You are on page 1of 13

Chapter I

Historical Note ISSUE: Whether or not the dispute between the parties
Lara vs. Del Rosario, G.R. No. L-6339 warrants an order compelling them to submit to
arbitration.
ISSUE Whether or not there are entitled for a mesada (one
month salaey). RULING: NO. The Agreement between petitioner and
private respondent is a contract. The provision to
RULING: NO. As to the month pay (mesada) under article submit to arbitration any dispute arising therefrom
302 of the Code of Commerce, article 2270 of the new Civil and the relationship of the parties is part of that
Code (Republic Act 386) appears to have repealed said contract and is itself a contract. As a rule, contracts are
Article 302 when it repealed the provisions of the Code of respected as the law between the contracting parties
Commerce governing Agency. This repeal took place on and produce effect as between them, their assigns and
August 30, 1950, when the new Civil Code went into effect, heirs. Clearly, only parties to the Agreement, DMC-USA
that is, one year after its publication in the Official Gazette. and MMI are bound by the Agreement and its arbitration
The alleged termination of services of the plaintiffs by the clause as they are the only signatories thereto. In
defendant took place according to the complaint on recognizing the right of the contracting parties to
September 4, 1950, that is to say, after the repeal of Article arbitrate or to compel arbitration, the splitting of the
302 which they invoke. Granting that article 302 of the proceedings to arbitration as to some of the parties on
Code of Commerce is still in force, it refers to one hand and trial for the others on the other hand, or
employees who are engaged under salary basis, "and the suspension of trial pending arbitration between
not to those who only receive compensation some of the parties, should not be allowed as it would,
equivalent to whatever service they may render." in effect, result in multiplicity of suits, duplicitous
procedure and unnecessary delay.

Chung Fu Industries (Phils.), Inc. v CA 206 SCRA 545 As RA 876 expressly authorizes arbitration of domestic
disputes, foreign arbitration as a system of settling
ISSUE: W/N petitioners are estopped from questioning the commercial disputes was likewise recognized when the
arbitration award in view of the stipulations in the parties’ Philippines adhered to the United Nations “Convention on
arbitration agreement that there shall be no further the Recognition and the Enforcement of Foreign Arbitral
judicial recourse if either party disagrees with the Awards of 1958” under the 10 May 1965 Resolution No. 71
arbitrator’s award. of the Philippine Senate, giving reciprocal recognition and
allowing enforcement of international arbitration
RULING: NO. It is stated explicitly under Art. 2044 of the agreements between parties of different nationalities
Civil Code that the finality of the arbitrators’ award is not within a contracting state.
absolute and without exceptions, thus, may be annulled or
rescinded. Under Sec. 24 and 25 of the Arbitration Law,
there are grounds for vacating, modifying or rescinding an La Naval Drug (LND) vs CA 236 SCRA 78
arbitrator’s award. Thus, judicial review of the award is
properly warranted when the factual circumstances
ISSUE: (1)W/N the litigants allowed other remedies such
referred to are present. as arbitration to settle their dispute without trial?
Voluntary arbitrators, by the nature of their functions, act (2)W/N CA has jurisdiction over the case?
in a quasi-judicial capacity. Therefore, their decisions
should not be beyond the scope of the power of judicial RULING: 1. YES. In an effort to declog the courts of an
review of this Court. Petitioners have amply made out a increasing volume of work load and, most importantly, in
case where the voluntary arbitrator failed to apply the order to accord contending parties with expeditious
terms and provisions of the Construction Agreement which alternatives for settling disputes, the law authorizes,
forms part of the law applicable as between the parties, indeed encourages, out of court settlements or
thus committing a grave abuse of discretion. adjudications. Compromises and arbitration are widely
known and used as such acceptable methods of resolving
On 19 June 1953, the Philippine Legislature enacted adversarial claims.
RA 876 otherwise known as “The Arbitration Law.” RA
No. 876 did not revoke and instead supplemented the 2 No. however the petitioner here had already submitted
provision of the New Civil Code on arbitration. himself to the court hence they are estopped form
questioning jurisdiction. In the case at bench, the want of
jurisdiction by the court is indisputable, given the nature of
the controversy. The arbitration law explicitly confines the
court’s authority only to pass upon the issue of whether
Judiciary Action there is or there is no agreement in writing providing for
Del Monte Corporation-USA vs. CA, G.R. No. 136154, 07 arbitration. In the affirmative, the statute ordains that the
February 2001 court shall issue an order “summarily directing the parties
to proceed with the arbitration in accordance with the conciliation and negotiation—is encouraged by the
terms thereof.” If the court, upon the other hand, finds that Supreme Court. Aside from unclogging judicial dockets,
no such agreement exists, “the proceedings shall be arbitration also hastens the resolution of disputes,
dismissed.” especially of the commercial kind. It is regarded as the
“wave of the future” in international civil and commercial
disputes. Brushing aside a contractual agreement calling
Insular Savings Bank v. Far East Bank and Trust for arbitration between the parties would be a step
Company, 492 SCRA 145 backward.

The Alternative Dispute Resolution Act of 2004


ISSUE: W/N RTC should have taken cognizance of the Korea Technologies Co, Ltd. (KOGIES) v. Lerma 542
complaint SCRA 1 (2008)

