You are on page 1of 36

ALTERNATIVE DISPUTE RESOLUTION | 1

We are imperfect beings living in an imperfect they try to use reason but nonetheless, the use of reason
society governed by an imperfect system. makes the process confrontational. It becomes
adversarial.
Diba? And because we are of that nature, how do we
define life? Life means our existence here. Another writer Why adversarial? Because when you institute or start
once told that life is characterized by a series of pain. the process of solving the controversy, you start with an
What ends life? Death. What do we experience when accusation. When you are presenting your evidence, it is a
we die? End. Pain. Life is characterized by pain but the clash of evidence. Trial system is supposed to be
beauty of it is you are given the option or the privilege of governed by due process of law. But the implementation
having short moments of joy in between this long line of of due process has been abused. They use it to delay, to
suffering. defeat a valid claim on the prefix that they have to be
heard, they cause delay. And since they want to be heard,
Why is human life full of conflicts? The root source of the confrontation or adversary is always sustained.
this conflict is because of the limitations of man. Why do
you have needs? Because your potentials are limited. What is the net output of the trial system? Decision.
Why does one want something? Because he is limited. A decision which is equivocal to what you use in the
Diba? For as long as he exists, a person will always want ordinary parlance as winner takes all. When you lose, you
something. Unfortunately, there are other individuals are lose everything; when you win, you win everything. We
also longing for their wants which brings us to conflict. distance the winner from the loser like saying the rich
There will always be inequality. No two people are the becomes richer and the poor becomes poorer. Do you
same. Consequently, if two or more individuals would think that that is beneficial to both parties? No, but we
have different objectives in life, chances are, conflict will cannot do away with it. The sad reality, we have to live
arise. with it. However we are not hopeless. Because we can
always adopt other methods. What are these?
Going further with the statement of Justice Romero in Alternative dispute resolutions.
the case of Chungfu, Conflict is inherent in human
existence and therefore, too much efforts of men and Does ADR change the trial system? No, we still have
institutions have been employed in order to resolve these to follow the trial system. We will just simply add other
conflicts. If you realize that you are limited, you would be options. We will not do away with the trial system. That
needing other source to help and assist you. However, is why we call it alternative another option, another
since there are differences between two men, if you way. Dont treat it as a substitute.
join them together, what would they do? They would
search for an alignment of their interests. That is why What are the other disadvantages of the trial system?
you have social institutions. And the purpose of these There is always delay. There is more effort and at the
institutions is aligning individuals interests with the end, it might only cause a denial of justice. Instead of the
interests of others. It is in the process of this alignment trial system bringing justice to us, it might only be a
that solutions are arrived at. source of injustice. However there are instances that this
system will really work especially in cases which are not
compromisable.
Now, the word ADR is very much recent. In fact in our
ADR was only introduced in the latter part of the
legal system, we have not encountered that word until the
thirteenth century or in the middle of the twentieth
last part of the last century. What do you call the
century. For the longest time, it has been the trial system
primitive way of resolving a conflict? They were
which has been adopted.
governed by the survival of the fittest. Meaning, as early
as that era, men already use methods of resolving In the Philippines, what was the first form of ADR
conflicts. The survival of the fittest was supplanted by and when did we have the very first alternative
the dictatorial system. When people started grouping dispute resolution? Do you still remember what you
together, they chose a leader. And whatever his decision studied in Persons & Family Relations? That whenever
is, it becomes their law. After this comes the era of the relatives are in conflict with one another, they cannot
monarchs wherein the power to decide was delegated to resort to any judicial process unless they first resort to a
the people, i.e., the early judges. This was followed by the family counseling. Even before the Spaniards came,
trial system. family counseling has already been existent in our
country. The Spanish Civil Code institutionalized family
What is the major characteristic of the trial system? counseling. During their era, the Spanish Code of Civil
It involves presentation of evidence. It is one, explaining Procedure made mention of adjusters. They are the
his side as against the explanation of the other. It is a proof of early form of arbitrators. But the Spanish Civil
more civilized way of combating with one another. Now, Code already mentioned about arbitrators and

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 2

compromises. Unfortunately, the Spanish Civil What is a uniform law? It is where each state has its
Procedure was repealed in its entirety when the own law (domestic/local laws) but each state adheres to a
Americans came. Therefore, arbitration and uniform law which is applicable to all the states
compromises under the Spanish Civil Code had no belonging to one country. In the US, commercial laws fall
procedural law to enforce them. Nonetheless, during the under the local legislation but they adopt a uniform law
American era, we adopted certain doctrines from the US which is practically the same as the UNCITRAL Model
and they started to expound ADR, more specifically, Law.
arbitration.
The concept of the UNCITRAL Model Law is that the
When did the Civil Code (RA 386) become a law? convention will come out with a model legislation on
August 30, 1950. In 1950, the laws on arbitration and arbitration. Member states of the UN are encouraged to
compromise were expanded. pass that model law as their own law on international
commercial arbitration. Purpose is so that there will be
This was followed by what law? By the Arbitration uniformity in the procedure and enforcement of
Law of the Philippines (RA No. 876) which was enacted arbitral awards.
in June 19, 1953.
If you will notice, under our ADR Act of 2004,
In other fields of law, arbitration and mediation have international commercial arbitration shall be principally
been introduced as well. However, they are not in the governed by UNCITRAL Model Law. That is in the field
concept of ADR that we understand today or as of international commerce.
embodied in the ADR Act.
What is our basic social unit next to the family? The
In what fields of law are these? In Labor Law or Barangay. Under the LGC, the Katarungang
Industrial Relations, there was already voluntary and Pambarangay Law was mentioned. Here, we have 3
compulsory arbitration. There is also mediation but it is methods of ADR: mediation, conciliation and arbitration.
not the way it is contemplated in the ADR Act but they Although the ADR Act was passed in 2004, we are
are almost the same except for one thing. already undergoing through this processes a long, long
What is that? The third person that would participate in time ago.
the conflict resolution is a public official. That is why Not to be outdone, our courts have also adopted some
they do not fall under the ADR Act. ADR forms: The JDR and the Court-Annexed Mediation
As far as ADR is concerned, what is the first and in fact, CAM was introduced in the last decade of the
convention? In 1958, there was a New York Convention. previous century while JDR, in the first decade of this
What was it all about? It was for the enforcement of century. In other words, the judiciary is very much ahead
arbitral awards. When countries come out with of the legislative branch as far as ADR is concerned.
decisions or awards in their respective arbitrations, there When did the ADR Act become a law? This law was
is no uniformity in the applicable rules and countries approved April 2, 2004, pubished on April 13 and
have the tendency of protecting their own subjects, ergo, became effective on April 28, 2004. (Case: Equitable PCI
you have favored awards. To resolve this problem, Banking Corp. v. RCBC)
members of the UN opted to adopt a common way of
recognizing and enforcing arbitral awards. And you call What kind of law is this? A special law. So as against
that the 1958 New York Convention. The Philippines the Civil Code, this will have precedence. In one case, it
adhered to this treaty. Therefore, we are mandated to was considered as a procedural law but I would not
respect, recognize and enforce foreign arbitral awards. So consider it as totally a procedural law. Perhaps, the better
if you are a party debtor who resides in the Philippines way to describe it it that it is a remedial law.
and there was an arbitral award in another country, you
are to recognize such award. What is the implication of this? It can be
given a retroactive effect. (Case: Equitable PCI
The other UN Convention is all about what? The Banking Corp. v. RCBC) Ang Rules of Court, yun,
UNCITRAL or the United Nations Commission on procedural law yun but if it is a combination of a
International Trade Law. What is this all about? This substantive and procedural, you call it remedial
was also held in New York. Very easy to remember, the law. This says that even for those controversies
first one was held in 1958, this one, just reverse, 1985. that happened prior to 2004, they are already
New York Convention which is otherwise known as the governed by the ADR Act.
UNCITRAL. The purpose of the Convention was to
come out with a model law.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 3

What is the State Policy as far as ADR is concerned? DEFINITION OF TERMS


How many policies are embodied in Sec. 2? There
are 4 but there is only 1 principal policy, i.e., to actively ADR- In its most general sense, it is any method or
promote party autonomy in the resolution of disputes or procedure of resolving dispute other than court litigation.
the freedom of the parties to make their own You do away with court litigation.
arrangements to resolve their disputes.
Under the ADR Act any process or procedure used to
What is the meaning of party autonomy? The resolve a dispute or controversy, other than by
freedom of the parties to make their own arrangements adjudication of a presiding judge of a court or an officer
to resolve their disputes. of a government agency, as defined in this Act, in which
a neutral third party participates to assist in the resolution
What are the 3 implementing policies in of issues, which includes arbitration, mediation,
order to promote party autonomy? conciliation, early neutral evaluation, mini-trial, or any
combination thereof.
1. The law shall promote ADR systems;
2. The law shall provide facilities that will What are the elements of ADR?
be used in these ADR systems; and
3. To enlist private sector. 1. It is a process to resolve a dispute;
-It is intended to solve a dispute, not to give
In other words, in coming out with the ADR birth to new problems.
Act, the ADR forms that are countenanced by -In interpreting the law on ADR, it has to be
this law must be such that instead of public interpreted liberally in favor of party autonomy,
officials who will act as a neutral third party, it confidentiality, choice of the private sector and
will be the private sector who must be engaged. against the participation of the government.
What is the reason for this? Not because of 2. It must not contravene any legal provision
impartiality issues; people in the government can (ex. gambling, combat, etc.);
be as impartial as in the private sector. It is 3. It must observe party autonomy
because when the public sector is involved in a 4. It does not involve court litigation and the
proceeding, people will always treat them as the participation of the public sector; and
stronger arm. Isipin mo na lang kung si Mayor yan o 5. There must be a neutral third person who
isang NBI agent, edi pag may sinabi ka, baka bukas, will assist the parties in coming out with a
kinakalkal na yung bahay mo. They are always resolution or who will render an award
associated with the strong arm of the State. We
Mediation a voluntary process in which a mediator,
avoid that. Kaya pivate sector. This will encourage
people to open up and participate in order to selected by the disputing parties, facilitates
assure party autonomy. communication and negotiation, and assists the parties in
reaching a voluntary agreement regarding a dispute
What does the last paragraph of Sec. 2
provide? Without prejudice to the adoption by It is a process in which a mediator, who is either selected
the SC of any ADR system. Meaning, they by the parties or appointed by the rules, will assist the
recognize that the SC already utilizes ADR parties in communicating and negotiating with one
forms. However the SC, as you will observe later another in arriving at the solution. In other words, he is
on, the ADR Law made mention that the SC can the cupid.
come out with rules in order to govern the
Who makes the decision or the resolution in
procedure in certain aspects of the ADR Act.
mediation? The parties. They are the authors of their
In addition to this, there is Section 52 or the Rule own solution.
Making Power of the Secretary of the DOJ where he is to
What is the output of this process? Mediated
formulate the appropriate rules and regulations necessary
settlement agreement.
for the implementation of this act. So that when you
study the ADR Act, you will also have to study its IRR. Conciliation a special type of mediation whereby the
Aside from that, also study the Special Rules on ADR neutral third party, aside from assisting the parties in
but only the applicable provisions germane to our communicating and negotiating with one another and
discussion. arriving in a solution, gives counseling and personal
opinion to the parties with regard to the controversy.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 4

Where did we encounter conciliation? Did the law Parang ikaw, may away kayong dalawa, kunwari sinong mas
define what conciliation is? Under the law on maganda. At the start of the proceeding, you try to convince me that
mediation, you can find conciliation. It is included there. you are more beautiful than her. Same is true with your opponent.
Sa huli, mag-aassess yung evaluator kung sinong mas maganda.
Who makes the decision or the resolution in Pero anong purpose nun? It is a nonbinding assessment. Pang-guide
conciliation? The parties. lang. Parang sasabihin niya, Pareho kayong maganda, pero mas
maganda yung isa. so pwedeng maisip nung isa, Sige na nga,
What does the conciliator do? mas maganda ka. Hindi yung Ikaw maganda, siya pangit.
That is trial system.
Assist the parties in communicating and
negotiating with one another and arriving in a What is the net output of a successful arbitration? A
solution settlement agreement.
Gives counseling and personal opinion to the
parties with regard to the controversy Who is the author of the solution? The parties
Gives an assessment or evaluation of the dispute themselves.
Such that if it goes into a full-blown trial, they But what is the task of the neutral evaluator? He shall
would be guided where they stand. It is a non- come out with an assessment. But it is nonbinding. It
binding assessment. He is a mediator who gives should only serve as a guidance.
a non-binding assessment to the parties.

What is the net output of a successful conciliation? Mini-Trial a structured dispute resolution method in
Mediated settlement agreement also. which the merits of a case are argued before a panel
comprising of senior decision makers with or without the
Arbitration a voluntary dispute resolution process in presence of a neutral third person after which the parties
which one or more arbitrators, appointed in accordance seek a negotiated settlement.
with the agreement of the parties, or rules promulgated
pursuant to this Act, resolve a dispute by rendering an This is the only method wherein the participation of a
award. neutral third person is NOT mandatory. It normally
happens when people are represented. Most probably,
Who makes the decision or the resolution in you will encounter this in the corporate setup wherein
arbitration? The arbitrator. the officers of different corporations will sit together and
submit their respective affidavits. Parang o, evaluate this, this
What is the net output of a successful arbitration? is our position, yung isa din, ganun. Then after the exchange
of ideas and documents, they discuss. After discussing,
GR: An award. the representatives are expected to bring with them an
EXPN: Unless during the process of arbitration, authority to negotiate with one another and if possible, to
the parties agree to a mediation. sign an agreement. So there is no need for a neutral third
In such event, it will be a settlement party.
agreement.
What is the net output here? Still a settlement
Early Neutral Evaluation (ENE) ADR process agreement. There is really no evaluation to be made.
wherein parties and their lawyers are brought together
early in a pre-trial phase to present summaries of their Let us illustrate this. Assuming, ikaw, di ka makaka-attend
cases and receive a nonbinding assessment by an tapos ikaw di ka din makaka-attend so you send representatives.
experienced neutral person, with expertise in the subject Who would be your representatives? Your respective boyfriends.
[or] in the substance of the dispute. Parang Mas maganda girlfriend ko yung isa ganun din. Tas
after ng exchange of ideas, someone will say, Maganda nga ang
Please note that while the definition of ADR only girlfriend mo pero maganda din naman yung sakin, diba? So
included ENE, when you go to the other forms of ADR, settlement agreement.
another term is used: ENE followed by Neutral
Evaluation. Who is the author of the solution? The parties
themselves.
It is a procedure wherein part of the proceeding would
be for the parties to discuss the merits of their respective
positions. Thereafter, the evaluator will come out with an Let us go to Arbitration.
assessment.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 5

