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ADR FINAL EXAM TSN

Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS

02/29/2016 these Rules to ascertain the facts in each case by every and all
reasonable means without regard to technicalities of law or
Construction is covered by E.O. No. 1008 or the “Construction procedure.
Industry Arbitration Law,” and the Revised Rules governing
Construction Arbitration. RULE 2 - JURISDICTION

According to Salvador Castro (in his MCLE lecture), on Nov. SECTION 2.1 Jurisdiction – The CIAC shall have original and
28, 1980 the Construction Industry Authority of the Philippines exclusive jurisdiction over construction disputes, which arose
was created by the Philippine Domestic Construction Board from, or is connected with contracts entered into by parties
and by P.D. 1746. They have the following obligations: involved in construction in the Philippines whether the dispute
arose before or after the completion of the contract, or after the
1. To establish procedures, guidelines, and criteria for abandonment or breach thereof. These disputes may involve
fair and expeditious adjudication and settlement of government or private contracts.
claims and disputes in contract implementation. Under Rule 2, take note that there are 2 requisites for the CIAC
to have jurisdiction over construction disputes:
2. To adjudicate and settle disputes concerning public
construction contracts; 1. The “construction contract” involves a construction in
the Philippines.
3. Formulate and recommend rules and procedures for
adjudication and settlement of claims and disputes in 2. The parties to the construction contract are bound by
the implementation of contracts of private construction. an arbitration agreement – directly or by reference.

On February 4, 1985, recognizing the need for technical Q: What are covered by the jurisdiction of the CIAC?
expertise in the speedy disposition in construction disputes, the
Construction Industry Arbitration Commission was created The jurisdiction of the CIAC may include but is not limited to
under EO no. 1008 (The Construction Arbitration Law). the following:

Sec. 2. Declaration of Policy. It is hereby declared to be 1. violation of specifications for materials and
the policy of the State to encourage the early and workmanship;
expeditious settlement of disputes in the Philippine
construction industry.
2. violation of the terms of agreement;
3. interpretation and/or application of contractual
Sec. 3. Creation. There is hereby established in the CIAP provisions;
a body to be known as the Construction Industry Arbitration 4. amount of damages and penalties;
Commission (CIAC). The CIAC shall be under the 5. commencement time and delays;
administrative supervision of the PDCB. 6. maintenance and defects;
7. payment default of employer or contractor and
Sec. 5. Composition of the Board. The Commission shall changes in contract cost.
consist of a Chairman and two (2) members, all to be
appointed by the CIAP Board upon recommendation by the
members of the PDCB. The claims include among others:
1. valuation or pricing of work
It was only on January 1989 that the CIAC started becoming 2. interpretation of specifications
operational. 3. construction practice
4. engineering technique
REVISED RULES OF PROCEDURE GOVERNING 5. evaluation of work accomplishment
CONSTRUCTION ARBITRATION 6. claim of price escalation
7. damages arising from takeover
8. adequacy of structural design
RULE 1 - POLICY AND OBJECTIVES
9. adequacy of supervision
SECTION 1.1 Statement of policy and objectives - It is the
Just remember, included in the jurisdiction of the CIAC is
policy and objective of these Rules to provide a fair and
anything that has something to do with construction.
expeditious resolution of construction disputes as an
alternative to judicial proceedings, which may restore the
disrupted harmonious and friendly relationships between or Metropolitan Water District vs. Mactan Rock Industries
among the parties.
“The jurisdiction of the CIAC as a quasi-judicial body is
SECTION 1.2 Applicability of rules - These Rules are confined to construction disputes, that is, those arising from, or
applicable to proceedings in arbitration before an Arbitral connected to, contracts involving "all on-site works on buildings
Tribunal of one or more Arbitrator/s. or altering structures from land clearance through completion
including excavation, erection and assembly and installation of
SECTION 1.3 Judicial rules not controlling - In any arbitration components and equipment." The CIAC has jurisdiction over
proceeding under these Rules, the judicial rules of evidence all such disputes whether the dispute arises before or after the
need not be controlling, and it is the spirit and intention of completion of the contract.”

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ADR FINAL EXAM TSN
Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS

William Golango Construction Corporation vs. Ray Burton Moreover, petitioner’s invocation of the arbitration clause
Development Corporation defeats the purpose of arbitration in relation to the construction
business. The state has continuously encouraged the use of
Under Section 1, Article III of the CIAC Rules, an arbitration dispute resolution mechanisms to promote party
clause in a construction contract shall be deemed as an autonomy. This court upheld the CIAC's jurisdiction in line with
agreement to submit an existing or future controversy to CIAC the state's policy to promote arbitration:
jurisdiction, "notwithstanding the reference to a different
arbitration institution or arbitral body in such contract x xx." The CIAC was created through Executive Order No. 1008 in
Elementary is the rule that when laws or rules are clear, it is recognition of the need to establish an arbitral machinery that
incumbent on the court to apply them. When the law (or rule) is would expeditiously settle construction industry disputes. The
unambiguous and unequivocal, application, not interpretation prompt resolution of problems arising from or connected with
thereof, is imperative. the construction industry was considered of necessary and
vital for the fulfillment of national development goals, as the
Hence, the bare fact that the parties herein incorporated an construction industry provides employment to a large segment
arbitration clause in the EPCC is sufficient to vest the CIAC of the national labor force and is a leading contributor to the
with jurisdiction over any construction controversy or claim gross national product.
between the parties. The arbitration clause in the construction
contract ipso facto vested the CIAC with jurisdiction. This rule However, where a surety in a construction contract actively
applies, regardless of whether the parties specifically choose participates in a collection suit, it is estopped from raising
another forum or make reference to another arbitral body. jurisdiction later. Assuming that petitioner is privy to the
Since the jurisdiction of CIAC is conferred by law, it cannot be construction agreement, we cannot allow petitioner to invoke
subjected to any condition; nor can it be waived or diminished arbitration at this late stage of the proceedings since to do so
by the stipulation, act or omission of the parties, as long as the would go against the law's goal of prompt resolution of cases in
parties agreed to submit their construction contract dispute to the construction industry.
arbitration, or if there is an arbitration clause in the construction
contract. The parties will not be precluded from electing to
Q: May the government be a party in the arbitration
submit their dispute to CIAC, because this right has been
proceedings before the CIAC?
vested in each party by law.
Yes. Under the last paragraph of Section 2.1.These disputes
It bears to emphasize that the mere existence of an may involve government or private contracts. Cases filed
arbitration clause in the construction contract is before the CIAC for arbitration include both the government
considered by law as an agreement by the parties to and the private parties.
submit existing or future controversies between them to
CIAC jurisdiction, without any qualification or condition SECTION 2.2 Coverage – Construction dispute shall include
precedent. To affirm a condition precedent in the construction those between or among parties to, or who are otherwise
contract, which would effectively suspend the jurisdiction of the bound by, an arbitration agreement, directly or by reference,
CIAC until compliance therewith, would be in conflict with the whether such parties are project owner, contractor,
recognized intention of the law and rules to automatically vest subcontractor, fabricator, project manager, design professional,
CIAC with jurisdiction over a dispute should the construction consultant, quantity surveyor, bondsman or issuer of an
contract contain an arbitration clause. insurance policy in a construction project.

Thus, there is no question that in this case, the CIAC properly 2.2.1 The CIAC shall continue to exercise original and
took cognizance of petitioner's complaint as it had jurisdiction exclusive jurisdiction over construction disputes although the
over the same. arbitration is commercial pursuant to Section 21 of R.A. 9285
or the Alternative Dispute Resolution Act of 2004.

2.2.2 Excluded from the coverage of this Rules are disputes


Stronghold Insurance Company vs. Sps. Stroem
arising from employer-employee relationships, which shall
Petitioner changed the theory of its case since its participation continue to be covered by the Labor Code of the Philippines.
in the trial court proceedings. It raised the issue of lack of
jurisdiction in view of an arbitration agreement for the first time. Q: Who are parties covered by the arbitration proceedings
before the CIAC?
To be clear, it is in the Owners-Contractor Agreement that the
1. Parties directly bound to the arbitration agreement
arbitration clause is found. The construction agreement was
signed only by respondents and the contractor, Asis-Leif, as
2. Parties bound by reference such as the project owner,
represented by Ms. Ma. Cynthia Asis-Leif. It is basic that
project manager, design professional, consultant,
"[c]ontracts take effect only between the parties, their assigns
quantity surveyor, bondsman or insurer of an
and heirs[.]" Not being a party to the construction agreement,
insurance policy in a construction project.
petitioner cannot invoke the arbitration clause. Petitioner, thus,
cannot invoke the jurisdiction of the CIAC.

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ADR FINAL EXAM TSN
Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS

Problem: If for example Mr.Puray is the owner of a construction SECTION 2.4 Jurisdictional challenge – A motion to dismiss
company. Ms.Araneta is his employee. Mr.Puray terminated based on lack of jurisdiction shall be resolved by the appointed
the services of Ms.Araneta. Aggrieved, she filed a complaint arbitral tribunal.
before the CIAC. Is the action correct?
Q: What are the grounds to be raised in a motion to dismiss for
No. Excluded from the coverage of this Rules are disputes lack of jurisdiction before the CIAC?
arising from employer-employee relationships, which shall
continue to be covered by the Labor Code of the Philippines. 1. That the dispute is not a construction dispute,
2. that the Respondent was represented by one without
SECTION 2.3 Condition for exercise of jurisdiction - For the capacity to enter into a binding arbitration agreement
CIAC to acquire jurisdiction, the parties to a dispute must be 3. that said agreement or submission is not valid for
bound by an arbitration agreement in their contract or some other reasons,
subsequently agree to submit the same to voluntary arbitration. 4. or does not cover the particular dispute sought to be
arbitrated,
If the parties to a construction contract that is to be performed 5. or other issues of interpretation or non-fulfillment of
in the Philippines entered into an arbitration agreement pre-conditions to arbitration that are raised therein.
whether in the form of an arbitration clause or submission
agreement, all disputes arising from or connected to the SECTION 2.5 Non-waiver of jurisdictional challenge - A party
contract will be resolved through arbitration before the CIAC. does not waive its right to challenge the jurisdiction of CIAC by
The jurisdiction of the CIAC over disputes arising from any of the following acts:
construction is premised upon the expressed agreement of the a) participating in the nomination process including
parties to submit the same to voluntary arbitration. challenging the qualifications of a nominee;
b) praying for extension of time to file appropriate
Section 17.d. of RA 9285 recognizes that parties to a dispute pleading/motion to dismiss;
arising from contracts of construction in the Philippines may, c) opposing an application for interim relief;
whether or not they have previously agreed to settle their d) filing of a motion to dismiss/suspend.
disputes by arbitration, nevertheless agree to settle their
disputes through mediation. They may agree that the mediator
RULE 3 - REQUEST FOR ARBITRATION / COMPLAINT
shall become the sole arbitrator for the dispute and treat the
settlement agreement they may enter into as an arbitral award SECTION 3.1 Filing - Any party to a construction contract
enforceable under the Arbitration Law, notwithstanding EO. no. desiring to avail of arbitration shall file its Request for
1008.
Arbitration in the prescribed form and number of copies to the
Secretariat of the CIAC.
This mode of settlement under Sec. 17.d. is distinct and
without prejudice to conciliation under resolution number 08- SECTION 3.3 Request to answer - The CIAC Secretariat shall
2002 of the CIAC wherein the parties may agree that their
within three (3) days from filing, transmit to the Respondent a
conciliator shall be the sole arbitrator of the settlement
request for his Answer, attaching thereto a copy of the
agreement drawn up after successful conciliation be made an complaint and the Request for Arbitration together with the
arbitral award enforceable under EO no. 1008. annexed documents.
RA 9285 also provides that even if the case is properly within
the jurisdiction of the CIAC, the parties may nevertheless by RULE 4 - EFFECT OF AGREEMENT TO ARBITRATE
written agreement ask the RTC to decide the case rather than
defer it to the CIAC or dismiss it. The law in effect recognizes SECTION 4.1. Submission to CIAC jurisdiction - An arbitration
that the regular courts have jurisdiction over construction clause in a construction contract or a submission to arbitration
disputes subject of the agreement, which therefor is ordinarily of a construction dispute shall be deemed an agreement to
subject to the jurisdiction of the CIAC when the parties agree to submit an existing or future controversy to CIAC jurisdiction,
submit the case to the regular courts. notwithstanding the reference to a different arbitration
institution or arbitral body in such contract or submission.
Example: Mr. Puray is a contractor and Mr.Rulete engaged the
services of Mr.Puray. For the CIAC to have jurisdiction over 4.1.1 When a contract contains a clause for the submission of
their dispute, they must have in their agreement that they a future controversy to arbitration, it is not necessary for the
voluntary agreed that in case of disputes they would submit it parties to enter into a submission agreement before the
to the jurisdiction of CIAC. If there is no agreement to that Claimant may invoke the jurisdiction of CIAC.
effect, Mr.Puray or Mr.Rulete could file with the RTC. But it is
much better to file it with the CIAC because the arbitrators So you enter into a submission agreement if your contract
seating there are experts to the issue at hand. Unless if the does not contain a clause for submission to arbitration.
judge was, before he became a lawyer, a civil engineer, then
we can say that he is knowledgeable. 4.1.2 An arbitration agreement or a submission to arbitration
shall be in writing, but it need not be signed by the parties, as
long as the intent is clear that the parties agree to submit a
present or future controversy arising from a construction