RULING: NO. As provided in the PCHC Rules, the findings FACTS: PGSMC, took the position that the arbitration
of facts of the decision or award rendered by the clause, which provided that the arbitral award shall be
Arbitration Committee shall be final and conclusive upon “final and binding upon the parties”, was null and void for
all the parties in said arbitration dispute. However, the being against public policy as it ousted Philippine courts of
decision of the Arbitration Committee is subject to judicial jurisdiction.
review if conditions found in Articles 2038-2040 of the
Civil Code are present. Petitioner erred in the procedure it RULING: Arbitration clause not contrary to public policy.
chose for judicial review of arbitral award. The proper Consistent with the policy of encouraging alternative
recourse of petitioner from the denial of its MR by the dispute resolution methods, courts should liberally
Arbitration Committee is to file either— construe arbitration clauses. Provided such clause is
a motion to vacate the arbitral award with the RTC, susceptible of an interpretation that covers the asserted
a petition for review with the Court of Appeals under dispute, an order to arbitrate should be granted. Any doubt
Rule 43 of the Rules of Court, should be resolved in favor of arbitration. In case a
or a petition for certiorari under Rule 65 of the Rules foreign arbitral body is chosen by the parties, the
of Court. arbitral rules of our domestic arbitration bodies
In the case at bar, petitioner filed a petition for review with would not be applied. As signatory to the Arbitration
the RTC when the same should have been filed with the Rules of the UNCITRAL Model Law on International
Court of Appeals under Rule 43 of the Rules of Court Commercial Arbitration of the United Nations
Commission on International Trade Law [UNCITRAL]
Alternative dispute resolution methods like arbitration, in the New York Convention on June 21, 1985, the
mediation, negotiation and conciliation, are encouraged by Philippine committed itself to be bound by the Model
the Supreme Court. By enabling parties to resolve their Law. We have even incorporated the Model Law in
disputes amicably, they provide solutions that are less Republic Act No. 9285, otherwise known as the
time-consuming, less tedious, less confrontational, and Alternative Dispute Resolution Act of 2004.” x x x
more productive of goodwill and lasting relationships. It “Thus, while the RTC does not have jurisdiction over
must be borne in mind that arbitration proceedings are disputes governed by arbitration mutually agreed
mainly governed by the Arbitration Law and suppletorily upon by the parties, still the foreign arbitral award is
by the Rules of Court. subject to judicial review by the RTC which can set
aside, reject or vacate it.”…. Chapter 7 of RA 9285 has
made it clear that all arbitral awards, whether domestic or
LM Power Engineering Corporation vs. Capistol foreign, are subject to judicial review on specific grounds
Industrial Construction Groups Inc., 399 SCRA 562 provided for.”
(2003)
PGMSC’s interests are duly protected by the law which
ISSUE: W/N there exists a controversy/dispute between requires that the arbitral award that may be rendered by
petitioner and respondent that requires prior recourse to KCAB must be confirmed here by the RTC before it can be
voluntary arbitration enforced.

RULING: YES. The instant case involves technical The salient features of RA 9285 applying and
discrepancies that are better left to an arbitral body that incorporating the UNCITRAL Model, namely:
has expertise in those areas. In any event, the inclusion of 1) RTC must refer to arbitration in proper case
an arbitration clause in a contract does not ipso 2) Foreign arbitral awards must be confirmed by the RTC
facto divest the courts of jurisdiction to pass upon the 3) RTC has jurisdiction to review foreign arbitral awards
findings of arbitral bodies, because the awards are still 4) Grounds for judicial review different in domestic and
judicially reviewable under certain conditions. foreign arbitral awards
5) RTC decision of assailed foreign arbitral award
Being an inexpensive, speedy and amicable method of appealable
settling disputes, arbitration—along with mediation,
disputes, arbitration - along with mediation, conciliation and
Reyes v. Balde II, 498 SCRA 186 negotiation - is encouraged by the Supreme Court.ADR is a
means used to resolve controversy. The objective of ADR
FACTS: Respondents claimed that the Design-Build forms methods and process is to resolve or facilitate the
Construction Agreement contained an arbitration clause, resolution of a dispute or controversy in a speedy, amicable
thus any dispute arising therefrom should be brought and inexpensive manner.
before the Construction Industry Arbitration Court.
Fundamental of ADR: Sources of ADR
ISSUE: Whether or not CIAC has jurisdiction.
Benguet Corp v. DENR-Mines Adjudication Board
(MAB), JG Realty and Mining Corp,
RULING: YES. CIAC has original and exclusive jurisdiction
545 SCRA 196 (2008)
over disputes arising from or connected with construction
contracts entered into by parties that have agreed to
RULING:
submit their dispute to voluntary arbitration. Needless to
say, the Design-Build Construction Agreement mutually
brought to voluntary arbitration before the Panel of
entered into by the parties contain an arbitration clause.
Arbitratiors. The availment of voluntary arbitration
before resort is made to the courts or quasi-judicial
It bears to stress that being an inexpensive, speedy,
agencies of the government is a valid contractual
and amicable method of settling disputes,
stipulation that must be adhered to by the parties. It is not
arbitration—along with mediation, conciliation, and
illegal and is in fact promoted by the State.
negotiation—is encouraged by the Supreme Court.
Aside from unclogging judicial dockets, arbitration
Sec 6 of RA 876 provides that “a party
also hastens the resolution of disputes, especially of
aggrieved by the failure, neglect or refusal
the commercial kind. It is thus regarded as the “wave
of another to perform under an agreement
of the future” in international civil and commercial
in writing providing for arbitration may
disputes.
petition the court for an order directing
that such arbitration proceed in the
Principles of ADR manner provided for in such
agreement.”
Maria Luisa Park Association, Inc. vs. Almendras, 588
SCRA 663, G.R. No. 171763 June 5, 2009 Sec 7 provides that the court shall stay
the action or proceeding until an
RULING: The terms of Article XII of the MLPAI by-laws arbitration has been had in accordance
clearly express the intention of the parties to bring first to with the terms of the agreement. After the
the arbitration process all disputes between them before a special proceeding of arbitration has been
party can file the appropriate action. The agreement to pursued and completed, then the lower
submit all disputes to arbitration is a contract. As such, the court may confirm the award made by the
arbitration agreement binds the parties thereto, In the arbitrator.
instant case, they, made no earnest effort to resolve their
differences in accordance with the arbitration clause ADR, however, is not inconsistent with judicial
provided for in their by-laws. Mere exchange of proceedings as opposed to the trial system. Judicial
correspondence will not suffice much less satisfy the proceedings complement ADR proceedings. When ADR is
requirement of arbitration. Arbitration being the mode of availed of during the pendency of an action in court, the
settlement between the parties expressly provided by their court does not lose jurisdiction over the case. The court
by laws should be respected proceeding will only be stayed. After the special
proceeding for arbitration has been pursued and
In a long line of cases, the SC has referred to alternative completed, then the court may confirm the award made by
dispute resolution, in general, and arbitration in particular, the arbitrator. (this is the ruling in BF Corp case cited here,
as the “wave of the future in international relations” not one of Benguet case’s issues)

Reyes, vs. Balde II, GR No. 168384 Transfield Philippines Inc. v Luzon Hydro Corporation