Conflict may arise among individuals, right? Conflict may confirmed the approval of RA 9285 by the President on
also arise between a corporation and an individual and April 2, 2004 and published on the newspaper on April
among two corporations. Likewise between two 13. So 15 days after the publication, which is April 28,
government agencies, between a government agency and 2014, it became a law. Henceforth, since it became a law
a private entity, state agains a state, a corporation in one after that date, its application to cases should follow as
state against a corporation in another state. matter of course; any cases filed after that should follow
RA 9285.
The ADR Act provides for 3 kinds of arbitration. In the case, the transaction happened sometime in 2000.
What are they? The request for arbitration was sometime in May of
1. Domestic arbitration 2004. The arbitral award was sometime in 2008.
2. International commercial arbitration Consequently, this is governed by the ADR Act.
3. Construction industry arbitration According to the SC, since the arbitration was initiated
after the effectivity of the law, the arbitration including
Now, we have identified them already: Mediation they the remedies after the award has been made must comply
shall be governed by the provisions of the ADR Act, with RA 9285.
Conciliation same is true. If arbitration?
If it is international commercial arbitration, it What does RA 9285 provide as far as questioning an
shall be governed by certain provisions of the arbitral award is concerned? That there should be a
ADR Act as well as UNCITRAL Model Law petition to vacate, petition to correct or petition to
together with the 1958 New York Convention amend, as the case may be. It has to be filed with the
If it is a domestic arbitration, it shall be governed RTC.
primarily by the ADR Act; secondarily, by the
Arbitration Law; thirdly, the Civil Code and After a decision has been rendered by the RTC, the
other related laws. remedy is to file an appeal under Sec. 46 of RA 9285. In
If it is construction industry arbitration, it shall this particular case, Equitable PCI Bank did not file an
be governed by EO No. 1008 together with its appeal. Instead, they filed a petition for review under
IRR. Rule 45. The SC said that the remedy is an appeal to the
CA and not a petition for review on certiorari under Rule
Now, the problem is if it falls under the other forms of 45. Having violated this, the petition was dismissed.
ADR (ENE, mini-trial, etc.), what will govern? The law Nonetheless, the SC ruled on the merit. Why did
says, if it partakes of the nature of arbitration, then you Equitable go to the Higher Court? Kasi sabi nila, may
adopt Arbitration Law. If it partakes of the nature of manifest disregard of the law. And that is one of the grounds
mediation, adopt the Law on Mediation. to vacate an arbitral award. Manifest disregard of the law.
Why manifest disregard of the law according to them?
CASES UNDER CHAPTER 1 Because the arbitral award was allegedly not in
consonance with our law on prescription, due process of
NOTE: ACTUAL FACTS OF THE ASSIGNED CASES
law and that there was a failure to cross-examine the
MAY DIFFER FROM WHAT WERE DISCUSSED. I witnesses of the winning party. The SC said that yes,
BASED THESE SOLELY UPON THE DISCUSSION OF manifest disregard of the law is one of the grounds to
ATTY. FERNANDEZ. vacate an arbitral award. Nonetheless, you have to prove
it. In this case, they said that it was not present.
1. EQUITABLE PCI BANK v. RCBC
This case involves a sales purchase agreement. There is 2. CHUNG FU INDUSTRIES V. CA
an arbitration clause in the agreement. Part of the The reason why I included this case is because my
agreement is a guaranty. There is a general guaranty discussion last time centered on a statement made by the
covered by par. 5(g) and theres a specific guaranty ponente, conflict is inherent in human society, much
covered by par. 5(h). Under par. 5(g), all claims arising effort has been exerted by men and institutions in
therefrom must be raised within 3 years after the devising ways of resolving conflicts. However, hindi
perfection or the closing date of the Sales Purchase niya inexplain to. They made it as a gospel truth without
Agreement. With respect to par. 5(h), it has to be filed any explanation. Lahat ng tao, gustong umangat, eh sa
within 6 months from the closing date. So that if you pagkagusto niya, lahat din ng tao, umaangat. Eh hindi common
base your claim under Par. 5(g), you are given 3 years and ang mga tao so definitely there will be a clash of interest.
if 5(h), 6 months.
This case is about a contract supposedly to construct a
Now what is the materiality of this case to our lesson in warehouse. The contractor was not able to finish the
Chapter 1? Please note that it is in this case that the SC construction. Ergo, the owner (Chung Fu) assumed the
construction. Roblecor, however, demanded for payment

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 6

and damages because he was not allowed to complete the 3. INSULAR SAVINGS BANK v. FEBTC
transaction. In this particular case, there was an Checks are special types of bills of exchange. Instead of
agreement in the arbitration clause which says, no paying cash, you issue checks. Now, how are these
further judicial recourse shall be allowed if the parties checks processed? Present it to the bank and that bank
disagree with the findings of the arbitrator because the (depository bank) will bring the check to Philippine
award shall be considered final and unappealable. The SC Clearing House Corp (PCHC). It is a body whose
made an outline on the reports assuming there is an members are financial institutions. Its function is to serve
arbitration clause. If there is an arbitration clause, the as the clearing center. It is where they bring a check to
claimant must institute an arbitration. If and when allow another bank (the drawee bank) either to accept or
another party to the arbitration went to the court ahead refuse the validity of the check. PCHC provided for
of the arbitration and subsequently a request for arbitration of disputes. Assuming that one bank refuses
arbitration is filed, what happens now? The SC said, you to honor a check, magkakaron ng claim pag yung isa has
do not dismiss the case. You simply suspend the case and already paid the check blablabla. Then the dispute shall have
await for the outcome of the arbitration. to be resolved by the arbitral body.

In this case, the arbitration was supposed to take place in In this case, Insular Bank was still under the name of
Korea. Please note that the contract was executed in and another bank. Here, the clearing house provided for
the project was in the Philippines. If you are going to remedies for its own awards. Sabi ng PCHC, if we have an
read the Construction Arbitration Law, the arbitration award and you want to question our award, you file a
here must be filed before the CIAC. However, in this notice of appeal before us and file a petition for review
case, the arbitration in Korea may continue. Why? with the RTC. The SC said that jurisdiction is something
Because the lawyer of the local company did not raise it that cannot be agreed upon by the parties. Jurisdiction is
as an issue. So, the lower court dismissed the case and let provided for by law. PCHC, although it has adopted its
the parties arbitrate. But there is a twist in this particular own arbitration rule, that rule cannot change our mode
case. Here, instead of filing an arbitration before the of going to courts. Consequently, the SC said that the
Korean Center for Arbitration, the Filipino company petition for review is not accordance with the Rules of
filed a case so that there will be an arbitration in the Court. Under the Rules, in order to do away with the
Philippines. What Chung Fu did was to raise the arbitral award, you must first file a petition to vacate the
arbitration clause. However, the court tried to convince award. Hence, the petition for review was dismissed.
the parties to enter into a new arbitration agreement and
that agreement was approved by the court. There, it was In this case, the SC also came out with an observation
agreed that the award by the arbitral body shall be final that the benefits that we derive out of ADR include
and unappealable. Unfortunately for Chungfu, syempre, the following:
Pilipino sa kapwa Pilipino, natalo siya. It is less time-consuming
It is less tedious
It is valid to provide in the arbitration clause that the It is less costly
award shall be final and unappealable. However, that
It is less confrontational
agreement will not deprive the court of its jurisdiction to
review in appropriate cases. In this case, under the new It promotes goodwill
arbitration clause, the arbitrator acted with grave abuse of It fosters a good lasting relationship
discretion. Therefore, resort to the Supeme Court is
proper. A certiorari is proper. 4. REYES v. BALDE

The award was vacated for being manifest disregard of It is a case involving the construction of a house, the
the law, there being an abuse of discretion. Why? house belongs to spouses Esquig. On the other hand, the
Because of the 12 grounds, there are no less than 5 contractor is Reyes, the party here is the judge. Esquiq
grounds that could show that there was really an abuse of initiated an arbitration pursuant to the arbitration clause
discretion. before the CIAC then Reyes filed a case with the RTC
for accounting. According to Reyes, there is a need for
Nagkaroon ng coup d etat. Dahil dun, nagkadelay. During the accounting and since this is does not involve
delay, the arbitrator awarded damages in favor of construction anymore but mere computation blablabla,
Roblecor dahil daw sa delay nung nagka-coup. Pati nung the CIAC has no jurisdiction. In the same manner, the
nagkabagyo, binigyan din niya ng compensation si Roblecor. Pati Esquig spouses questioned the case for accounting. They
sa increase ng presyo ng cement. Obviously, the arbitrator said that under the under the law, this is within the
favored one party. SC held that the lower court should exclusive jurisdiction of CIAC because this is involves a
have exercised its authority to vacate. dispute in the construction industry. Now please note
that in a claim that involves construction, regardless of

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 7

whether it is merely a collection of a sum of money, Pera


na lang pinag-usapan diba wala nang construction, still, it arose Their statement in these two cases is that, the arbitration
out of the construction contract, it will still be the CIAC clause is valid because anyway, the arbitrators are simply
who will have jurisdiction and the RTC case has to be authorized to determine factual issues. As what youve
dismissed. learned in Insurance Law, there are insurance adjusters,
the ones whod compute the real amount of the claim,
5. ABS-CBN v. WORLD INTERACTIVE when you bring your policy after an incident. After an
NETWORK SYSTEMS (WINS) JAPAN CO. incident, the insurance company doesnt give you the
In ABS-CBN, there is this arbitration clause, which whole amount in your contract, they will have their
included a sweeping clause that says that: The decision adjuster visit your place and he will compute the amount
of the arbitrator shall be final and unappealable; and no of their liability. Yun yung method nila sa insurance way back
further judicial recourse if either party disagrees with in 1910. So that determines nothing about the law, only
whole or any part thereof may be availed of. The the value, price, and all other factual issues. In other
Supreme Court noted that if the arbitral award rendered words, had the arbitration clause was to the effect that all
in favor of WINS, the ABS-CBNs petition on the findings of law or fact are final and unappealable, the
confirmation of the award, (ito ba yung naging segurista sila Supreme court would have stricken it down. Fortunately,
na they filed two cases). In other words, they filed a petition the arbitration clause here was not invalidated precisely
for review which combines Rule 45 on one hand and because limited lang naman yung trabaho ng arbitrators noon:
Rule on the other. Thinking perhaps, that if one is only to determine factual issues. So it does not deprive us
dismissed because it is the wrong mode of appeal, we still of our jurisdiction. Why? If questions of law are not
have the other one. In other words, this is the double- involved, we can always review.
barrel approach. Now for this reason alone, if you go to
the Higher Court using Rule 45 and Rule 65 in a single 7. ALLEN v. PROVINCE OF TAYABAS
petition, the Supreme Court said, this is a no-no in VEGA v. SAN CARLOS MILLING CO.
appellate practice. If you do so, your petition is doomed In these two cases, the SC started to change its attitude
for dismissal. Regardless of whatever is the subject about arbitration already. The SC believes that an
matter of your petition, combining the two rules is a no- arbitration clause which is declared by the parties in the
no, it is a pandaraya. You have to choose only one. agreement that the arbitral award shall be final and
However, the Supreme Court said, if you have no ground unappealable shall not be declared unlawful simply
to vacate because the grounds are very limited, if your because of that provision. It will only be declared
ground is there is palpable error in question of fact or law unlawful if it absolutely deprives the courts of
which does not necessarily fall under the four grounds to jurisdiction. And we will not interpret any arbitration
vacate, a party still has a remedy in Rule 43. In short, clause as invalid unless there is strong evidence that the
even if naging sigurista sila, none of those two are the arbitration clause is really invalid. Oo, pwede pa din siyang i-
appropriate remedies, not 45, not 46 but Rule 43. Why? declare as invalid especially if it absolutely deprives the
Because Rule 43 specifically provides that among the court of its jurisdiction.
cases involving arbitral awards, the decision of various
governmental entities, including an arbitral board shall be The view of Justice Malcolm is that even if the
appealable under this Rule. So if you want to go to the arbitration clause declares that the arbitral award is final
Higher Court and you have no more ground to vacate, and unappealable, it shall not be invalid just for that
Rule 43 can be your remedy. In which case, you go to the simple reason alone. Parang absolute yung kanyang
Court of Appeals directly from the arbitral body. interpretation. Therefore, in his dissenting opinion, he
said that this decision, the shift in the attitude of the
6. CHANG v. ROYAL EXCHANGE court toward arbitration clauses started to crystallize yung
ASSURANCE CORPORATION change in the attitude.
Ive included this case in your syllabus because I want
you to realize that ADR was not initially acceptable for 8. KOREAN TECHNOLOGIES v. LERMA
our courts. In this case, if you will notice, the Supreme DEL MONTE CORP-USA v. CA
Court did not say out right that the arbitration clause is In these cases, considering that arbitration is supposed to
invalid, instead they said that since the issue to be be international commercial arbitration, is it invalid if you
resolved is a factual issue, then the arbitration clause did provide an arbitration clause which says that the
not deprive the court of its jurisdiction. Now assuming arbitration should be done outside of the Philippines?
that the arbitration clause at that time is to the effect that The SC said no, because if that is your agreement that
all the rulings of the arbitral body involving all questions yours is an international commercial arbitration, then that
of law and questions of fact shall be final and is a valid clause. Why? Because after all, according to SC,
unappealable, definitely the SC at that time should have these two cases show that the SC has confirmed our
stricken down that arbitration clause.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 8

adherence to both the New York Convention of 1958 Section 4 of the ADR Act
and the New York Convention of 1985. (Electronic Signatures in Global and E-Commerce Act)

Here, the SC held that ADR such as arbitration, Its provisions are also applied in ADR meaning
mediation and conciliation are encouraged. And because we can now use electronic evidence in defending
they are encouraged, interpretation of the law must be in our claims in our proceedings.
favor of ADR. An information cannot be denied validity or
enforceability solely on the ground that is in the
form of an electronic data message
What laws shall govern alternative dispute An information cannot be denied validity and
resolutions? enforceability upon ground that it is merely
Republic Act 9285 (ADR Act) incorporated by reference; that it is just attached
Section 54 provides that a general repealing or referred to in your principal document.
clause. What is the problem about that? Since it
is a general repeal, there is still something done Kunwari, yung arbitration clause, naka-attach lang sa isang page
by the reader, you do not know with certainty na hindi nasign-an, basta duly incorporated by reference siya,
which laws were repealed already. pwede na. If I were the signatory I would have perhaps
The Implementing Rules & Regulations signed the major contract, but since mostly are annexes I
Civil Code provisions on Compromises wouldnt have the patience to sign all pages. The
When we go to Mediation, the result of a principal contract were the ones signed by the signatories
successful mediation would be a mediated but since there are attachments, yet unfortunately only
settlement agreement. It is nothing else but a one of the parties signed the annexes.
compromise. Compromise is defined as a
contract where parties give reciprocal
concessions in order to avoid litigation or stop MEDIATION
that which has already been instituted.
Is it possible that when the parties have a mediation
What laws shall govern arbitration? agreement but nonetheless, no one invoked that
provision in their agreement such that the action
1. International Commercial Arbitration that transpired has proceeded the pre-trial and
The provisions of the ADR Act on Arbitration during pre-trial, there was a CAM. Is it possible that
The Implementing Rules & Regulations the court will again refer this to a second mediation?
The Model Law YES. It is not a waste of time. The court has the
discretion to do so and it is merely enforcing the
The New York Convention of 1958 as far as
agreement of the parties.
recognition and enforcement of foreign arbitral
award is concerned.
Let us twist the facts. Assuming that there was
already a Court-Referred Mediation and after such,
2. Domestic Arbitration
there is again CAM, can there be a third mediation?
The provisions of the ADR Act YES. As far as mediation after pre-trial is concerned, the
The IRR on Domestic Arbitration. law provides that ---------------------
Arbitration Law (Republic Act 876) What are the duties of a mediator? Classify.
1. Duties relative to Impartiality
3. Construction Industry Arbitration 2. Duties relative to Self-determination
CIAC 3. Duties relative to Confidentiality
EO 1008 4. Duties relative to Requisite Qualification
Procedural rules on Construction Industry 5. Duties relative to the Conciliation Process
Arbitration. 6. Duties relative to the Mediation Process

What laws shall govern the other forms of ADR?