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ADR FINAL EXAM TSN
Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS

contract to arbitration. It may be in the form of exchange of from or connected with construction contract whether the
letters sent by post or by telefax, telexes, telegrams, electronic dispute arises before or after the completion of the contract.
mail or any other mode of communication. Thus, the date the parties entered into a contract and the date
of completion of the same, even if these occurred before the
We have discussed earlier that before CIAC can acquire constitution of the CIAC, did not automatically divest the CIAC
jurisdiction over construction disputes, the parties dispute must of jurisdiction as long as the dispute submitted for arbitration
be bound by an arbitration agreement in their contract, or that arose after the constitution of the CIAC. Stated differently, the
they subsequently agree to submit the same to voluntary jurisdiction of CIAC is over the dispute, not the contract; and
arbitration. the instant dispute having arisen when CIAC was already
constituted, the arbitral board was actually exercising current,
Take note that as long as the contract contains an arbitration not retroactive, jurisdiction. As such, there is no need to pass
clause, any party thereto has the right to compel the other to upon the issue of whether E.O. No. 1008 is a substantive or
arbitration before the CIAC even if the other party objects to procedural statute.
the CIAC’s jurisdiction for the reason that their arbitration
agreement calls for arbitration before another forum. Any NIA also contended that the CIAC did not acquire jurisdiction
agreement to arbitrate the construction dispute before a forum over the dispute since it was only HYDRO that requested for
other than the CIAC is therefore rendered ineffective. arbitration. It asserts that to acquire jurisdiction over a case, as
provided under E.O. 1008, the request for arbitration filed with
China Chang Jiang Energy Corporation (Philippines) v. CIAC should be made by both parties, and hence the request
Rosal Infrastructure Builders by one party is not enough.

What the law merely requires for a particular construction It is undisputed that the contracts between HYDRO and NIA
contract to fall within the jurisdiction of CIAC is for the parties contained an arbitration clause wherein they agreed to submit
to agree to submit the same to voluntary arbitration. Unlike in to arbitration any dispute between them that may arise before
the original version of Section 1, as applied in the Tesco case, or after the termination of the agreement. Consequently, the
the law does not mention that the parties should agree to claim of HYDRO having arisen from the contract is arbitrable.
submit disputes arising from their agreement specifically to the NIA's reliance with the ruling on the case of Tesco Services
CIAC for the latter to acquire jurisdiction over such disputes. Incorporated v. Vera, 30 is misplaced.
Rather, it is plain and clear that as long as the parties agree to
submit to voluntary arbitration, regardless of what forum they The 1988 CIAC Rules of Procedure which were applied by this
may choose, their agreement will fall within the jurisdiction of Court in Tesco case had been duly amended by CIAC
the CIAC, such that, even if they specially choose another Resolutions No. 2-91 and 3-93, Section 1 of Article III of which
forum, the parties will not be precluded from electing to submit read as follows:
their dispute before the CIAC because this right has been
vested upon each party by law, i.e., E.O. No. 1008. Submission to CIAC Jurisdiction — An arbitration clause in a
construction contract or a submission to arbitration of a
x xxx construction contract or a submission to arbitration of a
construction dispute shall be deemed an agreement to submit
Now that Section 1, Article III [CIAC Rules of Procedure an existing or future controversy to CIAC jurisdiction,
Governing Construction Arbitration], as amended, is submitted notwithstanding the reference to a different arbitration
to test in the present petition, we rule to uphold its validity with institution or arbitral body in such contract or submission.
full certainty. However, this should not be understood to mean When a contract contains a clause for the submission of a
that the parties may no longer stipulate to submit their disputes future controversy to arbitration, it is not necessary for the
to a different forum or arbitral body. Parties may continue to parties to enter into a submission agreement before the
stipulate as regards their preferred forum in case of voluntary claimant may invoke the jurisdiction of CIAC.
arbitration, but in so doing, they may not divest the CIAC of
jurisdiction as provided by law. Under the elementary principle Under the present Rules of Procedure, for a particular
on the law on contracts that laws obtaining in a jurisdiction construction contract to fall within the jurisdiction of CIAC, it is
form part of all agreements, when the law provides that the merely required that the parties agree to submit the same to
Board acquires jurisdiction when the parties to the contract voluntary arbitration. Unlike in the original version of Section 1,
agree to submit the same to voluntary arbitration, the law in as applied in the Tesco case, the law as it now stands does not
effect, automatically gives the parties an alternative forum provide that the parties should agree to submit disputes arising
before whom they may submit their disputes. That alternative from their agreement specifically to the CIAC for the latter to
forum is the CIAC. This, to the mind of the Court, is the real acquire jurisdiction over the same. Rather, it is plain and clear
spirit of E.O. No. 1008, as implemented by Section 1, Article III that as long as the parties agree to submit to voluntary
of the CIAC Rules. arbitration, regardless of what forum they may choose, their
agreement will fall within the jurisdiction of the CIAC, such that,
even if they specifically choose another forum, the parties will
National Irrigation Administration (NIA) vs. CA not be precluded from electing to submit their dispute before
the CIAC because this right has been vested upon each party
NIA's argument that CIAC had no jurisdiction to arbitrate on by law, i.e., E.O. No. 1008.
contract which preceded its existence is untenable. E.O. 1008
is clear that the CIAC has jurisdiction over all disputes arising

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ADR FINAL EXAM TSN
Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS

SECTION 4.2 Failure or refusal to arbitrate - Where the RULE 7- CONFIDENTIALITY


jurisdiction of CIAC is properly invoked by the filing of a
Request for Arbitration in accordance with these Rules, the SECTION 7.1 Confidentiality of proceedings – The arbitration
failure despite due notice which amounts to a refusal of the proceedings shall be considered confidential and shall not be
Respondent to arbitrate, shall not stay the proceedings published except (i) with the consent of the parties, or (ii) when
notwithstanding the absence or lack of participation of the necessary in case resort to the Court is made under the Rules
Respondent. In such case, CIAC shall appoint the arbitrator/s of Court. The term “arbitration proceedings” shall include
in accordance with these Rules. Arbitration proceedings shall communications to or from CIAC, the pleadings, applications
continue, and the award shall be made after receiving the and other papers filed with CIAC, sworn statements,
evidence of the Claimant. documentary and testimonial evidence, reports and minutes
taken of the proceedings, and other orders, decision, award or
Under this section, when the CIAC’s jurisdiction is properly resolution issued by the Arbitrator(s).
invoked by filing the request for arbitration, the arbitration shall
proceed even in the absence or lack of participation of the Q: What will happen to a person who violates confidentiality?
respondent and an award shall be made after receiving the
evidence. SECTION 7.2 Violation of confidentiality – Any person who
violates the immediately preceding confidentiality provision
Example: When the CIAC jurisdiction is properly invoked by shall be subject to the following sanctions:
Mr.Puray by filing the request for arbitration, the arbitration
shall still proceed even if Mr.Rulete will not participate. So what 7.2.1 If the violator is a lawyer, administrative action or
will happen? Still an award shall be made after receiving the proceeding to be conducted by CIAC, with proper notice and
evidence of the claimant.
hearing, for inhibition or prohibition from appearing as counsel
for any party in any arbitration case before CIAC for a period
4.2.1 In the event that, before award, the Respondent who had
not earlier questioned the jurisdiction of the Tribunal, appears not exceeding six (6) months; without prejudice to suspension
and offers to present his evidence, the Arbitral Tribunal may, or disbarment action before the Integrated Bar of the
for reasons that justifies the failure to appear, reopen the Philippines (IBP), at the instance of CIAC.
proceedings, require him to file his answer with or without
counterclaims, pay the fees, where required under these Rules, 7.2.2 If the violator is a duly licensed and registered
and allow him to present his evidence, with limited right to professional, administrative/ disciplinary action before the
cross examine witnesses already presented in the discretion of Professional Regulation Commission (PRC), at the instance of
the Tribunal. Evidence already admitted shall remain. The CIAC.
Tribunal shall decide the effect of such controverting evidence
presented by the Respondent on evidence already admitted So arbitrations before the CIAC are held in private and the
prior to such belated appearance. pleadings are confidential. Arbitration proceedings are not
open to public and only the parties themselves and their
Thus, take note that so long that there is still no award, respective witnesses and counsels can attend the proceedings.
Mr.Rulete can still file an answer and submit evidence. Only they can receive copies of the proceedings. Due to the
confidentiality of the proceedings, parties are assured their
SECTION 4.3.When arbitration cannot proceed - Where the trade secrets are kept secret from third parties. Also, arbitration
contract between the parties does not provide for arbitration records are not considered public records.
and the parties cannot agree to submit the dispute(s) to
arbitration, the arbitration cannot proceed and the Claimant/s RULE 8 – QUALIFICATIONS OF ARBITRATORS
shall be informed of that fact. SECTION 8.1 General qualification of arbitrators - The
Arbitrators shall be men of distinction in whom the business
So in this case, even if Mr.Puray already filed a request for sector and the government can have confidence. They shall be
arbitration before the CIAC, the same cannot proceed because technically qualified to resolve any construction dispute
of the absence of the arbitration clause. expeditiously and equitably. The Arbitrators shall come from
different professions. They may include engineers, architects,
Again, the arbitration cannot proceed when: construction managers, engineering consultants, and
businessmen familiar with the construction industry and
1. the contract between the parties does not provide for lawyers who are experienced in construction disputes.
arbitration
2. the parties cannot agree to submit the dispute to RULE 9 – NOMINATION AND APPOINTMENT OF
arbitration ARBITRATORS – Just read

RULE 5 – ANSWER/COUNTERCLAIMS.Just Read. Take note that parties are free to nominate persons of their
choice as their arbitrators, provided that the latter are
RULE 6 – SUBMISSION AND COMMUNICATIONS / independent and neutral preferably with specific expertise,
NOTICES.Just Read specialized competence in resolving construction disputes.

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ADR FINAL EXAM TSN
Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS

The tribunal may composed of Filipinos as well as foreigners. hereof. Any extensions of time to file memoranda or draft
Arbitration before the CIAC is conducted before a single decisions will not EXTEND the 10-day period to file a challenge
arbitrator or panel of arbitrators who are chosen from a list of or motion for inhibition. The challenge shall be based upon the
arbitrators accredited by the CIAC. following grounds:

SECTION 9.2 Sole Arbitrator - Where the parties have agreed a) relationship by blood or marriage within the sixth degree of
that the dispute(s) shall be settled by a Sole Arbitrator, each either party to the controversy, or to counsels within the fourth
party shall have the right to nominate six arbitrators. If any or degree, computed according to the rules of civil law.
both of the parties fail to submit the names of their nominees b) financial, fiduciary or other interest in the controversy
within the period/s prescribed by CIAC, a Sole Arbitrator shall c) partiality or bias;
be appointed by CIAC. d) incompetence, or professional misconduct.