Where the jurisdiction of CIAC is properly invoked, the failure ISSUE: Whether the pendency of arbitral proceedings
or refusal of herein petitioner to arbitrate shall not affect the foreclose resort to the courts for provisional reliefs.
proceedings. Arbitration proceedings shall continue
RULING: No. As a fundamental point, the pendency of
notwithstanding the absence or lack of participation of
arbitral proceedings does not foreclose resort to the courts
petitioner, and the award shall be made after receiving the
evidence of the claimant. It bears to stress that for provisional reliefs. The Rules of the ICC, which governs
being an inexpensive, speedy and amicable method of settling the parties' arbitral dispute, allows the application of a
party to a judicial authority for interim or conservatory
measures. Likewise, Section14 of Republic Act (R.A.) No. of the CIAC rules, whose policy and objective is to “provide
876 (The Arbitration Law) recognizes the rights of any a fair and expeditious settlement of construction disputes
party to petition the court to take measures to safeguard through a non-judicial process which ensures harmonious
and/or conserve any matter which is the subject of the and friendly relations between or among the parties.”
dispute in arbitration. In addition, R.A. 9285, otherwise
known as the "Alternative Dispute Resolution Act of 2004," Arbitration has been defined as “an arrangement for taking
allows the filing of provisional or interim measures with and abiding by the judgment of selected persons in some
the regular courts whenever the arbitral tribunal has no disputed matter, instead of carrying it to established
power to act or to act effectively. tribunals of justice, and is intended to avoid the
formalities, the delay, the expense and vexation of ordinary
MainPoint: Sources of ADR in this case at bar: litigation.”
Domestic laws and rules which may either be general
or special. General ADR laws are those applicable to all
forms of ADR such as Article III , Section 16, 1987 Subject Matter of ADR
Constitution; Chapters 1 and 2, Title XIV, Book IV, Civil People v. Vanzuela
Code of the Philippines; and the Arbitration Law (R.A
876); and the ADR act of 2004 (9285) and its IRR FACTS: RTC dismissed saying that the controversy in the
case involves an agrarian dispute which falls under the
primary and exclusive original jurisdiction of the
Uniwide Sales Realty and Resources Corporation vs Department of Agrarian Reform Adjudication Board
Titan-Ikeda Construction and Development (DARAB) because the controversy had the character of an
Corporation. "agrarian dispute."

