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CHAPTER 1 - INTRODUCTION Also, the “Local Government Code of 1991” requires conciliation, mediation
Historical Note
Judicial and legislative trends on dispute resolution consistently lean
towards the utilization of alternative means and methods implemented
outside the court trial system.
The Civil Code of the Philippines (Republic Act No. 386), which took effect
on Aug. 30, 1950, contains provisions on compromises and arbitrations
which encourage litigants to agree upon a fair compromise and authorize
arbitration as a means of concluding controversies.
On June 19, 1953, the Philippine Legislature enacted RA No. 876, otherwise
known as “The Arbitration Law.” RA No. 876 did not revoke and instead
supplemented the provisions of the New Civil Code on arbitration.
On May 10, 1965, another milestone in Philippine alternative dispute
resolution was achieved when the Philippine Senate passed Resolution No.
71 adhering to the United Nations “Convention on the Recognition and
Enforcement of Foreign Arbitral Awards” of June 10, 1958. This Convention
gave reciprocal recognition and allowed enforcement of international
arbitration agreements between the parties of different nationalities within
a contracting state. By such adherence, Philippine law has acknowledged
international arbitration as a system of settling commercial disputes.
The Philippines was a signatory to the United Nations Commission on
International Trade Law (UNCITRAL) New York Convention of June 21, 1985
which adopted the “Model Law on International Commercial Arbitration. By
such act, the Philippines committed to adhere to the Model Law.
Despite the foregoing efforts of the Legislature in the promotion of
alternative dispute resolution, the Judiciary continued to be plagued with
congested dockets. The sheer number of new cases filed, coupled with the
dearth of judges to man the first and second level courts, resulted in the
volume of new cases filed far outnumbering the cases actually disposed of
and resolved by our courts. These circumstances contribute to the
perennial problem of delay in the delivery of justice to party litigants.
Judiciary’s Action
The Judiciary’s response to the problems of delay in the delivery of justice
consisted of, among others, the requirement of conducting pre-trial
conferences, the utilization of the different modes of discovery; and the
strict proscription against forum-shopping. More importantly, the Supreme
Court passed administrative issuances encouraging the use of alternative
dispute resolution through the Philippine Mediation Center or through
judicial dispute resolution (JDR).
To emphasize the Judiciary’s resolve in strengthening the system of
alternative dispute resolution, the Supreme Court, speaking through Mr.
Justice Jose Vitug, in the case of La Naval Drug Corporation vs. Court of
Appeals, said that:
“In an effort to declog the courts of an increasing volume of
load and, most importantly, in order to accord contending
parties with expeditious alternatives for settling disputes, the
law authorizes, indeed encourages, out of court settlements or
adjudications. Compromises and arbitration are widely known
and used as such acceptable methods of resolving adversarial
claims.”
Alternative dispute resolution methods like arbitration, mediation,
negotiation, and conciliation, are encouraged by the Supreme Court.
Arbitration, in particular, is regarded as the “wave of the future” in
international civil and commercial disputes.
Legislative Action
Special domestic legislations have been passed prescribing arbitration,
mediation and conciliation in specific types of cases to help decongest
court dockets. For instance, the “Labor Code of the Philippines” mandated
the creation and constitution of the National Labor Relations Commission
(NLRC) which, together with its Arbitration Branch, has been dispensing
arbitration service in cases involving unfair labor practice, termination of
employment, conditions of employment, damages arising from employer-
employee relationship, and other labor-related disputes.
or arbitration in the barangay level before the pangkat ng tagapagkasundo
of would-be adverse parties in specified civil and criminal cases before
resort to courts can be had. The principle of alternative dispute resolution
in the barangay level had its roots in P.D. No. 1508 (“Establishing a System
of Amicably Settling Disputes at the Barangay Level”) whose provisions
were re-enacted as part of the Local Government Code of 1991.
Executive Branch’s Contribution
The Executive Branch of Government also contributed immensely in the
propagation of alternative dispute resolution. The Construction Industry
Arbitration Commission (CIAC), created under E.O. No. 1008 (“Construction
Industry Arbitration Law”) dated Feb. 4, 1985, is at the forefront in the
arbitration of disputes arising from or connected with construction
agreements. The CIAC, in the exercise of the powers granted it by Section
21 of E.O. No. 1008, approved and promulgated on Aug. 23, 1998 the
“Rules of Procedure Governing Construction Arbitration.” The said Rules has
undergone various amendments and, on Nov. 19, 2005, the CIAC passed
and approved the “CIAC Revised Rules of Procedure Governing
Construction Arbitration,” which took effect on Dec. 15, 2005.
On March 22, 2010, the Executive Branch of Government, through the
Office of the Solicitor General, enacted the “Rules on Alternative Dispute
Resolution (ADR) for Disputes Between National Government Agencies.”
Through these Rules, the Executive Branch of Government reiterated its
adherence to the policy of the law to encourage the amicable settlement of
disputes through alternative dispute resolution methods in lieu of
adversarial judicial processes even in disputes between national
government agencies.
The Alternative Dispute Resolution Act of 2004
On Feb. 4, 2004, Senate Bill No. 2671 and House Bill No. 5654 were
consolidated and enacted as the first comprehensive alternative dispute
resolution law in the Philippines – RA No. 9285 entitled: “An Act to
Institutionalize the Use of an Alternative Dispute Resolution System in the
Philippines and to Establish the Office for Alternative Dispute Resolution,
and for Other Purposes.” It is better known as the “Alternative Dispute
Resolution Act of 2004.” It was promulgated on April 2, 2004 and became
effective on April 28, 2004 after its publication on April 14, 2004. It is the
general law applicable to all forms of alternative dispute resolution such as
arbitration, mediation, conciliation, early neutral resolution, mini-trial, or
any combination thereof. It recognizes the international application of the
alternative dispute resolution system. It adopted the UNCITRAL Model Law
on International Commercial Arbitration. It paved the way for the
Philippines to be a venue for international commercial arbitration.
The Supreme Court, in Korea Technologies Co., Ltd. vs. Lerma, enumerated
and explained the salient features of R.A. No. 9285 applying and
incorporating the UNICTRAL Model, namely:
(1) The RTC must refer to arbitration in proper cases:
Under Sec. 24, the RTC does not have jurisdiction over disputes
that are properly the subject of arbitration pursuant to an
arbitration clause, and mandates the referral to arbitration in
such cases xxx.
(2) Foreign arbitral awards must be confirmed by the RTC:
Foreign arbitral awards while mutually stipulated by the parties
in the arbitration clause to be final and binding are not
immediately enforceable or cannot be implemented
immediately. Sec. 35[43] of the UNCITRAL Model Law stipulates
the requirement for the arbitral award to be recognized by a
competent court for enforcement xxx.
It is now clear that foreign arbitral awards when confirmed by
the RTC are deemed not as a judgment of a foreign court but as
a foreign arbitral award, and when confirmed, are enforced as
final and executory decisions of our courts of law.
(3) The RTC has jurisdiction to review foreign arbitral awards:
Sec. 42 in relation to Sec. 45 of RA 9285 designated and vested
the RTC with specific authority and jurisdiction to set aside,
reject, or vacate a foreign arbitral award on grounds provided
under Art. 34(2) of the UNCITRAL Model Law.
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(4) Grounds for judicial review different in domestic and foreign arbitral
awards:

Sec. 42 in relation to Sec. 45 of RA 9285 designated and vested

the RTC with specific authority and jurisdiction to set aside,
reject, or vacate a foreign arbitral award on grounds provided
under Art. 34(2) of the UNCITRAL Model Law.

For final domestic arbitral awards, which also need

confirmation by the RTC pursuant to Sec. 23 of RA 876 and shall
be recognized as final and executory decisions of the RTC, they
may only be assailed before the RTC and vacated on the
grounds provided under Sec. 25 of RA 876.

(5) RTC decision of assailed foreign arbitral award appealable:

Sec. 46 of RA 9285 provides for an appeal before the CA as the

remedy of an aggrieved party in cases where the RTC sets
aside, rejects, vacates, modifies, or corrects an arbitral award.

Thereafter, the CA decision may further be appealed or

reviewed before this Court through a petition for review under
Rule 45 of the Rules of Court.

xxx

Pursuant to Section 52 of RA No. 9285 calling for the passage of

implementing rules and regulations therefor, on Oc. 26, 2009, the
Implementing Rules and Regulations of the Alternative Dispute Resolution
Act of 2004 (IRR) was approved by the Secretary of Justice.

In order to provide the courts with the procedural rules on the prosecution
of ADR related actions and petitions, on Sept. 1, 2009, the Supreme Court
passed and approved the “Special Rules of Court on Alternative Dispute
Resolution,” which took effect on Oct. 30, 2009.

The Lawyer’s Role

The combined efforts of the Executive, Legislative and Judicial branches of

Government for the promotion of alternative dispute resolution is an
eloquent recognition and acceptance of the need to declog the courts’
dockets. Lawyers, being an integral part of the judicial system, have to tow
the line and contribute to the promotion of alternative dispute resolution.
As part of their duties to the court, lawyers have to assist the courts in
encouraging the parties to avail of alternative means of dispute resolution.
As part of their duties to their clients, lawyers have to explain the benefits
of the alternative dispute resolution system to them.

Lawyers may also play the role of alternative dispute resolution provider or
practitioner. A lawyer, in view of his excellent communication skills,
probity, and legal foresight, can be appointed as an arbitrator, mediator,
conciliator or neutral evaluator. When performing duties as such, lawyers
are expected to exert genuine and sincere efforts at bringing the parties to
a settlement within the scope of their authority. In all instances when
lawyers are allowed to participate in the dispute resolution process, they
have to perform their functions in good faith, with no other motive except
that of securing for the parties a speedy, inexpensive and amicable
settlement of their disputes and controversies.

-o0o-

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CHAPTER 2: FUNDAMENTALS OF ALTERNATIVE DISPUTE RESOLUTION
Alternative Dispute Resolution.
In a broad sense, alternative dispute resolution (ADR) is a system, using
means and methods allowed by law and approved by the parties, for the
purpose of resolving or facilitating the resolution of disputes and
controversies between them, in an expeditious and speedy manner
without resorting to court adjudication. This definition covers all forms and
methods of resolving disputes outside the court trial system. This definition
covers not only just arbitration, mediation, conciliation, early neutral
evaluation, mini-trial, or combinations thereof, but also includes similar
processes in quasi-judicial agencies such as the National Labor Relations
Commission, Regional Offices of the Department of Labor and
Employment, Intellectual Property Office, Mines and Geosciences Bureau,
Insurance Commission and other similar government agencies.
Definition.
RA 9285, Section 3: Definition of Terms
"Alternative Dispute Resolution System" means any process or
procedure used to resolve a dispute or controversy, other than by
adjudication of a presiding judge of a court or an officer of a
government agency, as defined in this Act, in which a neutral third
party participates to assist in the resolution of issues, which includes
arbitration, mediation, conciliation, early neutral evaluation, mini-
trial, or any combination thereof.
Under this definition, arbitral proceedings under the above-mentioned
administrative agencies exercising quasi-judicial power are not covered by
the ADR Act of 2004. This does not mean, however, that similar procedures
before quasi-judicial agencies are not considered forms of arbitration,
mediation, or conciliation. They are, except that they are not covered by
the ADR Act of 2004 there being specific laws and rules governing their
procedures.
State Policy on ADR.
RA 9285, SEC. 2. Declaration of Policy.
It is hereby declared the policy of the State to actively promote party
autonomy in the resolution of disputes or the freedom of the party to
make their own arrangements to resolve their disputes.
Towards this end, the State shall encourage and actively promote the
use of Alternative Dispute Resolution (ADR) as an important means to
achieve speedy and impartial justice and declog court dockets.
As such, the State shall provide means for the use of ADR as an
efficient tool and an alternative procedure for the resolution of
appropriate cases. Likewise, the State shall enlist active private sector
participation in the settlement of disputes through ADR.
This Act shall be without prejudice to the adoption by the Supreme
Court of any ADR system, such as mediation, conciliation, arbitration,
or any combination thereof as a means of achieving speedy and
efficient means of resolving cases pending before all courts in the
Philippines which shall be governed by such rules as the Supreme
Court may approve from time to time.
Insular Savings Bank vs. Far East Bank and Trust Company, 2006.
The Supreme Court declared the policy of the Judiciary on ADR as follows:
Alternative Dispute Resolution methods or ADRs – like arbitration,
mediation, negotiation, and conciliation – are encouraged by the Supreme
Court. By enabling the parties to resolve their disputes amicably, they
provide solutions that are less time-consuming, less tedious, less
confrontational, and more productive of goodwill and lasting friendships.
RCBC Capital Corporation vs. Banco de Oro Unibank, Inc., 2012.
The Supreme Court declared that:
Institutionalization of ADR was envisioned as ‘an important means to
achieve speedy and impartial justice and declog court dockets.’ The most
important feature of arbitration, and indeed, the key to its success, is the
public’s confidence and trust in the integrity of the process.
Note:
In a long line of cases, the Supreme Court has referred to alternative
dispute resolution in general, and arbitration in particular, as the “wave of
the future in international relations.”
Principles of ADR.
(1) Promotion of party autonomy and self-determination in the resolution
of disputes. – The parties are given the freedom to choose the form of ADR
they desire to avail of. They are also given the discretion to prescribe the
procedure to govern the ADR process (Department of Environment and
Natural Resources vs. United Planners Consultants, Inc, 2015).
Party autonomy extends to the choice of ADR providers or practitioners,
the venue of proceedings, and, in most cases, the terms of the concluding
agreements.
(2) Recognition of ADR as an efficient tool and an alternative procedure for
the resolution of cases. – ADR does not altogether do away with the court
trial system. ADR merely provides the parties with an alternative means of
settling their disputes in a manner that is different, separate and
independent from the court trial system.
(3) Enlisting of private sector participation. – The essence of ADR is that it
usually requires the participation of third parties who do not necessarily
dispense public service. Many ADR practitioners or providers hail from the
private sector in various fields of endeavor. There is a growing trend
towards private sector involvement in ADR.
Objectives and Benefits of ADR.
(1) Speedy and impartial justice. – ADR has been judicially recognized as a
tool for the speedy, inexpensive and amicable settlement of disputes.
(2) Declogging of court dockets. – The decongestion of court dockets is the
ultimate objective of ADR. In this sense, ADR and the court trial system,
one being the alternative to the other, work hand-in-hand to maximize the
benefits from each other.
Features of ADR.
(1) ADR is a means used to resolve a dispute or controversy. – The objective
of ADR forms, methods and processes is to resolve or facilitate the
resolution of a dispute or controversy in a speedy, amicable and
inexpensive manner. A procedure which has for its purpose the temporary
cessation of the discussion of issues in a controversy not leading to the
final conclusion of the dispute is not an ADR form. ADR should not be
resorted to when the motive is to delay or suspend the proceedings rather
than put an end or facilitate the conclusion of the controversy.
(2) ADR utilizes means and methods allowed by law. – ADR usually takes
the form of arbitration, mediation, conciliation, early neutral evaluation, or
mini-trial. It may also be any combination of the foregoing methods. The
ADR Act of 2004 did not limit the forms of ADR to the foregoing
enumeration. Any means or method aimed at resolving disputes outside
the court trial system may be recognized as an ADR form provided it is not
contrary to law, morals, good customs, public order or public policy.
(3) ADR is contractual in nature. - In keeping with the policy of the law to
actively promote party autonomy, the parties to a dispute are given the
freedom to agree to resolve their dispute and decide on the procedure
therefor. ADR and its procedures are, therefore, contractual in character.
As such, any form of ADR that satisfies the essential requisites of a
contract, and which is not contrary to law, morals, good customs, public
order or public policy, is allowable as a form of ADR.
The consent to undergo ADR may be a pre-causal consent as when the
parties to a contract stipulate that any dispute that will arise from the
contract shall be resolved by arbitration. The consent may also be a
present-causal consent as when the parties to an existing controversy
voluntarily submit themselves either to arbitration or mediation.
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(4) ADR avoids court trial. – In principle, ADR is conducted outside of the
court trial system. It is in lieu of, and conducted precisely to avoid, trial.
However, more often than not, ADR is conducted as part of court
proceedings, as distinguished from the trial stage of court proceedings.
This is the case of the “judicial dispute resolution” or “JDR” which, although
not governed by the ADR Act of 2004, requires judges to conduct
mediation between the parties as part of the pre-trial and prior to the start
of the trial stage. This is also the case of the court-annexed mediation
(CAM) conducted by the Philippine Mediation Center which, while not
governed by the ADR Act of 2004, is required to be conducted prior to pre-
trial.
ADR, however, is not inconsistent with judicial proceedings as opposed to
the trial system. Judicial proceedings complement ADR proceedings. When
ADR is availed of during the pendency of an action in court, the court does
not lose jurisdiction over the case. The court proceeding will only be
stayed. After the special proceeding for arbitration has been pursued and
completed, then the court may confirm the award made by the arbitrator.
The pendency of arbitral proceedings does not foreclose resort to courts
for provisional reliefs. The Arbitration Law (R.A. No. 876) recognizes the
right of any party to apply with the courts to take measures to safeguard
and/or conserve any matter which is the subject of the dispute in
arbitration. The ADR Act of 2004 (R.A. No. 9285) allows the filing of
petitions for provisional or interim measures with the regular courts
whenever the arbitral tribunal has no power to act or to act effectively.
(5) ADR usually involves the participation of a neutral third party. – The
third party participant may either be the arbitrator, mediator, conciliator,
or neutral evaluator. It is imperative that the third party participant
observe neutrality at all times. He is required to disclose any factor that
may influence the performance of his duties in conducting the ADR. These
factors may include relationship or affiliation, or prior dealings, with the
parties, or the latter’s relatives.
Sources of ADR Rules.
(1) Domestic laws and rules which may either be general or special. General
ADR laws are those applicable to all forms of ADR, such as the Arbitration
Law and the ADR Act of 2004. On the other hand, special ADR laws are
those that pertain to specific subject matters. Examples of these are the
Local Government Code of 1991, the Labor Code, and its IRR, and other
similar laws applicable to specific classes of disputes.
(2) Acts of the Executive Branch. – Examples of these are the Rules of ADR
for Disputes between National Government Agencies, and E.O. No. 1008
creating the Construction Industry Arbitration Commission as well as the
CIAC Revised Rules of Procedure Governing Construction Arbitration/
(3) Decisions of the Supreme Court which form part of the law of the land.
(4) International laws such as the UNCITRAL “Model Law on International
Commercial Arbitration,” and the “Convention on Recognition and
Implementation of Foreign Arbitral Awards.”
(5) General principles of law and equity.
Forms of ADR.
As enumerated under the ADR Act of 2004, the following are the forms of
ADR:
(1) Arbitration. – Arbitration is an arrangement for taking and abiding by
the judgment of selected persons in some disputed manner, instead of
carrying it to established tribunals of justice and is intended to avoid the
formalities, the delay, the expense and vexation of ordinary litigation.
(Uniwide Sales Realty and Resources Corporation vs. Titan-Ikeda
Construction and Development Corporation, 2006)
In its restricted sense, for purposes of the ADR Act of 2004, arbitration is a
voluntary dispute resolution process in which one or more arbitrators,
appointed in accordance with the agreement of the parties, or rules
promulgated pursuant to the ADR Act, resolve a dispute by rendering an
award.
(2) Mediation. – Mediation is a voluntary process in which a mediator,
selected by the disputing parties, facilitates communication and
negotiation, and assists the parties in reaching a voluntary agreement
regarding a dispute.
The basic distinction between arbitration and mediation is that in the
former, an arbitral tribunal or arbitrator evaluates evidence and the merits
of the case and renders an arbitral award based on his appreciation
thereof; while in the latter, the parties to the controversy are convinced by
a mediator to settle their controversy through a voluntary agreement
executed by the parties themselves called a “mediated settlement
agreement.” In other words, the concluding arbitral tribunal proceeding is
rendered by the third party arbitral tribunal or arbitrator; while the
concluding mediated settlement agreement in a mediation proceeding is
the voluntary agreement executed by the parties themselves.
(3) Conciliation. – Conciliation is the adjustment and settlement of a
dispute in a friendly, unantagonistic manner.
(4) Neutral and early neutral evaluation. – Neutral evaluation is an ADR
process wherein the parties and their lawyers are brought together to
present summaries of their cases and receive a non-binding assessment by
an experienced neutral person with expertise in the subject or in the
substance of the dispute. Early neutral evaluation is availed of early in the
pre-trial phase.
(5) Mini-trial. – It is a structured dispute resolution method in which the
merits of a case are argued before a panel composed of senior decision
makers, with or without the presence of a neutral third person, after which
the parties seek a negotiated settlement.
(6) Any combination of the foregoing. – Any combination of the foregoing
ADR forms, approved by the parties, not contrary to law, morals, good
customs, public order or public policy, may be implemented. An example of
a combination of ADR form is mediation-arbitration or med-arb, which is a
two-step dispute resolution process involving both mediation and
arbitration. Another combination is a mini-trial conducted as a
continuation of mediation, neutral or early neutral evaluation or any other
ADR process.
(7) Any other ADR form (Innominate ADR Form). – Any arrangement agreed
upon by the parties that satisfies the requisites of ADR, complies with the
essential requisites of a valid contract, and is not contrary to law, morals,
good customs, public order and public policy, is an acceptable form of ADR.
An agreement to resolve a dispute depending on the outcome, for
instance, of a boxing match, is tantamount to gambling which is contrary to
law. Therefore, such arrangement, apart from being void, cannot be
considered a form of ADR.
Classification of Forms of ADR.
(1) As to the number of parties, ADR may be bilateral or biparty when only
two (2) contending parties are involved, or multilateral or multi-party if
there are more than two (2) contending parties involved.
(2) As to the number of issues involved, ADR may be simple when only a
single issue is involved, or complex if there are two or more issues involved.
(3) As to the extent of the conclusion, ADR is either complete when all the
issues involved are resolved, or partial if only one or some but not all the
issues are resolved. In either case, the objective of the ADR form must be
to resolve the dispute fully or partially rather than merely suspend or defer
the resolution of the dispute.
(4) As to the role of evidence in the proceedings, ADR is evidentiary or
merit-based when the resolution of the dispute or controversy involved
requires the presentation of evidence and evaluation of the merits of the
case as in the case of arbitration; and it is non-evidentiary or non-merit
based if the merits of the case is not indispensable in the resolution of the
dispute as in the case of mediation.
(5) As to the pendency of a court case, ADR is case-related if conducted in
connection with or as a pre-requisite to trial as in the case of court-
annexed mediation or court-referred mediation; and it is independent if
conducted irrespective of any pending court case involving the issue.
(6) As to the applicable law, ADR is domestic of the parties’ place of
business, place of arbitration, and place of performance of the obligation
involved or subject matter of the dispute, are located in the Philippines.
Domestic Arbitration is governed by R.A. No. 876 (“The Arbitration Law”).
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ADR is international, if the parties’ places of business are in
different states; or the place of arbitration is outside the
Philippines; or the place where a substantial part of the
obligation is to be performed or the place where the subject
matter of the dispute is most closely connected is outside of
the Philippines; or the parties have agreed that the subject
matter of the dispute relates to more than one country.
International Commercial Arbitration is governed by the
provisions of the ADR Act on International Commercial
Arbitration.
And, ADR is foreign if it is conducted outside the Philippines. It
is submitted, however, that it is more accurate to define a
foreign arbitration as one whose seat is outside the Philippines.
Foreign ADR is also governed by the provisions of the ADR Act
of 2004 on International Commercial Arbitration.
Based on these classifications, an international commercial
arbitration conducted pursuant to the provisions of R.A. No.
9285 is domestic and international in character. On the other
hand, international commercial arbitration whose seat is other
than the Philippines is foreign and international in character.
(7) As to the permanence of the ADR provider or practitioner, ADR is either
ad hoc if the existence of the ADR practitioner is only temporary for
purpose of a particular dispute or controversy, or institutional if the ADR
provider’s existence is permanent in character and is not dependent on any
dispute or controversy.
Components of ADR.
The components of ADR are the following:
(1) Contending parties who are involved in a dispute or controversy.
(2) Dispute or controversy which is susceptible of being subjected to ADR.
(3) Form of ADR which may either be arbitration, mediation, conciliation,
early neutral evaluation, mini-trial or any combination of the foregoing.
(4) ADR provider or practitioner. An ADR provider is an institution or person
accredited as mediator, conciliator, arbitrator, neutral party evaluator, or
any person exercising similar functions in any ADR system. On the other
hand, an ADR practitioner is an individual acting as mediator, conciliator,
arbitrator or neutral evaluator who is not necessarily accredited as an ADR
provider.
Subject Matters of ADR.
In line with the policy to encourage the use of ADR, in general, all
adversarial disputes and controversies can be the subject matter of ADR,
except those which by law or reasons of public policy are declared not
capable of being subjected to ADR.
Under Section 6(b) to (h), R.A. No. 9285, the following issues are b
susceptible of ADR:
a. Civil Status of Persons. – A person’s status, whether married or
capable of marriage, emancipated or not, legally capacitated or
incompetent, is a matter determined by law and is not subject
to the discretion of the parties.
b. The validity of marriage or any ground for legal separation. –
These are matters over which the State has a keen interest to
protect. Thus, in proceedings for the declaration of nullity of
marriage, or for legal separation, the public prosecutor is
instructed to conduct a summary proceeding in order to ensure
that there is no collusion between the parties.
During the proceedings for the declaration of nullity of
marriage or the dissolution of the conjugal partnership of gains
or the absolute community, the distribution and disposition of
the assets of the conjugal partnership of gains or the absolute
community, custody of minor children to court approval, and
support pendente lite may, however, be the subject of ADR.
c. The jurisdiction of the courts. – Jurisdiction over the subject
matter of a case is determined by law and is not dependent
upon the allegations of the parties, except in the case of
jurisdiction by estoppel.
d. Future legitime. – Future legitime is inexistent and, hence,
cannot be waived. This principle is consistent with Articles 772
and 905 of the Civil Code of the Philippines.
e. Criminal liability. – Criminal liability is not susceptible of ADR,
although the civil liability arising from the offense and the
separate civil liability for quasi-delict based on the act or
omission constituting the offense, are proper subjects of ADR.
f. In general, those which, by law, cannot be compromised. –
Article 2035 of the Civil Code of the Philippines is an example of
a provision of law prohibiting compromise. It states that:
Art. 2035. No compromise upon the following questions shall be valid:
1. The civil status of persons;
2. The validity of a marriage or a legal separation;
3. Any ground for legal separation;
4. Future support;
5. The jurisdiction of courts;
6. Future legitime.
It is against public policy to waive or enter into a compromise regarding
future support. In principle, support is the basis for life and sustenance
which no one can contract away. However, support pendente lite and
accrued support, no longer being indispensable for the life and sustenance
of the person entitled thereto, may be the subject of a compromise and,
hence, may be the subject of ADR.
Section 6, R.A. No. 9285 also mentions labor disputes in the enumeration
of issues which cannot be subjected to ADR under the ADR Act of 2004.
This does not mean that labor disputes under the Labor code of the
Philippines (E.O. No. 442, as amended) and its Implementing Rules and
Regulations, are not susceptible of ADR. Section 6, R.A. No. 9285 merely
enumerates the disputes over which it is not applicable. Hence, while R.A.
No. 9285 is not applicable to labor disputes, they may still be the subject
matters of ADR under the auspices of the Labor Code and Its Implementing
Rules and Regulations, but not under R.A. No. 9285.
Seat and Venue of ADR.
The seat of ADR is the jurisdiction under whose law the proceeding is being
conducted. The venue or place of ADR, on the other hand, is the actual site
where the arbitration is being conducted. Hence, it is possible for the
venue or place of arbitration to be in a country different from the country
where the arbitration has its seat.
Basic Concepts.
Concluding Acts or Agreements.
ADR proceedings are completed upon the execution of a concluding act or
agreement. These concluding acts or agreements may take the form of a
mediated settlement agreement (or simply “settlement agreement”) or a
compromise agreement in the case of mediation, a judgment based on
compromise in the case of a court annexed mediation, or a waiver or
quitclaim in the case of conciliation. In the case of arbitration, they may
take the forms of an arbitral award, award on agreed terms, consent
award or award based on compromise.
An arbitral award is the partial or final decision by an arbitrator in resolving
the issue in a controversy.
A mediated settlement agreement is a contract executed by the mediating
parties, with the assistance of their respective counsel, certified by the
mediator, evidencing a successful mediation.
A compromise or compromise agreement is a contract whereby the parties,
by making reciprocal concessions, avoid litigation or put an end to one
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 ALTERNATIVE DISPUTE RESOLUTION
already existing. If the controversy subject matter of the compromise
agreement is also the subject of litigation, the compromise agreement can
be submitted to the court or tribunal for approval, and such approval is
usually contained in a judgment based on compromise.
A waiver or quitclaim is a statement renouncing any right or claim involved
in a controversy by one party in favor of the other. If the waived right or
claim is also the subject of litigation, the waiver and quitclaim can be
submitted to the court or tribunal and become the basis of the dismissal of
the action or proceeding.
The concluding acts or agreements are not forms of ADR. Rather, they
constitute the part of the ADR proceeding that completes it.
ADR Providers and Practitioners.
Among the ADR providers and practitioners, the arbitrator is
unquestionably authorized to render a binding resolution of the dispute
between the parties and, as such, is bound to consider the merits of the
controversy. On the other hand, the mediator is precluded from discussing
the merits of the controversy and cannot render a binding assessment of
the dispute.
The following neutral third persons are authorized to consider the merits of
the controversy and required to render a binding resolution of the dispute:
1. Arbitrator;
2. Mediator-arbitrator in a mediation-arbitration proceeding; and
3. The neutral third person in a mini-trial, neutral evaluation
(neutral evaluator), combination of ADR forms, or innominate
ADR form, who, upon agreement of the parties, is directed to
render a binding assessment.
By the nature of their functions, ADR providers and practitioners, including
arbitrators and mediators, act in a quasi-judicial capacity. They are quasi-
judicial agencies or instrumentalities.
As such, their decisions or awards are generally reviewable in a special civil
action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure as
amended. Basis for this principle is Section 1, Article VIII of the 1987
Constitution, which provides that:
“Section 1. The judicial power shall be vested in one Supreme
Court and in such lower courts as may be established by law.
Judicial power includes the duty of courts of justice to settle
actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not
there has been grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or
instrumentality of the Government.”
In a domestic arbitration, however, if the arbitral tribunal, in the exercise of
its authority to resolve or defer the resolution of the preliminary issue on
its jurisdiction over the arbitration agreement, opts to defer the resolution
of the jurisdictional issue until the final rendition of the arbitral award,
none of the parties can seek judicial relief from the deferment. Motions for
reconsideration, appeals and petitions for certiorari are not available to
challenge the decision of the arbitral tribunal to defer the resolution of the
preliminary jurisdictional issue. The remedy of an aggrieved party is to
proceed with the arbitration and petition the court for the setting aside of
the arbitral award on the ground that the arbitral tribunal exceeded its
powers.
Similarly, a petition for review under Section 43 of the 1997 Rules of Civil
Procedure is generally an available remedy for the review of decisions and
awards of ADR providers and practitioners because said remedy is
applicable for the following judgments or final orders:
“Section 1. Scope. – This rule shall apply to appeals from
judgments or final orders of the xxx voluntary arbitrators
authorized by law.” (Rule 43, 1997 Rules of Civil Procedure)
So also, in view of their quasi-judicial character, the civil liability of ADR
providers and practitioners for acts done in the performance of their duties
is the same as that for public officers as provided for under Section 38 (1),
Chapter 9, Book I of the Administrative Code of 1987, which provides:
“Section 38. Liability of Superior Officers. – (1) A public officer
shall not be civilly liable for acts done in the performance of his
official duties, unless there is a clear showing of band faith,
malice, or gross negligence.”
Preference for ADR.
There is a clear preference for the use of alternative dispute resolution
methods over the court trial system. Even before the advent of the ADR
Act of 2004, Article 2030 of the Civil Code of the Philippines already
instructs the courts to suspend proceedings if the possibility of settlement
through the different modes of alternative dispute resolution is present.
Hence, even if a case is already pending in court, either party may, before
or during the pre-trial, file a motion for the court to refer the parties to
alternative dispute resolution. And, even after the pre-trial, the parties may
jointly move for the suspension or dismissal of the action to allow a
compromise agreement. Thus:
Art. 2030. Every civil action or proceeding shall be suspended:
1. If willingness to discuss a possible compromise is expressed
by one or both parties; or
2. If it appears that one of the parties, before the
commencement of the action or proceeding, offered to
discuss a possible compromise but the other party refused
the offer.
The duration and terms of the suspension of the civil action or
proceeding and similar matters shall be governed by such provisions of
the rules of court as the Supreme Court shall promulgate.
Said rules of court shall likewise provide for the appointment and duties
of amicable compounders.
Koppel, Inc. vs. Makati Rotary Club Foundation, Inc., 2013.
Judicial proceeding disregarding arbitration agreements, beyond the point
when the parties should have been referred to arbitration, are null and
void, and the decisions rendered therein shall be reversed and set aside in
order to allow the remand of the case to the trial court and the referral of
the dispute to arbitration in accordance with the arbitration agreement.
If the alternative dispute resolution efforts materialize and result in a
settlement agreement, either party may submit the agreement to the court
before which the action is pending, and move for the approval thereof. If
the court finds that the settlement agreement is not contrary to law,
morals, public policy, or public order, it shall approve the same and render
judgment based thereon. Once so approved, either party may ask for the
execution of the agreement in the same manner that a judgment is
executed if necessary to compel the other party to comply therewith.
Office for Alternative Dispute Resolution.
RA 9285, SEC. 49. Office for Alternative Dispute Resolution.
There is hereby established the Office for Alternative Dispute
Resolution as an attached agency to the Department of Justice (DOJ)
which shall have a Secretariat to be headed by an executive director.
The executive director shall be appointed by the President of the
Philippines.
The objective of the office are:
a. To promote, develop and expand the use of ADR in the
private and public sectors; and
b. To assist the government to monitor, study and evaluate
the use by the public and the private sector of ADR, and
recommend to Congress needful statutory changes to
develop.
Strengthen and improve ADR practices in accordance with
world standards.
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 ALTERNATIVE DISPUTE RESOLUTION
RA 9285, SEC. 50. Powers and Functions of the Office for Alternative
Dispute Resolution.
The Office for Alternative Dispute Resolution shall have the following
powers and functions:
a. To formulate standards for the training of the ADR
practitioners and service providers;
b. To certify that such ADR practitioners and ADR service
providers have undergone the professional training
provided by the office;
c. To coordinate the development, implementation,
monitoring, and evaluation of government ADR programs;
d. To charge fees for their services; and
e. To perform such acts as may be necessary to carry into
effect the provisions of this Act.
IRR, Article 2.1. Establishment of the Office for Alternative Dispute
Resolution.
There is hereby established the OADR as an agency attached to the
Department of Justice.
It shall have a Secretariat and shall be headed by an Executive
Director, who shall be appointed by the President of the Philippines,
taking into consideration the recommendation of the Secretary of
Justice.
IRR, Article 2.2. Powers of the OADR.
The OADR shall have the following powers;
a. To act as appointing authority of mediators and
arbitrators when the parties agree in writing that it shall
be empowered to do so;
b. To conduct seminars, symposia, conferences and other
public fora and publish proceedings of said activities and
relevant materials/information that would promote,
develop and expand the use of ADR;
c. To establish an ADR library or resource center where ADR
laws, rules and regulation, jurisprudence, books, articles
and other information about ADR in the Philippines and
elsewhere may be stored and accessed;
d. To establish training programs for ADR
providers/practitioners, both in the public and private
sectors; and to undertake periodic and continuing training
programs for arbitration and mediation and charge fees
on participants.
It may do so in conjunction with or in cooperation with
the IBP, private ADR organizations, and local and foreign
government offices and agencies and international
organizations;
e. To certify those who have successfully completed the
regular professional training programs provided by the
OADR;
f. To charge for services rendered such as, among others, for
training and certifications of ADR providers;
g. To accept donations, grants and other assistance from
local and foreign sources; and
h. To exercise such other powers as may be necessary and
proper to carry into effect the provisions of the ADR Act.
IRR, Article 2.3. Functions of the OADR.
The OADR shall have the following functions;
a. To promote, develop and expand the use of ADR in the
private and public sectors through information, education
and communication;
b. To monitor, study and evaluate the use of ADR by the
private and public sectors for purposes of, among others,
policy formulation;
c. To recommend to Congress needful statutory changes to
develop, strengthen and improve ADR practices in
accordance with international professional standards;
d. To make studies on and provide linkages for the
development, implementation, monitoring and evaluation
of government and private ADR programs and secure
information about their respective administrative
rules/procedures, problems encountered and how they
were resolved;
e. To compile and publish a list or roster of ADR
providers/practitioners, who have undergone training by
the OADR, or by such training providers/institutions
recognized or certified by the OADR as performing
functions in any ADR system.
The list or roster shall include the addresses, contact
numbers, e-mail addresses, ADR service/s rendered (e.g.
arbitration, mediation) and experience in ADR of the ADR
providers/practitioners;
f. To compile a list or roster of foreign or international ADR
providers/practitioners.
The list or roster shall include the addresses, contact
numbers, e-mail addresses, ADR service/s rendered (e.g.
arbitration, mediation) and experience in ADR of the ADR
providers/practitioners; and
g. To perform such other functions as may be assigned to it.
In order to maximize the benefits of ADR and to ensure the smooth and
effective implementation of the provisions of the ADR Act of 2004 and its
IRR, as well as R.A. No. 876, the ADR Act of 2004 created the Office for
Alternative Dispute Resolution (OADR), which is attached to the
Department of Justice. It is headed by an Executive Director appointed by
the President upon the recommendation of the Secretary of Justice.
Among the principle objectives, powers and functions of the OADR are the
following:
1. To promote, develop and expand the use of ADR in the private
and public sectors through information, education and
communication;
2. To assist the government to monitor, study and evaluate the
use by the public and private sectors of ADR, and recommend
to Congress needful statutory changes to develop, strengthen
and improve ADR practices in accordance with world
standards;
3. To act as appointing authority of mediators when the parties
agree in writing that it shall be empowered to do so, and
4. To compile and publish a list or roster of ADR providers /
practitioners, and to compile a list or roster of foreign or
international ADR providers / practitioners.
-o0o-
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MEDIATION UNDER THE ADR ACT OF 2004
Mediation in General.
RA 9285, SEC. 7. Scope.
The provisions of this Chapter shall cover voluntary mediation,
whether ad hoc or institutional, other than court-annexed. The term
"mediation' shall include conciliation.
RA 9285, SEC. 8. Application and Interpretation.
In applying construing the provisions of this Chapter, consideration
must be given to:
 the need to promote candor or parties and mediators
through confidentiality of the mediation process,
 the policy of fostering prompt, economical, and amicable
resolution of disputes in accordance with the principles of
integrity of determination by the parties, and
 the policy that the decision-making authority in the
mediation process rests with the parties.
Among the forms of alternative dispute resolution, mediation and
arbitration are the most common and popular.
Mediation, as defined under the ADR Act of 2004, is “a voluntary process in
which a mediator, selected by the disputing parties, facilitates
communication and negotiation, and assists the parties in reaching a
voluntary agreement regarding a dispute. The same definition is carried
over to the Implementing Rules and Regulations of the ADR Act of 2004.
Excluded from the coverage of the ADR act are the court-annexed
mediation, which is a “mediation process conducted under the auspices of
the court,” and court-referred mediation, which is a “mediation ordered by
a court to be conducted in accordance with the agreement of the parties
when an action is prematurely commenced in violation of such
agreement.” Specifically, court-annexed mediation (CAM) is that conducted
prior to the pre-trial “where the judge refers the parties to the Philippine
Mediation Center (PMC) for the mediation of their dispute by trained and
accredited mediators.
Likewise excluded from the coverage of the ADR Act is the conciliation
conducted by the lupong tagapamayapa and pangkat ng tagapagkasundo
under Chapter 7, Book III of R.A. No. 7160 (The Local Government Code of
1991), and the judicial dispute resolution (JDR) which is the mediation,
conciliation and early neutral evaluation process conducted by the judge of
a pending case after a failed court-annexed mediation and before the pre-
trial stage.
This circumstance does not, however, exclude court-annexed mediation,
court-referred mediation and judicial dispute resolution as methods of
ADR, except that, they are not governed by the ADR Act of 2004.
The person who conducts the mediation is called the mediator, and the
parties thereto are the mediation parties. All other parties who take part in
the process are called non-party participants who can either be witnesses,
resource persons or experts.
Classification of Mediation.
As a form of ADR, mediation is non-evidentiary or non-merit based.
Compared with arbitration which takes into account the merits of the case
in the rendition of the arbitral award, mediation focuses on the facilitation
of communication and negotiation between the parties in order to
encourage them to voluntarily settle their dispute. Indeed, a mediator
must refrain from giving legal or technical advice or otherwise engaging in
counseling advocacy, and must abstain from expressing his personal
opinion on the rights and duties of the parties and the merits of any
proposal made.
On the basis of the structure of the ADR provider, mediation is either
institutional when administered by, and conducted under the rules of
mediation institution, and ad hoc if it is other than institutional.
RA 9285, SEC. 16. Effect of Agreement to Submit Dispute to Mediation
Under Institutional Rules.
An agreement to submit a dispute to mediation by any institution
shall include an agreement to be bound by the internal mediation and
administrative policies of such institution.
Further, an agreement to submit a dispute to mediation
under international mediation rule shall be deemed to
include an agreement to have such rules govern the
mediation of the dispute and for the mediator, the parties,
their respective counsel, and nonparty participants to
abide by such rules.
In case of conflict between the institutional mediation rules and the
provisions of this Act, the latter shall prevail.
An agreement to submit a dispute to mediation by an institution shall
include an agreement:
1. To be bound by the internal mediation and administrative
policies of such institution; and
2. To have such rules govern the mediation of the dispute and for
the mediator, the parties and their respective counsels and
non-party participants to abide by such rules.
Place of Mediation.
RA 9285, SEC. 15. Place of Mediation.
The parties are free to agree on the place of mediation. Failing such
agreement, the place of mediation shall be any place convenient and
appropriate to all parties
In order to promote self-determination and party autonomy of the
mediation parties, they are given the freedom to agree on the place of
mediation. In the absence of such agreement, the place of mediation shall
be any place convenient and appropriate to all parties. This is the default
venue of mediation.
Stages of Mediation.
In general, the mediation process consists of the following stages:
1. Opening statement of the mediator;
2. Individual narration by the parties;
3. Exchange by the parties;
4. Summary of issues;
5. Generalization and evaluation of options; and
6. Closure.
The foregoing process, however, is not obligatory and the parties, under
the principles of self-determination and party autonomy, may choose the
procedure that will govern their mediation.
The mediation process shall be held in private unless the parties consent to
the presence of persons other than themselves, their representatives and
the mediator.
The mediation shall be closed and concluded [i] by the execution of a
settlement agreement by the parties; [ii] by the withdrawal of any party
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 ALTERNATIVE DISPUTE RESOLUTION
from mediation; or [iii] by the written declaration of the mediator that any
further effort at mediation would not be helpful.
Advantages of Mediation.
In order to maintain the confidence of the mediation parties in the
mediation process, and encourage them to avail of mediation as a mode of
settling their disputes, Section 8 of ADR Act of 2004 gave the following
assurances:
1. Confidentiality in the mediation process;
2. Prompt, economical and amicable resolution of disputes;
3. The decision-making authority rests in the parties.
Confidential and Privileged Nature of Mediation Communication.
RA 9285, SEC. 9. Confidentiality of Information.
Information obtained through mediation proceedings shall be subject
to the following principles and guidelines:
(a) Information obtained through mediation shall be privileged and
confidential.
(b) A party, a mediator, or a nonparty participant may refuse to
disclose and may prevent any other person from disclosing a
mediation communication.
(c) Confidential Information shall not be subject to discovery and shall
be inadmissible if any adversarial proceeding, whether judicial or
quasi-judicial;
However, evidence or information that is otherwise
admissible or subject to discovery does not become
inadmissible or protected from discovery solely by reason
of its use in a mediation.
(d) In such an adversarial proceeding, the following persons involved
or previously involved in a mediation may not be compelled to
disclose confidential information obtained during mediation:
1. the parties to the dispute;
2. the mediator or mediators;
3. the counsel for the parties;
4. the nonparty participants;
5. any persons hired or engaged in connection with the
mediation as secretary, stenographer, clerk or assistant;
and
6. any other person who obtains or possesses confidential
information by reason of his/her profession.
(e) The protections of this Act shall continue to apply even of a
mediator is found to have failed to act impartially.
(f) a mediator may not be called to testify to provide information
gathered in mediation.
A mediator who is wrongfully subpoenaed shall be
reimbursed the full cost of his attorney's fees and related
expenses.
RA 9285, SEC. 10. Waiver of Confidentiality.
A privilege arising from the confidentiality of information may be
waived in a record, or orally during a proceeding by the mediator and
the mediation parties.
A privilege arising from the confidentiality of information may
likewise be waived by a nonparty participant if the information is
provided by such nonparty participant.
A person who discloses confidential information shall be precluded
from asserting the privilege under Section 9 of this Chapter to bar
disclosure of the rest of the information necessary to a complete
understanding of the previously disclosed information. If a person
suffers loss or damages in a judicial proceeding against the person
who made the disclosure.
A person who discloses or makes a representation about a mediation
is preclude from asserting the privilege under Section 9, to the extent
that the communication prejudices another person in the proceeding
and it is necessary for the person prejudiced to respond to the
representation of disclosure.
RA 9285, SEC. 11. Exceptions to Privilege.
(a) There is no privilege against disclosure under Section 9 if
mediation communication is:
1. in an agreement evidenced by a record authenticated by
all parties to the agreement;
2. available to the public or that is made during a session of a
mediation which is open, or is required by law to be open,
to the public;
3. a threat or statement of a plan to inflict bodily injury or
commit a crime of violence;
4. internationally used to plan a crime, attempt to commit,
or commit a crime, or conceal an ongoing crime or
criminal activity;
5. sought or offered to prove or disprove abuse, neglect,
abandonment, or exploitation in a proceeding in which a
public agency is protecting the interest of an individual
protected by law; but this exception does not apply where
a child protection matter is referred to mediation by a
court or a public agency participates in the child
protection mediation;
6. sought or offered to prove or disprove a claim or
complaint of professional misconduct or malpractice filed
against mediator in a proceeding; or
7. sought or offered to prove or disprove a claim of
complaint of professional misconduct of malpractice filed
against a party, nonparty participant, or representative of
a party based on conduct occurring during a mediation.
(b) There is no privilege under Section 9 if a court or administrative
agency, finds, after a hearing in camera, that the party seeking
discovery of the proponent of the evidence has shown that the
evidence is not otherwise available, that there is a need for the
evidence that substantially outweighs the interest in protecting
confidentiality, and the mediation communication is sought or offered
in:
1. a court proceeding involving a crime or felony; or
2. a proceeding to prove a claim or defense that under the
law is sufficient to reform or avoid a liability on a contract
arising out of the mediation.
(c) A mediator may not be compelled to provide evidence of a
mediation communication or testify in such proceeding.
(d) If a mediation communication is not privileged under an exception
in subsection (a) or (b), only the portion of the communication
necessary for the application of the exception for nondisclosure may
be admitted.
The admission of particular evidence for the limited
purpose of an exception does not render that evidence, or
any other mediation communication, admissible for any
other purpose
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 ALTERNATIVE DISPUTE RESOLUTION
RA 9285, SEC. 12. Prohibited Mediator Reports.
A mediator may not make a report, assessment, evaluation,
recommendation, finding, or other communication regarding a
mediation to a court or agency or other authority that make a ruling
on a dispute that is the subject of a mediation, except:
a. Where the mediation occurred or has terminated, or
where a settlement was reached.
b. As permitted to be disclosed under Section 13 of this
Chapter.
The ADR Act of 2004 maintains the confidentiality of the mediation process
by declaring that all information obtained through mediation proceedings
are privileged and confidential in character.
“A privilege is a rule of law that, to protect a particular relationship or
interest, either permits a witness to refrain from giving testimony he
otherwise could be expected to give, or permits someone, usually one of
the parties, to prevent the witnesses from revealing certain information.”
One way by which the ADR Act of 2004 is enforcing and guaranteeing this
privilege is by declaring certain information as confidential and, therefore,
not capable of being disclosed. Another way of ensuring the privilege is by
declaring the privileged information inadmissible in evidence.
Under the ADR Act of 2004, confidential information is “any information,
relative to the subject of mediation or arbitration, expressly intended by
the source not to be disclosed, or obtained under circumstances that
would create a reasonable expected on behalf of the source that the
information shall not be disclosed.”
Confidential information is, therefore, either expressly confidential or
impliedly confidential.
 It is expressly confidential if the intention not to be disclosed is
expressed by its source.
 It is impliedly confidential if obtained under circumstances that
would create a reasonable expectation on behalf of the source
that the information shall not be disclosed.
Confidential information includes:
1. Communication, oral or written, made in a dispute resolution
proceeding, including any memorandum, note or work product
of the neutral party or non-party participant;
2. An oral or written statement made or which occurs during the
mediation or for purposes of considering, conducting,
participating, initiating, continuing or reconvening mediation or
retaining a mediator; and
3. Pleadings, motions, manifestations, written statements and
reports filed or submitted in arbitration or for expert
evaluation.
The foregoing list of confidential information is not exclusive and may
include others as long as they satisfy the requirements of expressed
confidentiality or implied confidentiality.
Legal Effects of Confidential and Privileged Nature.
The legal effects of the confidential and privileged nature of information
obtained during mediation are the following:
1. A party, mediator or non-party participant may refuse to
disclose and may prevent any other person from disclosing
confidential information.
2. Confidential information shall not be subject to discovery and
shall be inadmissible in any adversarial proceeding, whether
judicial or quasi-judicial. However, evidence or information that
is otherwise admissible or subject to discovery does not
become inadmissible or protected from discovery solely by
reason of its use in mediation.
3. In an adversarial proceeding, the following persons involved or
previously involved in mediation may not be compelled to
disclose confidential information obtained during mediation:
a. Parties to the dispute;
b. Mediator or mediators;
c. Counsel for the parties;
d. Non-party participants;
e. Any person hired or engaged in connection with
mediation as secretary, stenographer, clerk or
assistant; and
f. Any person who obtains or possesses confidential
information by reason of his profession.
In other words, practically all of the parties, mediator, and non-
party participants are bound by the prohibition to disclose
confidential information.
4. The protection under the ADR Act shall continue to apply even
if a mediator is found to have failed to act impartially.
5. A mediator may not be called to testify to provide information
gathered in mediation.
Exceptions Based on Agreement, Nature of Proceedings, Crime or Social
Justice.
The privilege does not attach to or exist in the following communication:
1. Those contained in an agreement evidenced by a record
authenticated by all parties to the agreement. This kind of
information is not confidential in the first place because the
parties, by reducing their agreement into writing, have
impliedly manifested their intention to make use of the written
agreement for some future legal purpose.
2. Those available to the public or made during a session of
mediation which is open, or is required by law to be open, to
the public. The fact that the mediation process was made or
required to be open to the public is an indication that the
parties do not intend or should not expect the proceedings to
be confidential.
3. A threat or statement of a plan to inflict bodily injury or commit
a crime of violence. The State has a greater interest to prevent
acts of violence than to protect the confidentiality of
information obtained in mediation.
4. Communication intentionally used to plan, attempt to commit,
or commit, a crime, or conceal an on-going crime or criminal
activity. As in the immediately preceding exception, the State
has a greater interest to prevent the commission of crimes than
to protect the confidentiality of information obtained in
mediation.
5. Communication sought or offered to prove or disprove abuse,
neglect, abandonment, or exploitation in a proceeding in which
a public agency is protecting the interest of an individual
protected by law. The violator cannot conceal the abuse he has
committed against a protected individual by using the benefit
of the ADR Act. However, this exception does not apply where
a child protection matter is referred to mediation by a court or
a public agency which participates in the child protection
mediation.
6. Communication sought or offered to prove or disprove a claim
or complaint of professional misconduct or malpractice filed
against a mediator in a proceeding. The mediator cannot be
allowed to hide under the protective mantel of confidentiality
for his own misconduct or malpractice during the mediation.
7. Communication sought or offered to prove or disprove a claim
or complaint of professional misconduct or malpractice filed
against a party, non-party participant, or representative of a
party based on conduct occurring during mediation. Like in the
case of a mediator, the parties, their representatives, or non-
party participants cannot be allowed to hide under the
protective mantel of confidentiality for their own misconduct
or malpractice during the mediation.
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Exceptions Based on Public Policy.
For reasons of public policy, the privilege cannot be invoked for evidence
that is shown, before a court or administrative agency, after a hearing in
camera (privately, or in chambers), to be not otherwise available, and
there is a need for that evidence that substantially outweighs the interest
in protecting confidentiality, and the mediation communication is sought
or offered in:
1. A court proceeding involving a crime or felony;
2. A proceeding to prove a claim or defense that under the law is
sufficient to reform or avoid a liability on a contract arising out
of mediation.
As in the case of the exceptions based on agreement, nature of
proceedings, crimes or social justice, evidence admissible by reason of
exceptions based on public policy have the same limited extent of use.
Limited Use of Exempted Evidence.
Notwithstanding the inapplicability of the privilege and the confidential
nature of mediation communication in the foregoing instances, only such
portion of the communication necessary for the application of the
exception can be admitted in evidence. And the admission of the evidence
for the limited purpose of the exception does not render that evidence
admissible for any other purpose.
Privilege of the Mediator.
The mediator himself is bound by the confidential and privileged nature of
mediation communication. He is required to keep in utmost confidence all
confidential information obtained in the course of the mediation process,
and to discuss issues of confidentiality with the mediation parties before
beginning the mediation process.
A mediator may not be compelled to provide evidence of a mediation
communication or testify in such proceeding. He may not make a report,
assessment, evaluation, recommendation, finding or other communication
regarding a mediation to a court or agency or other authority that will
make a ruling on a dispute that is the subject of a mediation, except:
1. Where the mediation occurred or has terminated, or where a
settlement was reached; or
2. As permitted to be disclosed under Section 13 of the ADR Act,
i.e., the disclosure of known facts that a reasonable individual
would consider likely to affect the impartiality of the mediator,
including financial or personal interest in the outcome of the
mediation and existing or past relationship with a party or
foreseeable participant in the mediation.
Waiver of Confidentiality.
The protection of confidentiality and privileged nature of mediation
communication prescribed under Section 9 of the ADR Act, is susceptible of
waiver.
The waiver can either be expressed such as when it is contained in a record,
or made orally during a proceeding by the mediator and the mediation
parties, or implied [i] by failing to timely object to an objectionable
question propounded during a trial, or to a document being offered in
evidence, or [ii] by testifying or presenting a witness to testify on
confidential and privileged information. Objections to the admissibility of
evidence, including objections by reason of Section 9 of the ADR Act, must
be raised at the earliest opportunity; otherwise, they will be deemed
waived.
Waiver can also come by way of estoppel such as when a non-party
participant himself discloses the erstwhile confidential information. Also, a
person who discloses confidential information is barred from invoking the
privilege as to the remainder of the information necessary to a complete
understanding of the previously disclosed information. Similarly, a person
who discloses or makes a representation about mediation is precluded
form asserting the privilege to the extent that the communication
prejudices another in the proceeding and it is necessary for the person
prejudiced to respond to the representation of disclosure.
These principles are rooted on fair play and equity such that a person who
benefits from a disclosure ought not to prevent another from disclosing or
securing the disclosure of the rest of the erstwhile confidential information
as may be necessary to overcome the prejudice caused by the disclosure.
The Mediator.
RA 9285, SEC. 13. Mediator's Disclosure and Conflict of Interest.
The mediation shall be guided by the following operative principles:
(a) Before accepting a mediation, an individual who is requested to
serve as a mediator shall:
1. make an inquiry that is reasonable under the
circumstances to determinate whether there are any
known facts that a reasonable individual would consider
likely to affect the impartiality of the mediator, including a
financial or personal interest in the outcome of the
mediation and any existing or past relationship with a
party or foreseeable participant in the mediation; and
2. disclosure to the mediation parties any such fact known or
learned as soon as is practical before accepting a
mediation.
(b) If a mediation learns any fact described in paragraph (a) (1) of this
section after accepting a mediation, the mediator shall disclose it as
soon as practicable.
At the request of a mediation party, an individual who is requested to
serve as mediator shall disclose his/her qualifications to mediate a
dispute.
This Act does not require that a mediator shall have special
qualifications by background or profession unless the special
qualifications of a mediator are required in the mediation agreement
or by the mediation parties.
In consonance with the ADR policies of party autonomy and self-
determination, the mediation parties are given the freedom to select their
mediator and they may request the Office for Alternative Dispute
Resolution (OADR) to provide them with a list or roster of its certified
mediators, and their resumes. The OADR is an agency attached to the
Department of Justice which principally acts as the appointing authority of
mediators and arbitrators.
The role of the mediator is very crucial that his presence and competence
must be ensured. If the mediator selected by the parties is unable to act for
any reason, the parties may, upon being informed of such fact, select
another mediator. A mediator who refuses to act as such may withdraw or
may be compelled to withdraw from the mediation proceedings under any
of the following circumstances:
1. If any of the parties requests the mediator to withdraw. This
promotes and strengthens party autonomy and self-
determination in the selection of the mediator.
2. The mediator does not have the qualifications, training and
experience of the parties. No special qualification by
background or profession is required of mediators. However, if
a mediator is selected by the parties on account of his special
qualifications which turn out to be false or inaccurate, the
mediation parties may ask for his withdrawal.
For this purpose, the mediator may be requested by a
mediation party to disclose his qualifications to mediate a
dispute.
3. The mediator’s impartiality is in question. An impartial
settlement of the dispute is one of the objectives of the ADR
Act of 2004.
4. The continuation of the process will violate an ethical standard.
5. The safety of any one of the parties will be jeopardized.
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6. The mediator is unable to provide effective services.
7. In case of conflict of interest.
8. Other instances provided for under the IRR.
A mediator is generally precluded from making a report, assessment,
evaluation, recommendation, finding or other communication regarding a
mediation. Unlike an arbitrator, he cannot rule upon the merits of a claim
and render an award thereon except in a mediation-arbitration where the
mediator, upon an agreement of the parties in writing, is appointed as the
arbitrator for the arbitration phase of the proceedings.
Duties and Functions of Mediators.
Apart from the general duty of mediators to conduct mediation, mediators
are required to perform the following:
(1) Prior to mediation –
a. On competence. A mediator should maintain and continually
upgrade his professional competence in mediation skills;
ensure that his qualifications, training and experience are
known to and accepted by the parties, serve only when his
qualifications, training and experience enable him to meet the
reasonable expectations of the parties and not to hold himself
out or give the impression that he has qualifications, training
and experience that he does not have; and, upon the request
of a mediation party, disclose his qualifications to mediate a
dispute.
b. On impartiality. Before accepting a mediation, the mediator
should make an inquiry that is reasonable under the
circumstances to determine whether there are known facts
that a reasonable individual would consider likely to affect his
impartiality; and disclose any such fact known or learned as
soon as practicable. These disclosures may include a financial
or personal interest in the outcome of the mediation and any
existing or past relationship with a party or foreseeable
participant in the mediation.
(2) During the mediation –
a. Confidentiality as above discussed.
b. On consent and self-determination. A mediator shall exert
reasonable efforts to ensure that each party understands the
nature and character of the mediation proceedings, and that
each party is free and able to make whatever choices he
desires regarding his participation in the mediation as well as
his specific settlement options.
c. On promotion of respect and control of abuse of process. The
mediator shall encourage mutual respect between the parties,
and shall take reasonable steps, subject to the principle of self-
determination, to limit abuses of the mediation process.
Mediator’s Costs and Fees.
A mediator is allowed to charge costs, reasonable fees and charges against
the parties but he is under obligation to fully disclose and explain the basis
thereof.
In an ad hoc mediation, the parties are free to make their own
arrangements as to mediation costs and fees. In an institutional mediation,
mediation costs shall include the administrative charges of the mediation
institution, mediator’s fees and associated expenses.
If the mediator withdraws from the mediation, he shall return any
unearned fee and unused deposit. He shall not enter into a fee
arrangement contingent upon the results of the mediation or the amount
of the settlement because by doing so, he acquires financial and personal
interest in the outcome of the mediation which compromises his
impartiality. He, or any member of his immediate family or his agent, shall
not request, solicit, receive or accept any gift or any type of compensation
other than the agreed fee and the reimbursement of the expenses in
connection with any matter before him.
Mediated Settlement Agreements.
The concluding document in a successful mediation is called the mediated
settlement agreement or settlement agreement. It may also take the form
of a compromise agreement.
In whatever form it may be, the concluding agreement has the effect of res
judicata and, therefore, binding upon the parties whether or not it has
been submitted to the court for approval. However, there can be no
execution of the concluding agreement unless it has first been judicially
approved.
“Article 2037, Civil Code: A compromise has upon the parties
the effect and authority of res judicata; but there shall be no
execution except in compliance with a judicial compromise.”
The parties, by motion, have to present the concluding agreement to the
proper court for approval and the rendition of judgment based thereon.
The court is called upon to approve the concluding agreement provided it
is not contrary to law, morals, good customs, public order and public
policy. Once judicially approved, the concluding agreement may be
enforced through a writ of execution.
Miguel vs. Montanex, 2012. – Being a by-product of mutual concessions
and good faith of the parties, an amicable settlement has the force and
effect of res judicata even if not judicially approved.
RA 9285, SEC. 17. Enforcement of Mediated Settlement Agreement.
he mediation shall be guided by the following operative principles:
(a) A settlement agreement following successful mediation shall be
prepared by the parties with the assistance of their respective
counsel, if any, and by the mediator.
The parties and their respective counsels shall endeavor to make the
terms and condition thereof complete and make adequate provisions
for the contingency of breach to avoid conflicting interpretations of
the agreement.
(b) The parties and their respective counsels, if any, shall sign the
settlement agreement. The mediator shall certify that he/she
explained the contents of the settlement agreement to the parties in
a language known to them.
(c) If the parties so desire, they may deposit such settlement
agreement with the appropriate Clerk of a Regional Trial Court of the
place where one of the parties resides.
Where there is a need to enforce the settlement
agreement, a petition may be filed by any of the parties
with the same court, in which case, the court shall
proceed summarily to hear the petition, in accordance
with such rules of procedure as may be promulgated by
the Supreme Court.
(d) The parties may agree in the settlement agreement that the
mediator shall become a sole arbitrator for the dispute and shall treat
the settlement agreement as an arbitral award which shall be subject
to enforcement under Republic Act No. 876, otherwise known as the
Arbitration Law, notwithstanding the provisions of Executive Order
No. 1008 for mediated dispute outside of the CIAC.
The following principles apply to these concluding agreements:
1. A settlement agreement following a successful mediation shall
be prepared by the parties with the assistance of their
respective counsels, if any, and by the mediator.
2. The parties and their respective counsels, if any, shall sign a
settlement agreement, and the mediator shall certify that he
has explained the contents thereof to the parties in a language
known to them.
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3. If the parties agree, the settlement agreement may be jointly
deposited by the parties or deposited by one party with prior
notice to the other party or parties, with the Clerk of Court of
the Regional Trial Court (a) where the principal place of
business in the Philippines of any of the parties is located; (b) if
any of the parties is an individual, where any of those
individuals reside; or (c) in the National Capital Judicial Region.
4. Where there is a need to enforce the settlement agreement, a
petition may be filed by any of the parties in the same court, in
which case, the court shall summarily proceed to hear the
petition, in accordance with the Special ADR Rules.
5. The parties may agree in the settlement agreement that the
mediator shall become a sole arbitrator for the dispute and
shall treat the settlement agreement as an arbitral award which
shall be subject to enforcement under R.A. 876 (The Arbitration
Law).
The deposit of the settlement agreement with the Regional Trial Court is
not indispensable for the validity thereof. The deposit is purely voluntary
on the part of the parties who may jointly or singly cause the deposit with
the Regional Trial Court. The deposit is required for the enforceability of
the agreement. Unless deposited, the petition to enforce the settlement
agreement is premature and can be dismissed on the ground that a
condition precedent for filing the claim has not been complied with. The
Regional Trial Court whereat the deposit is made will be the venue of the
petition to enforce the deposited settlement agreement.
Role of Counsel in Mediation.
SEC. 14. Participation in Mediation.
Except as otherwise provided in this Act, a party may designate a
lawyer or any other person to provide assistance in the mediation.
In particular, they shall perform the following functions:
(1) Help their clients comprehend the mediation process and its
benefits and allow them to assume greater personal
responsibility in making decisions for the success of mediation
in resolving the dispute.
(2) Discuss with their clients the following:
 The substantive issues involved in the dispute.
 Prioritization of resolution in terms of importance
to client.
 Understanding the position of the other side and
the underlying fears, concerns, and needs
underneath that position.
 Need for more information or facts to be gathered
or exchanged with the other side for informed
decision-making.
 Possible bargaining options but stressing the need
to be open-minded about other possibilities.
 The best, worst, and most likely alternatives to a
negotiated agreement.
(3) Assist in preparing a compromise agreement that is not
contrary to law, morals, good customs, public order, or public
policy so that the same may be approved by the court, paying
particular attention to the issues of voluntary compliance of
what have been agreed upon, or otherwise to issues of
enforcement in case of breach.
(4) Assist, whenever applicable, in the preparation of a
manifestation of satisfaction of claims and mutual withdrawal
of complaint and counterclaim as basis for the court to issue an
order of dismissal.”
-o0o-