9.2.1 CIAC shall appoint as sole arbitrator the common A party may also request the inhibition of an arbitrator upon
nominee of the parties who is available and not disqualified. In other just and valid reasons affecting independence, integrity,
the absence of a common nominee or in cases where the impartiality and interest.
common nominee is disqualified or is not available, CIAC shall
return the lists of nominees to the parties and ask them to 9.6.1 A motion for inhibition or a request for the disqualification
make an agreement on a common nominee/s within 48 hours. and replacement of an arbitrator shall be treated as a
If the parties still fail to agree on a common nominee, CIAC challenge.
may appoint a Sole Arbitrator or an Arbitral Tribunal. If CIAC
decides to appoint a Sole Arbitrator, it may select an arbitrator RULE 10 – APPOINTMENT AND ACCEPTANCE OF
who is not a nominee of any one of the parties and who is not ARBITRATORS - Just Read
disqualified and is available for appointment.
RULE 11 – PRELIMINARY CONFERENCE / TERMS OF
We discussed earlier that a foreigner may be appointed or REFERENCE
accredited as arbitrator.
SECTION 11.1 Notice of conference - The Arbitrator/Arbitral
Q: May a foreign arbitrator who is not accredited by the CIAC Tribunal shall set the case for preliminary conference not later
be appointed as a co-arbitrator or assigned as a chair of an than 15 days after appointment of arbitrator(s) and a notice to
arbitral tribunal? YES. the parties thereof shall forthwith be sent to finalize the Terms
of Reference as provided in Rule 11.4 below, a draft copy of
SECTION 9.4 Conditions for appointment of foreign arbitrator15 which is attached thereto and to consider the following, among
- A foreign arbitrator not accredited by CIAC may be appointed others:
as a co-arbitrator or chairperson of an arbitral tribunal for a
construction dispute under the following conditions: a. possibility of amicable settlement;
b. necessity or desirability of amendments to pleadings;
a) the dispute is a construction dispute in which one party is an c. obtaining stipulations or admission of facts and/or
international partyi.e. one whose place of business is outside documents to avoid unnecessary proof;
the Philippines. For this purpose, the term international party d. limitation of the number of witnesses;
shall not include a domestic subsidiary of such international e. suggested formulation of issues by the parties;
party or a co-venturer in a joint venture with a party which has f. application for interim relief, appointment of experts and
its place of business in the Philippines. necessity of site inspection; and
g. such other matters as may aid in the just and speedy
b) the foreign arbitrator to be appointed is not a national of the disposition of the case.
Philippines and is not of the same nationality as the
international party in the dispute;
SECTION 11.3 Disclosure 20 – During the preliminary
conference the Arbitrator who had failed to make his or her
9.4.1 Procedure for appointment of foreign arbitrator.-The written disclosure required in the previous section shall
foreign arbitrator must be nominated by the international party disclose any circumstance likely to give rise to justifiable
or is the common choice of the two CIAC-accredited arbitrators doubts as to impartiality or independence, including financial or
one of whom was nominated by the international party. The personal interest in the outcome of the arbitration and any
nomination must be accompanied by a resume or bio-data of existing or past relationships with any individual or corporate
the nominee relevant to qualifications as a construction party together with their respective relatives or principal
arbitrator and a signed undertaking of the nominee to abide by stockholders/officers or foreseeable participant in the
CIAC arbitration rules and policies. proceedings. On the basis of such disclosure, either party may
ask clarificatory questions thereon that may lead to a decision
Q: Can you challenge the appointment of an arbitrator?Yes. to move for inhibition or accept the appointment.

SECTION 9.6 Challenge- An Arbitrator may be challenged by a SECTION 11.4 Terms of Reference. - This document functions
party at any time after his appointment but before the lapse like a pre-trial order in judicial proceedings and controls the
of the original 10-day period for submission of arbitration proceedings unless corrected for manifest errors by
memorandaor draft decision under Section 13.16, Rule 13 motion filed not later than the hearing date.
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Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS

11.4.1 Contents - The TOR shall include the following SECTION 13.2 Briefing on Rules and procedures
particulars:
SECTION 13.3 Order of presentation
a) the full names of the parties, and their respective counsels,
if any; SECTION 13.4 Expeditious procedures
b) the addresses and contact numbers of the parties/counsels,
to which notifications or communications arising in the course SECTION 13.5 Evidence - The parties may offer such
of the arbitration may validly be made; evidence as they desire and shall produce such additional
c) a summary of the parties' respective claims; documents and witnesses as the Arbitral Tribunal may deem
d) full statement of admitted facts and documents; necessary to a clear understanding of facts and issues for a
e) the issues to be resolved in question form; judicious determination of the dispute(s). The Arbitral Tribunal
f) the Arbitrators' full names; shall act according to justice and equity and merits of the case,
g) the place where arbitration proceedings shall be held; without regard to technicalities or legal forms and need
h) the breakdown, schedule of payments, and sharing of not be bound by any technical rule of evidence. Evidence
arbitration fees; shall be taken in the presence of the Arbitral Tribunal and all of
i) such other particulars as may be required by the Arbitral the parties, except where any of the parties is absent, or has
Tribunal for the proper and speedy adjudication of the case. waived his right to be present.

11.4.2 Signing - The Terms of Reference (TOR) shall be 13.5.1 Order to produce documentary evidence.
signed on each and every page thereof, by the parties together
with their respective counsel and the Arbitral Tribunal 13.5.2 Order to give testimony.
immediately after finalization thereof. In any case, the TOR
must be finalized and signed not later than five (5) days from SECTION 13.6 Affidavit in lieu of direct testimony -
inception.
SECTION 13.7 Examination by the Arbitral Tribunal - The
Q: Can arbitration proceed even without the terms of reference? Arbitral Tribunal may ask clarificatory questions of the
YES. witnesses at any stage of the proceedings.

SECTION 11.5 Arbitration To Proceed Even Without TOR. - In SECTION 13.8 Documentary evidence - As a general rule, no
the exercise of the sound discretion of the Arbitral Tribunal, documentary evidence(s) presented and offered shall be
arbitration shall proceed even without the Terms of Reference rejected unless the same is found by the Arbitral Tribunal to be
(TOR) on the basis of the issues formulated by the pleadings completely irrelevant.
filed by the parties.
SECTION 13.9 Offer of documents - All documents not offered
with the Arbitral Tribunal at the hearing but which are arranged
SECTION 11.6 Submission for Decision. – No factual issue at the hearing subsequently by agreement of the parties to be
being in dispute, the case may be deemed submitted for submitted, shall be filed within five (5) days from the
decision without an oral hearing and on the basis of termination of the hearing. All parties shall be afforded
documentary evidence already submitted. opportunity to examine such documents.

RULE 12 – VENUE SECTION 13.10 Site inspection –The Arbitral Tribunal may,
motuproprioafter notice to the parties, or upon motion of a
SECTION 12.1 Venue, Date and Time of Hearing - The party, conduct a site inspection of any building, place or
venue, date and time of the arbitral proceedings shall be premises, including any work, material, implement, machinery,
mutually agreed upon by the parties and the Arbitral appliance or any object therein. The Tribunal in deciding on the
Tribunal. In the event of disagreement, the choice of venue necessity of a site inspection, may consider whether a video or
made by the Arbitral Tribunal shall prevail. pictorial presentation may suffice.

RULE 13 - ARBITRATION PROCEEDINGS 13.10.1 Costs including transportation, accommodations,


meals, rental fee for the video/still camera, services, video tape
SECTION 13.1 Order of Proceedings - A hearing shall be recording, copy of pictures and other expenses shall be
opened by recording of the place, time and date of hearing, the equally shared by both parties.In special cases upon the
order of the Arbitral Tribunal, the party who seeks this video
presence of the Arbitral Tribunal, parties, and witnesses, if any.
and will benefit from it shall bear the expenses.
The names and addresses of all witnesses and exhibits in the
order received shall be made part of the record. SECTION 13.11 Adjournments - The Arbitral Tribunal for good
cause shown, may adjourn the hearing upon his/its own
13.1.1 Quorum - Two members of a tribunal shall comprise a initiative or upon the request of one of the parties. Adjournment
quorum for the purpose of conducting a hearing. shall not be more than five (5) working days.

Members of the Arbitral Tribunal shall be composed of three (3)


persons UNLESS they opted for a sole arbitrator.

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Q: Can arbitration proceed despite the absence of the party? appointment of receivers or detention, preservation, inspection
YES. of property, that is the subject of dispute in arbitration. Either
party may apply to the Court for assistance in implementing or
SECTION 13.12 Arbitration in the absence of the party - The enforcing an interim measure ordered by an Arbitral Tribunal.
Arbitration may proceed despite the absence of any party who
after due notice fails to be present or fails to obtain an RULE 15 – APPOINTMENT OF EXPERTS
adjournment. An award, however, shall not be made solely on
the default of a party. It shall be made on the basis of evidence RULE 16 – THE ARBITRATION AWARD
submitted and proven.
SECTION 16.1.Time of award - The award shall be rendered
SECTION 13.13 Closing of the hearings promptly by the Arbitral Tribunal within thirty (30) days from the
time the case is submitted for resolution but not more than six
Q: When can you reopen hearings? (6) months from the date of signing of the TOR, or in cases
where a TOR is absent, not more than six (6) months from the
SECTION 13.14 Reopening of hearing - The hearing may be date of the last preliminary conference called for the purpose of
reopened by the Arbitral Tribunal on their own motion or upon finalizing and/or signing of the TOR. There shall be no
the request of any party, upon good cause shown, at any time extensions of time unless approved by the CIAC.
before the award is rendered. When hearings are thus
reopened, the effective date for the closing of the hearing shall SECTION 16.2 Form of award- The Final award shall be in
be the date of closing of the reopened hearing. writing and signed by the Arbitral Tribunal or a majority of its
members. A dissent from the decision of the majority or a
SECTION 13.15 Summation - The Arbitral Tribunal may direct portion thereof shall be in writing specifying the portion/s
the parties to make a brief oral summation at the end of the dissented from with a statement of the reason/s thereof and
signed by the dissenting member.
oral hearing.
SECTION 16.3 Contents of the final award - Generally, the
In summary, the arbitral proceedings allow the party to decide Final Award shall contain the issues involved, a brief statement
on the following: and discussion of the facts, and the authority relied upon for
the resolution or disposition of the issues.
1. the time periods for filing the submissions
2. the submissions of affidavits or testimonies of SECTION 16.4 Award upon settlement - If the parties settle
witnesses
3. how formal will be the proceedings their dispute(s) during the course of the arbitration, the Arbitral
4. place where the arbitration will be conducted Tribunal, upon their request, may set forth the agreed
settlement as an Arbitral Award.
The arbitration can be held at any place in the Philippines.
Q: When does the jurisdiction of the arbitral tribunal end?
RULE 14 – INTERIM RELIEF
SECTION 16.6 Termination of jurisdiction –Except for
SECTION 14.1 Interim measures - In the course of the execution or post-award proceedings, the jurisdiction of the
proceedings, the Arbitral Tribunal may, upon the request of Arbitral Tribunal over the dispute is terminated upon the
either or both parties or upon its own initiative, issue orders as finality of the Final Award or Decision. Where an appeal is
is necessary to attain the following objectives: taken from a decision or Final Award, and the appellate court
directs a re-hearing or a hearing on the merits on any issue
a. to ensure the enforcement of the award; arising in the case, jurisdiction terminates only upon a final
disposition of the case by the appellate court and/or a final
determination of all incidental matters thereto.
b. to prevent irreparable loss or injury or deterioration of
property;
We discussed earlier, arbitration award before the CIAC
c. to minimize or avoid undue delays in project or contract continues to be confidential. That is the reason why arbitral
implementation; awards are not published except when CIAC itself publishes
abstract of the cases assigned to it.
d. to provide security for the performance of any obligation;
RULE 17 – POST-AWARD PROCEEDINGS
e. to produce or preserve any evidence;
Q: What are the grounds for correction of final award?
f. such other measures deemed by the Arbitral Tribunal to be
necessary to prevent a miscarriage of justice or abuse of rights SECTION 17.1 Motion for correction of final award - Any of the
of any of the parties. parties may file a motion for correction of the Final award
within fifteen (15) days from receipt thereof upon any of the
14.1.2 Such interim measures may include but shall not be following grounds:
limited to preliminary injunction directed against a party,
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a. an evident miscalculation of figures, a typographical or appeal from CIAC, basing on a question of law, may be
arithmetical error; brought to the CA rather than to the SC. This is because of the
doctrine of hierarchy of courts which allows the case to be
b. an evident mistake in the description of any party, person, transmitted or referred to the CA for resolution. But if the
date, amount, thing or property referred to in the award. appeal involves only question of facts, the case should be
appealed to the CA since the SC is not a trier of facts.
c. where the arbitrators have awarded upon a matter not
submitted to them, not affecting the merits of the decision upon RULE 19 - RELIEF NOT COVERED BY THE RULES 34
the matter submitted;
SECTION 19.1 Motion for relief not covered by the Rules 35 -
d. where the arbitrators have failed or omitted to resolve Every motion or other paper filed in connection with the
certain issue/s formulated by the parties in the Terms of execution of an award not expressly authorized by the Rules
Reference (TOR) and submitted to them for resolution;26 and shall be charged a filing fee of Php 3000.00 or as may be
prescribed by CIAC.
e. where the award is imperfect in a matter of form not
affecting the merits of the controversy. RULE 20 – SMALL CLAIMS 36
The motion shall be acted upon by the Arbitral Tribunal or the
surviving/remaining members.
SECTION 20.1 Small Claims - Cases where the claim does not
exceed P1 million shall be categorized as a small claim
Q: Can you file a motion for reconsideration or a new trial? NO thereby entitled to special procedures of disposition and
reduced fees.
SECTION 17.2 Motion for reconsideration or new trial.- A
motion for reconsideration or new trial shall be considered a
prohibited pleading. RULE 21– GENERAL MATTERS