FACTS: Court of Appeals held that the CIAC is an


arbitration body, which is not necessarily bound by the ISSUE: W/N the RTC has jurisdiction over the charge for
Rules of Court. estafa even if it involves agricultural tenants of the private
complainant.
ISSUE: W/N CIAC should have applied the Rules of Court in
the arbitration proceeding.
RULING: YES. In order that a court may acquire criminal
jurisdiction, the court must have jurisdiction over the (1)
RULING: NO. As an arbitration body, the CIAC can only
subject matter; (2) territory where the offense was
resolve issues brought before it by the parties through the
committed; and (3) person of the accused.
TOR which functions similarly as a pre-trial brief. In
rejecting Uniwide's claim for liquidated damages, the CIAC
The jurisdiction of a tribunal over the subject matter
held that there is no legal basis for passing upon and
of an action is conferred by law. It is determined by the
resolving Uniwide's claim for the following reasons: (1) no material allegations of the complaint or information
claim for liquidated damages arising from the alleged delay and the law at the time the action was commenced.
was ever made by Uniwide at any time before the Lack of jurisdiction of the court over an action or the
commencement of Titan's complaint; (2) the claim for subject matter of an action, cannot be cured by the silence,
liquidated damages was not included in the counterclaims acquiescence, or even by express consent of the parties.
stated in Uniwide's answer to Titan's complaint; (3) the
claim was not formulated as an issue to be resolved by the In the instant case, the RTC has jurisdiction over the
CIAC in the TOR; and (4) no attempt was made to modify subject matter because the law confers on it the power to
the TOR to accommodate the same as an issue to be hear and decide cases involving estafa (Article 315 of the
resolved. Uniwide insists that the CIAC should have Revised Penal Code).
applied Section 5, Rule 10 of the Rules of Court. On this
matter, the Court of Appeals held that the CIAC is an RTC also has jurisdiction over the offense charged since
arbitration body, which is not necessarily bound by the crime was committed within its territorial jurisdiction.
the Rules of Court. Also, the Court of Appeals found that The RTC likewise acquired jurisdiction over the persons of
the issue has never been made concrete enough to make the respondents because they voluntarily submitted to the
RTC's authority. Where the court has jurisdiction over the
Titan and the CIAC aware that it will be an issue. In fact,
subject matter and over the person of the accused, and the
Uniwide only introduced and quantified its claim for
crime was committed within its territorial jurisdiction, the
liquidated damages in its Memorandum submitted to the court necessarily exercises jurisdiction over all issues that
CIAC at the end of the arbitration proceeding. the law requires the court to resolve.
Thus, if Uniwide’s claim for liquidated damages was not
raised as an issue in the TOR or in any modified or Notably, while the RTC has criminal jurisdiction conferred
amended version of it, the CIAC cannot make a ruling on it. on it by law, the DARAB, on the other hand, has no
authority to try criminal cases at all.
The Rules of Court cannot be used to contravene the spirit
present action by reason of the sum of money involved
which, according to the law then in force, was within the
HOWEVER, while the court may have authority to pass original exclusive jurisdiction of inferior courts. It failed to
upon the criminal liability of the accused, it cannot make do so. Instead, at several stages of the proceedings in the
any civil awards that relate to the agrarian relationship of court a quo as well as in the CA, it invoked the jurisdiction
the parties because this matter is beyond its jurisdiction of said courts to obtain affirmative relief and submitted its
and, correlatively, within DARAB's exclusive domain. case for a final adjudication on the merits. It was only after
an adverse decision was rendered by the CA that it finally
woke up to raise the question of jurisdiction.
Jurisdiction over the subject matter of a case is
determined by law and is not dependent upon the Jurisdiction over the subject matter of a case is determined
allegations of the parties. by law and is not dependent upon the allegations of the
parties, except in the case of jurisdiction by estoppel.
VERDICT: Not guilty of estafa. The Court found that
respondents cannot be held liable for estafa for their Basic Concepts; ADR Providers and Practioners
failure to pay the rental on the agricultural land subject of Metro Construction, Inc.(MCI) vs. Chatham Properties,
the leasehold. What prevails today, under R.A. 6657, is Inc.(Chatham)
agricultural leasehold tenancy relationship (not share
tenancy), and all instances of share tenancy have been RULING: The CIAC original and exclusive jurisdiction over
automatically converted into leasehold tenancy. In such a disputes arising from, or connected with, contracts entered
relationship, the tenant’s obligation is simply to pay into by parties involved in construction in the Philippines,
rentals, not to deliver the landowner’s share. Given this whether the dispute arises before or after the completion
dispensation, the petitioner’s allegation that the of the contract, or after the abandonment or breach
respondents misappropriated the landowner’s share of the thereof. By express provision of Section 19 thereof, the
harvest is untenable. arbitral award of the CIAC is final and unappealable, except
on questions of law, which are appealable to the Supreme
Court.
Tijam vs. Sibonghanoy, G.R. No. L-21450, 15 April 1968
FACTS: Surety filed a pleading entitled MOTION TO CIAC IS A QUASI-JUDICIAL BODY—the language of
DISMISS, alleging substantially that RA 296 had already Section 1 of Circular No. 1-91 emphasizes the obvious
become effective, Sec. 88 of which placed within the inclusion of the CIAC even if it is not named in the
original exclusive jurisdiction of inferior courts all civil enumeration of quasi-judicial agencies. The
actions where the value of the subject-matter or the introductory words “[a]mong these agencies are”
amount of the demand does not exceed P2,000.00, preceding the enumeration of specific quasi-judicial
exclusive of interest and costs; and that the CFI therefore agencies only highlight the fact that the list is not exclusive
had no jurisdiction to try and decide the case. or conclusive. Further, the overture stresses and
acknowledges the existence of other quasi-judicial
ISSUE: Whether or not the Motion to dismiss is still agencies not included in the enumeration but should be
meritorious. deemed included. In addition, the CIAC is obviously
excluded in the catalogue of cases not covered by the
RULING: NO, Surety is now barred by laches. It has Circular and mentioned in Section 2 thereof for the reason
been held that a party cannot invoke the jurisdiction of that at the time the Circular took effect, E.O. No. 1008
a court to secure affirmative relief against his allows appeals to the Supreme Court on questions of law.
opponent and, after obtaining or failing to obtain such By nature of their functions, ADR providers and
relief, repudiate or question that same jurisdiction. It practitioners, including arbitrators and mediators, act
was further said that the question whether the court in quasi-judicial agencies. They are quasi-judicial
had jurisdiction either of the subject-matter of the agencies and instrumentalities.
action or of the parties was not important in such
cases because the party is barred from such conduct Yes. Appeals from the arbitral awards of the CIAC may be
not because the judgment or order of the court is valid brought to the Court of Appeals, and not to the Supreme
and conclusive as an adjudication, but for the reason Court alone. The grounds for the appeal are likewise
that such a practice cannot be tolerated — obviously broadened to include appeals on questions of facts and
for reasons of public policy. Furthermore, it has also appeals involving mixed questions of fact and law.
been held that after voluntarily submitting a cause and
encountering an adverse decision on the merits, it is A quasi-judicial agency or body has been defined as
too late for the loser to question the jurisdiction or an organ of government other than a court and other
power of the court. than a legislature, which affects the rights of private
parties “through either adjudication or rule-making.
The facts of this case show that from the time the Surety
became a quasi-party, it could have raised the question of
the lack of jurisdiction of the CFI to take cognizance of the
speedy remedy in the course of law. As such their
decision or awards are generally reviewable in a
ABS-CBN Broadcasting Corporation v. World special action for certiorari under Rule 65 of the
Interactive Network Systems Japan Co. Ltd, 544 SCRA 1997 Rules of Civil Procedure as amended.
308
An aggrieved party before the Arbitration Committee has
ISSUE: W/N an aggrieved party in a voluntary arbitration several judicial remedies available—it may petition the
dispute may avail of petition for review under Rule 43 or a RTC to issue an order vacating the award on the grounds
petition for certiorari under Rule 65 directly in the CA provided for under Section 24 of the Arbitration Law, or
when the grounds invoked to overturn the arbitrator’s file a petition for review under Rule 43 of the Rules of
decision are other than those for a petition to vacate an Court with the Court of Appeals, or file a petition for
arbitral award under the Arbitration Law certiorari under Rule 65. However, in the case at bar, the
alternative petition filed in the CA by petitioner was an
RULING: Arbitration Law (RA 876) did not expressly inappropriate mode of appeal which should have been
provide for errors of fact and/or law and grave abuse dismissed outright by CA. Remedies of appeal and
of discretion as grounds for maintaining a petition to certiorari are mutually exclusive and not alternative
vacate an arbitral award in the RTC hence, petitioner or successive.
may not avail of this remedy with the RTC. Adamson v. CA
previously held that a petition to vacate filed in the RTC A careful reading of the assigned errors reveals that the
not based on the grounds enumerated in Section 24 of the real issues calling for the CA’s resolution were less the
Arbitration Law should be dismissed. alleged grave abuse of discretion exercised by the
Section 24. Grounds for vacating award. - In any arbitrator and more about the arbitrator’s appreciation of
one of the following cases, the court must make an order the issues and evidence presented by the parties.
vacating the award upon the petition of any party to the Therefore, the issues clearly fall under the classification of
controversy when such party proves affirmatively that in errors of fact and law—questions which may be passed
the arbitration proceedings: upon by the CA via a petition for review under Rule 43.
Petitioner cleverly crafted its assignment of errors in such
(a) The award was procured by corruption, fraud, or other a way as to straddle both judicial remedies, that is, by
undue means; or alleging serious errors of fact and law (in which case a
petition for review under Rule 43 would be proper) and
(b) That there was evident partiality or corruption in the grave abuse of discretion (because of which a petition for
arbitrators or any of them; or certiorari under Rule 65 would be permissible). It must be
emphasized that every lawyer should be familiar with
(c) That the arbitrators were guilty of misconduct in the distinctions between the two remedies for it is not
refusing to postpone the hearing upon sufficient cause the duty of the courts to determine under which rule
shown, or in refusing to hear evidence pertinent and the petition should fall. Petitioner’s ploy was fatal to
material to the controversy; that one or more of the its cause.
arbitrators was disqualified to act as such under section
nine hereof, and wilfully refrained from disclosing such
disqualifications or of any other misbehavior by which the Chapter IV
rights of any party have been materially prejudiced; or
Policy on Arbitration
(d) That the arbitrators exceeded their powers, or so
imperfectly executed them, that a mutual, final and definite Frabelle Fishing Corporation v. Philippine American
award upon the subject matter submitted to them was not Life Insurance Company, 530 SCRA 543
made. xxx
RULING: The HLURB has no jurisdiction over an action
A petition for review under Rule 43 or a petition for for reformation of contracts. The jurisdiction lies with
certiorari under Rule 65 may be availed of in the CA the Regional Trial Court. Any disagreement which would
depending on the grounds relied upon by petitioner. require first an amendment or reformation of their
The proper remedy from the adverse decision of a contract is an issue which the courts may and can resolve
voluntary arbitrator, if errors of fact and/or law without the need of the expertise and specialized
are raised, is a petition for review under Rule 43. knowledge of the HLURB.