Law on Mediation if akin to mediation
Law on Arbitration if akin to arbitration

Not to be outdone, the SC came out with Special Rules


of Court on ADR.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 9

DUTIES RELATIVE TO IMPARTIALITY DUTIES RELATIVE TO CONSENT OR


SELF-DETERMINATION
1. Make an inquiry
Principle of Self-determination
When: Before accepting a mediation Giving the party the choice on the manner in which the
What: If there are any known facts that a reasonable proceedings will be done. The practice lies on the parties
individual would consider likely to affect the on how it will be done.
impartiality of the mediator.
1. Determine whether the parties know the
- The Mediator shall inquire whether he has financial nature of mediation as an alternative dispute
or personal interest in the outcome of the resolution procedure.
proceeding.
- Whether he has past or existing relationship with If the parties are not aware of its nature, perhaps their
the parties involved. confrontation will result into an adversarial procedure.

Assuming that he has discovered something, he has duty 2. Determine whether the parties know that
to disclose it with the parties. they have the right to participate and to
provide solution to the problem.
2. Make a disclosure
3. If the mediator finds out that the parties do not appreciate
4 instances which the mediator is mandated to make a the nature of mediation, to limit the issues to
disclosure: matters which the powers or the
1. Things that he already knows even prior to the understanding of the parties can
inquiry or as long as the fact will affect his accomodate.
impartiality;
2. Things he has discovered by reason of the Kung hanggang diyan lang sila, wag mo silang pilitin mag mediate
inquiry; further if they can only appreciate the matter up to that point.
3. After acceptance, things that he has discovered that
will affect his impartiality; 4. Terminate the proceeding if it appears to be
4. Things that one of the parties require him to useless.
disclose, whether it will affect his impartiality of
not, he has to disclose. Primary duty as to the principle of self-
determination: Mediator must always remind himself
3. Make a solicitation that it is not his role to come up with a solution, rather it
4. Not to be engaged professionally is within the parties to do so.

DUTIES RELATIVE TO CONFIDENTIALITY Otherwise, if the solution comes from him, the parties
will think that it is a superimposed solution which will
1. Duty to keep with utmost confidence all result to mistrust with the proceedings. There will be no
confidential information or half-hearted acceptance of the result.

Not because he wants to disclose it, he has the right to DUTIES RELATIVE TO THE
do so because the parties, aside from being given the CONCILIATION PROCESS
right to be protected of confidentiality of the information
gathered from the mediation proceedings, he himself has 1. GR: Refrain from giving legal or technical advice
the duty keep it confidential. EXPN: 1. If it is an evaluative mediation
2. Both parties agrees to it
2. He has to assure the parties that whatever
will be discussed in these proceedings will 2. GR: Refrain from giving an assessment or evaluation
be kept confidential on the merit of the controversy
EXPN: 1. If it is an evaluative mediation
2. Both parties agrees to it

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 10

Sa palagay niyo, mediator, ano ang dapat? Oo nga naman, But this specific provision (Section 14) talks of a lawyer
mediator, ano sa tingin niyo? Both parties agree.What is or any third person which may assist the party. What are
evaluative mediation? Assuming the only dispute is the rules?
about the interpretation of the law (example, are we 1. Unless prohibited by the rules, the parties may
covered by this law or not) and both parties are not designate a lawyer to participate in the proceedings
aware of the technicalities, the mediator can give his 2. The right to have lawyer may be waived provided
opinion because he cannot discuss with them unless he that it is in writing
delves into the issue. 3. That such waiver may be rescinded at any time of
the proceeding.
When the parties are not represented, what are his
duties with regard to conciliation?Recommend that Please note that the IRR gave several duties to the
the parites seek legal or professional advice. lawyer when he is participating in a mediation
proceeding. What are these?
DUTIES RELATIVE TO THE
MEDIATION PROCESS 1. To remember that his role in participating in a
mediation proceeding is to act as a collaborator
1. To let the parties know the settlement cost to the other party.
At the end of the day, they will have to know the total
settlement cost of the settlement as far as the resolution Since they are collaborators, there should be cooperation
is concerned. It is his duty to explain the parties to the among them. They should love one another.
actual settlement cost and their individual responsibilities
Normally what happens is that lawyers would create
2. Observe professionalism more friction if they dont collaborate which would not
The mediator should have professional relationship with help in resolving the problem.
the parties. He should be well-versed with the situation.
2. That the lawyer shall encourage his client to
3. Establish mutual respect actively participate in the proceeding.
In case it comes to a point that one of the parties are Say what you mean and mean what you say.
already shouting, he should know how to stop them. The
mediator should be in control of the proceedings, when 3. The lawyer shall prepare his client by letting him
one party is discussing he should make sure that the understand the mediation process, what the dispute
other would listen instead of cutting the conversation. is all about, the issues, the position of the parties, the
possible solutions to the problem, and if
4. Ensure that there is no abuse of the process unsuccessful, what other alternatives they have.
Examples could be when one of the parties would
successively avoid the proceedings using different PROVISIONS OF THE CIVIL CODE
excuses, when one of them would keep you waiting ON COMPROMISES
during a proceeding, or when during a proceeding one of
the parties would bring a very influential person so that If the party is a minor, a ward who is legally incapacitated, or
the other wouldnt be able to react well. an estate of a deceased

There should be a court approval so that the


PARTICIPATION IN THE compromise may be valid.
MEDIATION PROCESS
As a mediator, you should know whether your client is
Who are the participants in a mediation proceeding? legally incapacitated because if so, the court would have
The mediator, the parties, and if they want, they may to approve the settlement agreement.
designate a lawyer, counsel, or any third person whom
the parties agree to be present. These can also be experts If one of the parties is a corporation or a partnership
who have knowledge on the matter or the people who
are employed in the mediation process such as the Juridical persons may compromise only in the form
secretary, the messenger, etc. and with the requisites which may be necessary to
alienate their property.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 11

This means, since corporations act only by INSTITUTIONAL MEDIATION


representatives, these representatives should have
appropriate authority; there should be a board resolution, Section 16 provides two agreements:
secretarys certificate and if necessary, a special power of 1. When they agree that their mediation shall be
attorney to negotiate and to settle the dispute. conducted by an institution;
2. That their mediation shall be conducted in
PLACE OF MEDIATION accordance with the rules of the institution.

The parties may determine the place of mediation. If they simply agreed to the first one, then they will be
In the absence of such agreement, the mediation bound by the internal policies of the institution.
shall be done in any place that is considered as However, if the further agree that the rules of the
convenient and appropriate as to all parties. institution shall apply to their mediation, then their
Who decides if the place is convenient and mediation shall be conducted in accordance with the
appropriate? The mediator should decide but done rules and that the parties as well as the mediator shall be
in consultation with the parties. bound by such rules.

The mediator must consult the parties. If there is no Why did I make such fine distinction? Because even if
consultation, would it be invalid, can they object to you chose a particular institution, you can still agree to a
the proceeding? This premise is subject to self- different rule. Party autonomy guarantees your right that
destruction of the resolution because they are given to you can still agree on a different set of rules.
chance to cancel the negotiation when they find it
inconvenient. ADR Act/IRR shall govern over institutional
mediation rules in case of conflict.
GUIDELINES IN THE
CONDUCT OF THE MEDIATION What will govern a mediation if it is ad hoc? The
agreement of the parties. In case of absence of
1. There should be no untruthful/exaggerated agreement, the ADR Act and its IRR.
statements on the dispute resolution process and the
outcome. Assuming that there is conflict between the
2. The mediator shall help the parties reach a agreement of the parties and the ADR Act/IRR,
satisfactory resolution to the dispute but has no what will prevail? Mandatory provisions shall
authority to impose a settlement to the parties. prevail. But if the conflict is between the agreement of
the parties and mere directory provisions of the Act, the
The principle of self-determination where the parties former shall govern.
will decide the solution to the problem shall be
observed. What will govern the procedure of mediation if it is
institutional? The agreement of the parties. In case of
3. The parties should personally appear, if they do not absence of agreement, the ADR Act and its IRR.
want to do so, their representatives should be
present with written authority to negotiate/settle. Assuming that there is conflict between the
4. The mediation should be held in private. agreement of the parties and the ADR Act/IRR,
what will prevail? Mandatory provisions shall
The actual conduct of the mediation proceedings may be prevail. But if the conflict is between the agreement of
agreed upon by the parties but usually, these are the the parties and mere directory provisions of the Act, the
stages: former shall govern.
1. Opening statement of the mediator
2. Individual narration by the parties The court cannot force the parties to enter into an
3. Exchange by the parties agreement. It can only refer.
4. Summary of the issues
5. Generalization and evaluation of options What is a Mediated Settlement Agreement? The
6. Closure concluding document in a successful mediation.

How do you prepare it?


The parties, assisted by their counsels, if any,
and the mediator, shall prepare it.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 12

The mediator, parties and their counsels shall Assuming that there is already an enforcement proceeding, what
sign it. will you do? You raise your grounds for annulment as
The mediator shall certify (by signing) that he alternative defenses to the enforcement.
has read the agreement before the parties and
the have understood the contents thereof. Will a newly discovered document affect the issues
The settlement agreement shall be sealed and settled?
not disclosed to the courts except there is a GR: No.
petition for enforcement of the agreement EXPN: The document pertains to all the issues
or a single issue which is also an issue with the
If they do not wish to seal the agreement, they may mediator.
choose to deposit the same with the court.
What are the remedies in case of non-compliance by
Article 2037 of the Civil Code provides that there shall the other party or if the party who is trying to enforce
be no execution except in compliance with judicial extrajudicially fails?
compromise. Article 2041 of the Civil Code provides that he may:
1. Go to the court for enforcement
What is the purpose of the deposit with the court? It 2. File an action for rescission
is the initiatory or preparatory step for future
enforcement. Why? Because the IRR so provides that COSTS AND FEES
only deposited settlement agreements can be the subject
of enforcement by the court. Rule: Distinguish.

Who makes the deposit? The parties. If it is ad hoc,


- The parties are free to agree on the charges
Assuming that one of the parties would not agree to the deposit, - In the absence of such agreement, they shall be
what is the effect? Ideal situation is both parties would governed by the rates that are pegged by the Office for
agree to the deposit. If the other party does not agree, Alternative Dispute Resolution
your remedy is simply notify that other party that you will
deposit it unilaterally. If it is institutional,
- Mediation cost shall include the administrative charges
When are you supposed to make the deposit? Is of the mediation institution, mediators fees and
there a prescriptive period? Since a compromise is a associated expenses
contract, apply the prescriptive period for contracts. - In default of agreement of the parties as to the amount
and manner of payment of the mediations cost and fees,
Recommendations under the IRR relative to the the same shall be determined in accordance with the
preparation of the settlement agreement: applicable internal rules of the mediation service provider
1. Strive to make the terms and agreement taking into consideration the following factors:
complete. Complexity of the case
2. To address the contingencies of non-compliance Number of hours spent in mediaiton
or non-performance by the parties Training, experience and stature of the mediators

What is the effect of compromise under the Civil The mediators fee cannot be dependent on the outcome.
Code? It has the effect of res judicata. The parties shall If the mediation is terminated, the fees shall be adjusted.
be bound by their agreement and they can no longer
enforce their claim which is already covered by a ARBITRATION, IN GENERAL
compromise agreement in a court of law.
As far as arbitration is concerned, that is the history of
What is the remedy of a party who does not want to ADR is the history of arbitration.
comply/has a valid reason not to comply with the
settlement agreement? File an annulment proceeding. When we defined arbitration last time, we emphasized on
the fact that as far as the ADR Law is concerned, it is a
What would be his grounds? Those provided for under voluntary process. If it is not a voluntary process, then it
annulment of contracts. is not an arbitration under the ADR because all
arbitrations made under the ADR Law are voluntary.
Meaning to say, it is a choice made by the parties.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 13

In arbitration, the parties still litigate; there is still trial. Who can be an arbitrator? Anyone. Is there a need to
The procedure is still adversarial. The neutral third become a laywer? No need. For as long as you have
person still renders a decision and such is supposed to be some intelligence. You will not get someone who has
based on the merits of the case. Consequently, the parties very low IQ. Other than that, anyone can be an
still need to present evidence. So if it is not different with arbitrator. Who appoints? Normally, the parties. But the
the ordinary court trial, then what is the advantage in appointment can be done indirectly by the parties
engaging in arbitration than a court trial? It is the through an appointing authority or through certain
choice of the neutral third person whom they can trust. mechanism. What is the composition? The usual is
If he is a judge, any misdemeanor on his part means that composed of a panel of three but sometimes, a sole
he could be disciplined. How about the arbitrator? His arbitrator is allowed. Who determines if it should be
liability is limited to damages. In that, as far as neutrality sole or a panel? The agreement of the parties. Assuming
is concerned, a judge is expected to be more neutral. that the parties failed to indicate their choice, what is the
default mode? In international commercial and
Is arbitration really inexpensive? I dont think so. domestic arbitrations, the default is it should be
Most of arbitration proceedings involve a panel. If there composed of 3 arbitrators. In construction industry
is savings, perhaps, you can find that in the fact that arbitration, there is no such presumption. The parties are
parties are allowed to stipulate that whatever award is allowed to agree and if they failed to do so and the
rendered can be considered as final and unappealable. arbitration has already been commenced, the CIAC will
Since there is no more appeal, there will be a savings of ask the parties to advise the CIAC of their choice.
time, cost and efforts. But as to the fees, I think its more However, chances are, in the real practice, CIAC would
expensive to pay arbitrators. always appoint a panel of arbitrators, meaning they have
some sort of veto power. So even if the parties have
Kinds of Arbitrations agreed that they want a sole arbitrator, CIAC will appoint
a panel. So what would they do? They will ask each of
As to the relationship of the parties to one another the parties to nominate 3 arbitrators then the CIAC will
International Commercial make the choice.
Domestic
Construction Industry Can foreign individuals be arbitrators? Yes. Do they
need accreditation? No. Accreditation is for the benefit
As to the venue of the parties and not as a recognition of the
performance of that arbitrator.
Domestic in the Philippines
Foreign outside the Philippines What is arbitration agreement? It is a contract
whereby the parties agree that their dispute shall be
As to consent settled by an arbitration. It can be simply a one liner but
Voluntary choice of the parties it can go as long as they want. Kung gusto niyo na ilagay
Compulsary imposed by law lahat, lagay niyo na hanggang venue, effect, enforcement blablabla.
It must always be in writing. The three elements of a
As to the service provider contract must be present.
Ad hoc Types of arbitration agreement
Instutional/administered Agreement to Arbitrate
o Arbitration Clause
What is the objective of arbitration? To provide a o Independent Contract
speedy, inexpensive and voluntary process of resolving a o Contract by way of reference
dispute hence, it will avoid the formalities, expenses, Submission Agreement after the dispute has
aggravation and the delay that are incumbent in an already arisen, thats the time when the parties
ordinary trial. will agree to submit their dispute to arbitration

