, to split the
proceedings into arbitration for respondent Laperal
Realty and trial for the respondent lot buyers, or
to hold trial in abeyance pending arbitration
between petitioners and respondent Laperal

Realty, would in effect result in multiplicity of
suits, duplicitous procedure and unnecessary
delay. On the other hand, it would be in the
interest of justice if the trial court hears the
complaint against all herein respondents and
adjudicates petitioners rights as against theirs in a
single and complete proceeding.
With regard to the autonomy principle of a contracts
in relation to the arbitration agreement in that case,
is their arbitration agreement valid? YES.
How about the mutuality
principle? What is that?
of
contracts
A: The contract must bind both the contracting

parties. Its validity and compliance cannot be left to
the will of one of them.
Corollary to this rule, can a contract
containing an arbitration clause be unilaterally
rescinded?
In BF Construction, does the arbitration
agreement need be in a particular form?
A: YES.
BF CORPORATION, petitioner, vs. COURT OF
APPEALS, SHANGRI-LA PROPERTIES
FACTS: Petitioner and respondent Shangri-la
Properties, Inc. (SPI) entered into an agreement
whereby the latter engaged the former to
construct the main structure of the EDSA Plaza
Project. The construction work was in progress
when SPI decided to expand the project by
engaging the services of petitioner again. Thus,
the parties entered into an agreement for the
main contract works after which construction work
began. However, petitioner incurred delay in the
construction work that SPI considered as serious
and substantial.[1] On the other hand, according
to petitioner, the construction works progressed
in faithful compliance with the First Agreement
until a fire broke out on November 30, 1990
damaging Phase I of the Project.[2] Hence, SPI
proposed the re-negotiation of the agreement
between them. On May 30, 1991, petitioner and
SPI entered into a written agreement denominated
as Agreement for the Execution of Builders
Work for the EDSA Plaza Project According to SPI,
petitioner failed to complete the construction
works and abandoned the project.[3] This
resulted in disagreements between the parties as
regards their respective liabilities under the
contract. On July 12, 1993, upon SPIs initiative,
the parties respective representatives met in
conference but they failed to come to an
agreement.[4] On July 14, 1993, petitioner filed
with the Regional Trial Court of Pasig a complaint
for collection of the balance due under the
construction agreement. Named defendants

therein were SPI and members of its board of
directors namely, Alfredo C. Ramos, Rufo B.
Colayco, Antonio B. Olbes, Gerardo O. Lanuza, Jr.,
Maximo G. Licauco III and Benjamin C. Ramos.
SPI and its co-defendants filed a motion to
suspend proceedings instead of filing an answer.
The motion was anchored on defendants
allegation that the formal trade contract for the
construction of the project provided for a clause
requiring prior resort to arbitration before judicial
intervention could be invoked in any dispute
arising from the contract. The following day, SPI
submitted a copy of the conditions of the contract
containing the arbitration clause that it failed to
append to its motion to suspend proceedings.
Petitioner opposed said motion claiming that there
was no formal contract between the parties
although they entered into an agreement defining
their rights and obligations in undertaking the
project. It emphasized that the agreement did not
provide for arbitration and therefore the court
could not be deprived of jurisdiction conferred by
law by the mere allegation of the existence of an
arbitration clause in the agreement between the
parties. In reply to said opposition, SPI insisted
that there was such an arbitration clause in the
existing contract between petitioner and SPI. In a
rejoinder to SPIs reply, petitioner reiterated that
there was no arbitration clause in the contract
between the parties. It averred that granting that
such a clause indeed formed part of the contract,
suspension of the proceedings was no longer
proper. In its sur-rejoinder, SPI pointed out the
significance of petitioners admission of the due
execution of the Articles of Agreement. Thus,
on page D/6 thereof, the signatures of Rufo B.
Colayco, SPI president, and Bayani Fernando,
president of petitioner appear, while page D/7
shows that the agreement is a public document
duly notarized on November 15, 1991 by Notary
Public Nilberto R. Briones. Upon a finding that an
arbitration clause indeed exists, the RTC denied
the motion to suspend proceedings. It then ruled
that, assuming that the arbitration clause was
valid and binding, still, it was too late in the day
for defendants to invoke arbitration. CA annulled
and set aside the orders and stayed the
proceedings in the lower court. ISSUE: W/N the
contract for the construction of the EDSA Plaza
between petitioner BF Corporation and respondent
Shangri-la Properties, Inc. embodies an arbitration
clause in case of disagreement between the
parties in the implementation of contractual
provisions. Petitioners argument - while not
denying that there exists an arbitration clause in
the contract in question, asserts that in
contemplation of law there could not have been
one considering the following points. First, the trial
court found that the conditions of contract
embodying the arbitration clause is not duly

signed by the parties. Second, private respondents
misrepresented before the Court of Appeals that
they produced in the trial court a notarized
duplicate original copy of the construction
agreement because what were submitted were
mere photocopies thereof. The contract(s)
introduced in court by private respondents were
therefore of dubious authenticity. In other
words, petitioner denies the existence of the
arbitration clause primarily on the ground that the
representatives of the contracting corporations did
not sign the Conditions of Contract that
contained the said clause.
RULING: Republic Act No. 876 provides for the
formal requisites of an arbitration agreement as
follows: Section 4. Form of arbitration
agreement. A contract to arbitrate a controversy
thereafter arising 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. The
making of a contract or submission for arbitration
described in section two hereof, providing for
arbitration of any controversy, shall be deemed a
consent of the parties of the province or city
where any of the parties resides, to enforce such
contract of submission. The formal requirements
of an agreement to arbitrate are therefore the
following: (a) it must be in writing and (b) it must
be subscribed by the parties or their
representatives. There is no denying that the
parties entered into a written contract that was
submitted in evidence before the lower court. To
subscribe means to write underneath, as ones
name; to sign at the end of a document.[11] That
word may sometimes be construed to mean to
give consent to or to attest.[12] The Court finds
that, upon a scrutiny of the records of this case,
these requisites were complied with in the contract
in question. The Articles of Agreement, which
incorporates all the other contracts and
agreements between the parties, was signed by
representatives of both parties and duly notarized.
The failure of the private respondents
representative to initial the `Conditions of
Contract would therefor not affect compliance
with the formal requirements for arbitration
agreements because that particular portion of the
covenants between the parties was included by
reference in the Articles of Agreement. Petitioners
contention that there was no arbitration clause
because the contract incorporating said provision
is part of a hodge-podge document, is
therefore untenable. A contract need not be
contained in a single writing. It may be collected
from several different writings which do not
conflict with each other and which, when
connected, show the parties, subject matter,
terms and consideration, as in contracts entered
into by correspondence.[13] A contract may be
encompassed in several instruments even though
every instrument is not signed by the parties,

since it is sufficient if the unsigned instruments are
clearly identified or referred to and made part of
the signed instrument or instruments. Similarly, a
written agreement of which there are two copies,
one signed by each of the parties, is binding on
both to the same extent as though there had been
only one copy of the agreement and both had
signed it.[14] The flaw in petitioners contentions
therefore lies in its having segmented the various
components of the whole contract between the
parties into several parts. This notwithstanding,
petitioner ironically admits the execution of the
Articles of Agreement. Notably, too, the lower
court found that the said Articles of Agreement
also provides that the `Contract Documents
therein listed `shall be deemed an integral part of
this Agreement, and one of the said documents is
the `Conditions of Contract which contains the
Arbitration Clause. It is this Articles of Agreement
that was duly signed by Rufo B. Colayco, president
of private respondent SPI, and Bayani F.
Fernando, president of petitioner corporation. The
same agreement was duly subscribed before
notary public Nilberto R. Briones. In other words,
the subscription of the principal agreement
effectively
covered
the
other
documents
incorporated by reference therein. This Court
likewise does not find that the Court of Appeals
erred in ruling that private respondents were not
in default in invoking the provisions of the
arbitration clause which states that (t)he
demand for arbitration shall be made within a
reasonable time after the dispute has arisen and
attempts to settle amicably had failed. Under the
factual milieu, private respondent SPI should have
paid its liabilities under the contract in accordance
with its terms. However, misunderstandings
appeared to have cropped up between the parties
ostensibly brought about by either delay in the
completion of the construction work or by force
majeure or the fire that partially gutted the
project. The almost two-year delay in paying its
liabilities may not therefore be wholly ascribed to
private
respondent
SPI.
Besides,
private
respondent SPIs initiative in calling for a
conference between the parties was a step
towards the agreed resort to arbitration. However,
petitioner posthaste filed the complaint before the
lower court. Thus, while private respondent SPIs
request for arbitration on August 13, 1993 might
appear an afterthought as it was made after it had
filed the motion to suspend proceedings, it was
because petitioner also appeared to act hastily in
order to resolve the controversy through the
courts. The arbitration clause provides for a
reasonable time within which the parties may
avail of the relief under that clause.
Reasonableness is a relative term and the
question of whether the time within which an act
has to be done is reasonable depends on

attendant circumstances.[15] This Court finds that
under the circumstances obtaining in this case, a
one-month period from the time the parties held a
conference on July 12, 1993 until private
respondent SPI notified petitioner that it was
invoking the arbitration clause, is a reasonable
time. Indeed, petitioner may not be faulted for
resorting to the court to claim what was due it
under the contract. However, we find its denial of
the existence of the arbitration clause as an
attempt to cover up its misstep in hurriedly filing
the complaint before the lower court.
Section 4. Form of arbitration agreement. - A

contract to arbitrate a controversy thereafter
arising 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.
The making of a contract or submission for
arbitration described in section two hereof,
providing for arbitration of any controversy, shall
be deemed a consent of the parties to the
jurisdiction of the Court of First Instance of the
province or city where any of the parties resides,
to enforce such contract or submission.
Should it be subscribed by a notary public?

A: NO. The basic requirements of the law is it need
be only subscribed by the parties thereto. So basic
requirement in both domestic and ICA is that the
arbitration agreement must be in writing and
subscribed by the parties thereto.
The arbitration agreement can be made through an
exchange of letter or through reference to general
printed conditions which contain an arbitration
clause that are actually appended to the contract or
a mere statement of incorporation in a contract or
the terms of another document in like charter party.
In the case of BF CONSTRUCTION vs CA, the SC
ruled that a valid arbitration agreement may be one
of the documents referred to by the parties in
reference to their principal contract even if the other
contracting party's representative did not sign or did
not initial the conditions of the contract, that party
was nevertheless bound by the arbitration clause.
WHY?
A: Because the principle in the case is that a contract
need not be contained in a single contract. It may be
collected from several different writings which do not
conflict with each other and which when connected
show the parties' subject matter, terms and
consideration as in contracts entered into by
correspondents.
Take note that under the Civil Code which contains
governing obligations and contracts, contracts with
arbitration agreement are generally binding
whatever form they may have been entered into
provided that the essential requisites of a contract
are present namely the consent, subject matter and
the cause or consideration.
How about under the CC, regarding the form
of contract, what is the form for? Is that for
validity, enforceability, or to prove the
existence of the terms of the agreement
subject to parole evidence rule?
CASE: HERNAEZ vs DELOS ANGELES
FACTS: Petitioner Marlene Dauden-Hernaez, a
motion picture actress, had filed a complaint
against herein private respondents, Hollywood Far
East Productions, Inc., and its President and
General Manager, Ramon Valenzuela, to recover
P14,700.00 representing a balance allegedly due
said petitioner for her services as leading actress
in two motion pictures produced by the company,
and to recover damages. Upon motion of
defendants, the respondent court (Judge Walfrido
de los Angeles presiding) ordered the complaint
dismissed, mainly because the "claim of plaintiff
was not evidenced by any written document,
either public or private", and the complaint "was
defective on its face" for violating Articles 1356
and 1358 of the Civil, Code of the Philippines, as
well as for containing defective allege, petitions.
Plaintiff sought reconsideration of the dismissal
and for admission of an amended complaint,
attached to the motion. The court denied
reconsideration. The court also denied it for being
pro forma. The answer sets up the defense that
"the proposed amended complaint did not vary in
any material respect from the original complaint
except in minor details, and suffers from the same
vital defect of the original complaint", which is the
violation of Article 1356 of the Civil Code, in that
the contract sued upon was not alleged to be in
writing; that by Article 1358 the writing was
absolute and indispensable, because the amount
involved exceeds five hundred pesos; and that the
second motion for reconsideration did not
interrupt the period for appeal, because it was not
served on three days' notice.
ISSUE: Did the court below abuse its discretion in
ruling that a contract for personal services
involving more than P500.00 was either invalid of
unenforceable under the last paragraph of Article
1358 of the Civil Code of the Philippines?
RULING: We hold that there was abuse, since the

ruling herein contested betrays a basic and
lamentable misunderstanding of the role of the
written form in contracts, as ordained in the
present Civil Code. In the matter of formalities,
the contractual system of our Civil Code still
follows that of the Spanish Civil Code of 1889 and
of the "Ordenamiento de Alcala" 2 of upholding
the spirit and intent of the parties over formalities:
hence, in general, contracts are valid and binding
from their perfection regardless of form whether
they be oral or written. This is plain from Articles
1315 and 1356 of the present Civil Code. Thus,
the first cited provision prescribes: ART. 1315.
Contracts are perfected by mere consent, and
from that moment the parties are bound not only
to the fulfillment of what has been expressly
stipulated but also to all the consequences which,
according to their nature, may be in keeping with
good faith, usage and law. (Emphasis supplied)
Concordantly, the first part of Article 1356 of the
Code Provides: ART. 1356. Contracts shall be
obligatory in whatever form they may have been
entered into, provided all the essential requisites
for their validity are present.... (Emphasis
supplied) These essential requisites last mentioned
are normally (1) consent (2) proper subject
matter, and (3) consideration or causa for the
obligation assumed (Article 1318). 3 So that once
the three elements exist, the contract is generally
valid and obligatory, regardless of the form, oral
or written, in which they are couched.lawphi1.nt
To this general rule, the Code admits exceptions,
set forth in the second portion of Article 1356:
However, when the law requires that a contract be
in some form in order that it may be valid or
enforceable, or that a contract be proved in a
certain way, that requirement is absolute and
indispensable.... It is thus seen that to the general
rule that the form (oral or written) is irrelevant to
the binding effect inter partes of a contract that
possesses the three validating elements of
consent, subject matter, and causa, Article 1356
of the Code establishes only two exceptions, to
wit: (a) Contracts for which the law itself requires
that they be in some particular form (writing) in
order to make themvalid and enforceable (the socalled solemn contracts). Of these the typical
example is the donation of immovable property
that the law (Article 749) requires to be embodied
in a public instrument in order "that the donation
may be valid", i.e., existing or binding. Other
instances are the donation of movables worth
more than P5,000.00 which must be in writing,
"otherwise the donation shall be void" (Article
748); contracts to pay interest on loans (mutuum)
that must be "expressly stipulated in writing"
(Article 1956); and the agreements contemplated
by Article 1744, 1773, 1874 and 2134 of the
present Civil Code. (b) Contracts that the law
requires to be proved by some writing
(memorandum) of its terms, as in those covered
by the old Statute of Frauds, now Article 1403(2)

of the Civil Code. Their existence not being
provable by mere oral testimony (unless wholly or
partly executed), these contracts are exceptional
in requiring a writing embodying the terms thereof
for their enforceability by action in court. The
contract sued upon by petitioner herein
(compensation for services) does not come under
either exception. It is true that it appears included
in Article 1358, last clause, providing that "all
other contracts where the amount involved
exceeds five hundred pesos must appear in
writing, even a private one." But Article 1358
nowhere provides that the absence of written form
in this case will make the agreement invalid or
unenforceable. On the contrary, Article 1357
clearly indicates that contracts covered by Article
1358 are binding and enforceable by action or suit
despite the absence of writing. ART. 1357. If the
law requires a document or other special form, as
in the acts and contracts enumerated in the
following article, the contracting parties may
compel each other to observe that form, once the
contract has been perfected. This right may be
exercised simultaneously with the action the
contract. (Emphasis supplied) . It thus becomes
inevitable to conclude that both the court a quo as
well as the private respondents herein were
grossly mistaken in holding that because petitioner
Dauden's contract for services was not in writing
the same could not be sued upon, or that her
complaint should be dismissed for failure to state
a cause of action because it did not plead any
written agreement. The basic error in the court's
decision lies in overlooking that in our contractual
system it is not enough that the law should require
that the contract be in writing, as it does in Article
1358. The law must further prescribe that without
the writing the contract is not valid or not
enforceable by action.
What law determines the capacity to contract
of the parties?
A: It is determined by the law on contracts.
How about the legal capacity of the foreigner
to contract? What law will govern?
A: ARTICLE 15 of the CC. It is determined under
the laws of the country of his nationality.
Article 15. Laws relating to family rights and
duties, or to the status, condition and legal
capacity of persons are binding upon citizens of
the Philippines, even though living abroad. (9a)
How about the state and its instrumentality?
Can they be party to an arbitration

agreement?
A: YES, under the constitution it may enter into
contracts. There are no provisions under the
Philippine law prohibiting the state or its agencies
from resorting to arbitration whether with the
Philippine nationals or foreign nationals. Why?
Because arbitration is regarded simply as an
alternative to settling disputes other than court
action.
What is the requirement in order that an
arbitration agreement will be binding upon
the state or agency?
A: It is necessary that such agreement is entered
into with the consent or approval of the authorized
public officers or governing boards or as the case
maybe of the state or state agencies concerned.
Otherwise, such agreements will not be binding upon
the state or state agency.
Regarding the capacity of the state and its
instrumentalities, the leading case there is GASCON
vs ARROYO. The rule simply is subject to Sections
57- 65 of the Administrative Code of 1987.
CASE:
GASCON
vs
ARROYO
FACTS: The Lopez family is the owner of 2

television stations (Channels 2 and 4) which they
have operated through the ABS-CBN Broadcasting
Corporation. When martial law was declared in
1972, TV Channel 4 was closed by the military. Its
facilities were taken over by the Kanlaon
Broadcasting System which operated it as a
commercial TV station. It was, in turn, taken over
by the National Media Production Center (NMPC).
After the February 1986 EDSA revolution, the
Presidential Commission on Good Government
(PCGG) sequestered the aforementioned TV
Stations, and, thereafter, the Office of Media
Affairs took over the operation of TV Channel 4.
On 17 April 1986, the Lopez family, through
counsel, ex-Senator Lorenzo Tanada, requested
President Aquino to order the return to the Lopez
family of TV Stations 2 and 4. On 18 June 1986,
the PCGG approved the return of TV Station
Channel 2 to the Lopez family. Thereafter, the
Lopez family requested for the return of TV
Station Channel 4. Respondent Executive
Secretary, by authority of the President, entered
into with the ABS-CBN Broadcasting Corporation,
represented by its President, Eugenio Lopez, Jr.,
an "Agreement to Arbitrate", pursuant to which an
Arbitration Committee was created. Petitioners, as
taxpayers, now seek to annul and set aside the
"Agreement to Arbitrate" entered into by and
between the Republic of the Philippines,
represented by Executive Secretary Joker T.
Arroyo, and ABS-CBN Broadcasting Corporation,
represented by its President, Eugenio Lopez, Jr.,

dated 6 January 1987, to settle the claims of ABSCBN for the return of radio and television stations
(TV Station Channel 4), and to enjoin the
Arbitration Committee created under the aforesaid
agreement from adjudicating the claims of ABSCBN.
ISSUE: WON the Agreement to Arbitrate entered
into by the Republic and ABS-CBN Broadcasting
Corp. is valid and binding.
HELD: YES, it is valid! Respondent Executive
Secretary had the power and authority to enter
into the "Agreement to Arbitrate" with the ABSCBN Broadcasting Corporation, as he acted for and
in behalf of the President when he signed it;
hence, the aforesaid agreement is valid and
binding upon the Republic of the Philippines, as a
party thereto. Moreover, the settlement of
controversies is not vested in the courts of justice
alone to the exclusion of other agencies or bodies.
Whenever a controversy arises, either or both
parties to the controversy may file the proper
action in court. However, the parties may also
resort to arbitration under RA 876 which is a much
faster way of settling their controversy, compared
to how long it would take if they were to go to
court. In entering into the "Agreement to
Arbitrate", the Executive branch of the
government merely opted to avail itself of an
alternative mode of settling the claim of the
private
respondent
ABS-CBN
Broadcasting
Corporation for the return of TV Station Channel 4.
Court held that where the government takes
property from a private landowner for public use
without going through the legal process of
expropriation or negotiated sale, the aggrieved
party may properly maintain a suit against the
government without thereby violating the doctrine
of governmental immunity from suit without its
consent. That is, as it should be, for the doctrine
of governmental immunity from suit cannot serve
as an instrument for perpetrating an injustice to a
citizen. Finally, neither the "convening of
Congress" nor the "recent declaration of the
President that PTV-4 shall remain as the
information arm of the government" can render
"ineffective and unenforceable" the "Agreement to
Arbitrate" because at the time of the signing of the
said agreement, the President was exercising both
the legislative and executive powers of the
Government, and since the "Agreement to
Arbitrate" is valid, it is "enforceable and
irrevocable, save upon such grounds as exist at
law for the revocation of any contract."
What is the relativity of contract principle?
CASE: SALAS (supra)