A petition for certiorari under Rule 65 may also be With respect to the arbitrational clause in the 1998 MOA,
resorted to in accordance with the Constitution petitioner referred the dispute to the Philippine Dispute
and jurisprudence. The Court will not hesitate to Resolution Center, Inc., but respondents refused to submit to
review a voluntary arbitrator’s award where there its jurisdiction.
is a showing of grave abuse of authority or
discretion and such is properly raised in a petition Arbitration is one of the alternative methods of
for certiorari and there is no appeal, nor any plain, dispute resolution that is now rightfully vaunted as
“the wave of the future” in international relations, and appear, including an agreement to arbitrate some specific
is recognized worldwide. To brush aside a contractual thing, and an agreement to abide by the award, either in
agreement calling for arbitration in case of express language or by implication.
disagreement between the parties would therefore be
a step back-ward. ARBITRATION IN GENERAL;Doctrine of Separability
Gonzales v. Climax Mining and Australian Philippines
Mining Inc (GR No. 161957)
Arbitration Agreement ISSUE:
OSPA vs. CA, G.R. No. 156660 Whether the dispute between the parties should
be brought for arbitration under Rep. Act No. 876 even
FACTS: Petitioners assert that the relationship between though Gonzales has raised the twin issues of validity and
respondents and the individual sugar planters is governed by nullity of the Addendum Contract and, consequently, of the
milling contracts which provides in Art XX that all arbitration clause therein as well
controversies which may arise shall be submitted for
discussion to a Board of Arbitration; it also provides that if the RULING/MAIN POINT:
Planter was not a member of any association, then the said 1% Yes. The doctrine of separability, enunciates that
shall revert to the centrals. OSPA, without impleading any of an arbitration agreement is independent of the main
their individual members, sued respondents with the RTC for contract. The arbitration agreement is to be treated as a
Arbitration under RA 876 claiming that respondents violated separate agreement and does not automatically terminate
the Milling Contract when they gave to independent planters when the contract of which it is part comes to an end.
who do not belong to any association the 1% share, instead of The separability of the arbitration agreement is
especially significant to the determination of whether the
reverting said share to the centrals. Respondents filed MD for
invalidity of the main contract also nullifies the arbitration
lack of cause of action because petitioners had no milling
clause. Indeed, the doctrine denotes that the invalidity of
contract with respondents.
the main contract, also referred to as the "container"
contract, does not affect the validity of the arbitration
ISSUE: w/n petitioners are clothed with legal personality to file agreement. Irrespective of the fact that the main contract is
a suit or demand arbitration from, respondents without invalid, the arbitration clause/agreement still remains
impleading the individual Planters. valid and enforceable.
The separability of the arbitration clause is
Ruling: No. There is no legal basis for petitioners' purported confirmed in Art. 16(1) of the UNCITRAL Model Law and
right to demand arbitration when they are not parties to the Art. 21(2) of the UNCITRAL Arbitration Rules.
milling contracts, especially when the language of the Disputes do not go to arbitration unless and until
arbitration clause expressly grants the right to demand the parties have agreed to abide by the arbitrators
arbitration only to the parties to the contract.. decision. Necessarily, a contract is required for arbitration
to take place and to be binding. R.A. No. 876 recognizes the
Section 4 of R.A. 876 provides: A contract to arbitrate XXX shall contractual nature of the arbitration agreement.
be in writing and subscribed by the party sought to be
charged, or by his lawful agent. XXX
Cargill Phil Inc. v San Fernando Regala trading
The formal requirements of an agreement to arbitrate are
Facts: San Fernando Regala Trading filed before the trial
therefore the following: (a) it must be in writing and (b) it must
court a complaint for rescission of contract with damages
be subscribed by the parties or their representatives. To
against Cargill Philippines, Inc.. San Fernando Regala
subscribe means to write underneath, as one’s name; to sign Trading argued that since it was seeking rescission of the
at the end of a document. That word may sometimes be contract, it was in effect repudiating the contract which
construed to mean to give consent to or to attest. included the arbitration clause.