A lawyer of this right shall be made in writing by the party waiving it.

A waiver of participation or legal representation may be rescinded at

any time.

Except as otherwise provided in the ADR Act or IRR, a party may designate
a lawyer or any other person to provide assistance in the mediation. This
right may be waived but the waiver must be in writing and can be
rescinded at any time.

The lawyer or counsel so designated shall have the following roles:

1. Collaborate with the other lawyer in working together towards

the common goal of helping their clients resolve their
differences to their mutual advantage.

2. Encourage and assist the client to actively participate in

positive discussions and cooperate in crafting an agreement to
resolve their dispute.

3. Assist the client to comprehend and appreciate the mediation

process and its benefits, as well as the client’s greater and
personal responsibility for the success of mediation in resolving
the dispute.

4. Confer and discuss with the client the mediation process and
substance.

In the Consolidated and Revised Guidelines to Implement the Expanded

Coverage of Court-Annexed Mediation (CAM) and Judicial Dispute
Resolution (JDR), approved by the Supreme Court in the Resolution dated
Jan. 11, 2011 (A.M. No. 11-1-SC-PHILJA), albeit concerning CAM and JDR,
the Supreme Court defined the role of lawyers in mediation as follows:

“Lawyers may attend mediation proceedings in the role of

adviser and consultant to their clients, dropping their
combative role in the adjudicative process, and giving up their
dominant role in judicial trials. They must accept a less
directive role in order to allow the parties more opportunities
to craft their own agreement.

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ARBITRATION IN GENERAL
Concept of Arbitration.
As defined under the ADR Act, arbitration is a voluntary dispute resolution
process in which one or more arbitrators, appointed in accordance with the
agreement of the parties or rules promulgated pursuant to the ADR Act,
resolve a dispute by rendering an award. It has also been defined and
distinguished from the court trial system a follows:
“x x x An arrangement for taking and abiding by the judgment
of selected persons in some disputed matter, instead of
carrying it to established tribunals of justice, and is intended to
avoid the formalities, the delay, the expense and vexation of
ordinary litigation.”
The primary distinction between arbitration and mediation is that, in the
former, it is the arbitrator that decides the dispute and renders an arbitral
award to conclude the arbitral proceeding; while in the latter, it is the
parties themselves who enter into and execute a mediated settlement
agreement to conclude the mediation proceeding.
As to the role of evidence and the merits of the case, arbitration is a
merit/evidence based form of ADR.
A completed arbitral proceeding is concluded by an arbitral award
constituting the partial or final decision by an arbitrator in resolving the
issue in a controversy.
The arbitral award may come in the form of an award on agreed terms,
consent award, or award based on compromise if the parties settled their
dispute amicably.
Kinds of Arbitration.
Generally, there are two types of arbitration, compulsory and voluntary.
 Compulsory Arbitration: The process of settlement of [labor]
disputes by a government agency which has the authority to
investigate and to make an award which is binding on all
parties, and as a mode of arbitration where the parties are
compelled to accept the resolution of their dispute through
arbitration by a third party.
 Voluntary Arbitration: This involves the reference of a dispute
to an impartial body, the members of which are chosen by the
parties themselves, which parties freely consent in advance to
abide by the arbitral award issued after the proceedings where
both parties had the opportunity to be heard.
As thus defined, the ADR Act and its IRR govern voluntary arbitration but
not compulsory arbitration.
Of particular importance is the classification of arbitration based on the
seat of arbitration and the presence of foreign elements. Under this
classification, arbitration is either domestic, international commercial, or
foreign.
According to the ADR Act, arbitration is domestic if it is not international in
character. On the other hand, arbitration is international if any of the
following instances occur:
1. The parties’ places of business, which at the time of the
conclusion of the arbitration agreement, is in different states;
2. The place of arbitration provided in the arbitration agreement
and in which the parties have their places of business, is
outside of the Philippines;
3. The place where a substantial part of the obligation is to be
performed or the place with which the subject matter of the
dispute is most closely connected, and in which the parties
have their places of business, is outside the Philippines; or
4. The parties have expressly agreed that the subject matter of
the arbitration agreement relates to more than one country.
Based on the foregoing definitions, arbitration is domestic if the
components of parties’ place of business, place of arbitration, place of
performance of a substantial part of the obligation, and place where the
subject matter of the dispute is most closely connected, are all located in
the Philippines. Domestic Arbitration is governed by the Arbitration Law
(R.A. No. 876, the Model Law, and specific provisions of the ADR Act.
It is international if any of the above-mentioned instances is present. Thus,
if the parties’ places of business, place of arbitration, place of performance
of a substantial part of the obligation, or place where the subject matter of
the dispute is most closely connected, is outside the Philippines, the
arbitration is international in character.
An international arbitration is at the same time commercial if it covers
matters arising from all relationships of a commercial nature, whether
contractual or not, in which case the arbitration is called international
commercial arbitration. In defining the extent of commercial relationship-s
covered by this kind of arbitration, the IRR sought to expand rather than
delimit its coverage. Hence, the IRR, instead of defining commercial
relationships gave examples thereof implying that the enumeration is
merely descriptive and not exclusive.
An international commercial arbitration with the Philippines as its seat is
governed by the ADR Act and its IRR even if the place of arbitration is
outside the Philippines.
Arbitration is foreign if its seat is outside the Philippines even if the place of
arbitration is in the Philippines. Therefore, an international commercial
arbitration whose seat is outside the Philippines is a foreign arbitration.
This is true even if the place of arbitration is in the Philippines as long as
the seat of arbitration is not the Philippines. The ADR Act and its IRR govern
the recognition and enforcement of foreign material awards.
In this book, an ICA with the Philippines as its seat is referred to as plain
“ICA” or “Philippine ICA.” On the other hand, an ICA whose seat is outside
the Philippines is denominated as “Foreign ICA.”
By providing for a system of arbitration of an international and commercial
character, the ADR Act of 2004 opened the Philippines as a venue for
international commercial arbitration.
Policy on Arbitration
In Korea Technologies Co., Ltd. vs. Lerma, the Supreme Court had the
opportunity to reiterate the judicial policy on arbitration in the following
manner:
“Being an inexpensive, speedy and amicable method of settling
disputes, arbitration – along with mediation, conciliation and
negotiation – is encouraged by the Supreme Court. Aside from
unclogging judicial dockets, arbitration also hastens the
resolution of disputes, especially of the commercial kind. It is
thus regarded as the ‘wave of the future’ in international civil
and commercial disputes. Brushing aside a contractual
agreement calling for arbitration between the parties would be
a step backward.”
In Koppel, Inc. vs. Makati Rotary Club Foundation, Inc., the Supreme Court,
after declaring null and void all proceedings conducted by courts in
violation of arbitration agreements, including the decisions rendered
therein, went on to sustain the state policy of encouraging alternative
dispute resolution notwithstanding the harsh legal implications that that
policy may create. The Supreme Court said:
“This Court is not unaware of the apparent harshness if the
Decision that it is about to make. Nonetheless, this Court must
make the same if only to stress the point that, in our
jurisdiction, bona fide arbitration agreements are recognized
as valid; and that laws, rules and regulations do exist
protecting and ensuring their enforcement as a matter of
state policy. Gone should be the days when courts treat
otherwise valid arbitration agreements with disdain and
hostility, if not outright ‘jealousy,’ and then get away with it.
Courts should instead learn to treat alternative means of
dispute resolution as effective partners in the administration of
justice and, in the case of arbitration agreements, to afford
them judicial restraint. Today, this Court only performs its part
in upholding a once disregarded state policy.”
Objectives of Arbitration.
The basic objective of arbitration is to provide a speedy and inexpensive
method of settling disputes by allowing the parties to avoid the formalities,
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 ALTERNATIVE DISPUTE RESOLUTION
delay, expense and aggravation which commonly accompany ordinary
litigation, especially litigation which goes through the hierarchy of courts.
Arbitrator.
Arbitration is conducted by an arbitrator or an arbitral composed of two (2)
or more arbitrators. An arbitrator is the person appointed to render an
award, alone or with others, in a dispute that is the subject of an
arbitration agreement.
An arbitrator should be distinguished from an arbiter who is bound by the
rules of law and equity in rendering an award, unlike an arbitrator who
may use his own discretion in the performance of his functions. The Labor
Arbiters of the Arbitration Branch of the National Labor Relations
Commission are examples of arbiters.
Voluntary arbitrators, by the nature of their functions, act in a quasi-
judicial capacity, such that their decisions are within the scope of judicial
review. A voluntary arbitrator has been characterized as a “quasi-judicial
instrumentality.” Thus:
“Assuming arguendo that the voluntary arbitrator or the panel
of voluntary arbitrators may not strictly be considered as a
quasi-judicial agency, board or commission, still both he and
the panel are comprehended within the concept of a ‘quasi-
judicial instrumentality.’ It may even be stated that it was to
meet the very situation presented by the quasi-judicial
functions of the voluntary arbitrators here, as well as the
subsequent arbitrator / arbitral tribunal operating under the
Construction Industry Arbitration Commission, that the broader
term ‘instrumentalities’ was purposely included in Section 9 of
B.P. Blg. 129, as amended by R.A. No. 7902.”
Arbitration Agreement.
IRR, Article 4.7 Definition and Form of Arbitration Agreement.
The Arbitration agreement, as defined in Articles 1.6 A4, shall be in
writing.
An agreement is in writing if it is contained:
 in a document signed by the parties or in an exchange of
letters, telex, telegrams or other means of
telecommunication which provide a record of the
agreement, or
 in an exchange of statements of claim and defense in
which the existence of an agreement, or
 in an exchange of statements of claim and defense in
which the existence of an agreement is alleged by one
party and not denied by another.
The reference in a contract to a document containing an arbitration
clause constitutes an arbitration agreement provided that the
contracts is writing and the reference is such as to make that clause
part of the contract.
IRR, Article 4.8 Arbitration Agreement and Substantive Claim Before
Court.
(a) A court before which an action is brought in a matter which is the
subject of an arbitration agreement shall, if at least one party so
requests of both parties thereafter, refer the parties to arbitration
unless it finds that the arbitration agreement is null and void,
inoperative or incapable of being performed.
(b) Where an action referred to in the previous paragraph has been
brought, arbitral proceedings may nevertheless be commenced or
continued, and an award may be made, while the issue is pending
before the court.
(c) Where the action is commenced by or against multiple parties, one
or more of whom are parties to an arbitration agreement, the court
shall refer to arbitration those parties who are bound by the
arbitration agreement although the civil action may continue as to
those who are not bound by such arbitration agreement.
IRR, Article 4.9 Arbitration Agreement and Interim Measures by Court.
(a) It is not incompatible with an arbitration agreement for a party to
request from a court, before the constitution of the arbitral tribunal
or during arbitral proceedings, an interim measure of protection and
for a court to grant such measure.
(b) To the extent that the arbitral tribunal has no power to act or is
unable to act effectively, a request for interim measure of protection,
or modification thereof as provided for, and in the manner indicated
in, Article 4.17 (Power of Tribunal to Order Interim Measures), may be
made with the court.
The rules of interim or provisional relief provided for in paragraph (c)
of Article 4.17 of these Rules shall be observed.
A party may bring a petition under this Article before the court in
accordance with the Rules of Court or the Special ADR Rules.
An arbitration agreement is the agreement of the parties to submit to
arbitration all or certain disputes which have arisen or which may arise
between them in respect of a defined legal relationship, whether
contractual or not.
By nature, an arbitration agreement is contractual. As such, it should have
the essential elements of a contract such as (1) consent of the parties
freely given, (2) the cause or consideration, and (3) lawful object.
The Supreme Court explained the contractual nature of an arbitration
agreement in the case of Ormoc Sugarcane Planters’ Association, Inc.
(OSPA) vs. Court of Appeals. Said the Court:
“x x x An agreement to arbitrate is a contract, the relation of
the parties is contractual, and the rights and liabilities of the
parties are controlled by the law of contracts. In an agreement
for arbitration, the ordinary elements of a valid contract must
appear, including an agreement to arbitrate some specific
thing, and an agreement to abide by the award, either in
express language or by implication.”
So also in Cargill Philippines, Inc. vs. San Fernando Regala Trading, Inc., it
was held that:
“A contract is required for arbitration to take place and to be
binding. Submission to arbitration is a contract and a clause in a
contract providing that all matters in dispute between the
parties shall be referred to arbitration is a contract. The
provision to submit to arbitration any dispute arising therefrom
and the relationship of the parties is part of the contract and is
itself a contract.”
Likewise, in Tuna Processing, Inc. vs Philippine Kingford, Inc., the Supreme
Court elucidated that:
“x x x When a party enters into a contract containing a foreign
arbitration clause and, as in this case, in fact submits itself to
arbitration, it becomes bound by the contract, by the
arbitration and by the result of the arbitration, conceding
thereby the capacity of the other party to enter into the
contract, participate in the arbitration and cause the
implementation of the result. x x x”
There are two (2) modes of submitting a dispute or controversy to
arbitration depending on the existence or pendency of the dispute or
controversy to be submitted for resolution, namely [i] an agreement to
submit to arbitration, and [ii] a submission agreement. These modes were
differentiated in Ormoc Sugarcane Planters Association, Inc. (OSPA) vs.
Court of Appeals, as follows:
“The foregoing provision [Section 2, R.A. No. 876] speaks of
two modes of arbitration: (a) an agreement to submit to
arbitration some future dispute usually stipulated upon in a
civil contract between the parties, and known as an agreement
to submit to arbitration, and (b) an agreement to submit an
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existing matter of difference to arbitrators, termed the
submission agreement.”
An arbitration agreement is a formal contract; hence, its validity is
dependent on the contract being executed in a particular form. An
arbitration agreement “shall be in writing and subscribed by the party to be
charged, or by his lawful agent.”
“The formal requirements of an agreement to arbitrate are
therefore the following: (a) it must be in writing and (b) it must
be subscribed by the parties or their representatives.”
An arbitration agreement may be included in the container contract in
which case, it is referred to as an arbitration clause or a compromissoire, or
may be constituted in a separate contract. It may also come in the form of
a reference in a written contract to a document containing an arbitration
clause such as to make that clause part of the contract.
Arbitration clauses must be liberally construed consistent with the policy of
encouraging alternative dispute resolution methods. Provided such clause
is susceptible of an interpretation that covers the asserted dispute, an
order to arbitrate should be granted. Any doubt should be resolved in favor
of arbitration.
Doctrine of Separability.
Otherwise known as the Doctrine of Severability, the doctrine of
separability enunciates that an arbitration agreement is independent of the
main contract even if it is contained in an arbitration clause. The arbitration
agreement or clause is to be treated as a separate agreement such that,
even if the validity of the main contract is challenged, the arbitration
agreement or clause remains valid and enforceable.
In Gonzales vs. Climax Mining Ltd., the Supreme Court explained the
doctrine as follows:
“The separability of the arbitration agreement is especially
significant to the determination of whether the invalidity of the
main contract also nullifies the arbitration clause. Indeed, the
doctrine denotes that the invalidity of the main contract, also
referred to as the ‘container’ contract, does not affect the
validity of the arbitration agreement. Irrespective of the fact
that the main contract is invalid, the arbitration clause /
agreement still remains valid and enforceable.”
The foregoing ruling of the Supreme Court over-turned the earlier ruling in
the same case, Gonzales vs. Climax Mining Ltd., wherein the Supreme
Court held that:
“Arbitration before the Panel of Arbitrators is proper only when
there is a disagreement between the parties as to some
provisions of the contract between them, which needs the
interpretation and application of that particular knowledge and
expertise possessed by members of that Panel. It is not proper
when one of the parties repudiates the existence or validity of
such contract or agreement on the ground of fraud or
oppression as in this case. The validity of the contract cannot
be subject of arbitration proceedings. Allegations of fraud and
duress in the execution of a contract are matters within the
jurisdiction of the ordinary courts of law. These questions are
legal in nature and require the application and interpretation of
laws and jurisprudence which is necessarily a judicial function.
xxx
We agree that the case should not be brought under the ambit
of the Arbitration Law, but for a different reason. The question
of validity of the contract containing the agreement to submit
to arbitration will affect the applicability of the arbitration
clause itself. A party cannot rely on the contract and claim
rights or obligations under it and at the same time impugn its
existence or validity. Indeed, litigants are enjoined from taking
inconsistent positions. As previously discussed, the complaint
should have been filed before the regular courts as it involved
issues which are judicial in nature.”
Explaining the justification for the reversal of the above-quoted earlier
ruling, the Supreme Court said in the subsequent decision in G.R. Nos.
161957 and 167994 that:
“This brings us back to G.R. No. 161957. The adjudication of the
petition in G.R. No. 167994 effectively modifies part of the
Decision dated Feb 28, 2005 in G.R. No. 161957. Hence, we
now hold that the validity of the contract containing the
agreement to submit to arbitration does not affect the
applicability of the arbitration clause itself. A contrary ruling
would suggest that a party’s mere repudiation of the main
contract is sufficient to avoid arbitration. That is exactly the
situation that the separability doctrine, as well as jurisprudence
applying it, seeks to avoid. x x x.”
A more extensive explanation for the difference in the Gonzales decisions
was presented by the Supreme Court in Koppel, Inc. vs. Makati Rotary Club
Foundation, Inc., as follows:
“x x x The issue that confronted the Court then was whether
the PA-MGB [Panel of Arbitrators of the Mines and Geosciences
Bureau] has jurisdiction over that particular arbitration
complaint. Stated otherwise, the question was whether the
complaint for arbitration raises arbitrable issues that the PA-
MGB can take cognizance of.
Gonzales decided the issue in the negative. In holding that the
PA-MGB was devoid of any jurisdiction to take cognizance of
the complaint for arbitration, this Court pointed out to the
provisions of R.A. No. 7942, or the Mining Act of 1995, which
granted the PA-MGB with exclusive original jurisdiction only
over mining disputes, i.e., disputes involving “rights to mining
areas,” “mining agreements or permits,” and “surface owners,
occupants, claimholders or concessionaires” requiring the
technical knowledge and experience of mining authorities in
order to be resolved. Accordingly, since the complaint for
arbitration in Gonzales did not raise mining disputes as
contemplated under R.A. No. 7942 but only issues relating to
the validity of certain mining related agreements, this Court
held that such complaint could not be arbitrated before the
PA-MGB. It is in this context that we made the pronouncement
now in discussion:
Arbitration before the Panel of Arbitrators is proper only when
there is a disagreement between the parties as to some
provisions of the contract between them, which needs
interpretation and the application of that particular knowledge
and expertise possessed by members of that Panel. It is not
proper when one of the parties repudiates the existence or
validity of such contract or agreement on the ground of fraud
or oppression as in this case. The validity of the contract
cannot be the subject of arbitration proceedings. Allegations
of fraud and duress in the execution of a contract are matters
within the jurisdiction of the ordinary courts of law. These
questions are legal in nature and require the application and
interpretation of laws and jurisprudence which is necessarily a
judicial function.
The Court in Gonzales did not simply base its rejection of the
complaint for arbitration on the ground that the issue raised
therein, i.e., the validity of contracts, is per se non-arbitrable.
The real consideration behind the ruling was the limitation
that was placed by R.A. No. 7982 upon the jurisdiction of the
PA-MGB as an arbitral body. Gonzales rejected the complaint
for arbitration because the issue raised therein is not a mining
dispute per R.A. No. 7942 and it is for this reason, and only for
this reason, that such issue is rendered non-arbitrable before
the PA-MGB. As stated beforehand, R.A. No. 7942 clearly
limited the jurisdiction of the PA-MGB only to mining disputes.
In Cargill Philippines, Inc. vs. San Fernando Regala Trading, Inc., the
doctrine of separability was further explained in the following manner:
“x x x An arbitration agreement which forms part of the main
contract shall not be regarded as invalid or non-existent just
because the main contract is invalid or did not come into
existence, since the arbitration agreement shall be treated as
a separate agreement independent of the main contract. To
reiterate a contrary ruling would suggest that a party’s mere
repudiation of the main contract is sufficient to avoid
arbitration and that it is exactly the situation that the
separability doctrine sought to avoid. Thus, we find that even
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the party who has repudiated the main contract is not
prevented from enforcing its arbitration clause.”
Also, in Koppel, Inc. vs. Makati Rotary Club Foundation, Inc., the legal
implications of the doctrine of separability was explained as follows:
“Under the doctrine of separability, an arbitration agreement is
considered as independent of the main contract. Being a
separate contract in itself, the arbitration agreement may thus
be invoked regardless of the possible nullity or invalidity of the
main contract.
Once again instructive is Cargill, wherein this Court held that,
as a further consequence of the doctrine of separability, even
the very party who repudiates the main contract may invoke
its arbitration clause.”
Due Process in Arbitral Proceedings.
In line with the principle that ADR providers and practitioners, including
arbitrators, act in a quasi-judicial capacity, and that they are quasi-judicial
agencies or instrumentalities, the principles of administrative due process
equally apply to arbitral proceedings. Thus, in Equitable PCI Banking
Corporation vs. RCBC Capital Corporation, the Supreme Court applied the
principles of administrative due process in relation to the right to cross-
examine witnesses in an arbitral proceeding.
Judicial Review and Court Intervention.
IRR, Article 4.5. Extent of Court Intervention.
In matters governed by this Chapter, no court shall intervene except
where so provided in the ADR Act.
Resort to Philippine courts for matters within the scope of the ADR
Act shall be governed by the Special ADR Rules.
Article 4.8 Arbitration Agreement and Substantive Claim Before Court.
(a) A court before which an action is brought in a matter which is the
subject of an arbitration agreement shall, if at least one party so
requests of both parties thereafter, refer the parties to arbitration
unless it finds that the arbitration agreement is null and void,
inoperative or incapable of being performed.
(b) Where an action referred to in the previous paragraph has been
brought, arbitral proceedings may nevertheless be commenced or
continued, and an award may be made, while the issue is pending
before the court.
(c) Where the action is commenced by or against multiple parties, one
or more of whom are parties to an arbitration agreement, the court
shall refer to arbitration those parties who are bound by the
arbitration agreement although the civil action may continue as to
those who are not bound by such arbitration agreement.
There are three (3) types of judicial intervention in arbitration: [i] judicial
assistance in arbitration; [ii] judicial review of arbitral awards; and [iii]
judicial review of court decisions in ADR related cases.
The first (judicial assistance) allows the parties in an arbitration to secure
from the courts orders or processes that will aid in the conduct of the
arbitration. These include referral to arbitration, issuance of interim
measures of protection, assistance in taking evidence, and issuance of
confidentiality and protective orders.
The second (judicial review of arbitral awards) involves passing upon, to
the extent allowed and on grounds provided for by law, the propriety of
the arbitral award.
The third (judicial review of court decisions in ADR related cases) involves
the remedies available from the decisions or orders of the Regional Trial
Courts and the Court of Appeals rendered in the first two types of judicial
intervention.
The decisions of an arbitral tribunal are subject to judicial review. The
inclusion of an arbitration clause in a contract does not ipso facto divest
the courts of jurisdiction to pass upon the findings of arbitral bodies,
because awards are still judicially reviewable under certain conditions. In
ABS-CBN Broadcasting Corporation vs. World Interactive Network Systems
(WINS) Japan Co., Ltd., the Supreme Court, citing Insular Savings Bank vs.
Far East Bank and Trust Company, enumerated the judicial remedies an
aggrieved party to an arbitral award may take, namely:
“(1) A petition in the proper RTC to issue an order to vacate the
award on the grounds provided for in Section 24 of R.A. No.
876;
(2) A petition for review in the CA under Rule 43 of the Rules of
Court on questions of fact, of law, or mixed questions of fact
and law; and
(3) A petition for certiorari under Rule 65 of the Rules of Court
should the arbitrator have acted without or in excess of his
jurisdiction or with grave abuse of discretion amounting to lack
or excess of jurisdiction.”
The foregoing ruling is applicable to domestic arbitral awards but not to
international commercial arbitral awards which cannot be the subject of
petitions under Rule 43 or 65 of the Rules of Court.
Moreover, in a domestic arbitration, if the arbitral tribunal, instead of
rendering a preliminary ruling on its jurisdiction, decides to defer such
ruling until the rendition of the arbitral award, none of the parties can seek
judicial relief from the deferment. Motions for reconsideration, appeals
and petitions for certiorari are not available to challenge the decision of
the arbitral tribunal to defer the resolution of the preliminary jurisdictional
issues. The parties can, however, await the rendition of the final arbitral
award, and raise the jurisdictional issues before the courts in a proceeding
for setting aside or vacating the award.
Furthermore, not every question of fact is reviewable by the courts. The
review of factual issues by the Supreme Court on matters arising from
arbitration has been held limited. Thus:
“Aware of the objective of voluntary arbitration in the labor
field, in the construction industry, and in any other area for
that matter, the Court will not assist one or the other even
both parties in any effort to subvert or defeat that objective for
their private purposes. The Court will not review the factual
findings of an arbitral tribunal upon issues which are, at
bottom, issues of fact, no matter how cleverly disguised they
may be as ‘legal questions.’ The parties here had recourse to
arbitration and chose the arbitrators themselves; they must
have had confidence in such arbitrators. The Court will not,
therefore, permit the parties to re-litigate before it the issues
of facts previously presented and argued before the Arbitral
Tribunal, save only where a clear showing is made that, in
reaching its factual conclusions, the Arbitral Tribunal
committed an error so egregious and hurtful to one party as
to constitute grave abuse of discretion resulting in lack or loss
of jurisdiction. x x x Any other, more relaxed rule would result
in setting at naught the basic objective of a voluntary
arbitration and would reduce arbitration to a largely inutile
institution,”
The nature and extent of judicial review under the Special ADR Rules was
explained by the Supreme Court in RCBC Capital Corporation vs. Banco de
Oro Unibank, Inc., citing Asset Privatization Trust vs. Court of Appeals, as
follows:
“Judicial Review
At the outset, it must be stated that a review brought to this
Court under the Special ADR Rules is not a matter of right. Rule
19.36 of said Rules specified the conditions for the exercise of
this Court’s discretionary review of the CA’s decision.
Rule 19.36. Review discretionary.—A review by the Supreme
Court is not a matter of right, but of sound judicial discretion,
which will be granted only for serious and compelling reasons
resulting in grave prejudice to the aggrieved party. The
following, while neither controlling nor fully measuring the
court’s discretion, indicate the serious and compelling, and
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 ALTERNATIVE DISPUTE RESOLUTION
necessarily, restrictive nature of the grounds that will warrant
the exercise of the Supreme Court’s discretionary powers,
when the Court of Appeals:
a. Failed to apply the applicable standard or test for
judicial review prescribed in these Special ADR
Rules in arriving at its decision resulting in
substantial prejudice to the aggrieved party;
b. Erred in upholding a final order or decision despite
the lack of jurisdiction of the court that rendered
such final order or decision;
c. Failed to apply any provision, principle, policy or
rule contained in these Special ADR Rules resulting
in substantial prejudice to the aggrieved party; and
d. Committed an error so egregious and harmful to a
party as to amount to an undeniable excess of
jurisdiction.
The mere fact that the petitioner disagrees with the Court of
Appeals’ determination of questions of fact, of law or both
questions of fact and law, shall not warrant the exercise of the
Supreme Court’s discretionary power. The error imputed to
the Court of Appeals must be grounded upon any of the
above prescribed grounds for review or be closely analogous
thereto.
A mere general allegation that the Court of Appeals has
committed serious and substantial error or that it has acted
with grave abuse of discretion resulting in substantial prejudice
to the petitioner without indicating with specificity the nature
of such error or abuse of discretion and the serious prejudice
suffered by the petitioner on account thereof, shall constitute
sufficient ground for the Supreme Court to dismiss outright the
petition. (Emphasis supplied)
The applicable standard for judicial review of arbitral awards in
this jurisdiction is set forth in Rule 19.10 which states:
Rule 19.10. Rule on judicial review on arbitration in the
Philippines.--As a general rule, the court can only vacate or set
aside the decision of an arbitral tribunal upon a clear showing
that the award suffers from any of the infirmities or grounds
for vacating an arbitral award under Section 24 of Republic
Act No. 876 or under Rule 34 of the Model Law in a domestic
arbitration, or for setting aside an award in an international
arbitration under Article 34 of the Model Law, or for such other
grounds provided under these Special Rules.
xxxx
The court shall not set aside or vacate the award of the arbitral
tribunal merely on the ground that the arbitral tribunal
committed errors of fact, or of law, or of fact and law, as the
court cannot substitute its judgment for that of the arbitral
tribunal.
The above rule embodied the stricter standard in deciding
appeals from arbitral awards established by jurisprudence. In
the case of Asset Privatization Trust v. Court of Appeals, this
Court held:
As a rule, the award of an arbitrator cannot be set aside for
mere errors of judgment either as to the law or as to the facts.
Courts are without power to amend or overrule merely
because of disagreement with matters of law or facts
determined by the arbitrators. They will not review the findings
of law and fact contained in an award, and will not undertake
to substitute their judgment for that of the arbitrators, since
any other rule would make an award the commencement, not
the end, of litigation. Errors of law and fact, or an erroneous
decision of matters submitted to the judgment of the
arbitrators, are insufficient to invalidate an award fairly and
honestly made. Judicial review of an arbitration is, thus, more
limited than judicial review of a trial.”
Indeed, arbitration and court action are not incompatible. They may
proceed at the same time and independently of each other. They may even
complement each other.
A court before which an action is brought on a matter which is the subject
of an arbitration agreement shall, if at least one party so requests not later
than the pre-trial conference, or upon the request of both parties
thereafter, refer the parties to arbitration unless it finds that the
arbitration agreement is null and void, inoperative or incapable of being
performed. The court does not lose its jurisdiction over the case, and the
judicial proceeding is merely stayed until after the completion of the
arbitral process in which case the court may then confirm the award of the
arbitrator. This is the ruling in the case of Benguet Corporation vs.
Department of Environment and Natural Resources – Mines Adjudication
Board, wherein it was held that:
“In other words, in the event a case that should properly be the
subject of voluntary arbitration is erroneously filed with the
courts or quasi-judicial agencies, on motion of the defendant,
the court or quasi-judicial agency shall determine whether such
contractual provision for arbitration is sufficient and effective.
If in affirmative, the court or quasi-judicial agency shall then
order the enforcement of said provision. Besides, in BF
Corporation v. Court of Appeals, we already ruled:
In this connection, it bears stressing that the lower court has
not lost its jurisdiction over the case. Section 7 of Republic Act
No. 876 provides that proceedings therein have only been
stayed. After the special proceeding of arbitration has been
pursued and completed, then the lower court may confirm the
award made by the arbitrator.”
Prior to the ADR Act and its IRR, where the arbitration is multi-party, and
one or more but not all of them are parties to an arbitration agreement,
the court is given the discretion to refuse a referral to ADR if arbitration
will not be decisive and speedy or if it will result to multiplicity of suits,
duplicitous procedure and unnecessary delay.
Under the ADR Act and its IRR, the court is directed to refer to arbitration
those who are parties to the arbitration agreement, and proceed with the
court action as to those who are not bound by such arbitration agreement.
As a rule, only those parties who have agreed to submit a controversy to
arbitration may be compelled to submit to arbitration, including their heirs
and assignees.
However, in the case if Gerardo Lanuza Jr. vs. BF Corporation, the Supreme
Court held that corporate representatives may be compelled to submit to
arbitration proceedings pursuant to a contract entered into by a
corporation they represent if there are allegations of bad faith or malice in
their acts warranting the piercing of the veil of corporate fiction.
Under the Special Rules of Court on Alternative Dispute Resolution, the
court may issue an order directing the inclusion in the arbitration of those
parties who are not bound by the arbitration agreement but who agree to
such inclusion provided those originally bound by it do not object to their
inclusion.
The policy of party autonomy was recognized in delimiting court
intervention in arbitration. No court shall intervene in arbitration
proceedings except in the instances provided for under the ADR Act. This
rule, while acknowledging the freedom of the parties to determine the
procedure for the settlement of their dispute, also recognizes that there
are aspects of arbitration that require the participation of the courts. For
instance, the parties may apply with the courts for protective measures
and the enforcement thereof; assistance in taking evidence; arbitration
assistance and supervision; determination of jurisdiction of the arbitral
tribunal; recognition, enforcement and implementation of an arbitral
award; setting aside of an arbitral award; appointment of and challenge to
arbitrators; and court intervention in case of failure or impossibility of the
arbitral tribunal to act.
The Supreme Court in the case of Koppel, Inc. vs. Makati Rotary Club
Foundation, Inc., has categorically declared that non-compliance with the
arbitration agreement renders null and void all the judicial proceedings
conducted after the case should have been referred to arbitration.
Moreover, whatever decision may have been rendered should be vacated
and set aside, and the case should be remanded back to the court a quo,
and then be referred to arbitration pursuant to the arbitration agreement.
Thus:
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implement or enforce a petition for an interim measure on the sole ground

“The violation by the MeTC of the clear directives under RA
Nos. 876 and 9285 renders invalid all proceedings it undertook
in the ejectment case after the filing by the petitioner of its
Answer with Counterclaim – the point when the petitioner and
the respondent should have been referred to arbitration. This
case must, therefore, be remanded to the MeTC and be
suspended at said point. Inevitably, the decisions of the
MeTC, RTC, and the Court of Appeals must all be vacated.
The petitioner and the respondent must then be referred to
arbitration pursuant to the arbitration clause of the 2005
Lease Contract.”
that the petition is merely an ancillary relief and the principal action is
pending with the arbitral tribunal. While interim measures are categorized
in the ADR Act and IRR as ancillary remedies, they are different from
provisional remedies under the Rules of Court in that the application of
interim measures filed before the regular courts can stand by themselves
despite the pendency of the arbitration of the principal action before the
arbitral tribunal.
-o0o-

In domestic arbitration, the declaration under the law that a decision of the
appointing authority, or arbitrator or arbitral tribunal for that matter, is
“immediately executory, and not subject to appeal or motion for
reconsideration” does not foreclose the possibility of judicial review. The
remedy of the aggrieved party under the situation is to avail of a petition
for certiorari as a special civil action under Rule 65 (as amended) of the
1997 Rules of Civil Procedures, premised on grave abuse of discretion
amounting to lack or excess of jurisdiction there being no appeal or any
plain, speedy, and adequate remedy under the ordinary course of law. This
principle is true for the decisions of the appointing authority, arbitrator or
arbitral tribunal which by law have been declared as “immediately
executory, and not subject to appeal or motion for reconsideration.” This
principle, however, is not applicable to international commercial
arbitration and foreign arbitration where the available remedies are strictly
those provided under the ADR Act of 2004.

Interim Measures in Arbitration.

Recognizing the inter-dependency of arbitral tribunals and courts, as well

as their processes, the Supreme Court held in Transfield Philippines, Inc.,
vs. Luzon Hydro Corporation that:

“As a fundamental point, the pendency of arbitral proceedings

does not foreclose resort to the courts for provisional reliefs.
The Rules of the ICC, which governs the parties arbitral dispute,
allows the application of a party to a judicial authority for
interim or conservatory measures. Likewise, Section 14 of
Republic Act (R.A.) No. 876 (The Arbitration Law) recognizes the
rights of any party to petition the court to take measures to
safeguard and/or conserve any matter which is the subject of
the dispute in arbitration. In addition, R.A. 9285, otherwise
known as the Alternative Dispute Resolution Act of 2004,
allows the filing of provisional or interim measures with the
regular courts whenever the arbitral tribunal has no power to
act or to act effectively.”

Complementation between arbitration and court action is best exemplified

in the area of interim measures, otherwise referred to in the ADR Act as
“interim measures of protection” or “provisional reliefs,” are ancillary
remedies intended for the protection of the subject matter of the dispute.
They are akin to the provisional remedies under the 1997 Rules of Civil
Procedure. They include but are not limited to preliminary injunction,
appointment of receivers, detention of property, preservation of property,
and inspection of property subject of the dispute.

As a rule, interim measures are applied with and secured from the arbitral
tribunal. However, there are instances when the arbitral tribunal cannot
grant the interim measure such as when the arbitral tribunal is not yet
constituted, or when the arbitral tribunal already constituted has no power
to act or is unable to act effectively. In these instances, a party may apply
for interim measures with a court which may grant them. The petition for
this purpose shall be governed by the Special ADR Rules.

A provisional remedy under the Rules of court cannot exist without a

principal cause of action. Thus, preliminary attachment, preliminary
injunction or a temporary restraining order, receivership, replevin, and
support pendente lite, cannot exist independently of their principal actions
which could be an action for a sum of money in the case of preliminary
attachment, permanent injunction in the case of preliminary injunction
corporate rehabilitation in the case of receivership, foreclosure of chattel
mortgage in the case of replevin, and support in the case of support
pendente lite.