How about if the case involves multiple

parties?
A: SECTION 25 of RA 9285, Special Rules 4.7
SEC. 25. Interpretation of the Act. - In
interpreting the Act, the court shall have due
regard to the policy of the law in favor of
arbitration. Where action is commenced by or
against multiple parties, one or more of whom are
parties who are bound by the arbitration
agreement although the civil action may continue
as to those who are not bound by such arbitration
agreement.
Rule 4.7. Multiple actions and parties. - The court
shall not decline to refer some or all of the parties
to arbitration for any of the following reasons:
a. Not all of the disputes subject of the civil
action may be referred to arbitration;
b. Not all of the parties to the civil action
are bound by the arbitration agreement
and referral to arbitration would result in
multiplicity of suits;
c. The issues raised in the civil action could
be speedily and efficiently resolved in its
entirety by the court rather than in
arbitration;
d. Referral to arbitration does not appear
to be the most prudent action; or
e. The stay of the action would prejudice
the rights of the parties to the civil action
who are not bound by the arbitration
agreement.
The court may, however, issue an order directing
the inclusion in arbitration of those parties who
are not bound by the arbitration agreement but
who agree to such inclusion provided those
originally bound by it do not object to their
inclusion.
The principle again is that the arbitration agreement

only binds the parties thereto, their assigns and
interest.
Principle of separability
An arbitration agreement is independent from the
main contract. If the main contract is void, it does
not necessarily follow that the arbitration agreement
is void.
The principle of separability applies to:
1. Domestic arbitration
2. International commercial arbitration
Cargill v. San Fernando
ARBITRATION
we now hold that the validity of the contract
containing the agreement to submit to
arbitration does not affect the applicability of
the arbitration clause itself. A contrary ruling
would suggest that a party's mere repudiation
of the main contract is sufficient to avoid
arbitration. The doctrine of separability, or
severability as other writers call it, enunciates that
an arbitration agreement is independent of the main
contract. The arbitration agreement is to be treated
as a separate agreement and the arbitration
agreement does not automatically terminate when
the contract of which it is a part comes to an end.
Fraudulent inducements
Are fraudulent inducements to contract subject to
arbitration? Yes.
Under domestic arbitration the issue of fraudulent
inducement is subject to arbitration if the language
of the arbitration clause is broad enough that it
provides for arbitration of claims or disputes arisng
out of, from or relating to this contract.
In international commercial arbitration, the arbitral
tribunal is empowered under the model law to
decide any objection with respect to the existence or
validity of the arbitration agreement.
Since there are vices of consent here, it makes the
contract voidable subject to ratification.
Article 16 par 1 Model law
JANUARY 30, 2015- KAT

JANUARY 30
The arbitrator in that case of Sime Darby v.
Magsalin, did not commit grave abuse of discretion
because he has the plenary jurisdiction to determine
and interpret the scope to the agreement.
Article 16. Competence of arbitral tribunal to rule on

its jurisdiction (1) The arbitral tribunal may rule on
its own jurisdiction, including any objections with
respect to the existence or validity of the arbitration
agreement. For that purpose, an arbitration clause
which forms part of a contract shall be treated as an
agreement independent of the other terms of the
contract. A decision by the arbitral tribunal that the
contract is null and void shall not entail ipso jure the
invalidity of the arbitration clause.

How do you aver fraud? The circumstance
constituting fraud must be stated with particularity.
Invoke in timely manner
GR: An arbitration agreement must be invoked in a
timely manner to preclude court action.
If it is international commercial arbitration, the
arbitration agreement must be invoked to preclude
court action not later than when submitting the first
statement on the substance of the dispute.
If it is domestic arbitration - the arbitration
agreement must be invoked to preclude court action
not later than the pre-trial conference.
Q: if the party files a motion to dismiss instead of
invoking the arbitration agreement, is that allowed?
Yes on the ground that the court lacks jurisdiction
over the subject matter of the dispute.
WAIVER when:
1. Failure to invoke the arbitration agreement to
preclude court action
2. Failure to file a motion to dismiss on the
ground of lack of jurisdiction
3. Failure to give an answer with an affirmative
defense.
Factors considered when a party is deemed to
have waived his right to require arbitration
whether:
1. Partys action are inconsistent with the right
to arbitrate
2. Litigation machinery has been substantially
invoked
3. Party
either
requested
arbitration
enforcement close to the trial date or delayed
for a long period before asking for a stay of
the suit
4. Defendant seeking arbitration filed a
counterclaim asking for a stay of the
proceedings
5. Important intervening steps such as resort to
discovery procedure not otherwise available
in arbitration have been taken
6. Delay affected, misled or prejudiced the
opposing party
7. Parties in fact litigate in a court of law a
dispute that is subject to arbitration
Judicial relief before and after commencement

of arbitration
The rule is that an arbitration agreement must be
timely invoked to preclude/stay/suspend court
action. Does this mean that the court is
automatically excluded from acquiring jurisdiction
over the case? No.
The court will determine if the controversy is subject
to arbitration. The court only makes a prima facie
determination upholding the existence, validity and
enforceability of the arbitration agreement. So if the
court determines that arbitration agreement is not
subject to arbitration or that the agreement is void,
the court may proceed to hear and decide on the
case. Basis: rule 3 special adr rules c.f. 2.2 and 2.4
Rule 3 applies to domestic and international
commercial arbitration because the seat of
arbitration is in the Philippines.
Why is it not subject to a motion for reconsideration,
appeal or certiorari? The reason is the policy of
judicial restraint (least intervention of the court). The
court here makes a prima facie determination that
there is an existing and valid arbitration agreement.
After making such prima facie determination, it is the
duty of the court to refer the case to arbitration
pursuant to their arbitration agreement.
If the court determines that arbitration agreement is
void, inexistent, or unenforceable, it is the duty of
the court to proceed with the hearing of the case.
RULE 3: JUDICIAL RELIEF INVOLVING THE ISSUE
OF EXISTENCE, VALIDITY AND ENFORCEABILITY OF
THE ARBITRATION AGREEMENT
Rule 3.1. When judicial relief is available. - The
judicial relief provided in Rule 3, whether resorted to
before or after commencement of arbitration, shall
apply only when the place of arbitration is in the
Philippines.
A. Judicial
Arbitration
Relief
before
Commencement
of
Rule 3.2. Who may file petition. - Any party to an

arbitration agreement may petition the appropriate
court to determine any question concerning the
existence, validity and enforceability of such
arbitration agreement serving a copy thereof on the
respondent in accordance with Rule 1.4 (A).
Rule 3.3. When the petition may be filed. - The
petition for judicial determination of the existence,
validity and/or enforceability of an arbitration
agreement may be filed at any time prior to the
commencement of arbitration.

Despite the pendency of the petition provided
herein, arbitral proceedings may nevertheless be
commenced and continue to the rendition of an
award, while the issue is pending before the court.
Rule 3.4. Venue. - A petition questioning the
existence, validity and enforceability of an arbitration
agreement may be filed before the Regional Trial
Court of the place where any of the petitioners or
respondents has his principal place of business or
residence.
Rule 3.5. Grounds. - A petition may be granted only
if it is shown that the arbitration agreement is, under
the applicable law, invalid, void, unenforceable or
inexistent.
Rule 3.6. Contents of petition. - The verified petition
shall state the following:
a. The facts showing that the persons named as
petitioner or respondent have legal capacity to sue
or be sued;
b. The nature and substance of the dispute between
the parties;
c. The grounds and the circumstances relied upon by
the petitioner to establish his position; and
d. The relief/s sought.
Apart from other submissions, the petitioner must
attach to the petition an authentic copy of the
arbitration agreement.
Rule
3.7. Comment/Opposition.-The
comment/opposition of the respondent must be filed
within fifteen (15) days from service of the petition.
Rule 3.8. Court action. - In resolving the petition, the
court must exercise judicial restraint in accordance
with the policy set forth in Rule 2.4, deferring to the
competence or jurisdiction of the arbitral tribunal to
rule on its competence or jurisdiction.
Rule 3.9. No forum shopping. - A petition for judicial
relief under this Rule may not be commenced when
the existence, validity or enforceability of an
arbitration agreement has been raised as one of the
issues in a prior action before the same or another
court.
enforceability of an arbitration agreement shall not

be subject to a motion for reconsideration, appeal or
certiorari.
Such prima facie determination will not, however,
prejudice the right of any party to raise the issue of
the existence, validity and enforceability of the
arbitration agreement before the arbitral tribunal or
the court in an action to vacate or set aside the
arbitral award. In the latter case, the courts review
of the arbitral tribunals ruling upholding the
existence, validity or enforceability of the arbitration
agreement shall no longer be limited to a mere
prima facie determination of such issue or issues as
prescribed in this Rule, but shall be a full review of
such issue or issues with due regard, however, to
the standard for review for arbitral awards
prescribed in these Special ADR Rules.
B. Judicial Relief after Arbitration Commences
Rule 3.12. Who may file petition. - Any party to
arbitration may petition the appropriate court for
judicial relief from the ruling of the arbitral tribunal
on a preliminary question upholding or declining its
jurisdiction. Should the ruling of the arbitral tribunal
declining its jurisdiction be reversed by the court, the
parties shall be free to replace the arbitrators or any
one of them in accordance with the rules that were
applicable for the appointment of arbitrator sought
to be replaced.
Rule 3.13. When petition may be filed. - The petition
may be filed within thirty (30) days after having
received notice of that ruling by the arbitral tribunal.
Rule 3.14. Venue. - The petition may be filed before
the Regional Trial Court of the place where
arbitration is taking place, or where any of the
petitioners or respondents has his principal place of
business or residence.
Rule 3.15. Grounds. - The petition may be granted
when the court finds that the arbitration agreement
is invalid, inexistent or unenforceable as a result of
which the arbitral tribunal has no jurisdiction to
resolve the dispute.
Rule 3.16. Contents of petition. - The petition shall
state the following:
Rule 3.10. Application for interim relief. - If the

petitioner also applies for an interim measure of
protection, he must also comply with the
requirements of the Special ADR Rules for the
application for an interim measure of protection.
a. The facts showing that the person named as

petitioner or respondent has legal capacity to sue or
be sued;
Rule 3.11. Relief against court action. - Where there

is a prima facie determination upholding the
arbitration agreement.-A prima facie determination
by the court upholding the existence, validity or
c. The grounds and the circumstances relied upon by

the petitioner; and
b. The nature and substance of the dispute between

the parties;
d. The relief/s sought.

In addition to the submissions, the petitioner shall
attach to the petition a copy of the request for
arbitration and the ruling of the arbitral tribunal.
The arbitrators shall be impleaded as nominal parties
to the case and shall be notified of the progress of
the case.
Rule
3.17. Comment/Opposition.
The
comment/opposition must be filed within fifteen (15)
days from service of the petition.
Rule 3.18. Court action. - (A) Period for resolving the
petition.- The court shall render judgment on the
basis of the pleadings filed and the evidence, if any,
submitted by the parties, within thirty (30) days from
the time the petition is submitted for resolution.
(B) No injunction of arbitration proceedings. - The
court shall not enjoin the arbitration proceedings
during the pendency of the petition.
Judicial recourse to the court shall not prevent the
arbitral tribunal from continuing the proceedings and
rendering its award.
(C) When dismissal of petition is appropriate. - The
court shall dismiss the petition if it fails to comply
with Rule 3.16 above; or if upon consideration of the
grounds alleged and the legal briefs submitted by
the parties, the petition does not appear to be prima
facie meritorious.
Rule 3.19. Relief against court action. - The
aggrieved party may file a motion for reconsideration
of the order of the court. The decision of the court
shall, however, not be subject to appeal. The ruling
of the court affirming the arbitral tribunals
jurisdiction shall not be subject to a petition for
certiorari. The ruling of the court that the arbitral
tribunal has no jurisdiction may be the subject of a
petition for certiorari.
Rule 3.20. Where no petition is allowed. - Where the
arbitral tribunal defers its ruling on preliminary
question regarding its jurisdiction until its final
award, the aggrieved party cannot seek judicial relief
to question the deferral and must await the final
arbitral award before seeking appropriate judicial
recourse.
A ruling by the arbitral tribunal deferring resolution
on the issue of its jurisdiction until final award, shall
not be subject to a motion for reconsideration,
appeal or a petition for certiorari.
Rule 3.21. Rendition of arbitral award before court
decision on petition from arbitral tribunals

preliminary ruling on jurisdiction. - If the arbitral
tribunal renders a final arbitral award and the Court
has not rendered a decision on the petition from the
arbitral tribunals preliminary ruling affirming its

jurisdiction, that petition shall become ipso facto
moot and academic and shall be dismissed by the
Regional Trial Court. The dismissal shall be without
prejudice to the right of the aggrieved party to raise
the same issue in a timely petition to vacate or set
aside the award.
Rule 3.22. Arbitral tribunal a nominal party. - The
arbitral tribunal is only a nominal party. The court
shall not require the arbitral tribunal to submit any
pleadings or written submissions but may consider
the same should the latter participate in the
proceedings, but only as nominal parties thereto.
3.11 par 2
The prima facie determination made by the court will
not prejudice the right of the party to raise the issue
of the existence, validity, or enforceability before the
arbitral tribunal.
If court intervention is allowed, the court shall not
refuse to grant relief prior to the constitution of the
arbitral tribunal or even if after arbitration
commences and the action is already pending before
the tribunal.
Chung Fu industries v. CA
Under present law, may the parties who agree to
submit their disputes to arbitration further provide
that the arbitrators' award shall be final,
unappealable and executory?
Article 2044 of the Civil Code recognizes the validity
of such stipulation. Similarly, the Construction
Industry Arbitration Law provides that the arbitral
award "shall be final and inappealable except on
questions of law which shall be appealable to the
Supreme Court." 16
Where the parties agree that the decision of the
arbitrator shall be final and unappealable as in the
instant case, the pivotal inquiry is whether subject
arbitration award is indeed beyond the ambit of the
court's power of judicial review.
We rule in the negative. It is stated explicitly under
Art. 2044 of the Civil Code that the finality of the
arbitrators' award is not absolute and without
exceptions. Where the conditions described in
Articles 2038, 2039 and 2040 applicable to both
compromises and arbitrations are obtaining, the
arbitrators'
award
may
be
annulled
or
rescinded.19 Additionally, under Sections 24 and 25
of the Arbitration Law, there are grounds for
vacating, modifying or rescinding an arbitrator's

award. 20 Thus,
if
and
when
the
factual
circumstances referred to in the above-cited
provisions are present, judicial review of the award is
properly warranted.
What if courts refuse or neglect to inquire into the
factual milieu of an arbitrator's award to determine
whether it is in accordance with law or within the
scope of his authority? How may the power of
judicial review be invoked?
This is where the proper remedy is certiorari under
Rule 65 of the Revised Rules of Court. It is to be
borne in mind, however, that this action will lie only
where a grave abuse of discretion or an act without
or in excess of jurisdiction on the part of the
voluntary arbitrator is clearly shown.
It should be stressed, too, that voluntary arbitrators,
by the nature of their functions, act in a quasijudicial capacity.24 It stands to reason, therefore,
that their decisions should not be beyond the scope
of the power of judicial review of this Court.
Assume that there is an existing arbitration

agreement and the party files a motion to suspend
the proceeding kasi there is an arbitration
agreement. It was timely invoked by the parties.
Now the court refuses to suspend the proceedings
and continues to hear the case. What is your
remedy?
1. certiorari under rule 65
2. Prohibition
Referral to ADR
Rule 4 c.f Rule 2.2
Rule 2.2. Policy on arbitration.- (A) Where the
parties have agreed to submit their dispute to
arbitration, courts shall refer the parties to
arbitration pursuant to Republic Act No. 9285
bearing in mind that such arbitration agreement is
the law between the parties and that they are
expected to abide by it in good faith. Further, the
courts shall not refuse to refer parties to arbitration
for reasons including, but not limited to, the
following:
e. The place of arbitration is in a foreign country;

f. One or more of the issues are legal and one or
more of the arbitrators are not lawyers;
g. One or more of the arbitrators are not Philippine
nationals; or
h. One or more of the arbitrators are alleged not to
possess the required qualification under the
arbitration agreement or law.
(B) Where court intervention is allowed under ADR
Laws or the Special ADR Rules, courts shall not
refuse to grant relief, as provided herein, for any of
the following reasons:
a. Prior to the constitution of the arbitral tribunal,
the court finds that the principal action is the subject
of an arbitration agreement; or
b. The principal action is already pending before an
arbitral tribunal.
The Special ADR Rules recognize the principle of
competence-competence, which means that the
arbitral tribunal may initially rule on its own
jurisdiction, including any objections with respect to
the existence or validity of the arbitration agreement
or any condition precedent to the filing of a request
for arbitration.
The Special ADR Rules recognize the principle of
separability of the arbitration clause, which means
that said clause shall be treated as an agreement
independent of the other terms of the contract of
which it forms part. A decision that the contract is
null and void shall not entail ipso jure the invalidity
of the arbitration clause.
If a case is filed before the court in contravention of

the arbitration agreement, what are your remedies?
1. Motion to dismiss (lack of jurisdiction)
2. Motion to suspend proceeding (invoke in a
timely manner)
3. Motion for referral to ADR
Sec 24, RA 9285
c. The referral would result in multiplicity of suits;
SEC. 24. Referral to Arbitration. - A court before

which an action is brought in a matter which is the
subject matter of an arbitration agreement shall, if at
least one party so requests not later that the pretrial conference, or upon the request of both parties
thereafter, refer the parties to arbitration unless it
finds that the arbitration agreement is null and void,
inoperative or incapable of being performed.
d. The arbitration proceeding has not commenced;
RULE 4: REFERRAL TO ADR
a. The referral tends to oust a court of its

jurisdiction;
b. The court is in a better position to resolve the
dispute subject of arbitration;