Petitioners would argue that they could sue respondents, Ruling: Applying the Gonzales ruling, an arbitration
notwithstanding the fact that they were not signatories in the agreement which forms part of the main contract shall not
milling contracts because they are the recognized be regarded as invalid or non-existent just because the
representatives of the Planters. main contract is invalid or did not come into existence,
since the arbitration agreement shall be treated as a
This claim has no leg to stand on since petitioners did not sign separate agreement independent of the main contract. A
the milling contracts at all, whether as a party or as a contrary ruling would suggest that a party's mere
representative of their member Planters. repudiation of the main contract is sufficient to avoid
arbitration and that is exactly the situation that the
An agreement to arbitrate is a contract, the relation of the separability doctrine sought to avoid. Thus, we find that
parties is contractual, and the rights and liabilities of the even the party who has repudiated the main contract is not
parties are controlled by the law of contracts. In an agreement prevented from enforcing its arbitration clause.
for arbitration, the ordinary elements of a valid contract must
only on the parties to the contract. Since there are parties
Philrock, Inc. v Construction Industry Arbitration to the case who are not signatories nor assignees to the
Commission (CIAC) contract, they cannot be bound by the arbitration clause
[G.R. Nos. 132848-49. June 26, 2001.] contained therein. To allow arbitration to some and trial as
to others would result in multiplicity of suits and
unnecessary delay, hence, the court therein ruled that the
RULING: Section 4 of Executive Order 1008 expressly vests interest of justice would be best served if the court is
in the CIAC original and exclusive jurisdiction over disputes allowed to proceed with the adjudication of the case in
arising from or connected with construction contracts one complete proceeding. Similarly in this case, it is
entered into by parties that have agreed to submit their established that petitioners who have presented legitimate
dispute to voluntary arbitration. interests in the resolution of the controversy are not
parties to the PIATCO Contracts. Accordingly, they cannot
It is undisputed that the parties submitted themselves to be bound by the arbitration clause provided for in the
the jurisdiction of the Commission by virtue of their ARCA and hence, cannot be compelled to submit to
Agreement to Arbitrate. After submitting itself to arbitration proceedings. A speedy and decisive resolution
arbitration proceedings and actively participating therein, of all the critical issues in the present controversy,
petitioner is estopped from assailing the jurisdiction of the including those raised by petitioners, cannot be made
CIAC, merely because the latter rendered an adverse before an arbitral tribunal. The object of arbitration is
decision. Courts encourage the use of alternative precisely to allow an expeditious determination of a
methods of dispute resolution. When parties agree to dispute. This objective would not be met if this Court
settle their disputes arising from or connected with were to allow the parties to settle the cases by
arbitration as there are certain issues involving non-
construction contracts, the Construction Industry
parties to the PIATCO Contracts which the arbitral
Arbitration Commission (CIAC) acquires primary
tribunal will not be equipped to resolve.
jurisdiction. It may resolve not only the merits of such
controversies; when appropriate, it may also award Prior to the ADR Act and its IRR, where the arbitration is
damages, interests, attorney’s fees and expenses of multi-party, and one or more but not all of them are
litigation. In line with the principles that ADR providers parties to an arbitration agreement, the court is given the
and practitioners including arbitrators acting in a quasi- discretion to refuse a referral to ADR if arbitration will not
judicial capacity, the principles of administrative due be decisive and speedy or if it will result to multiplicity of
process equally apply to arbitral proceedings. (not in the suits, duplicitous procedure and unnecessary delay.
case)

Petition for Review Petition for Certiorari


Judicial Review and Court Intervention Rule 43 Rule 65
40. Agan vs Piatco (Phil. International Air Terminals, Proper issues that may be Proper issue that may be
Co.) raised pertain to raised must be limited to
(1) errors of fact (1) errors of jurisdiction, i.e.,
FACTS: The Build-Operate-Transfer (BOT) bid project for (2) errors of law grave abuse of discretion
the construction of NAIA Terminal III was awarded to the (3) mixed errors of fact and amounting to a lack or
Paircargo Consortium (now PIATCO). Asia's Emerging law excess of jurisdiction.
Dragon Corp (AEDC), another bidder, protested the lack of
pre-qualification requirements of PIATCO and sought the Note: It cannot be availed of
nullification of the Concession Agreements under which where appeal is the proper
the Government granted PIATCO the exclusive right to remedy or as a substitute for
operate a commercial international passenger terminal a lapsed appeal.
within the Island of Luzon" during the concession period
and to collect the fees and rentals. As a consequence of
such exclusive franchise, Terminals I and II will be closed Chapter VI
down. Subsequently, President Arroyo declared that she
will not honor the PIATCO contracts for being null and Rockland Construction Co., Inc. vs. Mid-Pasig Land
void. An arbitration proceedings pursuant to Section Development Corporation 543 SCRA 596 (2008) –
10.02 of the ARCA (Amended and Restated Concession
Agreement) have been filed at the instance of respondent Ruling: The doctrine of estoppel is based on the grounds
PIATCO. (before the ICC) of public policy, fair dealing, good faith and justice, and its
purpose is to forbid one to speak against his own act,
ISSUE: W/N the arbitration step taken by PIATCO will oust representations, or commitments to the injury of one to
this Court of its jurisdiction over the cases. whom they were directed and who reasonably relied
thereon. Since estoppel is based on equity and justice, it is
RULING: NO. In Del Monte Corporation-USA v. Court of
essential that before a person can be barred from asserting
Appeals, it was held that the arbitration clause is binding
a fact contrary to his act or conduct, it must be shown that Agreement for the East Zone. Meanwhile,
such act or conduct has been intended and would unjustly Maynilad was awarded for the West Zone. 1
cause harm to those who are misled if the principle were
not applied against him. For estoppel to apply, the action
This Concession Agreement with the
giving rise thereto must be unequivocal and
Metropolitan Waterworks and Sewerage
intentional because, if misapplied, estoppel may
become a tool of injustice
System (MWSS) back in 1997 carried a
provision that pushes the government to
MAYNILAD CASE "indemnify" the utility firm against any loss that
could result from the regulator's actions. As
Maynilad Water Services, Inc. regulator, the MWSS approves or rejects
petitions for water rate adjustments. However,
(Philippines) v. Republic of the MWSS rejected the Manila Water’s request to
Philippines raise water rates for year 2013 to 2017.
Instead, it even told the utility firm to slash its
basic water charge by P2.77 per cubic meter.
Date of Commencement: 27 March 2015 Similarly, MWSS also rejected Maynilad’s
Length of Proceedings: 2-3 years request for tariff adjustments for the period
2013 to 2017.2
MANILA WATER CASE (THE RECENT ONE) ARBITRATION RULING
– CASE INFORMATION NOT YET The international tribunal backed by the
AVAILABLE Permanent Court of Arbitration ordered the
Republic to indemnify Manila Water the amount
BACKGROUND of ₱7,390,000,000 representing the actual
Water concessionaires, Maynilad and Manila losses it suffered from 1 June 2015 until 22
Water, separately brought a case for arbitration November 2019. It also ordered the state to
stemming from the government’s refusal of pay 100 percent of the amounts paid by Manila
water rate hikes resulting to losses for both Water to the PCA and 85 percent of Manila
utility firms. The antecedent facts are as Water’s other claimed costs.
follows:
The ruling for Manila Water came almost 3
In 1997, the Philippine Government, led by years after the PCA ruled on a similar case
President Fidel V. Ramos, solicited bids for filed by west zone concessionaire Maynilad
concession agreements with Metropolitan Services, Inc. In that case, the Court has
Waterworks and Sewerage System (MWSS) to ordered the state to reimburse P3.4 billion for
address the water crisis in Metro Manila that Maynilad’s losses from March 2015 to August
existed due to the incapability of the MWSS to 2016.3
maintain viable operations due to technical
inefficiencies and enormous financial debts. MAYNILAD’S VICTORY BECOMES FINAL
The Government unilaterally determined the The Philippine government filed an application
terms of the agreements, which were bidden to set aside the arbitral decision ordering
out on a take it or leave it basis. Malacañang to compensate Maynilad for its
Manila Water was one of many local and
international corporations who responded to 1
https://www.manilawater.com/customer/agos/2019-12-
the Government’s call for public-private 04/press-statement-on-the-award-recently-issued-by-an-
partnership to solve the water crisis. It offered arbitral-tribunal-in-favor-of-manila-water-as-administered-
the lowest fee to serve as concessionaire of by-the-permanent-court-of-arbitration
MWSS, which decided to pay the fee with the 2
https://business.inquirer.net/258771/maynilad-arbitration-
water tariff to be collected by the victory-becomes-final
3
concessionaire. Manila Water was
subsequently awarded the Concession https://www.cnnphilippines.com/news/2019/11/29/Manila-
Water-arbitration.html
revenue losses. However, this was dismissed good water concessionaire agreement should
by the High Court – be.7
the lower division of Singapore’s Supreme
Court, in a ruling dated September 4, 2018. WAIVING THE ARBITRAL AWARDS
The Supreme Court of Singapore favored the The water concessionaires would no longer
arbitral decision that sided with Maynilad Water seek to collect from the government close to
Services Inc. This has become final on October P11 billion that an international arbitration court
4, 2018 after the Philippine government had awarded to them for foregone revenue
decided to no longer elevate the case to the from higher rates that they were unable to
Court of Appeal, the higher division of implement. In addition to no longer pursuing its
Singapore’s Supreme Court. collection of the P7.4 billion arbitral award,
(Note: A second arbitration is still pending).4 Manila Water is willing to defer rate increases
scheduled for January 2020. Maynilad is
GOVERNMENT’S RESPONSE supposed to raise its basic charge by P1.95
The Philippine Government will appeal the per cubic meter and Manila Water P2 per cubic
ruling of an international tribunal which ordered meter effective Jan.1.8
officials to pay billions of refunds to water
concessionaires Maynilad and Manila Water.
According to Presidential Spokesperson
Salvador Panelo, the Government will either
appeal the decision in the Supreme Court of
Singapore or oppose the enforcement of the
arbitral ruling once a petition is filed in court for
its reinforcement. The opposition will be
grounded on the fact that the contract is
against public policy and interest of the Filipino
people.5