However, this principle is not true for interim measures under the ADR Act
and its IRR. In the case of interim measures, a court cannot refuse to grant,

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INTERNATIONAL COMMERCIAL ARBITRATION UNDER THE
ADR ACT OF 2004 AND ITS IMPLEMENTING RULES AND REGULATIONS
The ADR Act of 2004 adopted the UNCITRAL Model Law on International
Commercial Arbitration and, by operation of Article 19 of the ADR Act,
made the Model Law the governing statute for international commercial
arbitration (or “ICA”) conducted in accordance with Philippine law.
SEC. 19. Adoption of the Model Law on International Commercial
Arbitration.
International commercial arbitration shall be governed by the Model
Law on International Commercial Arbitration (the "Model Law")
adopted by the United Nations Commission on International Trade
Law on June 21, 1985 (United Nations Document A/40/17) and
recommended approved on December 11, 1985, copy of which is
hereto attached as Appendix "A".
In view of the adoption by reference of the Model Law, the ADR Act of
2004 devoted some of its provisions on international commercial
arbitration to the harmonization of the principles contained in the Model
Law with existing Philippine laws, rules and jurisprudence. Thus, the ADR
Act of 2004 has provisions dealing with legal representation in
international arbitration, confidentiality of arbitral proceedings, referral of
court action to arbitration, definition and functions of the appointing
authority, the grant of interim measures of protection, governing law, and
the place and language of arbitration.
In view of the adoption of the Model Law, the Implementing Rules and
Regulations of the ADR Act of 2004 (IRR) became the repository not only of
the rules implementing the ADR Act but also the rules implementing the
Model Law. The IRR was passed by the Department of Justice on October
26, 2009 and took effect on December 31, 2009, fifteen days after the
completion of its publication in at least 2 newspapers of general
circulation.
International Commercial Arbitration.
Arbitration is international if any of the following instances occur:
1. The parties’ places of business, which at the same time of the
conclusion of the arbitration agreement, is in different states;
2. The place of arbitration provided in the arbitration agreement
and in which the parties have their places of business, is
outside the Philippines;
3. The place where a substantial part of the obligation is to be
performed or the place with which the subject matter of the
dispute is most closely connected, and in which the parties
have their places of business, is outside the Philippines; or
4. The parties have expressly agreed that the subject matter of
the arbitration agreement relates to more than one country.
Arbitration is commercial if it covers matters arising from all relationships
of a commercial nature, whether contractual or not.
 An international commercial arbitration with the Philippines as
its seat is governed by the ADR act and the IRR, even if the
place of arbitration is outside the Philippines.
 On the other hand, an international commercial arbitration
whose seat is outside the Philippines is a foreign arbitration
even if the place of arbitration is in the Philippines.
The ADR Act and its IRR govern only the aspect of recognition and
enforcement of the foreign arbitral award.
This Chapter treats of international commercial arbitration whose seat is in
the Philippines. Hence, unless otherwise specified, references to
“international commercial arbitration” or “ICA” in this Chapter shall pertain
to Philippine ICA.
Coverage of IRR Provisions on ICA.
IRR, Article 4.1. Scope of Application.
(a) This Chapter applies to international commercial arbitration,
subject to any agreement in force between the Philippines and other
state or states.
(b) This Chapter applies only if the place or seat of arbitration is the
Philippines and in default of any agreement of the parties on the
applicable rules.
(c) This Chapter shall not affect any other law of the Philippines by
virtue of which certain disputes may not be submitted to arbitration
or may be submitted to arbitration only according to provisions other
than those of the ADR Act.
IRR, Article 4.2. Rules of Interpretation.
(a) International commercial arbitration shall be governed by the
Model Law on International Commercial Arbitration.
(b) In interpreting this Chapter, regard shall be had to the
international origin of the Model Law and to the need for uniformity
in its interpretation. Resort may be made to the travaux
preparatoires and the Report of the Secretary-General of the United
Nations Commission on International Trade Law dated March 1985
entitled, "International Commercial Arbitration: Analytical
Commentary on Draft Text identified by reference number A/CN.
9/264".
(c) Moreover, in interpreting this Chapter, the court shall have due
regard to the policy of the law in favor of arbitration and the policy of
the Philippines to actively promote party autonomy in the resolution
of disputes or the freedom of the parties to make their own
arrangement to resolve their dispute.
(d) Where a provision of this Chapter, except the Rules applicable to
the substance of the dispute, leaves the parties free to determine a
certain issue, such freedom includes the right of the parties to
authorize a third party, including an institution, to make that
determination.
(e) Where a provision of this Chapter refers to the fact that the parties
have agreed or that they may agree or in any other way refers to an
agreement of the parties, such agreement includes any arbitration
rules referred to in that agreement.
(f) Where a provision of this Chapter, other than in paragraph (a) of
Article 4.25 (Default of a Party) and paragraphs (b) (i) of Article 4.32
(Termination of Proceedings), refers to a claim, it also applies to a
counter-claim, and where it refers to a defense, it also applies to a
defense to such counter-claim.
IRR, Article 4.3. Receipt of Written Communications.
(a) Unless otherwise agreed by the parties:
(i) any written communication is deemed to have been
received if it is delivered to the addressee personally or at
his/her place of business, habitual residence or mailing
address;
if none of these can be found after making a
reasonable inquiry, a written communication is
deemed to have been received if it is sent to
the addressee’s last known place of business,
habitual residence or mailing address by
registered letter or any other means which
provides a record of the attempt to deliver it;
(ii) the communication is deemed to have been received
on the day it is so delivered.
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 ALTERNATIVE DISPUTE RESOLUTION
(b) The provisions of this Article do not apply to communications in
court proceedings, which shall be governed by the Rules of Court.
IRR, Article 4.4. Waiver of Right to Object.
Any party who knows that any provision of this Chapter from which
the parties may derogate or any requirement under the arbitration
agreement has not been complied with and yet proceeds with the
arbitration without stating the objections for such non-compliance
without undue delay or if a time limit is provided therefor, within
such period of time, shall be deemed to have waived the right to
object.
IRR, Article 4.5. Extent of Court Intervention.
In matters governed by this Chapter, no court shall intervene except
where so provided in the ADR Act.
Resort to Philippine courts for matters within the scope of the ADR
Act shall be governed by the Special ADR Rules.
IRR, Article 4.6. Court or Other Authority for Certain Functions of
Arbitration Assistance and Supervision.
(a) The functions referred to in paragraphs (c) and (d) of Article 4.11
(Appointment of Arbitrators) and paragraph (c) of Article 4.13
(Challenge Procedure) and paragraph (a) of Article 4.14 (Failure or
Impossibility to Act) shall be performed by the appointing authority as
defined in Article 1.6 C1, unless the latter shall fail or refuse to act
within thirty (30) days from receipt of the request in which case the
applicant may renew the application with the court.
The appointment of an arbitrator is not subject to appeal
or motion for reconsideration.
(b) The functions referred to in paragraph (c) of Article 4.16 (c)
(Competence of Arbitral Tribunal to Rule on its Jurisdiction), second
paragraph of Article 4.34 (Application for Setting Aside an Exclusive
Recourse Against Arbitral Award), Article 4.35 (Recognition and
Enforcement), Article 4.38 (Venue and Jurisdiction), shall be
performed by the appropriate Regional Trial Court.
(c) A Court may not refuse to grant, implement or enforce a petition
for an interim measure, including those provided for in Article 4.9
(Arbitration Agreement and Interim Measures by Court), Article 4.11
(Appointment of Arbitrators), Article 4.13 (Challenge Procedure),
Article 4.27 (Court Assistance in Taking Evidence), on the sole ground
that the Petition is merely an ancillary relief and the principal action is
pending with the arbitral tribunal.
The provisions of Chapter 4 of the IRR, dealing with the subject of
international commercial arbitration, are applicable only to internal
commercial arbitration conducted in accordance with Philippine Law
covering disputes that are not prohibited by Philippine Law to be submitted
for arbitration or are not covered by other Philippine laws already
providing for arbitration. Note, however, that the rules of procedure for
international commercial arbitration provided for under the ADR Act or its
IRR may also be applied for international commercial arbitration conducted
outside the Philippines if they are adopted as the rules of procedure by the
parties in the exercise of their privileges of party-autonomy and self-
determination.
The provisions of the IRR on international commercial arbitration are
default rules, which means that they are applicable only in the absence or
in default of applicable provisions contained in:
1. An agreement in force between the Philippines and other state
or states; and
2. An agreement between the parties on the applicable rules.
The default nature of the provisions of the IRR was consciously adopted in
recognition of the basic premises of party autonomy and self-
determination. Be that as it may, the same IRR recognized the need for the
Supreme Court to enact Special Rules of Court on ADR for proceedings
which under the ADR Act are to be conducted by the courts like assistance
in taking evidence, setting aside an arbitral award, and the enforcement of
the arbitral award.
Rules of Interpretation.
The following are the rules in the interpretation of the ADR Act of 2004, the
Model Law and the IRR:
1. Interpretation of the ADR Act. The court interpreting the ADR
Act and its IRR shall have due regard to the policy of the law
favoring arbitration.
2. Interpretation of the Model Law. Regard should be given to the
fact that the Model Law is of international origin and there is a
need for uniformity in its interpretation. Hence, concepts and
principles under the Model Law should be understood in the
light of their international usage rather than their ordinary
domestic or local usage.
3. Interpretation of the IRR.
a. The same policies on the interpretation of the ADR
Act and Model Law are applicable.
b. Party autonomy should be promoted in the
resolution of the dispute.
c. The freedom of the parties to determine certain
issues includes the right to authorize a third party,
including an institution, to make that
determination.
d. A reference to an agreement of the parties includes
any arbitration rules referred to in that agreement.
e. And, the rules applicable to claims are equally
applicable to counterclaims, and those applicable
to defenses are equally applicable to defenses
against counterclaims.
Rules on Receipt of Written Communications in ICA.
Very often, the parties and the arbitrators in international commercial
arbitration are of different or varied nationalities with stations located in
different countries. Also, the subject matter of the dispute may be located
in a different state. Written communications, electronic or otherwise,
therefore, play a vital role in international commercial arbitration. Thus,
the IRR devoted provisions on the delivery and receipt thereof.
In line with the policy of party autonomy, the governing rules on the
receipt of communications in international commercial arbitration are
those provided for by the parties in their arbitration agreement. In default
of such rules, communication is deemed received:
1. If it is delivered to the addressee personally or at his place of
business, habitual residence or mailing address; or
2. If there is none, if it is delivered by registered letter or any
other means which provide a record of the attempt to deliver
it, to the last known place of business, habitual residence or
mailing address.
Unlike under the Revised Rules of Court where the date of filing a pleading
is the date on which it is mailed, under the IRR, written communication is
deemed received on the day it is “delivered” and not on the day the mail is
posted with the post office.
Waiver of the Right to Object in ICA.
As a consequence of the merit/evidence based nature of arbitration, it is
also procedurally driven. A set of rules, procedures, conditions, and
requirement have to be observed and complied with albeit not with the
strictness or court proceedings. In view thereof, numerous objections to
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non-compliance with the rules, procedures, conditions and requirements
are to be expected in an arbitral proceeding.
Arbitration is different from mediation in that the latter is not merit or
evidence based and, therefore, not procedurally driven. Hence, the ADR
Act and IRR limited the application of the rules on waiver in mediation
proceedings to waivers of confidentiality and privilege only. On the other
hand, in the case of international commercial arbitration, the IRR expanded
the application of the rules on waiver to include non-compliance with the
rules or requirements.
Objections to non-compliance with the rules or any requirement under the
arbitration agreement must be raised without undue delay or within the
time prescribed therefor, failing which, the right to object is deemed
waived. This rule is based on the equitable doctrine of estoppel. Under this
doctrine, an admission or representation cannot be denied or disproved as
against the person relying on it. Estoppel in pais happens when one, by his
acts, representations, or admissions, or by his own silence when he ought
to speak out, intentionally or through culpable negligence, induces another
to believe certain facts to exist and such other person relies and acts on
such belief in a manner that he will be prejudiced if the former is permitted
to deny the existence of such facts. Under these circumstances, the
existence of the fact in issue cannot be denied or disproved as against the
party relying on it.
The act of a party of proceeding with the arbitration notwithstanding the
non-compliance with the rules or the arbitration agreement, or the failure
of a party to raise an objection without undue delay in an arbitration, are
examples of estoppel in pais. In either case, the act, omission or silence
giving rise to estoppel must be unequivocal and intentional.
Confidentiality in ICA.
ADR Act, SEC. 23. Confidential of Arbitration Proceedings.
The arbitration proceedings, including the records, evidence and the
arbitral award, shall be considered confidential and shall not be
published, except:
1. with the consent of the parties, or
2. for the limited purpose of disclosing to the court of
relevant documents in cases where resort to the court is
allowed herein.
Provided, however, that the court in which the action or the appeal is
pending may issue a protective order to prevent or prohibit disclosure
of documents or information containing secret processes,
developments, research and other information where it is shown that
the applicant shall be materially prejudiced by an authorized
disclosure thereof.
IRR, Article 4.41. Confidentially of Arbitration Proceedings.
The arbitration proceedings, including the records, evidence and the
arbitral award, shall be considered confidential and shall not be
poolside except:
a. with the consent of the parties; or
b. for the limited purpose of disclosing to the court relevant
documents in cases where resort to the court is allowed
herein.
Provided, however, that the court in which the action or the appeal is
pending may issue a protective order to prevent or prohibit disclosure
of documents or information containing secret processes,
developments, research and other information where it is shown that
the applicant shall be materially prejudiced by an authorized
disclosure thereof.
Due Process.
IRR, Article 4.18. Equal Treatment of Parties.
The parties shall be treated with equality and each shall be given a full
opportunity of presenting his/her case.
As an assurance of impartiality and due process in the arbitral proceedings,
the IRR mandates that the parties shall be treated equally and shall be
given a full opportunity to present their sides.
The essence of due process lies in the reasonable opportunity to be heard.
It does not require an actual presentation of a party’s side to a dispute.
Due process is complied with if a party is given an opportunity to present
his side of the dispute even if he does not actually avail of such
opportunity. A party should not be allowed to derail and delay an arbitral
proceeding if he has no real intention to present his side but merely
invokes due process to prolong or prevent the procedure.
As part of due process, the arbitral tribunal in an international commercial
arbitration is directed to give the parties sufficient advance notice of any
hearing and of any meeting of the arbitral tribunal for the purpose of
inspecting goods, properties or documents. Also, a party is directed to
communicate to the other party all statements, documents or other
information, including expert reports or evidentiary document that he will
supply to the arbitral tribunal.
Place or Venue of ICA.
Article 4.20. Place of Arbitration.
(a) The parties are free to agree on the place of arbitration. Failing
such agreement, the place of arbitration shall be in Metro Manila
unless the arbitral tribunal, having regard to the circumstances of the
case, including the convenience of the parties, shall decide on a
different place of arbitration.
(b) Notwithstanding the rule stated in paragraph (a) of this provision,
the arbitral tribunal may, unless otherwise agreed by the parties,
meet at any place it considers appropriate for consultation among its
members, for hearing witnesses, experts or the parties, or for
inspection of goods, other property or documents.
The place or venue of arbitration in an international commercial arbitration
shall be that determined by the parties.
The default place of arbitration shall be in Metro Manila, unless the arbitral
tribunal decides on a different place of arbitration taking into consideration
the circumstances of the case.
The conduct of consultation among the members of the arbitral tribunal,
and the hearing of witnesses, experts or the parties, or the inspection of
goods, properties or documents, shall be held, unless otherwise
determined by the parties, at a place considered appropriate by the
arbitral tribunal.
Commencement of ICA Proceedings.
IRR, Article 4.21. Commencement of Arbitral Proceedings.
Unless otherwise agreed by the parties, the arbitral proceedings in
respect of a particular dispute commence on the date on which a
request for that dispute to be referred to arbitration is received by
the respondent.
The date of commencement of international commercial arbitration is to
be determined by the parties.
The default date of commencement of arbitration is the date on which a
request for that dispute to be referred to arbitration is received by the
respondent.
Language in ICA.
IRR, Article 4.22. Language.
(a) The parties are free to agree on the language or languages to be
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used in the arbitral proceedings. Failing such agreement, the language
to be used shall be English. This agreement, unless otherwise
specified therein, shall apply to any written statement by a party, any
hearing and any award, decision or other communication by the
arbitral tribunal.
(b) The arbitral tribunal may order that any documentary evidence
shall be accompanied by a translation into the language or languages
agreed upon by the parties or determined by the arbitral tribunal in
accordance with paragraph (a) of this Article.
The parties to an international commercial arbitration shall determine the
language or languages to be used during the arbitral proceedings, including
that for any written statement, hearing, award, decision or other
communications by the arbitral tribunal. The arbitral tribunal may order
that any documentary evidence shall be accompanied by a translation
thereof in the language or languages to be
In default thereof, English shall be used.
Applicable Law in ICA.
IRR, Article 4.28. Rules Applicable to the Substance of Dispute.
(a) The arbitral tribunal shall decide the dispute in accordance with
such rules of law as are chosen by the parties as applicable to the
substance of the dispute.
Any designation of the law or legal system of a given state
shall be construed, unless otherwise expressed, as directly
referring to the substantive law of that state and not its
conflict of laws rules.
(b) Failing any designation by the parties, the arbitral tribunal shall
apply the law determined by the conflict of laws rules, which it
considers applicable.
(c) The arbitral tribunal shall decide ex aequo et bono or as amiable
compositeur only if the parties have expressly authorized it to do so.
(d) In all cases, the arbitral tribunal shall decide in accordance with
the terms of the contract and shall take into account the usages of the
trade applicable to the transaction.
The law applicable to the dispute should be distinguished from the law
applicable to the arbitral proceeding. The first is the substantive law under
which the rights and obligations of the parties will be determined, while
the latter is the law which will govern the arbitral proceedings and vest
jurisdiction on the arbitrator or arbitral tribunal. For instance, in an ICA
where the parties whose principal places of business is outside the
Philippines have chosen Philippine law as the governing law and the
Philippines as the seat of arbitration, the law applicable to the dispute is
Philippine law (the Civil Code for instance), and the law applicable to the
arbitral proceeding is also Philippine Law (ADR Act and its IRR).
The parties in an international commercial arbitration can agree on the
governing law that will be applied to the resolution of their dispute. The
governing law generally refers to substantive law. Substantive law,
distinguished from conflicts of law or private international law, is the law or
legal system applicable to the complete resolution of the dispute. Conflicts
of law or private international law, on the other hand, is “that part of the
municipal law of a state which directs courts and administrative agencies,
when confronted with a legal problem involving a foreign element,
whether or not they should apply a foreign law or foreign laws. In other
words, conflicts of law or private international law is the set of domestic
laws that determines which between the domestic laws of two or more
states should apply to the resolution of a dispute involving foreign
elements.
In the absence of an agreement between the parties, the law determined
by conflicts of law rules as determined by the arbitral tribunal to be
applicable taking into account the terms of the contract and the usages of
the trade, shall be applied.
Appointing Authority in ICA.
IRR, Article 1.6, C(1).
Appointing Authority as used in the Model Law shall mean the person
or institution named in the arbitration agreement as the appointing
authority; or the regular arbitration institution under whose rules the
arbitration is agreed to be conducted.
Where the parties have agreed to submit their dispute to institutional
arbitration rules and unless they have agreed to a different
procedure, they shall be deemed to have agreed to the procedure
under such arbitration rules for the selection and appointment of
arbitrators.
In ad hoc arbitration, the default appointment of an arbitrator shall
be made by the National President of the Integrated Bar of the
Philippines (IBP) or his /her duly authorized representative.
The appointing authority in an ICA is the person or institution named in the
arbitration agreement as such, or the regular arbitration institution under
whose rules the arbitration is agreed to be conducted, authorized to make
the default appointment of arbitrators or the sole arbitrator. In addition,
the appointing authority in an ICA has the following functions:
1. Take the necessary measures to appoint an arbitrator in case
any party, or the arbitrators already appointed, or any third
party fails to perform any function necessary for the
appointment of the arbitrator.
2. Decide on the challenge against an arbitrator if the arbitral
tribunal rejects the challenge.
3. Consider the qualifications of an arbitrator, the necessity of
ensuring impartiality and independence of the arbitrator, and
the advisability of appointing an arbitrator who is of a
nationality different from those of the parties.
Where the parties have agreed to submit their dispute to institutional
arbitration rules and unless they have agreed to a different procedure, they
shall be deemed to have agreed to the procedure under such arbitration
rules for the selection and appointment of arbitrators. Thus, in that
situation, there is no need to designate an appointing authority for
purposes of appointment or arbitrators.
And, in an ad hoc arbitration, unless a different procedure has been agreed
upon by the parties, the default appointment of an arbitrator shall be
made by the National President of the Integrated Bar of the Philippines
(IBP) or his duly designated representative. The default appointing
authority in this situation is the IBP National President or his
representative.
Arbitrators and Arbitral Tribunals in ICA.
IRR, Article 4.10 Number of Arbitrators.
The parties are free to determine the number of arbitrators Failing
such determination, the number of arbitrators shall be three (3).
IRR, Article 4.11. Appointment of Arbitrators.
(a) No person shall be produced by reason of his/her nationality from
acting as an arbitrator, unless otherwise agreed by the parties.
(b) The parties are free to agree on a procedure of appointing the
arbitrator or arbitrators, subject to provisions of paragraphs (d) and
(e) of this Article.
(c) Failing such agreement:
i. in an arbitration with three (3 ) arbitrators, each party
shall appoint one arbitrator, and the two (2) arbitrators
thus appointed shall appoint the third arbitrator;
if any party fails to appoint the arbitrator within thirty (30)
days of receipt of a request to do so from the other party,
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or if the two (2) arbitrators fail to agree on the third
arbitrator within thirty days (30) days of their
appointment shall be made, upon request of a party, by
the appointing authority;
ii. in an arbitration with a sole arbitrator, if the parties are
unable to agree on the arbitrator, he/she shall be
appointed, upon request of a party, by the appointing
authority.
(d) Where, under an appointment procedure agreed upon the parties,
i. a party fails to act as required under such procedure, or
ii. the parties, or two arbitrators, are unable to reach an
agreement expected of them under such procedure, or
iii. a third party, including an institution, fails to perform any
function entrusted to it under such procedure,
Any party may request the appointing authority to take the necessary
measure to appoint an arbitrator, unless the agreement on the
appointment procedure provides other means for securing the
appointment.
(e) A decision on a matter entrusted by paragraphs (c) and (d) of this
to the appointing authority shall be immediate executory and not be
subject to a motion for reconsideration or appeal.
The appointing authority shall have in appointing an
arbitrator, due regard to any qualifications required of the
arbitrator by the agreement of the parties and to such
considerations as are likely to secure the appointment of
an independent and impartial arbitrator and, in the case
of a sole or third arbitrator, shall take into account as well
the advisability of appointing an arbitrator of a nationality
other than the Rules of Court of the Special ADR Rules.
In line with the principles of party autonomy and self-determination, the
parties in an international commercial arbitration are free to determine the
number of their arbitrators and the procedure for their appointment. The
default number of arbitrators is three (3). The following is the default
procedure for the appointment of arbitrators.
1. In an arbitration with three (3) arbitrators, each party shall
appoint one arbitrator, and both appointed arbitrators shall
appoint the third arbitrator, failing which the appointment shall
be made by the appointing authority.
2. In an arbitration with a sole arbitrator, the arbitrator shall be
appointment, upon the request of a party, by the appointing
authority.
Where, under an appointment procedure agreed upon by the parties, a
party, or the arbitrators already appointed, or a third party, including an
institution, fails to perform any functions under such procedure preventing
the appointment of any or all arbitrators, the arbitration agreement shall
govern the procedure. If there is none, any party may request the
appointing authority to take measures to appoint an arbitrator. The
decision of the appointing authority on this matter shall be immediately
executory and shall not be subject to a motion for reconsideration or
appeal.
The appointing authority shall consider the following factors in the
appointment of arbitrators:
1. Qualifications required by the agreement of the parties;
2. Considerations as are likely to secure the appointment of an
independent and impartial arbitrator; and
3. In the case of sole or third arbitrators, the advisability of
appointing an arbitrator of a nationality other than those of the
parties. This is intended to avoid bias that may arise from so-
called “hometown” decisions.
If any party is not satisfied with the appointment of any, some or all of the
arbitrators, he may file a petition in court challenging the appointment of
the arbitrators.
The arbitral tribunal is deemed constituted when the sole arbitrator or the
last member of the panel of arbitrators who has been nominated has
accepted his nomination and written communication of said nomination
and acceptance has been received by the party making the request.
IRR, Article 4.12 Grounds for Challenge.
(a) When a person is approached in connection with his/her possible
appointment as an arbitrator, he/she impartiality or independence.
An arbitrator, from the time of his/her appointment and
throughout the arbitral proceedings shall, without delay,
disclose any such circumstance to the parties unless they
have already been informed of them him/her.
(b) An arbitrator may be challenged only if circumstances exist that
give rise to justifiable doubts as to his/her impartiality or
independence, or if he/she does not possess qualifications agreed to
by the parties.
A party may challenge an arbitrator appointed by
him/her, or in whose appointment he/she has
participated, only for reasons of which he/she becomes
aware after the appointment has been made.
Grounds for Challenge of an Arbitrator in ICA.
A person approached for possible appointment as arbitrator has the duty
to disclose any circumstance likely to raise doubts about his impartiality or
independence. This duty exists from the time of his appointment and
subsists during the arbitral proceedings, unless the parties have been
previously informed of the circumstance affecting his impartiality or
independence.
An arbitrator may be challenged only if circumstances exist that give rise to
a justifiable doubt as to his [i] impartiality or independence; [ii] possession
of the qualifications agreed upon by the parties. A party who appointed an
arbitrator shall not be allowed to challenge that arbitrator. This rule is
grounded on estoppel. However, does not apply where the act of
appointing was performed without the knowledge, actual or constructive,
of the actual facts, and except for reasons which the appointing party
became aware of after the appointment was made.
Procedure for the Challenge in ICA.
Article 4.13. Challenge Procedure.
(a) The parties are free to agree on a procedure for challenging an
arbitrator, subject to the provisions of this Article.
(b) Failing such agreement, a party who intends to challenge an
arbitrator shall, within fifteen (15) days after becoming aware of the
constitution of the arbitral tribunal or after becoming aware of any
circumstances referred to in paragraph (b) of Article 4.12 (Grounds for
Challenge,) send a written statement of the reasons for the challenge
to the arbitral tribunal.
Unless the challenged arbitrator withdraws from his/her
office or the other party agrees to the challenged
arbitrator withdraws from his/her office or the party
agrees to the challenge, the arbitral tribunal shall decide
on the challenge.
(c) If a challenge under any procedure agreed upon by the parties or
under the procedure of paragraph (b) of this Article is not successful,
the challenging party may request the appointing authority, within
thirty (30) days after having received notice of the decision rejecting
the challenge, to decide on the challenge, which decision shall be
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immediately executory and not subject to motion for reconsideration
or appeal.
While such a request is pending, the arbitral tribunal,
including the challenged arbitrator, may continue the
arbitral proceedings and make an award.
A party may bring a petition under this Article before the court in
accordance with the Rules of Court or the Special ADR Rules.
The procedure for the challenge against an arbitrator in international
commercial arbitration is that agreed upon by the parties. The following is
the default procedure:
1. The challenging party shall send a written statement of the
reasons for the challenge to the arbitral tribunal within 15 days
after becoming aware of the constitution of the arbitral
tribunal or after becoming aware of the circumstance
constituting the ground for the challenge. Thereafter, the
arbitral tribunal shall decide the challenge.
2. If the challenge before the arbitral tribunal is not successful,
the challenging party may request the appointing authority
within 30 days from notice of the decision rejecting the
challenge, to decide the challenge, which decision shall be
immediately executory, and not be subject to a motion for
reconsideration or appeal.
A party may file a petition in court questioning the decision in the challenge
against an arbitrator in accordance with the Special Rules of Court on
Alternative Dispute Resolution. After a successful challenge, a substitute
arbitrator will have to be appointed. The appointment of the substitute
arbitrator shall be governed by the same rules applicable to the
appointment of the replaced arbitrator.
Procedure in Case the Arbitrator Fails to Act in ICA.
Article 4.14. Failure or Impossibility to Act.
(a) If an arbitrator becomes de jure or de facto unable to perform
his/her functions or for other reasons fails to act without undue
delay, his/her mandate terminates if he/she withdraws from his/her
office or if the parties agree on the termination.
Otherwise, if the controversy remains concerning any of
these grounds, any party may request the appointing
authority to decide on the termination of the mandate,
which decision shall be immediately executory and not
subject for motion for reconsideration or appeal.
(b) If, under this Article or paragraph (b) of Article 4.13 (Challenge
Procedure), an arbitrator withdraws from his/her office or a party
agrees for termination of the mandate of an arbitrator, this does not
imply acceptance of the validity of any ground referred to in this
Article or in paragraph (b) of Article 4.12 (Grounds for Challenge).
The remedy of termination of mandate of an arbitrator should be
distinguished from a challenge to an arbitrator which is premised on
partiality or lack of qualifications. If an arbitrator in an international
commercial arbitration becomes de jure or de facto unable to perform his
functions or fails to act without undue delay, his mandate terminates [i] if
he withdraws, or [ii] if the parties agree on the termination. The
withdrawal of the arbitrator does not carry with it an implied acceptance of
the existence or veracity of the ground for termination.
If the controversy remains, any party may request the appointing authority
to decide on the termination of the arbitrator, which decision shall be
immediately executory, and not be subject to a motion for reconsideration
or appeal.
The appointment of the substitute arbitrator shall be governed by the
same rules applicable in the appointment of the replaced arbitrator.
Jurisdiction of Arbitral Tribunal in ICA.
Article 4.16. Competence of Arbitral Tribunal to Rule on its
Jurisdiction.
(a) The arbitral tribunal may rule on its own jurisdiction, including any
objections with respect to the existence or validity of the arbitration
agreement or any condition precedent to the filing of the request for
arbitration.
For that purpose, an arbitration clause, which forms part
of a contract shall be treated as an agreement
independent of the other terms of the contract.
A decision by the arbitral tribunal that the contract is null
and void shall not entail ipso jure the invalidity of the
arbitration clause.
(b) A plea that the arbitral tribunal does not have jurisdiction shall be
raised not later than the submission of the statement of defense (I.e.,
in an Answer or Motion to Dismiss).
A party is not precluded from raising such plea by the fact
that he/she has appointed, or participated in the
appointment of, an arbitrator.
A plea that the arbitral tribunal is exceeding the scope of
its authority shall be raised as soon as the matter alleged
to be beyond the scope of its authority is raised during the
arbitral proceedings.
The arbitral tribunal may, in either case, admit a later plea
if it considers the delay justified.
(c) The arbitral tribunal may rule on a plea referred to in paragraph (b)
of this Article either as a preliminary question or in an award on the
merits.
If the arbitral tribunal rules as a preliminary question that
it has jurisdiction, any party may request, within thirty
(30) days after having received notice of that ruling, the
Regional Trial Court to decide the matter, which decision
shall be immediately executory and not subject to motion
for reconsideration or appeal.
While such a request is pending, the arbitral tribunal may
contribute the arbitral proceedings and make an award.
Jurisdiction is the right to act or the power and authority to hear and
determine a case. In the case of an arbitral tribunal, it is the authority by
virtue of which it can resolve disputes in an arbitration proceeding by
rendering an award thereon.
Jurisdiction over the Subject Matter.
The jurisdiction of an arbitral tribunal over the subject matter of the
controversy is conferred by law. This law is the ADR Act of 2004 in the case
of arbitration under the auspices thereof including an international
commercial arbitration.
There are two (2) instances when a court, quasi-judicial agency or arbitral
tribunal act without jurisdiction, namely: [i] lack of jurisdiction, or [ii] when
it goes beyond its jurisdiction which it had in the first place, in which case it
acted in excess of jurisdiction. In the case of courts, lack of jurisdiction or
excess of jurisdiction are the proper grounds for a petition for certiorari as
a special civil action under Rule 65 of the 1997 Rules of Civil Procedure.
Lack of Jurisdiction.
The jurisdiction of an arbitral tribunal includes the authority to rule on its
own jurisdiction in the same way that courts have the power to rule on
motions to dismiss complaints or petitions based on lack of jurisdiction.
The arbitral tribunal necessarily has the power to rule on objections to its
jurisdiction such as those raised against the existence or validity of the
arbitration agreement or any condition precedent to the filing of a request
for arbitration. Its jurisdiction also includes the power to determine the
admissibility, relevance, materiality and weight of any evidence, and the
issuance of subpoena to compel the attendance of witnesses and the
production of documents.
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Gonzales vs. Climax Mining Ltd. In determining the jurisdiction of an
arbitral tribunal, the arbitration agreement or arbitration clause should be
treated as an independent and separate agreement from the container
agreement, and, hence, the invalidity of the latter does not automatically
result in the nullity of the former. It is only in the event that the arbitration
agreement or clause is itself void, inexistent or inoperative that the arbitral
tribunal’s jurisdiction may be questioned.
Note:
In general, jurisdiction over the subject matter being a matter of law,
cannot be waived and cannot be the subject of a compromise or the
stipulation of the parties. The issue of jurisdiction may be raised at any
stage of the proceedings, even on appeal, and is not lost by waiver or
estoppel. It may be questioned even for the first time on appeal. It is only
in exceptional instances that the Supreme Court has sustained waivers of
or against the jurisdiction of a court such as when a party has incurred
laches in raising the issue of jurisdiction, or is estopped by reason of his
active participation in the proceedings of the court whose jurisdiction he
questions.
The rule is different, however, in a challenge against the jurisdiction of
arbitral tribunals in an international commercial arbitration. The challenge
should be raised not later than the submission of the statement of defense
in the answer or in a motion to dismiss; otherwise, the objection is deemed
waived. However, a party is not precluded from raising a jurisdictional
challenge even if he has participated in the appointment of an arbitrator or
has himself appointed one.
Excess of Jurisdiction.
Where an arbitral tribunal which has jurisdiction in the first place but
exceeds the scope of its authority (excess of jurisdiction), a party may raise
the objection as soon as the excess of jurisdiction over a matter alleged to
be beyond the scope of its authority becomes apparent; otherwise, the
objection will be deemed waived unless the delay is justified.
Judicial Review of Jurisdictional Issue.
The decision of a court or quasi-judicial agency without jurisdiction over
the subject matter is null and void ab initio. In the same manner, the
arbitral award of an arbitral tribunal which does not have jurisdiction is
also null and void ab initio unless there is a waiver of the absence of
jurisdiction. Unlike in a domestic arbitration, in an ICA, petitions under Rule
43 (petition for review) and Rule 65 (petition for certiorari) are not
available.
The arbitral tribunal whose acts are challenged for lack or excess of
jurisdiction may either [i] consider the challenge as a preliminary question
or a threshold issue and render a ruling thereon before conducting the
arbitration, or [ii] defer the resolution thereof until the rendition of the
arbitral award and the resolution of the jurisdictional issue shall form part
thereof especially in instances when the jurisdictional challenge does not
appear to be indubitable. Unlike an arbitral tribunal, a court cannot defer
the resolution of a motion to dismiss for the reason that the ground
therefor does not appear to be indubitable.
If the arbitral tribunal renders a preliminary ruling on the jurisdictional
issue, an aggrieved party may elevate the ruling for review by the Regional
Trial Court within 30 days from receipt of the ruling, and the decision of the
court therein shall be immediately executory and not be subject to a
motion for reconsideration or appeal.
The arbitration proceedings may proceed notwithstanding the pendency of
a judicial action with the Regional Trial Court unless the court issues in the
meantime a temporary restraining order or a writ of preliminary injunction
enjoining the conduct of the international commercial arbitration during
the pendency of the court action or petition.
On the other hand, if the arbitral tribunal defers the resolution of the
jurisdictional issue which will be resolved as part of the arbitral award, the
order of deferment is not susceptible of judicial relief. However, the
arbitral award, including the ruling on the jurisdictional issue, may be
challenged in court in the same manner and procedure for challenging an
arbitral award, i.e. setting aside or vacating an arbitral award.
Jurisdiction over the Parties.
The jurisdiction of an arbitral tribunal over the person of the parties in an
arbitration is conferred by the consent of the parties to submit to
arbitration. The consent may be contained either in an agreement to
submit to arbitration (for pre-causal consent) which is entered into at the
time of the execution of an arbitration agreement or a contract which
includes an arbitration clause, or in a submission agreement (for present
causal consent) between parties who do not have an arbitration agreement
or a contract with an arbitration clause but who nonetheless agree to
submit an existing dispute or controversy to arbitration.
Interim Measures in ICA.
Article 4.9 Arbitration Agreement and Interim Measures by Court.
(a) It is not incompatible with an arbitration agreement for a party to
request from a court, before the constitution of the arbitral tribunal
or during arbitral proceedings, an interim measure of protection and
for a court to grant such measure.
(b) To the extent that the arbitral tribunal has no power to act or is
unable to act effectively, a request for interim measure of protection,
or modification thereof as provided for, and in the manner indicated
in, Article 4.17 (Power of Tribunal to Order Interim Measures), may be
made with the court.
The rules of interim or provisional relief provided for in paragraph (c)
of Article 4.17 of these Rules shall be observed.
A party may bring a petition under this Article before the court in
accordance with the Rules of Court or the Special ADR Rules.
Article 4.17. Power of Arbitral Tribunal to Order Interim Measures.
(a) Unless otherwise agreed by the parties, the arbitral tribunal may,
at the request of the party, order any party to take such interim
measures of protection as the arbitral tribunal may consider
necessary in respect of the subject to matter of the dispute following
paragraph (c) of this Article. Such interim measures may include, but
shall not be limited to, preliminary injunction directed against a party,
appointment of receivers, or detention, preservation, inspection of
property that is the subject of the dispute in arbitration.
(b) After constitution of the arbitral tribunal, and during arbitral
proceeding, a request for interim measures of protection, or
modification thereof shall be made with the arbitral tribunal.
The arbitral tribunal is deemed constituted when the sole
arbitrator or the third arbitrator, who has been
nominated, has accepted the nomination and written
communication of said nomination and acceptance has
been received by the party making the request.
(c) The following rules on interim or provisional relief shall be
observed:
(i) Any party may request that the interim or provisional
relief shall be observed:
(ii) Such relief may be granted:
(aa) To prevent irreparable loss or injury;
(bb) To provide security for the performance of
an obligation;
(cc) To produce or preserve evidence
(dd) To compel any other appropriate acts or
omissions.
(iii) The order granting provisional relief may be
conditioned upon the provision of security or any act or
omission specified in order.
(iv) Interim or provisional relief is requested by written
application transmitted by reasonable means to the
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arbitral tribunal and the party against whom relief is
sought, describing in appropriate details of the precise
relief, the party against whom the relief is requested, the
ground for the relief, and the evidence, supporting the
request.
(v) The order granting or denying an application for the
interim relief shall be binding upon the parties.
(vi) Either party may apply with the court for assistance in
implementing or enforcing an interim measure ordered by
an arbitral tribunal.
(vii) A party who does not comply with the order shall be
liable for all damages, resulting from noncompliance,
including all expenses, and reasonable attorney's fees,
paid in obtaining the order's judicial enforcement.
The procedure for granting interim measures in ICA is as follows:
1. After the arbitral tribunal has been constituted, any party may
request for the grant of interim measures from the arbitral
tribunal against the adverse party. This request shall be in
writing transmitted by reasonable means to the arbitral
tribunal and the adverse party, describing the precise relief in
appropriate detail, the ground therefor, and the evidence
supporting the request.
2. The relief may be granted in order to prevent irreparable loss
(similar to preliminary injunction); to provide security for the
performance of an obligation (similar to preliminary
attachment); to produce or preserve evidence (similar to the
modes of discovery); or to compel any other appropriate act or
omission.
3. The grant of the interim measure may be conditioned upon the
provision of security (similar to an attachment or injunction
bond) or any act or omission specified in the order.
4. The order either granting or denying the request for interim
measures shall be binding upon the parties and either party
may apply with the courts for assistance in implementing or
enforcing it.
5. A party who refuses to comply with the order for an interim
measure shall be liable for damages resulting from non-
compliance, including all expenses and reasonable attorney’s
fees paid in obtaining the judicial enforcement thereof. A party
who refuses to comply with the court order compelling
compliance with an interim measure may be cited for indirect
contempt of court.
6. Before the constitution of the arbitral tribunal, or to the extent
that the arbitral tribunal already constituted has no power to
act effectively, the interim measure may be requested from the
courts in accordance with the Special Rules of Court on
Alternative Dispute Resolution.
Legal Representation in ICA.
RA 9285, SEC. 22. Legal Representation in International Arbitration.
In international arbitration conducted in the Philippines, a party may
be presented by any person of his choice. Provided, that such
representative, unless admitted to the practice of law in the
Philippines, shall not be authorized to appear as counsel in any
Philippine court, or any other quasi-judicial body whether or not such
appearance is in relation to the arbitration in which he appears.
IRR, Article 4.40. Legal Representation in International Commercial
Arbitration.
In international commercial arbitration conducted in the Philippines,
a party may be represented by any person of his/her choice:
Provided, that such representative, unless admitted to the practice of
law in the Philippines, shall not be authorized to appear as counsel in
any Philippine court or any other quasi-judicial body whether or not
such appearance is in relation to the arbitration in which he/she
appears.
As a rule, only lawyers accredited by the Supreme Court can practice law in
the Philippines. In an international commercial arbitration conducted in the
Philippines, a party may be represented by a person of his choice even if a
non-lawyer. However, if a non-lawyer is so appointed, he shall not be
authorized to appear as counsel in any Philippine court or any quasi-judicial
body even if such appearance is in relation to the arbitration in which he
appears.
Rules of Procedure in ICA.
IRR, Article 4.19. Determination of the Rules of Procedure.
(a) Subject to the provisions of this Chapter, the parties are free to
agree on the procedure to be followed by the arbitral tribunal in
conducting the proceedings.
(b) Falling such agreement, the arbitral tribunal may, subject to this
Chapter, conduct the arbitration in such manner as it considers
appropriate. Unless the arbitral tribunal considers it inappropriate,
the UNCITRAL Arbitration Rules adopted by the UNCITRAL on 28 April
1976 and the UN General Assemble on 15 December 1976 shall apply
subject to the following clarification:
All references to the "Secretary-General of the Permanent
Court of Arbitration at the Hague" shall be deemed to
refer to the appointing authority.
(c) The power conferred upon the arbitral tribunal includes the power
to determine the admissibility, relevance, materiality and weight of
any evidence
IRR, Article 4.23 Statements of Claim and Defense.
(a) Within the period of time agreed by the parties or determined by
the arbitral tribunal, the claimant shall state the facts supporting
his/her/its claim, the points at issue and the relief or remedy sought,
and the respondent shall state his/her/its defense in respect of these
particulars, unless the parties have otherwise agreed as to the
required elements of such statements.
The parties may submit with their statements, all
documents they consider to be relevant or may add a
reference to the documents or other evidence they will
submit.
(b) Unless otherwise agreed by the parties, either party may amend or
supplement his/her claim or defense during the course of the arbitral
proceedings, unless the arbitral tribunal considers it inappropriate to
allow such amendment having regard to the delay in making it.
Article 4.24 Hearing and Written Proceedings.
(a) Subject to any contrary agreement by the parties, the arbitral
tribunal shall decide whether to hold oral hearings for the
presentation of evidence or for oral argument, or whether the
proceedings shall be conducted on the basis of documents and other
materials. However, unless the parties have agreed that no hearings
at an appropriate stage of the proceedings, if so requested by a party.
(b) The parties shall be given sufficient advance notice of any hearing
and of any meeting of the arbitral tribunal for the purposes of
inspection goods, other property or documents.
(c) All statements, documents or other information supplied to the
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arbitral by one party shall be communicated to the other party. Also,
an expert report or evidentiary document on which the arbitral
tribunal may rely in making its decision shall be communicated to the
parties
Article 4.25 Default of a Party.
Unless otherwise agreed by the parties, if, without, showing sufficient
cause,
(a) the claimant fails to communicate his statement of claim in
accordance with paragraph (a) Article 4.23 (Statement of Claim and
Defense), the arbitral tribunal shall terminate the proceedings;
(b) the respondent fails to communicate his/her/its statement of
defense in accordance with paragraph (a) Article 4.23 (Statement of
Claim and Defense), the arbitral tribunal shall continue the
proceedings without treating such failure in itself as an admission of
the claimant’s allegations.
(c) any party’s fails to appear at a hearing or to produce documentary
evidence, the arbitral tribunal may continue the proceedings and
make the award on the evidence before it.
Article 4.29. Decision-Making by Panel of Arbitrators.
In arbitral proceedings with more than one arbitrator, any decision of
the arbitral tribunal shall be made, unless otherwise agreed by other
parties, by a majority of all its members.
However, questions of procedure may be decided by a
presiding arbitrator, if so authorized by the parties or all
members of the arbitral tribunal.
Article 4.30. Settlement.
If, during arbitral proceedings, the parties settle the dispute, the
arbitral tribunal shall terminate the proceedings and, if requested by
the parties and not objected to by the arbitral tribunal, record the
settlement in the form of an arbitral award on agreed terms.
An award on agreed terms shall be made in accordance with the
provisions of Article 4.31 (Form and Contents of Award), and shall
state that it is an award.
Such an award has the same status and effect as any other award on
the merits of the case.
Determination of the Rules of Procedure.
The general rule is that the parties in an international commercial
arbitration are free to determine the rules that will govern their arbitration
proceedings.
In default thereof, the arbitral tribunal shall apply to “UNCITRAL Arbitration
Rules” adopted by the UNCITRAL on April 28, 1976 and the UN General
Assembly on Dec. 15, 1976, unless the arbitral tribunal finds said Rules
inappropriate, in which case, it shall determine the appropriate procedure.
The procedure in international commercial arbitration in default of an
agreement of the parties is as follows:
(1) Statement of Claims. Within the period agreed upon by the parties or
determined by the arbitral tribunal, the claimant shall state the facts
supporting his claim, the issues and relief or remedy sought, and shall
submit therewith or refer therein to relevant documents.
(2) Statement of Defenses. In the same manner and period, the respondent
shall state his defenses thereto and submit therewith or refer therein to
relevant documents.
(3) Default of the parties. The failure of the claimant or respondent to
communicate their statements of claims or defenses as the case may be
during the period therefor, or their failure to appear at a hearing or to
produce documentary evidence, results in the default of the failing party.
The default of the claimant for failure to communicate his statement of
claims results in the termination of the proceedings. The default of the
respondent to communicate his statement of defenses shall not terminate
the proceedings and, instead, it shall proceed without such failure being
considered as an admission of the claimant’s allegations. The failure of any
party to appear during the hearings, or to produce documents, amounts to
a waiver thereof and the arbitral tribunal shall render an award on the
basis of evidence submitted to it.
(4) Amendment of claims or defenses. The parties may amend or
supplement their claims or defenses, as the case may be, unless the
arbitral tribunal considers the amendment inappropriate.
(5) Hearings. The arbitral tribunal shall determine whether to hold oral
hearings only, oral arguments only, or just require the submission of
documents, during the appropriate stages of the arbitral proceeding, the
dates of which the parties shall be given sufficient advance notice. In the
conduct of hearings, the arbitral tribunal can employ the following
processes in taking evidence:
a. Court assistance in taking evidence. The arbitral tribunal, or any
party with the approval of the arbitral tribunal, may request
from the courts assistance in taking evidence.
b. Subpoena. The arbitral tribunal has the power to issue
subpoena in order to compel the attendance of witnesses
(subpoena ad testificandum) and the production of documents
(subpoena duces tecum). Note, however, that an arbitral
tribunal does not have contempt powers. The power to cite for
direct or indirect contempt is not one of the powers granted by
the ADR Act to an arbitral tribunal. Hence, should a party or
witness refuse to comply with a subpoena issued by the arbitral
tribunal, the aggrieved party must invoke judicial intervention
to compel compliance with the subpoena, and, in the event of
failure to comply with the court’s directive, cite the refusing
party in contempt of court. In this case, it is the court’s
directive that has been violated and, hence, the contemptuous
act was committed, not against the arbitral tribunal, but against
the court itself.
c. Expert. The arbitral tribunal may appoint experts to report to it
on specific issues, require the parties to provide the expert with
relevant information, access to documents, goods or property,
and require the expert to participate in the hearings for the
refutation of his findings through questions propounded by the
parties or the presentation of another expert witness. The
expert sought by the arbitral tribunal is similar to an amicus
curiae or a ‘friend of the court.’
The expert referred to in the IRR is not the expert witness
called upon by the parties themselves to testify on matters of
opinion favorable to the presenting party. Instead, he is called
upon by the arbitral tribunal itself to provide assistance to the
tribunal.
(6) Conclusion / closure. An international commercial arbitration
proceeding may be concluded or closed in either of two (2) ways:
a. By an award or settlement. In arbitral proceedings with more
than one (1) arbitrator, the decision shall be made by a
majority of the members. Questions of procedure may,
however, be decided by a presiding arbitrator if so authorized
by the parties or by all members of the arbitral tribunal.
If during the arbitral proceedings, the parties settle their
dispute, the arbitral tribunal shall terminate the proceedings,
and, if requested by the parties and not objected to by the
arbitral tribunal, record the settlement in the form of an
arbitral award on agreed terms which shall be in the same form
as a regular arbitral award.
The award shall be made in writing, signed by the sole
arbitrator, or a majority of the arbitrators of the arbitral
tribunal provided that the reason for the omitted signature, the
reasons upon which it is based unless the parties agree
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otherwise or is an award on agreed terms, and the date and
place of arbitration are stated, and a copy delivered to each
party.
b. Termination. The arbitral tribunal shall issue an order for
termination of the arbitration when [i] the claimant withdraws
his claim, unless the respondent objects thereto on the basis of
a legitimate interest in obtaining a final settlement of the
dispute; [ii] the parties agree to terminate the proceedings; or
[iii] the arbitral tribunal finds that the continuation of the
proceedings has become unnecessary or impossible.
In both instances, the mandate of the arbitral tribunal ends except that, if
the conclusion of the proceedings is by way of an award or settlement, the
arbitral tribunal’s mandate extends [i] to correct and interpret the award,
[ii] to set aside an exclusive recourse against the arbitral award; or, [iii]
when reserved, to the quantification of costs and the determination of the
party liable therefor, or the division thereof.
The arbitral tribunal retains jurisdiction until the award becomes final and
executory. The arbitral award becomes final and executory after the last of:
1. The rendition of the arbitral award.
2. The hearing on the quantification of the costs and the
determination of the party liable therefor, or the division
thereof between the parties, provided that a reservation for
such hearing and quantification has been made by the arbitral
tribunal.
3. The expiration of the periods for correction and interpretation
of the award, or for making an additional award (i.e., unless a
different period is agreed upon by the parties or the periods
are extended by the arbitral tribunal, 30 days from the receipt
of the award if initiated by a party, or 30 days from the date of
the award if initiated by the arbitral tribunal), without any
party or the arbitral tribunal availing of the said remedies.
4. If the said remedies are availed of by the parties or the arbitral
tribunal, within the same periods stated above counted from
the date of the receipt of or issuance of the arbitral award as
the case may be.
Costs in ICA.
Costs in an international commercial arbitration include only the [i] fees of
the arbitral tribunal; [ii] travel and other expenses; [iii] costs of expert
advice; [iv] travel and other expenses of witnesses; [v] costs for legal
representation and assistance; and [vi] fees and expenses of the appointing
authority. In all instances, the costs shall be reasonable taking into account
the amount in dispute, the complexity of the subject matter, the time
spent by the arbitrators, and any other relevant circumstances of the case.
In principle, the costs shall be borne by the unsuccessful party. However,
the arbitral tribunal may apportion the costs if reasonable under the
circumstances of the case. In the case of costs for legal representation and
assistance, the arbitral tribunal shall be free to determine which party shall
bear such costs or may apportion them if reasonable.
In one case, the Supreme Court held that, where the petitioner had a valid
reason to institute the arbitral proceeding as he believed that he was
entitled to his claim, and the respondent cannot be faulted for defending
himself for perceived wrongful acts and conditions, it is only fitting that
both parties should share in the burden of the cost of arbitration, in a pro
rata basis so as not to put a price on the right to litigate.
Correction and Interpretation of ICA Award.
IRR, Article 4.33. Correction and Interpretation of Award, Additional
Award.
(a) Within thirty (30) days from receipt of the award, unless another
period of time has been agreed upon by the parties:
i. A party may, with notice to the other party, request the
arbitral tribunal to correct in the award any errors in
computation, any clerical or typographical errors or any
errors of similar nature;
ii. A party may, it so agreed by the parties and with notice to
the other party, request the arbitral tribunal to give an
interpretation of a specific point or part of the award.
(b) If the arbitral tribunal considers the request to be justified, It shall
make the correction or give the interpretation within thirty (30) days
from receipt of the request. The interpretation shall form part of the
award.
(c) The arbitral tribunal may correct any error of the type referred to
in paragraph (a) of this Article on its own initiative within thirty (30)
day from the date of the award
(d) Unless otherwise agreed by the parties, a party may, with notice
to the other party, request, within thirty (30) days receipt of the
award, the arbitral tribunal to make an additional award as to claims
presented in the arbitral proceedings but omitted from the award. If
the arbitral tribunal considers the request to be justified, it shall make
the additional award within sixty (60) days
(e) The arbitral tribunal may extend, if necessary, the period of time
within which it shall make a correction interpretation or an additional
award under paragraphs (a) and (b) of this Article.
(f) The provisions of Article 4.31 (Form and Contents of Award) shall
apply to a correction or interpretation of the award or to an
additional award.
The arbitral award in an international commercial arbitration does not
become executory until after the lapse of the period for its amendment.
Subject to any agreement of the parties for the periods for amendment of
the arbitral award, or to the extended period that may be granted by the
arbitral tribunal therefor, an arbitral award may be amended in any of the
following manners:
(1) Agreement of the parties. The arbitration agreement may provide for
the instances when an amendment of the arbitral award is allowed. While
this circumstance is not expressly provided for under the ADR Act of 2004
or its IRR, it is premised on the principle that the parties are free to
determine the rules that will govern their arbitral proceedings.
(2) Quantification of the costs and the determination of the party liable
therefor, or the division thereof between the parties, provided that a
reservation for such hearing and quantification has been made by the
arbitral tribunal.
(3) Correction of typographical and similar errors initiated by a party. A
party may ask the arbitral tribunal for the correction of the award, within
30 days from receipt of the award, and with notice to the other party for
any error in computation, clerical or typographical error, or other errors of
similar nature.
The same principle obtains in the proceedings before the regular courts. As
a rule, a regular court losses jurisdiction over its judgment once it becomes
executory, except to implement or enforce the same, correct typographical
errors, or to issue orders or writs to preserve the judgment. Moreover, the
only exceptions to the principle of immutability of judgments, i.e., that final
judgments may no longer be modified, are: [i] the correction of clerical
errors, [ii] the so called nun pro tunc entries which cause no prejudice to
any party, and [iii] void judgments.
An error is typographical or clerical in character, and therefore, correctible
even after the decision has become executory, if the error is occasioned by
a mistake in copying or typing, does not alter the substance of the decision,
and does not affect or prejudice substantial rights.
(4) Correction of typographical error initiated by the arbitral tribunal.
Within 30 days from the date of the award, the arbitral tribunal may motu
proprio correct any typographical error therein.
(5) Interpretation of the award. Within the same period for the correction
of typographical errors initiated by a party, the parties may agree to
request the arbitral tribunal to given an interpretation of a specific point or
part of the award.
If the arbitral tribunal finds the request for correction or interpretation
justified, it shall make the correction or give the interpretation within 30
days from receipt of the request, and the interpretation or correction shall
form part of the award.
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(6) Additional award. Within 30 days from receipt of the award, a party,
with notice to the other party, may request the arbitral tribunal to make an
additional award as to claims presented in the arbitral proceeding but
omitted in the award. If justified, the arbitral tribunal shall make the
additional award within 60 days from receipt of the request which shall be
in the form of an arbitral award.
Unlike a domestic arbitral award, an international commercial arbitral
award cannot be corrected by the courts. Only the arbitral tribunal may
correct an international commercial arbitral award. Courts can only set
them aside, extend recognition to them, or refuse to recognize them.
Setting Aside an ICA Award.
Article 4.34. Aplication for Setting Aside an Exclusive Recourse against
Arbitral Award.
(a) Recourse to a court against an arbitral award may be made only by
application for setting aside in accordance with second and third
paragraphs of this Article.
(b) An arbitral award may be set aside by the Regional Trial Court only
If:
(i) the party making the application furnishes proof that:
a. a party to the arbitration agreement was under some
incapacity ; or the said agreement is not valid under the
law to which the parties have subjected it or, failing any
indication thereon, under the law of the Philippines; or
b. the party making the application was not given proper
notice of the appointment of an arbitrator or of the
arbitral proceedings or was otherwise unable to present
his case; or
c. the award deals with a dispute not contemplated by or
not failing within the terms of the submission to
arbitration, or contains, decisions on matters beyond the
scope of the submission to arbitration, provided that, if
the decisions on matters submitted to arbitration can be
separated from those not so submitted, only the part of
the award which contains decisions on matters not
submitted to arbitration may be set aside; or
d. the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement of
the parties, unless such agreement was in conflict with a
provision of ADR Act from which the parties cannot
derogate, or, falling such agreement, was not in
accordance with ADR Act; or
(ii) the Court finds that:
a. the subject-matter of the dispute is not capable of
settlement by arbitration under the law of the Philippines;
or
b. the award is in conflict with the public policy of the
Philippines.
(c) An application for setting aside may not be made after three
months have elapsed from the date on which the party making that
application had received the award or, If a request had been made
under Article 4.33 (Correction and Interpretation of Award, Additional
Award) from the date on which that request has been disposed of by
the Arbitral tribunal
(d) The court, when asked to set aside an award, may, where
appropriate and so requested by a party, suspend the setting aside
proceedings for a period of time determined by it in order to give the
arbitral tribunal an opportunity resume the arbitral proceedings or
take such other action as in the arbitral tribunal's opinion will
eliminate the grounds for setting aside.
(e) A party may bring a petition under this Article before the court in
accordance with the Special ADR Rules.
An international commercial arbitral award may be set aside through the
courts, particularly the Regional Trial Court, provided that:
(1) The petitioner furnishes proof that there was:
a. Defect in the arbitration agreement because a party was under
some incapacity or the said agreement is not valid under the
applicable law;
b. Violation of due process because the petitioner was not given
proper notice of the appointment of an arbitrator or the
arbitral proceeding, or was other unable to present his case;
c. Lack or excess of jurisdiction on the part of the arbitral tribunal
because the award deals with a dispute not contemplated by or
not falling within the terms of the submission to arbitration, or
contains decisions or matters beyond the scope of the
submission of the arbitration, subject to the application of the
doctrine of severability / separability; or
d. The arbitration agreement was violated the composition of the
arbitral tribunal or the arbitral process was not in accordance
with the agreement of the parties, unless such agreement was
in conflict with a provision of the ADR Act from which the
parties cannot derogate, or, failing such agreement, was not in
accordance with the ADR Act.
(2) Or, the court finds that:
a. The subject of the dispute is not capable of settlement under
the laws of the Republic of the Philippines; or
b. The award is in conflict with public policy of the Philippines.
The foregoing instances show that, notwithstanding the adoption and
application of the Model Law as part of the ADR Act and its IRR, Philippine
law on disputes not capable of being made subject to ADR and public policy
are inviolable.
Unlike the grounds for refusing recognition of an ICA or foreign arbitral
award which are declared exclusive, the foregoing rounds for setting aside
an ICA award have not been similarly declared exclusive. However, their
enumeration shows the intent to keep them exclusive. Moreover, under
Rule 19.10 of the Special Rules, no other ground for setting aside can be
raised except if it amounts to a violation of public policy. Rule 19.10,
requiring as it does the element of violation of public policy for any other
ground, which is itself a specified ground, therefore reinforces the
exclusivity of the grounds for setting aside an ICA award.
In an international commercial arbitration, the venue for setting aside
proceedings, as well as for the recognition and enforcement of awards, and
any application for assistance and supervision, except appeal, shall be with
the Regional Trial Court [i] where the arbitration proceedings took place;
[ii] where the asset to be attached or levied upon, or the act to be enjoined
is located; [iii] where any of the parties to the dispute resides or has his
place of business; [iv] in the National Capital Judicial Region, at the option
of the applicant.
The court may, if requested by a party, suspend the setting aside
proceedings for a period of time determined by it in order to give the
arbitral tribunal an opportunity to resume the arbitral proceedings or to
take such other action as in the arbitral tribunal’s opinion will eliminate the
grounds for setting aside.
Time for Filing of the Petition for Setting Aside.
The petition for setting aside must be filed within three (3) months from
the date on which the party making that application received the award, or
from the date on which a request for correction, interpretation or
additional award has been disposed of by the arbitral tribunal. A month is
deemed to be composed of 30 days each and, hence, the 3-month period
within which to file the petition to set aside an arbitral award is composed
of 90 days.
Recognition and Enforcement of ICA and Foreign Arbitral Awards.
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IRR, Article 4.35. Recognition and Enforcement.
a) A foreign arbitral award shall be recognized as binding and, upon
petition in writing to the regional trial Court, shall be enforced subject
to the provisions of this Article and of Article 4.36 (Grounds for
Refusing Recognition or Enforcement).
(b) The petition for recognition and enforcement of such arbitral
awards shall be filled with the Regional trial Court In accordance with
Special ADR Rules.
i. Convention Award - The New York Convention shall
govern the recognition and enforcement of arbitral
awards covered by said Convention.
The petitioner shall establish that the country in which the
foreign arbitration award was made is a party to the New
York Convention
ii. Non-Convention Award – The recognition and
enforcement of foreign arbitral awards not covered by the
New York Convention shall be done in accordance with
procedural rules to be promulgated by the Supreme Court.
The court may, on grounds of comity and reciprocity,
recognize and enforce a non-convention award as a
convention award.
(c) The party relying on an award or applying for its enforcement shall
file with the Regional Trial Court the original or duly authenticated
copy of the award and the original arbitration agreement or a duly
authenticated copy thereof.
If the award or agreement is not made in an official
language of the Philippines, the party shall supply a duly
certified translation thereof into such language.
(d) A foreign arbitral award when confirmed by a court of a foreign
country, shall be recognized and enforced as a foreign arbitral award
and not as a judgment of a foreign court.
(e) A foreign arbitral award when confirmed by the Regional Trial
Court, shall be enforced in the same manner as final and executory
decisions of courts of law of the Philippines.
(f) If the Regional Trial Court has recognized the arbitral award but an
application for rejection and/or) suspension of enforcement of that
award is subsequently made, the Regional Trial Court may, if it
considers the application to be proper, vacate or suspend the decision
to enforce that award and may also, on the application of the party
claiming recognition or enforcement of that award, order the other
party seeking rejection or suspension to provide appropriate security.
Recognition is the means by which a Philippine court gives legal
acknowledgement to a foreign arbitral award and confers upon it the
capability to be enforced under Philippine law through Philippine legal
processes. It means that “our courts will allow said foreign judgment to be
presented as a defense to a local litigation.
Confirmation, on the other hand, is the judicial affirmation of a domestic
arbitral award. In various decisions of the Supreme Court, however, the
terms recognition and confirmation have been used interchangeably.
Enforcement means the execution and implementation of the foreign
arbitral award through Philippine legal processes. It exists “when a plaintiff
wants courts to positively carry out and make effective in the Philippines a
foreign judgment.”
Although Article 4.35 of the IRR falls under Chapter 4 on International
Commercial Arbitration, said Article provides the rules for the recognition
and enforcement of “foreign arbitral awards.” A foreign arbitral award, as
defined under the Special Rules of Court on ADR, is “one made in a country
other than the Philippines.” It is submitted, however, that a more accurate
definition of a foreign arbitral award is that it is one rendered in an
arbitration whose seat is outside the Philippines. Hence, an ICA award
rendered in an arbitral proceeding whose seat is outside the Philippines,
i.e., foreign ICA, is essentially a foreign arbitral award.
A foreign arbitral award must go through the process of “recognition” in
order to be entitled to enforcement in the Philippines.
On the other hand, a domestic arbitral award, while not requiring
recognition, generally has to go through the process of “confirmation” prior
to their implementation. There is no need for Philippine Courts to give
arbitral award rendered in a domestic arbitration legal recognition under
Philippine law apart from mere confirmation.
On the treatment of Philippine ICA awards, there is greater kinship
between a Philippine ICA award and a foreign arbitral award. Inferring from
the fact that the rules on recognition of foreign arbitral awards are
contained in Chapter 4 of the IRR which governs Philippine ICA, there exists
legal basis to require recognition instead of just confirmation for Philippine
ICA awards. The Supreme Court, in enacting the Special Rules of Court on
ADR, categorically used the term “recognition” rather than “confirmation”
for Philippine ICA awards. Moreover, in the same Special Rules of Court on
ADR, the grounds for the recognition of a convention award and as-in
convention award are practically the same as the grounds for recognition
or setting aside of Philippine ICA awards.
While both Philippine ICA awards and foreign ICA awards require
recognition by Philippine courts similar to a foreign arbitral award, the
award in a Philippine ICA is susceptible of vacation or setting aside by a
Philippine Court, but the award in a foreign ICA is not susceptible of
vacation or setting aside and can only be recognized or refused recognition,
it being essentially a foreign arbitral award.
Once recognition is accorded by a Philippine court to a foreign judgment, in
effect, it is the decision, order or writ of the Philippine court that is being
enforced. In the same manner, an ICA award or a foreign arbitral award
when extended recognition by the Regional Trial Court shall be enforced in
the same manner as final and executory decisions of courts of law of the
Philippines.
Jurisdiction, Venue and Nature of Proceedings.
Jurisdiction over proceedings for the recognition and enforcement of ICA
and foreign arbitral awards, vacating or setting aside an ICA award, and any
application with a court for arbitration assistance thereon, is vested by the
ADR Act on the Regional Trial Court.
The venue of the proceedings shall be [i] where the arbitration proceedings
are conducted; [ii] where the asset to be attached or levied upon, or the
act to be enjoined, is located (as in the cause of real actions or actions
quasi in rem); [iii] where any of the parties to the dispute resides or has his
place of business (as in the case of personal actions); or [iv] in the National
Capital Judicial Region at the option of the applicant.
Except for the appeal, the foregoing proceedings shall be deemed as
special proceedings, like those for the settlement of estates, escheat,
guardianship, trustees, adoption, habeas corpus, change of name,
declaration of absence or death, and cancellation or correction of entries in
the Civil Registry. They shall also be summary in nature, i.e., hearings shall
be conducted principally on the basis of the affidavits of the parties and
their witnesses.
In the proceedings for the recognition and enforcement of ICA and foreign
arbitral awards susceptible of recognition, the court shall sent notice to the
parties at their addresses of record in the arbitration, or if any party cannot
be served with notice at such address, at such party’s last known address.
The notice shall be sent at least 15 days before the date set for initial
hearing.
Grounds for Refusing Recognition and Procedure for Recognition of
Convention and As-in Convention Awards.
In general, the conditions and requisites for the recognition and
enforcement of foreign judgments in the Philippines are:
1. Proof of the foreign judgment;
2. The judgment must be on a civil or commercial matter;
3. There must be no lack of jurisdiction, no want of notice, no
collusion, no fraud, no clear mistake of law or fact;
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4. The judgment must not contravene a sound and established
public policy of the forum; and
5. The judgment must be res judicata in the state that rendered it.
The ADR Act and its IRR, however, prescribe a slightly different set of
conditions and requirements for the recognition of foreign arbitral awards,
including foreign ICA awards, the application of which depend upon the
nature of the proceedings leading to the award, i.e., convention award,
non-convention award, and as-in convention award.
A convention award is a foreign arbitral award made in a state which is a
party to the New York Convention. Its recognition and enforcement shall
be governed by the New York Convention as implemented by the IRR.
A non-convention award, on the other hand, is a foreign arbitral award
made in a state which is not a party to the New York Convention. It cannot
be recognized or enforced under the ADR Act of 2004 but it may be
deemed as a presumptive evidence of a right as between parties in
accordance with Section 48, Rule 39 of the 1997 Rules of Civil Procedure.
An as-in convention award is one which is made in a state which is not a
party to the New York Convention but which, by reason of comity and
reciprocity, may be recognized and enforced as if it is a convention award.
Grounds for Refusing Recognition.
IRR, Article 4.36. Grounds for Refusing Recognition or Enforcement.
A CONVENTION AWARD.
Recognition or enforcement of an arbitral award, made in a state,
which is a party to the New York Convention, may be refused, at the
request of the party against whom it is provoked, only if the party
furnishes to the Regional Trial Court proof that:
(a) The parties to the arbitration agreement are, under the law
applicable to them, under some incapacity; or the said agreement is
not valid under the law to which the parties have subjected it or;
failing any indication thereon, under the law of the country where the
award was made; or
(b) the party against whom the award is invoked was not given proper
notice of the appointment of an arbitrator or of the arbitral
proceedings or was otherwise in able to present his case; or
(c) the award deals with dispute not contemplated by or not failing
within the terms of the submission to arbitration, or it contains
decisions on matters beyond the scope of the submission to
arbitration;
Provided that, if the decisions on matters submitted to
arbitration can be separated from those not so submitted,
that part of the award which contains decisions on
matters submitted to arbitration may be recognized and
enforced; or
(d) the composition of the arbitral tribunal or the arbitral procedure
was not in accordance with the agreement of the parties or, failing
such agreement, was not in accordance with the law of the country
where the arbitration too place; or
(e) the award has not become binding on the parties or has been set
aside or suspended by a court of the country in which, or under the
law of which, that award was made.
Recognition and enforcement of an arbitral award may also be
refused if the Regional Trial Court where recognition and enforcement
is sought finds that:
a. the subject-matter of the dispute is not capable of
settlement by arbitration under the law of Philippines; or
b. the recognition or enforcement of the award would be
contrary to the public policy of the Philippines.
A party to a foreign arbitration proceeding may oppose an application
for recognition and enforcement of the arbitral award in accordance
with the Special ADR Rules only on the grounds enumerated under
paragraph (a) and (c) of Article 4.35 (Recognition and Enforcement).
Any other ground raised shall be disregarded by the Regional Trial
Court.
xxx
The proofs and grounds for refusing to grant recognition to convention
awards and as-in convention awards are similar to the grounds for the
setting aside of an arbitral award in an international commercial
arbitration. This is because international commercial arbitral awards,
convention awards, and as-in convention awards are all imbued with
foreign elements – [i] the New York Convention which served as basis for
the ADR Act of 2004, and its provisions on international commercial
arbitration, and [iii] the foreign arbitral tribunal which rendered the
convention or as-in convention award.
Specifically, the grounds for refusing recognition and enforcement to
convention and as-in convention awards are as follows:
1. Defect in the arbitration agreement because a party was under
some incapacity or the said agreement is not valid under the
applicable law;
2. Violation of due process because the petitioner was not given
proper notice of the appointment of an arbitrator or the
arbitral proceeding, or was otherwise unable to present his
case;
3. Lack or excess of jurisdiction on the part of the arbitral tribunal
because the award deals with a dispute not contemplated by or
not falling within the terms of the submission to arbitration, or
contains decisions on matters beyond the scope of the
submission of the arbitration, subject to the application of the
doctrine of severability / separability;
4. Violation of the arbitration agreement because the
composition of the arbitral tribunal or the arbitral process was
not in accordance with the agreement of the parties, unless
such agreement was in conflict with a provision of the ADR Act
from which the parties cannot derogate, or, failing such
agreement, was not in accordance with the ADR Act;
Or, if there is a finding from the court that:
1. The subject of the dispute is not capable of settlement under
the laws of the Republic of the Philippines; or
2. The award is in conflict with public policy if the Philippines.
In the case of as-in convention awards, the applicant shall additionally
present proof of comity and reciprocity between the Philippines and the
non-convention state where the arbitral award was rendered.
Any other ground shall be disregarded by the court. This principle was
applied by the Supreme Court in the case of Tuna Processing, Inc. vs.
Philippine Kingford, Inc., where it was held that a foreign corporation not
licensed to do business in the Philippines, and which is generally prohibited
by the Corporation Code of the Philippines from filing suit in the
Philippines, has legal capacity to sue under the provisions of the ADR Act of
2004. Thus:
“Sec. 45 of the ADR Act of 2004 provides that the opposing
party in an application for recognition and enforcement of the
arbitral award may raise only those grounds that were
enumerated under Article V of the New York Convention x x x.”
xxx xxx
Clearly, not one of these grounds touched on the capacity to sue of the
party seeking the recognition and enforcement of the award.
Pertinent provisions of the Special Rules of Court on ADR, which was
promulgated by the Supreme Court, likewise support this position.
Rule 13.1 of the Special Rules provides that ‘’any party to a foreign
arbitration may petition the court to recognize and enforce a foreign
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arbitral award.” The contents of the petition are enumerated in Rule 13.5.
Capacity to sue is not included.
Oppositely, in the Rule on local arbitration awards or arbitrations in
instances where the ‘place of arbitration is in the Philippines,’ it is
specifically required that a petition ‘to determine any question concerning
the existence, validity and enforceability of such arbitration agreement’
available to the parties before the commencement of arbitration and/or
petition for ‘judicial relief from the ruling of the arbitral tribunal on a
preliminary question upholding or declining its jurisdiction’ after arbitration
has already commenced should state ‘the facts showing that the persons
named as petitioner or respondent have legal capacity to sue or be sued.’
Indeed, it is in the best interest of justice that in the enforcement of a
foreign arbitral award, we deny availment by the losing party of the rule
that bars foreign corporations not licensed to do business in the Philippines
from maintaining a suit in our courts. When a party enters into a contract
containing a foreign arbitration clause and, as in this case, in fact submits
itself to arbitration, it becomes bound by the contract, by the arbitration
and by the result of arbitration, conceding thereby the capacity of the
other party to enter into the contract, participate in the arbitration and
cause the implementation of the result. x x x
Clearly, on the matter of capacity to sue, a foreign arbitral award should
be respected not because it is favored over domestic laws and
procedures, but because Republic Act No. 9285 has certainly erased any
conflict of law in question.
Finally, even assuming, only for the sake of argument, that the court a quo
correctly observed that the Model Law, not the New York Convention,
governs the subject award, petitioner may still seek recognition and
enforcement of the award in Philippine court, since the Model Law
prescribes substantially identical exclusive grounds for refusing recognition
or enforcement.
Premises considered, petitioner TPI, although not licensed to do business
in the Philippines, may seek recognition and enforcement of the foreign
arbitral award in accordance with the ADR Act of 2004.
Procedure for Recognition of Convention and As-in Convention Awards.
waived by the agreement or stipulation of the parties without
prejudice to judicial review by certiorari under Rule 65 (as
amended) of the Rules of Court.
Legal Effects of Non-Convention Awards.
Non-convention awards, unless they qualify to be as-in convention awards,
are not entitled to recognition or enforcement under the ADR Act. They
may, however, be given legal effect in the Philippines on the basis of
Section 48, Rule 39 of the 1997 Rules of Civil Procedure, which provides
that:
Section 48. Effect of foreign judgments or final orders. — The
effect of a judgment or final order of a tribunal of a foreign
country, having jurisdiction to render the judgment or final
order is as follows:
a. In case of a judgment or final order upon a specific
thing, the judgment or final order, is conclusive
upon the title to the thing, and
b. In case of a judgment or final order against a
person, the judgment or final order is presumptive
evidence of a right as between the parties and their
successors in interest by a subsequent title.
In either case, the judgment or final order may be repelled by
evidence of a want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.
Under Article 4.37(a) of the IRR, in conjunction with Section 48, Rule 39 of
the 1997 Rules of Civil Procedure, a non-convention award which does not
qualify as an as-in convention award is either “conclusive upon the title to
a thing” or, at best, is a “presumptive evidence of a right as between the
parties and their successors in interest by subsequent title,” provided there
is no want of jurisdiction, no want of notice, no collusion, no fraud and no
clear mistake of fact or law.
-o0o-