RULE 18 – EXECUTION OF FINAL AWARD SECTION 21.2 Control over proceedings 37 - The Arbitral
Tribunal shall exercise complete control over all proceedings to
SECTION 18.1 Execution of Award. - A final arbitral award insure a speedy, adequate and justifiable disposition of the
shall become executory upon the lapse of fifteen (15) days disputes and cases submitted to them for resolution.
from receipt thereof by the parties.
SECTION 21.6 Waiver of Rules - Any party who proceeds with
Just read through the subsequent subsections… the arbitration after knowledge that any provision or
requirement of these Rules has not been complied with and
Just remember that the CIAC arbitral award need not be fails to state his objection thereto in writing, shall be deemed to
confirmed by the RTC to be executed as provided under EO no have waived his right to object.
1008. The CIAC award is executory. Thus, it need not be
confirmed by the court. SECTION 21.7 Freedom to settle 38 - The parties shall be free
to settle the dispute(s) anytime even if the same is under
Under EO 1008, arbitral award are final and non-appealable arbitration. In such case, the actual expenses incurred for
except when it involves question of law, in which case it can be arbitration shall be charged against the deposit. If the deposit
appealed to the SC before the award becomes final. is insufficient, the parties shall equally shoulder the balance.

E.O. no 1008.Sec. 19. Finality of Awards. The arbitral RULE 22 – COSTS


award shall be binding upon the parties. It shall be final and
inappealable except on questions of law which shall be RULE 23. REPEALING CLAUSE
appealable to the Supreme Court.
RULE 24. SEPARABILITY CLAUSE
But also look at the Rules of Procedure. It states that all
appeals of judgments or orders of quasi-judicial agencies, RULE 25. EFFECTIVITY
including the CIAC, through the exercise of the quasi-judicial
functions shall be brought to the CA – whether they involve
questions of fact or questions of law, or even a mix of Next meeting:
questions of fact and law.
RA 876
Metro Construction vs. Chatham Properties RA 9285

In view of the amendment brought about by circular 1-91 and


1-95 in conjunction with RA 7902 which is now embodied in
Rule 43 of the 1997 Rules of Civil Procedure, appeals from
arbitral awards of the CIAC may be brought not only to the SC
for questions of law as allowed under Sec. 19 of EO no. 1008,
but also to the CA for questions of fact and law. But even an
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03/14/2016 award is lodged with the RTC in the place where the arbitration
-no recording file available- was held; in the place where the attached property is located;
the residence of any of the parties, or the regular place of
03/21/2016 business; or in the NCR at the option of the applicant.

Section 23. Confirmation of award


RA 876.Sec. 18.Proceeding in lieu of hearing.
Q: After the award is made, what may the party do?
Q:May oral hearing be dispensed with?
A: Any party to the controversy which was arbitrated may apply
A: According to Sec. 19, it may be waived provided that the to the court having jurisdiction, as provided in section twenty-
parties, by written agreement, submitted their differences to eight, for an order confirming the award.
arbitration.
Q: When?
Sec. 19.Time for Rendering Award A: At any time within one month after the award is made.

The general rule is that the written award of the arbitrators Take note that the award of arbitrators is not immediately
shall be rendered within 30 days after the closing of the executory. The award must be confirmed by the court having
hearings or if the oral hearings shall have been waived, within jurisdiction.
thirty days after the arbitrators shall have declared such
proceedings in lieu of hearing closed. Take note that the period Q: How is it made?
may be extended by mutual consent of the parties. A: By filing a motion for confirmation and securing a judgment.

Exception: When the parties shall have stipulated by written Section 24.Grounds for vacating award.
agreement the time within which the arbitrators must render
their award. In any one of the following cases, the court must make an
order vacating the award upon the petition of any party to the
Section 20.Form and contents of award. controversy:

Q: How shall the award be made? (a) The award was procured by corruption, fraud, or
other undue means; or
A: The award must be made in writing and signed and
acknowledged by a majority of the arbitrators, if more than one; (b) That there was evident partiality or corruption in
and by the sole arbitrator, if there is only one. the arbitrators or any of them; or

Q: If during the course of arbitration, the parties have settled (c) That the arbitrators were guilty of misconduct in
their differences, what may the parties do? refusing to postpone the hearing upon sufficient
cause shown, or in refusing to hear evidence
A: They may request of the arbitrators that such settlement be pertinent and material to the controversy; that one or
embodied in an award which shall be signed by the arbitrators. more of the arbitrators was disqualified to act as such
under section nine hereof, and wilfully refrained from
Take note: No arbitrator shall act as a mediator in any disclosing such disqualifications or of any other
proceeding in which he is acting as arbitrator; and all misbehavior by which the rights of any party have
negotiations towards settlement of the dispute must take place been materially prejudiced; or
without the presence of the arbitrators.
(d) That the arbitrators exceeded their powers, or so
Section 21.Fees of arbitration. - The fees of the arbitrators imperfectly executed them, that a mutual, final and
shall be fifty pesos per day unless the parties agree otherwise definite award upon the subject matter submitted to
in writing prior to the arbitration. them was not made.

Section 22. Arbitration deemed a special proceeding. Q: What if the party wishes to have the award vacated on valid
grounds and he is faced with an unaccommodating court, what
Arbitration under a contract or submission shall be deemed a is his remedy? Stated otherwise, what if the judge would not
special proceeding. allow it, what is the remedy then?

Q: What is a special proceeding? A: If you are faced with an unaccommodating court, the proper
remedy would be certiorari under Rule 65. It must be borne in
A: Under Rule 1. Sec. 3(c), a special proceeding is a remedy mind, however, that this action will only lie when there is grave
by which a party seeks to establish a status, a right, or a abuse of discretion amounting to lack or in excess of
particular fact. jurisdiction on the part of the voluntary arbitrator.

Being a special proceeding, jurisdiction over petitions and Read Case:


motions for enforcement and arbitration or for settling the
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1. Chungfu Industries vs. CA (GR no. 96283) In any one of the following cases, the court must make an
order modifying or correcting the award, upon the application
of any party to the controversy which was arbitrated:
Chungfu Industries vs. CA
(GR no. 96283) (a) Where there was an evident miscalculation of
figures, or an evident mistake in the description of any
1stIssue:May the parties who agree to submit their disputes to person, thing or property referred to in the award; or
arbitration further provide that the arbitrators' award shall be final,
unappealable and executory? (b) Where the arbitrators have awarded upon a matter
not submitted to them, not affecting the merits of the
decision upon the matter submitted; or
Ruling: YES
(But not absolute.In this case the court committed GAOD). (c) Where the award is imperfect in a matter of form
not affecting the merits of the controversy, and if it
Article 2044 of the Civil Code recognizes the validity of such had been a commissioner's report, the defect could
stipulation, thus: have been amended or disregarded by the court.

Any stipulation that the arbitrators' award or decision shall be final is


valid, without prejudice to Articles 2038, 2039 and 2040. Section 26. Motion to vacate, modify or correct award: when
made.
Similarly, the Construction Industry Arbitration Law provides that
the arbitral award "shall be final and inappealable except on Section 27. Judgment
questions of law which shall be appealable to the Supreme Court."
Section 28. Papers to accompany motion to confirm, modify,
Where the parties agree that the decision of the arbitrator shall be correct, or vacate award.
final and unappealable as in the instant case, the pivotal inquiry is
Section 29. Appeals
whether subject arbitration award is indeed beyond the ambit of the
court's power of judicial review.
Q: How may an appeal be taken from an order made in a
proceeding under this Act, or from a judgment entered upon an
We rule in the negative. It is stated explicitly under Art. 2044 of the award?
Civil Code that the finality of the arbitrators' award is not absolute
and without exceptions. Where the conditions described in Articles A: Through certiorari proceedings, but such appeals shall be
2038, 2039 and 2040 applicable to both compromises and limited to questions of law.
arbitrations are obtaining, the arbitrators' award may be annulled
or rescinded. Additionally, under Sections 24 and 25 of the Section 30.Death of party.
Arbitration Law, there are grounds for vacating, modifying or
rescinding an arbitrator's award. Thus, if and when the factual Q: Where a party dies after making a submission or a contract
circumstances referred to in the above-cited provisions are present, to arbitrate as prescribed in this Act, what happens to the
judicial review of the award is properly warranted. proceedings?
A:The proceedings may be begun or continued upon the
2nd Issue: What if courts refuse or neglect to inquire into the factual application of, or notice to, his executor or administrator, or
milieu of an arbitrator's award to determine whether it is in temporary administrator of his estate. In any such case, the
court may issue an order extending the time within which
accordance with law or within the scope of his authority? How may
notice of a motion to confirm, vacate, modify or correct an
the power of judicial review be invoked?
award must be served.
This is where the proper remedy is certiorari under Rule 65 of the Section 31.Repealing clause. - The provisions of chapters
Revised Rules of Court. It is to be borne in mind, however, that this one and two, Title XIV, of the Civil Code shall remain in force.
action will lie only where a grave abuse of discretion or an act All other laws and parts of laws inconsistent with this Act are
without or in excess of jurisdiction on the part of the voluntary hereby repealed. If any provision of this Act shall be held
arbitrator is clearly shown. For "the writ of certiorari is an extra- invalid the remainder that shall not be affected thereby.
ordinary remedy and that certiorari jurisdiction is not to be equated
with appellate jurisdiction. In a special civil action of certiorari, the In effect, the arbitration law is suppletory to the Civil Code
Court will not engage in a review of the facts found nor even of the provisions.
law as interpreted or applied by the arbitrator unless the supposed
errors of fact or of law are so patent and gross and prejudicial as to
amount to a grave abuse of discretion or an exces de pouvoir on the Republic Act No. 9285
part of the arbitrator."
The Alternative Dispute Resolution Act of 2004 may be
Section 25. Grounds for modifying or correcting award considered a major breakthrough in the Philippine Court
System. This ADR law is a response to address the perennial