Rule 4.1. Who makes the request. - A party to a

pending action filed in violation of the arbitration
agreement, whether contained in an arbitration
clause or in a submission agreement, may request
the court to refer the parties to arbitration in
accordance with such agreement.
Rule 4.2. When to make request. - (A) Where the
arbitration agreement exists before the action is

filed. - The request for referral shall be made not
later than the pre-trial conference. After the pre-trial
conference, the court will only act upon the request
for referral if it is made with the agreement of all
parties to the case.
(B) Submission agreement. - If there is no existing
arbitration agreement at the time the case is filed
but the parties subsequently enter into an arbitration
agreement, they may request the court to refer their
dispute to arbitration at any time during the
proceedings.
Rule 4.3. Contents of request. - The request for
referral shall be in the form of a motion, which shall
state that the dispute is covered by an arbitration
agreement.
Apart from other submissions, the movant shall
attach to his motion an authentic copy of the
The request shall contain a notice of hearing
addressed to all parties specifying the date and time
when it would be heard. The party making the
request shall serve it upon the respondent to give
him the opportunity to file a comment or opposition
as provided in the immediately succeeding Rule
before the hearing.
Rule
The
days from service of the petition. The
comment/opposition should show that: (a) there is
no agreement to refer the dispute to arbitration;
and/or (b) the agreement is null and void; and/or (c)
the subject-matter of the dispute is not capable of
settlement or resolution by arbitration in accordance
with Section 6 of the ADR Act.
Rule 4.5. Court action. - After hearing, the court
shall stay the action and, considering the statement
of policy embodied in Rule 2.4, above, refer the
parties to arbitration if it finds prima facie, based on
the pleadings and supporting documents submitted
by the parties, that there is an arbitration agreement
and that the subject-matter of the dispute is capable
of settlement or resolution by arbitration in
accordance with Section 6 of the ADR Act.
Otherwise, the court shall continue with the judicial

proceedings.
Rule 4.6. No reconsideration, appeal or certiorari. An order referring the dispute to arbitration shall be
immediately executory and shall not be subject to a
motion for reconsideration, appeal or petition for
certiorari.
An order denying the request to refer the dispute to
arbitration shall not be subject to an appeal, but may
be the subject of a motion for reconsideration and/or
a petition for certiorari.
Rule 4.7. Multiple actions and parties. - The court
shall not decline to refer some or all of the parties to
arbitration for any of the following reasons:
a. Not all of the disputes subject of the civil action
may be referred to arbitration;
b. Not all of the parties to the civil action are bound
by the arbitration agreement and referral to
arbitration would result in multiplicity of suits;
c. The issues raised in the civil action could be
speedily and efficiently resolved in its entirety by the
court rather than in arbitration;
d. Referral to arbitration does not appear to be the
most prudent action; or
e. The stay of the action would prejudice the rights
of the parties to the civil action who are not bound
by the arbitration agreement.
The court may, however, issue an order directing the
inclusion in arbitration of those parties who are not
bound by the arbitration agreement but who agree
to such inclusion provided those originally bound by
it do not object to their inclusion.
Rule 4.8. Arbitration to proceed.- Despite the
pendency of the action referred to in Rule 4.1,
above, arbitral proceedings may nevertheless be
commenced or continued, and an award may be
made, while the action is pending before the court.
Can the motion to refer the case to ADR a litigable
motion? Yes, it is a litigable motion. You have to
notify the other party.
The
arbitration
proceeding
will
proceed
independently of the civil action filed in court.
Rule on liberality
the court is guided on the rule on liberality in
resolving the issue subject of the arbitration. The
scope of the arbitration agreement should be
interpreted liberally so that any doubt concerning
arbitrable issues should be resolved in favor of

arbitration. Recall: plenary jurisdiction of the
arbitrator. Courts should liberally construe arbitration
clauses to encourage ADR.
SEC. 25. Interpretation of the Act. - In
interpreting the Act, the court shall have due regard
to the policy of the law in favor of arbitration. Where
action is commenced by or against multiple parties,
one or more of whom are parties who are bound by
the arbitration agreement although the civil action
may continue as to those who are not bound by such
LM POWER ENGINEERING V. CAPITOL
Being an inexpensive, speedy and amicable method
of settling disputes,[24] arbitration -- along with
mediation, conciliation and negotiation -- is
encouraged by the Supreme Court. Aside from
unclogging judicial dockets, arbitration also hastens
the resolution of disputes, especially of the
commercial kind.[25] It is thus regarded as the wave
of the future in international civil and commercial
disputes.[26] Brushing aside a contractual agreement
calling for arbitration between the parties would be a
step backward.[27]
Consistent with the above-mentioned policy of
encouraging alternative dispute resolution methods,
courts
should
liberally
construe
arbitration
clauses. Provided such clause is susceptible of an
interpretation that covers the asserted dispute, an
order to arbitrate should be granted.[28] Any doubt
should be resolved in favor of arbitration.[29]
it is plain and clear that as long as the parties agree
to submit to voluntary arbitration, regardless of what
forum they may choose, their agreement will fall
within the jurisdiction of the CIAC, such that, even if
they specifically choose another forum, the parties
will not be precluded from electing to submit their
dispute before the CIAC because this right has been
vested upon each party by law, i.e., E.O. No.
1008.[34]
Clearly, there is no more need to file a request with
the CIAC in order to vest it with jurisdiction to decide
a construction dispute.
The arbitral clause in the Agreement is a
commitment on the part of the parties to submit to
arbitration the disputes covered therein. Because
that clause is binding, they are expected to abide by
it in good faith.[35] And because it covers the dispute
between the parties in the present case, either of
them may compel the other to arbitrate.[36]
if an action is commenced before a court on a matter

that is the subject of an arbitration agreement, the
court is not allowed to dismiss the action. The court

simply has to suspend the action to await the final
outcome of the arbitration for possible confirmation
and enforcement of the award before the court.
Why?
GR: the arbitral award is subject to judicial
confirmation.
E: Awards rendered by the CIAC because they are
immediately executory.
If an action is filed before the court, even if the
arbitration agreement is timely invoked, the RTC
does not lose its jurisdiction over the case. Even if it
should determine later on the case is subject to
arbitration.
Sec 7, RA 876
Section 7. Stay of civil action. - If any suit or
proceeding be brought upon an issue arising out of
an agreement providing for the arbitration thereof,
the court in which such suit or proceeding is
pending, upon being satisfied that the issue involved
in such suit or proceeding is referable to arbitration,
shall stay the action or proceeding until an
arbitration has been had in accordance with the
terms of the agreement: Provided, That the
applicant, for the stay is not in default in proceeding
with such arbitration.
The proceeding before the RTC should only be
stayed and after the special proceeding in arbitration
has been pursued and completed then the lower
court may confirm the award made by the arbitrator.
Provisional remedies
Are provisional remedies applicable of arbitration
proceedings? Yes, provisional remedies are
applicable in arbitration proceedings based on Rule
5.
RULE 5: INTERIM MEASURES OF PROTECTION
Rule 5.1. Who may ask for interim measures of
protection. - A party to an arbitration agreement
may petition the court for interim measures of
protection.
Rule 5.2. When to petition. - A petition for an
interim measure of protection may be made (a)
before arbitration is commenced, (b) after arbitration
is commenced, but before the constitution of the
arbitral tribunal, or (c) after the constitution of the
arbitral tribunal and at any time during arbitral
proceedings but, at this stage, only to the extent
that the arbitral tribunal has no power to act or is
unable to act effectively.

Rule 5.3. Venue. - A petition for an interim measure
of protection may be filed with the Regional Trial
Court, which has jurisdiction over any of the
following places:
a. Where the principal place of business of any of
the parties to arbitration is located;
b. Where any of the parties who are individuals
resides;
c. Where any of the acts sought to be enjoined are
being performed, threatened to be performed or not
being performed; or
d. Where the real property subject of arbitration, or
a portion thereof is situated.
Rule 5.4. Grounds. - The following grounds, while
not limiting the reasons for the court to grant an
interim measure of protection, indicate the nature of
the reasons that the court shall consider in granting
the relief:
a. The need to prevent irreparable loss or injury;
b. The need to provide security for the performance
of any obligation;
c. The need to produce or preserve evidence; or
d. The need to compel any other appropriate act or
omission.
Rule 5.5. Contents of the petition. - The verified
petition must state the following:
a. The fact that there is an arbitration agreement;
b. The fact that the arbitral tribunal has not been
constituted, or if constituted, is unable to act or
would be unable to act effectively;
c. A detailed description of the appropriate relief
sought;
c. Appointment of a receiver;
d. Detention, preservation, delivery or inspection of
property; or,
e. Assistance in the enforcement of an interim
measure of protection granted by the arbitral
tribunal, which the latter cannot enforce effectively.
Rule 5.7. Dispensing with prior notice in certain
cases. - Prior notice to the other party may be
dispensed with when the petitioner alleges in the
petition that there is an urgent need to either (a)
preserve property, (b) prevent the respondent from
disposing of, or concealing, the property, or (c)
prevent the relief prayed for from becoming illusory
because of prior notice, and the court finds that the
reason/s given by the petitioner are meritorious.
Rule
The
days from service of the petition. The opposition or
comment should state the reasons why the interim
measure of protection should not be granted.
Rule 5.9. Court action. - After hearing the petition,
the court shall balance the relative interests of the
parties and inconveniences that may be caused, and
on that basis resolve the matter within thirty (30)
days from (a) submission of the opposition, or (b)
upon lapse of the period to file the same, or (c) from
termination of the hearing that the court may set
only if there is a need for clarification or further
argument.
If the other parties fail to file their opposition on or
before the day of the hearing, the court shall motu
proprio render judgment only on the basis of the
allegations in the petition that are substantiated by
supporting documents and limited to what is prayed
for therein.
a. Preliminary injunction directed against a party to

arbitration;
In cases where, based solely on the petition, the

court finds that there is an urgent need to either (a)
preserve property, (b) prevent the respondent from
disposing of, or concealing, the property, or (c)
prevent the relief prayed for from becoming illusory
because of prior notice, it shall issue an immediately
executory temporary order of protection and require
the petitioner, within five (5) days from receipt of
that order, to post a bond to answer for any damage
that respondent may suffer as a result of its order.
The ex-parte temporary order of protection shall be
valid only for a period of twenty (20) days from the
service on the party required to comply with the
order. Within that period, the court shall:
b. Preliminary attachment against property or

garnishment of funds in the custody of a bank or a
third person;
a. Furnish the respondent a copy of the petition and

a notice requiring him to comment thereon on or
before the day the petition will be heard; and
d. The grounds relied on for the allowance of the

petition
attach to his petition an authentic copy of the
Rule 5.6. Type of interim measure of protection
that a court may grant.- The following, among
others, are the interim measures of protection that a
court may grant:

b. Notify the parties that the petition shall be heard
on a day specified in the notice, which must not be
beyond the twenty (20) day period of the effectivity
of the ex-parte order.
The respondent has the option of having the
temporary order of protection lifted by posting an
appropriate counter-bond as determined by the
court.
If the respondent requests the court for an extension
of the period to file his opposition or comment or to
reset the hearing to a later date, and such request is
granted, the court shall extend the period of validity
of the ex-partetemporary order of protection for no
more than twenty days from expiration of the
original period.
After notice and hearing, the court may either grant
or deny the petition for an interim measure of
protection. The order granting or denying any
application for interim measure of protection in aid
of arbitration must indicate that it is issued without
prejudice to subsequent grant, modification,
amendment, revision or revocation by an arbitral
tribunal.
Rule 5.10. Relief against court action. - If
respondent was given an opportunity to be heard on
a petition for an interim measure of protection, any
order by the court shall be immediately executory,
but may be the subject of a motion for
reconsideration and/or appeal or, if warranted, a
petition for certiorari.
Rule 5.11. Duty of the court to refer back. - The
court shall not deny an application for assistance in
implementing or enforcing an interim measure of
protection ordered by an arbitral tribunal on any or
all of the following grounds:
a. The arbitral tribunal granted the interim relief ex
parte; or
b. The party opposing the application found new
material evidence, which the arbitral tribunal had not
considered in granting in the application, and which,
if considered, may produce a different result; or
c. The measure of protection ordered by the arbitral
tribunal amends, revokes, modifies or is inconsistent
with an earlier measure of protection issued by the
court.
If it finds that there is sufficient merit in the
opposition to the application based on letter (b)
above, the court shall refer the matter back to the
arbitral tribunal for appropriate determination.
Rule 5.12. Security. - The order granting an interim
measure of protection may be conditioned upon the
provision of security, performance of an act, or

omission thereof, specified in the order.
The Court may not change or increase or decrease
the security ordered by the arbitral tribunal.
Rule 5.13. Modification, amendment, revision or
revocation of courts previously issued interim

measure of protection. - Any court order granting or
denying interim measure/s of protection is issued
without prejudice to subsequent grant, modification,
amendment, revision or revocation by the arbitral
tribunal as may be warranted.
An interim measure of protection issued by the
arbitral tribunal shall, upon its issuance be deemed
to have ipso jure modified, amended, revised or
revoked an interim measure of protection previously
issued by the court to the extent that it is
inconsistent with the subsequent interim measure of
protection issued by the arbitral tribunal.
Rule 5.14. Conflict or inconsistency between interim
measure of protection issued by the court and by the

arbitral tribunal. - Any question involving a conflict or
inconsistency between an interim measure of
protection issued by the court and by the arbitral
tribunal shall be immediately referred by the court to
the arbitral tribunal which shall have the authority to
decide such question.
Rule 5.15. Court to defer action on petition for an
interim measure of protection when informed of

constitution of the arbitral tribunal. - The court shall
defer action on any pending petition for an interim
measure of protection filed by a party to an
arbitration agreement arising from or in connection
with a dispute thereunder upon being informed that
an arbitral tribunal has been constituted pursuant to
such agreement. The court may act upon such
petition only if it is established by the petitioner that
the arbitral tribunal has no power to act on any such
interim measure of protection or is unable to act
thereon effectively.
Rule 5.16. Court assistance should arbitral tribunal
be unable to effectively enforce interim measure of

protection. - The court shall assist in the
enforcement of an interim measure of protection
issued by the arbitral tribunal which it is unable to
effectively enforce.
Are you required to furnish a copy of the petition for

interim measure of protection to the other party?
GR: Yes you should notify the other party (c.f. Rule
5.8)
E: it can be dispensed with in certain cases.

GR: Notify the other party if it is an interim
temporary protection order
(ii) to provide security for the performance of any

obligation;
E: No need to notify if it is an ex-parte temporary

order protection.
(iii) to produce or preserve any evidence; or
An ex-parte TOP issues immediately upon the filing

of the petition because of the urgency of the
situation. Notify the other party after the ex-parte
TOP is issued within the 20 days.
An ex-parte TOP is similar to the 72 hour ex parte
TRO that is issued by the executive judge when
there is an extreme urgency. This can be extended
by 17 days. So the same period to take effect. 20
days. You still have to notify the other party. The
case will be raffled to the presiding judge. There will
a summary hearing to determine whether to extend
the 72 hour ex parte TRO.
Also am interim measure of protection is immediately
executor it may
be subject to a motion for
reconsideration, appeal or a petition for certiorari
It is not only the court can grant an interim measure
of protection. You can also avail of the interim
measures before the arbitral tribunal.
Basis on the grant of interim measures of
protection
(iv) to compel any other appropriate act or omission.

(3) The order granting provisional relief may be
conditioned upon the provision of security or any act
or omission specified in the order.
(4) Interim or provisional relief is requested by
written application transmitted by reasonable means
to the Court or arbitral tribunal as the case may be
and the party against whom the relief is sought,
describing in appropriate detail the precise relief, the
party against whom the relief is requested, the
grounds for the relief, and evidence supporting the
request.
(5) The order shall be binding upon the parties.
(6) Either party may apply with the Court for
assistance in Implementing or enforcing an interim
measure ordered by an arbitral tribunal.
(7) A party who does not comply with the order shall
be liable for all damages resulting from
noncompliance, including all expenses, and
reasonable attorney's fees, paid in obtaining the
order's judicial enforcement.
Sec 28, ra 9285

28. Grant
Protection. SEC.
of
Interim
Measure
of
(a) It is not incompatible with an arbitration

agreement for a party to request, before constitution
of the tribunal, from a Court an interim measure of
protection and for the Court to grant such measure.
After constitution of the arbitral tribunal and during
arbitral proceedings, a request for an interim
measure of protection or modification thereof, may
be made with the arbitral tribunal or to the extent
that the arbitral tribunal has no power to act or is
unable to act effectively, the request may be made
with the Court. The arbitral tribunal is deemed
constituted when the sole arbitrator or the third
arbitrator who has been nominated, has accepted
the nomination and written communication of said
nomination and acceptance has been received by the
party making request.
(b) The following rules on interim or provisional relief
shall be observed:
(1) Any party may request that provision relief be
granted against the adverse party:
(2) Such relief may be granted:
(i) to prevent irreparable loss or injury:
Home bankers v. CA
Section 14 of Republic Act 876, allows any party to
the arbitration proceeding to petition the court to
take measures to safeguard and/or conserve any
matter which is the subject of the dispute in
arbitration,
In the case at bar, undeniably, private respondent
has initiated arbitration proceedings as required by
the PCHC rules and regulations, and pending
arbitration has sought relief from the trial court for
measures to safeguard and/or conserve the subject
of the dispute under arbitration, as sanctioned by
section 14 of the Arbitration Law, and otherwise not
shown to be contrary to the PCHC rules and
regulations.
At this point, we emphasize that arbitration, as an
alternative method of dispute resolution, is
encouraged by this Court. Aside from unclogging
judicial dockets, it also hastens solutions especially
of commercial disputes. 50 The Court looks with
favor upon such amicable arrangement and will only
interfere with great reluctance to anticipate or nullify
the action of the arbitrator. 51

Competence-competence principle
The first opportunity to rule on the issue whether the
tribunal has jurisdiction over the said dispute must
be given to the tribunal itself. It requires the court to
exercise judicial restraint and refer to the tribunal
this issue.
c.f rule 2.4
Rule
2.4. Policy
implementing
competence-
competence principle. - The arbitral tribunal shall be

accorded the first opportunity or competence to rule
on the issue of whether 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 agreement.
When a court is asked to rule upon issue/s affecting
the competence or jurisdiction of an arbitral tribunal
in a dispute brought before it, either before or after
the arbitral tribunal is constituted, the court must
exercise judicial restraint and defer to the
competence or jurisdiction of the arbitral tribunal by
allowing the arbitral tribunal the first opportunity to
rule upon such issues.
Where the court is asked to make a determination of
whether the arbitration agreement is null and void,
inoperative or incapable of being performed, under
this policy of judicial restraint, the court must make
no more than a prima facie determination of that
issue.
Unless the court, pursuant to such prima facie
determination, concludes that the arbitration
agreement is null and void, inoperative or incapable
of being performed, the court must suspend the
action before it and refer the parties to arbitration
pursuant to the arbitration agreement.
Appointment of arbitrators
Who appoints the arbitrator? The arbitrator is
appointed by the parties based on their arbitration
agreement.
Qualifications of an arbitrator
1. Of legal age
2. In full enjoyment of his civil rights and
3. Must know how to read and write
Disqualifications of an arbitrator
Section 10, RA 876 for domestic arbitration

Article 12, Model Law for international
arbitration
Section 10. Qualifications of arbitrators. - Any

person appointed to serve as an arbitrator must be
of legal age, in full-enjoyment of his civil rights and
know how to read and write. No person appointed to
served as an arbitrator shall be related by blood or
marriage within the sixth degree to either party to
the controversy. No person shall serve as an
arbitrator in any proceeding if he has or has had
financial, fiduciary or other interest in the
controversy or cause to be decided or in the result of
the proceeding, or has any personal bias, which
might prejudice the right of any party to a fair and
impartial award.
No party shall select as an arbitrator any person to
act as his champion or to advocate his cause.
If, after appointment but before or during hearing, a
person appointed to serve as an arbitrator shall
discover any circumstances likely to create a
presumption of bias, or which he believes might
disqualify him as an impartial arbitrator, the
arbitrator shall immediately disclose such information
to the parties. Thereafter the parties may agree in
writing:
(a) to waive the presumptive disqualifying
circumstances; or
(b) to declare the office of such arbitrator vacant.
Any such vacancy shall be filled in the same manner
as the original appointment was made.
Article 12. Grounds for challenge (1) When a person
is approached in connection with his possible
appointment as an arbitrator, he shall disclose any
circumstances likely to give rise to justifi able doubts
as to his impartiality or independence. An arbitrator,
from the time of his appointment and throughout the
arbitral proceedings, shall without delay disclose any
such circumstances to the parties unless they have
already been informed of them by him. (2) An
arbitrator may be challenged only if circumstances
exist that give rise to justifi able doubts as to his
impartiality or independence, or if he does not
possess qualifi cations agreed to by the parties. A
party may challenge an arbitrator appointed by him,
or in whose appointment he has participated, only
for reasons of which he becomes aware after the
appointment has been made.
Method of appointing an arbitrator
The parties are given the freedom to decide the
method on how they will appoint an arbitrator. This
is subject to the limitation that they cannot exclude
in their agreement the right of party to invoke the
aid of the appointing authority.