The procedure for the recognition and enforcement of convention and as-
in convention awards is as follows:

1. Filing of application. The party relying upon an award or

applying for its enforcement shall file with the Regional Trial
Court the original or duly authenticated copy of the award and
the original arbitration agreement. If the award or agreement is
not made in an official language of the Philippines, the party
shall supply a duly certified translation thereof into such
language.

2. Recognition. Once confirmed by recognition, the foreign

arbitral award shall be enforced in the same manner as final
and executory decisions of the courts of law of the Philippines.

3. Consolidation / concurrent hearings. The parties and the

arbitral tribunal may agree on [i] the consolidation of
proceedings or [ii] the conduct of concurrent hearings with
other related arbitration proceedings, e.g., petition for the non-
recognition or rejection of the same arbitral award.

4. Rejection / suspension. The Regional Trial Court, upon a

subsequent application for rejection or suspension of the
enforcement of the award, may vacate or suspend the
enforcement of the court decision to recognize the arbitral
award and may also, on the application of the party claiming
recognition or enforcement, order the party seeking rejection
or suspension to provide appropriate security like a bond for
instance. In the case of an as-in convention award, the court
may also remit the award to the arbitral tribunal if the
objections raised may be cured or rectified.

5. Appeals. The decision of the Regional Trial Court recognizing,

enforcing, vacating or setting aside an arbitral award may be
appealed to the Court of Appeals in accordance with the
Special Rules on ADR, which shall require the appealing party to
post a counter-bond in favor of the prevailing party in the
amount of the award. The right to appeal may be validly

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DOMESTIC ARBITRATION
DOMESTIC ARBITRATION
In general, arbitration is domestic if conducted in the Philippines.
Specifically, arbitration is domestic if the components of parties’ places of
business, place of arbitration, place of performance of a substantial part of
the obligation, and place where the subject matter of the dispute is most
closely connected, are all located in the Philippines.
The ADR Act of 2004 (Republic Act No. 9285) devoted only 2 sections to
domestic arbitration, namely:
SEC. 32. Law Governing Domestic Arbitration.
Domestic arbitration shall continue to be governed by Republic Act
No. 876, otherwise known as "The Arbitration Law" as amended by
this Chapter. The term "domestic arbitration" as used herein shall
mean an arbitration that is not international as defined in Article (3)
of the Model Law.
Section 32: which distinguished domestic arbitration from
international arbitration and declared that “The Arbitration
Law” (R.A. No. 876) remains to be applicable to domestic
arbitration;
SEC. 33. Applicability to Domestic Arbitration.
Article 8, 10, 11, 12, 13, 14, 18 and 19 and 29 to 32 of the Model Law
and Section 22 to 31 of the preceding Chapter 4 shall apply to
domestic arbitration.
Section 33: which adopted certain provisions of the Model Law
and the ADR Act on international commercial arbitration to
domestic arbitration.
WHAT LAWS GOVERN DOMESTIC ARBITRATION?
1. The Arbitration Law (R.A. No. 876);
2. The Model Law (Articles 8, 10, 11, 12, 13,14, 18, 19);
3. The following provisions of the ADR Act on international
commercial arbitration:
i. Section 22 (Legal Representation in International
Commercial Arbitration)
ii. Section 23 (Confidentiality of Arbitration
Proceedings)
iii. Section 24 (Referral to Arbitration)
iv. Section 25 (Interpretation of the Act)
v. Section 26 (Meaning of “Appointing Authority”)
vi. Section 27 (What Functions May be Performed by
Appointing Authority)
vii. Section 28 (Grant of Interim Measures)
viii. Section 29 (Further Authority for Arbitrator to
Grant Measures of Protection)
ix. Section 30 (Place of Arbitration)
x. Section 31 (Language of Arbitration)
xi. Section 32 (Laws Governing Domestic Arbitration)
xii. Section 33 (Applicability of Domestic Arbitration)
4. IRR of the ADR Act (Department Circular No. 98); and
5. All other rules applicable to international commercial
arbitration which may be given suppletory application in the
absence of specific applicable provisions
It has been observed that most of the provisions of the IRR on domestic
arbitration were adopted from the same rules applicable to international
commercial arbitration.
This is to be expected considering that both set of rules and regulations
were patterned after the Model Law. On this regard, the IRR will be used as
the main guide on the discussion on domestic arbitration.
DISPUTES COVERED BY RULES ON DOMESTIC ARBITRATION
Article 5.1, IRR. Scope of Application.
(a) Domestic arbitration, which is not international as defined in
paragraph C'8 of Article 1.6 shall continue to be governed by Republic
Act No. 876, otherwise known as "The Arbitration Law", as amended
by the ADR Act. Articles 8, 10, 11, 12, 13, 14, 18 and 19 and 29 to 32 of
the Model Law and Sections 22 to 31 of the ADR Act are specifically
applicable to domestic arbitration.
In the absence of a specific applicable provision, all other rules
applicable to international commercial arbitration may be applied in a
suppletory manner to domestic arbitration.
(b) This Chapter shall apply to domestic arbitration whether the
dispute is commercial, as defined in Section 21 of the ADR Act, or non-
commercial, by an arbitrator who is a private individual appointed by
the parties to hear and resolve their dispute by rendering an award;
Provided that, although a construction dispute may be
commercial, it shall continue to be governed by E.O. NO.1
008, s.1985 and the rules promulgated by the Construction
Industry Arbitration Commission.
(c) Two or more persons or parties may submit to arbitration by one
or more arbitrators any controversy existing between them at the
time of the submission and which may be the subject of an action; or
the parties to any contract may in such contract agree to settle by
arbitration a controversy thereafter arising between them.
Such submission or contract shall be valid, enforceable
and irrevocable, save upon such grounds as exist at law
for the revocation of any contract.
Such submission or contract may include questions arising out of
valuations, appraisals or other controversies which may be collateral,
incidental, precedent or subsequent to any dispute between the
parties.
A controversy cannot be arbitrated where one of the parties to the
controversy is an infant, or a person judicially declared to be
incompetent, unless the appropriate court having jurisdiction
approved a petition for permission to submit such controversy to
arbitration made by the general guardian or guardian ad litem of the
infant or of the incompetent.
But where a person capable of entering into a submission or contract
has knowingly entered into the same with a person incapable of so
doing, the objection on the ground of incapacity can be taken only in
behalf of -the person so incapacitated.
Unlike the provisions of the ADR Act on international commercial
arbitration and the rules corresponding thereto which cover only disputes
arising from relationships of a commercial nature, the provisions and rules
on domestic arbitration cover both commercial and non-commercial
disputes, provided they are susceptible of arbitration and do not fall within
the exclusive original arbitral jurisdiction of quasi-judicial agencies.
DUE PROCESS IN DOMESTIC ARBITRATION
Article 5.17, IRR. Equal Treatment of Parties.
The parties shall be treated with equality and each party shall be
given a full opportunity of presenting his/her/its case.
The parties to a domestic arbitration, like in the case of international
commercial arbitration, are entitled to be treated equally and with due
process.
Equitable PCI Banking Corporation vs. RCBC Capital
Corporation, 574 SCRA 858 [2008]
The well-settled rule is that administrative agencies exercising
quasi-judicial powers shall not be fettered by the rigid
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 ALTERNATIVE DISPUTE RESOLUTION
technicalities of procedure, albeit they are, at all times
required, to adhere to the basic concepts of fair play.
Quiambao vs. Court of Appeals
Submission of position papers may be sufficient as long as the
parties thereto are given the opportunity to be heard. The
essence of due process is simply an opportunity to be heard, or
an opportunity to explain one’s side or opportunity to seek
reconsideration of the action or ruling complained of. This
constitutional mandate is deemed satisfied if a person is
granted an opportunity to seek reconsideration of an action or
ruling. It does not require trial-type proceedings similar to
those in courts of justice. Where opportunity to be heard either
through oral arguments or through pleadings is accorded, there
is no denial of due process.
PLACE OR VENUE OF ARBITRATION
Article 5.19, IRR. Place of Arbitration.
(a) The parties are free to agree on the place of arbitration. Failing
such agreement, the place of arbitration shall be in Metro Manila
unless the arbitral tribunal, having regard to the circumstances of the
case, including the convenience of the parties, shall decide on a
different place of arbitration.
(b) The arbitral tribunal may, unless otherwise agreed by the parties,
meet at any place it considers appropriate for consultation among its
members, for hearing witnesses, experts or the parties, or for
inspection of goods, other property or documents.
Like in international commercial arbitration, the place or venue of a
domestic arbitration is to be determined by the parties.
If there is no such agreement, then the arbitration shall be conducted in
Metro Manila, unless the arbitral tribunal shall decide on a different place
taking into account the circumstances of the case and the convenience of
the parties.
LANGUAGE
Article 5.21, IRR. Language.
(a) The parties are free to agree on the language or languages to be
used in the arbitral proceedings.
Failing such agreement, the language to be used shall be
English or Filipino.
The language/s agreed, unless otherwise specified therein,
shall be used in all hearings and all written statements,
orders or other communication by the parties and the
arbitral tribunal.
(b) The arbitral tribunal may order that any documentary evidence
shall be accompanied by a translation into the language or languages
agreed upon by the parties in accordance with paragraph (a) of this
Article.
The rule in the determination of the language that will be used in the
arbitration proceedings is the same for domestic and international
commercial arbitration, including the prerogative of the arbitral tribunal to
require a translation of documentary evidence if not in the official
language, except that Filipino is added to English as a default language in
domestic arbitration. The inclusion of Filipino as a default language in a
domestic arbitration is understandable considering that it is an official
language in the Philippines.
CONFIDENTIALITY
Article 5.42, IRR. Confidentiality of Arbitration Proceedings.
The arbitration proceedings, including the records, evidence and the
arbitral award and other confidential information, shall be considered
privileged and confidential and shall not be published except:
1. with the consent of the parties; or
2. for the limited purpose of disclosing to the court relevant
documents in cases where resort to the court is allowed
herein:
Provided, however, that the court in which the action or the appeal is
pending may issue a protective order to prevent or prohibit disclosure
of documents or information containing secret processes,
developments, research and other information where it is shown that
the applicant shall be materially prejudiced by an authorized
disclosure thereof.
The arbitration proceedings, records, evidence, arbitral award and other
confidential information are privileged and shall not be published, except:
[i] with the consent of the parties; or [ii] for the limited purpose of
disclosing to the court relevant documents where resort to the court is
allowed.
The Court may issue protective orders to prevent or prohibit the disclosure
of documents or information containing secret processes, developments,
research and other information. The rule is the same in the case of
international commercial arbitration.
RULES ON RECEIPT OF WRITTEN COMMUNICATION
Article 5.2, IRR. Delivery and Receipt of Written Communications.
(a) Except as otherwise agreed by the parties, a written
communication from one party to the other or to the arbitrator or to
an arbitration institution or from the arbitrator or arbitration
institution to the parties shall be delivered to the addressee
personally, by registered mail or by courier service.
Such communication shall be deemed to have been
received on the date it is delivered at the addressee's
address of record, place of business, residence or last
known address.
The communication, as appropriate, shall be delivered to
each party to the arbitration and to each arbitrator, and,
in institutional arbitration, one copy to the administering
institution.
(b) During the arbitration proceedings, the arbitrator may order a
mode of delivery and a rule for receipt of written communications
different from that provided in paragraph (a) of this Article.
(c) If a party is represented by counselor a representative, written
communications for that party shall be delivered to the address of
record of such counselor representative.
(d) Except as the parties may agree or the arbitrator may direct
otherwise, a written communication may be delivered by electronic
mail or facsimile transmission or by such other means that will
provide a record of the sending and receipt thereof at the recipient's
mailbox (electronic inbox).
Such communication shall be deemed to have been
received on the same date of its transmittal and receipt in
the mailbox (electronic inbox).
The same rule prevailing in international commercial arbitration for the
reception of evidence is applicable in a domestic arbitration. In line with
the policy of party autonomy, the general rule on receipt of
communications in international commercial arbitration as well as
domestic arbitration is that provided for by the parties in their arbitration
agreement.
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In the absence of such an agreement, written communications among the
parties and the arbitrators shall be delivered personally, by registered mail
or courier service, and shall be deemed to be received on the date it is
delivered at the addressee’s address of record, place of business, residence
or last known address.
In consonance with prevailing Philippine procedural laws, written
communications and pleadings intended for a party represented by a
counsel, should be addressed to his counsel.
The use of electronic mail, facsimile transmission or other electronic means
is permitted as long as there is a record of the sending and receipt of the
communication at the recipient’s mail box, and such electronic
communication shall be deemed to have been received on the same date
of its transmittal.
WAIVER OF OBJECTIONS
Article 5.3, IRR. Waiver of Right to Object.
(a) A party shall be deemed to have waived his right to object to non-
compliance with any non-mandatory provision of these Rules (from
which the parties may derogate) or any requirement under the
arbitration agreement when:
i. He/she/it knows of such non-compliance; and
ii. Proceeds with the arbitration without stating his/her/its
objections to such non-compliance without undue delay
or if a time-limit is provided therefor, within such period
of time.
(b) If an act is required or allowed to be done under this Chapter,
unless the applicable rule or the agreement of the parties provides a
different period for the act to be done, it shall be done within a period
of thirty (30) days from the date when such act could have been done
with legal effect.
The rule on waiver of objections to non-compliance with a non-mandatory
rule or any requirement under an arbitration agreement for domestic
arbitration is similar to the rule in international commercial arbitration. A
party may be estopped from questioning non-compliance or is deemed to
have waived his objection thereto if he fails to raise the objection without
delay or within the time prescribed therefor (30 days if no period is
prescribed), provided he knows of such non-compliance.
Rockland Construction Co., Inc. vs. Mid-Pasig Land
Development Corporation, 543 SCRA 596 [2008]
The act, omission or silence giving rise to waiver or estoppel
must be unequivocal and intentional.
Extent of Court Intervention.
IRR, Article 5.4. Extent of Court Intervention.
In matters governed by this Chapter, no court shall intervene except
in accordance with the Special ADR Rules.
IRR, Article 5.5. Court or Other Authority for Certain Functions of
Arbitration Assistance and Supervision.
The functions referred to in paragraphs (c) and (d) of Article 5.10
(Appointment of Arbitrators), paragraph (a) of Article 5.11 (Grounds
for Challenge), and paragraph (a) of Article 5.13 (Failure or
Impossibility to Act), shall be performed by the appointing authority,
unless the latter shall fail or refuse to act within thirty (30) days from
receipt of the request in which case, the applicant may renew the
application with the court.
The same rule in international commercial arbitration on the extent of
court intervention obtains in domestic arbitration. No court shall intervene
except in the instances allowed by the Arbitration Law, ADR Act and Special
ADR Rules.
Pursuant to the IRR, among these instances are when, 30 days having
elapsed from receipt of the request for arbitration, the appointing
authority fails to perform functions imposed, in which cases the applicant
may apply with the courts for the same relief.
Also, interim measures may be requested or enforced through the courts.
Thus:
Transfield Philippines, Inc. vs. Luzon Hydro Corp.
As a fundamental point, the pendency of arbitral proceedings
does not foreclose resort to the courts for provisional reliefs.
The Rules of the ICC, which govern the parties’ arbitral
dispute, allow the application of a party to a judicial authority
for interim or conservatory measures. Likewise, Section 4 of
RA 876 (The Arbitration Law) recognizes the rights of any party
to petition the court to take measures to safeguard and/ir
conserve any matter which is the subject of the dispute in
arbitration. In addition, RA 9285, otherwise known as the ADR
Act of 2004, allows the filing of provisional or interim measures
with the courts whenever the arbitral tribunal has no power to
act or to act effectively.
Resort to court intervention from a domestic arbitral award may also be
had through Section 24 of RA 876 to vacate the arbitral award, a petition
for review under Rule 43 of the 1997 Rules of Civil Procedure and a petition
for certiorari under Rule 65. Petitions under Rule 43 or 65 are not available
as remedies from an international commercial arbitral award.
If the arbitral tribunal, in the exercise of its authority to resolve or defer the
resolution of the preliminary issue of its jurisdiction over the arbitration
agreement, decides to defer the resolution thereof until the rendition of
the arbitral award, none of the parties can seek judicial relief from the
deferment. Motions for reconsideration, appeals and petitions for
certiorari are not available to challenge the decision of the arbitral tribunal
to defer the resolution of the preliminary jurisdictional issues. The parties
can, however, await the rendition of the final arbitral award, and raise the
jurisdictional issue before the courts in a proceeding for setting aside or
vacating the award.
The conditions for judicial review of arbitral awards have been defined by
the Supreme Court in National Power Corporation vs. Alonzo-Legasto, 2004
as follows:
“x x x As a rule, the arbitrator’s award cannot be set aside for
mere errors of judgment either as to the law or as to the facts.
Courts are generally without power to amend or over-rule
merely because of disagreement with matters of law or facts
determined by the arbitrators. They will not review the
findings of law and fact contained in an award, and will not
undertake to substitute their judgment for that of the
arbitrators. A contrary rule would make an arbitration award
the commencement, not the end, of litigation. Errors of law
and fact, or an erroneous decision on matters submitted to the
judgment of the arbitrators, are insufficient to invalidate an
award fairly and honestly made. Judicial review of an
arbitration award is, thus, more limited than judicial review of a
trial.
However, an arbitration award is not absolute and without
exceptions. Where the conditions described in Articles 2038,
2039 and 2040 of the Civil Code applicable to both
compromises and arbitrations are obtaining, the arbitrator’s
award may be annulled or rescinded. Additionally, judicial
review of an arbitration award is warranted when the
complaining party has presented proof of the existence of any
of the grounds for vacating, modifying or correcting an award
outlined in Sections 24 and 25 of RA No 876. x x x”
Moreover, an arbitral award may be vacated if made with “manifest
disregard of the law.” Hence:
“Finally, it should be stressed that while a court is precluded
from overturning an award for errors in determination of
factual issues, nevertheless, if an examination of the record
reveals no support whatsoever for the arbitrator’s
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 ALTERNATIVE DISPUTE RESOLUTION
determinations, their award must be vacated. In the same
manner, an award must be vacated if it was made in ‘manifest
disregard of the law.’
xxx xxx
Following Asset Privatization Trust, errors in law and fact would
not generally justify the reversal of an arbitral award. A party
asking for the vacation of an arbitral award must show that any
of the grounds for vacating, rescinding, or modifying an award
are present or that the arbitral award was made in manifest
disregard of the law. Otherwise, the Court is duty-bound to
uphold an arbitral award.
xxx xxx
The US case of Merrill Lynch, Pierce, Fenner & Smith, Inc. vs.
Jaros expounded on the phrase, ‘manifest disregard of the law’
in the following wise:
“This court has emphasized that manifest disregard of the law
is a very narrow standard of review. A mere error in
interpretation or application of the law is insufficient. Rather,
the decision must fly in the face of clearly established legal
precedent. When faced with questions of law, an arbitration
panel does not act in manifest disregard of the law unless (1)
the applicable legal principle is clearly defined and not subject
to reasonable debate; and (2) the arbitrators refused to heed
that legal principle.
Thus, to justify the vacation of an arbitral award on account of
‘manifest disregard of the law,’ the arbiter’s findings must
clearly and unequivocably violate an established legal
precedent. Anything less would not suffice.” (Equitable PCI
Banking Corporation vs. RCBS Capital Corporation).
Representation.
IRR, Article 5.41. Legal Representation in Domestic Arbitration.
(a) In domestic arbitration conducted in the Philippines, a party may
be represented by any person of his/her/its choice:
Provided, that such representative, unless admitted to the
practice of law in the Philippines, shall not be authorized
to appear as counsel in any Philippine Court, or any other
quasi-judicial body whether or such appearance is in
relation to the arbitration in which he/she appears.
xxx
The same rule on representation in international commercial arbitration
obtains in domestic arbitration. A party may appear by himself or be
represented or assisted by any person of his choice, provided that such
representative, unless admitted to the practice of law in the Philippines,
shall not be authorized to appear as counsel in any Philippine court or
quasi-judicial body. A party desiring to be represented by counsel shall
notify the other party or parties of such intention at least 5 days prior to
the hearing.
Arbitration Agreement.
IRR, Article 5.6. Form of Arbitration Agreement.
An arbitration agreement shall be in writing. An agreement is in
writing if it is contained in a document signed by the parties or in an
exchange of letters, telex, telegrams or other means of
telecommunication which provide a record of the agreement, or in an
exchange of statements of claim and defense in which the existence
of an agreement is alleged by one party and not denied by the other.
The reference in a contract to a document containing an arbitration
clause constitutes an arbitration agreement provided that the
contract is in writing and the reference is such as to make that clause
part of the contract.
Article 5.7. Arbitration Agreement and Substantive Claim Before
Court.
(a) A party to an action may request the court before which it is
pending to stay the action and to refer the dispute to arbitration in
accordance with their arbitration agreement not later than the pre-
trial conference.
Thereafter, both parties may make a similar request with
the court.
The parties shall be referred to arbitration unless the court
finds that the arbitration agreement is null and void,
inoperative or incapable of being performed.
(b) Where an action referred to in paragraph (a) of this Article has
been brought, arbitral proceedings may nevertheless be commenced
or continued, and an award may be made, while the issue is pending
before the court.
(c) Where the action is commenced by or against multiple parties, one
or more of whom are parties to an arbitration agreement, the court
shall refer to arbitration those parties who are bound by the
arbitration agreement although the civil action may continue as to
those who are not bound by such arbitration agreement.
Arbitration Law, Section 2. Persons and matters subject to arbitration.
Two or more persons or parties may submit to the arbitration of one
or more arbitrators any controversy existing between them at the
time of the submission and which may be the subject of an action, or
the parties to any contract may in such contract agree to settle by
arbitration a controversy thereafter arising between them.
Such submission or contract shall be valid, enforceable
and irrevocable, save upon such grounds as exist at law
for the revocation of any contract.
Such submission or contract may include question arising out of
valuations, appraisals or other controversies which may be collateral,
incidental, precedent or subsequent to any issue between the parties.
A controversy cannot be arbitrated where one of the parties to the
controversy is an infant, or a person judicially declared to be
incompetent, unless the appropriate court having jurisdiction approve
a petition for permission to submit such controversy to arbitration
made by the general guardian or guardian ad litem of the infant or of
the incompetent.
But where a person capable of entering into a submission or contract
has knowingly entered into the same with a person incapable of so
doing, the objection on the ground of incapacity can be taken only in
behalf of the person so incapacitated.
Arbitration Law, Section 4. Form of arbitration agreement.
A contract to arbitrate a controversy thereafter arising between the
parties, as well as a submission to arbitrate an existing controversy
shall be in writing and subscribed by the party sought to be charged,
or by his lawful agent.
The making of a contract or submission for arbitration described in
section two hereof, providing for arbitration of any controversy, shall
be deemed a consent of the parties to the jurisdiction of the Court of
First Instance of the province or city where any of the parties resides,
to enforce such contract or submission.
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 ALTERNATIVE DISPUTE RESOLUTION
As previously emphasized, an agreement to arbitrate is a contract and, as
such, the arbitration agreement must satisfy the essential requisites of a
valid contract.
Like in the case of mediation and international commercial arbitration, the
consent to arbitrate can either be a pre-causal consent (agreement to
submit to arbitration) such as when the parties agree in a contract to settle
by arbitration a controversy that will arise between them; or a present
causal consent (submission agreement) such as when the controversy
already exists between the parties at the time of the submission to
arbitration. The submission and contract shall be valid, enforceable and
irrevocable except upon grounds provided by law for the revocation of
contracts.
Of these grounds, the Arbitration Law and the IRR emphasize the
incapacity of a party. Where one of the parties to the controversy is an
infant, or a person judicially declared to be incompetent, the dispute is not
capable of arbitration, unless the referral to arbitration is made by a
general guardian or a guardian ad litem. And the incapacity of a party
cannot be invoked by a party who knowingly entered into an arbitration
agreement with an incapacitated party.
An arbitration agreement must be in writing and subscribed by the party
sought to be charged, or by his lawful agent.
A court before which an action is brought on a matter which is the subject
of an arbitration agreement shall, if at least one party so requests not later
than the pre-trial conference, or upon the request of both parties
thereafter, refer the parties to arbitration unless it finds that the
arbitration agreement is null and void, inoperative or incapable of being
performed. If the parties so request in the same manner, the court may
stay the proceedings during the pendency of the arbitration. In such case,
the court does not lose its jurisdiction over the case and the proceedings
are merely stayed to await the rendition of the arbitral award which shall
be enforced by the court.
Moreover, even while the court proceedings are pending, the arbitration
can proceed and an award may be made thereon. The rule, however, is
different where the issue involved is the challenge to an arbitrator. In this
case, the elevation of the incident to a court suspends the arbitration.
When the court action is multi-party, and one or more but not all of the
parties are parties to an arbitration agreement, the court shall refer those
who are parties to the arbitration agreement to arbitration, and proceed
with the court action as to those who are not bound by such arbitration
agreement. The court, however, may issue an order directing the inclusion
in the arbitration of those parties who are not bound by the arbitration
agreement but who agree to such inclusion provided that hose originally
bound by it do not object to their inclusion. In Gerardo Lanuza, Jr. vs. BF
Corporation, the Supreme Court held that, as a result of piercing the veil of
corporate fiction, corporate representatives may be compelled to submit
to arbitration proceedings pursuant to a contract entered into by the
corporation they represent.
Determination of Applicable Rules of Procedure.
IRR, Article 5.18 Determination of Rules of Procedure.
(a) Subjected to the provisions of these Rules, the parties are free to
agree on the procedure to be followed by the arbitral tribunal in
conducting the proceedings.
(b) Failing such agreement, the arbitral tribunal may subject to the
provision of the ADR Act, conduct the arbitration in such manner as it
considers appropriate.
The power conferred upon the arbitral tribunal includes
the power to determine admissibility, relevance,
materially and weight of evidence.
The determination of the applicable rules of procedure is essentially the
same for domestic arbitration and international commercial arbitration.
The parties are free to agree on the applicable rules of procedure, in the
absence of which, the arbitral tribunal may conduct the arbitration in the
manner it considers appropriate.
Commencement of Arbitral Proceedings.
Arbitration Law, Section 5. Preliminary procedure.
An arbitration shall be instituted by:
A. In the case of a contract to arbitrate future controversies by the
service by either party upon the other of a demand for arbitration in
accordance with the contract.
Such demand shall be set forth the nature of the controversy, the
amount involved, if any, and the relief sought, together with a true
copy of the contract providing for arbitration.
The demand shall be served upon any party either in person or by
registered mail.
In the event that the contract between the parties provides for the
appointment of a single arbitrator, the demand shall be set forth a
specific time within which the parties shall agree upon such
arbitrator.
If the contract between the parties provides for the appointment of
three arbitrators, one to be selected by each party, the demand shall
name the arbitrator appointed by the party making the demand;
and shall require that the party upon whom the demand is
made shall within fifteen days after receipt thereof advise
in writing the party making such demand of the name of
the person appointed by the second party;
such notice shall require that the two arbitrators so
appointed must agree upon the third arbitrator within ten
days from the date of such notice. x x x
IRR, Article 5.20 Commencement of Arbitral Proceedings.
(a) Where there is a prior arbitration agreement between the parties,
arbitration is deemed commenced as follows:
(i) In institutional arbitration is commenced in accordance
with the arbitration rules of the institution agreed upon by
the parties.
(ii) In ad hoc arbitration, arbitration is commenced by the
claimant upon delivering to the respondent a demand for
arbitration. A demand may be in any form stating:
(aa) the name, address and description of each
of the parties;
(bb) a description of the nature and
circumstances of the dispute giving rise to the
claim;
(cc) a statement of the relief sought, including
the amount of the claim;
(dd) the relevant agreements, if any, including
the arbitration agreement, a copy of which
shall be attached; and
(ee) appointment of arbitrators and / or
demand to appoint.
(b) If the arbitration agreement provides for the appointment of a
sole arbitrator, the demand shall include an invitation of the claimant
to the respondent to meet and agree upon such arbitrator, the place,
time and date stated therein which shall not be less than thirty (30)
days from receipt of the demand.
(c) If the arbitration agreement provides for the establishment of an
arbitral tribunal of three (3) arbitrators, the demand shall name the
arbitrator appointed by the claimant.
It shall include the curriculum vitae of the arbitrator
appointed by the claimant and the latter’s acceptance of
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 ALTERNATIVE DISPUTE RESOLUTION

the appointment.
No person shall serve as an arbitrator in any proceeding if
(d) Where there is no prior arbitration agreement, arbitration may be
he/she has or has had financial, fiduciary or other interest
initiated by one party through a demand upon the other to submit
in the controversy or cause to be decided or in the result
their dispute to arbitration.
of the proceeding, or has any personal bias, which might
prejudice the right of any party to a fair and impartial
Arbitration shall be deemed commenced upon the
award.
agreement by the other party to submit the dispute to
arbitration.
No party shall select as an arbitrator any person to act as his/her
champion or to advocate his/her cause.
(e) The demand shall require the respondent to name his/her/its/
arbitrator within a period which shall not be less than fifteen (15)
(b) The parties are free to agree on a procedure of appointing the
days from receipt of the demand. This period may be extended by
arbitrator or arbitrators. If, in the contract for arbitration or in the
agreement of the parties.
submission, a provision is made for a method of appointing an
arbitrator or arbitrators, such method shall be followed.
Within said period, the respondent shall give a written
notice to the claimant of the appointment of the
(c) Failing such agreement,
respondent’s arbitrator and attach to the notice the
arbitrator’s curriculum vitae and the latter’s acceptance of
(i) in an arbitration with three (3) arbitrators, each party
the appointment.
shall appoint one (1) arbitrator, and the two (2) arbitrators
thus appointed shall appoint the third arbitrator; if a party
fails to appoint the arbitrator within thirty (30) days of
In general, the commencement of arbitral proceedings is determined by
receipt of a request to do so from the other party, or if the
the prior arbitration agreement between the parties. Up to that extent,
two arbitrators fail to agree on the third arbitrator within
there is similarity between international commercial arbitration and
thirty (30) days of their appointment, the appointment
domestic arbitration on the commencement of arbitral proceedings.
shall be made, upon request of a party, by the appointing
authority;
The following are the specific rules for the commencement of domestic
arbitration:
(ii) in an arbitration with a sole arbitrator, if the parties
are unable to agree on the arbitrator, he/she shall be
1. In an institutional arbitration where there is no prior arbitration
appointed, upon request of a party, by the appointing
agreement, it is commenced in accordance with the arbitration
authority.
rules of the institutional arbitrator.
(d) Where, under an appointment procedure agreed upon by the
2. In an ad hoc arbitration where there is a prior arbitration
parties,
agreement, it is commenced upon the delivery by the claimant
to the respondent of a demand for arbitration. The demand for
(i) a party fails to act or appoint an arbitrator as required
arbitration shall be in any form and shall state the name,
under such procedure, or
address and description of each of the parties; the description
of the nature and circumstances of the dispute giving rise to
(ii) the parties, or two (2) arbitrators, are unable to
the claim; the relief sought including the amount of the claim;
appoint an arbitrator or reach an agreement expected of
the relevant agreements including the arbitration agreement, a
them under such procedure, or
copy of which shall be attached; and the appointment of the
arbitrators and/or demand to appoint.
(iii) a third party, including an institution, fails to appoint
an arbitrator or to perform any function entrusted to it
Where there is no prior arbitration agreement, it is initiated by
under such procedure, or
one party through a demand upon the other to submit their
dispute to arbitration, and arbitration is deemed commenced
(iv) The multiple claimants or the multiple respondents
upon the agreement by the other party to submit the dispute
is/are unable to appoint its/their respective arbitrator,
to arbitration. The demand shall also require the respondent to
any party may request the appointing authority to appoint
name his arbitrator within a period which shall not be less than
an arbitrator.
15 days from receipt of the demand.
In making the appointment, the appointing authority shall summon
The default rule in the case of international commercial arbitration is that it
the parties and their respective counsel to appear before said
is commenced on the date on which a request for the dispute to be
authority on the date, time and place set by it, for the purpose of
referred to arbitration is received by the respondent, while that for
selecting and appointing a sole arbitrator.
domestic arbitration where there is no prior arbitration agreement is
reckoned from the date when the other party agreed to submit the dispute
If a sole arbitrator is not appointed in such meeting, or the meeting
to arbitration.
does not take place because of the absence of either or both parties
despite due notice, the appointing authority shall appoint the sole
Arbitrators and Arbitral Tribunals.
arbitrator.