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issues increasing court dockets, expensive litigation fees, slow Q: How shall the state achieve ADR
paced judicial proceedings and the rigid adversary court A: The state shall use the ADR as an efficient tool and an
system. alternative procedure for the resolution of appropriate cases by

Court dockets are seriously congested due to infinite filing of 1. Enlisting active private sector participation in the
cases and delayed court resolutions because of inefficiency, settlement of disputes through ADR
incompetence, sloth, laziness, corruption, and conflict of 2. without prejudice to the adoption by the Supreme
interest of court officials. Moreover, the ADR law addresses the Court of any ADR system, such as mediation,
indispensable effects of globalization of commercial conciliation, arbitration, or any combination thereofas
transactions such as the expansion of international trade of a means of achieving speedy and efficient means of
foreign investments which require domestic laws to adopt resolving cases
alternative ways of dispute resolution applicable in commerce.
Read:
In contemplation of RA 9285, take note that there are 2 general
categories of arbitration: 1. Magellan Capital Mgt. Corp. vs. Zosa (355 S 157)

1. Domestic Arbitration – an arbitration that is not “It is error for the petitioners to claim that the case should fall
“international” as defined in Article 1, par. 3 of the Model Law. under the jurisdiction of the Securities and Exchange
It is an arbitration where the proceedings are held and where Commission [SEC, for brevity]. The controversy does not in
the award is rendered in the Philippines. The seat of arbitration anyway involve the election/appointment of officers of
is here in the Philippines. It does not have any of the petitioner MCHC, as claimed by petitioners in their assignment
characteristics of an International Arbitration under Art. 1 (3) of of errors. Respondent Zosa's amended complaint focuses
the Model Law. heavily on the illegality of the Employment Agreement's
"Arbitration Clause" initially invoked by him in seeking his
2. International Commercial Arbitration – is an arbitration termination benefits under Section 8 of the employment
where (just like domestic arbitration), the proceedings are held contract. And under Republic Act No. 876, otherwise known as
and the award is rendered in the Philippines but involves a the "Arbitration Law," it is the regional trial court which
dispute arising from a commercial relationship that possesses exercises jurisdiction over questions relating to arbitration.”
any of the characteristics that make it international under Art. 1
par. 3 of the Model Law. SEC. 7.Scope. - The provisions of this Chapter shall cover
voluntary mediation, whether ad hoc or institutional, other than
According to Art. 1(3)of the Model Law,an arbitration is court-annexed. The term "mediation' shall include conciliation
international if:
Mediation – is where the services of a mediator is offered by a
(a) the parties to an arbitration agreement have, at the time of third party
the conclusion of that agreement, their places of business in
different States; or Conciliation – is where the services of the third party that will
facilitate the conciliation process is solicited by the one of the
(b) one of the following places is situated outside the State in parties
which the parties have their places of business:
ADR Provider - means institutions or persons accredited as
(i) the place of arbitration if determined in, or pursuant mediator, conciliator, arbitrator, neutral evaluator, or any
to, the arbitration agreement; person exercising similar functions in any Alternative Dispute
Resolution system. This is without prejudice to the rights of the
(ii) any place where a substantial part of the parties to choose nonaccredited individuals to act as mediator,
obligations of the commercial relationship is to be conciliator, arbitrator, or neutral evaluator of their dispute.
performed or the place with which the subject-matter
of the dispute is most closely connected; or Arbitrator - means the person appointed to render an award,
alone or with others, in a dispute that is the subject of an
(c) the parties have expressly agreed that the subject-matter of arbitration agreement.
the arbitration agreement relates to more than one country.
Government Agency - means any government entity, office or
Also take note that international commercial arbitration is officer, other than a court, that is vested by law with quasi-
governed by the model law and some specific provisions of RA judicial power to resolve or adjudicate dispute involving the
9285. government, its agencies and instrumentalities, or private
persons;
RA 9285.SEC. 2.Declaration of Policy.
International Party - shall mean an entity whose place of
What is being promoted by the law is party autonomy in the business is outside the Philippines. It shall not include a
resolution of disputes. In other words, the use of ADR provides domestic subsidiary of such international party or a coventurer
empowerment to the parties in the dispute. in a joint venture with a party which has its place of business in
the Philippines.

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SEC. 4.Electronic Signatures in Global and E-Commerce General Rule: public officers shall not be civilly liable for acts
Act. - The provisions of the Electronic Signatures in Global and done in the performance of their official duties.
E-Commerce Act, and its implementing Rules and Regulations
shall apply to proceeding contemplated in this Act. Exceptions: Clear showing of B.F.; M; G.N.

This is because of the advances of electronic communications Illustrative Case:


in commerce.
1. Pajares vs. Alipante R-190-P September 15, 1957
Under Sec. 5 (e) of RA 8792, "Electronic Signature" refers to
any distinctive mark, characteristic and/or sound in electronic “We agree that the respondent is guilty of gross negligence
form, representing the identity of a person and attached to or and conduct seriously prejudicial to the best interest of the
logically associated with the electronic data message or service. The evidence shows respondent to have been
electronic document or any methodology or procedures completely unmindful of his duties, so indifferent to his
employed or adopted by a person and executed or adopted by responsibilities as to be scornful of them, and utterly uncaring
such person with the intention of authenticating or approving of the rights of the parties. He has by his conduct shown
an electronic data message or electronic document. himself to be unfit for public service, specially that connected
with the administration of justice, which demands the highest
Also take note of Digital Signature. Under the Rules on sense of dedication and zeal in the protection and conservation
Electronic Evidence, "Electronic signature" refers to any of the rights and interests of litigants as well as in assuring the
distinctive mark, characteristic and/or sound in electronic form, efficacy and integrity of the judicial process.”
representing the identity of a person and attached to or
logically associated with the electronic data message or SEC. 6.Exception to the Application of this Act. - The
electronic document or any methodology or procedure provisions of this Act shall not apply to resolution or settlement
employed or adopted by a person and executed or adopted by of the following:
such person with the intention of authenticating, signing or
approving an electronic data message or electronic document. (a) labor disputes covered by Presidential Decree No. 442,
For purposes of these Rules, an electronic signature includes otherwise known as the Labor Code of the Philippines, as
digital signatures. amended and its Implementing Rules and Regulations;
(b) the civil status of persons;
SEC. 5.Liability of ADR Provider and Practitioner. - The (c) the validity of a marriage;
ADR providers and practitioners shall have the same civil (d) any ground for legal separation;
liability for the Acts done in the performance of then duties as (e) the jurisdiction of courts;
that of public officers (f) futurelegitime;
(g) criminal liability; and
The liability of ADR providers and practitioners are similar to (h) those which by law cannot be compromised
the liability of the superior public officers except for Sec. 38 (1)
chapter 9 Book 1 of the Administrative Code which provides: Relate Sec. 6 of RA 9285 with Art. 2035 of the Civil Code

A public officer shall not be civilly liable for acts done SEC. 7.Scope. - The provisions of this Chapter shall cover
in the performance of his official duties unless there is voluntary mediation, whether ad hoc or institutional, other than
a clear showing of bad faith, malice, or gross court-annexed. The term "mediation' shall include conciliation.
negligence.
"Mediation" means a voluntary process in which a mediator,
So, what are the grounds of civil liability? selected by the disputing parties, facilitates communication and
negotiation, and assist the parties in reaching a voluntary
1. Bad Faith agreement regarding a dispute.
2. Malice
3. Gross Negligence "Mediator" means a person who conducts mediation;

Bad Faith – involves actual or constructive fraud or a design to Q: Why is Court Annex not included?
deceive or mislead another, or a neglect or refusal to fulfil A: It would be duplicating the existing mediation procedure
some duty or some contractual obligation, not prompted by an already established in the judiciary. Such inclusion would
honest mistake as to one’s rights and duties but by some encroach with the separation of powers between judiciary and
interest and/or sinister motive. congress. Further, such cases guarantee (under the court
annex mediation program of the judiciary department) that they
Malice – is the intentional doing of a wrongful act without just are already within the cognizance of the court. Thus to include
cause, or excuse with intent to inflict an injury. CAM cases under the application of this Act is tantamount to
depriving the courts of their jurisdiction over the same.
Gross Negligence – is the intentional failure to perform a
manifest duty and reckless disregard of the consequences as SEC. 8. Application and Interpretation
affecting the life and property of another.
This reiterates the state policy of promoting ADR in order to
avoid protracted litigation that may entail unnecessary
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expenses. Emphasis must be given to the need to promote (5) sought or offered to prove or disprove abuse,
candor of parties and mediators through confidentiality of the neglect, abandonment, or exploitation in a proceeding
mediation process (which is one of the features of ADR). in which a public agency is protecting the interest of
an individual protected by law; but this exception does
Other features: 1. Cost effective 2. Binding 3. Within the power not apply where a child protection matter is referred to
of the parties mediation by a court or a public agency participates in
the child protection mediation;
SEC. 9.Confidentiality of Information.
(6) sought or offered to prove or disprove a claim or
Insular Life vs. CA complaint of professional misconduct or malpractice
filed against mediator in a proceeding; or
Discovery is defined as the disclosure of facts resting in the
knowledge of the defendant or as the production of deeds, (7) sought or offered to prove or disprove a claim of
writings, or things in his possession or commerce. complaint of professional misconduct of malpractice
filed against a party, nonparty participant, or
Modes of Discovery under Rules of Court: representative of a party based on conduct occurring
during a mediation.
1. Depositions pending action
2. Depositions before action or pending appeal (b) There is no privilege under Section 9 if a court or
3. Interrogatories to parties administrative agency, finds, after a hearing in camera, that the
4. Admission by adverse party party seeking discovery of the proponent of the evidence has
5. Production or inspection of documents or things shown that the evidence is not otherwise available, that there
6. Physical and mental examination of persons is a need for the evidence that substantially outweighs the
interest in protecting confidentiality, and the mediation
SEC. 10. Waiver of Confidentiality communication is sought or offered in:

Waiver is the voluntary repudiation of a right expressed or (1) a court proceeding involving a crime or felony; or
implied.
(2) a proceeding to prove a claim or defense that
A privilege arising from the confidentiality of information may under the law is sufficient to reform or avoid a liability
be waived in a record or orally during the proceedings by the on a contract arising out of the mediation.
mediator and the mediation parties.
(c) A mediator may not be compelled to provide evidence of a
However, the confidentiality arising from the confidentiality of mediation communication or testify in such proceeding.
information may likewise be waived by a nonparty participant if
the information is provided by such nonparty participant. (d) If a mediation communication is not privileged under an
exception in subsection (a) or (b), only the portion of the
Q: Who will waive the confidentiality of information under this communication necessary for the application of the exception
section? for nondisclosure may be admitted. The admission of particular
evidence for the limited purpose of an exception does not
A: A privilege arising from the confidentiality of information may render that evidence, or any other mediation communication,
be waived in a record, or orally during a proceeding by the admissible for any other purpose.
mediator and the mediation parties.
SEC. 12.Prohibited Mediator Reports.
SEC. 11.Exceptions to Privilege. -
SEC. 13.Mediator's Disclosure and Conflict of Interest.
(a) There is no privilege against disclosure under Section 9 if
mediation communication is: At the request of a mediation party, an individual who is
requested to serve as mediator shall disclose his/her
(1) in an agreement evidenced by a record qualifications to mediate a dispute.
authenticated by all parties to the agreement;
Before accepting a mediation, an individual who is requested
(2) available to the public or that is made during a to serve as a mediator shall:
session of a mediation which is open, or is required
by law to be open, to the public; (1) make an inquiry that is reasonable under the
circumstances to determinate whether there are any
(3) a threat or statement of a plan to inflict bodily known facts that a reasonable individual would
injury or commit a crime of violence; consider likely to affect the impartiality of the mediator,
including a financial or personal interest in the
(4) internationally used to plan a crime, attempt to outcome of the mediation and any existing or past
commit, or commit a crime, or conceal an ongoing relationship with a party or foreseeable participant in
crime or criminal activity; the mediation; and