Appointing authority
Who is this appointing authority?
Rule 1.11.b
b. "Appointing Authority" shall mean the person or
institution named in the arbitration agreement as the
appointing authority; or the regular arbitration
institution under whose rule the arbitration is agreed
to be conducted. Where the parties have agreed to
submit their dispute to institutional arbitration rules,
and unless they have agreed to a different
procedure, they shall be deemed to have agreed to
procedure under such arbitration rules for the
selection and appointment of arbitrators. In ad hoc
arbitration, the default appointment of arbitrators
shall be made by the National President of the
Integrated Bar of the Philippines or his duly
authorized representative.
If the arbitrator the parties appointed died, they did
not name a substitute, and in their agreement there
was no method on replacing the former, what is your
remedy? A party may request the court to act as an
appointing authority in specific instances.
RULE 6: APPOINTMENT OF ARBITRATORS
Rule 6.1. When the court may act as Appointing
Authority. - The court shall act as Appointing
Authority only in the following instances:
a. Where any of the parties in an institutional
arbitration failed or refused to appoint an arbitrator
or when the parties have failed to reach an
agreement on the sole arbitrator (in an arbitration
before a sole arbitrator) or when the two designated
arbitrators have failed to reach an agreement on the
third or presiding arbitrator (in an arbitration before
a panel of three arbitrators), and the institution
under whose rules arbitration is to be conducted fails
or is unable to perform its duty as appointing
authority within a reasonable time from receipt of
the request for appointment;
b. In all instances where arbitration is ad hoc and
the parties failed to provide a method for appointing
or replacing an arbitrator, or substitute arbitrator, or
the method agreed upon is ineffective, and the
National President of the Integrated Bar of the
Philippines
(IBP)
or
his
duly
authorized
representative fails or refuses to act within such
period as may be allowed under the pertinent rules
of the IBP or within such period as may be agreed
upon by the parties, or in the absence thereof,
within thirty (30) days from receipt of such request
for appointment;
c. Where the parties agreed that their dispute shall

be resolved by three arbitrators but no method of
appointing those arbitrators has been agreed upon,
each party shall appoint one arbitrator and the two
arbitrators thus appointed shall appoint a third
arbitrator. If a party fails to appoint his arbitrator
within thirty (30) days of receipt of a request to do
so from the other party, or if the two arbitrators fail
to agree on the third arbitrator within a reasonable
time from their appointment, the appointment shall
be made by the Appointing Authority. If the latter
fails or refuses to act or appoint an arbitrator within
a reasonable time from receipt of the request to do
so, any party or the appointed arbitrator/s may
request the court to appoint an arbitrator or the third
arbitrator as the case may be.
Rule 6.2. Who may request for appointment. - Any
party to an arbitration may request the court to act
as an Appointing Authority in the instances specified
in Rule 6.1 above.
Rule 6.3. Venue. - The petition for appointment of
arbitrator may be filed, at the option of the
petitioner, in the Regional Trial Court (a) where the
principal place of business of any of the parties is
located, (b) if any of the parties are individuals,
where those individuals reside, or (c) in the National
Capital Region.
Rule 6.4. Contents of the petition. -The petition
a. The general nature of the dispute;
b. If the parties agreed on an appointment
procedure, a description of that procedure with
reference to the agreement where such may be
found;
c. The number of arbitrators agreed upon or the
absence of any agreement as to the number of
arbitrators;
d. The special qualifications that the arbitrator/s
must possess, if any, that were agreed upon by the
parties;
e. The fact that the Appointing Authority, without
justifiable cause, has failed or refused to act as such
within the time prescribed or in the absence thereof,
within a reasonable time, from the date a request is
made; and
f. The petitioner is not the cause of the delay in, or
failure of, the appointment of the arbitrator.
attach to the petition (a) an authentic copy of the
arbitration agreement, and (b) proof that the

Appointing Authority has been notified of the filing of
the petition for appointment with the court.
Rule
The
days from service of the petition.
Rule 6.6. Submission of list of arbitrators. - The
court may, at its option, also require each party to
submit a list of not less than three (3) proposed
arbitrators together with their curriculum vitae.
Rule 6.7. Court action. - After hearing, if the court
finds merit in the petition, it shall appoint an
arbitrator; otherwise, it shall dismiss the petition.
In making the appointment, the court shall have
regard to such considerations as are likely to secure
the appointment of an independent and impartial
arbitrator.
At any time after the petition is filed and before the
court makes an appointment, it shall also dismiss the
petition upon being informed that the Appointing
Authority has already made the appointment.
Rule 6.8. Forum shopping prohibited. - When there
is a pending petition in another court to declare the
arbitration
agreement
inexistent,
invalid,
unenforceable, on account of which the respondent
failed or refused to participate in the selection and
appointment of a sole arbitrator or to appoint a
party-nominated arbitrator, the petition filed under
this rule shall be dismissed.
Rule 6.9. Relief against court action. - If the court
appoints an arbitrator, the order appointing an
arbitrator shall be immediately executory and shall
not be the subject of a motion for reconsideration,
appeal or certiorari. An order of the court denying
the petition for appointment of an arbitrator may,
however, be the subject of a motion for
reconsideration, appeal or certiorari.
Challenge to appointment of arbitrator

Foreigners are allowed to arbitrators. Nationality is
not a ground to challenge an arbitrator unless the
parties have specified in their agreement.
RULE 7: CHALLENGE TO APPOINTMENT OF
ARBITRATOR
Rule 7.1. Who may challenge. - Any of the parties
to an arbitration may challenge an arbitrator.
Rule 7.2. When challenge may be raised in court. When an arbitrator is challenged before the arbitral
tribunal under the procedure agreed upon by the
parties or under the procedure provided for in Article
13 (2) of the Model Law and the challenge is not

successful, the aggrieved party may request the
Appointing Authority to rule on the challenge, and it
is only when such Appointing Authority fails or
refuses to act on the challenge within such period as
may be allowed under the applicable rule or in the
absence thereof, within thirty (30) days from receipt
of the request, that the aggrieved party may renew
the challenge in court.
Rule 7.3. Venue. - The challenge shall be filed with
the Regional Trial Court (a) where the principal place
of business of any of the parties is located, (b) if any
of the parties are individuals, where those individuals
reside, or (c) in the National Capital Region.
Rule 7.4. Grounds. - An arbitrator may be
challenged on any of the grounds for challenge
provided for in Republic Act No. 9285 and its
implementing rules, Republic Act No. 876 or the
Model Law. The nationality or professional
qualification of an arbitrator is not a ground to
challenge an arbitrator unless the parties have
specified in their arbitration agreement a nationality
and/or professional qualification for appointment as
arbitrator.
Rule 7.5. Contents of the petition. - The petition
a. The name/s of the arbitrator/s challenged and
his/their address;
b. The grounds for the challenge;
c. The facts showing that the ground for the
challenge has been expressly or impliedly rejected by
the challenged arbitrator/s; and
d. The facts showing that the Appointing Authority
failed or refused to act on the challenge.
court shall dismiss the petition motu
proprio unless it is clearly alleged therein that the
Appointing Authority charged with deciding the
challenge, after the resolution of the arbitral tribunal
rejecting the challenge is raised or contested before
such Appointing Authority, failed or refused to act on
the challenge within thirty (30) days from receipt of
the request or within such longer period as may
apply or as may have been agreed upon by the
parties.
The
Rule 7.6. Comment/Opposition. - The challenged

arbitrator or other parties may file a comment or
opposition within fifteen (15) days from service of
the petition.
Rule 7.7. Court action. - After hearing, the court
shall remove the challenged arbitrator if it finds merit

in the petition; otherwise, it shall dismiss the
petition.
a. The party or parties who named and appointed

the challenged arbitrator agree to the challenge and
withdraw the appointment.
compensation shall be filed in the same case and in

the court where the petition to replace the
challenged arbitrator was filed. The court, in
determining the amount of the award to the
challenged arbitrator, shall receive evidence of
expenses to be reimbursed, which may consist of air
tickets, hotel bills and expenses, and inland
transportation. The court shall direct the challenging
party to pay the amount of the award to the court
for the account of the challenged arbitrator, in
default of which the court may issue a writ of
execution to enforce the award.
b. The other arbitrators in the arbitral tribunal agree

to the removal of the challenged arbitrator; and
FEBRUARY 27, 2015
The court shall allow the challenged arbitrator who

subsequently agrees to accept the challenge to
withdraw as arbitrator.
The court shall accept the challenge and remove the
arbitrator in the following cases:
c. The challenged arbitrator fails or refuses to submit

his comment on the petition or the brief of legal
arguments as directed by the court, or in such
comment or legal brief, he fails to object to his
removal following the challenge.
The court shall decide the challenge on the basis of
evidence submitted by the parties.
The court will decide the challenge on the basis of
the evidence submitted by the parties in the
following instances:
a. The other arbitrators in the arbitral tribunal agree
to the removal of the challenged arbitrator; and
b. If the challenged arbitrator fails or refuses to
submit his comment on the petition or the brief of
legal arguments as directed by the court, or in such
comment or brief of legal arguments, he fails to
object to his removal following the challenge.
Rule 7.8. No motion for reconsideration, appeal or
certiorari. - Any order of the court resolving the
petition shall be immediately executory and shall not
be the subject of a motion for reconsideration,
appeal, or certiorari.
of expenses and
reasonable compensation to challenged arbitrator. Rule
7.9. Reimbursement
Unless the bad faith of the challenged arbitrator is

established with reasonable certainty by concealing
or failing to disclose a ground for his disqualification,
the challenged arbitrator shall be entitled to
reimbursement of all reasonable expenses he may
have incurred in attending to the arbitration and to a
reasonable compensation for his work on the
arbitration. Such expenses include, but shall not be
limited to, transportation and hotel expenses, if any.
A reasonable compensation shall be paid to the
challenged arbitrator on the basis of the length of
time he has devoted to the arbitration and taking
into consideration his stature and reputation as an
arbitrator. The request for reimbursement of
expenses and for payment of a reasonable
RULE 8: TERMINATION OF THE MANDATE

OF ARBITRATOR
Rule 8.1. Who may request termination and on
what grounds.- Any of the parties to an arbitration
may request for the termination of the mandate of
an arbitrator where an arbitrator becomes de jure
or de facto unable to perform his function or for
other reasons fails to act without undue delay and
that arbitrator, upon request of any party, fails or
refuses to withdraw from his office.
Rule 8.2. When to request. - If an arbitrator
refuses to withdraw from his office, and
subsequently, the Appointing Authority fails or
refuses to decide on the termination of the
mandate of that arbitrator within such period as
may be allowed under the applicable rule or, in
the absence thereof, within thirty (30) days from
the time the request is brought before him, any
party may file with the court a petition to
terminate the mandate of that arbitrator.
Rule 8.3. Venue. - A petition to terminate the
mandate of an arbitrator may, at that petitioners
option, be filed with the Regional Trial Court (a)
where the principal place of business of any of the
parties is located, (b) where any of the parties
who are individuals resides, or (c) in the National
Capital Region.
Rule 8.4. Contents of the petition. - The petition
a. The name of the arbitrator whose
mandate is sought to be terminated;
b. The ground/s for termination;
c. The fact that one or all of the parties
had requested the arbitrator to withdraw
but he failed or refused to do so;
d. The fact that one or all of the parties
requested the Appointing Authority to act
on the request for the termination of the
mandate of the arbitrator and failure or

inability of the Appointing Authority to act
within thirty (30) days from the request of
a party or parties or within such period as
may have been agreed upon by the parties
or allowed under the applicable rule.
The petitioner shall further allege that one or all of
the parties had requested the arbitrator to
withdraw but he failed or refused to do so.
Take note class that this is a condition sine qua non

that there should be a mediation, one or all of the
parties had requested the arbitrator to withdraw but
he failed or refuse to do so
Rule 8.6. Court action. - After hearing, if the
court finds merit in the petition, it shall terminate
the mandate of the arbitrator who refuses to
withdraw from his office; otherwise, it shall
dismiss the petition. Rule 8.7. No motion for
reconsideration or appeal. - Any order of the court
resolving the petition shall be immediately
executory and shall not be subject of a motion for
reconsideration,
appeal
or
petition
for
certiorari. Rule 8.8. Appointment of substitute
arbitrator. - Where the mandate of an arbitrator is
terminated, or he withdraws from office for any
other reason, or because of his mandate is
revoked by agreement of the parties or is
terminated for any other reason, a substitute
arbitrator shall be appointed according to the rules
that were applicable to the appointment of the
arbitrator being replaced.
When is
instituted?
an
arbitral
tribunal
deemed
A: When the sole arbitrator or the third arbitrator

who has been nominated has accepted the
nomination and written communication of the said
nomination and such acceptance has been received
by the party making the request.
CHAPTER
IV.
PROCEEDINGS
THE
ARBITRATION
Take note class that there can be mediation prior to

arbitration and judicial relief after arbitration
commences.
In the conduct of arbitral proceedings, the parties
are treated equally and each party is given the full
opportunity of presenting his case. This is the
fundamental requirements of due process.
How about the place of arbitration.
Where should arbitration be conducted?
A: In the place so designated by the parties to the

arbitration.
SECTION 30 of RA 9285
SEC. 30. Place of Arbitration. - The parties are
free to agree on the place of arbitration. Failing
such agreement, the place of arbitration shall be
in Metro Manila, unless the arbitral tribunal, having
regard to the circumstances of the case, including
the convenience of the parties shall decide on a
different place of arbitration. The arbitral tribunal
may, unless otherwise agreed by the parties, meet
at any place it considers appropriate for
consultation among its members, for hearing
witnesses, experts, or the parties, or for inspection
of goods, other property or documents.
Take note that the arbitral tribunal shall consider the
convenience of the parties. That a place chosen by
the arbitral tribunal must have relevance to the
contract and should not impose any undue hardship
upon one or the other party to the contract specially
in terms of attending the hearing or presenting of
witnesses.
What is the language that should be used in
the conduct of arbitral proceedings?
A: SECTION 31 of RA 9285
SEC. 31. Language of the Arbitration. - The
parties are free to agree on the language or
languages to be used in the arbitral proceedings.
Failing such agreement, the language to be used
shall be English in international arbitration, and
English or Filipino for domestic arbitration, unless
the arbitral tribunal shall determine a different or
another language or languages to be used in the
proceedings. This agreement or determination,
unless otherwise specified therein, shall apply to
any written statement by a party, any hearing and
any award, decision or other communication by
the arbitral tribunal. The arbitral tribunal may
order that any documentary evidence shall be
accompanied by a translation into the language or
languages agreed upon by the parties or
determined in accordance with paragraph 1 of this
section.
In default, it is the arbitral tribunal that shall
determine the language to be used.
What law will govern the procedure in the
conduct of arbitration proceeding?

A: It is the choice of the parties. If their choice is the
Philippines as the place of arbitration, it simply
means that the arbitration itself is subject to
Philippine law as the lex loci arbitri . In other words,
the parties are free to adopt such rules governing
the procedure of the arbitration subject to the due
process requirement under the law.
Assume that there is no agreement between
the parties. What law of procedure will
govern?
A: The arbitral tribunal, in default of an agreement
between the parties, shall determine the law of
procedure.
Take note that under the law, at the arbitral tribunal
is given supplementary discretion on how to conduct
arbitration proceedings including the power to
determine the admissibility, relevance, materiality
and weight of any evidence. This supplementary
discretion allows the tribunal to tailor the conduct of
the proceedings to the specific features of the case
without retrains of the additional local law, including
any domestic rules on evidence and it provides
means for resolving any procedure and questions
that are not promulgated in the arbitration
agreement.
In the absence of an agreement between the
parties, it is the arbitral tribunal that shall determine
the law on procedure. We said that due process
should be observed. In the leading case of ANG
TIBAY vs CIR, as applied to arbitration proceedings
it means that:
-a party is given the chance to be heard and submit
his evidence
- consider the evidence presented
- the tribunal must have something to support its
decision
- the evidence to support the decision must be
substantial
- the decision rendered on the evidence presented or
at least contained in the record of the proceedings
and
- the decision has been rendered in such a manner
that the parties can know the issues involved and
the reasons for the decisions rendered.
How about hearings before the arbitrators,
are hearings required to be conducted?
A: The general rule is that there must be hearings.
Hearings are to be conducted. That is the rule in
ICA.
You said that there can be no hearings. So
what is the basis? Can the proceedings in ICA
proceed without hearings? What is the basis
of the arbitral tribunal in arriving a decision if
they have no hearings?