What is the policy of the State with regard to Doctrine of Separability or Severability
arbitration? The State encourages the parties to arbitrate In the cases assigned, one decision says that if the
rather than to litigate. principal contract is null and void, the ancillary contract,
which is the arbitration agreement, is also null and void.
What is the coverage of the ADR Act? Only up to However, two years thereafter, the SC reversed itself in
voluntary arbitration and these are international that it already adopted the Principle of Severability.
commercial, domestic and construction industry
arbitration.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 14

What is this doctrine? When you studied ObliCon, you NOTE: An arbitral body is not a governmental agency but it is
were asked to distinguish a principal contract from an still considered as an instrumentality. Why? Because its
ancillary contract. Principal can stand on its own and the organization is authorized by law for purposes of exercising
ancillary depends on the existence of the other. quasi-judicial function hence, there should be observance of
Therefore, if the principal contract is null and void, there due process, nonetheless. What kind of due process?
Administrative due process, not judicial. What are the
can be no ancillary contract which is valid. Principle of
requirements? Dual requirements of notice and hearing. In
severability is an exception. Regardless of the validity or fact, even if there is no notice, as long as he had the
invalidity of the principal contract, the arbitration opportunity to ventilate his cause, administrative due process
agreement, whether it is a separate contract, or merely an has been complied with. How about hearing or cross-
arbitration clause or by way of reference or a submission examination? The law says if allowed by the rules, then it
agreement, it shall be treated independently in such a becomes a matter of right however, it is a mere personal right.
manner that the validity of the principal will not affect Therefore, it can be waived.
the arbitration agreement. Why? By necessity because
how else can arbitration serve its function if the moment
you declare the principal contract as null and void, it INTERNATIONAL COMMERCIAL
loses its authority. ARBITRATION
Commencement of Arbitration The law on international commercial arbitration can be
The law says arbitration shall start by the agreement of found on 4 documents:
the parties but if they failed to provide, it shall
commence when the respondent receives a notice or 1. ADR Act PRINCIPAL LAW
request for arbitration. From that time on, arbitration 2. UNCITRAL Model Law
commences. 3. IRR of the ADR Act
4. 1958 New York Convention for the
Constitution of the Arbitral Body enforcement and recognition of arbitral awards
Arbitral Body may refer to sole arbitrator or a panel
of arbitrators. SECTION 19- ADOPTION OF THE MODEL
LAW ON INTERNATIONAL COMMERCIAL
When is it deemed constituted? ARBITRATION
If he is a sole arbitrator, from the moment he
accepts his nomination and such acceptance has What is a model law? A pattern or sample law. It is
been communicated to the parties. intended for several States therefore, its provisions must
be simple.
If it is a panel of arbitrators, there must be be 3
arbitrators and the 3rd arbitrator shall be chosen Does it regulate anything? Unless a State adopts it as
by the first 2 arbitrators so the acceptance of the its own law, it is nothing else but a piece of paper.
3rd arbitrator is pivotal here and such acceptance,
when communicated to the parties, shall start the When was it formed? 1985
constitution of the arbitral body.
When did the Philippines adopt it? 2004
Why is this material? Because prior to to the
constitution, you ask for interim measures of What are the purposes of adopting the model law?
protection from the courts alone. After the 1. To recognize the desirability of uniformity on
constitution, you can now ask the arbitral body the law of arbitral procedures
to issue such protection unless it is obvious that 2. To recognize the specific needs of international
the arbitral body has the authority to grant such arbitration practice for a uniform law
protection or is ineffective. In which event, go to
the court. NOTE: The adopting States are still free to add matters that
are germane to their respective system. Therefore, not all
Doctrine of Competence Competence subject matters relative to arbitration are governed by the
Why do you use the word twice? An arbitral body is Model Law. Only those that are deemed common to all shall
competent to determine its own competence. In other be governed by it.
words, it has the authority to determine for itself if it has
jurisdiction over a particular dispute. It doesnt have to It is considered as lex specialis. Meaning that for matters
governed specifically by the Model Law, no other provisions of
go to another entity to determine if it is competent.
the domestic law shall interfere on that particular matter.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 15

Whatever is provided for by the Model Law, it will be to the What is that policy? That it favors arbitration.
exclusion of all domestic provisions. It is a special law.
Where a provision of this chapter leaves the
Matters NOT governed by the Model Law parties free to determine a certain issue, such
Arbitrability of the subject matter of dispute freedom includes the right of the parties to
Capacity of the parties to enter into an arbitraion authorize a third party, including the institution,
agreement to make that determination.
State immunity from suit
Enforcement by national courts of interim It means that the parties are free to delegate the
measures of protection right to agree or to stipulate on matters which
Competence of the arbitrator to reform a they are allowed to to other persons including
contract the institution.
- Under our Civil Code, our courts cannot
contract for the parties. INTERNATIONAL COMMERCIAL
Fixing of arbitrators fees ARBITRATION
Request for deposit
Prescription or time limit As discussed last time, the UNCITRAL Model Law was
intended to be a pattern and member states of the United
Consolidation of arbitral proceedings
Nations are encouraged to adopt it as their own law with
Contractual relations between the arbitrators, respect to arbitration conducted between international
parties or the arbitral body parties. Because of this, the UNCITRAL Model Law,
Security fees being a pattern law, must be simple, brief and without
Enforcement of the award by the court much of details. Otherwise, while the conflict may not be
That is why after the adoption of the Model Law, the SC among the states, the conflict will arise between domestic
came out with the Special Rules of Court on ADR. law and the model law. So, only the essentials are
provided by the model law. It will not tell you about the
SECTION 20 INTERPRETATION OF THE details.
MODEL LAW
Article 1 - The scope of application
In interpreting the Model Law, regard shall be had
into its international origin. Because of its Par. 1 says that the model law shall apply to international
international character and because our ADR Law is commercial arbitration (ICA) subject to any agreement in
recent, we can use the jurisprudence of other countries. force between the state and any other state/s. What does
We can rely on how they interpreted the provisions of this mean? It will govern international commercial
the Model Law. arbitration. However, it is without prejudice to existing
agreements among states. Do you still remember your
In interpreting the Model Law, regard shall be made Transpo Law? Have you heard of CoGSA? That is an
of the need for uniformity in its interpretation. international treaty. For as long as carriage of goods by
Precisely, it is adopted by the UN Commission on sea, it will be governed by that treaty and not the Model
International Trade Law for purposes of uniformity. You Law.
cannot come out with an interpretation contrary to the
interpretation made by other countries. Par. 2 a lot of students are confused whether ICA is the
same as foreign arbitration. That is not the case. ICA is
In interpreting the Model Law, resort may be made more akin to domestic arbitration. Why? Because it is an
to travaux preparatories. It is the UNCITRAL. Like in arbitration that must be conducted within the Philippine
Congress, diba may journal. Dito naman, UNCITRAL.The territory. It is not a foreign arbitration with an
preparatory work or report of the Secretary General. international color. Why do we call it an international
color? Because the parties therein are international
Whenever you read Section 20, please do not forget parties. While we call it international, it is not a foreign
Article 4.2 of the IRR. It talks about the rules of arbitration. The second clause of par. 2 provides for an
interpretation and it gave us additional tools of exception. Except Arts. 8, 9, 35 and 36.
interpretation.
In interpreting this chapter, the court shall have
due regard of the policy of the law with regard to
arbitration.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 16

Art. 8 The referral by the court of the Company A is in Japan as well as Company B. However,
dispute to an arbitration in that arbitration agreement pertaining to a project in the
Philippines, they said that the arbitration shall be
If and when the parties go to Philippine Courts but they conducted in the Philippines. It becomes now an
have an arbitration agreement, in order to submit their international arbitration as well.
dispute to a foreign institution, that is a situation where
the arbitration will take place outside of the Philippines The third instance where there will be an international
but nonetheless, to the extent that the referral is to be arbitration notwithstanding the fact that the parties hold
made, it will be governed by the Model Law. That is the their principal office in the same state is if the obligation
exception. Meaning to say, you apply the law only in the which under that relationship between them (dafuq) is to
Philippines except in these four instances. First one is be performed substantially in another state or the subject
referral. matter of their relationship is closer to another state.

Art. 9 The interim measures of protection Finally, par. c, it would still be an international arbitration
if by agreement, the parties stipulated that the subject
While the arbitration may take place outside of the matter of their arbitration agreement relates to more than
Philippines, you still apply the Model Law applicable to one country. In these 4 instances, arbitration is
the Philippine arbitration for applications for interim international. And these international arbitrations are
measures of protection. conducted in our country being the adoptive state.

Art. 35 & 36 Recognition, enforcement and Par. 4 is just a clarification. Assuming that a party has
the action to vacate foreign arbitral awards several places of business. It conducts business in HK, in
Japan and Singapore. How would you know his place of
For as long as the arbitration is conducted business as far as international commercial arbitration is
outside but they want it to be enforced in the Philippines, concerned? The place of business is that which has the
they want it to be vacated in the Philippines, you apply closest relationship to the arbitration agreement.
the Model Law in these instances, only to the extent that Assuming Company A conducts business in Japan, HK,
you are enforcing, recognizing or vacating the foreign Singapore and the Philippines. Now, there is a
arbitral award. transaction where a supply agreement of materials is
involved. The materials should be supplied in the
Par. 3 International Arbitration. Please note that the Philippines. What is the place of business, then? As far as
Model Law did not define what a commercial law is all an arbitration relating to that subject, the place of
about. Rather, it gave emphasis to what is international business is in the Philippines.
arbitration. Your definition of commercial arbitration is
found in ADR Act. An arbitration is deemed If a party has no place of business, then his place of
international in several instances. The first one is if the business shall be deemed to be his habitual residence.
parties to an arbitration have their places of business in
different states. Ex. Company A conducts business in Par. 5 Do you still remember the first few provisions of
Japan. Company B conducts business in the Philippines. the ADR Act where there can be certain matters which
The principal office of Company A is in Japan. The cannot be the subject of alternative dispute resolution?
principal office of Company B is in the Philippines. They That is what is being contemplated in this provision. In
have an aggravation in the Philippines. Thats not the Philippines, if there is a a law that provides for
domestic arbitration. It is an international arbitration. arbitration of a particular subject matter, under certain
What is the international element there? The fact that procedure, then that will not be governed by the
one party does not have its place of business in the international commercial arbitration under the Model
Philippines. This is the Place of Business Test. If the Law. For example, a labor dispute, seamen, crew
places of business of the parties to an arbitration pertain members of a particular vessel docked in Palawan. The
to various states and the arbitration is conducted in the crewmen are Indians claiming their salary from the
Philippines, then the arbitration is international. owners of the vessel who are Russians. Unfortunately,
they are in the Philippines. They filed a case. Can they
What about if both parties hold their places of business just say, lets file for arbitration? What are they claiming?
in one and the same country? That is provided for by Unpaid salary of seamen. Under our law, it will be
subparagraph b of par. 3 of Art. 1. Assuming that the governed by arbitration under the NLRC. All the
parties conduct their business in the same State, there can elements of internationality are present but you will not
still be an international arbitration for as long as their apply the international commercial arbitration provisions
places of business is different from where the arbitration of the Model Law because there is a law in the
is conducted as agreed upon in the arbitration agreement. Philippines which deals with these matters.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 17

ARTICLE 2 Definition of Arbitration Model Law as well as the ADR Act that are mandatory
and there are those which are merely directory. Rule of
Remember that international commercial arbitration can thumb to guide you whether it is mandatory or directory-
either be ad hoc or administered. Whenever you use the if the law says UNLESS the parties agree to the
term Arbitral tribunal, using the Model Law, that contrary, the rule is it is merely directory. But that is
tribunal may either be sole arbitrator or a panel of only a guide. Chances are directory lang yan. The parties
arbitrators. So you can refer a single individual as an are given discretion eh. If a provision of law or a
arbitral tribunal. Simply speaking, if you are into procedure by agreement of the parties is something that
grammar, then, thats wrong. the parties may derogate from, then non-compliance by
one party without the other party raising an objection but
We discussed already the last 3 paragraphs of Article 2 rather proceeded with the arbitration and the objection
when we discussed the interpretation of the law on ICA. was not given in due time or within the period provided
The 1st one being if there is an agreement, if the parties for, then such failure to object is deemed a waiver of that
are allowed to agree, then they can extend themselves provision. Eh directory lang, hindi mandatory eh.
through their representatives. Assuming that they have
made an agreement, that agreement shall include the ARTICLE 5
rules of an institution if they agreed that their arbitration
shall be administered by an institution. We also discussed The court, as much as possible, should not interfere with
last time that whenever the words claim and defense are the arbitration. But this is not absolute. There are
used in the Model Law, they shall refer to counterclaims instances where the court is allowed to interfere in the
as well as defense to the counterclaim except in Article dispute. Appeal, interim measures of protection, etc.
35-a (the provision in default) or Art. 32 par 2, subpar. a. However, Art. 5 emphasizes the fact that if at all, let us
not involve the courts anymore unless it is necessary.
ARTICLE 3 Receipt of Written Communication When is it necessary? When it is allowed by the law itself.
Some of this instances are in Art. 6
The reason in including this provision is because most of
the delays happen because of this exchange of There are 6 provisions in the Model Law where the
communications. So, to avoid further delay, the framers courts are allowed to intervene in arbitration. In Section
of the Model Law deemed it appropriate to provide 27 of the ADR Act which defines appointing authority,
provisions on the receipt of communications. The receipt only the first 4 are provided. However, here in Article 6
may refer to actual receipt or constructive receipt. If it is of the Model Law, added are Art. 16 par 3 and Art. 34
actual, it could be in two ways. The first one is when par 2. Who is the appointing authority under Sec. 27 of
you personally deliver the communication to the person the ADR Act? He is the one appointed by the parties or
wherever he is found. You reside in Cebu but you are in the institution designated by the parties to act as the
Baguio for a convention. I give it to you in Baguio. That appointing authority. In default of that, if the arbitration
is personal delivery. Anywhere you are found. Second is ad hoc, the appointing authority shall be the National
actual receipt is when you deliver the communication to President of the IBP or his representative. If it is
the place of business, to his habitual residence or his last institutional, the officer of the institution as defined by
known address. For as long as there is proof of delivery, the rules of such institution. Those are the appointing
it is valid. Constructive receipt happens when the one authorities. Art. 16 pertains to challenge procedure.
sending the communication is no longer aware of the Challenging the appointment of the arbitrator. In other
current whereabouts of the addressee. What you do is if words, tapos na ang appointment. In this instance, if
you know his last place of business, his last habitual there is an issue regarding the challenge procedure, you
residence or his last known address, you send it there go to the court directly na. Art. 34 par 2 pertains to the
through mail or any kind of delivery for as long as there setting aside of an award. That is a purely judicial action.
is a record to that effect. If you use LBC, it is recorded. The appointing authority has no business in that award.
They are more efficient than our postal office. When is it So, kapag courts ang usapan, yung anim. Kapag
deemed received? On the day it is delivered. appointing authority, yung apat lang na nasa Section 27
ng ADR Act.
The provisions of this article do not apply to
communications in all court proceedings.
Now if there is a mix-up, where do you go first? The rule
ARTICLE 4 Waiver of Right to Object is you go first to the appointing authority. If he neglects
his duty, go to the court.
One term which you should be very particular with is the
term derogate. Law from which the parties to
arbitration may not derogate. There are provisions of the