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(2) disclosure to the mediation parties any such fact The general assembly recommended that all states shall give
known or learned as soon as is practical before due consideration to the Model Law of the International
accepting a mediation. Arbitration in view of the desirability of uniformity of the law on
arbitral procedures and the specific rules of International
(b) If a mediation learns any fact described in paragraph (a) (1) Commercial Arbitration practice.
of this section after accepting a mediation, the mediator shall
disclose it as soon as practicable. The Model Law constitutes a sound and promising basis for
the desired empowerment of national laws. It covers all stages
SEC. 14.Participation in Mediation. of the arbitral process from the arbitration agreement, to the
recognition, and the enforcement of the arbitral award and
A lawyer or a non-lawyer may be designated to provide reflects a world-wide consensus on the principles and
assistance in the mediation except as otherwise provided in important issues of international arbitration practice. Moreover,
RA 9285. A waiver of this right, in case the party waives, shall the form of a model law was chosen as the vehicle for the
be made in writing. improvement in view of the flexibility it gives the states in
preparing arbitration laws.
Tan Chay vs. West Coast Life Insurance Company 51 P 88
The model law allows the possibility of incorporating an
SC: to rescind is to abrogate a null or void contract arbitration agreement and procedural provisions of a foreign
law provided there is no conflict with the few mandatory
SEC. 15. Place of Mediation. - The parties are free to agree provisions of the model law.
on the place of mediation. Failing such agreement, the place of
mediation shall be any place convenient and appropriate to all Article 5 of the Model Law provides: Extent of court
parties. intervention. In matters governed by this Law, no court shall
intervene except where so provided in this Law.
SEC. 16. Effect of Agreement to Submit Dispute to
Mediation Under Institutional Rules. SEC. 20.Interpretation of Model Law. - In interpreting the
Model Law, regard shall be had to its international origin and to
Section 16 mandates that any agreement to submit a future the need for uniformity in its interpretation and resort may be
dispute to an institution that provides mediation services shall made to the travauxpreparatories and the report of the
also include submission to said institution’s rules and Secretary General of the United Nations Commission on
regulations governing the conduct of the mediation. International Trade Law

Take note that in case of conflict between the institution’s rules The correct French phrase is travauxpreparatoir which means
and RA 9285, it is the latter that shall prevail. official record of a negotiation.

SEC. 17.Enforcement of Mediated Settlement Agreement. SEC. 21.Commercial Arbitration.- An arbitration is


"commercial" if it covers matters arising from all relationships of
SEC. 18.Referral of Dispute to other ADR Forms. - The a commercial nature, whether contractual or not. Relationships
parties may agree to refer one or more or all issues arising in a of a transactions:
dispute or during its pendency to other forms of ADR such as
but not limited to 1. any trade transaction for the supply or exchange of
goods or services;
(a) the evaluation of a third person or 2. distribution agreements;
(b) a mini-trial, 3. construction of works;
(c) mediation-arbitration, or a combination thereof. 4. commercial representation or agency;
5. factoring;
"Mini-Trial" means a structured dispute resolution method in 6. leasing,
which the merits of a case are argued before a panel 7. consulting;
comprising senior decision makers with or without the 8. engineering;
presence of a neutral third person after which the parties seek 9. licensing;
a negotiated settlement 10. investment;
11. financing;
CHAPTER 4 - INTERNATIONAL COMMERCIAL 12. banking;
ARBITRATION 13. insurance;
14. joint venture and other forms of industrial or business
SEC. 19.Adoption of the Model Law on International cooperation;
Commercial Arbitration. 15. carriage of goods or passengers by air, sea, rail or
International commercial arbitration shall be governed by the road.
Model Law on International Commercial Arbitration (the "Model
Law") adopted by the United Nations Commission on Q: When is an arbitration considered commercial?
International Trade Law on June 21, 1985
A: In answering this, you have to refer to Sec. 21 of RA 9285
and Art. 3 (1) of the Model Law. Hence, arbitration is
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commercial if it involves matters arising from all relationships of Vega vs. San Carlos Milling 51 P 917
commercial in nature, whether contractual or not.
The rule now is that unless the agreement is such as
SEC. 22.Legal Representation in International Arbitration. absolutely to close the doors of the courts against the
parties, which agreement would be void, the courts
Representation in international arbitration could be by a lawyer will look with favor upon such amicable arrangement
and a non-lawyer. This provision allows a party to be and will only with great reluctance interfere to
represented by any person of his choice. However, it prohibits anticipate or nullify the action of the arbitrator.
anyone who is not admitted to the practice of law from
representing them before a judicial/ quasi-judicial body even if SEC. 25.Interpretation of the Act. - In interpreting the Act, the
the proceeding is related to arbitration process. court shall have due regard to the policy of the law in favor of
arbitration. Where action is commenced by or against multiple
Consistent with Philippine’s intention to be an international parties, one or more of whom are parties who are bound by the
commercial arbitration center, this provision allows foreign arbitration agreement, the courts shall refer the parties to
lawyers, although not admitted to practice law in the territory or arbitration although the civil action may continue as to those
the seat of arbitration, to represent the party before the who are not bound by such arbitration agreement.
international arbitral tribunal. Such foreign lawyer falls within
the scope of “any person.” Allowing foreign lawyers to This emphasizes the rule of liberality in favor of arbitration
represent a party before an international arbitral tribunal is not
tantamount to a surrender of sovereignty. In fact, it would be
beneficial to the Philippines as an international commercial LM Power Engineering Corp. vs. Capitol 399 S 562
arbitration center.
Consistent with the policy of encouraging alternative
SEC. 23.Confidential of Arbitration Proceedings. - The dispute resolution methods, courts should liberally
arbitration proceedings, including the records, evidence and construe arbitration clauses. Provided such clause is
the arbitral award, shall be considered confidential and shall susceptible of an interpretation that covers the
not be published except asserted dispute, an order to arbitrate should be
granted. Any doubt should be resolved in favor of
(1) with the consent of the parties, or arbitration.
(2) for the limited purpose of disclosing to the court of relevant
documents in cases where resort to the court is allowed herein. Read:

Provided, however, that the court in which the action or the 1. 157 S 592
appeal is pending may issue a protective order to prevent or 2. BF Corp. vs. CA 288 S 285
prohibit disclosure of documents or information containing 3. Toyota vs. CA 216 S 236
secret processes, developments, research and other 4. Philwrap Inc. vs. CIAC 359 S 682
information where it is shown that the applicant shall be
materially prejudiced by an authorized disclosure thereof. Toyota vs. CA

Arbitration proceedings are confidential because they are like The contention that the arbitration clause has become
amicable settlement proceedings. disfunctional because of the presence of third parties
is untenable.
SEC. 24.Referral to Arbitration. - A court before which an
action is brought in a matter which is the subject matter of an Contracts are respected as the law between the
arbitration agreement shall, contracting parties. As such, the parties are thereby
expected to abide with good faith in their contractual
1. if at least one party so requests not later that the pre- commitments. Toyota is therefore bound to respect
trial conference, or the provisions of the contract it entered into with APT.
2. upon the request of both parties thereafter,
Toyota filed an action for reformation of its contract
refer the parties to arbitration. with APT, the purpose of which is to look into the real
intentions/agreement of the parties to the contract and
Without any of the above request, there can be no referral to determine if there was really a mistake in the
UNLESS if it finds that the arbitration agreement is null and designation of the boundaries of the property as
void, inoperative or incapable of being performed. alleged by Toyota. Such questions can only be
answered by the parties to the contract themselves.
Arbitration proceedings are not mandatory but are subject to This is a controversy which clearly arose from the
the will of the parties to the controversy. Strictly speaking, it is contract entered into by APT and Toyota. Inasmuch
consensual. as this concerns more importantly the parties APT
and Toyota themselves, the arbitration committee is
therefore the proper and convenient forum to settle
the matter as clearly provided in the deed of sale.

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Having been apprised of the presence of the Art. 13 (3). If a challenge under any procedure agreed upon by
arbitration clause in the motion to dismiss filed by the parties or under the procedure of paragraph (2) of this
APT, Judge Tensuan should have at least suspended article is not successful, the challenging party may request,
the proceedings and directed the parties to settle their within thirty days after having received notice of the decision
dispute by arbitration. Judge Tensuan should have rejecting the challenge, the court or other authority specified in
not taken cognizance of the case. article 6 to decide on the challenge, which decision shall be
subject to no appeal; while such a request is pending, the
SEC. 26. Meaning of Appointing Authority arbitral tribunal, including the challenged arbitrator, may
continue the arbitral proceedings and make an award.
"Appointing Authority" as used in the Model Law shall mean
the person or institution named in the arbitration agreement as Article 14. Failure or impossibility to act
the appointing authority; or the regular arbitration arbitration
institution under whose rules the arbitration is agreed to be (1) If an arbitrator becomes de jure or de facto unable to
conducted. Where the parties have agreed to submit their perform his functions or for other reasons fails to act without
dispute to institutional arbitration rules, and unless they have undue delay, his mandate terminates if he withdraws from his
agreed to a different procedure, they shall be deemed to have office or if the parties agree on the termination. Otherwise, if a
agreed to procedure under such arbitration rules for the controversy remains concerning any of these grounds, any
selection and appointment of arbitrators. In ad hoc arbitration, party may request the court or other authority specified in
the default appointment of an arbitrator shall be made by the article 6 to decide on the termination of the mandate, which
National President of the Integrated Bar of the Philippines (IBP) decision shall be subject to no appeal.
or his duly authorized representative.
SEC. 28.Grant of Interim Measure of Protection.
SEC. 27. What Functions May be Performed by Appointing
Authority The ADR law expanded the power of the arbitrators.

Under Art. 11 (3) of the Model Law: Take note that courts are permitted to grant interim and
provisional relief during the pendency of arbitral proceedings. It
Failing such agreement, is also recognized that arbitral tribunals are authorized to
provide interim measures such as
(a) in an arbitration with three arbitrators, each party
shall appoint one arbitrator, and the two arbitrators 1. Preliminary injunction
thus appointed shall appoint the third arbitrator; if a 2. Appointment of receivers
party fails to appoint the arbitrator within thirty days of 3. Detention
receipt of a request to do so from the other party, or if 4. Preservation
the two arbitrators fail to agree on the third arbitrator 5. Inspection of property, among others
within thirty days of their appointment, theappointment
shall be made, upon request of a party, by the court Even granting that both the courts and arbitral tribunal are
or other authority specified in article 6; given the same power, parties cannot avail of this
simultaneously. The court only has the authority to grant
(b) in an arbitration with a sole arbitrator, if the parties interim measures to the extent that the tribunal has no power
are unable to agree on the arbitrator, he shall be to act or is unable to act effectively. The law does not provide
appointed, upon request of a party, by the court or for concurrent power of the courts and arbitral tribunal to grant
other authority specified in article 6. interim measure of protection. The court must exercise these
powers sparingly, giving weight or precedence to the exercise
Art. 11 (4). Where, under an appointment procedure agreed thereof by the arbitral tribunal. Any party granted a provisional
upon by the parties, relief has to apply with the court for assistance in implementing
or enforcing the interim measures because the arbitral tribunal
(a) a party fails to act as required under such has no coercive powers.
procedure, or Homebankers Savings and Trust vs. CA 318 S 558