(e) If the default appointment of an arbitrator is objected to by a

IRR, Article 5.9. Number of Arbitrators.
The parties are free to determine the number of arbitrators. Failing
such determination, the number of arbitrators shall be three (3).
IRR, Article 5.10. Appointment of Arbitrators.
(a) Any person appointed to serve as an arbitrator must be of legal
age, in full enjoyment of his/her civil rights and knows how to read
and write.
No person appointed to serve as an arbitrator shall be
related by blood or marriage within the sixth degree to
either party to the controversy.
party on whose behalf the default appointment is to be made, and
the defaulting party requests the appointing authority for additional
time to appoint his/her arbitrator, the appointing authority, having
regard to the circumstances, may give the requesting party not more
than thirty (30) days to make the appointment.
If the objection of a party is based on the ground that the party did
not fail to choose and appoint an arbitrator for the arbitral tribunal,
there shall be attached to the objection the appointment of an
arbitrator together with the latter’s acceptance thereof and
curriculum vitae.
Otherwise, the appointing authority shall appoint the
arbitrator for that party.
(f) In making a default appointment, the appointing authority shall
have regard to such considerations as are likely to secure the

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 ALTERNATIVE DISPUTE RESOLUTION
appointment of an independent and impartial arbitrator.
In order to achieve speedy and impartial justice and to
moderate the cost of arbitration, in choosing an arbitrator,
the appointing authority shall give preference to a
qualified person who has a place of residence or business
in the same general locality as the agreed venue of the
arbitration and who is likely to accept the arbitrator’s fees
agreed upon by the parties, or as fixed in accordance
either with the internal guidelines or the Schedule of Fees
approved by the administering institution or by the
appointing authority.
(g) The appointing authority shall give notice in writing to the parties
of the appointment made or its inability to comply with the Request
for Appointment and the reasons why it is unable to do so, in which
later case, the procedure described under Article 5.5 (Court or Other
Authority for Certain Functions of arbitration Assistance and
Supervision) shall apply.
(h) A decision on a matter entrusted by this Article to the appointing
authority shall be immediately executory and not subject to appeal or
motion for reconsideration.
The appointing authority shall be deemed to have been
given by the parties discretionary authority in making the
appointment but in doing so, the appointing authority
shall have due regard to any qualification or
disqualification of an arbitrator/s under paragraph (a) of
Article 5.10 (Appointment of Arbitrators) as well as any
qualifications required of the arbitrator/s by the
agreement of the parties and to such considerations as are
likely to secure the appointment of an independent and
impartial arbitrator.
(i) The chairman of the arbitral tribunal shall be selected in
accordance with the agreement of the parties and/or the rules agreed
upon or, in default thereof, by the arbitrators appointed.
(j) Any clause giving one of the agreement, if otherwise valid, shall be
construed as permitting the appointment of one (1) arbitrator by all
claimants and one (1) arbitrator by all respondents. The third
arbitrator shall be appointed as provided above.
If all the claimants or all the respondents cannot decide among
themselves on an arbitrator, the appointment shall be made for them
by the appointing authority.
(k) The appointing authority may adopt Guidelines for the making of a
Request for Appointment.
(l) Except as otherwise provided in the Guidelines of the appointing
authority, if any, a Request for Appointment shall include, as
applicable, the following:
(i) the demand for arbitration;
(ii) the name/s and curricula vitae of the appointed
arbitrator/s;
(iii) the acceptance of his/her/its appointment of the
appointed arbitrator/s;
(iv) any qualification or disqualification of the arbitrator as
provided in the arbitration agreement;
(v) an executive summary of the dispute which should
indicate the nature of the dispute and the parties thereto;
(vi) principal office and officers of a corporate party;
(vii) the person/s appearing as counsel for the party/ies;
and
(viii) information about arbitrator’s fees where there is an
agreement between the parties with respect thereto.
In institutional arbitration, the request shall include such further
information or particulars as the administering institution shall
require.
(m) A copy of the Request for Appointment shall be delivered to the
adverse party. Proof of such delivery shall be included in, and shall
form part of, the Request for Appointment filed with the appointing
authority.
(n) A party upon whom a copy of the Request for Appointment is
communicated may, within seven (7) days of its receipt, file with the
appointing authority his/her/its objection/s to the Request or ask for
an extension of time, not exceeding thirty (30) days from receipt of
the request, to appoint an arbitrator or act in accordance with the
procedure agreed upon or provided by these Rules.
Within the aforementioned periods, the party seeking the
extension shall provide the appointing authority and the
adverse party with a copy of the appointment of his/her
arbitrator, the latter’s curriculum vitae, and the latter’s
acceptance of the appointment. In the event that the said
party fails to appoint an arbitrator within said period, the
appointing authority shall make the default appointment.
(o) An arbitrator, in accepting an appointment, shall include, in
his/her acceptance letter, a statement that:
(i) he/she agrees to comply with the applicable law, the
arbitration rules agreed upon by the parties, or in default
thereof, these Rules, and the Code of Ethics for Arbitrators
in Domestic Arbitration, if any;
(ii) he/she accepts as compensation the arbitrator’s fees
agreed upon by the parties or as determined in
accordance with the rules agreed upon by the parties, or
in default thereof, these Rules; and
(iii) he agrees to devote as much time and attention to the
arbitration as the circumstances may require in order to
achieve the objective of a speedy, effective and fair
resolution of the dispute.
IRR, Article 5.11. Grounds for Challenge.
(a) When a person is approached in connection with his/her possible
appointment as an arbitrator, he/she shall disclose any circumstance
likely to give rise to justifiable doubts as to his/her impartiality,
independence, qualifications and disqualifications.
An arbitrator, from the time of his/her appointment and
throughout the arbitral proceedings, shall without delay,
disclose any such circumstances to the parties unless they
have already been informed of them by him/her.
A person, who is appointed as an arbitrator notwithstanding the
disclosure made in accordance with this Article, shall reduce the
disclosure to writing and provide a copy of such written disclosure to
all parties in the arbitration.
(b) An arbitrator may be challenged only if:
(i) circumstances exist that give rise to justifiable doubts
as to his/her impartiality or independence;
(ii) he/she does not possess qualifications as provided for
in this Chapter or those agreed to by the parties;
(iii) he/she is disqualified to act as arbitration under these
Rules;
(iv) he refuses to respond to questions by a party
regarding the nature and extent of his professional
dealings with a party or its counsel.
(c) If, after appointment but before or during hearing, a person
appointed to serve as an arbitrator shall discover any circumstances
likely to create a presumption of bias, or which he/she believes might
disqualify him/her as an impartial arbitrator, the arbitrator shall
immediately disclose such information to the parties. Thereafter, the
parties may agree in writing:
(i) to waive the presumptive disqualifying circumstances;
or
(ii) to declare the office of such arbitrator vacant. Any such
vacancy shall be filed in the same manner the original
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 ALTERNATIVE DISPUTE RESOLUTION
appointment was made.
(d) After initial disclosure is made and in the course of the arbitration
proceedings, when the arbitrator discovers circumstances that are
likely to create a presumption of bias, he/she shall immediately
disclose those circumstances to the parties.
A written disclosure is not required where it is made
during the arbitration and it appears in a written record of
the arbitration proceedings.
(e) An arbitrator who has or has had financial or professional dealings
with a party to the arbitration or to the counsel of either party shall
disclose in writing such fact to the parties, and shall, in good faith,
promptly respond to questions from a party regarding the nature,
extent and age of such financial or professional dealings.
Article 5.12. Challenge Procedure.
(a) The parties are free to agree on a procedure for challenging an
arbitrator, subject to the provisions of paragraph (c) of this Article.
(b) Failing such agreement, a party who intends to challenge an
arbitrator shall, within fifteen (15) days after becoming aware of the
constitution of the arbitral tribunal or after becoming aware of any
circumstance referred to in paragraph (b) of Article 5.11 (Grounds for
Challenge), send a written statement of the reasons for the challenge
to the arbitral tribunal. Unless the challenged arbitrator withdraws
from his/her office or the other party agrees to the challenge, the
arbitral tribunal shall decide on the challenge.
(c) If a challenge under any procedure agreed upon by the parties or
under the procedure of paragraph (b) of this Article in not successful,
the challenging party may request the appointing authority, within
thirty (30) days after having received notice of the decision rejecting
the challenge, to decide on the challenge, which decision shall be
immediately executory and not subject to appeal or motion for
reconsideration. While such a request is pending, the arbitral tribunal,
including the challenged arbitrator, may continue the arbitral
proceedings and make an award.
(d) If a request for inhibition is made, it shall be deemed as a
challenge.
(e) A party may challenge an arbitrator appointed by him/her/it, or in
whose appointment he/she/it has participated, only for reasons of
which he/she/it becomes aware after the appointment has been
made.
(f) The challenge shall be in writing and it shall state specific facts that
provide the basis for the ground relied upon for the challenge.
A challenge shall be made within fifteen (15) days from
knowledge by a party of the existence of a ground for a
challenge or within fifteen (15) days from the rejection by
an arbitrator of a party’s request for his/her inhibition.
(g) Within fifteen (15) days of receipt of the challenge, the challenged
arbitrator shall decide whether he/she shall accept the challenge or
reject it. If he/she accepts the challenge, he/she shall voluntarily
withdraw as arbitrator. If he/she rejects it, he/she shall communicate,
within the same period of time, his/her rejection of the challenge and
state the facts and arguments relied upon for such rejection.
(h) An arbitrator who does not accept the challenge shall be given an
opportunity to be heard.
(i) Notwithstanding the rejection of the challenge by the arbitrator,
the parties may, within the same fifteen (15) day period, agree to the
challenge.
(j) In default of an agreement of the parties to agree on the challenge
thereby replacing the arbitrator, the arbitral tribunal shall decide on
the challenge within thirty (30) days from receipt of the challenge.
(k) If the challenge procedure as agreed upon by the parties or as
provided in this Article is not successful, or a party or the arbitral
tribunal shall decline to act, the challenging party may request the
appointing authority in writing to decide on the challenge within
thirty (30) days after having received notice of the decision rejecting
the challenge.
The appointing authority shall decide on the challenge
within fifteen (15) days from receipt of the request.
If the appointing authority shall fail to act on the challenge
within thirty (30) days from the date of its receipt or
within such further time as it may fix, with notice to the
parties, the requesting party may renew the request with
the court.
The request made under this Article shall include the challenge, the
reply or explanation of the challenged arbitrator and relevant
communication, if any, from either party, or from the arbitral
tribunal.
(n) Every communication required or agreement made under this
Article in respect of a challenge shall be delivered, as appropriate, to
the challenged arbitrator, to the parties, to the remaining members of
the arbitral tribunal and to the institution administering the
arbitration, if any.
(m) A challenged arbitrator shall be replaced if:
(i) he/she withdraws as arbitrator, or
(ii) the parties agree in writing to declare the office of
arbitrator vacant, or
(iii) the arbitral tribunal decides the challenge and
declares the office of the challenged arbitrator vacant, or
(iv) the appointing authority decides the challenge and
declares the office of the challenged arbitrator vacant, or
(v) in default of the appointing authority, the court
decides the challenge and declares the office of the
challenged arbitrator vacant.
(n) The decision of the parties, the arbitral tribunal, the appointing
authority, or in proper cases, the court, to accept or reject a challenge
is not subject to appeal or motion for reconsideration.
(o) Until a decision is made to replace the arbitrator under this Article,
the arbitration proceeding shall continue notwithstanding the
challenge, and the challenged arbitrator shall continue to participate
therein as an arbitrator.
However, if the challenge incident is raised before the
court, because the parties, the arbitral tribunal or
appointing authority failed or refused to act within the
period provided in paragraphs (j) and (k) of this Article,
the arbitration proceeding shall be suspended until after
the court shall have decided the incident.
The arbitration shall be continued immediately after the
court has delivered an order on the challenging incident.
If the court agrees that the challenged arbitrator shall be
replaced, the parties shall immediately replace the
arbitrator concerned.
(p) The appointment of a substitute arbitrator shall be made pursuant
to the procedure applicable to the appointment of the arbitrator
being replaced.
Article 5.13. Failure or Impossibility to Act.
(a) If an arbitrator becomes de jure or de facto unable to perform
his/her functions or for other reasons fails to act without undue
delay, his/her mandate terminates if he/she withdraws from his/her
office or if the parties agree on the termination.
Otherwise, if a controversy remains concerning any of
these grounds, any party may request the appointing
authority to decide on the termination of the mandate,
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which decision shall be immediately executory and not
subject to appeal or motion for reconsideration.
(b) If, under this Article or Article 5.12 (Challenge Procedure), an
arbitrator withdraws from his/her office or a party agrees to the
termination of the mandate of an arbitrator, this does not imply
acceptance Of the validity of any ground referred to in this Article
5.12.
IRR, Article 5.14. Appointment of Substitute Arbitrator.
Where the mandate of an arbitrator terminates under Articles 5.12
(Challenge Procedure) or 5.13 (Failure or Impossibility) or because of
his withdrawal from office for any other reason or because of the
revocation of his mandate by agreement of the parties or in any other
case of termination of his/her mandate, a substitute arbitrator shall
be appointed according to the rules applicable to the arbitrator being
replaced
Arbitration Law, Section 8. Appointment of arbitrators.
If, in the contract for arbitration or in the submission described in
section two, provision is made for a method of naming or appointing
an arbitrator or arbitrators, such method shall be followed; but if no
method be provided therein the Court of First Instance shall designate
an arbitrator or arbitrators.
The Court of First Instance shall appoint an arbitrator or arbitrators,
as the case may be, in the following instances:
a. If the parties to the contract or submission are unable to
agree upon a single arbitrator; or
b. If an arbitrator appointed by the parties is unwilling or
unable to serve, and his successor has not been appointed
in the manner in which he was appointed; or
c. If either party to the contract fails or refuses to name his
arbitrator within fifteen days after receipt of the demand
for arbitration; or
d. If the arbitrators appointed by each party to the contract,
or appointed by one party to the contract and by the
proper Court, shall fail to agree upon or to select the third
arbitrator.
e. The court shall, in its discretion appoint one or three
arbitrators, according to the importance of the
controversy involved in any of the preceding cases in
which the agreement is silent as to the number of
arbitrators.
f. Arbitrators appointed under this section shall either
accept or decline their appointments within seven days of
the receipt of their appointments. In case of declination or
the failure of an arbitrator or arbitrators to duly accept
their appointments the parties or the court, as the case
may be, shall proceed to appoint a substitute or
substitutes for the arbitrator or arbitrators who decline or
failed to accept his or their appointments.
Arbitration Law, Section 9. Appointment of additional arbitrators.
Where a submission or contract provides that two or more arbitrators
therein designated or to be thereafter appointed by the parties, may
select or appoint a person as an additional arbitrator, the selection or
appointment must be in writing. Such additional arbitrator must sit
with the original arbitrators upon the hearing.
Section 10. Qualifications of arbitrators.
Any person appointed to serve as an arbitrator must be of legal age,
in full-enjoyment of his civil rights and know how to read and write.
No person appointed to served as an arbitrator shall be related by
blood or marriage within the sixth degree to either party to the
controversy.
No person shall serve as an arbitrator in any proceeding if he has or
has had financial, fiduciary or other interest in the controversy or
cause to be decided or in the result of the proceeding, or has any
personal bias, which might prejudice the right of any party to a fair
and impartial award.
No party shall select as an arbitrator any person to act as his
champion or to advocate his cause.
If, after appointment but before or during hearing, a person
appointed to serve as an arbitrator shall discover any circumstances
likely to create a presumption of bias, or which he believes might
disqualify him as an impartial arbitrator, the arbitrator shall
immediately disclose such information to the parties. Thereafter the
parties may agree in writing:
a. to waive the presumptive disqualifying circumstances; or
b. to declare the office of such arbitrator vacant. Any such
vacancy shall be filled in the same manner as the original
appointment was made.
Arbitration Law, Section 11. Challenge of arbitrators.
The arbitrators may be challenged only for the reasons mentioned in
the preceding section which may have arisen after the arbitration
agreement or were unknown at the time of arbitration.
The challenge shall be made before them.
If they do not yield to the challenge, the challenging party may renew
the challenge before the Court of First Instance of the province or city
in which the challenged arbitrator, or, any of them, if there be more
than one, resides.
While the challenging incident is discussed before the court, the
hearing or arbitration shall be suspended, and it shall be continued
immediately after the court has delivered an order on the challenging
incident.
Arbitration Law, Section 13. Oath of arbitrators.
Before hearing any testimony, arbitrators must be sworn, by any
officer authorized by law to administer an oath, faithfully and fairly to
hear and examine the matters in controversy and to make a just
award according to the best of their ability and understanding.
Arbitrators shall have the power to administer the oaths to all
witnesses requiring them to tell the whole truth and nothing but the
truth in any testimony which they may give in any arbitration hearing.
This oath shall be required of every witness before any of his
testimony is heard.
Number of Arbitrators.
Unless the parties have agreed otherwise, there shall be three (3)
arbitrators for domestic arbitration.
Qualifications and Disqualifications.
An arbitrator must:
1. Be of legal age;
2. Be in full enjoyment of his civil rights; and
3. Know how to read and write.
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The foregoing qualifications are prescribed in the Arbitration Law and in
the IRR. However, they are not similarly required for international
commercial arbitration except that an arbitrator in an international
commercial arbitration may be challenged if he does not possess the
qualifications agreed to by the parties.
No person shall serve as an arbitrator in any proceeding if:
1. He is related by blood or marriage within the 6 th degree to
either party to the controversy;
2. He has or has had financial, fiduciary or other interest in the
controversy or cause to be decided, or in the result of the
proceeding;
3. He has personal bias which might prejudice the right of any
party to a fair and impartial award; or
4. He has been selected to act as champion or to advocate a
party’s cause.
The reason for the foregoing disqualifications is the same as in the case of
international commercial arbitration, i.e., the arbitrator must be impartial
and independent. In both domestic and international commercial
arbitration, the arbitrator is required to disclose these circumstances and
may be challenged on account thereof.
Procedure for the Appointment of Arbitrators.
The parties in a domestic arbitration are free to agree on the procedure for
the appointment of arbitrators except that, in order to prevent undue
advantage, an agreement or clause giving a party the power to choose
more arbitrators than the other is void. The parties may, however, agree to
empower the arbitrators already appointed to select and appoint
additional arbitrators who shall sit with the original arbitrators.
If there is no agreement for the appointment, the following are the default
rules:
(1) Appointment by the parties. In an arbitration with three (3) arbitrators,
each party shall appoint one (1) arbitrator, and the two (2) arbitrators thus
appointed shall appoint the third arbitrator within 30 days from receipt of
a request to do so, failing which, the appointment shall be made by the
appointing authority.
In an arbitration with a sole arbitrator, the parties shall agree on the
arbitrator, failing which, the appointment shall be made by the appointing
authority upon the request of a party.
(2) Default appointment by appointing authority. The appointing authority
in an ad hoc domestic arbitration, in the absence of an agreement of the
parties, is the National President of the IBP or his duly authorized
representative. In the case of institutional domestic arbitration, there is no
need for an appointing authority for purposes of appointing arbitrators
because the parties have already designated the institutional ADR provider
under whose rules the arbitrator or arbitrators are to be selected.
Where, under an appointment procedure agreed upon by the parties, a
party or the arbitrators already appointed, or a third party, including an
institution, or the multiple claimants or multiple respondents, fail to
appoint any arbitrator or fail to perform any function entrusted to them
preventing the appointment of any arbitrator, any party may request the
appointing authority to appoint an arbitrator. The appointing authority
may make the appointment or give the appointing party who objects to a
default appointment time to make the appointment but not more than 30
days. The decision of the appointing authority on these matters shall be
immediately executory and shall not be subject to appeal or motion for
reconsideration. The principle is the same as that for international
commercial arbitration.
In the case of sole arbitrators, Article 5.10 of the IRR additionally empowers
the appointing authority to summon the parties and their counsel to
appear before it in order to select and appoint the sole arbitrator, failing
which, the appointing authority shall make the appointment.
(3) Request for appointment. The Request for Appointment with proof of
delivery to the adverse party shall be filed with the appointing authority.
Within 7 days from receipt of the Request for Appointment, the adverse
party may file his objections to the Request or ask for an extension not
exceeding 30 days to appoint an arbitrator.
(4) Acceptance of appointment. An arbitrator, in accepting his
appointment, shall submit an acceptance letter which shall include
statements that [i] he agrees to comply with the applicable law and rules of
arbitration; [ii] he accepts the applicable arbitrator’s fees; and [iii] he
agrees to devote as much time and attention to the arbitration as the
circumstances may require.
(5) Oath of arbitrators. Before hearing any testimony, arbitrators shall take
an oath to faithfully and fully hear and examine the matters in controversy
and to make a just award according to the best of their ability and
understanding.
Grounds for Challenge.
An arbitrator may be challenged only if:
i. Circumstances exist that give rise to a justifiable doubt as to his
impartiality or independence;
ii. He does not possess the qualifications provided for under the
law or agreed to by the parties;
iii. He is disqualified to act as an arbitrator; or
iv. He refuses to respond to questions by a part regarding the
nature and extent of his professional dealings with a party or
his counsel.
The third (disqualification) and the fourth (refusal to answer) grounds are
not provided for in the rules on international commercial arbitration but
are provided for in the rules on domestic arbitration based on Section 10 of
RA No 876.
The party appointing an arbitrator may challenge that arbitrator for
reasons which the party became aware of after the appointment was
made. Otherwise, he is already estopped from challenging the
appointment he himself made.
If an arbitrator so appointed discovers the existence of any circumstance
that would create a presumption of bias or would render him a partial
arbitrator, he shall immediately disclose such information to the parties.
The parties may agree in writing to either [i] waive the presumptive
disqualifying circumstance; or [ii] declare the office of such arbitrator
vacant and appoint a substitute arbitrator in the same manner as the
original appointment.
In addition, where the presumptive evidence of bias consists of prior
professional or financial dealings with a party or his counsel, the arbitrator
shall disclose such fact to the parties and shall respond promptly and in
good faith to questions from a party regarding the nature, extent and age
of such dealings. The arbitrator’s refusal to respond is a ground to
challenge him.
Procedure for the Challenge.
The procedure for the challenge against an arbitrator in a domestic
arbitration is similar to that provided for in international commercial
arbitration. The general rule is that the procedure that is agreed upon by
the parties for challenging an arbitrator shall be applied. In default thereof,
the following procedure shall govern:
1. The challenging party shall send a written statement of the
reasons for the challenge to the arbitral tribunal within 15 days
after becoming aware of the constitution of the arbitral
tribunal or after becoming aware of the circumstances
surrounding the ground for the challenge. The challenge shall
be in writing and shall state specific facts that provide basis for
the ground for the challenge. A request for inhibition shall be
deemed a challenge.
2. Within 15 days from receipt of a challenge, the challenged
arbitrator may either accept or reject the challenge. If he
accepts it, he shall voluntarily withdraw as arbitrator.
3. If he rejects the challenge, he shall communicate within the
same period of 15 days his rejection of the challenge and state
the facts and arguments relied upon therefor. He shall be given
an opportunity to be heard on the matter.
4. Notwithstanding the rejection of the challenge by the
challenged arbitrator, within the same period of 15 days, the
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parties may agree to the challenge and replace the challenged
arbitrator.
5. If the challenged arbitrator does not accept the challenge or
does not withdraw from his office, and the parties do not agree
to the challenge, the arbitral tribunal shall decide the challenge
within 30 days from receipt of the notice of the decision
rejecting the challenge.
6. If the challenge before the arbitral tribunal is not successful, or
a party or arbitral tribunal shall decline to act, within 30 days
from notice of the decision rejecting the challenge, the
challenging party may request the appointing authority to
decide the challenge.
7. If the appointing authority shall fail to act on the challenge
within 30 days from the date of its receipt, or within such
further time as it may fix, the requesting party may, with notice
to the parties, renew the request with the court.
8. Until a decision is made by the challenged arbitrator, the
parties, the arbitral tribunal, or the appointing authority, as the
case may be, the arbitration proceeding shall continue
notwithstanding the challenge and the challenged arbitrator
shall continue to participate therein as arbitrator. However,
once the challenge is elevated to the court, the arbitration
proceeding shall be suspended until after the court shall have
decided the incident.
9. The decision of the parties, the arbitral tribunal, the appointing
authority or the court, in proper cases, to accept or reject a
challenge shall be immediately executory and is not subject to
appeal or motion for reconsideration.
10. The appointment of a substitute arbitrator shall be made
pursuant to the procedure applicable to the appointment of
the arbitrator being replaced.
Procedure in Case the Arbitrator Fails to Act.
As in the case of international commercial arbitration, if an arbitrator in a
domestic arbitration becomes de jure or de facto unable to perform his
functions or fails to act without undue delay, his mandate terminates if [i]
he withdraws, or [ii] the parties agree on the termination. In order to
facilitate the voluntary withdrawal of an arbitrator, the withdrawal will not
carry with it the implication that the arbitrator involved accepted the
existence or veracity of the ground for his termination.
If the controversy remains, any party may request the appointing authority
to decide on the termination of the arbitrator, which decision shall be
immediately executory, and shall not be subject to a motion for
reconsideration or appeal.
The appointment of a substitute arbitrator, whether on account of a
challenged procedure, or on account of his failure or impossibility to act,
shall be governed by the same rules applicable in the appointment of the
replaced arbitrator.
Arbitral Proceedings.
IRR, Article 5.21 Language.
(a) The parties are free to agree on the language or languages to be
used in the arbitral proceedings. Failing such agreement, the language
to be used shall be English or Filipino.
The language/s agreed, unless otherwise specified therein,
shall be in all hearings and all written statements, orders
or other communication by the parties and the arbitral
tribunal.
(b) The arbitral tribunal may order that any documentary evidence
shall be accompanied by a translation into the language or languages
agreed upon by the parties in accordance with paragraph (a) of this
Article.
IRR, Article 5.22 Statement of Claim and Defense.
(a) Within the period of time agreed by the parties or determined by
the arbitral tribunal, the claimant shall state the facts supporting
his/her/its claim, the points at issue and the relief or remedy sought,
and the respondent shall state his/her defense in respect of these
particulars, unless the parties may have otherwise agreed as to the
required elements of such statements.
The parties may submit with their statements all
documents they consider to be relevant or may add a
reference to the documents or other evidence they will
submit.
(b) Unless otherwise agreed by the parties, either party may amend or
supplement his/her/its claim or defense during the course of the
arbitral proceedings, unless the arbitral tribunal considers it
inappropriate to allow such amendments having regard to the delay
in making it.
IRR, Article 5.23 Hearing and Written Proceedings
(a) In ad hoc arbitration, the procedure determined by the arbitrator,
with the agreement of the parties, shall be followed.
In institutional arbitration, the applicable rules of
procedure of the arbitration institution shall be followed.
In default of agreement of the parties, the arbitration
procedure shall be as provided in this Chapter.
(b) Within thirty (30) days from the appointment of the arbitrator or
the constitution of an arbitral tribunal, the arbitral tribunal shall call
the parties and their respective counsels to a pre-hearing conference
to discuss the following matters:
(i) The venue or place/s where the arbitration proceeding
may be conducted in an office space, a business center, a
function room or any suitable place agreed upon by the
parties and the arbitral tribunal, which may vary per
session/hearing/conference;
(ii) The manner of recording the proceedings;
(iii) The periods for the communication of the statement
of claims with or without counterclaims, and answer to
the counterclaim/s and the form and contents of such
pleadings.
(iv) The definition of the issues submitted to the arbitral
tribunal for determination and the summary of the claims
and counterclaims of the parties;
(v) The manner by which evidence may be offered if an
oral hearing is required, the submission of sworn written
statements in lieu of oral testimony, the cross-
examination and further examination of witnesses;
(vi) The delivery of certain types of communications such
as pleadings, terms of reference, order granting interim
relief, final award and the like that, if made by electronic
or similar means, shall require further confirmation in the
form of a hard copy or hard copies delivered personally or
by registered post.
(vii) The issuance of subpoena or subpoena duces tecum
by the arbitral tribunal to compel the production of
evidence if either party shall or is likely to request it;
(viii) The manner by which expert testimony will be
received if a party will or is likely to request the arbitral
tribunal to appoint one or more experts, and in such case,
the period for the submission to the arbitrator by the
requesting party of the proposed terms of reference for
the expert, the fees to be paid, the manner of payment to
the expert and the deposit by the parties or the requesting
party of such amount necessary to cover all expenses
associated with the referral of such issues to the expert
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before the expert is appointed;
(ix) The possibility of either party applying for an order
granting interim relief either with arbitral tribunal or with
the court, and, in such case, the nature of the relief to be
applied for;
(x) The possibility of a site or ocular inspection, the
purpose of such inspection, and in such case, the date,
place and time of the inspection and the manner of
conducting it, and the sharing and deposit of any
associated fees and expenses;
(xi) The amount to be paid to the arbitral tribunal as fees
and the associated costs, charges and expenses of
arbitration and the manner and timing of such payments;
and
(xii) Such other relevant matters as the parties and the
arbitral tribunal may consider necessary to provide for a
speedy and efficient arbitration of the dispute.
(c) To the extent possible, the arbitral tribunal and the parties shall
agree upon any such matters and in default of agreement, the arbitral
tribunal shall have the discretion and authority to make the decision,
although in making decision, regard shall be given to the views
expressed by both parties.
(d) The arbitral tribunal shall, in consultation with the parties, fix the
date/s and the time of hearing, regard being given to the desirability
of conducting and concluding an arbitration without undue delay.
(e) The hearing set shall not be postponed except with the conformity
of the arbitrator and the parties and only for a good and sufficient
cause.
The arbitral tribunal may deny a request to postpone or to
cancel a scheduled hearing on the ground that a party has
requested or is intending to request from the court or
from the arbitrator an order granting interim relief.
(f) A party may, during the proceedings, represent
himself/herself/itself or through a representative, at such hearing.
(g) The hearing may proceed in the absence of a party who fails to
obtain an adjournment thereof or who, despite due notice, fails to be
present, by himself/herself/itself or through a representative, at such
hearing.
(h) Only parties, their respective representatives, the witnesses and
the administrative staff of the arbitral tribunal shall have the right to
be present if the parties, upon being informed of the presence of such
person and the reason for his/her presence, interpose no objection
thereto.
(i) Issues raised during the arbitration proceeding relating to (a) the
jurisdiction of the arbitral tribunal over one or more of the claims or
counter claims, or (b) the arbitrability of a particular claim or counter
claim, shall be resolved by the arbitral tribunal as threshold issues, if
the parties so request, unless they are intertwined with factual issues
that they cannot be resolved ahead of the hearing on the merits of
the dispute.
(j) Each witness shall, before giving testimony, be required to take an
oath/ affirmation before the arbitral tribunal, to tell the whole truth
and nothing but the truth during the hearing.
(k) The arbitral tribunal shall arrange for the transcription of the
recorded testimony of each witness and require each party to share
the cost of recording and transcription of the testimony of each
witness.
(l) Each party shall provide the other party with a copy of each
statement or document submitted to the arbitral tribunal and shall
have an opportunity to reply in writing to the other party's
statements and proofs.
(m) The arbitral tribunal may require the parties to produce such
other documents or provide such information as in its judgment
would be necessary for it to render a complete, fair and impartial
award.
(n) The arbitral tribunal shall receive as evidence all exhibits
submitted by a party properly marked and identified at the time of
submission.
(o) At the close of the hearing, the arbitral tribunal shall specifically
inquire of all parties whether they have further proof or witnesses to
present; upon receiving a negative reply, the arbitral tribunal shall
declare the hearing closed.
(p) After a hearing is declared closed, no further motion or
manifestation or submission may be allowed except for post-hearing
briefs and reply briefs that the parties have agreed to submit within a
fixed period after the hearing is declared closed, or when the arbitral
tribunal, motu proprio or upon request of a party, allows the
reopening of the hearing.
(q) Decisions on interlocutory matters shall be made by the sole
arbitrator or by the majority of the arbitral tribunal.
The arbitral tribunal may authorized its chairman to issue
or release, on behalf of the arbitral tribunal, its decision
on interlocutory matters.
(r) Except as provide in section 17 (d) of the ADR Act. No arbitrator
shall act as a mediator in a any proceeding in which he/she is acting as
arbitrator even if requested by the parties; and all negotiations.
(s) Before assuming the duties of his/her office, an arbitrator must be
sworn by any officer authorized by law to administer an oath or be
required to make an affirmation to faithfully and fairly hear and
examine the matters in controversy and make a just award according
to the best his/her ability and understanding.
A copy of the arbitrator's oath or affirmation shall be
furnished each party to the arbitration.
(t) Either party may object to the commencement or continuation of
an arbitration proceeding unless the arbitrator takes an oath or
affirmation as required in this chapter.
If the arbitrator shall refuse to take an oath or affirmation
as required by law and this rule, he/she shall be replaced.
The failure to object to the absence of an oath or
affirmation shall be deemed a waiver of such objection
and the proceedings shall continue in due course and may
not later be used as a ground to invalidate the
proceedings.
(u) The arbitral tribunal shall have the power to administer oaths to,
or require affirmation from, all witnesses directing them to tell the
truth, the whole truth and nothing but the truth in any testimony,
oral or written, which they may give or offer in any arbitration
hearing.
The oath or affirmation shall be required of every witness
before his/her testimony, oral or written, is heard or
considered.
(v) The arbitral tribunal shall have the power to require any person to
attend a hearing as a witness.
It shall have the power to subpoena witnesses, to testify
and/or produce documents when the relevancy and
materiality thereof has been shown to the arbitral
tribunal.
The arbitral tribunal may also require the exclusion of any
witness during the testimony of any other witness.
Unless the parties otherwise agree, all the arbitrators in
any controversy must attend all the hearings and hear the
evidence of the parties.
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Article 5.24 Power of Arbitral Tribunal to Order Interim Measures.
(a) unless otherwise agreed by the parties, the arbitral tribunal may,
at the request of a party and in accordance with the this Article, order
any party to take such interim measures of protection as the arbitral
tribunal may consider necessary in respect of the subject matter of
the dispute of the procedure.
Such interim measures may include, but shall not be
limited, to preliminary injunction directed against a party,
appointment of receivers or detention of property that is
the subject of the dispute in arbitration or its preservation
or inspection.
(b) After the constitution of the arbitral tribunal, and during the
arbitration proceedings, a request for interim measures of protection,
or modification thereof, may be made with the arbitral tribunal.
The arbitral tribunal is deemed constituted when the sole
arbitrator or the third arbitrator, who has been
nominated, has accepted the nomination and written
communication of said nomination and acceptance has
been received by the party making the request.
(c) The following rules on interim or provisional relief shall be
observed:
(i) Any party may request that provisional or interim relief
be granted against the adverse party.
(ii) Such relief may be granted:
(aa) To prevent irreparable loss or injury;
(bb) To provide security for the performance of
an obligation;
(cc) To produce or preserve evidence; or
(dd) To compel any other appropriate act or
omissions.
(iii) The order granting provisional relief may be
conditioned upon the provision of security or any act or
omission specified in the order.
(iv) Interim provisional relief is requested by written
application transmitted by reasonable means to the
arbitral tribunal and the party against whom relief is
sought, describing in appropriate detail of the precise
relief, the party against whom relief is requested the
ground for the relief, and the evidence supporting the
request.
(v) The order either granting or denying an application for
interim relief shall be binding upon the parties.
(vi) Either party may apply with the court for assistance in
implementing or enforcing an interim measure ordered by
an arbitral tribunal.
(vii) A party who does not comply with the order shall be
liable for all damages, resulting from noncompliance,
including all expenses, and reasonably attorney’s fees,
paid in obtaining the order’s judicial enforcement.
(d) The arbitral tribunal shall be have the power at any time, before
rendering the award, without prejudice to the rights of any party to
petition the court to take measures to safeguard and/or conserve any
matter which is the subject of the dispute in arbitration.
Article 5.25. Default of a Party.
Unless otherwise agreed by the parties, if, without showing sufficient
causes.
(a) the claimant fails to communicate his/her/its statement of claim in
accordance with paragraph (a) of Article 5.22(Statement of Claim and
Defense), the arbitral tribunal shall terminate the proceedings;
(b) ]the respondent fails to communicate his/her/its statement of
defense in accordance with paragraph (a) of Article 5.22 (Statements
of Claim and Defense), the arbitral tribunal shall continue the
proceedings without treating such failure in itself as an admission of
the claimant’s allegations;
(c) any party fails to appear at a hearing or to produce documentary
evidence, the arbitral tribunal may continue the proceedings and
make the award based on the evidence before it.
Article 5.26. Expert Appointed by the Arbitral Tribunal.
(a) Unless otherwise agreed by the parties, the arbitral tribunal,
(i) may appoint one or more experts to report to it on
specific issues to be determined by the arbitral tribunal; or
(ii) may require a party to give the expert any relevant
information or to produce, or to provide access to, any
relevant documents, goods or other property for his/her
inspection.
(b) Unless otherwise agreed by the parties, if a party so request or if
the arbitral tribunal considers it necessary, the expert shall, after
delivery of his/her written or oral report, participate in a hearing
where the parties have the opportunity to put questions to him/her
and to present expert witnesses in order to testify on the points at
issue.
(c) upon agreement of the parties, the finding of the expert engaged
by the arbitral tribunal on the matter/s referred to him shall be
binding upon the parties and the arbitral tribunal.
Article 5.27. Court Assistance in Taking Evidence and Other Matters.
(a) The arbitral tribunal or a party, with the approval of the arbitral
tribunal may request from a court, assistance in taking evidence such
as the issuance of subpoena ad testificandum and subpoena duces
tecum, deposition taking, site or ocular inspection, and physical
examination of properties.
The court may grant the request within its competence
and according to its rules on taking evidence.
(b) The arbitral tribunal or a party to the dispute interested in
enforcing an order of the arbitral tribunal may request from a
competent court, assistance in enforcing orders of the arbitral
tribunal, including but not limited, to the following:
(i) Interim or provision relief;
(ii) Protective orders with respect to confidentiality;
(iii) Orders of the arbitral tribunal pertaining to the subject
matter of the dispute that may affect third persons and/or
their properties; and/or
(iv) Examination of debtors.
Article 5.28 Rules Applicable to the Substance of Dispute.
(a) The arbitral tribunal shall decide the dispute in accordance with
such law as is chosen by the parties, In the absence of such
agreement, Philippine law shall apply.
(b) The arbitral tribunal may grant any remedy or relief which it
deems just and equitable and within the scope of the agreement of
the parties, which shall include, but not be limited to, the specific
performance of a contract.
(c) In all cases, the arbitral tribunal shall decide in accordance with the
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terms of the contract and shall take into account the usages of the
trade applicable to the transaction.
IRR, Article 5.29. Decision Making by the Arbitral Tribunal.
(a) The arbitration proceedings with more than one arbitrator, any
decision of the arbitral tribunal shall be made, unless otherwise
agreed by the parties, by a majority of all its members.
However questions of procedure may be decided by the
chairman of the arbitral tribunal, if so authorized by the
parties or all members of the arbitral tribunal.
(b) Unless otherwise agreed upon by the parties, the arbitral tribunal
shall render its written award within thirty (30) days after the closing
of all hearings and/or submission of the parties’ respective briefs or if
the oral hearings shall have been waived, within thirty 30) days after
the arbitral tribunal shall have declared such proceedings in lieu of
hearing closed. This period may be further extended by mutual
consent of the parties.
IRR, Article 5.30 Settlement.
(a) If, during arbitral proceedings, the parties settle the dispute, the
arbitral tribunal, record the settlement in the form of an arbitral
award on agreed terms, consent award or award based on
compromise.
(b) An award as rendered above shall be made in accordance with the
provisions of Article 5.31 (Form and Contents of Award) and shall
state that it is an award. Such an award has the same status and
effect as any other award on the merits of the case.
IRR, Article 5.31. Form and Contents of Award.
(a) The award shall be made in writing and shall be signed by the
arbitral tribunal.
In arbitration proceedings with more than one arbitrator,
the signatures of the majority of all members of the
arbitral tribunal shall suffice, provided that the reason for
any omitted signature us stated.
(b) The award shall state the reasons upon which is based, unless the
parties have agreed that no reasons are to be given or the award on
agreed terms, consent award based on compromise under Article 5.30
(Settlement).
(c) The award shall state its date and the placed of arbitration as
determined in accordance with the paragraph (a) of Article 5.19 (Place
of Arbitration). The award shall be deemed to have made at that
place.
(d) After the award is made, a copy signed by the arbitrators in
accordance with the paragraph (a) of this Article shall be delivered to
each party.
(e) The award of the arbitral tribunal need not be acknowledged,
sworn to under oath, or affirmed by the arbitral tribunal unless so
required on writing by the parties.
If despite such requirement, the arbitral tribunal shall fail
to do as required, the parties may, within thirty days from
the receipt of said award, request the arbitral tribunal to
supply the omission.
The failure of the parties to make an objection or make
such request within the said period shall be deemed a
waiver or such requirement and may no longer be raised
as a ground to invalidate the award.
IRR, Article 5.32. Termination of Proceedings.
(a) The arbitration proceedings are terminated by the final award or
by an order of the arbitral tribunal in accordance with paragraph (b)
of this Article.
(b) The arbitral tribunal shall issue an order for the termination of the
arbitration proceedings when:
(i) The claimant withdraws his claim, unless the
respondents objects thereto for the purpose of
prosecuting his counterclaims in the same proceedings of
the arbitral tribunal recognizes a legitimate interest on his
part in obtaining a final settlement of the dispute; or
(ii) The parties agree on the termination of the
proceedings; or
(iii) The arbitral tribunal finds that the continuation of the
proceedings has for any other reason before unnecessary
or impossible; or
(iv) The required deposits are not paid in full in
accordance with paragraph (d) of Article 5.46 (Fees and
Costs).
(c) The mandate of the arbitral tribunal ends with the termination of
the arbitration proceedings, subject to the provisions of Article 5.33
(Correction and Interpretation of Award) and Article 5.34 (Application
for Settings Aside in Exclusive Recourse Against the Arbitral Award).
(d) Except as otherwise provided in the arbitration agreement, no
motion for reconsideration correction and interpretation of award or
additional award shall be with the arbitral tribunal.
The arbitral tribunal, by releasing its final award, loses
jurisdiction over the dispute and the parties to the arbitral
tribunal, by releasing its final award, loses jurisdiction
over the dispute and the parties to the arbitration.
However, where is shown that the arbitral tribunal failed
to resolve an issue submitted to him or determination a
verified motion to complete a final award may be made
within thirty (30) days from its receipt.
(e) Notwithstanding the foregoing, the arbitral tribunal may for
special reason, reserved in the final award in order a hearing to
quantity costs and determine which party shall bear the costs or
apportionment thereof as may be determined to be equitable.
Pending determination of this issue, the award shall not
be deemed final for purposes of appeal, vacations,
correction, or any post-award proceedings
The default procedure in domestic arbitration is as follows:
(1) Statement of claims. As in international commercial arbitration, the
claimant in a domestic arbitration is required to submit within the time
agreed upon by the parties or determined by the arbitral tribunal his
statement of claims including the supporting facts, points at issue and the
relief sought.
(2) Statement of defenses. In the same manner and period, the respondent
shall state his defenses.
(3) Amendment of claims or defenses. The parties may amend or
supplement their claims or defenses, as the case may be, unless the
arbitral tribunal considers the amendment inappropriate or dilatory.
(4) Hearing and written proceedings. In an ad hoc domestic arbitration,
the procedure determined by the arbitrator with the agreement of the
parties shall be followed. In an Institutional domestic arbitration, the rules
of procedure of the institutional arbitrator shall be followed which has
been impliedly accepted by the parties on account of the designation of
the institutional arbitral tribunal.
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There is, however, a slight variance between the default procedure for
international commercial arbitration and domestic arbitration. In the case
of the latter, the following procedure will be followed:
a. Pre-hearing conference. In order to expedite the arbitral
proceedings, the parties in a domestic arbitration are required
to undergo a pre-hearing conference within 30 days from the
appointment of the arbitrator or the constitution of an arbitral
tribunal during which they shall discuss the venue of
arbitration; manner of recording the proceedings; periods of
communication of the statement of claim, answer and answer
to counterclaims, and the form and contents thereof; manner
of offering evidence; delivery of certain types of
communications; issuance of subpoena by the arbitral tribunal;
manner of receiving expert testimony; possibility of applying
for interim relief; possibility of site or ocular inspection; the
fees of the arbitral tribunal; and such other relevant matters.
The possibility of a compromise is not among those that the
parties and the arbitral tribunal are required to discuss during
the pre-hearing conference. This is because no arbitrator shall
act as mediator in any proceeding where he is acting as an
arbitrator except where, under a settlement agreement, the
parties agree to constitute the mediator as an arbitrator under
Section 17, ADR Acct
b. Threshold issues. Issues on the jurisdiction of the arbitral
tribunal over the claims and counterclaims, or the arbitrability
of the claims or counterclaims, shall be resolved by the arbitral
tribunal as threshold issues if the parties so request, unless the
issues are intertwined with factual issues that they cannot be
resolved ahead of the hearing on the merits.
c. Hearing dates and postponements. The arbitral tribunal shall,
in consultation with the parties, fix the date and time of the
hearings. The hearings shall not be postponed except with the
conformity of the arbitrator and for good and sufficient cause.
d. Default of a party. Like in international commercial
arbitration, if the claimant fails to communicate his statement
of claims, the arbitral tribunal shall terminate the proceedings.
If it is the respondent who fails to communicate his statement
of defenses, the arbitral tribunal shall continue the proceedings
without treating such failure in itself as an admission of the
claimant’s allegations. If any party fails to appear at a hearing
or produce evidence, he shall be deemed to have waived them,
and the arbitral tribunal may continue the proceedings and
render an award based on the evidence before it.
e. Decision on interlocutory matters. Decisions on interlocutory
matters shall be made by the sole arbitrator or by the majority
of the arbitral tribunal. The arbitral tribunal may authorize its
chairman to issue or release its decision on interlocutory
matters.
f. Consolidation or concurrent hearings. In consonance with the
authority of the parties to determine the rules of procedure to
be followed in arbitration, they may agree to consolidate the
arbitration proceedings with other arbitration proceedings or
hold concurrent hearings.
g. Closure of hearing. After the hearing is closed, no further
motion, manifestation or submission may be allowed, except
for post-hearing briefs and reply briefs, unless the arbitral
tribunal, motu proprio or upon the request of a party, allows
the re-opening of the hearing.
(5) Rules on taking evidence. The following are the rules on reception of
evidence as well as the processes that the arbitral tribunal may employ in
taking evidence:
a. Testimonial evidence. Witnesses, before giving testimony,
shall be required to take an oath or affirmation to tell the truth,
the whole truth and nothing but the truth. The arbitral tribunal
shall arrange for the transcription of the recorded testimony of
the witnesses. The parties may also agree in writing to submit
their dispute to arbitration other than by oral hearing.
b. Documentary evidence. Each party shall provide the other
with copies of the statements or documents submitted to the
arbitral tribunal The arbitral tribunal may require the parties to
produce such other necessary documents The arbitral tribunal
shall receive as evidence all exhibits submitted by a party
marked and identified at the time of the submission.
c. Subpoena. The arbitral tribunal shall have the power to issue
subpoena duces tecum and ad testificandum.
d. Expert. The arbitral tribunal, as in the case of international
commercial arbitration, may appoint one or more experts to
report to it on specific issues, may require the parties to submit
relevant information or grant access thereto to such expert,
and may grant the parties opportunity to ask questions of the
expert and present their own experts to testify on the points at
issue. However, in the case of domestic arbitration, it is
provided that, upon the agreement of the parties, the finding
of the expert engaged by the arbitral tribunal shall be binding
upon them and the arbitral tribunal.
e. Court assistance in taking evidence. The same opportunity to
avail of court assistance in taking evidence available in
international commercial arbitration is also available for
domestic arbitration. The provisions of the IRR on domestic
arbitration specified some of these modes of assistance, such
as – issuance of subpoena duces tecum and ad testificandum,
interim or provisional reliefs, protective orders with respect to
confidentiality, orders that may affect third parties, and
examination of debtors.
(6) Decision. The decision of an arbitral tribunal shall be made by the sole
arbitrator, or, unless otherwise agreed upon by the parties, by the majority
of the arbitrators in a multi-arbitrator proceeding. However, questions of
procedure may be decided by the chairman of the arbitral tribunal if so
authorized by the parties or by all members of the arbitral tribunal The
arbitral tribunal shall render its written award within 30 days after the
closing of the hearings, the submission of the parties’ respective briefs, or
the declaration by the arbitral tribunal that the proceedings have been
closed. This period may be extended by the parties.
(7) Form and content of the award. As in international commercial
arbitration, the award in a domestic arbitration shall be in writing, signed
by the arbitrator, and shall state the date of rendition and the place of
arbitration. In an arbitration with more than 1 arbitrator, the award shall
be signed by majority of all the members provided that the reason for any
omitted signature is stated. The award shall state the reason upon which it
is based unless the parties have agreed otherwise or the award is an award