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 18

Pivotal matter: when we defined commercial arbitration, Model Law is deemed modified by Sec. 24 of the ADR
it pertains to a dispute arising from a commercial Act.
relationship. Diba? Whether it is contractual or not. Look
at the words in this law. which may arise between them Par 2 If there is a pending court proceeding, the
in respect of a defined legal relationship, whether arbitration could still be availed of and award can still be
contractual or not. As contemplated by the Model Law, rendered.
it may apply to any kind of relationship for as long as it is
legal. However in the Philippines, if we talk of ARTICLE 9 ARBITRATION AGREEMENT
international arbitration, it must be an arbitration which AND INTERIM MEASURES
is commercial as well. Why? Because when we signed the
UN Convention of New York of 1958 for the This is also Sec. 28 of the ADR Act. Why is the provision
enforcement and recognition of foreign arbitral awards, in the ADR Act very detailed while this one is a one-liner
our subscription to the treaty was conditioned upon the paragraph? Because this is supposed to be a uniform law.
fact that the award must be in a dispute which must be The simpler it is, the better.
commercial in character. So to be uniform, since we
limited our participation in the 1958 Convention to ARTICLE 10 NUMBER OF ARBITRATORS
commercial arbitration, by necessity, we also have to
define commercial arbitration and limit our international The parties are free to agree on the number. Failure to do
arbitration to commercial ones. so, default mode is the panel of arbitrators shall be
composed of 3 arbitrators. Rule of thumb, you shall
FORM OF ARBITRATION AGREMENT never forget, agree on only 1 arbitrator. Otherwise, the
default mode is 3 arbitrators. You triple the cost.
Arbitration Agreement is present when:
No person shall be excluded from acting as an arbitrator
ARBITRATION AGREEMENT IN WRITING by reason of his nationality unless otherwise agreed by
the parties There is another exception there. In case of a
o If expressly stipulated and signed by the parties sole arbitrator or the appointment of a third arbitrator.
o Exchange of communications if the agreement to Consideration must be made by the appointing authority.
arbitrate can be traced therein, then that will The sole arbitrator or the 3rd arbitrator must not be of
constitute an agreement to arbitrate the same nationality as any of the parties.
o I made a request to you, let us please arbitrate on
the dispute that happened between us. In your How about the manner of appointing them? The first
defense, you did not address the invitation to rule is you can adopt your own procedure. Kung gusto
arbitrate. From that exchange of statement of claims mo, maglagay ka ng sarili mong qualifications, pwede.
and defenses, it can be inferred that the parties Pano pipiliin, bunutan, tambyolo, pwede! Kung anong
considered to submit their dispute to arbitration, gusto niyo. Par. 3 of Art. 11 talks about a situation
then it can be deemed to be an agreement to wherein no agreement on procedure has been made by
arbitrate. the parties. Nakaligtaan baka tinamad na si Attorney.
o If a contract refers to a document which embodies What does the Model Law provide? Each party shall
an arbitration clause provided that the major contract appoint their own members in the panel of arbitrators.
is in writing and that the referral is very clear that the The third one shall be chosen by the two arbitrators
arbitration clause shall likewise apply to the main already chosen. That is in case of a panel of 3 arbitrators.
contract. Pag walang reference na mag-aapply din If sole arbitrator, he must be chosen by the parties. Now,
yung clause sa main contract, hindi pwede. par. 11 subparagraph 3 (a) is to the effect that if there is a
problem, you can refer to the appointing authority or the
ARTICLE 8 court. Subparagraph b is also a matter which can be
referred to the appointing authority or the court.
Section 24 of the ADR Act pertains to the referral to
arbitration. Actually, Article 8 is nothing else but Sec. 24. The first scenario is there is a procedure and it was
However, there is a slight difference. Dun sa isa, there is followed. The second scenario is there is no procedure,
a mention of pre-trial. Prior to pre-trial, one party may use the law. The third scenario is there is a procedure but
request. After pre-trial, both parties must request. Sa there is a failure to comply with the procedure. In which
Model Law, sabi lang, a party may request that the event, you can again refer to the appointing authority.
dispute be referred to arbitration prior to his statement
on the substance of the dispute. In other words, prior to Please note that whenever the appointing authority or the
the filing of any pleading. Our conclusion? Since our court will make the appointment for and in behalf of the
principal law on ADR is the ADR Act, Article 8 of the

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 19

parties relative to par. 3 and 4 of this article, the court ARTICLE 14 FAILURE OR IMPOSSIBILITY
shall take into consideration 3 matters: TO ACT

1. The qualification of the arbitrator as agreed If an arbitrator is unable or for some reasons, fails to
upon by the parties perform his functions or fails to act with undue delay, his
2. There should be no circumstances relative to this mandate is terminated if he withdraws or if the parties
appointee that would affect his independence agree on his termination. Otherwise, the request maybe
and impartiality, also the expectation of the made by one party in accordance with Article 6. When
parties. Mamaya ang dispute regarding sa future you challenge a particular arbitrator or an arbitrator,
commodities tapos ang inappoint eh high school either de jure or de facto, fails to perform, there are three
graduate, anong malay niya dun. options:
3. The non-appointment of an arbitrator who is of
the same nationality as any of the parties 1. He voluntarily withdraws. Chinachallenge ako?
Withdraw na lang ako. To hell with these parties.
GROUNDS FOR CHALLENGE 2. If he does not want to inhibit, for the other party
to agree na iterminate na siya.
When we studied mediation law under the ADR Act, we
talked about the duty to disclose of the mediator. Here in Challenge is resolved on the merits. Under the law, it says
arbitration, there is also that duty. However, the here that otherwise, if any of the controversy remains
provision of the Model Law is simpler than that of the concerning any of these grounds, any party may request
mediation law. Here what are they supposed to dispose? the court or the other authorities described in Article 6 to
decide on the termination which decision shall be subject
1. Circumstances that might affect the to no appeal.
independence or impartiality of the
arbitrator If you think there is a circumstance If someone withdraws, it shall not be taken against him.
or a fact that might affect your impartiality or
independence, you have to divulge that. Kunwari CHALLENGE OF JURISDICTION
ex-girlfriend ko yung isang party tapos
kinindatan niya ko tapos kinindatan ko din siya. Jurisdiction is defective in two ways.
That might affect my impartiality. So kailangan
kong sabihin na ex ko siya. 1. One is the quasi-judicial body simply doesnt
2. The arbitrator does not possess the have authority. Therefore, it has no jurisdiction.
qualification as agreed upon by the parties. 2. Second, it has the jurisdiction. However, it
abused it by making acts which are beyond his
Last sentence a party may challenge an arbitrator authority.
appointed by him or in whose appointment he has
participated after he becomes aware of the circumstances If the issue of jurisdiction of the arbitral tribunal is to be
after the appointment has been made. Inappoint mo nga raised, the law says that the tribunal can rule on its own
siya eh hindi mo pa alam eh. Kapag nalaman mo ayun jurisdiction. Who will determine if it has jurisdiction or
pwede mo na ichallenge. not? The arbitral body has the authority to determine.
This is the principle of competence-competence.
CHALLENGE PROCEDURE
Par 2 is the Principle of Separability. Par 3 is how the
The parties are free to agree on the procedure arbitral tribunal will resolve. The decision of the arbitral
In default thereof, follow what is provided for by tribunal that the contract is null and void shall not ipso
law. That is within 15 days from notice of the facto or ipso jure entail the invalidity of the arbitration
constitution of the arbitral body or from the clause. However, it can also be proven that the
time that you became aware of that arbitration clause is likewise void. There can be a ruling
circumstance. File a request to inhibit. that both the mother contract and the arbitration
Assuming that this challenge is not acted upon. agreement are null and void.
Then, you can go to the appointing authority
A plea that the arbitral tribunal does not have
within 30 days.
jurisdiction shall be raised not later than the
The decision is without appeal. If the court submission of the statement of defense.
already decided, it is unappealable.
Lack of jurisdiction plea must be made before the
submission of defense

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 20

Abuse of discretion amounting to lack of jurisdiction What must be embodied in the claim?
shall be raised as soon as the matter alleged to be
beyond the scope of its authority is raised during the Facts supporting his claim
arbitral proceedings. Issues and the ground relied upon
Relief prayed for
The arbitral tribunal may, in either case, admit a later plea
Attachments of documents
if it considers the delay justied.
If the documents are voluminous, just make a
reference to the documents which you intend to
Assuming you pleaded that there is lack of jurisdiction.
use during the proceedings.
The arbitral tribunal has the option.
ART 24 HEARINGS AND PROCEEDINGS
It may resolve the same as a preliminary issue; or
it may resolve the same at the time they render Subject to any contrary agreement by the parties, the
judgment. arbitral tribunal shall decide whether to hold:
So to avoid all waste of time, money and effort, wag mo oral hearings for the presentation of evidence or
ng tanggapin kung alam mong wala kang jurisdiction.
for oral argument only, or
ARTICLE 18 Equal treatment of parties whether the proceedings shall be conducted on
the basis of documents and other materials.
This is the minimum requirement of due process in
arbitration proceedings. First, parties should be treated However, unless the parties have agreed that no hearings
with equality and they should be given full opportunities shall be held, the arbitral tribunal shall hold such hearings
to present their case. at an appropriate stage of the proceedings, if so
requested by a party.
Another requirement is he be given notice.
Normally, the arbitral tribunal will ask the parties
RULE 19 DETERMINATION OF RULES OF whether they agree that no hearing shall be conducted
PROCEDURE anymore. But that is very risky. Always tell your client to
make a reservation that a hearing may be requested.
Parties are free to agree on the procedure to be followed
by the arbitral tribunal in conducting the proceedings
subject to the mandatory provisions of the law. Par 2 & 3:
There must be a notice of any meeting or
If the parties fail to agree on the procedure, the arbitral hearing of the tribunal
tribunal shall determine its own procedure subject to the Any document submitted by one party to the
mandatory provisions of the law. arbitral tribunal must also be submitted to the
other party.
ART 20 & 22 PLACE OF ARBITRATION;
LANGUAGE ART 25 DEFAULT OF A PARTY

Slightly modified by Sec. 30 & 31 of the ADR Act. In this case, only the complainant may be declared in
default. The result is dismissal of your case because here,
ART 21 COMMENCEMENT OF THE the initiatory act is the request, not a statement of claim
PROCEEDINGS unlike in a regular judicial proceeding.

Unless otherwise agreed by the parties, the proceedings *Recording got cut. Just read the codal provisions of the
shall commence from the time the respondent has Model Law from Art. 26 onwards. Sorry!*
received the request to arbitrate. ______________

ART 23 STATEMENTS OF CLAIMS AND 10/15/14 Continuation of the discussion on the


DEFENSES Model Law

These are your principal pleadings. Whenever there is conflict or a proceeding, what are
the two types of laws involved? Substantive and
procedural laws.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 21

As far as procedural law is concerned, what will in rendering the award, the arbitrators have no
govern ICA? business using equity.
The ADR Act. It is not a substantive law, it is a
remedial law. Amiable compositeur
UNCITRAL Model Law Making an adjustment. Like the Solomonic
Special Rules of Court on ADR Decision Under the law perhaps would have been
to conduct a blood test but Solomon just used
IRR
adjustment, tinignan lang yung tao, itsura nung
babae. Parang compromise. If you are going to
All of these allow the parties to agree on the procedure.
accept this small amount, then I will convince the
But the agreement of the parties is not the law. It is the
other party to pay you. Arbitrators cannot also act as
law between the parties but not the law that will govern
amiable compositeur unless the parties agree to it.
the arbitrators.
In either case, the decision must be based on the
contract as interpreted by the substantive law as
What about substantive law?
agreed upon by the parties.
Law agreed upon by the parties
If you refer to a particular law belonging to a particular How does the panel of arbitrators exercise its
state, that law is not its conflict of law but decision-making authority?
substantive law. Example: Civil Code.
If sole arbitrator, he himself must decide
If panel of arbitrators, the decision must be made
In default of such, adopt the processual
by the majority of the arbitrators unless
presumption which is the law of the place where
otherwise agreed by the parties
arbitration is conducted. In which event, you will
also consider the conflict of law in that country. In case of questions of procedure, it may be
decided by the presiding arbitrator
In my experience as a lawyer, an ICA was conducted
in Singapore but the parties agreed that the Civil What if the parties instead of allowing the arbitrators to
Code shall be applied. Unfortunately, the arbitrator render an award, entered into a compromise agreement?
that was chosen was a Singaporean lawyer and since The arbitration proceeding shall be terminated. Upon
he does not know what the Civil Code is all about, request with the arbitral tribunal, the compromise
we had to present evidence on what the Civil Code is agreement shall be made in the form of an award.
all about. Unfortunately again, he forgot everything
that we discussed. Thus, he applied the common law Form and contents of the award
on sales. And this is wrong because under our Civil 1. Must be in writing
Code, the parties must restore to each other what 2. Signed by the arbitrator/s
they may have received in case rescission occurs. In 3. Basis of such award unless the parties agree that
the case, it was rescinded, there was no order to no such basis shall be stated
restore the goods and we were required to pay the 4. Place and date of arbitration
purchase price.
If one of these requirements has not been complied
Ex aequo et bono with, what will happen to the award? *Sir did not
The UNCITRAL Model Law says that arbitral answer*
tribunals shall decide ex aequo et bono or as amiable
compositeur only if the parties has expressly After the award has been rendered, what will happen to
authorized it do so. Aequo et bono is nothing else the arbitration proceeding? It will be terminated. What
but equity and fairness. is the requirement so that it will be terminated?
When the award has become final or there is an order
When do you use equity under our jurisdiction? terminating the proceeding. When does an award
Only when there is no applicable law. If there is an become final? If the party whom the award is invoked
applicable law, the duty of the court is just to apply against does not contest the award within 30 days from
the law. the day the award has been rendered. Where shall he
contest? To another body via an appeal. Therefore, the
The provision of the Model Law is to the effect that authority of the arbitral tribunal shall not be terminated if
equity is to be used only when allowed by the there is an appeal.
parties. If the parties do not allow equity to be used

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 22

The period determinative of the finality of the award are recognizes a legitimate interest on his part in
the periods provided for in the correction and obtaining a final settlement on the dispute
interpretation of the award by the arbitral body. After the 3. Any further proceeding will no longer be
lapse of 30 days and there is no request for correction or necessary or possible
interpretation, it becomes final.
RECOURSE AGAINST THE AWARD
Rules on Correction and Interpretation of the award
What is the remedy in case a party is not satisfied
CORRECTION with the award? He must file a petition to set aside the
When: Within 30 days from the receipt of the award, arbitral award.
unless another period has been agreed upon
Requirements What is the period to file such petition? There is no
Request to the tribunal period provided by the Model Law
Notice to the other party
Subject matter of the correction Grounds for setting aside
Errors in computation 1. A party to the arbitration agreement was under some
incapacity; or the arbitration agreement is not valid
Clerical or typographical errors
under the law to which the parties have subjected it
Any errors of similar nature or in default an agreement as to the law applicable,
under the law of the country where the arbitration
How about errors in judgment? Not a proper proceeding was conducted;
subject matter of correction. 2. The party making the application was not given
notice to the appointment of the arbitrators or the
INTERPRETATION proceeding or was otherwise unable to present his
When: Within 30 days from the receipt of the award, case;
unless another period has been agreed upon 3. The award deals with a dispute not otherwise a
Requirements subject of the arbitration agreement or the terms of
The remedy of a request for interpretation has the submission to arbitration or beyond the terms
been previously agreed upon by the parties thereof;
Request to the tribunal
Notice to the other party NOTE: Principle of separability may be applied

NOTE: The arbitral tribunal may, in its own initiative, correct 4. The composition of the arbitral tribunal or the
its award within 30 days proceeding was not in accordance with the
agreement of the parties UNLESS their agreement
ADDITIONAL AWARD is in violation of a mandatory provision of the law
If a particular issue subject of the proceedings has been
omitted from the award. What if at the time the arbitration agreement was
contracted, one of the party is a minor but at the
When: Within 30 days from the receipt of the award time of arbitration, he is already of age, is that a
Requirements: ground to vacate an arbitral award? There is no waiver
Remedy to request has been previously agreed even if that previously incapacitated party participated in
upon by the parties the arbitration proceeding. The law requires that the
Notice to the other party parties are capacitated at the time they enter into an
Request to the tribunal arbitration agreement.