A: YES. There must be submission of papers and
documents before the arbitral tribunal.
Section 18. Proceeding in lieu of hearing. The parties to a submission or contract to arbitrate
may, by written agreement, submit their dispute
to arbitration by other than oral hearing. The
parties may submit an agreed statement of facts.
They may also submit their respective contentions
to the duly appointed arbitrators in writing; this
shall include a statement of facts, together with all
documentary proof. Parties may also submit a
written argument. Each party shall provide all
other parties to the dispute with a copy of all
statements and documents submitted to the
arbitrators. Each party shall have an opportunity
to reply in writing to any other party's statements
and proofs; but if such party fails to do so within
seven days after receipt of such statements and
proofs, he shall be deemed to have waived his
right to reply. Upon the delivery to the arbitrators
of all statements and documents, together with
any reply statements, the arbitrators shall declare
the proceedings in lieu of hearing closed.
The rule is that hearing should be conducted unless

the parties agreed otherwise. But they have to take
note of Section 18 of the Model Law wherein they
have to submit their respective memoranda or
position papers before the arbitrators.
What is the rule when it is domestic
arbitration? Are hearings required to be
conducted?
(RA 9285) Section 14. Subpoena and subpoena

duces tecum. - Arbitrators shall have the power to
require any person to attend a hearing as a
witness. They shall have the power to subpoena
witnesses and documents when the relevancy of
the testimony and the materiality thereof has been
demonstrated to the arbitrators. Arbitrators may
also require the retirement of any witness during
the testimony of any other witness. 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; but an
award by the majority of them is valid unless the
concurrence of all of them is expressly required in
the submission or contract to arbitrate. The
arbitrator or arbitrators shall have the power at
any time, before rendering the award, without
prejudice to the rights of any party to petition the
court to take measures to safeguard and/or

dispute in arbitration.
There is conduct of hearings before the arbitrator.
Under SECTION 14 of the Arbitration Law,
arbitrators are required to attend all the hearings
and hear all the allegations and proofs presented by
the parties.
Take note of the rule of arbitrators that an arbitrator
is required to be impartial. When you say he should
be impartial. it does not mean that they are not
allowed to take part or to take an active role in the
proceedings before them.
Again, an arbitrator is akin to a judge who should be
competent and impartial. An arbitrator is the sole
judge of the relevancy and materiality of all evidence
offered and he is not bound to observe the rules on
evidence under the rules of court.
Is the arbitral tribunal bound to conform with
the rules of court?
A: Under the arbitration law, NO. That is found
under Section 15 of the Arbitration Law.
Can experts be appointed in both domestic
and ICA?
A: If it is ICA, YES. Experts can be appointed by the
arbitral tribunal. this is related to the fundamental
right of a party to be able to present evidence by
expert appointed by the tribunal.
If it is DA, they can still be appointed by the arbitral
tribunal because there is no prohibition under the
law. Again, this is rested to the fundamental right of
a party to be able t present evidence by expert
appointed by the arbitral tribunal.
We said that you apply for provisional
remedies before the court under Rule 5. How
about before the arbitral tribunal?
A: Provisional remedies can be availed of even
before the arbitral tribunal.
Does that apply to both DA and ICA?
Section 17. Reopening of hearing. - The hearing
may be reopened by the arbitrators on their own
motion or upon the request of any party, upon
good cause, shown at any time before the award
is rendered. When hearings are thus reopened the
effective date for the closing of the hearings shall
be the date of the closing of the reopened
hearing.
YES. Section 17 of the Model Law says that the
arbitral tribunal, at the request of any party, can
order a party to take interim measure of protection

in respect with the subject matter of the dispute.
It is available in both ICA and DA as well as under
RA 9285.
When can you apply before the arbitral
tribunal?
A: AFTER THE CONSTITUTION OF THE ARBITRAL
TRIBUNAL
and
DURING
ARBITRATION
PROCEEDINGS and AT ANY TIME BEFORE THE
RENDITION OF THE AWARD.
How about before the courts, when can you
apply provisional remedies?
A: Prior to the constitution of the arbitral tribunal or
even during the arbitration proceedings or after the
constitution of the arbitral tribunal to the extent that
the arbitral tribunal has no power to act or is unable
to act effectively.
Assume that a party disregards or disobeys
the provisional relief issued by the arbitral
tribunal. What is your remedy?
A: Apply before the court for assistance for the
implementation.
SECTION 28 B and 29 of RA 9285
28. Grant
Protection. SEC.
of
Interim
Measure
of
(b) The following rules on interim or

provisional relief shall be observed:
(1) Any party may request that
provision relief be granted against
the adverse party:
(2) Such relief may be granted:
(i) to prevent irreparable
loss or injury:
(ii) to provide security for
the performance of any
obligation;
(iii) to produce or preserve
any evidence; or
(iv) to compel any other
appropriate act or omission.
(3) The order granting provisional
relief may be conditioned upon the
provision of security or any act or
omission specified in the order.
(4) Interim or provisional relief is
requested by written application
transmitted by reasonable means to
the Court or arbitral tribunal as the
case may be and the party against
whom the relief is sought,
describing in appropriate detail the

precise relief, the party against
whom the relief is requested, the
grounds for the relief, and evidence
supporting the request.
(5) The order shall be binding upon
the parties.
(6) Either party may apply with the
Court
for
assistance
in
Implementing or enforcing an
interim measure ordered by an
arbitral tribunal.
(7) A party who does not comply
with the order shall be liable for all
damages
resulting
from
noncompliance,
including
all
expenses,
and
reasonable
attorney's fees, paid in obtaining
the order's judicial enforcement.
SEC. 29. Further Authority for Arbitrator to
Grant Interim Measure of Protection. - Unless
otherwise agreed by the parties, the arbitral
tribunal may, at the request of a party, order any
party to take such interim measures of protection
as the arbitral tribunal may consider necessary in
respect of the subject matter of the dispute
following the rules in Section 28, paragraph 2.
Such interim measures may include but shall not
be limited to preliminary injuction directed against
a party, appointment of receivers or detention,
preservation, inspection of property that is the
subject of the dispute in arbitration. Either party
may apply with the Court for assistance in
implementing or enforcing an interim measures
ordered by an arbitral tribunal.
Under Rule 5.16, the court shall assist in the

enforcement of an interim measure of protection
issued by the arbitral tribunal which it is unable to
effective enforce. A party who does not comply with
the provisional order shall be liable for all damages
resulting form the non-compliance including all the
expenses and reasonable attorney's fees paid in
obtaining first judicial enforcement.
During conduct of arbitration proceedings, can
a party be declared in default if the party fails
to appear?
A: If it is DA, the hearing may proceed in the
absence of any party who after due notice fails to be
present at such hearing or fails to obtain an
adjournment thereof.
In both DA and ICA, there is NO declaration of
default of a party who fails to be present during the
conduct of the arbitration proceedings. Unlike in
ordinary civil actions. Under CivPro, when is a
party declared in default?
- If a defendant party fails to file his answer,
upon motion of the other party with due notice to

the defending party, he can be declared in default.
So, if a party cannot be declared in default in
arbitration proceedings, obviously there can be no
default awards that can be made or entered into by
arbitral tribunal.
Take note that due notice to the other party is a
condition sine qua non before the arbitration
proceedings may be continued in the absence of the
party.
If it is ICA, the rule is that if the claimant fails to
communicate his statement of claim, the effect of
that is that the arbitral tribunal shall terminate
proceedings. If the respondent fails to communicate
his statement of defense, the proceedings shall
continue without treating such failure as admission
of the claimants obligation. And any party who fails
to appear at a hearing or to produce documentary
evidence, then the arbitral tribunal may continue
proceedings and make an award evidence? before it.
We said that in arbitration proceedings, there can be
judicial relief before the arbitration proceedings
commences or even after arbitration proceedings
commences.
B.
Judicial
Relief
after
Arbitration
Commences
Rule 3.12. Who may file petition. - Any party to
arbitration may petition the appropriate court for
judicial relief from the ruling of the arbitral tribunal
on a preliminary question upholding or declining
its jurisdiction. Should the ruling of the arbitral
tribunal declining its jurisdiction be reversed by
the court, the parties shall be free to replace the
arbitrators or any one of them in accordance with
the rules that were applicable for the appointment
of arbitrator sought to be replaced.
Rule 3.13. When petition may be filed. - The
petition may be filed within thirty (30) days after
having received notice of that ruling by the arbitral
tribunal.
RULE 3.15 TAKE NOTE OF THESE GROUNDS
Rule 3.15. Grounds. - The petition may be
granted when the court finds that the arbitration
agreement is invalid, inexistent or unenforceable
as a result of which the arbitral tribunal has no
jurisdiction to resolve the dispute.
Rule 3.18. Court action. - (A) Period for resolving
the petition.- The court shall render judgment on
the basis of the pleadings filed and the evidence, if
any, submitted by the parties, within thirty (30)
days from the time the petition is submitted for
resolution.

(B) No injunction of arbitration proceedings. - The
court shall not enjoin the arbitration proceedings
during the pendency of the petition.
Judicial recourse to the court shall not prevent the
arbitral tribunal from continuing the proceedings
and rendering its award.
(C) When dismissal of petition is appropriate. The court shall dismiss the petition if it fails to
comply with Rule 3.16 above; or if upon
consideration of the grounds alleged and the legal
briefs submitted by the parties, the petition does
not appear to be prima facie meritorious.
Rule 3.19. Relief against court action. - The
aggrieved party may file a motion for
reconsideration of the order of the court. The
decision of the court shall, however, not be
subject to appeal. The ruling of the court affirming
the arbitral tribunals jurisdiction shall not be
subject to a petition for certiorari. The ruling of
the court that the arbitral tribunal has no
jurisdiction may be the subject of a petition for
certiorari.
Rule 3.20. Where no petition is allowed. - Where
the arbitral tribunal defers its ruling on preliminary
question regarding its jurisdiction until its final
award, the aggrieved party cannot seek judicial
relief to question the deferral and must await the
final arbitral award before seeking appropriate
judicial recourse.
A ruling by the arbitral tribunal deferring resolution
on the issue of its jurisdiction until final award,
shall not be subject to a motion for
reconsideration, appeal or a petition for certiorari.
Rule 3.21. Rendition of arbitral award before
court decision on petition from arbitral tribunals

preliminary ruling on jurisdiction. - If the arbitral
tribunal renders a final arbitral award and the
Court has not rendered a decision on the petition
from the arbitral tribunals preliminary ruling
affirming its jurisdiction, that petition shall become
ipso facto moot and academic and shall be
dismissed by the Regional Trial Court. The
dismissal shall be without prejudice to the right of
the aggrieved party to raise the same issue in a
timely petition to vacate or set aside the award.
Rendition of arbitral award before court decision. If

the arbitral tribunal renders a final arbitral award,
and the court has not rendered a decision on the
petition from the arbitral tribunal's preliminary ruling
within its jurisdiction, that petition shall become ipso
facto moot and academic and shall be dismissed by
the RTC. Take note that the dismissal shall be
WITHOUT prejudice to the right of the aggrieved
party to raise the same issue and file a petition to
vacate the set aside the said complaint. The arbitral
tribunal only makes a preliminary determination that
it has jurisdiction. Please take note of RULE 3.
23. Confidential
of
Arbitration
Proceedings. - The arbitration proceedings,
including the records, evidence and the arbitral
award, shall be considered confidential and shall
not be published except (1) with the consent of
the parties, or (2) for the limited purpose of
disclosing to the court of relevant documents in
cases where resort to the court is allowed herein.
Provided, however, that the court in which the
action or the appeal is pending may issue a
protective order to prevent or prohibit disclosure
of documents or information containing secret
processes, developments, research and other
information where it is shown that the applicant
shall be materially prejudiced by an authorized
disclosure thereof.
SEC.
Take note class that arbitration proceedings should

be confidential. You can file before the court for the
issuance of a protective order.
RULE 10
RULE 10: CONFIDENTIALITY/PROTECTIVE
ORDERS
Rule 10.1. Who may request confidentiality. - A
party, counsel or witness who disclosed or who
was compelled to disclose information relative to
the subject of ADR under circumstances that
would create a reasonable expectation, on behalf
of the source, that the information shall be kept
confidential has the right to prevent such
information from being further disclosed without
the express written consent of the source or the
party who made the disclosure.
Rule 10.4. Grounds. - A protective order may be
granted only if it is shown that the applicant would
be materially prejudiced by an unauthorized
disclosure of the information obtained, or to be
obtained, during an ADR proceeding.
Rule 10.5. Contents of the motion or petition. The petition or motion must state the following:
a. That the information sought to be
protected was obtained, or would be
obtained, during an ADR proceeding;
b. The applicant would be materially
prejudiced by the disclosure of that
information;
c. The person or persons who are being
asked
to
divulge
the
confidential
information participated in an ADR
proceedings; and
d. The time, date and place when the ADR
proceedings took place.

lawyer ka nila?
Rule 10.9. Relief against court action. - The order
enjoining a person or persons from divulging
confidential information shall be immediately
executory and may not be enjoined while the
order is being questioned with the appellate
courts.
If the court declines to enjoin a person or persons
from divulging confidential information, the
petitioner may file a motion for reconsideration or
appeal.
Rule 10.10. Consequence of disobedience. - Any
person who disobeys the order of the court to
cease from divulging confidential information shall
be imposed the proper sanction by the court.
Under Rule 10.10, any person who disclaims the

order of the court shall seize from divulging
confidential information shall be imposed with a
proper sanction by the court.
A: A board resolution to offer, negotiate, accept and

decide on compromise agreements.
How long should the mediation proceedings
last?
A: Take note that this is done during the pre-trial
stage. Mediators shall a period of not exceeding 30
days to complete the mediation process. Such period
shall be computed from the date first appeared for
initial conference. An extended period of another 30
days may be granted by the court upon motion filed
by the mediator with the conformity with the parties.
During the period while the case is undergoing
mediation, the period during which the case is
undergoing mediation shall be excluded from the
regular mandatory periods for trials and rendition of
judgment in ordinary cases. Suspended ang period
for the judge to render decision.
Who selects the mediator?
MEDIATION
A: The parties shall select the mutually acceptable

mediator form the list of the accredited mediators.
How do you define mediation?
What if hindi kayo magkasundo?
When is there conducted?
A: If the parties cannot agree, the PMC Unit staff, in

the presence of the parties and the mediator will
choice by potluck the one who wil mediate.
A: Before the trial. So, during the pre-trial stage of

the proceeding. This is mandatory.
What is the procedure?
A: After the last pleading has been filed, the judge
shall issue an order requiring the parties to appear
before the Philippine Mediation Center.
How about the individual party? Are they
allowed not to appear before mediation?
Instead, only their lawyers will appear?
A: As a general rule, they should be personally
present during the conduct of the mediation
proceedings. Meaning to say, hindi pwede kung si
lawyer lang ang mag appear. That is prohibited.
The lawyer appears with the client. What if si lawyer
lang? He can represent the client.
What is required to be executed?
A: A Special Power of Attorney. the power to enter
into a compromise, SPA is required. the client may
not be personally present if the lawyer is armed with
a special power of attorney. That is allowed.
How about corporations, partnerships or other
juridical entities? Ano ang requirement kung
A mediator shall be considered as an officer of the

court, one performing his duties as such or in
connection therewith. So ano talaga yung role ng
parties? Kelangan bang magkaharap talaga any
parties.
What is the procedure there?
A: That is allowed. As long as it is with the consent
of both parties. The mediator may hold separate
caucuses with each party to determine their
respective field of interest in the dispute. The
mediator shall not record in any manner the
proceedings in the joint parties for any purposes. No
transcript of records of the mediation proceedings
shall be taken. If personal notes are taken by the
mediator, this are only taken for guidance. The
notes are destroyed. They shall be inadmissible as
evidence in any other proceedings.
Assume that natapos na any mediation tapos
hindi nagsettle any mga parties.
So JDR
muna. Mediation fails, JDR will be conducted
by the trial judge. So what if the parties
settled during the mediation?
Anong
mangyayari?

A: In full settlement of the dispute is reached, the
parties assisted by their respective counsels shall
draft the compromise agreement which shall be
submitted by the court for judgment upon the
compromise. It shall be subject to court approval.
What if meron naming compliance soon sa
agreement?
A: You have to file satisfaction of claims. That is
important. You have to file in court satisfaction of
claims. Where compliance is made, the parties must
submit satisfaction of claims or mutual withdrawal of
claims and thereafter, the court shall enter and order
dismissing the case.
What are those cases that can be subject to
court annexed mediation (CAM)?
A: The mediation has already reached the court. This
is mandatory coverage of CAM and JDR.
1. All civil case and civil liability of criminal cases
covered by the rule on summary procedure including
civil liability for violation of BP 22 except those which
by law cannot be compromised.
2. Special Proceedings for the Settlement of estate
3. All civil and criminal cases filed with a certification
to file action issued by the Punong Banraggay o
Pangkat ng Tagapagkasundo under the Revised
Katarungang Pangbaranggay Law.
level courts in the absence of the RTC judge.

Why? Because the general rule is that habeas corpus
cases are cognizable by the RTC and not by the first
level courts. Kaya wabi ditto, only in the absence of
the RTC judge that are brought up on appeal a
special jurisdiction granted to first level courts.
The following cases shall not be referred to
CAM or JDR:
1. Civil cases which by law cannot be compromised
2. Other criminal cases not covered under here(?)
3. Habeas corpus petition. It is not mediatable.
4. All All cases under RA 9262 or the Violence
against Women and Children Law
5. Cases with pending application or restraining
orders and preliminary injunction
However, in cases covered under 1, 4 and 5, if the
parties informed the court that they agree to
undergo mediation, like on the custody of minor
children, separation of property, support pendente
lite, then the court shall refer them to mediation.
How about mediation fee? How much?
A: Five hundred.
4. The civi aspect of quasi offenses under the RPC
How about if the accused id detained?
5. The civil aspect of less grave penalties punishable

by correctional penalties not exceeding 6 years
imprisonment where the offended party is a private
person
A: He can be exempt form paying mediation fee. The

accused appellant is exempt from paying mediation
fee.
6. The civil aspect of estafa, theft and libel.
How many
conducted?
How about qualified theft?
A: No specific time. It depends upon the parties.
A: NO.
How many people are allowed during the

mediation session?
7. All civil cases and public proceeding testate or

estate brought before the original and exclusive
jurisdiction granted to the first level courts
8. All cases of forcible entry and unlawful detainer
brought upon appeal from the exclusive and original
jurisdiction granted to the first level courts.
9. All civil cases involving title to or possession of
real property or any interest therein brought on
appeal from the exclusive and original jurisdiction of
the first level courts
10. All habeas corpus and cases decided by the first
hours
should
mediation
be
A: No specific number.
What is the official language to be used?
A: NONE. The disputing parties and the mediator can
use their native language provided that everyone
can understand each other.
Assume that nag settle tayo during mediation.
May compromise agreement. Inapprove ng
court. So there is already a judgment based on
the compromise. Now the other party to the
said agreement ayaw niya magcomply. What

is the remedy?
A: Apply for a writ of execution so that the sheriff of
the court now will compel the husband to give
support pendente lite.
We are talking about court annexed meditation in
the trial court level. It can be before the usually
RTCs.
How about appellate court mediation? Is there
such a thing?
A: YES. The following cases are subject to appellate
court mediation.
1. Civil cases brought on ordinary appeal or petition
for review
2. Appeals from final orders, awards, judgments,
resolutions of the court of Tax Appeal or CTA and
quasi judicial agencies in the exercise of their quasi
judicial function through petition for review or
certiorari that questions a decision for having been
rendered in grave abuse of discretion amounting to
lack of jurisdiction.
(Agencies: Land Registration Authority, Office of the
President, Civil Aeronautics Board, Bureau of
Patents, National Electrification Administration,
Energy Regulatory Board, DAR, GSIS, CIAC and
Voluntary Arbitrators)
3. Special civil actions or certiorari except those
involving pure questions of law
Take note that pwede kang mag mediation even

before the appellate court.
What is the basis of the court annexed
mediation?
A: SC en banc resolution in AM 01-10-5 dated
October 16, 2001
Are mediation proceedings admissible as
evidence? Can you subpoena the mediator to
appear before the court and testify in that
same case?
A: All matters discussed or communicated by the
parties including request for mediation during
mediation conference and presented in the
mediation centre are strictly confidential and are
inadmissible in evidence for any purpose in any other
proceedings.
However or information that is otherwise
admissible does not become inadmissible
solely by reason of its use in mediation.
This is to prevent the abuse of this privilege by the
parties or their counsels. No active role on the part
of the mediator. Facilitator lang.
MARCH 13, 2015

How does the Arbitral Tribunal render a
decision?
4. Habeas corpus cases involving custody of minors

with the consent of the parties provided that the
minor is not detained for the commission of a
criminal offense
Assume that the arbitral tribunal is composed of

more than 3 arbitrators, how does it render a
decision?
5. Cases cognizable by the Katarungang

Pambaranggay under RA 7160 or offenses
punishable by imprisonment not exceeding 1 year or
a fine not exceeding 5,000 or both
If it is International Commercial Arbitration the basis

there is Art. 29 of the Model law and model law
provides for a majority vote if there is more than 1
arbitrator.
Cases not mediated under the appellate court:
How about if it is a decision in domestic

arbitration?
1. Civil cases which by law cannot be compromised

2. Criminal cases except those under number 4 (?)
or habeas corpus of minors, habeas corpus petitions
involving custody of minors
3. Habeas corpus petitions involving custody of
minors when the subject is the need for some
condition in a criminal offense
4. Cases with pending application for restraining
order or preliminary injection unless both parties
request for mediation
It depends! Again, if there is more than 1 arbitrator

then it is decided by a majority vote unless it is
decided only by a sole arbitrator.
Take note class that arbitration law is silent about
that matter thus we can just assume that by a
majority vote of all the arbitrators if more than 1
arbitrator or it can be rendered by a sole arbitrator.
What about separate or partial final awards is
that possible?