on agreed terms, consent award or award based on compromise. A signed
copy of the award shall be delivered to each party.
The award in a domestic arbitration need not be acknowledged or sworn to
under oath or affirmed by the arbitral tribunal unless so required in writing
by the parties. The parties may require the arbitral tribunal to supply the
omission within 30 days from receipt of the award, or they may waive the
effects thereof by not objecting thereto within the said period.
(8) Settlement. The rule is the same for the settlement of disputes whether
the arbitration is domestic or international, i.e., the proceedings will be
terminated by the execution of an arbitral award on agreed terms, consent
award or award based on compromise which the parties may request to be
recorded. Said form of award shall have the same status and effect as any
other award on the merits.
(9) Termination of proceedings. Like in an international commercial
arbitration, a domestic arbitration is terminated either by:
a. Withdrawal of the claim unless the respondent objects
thereto for the purpose of prosecuting his counterclaims or the
arbitral tribunal recognizes a legitimate interest on his part in
obtaining a final settlement of the dispute. The circumstance
that the respondent has a counterclaim that he intends to
prosecute is also provided for as a ground for objection to the
dismissal of actions upon motion of the plaintiff under Section
2, Rule 17 of the Rules of Court.
b. The agreement of the parties to terminate the proceedings;
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c. The finding by the arbitral tribunal that the continuation of
the proceeding has become unnecessary or impossible;
d. Non-payment of the required deposits in full. This is not true
for international commercial arbitration. Nonetheless, this
provision is based on the principle obtaining under Philippine
law that the payment of docket fees is necessary to the
completion of the filing of complaints, appeals or petitions
whenever required by the rules.
Interim Measures.
IRR, Article 5.8. Arbitration Agreement and Interim Measures by
Court.
(a) It is not incompatible with an arbitration agreement for a party to
request from a court, before the constitution of the arbitral tribunal
or during arbitral proceedings, an interim measure of protection and
for a court to grant such measure.
(b) After the constitution of the arbitral tribunal and during arbitral
proceedings, a request for an interim measure of protection, or
modification thereof, may be made with the arbitral tribunal or to the
extent that the arbitral tribunal has no power to act or is unable to act
effectively, the request may be made with the court.
(c) The following rules on interim or provisional relief shall be
observed:
(i) Any party may request that interim or provisional relief
be granted against the adverse party.
(ii) Such relief may be granted:
(aa) To prevent irreparable loss or injury;
(bb) To provide security for the performance of
an obligation;
(cc) To produce or preserve evidence; or
(dd) To compel any other appropriate act or
omissions.
(iii) The order granting provisional relief may be
conditioned upon the provision of security or any act or
omission specified in the order.
(iv) Interim or provisional relief is requested by written
application transmitted by reasonable means to the
arbitral tribunal and the party against whom relief is
sought, describing in appropriate detail of the precise
relief, the party against whom the relief is requested, the
ground for the relief, and the evidence supporting the
request.
(v) The order either grating or denying an application for
interim relief shall be binding upon the parties.
(vi) Either party may apply with the court for assistance in
implementing or enforcing an interim measure ordered by
an arbitral tribunal.
(vii) A party who does not comply with the order shall be
liable for all damages, resulting from noncompliance,
including all expenses, and reasonable attorney’s fees,
paid in obtaining the order’s judicial enforcement.
(d) Unless otherwise agreed by the parties, the arbitral tribunal may,
at the request of a party, order any party to take such interim
measures of protection as the arbitral tribunal may consider
necessary in respect of the subject matter of the dispute following the
Rules in this Article.
Such interim measures may include but shall not be
limited to preliminary injunction directed against a party,
appointment of receivers or detention, preservation,
inspection of property that is the subject of the dispute in
arbitration.
Either party may apply with the court for assistance in
implementing or enforcing an interim measure ordered by
an arbitral tribunal.
IRR, Article 5.16 Power of Arbitral Tribunal to Order Interim
Measures.
(a) Unless otherwise agreed by the parties, the arbitral tribunal may,
at the request of a party, order any party to take such interim
measures of protection as the arbitral tribunal may consider
necessary in respect of the subject matter of the dispute following the
rules in this Article.
Such interim measures may include, but shall not be
limited to preliminary injunction directed against a party,
appointment of receivers or detention preservation,
inspection of property that is the subject of the dispute in
arbitration.
(b) After the constitution of the arbitral tribunal, and during arbitral
proceedings, a request for interim measures of protection, or
modification thereof, shall be made with the arbitral tribunal.
The arbitral tribunal is deemed constituted when the sole
arbitrator or the third arbitrator, who has been
nominated, has accepted the nomination and written
communication of said nomination and acceptance has
been received by the party making the request.
(c) The following rules on interim or provisional relief shall be
observed:
(i) Any party may request that the provisional or interim
relief be granted against the adverse party.
(ii) Such relief may be granted:
(aa) To prevent irreparable loss or injury;
(bb) To provide security for the performance of
an obligation;
(cc) To produce or preserve evidence; or
(dd) To compel any other appropriate act or
omissions.
(iii) The order granting provisional relief may be
conditioned upon the provision of security or any act or
omission specified in the order.
(iv) Interim or provisional relief is requested by written
application transmitted by reasonable means to the
arbitral tribunal and the party against whom relief is
sought, describing in appropriate detail the precise relief,
the party against whom the relief is requested, the ground
for the relief and the evidence supporting the request.
(v) The order either granting or denying an application for
interim relief shall be binding upon the parties.
(vi) Either party may apply with the court for assistance in
implementing or enforcing an interim measure ordered by
an arbitral tribunal.
(vii) A party who does not comply with the order shall be
liable for all damages, resulting from noncompliance,
including all expenses, and reasonable attorney’s fee paid
in obtaining the order’s judicial enforcement.
Article 5.24 Power of Arbitral Tribunal to Order Interim Measures.
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 ALTERNATIVE DISPUTE RESOLUTION
(a) unless otherwise agreed by the parties, the arbitral tribunal may,
at the request of a party and in accordance with the this Article, order
any party to take such interim measures of protection as the arbitral
tribunal may consider necessary in respect of the subject matter of
the dispute of the procedure.
Such interim measures may include, but shall not be
limited, to preliminary injunction directed against a party,
appointment of receivers or detention of property that is
the subject of the dispute in arbitration or its preservation
or inspection.
(b) After the constitution of the arbitral tribunal, and during the
arbitration proceedings, a request for interim measures of protection,
or modification thereof, may be made with the arbitral tribunal.
The arbitral tribunal is deemed constituted when the sole
arbitrator or the third arbitrator, who has been
nominated, has accepted the nomination and written
communication of said nomination and acceptance has
been received by the party making the request.
(c) The following rules on interim or provisional relief shall be
observed:
(i) Any party may request that provisional or interim relief
be granted against the adverse party.
(ii) Such relief may be granted:
(aa) To prevent irreparable loss or injury;
(bb) To provide security for the performance of
an obligation;
(cc) To produce or preserve evidence; or
(dd) To compel any other appropriate act or
omissions.
(iii) The order granting provisional relief may be
conditioned upon the provision of security or any act or
omission specified in the order.
(iv) Interim provisional relief is requested by written
application transmitted by reasonable means to the
arbitral tribunal and the party against whom relief is
sought, describing in appropriate detail of the precise
relief, the party against whom relief is requested the
ground for the relief, and the evidence supporting the
request.
(v) The order either granting or denying an application for
interim relief shall be binding upon the parties.
(vi) Either party may apply with the court for assistance in
implementing or enforcing an interim measure ordered by
an arbitral tribunal.
(vii) A party who does not comply with the order shall be
liable for all damages, resulting from noncompliance,
including all expenses, and reasonably attorney’s fees,
paid in obtaining the order’s judicial enforcement.
(d) The arbitral tribunal shall be have the power at any time, before
rendering the award, without prejudice to the rights of any party to
petition the court to take measures to safeguard and/or conserve any
matter which is the subject of the dispute in arbitration.
Similar to international commercial arbitration, the parties in a domestic
arbitration may seek from the arbitrator or arbitral tribunal interim
measures including preliminary injunction, appointment of receivers,
detention of property, and preservation and inspection thereof. Either
party may also secure assistance from the courts for the implementation of
interim measures.
The same procedure as in international commercial arbitration obtains for
interim measures under a domestic arbitration, namely:
1. After the arbitral tribunal has been constituted, any party may
request for the grant of interim measures from the arbitrator
or arbitral tribunal against the adverse party.
2. The relief may be granted in order to prevent irreparable loss
(similar to preliminary injunction); to provide security for the
performance of an obligation (similar to preliminary
attachment); to produce or preserve evidence (similar to
modes of discovery); or to compel any other appropriate act or
omission.
3. The grant of the interim measure may be conditioned upon the
provision of security (similar to an attachment bond or
injunction bond) or any act or omission specified in the order.
4. The order either granting or denying the request for interim
measures shall be binding upon the parties and either party
may apply with the courts for assistance in implementing or
enforcing an interim measure.
5. A party who refuses to comply with the order shall be liable for
damages resulting from non-compliance, including all expenses
and reasonable attorney’s fees paid in obtaining judicial
enforcement.
6. Before the constitution of the arbitral tribunal, or to the extent
that the arbitral tribunal already constituted has no power to
act effectively, the interim measures may be requested from
the court in accordance with the Special Rules of Court on ADR.
Multi-Party Arbitration.
IRR, Article 5.44. Multi-Party Arbitration.
(a)When a single arbitration involves more than two parties, these
Rules, to the extent possible, shall be used subject to such
modifications consistent with Articles 5.17 (Equal Treatment of
Parties) and 5.18 (Determination of Rules of Procedure) as the arbitral
tribunal shall deem appropriate to address possible complexities of a
multi-party arbitration.
(b) When a claimant includes persons who are not parties to or
otherwise bound by the arbitration agreement , directly or by
reference, between him/her and the respondent as additional
claimants or the additional respondents unless not later than the date
communicating his/her answer to the request for arbitration, either
by motion or by a special defense in his answer, he objects, on
jurisdictional grounds, to the inclusion of such additional
respondents.
The additional respondents shall be deemed to have
consented to their inclusion in the arbitration unless, not
later than the date of communicating their answer to the
request for arbitration, wither by motion or a special
defense in their answer, they object, on jurisdictional
grounds, to their inclusion.
The procedural rule for multi-party domestic arbitration is the same as in
the case of international commercial arbitration. In a multi-party domestic
arbitration, the arbitral tribunal is empowered to implement procedural
modifications as it shall deem appropriate to address the complexities of
the multi-party arbitration.
Fees and Costs.
IRR, Article 5.46. Fees and Costs.
(a) The fees of the arbitrators shall be agreed upon by the parties and
the arbitrator/s in writing prior to the arbitration.
In default of agreement of the parties as to the amount and manner
of payment of arbitrator’s fees, the arbitrator’s fees shall be
determined in accordance with the applicable internal rules of the
regular arbitration institution under whose rules he arbitration is
conducted; or in ad hoc arbitration, the Schedule of Fees approved by
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 ALTERNATIVE DISPUTE RESOLUTION
the IBP, If any, or in default thereof, the Schedule of Fees that may be
approved by the OADR.
(b) In addition to arbitrator’s fees, the parties shall be responsible for
the payment of the administrative fees of an arbitration institution
administering an arbitration and cost of arbitration.
The latter shall include, as appropriate, the fees of an
expert appointed by the arbitral tribunal, the expenses for
conducting a site inspection, the use of a room where
arbitration proceedings shall be or have been conducted,
the expenses for the recording and transcription of the
arbitration proceedings.
(c) The arbitral tribunal shall fix the costs of arbitration in its award.
The term "costs" include only:
(i) The fees of the arbitral tribunal to be stated separately
as to each arbitrator and to be fixed by the arbitral
tribunal itself in accordance with this Article;
(ii) The travel and other expenses incurred by the
arbitrators;
(iii) The costs of expert advice and of other assistance
required by the arbitral tribunal, such as site inspection
and expenses for the recording and transcription of the
arbitration proceedings;
(iv) The travel and other expenses of witnesses to the
extent such expenses are provided by the arbitral tribunal;
(v) The costs for legal representation and assistance of the
successful party if such costs were claimed during the
arbitral proceedings, and only to the extent that the
arbitral tribunal determines that the amount of such costs
is reasonable;
(vi) Any fees and expenses of the appointing authority.
(d) The fees of the arbitral tribunal shall be reasonable in amount,
taking into account the amount in dispute, the complexity of the
subject matter, the time spent by the arbitrators and any other
relevant circumstances of the case.
If an appointing authority has been agreed upon by the parties and if
such appointing authority has issued a schedule of fees for arbitrators
in domestic cases which it administers, the arbitral tribunal, in fixing
its fees shall take that schedule of fees into account to the extent that
it considers appropriate in the circumstances of the case.
If such appointing authority has not issued a schedule of fees for
arbitrators in international cases, any party may, at any time request
the appointing authority to furnish a statement setting forth the basis
for establishing fees which is customarily followed in international
cases in which the authority appoints arbitrators.
If the appointing authority consents to provide such a
statement, the arbitral tribunal, in fixing its fees shall take
such information into account to the extent that it
considers appropriate in the circumstances of the case.
In cases referred to in paragraph (d) of this Article, when a party so
requests and the appointing authority consents to perform the
function, the arbitral tribunal shall fix its fees only after consultation
with the appointing authority which may make any comment it
deems appropriate to the arbitral tribunal concerning the fees.
(e) Except as provided in the next paragraph, the costs of arbitration
shall, in principle, be borne by the unsuccessful party.
However, the arbitral tribunal may apportion each of such
costs between the parties if it determines that
apportionment is reasonable, taking into account the
circumstances of the case.
With respect to the costs of legal representation and assistance
referred to in paragraph (c) (iii) of this Article, the arbitral tribunal,
taking into account the circumstances of the case, shall be free to
determine which party shall bear such costs or may apportion such
costs between the parties if it determines that appointment is
reasonable.
When the arbitral tribunal issues an order for the termination of the
arbitral proceedings or makes an award on agreed terms, it shall fix
the costs of arbitration referred to in paragraph (a) of this Article in
the context of that order or award.
(e) Except as otherwise agreed by the parties, no additional fees may
be charged by the arbitral tribunal for interpretation or correction or
completion of its award under these Rules.
(f) The arbitral tribunal, on its establishment, may request each party
to deposit an equal amount as an advance for the costs referred to in
paragraphs (i), (ii) and (iii) of paragraph (c) of this Article.
During the course of the arbitral proceedings, the arbitral tribunal
may request supplementary deposits from the parties.
If an appointing authority has been agreed upon by the parties, and
when a party so requests and the appointing authority consents to
perform the function, the arbitral tribunal shall fix the amounts of any
deposits or supplementary deposits only after consultation with the
appointing authority which may make any comments to the arbitral
tribunal which it deems appropriate concerning the amount of such
deposits and supplementary deposits.
If the required deposits are not paid in full within thirty (30) days after
receipt of the request, the arbitral tribunal shall so inform the parties
in order that one of them may make the required payment within
such a period or reasonable extension thereof as may be determined
by the arbitral tribunal.
If such payment is not made, the arbitral tribunal may
order the termination of the arbitral proceedings.
After the award has been made, the arbitral tribunal shall render an
accounting to the parties of the deposits received and return any
unexpended balance to the parties.
The general rule is that the fees of the arbitrators in a domestic arbitration
shall be determined by the agreement of the parties in writing prior to the
arbitration. In default of such an agreement, the arbitrator’s fees shall be
determined in accordance with the applicable internal rules of the regular
arbitration institution under whose rules the arbitration is conducted; or in
an ad hoc arbitration, the Schedule of Fees approved by the IBP, if any, or
the Schedule of Fees that may be approved by the Office for ADR.
The costs of arbitration shall be determined by the arbitral tribunal.
Correction, Interpretation and Additional Award.
IRR, Article 5.33. Correction and Interpretation of Award, Additional
Award.
(a) Within thirty (30) days from receipt of the award, unless another
period of time has been agreed upon by the parties.
(i) A party may, with notice to the other party, the arbitral
tribunal to correct in the awards any errors in
computation, any clerical or typographical errors or any
errors similar nature
(ii) If so agreed by the parties, with notice to the other
party, may request the arbitral tribunal to give an
interpretation of a specific point or part of the award.
If the arbitral tribunal considers the request to be justified, it shall
make the connection or give the interpretation within thirty (30) days
from receipt of the request. The interpretation shall form part of the
award.
(b) The arbitral tribunal may correct any errors of the type referred to
in paragraph (a) of this Article on its own initiative within thirty (30)
days of the date of the award.
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(c) Unless otherwise agreed by the parties, a party may, with notice to
the other party, may request within thirty (30) days of receipt of the
award, the arbitral tribunal to make an additional award as to claims
presented in the arbitral proceedings but omitted from the award.
If the arbitral tribunal considers the request to be
justified, it shall make the additional award within sixty
(60) days.
(d) The arbitral tribunal may extend, if necessary, the period of time
within which it shall make a correction, interpretation or an
additional award under paragraphs (a) and (c) of this Article.
(e) The provisions of Article 5.31 (Form and Contents of Award) shall
apply to a correction or interpretation of the award to an additional
award.
Arbitration Law, Section 17. Reopening of hearing.
The hearing may be reopened by the arbitrators on their own motion
or upon the request of any party, upon good cause, shown at any time
before the award is rendered.
When hearings are thus reopened the effective date for the closing of
the hearings shall be the date of the closing of the reopened hearing.
Arbitration Law, Section 25. Grounds for modifying or correcting
award.
In any one of the following cases, the court must make an order
modifying or correcting the award, upon the application of any party
to the controversy which was arbitrated:
a. Where there was an evident miscalculation of figures, or
an evident mistake in the description of any person, thing
or property referred to in the award; or
b. Where the arbitrators have awarded upon a matter not
submitted to them, not affecting the merits of the decision
upon the matter submitted; or
c. Where the award is imperfect in a matter of form not
affecting the merits of the controversy, and if it had been
a commissioner's report, the defect could have been
amended or disregarded by the court.
The order may modify and correct the award so as to effect the intent
thereof and promote justice between the parties.
Arbitration Law, Section 26. Motion to vacate, modify or correct
award: when made.
Notice of a motion to vacate, modify or correct the award must be
served upon the adverse party or his counsel within thirty days after
award is filed or delivered, as prescribed by law for the service upon
an attorney in an action.
Article 5.32 (d) of the IRR emphatically states that “no motion for
reconsideration, correction and interpretation of ward or additional award
shall be filed with the arbitral tribunal.” This is premised upon the principle
that when the arbitral tribunal renders its final award, it loses jurisdiction
over the dispute and the parties to the arbitration. However, Section 17 of
RA 876 specifically allows the continuation of the arbitral proceeding motu
proprio by the arbitrators or upon motion of a party, upon good cause
shown.
Thus, the IRR provided for the amendment or modification the arbitral
award by the arbitral tribunal in the following instances as exceptions to
the general rule.
1. Under the arbitration agreement. If amendment is provided for
in the arbitration agreement, the arbitral tribunal may cause
the amendment of the award.
2. Failure to resolve an issue. If the arbitral tribunal failed to
resolve an issue, the parties may ask for the resolution thereof.
3. Quantification of costs. If the arbitral tribunal made a
reservation in the final award for the conduct of a hearing to
quantify costs and to determine which party shall bear the
costs or the apportionment thereof, it may supplement the
award by such quantification, determination and
apportionment.
4. Correction of typographical and similar errors initiated by a
party. A party may ask the arbitral tribunal for the correction of
the award, within 30 days from receipt of the award, and with
notice to the other party, for any errors in computation, clerical
or typographical error, or other errors of similar nature.
5. Correction of typographical error initiated by the arbitral
tribunal. Within 30 days from the date of the award, the
arbitral tribunal may motu proprio correct any typographical
error therein.
6. Interpretation of the award. Within the same period, the
parties may agree to request the arbitral tribunal to give an
interpretation on a specific point or part of the award. If the
arbitral tribunal finds the request for correction or
interpretation justified, it shall make the correction or give the
interpretation within 30 days from receipt of the request, and
the interpretation or correction shall form part of the award.
7. Additional award. Within 30 days from receipt of the award, a
party, with notice to the other, may request the arbitral
tribunal to make an additional award as to claims presented in
the arbitral proceeding but omitted in the award. If justified,
the arbitral tribunal shall make the additional award within 60
days from receipt of the request which shall be in the form of
an arbitral award.
The first instance of amendment or modification (amendment under the
arbitration agreement) is not specifically mentioned among the instances
when an award in an international commercial arbitration may be modified
or amended. However, considering that the general rule in matters of
arbitral procedure whether international or domestic is the agreement of
the parties, the arbitration agreement providing for the amendment of the
arbitral award is a true exception to the general rule that a domestic
arbitral award, once rendered, cannot be amended or modified.
The rest of the instances when a modification or amendment of a domestic
arbitral award can be made by the arbitral tribunal are equally applicable
to an international commercial arbitral award.
The second instance (failure to resolve an issue) provided for under Article
5.32 (d) of the IRR, is practically the same as the 7 th instance (additional
award) provided for under Article 5.33 (c) of the IRR. The only distinction is
on the point of emphasis. While Article 5.32 (d) uses the term unresolved
“issues,” Article 5.33 (c) speaks of “claims” omitted in the award.
Irrespective of the term used or the point of emphasis, the fact remains
that a domestic arbitral award may be modified or amended in order to
completely resolve all matters involved in the dispute.
Unless any other period of time has been agreed upon by the parties, the
parties may ask for the correction, interpretation or the rendition of an
additional award by the arbitral tribunal within 30 days from receipt of the
award. The notice of a motion to vacate, modify or correct an award must
be served upon the adverse party or his counsel within 30 days after the
award is filed or delivered.
The foregoing grounds for amendment or modification of an arbitral award
by the arbitral tribunal should be distinguished from the grounds for the
amendment or modification of an arbitral award by the court. A court may
amend or modify a domestic arbitral award in the following instances:
1. Where there is an evident miscalculation of figures, or an
evident mistake in the description of any person, thing or
property referred to in the award;
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2. Where the arbitrators have awarded upon a matter not
submitted to them, not affecting the merits of the decision
upon the matter submitted; or
3. Where the award is imperfect in a matter of form not affecting
the merits of the controversy, and if it has been a
commissioner’s report, the defect could have been amended or
disregarded by the court.
If the award upon a matter not submitted for arbitration, or if the
imperfect form of the award, affects the merits of the decision or
controversy, the award should be vacated instead of merely being
amended or modified by the court.
The judgment of the Regional Trial Court rendered in a motion to confirm,
modify, correct or vacate an award shall have the same force and effect as
a judgment in an action and may be enforced as if it had been rendered in
the court in which it is entered. The judgment of the Regional Trial Court
may be appealed to the Court of Appeals through a petition for review.
The remedy of correction of an arbitral award by the courts is not available
in the case of international commercial arbitral awards which can be
corrected or modified only by the arbitral tribunal.
Setting Aside an Arbitral Award.
IRR, Article 5.34. Application for Setting Aside an Exclusive Recourse
against Arbitral Award.
The court when asked to set aside an award, may, where appropriate
and so requested by a party, suspend the setting aside proceedings
for a period of time determined by it in order to give the arbitral
tribunal an opportunity to resume the arbitral proceedings or to take
such other action as in the arbitral tribunal’s opinion will eliminate
the grounds for setting aside an award.
A domestic arbitral award may be set aside through the courts only on the
following grounds:
1. The arbitral award was procured by corruption, fraud or other
undue means;
2. There was evident partiality or corruption in the arbitral
tribunal or any of its members;
3. The arbitral tribunal was guilty of misconduct or any form of
misbehavior that has materially prejudiced the rights of any
party;
4. One or more of the arbitrators was disqualified to act as such
and willfully refrained from disclosing such disqualification;
5. The arbitral tribunal exceeded its powers, or so imperfectly
executed them, such that a complete, final, and definite award
upon the subject matter submitted to it was not made.
These grounds are exclusive and the court cannot consider any other
ground unless it amounts to a violation of public policy.
Compare the foregoing grounds with those applicable to the setting aside
of international commercial arbitral awards, to wit:
1. The petitioner furnishes proof that there was:
a. Defect in the arbitration agreement because a party was
under some incapacity or the said agreement is not valid under
the applicable law;
b. Violation of due process because the petitioner was not
given proper notice of the appointment of an arbitrator or the
arbitral proceeding, or was otherwise unable to present his
case;
c. Lack or excess of jurisdiction on the part of the arbitral
tribunal because the award deals with a dispute not
contemplated by or not falling within the terms of the
submission to arbitration, or contains decisions on matters
beyond the scope of the submission of the arbitration, subject
to the application of the doctrine of severability / separability;
or
d. Violation of the arbitration agreement because the
composition of the arbitral tribunal or the arbitral process was
not in accordance with the agreement of the parties, unless
such agreement was in conflict with a provision of the ADR Act
from which the parties cannot derogate, or, failing such
agreement, was not in accordance with the ADR Act;
2. Or the court finds that:
a. The subject of the dispute is not capable of settlement under
the laws of the Republic of the Philippines; or
b. The award is in conflict with public policy of the Philippines.
Unlike the grounds for setting aside domestic arbitral awards, and the
grounds for refusing recognition of ICA or foreign arbitral awards which
have been declared exclusive, there is no express declaration that the
foregoing grounds for ICA awards are similarly exclusive. However, under
the principle of expressio unius est exclusio alterius, the enumeration of the
foregoing grounds is deemed exclusive.
The difference in the grounds for setting aside an international commercial
arbitral award and a domestic arbitral award in the IRR is brought about by
the fact that the Model Law and the ADR Act of 2004 which adopted the
Model Law, were the basis for the grounds for setting aside an
international commercial arbitral award, while R.A. No. 876 was the basis
for the grounds for setting aside a domestic arbitral award.
That the subject of the dispute is not capable of settlement under
Philippine law, or that the award is in conflict with public policy, being
premised upon general principles of law, are applicable to both
international commercial arbitral awards and domestic arbitral awards.
The court before which a petition for setting aside a domestic arbitral
award is filed has the prerogative and option to suspend the court
proceedings in the following instances:
1. The court may suspend the setting aside proceedings to give
the arbitral tribunal an opportunity to resume the arbitral
proceedings or take such action which will eliminate the
grounds for setting aside an award;
2. The petitioner or the oppositor may petition the court to remit
the case to the same arbitral tribunal for the purpose of making
a new or revised final and definite award or to direct a new
hearing before the same or new arbitral tribunal;
3. If the ground for vacating an arbitral award does not affect the
merits of the case and may be cured or remedied, the adverse
party may oppose the petition and instead request the court to
suspend the vacation or setting aside proceedings to give the
arbitral tribunal an opportunity to cure or remedy the ward or
resume the arbitration proceedings or take such action as will
eliminate the grounds for vacation or setting aside.
In the foregoing instances, opportunity is being given to the arbitral
tribunal to cure any defect in its proceedings and award.
Confirmation of Domestic Arbitral Awards.
IRR, Article 5.36. Confirmation of Award.
The party moving for an order confirming, modifying, correcting, or
vacating an award, shall, at the time that such motion is filled with
the court for the entry of judgment thereon, also file the original or
verified copy of the award, the arbitration or settlement agreement,
and such papers as may be required by the Special ADR Rules.
IRR, Article 5.37. Judgment.
Upon the grant of an order confirming, modifying or correcting an
award, judgment may be entered in conformity therewith in the court
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where said application is filed.
Costs of the application and the proceedings subsequent thereto may
be awarded by the court In its discretion. If awarded, the amount
thereof must be included in the judgment. Judgment will be enforced
like court judgments.
IRR, Article 5.38. Appeal.
A decision of the court confirming, vacating, setting aside, modifying
or correcting an arbitral award may be appealed to the Court of
Appeals in accordance with Special ADR Rules.
The losing party who appeals from the judgment of the Court
confirming an arbitral award shall be required by the Court of Appeals
to post a counter-bond executed in favor of the prevailing party equal
to the amount of the award in accordance with the Special ADR Rules.
IRR, Article 5.39. Venue and Jurisdiction.
Proceedings for recognition and enforcement of an arbitration
agreement or for vacation or setting aside of an arbitral award, and
any application with a court for arbitration assistance and
supervision, except appeal, shall be deemed as special proceedings
and shall be filed with the court
a. where the arbitration proceedings are conducted;
b. where the asset to be attached or levied upon, or the act
to be enjoined is located;
c. where any of the parties to the dispute resides or has its
place of business; or
d. in the National Capital Judicial Region at the option of the
applicant.
Arbitration Law, Section 22. Arbitration deemed a special proceeding.
Arbitration under a contract or submission shall be deemed a special
proceeding, of which the court specified in the contract or submission,
or if none be specified, the Court of First Instance for the province or
city in which one of the parties resides or is doing business, or in
which the arbitration was held, shall have jurisdiction.
Any application to the court, or a judge thereof, hereunder shall be
made in manner provided for the making and hearing of motions,
except as otherwise herein expressly provided
Arbitration Law, Section 23. Confirmation of award.
At any time within one month after the award is made, any party to
the controversy which was arbitrated may apply to the court having
jurisdiction, as provided in section twenty-eight, for an order
confirming the award;
and thereupon the court must grant such order unless the
award is vacated, modified or corrected, as prescribed
herein.
Notice of such motion must be served upon the adverse party or his
attorney as prescribed by law for the service of such notice upon an
attorney in action in the same court.
Arbitration Law, Section 29. Appeals.
An appeal may be taken from an order made in a proceeding under
this Act, or from a judgment entered upon an award through
certiorari proceedings, but such appeals shall be limited to questions
of law.
The proceedings upon such an appeal, including the judgment
thereon shall be governed by the Rules of Court in so far as they are
applicable.
Unlike awards rendered in a foreign arbitration and Philippine ICA which
require the filing of a petition in court for recognition and enforcement
during which proof of entitlement to recognition must be presented, the
judicial affirmation of a domestic arbitral award is made by filing a motion
for confirmation and securing an entry of judgment from the court. The
distinction is brought about by the fact that, in the case of a foreign
arbitration, the award is rendered by a foreign entity applying foreign law,
thus the need to go through the process of recognition and enforcement.
And, in the case of a Philippine ICA award, the requirement for recognition
is provided for in the UNCITRAL Model Law on International Commercial
Arbitration which requirement was adopted in the ADR Act of 2004.
On the other hand, an award in a domestic arbitration is rendered by a
Philippine arbitral tribunal applying Philippine Law. Hence, all that is
required in order to enforce a domestic award is to have it confirmed
through a motion filed in court. The confirmation of an arbitral award
carries with it by necessary implication the execution thereof.
Similar to international commercial arbitration, proceedings for the
confirmation, vacation or setting aside of a domestic arbitral award, and
any application for arbitration assistance, except appeal, shall be deemed
as special proceedings. Jurisdiction over these petitions and motions is
lodged with the Regional Trial Court:
i. where the arbitration proceedings were conducted;
ii. where the asset to be attached or levied or the act to be
enjoined is located;
iii. where any of the parties resides or has his place of business; or
iv. in the National Capital Judicial Region, at the option of the
applicant.
There is a likely confusion that may arise as to the venue of judicial
proceedings arising from domestic arbitration. Article 5.39 of the IRR
mentions the location of the asset or act involved and the National Capital
Judicial Region as possible venues for the confirmation of an arbitral award,
vacating the arbitral award or securing court assistance measures, in a
domestic arbitration.
On the other hand, Section 22 of RA No 876 limited the choice of venue to
the residence of the parties, their places of business, or the place of
arbitration.
Ordinarily, the IRR, like any other rule or regulation which derives its
efficacy from the substantive law which it seeks to implement (RA No. 876),
cannot provide for an additional venue apart from those specifically
mentioned in R.A. No 876. There is really no conflict because Section 47 of
ADR Act of 2004, which is itself a substantive law that the IRR must
implement, provides that the jurisdiction and venue of court proceedings
shall be with the Regional Trial Court:
i. where the arbitration proceedings were conducted;
ii. where the asset to be attached or levied or the act to be
enjoined is located;
iii. where any of the parties resides or has his place of business; or
iv. in the National Capital Judicial Region, at the option of the
applicant.
-o0o-
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CHAPTER 7
Other Forms of ADR.
Among the various forms of ADR, arbitration and mediation are
undoubtedly the most common and popular. Thus, specific laws like R.A.
No. 876 (“The Arbitration Law”), and the chapters of the ADR Act of 2004
and its IRR, have been devoted specifically to then. Be that as it may,
parties are allowed to avail of other forms of ADR for the amicable
resolution of their disputes. These other forms of ADR are the following:
1. Early neutral evaluation
2. Neutral evaluation
3. Mini-trial
4. Mediation-arbitration
5. Combination thereof
6. And any other ADR Form
In consonance with the principle of party autonomy and self-
determination, the provisions of the IRR on the foregoing forms of ADR
apply only in the absence of an agreement between the parties or the
insufficiency thereof.
The IRR made the specific provisions on arbitration and mediation
suppletorily applicable to the other forms of ADR. If the ADR form is more
akin to mediation than arbitration, the specific provisions of the IRR on
mediation shall have suppletory application to the extent that they are not
in conflict with the agreement of the parties or the specific provisions of
the chosen ADR form. On the other hand, if the ADR form is more akin to
arbitration than mediation, the specific provisions of the IRR on arbitration
shall have suppletory application to the extent that they are not in conflict
with the agreement of the parties or the specific provisions of the chosen
ADR form.
For instance, if the neutral third person in these other forms of ADR will
merely assist the parties in reaching a voluntary agreement, the form of
ADR used is akin to mediation and the provisions of the IRR on mediation
shall have suppletory application. On the other hand, if the neutral third
person will have the power to make a binding resolution on the dispute,
the form of ADR used is akin to arbitration and the provisions of the IRR,
the ADR Act of 2004 and R.A. No. 876 on domestic arbitration shall have
suppletory application.
In sum, the rules for the other forms of ADR, in the order of applicability,
are:
1. The agreement of the parties;
2. Provisions of the IRR specifically applicable to the particular
form of ADR; and
3. Provisions of the IRR on arbitration or mediation for other
forms of ADR akin to arbitration and mediation, respectively.
Neutral and Early Neutral Evaluation.
IRR, Article 7.6. Neutral or Early Neutral Evaluation.
(a) The neutral or early neutral evaluation shall be governed by the
rules and procedure agreed upon by the parties. In the absence of
said agreement, this Rule shall apply.
(b) If the parties cannot agree on, or fail to provide for:
(i) The desired qualification of the neutral third person;
(ii) The manner of his/her selection;
(iii) The appointing authority (not IBP) who shall have the
authority to make the appointment of a neutral third
person; or
(iv) If despite agreement on the foregoing and the lapse of
the period of time stipulated for the appointment, the
parties are unable to select a neutral third person or
appointing authority, then, either party may request the
default appointing authority, as defined under paragraph
C1 of Article (Definition of Terms), to make the
appointment taking into consideration the nature of the
dispute and the experience and expertise of the neutral
third person.
(c) The parties shall submit and exchange position papers containing
the issues and statement of the relevant facts and appending
supporting documents and affidavits of witnesses to assist the neutral
third person in evaluating or assessing the dispute.
(d) The neutral third person may request either party to address
additional issues that he/she may consider necessary for a complete
evaluation/assessment of the dispute.
(e) The neutral third person may structure the evaluation process in
any manner he/she deems appropriate.
In the course thereof, the neutral third person may
identify areas of agreement, clarify the issues, define
those that are contentious, and encourage the parties to
agree on a definition of issues and stipulate on facts or
admit the genuineness and due execution of documents.
(f) The neutral third person shall issue a written evaluation or
assessment within thirty (30) days from the conclusion of the
evaluation process.
The opinion shall be non-binding and shall set forth how
the neutral third person would have ruled had the matter
been subject to a binding process.
The evaluation or assessment shall indicate the relative
strengths and weakness of the positions of the parties, the
basis for the evaluation or assessment, and an estimate,
when feasible, of the amount for which a party may be
liable to the other if the dispute were made subject to a
binding process.
(g) There shall be no ex-parte communication between the neutral
third person and any party to dispute without the consent of all
parties.
(h) All papers and written presentations communicated to the neutral
third person, including any paper prepared by a party to be
communicated to the neutral third person or to the other party as
part of the dispute resolution process, and the neutral third person’s
written non-binding assessment or evaluation, shall be treated as
confidential.
Neutral evaluation is an ADR process wherein the parties and their lawyers
are brought together to present summaries of their cases and to receive a
non-binding assessment by an experienced neutral person, with expertise
in the subject matter or substance of the dispute. Early neutral evaluation
is availed of early in the pre-trial phase.
The agreement of the parties shall govern the conduct of the neutral or
early neutral evaluation. In default of an agreement, the provisions of the
IRR on neutral or early neutral evaluation shall apply.
Essentially, a neutral and early neutral evaluation are akin to mediation
and, hence, in the absence of an agreement between the parties or of
specific provisions of the law or rules applicable to them. The rules on
mediation shall apply suppletorily. However, the parties may, in the
exercise of their right to party autonomy and self-determination, empower
the neutral third person to render a binding assessment in which case, the
neutral or early neutral evaluation becomes akin to domestic arbitration.
Under these situation, the rules on arbitration shall apply suppletorily.
Furthermore, if the parties cannot or fail to agree on the qualifications of
the neutral third person, the manner of his selection, or the appointing
authority therefor, or if the parties are unable to make the selection
despite their agreement on the foregoing, either party may request the
default appointing authority to make the appointment. The default
appointing authority in this case is the same as that for international
commercial arbitration and domestic arbitration, i.e., the National
President of the IBP or his representative.
In a neutral evaluation, the parties are required to submit and exchange
position papers containing the issues and statements of the relevant facts
and append thereto supporting documents and affidavits of witnesses. In
order to maintain the impartiality of the neutral third person, there shall be
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no ex parte communication between him and any party to the dispute.
Confidentiality of the proceedings, communications and assessment shall
also be maintained.
The neutral third person shall issue a written evaluation or assessment
within 30 days from the conclusion of the evaluation process. Generally, his
opinion shall not be binding. However, the neutral third person is required
to set forth how he would have ruled had the matter been subject to a
binding process.
Mini-Trial.
IRR, Article 7.7. Mini-Trial.
(a) A mini-trial shall be governed by the rules and procedure agreed
upon by the parties. In the absence of said agreement, this Rule shall
apply.
(b) A mini-trial shall be conducted either as: (i) a separate dispute
resolution process; or (ii) a continuation of mediation, neutral or early
neutral evaluation or any other ADR process.
(c) The parties may agree that a mini-trial be conducted with or
without the presence and participation of a neutral third person. If a
neutral third person is agreed upon and chosen, he/she shall preside
over the mini-trial.
The parties may agree to appoint one or more (but equal
in number per party) senior executive/s, on its behalf, to
sit as mini-trial panel members.
(d) The senior executive/s chosen to sit as mini-trial panel members
must be duly authorized to negotiate and settle the dispute with the
other party.
The appointment of a mini-trial panel member/s shall be
communicated to the other party.
This appointment shall constitute a representation to the
other party that the mini-trial panel member/s has/have
the authority to enter into a settlement agreement
binding upon the principal without any further action or
ratification by the latter.
(e) Each party shall submit a brief executive summary of the dispute
in sufficient copies as to provide one copy to each mini-trial panel
member and to the adverse party.
The summary shall identify the specific factual or legal
issue or issues. Each party may attach to the summary a
more exhaustive recital of the facts of the dispute and the
applicable law and jurisprudence.
(f) At the date time and place agreed upon, the parties shall appear
before the mini-trial panel members.
The lawyer of each party and/or authorized
representative shall present his/her case starting with the
claimant followed by the respondent.
The lawyer and/or representative of each party may
thereafter offer rebuttal or sur-rebuttal arguments.
Unless the parties agree on a shorter or longer period, the
presentation-in-chief shall be made, without interruption, for one
hour and the rebuttal or sur-rebuttal shall be thirty (30) minutes.
At the end of each presentation, rebuttal or sur-rebuttal, the mini-trial
panel member/s may ask clarificatory questions from any of the
presentors.
(g) After the mini-trial, the mini-trial panel members shall negotiate a
settlement of the dispute by themselves.
In cases where a neutral third person is appointed, the neutral third
person shall assist the proceedings shall be governed by Chapter 3 of
Mediation.
Mini-trial is a structured dispute resolution method in which the merits of
a case are argued before a panel composed of senior decision-makers, with
or without the presence of a neutral third person, before which the parties
seek a negotiated settlement. The agreement of the parties shall govern
the conduct of the proceedings, in the absence of which, the provisions of
the IRR on mini-trial shall be applicable. Mini-trial is essentially akin to
mediation and, hence, Chapter 3 of the IRR on mediation is suppletorily
applicable, unless the panel of decision-makers, or the neutral third
person, is given by the parties the authority to render a binding decision, in
which case, the proceedings become akin to domestic arbitration and the
IRR provisions on arbitration become suppletorily applicable.
A mini-trial may be conducted either as [i] a separate dispute resolution
process; or [ii] as a continuation of mediation, neutral or early neutral
evaluation or any other ADR process. In either case, the proceedings may
be conducted with or without the presence or participation of a neutral
third person. If one is chosen, he shall preside over the mini-trial.
The panel of senior executives or decision-makers shall be appointed by
the parties. They may choose one or more for each party provided that the
parties shall appoint an equal number of senior executives or decision-
makers. The parties shall submit a brief summary of the dispute, identifying
the specific factual or legal issues, after which they shall appear before the
mini-trial panel members before whom their lawyers shall present their
respective cases starting with the claimant. Thereafter, the lawyers or the
parties’ representatives may offer rebuttal or sur-rebuttal arguments. The
presentation-in-chief shall be made without interruption for 1 hour, and
the rebuttal or sur-rebuttal shall be for 30 minutes, unless a different
period is agreed upon by the parties. The panel members may ask
clarificatory questions after each presentation, rebuttal or sur-rebuttal.
Mediation-Arbitration.
IRR, Article 7.8. Mediation–Arbitration.
(a) A Mediation-Arbitration shall be governed by the rules and
procedure agreed upon by the parties, In the absence of said
agreement, Chapter 5 on Mediation shall first apply and thereafter,
Chapter 5 on Domestic Arbitration.
(b) No Person shall having been engage and having acted as mediator
of a dispute between the parties, following a failed mediation, act as
arbitrator of the same dispute, unless the parties, in a written
agreement, expressly authorize the mediator to hear and decide the
case as an arbitrator
(c) The mediator who becomes an arbitrator pursuant to this Rule
shall make an appropriate disclosure to the parties as if the
arbitration proceeding had commenced and will proceed as a new
dispute resolution process, and shall, before entering upon his/her
duties, executive the appropriate oath or affirmation of office as
arbitrator in accordance with these Rules.
Mediation-arbitration (or med-arb) is a two-step dispute resolution
process involving mediation and then followed by arbitration.
The proceedings shall be governed by the agreement of the parties. In the
absence of an agreement, and in view of its dual nature, its proceedings
shall be governed by the rules on mediation first, and thereafter, by the
rules on domestic arbitration.
As a rule, no arbitrator shall act as mediator, and no mediator shall act as
arbitrator, at the same time in any proceeding. The mediator so appointed
is precluded from acting as arbitrator of the same dispute, unless the
parties have agreed in writing therefor. Perforce, a mediator, while
generally precluded from discussing with the parties the merits of the
dispute, may do so when duly appointed as an arbitrator in a mediation-
arbitration.
During the arbitration stage, the mediator who is authorized in writing to
act as arbitrator shall make an appropriate disclosure as if the arbitration
proceeding had just commenced. He shall likewise take the appropriate
oath or affirmation as an arbitrator.
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Combination and Innominate Forms of ADR.

In the choice of allowable ADR forms, the parties are allowed to avail of
any combination of ADR forms. The parties may even come up with their
own forms or methods which, albeit innominate, may be allowed by law as
long as they satisfy the requisites of ADR, comply with the essential
requisites of a valid contract, and are not contrary to law, morals, public
policy, public order and good customs.

As in the case of the nominate ADR forms, combinations and innominate

ADR forms are governed principally by the agreement of the parties. In the
absence of such agreement, the rules and procedure for mediation are
suppletorily applicable if the combination or innominate ADR form is akin
to mediation. The rules and procedure for arbitration, on the other hand,
apply suppletorily to combinations and innominate ADR forms that are akin
to arbitration.

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CHAPTER 8 requirements, i.e., that the respondent was furnished a copy of the
petition.
Special Rules of Court on Alternative Dispute Resolution
The petitioner is required to serve copies of the petition upon the
General Provisions. respondent before it is filed in court. Service of the petition shall be made
through personal service or by courier proof of which shall be attached to
The ADR Act of 2004, R.A. No. 876 (“The Arbitration Law”, the Model Law, the petition.
and the Implementing Rules and Regulations of the ADR Act, deferred to
the Supreme Court’s authority to enact special rules of procedure Summary Proceedings.
applicable in courts for specific areas and aspects of ADR. The above-
mentioned substantive laws, as well as the other sources of ADR rules,
however, are not the source of the authority of the Supreme Court to Special ADR Rules, Rule 1.3. Summary proceedings in certain cases.
enact the Special Rules of Court on Alternative Dispute Resolution
otherwise known as the “Special ADR Rules.” The proceedings in the following instances are summary in nature and
shall be governed by this provision:
Under the Constitution, the Supreme Court has the exclusive power and
authority to promulgate rules of practice and procedure subject to the a. Judicial Relief Involving the Issue of Existence, Validity or
condition that they shall not diminish, increase or modify substantive Enforceability of the Arbitration Agreement;
rights.
b. Referral to ADR;
The authority to enact rules of practice and procedure, emanating as it
does from the Constitution, renders the rules promulgated by the Supreme c. Interim Measures of Protection;
Court applicable only to proceedings before Philippine courts and any
quasi-judicial agency which may adopt the rules in a suppletory character. d. Appointment of Arbitrator;
Unlike the rules of procedure under the ADR Act which may be adopted by
the parties in proceedings conducted outside the Philippine territorial e. Challenge to Appointment of Arbitrator;
jurisdiction in accordance with the principles of party autonomy and self-
determination, the Special ADR Rules are applicable only in proceedings in f. Termination of Mandate of Arbitrator;
Philippine courts.
g. Assistance in Taking Evidence;
The Special ADR Rules was passed and approved on Sept. 1, 2009, and took
effect after the completion of its publication. h. Confidentiality/Protective Orders; and

Subject Matter and Coverage. i. Deposit and Enforcement of Mediated Settlement

Agreements.
The Special ADR Rules govern the following judicial processes and
proceedings: (A) Service and filing of petition in summary proceedings.

1. Relief on the issue of existence, validity and enforceability of The petitioner shall serve, either by personal service or courier, a copy
the arbitration agreement; of the petition upon the respondent before the filing thereof.
2. Referral to alternative dispute resolution;
3. Interim measures of protection; Proof of service shall be attached to the petition filed in
4. Appointment of arbitrator; court.
5. Challenge to appointment of arbitrator;
6. Termination of mandate of arbitrator; For personal service, proof of service of the petition consists of the
7. Assistance in taking evidence; affidavit of the person who effected service, stating the time, place
8. Confirmation, correction or vacation of award in domestic and manner of the service on the respondent.
arbitration;
9. Recognition and enforcement or setting aside of an award in For service by courier, proof of service consists of the
international commercial arbitration; signed courier proof of delivery.
10. Recognition and enforcement of foreign arbitral award;
11. Confidentiality / protective orders; If service is refused or has failed, the affidavit or delivery
12. Deposits and enforcement of mediated settlement agreements. receipt must state the circumstances of the attempted
service and refusal or failure thereof.
The foregoing proceedings under the Special ADR Rules are summary in
nature, except [i] those that pertain to the confirmation or recognition and (B) Notice.
enforcement of arbitral awards, whether domestic, international
commercial, or foreign, which are non-summary proceedings, and [iii] the Except for cases involving Referral to ADR and
deposit of mediated settlement agreements which is not a judicial Confidentiality/Protective Orders made through motions,
proceeding.
The court shall, if it finds the petition sufficient in form
The foregoing specific reliefs are applicable only to domestic arbitration and substance, send notice to the parties directing them
and Philippine ICA, except referral to ADR, assistance in taking evidence to appear at a particular time and date for the hearing
and recognition of the arbitral award which are applicable also to foreign thereof which shall be set no later than five (5) days from
arbitration, including foreign ICA. the lapse of the period for filing the opposition or
comment.
Special Proceedings.
The notice to the respondent shall contain a statement
allowing him to file a comment or opposition to the
Special ADR Rules, Rule 1.2. Nature of the proceedings. petition within fifteen (15) days from receipt of the notice.