NOTE: The periods may be adjusted by the arbitral tribunal if Invalidity of the arbitration agreement
necessary. Illustration: A & B entered into an arbitration agreement.
The agreed that the arbitration shall be conducted in the
TERMINATION ORDER Philippines but the substantive law shall be the law of
Malaysia. It is valid under the Malaysian law but it is
What are the instances that would justify the order of invalid under the Philippines. Can the award be
termination? questioned? Yes because the arbitration agreement is not
1. The parties agree to terminate valid under the Philippine law as well.
2. The claimant withdraws, unless the respondent
objects thereto and the arbitral tribunal *Feeling ko mali si Sir dito. Sabi kasi sa Model Law,
isusubject mo lang siya sa law of the state where the

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 23

arbitration is being conducted kapag walang agreement as If the ICA was conducted in the Philippines but the
to the substantive law that will apply. So kung merong award is to be enforced in Japan, there is nothing that
agreement, like yung sa Malaysia, kung valid sa Malaysia, would prevent the winning party to have the award
hindi na dapat siya maqquestion. Kung wala yung recognized in the Philippines.
agreement na Malaysian Laws yung mag-aapply, saka lang
magiging ground to question the award dahil valid sa laws As far as arbitral awards rendered in the Philippines are
ng country where the arbitration is being conducted, i.e., concerned, we do not ask for their recognition. Rather,
Philippine laws. Feeling ko lang naman. Thouuuugh may we ask for their confirmation.
point siya sa next example*
ADR ACT
Assuming the arbitration agreement says Issues
pertaining to marriage shall be subject to international Foreign awards under the ADR Act
commercial arbitration with regard to disputes regarding Convention award
the parties properties Can you subject that arbitration Non-convention award
in the Philippines? No because under the ADR Act, it is
excluded. It is not arbitrable. Why is it considered as a convention award? It was
rendered in a country who is a signatory to the UN
*So pano na? Lol* Convention of New York.
DUE PROCESS REQUIREMENT What else is the distinction between them as far as
Notice enforcement and recognition are concerned? A foreign
Opportunity to present his case convention award regardless of the state where it was
rendered may be recognized and enforced in the
Even if he was notified but he was not given an Philippines.
opportunity to present his case, the award is
questionable. Even if it is a non-convention award, by reason of the
principle of reciprocity and comity among nations, that
These are the grounds to set aside provided for the award rendered in that non-convention country may still
parties. What are the grounds provided for the court be enforced in the Philippines as a convention award.
to set aside the award? With respect to non-convention awards rendered in a
1. Subject matter of the arbitration is not capable country where we dont have a reciprocity and comity
of settlement agreement, then we will have to treat it as just another
2. Subject matter of the award is contrary to public foreign judgment.
policy
Foreign award vs. Foreign judgment (Possible bar
What shall the party who is very much in favor of the question)
award do after the rendition of the award? File for the Foreign award A conclusive presumption of a right.
recognition and enforcement of the award. Once it is recognized in the Philippines, it will be
enforced as any other decision in the Philippine courts. It
Recognition is an enforceable decision. The court will no longer
inquire into the merits of the award. The only thing you
What law shall govern the recognition and enforcement have to prove are the jurisdictional facts, i.e.,
of an award in an ICA? ICA conducted in the Philippines that the country where it was rendered is a
shall be governed by the Model Law as adopted by the signatory to the UN Convention
Philippines. It is just like any other domestic arbitration. documentary requirements (authentic copy of
ICA conducted outside the Philippines shall be the award, the arbitration agreement)
if the language is a language not pursuant to the
Is it possible to file a petition for recognition and a model law, a translation thereof
petition for enforcement separately or is that already If you miss one of these jurisdictional requirements, the
a splitting of cause of action? It is possible. It is award will not be recognized in the Philippines.
allowed and not considered as splitting of cause of action
because of the international character of the arbitration. Rule 39, Sec. 48 of the ROC
There is a big possibility that while it has been rendered Under the New York Convention, once a foreign arbitral
in this country but it has to be enforced in another award has been recognized in the Philippines, it can be
country. enforced as an arbitral award.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 24

If it is merely a foreign judgment, in order to enforce it, Domestic Arbitration


you have to abide by this rule under the Rules of Court. An arbitration conducted in the Philippines which does
Foreign judgment under the ROC. not have an international element. *Refer to the elements
that make an arbitration international*
If it is merely a presumption of an existence of a right,
then it is subject to rebuttal by the other party. It is In international arbitration, the arbitration is further
merely a proof that you have a right. There must be a qualified by commercial because the subject matter of the
determination by the judge that you really have that right. arbitration pertains to a dispute arising from a
The conclusion is that it is as if you have to file your commercial relationship, whether contractual or not.
claim in the Philippines again and there will be a trial de What about in domestic arbitration, what can be the
novo. Papatunayan mo nanaman lahat. With the subject matter of arbitration? It can be commercial
exception that you can use that foreign judgment as a (whether contractual or not) or non-commercial. The
proof of your right before the court. However, in an subject matter of arbitration is anything that pertains to a
arbitral award which was already recognized here, you legal relationship.
need not prove it again. You simply have to state the
jurisdictional facts which we have enumerated earlier. What type of dispute can be the subject matter of
domestic arbitration then if it only calls for a legal
If the court ordered the relationship? It must be a dispute that can be the
recognition/enforcement/setting aside of the subject matter of a legal action. For as long as they are
arbitral award? What will be the remedy of the losing not excluded by the ADR Act such as disputes regarding
party? The resolution of the RTC which recognized or legal separation, jurisdiction of courts, future legitimes,
enforced or set aside the arbitral award maybe subject of those which cannot be compromised, etc.
further appeal. To whom? To the Court of Appeals
under Sec. 45 of the ADR Act. SEC. 33 of ADR Act
Mentioned certain provisions of the Model Law
Aside from this appeal, is there anything else? Rule
43(1) Awards rendered by voluntary arbitrators are Art 8 of the Model Law Arbitration
subject to appeal to the Court of Appeals. An arbitral Agreement and Substantive Claim
proceeding is a quasi-judicial proceeding. That is why we If the parties brought before the court a subject
have to link it to this provision of the Rules of Court. It matter of a dispute which is also covered by the
is subject to petition for review under Rule 43 where arbitration agreement, upon request of one party
questions of both fact and/or law may be brought. Note before pre-trial or upon request of both parties after
that it is a direct appeal to the Court of Appeals from the pre-trial, the court shall refer the matter to
arbitral body to the CA; not from the RTC to the CA. arbitration UNLESS the court finds out that the
When there is manifest disregard of the law, you may use arbitration agreement is void.
this remedy.
If after pre-trial, only one party requested the court
to refer the case to arbitration, and the court denied
DOMESTIC ARBITRATION the request because only one party and not both
requested, can there still be arbitration nonetheless?
What shall govern Domestic Arbitration? Yes. Even if the court will not refer you to
arbitration, just proceed. By express provision of the
Primarily, by the Arbitration Law (RA 876)
law, notwithstanding the pendency of the referral by
Model Law the court, parties may still proceed with the
ADR Act provisions pertinent to international arbitration.
commercial arbitration (Sec 23-32) Article 10 Number of Arbitrators
IRR of the ADR Act o Parties may determine the number
Special Rules of Court on ADR With respect o In default thereof, there will be 3 arbitrators
to court proceedings affecting domestic Appointment of Arbitrators
arbitration o Parties may agree on the procedure of
appointment
By virtue of Sec. 32 of the ADR Act, reference has been Qualifications of the Arbitrators
made to the Arbitration Act of the Philippines. o No person shall be precluded to act as an
arbitrator by reason of his nationality

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 25

IF SOLE ARBITRATOR, Before whom shall the challenge shall be submitted?


GR: Parties must agree and appoint together the It must be filed with the arbitral tribunal.
arbitrator
IF THEY FAIL TO APPOINT: Appointment shall be What will happen next after submission of the
made by the appointing authority. challenge? The arbitrator concerned shall be given the
prerogative either to agree or to deny the challenge. In
IF PANEL OF ARBITRATORS, other words, he accepts or he withdraws. If he accepts
GR: Each party shall appoint 1 arbitrator. The two the challenge, he is given the right to defend himself. On
appointed arbitrators shall select the 3rd arbitrator. the part of the parties, they may agree nonetheless to
IF THE 2 FAILED TO AGREE ON THE 3RD remove the challenged arbitrator. Substitution shall take
ARBITRATOR: The appointing authority shall appoint. place in this case.

Assuming that there is an agreement on the NOTE: The agreement to remove an arbitrator may only
appointment. Is there still an instance where the be exercised once and that is immediately after the filing
appointing authority will make the appointment of the challenge.
nonetheless? Yes. When the procedure is not followed.
Determine whether it is a sole/panel of arbitrators. If the arbitrator accepts the challenge, it shall now be the
duty of the arbitral tribunal to resolve the challenge.
NOTE: While the law always mentions of appointing
authority, the IRR says that if the appointing authority fails to If the tribunal resolved in favor of the challenged
act within 30 days, that authority will be passed on, by way of a arbitrator, it is an unsuccessful challenge. As such, that
request, to the court. party who made the challenge can go to the appointing
authority which may deny or grant the challenge. If it
In other words, the order is: 1. Parties 2. Appointing grants the challenge and therefore removes the arbitrator,
Authority 3. Court it shall be unappealable. If the decision is to retain the
arbitrator or fails to act within 30 days, make a request to
IF ANY OF THESE MADE AN APPOINTMENT, the court.
SUCH APPOINTMENT SHALL NOT BE
APPEALABLE. IT BECOMES IMMEDIATELY NOTE: In all stages of the challenge, the arbitral tribunal is
EXECUTORY. obliged under the rules to continue with the proceeding. The
only instance where it will stop the proceeding is when
ART. 12 (Model Law) GROUNDS FOR the challenge reaches the court. In which event, the arbitral
CHALLENGE tribunal will have to suspend the proceeding in deference to
the courts authority. Once the latter decides on the challenge,
There exists a justifiable doubt as to the the proceeding is immediately resumed. If the decision is
independence and impartiality of the arbitrator removal, there will be substitution.
The qualifications of the arbitrator are not met
PROCEDURE OF THE ARBITRATION
NOTE: Under the Arbitration Law, there are certain PROCEEDING
qualifications provided. These qualifications must be
met as well. Otherwise, there is a ground to challenge. 1. Parties are free to agree
2. If they fail to agree,
What is the first duty of an arbitrator?
Before the acceptance of appointment or as soon as the If institutional, follow the rules of the institution
circumstance arises, disclose circumstances/facts that If ad hoc, that which is adopted by the arbitrators
would affect his independence and impartiality in consultation with the parties
NOTE: This is subject to waiver by the parties.
APPLICABLE PROVISIONS OF THE ADR ACT
ON DOMESTIC ARBITRATION
CHALLENGE PROCEDURE
Sec. 22 Legal Representation
A party has 15 days from the time he receives a
Even a non-lawyer may represent the parties. However, if
communication as to the appointment of the arbitrator
the representative is a non-lawyer, he may not represent
OR from the time he learns the circumstance which is
the party before the court and any quasi-judicial agency.
the ground to challenge the appointment to challenge the
appointment unless another period has been agreed upon
Meaning prior to the constitution of the arbitral body, for
by the parties.
purposes of application for interim measures of
protection OR during the proceedings where the tribunal

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 26

cannot act, the representative of the party must be a NOTE: ADR does not address multiplicity of suits
lawyer. but actually promotes it; however the focus is not
related to the multiplicity of suits instead to promote
CONFIDENTIALITY speedy resolutions

2. Whenever the law allows court intervention, the court


All matters in the arbitration proceeding are confidential will intervene; however this intervention will be limited
except: to those allowed by the law
Parties have agreed
Matters which must be disclosed to the court The court does not turn its back against ADR
instead the intervention should be in a
ARBITRATION LAW cooperative stance with respect to ADR.
Who are qualified to be a party to an arbitration If the law does not say that you can file an
proceeding? Persons who are parties to a valid appeal or a motion for reconsideration, then the
arbitration agreement or a valid submission to arbitration. court shall not grant it.
Not anybody can be a party to arbitration. ADR and the court are not independent with
each other, instead they are complementary
SPECIAL RULES OF COURT ON ADR
JUDICIAL POLICIES ON ARBITRATION
What are the policies of the state with regard to
ADR? 1. The court should refer the parties to
1. To promote the use of ADR in resolving disputes arbitration if they agree to arbitrate
2. To encourage the participation of the private sector Why? The basis of the court to do such is the
in the different modes of ADR law on contracts. Between the contracting parties,
3. To encourage the party autonomy in the settlement the terms and conditions embodied in that contract
of disputes shall be the law between them. If the parties agree
that their dispute will be solved via arbitration, it
shall be solved by arbitration. The court will simply
Among these policies, which are enunciated by the
Special Rules on ADR? The policy to actively promote implement that law between them.
the use of the modes of ADR and the principle of party
Preference for arbitration - Unlike before
autonomy.
where lawyers can make up reasons to avoid
What is the principle of self-determination as arbitration, now there is already a law that
compared to the principle of party autonomy? Self- prevents them to avoid arbitration.
determination is where the parties are the ones making
8 grounds to avoid arbitration (before) not valid
their own decision which is only applicable to mediation.
excuses anymore
Principle of Party autonomy is the freedom of the parties
to make arrangements for the settlement of their dispute 1. Referral tends to oust a court of its
and it applies to all modes of alternative dispute
jurisdiction
resolutions.
2. The court is in a better position to resolve
What are the judicial policies in relation to ADR in the dispute
the Special Rules on ADR? 3. Referral would result to multiplicity of suits
4. Arbitration proceeding has not commenced
1. To promote the use of ADR modes, specifically
mediation and arbitration. 5. Place of arbitration is in a foreign country
6. If one or more of the issues are legal and
How will this be implemented and what is the one or more arbitrators are not lawyers
use of promoting ADR? 7. One or more of the arbitrators are not
To unclog the court dockets Philippine nationals
To promote speedy resolution of disputes 8. One or more of the arbitrators are alleged
MOST IMPORTANT: To curb litigious not to possess the required qualification
culture (adversarial attitude of the parties under the arbitration agreement or law.
involved wherein they always consider each
other as their enemy)