M: both the Model law and arbitration law does not
provide whether arbitral tribunals may render
separate or partial awards. However, there is no
reason for not recognizing that arbitral tribunals
have the authority to separate or render separate
awards when such is appropriate. The basis for
which is Rule 36 S5 of the rules of court, it is actually
applied by analogy. Rule 36 S5 provides:
Section 5. Separate judgments. When more
than one claim for relief is presented in an action,
the court, at any stage, upon a determination of the
issues material to a particular claim and all
counterclaims arising out of the transaction or
occurrence which is the subject matter of the claim,
may render a separate judgment disposing of such
claim. The judgment shall terminate the action with
respect to the claim so disposed of and the action
shall proceed as to the remaining claims. In case a
separate judgment is rendered the court by order
may stay its enforcement until the rendition of a
subsequent judgment or judgments and may
prescribe such conditions as may be necessary to
secure the benefit thereof to the party in whose
favor the judgment is rendered. (5a)
Maam Guerzo: Okay, so you mean to say that
separate or partial awards may be rendered by
arbitral tribunals, applying by analogy R36S5 of the
Rules of Court. Apart from that, Section 3(f) of R.A.
9285 recognizes that an award may mean any partial
or final decision by an arbitrator. Take note class,
apart from using as basis R36S5 of the Rules of
Court in saying that separate or partial awards can
be rendered by the arbitral tribunal or by the
arbitrator, Section 3(f) of R.A. 9285 may also be
made basis.
In the case of Tambaoan vs. CA, 365 S 359,
the SC held that:
separate awards are analogous to judgments that
are partial but final in nature because they put an
end to a particular matter or to some defined and
separate branch of a controversy. However class
there is a caveat, although arbitral tribunals can
render separate awards, this prerogative should be
used sparely in order to achieve the objective of
arbitration in promoting a speedy and expeditious
resolution of the entire controversy and not just a
part of it.
Next regarding the scope of relief that may be
given?
S20 of the arbitration law provides, the arbitral
tribunal or arbitrator may grant any remedy or relief
that they may deem just and equitable and within
the scope of the agreement of the parties, which
shall include but is not limited to specific
performance of the contract. In other words, as long
as the award derives its essence from the contract
and is based on the possibly plausible interpretation

of the contract, It is allowed.
Take note class that any limitation on the remedial
power of the arbitrator must either be explicitly
contained or clearly incorporated by reference in the
arbitration clause.
How about punitive damages can it be
awarded by arbitrators?
Yes as long as it has been agreed by the parties. In
other words there is no limitation for the arbitrator to
award monetary damages, since it is empowered to
award monetary damages in addition to specific
performance.
In the case of Asset Privatization Trust v. CA,
300 S 579:
Here the SC ruled that arbitrators cannot resolve
issues beyond the scope of the submission
agreement, the parties to such an agreement are
bound by the arbitrators award, only to the extent
and in the manner prescribed by the contract and
only if the award is rendered in conformity thereto.
Hence arbitrators can decide only those matters that
are submitted to them. This is based on S20 of the
Arbitration law and this applies by analogy to
international commercial arbitration.
So the basic premise there class is that the scope of
the arbitrators authority should be interpreted
broadly so that the arbitration may serve its purpose.
How about the time for rendering an award in
domestic arbitration? Are the arbitrators
bound to render an award within a specified
period?
J: In domestic arbitration, the arbitrators should
render an award within 30 days after the closing of
the hearings.
Maam Guerzo: If it is DA, it should be 30d after the
close of the hearings or if such hearings shall not be
made, it should be 30d after the arbitrator have
declared such hearings closed. What is your basis for
saying that?
J: S19 of RA ****.
Maam Guerzo: so it should be within 30d unless the
parties stipulate another time. [NB: If it is DA, it
must render its award in the period of time
prescribed by the parties and in the absence of
agreement, within 30 days after closing of hearings.]
How about
Arbitration?
if
it
is
International
Commercial
J: When it comes to ICA, there is no timeframe

provided by law, however if there is agreement

between the parties, in such case the arbitral
tribunal the award must be rendered within such
period agreed by the parties.
MG: So it is again based on the agreement of the
parties if it is International Commercial Arbitration.
Now, regarding the form of the award, the
statement of facts and law upon which the award is
based, the basic premise is that under the Model
Law which also applies to Domestic Arbitration, the
parties may agree that the arbitral tribunal need not
state the reason for its award, why is that so?
Diba under the constitution the decision must state
the facts and law upon which the decision is based.
That is basic. What if it is in arbitration?
R: It is valid maam if it is expressly agreed upon by
the parties.
MG: So the GR is that the decision of the arbitrator
should state the facts and law upon which it is based
unless the parties agreed otherwise. How about if it
is Domestic Arbitration?
Diba sabi natin the rule is that they have to apply

substantive law, how about if it is ICA?
K: For ICA, S28 of the Model Law provides that the
arbitrators may make a decision on the substance of
the issue based on the agreed law of the parties.
MG: So if it is ICA, it is based on the agreed law of
the parties, hence?
K: the provision states that the substance of the
dispute in ICA shall be decided in accordance with
such rules of law as are chosen by the parties as
applicable to the substance of the dispute. Secondly,
the agreed law of the parties refers to the
substantive law of the state so this one does not
refer to its conflict rules.
MG: how about if it is Domestic Arbitration, what law
will apply? Is it still based on the agreement of the
parties?
K: If it is DA, they may make decision as they deem
equitable.
Now with regard to the form of award if it is

Domestic Arbitration:
MG: So you mean the arbitrators may render

decision on the basis of equity. That is allowed! So
what is the GR if it is domestic arbitration?
The award must be in writing, signed

acknowledged by majority of the arbitrators.
and
K: the arbitrators may render a decision based on

equity.
International
MG: Even if they do not apply substantive law that is

allowed?
1. in writing, signed by the arbitrator/s

2. it must state the reasons upon which it is
based unless the parties agreed that no
reasons are to be given or the award is on
the agreed terms or amicable settlement
3. it shall state its place and date of arbitration
when the award is deemed made
K: The parties may decide on the rule that may

govern.
Form of award if it
Commercial Arbitration:
is
Remember class if it is ICA, it shall state the place

and date of arbitration and if it is DA kailangan iacknowledge, if ICA, there is no need for
acknowledgement.
How about under RA 9285, kailangan pa ba
ang acknowledgment? NO need for it to be
acknowledged!
The leading case there is Grogun v. Napocor 411 S
357. Sabi dito before RA 9285, an award that is not
verified by the sole arbitrator or by majority of the
arbitrators as required under S20 of the Arbitration
law is invalid, however, under RA 9285, no more
need for it to be acknowledged before the notary
public!
Now regarding the substantive law that is
applicable to arbitration, what is the rule in
rendering decisions by arbitrators?
MG: So they may decide on what rule. How about

the agreement of the parties, what if in Domestic
Arbitration the parties agree as to what law will
apply is that possible? because the rule is that the
agreement of the parties is of paramount interest in
arbitration cases right?
The GR is that in both DA and ICA, it depends. If the
parties agree that a specific law will govern apply
that, otherwise, apply equity if it is DA, if it is ICA
you apply the agreed law of the parties with regard
to the substantive law and do not use the conflict
rules.
Take note class that if it is ICA, the choice of the
applicable law will be respected law unless the body
of law chosen is:
1. Contrary to public policy of the Philippines
2. Contrary to the universally accepted principle
of morality
3. Penal character
4. Purely fiscal or administrative in character
5. Would work undeniable injustice to the
citizens or residents of the Philippines

6. Would work against the vital interest or
national security of the Philippines.
B: If it is ICA maam the basis for correction is under

Rule 33 of the Model law which provides:
Assume that during the hearing before the

arbitral tribunal the parties agreed to end the
case and enter into a compromise agreement,
is that allowed? Yes!
Article 33. Correction and interpretation of award;

additional award
MG: If that is DA what is the rule?

C: If it is DA, so the arbitrators may render an award
based on the agreement of the parties.
MG: So it will be entered as an award and that
award is called a settlement award. How about if it is
ICA?
C: In ICA, the arbitrators may also render an award
based on the agreement of the parties.
MG: Yes, so take note class that such an award has
the same status and effect as any other award on
the merits of the case. This is based on Article 30 of
the Model Law. So take note, during the conduct of
arbitral proceedings, if the parties agree to enter into
a compromise they may do so and such compromise
may be entered as a settlement award and treated
as an award on the merits of the case.
Now assume that the arbitral tribunal renders
a decision, let us assume that it is Domestic
Arbitration, one of the parties wants to correct
the award before the arbitral tribunal is that
allowed?
(1) Within thirty days of receipt of the award, unless

another period of time has been agreed upon by the
parties:
(a) a party, with notice to the other party, may
request the arbitral tribunal to correct in the award

any errors in computation, any clerical or
typographical errors or any errors of similar nature;
(b) if so agreed by the parties, a party, with notice
to the other party, may request the arbitral tribunal

to give an interpretation of a specific point or part of
the award.
If the arbitral tribunal considers the request to be

justified, it shall make the correction or give the
interpretation within thirty days of receipt of the
request. The interpretation shall form part of the
award.
(2) The arbitral tribunal may correct any error of the
type referred to in paragraph (1)(a) of this article on
its own initiative within thirty days of the date of the
award.
11.1. Who may request confirmation,

correction or vacation. - Any party to a domestic
(3) Unless otherwise agreed by the parties, a party,

with notice to the other party, may request, within
thirty days of receipt of the award, the arbitral
tribunal to make an additional award as to claims
presented in the arbitral proceedings but omitted
from the award. If the arbitral tribunal considers the
request to be justifi ed, it shall make the additional
award within sixty days.
11.2. When to request

correction/modification or vacation. -
confirmation,
(4) The arbitral tribunal may extend, if necessary,

the period of time within which it shall make a
correction, interpretation or an additional award
under paragraph (1) or (3) of this article.
(B) Correction/Modification. - Not later than thirty

(30) days from receipt of the arbitral award, a party
may petition the court to correct/modify that award.
(5) The provisions of article 31 shall apply to a

correction or interpretation of the award or to an
additional award.
B: Yes maam, correction may be allowed. It is

provided for under Rule 11 of the Special Rules on
ADR.
Rule
arbitration may petition the court to confirm, correct

or vacate a domestic arbitral award.
Rule
How about before the arbitral tribunal or the

body itself, is the correction of an award
rendered in DA allowed by law?
B: I dont think so maam. Because the parties in an
arbitration if it is a domestic arbitration are bound by
their agreement hence the error cannot be corrected
on the level of the arbitral tribunal.
MG: So if it is a DA, before the arbitral tribunal, no
correction, modification or interpretation of an award
is allowed. How about if it is ICA?
MG: So if it is ICA pwede pa magpa correct ng award

before the arbitral tribunal, if it is DA it is not
allowed. The main reason there class is that the
arbitral tribunal loses its authority or jurisdiction the
moment it renders its decision. So thats the reason
why if you want to question a certain award, your
recourse shall not be before the arbitral tribunal
itself but with the courts already.

You cannot correct the award before the arbitral
tribunal if it is DA but if it is ICA pwede siya as long
as it refers to errors in computation, clerical or
typographical errors or any error of similar nature
but with prior notice to the other party.
In sum [NB: Copied from 2014 TSN)
A: Distinguish as corrections are only allowed in ICA,

but not in domestic:
Under Article 33 of the Model Law, correction is
allowed only on the grounds of errors in computation
and any other clerical or typographical errors of
similar nature; but with prior notice to the other
party.
Under 9285, correction before the arbitral body is
not allowed as the Tribunal loses its jurisdiction the
moment it renders a decision.
How about finality of an award, when is it
considered final if it is DA?
Under S26 by deduction, upon lapse of 30days after
the award is delivered to the parties or their lawyers
if they are represented by counsel. If it is ICA, it is
after 3 months from receipt of the award.
Take note class that awards rendered in arbitration
are considered confidential because arbitral
proceedings are held in private and all pleadings are
treated confidential so that the awards are not
published. So the rule there regarding the
confidentiality rule as to arbitration proceedings
includes all the records, the evidence and the arbitral
award. It shall be considered as confidential and will
not be published unless the parties to the said
proceeding consents or for the limited purpose of
disclosing to the court of the correction with an
action or appeal pending before the said court, so
that is the rule on confidentiality.
Now we go to recourse against awards.
Note class that arbitral awards are subject to judicial
review that is the general premise. But corollary to
that rule is the rule on judicial restraint under Rule 1
of the Special ADR Law. The arbitration agreement
may provide that the arbitrators award shall be final,
non-appealable and executory. So corollary to this
rule is that an agreement to refer a dispute to
arbitration shall mean that the arbitral award shall be
final and binding, hence, a party is precluded from
questioning the merits of the arbitral award through
filing an appeal or certiorari.
What is the basis for saying that if the parties
agree that the arbitral award is final, non-
appealable and executory the same is allowed

and valid under the law?
R: Article 2044 of the Civil Code which provides that
any stipulation that the arbitrators award or decision
shall be final is valid without prejudice to the
provisions of Article 2038, 2039 and 2040.
MG: The parties therefore may agree that the award
is final, binding and executory but it is subject to
limitation that the decisions of the arbitrator are
subject to judicial review and may be annulled or
rescinded if the conditions under Articles 2038, 2039
and 2040 and Sections 24 and 25 of the Arbitration
law apply.
Sec. 24. Grounds for vacating award. - In any one of
the following cases, the court
must make an order vacating the award upon the
petition of any party to the controversy when such
party proves affirmatively that in the arbitration
proceedings:
(a)
The award was procured by corruption,
fraud, or other undue means; or
(b)
That there was evident partiality or
corruption in the arbitrators or any of them; or
(c)
That the arbitrators were guilty of misconduct
in refusing to postpone the hearing upon sufficient
pertinent and material to the controversy; that one
or more of the arbitrators was disqualified to act as
such under section nine hereof, and willfully
refrained from disclosing such disqualifications or of
party have been materially prejudiced; or
(d)
That the arbitrators exceeded their powers,
or so imperfectly executed them, that a mutual, final
and definite award upon the subject matter
submitted to them was not made.
Where an award is vacated, the court, in its

discretion, may direct a new hearing either before
the same arbitrators or before a new arbitrator or
arbitrators to be chosen in the manner provided in
the submission or contract for the selection of the
original arbitrator or arbitrators, and any provision
limiting the time in which the arbitrators may make a
decision shall be deemed applicable to the new
arbitration and to commence from the date of the
court's order.
Where the court vacates an award, costs, not

exceeding fifty pesos and

disbursements may be awarded to the prevailing
party and the payment thereof may be enforced in
like manner as the payment of costs upon the
motion in an action.
The award may also be vacated on any or all

of the following grounds:
a. The arbitration agreement did not exist, or is
invalid for any ground for the revocation of a
contract or is otherwise unenforceable; or
b. A party to arbitration is a minor or a person
judicially declared to be incompetent.
MG: So S24 defines or enumerates the grounds

wherein you can vacate an arbitral award.
When can you petition before the court to
vacate an arbitral award? Read Rule 11.2 of
the Special ADR Rules.
to request
correction/modification or vacation. Rule
11.2. When
confirmation,
(A) Confirmation. - At any time after the lapse of

thirty (30) days from receipt by the petitioner of the
arbitral award, he may petition the court to confirm
that award.
(B) Correction/Modification. - Not later than thirty
(30) days from receipt of the arbitral award, a party
may petition the court to correct/modify that award.
(C) Vacation. - Not later than thirty (30) days from
receipt of the arbitral award, a party may petition
the court to vacate that award.
So you can file a petition before the RTC within
30days from the receipt of the arbitral award and file
a petition to vacate the same. So class also note of
the grounds under Rule 11.4 that are similar to S24.
Rule 11.4. Grounds. - (A) To vacate an arbitral
award. - The arbitral award may be vacated on the
following grounds:
a. The arbitral award was procured
corruption, fraud or other undue means;
through
b. There was evident partiality or corruption in the

arbitral tribunal or any of its members;
c. The arbitral tribunal was guilty of misconduct or
any form of misbehavior that has materially
prejudiced the rights of any party such as refusing to
postpone a hearing upon sufficient cause shown or
to hear evidence pertinent and material to the
controversy;
d. One or more of the arbitrators was disqualified to
act as such under the law and willfully refrained from
disclosing such disqualification; or
e. The arbitral tribunal exceeded its powers, or so
imperfectly executed them, such that a complete,
final and definite award upon the subject matter
submitted to them was not made.
The petition to vacate an arbitral award on the

ground that the party to arbitration is a minor or a
person judicially declared to be incompetent shall be
filed only on behalf of the minor or incompetent and
shall allege that (a) the other party to arbitration had
knowingly entered into a submission or agreement
with such minor or incompetent, or (b) the
submission to arbitration was made by a guardian or
guardian ad litem who was not authorized to do so
by a competent court.
In deciding the petition to vacate the arbitral
award, the court shall disregard any other
ground than those enumerated above.
So connect Section 24 to Rule 11.4. The grounds
enumerated on such provisions are exclusive. So if
you want to vacate an arbitral award on grounds
other than those enumerated under 11.4 and S24,
what will the court do? The court will dismiss your
petition because the grounds under the law are
exclusive. Now please read Section 25.
Section 25. Grounds for modifying or correcting
award. - In any one of the following cases, the court
must make an order modifying or correcting the
award, upon the application of any party to the
controversy which was arbitrated:
(a)
Where there was an evident miscalculation
of figures, or an evident mistake in the description of
any person, thing or property referred to in the
award; or
(b)
Where the arbitrators have awarded upon a
matter not submitted to them, not affecting the
merits of the decision upon the matter submitted; or
(c)
Where the award is imperfect in a matter of
form not affecting the merits of the controversy, and
if it had been a commissioner's report, the defect
could have been amended or disregarded by the
court.
The order may modify and correct the award so as

to effect the intent thereof and promote justice
between the parties.