ROOM FOR NEGOTIATION


Officials from both Maynilad and Manila Water
agreed to negotiate the supposed onerous
deals with the government, which were signed
in 1997. Manila Water president Jose Rene
Almendras and Maynilad president Ramoncito
Fernandez said they were ready to cooperate
with the government in striking a new deal,
without the “onerous” provisions.6

The government shall form a team composed


of lawyers from OSG, the Office of the
Government Corporate Counsel, the Finance
Department, and the Justice Department to
form the government’s own version of what a

4
https://business.inquirer.net/258771/maynilad-arbitration-
victory-becomes-final
5 7
https://cnnphilippines.com/news/2019/12/9/Panelo- https://cnnphilippines.com/news/2019/12/9/Panelo-
Malacanang-Maynilad-Manila-Water-Singapore-arbitral- Malacanang-Maynilad-Manila-Water-Singapore-arbitral-
ruling- ruling-
appeal.html?fbclid=IwAR0TXVThbNltnbqfWdMQpX3vgecPSd5 appeal.html?fbclid=IwAR0TXVThbNltnbqfWdMQpX3vgecPSd5
3HWfPzPEyn6CmF0H9I14IV2akERM 3HWfPzPEyn6CmF0H9I14IV2akERM
6 8
https://business.inquirer.net/285136/water-firms-waiving- https://business.inquirer.net/285136/water-firms-waiving-
p10-8-billion-award p10-8-billion-award
Judiciary’s Action:
1. Requirement of conducting pre-trial
conferences
2. Utilization of different modes of discovery
3. Strict proscription against forum shopping

SC passed Admin. issuances encouraging the use of


alternative dispute resolution through—
a. Philippine Mediation Center; or
b. JDR

ADR Methods—
a. Arbitration
b. Mediation
c. Negotiation
d. Conciliation

NLRC, together with its arbitration branch—cases


involving unfair labor practice, termination of
employment, conditions of employment, damages
arising from EER, and other labor-related disputes.

Local Government Code of 1991 (R.A. 7160) –requires


conciliation, mediation, or arbitration in the barangay
level before the pangkat ng tagapagkasundo of would-
be adverse parties in specified civil and criminal cases
NOTES: before resort to the courts can be had.

History Construction Industry Arbitration Commission (CIAC) –


disputes related to, arising from, or connected with
1. Civil Code took effect on August 30, 1950 construction agreements.
2. June 19, 1953—R.A. 876 Arbitration Law was
enacted, which did not revoke, and instead Alternative Dispute Resolution— is a system, using
supplemented the provisions of the NCC on means and methods allowed by law, and approved by
arbitration. parties for the purpose of resolving or facilitating the
3. Resolution No. 71—convention that gave resolution of disputes and controversies between them
recprocal recognition and allowed enforcement in an expeditious and speedy manner, without resorting
of international arbitration agreements to court adjudication.
between parties of different nationalities within
a contracting state Principles of ADR
4. United Nations Commission on International 1. Promotion of party autonomy and self-
Trade Law (UNCITRAL) June 21, 1985, which determination in the resolution of disputes;
adopted the Model Law on International 2. Recognition of ADR as efficient tool and an
Commercial Arbitration alternative procedure for resolution of cases;
5. R.A. 9285 Alternative Dispute Resolution Act of 3. Enlisting of private sector participation, as many
2004 –first comprehensive alternative dispute ADR practitioners or providers hail from the
resolution law in the Ph; which also adopted the private sector in various fields of endeavor.
UNCITRAL Model Law.