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 27

2. Principle of Competence-Competence - The


court shall have the authority to determine whether it 3. Principle of Separability arbitration clause shall
has the authority to resolve the dispute be treated separately from the mother contract.
4. Recognition of the freedom of the parties to
First competence: Since the arbitral tribunal is the party determine the procedure of the arbitration itself
involved, then it will be given the first crack to determine Pag gusto nilang isang taon ang arbitration nila, isang taon
whether it is competent.
kung gusto nila isang oras, isang oras. Walang pakialam ang
Types of issues involved in the competence of the korte diyan. What is the rule in case there is no
Arbitral Tribunal agreement? The arbitral tribunal is free to adopt its
Whether or not the arbitral tribunal has own procedure. The Rules shall only be suppletory in
jurisdiction over the dispute character EXCEPT if the provision of the Rules is
Whether or not there is an existing valid one which the parties cannot derogate and therefore
arbitration agreement must be followed. In other words, if it is a
Whether there is a condition precedent which mandatory provision.
must be complied with
JUDICIAL POLICIES WITH RESPECT TO
Second competence: The court shall have the authority to MEDIATION
determine whether it has the authority to resolve the
dispute 1. Court-annexed mediation is not governed by our
ADR System. Rather, it shall be governed by the
Elements of competence-competence
corresponding Supreme Court Circular on the
In the principle of competence competence, matter. If it is court-annexed mediation, it is not
when you give the first crack to the arbitral within this course.
tribunal to determine its jurisdiction, the court 2. If the parties agree to submit their dispute to
shall act with restraint. mediation, the court shall suspend its
proceedings and refer the parties to voluntary
Act with judicial restraint Dapat hindi mediation.
nagmamadali. If the arbitral tribunal has the capability 3. Even if the parties agree that their dispute shall
to resolve the issue on its own, the court shall let the be settled by way of mediation, there is nothing
tribunal be the one to rule on the dispute. It doesnt
mean to refrain. that would prevent them to adopt subsequently
that instead of a voluntary mediation, they
When the court will resolve the issue of simply be governed by court-annexed mediation.
existence, validity and enforceability of an
arbitration agreement, then it will resolve it in a What are the judicial policies with respect to
mediation-arbitration?
prima facie manner. 1. No arbitrator shall also act as the mediator of the
parties and that in any negotiation conducted for
Prima facie determination Tentative in
character; will stand and has support but is purposes of settlement, no arbitrator should be
subject to change if there is a stronger ground to allowed to attend.
change it. 2. The mediator cannot also act as an arbitrator
except when the settlement agreement is reached
Prima facie evidence sufficient to prove a legal by the parties and part of that settlement
fact until a stronger evidence is made available. agreement states that their mediator shall also act
Pwedeng palitan. For as long as you can give a
as their arbitrator for purposes of rendering an
better basis for your new position but if you
cannot present a better position, it stands; it will award based on the settlement agreement.
govern. Pag sinabi ng court, this arbitration
agreement is invalid, that is only a prima facie
determination of the court. You can still prove
that it is valid. Same is true with the opposite, pag
sinabing valid, pwede mo pa din iprove na invalid.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 28

RULE 1
What is the proof of service that must be
What are the actions governed by the Special Rules attached to your petition before filing with the
on ADR? (ARI-ACTED-IF-CD) court? It depends on the mode of delivery. If by
personal delivery, the petitioner or his
1. Relief in relation to existence, validity and representative shall deliver it to the respondent. He
enforceability of an arbitration agreement. must execute an affidavit stating the circumstances
2. Referral to arbitration under which the petition was delivered. The time,
3. Interim measures of protection date, place of delivery and the manner of delivery. If
4. Appointment of arbitrators by courier, parang LBC, DHL, UPS. When they
5. Challenge procedure deliver it to you or to your authorized representative,
they let you sign something, the delivery receipt.
6. Termination of the mandate of the arbitrator
That receipt should be attached to your petition and
7. Assistance in taking evidence it is called by the court as the courier proof of
8. Confirmation, correction and vacation of a delivery. Assuming, there is no person
domestic arbitral award present/refusal to accept/failure to deliver either by
9. Recognition, enforcement and setting aside of an personal or courier delivery, the proof instead would
award in an international commercial arbitration be a reason for the failure or a statement which
10. Recognition and enforcement of foreign arbitral states that it was indeed delivered and explains the
reason why it failed.
award
11. Confidentiality protective orders Who will execute the affidavit in a courier
12. Deposit and enforcement of mediated service?
settlement agreements There is no need for an affidavit under the summary
of proceedings, instead it is still the courier proof of
What is the nature of these cases? They are considered service which will prevail provided that it is indicated
special proceedings as distinguished from ordinary civil therein that there was an attempt and the reason why
actions. that attempt failed.

What is its other characteristic? 9 of them are Assuming that you have complied with the proof
summary in character. 3 will be governed by regular of service and have performed the necessary
proceedings. All 3 are pertaining to awards. Out of the 9, filing, what will the court do?
can we still further classify them? Yes. 7 of these When the court finds that the petition is sufficient in
summary proceedings must be initiated by filing a form and substance, then it will proceed, otherwise,
petition. 2 may be initiated by a motion. What are the 2 it will dismiss your petition.
that can be initiated by a motion? Referral to
arbitration and confidentiality protective orders. Why? Sufficient in form the petition complies with all
Because there is a possibility that there is already a the formal requirements provided by the rules
pending case before the court. Sufficient in substance There are allegations that
should be embodied there, not only the grounds, but
Summary in character also the contents of the petition required like the
What is the difference between these special legal capacity to sue and be sued, factual
summary proceedings under the Special Rules on antecedents, reliefs, and also the ground relied upon.
ADR and the summary proceedings under the Rules You have to attach evidence that will support your
of Court? factual allegations, including the pertinent
documents which are the subject matter of the case.
1. As to the manner of initiating the proceedings If all of the allegations enumerated are met, then
Under the Special Rules: You do not file directly there is sufficiency in substance.
with the court. There is a condition precedent before
filing with the court. That is service of the petition What are the formal requirements under the
to the respondent. After serving the petition to the summary proceedings?
opponent, you prepare a proof of service. Attach the 1) All pleadings to be filed in the summary
proof of service to the copy which you subsequently proceedings whether it is the principal motion,
file to the court. an answer, or an opposition, they must be
Under the Rules of Court: You file with the court verified by the party concerned.
first and let the court serve summons. 2) Certificate of non-forum shopping

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 29

3) Proof of service of the petition to the other opposition thereto, the court will simply ask for
party before filing in court clarificatory questions.
4) Signature of the lawyer, MCLT compliance
number, IBP number, PTR number, etc. and After the hearing, when will it be resolved?
Within 30 days after the hearing.
since this done in the RTC of course there will
be a need for a lawyer.
Lets go to the other 3 which shall be resolved by
regular special proceeding.
After determining that it is already sufficient in
form and substance, the court shall: What is the procedure there?
1. File the initiatory pleading with the court
1) Direct the defendant to file an opposition within 2. Court shall serve the petition to the other party and
15 days after receipt of notice require him to file his answer within 15 days from
the receipt of the petition because the order
2) There should be a setting of a hearing which
requiring them to file his answer attached thereto is
shall not be more than 5 days from the lapse of the petition.
the period to file an opposition or comment
What will take the place of summons in order to
Rule 1.3 (B) Notice.-Except for cases comply with due process of law? The compliance with
involving Referral to ADR and jurisdictional facts.
Confidentiality/Protective Orders
made through motions, the court shall, Jurisdictional facts
if it finds the petition sufficient in Proof that the respondent has received a copy of
form and substance, send notice to the the petition
parties directing them to appear at a That he has been served a copy of the notice of
particular time and date for the hearing
hearing thereof which shall be set no
later than five (5) days from the lapse Summary of topics to be discussed
of the period for filing the opposition
or comment. The notice to the Who can file a petition?
respondent shall contain a statement When can you file the petition?
allowing him to file a comment or What are the grounds to file the petition?
opposition to the petition within What are the contents of the petition?
fifteen (15) days from receipt of the When to file your opposition or comment?
notice. X X X What would be the possible relief that could be
granted by the court?
So let us visualize that. I issued an order when you It approves the relief
receive it, file your opposition within 15 days. The It denies the relief
date of the hearing will be included that notice What will be the remedy in case the parties do
which shall be no more than 5 days from the lapse not agree with the relief provided?
of the period to file the comment or opposition.
HOWEVER, Rule 3.17 provides that the RULE 3 JUDICIAL RELIEF INVOLVING THE
comment/opposition must be filed within fifteen ISSUE OF EXISTENCE, VALIDITY AND
(15) days from service of the petition. ENFORCEABILITY OF THE ARBITRATION
AGREEMENT
The Rules on Summary Procedure provide that the
comment or opposition must be filed within 15 days In what type of arbitration is this available? Only in
from the receipt of the notice. However, in Rule 3, it domestic and international commercial arbitration. If
is from the service of the petition. Which one will foreign arbitration, this will not apply.
we adopt here? *Sir did not answer huhubelz*
Where is international commercial arbitration
Assuming that a comment or opposition was filed, conducted? When we studied the Model Law, this law
we are now in the hearing. What happens during shall apply to arbitration conducted in the state what is
the hearing? It shall only be for 1 day. Since it is the state referred to in the Model Law? The adopting
summary, and there is already a petition and an state. If the Philippines adopted it, it should be
conducted in the Philippines. It must be conducted in the

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 30

adopting state. This is a fundamental rule. International arbitration agreement in this case where there is no
commercial arbitration under the Model Law as adopted issue yet? There is a opinion that this is a dead remedy.
by the Philippines are conducted in the Philippines. If Even if there is a remedy like this, it cannot be used. But
they are conducted outside the Philippines, it is not its just an opinion.
international commercial arbitration; under our law, it is a
foreign arbitration. Where do you file the petition? Before the RTC of the
principal place of business or residence of any of the
The issue on the EVE of an arbitration agreement shall parties.
refer only to arbitration conducted in the Philippines and
they may only either be domestic arbitration or What are the contents?
international commercial arbitration. The facts showing that the persons named as
petitioner or respondent have legal capacity to
When do you file this? When is this remedy sue or be sued;
available? Before or after the commencement of the The nature and substance of the dispute
arbitration. between the parties;
The grounds and the circumstances relied upon
Who can file this action? Only the party to an by the petitioner to establish his position; and
arbitration agreement who is questioning the EVE of the The relief/s sought
arbitration agreement. Not any party although the rule
says any party. Hindi interesado sa pagquestion ng validity ng Ito yung sinasabi kong substantial requirements.
arbitration agreement yung party na gusto makipag-arbitrate. He
is for the validity of the arbitration agreement. Example: Grounds: That the arbitration agreement is either
10 years ago I entered into an arbitration agreement with
Void
you, tapos ngayon sinasabi mo pinilit lang kita ginamitan
kita ng force para mag-enter into the arbitration Invalid
agreement. Sino pwede magfile ng action? Ikaw lang. Unenforceable
Kasi ako, in favour of validity. You are in favor of the Inexistent
invalidity. The word any in the rule must be interpreted
to be the party questioning the EVE of the arbitration The petitioner must attach an authentic copy of the
agreement. You can read it in between the lines., to arbitration agreement. What do you mean by
determine any question Presumption is in favor of authentic? A copy the genuineness and due execution of
validity of the arbitration agreement. which can be seen on its face. Like a certified true copy
or the original copy.
When will arbitration commence? Sending of the
request and receipt thereof by the other party. By the All other attachments are merely formal requirements.
time the other party has received the request, the arbitral BUT with respect to the annex of the arbitration
proceeding has commenced. Not the constitution of the agreement, it is already a substantial requirement.
arbitral tribunal. The materiality of the constitution of the
arbitral tribunal lies with the fact that prior to the What is the initial action of the court?
constitution of the tribunal, you file your interim measure To exercise judicial restraint to determine first
of protection with the court. After it has been whether the arbitral tribunal is capable on ruling
constituted, sa arbitral tribunal na. on the dispute; it must not be an eager beaver.
Declare the arbitration agreement as inexistent
How about in construction industry arbitration? The Declare the validity of the arbitration agreement
proceeding commences upon filing the petition before
the CIAC. What is the remedy of the losing party if the court
declares the arbitration agreement as valid? Shall not
BEFORE THE COMMENCEMENT OF THE be subject to MR, appeal or certiorari. However, since it
ARBITRATION PROCEEDING is merely a prima facie determination, such prima
facie determination will not, however, prejudice the right
Remember that you cannot go to court without a of any party to raise the issue of the existence, validity
justiciable issue. There must be a controversy before the and enforceability of the arbitration agreement before the
court may exercise its judicial power because it is a arbitral tribunal or the court in an action to vacate or set
passive arm of the government. Prior to the aside the arbitral award.
commencement, you can question the arbitration
agreement. But when will you really question the

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 31

AFTER THE COMMENCEMENT OF THE file for a petition; instead you file a motion in the same
ARBITRATION PROCEEDING court. In this particular relief, the initiatory pleading
required is a simple motion. And this is one of the two
Who can file? Any party who questions the EVE of an instances where the relief may be initiated by a mere
arbitration agreement. motion. The others must be initiated by a petition.

What is the condition precedent before filing this? Is it possible to file a petition even if there is already
The fact that the issue of EVE of the arbitration a pending case? No, because there is already a case.
agreement has been raised earlier before the arbitral body
but the latter ruled in favor of the existence or validity of If there is no case yet, is there a need for referral?
the arbitration agreement. That is why you will go to the No, your remedy would be to request for an arbitration
court to question kung valid nga o hindi. to the other party; send a demand to the other party.

What are the possible defenses in this kind of relief?


Where do you file? RTC of If the other party agrees that there is an arbitration
Place of business of either of the parties agreement, then the court will simply refer them. Any of
Place of residence of either of the parites the grounds under Rule 3 can be raised as a defense in
Place where the arbitration is conducted this case.