Under Section 24 the grounds enumerated are more
serious and substantial and involves the integrity of
the award unlike in Section 25.
Note class that under Rule 11 the petition filed there

must be verified hence under oath. Please continue
reading R11.6
Earlier we said that correction of an award rendered

in Domestic Arbitration is not possible if it is
requested before the arbitral tribunal because the
tribunal loses its jurisdiction the moment it renders
an award.
Rule 11.6. Contents of petition. - The petition must

What is your remedy then if you want to have

your award corrected which was rendered in
Domestic Arbitration.
b. The jurisdictional issues raised by a party

during arbitration proceedings;
MG: Your remedy there is to file before the courts

for a petition to correct or modify an arbitral award.
Can you please read the grounds enumerated?
(B) To correct/modify an arbitral award. - The Court
may correct/modify or order the arbitral tribunal to
correct/modify the arbitral award in the following
cases:
a. Where there was an evident miscalculation
of figures or an evident mistake in the
description of any person, thing or property
referred to in the award;
b. Where the arbitrators have awarded upon
a matter not submitted to them, not affecting
the merits of the decision upon the matter
submitted;
c. Where the arbitrators have omitted to
resolve an issue submitted to them for
resolution; or
d. Where the award is imperfect in a matter
of form not affecting the merits of the
controversy, and if it had been a
commissioners report, the defect could have
been amended or disregarded by the Court.
So if you will notice, the grounds for the correction
or modification of an arbitral award only involve
trivial matters and do not involve the integrity of the
award, unlike the grounds for vacation of an arbitral
award. Now continue reading Rule 11.2 (d).
(D) A petition to vacate the arbitral award may be
filed, in opposition to a petition to confirm the
arbitral award, not later than thirty (30) days from
receipt of the award by the petitioner. A petition to
vacate the arbitral award filed beyond the
reglementary period shall be dismissed.
(G) A petition to correct an arbitral award may be
included as part of a petition to confirm the arbitral
award or as a petition to confirm that award.
a. The addresses of the parties and any

change thereof;
c. The grounds relied upon by the parties in

seeking the vacation of the arbitral award
whether the petition is a petition for the
vacation or setting aside of the arbitral award
or a petition in opposition to a petition to
confirm the award; and
d. A statement of the date of receipt of the
arbitral award and the circumstances under
which it was received by the petitioner.
attach to the petition the following:
a. An authentic copy of the arbitration
agreement;
b. An authentic copy of the arbitral award;
c. A certification against forum shopping
executed by the applicant in accordance with
Section 5 of Rule 7 of the Rules of Court; and
d. An authentic copy or authentic copies of
the appointment of an arbitral tribunal.
Continue reading Rule 11.7.
Rule 11.7. Notice. - Upon finding that the petition
filed under this Rule is sufficient both in form and in
substance, the Court shall cause notice and a copy
of the petition to be delivered to the respondent
allowing him to file a comment or opposition thereto
within fifteen (15) days from receipt of the petition.
In lieu of an opposition, the respondent may file a
petition in opposition to the petition.
The petitioner may within fifteen (15) days from
receipt of the petition in opposition thereto file a
reply.
Last Rule 11.9.
Rule 11.9. Court action. - Unless a ground to vacate
an arbitral award under Rule 11.5 above is fully
established, the court shall confirm the award.

An arbitral award shall enjoy the presumption that it
was made and released in due course of arbitration
and is subject to confirmation by the court
In resolving the petition or petition in opposition
thereto in accordance with these Special ADR Rules,
the court shall either confirm or vacate the arbitral
award. The court shall not disturb the arbitral
tribunals determination of facts and/or interpretation
of law.
In short there will be an entry of judgment

before the RTC.
Now assume that the ground raised in the
petition to vacate an award in Domestic
arbitration on the ground that the arbitral
tribunal committed errors of fact or law or
mixed questions of fact and law, will the RTC
entertain your petition? NO! the basis for that is
Rule 19.10 par. 3 of the Special Rules on ADR.
In a petition to vacate an award or in petition to

vacate an award in opposition to a petition to
confirm
the
award,
the
petitioner
may
simultaneously apply with the Court to refer the case
back to the same arbitral tribunal for the purpose of
making a new or revised award or to direct a new
hearing, or in the appropriate case, order the new
hearing before a new arbitral tribunal, the members
of which shall be chosen in the manner provided in
the arbitration agreement or submission, or the law.
In the latter case, any provision limiting the time in
which the arbitral tribunal may make a decision shall
be deemed applicable to the new arbitral tribunal.
Rule 19.10 par. 3 states:
In referring the case back to the arbitral tribunal or

to a new arbitral tribunal pursuant to Rule 24 of
Republic Act No. 876, the court may not direct it to
revise its award in a particular way, or to revise its
findings of fact or conclusions of law or otherwise
encroach upon the independence of an arbitral
tribunal in the making of a final award.
You file a Motion for Reconsideration before the

same court or RTC within 15 days from the receipt of
the order. Apart from that what are the other
remedies?
Now assume that you filed a petition to vacate

an award in Domestic Arbitration before the
court and the court granted your petition and
so the arbitral award is deemed vacated, what
will happen next?
Note that under the law, the Regional Trial Court in
its discretion may direct a new hearing before the
same arbitrators or before new arbitrators to be
chosen in the same manner as provided in the
submission or contract for the selection of the
original arbitrators. So we will go back to a hearing
before the arbitral tribunal.
Note class that the judgment of the RTC in DA
vacating, modifying or correcting the award is
considered as an order or decision entered
upon an award. What does this mean?
So again it will be considered as if it was a judgment
rendered by the RTC and execution pursuant Rule 39
of the Rules of Court:
1. It shall be entered as if it were rendered in
an action;
2. It will have the same force and effect of a
judgment in an action;
3. It will be enforced as if it were rendered in
the court in which it was entered.
The court shall not set aside or vacate the award of

the arbitral tribunal merely on the ground that the
arbitral 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.
Now assume that the RTC granted the petition
to vacate, correct or modify the Domestic
Arbitral award, and you are the other party
and you were aggrieved what will be your
remedy?
What if your MFR is denied, what will be your other

remedy? File an appeal before the CA. What is your
mode of appeal? Mode of appeal there is through a
petition for review. How about certiorari, is that
remedy allowed?
Take note class that if you file an appeal through
petition for review before the CA you cannot file
petition for certiorari. Hindi pwede ang simultaneous
remedies. This is because where the remedies of
appeal and certiorari are specially made available to
the party under the Special ADR Rules, recourse to
one precludes the other. So either you appeal or
certiorari because the basic premise is that certiorari
is not a substitute for a lost appeal.
So what if it is International Commercial
Arbitration and you want to vacate or desist
its enforcement, what is your remedy? WE find
that in the Special ADR Rules.
RULE 12: RECOGNITION AND ENFORCEMENT
OR
SETTING
ASIDE
OF
AN
INTERNATIONALCOMMERCIAL ARBITRATION
AWARD
Rule 12.1. Who may request recognition and
enforcement or setting aside. - Any party to an
international commercial arbitration in the Philippines
may petition the proper court to recognize and
enforce or set aside an arbitral award.

Rule 12.2. When to file petition. - (A) Petition to
recognize and enforce. - The petition for
enforcement and recognition of an arbitral award
may be filed anytime from receipt of the award. If,
however, a timely petition to set aside an arbitral
award is filed, the opposing party must file therein
and in opposition thereto the petition for recognition
and enforcement of the same award within the
period for filing an opposition.
(B) Petition to set aside. - The petition to set aside
an arbitral award may only be filed within three (3)
months from the time the petitioner receives a copy
thereof. If a timely request is made with the arbitral
tribunal for correction, interpretation or additional
award, the three (3) month period shall be counted
from the time the petitioner receives the resolution
by the arbitral tribunal of that request.
A petition to set aside can no longer be filed after
the lapse of the three (3) month period. The
dismissal of a petition to set aside an arbitral award
for being time-barred shall not automatically result in
the approval of the petition filed therein and in
opposition thereto for recognition and enforcement
of the same award. Failure to file a petition to set
aside shall preclude a party from raising grounds to
resist enforcement of the award.
Rule 12.3. Venue. - A petition to recognize and
enforce or set aside an arbitral award may, at the
option of the petitioner, be filed with the Regional
Trial Court: (a) where arbitration proceedings were
conducted; (b) where any of the assets to be
attached or levied upon is located; (c) where the act
to be enjoined will be or is being performed; (d)
where any of the parties to arbitration resides or has
its place of business; or (e) in the National Capital
Judicial Region.
12.4. Grounds to set aside or resist
enforcement. - The court may set aside or refuse the
Rule
enforcement of the arbitral award only if:
a. The party making the application furnishes proof

that:
(i). A party to the arbitration agreement was under
some incapacity, or the said agreement is not valid
under the law to which the parties have subjected it
or, failing any indication thereof, under Philippine
law; or
(ii). The party making the application to set aside or
resist enforcement was not given proper notice of
the appointment of an arbitrator or of the arbitral
proceedings or was otherwise unable to present his
case; or
(iii). The award deals with a dispute not
contemplated by or not falling within the terms of
the submission to arbitration, or contains decisions
on matters beyond the scope of the submission to

arbitration; provided that, if the decisions on matters
submitted to arbitration can be separated from those
not so submitted, only that part of the award which
contains decisions on matters not submitted to
arbitration may be set aside or only that part of the
award which contains decisions on matters
submitted to arbitration may be enforced; or
(iv). The composition of the arbitral tribunal or the
arbitral procedure was not in accordance with the
agreement of the parties, unless such agreement
was in conflict with a provision of Philippine law from
which the parties cannot derogate, or, failing such
agreement, was not in accordance with Philippine
law;
b. The court finds that:
(i). The subject-matter of the dispute is not capable
of settlement by arbitration under the law of the
Philippines; or
(ii). The recognition or enforcement of the award
would be contrary to public policy.
In deciding the petition, the Court shall disregard
any other ground to set aside or enforce the arbitral
award other than those enumerated above.
The petition to set-aside or a pleading resisting the
enforcement of an arbitral award on the ground that
a party was a minor or an incompetent shall be filed
only on behalf of the minor or incompetent and shall
allege that (a) the other party to arbitration had
knowingly entered into a submission or agreement
with such minor or incompetent, or (b) the
submission to arbitration was made by a guardian or
guardian ad litem who was not authorized to do so
by a competent court.
Note class that the grounds to set aside or resist an
award in International Commercial Arbitration are
exclusive just like that of Domestic Arbitration.
Rule 12.5. Exclusive recourse against arbitral
award. - Recourse to a court against an arbitral
award shall be made only through a petition to set
aside the arbitral award and on grounds prescribed
by the law that governs international commercial
arbitration. Any other recourse from the arbitral
award, such as by appeal or petition for review or
petition for certiorari or otherwise, shall be dismissed
by the court.
So take note class of Rule 12.5. Now as to the form
of the petition it must be verified.
Rule 12.6. Form. - The application to recognize and
enforce or set aside an arbitral award, whether made
through a petition to recognize and enforce or to set
aside or as a petition to set aside the award in

opposition thereto, or through a petition to set aside
or petition to recognize and enforce in opposition
thereto, shall be verified by a person who has
personal knowledge of the facts stated therein.
When a petition to recognize and enforce an arbitral
award is pending, the application to set it aside, if
not yet time-barred, shall be made through a
petition to set aside the same award in the same
proceedings.
When a timely petition to set aside an arbitral award
is filed, the opposing party may file a petition for
recognition and enforcement of the same award in
opposition thereto.
Note also of the contents of the petition and also
read Rule 12.12 and 12.13:
Rule 12.7. Contents of petition. - (A) Petition to
recognize and enforce. - The petition to recognize
and enforce or petition to set aside in opposition
thereto, or petition to set aside or petition to
recognize and enforce in opposition thereto, shall
a. The addresses of record, or any change thereof,
of the parties to arbitration;
b. A statement that the arbitration agreement or
submission exists;
c. The names of the arbitrators and proof of their
appointment;
d. A statement that an arbitral award was issued and
when the petitioner received it; and
e. The relief sought.
Apart from other submissions, the petitioner shall
attach to the petition the following:
a. An authentic copy of the arbitration agreement;
b. An authentic copy of the arbitral award;
c. A verification and certification against forum
shopping executed by the applicant in accordance
with Sections 4 and 5 of Rule 7 of the Rules of
Court; and
d. An authentic copy or authentic copies of the
appointment of an arbitral tribunal.
(B) Petition to set aside. - The petition to set aside
or petition to set aside in opposition to a petition to
recognize and enforce an arbitral award in
international commercial arbitration shall have the
same contents as a petition to recognize and enforce
or petition to recognize and enforce in opposition to
a petition to set aside an arbitral award. In addition,
the said petitions should state the grounds relied

upon to set it aside.
Further, if the ground of the petition to set aside is
that the petitioner is a minor or found incompetent
by a court, there shall be attached to the petition
certified copies of documents showing such fact. In
addition, the petitioner shall show that even if the
submission or arbitration agreement was entered
into by a guardian or guardian ad litem, the latter
was not authorized by a competent court to sign
such the submission or arbitration agreement.
In either case, if another court was previously
requested to resolve and/or has resolved, on appeal,
the arbitral tribunals preliminary determination in
favor of its own jurisdiction, the petitioner shall
apprise the court before which the petition to
recognize and enforce or set aside is pending of the
status of the appeal or its resolution.
Rule 12.12 and 12.13
Rule 12.12. Presumption in favor of confirmation. It is presumed that an arbitral award was made and
released in due course and is subject to enforcement
by the court, unless the adverse party is able to
establish a ground for setting aside or not enforcing
an arbitral award.
Rule 12.13. Judgment of the court. - Unless a
ground to set aside an arbitral award under Rule
12.4 above is fully established, the court shall
dismiss the petition. If, in the same proceedings,
there is a petition to recognize and enforce the
arbitral award filed in opposition to the petition to
set aside, the court shall recognize and enforce the
award.
thereto in accordance with the Special ADR Rules,
the court shall either set aside or enforce the arbitral
of law.
Remember class that arbitral awards are subject to
judicial review. Again, arbitral awards rendered by
arbitral tribunals are subject to limited judicial
review. What is the legal basis for this? Read Rule
19.10:
Rule 19.10. Rule on judicial review on arbitration in
the Philippines. - As a general rule, the court can
only vacate or set aside the decision of an arbitral
tribunal upon a clear showing that the award suffers
from any of the infirmities or grounds for vacating an
arbitral award under Section 24 of Republic Act No.
876 or under Rule 34 of the Model Law in a domestic
arbitration, or for setting aside an award in an
international arbitration under Article 34 of the Model

Law, or for such other grounds provided under these
Special Rules.
If the Regional Trial Court is asked to set aside an
arbitral award in a domestic or international
arbitration on any ground other than those provided
in the Special ADR Rules, the court shall entertain
such ground for the setting aside or non-recognition
of the arbitral award only if the same amounts to a
violation of public policy.
The court shall not set aside or vacate the award of
the arbitral tribunal merely on the ground that the
arbitral 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.
Take note the case of Asset Privatization Trust v. CA
where the court held that:
The courts in general will not review the findings of
law and fact contained in an award and shall not
undertake to substitute their judgment for that of
the arbitrators because any other rule would make
an award a commencement and not an end of
litigation.
So when is judicial review available to correct
an arbitral award?
First, in the case of Chungfu Industries v. CA, if the
arbitrator failed to apply the terms and conditions of
the agreement which forms part of the law
applicable between the parties thus committing
grave abuse of discretion;
Why is there a necessity for an arbitral award

to be judicially confirmed? Is it necessary for
an arbitral award to be judicially confirmed?
Judicial confirmation of arbitral awards is necessary
for their enforceability. So that is confirmation for
enforceability of the arbitral award. Please read Rule
11.2 confirmation of an arbitral award.
When to request
correction/modification or vacation. Rule
11.2.
confirmation,
(A) Confirmation. - At any time after the lapse of

thirty (30) days from receipt by the petitioner of the
arbitral award, he may petition the court to confirm
that award.
(E) A petition to confirm the arbitral award may be
filed, in opposition to a petition to vacate the arbitral
award, at any time after the petition to vacate such
arbitral award is filed. The dismissal of the petition to
vacate the arbitral award for having been filed
beyond the reglementary period shall not result in
the dismissal of the petition for the confirmation of
such arbitral award.
(F) The filing of a petition to confirm an arbitral
award shall not authorize the filing of a belated
petition to vacate or set aside such award in
opposition thereto.
Under R11.2 (a) The petition to confirm must be
filed after the lapse of 30days because the award is
then already considered final. So subject to
confirmation of the court are final awards.
Second, in the case of Asset Privatization Trust v.