All proceedings under the Special ADR Rules are special proceedings.
Except for the deposit of mediated settlement agreements, the foregoing
procedures are “special proceedings.” As such, jurisdiction over the
persons of the parties is acquired by the court, no through the service of
summons, but upon proof of compliance with the jurisdictional
The motion filed pursuant to the rules on Referral to ADR or
Confidentiality/Protective Orders shall be set for hearing by the
movant and contain a notice of hearing that complies with the
requirements under Rule 15 of the Rules of Court on motions.
(C) Summary hearing.
In all cases, as far as practicable, the summary hearing shall be

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 ALTERNATIVE DISPUTE RESOLUTION
conducted in one (1) day and only for purposes of clarifying facts.
Except in cases involving Referral to ADR or Confidentiality/Protective
Orders made through motions, it shall be the court that sets the
petition for hearing within five (5) days from the lapse of the period
for filing the opposition or comment.
(D) Resolution.
The court shall resolve the matter within a period of thirty (30) days
from the day of the hearing.
The proceedings under the Special ADR Rules are generally summary and,
therefore, are conducted by way of submission of verified pleadings,
affidavits and supporting documents, except for the proceedings involving
the confirmation, recognition and enforcement of arbitral awards which
are generally non-summary and the deposit of mediated settlement
agreements which is not a judicial proceeding.
As a consequence of the summary nature of the proceedings under the
Special ADR Rules, the following pleadings, motion or petitions are not
allowed and shall not be accepted for filing, and if inadvertently accepted,
should not be considered by the court.
1. Motion to dismiss (therefore, any ground for a motion to
dismiss must be pleaded in the answer in opposition to the
petition or motion);
2. Motion for bill of particulars;
3. Motion for new trial or for reopening of trial;
4. Petition for relief from judgment;
5. Motion for extension, except in cases where an ex parte
temporary restraining order of protection has been issued (in
which case the adverse party is amply protected from any delay
that may be caused by the extension);
6. Rejoinder to reply (the reply, therefore, is the last pleading to
be filed);
7. Motion to declare a party in default; and
8. Any other pleading specifically disallowed under any provision
of the Special ADR Rules.
If inadvertently accepted for filing, any of the foregoing motions or
pleadings may be expunged from the records of the case.
Non-summary Proceedings.
Special ADR Rules, Rule 1.8. Service and filing of pleadings, motions
and other papers in non-summary proceedings.
The initiatory pleadings shall be filed directly with the court.
The court will then cause the initiatory pleading to be
served upon the respondent by personal service or
courier.
Where an action is already pending, pleadings, motions
and other papers shall be filed and/or served by the
concerned party by personal service or courier.
Where courier services are not available, resort to
registered mail is allowed.
(A) Proof of filing.
The filing of a pleading shall be proved by its existence in the record
of the case.
If it is not in the record, but is claimed to have been filed personally,
the filing shall be proved by the written or stamped acknowledgment
of its filing by the clerk of court on a copy of the same;
If filed by courier, by the proof of delivery from the courier
company.
(B) Proof of service.
Proof of personal service shall consist of a written admission by the
party served, or the official return of the server, or the affidavit of the
party serving, containing a full statement of the date, place and
manner of service.
If the service is by courier, proof thereof shall consist of an affidavit of
the proper person, stating facts showing that the document was
deposited with the courier company in a sealed envelope, plainly
addressed to the party at his office, if known, otherwise at his
residence, with postage fully pre-paid, and with instructions to the
courier to immediately provide proof of delivery.
(C) Filing and service by electronic means and proof thereof.
Filing and service of pleadings by electronic transmission may be
allowed by agreement of the parties approved by the court.
If the filing or service of a pleading or motion was done by electronic
transmission, proof of filing and service shall be made in accordance
with the Rules on Electronic Evidence.
The proceedings under the Special ADR Rules which are generally non-
summary are the following:
1. Confirmation, correction or vacation of award in domestic
arbitration;
2. Recognition and enforcement of an award in an international
commercial arbitration; and
3. Recognition and enforcement of a foreign arbitral award.
The technical rules on the service of summons ordinarily applicable to
regular court proceedings are not applicable under the Special ADR Rules.
Instead, the Special ADR Rules require, for non-summary proceedings, that
the initiatory pleading be filed directly with the court which will then serve
a copy thereof to the respondent by personal service or courier. If the
court action is already pending, the initiatory pleading or motion shall be
served by personal service or courier upon the respondent before it is filed
in court. In the event that courier service is not available, resort may be
had to service by registered mail.
The Special ADR Rules is one of the rules where filing and service of
pleadings by electronic means may be allowed by agreement of the parties.
Proof of filing and service thereof shall be made in accordance with the
Rules on Electronic Evidence.
Jurisdiction and Venue.
Jurisdiction over any of the proceedings covered by the Special ADR Rules
is lodged by law with the Regional Trial Courts. Generally, the venue is
either [i] the place where any of the parties resides or has his place of
business; [ii] the place where the asset or act involved is located, or [iii] the
National Capital Judicial Region, at the option of the petitioner.
Fundamental Principles Adopted by the Special ADR Rules.
Special ADR Rules, Rule 2.1. General policies.
It is the policy of the State to actively promote the use of various
modes of ADR and to respect party autonomy or the freedom of the
parties to make their own arrangements in the resolution of disputes
with the greatest cooperation of and the least intervention from the
courts.
To this end, the objectives of the Special ADR Rules are to encourage
and promote the use of ADR, particularly arbitration and mediation,
as an important means to achieve speedy and efficient resolution of
disputes, impartial justice, curb a litigious culture and to de-clog court
dockets.
The court shall exercise the power of judicial review as provided by
these Special ADR Rules. Courts shall intervene only in the cases
allowed by law or these Special ADR Rules.
Special ADR Rules, Rule 2.2. Policy on arbitration.
(A) Where the parties have agreed to submit their dispute to
arbitration, courts shall refer the parties to arbitration pursuant to
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 ALTERNATIVE DISPUTE RESOLUTION
Republic Act No. 9285 bearing in mind that such arbitration
agreement is the law between the parties and that they are expected
to abide by it in good faith.
Further, the courts shall not refuse to refer parties to arbitration for
reasons including, but not limited to, the following:
a. The referral tends to oust a court of its jurisdiction;
b. The court is in a better position to resolve the dispute
subject of arbitration;
c. The referral would result in multiplicity of suits;
d. The arbitration proceeding has not commenced;
e. The place of arbitration is in a foreign country;
f. One or more of the issues are legal and one or more of the
arbitrators are not lawyers;
g. One or more of the arbitrators are not Philippine
nationals; or
h. One or more of the arbitrators are alleged not to possess
the required qualification under the arbitration agreement
or law.
(B) Where court intervention is allowed under ADR Laws or the
Special ADR Rules, courts shall not refuse to grant relief, as provided
herein, for any of the following reasons:
a. Prior to the constitution of the arbitral tribunal, the court
finds that the principal action is the subject of an
arbitration agreement; or
b. The principal action is already pending before an arbitral
tribunal.
The Special ADR Rules recognize the principle of competence-
competence, which means that the arbitral tribunal may initially rule
on its own jurisdiction, including any objections with respect to the
existence or validity of the arbitration agreement or any condition
precedent to the filing of a request for arbitration.
The Special ADR Rules recognize the principle of separability of the
arbitration clause, which means that said clause shall be treated as an
agreement independent of the other terms of the contract of which it
forms part.
A decision that the contract is null and void shall not entail
ipso jure the invalidity of the arbitration clause.
Special ADR Rules, Rule 2.3. Rules governing arbitral proceedings.
The parties are free to agree on the procedure to be followed in the
conduct of arbitral proceedings.
Failing such agreement, the arbitral tribunal may conduct arbitration
in the manner it considers appropriate.
Special ADR Rules, Rule 2.4. Policy implementing competence-
competence principle.
The arbitral tribunal shall be accorded the first opportunity or
competence to rule on the issue of whether or not it has the
competence or jurisdiction to decide a dispute submitted to it for
decision, including any objection with respect to the existence or
validity of the arbitration agreement.
When a court is asked to rule upon issue/s affecting the competence
or jurisdiction of an arbitral tribunal in a dispute brought before it,
either before or after the arbitral tribunal is constituted, the court
must exercise judicial restraint and defer to the competence or
jurisdiction of the arbitral tribunal by allowing the arbitral tribunal the
first opportunity to rule upon such issues.
Where the court is asked to make a determination of whether the
arbitration agreement is null and void, inoperative or incapable of
being performed, under this policy of judicial restraint, the court must
make no more than a prima facie determination of that issue.
Unless the court, pursuant to such prima facie determination,
concludes that the arbitration agreement is null and void, inoperative
or incapable of being performed, the court must suspend the action
before it and refer the parties to arbitration pursuant to the
arbitration agreement.
Special ADR Rules, Rule 2.5. Policy on mediation.
The Special ADR Rules do not apply to Court-Annexed Mediation,
which shall be governed by issuances of the Supreme Court.
Where the parties have agreed to submit their dispute to mediation, a
court before which that dispute was brought shall suspend the
proceedings and direct the parties to submit their dispute to private
mediation.
If the parties subsequently agree, however, they may opt
to have their dispute settled through Court-Annexed
Mediation.
Special ADR Rules, Rule 2.6. Policy on Arbitration-Mediation or
Mediation-Arbitration.
No arbitrator shall act as a mediator in any proceeding in which he is
acting as arbitrator; and all negotiations towards settlement of the
dispute must take place without the presence of that arbitrator.
Conversely, no mediator shall act as arbitrator in any
proceeding in which he acted as mediator.
Special ADR Rules, Rule 2.7. Conversion of a settlement agreement to
an arbitral award.
Where the parties to mediation have agreed in the written settlement
agreement that the mediator shall become the sole arbitrator for the
dispute or that the settlement agreement shall become an arbitral
award, the sole arbitrator shall issue the settlement agreement as an
arbitral award, which shall be subject to enforcement under the law.
The Special ADR Rule took into account the following fundamental policies,
principles and objectives of ADR:
(1) Self-determination, party autonomy, and promotion of ADR as a means
of resolving disputes. The Special ADR Rules took into account the objective
of ADR of achieving a speedy and efficient resolution of disputes, impartial
justice, curbing a litigious culture and Declogging court dockets.
(2) Preference for arbitration. The Special ADR Rules requires courts to
refer to arbitration parties who have agreed to submit their disputes to
arbitration, and precludes courts from refusing the referral for any of the
following and other similar reasons:
a. The referral tends to oust a court of its jurisdiction;
b. The court is in a better position to resolve the dispute subject
of the arbitration;
c. The referral would result in multiplicity of suits;
d. The arbitration proceeding has not commenced;
e. The place of arbitration is in a foreign country;
f. One or more of the issues are legal and one or more arbitrators
are not lawyers;
g. One or more of the arbitrators are not Philippine nationals; or
h. One or more of the arbitrators are alleged not to possess the
required qualification under the arbitration agreement or law.
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(3) Doctrine of separability / severability. The arbitration clause shall be

treated as an agreement independent of the contract of which it forms
part, and a decision that the contract is null and void shall not entail ipso
jure the invalidity of the arbitration clause.

(4) Freedom to agree on the procedure to be followed in the conduct of

arbitral proceedings. Only in the absence of such agreement may the
arbitral tribunal conduct arbitration in the manner it considers appropriate.

(5) The “competence-competence principle.” The arbitral tribunal should be

accorded the first opportunity or competence to rule on the issue of
whether or not it has the competence or jurisdiction to decide a dispute
submitted to it for decision, including any objection with respect to the
existence or validity of the arbitration agreement. The same principle calls
upon the courts, when asked to rule upon issues affecting the competence
or jurisdiction of an arbitral tribunal in a dispute brought before it, either
before or after the arbitral tribunal is constituted, to exercise judicial
restraint and defer to the competence or jurisdiction of the arbitral
tribunal by allowing the arbitral tribunal the first opportunity to rule upon
such issues.

(6) No arbitrator shall act as mediator in any proceeding in which he is

acting as arbitrator. Conversely, no mediator shall act as arbitrator in any
proceeding in which he is acting as mediator. However, where the parties
to mediation have agreed in the written settlement agreement that the
mediator shall become the sole arbitrator for the dispute or that the
settlement agreement shall become an arbitral award, the mediator-
arbitrator shall issue the settlement agreement as an arbitral award, which
shall be subject to enforcement under the law.

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CHAPTER 9
Special Rules of Court on Alternative Dispute
Resolution
-The Special Court Reliefs-
A. Judicial Relief Involving the Issues of Existence, Validity and
Enforceability of the Arbitration Agreement.
Rule 3.1. When judicial relief is available .
The judicial relief provided in Rule 3, whether resorted to before or
after commencement of arbitration, shall apply only when the place
of arbitration is in the Philippines.
The judicial relief referred to in Rule 3 of the Special ADR Rules is a petition
for judicial determination of the existence, validity and/or enforceability of
an arbitration agreement. The issues involved in these proceedings are:
1. Existence of the arbitration agreement – whether or not there
is an arbitration agreement.
2. Validity of the arbitration agreement – whether or not the
arbitration agreement complies with all the essential requisites
for a valid contract.
3. Enforceability of the arbitration agreement – whether or not
the arbitration agreement is enforceable in accordance with
Article 1403 of the Civil Code.
This Judicial Relief is applicable only to arbitration proceedings in the
Philippines. Proceedings of this nature are summary. Thus, in the case of
Gonzales vs. Climax Mining Ltd, 2007:
“This special proceeding is the procedural mechanism for the
enforcement of the contract to arbitrate. The jurisdiction of the
courts in relation to Sec. 6 of R.A. No. 876 as well as the nature
of the proceedings was expounded upon in La Naval Drug
Corporation vs. Court of Appeals. There it was held that R.A.
No. 876 explicitly confines the court’s authority only to the
determination of whether or not there is an agreement in
writing providing for arbitration. In the affirmative, the statute
ordains that the court shall issue an order ‘summarily directing
the parties to proceed with the arbitration in accordance with
the terms thereof.’ If the court, upon the other hand, finds that
no such agreement exists, ‘the proceeding shall be dismissed.’
The cited case also stressed that the proceedings are
summary in nature. The same thrust was made in the earlier
case of Mindanao Portland Cement Corp. vs. Mcdonough
Construction Co., of Florida which held, thus:
‘Since there obtains herein a written provision for arbitration as
well as failure on respondent’s part to comply therewith, the
court a quo rightly ordered the parties to proceed to
arbitration in accordance with the terms of their agreement.
Respondent’s arguments touching upon the merits of the
dispute are improperly raised therein. They should be
addressed to the arbitrators. This proceeding is merely a
summary remedy to enforce the agreement to arbitrate. The
duty of the court in this case is not to resolve the merits of the
parties’ claims but only to determine if they should proceed
to arbitration or not.’”
Judicial Relief before Commencement of Arbitration
Rule 3.2. Who may file petition.
Any party to an arbitration agreement may petition the appropriate
court to determine any question concerning the existence, validity
and enforceability of such arbitration agreement serving a copy
thereof on the respondent in accordance with Rule 1.4 (A).
Rule 3.3. When the petition may be filed.
The petition for judicial determination of the existence, validity
and/or enforceability of an arbitration agreement may be filed at any
time prior to the commencement of arbitration.
Despite the pendency of the petition provided herein, arbitral
proceedings may nevertheless be commenced and continue to the
rendition of an award, while the issue is pending before the court.
Rule 3.4. Venue.
A petition questioning the existence, validity and enforceability of an
arbitration agreement may be filed before the Regional Trial Court of
the place where any of the petitioners or respondents has his
principal place of business or residence.
Rule 3.5. Grounds.
A petition may be granted only if it is shown that the arbitration
agreement is, under the applicable law, invalid, void, unenforceable
or inexistent.
Rule 3.6. Contents of petition.
The verified petition shall state the following:
a. The facts showing that the persons named as petitioner
or respondent have legal capacity to sue or be sued;
b. The nature and substance of the dispute between the
parties;
c. The grounds and the circumstances relied upon by the
petitioner to establish his position; and
d. The relief/s sought.
Apart from other submissions, the petitioner must attach to the
petition an authentic copy of the arbitration agreement.
Rule 3.7. Comment/Opposition.
The comment/opposition of the respondent must be filed within
fifteen (15) days from service of the petition.
Rule 3.8. Court action.
In resolving the petition, the court must exercise judicial restraint in
accordance with the policy set forth in Rule 2.4, deferring to the
competence or jurisdiction of the arbitral tribunal to rule on its
competence or jurisdiction.
Rule 3.9. No forum shopping.
A petition for judicial relief under this Rule may not be commenced
when the existence, validity or enforceability of an arbitration
agreement has been raised as one of the issues in a prior action
before the same or another court.
Rule 3.10. Application for interim relief.
If the petitioner also applies for an interim measure of protection, he
must also comply with the requirements of the Special ADR Rules for
the application for an interim measure of protection.
Rule 3.11. Relief against court action.
Where there is a prima facie determination upholding the arbitration
agreement. A prima facie determination by the court upholding the
existence, validity or enforceability of an arbitration agreement shall
not be subject to a motion for reconsideration, appeal or certiorari.
Such prima facie determination will not, however, prejudice the right
of any party to raise the issue of the existence, validity and
enforceability of the arbitration agreement before the arbitral
tribunal or the court in an action to vacate or set aside the arbitral
award.
In the latter case, the court’s review of the arbitral
tribunal’s ruling upholding the existence, validity or
enforceability of the arbitration agreement shall no longer
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 ALTERNATIVE DISPUTE RESOLUTION
be limited to a mere prima facie determination of such
issue or issues as prescribed in this Rule, but shall be a full
review of such issue or issues with due regard, however,
to the standard for review for arbitral awards prescribed
in these Special ADR Rules.
The rules on judicial relief prior to the commencement of arbitration apply
when the following circumstances are present:
1. The arbitration proceeding has not yet commenced; and
2. There is between the parties a dispute regarding the existence,
validity or enforceability of the arbitration agreement.
The procedural rules are as follows:
(1) Petition. The initiatory pleading for judicial relief before the
commencement of arbitration is a petition filed with the Regional Trial
Court where any of the parties resides or has his principal place of
business. The petition should state facts showing [i] the legal capacity of
the parties to sue and be sued; [ii] the nature and substance of the dispute;
[iii] the grounds and circumstances relied upon by the petitioner, and [iv]
the relief sought.
As in all other initiatory pleadings under the Special ADR Rules,
the petition must be verified and must be accompanied by a
certification of non-forum shopping. An authentic copy of the
arbitration agreement should be attached to the petition unless
the ground relied upon is the non-existence or unenforceability
of the arbitration agreement. A copy of the petition shall be
served upon the respondent before it is filed in court.
The filing of the petition does not prevent the commencement
of the arbitration, or the continuation thereof and the rendition
of an award therein.
(2) Comment / opposition. Within 15 days from service of the petition, the
respondent must file his comment or opposition.
(3) Court Action. In resolving the petition, the court must exercise judicial
restraint and defer to the competence or jurisdiction of the arbitral
tribunal to rule on its competence and jurisdiction.
(4) Relief against court action. The determination by the court upholding
the existence, validity or enforceability of the arbitration agreement under
these proceedings is merely prima facie. Such prima facie determination,
however, shall not be subject to a motion for reconsideration, appeal or
certiorari, but shall be without prejudice to the right of any party to raise
the same issues before the arbitral tribunal or the court in a petition to
vacate or set aside the arbitral award which shall be resolved in accordance
with the standards set for such proceedings.
On the other hand, if the court finds the arbitration agreement inexistent,
invalid or unenforceable, the aggrieved party may file a motion for
reconsideration or a petition for certiorari. The distinction is necessary in
order to provide judicial remedy for a ruling against the jurisdiction of an
arbitral tribunal in line with the state policy of giving preference to ADR.
Judicial Relief after Arbitration Commences
Rule 3.12. Who may file petition.
Any party to arbitration may petition the appropriate court for
judicial relief from the ruling of the arbitral tribunal on a preliminary
question upholding or declining its jurisdiction.
Should the ruling of the arbitral tribunal declining its
jurisdiction be reversed by the court, the parties shall be
free to replace the arbitrators or any one of them in
accordance with the rules that were applicable for the
appointment of arbitrator sought to be replaced.
Rule 3.13. When petition may be filed.
The petition may be filed within thirty (30) days after having received
notice of that ruling by the arbitral tribunal.
Rule 3.14. Venue.
The petition may be filed before the Regional Trial Court of the place
where arbitration is taking place, or where any of the petitioners or
respondents has his principal place of business or residence.
Rule 3.15. Grounds.
The petition may be granted when the court finds that the arbitration
agreement is invalid, inexistent or unenforceable as a result of which
the arbitral tribunal has no jurisdiction to resolve the dispute.
Rule 3.16. Contents of petition.
The petition shall state the following:
a. The facts showing that the person named as petitioner
or respondent has legal capacity to sue or be sued;
b. The nature and substance of the dispute between the
parties;
c. The grounds and the circumstances relied upon by the
petitioner; and
d. The relief/s sought.
In addition to the submissions, the petitioner shall attach to the
petition a copy of the request for arbitration and the ruling of the
arbitral tribunal.
The arbitrators shall be impleaded as nominal parties to the case and
shall be notified of the progress of the case.
Rule 3.17. Comment/Opposition.
The comment/opposition must be filed within fifteen (15) days from
service of the petition.
Rule 3.18. Court action.
(A) Period for resolving the petition. - The court shall render judgment
on the basis of the pleadings filed and the evidence, if any, submitted
by the parties, within thirty (30) days from the time the petition is
submitted for resolution.
(B) No injunction of arbitration proceedings. - The court shall not
enjoin the arbitration proceedings during the pendency of the
petition.
Judicial recourse to the court shall not prevent the arbitral tribunal
from continuing the proceedings and rendering its award.
(C) When dismissal of petition is appropriate. - The court shall dismiss
the petition if it fails to comply with Rule 3.16 above; or if upon
consideration of the grounds alleged and the legal briefs submitted by
the parties, the petition does not appear to be prima facie
meritorious.
Rule 3.19. Relief against court action.
The aggrieved party may file a motion for reconsideration of the order
of the court.
The decision of the court shall, however, not be subject to appeal.
The ruling of the court affirming the arbitral tribunal’s jurisdiction
shall not be subject to a petition for certiorari.
The ruling of the court that the arbitral tribunal has no jurisdiction
may be the subject of a petition for certiorari.
Rule 3.20. Where no petition is allowed.
Where the arbitral tribunal defers its ruling on preliminary question
regarding its jurisdiction until its final award, the aggrieved party
cannot seek judicial relief to question the deferral and must await the
final arbitral award before seeking appropriate judicial recourse.
A ruling by the arbitral tribunal deferring resolution on the issue of its
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jurisdiction until final award, shall not be subject to a motion for
reconsideration, appeal or a petition for certiorari.
Rule 3.21. Rendition of arbitral award before court decision on
petition from arbitral tribunal’s preliminary ruling on jurisdiction.
If the arbitral tribunal renders a final arbitral award and the Court has
not rendered a decision on the petition from the arbitral tribunal’s
preliminary ruling affirming its jurisdiction, that petition shall become
ipso facto moot and academic and shall be dismissed by the Regional
Trial Court.
The dismissal shall be without prejudice to the right of the aggrieved
party to raise the same issue in a timely petition to vacate or set aside
the award.
Rule 3.22. Arbitral tribunal a nominal party.
The arbitral tribunal is only a nominal party.
The court shall not require the arbitral tribunal to submit any
pleadings or written submissions but may consider the same should
the latter participate in the proceedings, but only as nominal parties
thereto.
While the sub-title of Rule 3 of the Special ADR Rules state that the judicial
relief sought from the court pertains to the “existence, validity or
enforceability” of the arbitration agreement, that is accurate only for
judicial relief prior to the commencement of the arbitration or at the latest,
prior to the rendition by the arbitral tribunal of a preliminary ruling on its
jurisdiction. After the commencement of the arbitration and the
constitution of the arbitral tribunal, and after the arbitral tribunal has
rendered a preliminary ruling on its jurisdiction, the proper issue for
judicial relief is whether or not the arbitral tribunal has jurisdiction over the
arbitral proceedings. Subsumed into the said issue is the existence, validity
or enforceability of the arbitration agreement upon which emanates the
jurisdiction and authority of the arbitral tribunal.
The rules on judicial relief after the commencement of arbitration apply
under the following circumstances:
(1) The arbitration proceeding has already commenced, the arbitral
tribunal has been constituted and has rendered a preliminary ruling on its
jurisdiction; and
(2) A party desires to challenge the arbitral tribunal’s ruling on the issue of
jurisdiction.
The commencement of arbitration is determined by the agreement of the
parties, in the absence of which, it is commenced in accordance with the
rules of the institutional arbitrator, or upon the delivery by the claimant to
the respondent of a demand for arbitration if there is a prior arbitration
agreement or, when there is no prior arbitration agreement, upon the
agreement of the respondent to submit the dispute to arbitration after
being served a demand to arbitrate.
Hereunder are the procedural rules:
1. Petition. Within 30 days from receipt of the notice of a ruling
from an arbitral tribunal, an aggrieved party may file a petition
with the Regional Trial Court [i] where the arbitration is taking
place, or [ii] where any of the petitioners or respondents has
his principal place of business or residence, at the option of the
petitioner, for judicial relief from the ruling of the arbitral
tribunal on a preliminary question upholding or declining its
jurisdiction.
The petition shall state [i] the facts showing that the petitioner
or respondent has legal capacity to sue or be sued; [ii] the
nature and substance of the dispute; [iii] the grounds and
circumstances relied upon for the petition; and [iv] the relief
sought. The petitioner shall attach a copy of the request for
arbitration and the ruling of the arbitral tribunal. The
respondents shall be furnished with a copy of the petition
before it is filed.
2. Comment / opposition. The respondent should file his comment
or opposition within 15 days from the date of service of the
petition.
3. Court action. The court shall render judgment on the basis of
the pleadings filed and evidence submitted, within 30 days
from the time the petition is submitted for resolution.
When the arbitration has commenced, but the arbitral tribunal
has not yet been constituted, or although constituted, has not
yet rendered a ruling on its jurisdiction, courts are enjoined not
to entertain any petition for judicial relief on the issue of
jurisdiction or, if already pending, to refer the issue back to the
arbitral tribunal once constituted. In view of the competence-
competence principle, courts are enjoined to exercise judicial
restraint and defer to the competence or jurisdiction of the
arbitral tribunal to rule on its competence or jurisdiction.
The filing and pendency of the petition for judicial relief shall
not be a cause for the court to enjoin the arbitration
proceeding and the arbitral tribunal may with the arbitration
and render the award.
4. Relief against court action. The aggrieved party may file a
motion for reconsideration of the order of the court, which
shall, however, not be subject to an appeal. An order affirming
the jurisdiction of the arbitral tribunal shall not be subject to a
petition for certiorari, but an order denying jurisdiction may be
the subject of such a petition.
If the arbitral tribunal, instead of rendering a preliminary ruling
on its jurisdiction, decides to defer such ruling until the
rendition of the arbitral award, none of the parties can seek
judicial relief from the deferment. Motions for reconsideration,
appeal, and petitions for certiorari are not available to
challenge the decision of the arbitral tribunal to defer the
resolution of the preliminary jurisdictional issues. The parties
can, however, await the rendition of the final arbitral award,
and raise the same issues before the court in a proceeding for
setting aside or vacating the award.
If, in the meantime that the resolution of the preliminary
jurisdictional issue is deferred, or before the court could render
any ruling thereon, the arbitral tribunal renders the final
arbitral award, the prospective or pending petition for judicial
relief on the preliminary jurisdictional issue, will be rendered
moot and academic, and any pending petition ought to be
dismissed. Again, the aggrieved party may raise the same issues
before the court in a proceeding to set aside or to vacate the
arbitral award.
In a petition for judicial relief, the arbitrator or the members of the arbitral
tribunal shall be nominal parties. A nominal party is one who is named as
party in an action although the real interest is with some other party.
Although the arbitrator or members of the arbitral tribunal are named as
nominal parties in these proceedings, the real interest lies with the
claimant and the respondent who stand to be benefited or injured by any
decision of the court. As such, said parties are expected to actively pursue
the claim or oppose it as the case may be. As nominal parties, it is not
mandatory for the arbitrator or members of the arbitral tribunal to file
pleadings or submissions for the consideration of the court.
A nominal party must be distinguished from a real party-in-interest, an
indispensable party, and a necessary party. A real party-in-interest is “the
party who stands to be benefited or injured by the judgment or the party
entitled to the avails of the suit.”
An indispensable party is “a party who has such an interest in the
controversy or subject matter that a final adjudication cannot be made, in
his absence, without injuring or affecting that interest.” The absence of an
indispensable party renders all subsequent actions of the court null and
void for want of authority to act, not only as to the absent parties but even
as to those present.
A necessary party is one who is not indispensable but “who ought to be
joined as a party if complete relief is to be accorded as to those who are
already parties, or for a complete determination or settlement of the claim
subject of the action.”
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The circumstance that not all of the parties to the civil action are bound by
the arbitration agreement or that referral to arbitration would result in
multiplicity of suits are not grounds to deny the referral of a pending action
to arbitration. In such situation, the court may issue an order directing the
inclusion in the arbitration of those parties who are not bound by the
arbitration agreement but who agree to such inclusion provided those
originally bound by it do not object to their inclusion. The included parties
are necessary parties to the arbitration proceedings because their non-
inclusion, while not affecting the validity of the arbitration, will result in an
incomplete determination or settlement of the claim subject of the
arbitration.
B. Referral to ADR.
Rule 4.1. Who makes the request.
A party to a pending action filed in violation of the arbitration
agreement, whether contained in an arbitration clause or in a
submission agreement, may request the court to refer the parties to
arbitration in accordance with such agreement.
Rule 4.2. When to make request.
(A) Where the arbitration agreement exists before the action is filed. -
The request for referral shall be made not later than the pre-trial
conference. After the pre-trial conference, the court will only act upon
the request for referral if it is made with the agreement of all parties
to the case.
(B) Submission agreement. - If there is no existing arbitration
agreement at the time the case is filed but the parties subsequently
enter into an arbitration agreement, they may request the court to
refer their dispute to arbitration at any time during the proceedings.
Rule 4.3. Contents of request.
The request for referral shall be in the form of a motion, which shall
state that the dispute is covered by an arbitration agreement.
Apart from other submissions, the movant shall attach to his motion
an authentic copy of the arbitration agreement.
The request shall contain a notice of hearing addressed to all parties
specifying the date and time when it would be heard.
The party making the request shall serve it upon the respondent to
give him the opportunity to file a comment or opposition as provided
in the immediately succeeding Rule before the hearing.
Rule 4.4. Comment/Opposition.
The comment/opposition must be filed within fifteen (15) days from
service of the petition. The comment/opposition should show that:
a. there is no agreement to refer the dispute to arbitration;
and/or
b. the agreement is null and void; and/or
c. the subject-matter of the dispute is not capable of
settlement or resolution by arbitration in accordance with
Section 6 of the ADR Act.
Rule 4.5. Court action.
After hearing, the court shall stay the action and, considering the
statement of policy embodied in Rule 2.4, above, refer the parties to
arbitration if it finds prima facie, based on the pleadings and
supporting documents submitted by the parties, that there is an
arbitration agreement and that the subject-matter of the dispute is
capable of settlement or resolution by arbitration in accordance with
Section 6 of the ADR Act. Otherwise, the court shall continue with the
judicial proceedings.
Rule 4.6. No reconsideration, appeal or certiorari.
An order referring the dispute to arbitration shall be immediately
executory and shall not be subject to a motion for reconsideration,
appeal or petition for certiorari.
An order denying the request to refer the dispute to arbitration shall
not be subject to an appeal, but may be the subject of a motion for
reconsideration and/or a petition for certiorari.
Rule 4.7. Multiple actions and parties.
The court shall not decline to refer some or all of the parties to
arbitration for any of the following reasons:
a. Not all of the disputes subject of the civil action may be
referred to arbitration;
b. Not all of the parties to the civil action are bound by the
arbitration agreement and referral to arbitration would
result in multiplicity of suits;
c. The issues raised in the civil action could be speedily
and efficiently resolved in its entirety by the court rather
than in arbitration;
d. Referral to arbitration does not appear to be the most
prudent action; or
e. The stay of the action would prejudice the rights of the
parties to the civil action who are not bound by the
arbitration agreement.
The court may, however, issue an order directing the inclusion in
arbitration of those parties who are not bound by the arbitration
agreement but who agree to such inclusion provided those originally
bound by it do not object to their inclusion.
Rule 4.8. Arbitration to proceed.
Despite the pendency of the action referred to in Rule 4.1, above,
arbitral proceedings may nevertheless be commenced or continued,
and an award may be made, while the action is pending before the
court.
While the sub-title of Rule 4 of the Special ADR Rules is “Referral to ADR,”
this Rule actually pertains to the referral of a pending court action to
arbitration rather than any other form of ADR. The situation contemplated
by this Rule is that where:
1. There is already a pending court action;
2. There is either a pre-action agreement or a present-action
arbitration agreement; and
3. One or both parties desire to undergo arbitration.
The arbitration agreement is pre-action if executed prior to the filing of an
action, and it is present-action if executed after the filing of the action.
This classification of arbitration agreements based on the time of execution
relative to the filing of the action should be distinguished from the
classification based on the time of execution relative to the existence of the
dispute, i.e., pre-causal arbitration agreement (agreement to submit to
arbitration) or present-causal arbitration agreement (submission
agreement). For purposes of determining the timeliness of the request for
referral to arbitration and the number of the parties who are required to
make the request, the relevant classification is that based on the time of
the execution of the arbitration agreement relative to the filing of the
action, i.e. pre-action or present-action arbitration agreement. On the
other hand, in determining the date of commencement of the arbitration,
the pertinent classification is that based on the time of the execution, the
pertinent classification is that based on the time of the execution of the
arbitration agreement relative to the existence of the dispute, i.e. pre-
causal or present-causal arbitration agreement.
If there is a pre-action arbitration agreement, which may either be an
agreement to submit to arbitration or a submission agreement, the request
for referral to arbitration may be made by any one of the parties not later
than the pre-trial conference. A request made after the pre-trial
conference must be with the agreement of both parties.
In the case of a present-action arbitration agreement, which is necessarily a
submission agreement, the parties may request the referral to arbitration
at any time during the proceedings.
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Hereunder are the procedural rules:
(1) Request/Motion. The pleading that initiates the referral to arbitration is
a “request” or a “motion” and not a petition because the rules on referral
to ADR contemplate the existence of a pending court action already
initiated either by a complaint or petition. Apart from the allegations and
submissions in support of the request for referral to arbitration, the motion
shall contain an authentic copy of the arbitration agreement and, as in the
case of litigated motions, must be served upon the respondent and be set
for hearing.
(2) Comment / opposition. The comment or opposition must be filed within
15 days from service of the request or motion and must show that [i] there
is no agreement to refer the dispute to arbitration; [ii] the agreement is
null and void; or [iii] the subject matter of the dispute is not capable of
settlement or resolution by arbitration.
(3) Court action. The court may [i] grant the motion if it finds prima facie
that there is a valid and enforceable arbitration agreement and that the
subject matter of the dispute is capable of arbitration; or [ii] deny it if the
court finds otherwise. Either way, the court should stay the judicial
proceedings while the motion for referral is pending resolution. Arbitral
proceedings, however, may be commenced or continued, and an award
may be made thereon, while the action is pending in court.
As in the case of judicial relief involving the issues of existence, validity and
enforceability of an arbitration agreement, the finding of the court that a
valid and enforceable arbitration agreement exists and that the dispute
involved is capable of arbitration, resulting in the grant of the motion for
referral, is prima facie, and not conclusive upon the parties.
(4) Relief against court action. The order granting the motion for referral to
arbitration shall be immediately executory and shall not be subject to a
motion for reconsideration, appeal or petition for certiorari. On the other
hand, an order denying the request for referral, although not subject to
appeal, may be the subject of a motion for reconsideration and a petition
for certiorari. The opportunity to reverse a ruling adverse to arbitration is
made available by way of a motion for reconsideration or a petition for
certiorari.
In accordance with the principle of preference for alternative dispute
resolution, courts are prohibited from denying the request for referral of
some or all of the parties to arbitration for any of the following reasons:
1. Not all of the disputes subject of the civil action may be
referred to arbitration;
2. Not all of the parties to the civil action are bound by the
arbitration agreement and referral to arbitration would result
in multiplicity of suits;
3. The issues raised in the civil action could be speedily and
efficiently resolved in its entirety by the court rather than in an
arbitration;
4. Referral to arbitration does not appear to be the most prudent
action; or
5. The stay of the action would prejudice the rights of the parties
to the civil action who are not bound by the arbitration
agreement. The court may, however, issue an order directing
the inclusion in the arbitration of those parties who are not
bound by the arbitration agreement but who agree to such
inclusion provided that those originally bound by it do not
object to their inclusion.
In Koppel, Inc. vs. Makati Rotary Club Foundation, Inc., the Supreme Court
discussed the legal effects of the non-application of the arbitration clause
to a case, as follows: [i] the judicial proceedings conducted beyond the
point when the dispute should have been referred to arbitration are
rendered invalid; [ii] the decisions, including those of the appellate courts,
must be vacated and set aside; [iii] the case must be remanded to the court
a quo to be suspended at said point; and [iv] the petitioner and respondent
must then be referred to arbitration pursuant to the arbitration clause.
C. Interim Measures of Protection.
Rule 5.1. Who may ask for interim measures of protection .
A party to an arbitration agreement may petition the court for interim
measures of protection.
Rule 5.2. When to petition.
A petition for an interim measure of protection may be made (a)
before arbitration is commenced, (b) after arbitration is commenced,
but before the constitution of the arbitral tribunal, or (c) after the
constitution of the arbitral tribunal and at any time during arbitral
proceedings but, at this stage, only to the extent that the arbitral
tribunal has no power to act or is unable to act effectively.
Rule 5.3. Venue.
A petition for an interim measure of protection may be filed with the
Regional Trial Court, which has jurisdiction over any of the following
places:
a. Where the principal place of business of any of the
parties to arbitration is located;
b. Where any of the parties who are individuals resides;
c. Where any of the acts sought to be enjoined are being
performed, threatened to be performed or not being
performed; or
d. Where the real property subject of arbitration, or a
portion thereof is situated.
Rule 5.4. Grounds.
The following grounds, while not limiting the reasons for the court to
grant an interim measure of protection, indicate the nature of the
reasons that the court shall consider in granting the relief:
a. The need to prevent irreparable loss or injury;
b. The need to provide security for the performance of any
obligation;
c. The need to produce or preserve evidence; or
d. The need to compel any other appropriate act or
omission.
Rule 5.5. Contents of the petition.
The verified petition must state the following:
a. The fact that there is an arbitration agreement;
b. The fact that the arbitral tribunal has not been
constituted, or if constituted, is unable to act or would be
unable to act effectively;
c. A detailed description of the appropriate relief sought;
d. The grounds relied on for the allowance of the petition
Apart from other submissions, the petitioner must attach to his
petition an authentic copy of the arbitration agreement.
Rule 5.6. Type of interim measure of protection that a court may
grant.
The following, among others, are the interim measures of protection
that a court may grant:
a. Preliminary injunction directed against a party to
arbitration;
b. Preliminary attachment against property or
garnishment of funds in the custody of a bank or a third
person;
c. Appointment of a receiver;
d. Detention, preservation, delivery or inspection of
property; or,
e. Assistance in the enforcement of an interim measure of
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protection granted by the arbitral tribunal, which the
latter cannot enforce effectively.
The rules on judicial issuance of interim measures of protection
contemplate the situation:
1. Either [i] before the commencement of arbitration, or [ii] after
the commencement of the arbitration but prior to the
constitution of the arbitral tribunal, or [iii] after the arbitral
tribunal’s constitution but it has no power to act or is unable to
act effectively; and
2. Where a party desires to secure interim measures of
protection.
A measure of protection may either be interim or temporary.
Interim Measures of Protection.
1. Preliminary injunction directed against a party to arbitration;
2. Preliminary attachment against property or garnishment of
funds in the custody of a bank or a third person;
3. Appointment of a receiver;
4. Detention, preservation, delivery or inspection of property; or,
5. Assistance in the enforcement of an interim measure of
protection granted by the arbitral tribunal, which the latter
cannot enforce effectively.
The following are the rules of procedure for the application for interim
measures of protection with the court:
(1) Petition. The application for an interim measure of protection is
initiated by filing a petition with the Regional Trial Court of the place where
[i] any of the parties has his principal place of business or residence; [ii] any
of the acts sought to be enjoined are being performed or threatened to be
performed; or [iii] the real property subject of the arbitration is situated, at
the option of the petitioner.
Prior notice must be served upon the adverse party unless the petitioner
alleges in the petition an application for an ex parte temporary protective
measure to the effect that there is an urgent need to either [i] preserve
property; [ii] prevent the respondent from disposing of, or concealing the
property, [iii] or prevent the relief prayed for from becoming illusory
because of prior notice, and the court finds that the reasons given are
meritorious.
(2) Comment / opposition. The comment or opposition must be filed within
15 days from service of the petition.
(3) Court action. The court shall resolve the petition within 30 days from
the [i] submission of the opposition, or [ii] upon the lapse of the period to
file the same, or [iii] from the termination of the hearing that may be set if
there is need for clarification or further argumentation. In resolving the
petition, the court is required to balance the relative interests of the
parties and the inconveniences that may be caused.
If the basis for the petition for an interim measure is the non-constitution
of the arbitral tribunal, the court, upon being informed of the subsequent
constitution of the arbitral tribunal, shall defer action on the petition unless
it is established that the arbitral tribunal has no power to act on any such
interim measure of protection or is unable to act thereon effectively.
The interim measure of protection issued by the court is without prejudice
to the subsequent grant, modification, amendment, revision or revocation
thereof by the arbitral tribunal.
(4) Relief against court action. An order of the court granting or denying an
interim measure may be the subject of a motion for reconsideration,
appeal or a petition for certiorari. If the protective measure was issued in a
proceeding whereat the adverse party was given an opportunity to be
heard, the order of the court granting the petition shall be immediately
executory. Otherwise, the order of the court shall not be immediately
executory, except if it is a temporary protective measure.
Temporary Order of Protection or Temporary Protective Measure.
A temporary protective measure (TPM), otherwise referred to as
temporary order of protection (TOP), is an injunctive relief the office of
which is to preserve property subject matter of the arbitration, prevent the
disposition or concealment thereof, or prevent the relief prayed for from
becoming moot and academic, during the period that the court is resolving
the application for the interim protective measure. A TOP or TPM is applied
for ex parte, is immediately executory, and has a lifetime of only 20 days
from issuance unless extended for another 20 days. A TOP or TPM may be
issued by the court under the following conditions:
1. There is an urgent need to [i] preserve property; [ii] prevent
the respondent from disposing of, or concealing the property;
or [iii] prevent the relief prayed for from being illusory because
of prior notice;
2. The petitioner shall post a bond to answer for any damage that
the respondent may suffer as a result thereof;
3. It shall be valid only for 20 days from the service on the party
required to comply therewith, unless extended but not for
more than 20 days;
4. During the 20-day period and any extension thereof, the court
shall determine the propriety of issuing the principal interim
protective measure requested; and
5. It can be lifted by the respondent by posting an appropriate
counter-bond as determined by the court.
A TOP or TPM is similar to a temporary restraining order (TRO) in that
these measures are temporary in character, intended to ensure the efficacy
of the principal relief (interim protective measure for a TPO or TPM, or writ
of preliminary injunction for a TRO), and have, as a general rule, a lifetime
of 20 days. They are, however, different in the following respects:
1. The effectivity of a TOP or TPM is susceptible of extension for
not more than 20 days, while a TRO is non-extendible and
becomes functus oficio after the lapse of 20 days from the
service thereof.
2. A bond is required for a TOP or TPM unlike a TRO which does
not generally require the posting of a bond. Instead, a bond is
required for the issuance of a writ of preliminary injunction;
3. And a TOP or TPM may be lifted through the posting of a
counter-bond which is not true of a TRO. Instead, a counter-
bond may lift a writ of preliminary injunction.
Preference for Arbitration.
The rules on interim measures of protection recognize the principle of
preference for arbitration over judicial proceedings. The following
instances illustrate this principle:
1. Any court order granting or denying an interim measure of
protection is without prejudice to the subsequent grant,
modification, amendment, revision or revocation thereof by
the arbitral tribunal.
2. An interim measure of protection issued by the arbitral tribunal
shall, upon its issuance be deemed to have ipso jure modified,
amended, revised or revoked an interim measure of protection
issued by the court to the extent that it is inconsistent with the
subsequent interim measure of protection issued by the
arbitral tribunal.
3. Any question involving a conflict or inconsistency between an
interim measure of protection issued by a court and one issued
by an arbitral tribunal shall be immediately referred by the
court to the arbitral tribunal which shall have the authority to
decide such question.
4. The court shall defer action on any pending petition for an
interim measure of protection filed by a party to an arbitration
agreement arising from or in connection with a dispute
thereunder upon being informed that an arbitral tribunal has
been constituted pursuant to such an agreement.
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5. And the court shall assist in the enforcement of an interim
measure of protection issued by the arbitral tribunal which the
latter is unable to effectively enforce.
D. Appointment of Arbitrators.
Rule 6.1. When the court may act as Appointing Authority .
The court shall act as Appointing Authority only in the following
instances:
a. Where any of the parties in an institutional arbitration
failed or refused to appoint an arbitrator or when the
parties have failed to reach an agreement on the sole
arbitrator (in an arbitration before a sole arbitrator) or
when the two designated arbitrators have failed to reach
an agreement on the third or presiding arbitrator (in an
arbitration before a panel of three arbitrators), and the
institution under whose rules arbitration is to be
conducted fails or is unable to perform its duty as
appointing authority within a reasonable time from
receipt of the request for appointment;
b. In all instances where arbitration is ad hoc and the
parties failed to provide a method for appointing or
replacing an arbitrator, or substitute arbitrator, or the
method agreed upon is ineffective, and the National
President of the Integrated Bar of the Philippines (IBP) or
his duly authorized representative fails or refuses to act
within such period as may be allowed under the pertinent
rules of the IBP or within such period as may be agreed
upon by the parties, or in the absence thereof, within
thirty (30) days from receipt of such request for
appointment;
c. Where the parties agreed that their dispute shall be
resolved by three arbitrators but no method of appointing
those arbitrators has been agreed upon, each party shall
appoint one arbitrator and the two arbitrators thus
appointed shall appoint a third arbitrator. If a party fails to
appoint his arbitrator within thirty (30) days of receipt of a
request to do so from the other party, or if the two
arbitrators fail to agree on the third arbitrator within a
reasonable time from their appointment, the appointment
shall be made by the Appointing Authority.
If the latter fails or refuses to act or appoint an arbitrator
within a reasonable time from receipt of the request to do
so, any party or the appointed arbitrator/s may request
the court to appoint an arbitrator or the third arbitrator as
the case may be.
Rule 6.2. Who may request for appointment.
Any party to an arbitration may request the court to act as an
Appointing Authority in the instances specified in Rule 6.1 above.
Rule 6.3. Venue.
The petition for appointment of arbitrator may be filed, at the option
of the petitioner, in the Regional Trial Court (a) where the principal
place of business of any of the parties is located, (b) if any of the
parties are individuals, where those individuals reside, or (c) in the
National Capital Region.
Rule 6.4. Contents of the petition.
The petition shall state the following:
a. The general nature of the dispute;
b. If the parties agreed on an appointment procedure, a
description of that procedure with reference to the
agreement where such may be found;
c. The number of arbitrators agreed upon or the absence
of any agreement as to the number of arbitrators;
d. The special qualifications that the arbitrator/s must
possess, if any, that were agreed upon by the parties;
e. The fact that the Appointing Authority, without
justifiable cause, has failed or refused to act as such within
the time prescribed or in the absence thereof, within a
reasonable time, from the date a request is made; and
f. The petitioner is not the cause of the delay in, or failure
of, the appointment of the arbitrator.
Apart from other submissions, the petitioner must attach to the
petition (a) an authentic copy of the arbitration agreement, and (b)
proof that the Appointing Authority has been notified of the filing of
the petition for appointment with the court.
Rule 6.5. Comment/Opposition.
The comment/opposition must be filed within fifteen (15) days from
service of the petition.
Rule 6.6. Submission of list of arbitrators.
The court may, at its option, also require each party to submit a list of
not less than three (3) proposed arbitrators together with their
curriculum vitae.
Rule 6.7. Court action.
After hearing, if the court finds merit in the petition, it shall appoint
an arbitrator; otherwise, it shall dismiss the petition.
In making the appointment, the court shall have regard to such
considerations as are likely to secure the appointment of an
independent and impartial arbitrator.
At any time after the petition is filed and before the court makes an
appointment, it shall also dismiss the petition upon being informed
that the Appointing Authority has already made the appointment.
Rule 6.8. Forum shopping prohibited.
When there is a pending petition in another court to declare the
arbitration agreement inexistent, invalid, unenforceable, on account
of which the respondent failed or refused to participate in the
selection and appointment of a sole arbitrator or to appoint a party-
nominated arbitrator, the petition filed under this rule shall be
dismissed.
Rule 6.9. Relief against court action.
If the court appoints an arbitrator, the order appointing an arbitrator
shall be immediately executory and shall not be the subject of a
motion for reconsideration, appeal or certiorari.
An order of the court denying the petition for appointment of an
arbitrator may, however, be the subject of a motion for
reconsideration, appeal or certiorari.
The rules on the judicial appointment of arbitrators apply if:
(1) There is a failure to appoint an arbitrator under the following
circumstances:
a. Where any of the parties in an institutional arbitration failed or
refused to appoint an arbitrator, or the parties have failed to
reach an agreement on the sold arbitrator (in an arbitration
before a sole arbitrator), or when the two designated
arbitrators have failed to reach an agreement on the third or
presiding arbitrator (in an arbitration before a panel of three
arbitrators), and the institution under whose rules arbitration is
to be conducted fails or is unable to perform its duly as
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appointing authority within a reasonable time from receipt of
the request for appointment;
b. When the arbitration is ad hoc and the parties failed to provide
a method for appointing or replacing an arbitrator, or
substitute arbitrator, or the method agreed upon is ineffective,
and the National President of the IBP or his duly authorized
representative fails or refuses to act within such period as may
be allowed under the pertinent rules of the IBP or within such
period as may be agreed upon by the parties, or in the absence
thereof, within 30 days from receipt of such request for
appointment;
c. Where the parties agreed that their dispute shall be resolved
by three arbitrators but no method of appointing those
arbitrators has been agreed upon, and the parties, and
subsequently, the appointing authority, fails or refuses to
appoint the arbitrator within a reasonable time from receipt of
the request to do so.
(2) And any party or the appointed arbitrators request the court to act as
the appointing authority and appoint the arbitrator or third arbitrator as
the case may be.
Hereunder are the rules of procedure for the judicial appointment of
arbitrators:
1. Petition. The petition for the appointment of an arbitrator shall
be filed with the RTC [i] where the principal place of business of
any of the parties is located; [ii] of any of the parties are
individuals, where those individuals reside; or [iii] in the
National Capital Judicial Region, at the option of the petitioner.
The petition shall state [i] the general nature of the dispute; [ii]
a description of the procedure for the appointment of
arbitrators, f there is any, and the agreement containing such
procedure; [iii] the number of the arbitrators agreed upon or
those absence of such an agreement; [iv] the special
qualifications of the arbitrators if there is any agreement
thereon; [v] the fact that the appointing authority, without
justifiable cause, has failed or refused to act as such within the
time prescribed or within a reasonable time, from the date a
request was made; and [vi] the petitioner is not the cause of
the delay or in the failure of the appointment of the arbitrator.
The petition should contain an authentic copy of the arbitration
agreement, and proof that the appointing authority has been
notified of the filing of the petition for appointment with the
court. The petition shall be served upon the respondent before
it is filed in court.
2. Comment / opposition. The comment or opposition must be
filed within 15 days from the service of the petition.
3. Court action. In addition to making the appointment, the court
may require each party to submit a list of not less than 3
proposed arbitrators together with their curriculum vitae from
whom the court may appoint the arbitrator. Prior to the
appointment, if the court is informed that the appointing
authority has already made an appointment, it shall dismiss the
petition.
4. Relief against court action. The order of the court appointing an
arbitrator shall be immediately executory and shall not be the
subject of a motion for reconsideration, appeal on certiorari.
An order of the court denying the petition for appointment of
an arbitrator may, however, be the subject of a motion for
reconsideration, appeal or certiorari.
E. Challenge to Appointment of Arbitrator.
Rule 7.1. Who may challenge.
Any of the parties to an arbitration may challenge an arbitrator.
Rule 7.2. When challenge may be raised in court.
When an arbitrator is challenged before the arbitral tribunal under
the procedure agreed upon by the parties or under the procedure
provided for in Article 13 (2) of the Model Law and the challenge is
not successful, the aggrieved party may request the Appointing
Authority to rule on the challenge, and it is only when such
Appointing Authority fails or refuses to act on the challenge within
such period as may be allowed under the applicable rule or in the
absence thereof, within thirty (30) days from receipt of the request,
that the aggrieved party may renew the challenge in court.
Rule 7.3. Venue.
The challenge shall be filed with the Regional Trial Court (a) where the
principal place of business of any of the parties is located, (b) if any of
the parties are individuals, where those individuals reside, or (c) in
the National Capital Region.
Rule 7.4. Grounds.
An arbitrator may be challenged on any of the grounds for challenge
provided for in Republic Act No. 9285 and its implementing rules,
Republic Act No. 876 or the Model Law.
The nationality or professional qualification of an arbitrator is not a
ground to challenge an arbitrator unless the parties have specified in
their arbitration agreement a nationality and/or professional
qualification for appointment as arbitrator.
Rule 7.5. Contents of the petition.
The petition shall state the following:
a. The name/s of the arbitrator/s challenged and his/their
address;
b. The grounds for the challenge;
c. The facts showing that the ground for the challenge has
been expressly or impliedly rejected by the challenged
arbitrator/s; and
d. The facts showing that the Appointing Authority failed
or refused to act on the challenge.
The court shall dismiss the petition motu proprio unless it is clearly
alleged therein that the Appointing Authority charged with deciding
the challenge, after the resolution of the arbitral tribunal rejecting the
challenge is raised or contested before such Appointing Authority,
failed or refused to act on the challenge within thirty (30) days from
receipt of the request or within such longer period as may apply or as
may have been agreed upon by the parties.
Rule 7.6. Comment/Opposition.
The challenged arbitrator or other parties may file a comment or
opposition within fifteen (15) days from service of the petition.
Rule 7.7. Court action.
After hearing, the court shall remove the challenged arbitrator if it
finds merit in the petition; otherwise, it shall dismiss the petition.
The court shall allow the challenged arbitrator who subsequently
agrees to accept the challenge to withdraw as arbitrator.
The court shall accept the challenge and remove the arbitrator in the
following cases:
a. The party or parties who named and appointed the
challenged arbitrator agree to the challenge and withdraw
the appointment.
b. The other arbitrators in the arbitral tribunal agree to
the removal of the challenged arbitrator; and
c. The challenged arbitrator fails or refuses to submit his
comment on the petition or the brief of legal arguments as
directed by the court, or in such comment or legal brief,
he fails to object to his removal following the challenge.
The court shall decide the challenge on the basis of evidence
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submitted by the parties.
The court will decide the challenge on the basis of the evidence
submitted by the parties in the following instances:
2.
a. The other arbitrators in the arbitral tribunal agree to
the removal of the challenged arbitrator; and
facts showing that the appointing authority failed or refused to
act on the challenge. A copy of the petition shall be served
upon the respondent before it is filed in court.
Comment / opposition. The challenged arbitrator or other
parties may file a comment or opposition within 15 days from
service of the petition.

b. If the challenged arbitrator fails or refuses to submit his
comment on the petition or the brief of legal arguments as
directed by the court, or in such comment or brief of legal
arguments, he fails to object to his removal following the
challenge.
Rule 7.8. No motion for reconsideration, appeal or certiorari .
Any order of the court resolving the petition shall be immediately
executory and shall not be the subject of a motion for
reconsideration, appeal, or certiorari.
Rule 7.9. Reimbursement of expenses and reasonable compensation
to challenged arbitrator.
Unless the bad faith of the challenged arbitrator is established with
reasonable certainty by concealing or failing to disclose a ground for
his disqualification, the challenged arbitrator shall be entitled to
reimbursement of all reasonable expenses he may have incurred in
attending to the arbitration and to a reasonable compensation for his
work on the arbitration.
Such expenses include, but shall not be limited to, transportation and
hotel expenses, if any.
3. Court action. The court has any of the following options in
resolving the petition:
a. Grant the petition by removing the challenged
arbitrator if it finds merit in the petition;
b. Dismiss the petition if there is no merit thereto;
c. Allow the challenged arbitrator to withdraw as
arbitrator;
d. Accept the challenge and remove the arbitrator if
[i] the party or parties who named and appointed
the challenged arbitrator agree to the challenge
and withdraw the appointment; [ii] the other
arbitrators in the arbitral tribunal agree to the
removal of the challenged arbitrator; or [iii] the
challenged arbitrator fails or refuses to submit his
comment on the petition or the brief of legal
arguments as directed by the court, or he fails to
object to his removal.
4. No relief against court action. Any order of the court resolving
the petition shall be immediately executory and shall not be
subject to a motion for reconsideration, appeal or certiorari.
F. Termination of Mandate of Arbitrator.