(b) the parties, or two arbitrators, are unable to reach A party to a pending arbitration has the right without
an agreement expected of them under such violating the rule on forum shopping to institute an
procedure, or action to obtain a writ of preliminary attachment from
the court to preserve the property which is the subject
(c) a third party, including an institution, fails to matter of the arbitration pursuant to last proviso of
perform any function entrusted to it under such Section 14 of the Arbitration Law which accords the
procedure, right to petition the court to take measures to
safeguard any matter which is the subject of the
any party may request the court or other authority specified in dispute in arbitration.
article 6 to take the necessary measure, unless the agreement
on the appointment procedure provides other means for Consistent to the ruling in homebankers, RA 9285 provides
securing the appointment. that it is not incompatible with an arbitration agreement for a
party to request, before constitution of the tribunal, from a
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Court an interim measure of protection and for the Court to SEC. 31.Language of the Arbitration. - The parties are free
grant such measure. After constitution of the arbitral tribunal to agree on the language or languages to be used in the
and during arbitral proceedings, a request for an interim arbitral proceedings. Failing such agreement, the language to
measure of protection or modification thereof, may be made be used shall be English in international arbitration, and
with the arbitral tribunal or to the extent that the arbitral tribunal English or Filipino for domestic arbitration, unless the arbitral
has no power to act or is unable to act effectively, the request tribunal shall determine a different or another language or
may be made with the Court. The arbitral tribunal is deemed languages to be used in the proceedings. This agreement or
constituted when the sole arbitrator or the third arbitrator who determination, unless otherwise specified therein, shall apply
has been nominated, has accepted the nomination and written to any written statement by a party, any hearing and any award,
communication of said nomination and acceptance has been decision or other communication by the arbitral tribunal.
received by the party making request.
The arbitral tribunal may order that any documentary evidence
SEC. 29.Further Authority for Arbitrator to Grant Interim shall be accompanied by a translation into the language or
Measure of Protection. languages agreed upon by the parties or determined in
accordance with paragraph 1 of this section.
This section specifically refers to the granting of preliminary
injunction, but includes also includes appointment of receivers, 03/28/2016
detention, preservation, inspection…
DOMESTIC ARBITRATION
SEC. 30. Place of Arbitration. - The parties are free to agree
on the place of arbitration. Failing such agreement, the place of -sorry recording inaudible-
arbitration shall be in Metro Manila, unless the arbitral tribunal,
having regard to the circumstances of the case, including the 04/04/2016
convenience of the parties shall decide on a different place of
arbitration. What is mediation?

The arbitral tribunal may, unless otherwise agreed by the Mediation is a process of settling disputes with the assistance
parties, meet at any place it considers appropriate for of an acceptable, impartial and neutral third party called a
consultation among its members, for hearing witnesses, mediator. The mediator helps parties identify issues and
experts, or the parties, or for inspection of goods, other develop proposals to resolve their disputes. Once the parties
property or documents. have arrived at a mutually acceptable arrangement, the
agreement becomes the basis for the court’s decision on the
Take note that the place chosen for the arbitral tribunal must case.
have some relevance to the contract and should not impose
any undue hardships on one or to the other party to the This form of mediation is also known as court-annexed
contract especially in terms of attending the hearings. mediation since the case has already been filed in court.

Relate with Article 20 of the Model Law. What is Judicial Dispute Resolution?

Article 20. Place of arbitration Judicial Dispute Resolution (JDR) is another innovation in the
Philippine court system. When court-annexed mediation fails,
(1) The parties are free to agree on the place of the case is brought to the judge who then acts as a conciliator,
arbitration. Failing such agreement, the place of a neutral evaluator and a mediator. The judge will try to
arbitration shall be determined by the arbitral tribunal mediate the case. If the judge’s intervention as a mediator
having regard to the circumstances of the case, succeeds, the case is concluded with a judgment based on a
including the convenience of the parties. compromise. If the dispute is still unresolved, then the case is
referred to another judge for trial. Both parties must now be
(2) Notwithstanding the provisions of paragraph/ (1) of prepared for litigation.
this article, the arbitral tribunal may, unless otherwise
agreed by the parties, meet at any place it considers What cases are covered by mediation?
appropriate for consultation among its members, for
hearing witnesses, experts or the parties, or for 1. All civil cases, settlement of estates and cases
inspection of goods, other property or documents. covered by the Rule on Summary Procedure. Typical
cases would be collection of debts, ejectment of
The mandatory rules of the place where the arbitration is tenants in apartment dwellings, and inheritance
conducted may be a ground for the court of the state where the disputes among family members.
arbitration is held to set aside the award. Where the arbitral
award is to be enforced abroad, it is important to hold the 2. Cases cognizable by the Lupong Tagapamayapa
arbitration proceedings in a state that is a signatory to the New under the KatarungangPambarangay Law such as
York convention so that the award will be entitled with the disputes between neighbors of the same barangay
benefits of said convention. over property.

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3. The civil aspect of Batas Pambansa 22, which covers How effective is mediation?
the debts paid through bouncing checks.
In the pilot project on mediation conducted by the Philippine
4. The civil aspect of quasi-offenses under negligence Judicial Academy (PHILJA), 85% of cases referred for
like motor vehicle accidents that has damaged the mediation reached settlement. Surveys conducted after
vehicle or injured passengers or pedestrians. mediation also revealed a high level of satisfaction among
disputing parties in the outcome of their case. Close to 100%
What cases are excluded from mediation? of the parties involved complied with the agreement reached in
Cases which cannot be compromised are not included, like mediation
legal separation or annulment of marriage.
How long will mediation take?
Can I or the other party refuse mediation?
Parties are given 30 days for mediation sessions. The period
No. Once the court determines that your case is mediatable, may be extended to another 30 days to allow you to reach a
the parties are compelled to appear before the Philippine compromise agreement.
Mediation Center (PMC) unit. If the complainant fails to appear
for mediation, the case may be dismissed. If the defendant is How much will it cost me?
absent, the complainant may be allowed to present their side in
court without you. The court will then decide the case on the A mediation fee of P500.00 is collected by the Clerk of Court
basis of what was presented. upon the filing of certain pleadings in court. This fee will accrue
to the Mediation Fund for the training of mediators, payment of
How will I benefit mediation? mediator’s fees and other operating expenses of the Philippine
Mediation Center (PMC). The fee will be collected upon the
1. Mediation has been proven to be a faster and filing of the following pleadings
certainly less expensive option for settling disputes.
Settlements have occurred in as little as one or two IN CIVIL CASES:
mediation sessions.
2. Mediation also provides for a fair resolution of your 1. Complaint
case. By jointly resolving the dispute, both parties can 2. Records of the case
come up as winners. 3. Answer with a mediatable counterclaim
3. But best of all, mediation has been proven to restore
relationships long disrupted by conflict. The process
of mediation tackles the roots of misunderstanding to IN CRIMINAL CASES:
help parties resolve their differences.
1. Complaint/information for an offense falling under the
KatarungangPambarangay Law
Where did this idea come from? 2. Complaint/information for violation of Batas
Pambansa 22, estafa and libel where damages are
sought
Mediation is rooted in our historical experience, in the time
3. Complaint/information for quasi-offenses falling under
when disputing parties would bring their conflict to the village
Title 14 of the Revised Penal Code.
elder for settlement. As a system, mediation can be found in
many indigenous cultures.

What happens when I can’t afford mediation?


Does mediation replace the barangay system of You can ask your lawyer to allow you to avail of court services
justice? as a pauper litigant. If the court approves, then mediation is
free.
NO. Court-annexed mediation actually complements the
Barangay Justice System (KatarungangPambarangay), How is the confidentiality and privacy of my case
probably the most familiar mode of mediation in the country, in guarded in mediation?
bringing a speedy and fair resolution to disputes. In this system,
the barangay leaders act as mediators between disputing Sessions are strictly private and confidential. This is to
parties within their constituency. The Barangay Justice System encourage the needed openness and spontaneity for effective
attempts to prevent the case from even going to court. Court- communication in mediation. The mediator can not record the
annexed mediation begins when there is a failure to mediate in proceedings in any manner other than taking down a few
the barangay level resulting in the filing of the dispute in court. personal notes for guidance. Even the trial court is not
Mediation attempts to resolve the dispute without going into furnished these notes. Any information from a mediation
adversarial proceedings. Courts will actually dismiss certain session is in fact inadmissible in court. Mediators can not be
cases which have not passed through the subpoenaed to reveal what happened during these sessions
KatarungangPambarangay. either. All documents submitted by the parties will be returned
to them after mediation.

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What is Judicial Dispute Resolution? Why do a JDR?

Judicial Dispute Resolution, or “JDR”, is a voluntary, The goal of a JDR is to help both parties to settle some or all of
confidential dispute resolution process. Its primary purpose is the issues in the lawsuit. The key benefit of a JDR is that both
reaching a settlement on some or all of the issues in a lawsuit, parties can hear a judge’s objective assessment of their case.
with the assistance of a judge. The judge’s assessment gives each party a sense of the
strength of their case and the likely outcome at trial, and this
What is the JDR procedure? usually provides a starting point for settlement discussions.
Most cases settle at or very soon after the JDR is held.
In a JDR, the parties to a lawsuit and their lawyers meet with a
judge at the courthouse. The exact format of each JDR will When is a JDR appropriate?
vary slightly depending on the current practice for the court
involved and the preferences of the parties and the judge JDRs work best in cases where the parties are willing to
conducting the JDR. However, in general, the lawyers will consider settlement, but have been unable to resolve
prepare written submissions for the judge (“briefs”) well before differences of opinion about certain issues in a lawsuit (e.g. the
the JDR date, and provide these briefs to the judge and to degree to which each party is responsible for the damages
each party. Each brief will set out that party’s case, presenting suffered, or what range of damages would be suitable in the
the facts as that party understands them, the legal arguments circumstances). Although most lawsuits involve some degree
in support of that party’s case, and outline the evidence and of conflicting evidence and questions of witness credibility,
law supporting those submissions. These briefs help the judge JDRs are not as well-suited to disputes that turn largely on
to understand the important issues in the lawsuit and help each questions of credibility and conflicting evidence. The JDR
party understand the other side’s point of view. process is also not generally useful if the client wants to have
the court make a decision that will set a legal precedent (e.g.
On the actual day of the JDR, the parties to the lawsuit and constitutional disputes). JDRs are usually held after
their lawyers meet with the judge at the courthouse. Each of examinations for discoveries are completed, so that each side
the parties is usually given the chance to explain their side of can be satisfied that they have all or most of the essential facts
the story, and each party’s lawyers will make submissions in and evidence in support of their case.
support of their case, usually based on the briefs they have
submitted. What are the benefits of a JDR?

After hearing from all the participants, in Edmonton, the judge A JDR:
will then tell the parties what ruling the judge would have made
if the JDR evidence and argument had been presented to them • promotes settlement, even in cases where prior
at trial, and the reasons for that decision. After the judge gives negotiations have failed, by facilitating discussion between the
his or her opinion, the parties usually engage in settlement parties and getting feedback from a judge.
negotiations, often without the judge present. In Calgary, most
judges work with the parties after the initial submissions to try • allows for solutions that wouldn’t be available if the matter
to reach settlement and do not give an opinion on the likely went to trial (e.g. letters of apology, reference letters, rather
result at trial until much later in the process. than just damages)

The judge’s opinion in a JDR is nonbinding, unless the parties • is usually faster, takes less time and is less expensive than a
agree otherwise. The judge’s opinion is not an official court full-blown trial would be.
judgment, so it cannot be appealed. If here is no settlement
following a JDR, and the matter proceeds to trial, the JDR • gives the parties an opportunity to have their case heard by a
judge cannot be the trial judge. The JDR judge will not share judge, without having to deal with the expense and time
any information about the JDR with any other judge. commitment of a trial.

Where does the JDR take place? • gives the parties a sense of what to expect, both from the
court and from the opposing parties, if the lawsuit proceeded to
A JDR usually takes place in a conference room at the trial.
courthouse or, occasionally, in the judge’s office (“chambers”).
On rare occasions where a conference room would be too • allows the parties to maintain their privacy because the JDR,
small to accommodate all the people involved, the JDR may be unlike a trial, is confidential and not held in open court.
held in a courtroom. However, if the JDR is held in a courtroom,
it is not open to the public. • there is no charge for the judge’s time

How long are JDRs? What are the downsides to JDR?