Lawyers are expected to exert genuine and sincere Objectives and Benefits of ADR
efforts at bringing parties to a settlement within the 1. Speedy and impartial justice
scope of their authority. 2. Declogging of court dockets
Features of ADR Mini-trial—a structured dispute resolutin method in
1. Means used to resolve a dispute or controversy. which the merits of the case are argued before a panel
2. Utilizes means and methods allowed by law. composed of senior decision makers, with or without
Such as: arbitration, mediation, the presence of a neutral third person, after which the
conciliation, early neutrak evaluation or parties seek a negotiated settlement
mini-trial.
3. Contractual in nature Combination of these—any combination of the forms
4. Avoids court trial aforementioned, consented by the parties, not contrary
However, more often than not, ADR is to law, public order or public policy
coducted as part of court proceedings
as distinguished from the trial stage of Components of ADR
court proceedings as in the case of JDR, 1. Contending parties
which, although not governed by ADR 2. Dispute or controversy
Act of 2004, requires judges to conduct 3. Form of ADR
mediation between parties as part of 4. ADR provider or practitioner
the pre-trial and prior to the trial stage.
Likewise the case of Court Annexed General Rule: All adversarial disputes and controversies
Mediation (CAM), while not governed can be the subject matter of ADR.
by ADR Act of 2004, is required to be Exceptions:
conducted prior to pre-trial. a. Civil status of persons
5. Usually involves the participation of a neutral b. Validity of marriage or any ground for legal
third party. separation
c. Jurisdiction of the courts, except on the cases of
Forms of ADR estoppel
d. Future legitime
Arbitration—voluntary dispute resolution process in e. Criminal liability
which one or more arbitrators appointed in accordance f. In general, those which by law cannot be
with the agreement of the parties or rules promulgated compromised
pursuant to the ADR Act, resolve a dispute by rendering g. Labor disputes (governed by the Labor Code)
an award.
The seat of ADR is jurisdiction under whose law the
Mediation—voluntary process in which a mediator, proceeding is being conducted, The venue or place of
selected by the disputing parties, facilitates ADR on the other hand, is the actual site where the
communication and negotiation, and assists parties in arbitration is conducted.
reaching a voluntary agreement regarding a dispute.
ADR proceedings are completed upon the execution of
The concluding arbitral award in an arbitration a concluding act or agreement.
proceeding is rendered by the third party arbitral 1. Arbitral award—partial or final decision od
tribunal or arbitrator; while the concluding mediated an arbitrator in resolving the issue in a
settlement agreement in a mediation proceeding is the controversy.
voluntary agreement executed by the parties 2. Settlement agreement—contract executed
themselves. by the mediating parties, assisted by their
respective counsel, certified by a mediator,
Conciliation—adjustment and settlement of a dispute in evidencing a succesful mediation.
a friendly, unantagonistic manner. 3. Compromise agreement—contract,
whereby parties, by making reciprocal
Neutral and Early Neutral Evaluation—ADR process concessions, avoid litigation or put an end
wherein the parties and their lawyers are brought to one already existing.
together to present summaries of their cases and 4. Waiver or quitclaim—statement
receive a non-binding assessment by an experienced renouncing any right or claim in a
neutral person with expertise in the subject of the controversy by one party in favor of the
dispute. other.
provided by law, the propriety of the arbitral
By the nature of their functions, ADR providers and award; and
practitioners, including arbitrators and mediators, act 3. Judicial review of court decisions in ADR
in a quasi-judicial capacity. They are quasi-judicial related cases—involves remedies available
agencies or instrumentalities. from the orders of the RTC and the CA rendered
in the first two tyoes of judicial intervention.

MEDIATION
DOMESTIC ARBITRATION
As a form of ADR, Mediation is non-evidentiary or non-
merit based. In general, arbitration is domestic if conducted in the
Philippines.
Mediated Settlement Agreement
The concluding agreement has the effect of a res The ADR Act of 2004 devoted only two (2) sections to
judicata, and therefore, binding upon the parties domestic arbitration:
whether or not it has been submitted to the court for a. Section 32, which distinguished domestic
approval. However, there can be no execution of the arbitration from international arbitration and
concluding agreement unless it has been first judicially declared that the Arbitration Law (R.A. 876)
approved. The parties, by motion, have to present the remains to be applicable to domestic
concluding agreement to the proper court for approval arbitration; and
and the rendition of the judgment based thereon. The b. Section 33, which adopted certain provisions of
court is called upon to approve the concluding the Model Law and the ADR Act on
agreement provided it is not contrary to law, good international commercial arbitration to
morals, good customs, public order and public policy. domestic arbitration
Once judicially approved, the concluding agreement
may be enforced through a writ of execution. Unlike the provisions of ADR Act of 2004 on
international commercial arbitration and the rules
corresponding thereto which cover only disputes arising
ARBITRATION from relationships of a commercial nature, the
provisions and rules on domestic arbitration cover both
Kinds: commercial and non commercial disputes provided they
Compulsory Arbitration—process of settlement of are susceptible of arbitration and do not fall within the
(labor) disputes by a government agency who has the exclusive originl arbitral jurisdiction of quasi-judicial
authority to investigate and to make an award which is agencies.
binding on all parties and a mode of arbitration where
the parties are compelled to accept the resolution of
Alternative Dispute Resolution; Court
their dispute through arbitration by a third party. Diversion; Stages (2012)

Voluntary Arbitration—involves the reference of a No.VIII.B. Discuss the three (3) Stages of
dispute to an impartial body, members of which are Court Diversion in connection with
chosen by the parties themselves, which parties freely Alternative Dispute Resolution. (5%)
consent in advance to abide by the arbitral award issued SUGGESTED ANSWER:
after the proceedings where both parties had the The three stages of diversion are CourtAnnexed Mediation (CAM),
opportunity to be heard. Judicial Dispute Resolution, and Appeals Court Mediation (ACM).
During CAM, the judge refers the parties to the Philippine Mediation
Center (PMC) for the mediation of their dispute by trained and
Three types of judicial intervention in arbitration: accredited mediators. If CAM fails, the JDR is undertaken by the JDR
1. Judicial assistance in arbitration—allows the judge, acting as a mediator-conciliator-early neutral evaluator. The
parties in an arbitration to secure from the third case is during appeal, where covered cases are
courts orders or processes that will aid in the referred to ACM.
conduct of the arbitration; e.g.issuance of
interim measures of protection
2. Judicial review of arbitral awards—involves
passing upon to the extent and on grounds

You might also like