If you are lazy to memorize, if there is no arbitration yet, The arbitration agreement is
you either bring the action in the court where either of o Inexistent
the parties reside or where their principal place of o Invalid
business is. If the arbitration has already commenced, o Unenfoceable
then you file in the place where the arbitration is The subject matter of the dispute is not proper
conducted. for arbitration because it is violative of the ADR
Act
In specific cases wherein the relief is directly related to a
particular place, then youll file your petition there. For Court Action
special cases involving Protective Orders, then you have Grant the motion. In such event, the referral will
to file in the area covered therein. be made
Deny the motion - Proceed with the civil action
Contents: SAME + Attach the ruling of the arbitral
body What is your remedy? If the court refers the parties to
arbitration, no appeal or no certiorari. But if there is no
Court Action referral you can go for certiorari or motion for
Deny Uphold the validity/existence reconsideration but not appeal. Why no appeal?
Because the order denying the referral is an interlocutory
Grant declare the arbitration agreement
order in that case. An interlocutory order is not
void/inexistent/unenforceable
appealable. The remedy is a petition for certiorari under
Rule 65 of the ROC if there is grave abuse of discretion
REFERRAL TO ARBITRATION
or excess or lack of jurisdiction. Why MR? Because it is
When do you go to court and ask for a referral? If a pre-requisite in order for you to be able to file a
there is violation of the arbitration agreement. petition for certiorari under Rule 65 because it is required
that the party applying for certiorari must have no other
Who files the referral? Normally, it will be the remedies available.
defendant because of course, the party who filed the
action before the court, i.e., the plaintiff, is interested in APPLICATION FOR INTERIM MEASURES OF
pursuing the court action. PROTECTION

What is the requirement? Who can file? Any party as long as he is in need of
protection because someone is doing an act which is
An violation of the arbitration agreement injurious to him or someone is doing an act which
because a case was filed in court even if there is violates his rights (injunction) or the other party is doing
an arbitration agreement. some acts which will eventually render the award useless
(attachment).
What type of pleading is filed? Since there is already a
pending case, you wont have to go to another court and

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 32

When to apply? Presumption: The arbitral tribunals protective order


Prior to the commencement of arbitration has modified the one issued by the court.
After the commencement of the arbitration
proceeding but before the constitution of the What if an application has been made before the
arbitral tribunal court and during the pendency, the arbitral tribunal
After the constitution of the arbitral tribunal but has been constituted, what will the court do? It shall
the tribunal has no power to issue the protective defer any action and refer the matter to the arbitral
order or even if it has the power, its exercise will tribunal UNLESS one party can prove that the tribunal
be ineffective has no power or even if it has the power, has no means
to enforce it.
Reasons for the court to grant the IMP
APPOINTMENT OF ARBITRATORS
The need to prevent irreparable loss or injury;
The need to provide security for the performance of When can the court act as the appointing authority?
any obligation;
The need to produce or preserve evidence; or 1. If institutional
The need to compel any other appropriate act or If any party failed or refused to appoint an
omission. arbitrator
When the parties have failed to reach an
Contents agreement on the sole arbitrator (Sole arbitrator)
There is an arbitration agreement When the two designated arbitrators have failed
The arbitral tribunal has not yet been constituted to reach an agreement on the third or presiding
Relief sought arbitrator (panel of arbitrators)
Grounds relied upon If there is no agreement as to the procedure, the
NOTE: The grounds provided under the provisional institution under whose rules arbitration is to be
remedies under the ROC are the same grounds conducted fails or is unable to perform its duty
described here as appointing authority
NOTE: Aside from these, a party may also ask the courts
assistance in the enforcement of the protective measure 2. If ad hoc
granted by the arbitral tribunal. If there is no appointing authority agreed upon and the
National President of the IBP or his duly authorized
Duty of the court to refer back representative fails or refuses to act within 30 days or
The court shall not deny an application for assistance in that provided by the parties
implementing or enforcing an interim measure of
protection ordered by an arbitral tribunal on any or all of 3. If the parties failed to appoint and the appointing
the following grounds: authority likewise fails or refuses to appoint
The arbitral tribunal granted the interim relief ex
parte; or RULE: Parties -> Appointing Authority -> Court
The party opposing the application found new
Who may request for appointment? The party who
material evidence, which the arbitral tribunal had
has not reneged on his duty to appoint
not considered in granting in the application, and
which, if considered, may produce a different
Court Action
result; or
If in the pendency, appointment has been made
The measure of protection ordered by the
by the parties or the appointing authority,
arbitral tribunal amends, revokes, modifies or is
dismiss.
inconsistent with an earlier measure of
protection issued by the court. Appoint

This is when the party went to court first and Contents


was issued a protective order and thereafter, The general nature of the dispute
applied for another before the arbitral tribunal The appointment procedure, if there is any
which caused an inconsistency. In which case, The number of arbitrators agreed upon, if there
the court shall give the arbitral tribunal to is any agreement
resolve these matters. The court shall exercise The special qualifications, if any
judicial restraint.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 33

The fact that the Appointing Authority, without TERMINATION OF THE MANDATE OF THE
justifiable cause, has failed or refused to act as ARBITRATOR
such within the time prescribed or in the absence
thereof, within a reasonable time Who may file? Any of the parties where:
The petitioner is not the cause of the delay in, or An arbitrator becomes de jure or de facto unable
failure of, the appointment of the arbitrator to perform his function or for other reasons fails
Authentic copy of the arbitration agreement to act without undue delay AND
Proof that the Appointing Authority has been that arbitrator, upon request of any party, fails or
notified of the filing of the petition for refuses to withdraw from his office.
appointment with the court
Under the rule, you may go directly to the court after
*Forum shopping prohibited such failure or refusal to withdraw or within 30 days the
request was sent to him. But Atty. Fernandez believes
If the court appoints, not subject to that it should be referred to the arbitral tribunal first.
MR/appeal/certiorari
If the court refuses to appoint, subject to ASSISTANCE IN TAKING EVIDENCE
MR/appeal/certiorari
Ground: If there is a need for court assistance in taking
CHALLENGE PROCEDURE evidence.

Here, it is the arbitrator who is being challenged; not the Sometimes, while the arbitral tribunal would want to
authority of the arbitral tribunal. receive evidence, it simply cannot do so dahil minsan, the
witness is very far, etc. In such case, ineffectual yung
Ground: He fails to meet the qualifications either by the arbitration. What can you do? You may ask the court to
ADR Act, the Model Law or the Arbitration Law or the assist in the taking evidence.
ones set by the parties
What are requirements?
Contents Evidence is relevant and material
Arbitrators challenged and their addresses Court has competence to receive that kind of
Grounds evidence
The facts showing that the ground for the
challenge has been expressly or impliedly Types of assistance
rejected by the challenged arbitrator/s Comply with a subpoena ad testificandum and/or
The facts showing that the Appointing Authority subpoena duces tecum
failed or refused to act on the challenge Appear as a witness before an officer for the taking
of his deposition upon oral examination or by
Before proceeding with this action, tanungin mo muna written interrogatories
yung arbitrator kung willing siyang magwithdraw. Kung Allow the physical examination of the condition of
nagwithdraw, tapos ang usapan. Kung ayaw, bring the persons, or the inspection of things or premises and,
matter first to the arbitral tribunal. If the arbitral tribunal when appropriate, to allow the recording and/or
did not agree to the tribunal, go to your appointing documentation of condition of persons, things or
authority. If the latter fails to act within 30 days or you premises
are not satisfied with its ruling, go to the court. To allow the examination and copying of documents;
and
RULE: Ask the arbitrator -> Arbitral Tribunal -> To perform any similar acts.
Appointing Authority -> Court
Contents
NOTE: From the arbitrator to the appointing authority, There is an ongoing arbitration proceeding even if
the arbitration proceeding shall not be suspended. ONLY such proceeding could not continue due to some
when it reaches the court shall the arbitration proceeding legal impediments
be suspended.
The arbitral tribunal ordered the taking of evidence
*No MR/Appeal/Certiorari or the party desires to present evidence to the arbitral
tribunal
Materiality or relevance of the evidence to be taken

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 34

The names and addresses of the intended witness/es, Award in Domestic Arbitration
place where the evidence may be found, the place Correction
where the premises to be inspected are located or the Confirmation
place where the acts required are to be done Vacation
Apply the provisions of the ROC on the modes of Award in International Commercial Arbitration
discovery suppletorily just like the interim measures of Recognition
protection, apply the provisions on the provisional
Enforcement
remedies.
Setting aside
CONFIDENTIALITY PROTECTION ORDER
NOTE: Correction is within the jurisdiction of the arbitral
tribunal
This is the only relief where you can have two modes of
application
Award in Foreign Arbitration
By way of a petition If there is no ongoing court
Recognition
action or quasi-judicial proceeding where the
disclosure is sought to be made Enforcement
By way of a motion if the disclosure is supposed to
Confirmation
be done in a pending case before the court
Simply an action to prove to the court that a valid
arbitration proceeding has been conducted and an award
When is an information privileged? It is in relation to
has been rendered in such arbitration and asking the
its admissibility in court. If it is inadmissible or cannot be
court to declare that the award is valid and pursuant to
the subject of any mode of discovery, it is privileged.
the arbitration agreement between the parties.
When is it confidential? You can simply refuse to
Vacation
disclose the information as a matter of right. You cannot
Action to invalidate or set aside the award
be forced to disclose it as a matter of right. Everyone can
claim confidentiality but not everyone can claim that it is
Grounds to vacate
privileged.
You can use these grounds to vacate the award or as a
If a party submits only a portion of the document and
defense to defeat the confirmation. If the other party files
claims that the other parts are confidential, the other
a petition for confirmation, you can file a petition for
party, if he demands, must be allowed to examine the
vacation in opposition to the confirmation. Same is true
whole document. If the law says it is privileged, it cannot
with the reverse.
be allowed.
When to file? Within 30 days from the receipt of the
CONFIRMATION, CORRECTION AND
award
VACATION OF AN AWARD IN DOMESTIC
ARBITRATION
Correction
May be filed simultaneously as a part of your petition to
Instituted by a petition filed directly with the Court.
confirm or vacate. If solely a petition for correction, it
shall be treated as a petition to confirm if you are the
The hearing here is not 1 day.
winning party or a petition to vacate if you are the losing
party in the award.
After the submission of the opposition or comment, the
court will determine if there is a factual issue or none. If
A party may request that instead of ruling on the petition
there is a factual issue, general rule is there must be a
to confirm, correct or vacate, that the arbitral tribunal be
hearing or may require the parties to submit affidavits.
given a chance to rectify its ruling so that it will reopen
Apply the judicial affidavit rule.
the proceedings and make the corresponding changes.
If there are no factual issues, depending on the necessity,
In a petition to confirm or vacate, the court will no
the court may require the parties to submit their
longer touch the merits of the award. It will only rule if
respective legal brief.
the ground to vacate is present or whether the
confirmation of the award is proper.

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 35

RECOGNITION, ENFORCEMENT AND Referral to mediation


SETTING ASIDE OF AN AWARD IN AN
INTERNATIONAL COMMERCIAL MR/APPEAL/CERTIORARI
ARBITRATION
Assuming that the court has already intervened and you
Grounds See discussion on ICA are not satisfied with the ruling of the court, what is your
remedy? If applicable, MR/appeal/certiorari.
No correction jurisdiction of the arbitral tribunal.
The subject matter of your MR/appeal/certiorari must
RECOGNITION AND ENFORCEMENT OF not be the merit of your award but the act of the court is
FOREIGN ARBITRAL AWARD not proper under the law.

Grounds: See discussion on ICA + The award has not A party may ask the Regional Trial to reconsider its
yet become binding on the parties or has been set aside ruling on the following:
or suspended by a court of the country in which that
award was made
That the arbitration agreement is inexistent, invalid
or unenforceable pursuant to Rule 3.10 (B)
Why is there no remedy to vacate? Because in a
foreign arbitral award, the authority to decide did not Upholding or reversing the arbitral tribunals
emanate from the Philippine jurisdiction but rather, from jurisdiction pursuant to Rule 3.19;
a foreign jurisdiction. By way of international law, we Denying a request to refer the parties to arbitration;
have no business reviewing the exercise of the judicial Granting or denying a party an interim measure of
authority in another jurisdiction. The only thing allowed protection
is just to recognize them if you want to. That is why there Denying a petition for the appointment of an
is no setting aside or vacation of a foreign arbitral award. arbitrator;
Refusing to grant assistance in taking evidence;
DEPOSIT AND ENFORCEMENT OF A Enjoining or refusing to enjoin a person from
MEDIATED SETTLEMENT AGREEMENT divulging confidential information;
Confirming, vacating or correcting a domestic
This is the remedy in order to avoid repetitious demands arbitral award;
from the other party. In order to enforce the agreement
Suspending the proceedings to set aside an
reached through mediation. You make a deposit.
international commercial arbitral award and referring
the case back to the arbitral tribunal;
Subject to the agreement of the parties, they may submit
jointly or one party may make the deposit. Setting aside an international commercial arbitral
award;
The Clerk of Court must make a book on settlement Dismissing the petition to set aside an international
agreement. Parang Registry of Settlement Agreements. commercial arbitral award, even if the court does not
recognize and/or enforce the same;
The effect of this is if the party reneged on his duties, Recognizing and/or enforcing, or dismissing a
you can file a petition to enforce his obligation under the petition to recognize and/or enforce an international
settlement agreement. The court can enforce your commercial arbitral award;
contract. Hindi na niya pwede sabihin na ang mahal eh Declining a request for assistance in taking evidence;
blablablabla Adjourning or deferring a ruling on a petition to set
aside, recognize and/or enforce an international
OTHER FORMS OF ADR commercial arbitral award;
Recognizing and/or enforcing a foreign arbitral
If the proceeding is akin to arbitration, whatever is award, or refusing recognition and/or enforcement
applicable to arbitration, apply the rules on arbitration. If of the same; and
mediation, rules on mediation. Granting or dismissing a petition to enforce a
deposited mediated settlement agreement.
However, in the Special Rules, it is stated that if there are
applicable rules in arbitration to mediation, it must be
applied. Examples are: No motion for reconsideration shall be allowed from the
following rulings of the Regional Trial Court:
Protective orders
Deposits

Fiat voluntas tua.


ALTERNATIVE DISPUTE RESOLUTION | 36

A prima facie determination upholding the existence,


validity or enforceability of an arbitration agreement
pursuant to Rule 3.1 (A);
An order referring the dispute to arbitration;
An order appointing an arbitrator;
Any ruling on the challenge to the appointment of an
arbitrator;
Any order resolving the issue of the termination of
the mandate of an arbitrator; and
An order granting assistance in taking evidence.

2nd motion for reconsideration is not allowed.

CERTIORARI
You can only use certiorari under Rule 65 if you go to
the CA from the RTC. Under Rule 43 is still available as
far as CIAC is concerned but as far as domestic
arbitration and ICA are concerned, wag niyo nang
gamitin yang Rule 43.

The final remedy that you could avail of is petition for


review before the Supreme Court. It is not certiorari but
an appeal.

Fiat voluntas tua.