CA, if the arbitrators resolve the issues beyond the
scope of the submission agreement;
Also take note of R11.9 class, court action, this is

very important:
Third, if the arbitrators acted in manifest disregard of

the law;
Rule 11.9. Court action. - Unless a ground to vacate

an arbitral award under Rule 11.5 above is fully
established, the court shall confirm the award.
Fourth, when the voluntary arbitrator failed to apply

the terms and provisions of the agreement which
form part of the applicable law between the parties.
So if it is Domestic Arbitral award it is subject to the

courts automatic confirmation based on Rule 11.9.
IN another case, the case of Carpio v. Sulu

Resources Dev. Corp., 387 S 138, here the SC held
that:
Even if the review by the CA of the CIAC decisions
included questions of fact and law, review of the
factual findings were warranted only when such
factual findings were challenged to have been made
in grave abuse of discretion. So that is the standard
of limited judicial review.
Now let us go to the Enforcement of Philippine
Arbitral awards. Again Philippine Arbitral
Awards refer to both DA and ICA.
An arbitral award shall enjoy the presumption that it

was made and released in due course of arbitration
and is subject to confirmation by the court
So please take note of that it is automatic for the
court to confirm the award. How about if it is ICA?
Kindly please read Rule 12.13:
Rule 12.13. Judgment of the court. - Unless a
ground to set aside an arbitral award under Rule
12.4 above is fully established, the court shall
dismiss the petition. If, in the same proceedings,
there is a petition to recognize and enforce the
arbitral award filed in opposition to the petition to
set aside, the court shall recognize and enforce the
award.

thereto in accordance with the Special ADR Rules,
the court shall either set aside or enforce the arbitral
of law.
So if it is ICA it is not automatic for the court to
confirm the award unless there is a separate petition
or in the same proceeding there is a petition to
recognize and enforce the arbitral award.
Again confirmation is for the enforceability of the
arbitral award.
How about an award rendered by the CIAC,
does it still need confirmation?
Diba sabi nga natin, if you file disputes regarding
construction before the court, the court is mandated
to dismiss, so the question is kailangan pa ba iconfirm ng court an award rendered by the CIAC?
Note class that the GR is that all awards may by the
arbitrator/s or arbitral tribunal requires confirmation
of the court to be enforceable except CIAC arbitral
awards which need not be confirmed by The RTC to
be enforceable under EO 1008. So no need if it is a
CIAC award.
So let us review, Rule 1.1 of the Special ADR Rules:
Rule 1.1. Subject matter and governing rules.-The
Special Rules of Court on Alternative Dispute
Resolution (the "Special ADR Rules") shall apply to
and govern the following cases:
a. Relief on the issue of Existence, Validity, or
Enforceability of the Arbitration Agreement;
b. Referral to Alternative Dispute Resolution ("ADR");
c. Interim Measures of Protection;
d. Appointment of Arbitrator;
e. Challenge to Appointment of Arbitrator;
f. Termination of Mandate of Arbitrator;
g. Assistance in Taking Evidence;
h. Confirmation, Correction or Vacation of Award in
Domestic Arbitration;
i. Recognition and Enforcement or Setting Aside of
an Award in International Commercial Arbitration;
j. Recognition and Enforcement of a Foreign Arbitral
Award;
k. Confidentiality/Protective Orders; and
l. Deposit and Enforcement of Mediated Settlement

Agreements.
Note class that all proceeding under the Special ADR
Rules are considered Special Proceedings. Which of
the proceedings are considered as summary in
nature? Kindly read Rule 1.3:
Rule 1.3. Summary proceedings in certain cases.The proceedings in the following instances are
summary in nature and shall be governed by this
provision:
a. Judicial Relief Involving the Issue of Existence,
Validity or Enforceability of the Arbitration
Agreement;
b. Referral to ADR;
c. Interim Measures of Protection;
d. Appointment of Arbitrator;
e. Challenge to Appointment of Arbitrator;
f. Termination of Mandate of Arbitrator;
g. Assistance in Taking Evidence;
h. Confidentiality/Protective Orders; and
i. Deposit and Enforcement of Mediated Settlement
Agreements.
Take note that the aforementioned are the only ones
which are summary in nature under the Special ADR
Rules. So if it is Special ADR Rules, the service and
filing of petitions is through personal service or by
courier.
(C) Summary hearing. - In all cases, as far as
practicable, the summary hearing shall be conducted
in one (1) day and only for purposes of clarifying
facts.
So either by personal service or by courier. Pag
governed by summary proceedings there is only 1
day hearing.
(C) Summary hearing. - In all cases, as far as
practicable, the summary hearing shall be conducted
in one (1) day and only for purposes of clarifying
facts.
Kapag summary hearings, the court shall resolve the
matter within a period of 30 days from the date of
hearing.
Take note also of Rule 1.5 regarding the requirement
of certification against forum shopping which is
required to be appended to all initiatory pleadings

except a Motion to refer the dispute to an alternative
dispute resolution. Take note of Rule 1.6:
Rule 1.6. Prohibited submissions. - The following
pleadings, motions, or petitions shall not be allowed
in the cases governed by the Special ADR Rules and
shall not be accepted for filing by the Clerk of Court:
a. Motion to dismiss;
b. Motion for bill of particulars;
c. Motion for new trial or for reopening of trial;
d. Petition for relief from judgment;
e. Motion for extension, except in cases where an
ex-parte temporary order of protection has been
issued;
f. Rejoinder to reply;
g. Motion to declare a party in default; and
h. Any other pleading specifically disallowed under
any provision of the Special ADR Rules.
The court shall motu proprio order a pleading/motion
that it has determined to be dilatory in nature be
expunged from the records.
Now we said earlier that if it summary in nature it is
thru personal service or through a courier, now what
if the proceeding is non-summary what is the rule?
That is found under Rule 1.8:
Rule 1.8. Service and filing of pleadings, motions
and other papers in non-summary proceedings. The initiatory pleadings shall be filed directly with
the court. The court will then cause the initiatory
pleading to be served upon the respondent by
personal service or courier. Where an action is
already pending, pleadings, motions and other
papers shall be filed and/or served by the concerned
party by personal service or courier. Where courier
services are not available, resort to registered mail is
allowed.
As stated above, service through registered mail is
allowed only if the proceeding is not summary in
nature.
shall be made in accordance with the Rules on

Electronic Evidence.
Rule 1.9:
Rule 1.9. No summons. - In cases covered by the
Special ADR Rules, a court acquires authority to act
on the petition or motion upon proof of jurisdictional
facts, i.e., that the respondent was furnished a copy
of the petition and the notice of hearing.
So hindi kailangan ng summons unlike ordinary civil
procedure.
(A) Proof of service. - A proof of service of the
petition and notice of hearing upon respondent shall
be made in writing by the server and shall set forth
the manner, place and date of service.
(B) Burden of proof. - The burden of showing that a
copy of the petition and the notice of hearing were
served on the respondent rests on the petitioner.
Now let us jump to rule 19, MFR when allowed:
Rule 19.1. Motion for reconsideration, when
allowed. - A party may ask the Regional Trial to
reconsider its ruling on the following:
a. That the arbitration agreement is inexistent,
invalid or unenforceable pursuant to Rule 3.10 (B);
b. Upholding or reversing the arbitral tribunals
jurisdiction pursuant to Rule 3.19;
c. Denying a request to refer the parties to
arbitration;
d. Granting or denying a party an interim measure of
protection;
e. Denying a petition for the appointment of an
arbitrator;
f. Refusing to grant assistance in taking evidence;
g. Enjoining or refusing to enjoin a person from
divulging confidential information;
h. Confirming, vacating or correcting a domestic
arbitral award;
How about filing through electronic means is that

allowed? Yes that is allowed as provided under Rule
1.8 (c).
i. Suspending the proceedings to set aside an

international commercial arbitral award and referring
the case back to the arbitral tribunal;
(C) Filing and service by electronic means and proof

thereof. - Filing and service of pleadings by
electronic transmission may be allowed by
agreement of the parties approved by the court. If
the filing or service of a pleading or motion was done
by electronic transmission, proof of filing and service
j. Setting aside an international commercial arbitral

award;
k. Dismissing the petition to set aside an
international commercial arbitral award, even if the
court does not recognize and/or enforce the same;

l. Recognizing and/or enforcing, or dismissing a
petition to recognize and/or enforce an international
commercial arbitral award;
f. Setting aside
arbitration award;
an
international
commercial
m. Declining a request for assistance in taking

evidence;
g. Dismissing the petition to set aside an

international commercial arbitration award even if
the court does not decide to recognize or enforce
such award;
n. Adjourning or deferring a ruling on a petition to

set aside, recognize and/or enforce an international
h. Recognizing and/or enforcing an international

commercial arbitration award;
o. Recognizing and/or enforcing a foreign arbitral

award, or refusing recognition and/or enforcement of
the same; and
p. Granting or dismissing a petition to enforce a
deposited mediated settlement agreement.
No motion for reconsideration shall be allowed from
the following rulings of the Regional Trial Court:
a. A prima facie determination upholding the
existence, validity or enforceability of an arbitration
agreement pursuant to Rule 3.1 (A);
b. An order referring the dispute to arbitration;
c. An order appointing an arbitrator;
d. Any ruling on the challenge to the appointment of
an arbitrator;
e. Any order resolving the issue of the termination of
the mandate of an arbitrator; and
f. An order granting assistance in taking evidence.
So when to move for reconsideration? It is to be
made within a non-extendible period of 15days from
the receipt of the questioned ruling or order. Let us
go to Rule 19.12, appeal to the CA:
Rule 19.12. Appeal to the Court of Appeals. - An
appeal to the Court of Appeals through a petition for
review under this Special Rule shall only be allowed
from the following final orders of the Regional Trial
Court:
a. Granting or denying an interim measure of
protection;
b. Denying a petition for appointment of an
arbitrator;
c. Denying a petition for assistance in taking
evidence;
d. Enjoining or refusing to enjoin a person from
divulging confidential information;
e. Confirming, vacating or correcting/modifying a
domestic arbitral award;
i. Dismissing a petition to enforce an international

commercial arbitration award;
j. Recognizing and/or enforcing a foreign arbitral
award;
k. Refusing recognition and/or enforcement of a
foreign arbitral award;

l. Granting or dismissing a petition to enforce a

deposited mediated settlement agreement; and
m. Reversing the ruling of the arbitral tribunal
upholding its jurisdiction.
Where to appeal? Before the CA. What is the mode
of appeal? Through a petition for review. How about
decisions rendered by the CIAC, pwede pa ba magappeal sa decision of the CIAC that has already
attained finality? Earlier we said diba that CIAC
awards cannot be confirmed before the courts. Hindi
ba pwede mag-intervene ang court. So what will be
your remedy? CIAC is considered a quasi-judicial
body and hence you can appeal therefrom under
Rule 43, that is petition for review before the CA.
Please take note class of Rule 19.12!
j. Allowing a party to enforce a foreign arbitral award

pending appeal; and
k. Denying a petition for assistance in taking
evidence.
This is a Special Civil Action for certiorari before the
CA. how about appeal by certiorari to the SC under
Rule 19.36?
Rule 19.36. Review discretionary. - A review by the
Supreme Court is not a matter of right, but of sound
judicial discretion, which will be granted only for
serious and compelling reasons resulting in grave
prejudice to the aggrieved party.
MARCH 20
March 20
Lastly, Rule 19.26, certiorari to the CA:

Rule 19.26. Certiorari to the Court of Appeals. When the Regional Trial Court, in making a ruling
under the Special ADR Rules, has acted without or in
excess of its jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction,
and there is no appeal or any plain, speedy, and
adequate remedy in the ordinary course of law, a
party may file a special civil action for certiorari to
annul or set aside a ruling of the Regional Trial
Court.
A special civil action for certiorari may be filed
against the following orders of the court.
a. Holding that the arbitration
inexistent, invalid or unenforceable;
agreement
is
b. Reversing the arbitral tribunals preliminary

determination upholding its jurisdiction;
c. Denying the request to refer the dispute to
arbitration;
d. Granting or refusing an interim relief;
e. Denying a petition for the appointment of an
arbitrator;
f. Confirming, vacating or correcting a domestic
arbitral award;
g. Suspending the proceedings to set aside an
international commercial arbitral award and referring
the case back to the arbitral tribunal;
h. Allowing a party to enforce an international
commercial arbitral award pending appeal;
i. Adjourning or deferring a ruling on whether to set
aside, recognize and or enforce an international
Judicial dispute resolution

It is conducted during the pre-trial stage when there
is failure of litigation. This is mandatory for the
parties to undergo judicial dispute resolute.
Basis of JDR:
1. A.M 04-01-12-sc-philja
2. A.M 11-01-06-SC-philja
Purpose of JDR:
1. To empower the parties to resolve their own
disputes and give practical effect to the state
policy expressed in the ADR Act (RA 9285)
2. To actively promote party autonomy in the
resolution of disputes or the freedom of the
parties to make their own arrangement to
resolve disputes
3. To put an end to pending litigation through a
compromise agreement of the parties
Three Stages of court diversion
1. CAM (court annexed mediation
2. JDR (judicial dispute resolution)
3. ACM (Appellate court mediation)
Court annexed mediation
During the pre-trial stage, this is where CAM
happens. There is no court participation yet because
the mediator appointed by the Philippine Mediation
Unit, who will try settle the issues between or among
the parties.
If the parties compromise during CAM, trial will not
proceed. Trial will end. If the parties do not
compromise during CAM, then you go to JDR.

Judicial dispute resolution
During the JDR, there is now the participation of the
judge assumes the role of mediator, conciliator, an
early neutral evaluator and combination of any of the
above.
Conciliator and Mediator
The judge facilitates the settlement discussion
between parties and tries to reconcile their
differences.
Early neutral evaluator
The judge assesses the relative strengths and
weakness of each partys case and makes a nonbinding and impartial evaluation of the chances of
each partys success in the case.
If during the JDR process the parties come to an
agreement, the trial will end. If the parties do settle
during the JDR, then trial proper will proceed. The
JDR judge is still the trial judge who will hear the
case.
JDR judge handles the case from the filing of the
complaint to the conduct of CAM up to the JDR
during the pre-trial stage. He is the judge to whom
the case was originally raffled.
Trial Judge- he presides the pre-trial proper, trial and
renders a decision of the case.
Appellate court mediation
The ACM is during the appeal where the case is
referred to the Philippine Mediation Board Appeal for
mediation.
Two-judge system
If JDR fails, is the JDR judge the same with the trial
judge? No, because during the JDR stage he
assumed the role of an early neutral evaluator and
prejudged the dispute.
GR: the trial judge will not be the same person who
acted as JDR judge
E: the parties agree the trial and JDR judge be the
same
2. The JDR judge may have elicited confidential

information that may create bias and
partiality that could his judgment.
2 stages of JDR
1. Filing of the complaint to the conduct of CAM
and JDR during the pre-trial stage. The judge
to whom the case was originally raffled is
the JDR judge.
2. Pre-trial proper to Trial and Judgment. The
here is trial judge.
If JDR fails, who will preside the case?
Distinguish if it is single or a multiple sala court.
If it is a multiple sala court and JDR fails, the
case shall be raffled to another court where the
rest of the judicial proceeding shall be held.
If it is a single sala court and JDR fails, the JDR
proceedings shall be conducted at the station
where the case was originally filed. Trial proper
will be conducted by the judge of the pair court if
there is no agreement by the parties. If the
parties agree, it will be the court of origin, the
trial proper will be conducted by the court of
origin.
If there is a prayer for provisional remedies, this
will be decided by the court where the case was
originally filed.
MID-TRIAL JDR
There can still be JDR during the trial stage proper
MID-TRIAL JDR PROCEDURE:
1. File a written motion in that court stating that
one or both parties indicate willingness to
discuss a possible compromise.
2. If the motion is granted, the trial shall be
suspended and the case shall be referred to
JDR.
The case shall be conducted by another
judge through raffle in multiple sala courts.
If it is a single sala court, JDR is conducted
by the nearest court (pair court, if any,
regardless of level of the latter court)
The JDR judge shall not preside over the trial of the
case when the parties did not settle their dispute at
JDR. This is because:
The result of the JDR proceedings shall be

referred to the court of origin for appropriate
action
1. Parties will be more spontaneous once they

are assured that the JDR judge will not be
the one to try the case
3. If the settlement is reached during JDR, the

JDR court shall take appropriate action
thereon. (either to approve or disapprove the
compromise agreement of the parties and to
proceed with trial)

Role of Lawyers in CAM/JDR Proceedings
Second level courts 60 days from the time the

parties first appeared for JDR (RTC)
Lawyers may attend CAM/JDR proceedings but his

role is limited as advisers, consultants.
Confidentiality rule in JDR

The information gathered here are privileged and
confidential. These are inadmissible as evidence in
any other proceeding.
They must drop their combative role in the

adjudication process.
He must give up his dominant role in the judicial
trial.
He must accept a less directive role in order to allow
the parties more opportunities to craft their own
agreement.
Responsibilities
Proceedings
of
Lawyers
in
CAM/JDR
1. help their clients comprehend the mediation

process and its benefits.
2. allow their clients assume greater personal
responsibility in making decisions for the
success of the mediation in resolving the
dispute.
3. assist their clients in preparing a compromise
agreement that is not contrary to law,
morals, good customs, public order or public
policy so that the CA may be approved the
court.
4. pay particular attention to issues of
voluntary compliance of what has been
agreed upon or otherwise to issues of
enforcement in case of breach
5. Assist wherever applicable in the preparation
of a manifestation of satisfaction of claims
and mutual withdrawal of complaint and
counterclaim as basis for the court to issue
an order of dismissal.
Recall: Pre-trial is mandatory. If a party fails to
appear, what are the sanctions?
Effect of failure to appear during pre-trial
1. It shall be cause for dismissal of the action.
The dismissal shall be with prejudice, unless
otherwise ordered by the court.
2. It shall be cause to allow the other party to
present his evidence ex parte and the court
to render judgment on the basis thereof
Duration of JDR
General rule
First level courts 30 days from the time the parties
first appeared for JDR (MTC, MCTC,MeTC)
During the conduct of CAM and JDR matters

discussed, communications made, requests for
mediation and documents presented are privileged
and confidential. However, evidence or information
that is otherwise admissible does not become
inadmissible solely by reason of its use in JDR.
Prohibition on JDR Judge and Court personnel
JDR judge shall not pass any information in the
course of conciliation and early neutral evaluation to
the trial judge or to any other person. The
prohibition includes court personnel or any other
person present during such proceedings. JDR
proceedings are not public hearings, they to be
conducted in private.
A JDR judge can take down notes during the
proceedings but this is only for his own personal
consumption.
See notes!
Note: Memorize COVERAGE OF JDR which the same
CAM. There is a hand-out on Mediation and JDR
given by Atty. Guerzo,as per instruction of Bruneson.
-END-

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ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)

ATTY. CATHERINE BARRION- GUERZO |1

Atty. Guerzo: So, by the definition given by law, in

ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)

Arbitration means a voluntary dispute resolution

When court- annexed mediation ails, the case is

ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)

Parties may select

Main Disadvantage: Absence of any precedence

ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)

to one of the herein plaintiffs;

MAIN ISSUE: WON the arbitrators exceeded

ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)

submitted to them was not made. (Underscoring

GENERAL RULE: The arbiters decision cant be set

ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)

adopted by the United National Commission

What are the different kinds of arbitration

known as "The Arbitration Law" as amended by

(Article 1(3) of the Model Law)

ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)

How about if it is international commercial

ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)

If it is a convention award under RA 9285, the

(d) any ground for legal separation;

ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)

The Voluntary Arbitrator or panel of Voluntary

3. If accompanied with a claim for

ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)

and all disputes between an employer and a

5. Cases arising from any violation of

6. Except claims for Employees

Article 217 of the labor code does not refer to

b. The Commission shall have exclusive

In the case of San Jose vs. NLRC 294 S 336. The

Voluntary arbitration; jurisdiction of labor

What is the exclusive and original jurisdiction of the

Art. 217. Jurisdiction of Labor Arbiter and the

ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)

enforcement of company procedure/policies shall be

SAN JOSE V. NLRC

What can be the subject of voluntary arbitration?

1. The jurisdiction of the Labor Arbiter and

Art. 261. Jurisdiction of Voluntary Arbitrators or

Art. 262. Jurisdiction over other labor disputes.

Article 224 [217] speaks of original jurisdiction.

The labor arbiter cannot automatically assume

Parenthetically, the original and exclusive

So in order to remove these disputes from the

ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)

termination disputes and unfair labor

The VA can rule upon issue even if it is not part of

In the earlier case of ASSET PRIVATIZATION v.

So here the illegal termination dispute is under the

What is the reckoning point of an arbitral award?

ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)

the Court rules herein that CBA arbitral awards

SAN MIGUEL V. NLRC 2003

BENGUET CORPORATION V. DENR

Here, the SC applied the doctrine of estoppel to

The ADR law did not amend the provisions of the

ALTERNATIVE DISPUTE RESOLUTION SY: 2014- 2015 (3-MANRESA)

disputes shall be governed by Executive Order No.

What is the law that primarily governs construction