The length of a JDR varies with the complexity of the case and • A JDR is voluntary, so a party cannot be required to
the number of issues that need to be dealt with. Most JDRs are participate
scheduled for half a day to a full day.
• There is a substantial cost to prepare detailed briefs

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• The JDR judge’s opinion is based on limited information be appropriated by an official or tribunal (sic) no
without the procedural protections of a trial (e.g. rules of matter how well-intentioned it is, even in the pursuit of
evidence and ability to assess the credibility of witnesses) and the dearest substantial right
once given it might be difficult for the “unsuccessful” party to
convince the other side to settle on a different basis In the same manner, petitioners cannot arrogate into the
powers of voluntary arbitrators the original and exclusive
• Due to the popularity of JDRs it is often difficult to obtain a jurisdiction of Labor Arbiters over
JDR date quickly
1. unfair labor practices,
FINAL WORD: 2. termination disputes, and
3. claims for damages,
READ CASES. SO MANY. WOW. AIN’T NOBODY GOT TIME
FO’ DAT! in the absence of an express agreement between the parties in
order for Article 262 of the Labor Law to apply in the case at
San Miguel Corporation vs. NLRC bar.

Petitioners filed a motion to dismiss the complaint, alleging that Senarlo vs. Judge Paderanga
respondent Labor Arbiter had no jurisdiction over the subject
matter of the complaint, and that respondent Labor Arbiter Since mediation is part of Pre-Trial, the trial court shall impose
must defer consideration of the unfair labor practice complaint the appropriate sanction including but not limited to censure,
until after the parties have gone through the grievance reprimand, contempt and such sanctions as are provided
procedure provided for in the existing Collective Bargaining under the Rules of Court for failure to appear for pre-trial, in
Agreement (CBA). Respondent Labor Arbiter denied this case any or both of the parties absent himself/themselves, or
motion in a Resolution for abusive conduct during mediation proceedings. (Emphases
ours.)
Ruling:
Under Rule 18, Section 5 of the Rules of Court, failure of the
It may be the case that employees other than union members plaintiff to appear at pre-trial shall be cause for dismissal of the
may have been terminated also by petitioner SMC on account action:
of its redundancy program. If that is true, the discharges may
really be for a bona fide authorized cause under Article 283 11 SEC. 5.Effect of failure to appear. - The failure of the plaintiff to
of the Labor Code. On the other hand, it is also possible that appear when so required pursuant to the next preceding
such may only be a clever scheme of the petitioner company to section shall be cause for dismissal of the action. The
camouflage its real intention of discriminating against union dismissal shall be with prejudice, unless otherwise ordered by
members particularly the private respondents. In any case, the court. A similar failure on the part of the defendant shall be
these matters will be best ventilated in a hearing before the cause to allow the plaintiff to present his evidence ex parte and
Labor Arbiter. the court to render judgment on the basis thereof. (Emphasis
ours.)
It is for the above reason that we cannot hold the petitioners
guilty of the ULP charge. This will be the task of the Labor As may be gleaned from above, there was ostensible legal
Arbiter. We however find that based on the circumstances basis for Judge Paderanga to dismiss an action for failure of
surrounding this case and settled jurisprudence on the subject, the plaintiff to attend the mediation conference.
the complaint filed by the private respondents on February 25,
1991 alleges facts sufficient to constitute a bona fide case of However, Judge Paderanga’s Order dated November 9, 2005,
ULP, and therefore properly cognizable by the Labor Arbiter dismissing Civil Case No. 2005-160, was improperly and
under Article 217 (a) of the Labor Code. This is consistent with prematurely issued. Judge Paderanga failed to take into
the rule that jurisdiction over the subject matter is determined consideration that Bacalzo, the plaintiff in Civil Case No. 2005-
by the allegations of the complaint. 160, could not have attended the mediation conference
scheduled on November 4, 2005 because the said date had
Finally, petitioners try to impress on this Court the strong State been declared a regular holiday under Presidential
policy on the promotion of voluntary modes of settlement of Proclamation No. 933. The declaration of November 4, 2005
labor disputes crafted in the Constitution and the Labor Code as a holiday was a development totally outside Bacalzo’s
which dictate the submission of the CBA dispute to grievance control for which she should not be sanctioned with the
and arbitration. dismissal of Civil Case No. 2005-160.

In this regard, the response of the Solicitor General is apt: It is true that when Judge Paderanga issued his Order dated
October 7, 2005, setting the mediation conference for Civil
Petitioners deserve commendation for divulging and Case No. 2005-160 on November 4, 2005, the latter date had
bringing to public respondents' attention the noble not yet been declared a holiday. Presidential Proclamation No.
legislative intent behind the law mandating the 933, declaring November 4, 2005 a regular holiday in
inclusion of grievance and voluntary arbitration celebration of Eid’lFitr, was issued only on October 14, 2005.
provisions in the CBA. However, in the absence of an
express legal conferment thereof, jurisdiction cannot
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ADR FINAL EXAM TSN
Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS

Nevertheless, the Order dismissing Civil Case No. 2005-160 Failure to arbitrate is not a ground for
was issued by Judge Paderanga on November 9, 2005, well dismissal. 10
after the issuance of Presidential Proclamation No. 933 on
October 14, 2005, and the actual celebration of the holiday of In a catena of cases 11 inspired by Justice Malcolm's
Eid’lFitr on November 4, 2005. By the time Judge Paderanga provocative dissent in Vega v. San Carlos Milling Co. 12, this
ordered Civil Case No. 2005-160 dismissed, he should have Court has recognized arbitration agreements as valid, binding,
already been aware that November 4, 2005 was a regular enforceable and not contrary to public policy so much so that
holiday. when there obtains a written provision for arbitration which is
not complied with, the trial court should suspend the
Judge Paderanga cannot entirely put the blame on the proceedings and order the parties to proceed to arbitration in
supposedly misleading Mediator’s Report. As the Court notes, accordance with the terms of their
the RTC had already received on November 8, 2005 the agreement 13. Arbitration is the "wave of the future" in dispute
Mediator’s Report, which stated that the parties failed to attend resolution. 14 To brush aside a contractual agreement calling
the November 4, 2005 mediation conference. Judge for arbitration in case of disagreement between parties would
Paderanga issued the assailed Order dismissing Civil Case No. be a step backward. 15
2005-160 the following day, on November 9, 2005, a mere five
days after November 4, 2005. Judge Paderanga could not
have forgotten so soon that November 4, 2005 was a holiday. Nonetheless, we grant the petition.
Moreover, the same Mediator’s Report requested for the
resetting of the mediation conference to November 21, 2005. A submission to arbitration is a contract. 16 As such, the
Judge Paderanga could have easily inquired with the PMC or Agreement, containing the stipulation on arbitration, binds the
required them to explain the reason for the resetting. Yet, parties thereto, as well as their assigns and heirs. 17 But only
Judge Paderanga no longer bothered to look into the reason they. Petitioners, as heirs of Salas, Jr., and respondent Laperal
for the non-appearance of the parties or the basis for the Realty are certainly bound by the Agreement. If respondent
request of the mediator for resetting. Without providing any Laperal Realty had assigned its rights under the Agreement to
reasons therefor, Judge Paderanga chose to ignore the a third party, making the former, the assignor, and the latter,
request for resetting and immediately ordered the dismissal of the assignee, such assignee would also be bound by the
Civil Case No. 2005-160. arbitration provision since assignment involves such transfer of
rights as to vest in the assignee the power to enforce them to
His action is contrary to the policy that the judge referring the same extent as the assignor could have enforced them
the case to mediation should extend to the mediator every against the debtor 18 or in this case, against the heirs of the
possible support and assistance. original party to the Agreement. However, respondents
Rockway Real Estate Corporation, South Ridge Village, Inc.,
Courts and litigants should give the mediation process a Maharami Development Corporation, spouses Abrajano,
fair chance to work in order for mediation to become an spouses Lava, Oscar Dacillo, Eduardo Vacuna, Florante de la
effective tool in facilitating amicable settlement of cases. Cruz and Jesus Vicente Capellan are not assignees of the
rights of respondent Laperal Realty under the Agreement to
A heavy workload does not excuse Judge Paderanga from develop Salas, Jr.'s land and sell the same. They are, rather,
ascertaining all pertinent facts that would have enabled him to buyers of the land that respondent Laperal Realty was given
justly resolve or decide a case. A judge must not sacrifice the the authority to develop and sell under the Agreement. As such,
orderly administration of justice in favor of a speedy but they are not "assigns" contemplated in Art. 1311 of the New
reckless disposition of a case. A prudent judge should have Civil Code which provides that "contracts take effect only
ascertained the facts before reaching conclusions and issuing between the parties, their assigns and heirs".
orders. It is routinary in every case that the judge carefully
evaluates facts before issuing an order in court. Otherwise, the Petitioners claim that they suffered lesion of more than one-
judge may be held liable for culpable negligence. fourth (1/4) of the value of Salas, Jr.'s land when respondent
Laperal Realty subdivided it and sold portions thereof to
Heirs of Salas vs. Laperal Realty Corp respondent lot buyers. Thus, they instituted action 19 against
both respondent Laperal Realty and respondent lot buyers for
Petitioners argue, thus: rescission of the sale transactions and reconveyance to them
of the subdivided lots. They argue that rescission, being their
The petitioners' causes of action did not cause of action, falls under the exception clause in Sec. 2 of
emanate from the Owner-Contractor Republic Act No. 876 which provides that "such submission [to]
Agreement. or contract [of arbitration] shall be valid, enforceable and
irrevocable, save upon such grounds as exist at law for the
revocation of any contract".
The petitioners' causes of action for
cancellation of contract and accounting are
covered by the exception under the The petitioners' contention is without merit. For while rescission,
Arbitration Law. as a general rule, is an arbitrable issue, 20 they impleaded in
the suit for rescission the respondent lot buyers who are
neither parties to the Agreement nor the latter's assigns or

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Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS

heirs. Consequently, the right to arbitrate as provided in Article


VI of the Agreement was never vested in respondent lot buyers.

Respondent Laperal Realty, as a contracting party to the


Agreement, has the right to compel petitioners to first arbitrate
before seeking judicial relief. However, to split the
proceedings into arbitration for respondent Laperal Realty
and trial for the respondent lot buyers, or to hold trial in
abeyance pending arbitration between petitioners and
respondent Laperal Realty, would in effect result in
multiplicity of suits, duplicitous procedure and
unnecessary delay. On the other hand, it would be in the
interest of justice if the trial court hears the complaint
against all herein respondents and adjudicates petitioners'
rights as against theirs in a single and complete
proceeding

Toyota vs. CA

The contention that the arbitration clause has become


disfunctional because of the presence of third parties
is untenable.

Contracts are respected as the law between the


contracting parties. As such, the parties are thereby
expected to abide with good faith in their contractual
commitments. Toyota is therefore bound to respect
the provisions of the contract it entered into with APT.

Toyota filed an action for reformation of its contract


with APT, the purpose of which is to look into the real
intentions/agreement of the parties to the contract and
to determine if there was really a mistake in the
designation of the boundaries of the property as
alleged by Toyota. Such questions can only be
answered by the parties to the contract themselves.
This is a controversy which clearly arose from the
contract entered into by APT and Toyota. Inasmuch
as this concerns more importantly the parties APT
and Toyota themselves, the arbitration committee is
therefore the proper and convenient forum to settle
the matter as clearly provided in the deed of sale.

Having been apprised of the presence of the


arbitration clause in the motion to dismiss filed by
APT, Judge Tensuan should have at least suspended
the proceedings and directed the parties to settle their
dispute by arbitration. Judge Tensuan should have
not taken cognizance of the case.

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