A reasonable compensation shall be paid to the challenged arbitrator

on the basis of the length of time he has devoted to the arbitration
and taking into consideration his stature and reputation as an
arbitrator.
The request for reimbursement of expenses and for payment of a
reasonable compensation shall be filed in the same case and in the
court where the petition to replace the challenged arbitrator was
filed.
The court, in determining the amount of the award to the challenged
arbitrator, shall receive evidence of expenses to be reimbursed, which
may consist of air tickets, hotel bills and expenses, and inland
transportation.
The court shall direct the challenging party to pay the amount of the
award to the court for the account of the challenged arbitrator, in
default of which the court may issue a writ of execution to enforce
the award.
Rule 8.1. Who may request termination and on what grounds .
Any of the parties to an arbitration may request for the termination of
the mandate of an arbitrator where an arbitrator becomes de jure or
de facto unable to perform his function or for other reasons fails to
act without undue delay and that arbitrator, upon request of any
party, fails or refuses to withdraw from his office.
Rule 8.2. When to request.
If an arbitrator refuses to withdraw from his office, and subsequently,
the Appointing Authority fails or refuses to decide on the termination
of the mandate of that arbitrator within such period as may be
allowed under the applicable rule or, in the absence thereof, within
thirty (30) days from the time the request is brought before him, any
party may file with the court a petition to terminate the mandate of
that arbitrator.
Rule 8.3. Venue.

The rules of procedure on the judicial challenge to the appointment of
arbitrators apply to the following situation:
1. The challenge to the appointment of an arbitrator before the
arbitral tribunal is not successful, and the appointing authority
fails or refuses to act on the challenge within such period of
time as may be allowed under the applicable rule or, in the
absence thereof, within 30 days from receipt of the request.
2. The aggrieved party wants to secure judicial action on the
challenge.
A petition to terminate the mandate of an arbitrator may, at that
petitioner’s option, be filed with the Regional Trial Court (a) where
the principal place of business of any of the parties is located, (b)
where any of the parties who are individuals resides, or (c) in the
National Capital Region.
Rule 8.4. Contents of the petition.
The petition shall state the following:
a. The name of the arbitrator whose mandate is sought to
be terminated;

The procedure for the challenge to the appointment of an arbitrator before
the court is as follows:
1. Petition. The petition for the judicial challenge shall be filed
with the Regional Trial Court [i] where the principal place of
business of any of the parties is located, [ii] if any of the parties
are individuals, where those individuals reside, or [iii] in the
National Capital Judicial Region, at the option of the petitioner.
The petition shall state [i] the name of the arbitrator challenged
and his address; [ii] grounds for the challenge; [iii] the facts
showing that the ground for the challenge has been expressly
or impliedly rejected by the challenged arbitrator; and [iv] the
b. The ground/s for termination;
c. The fact that one or all of the parties had requested the
arbitrator to withdraw but he failed or refused to do so;
d. The fact that one or all of the parties requested the
Appointing Authority to act on the request for the
termination of the mandate of the arbitrator and failure
or inability of the Appointing Authority to act within thirty
(30) days from the request of a party or parties or within
such period as may have been agreed upon by the parties
or allowed under the applicable rule.

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The petitioner shall further allege that one or all of the parties had
requested the arbitrator to withdraw but he failed or refused to do
so.
Rule 8.5. Comment/Opposition.
The comment/opposition must be filed within fifteen (15) days from
service of the petition.
Rule 8.6. Court action.
After hearing, if the court finds merit in the petition, it shall terminate
the mandate of the arbitrator who refuses to withdraw from his
office; otherwise, it shall dismiss the petition.
Rule 8.7. No motion for reconsideration or appeal.
Any order of the court resolving the petition shall be immediately
executory and shall not be subject of a motion for reconsideration,
appeal or petition for certiorari.
Rule 8.8. Appointment of substitute arbitrator.
Where the mandate of an arbitrator is terminated, or he withdraws
from office for any other reason, or because of his mandate is revoked
by agreement of the parties or is terminated for any other reason, a
substitute arbitrator shall be appointed according to the rules that
were applicable to the appointment of the arbitrator being replaced.
The rules on the judicial termination of mandate of an arbitrator apply
when:
1. An arbitrator becomes de jure or de facto unable to perform his
functions or for other reasons fail to act without undue delay.
2. The arbitrator, upon request of any party, fails or refuses to
withdraw from his office;
3. The appointing authority fails or refuses to decide on the
termination of the mandate of the arbitrator within such
period of time as may be allowed under the applicable rule or,
in the absence thereof, within 30 days from the time the
request is brought before him; and
4. Any party seeks judicial action in terminating the mandate of
the arbitrator.
The relief for the termination of the mandate of an arbitrator is different
from a challenge to an arbitrator. In the judicial challenge to an arbitrator,
the arbitrator is sought to be removed on the ground of partiality or non-
compliance with the qualifications required of him. In the judicial
termination of the mandate of an arbitrator, the arbitrator who has been
validly appointed has become incapable of performing his functions or has
become unable to do so.
The procedure for the judicial termination of the mandate of an arbitrator
is as follows:
1. Petition. The petition shall be filed with the Regional Trial Court
[i] where the principal place of business of any of the parties is
located, [ii] where any of the parties who are individuals reside,
or [iii] in the National Capital Judicial Region, at the option of
the petitioner.
The petition shall state [i] the name of the arbitrator whose
mandate is sought to be terminated; [ii] the grounds for the
termination; [iii] the fact that one or all of the parties had
requested the arbitrator to withdraw but he failed or refused
to accede; and [iv] the fact that one or all of the parties
requested the appointing authority to act on the request but is
unable or has failed to act within 30 days from the request or
within such period of time as may have been agreed upon by
the parties allowed under the applicable rule. A copy of the
petition shall be served upon the respondent before it is filed in
court.
2. Comment / opposition. The comment or opposition must be
filed within 15 days from service of the petition.
3. Court action. The court shall grant the petition and terminate
the mandate of the arbitrator if it finds merit in the petition;
otherwise, it shall dismiss the petition. If the petition is granted,
a substitute arbitrator shall be appointed according to the rules
that were applicable to the appointment of the arbitrator being
replaced.
4. No relief against court action. Any order of the court resolving
the petition shall be immediately executory and shall not be
subject to a motion for reconsideration, appeal or petition for
certiorari.
G. Assistance in Taking Evidence.
Rule 9.1. Who may request assistance.
Any party to an arbitration, whether domestic or foreign, may request
the court to provide assistance in taking evidence.
Rule 9.2. When assistance may be sought.
Assistance may be sought at any time during the course of the arbitral
proceedings when the need arises.
Rule 9.3. Venue.
A petition for assistance in taking evidence may, at the option of the
petitioner, be filed with Regional Trial Court where (a) arbitration
proceedings are taking place, (b) the witnesses reside or may be
found, or (c) where the evidence may be found.
Rule 9.4. Ground.
The court may grant or execute the request for assistance in taking
evidence within its competence and according to the rules of
evidence.
Rule 9.5. Type of assistance.
A party requiring assistance in the taking of evidence may petition the
court to direct any person, including a representative of a
corporation, association, partnership or other entity (other than a
party to the ADR proceedings or its officers) found in the Philippines,
for any of the following:
a. To comply with a subpoena ad testificandum and/or
subpoena duces tecum;
b. To appear as a witness before an officer for the taking
of his deposition upon oral examination or by written
interrogatories;
c. To allow the physical examination of the condition of
persons, or the inspection of things or premises and, when
appropriate, to allow the recording and/or documentation
of condition of persons, things or premises (i.e.,
photographs, video and other means of
recording/documentation);
d. To allow the examination and copying of documents;
and
e. To perform any similar acts.
Rule 9.6. Contents of the petition.
The petition must state the following:
a. The fact that there is an ongoing arbitration proceeding
even if such proceeding could not continue due to some
legal impediments;
b. The arbitral tribunal ordered the taking of evidence or
the party desires to present evidence to the arbitral
tribunal;
c. Materiality or relevance of the evidence to be taken;
and
d. The names and addresses of the intended witness/es,
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place where the evidence may be found, the place where
the premises to be inspected are located or the place
where the acts required are to be done.
Rule 9.7. Comment/Opposition.
The comment/opposition must be filed within fifteen (15) days from
service of the petition.
Rule 9.8. Court action.
If the evidence sought is not privileged, and is material and relevant,
the court shall grant the assistance in taking evidence requested and
shall order petitioner to pay costs attendant to such assistance.
Rule 9.9. Relief against court action.
The order granting assistance in taking evidence shall be immediately
executory and not subject to reconsideration or appeal. If the court
declines to grant assistance in taking evidence, the petitioner may file
a motion for reconsideration or appeal.
Rule 9.10. Perpetuation of testimony before the arbitral tribunal is
constituted.
At anytime before arbitration is commenced or before the arbitral
tribunal is constituted, any person who desires to perpetuate his
testimony or that of another person may do so in accordance with
Rule 24 of the Rules of Court.
Rule 9.11. Consequence of disobedience.
The court may impose the appropriate sanction on any person who
disobeys its order to testify when required or perform any act
required of him.
The specific relief for judicial assistance in taking evidence is an exception
to the principle that the Special ADR Rules are applicable only to domestic
arbitration and Philippine ICA. The relief is available whether the
arbitration is domestic or foreign. The rules on judicial assistance in taking
evidence apply in the following situation:
1. There is a pending arbitration, whether domestic or foreign;
2. A party desires to present evidence or the arbitral tribunal
ordered the taking of evidence, necessitating court assistance;
and
3. The evidence is sought from a person, including a
representative of a corporation, association, partnership or
other entity, other than a party to the arbitration or its officers,
found in the Philippines.
When, however, arbitration has not yet commenced or the arbitral tribunal
has not yet been constituted, any person who desires to perpetuate his
testimony or that of another may avail of this rule on depositions before
action or pending appeal under Rule 24 of the Rules of Civil Procedure.
Examples of court assistance in taking evidence are enumerated in Rule 9.5
of the Special ADR Rules. They correspond to the different classes of
evidence under the Rules of Court. Thus:
1. On testimonial evidence:
a. To comply with a subpoena ad testificandum; and
b. To appear as witness before an officer for the
taking of his deposition upon oral examination or
written interrogatories.
2. On documentary evidence:
a. To comply with a subpoena duces tecum;
b. To allow the examination and copying of
documents
3. On real evidence:
To allow the physical examination of the condition
of persons, or the inspection of things or premises
and, when appropriate, to allow the recording or
documentation of the conditions of persons, things
or premises (i.e. taking photographs, video
recording or using other means of recording or
documentation).
The foregoing enumeration of the types of court assistance in
taking evidence under Rule 9.5 of the Special ADR Rules is not
exclusive.
The arbitral tribunal is not clothed with authority to cite persons or parties
in contempt. However, the court may impose sanctions including the
citation for contempt, against persons who violate its orders issued in
assisting the arbitral tribunal in taking evidence.
The procedure for judicial assistance in taking evidence is as follows:
1. Petition. The petition shall be filed with the Regional Trial Court
where [i] arbitration proceedings are taking place; [ii] the
witness resides or may be found; or [iii] the evidence may be
found, at the option of the petitioner.
The petition must state [i] the fact there is an ongoing
arbitration proceeding even if such proceeding cannot continue
due to some legal impediments; [ii] the arbitral tribunal
ordered the taking of evidence or a party desires to present
evidence to the arbitral tribunal; [iii] the materiality or
relevance of the evidence to be taken; and [iv] the names and
addresses of the intended witnesses, place where the evidence
may be found, or the place where the acts required are to be
done. A copy of the petition shall be served upon the
respondent before it is filed in court.
2. Comment / opposition. The comment or opposition must be
filed within 15 days from service of the petition.
3. Court action. If the evidence sought is not privileged, and is
material and relevant, the court shall grant the request for
assistance in taking evidence and shall order the petitioner to
pay the costs attendant to such assistance.
4. Relief against court action. The order granting the request for
assistance in taking evidence shall be immediately executory
and not subject to a motion for reconsideration, appeal, or
petition for certiorari. If the court declines to grant assistance
in taking evidence, the petitioner may file a motion for
reconsideration, appeal or petition for certiorari.
H. Confidentiality / Protective Orders
Rule 10.1. Who may request confidentiality.
A party, counsel or witness who disclosed or who was compelled to
disclose information relative to the subject of ADR under
circumstances that would create a reasonable expectation, on behalf
of the source, that the information shall be kept confidential has the
right to prevent such information from being further disclosed
without the express written consent of the source or the party who
made the disclosure.
Rule 10.2. When request made.
A party may request a protective order at anytime there is a need to
enforce the confidentiality of the information obtained, or to be
obtained, in ADR proceedings.
Rule 10.3. Venue.
A petition for a protective order may be filed with the Regional Trial
Court where that order would be implemented.
If there is a pending court proceeding in which the information
obtained in an ADR proceeding is required to be divulged or is being
divulged, the party seeking to enforce the confidentiality of the
information may file a motion with the court where the proceedings
are pending to enjoin the confidential information from being
divulged or to suppress confidential information.
Rule 10.4. Grounds.
A protective order may be granted only if it is shown that the
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applicant would be materially prejudiced by an unauthorized
disclosure of the information obtained, or to be obtained, during an
ADR proceeding.
Rule 10.5. Contents of the motion or petition.
The petition or motion must state the following:
a. That the information sought to be protected was
obtained, or would be obtained, during an ADR
proceeding;
b. The applicant would be materially prejudiced by the
disclosure of that information;
c. The person or persons who are being asked to divulge
the confidential information participated in an ADR
proceedings; and
d. The time, date and place when the ADR proceedings
took place.
Apart from the other submissions, the movant must set the motion
for hearing and contain a notice of hearing in accordance with Rule 15
of the Rules of Court.
Rule 10.6. Notice.
Notice of a request for a protective order made through a motion
shall be made to the opposing parties in accordance with Rule 15 of
the Rules of Court.
Rule 10.7. Comment/Opposition.
The comment/opposition must be filed within fifteen (15) days from
service of the petition.
The opposition or comment may be accompanied by written proof
that (a) the information is not confidential, (b) the information was
not obtained during an ADR proceeding, (c) there was a waiver of
confidentiality, or (d) the petitioner/movant is precluded from
asserting confidentiality.
Rule 10.8. Court action.
If the court finds the petition or motion meritorious, it shall issue an
order enjoining a person or persons from divulging confidential
information.
In resolving the petition or motion, the courts shall be guided by the
following principles applicable to all ADR proceedings:
Confidential information shall not be subject to discovery and shall be
inadmissible in any adversarial proceeding, whether judicial or quasi
judicial.
However, evidence or information that is otherwise admissible or
subject to discovery does not become inadmissible or protected from
discovery solely by reason of its use therein.
For mediation proceedings, the court shall be further guided by the
following principles:
a. Information obtained through mediation shall be
privileged and confidential.
b. A party, a mediator, or a nonparty participant may
refuse to disclose and may prevent any other person from
disclosing a mediation communication.
c. In such an adversarial proceeding, the following persons
involved or previously involved in a mediation may not be
compelled to disclose confidential information obtained
during the mediation: (1) the parties to the dispute; (2)
the mediator or mediators; (3) the counsel for the parties:
(4) the nonparty participants; (5) any persons hired or
engaged in connection with the mediation as secretary,
stenographer; clerk or assistant; and (6) any other person
who obtains or possesses confidential information by
reason of his/ her profession.
d. The protection of the ADR Laws shall continue to apply
even if a mediator is found to have failed to act
impartially.
e. A mediator may not be called to testify to provide
information gathered in mediation. A mediator who is
wrongfully subpoenaed shall be reimbursed the full cost
of his attorney fees and related expenses.
Rule 10.9. Relief against court action.
The order enjoining a person or persons from divulging confidential
information shall be immediately executory and may not be enjoined
while the order is being questioned with the appellate courts.
If the court declines to enjoin a person or persons from divulging
confidential information, the petitioner may file a motion for
reconsideration or appeal.
Rule 10.10. Consequence of disobedience.
Any person who disobeys the order of the court to cease from
divulging confidential information shall be imposed the proper
sanction by the court.
The protective order referred to under the rules on judicial enforcement of
confidentiality is different from the interim protective measures under Rule
5 of the Special ADR Rules. The protective order under Rule 10 of the
Special ADR Rules refers to the judicial enforcement of the confidential
nature of information disclosed or obtained during an ADR proceeding.
The rules on confidentiality and protective orders apply when:
1. An ADR proceeding is pending;
2. A party, counsel or witness disclosed information or was other
compelled to disclose information;
3. The disclosure was made under circumstances that would
create a reasonable expectation, on behalf of the source, that
the information shall be kept confidential;
4. The source of the information or the party who made the
disclosure has the right to prevent such information from being
disclosed;
5. The source of the information or the party who made the
disclosure has not given his express consent to any disclosure;
6. The applicant would be materially prejudiced by an
unauthorized disclosure of the information obtained, or to be
obtained, during the ADR proceeding.
The benefit of the rule is available not just for arbitration proceedings, but
for all other forms of ADR.
Hereunder is the procedure for the judicial enforcement of confidentiality
or protective measures:
1. Petition or motion. If there is no pending court proceeding in
which the information obtained in an ADR proceeding is
required to be divulged or being divulged, the initiatory
pleading shall be a petition to be filed with the Regional Trial
Court of the place where the order may be implemented. A
copy of the petition shall be served upon the respondent
before it is filed in court.
If there is already a pending court proceeding, a separate
petition will be improper because that will amount to
multiplicity of suits and forum-shopping. Under this situation,
the applicant should file with the court where the proceeding is
pending a motion to enjoin the disclosure or to suppress the
confidential information. Being a litigated motion, the movant
is required to set aside the motion for hearing in accordance
with Rule 15 of the Rules of Civil Procedure. Where the
situation is more urgent, such as when a question involving
confidential information has already been propounded to a
witness, a timely objection must be raised by a party in the
case who will be aggrieved by the disclosure before the
question is answered.
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2. Comment / opposition. The comment or opposition must be
filed within 15 days from service of the petition or motion. The
comment or opposition may be accompanied by proof that [i]
the information is not confidential; [ii] the information was not
obtained during an ADR proceeding; [iii] there was a waiver of
confidentiality; or [iv] the petitioner or movant is precluded
from asserting confidentiality.
3. Court action. If the court finds the petition or motion
meritorious, it shall issue an order enjoining the persons
involved from divulging confidential information. The court
shall impose the proper sanction, including citation for
contempt, against any person who disobeys the order of the
court to cease from divulging confidential information.
4. Relief against court action. The order enjoining the disclosure
of confidential information shall be immediately executory and
may not be enjoined while the order is being questioned
before the appellate courts. The order enjoining persons
involved from divulging confidential information may be the
subject of a motion for reconsideration or appeal, but not a
petition for certiorari.
I. Confirmation, Recognition, Enforcement, Correction, Vacation
or Setting Side of Arbitral Awards
Rules 11-13 of the Special ADR Rules govern the confirmation, recognition,
enforcement, correction, vacation or setting aside of arbitral awards. The
circumstances covered by these rules are as follows:
1. An arbitral award has been rendered either in a [i] domestic
arbitration; [ii] Philippine ICA; or [iii] foreign arbitration
resulting in a convention award or non-convention award but
with comity and reciprocity (as in convention award).
2. A party seeks to [i] confirm, correct or vacate the domestic
arbitral award; [ii] recognize and enforce, or set aside the
Philippine ICA award; or [iii] recognize and enforce the foreign
convention award or foreign as-in convention award.
Ia. Confirmation, Correction or Vacation of Domestic
Arbitral Awards
Rule 11.1. Who may request confirmation, correction or vacation .
Any party to a domestic arbitration may petition the court to confirm,
correct or vacate a domestic arbitral award.
Rule 11.2. When to request confirmation, correction/modification or
vacation.
(A) Confirmation. - At any time after the lapse of thirty (30) days from
receipt by the petitioner of the arbitral award, he may petition the
court to confirm that award.
(B) Correction/Modification. - Not later than thirty (30) days from
receipt of the arbitral award, a party may petition the court to
correct/modify that award.
(C) Vacation. - Not later than thirty (30) days from receipt of the
arbitral award, a party may petition the court to vacate that award.
(D) A petition to vacate the arbitral award may be filed, in opposition
to a petition to confirm the arbitral award, not later than thirty (30)
days from receipt of the award by the petitioner. A petition to vacate
the arbitral award filed beyond the reglementary period shall be
dismissed.
(E) A petition to confirm the arbitral award may be filed, in opposition
to a petition to vacate the arbitral award, at any time after the
petition to vacate such arbitral award is filed. The dismissal of the
petition to vacate the arbitral award for having been filed beyond the
reglementary period shall not result in the dismissal of the petition
for the confirmation of such arbitral award.
(F) The filing of a petition to confirm an arbitral award shall not
authorize the filing of a belated petition to vacate or set aside such
award in opposition thereto.
(G) A petition to correct an arbitral award may be included as part of
a petition to confirm the arbitral award or as a petition to confirm
that award.
Rule 11.3. Venue.
The petition for confirmation, correction/modification or vacation of a
domestic arbitral award may be filed with Regional Trial Court having
jurisdiction over the place in which one of the parties is doing
business, where any of the parties reside or where arbitration
proceedings were conducted.
Rule 11.4. Grounds.
(A) To vacate an arbitral award. - The arbitral award may be vacated
on the following grounds:
a. The arbitral award was procured through corruption,
fraud or other undue means;
b. There was evident partiality or corruption in the arbitral
tribunal or any of its members;
c. The arbitral tribunal was guilty of misconduct or any
form of misbehavior that has materially prejudiced the
rights of any party such as refusing to postpone a hearing
upon sufficient cause shown or to hear evidence pertinent
and material to the controversy;
d. One or more of the arbitrators was disqualified to act as
such under the law and willfully refrained from disclosing
such disqualification; or
e. The arbitral tribunal exceeded its powers, or so
imperfectly executed them, such that a complete, final
and definite award upon the subject matter submitted to
them was not made.
The award may also be vacated on any or all of the following grounds:
a. The arbitration agreement did not exist, or is invalid for
any ground for the revocation of a contract or is otherwise
unenforceable; or
b. A party to arbitration is a minor or a person judicially
declared to be incompetent.
The petition to vacate an arbitral award on the ground that the party
to arbitration is a minor or a person judicially declared to be
incompetent shall be filed only on behalf of the minor or incompetent
and shall allege that (a) the other party to arbitration had knowingly
entered into a submission or agreement with such minor or
incompetent, or (b) the submission to arbitration was made by a
guardian or guardian ad litem who was not authorized to do so by a
competent court.
In deciding the petition to vacate the arbitral award, the court shall
disregard any other ground than those enumerated above.
(B) To correct/modify an arbitral award. - The Court may
correct/modify or order the arbitral tribunal to correct/modify the
arbitral award in the following cases:
a. Where there was an evident miscalculation of figures or
an evident mistake in the description of any person, thing
or property referred to in the award;
b. Where the arbitrators have awarded upon a matter not
submitted to them, not affecting the merits of the decision
upon the matter submitted;
c. Where the arbitrators have omitted to resolve an issue
submitted to them for resolution; or
d. Where the award is imperfect in a matter of form not
affecting the merits of the controversy, and if it had been
a commissioner’s report, the defect could have been
amended or disregarded by the Court.
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Rule 11.5. Form of petition.
An application to vacate an arbitral award shall be in the form of a
petition to vacate or as a petition to vacate in opposition to a petition
to confirm the same award.
An application to correct/modify an arbitral award may be included in
a petition to confirm an arbitral award or in a petition to vacate in
opposition to confirm the same award.
When a petition to confirm an arbitral award is pending before a
court, the party seeking to vacate or correct/modify said award may
only apply for those reliefs through a petition to vacate or
correct/modify the award in opposition to the petition to confirm the
award provided that such petition to vacate or correct/modify is filed
within thirty (30) days from his receipt of the award.
A petition to vacate or correct/modify an arbitral award filed in
another court or in a separate case before the same court shall be
dismissed, upon appropriate motion, as a violation of the rule against
forum-shopping.
When a petition to vacate or correct/modify an arbitral award is
pending before a court, the party seeking to confirm said award may
only apply for that relief through a petition to confirm the same
award in opposition to the petition to vacate or correct/modify the
award.
A petition to confirm or correct/modify an arbitral award filed as
separate proceeding in another court or in a different case before the
same court shall be dismissed, upon appropriate motion, as a
violation of the rule against forum shopping.
As an alternative to the dismissal of a second petition for
confirmation, vacation or correction/modification of an arbitral award
filed in violation of the non-forum shopping rule, the court or courts
concerned may allow the consolidation of the two proceedings in one
court and in one case.
Where the petition to confirm the award and petition to vacate or
correct/modify were simultaneously filed by the parties in the same
court or in different courts in the Philippines, upon motion of either
party, the court may order the consolidation of the two cases before
either court.
In all instances, the petition must be verified by a person who has
knowledge of the jurisdictional facts.
Rule 11.6. Contents of petition.
The petition must state the following:
a. The addresses of the parties and any change thereof;
b. The jurisdictional issues raised by a party during
arbitration proceedings;
c. The grounds relied upon by the parties in seeking the
vacation of the arbitral award whether the petition is a
petition for the vacation or setting aside of the arbitral
award or a petition in opposition to a petition to confirm
the award; and
d. A statement of the date of receipt of the arbitral award
and the circumstances under which it was received by the
petitioner.
Apart from other submissions, the petitioner must attach to the
petition the following:
a. An authentic copy of the arbitration agreement;
b. An authentic copy of the arbitral award;
c. A certification against forum shopping executed by the
applicant in accordance with Section 5 of Rule 7 of the
Rules of Court; and
d. An authentic copy or authentic copies of the
appointment of an arbitral tribunal.
Rule 11.7. Notice.
Upon finding that the petition filed under this Rule is sufficient both in
form and in substance, the Court shall cause notice and a copy of the
petition to be delivered to the respondent allowing him to file a
comment or opposition thereto within fifteen (15) days from receipt
of the petition. In lieu of an opposition, the respondent may file a
petition in opposition to the petition.
The petitioner may within fifteen (15) days from receipt of the
petition in opposition thereto file a reply.
Rule 11.8. Hearing.
If the Court finds from the petition or petition in opposition thereto
that there are issues of fact, it shall require the parties, within a
period of not more than fifteen (15) days from receipt of the order, to
simultaneously submit the affidavits of all of their witnesses and reply
affidavits within ten (10) days from receipt of the affidavits to be
replied to.
There shall be attached to the affidavits or reply affidavits documents
relied upon in support of the statements of fact in such affidavits or
reply affidavits.
If the petition or the petition in opposition thereto is one for vacation
of an arbitral award, the interested party in arbitration may oppose
the petition or the petition in opposition thereto for the reason that
the grounds cited in the petition or the petition in opposition thereto,
assuming them to be true, do not affect the merits of the case and
may be cured or remedied.
Moreover, the interested party may request the court to suspend the
proceedings for vacation for a period of time and to direct the arbitral
tribunal to reopen and conduct a new hearing and take such other
action as will eliminate the grounds for vacation of the award.
The opposition shall be supported by a brief of legal arguments to
show the existence of a sufficient legal basis for the opposition.
If the ground of the petition to vacate an arbitral award is that the
arbitration agreement did not exist, is invalid or otherwise
unenforceable, and an earlier petition for judicial relief under Rule 3
had been filed, a copy of such petition and of the decision or final
order of the court shall be attached thereto.
But if the ground was raised before the arbitral tribunal in a motion to
dismiss filed not later than the submission of its answer, and the
arbitral tribunal ruled in favor of its own jurisdiction as a preliminary
question which was appealed by a party to the Regional Trial Court, a
copy of the order, ruling or preliminary award or decision of the
arbitral tribunal, the appeal therefrom to the Court and the order or
decision of the Court shall all be attached to the petition.
If the ground of the petition is that the petitioner is an infant or a
person judicially declared to be incompetent, there shall be attached
to the petition certified copies of documents showing such fact.
In addition, the petitioner shall show that even if the submission or
arbitration agreement was entered into by a guardian or guardian ad
litem, the latter was not authorized by a competent court to sign such
the submission or arbitration agreement.
If on the basis of the petition, the opposition, the affidavits and reply
affidavits of the parties, the court finds that there is a need to conduct
an oral hearing, the court shall set the case for hearing.
This case shall have preference over other cases before the court,
except criminal cases.
During the hearing, the affidavits of witnesses shall take the place of
their direct testimonies and they shall immediately be subject to
cross-examination thereon.
The Court shall have full control over the proceedings in order to
ensure that the case is heard without undue delay.
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Rule 11.9. Court action.
Unless a ground to vacate an arbitral award under Rule 11.5 above is
fully established, the court shall confirm the award.
An arbitral award shall enjoy the presumption that it was made and
released in due course of arbitration and is subject to confirmation by
the court.
In resolving the petition or petition in opposition thereto in
accordance with these Special ADR Rules, the court shall either
confirm or vacate the arbitral award. The court shall not disturb the
arbitral tribunal’s determination of facts and/or interpretation of law.
In a petition to vacate an award or in petition to vacate an award in
opposition to a petition to confirm the award, the petitioner may
simultaneously apply with the Court to refer the case back to the
same arbitral tribunal for the purpose of making a new or revised
award or to direct a new hearing, or in the appropriate case, order the
new hearing before a new arbitral tribunal, the members of which
shall be chosen in the manner provided in the arbitration agreement
or submission, or the law.
In the latter case, any provision limiting the time in which the arbitral
tribunal may make a decision shall be deemed applicable to the new
arbitral tribunal.
In referring the case back to the arbitral tribunal or to a new arbitral
tribunal pursuant to Rule 24 of Republic Act No. 876, the court may
not direct it to revise its award in a particular way, or to revise its
findings of fact or conclusions of law or otherwise encroach upon the
independence of an arbitral tribunal in the making of a final award.
The Special ADR Rules clarify that judicial affirmation of a domestic arbitral
award is one through “confirmation” and not “recognition.” Recognition
pertains to the grant of legal effect by Philippine courts to an arbitral award
with foreign elements, i.e., either the arbitral tribunal that rendered the
award is foreign, like in the case of a foreign arbitral award, or the basis of
the authority for rendering the award is an international convention, treaty
or agreement like in the case of an international commercial arbitral
award.
A domestic arbitral award carries with it the presumption that it was
rendered in due course of the arbitration and is, therefore, entitled to
confirmation by the court. This presumption may be rebutted by evidence
of the existence of any of the grounds for vacating or setting aside the
arbitral award.
Causes of Action and Grounds.
Three (3) principal causes of action are covered by Rule 11 of the Special
ADR Rules, namely:
(1) Confirmation of the domestic arbitral award, the petition for which can
be filed at any time after the lapse of 30 days from receipt by the petitioner
of the arbitral award, unless it is filed in opposition to a petition for
vacation in which case the petition for confirmation may be filed at any
time after the filing of the petition for vacation. The petition shall be
granted unless there exist grounds to vacate the arbitral award.
(2) Correction or modification of the domestic arbitral award, the petition
for which must be filed not later than 30 days from receipt of the arbitral
award, unless the correction is applied for as a supplementary relief to a
petition or confirmation in which case the correction may be applied for at
the same time as filing of the petition for confirmation. The grounds are as
follows:
a. Where there was an evident miscalculation of figures or an
evident mistake in the description of any person, thing or
property referred to in the award;
b. Where the arbitrators have awarded upon a matter not
submitted to them, not affecting the merits of the decision
upon the matter submitted;
c. Where the arbitrators have omitted to resolve an issue
submitted to them for resolution; or
d. Where the award is imperfect in a matter of form not
affecting the merits of the controversy, and if it had been a
commissioner’s report, the defect could have been amended or
disregarded by the Court.
(3) Vacation of the domestic arbitral award, the petition or petition-in-
opposition for which must be filed not later than 30 days from receipt of
the arbitral award. The grounds are as follows:
a. The arbitral award was procured through corruption, fraud
or other undue means;
b. There was evident partiality or corruption in the arbitral
tribunal or any of its members;
c. The arbitral tribunal was guilty of misconduct or any form of
misbehavior that has materially prejudiced the rights of any
party such as refusing to postpone a hearing upon sufficient
cause shown or to hear evidence pertinent and material to the
controversy;
d. One or more of the arbitrators was disqualified to act as such
under the law and willfully refrained from disclosing such
disqualification; or
e. The arbitral tribunal exceeded its powers, or so imperfectly
executed them, such that a complete, final and definite award
upon the subject matter submitted to them was not made.
f. The arbitration agreement did not exist, or is invalid for any
ground for the revocation of a contract or is otherwise
unenforceable; or
g. A party to the arbitration is a minor or a person judicially
declared to be incompetent, in which case, the petition shall be
filed only on behalf of the minor or the incompetent person,
and shall allege that [i] the other party had knowingly entered
into a submission or agreement with such minor or
incompetent; and [ii] the submission to arbitration was made
by a guardian or guardian ad litem who was not authorized to
do so by a competent court.
The foregoing grounds are exclusive and the court cannot consider any
other ground.
Combination of Causes of Action.
The principle of combined reliefs is available in proceedings allowing
vacation or setting aside and correction of the arbitral award. These are the
proceedings involving domestic arbitral awards and Philippine ICA awards,
but not for foreign arbitral awards which cannot be vacated or set aside. In
brief, the principle allows the combination of 2 or more reliefs to be
pleaded in the same proceeding. The initiatory relief is that which is
pleaded in the initiatory petition, while the relief-in-opposition is that
prayed for in order to oppose the initiatory relief. A relief may also be a
supplementary relief as in the case of a prayer for correction of an arbitral
award in support of a petition for confirmation. And a relief may also be an
alternative relief as in the case of a prayer for correction as an alternative
to a petition to vacate in opposition to a petition for confirmation.
Specifically, the following combinations are possible:
1. Confirmation / vacation. A petition for confirmation of a
domestic award can be opposed by a petition-in-opposition
seeking to vacate the award.
2. Confirmation / correction. A petition for confirmation of a
domestic award may include a petition for the correction of the
arbitral award. The correction of the arbitral award necessarily
implies the confirmation of the corrected or modified award. A
petition for confirmation of the award may also be opposed by
a petition-in-opposition seeking the correction or modification
of the award in order to make the award acceptable to the
party moving for its correction.
3. Vacation / correction. A petition to vacate an award may
include a petition for the correction of the domestic arbitral
award. It may also be opposed by a petition-in-opposition
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seeking the correction or modification of the award in order to
make the award acceptable to the party seeking its vacation.
While the foregoing combinations may come into play in a single petition,
the rules do not allow the filing of petitions-in-opposition to vacate or
correct a domestic arbitral award beyond the reglementary period for the
filing of the petition had it been filed in the first instance. Hence, a petition
for confirmation filed more than 30 days from receipt of the arbitral award,
and therefore, filed within the reglementary period for such petitions, may
no longer be opposed via a petition-in-opposition to vacate or correct the
award. This does not, however, prevent the oppositor from filing an
opposition to the petition except that he can no longer seek the affirmative
relief of vacating or modifying the award on the grounds provided therefor.
A petition for the vacation of a domestic arbitral award filed beyond the
reglementary period shall be dismissed but that dismissal will not render
dismissible a petition-in-opposition seeking to confirm the arbitral award.
While the petition to vacate the award was filed beyond the reglementary
period, the petition-in-opposition to confirm the award not having any
reglementary period, has been filed on time and, therefore, is not
dismissible. Instead, the petition-in-opposition for confirmation will be
considered a petition for confirmation filed in the first instance.
Combination is possible only in the following instances:
1. If the petition to vacate, with a filing period of 30 days from
receipt of the arbitral award, is filed first as it can be opposed
by a petition-in-opposition for confirmation which can be filed
at any time after the petition to vacate has been filed.
2. Or if the arbitral award is received ahead by the party intending
to confirm it and it is received later by the party intending to
vacate it, in which case, the filing period for the petition to set
aside the arbitral award will overlap with the filing period for
the petition for confirmation.
In the foregoing instances, the earlier petition can be opposed by a
petition-in-opposition during the overlapping period.
The rules prohibit forum shopping and multiplicity of suits. If a petition for
confirmation is already pending before a court, no petition-in-opposition
seeking to vacate the same arbitral award may be filed with any other
court. So also, if a petition for vacation is already pending before a court,
no petition-in-opposition seeking to confirm the same arbitral award may
be filed with any other court. Any such subsequent petition may be
dismissed for being violative of the rule against forum shopping or
consolidated with the petition filed earlier. If the petitions were filed
simultaneously, upon motion of either party, the cases may be
consolidated in either court.
Procedural Rules.
Hereunder is the procedure for the judicial confirmation, correction or
vacation of domestic arbitral awards:
1. Petition. The initiatory pleading for confirmation, correction or
vacation of a domestic arbitral award in the first instance is a
petition to be filed with the Regional Trial Court having
jurisdiction over the place [i] in which one of the parties is
doing business; [ii] where any of the parties resides; or [iii]
where the arbitration proceeding was conducted.
The petition must state the [i] addresses of the parties and any
change thereof; [ii] the jurisdictional issues raised by a party
during arbitration proceedings; [iii] the grounds relied upon;
and [iv] the date of receipt of the arbitral award and the
circumstances under which it was received by the petitioner.
The petition must contain an authentic copy of the arbitration
agreement, an authentic copy of the arbitral award, a
certification against forum shopping, and an authentic copy of
the appointment of the arbitral tribunal.
Where, however, confirmation, correction or vacation of the
domestic arbitral award is to be pleaded in opposition to a
pending petition, the oppository pleading to be filed is a
petition-in-opposition.
2. Comment / opposition / petition-in-opposition. If the petition is
sufficient in form and substance, the court shall cause notice
and a copy of the petition to be delivered to the respondent.
Within 15 days from receipt of such notice, the respondents
may file a comment, opposition, or a petition-in-opposition
unless the period for the filing thereof has prescribed.
3. Reply. The petitioner may file a reply within 15 days from
receipt of the comment or opposition, or a comment or
opposition to the petition-in-opposition.
4. Hearing. The proceeding for the confirmation, correction or
vacation of domestic arbitral awards may be summary or
regular. If the court finds through the petition or petition-in-
opposition thereto that there are issues of fact, it shall require
the parties to submit the affidavits of all their witnesses (within
a period of not more than 15 days from receipt of the order)
and reply affidavits (within 10 days from receipt of the
affidavits to be replied to), attaching thereto the documents
relied upon in support of the statements of fact contained in
the affidavits. Up to this stage, the proceedings are summary.
If the court finds that, on the basis of the petition, the
opposition, and the affidavits of the parties, there is a need to
conduct an oral hearing, the court shall set the case for hearing
during which, the affidavits of the witnesses shall take the place
of their direct testimonies and they shall be immediately
subjected to cross-examination. Upon this stage, the
proceedings become regular in character.
5. Court Action. The court may either confirm or vacate the
award. It shall confirm the award unless a ground exists to
vacate the domestic arbitral award. The confirmation of an
arbitral award carries with it by necessary implication the
execution thereof. The arbitral award carries with it the
presumption that it has been issued in due course of the
arbitration and is subject to confirmation by the court.
If the petition or petition-in-opposition to vacate the award
contains an application for the court to refer the case back to
the arbitral tribunal that rendered the award for the purpose of
making a new or revised award or to direct a new hearing, or in
an appropriate case, to order a new hearing before a new
arbitral tribunal, the members of which shall be chosen in the
manner provided in the arbitration agreement, or submission,
or the law, the court may grant such reliefs.
In any case, the court shall not disturb the arbitral tribunal’s
determination of facts and interpretation of the law.
6. Relief against court action. The order of the court confirming,
vacating, or correcting a domestic arbitral award may be the
subject of a motion for reconsideration, appeal or petition for
certiorari. Section 29 of the Arbitration Law limits the appeal to
questions of law only.
Ib. Recognition, Enforcement or Setting Aside of ICA
Awards
Rule 12.1. Who may request recognition and enforcement or setting
aside.
Any party to an international commercial arbitration in the
Philippines may petition the proper court to recognize and enforce or
set aside an arbitral award.
Rule 12.2. When to file petition.
(A) Petition to recognize and enforce. - The petition for enforcement
and recognition of an arbitral award may be filed anytime from
receipt of the award.
If, however, a timely petition to set aside an arbitral
award is filed, the opposing party must file therein and in
opposition thereto the petition for recognition and
enforcement of the same award within the period for
filing an opposition.
(B) Petition to set aside. - The petition to set aside an arbitral award
may only be filed within three (3) months from the time the petitioner
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receives a copy thereof.
If a timely request is made with the arbitral tribunal for
correction, interpretation or additional award, the three
(3) month period shall be counted from the time the
petitioner receives the resolution by the arbitral tribunal
of that request.
A petition to set aside can no longer be filed after the lapse of the
three (3) month period.
The dismissal of a petition to set aside an arbitral award
for being time-barred shall not automatically result in the
approval of the petition filed therein and in opposition
thereto for recognition and enforcement of the same
award.
Failure to file a petition to set aside shall preclude a party from raising
grounds to resist enforcement of the award.
Rule 12.3. Venue.
A petition to recognize and enforce or set aside an arbitral award
may, at the option of the petitioner, be filed with the Regional Trial
Court: (a) where arbitration proceedings were conducted; (b) where
any of the assets to be attached or levied upon is located; (c) where
the act to be enjoined will be or is being performed; (d) where any of
the parties to arbitration resides or has its place of business; or (e) in
the National Capital Judicial Region.
Rule 12.4. Grounds to set aside or resist enforcement .
The court may set aside or refuse the enforcement of the arbitral
award only if:
a. The party making the application furnishes proof that:
(i). A party to the arbitration agreement was
under some incapacity, or the said agreement
is not valid under the law to which the parties
have subjected it or, failing any indication
thereof, under Philippine law; or
(ii). The party making the application to set
aside or resist enforcement was not given
proper notice of the appointment of an
arbitrator or of the arbitral proceedings or was
otherwise unable to present his case; or
(iii). The award deals with a dispute not
contemplated by or not falling within the
terms of the submission to arbitration, or
contains decisions on matters beyond the
scope of the submission to arbitration;
provided that, if the decisions on matters
submitted to arbitration can be separated
from those not so submitted, only that part of
the award which contains decisions on matters
not submitted to arbitration may be set aside
or only that part of the award which contains
decisions on matters submitted to arbitration
may be enforced; or
(iv). The composition of the arbitral tribunal or
the arbitral procedure was not in accordance
with the agreement of the parties, unless such
agreement was in conflict with a provision of
Philippine law from which the parties cannot
derogate, or, failing such agreement, was not
in accordance with Philippine law;
b. The court finds that:
(i). The subject-matter of the dispute is not
capable of settlement by arbitration under the
law of the Philippines; or
(ii). The recognition or enforcement of the
award would be contrary to public policy.
In deciding the petition, the Court shall disregard any other ground to
set aside or enforce the arbitral award other than those enumerated
above.
The petition to set-aside or a pleading resisting the enforcement of an
arbitral award on the ground that a party was a minor or an
incompetent shall be filed only on behalf of the minor or incompetent
and shall allege that (a) the other party to arbitration had knowingly
entered into a submission or agreement with such minor or
incompetent, or (b) the submission to arbitration was made by a
guardian or guardian ad litem who was not authorized to do so by a
competent court.
Rule 12 of the Special ADR Rules governs the recognition and enforcement
or setting aside of a Philippine ICA award. A foreign ICA award shall be
treated as a foreign arbitral award, and its recognition and enforcement
will be governed by Rule 13 of the Special ADR Rules.
In these discussions, reference to “ICA” or International Commercial
Arbitration pertains to “Philippine ICA.” On the other hand, ICA whose seat
is other than the Philippines are referred to as “Foreign ICA.”
Cause of Action.
The following are the exclusive causes of action covered by Rule 12 of the
Special ADR Rules:
1. Recognition and enforcement of an ICA award, the petition for
which can be filed at any time from receipt of the award. The
court shall grant the petition unless any of the grounds for
setting aside the arbitral award is established.
If a timely petition to set aside has first been filed, the
oppositor must file therein and in opposition thereto the
petition for recognition and enforcement thereof within the
period for filing an opposition.
2. Setting aside an ICA award, the petition for which should be
filed within 3 months from the time the petition receives a
copy of the ICA award or the resolution of the arbitral tribunal
for the correction or interpretation of the award or the
rendition of an additional award if a timely request has been
filed therefor. It can also be filed in opposition to a petition for
recognition and enforcement provided it is not yet time-barred.
Be that as it may, the dismissal of a petition to set aside for
being time-barred shall not automatically result in the approval
of the petition filed therein or in the opposition thereto for the
recognition or enforcement of the same award.
Judicial correction or modification is not available for an ICA award. Any
other judicial recourse against an ICA award, such as an appeal, petition for
review, or petition for certiorari, are disallowed and shall be dismissed.
Grounds.
The grounds for setting aside an ICA award or to resist its enforcement
which are the same grounds for the non-recognition of foreign arbitral
awards, are as follows:
1. The party making the application furnishes proof that:
(a) A party to the arbitration agreement was under some
incapacity, or the said agreement is not valid under the law to
which the parties have subjected it or, filing any indication
thereof, under Philippine law;
(b) The party making the application to set aside or resist
enforcement was not given proper notice of the appointment
of an arbitrator or of the arbitral proceedings or was otherwise
unable to present his case;
(c) The award deals with a dispute not contemplated by or not
falling within the terms of the submission to arbitration, or
contains decisions on matters beyond the scope of the
submission to arbitration; provided that, if the decisions on
matters submitted to arbitration can be separated from those
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 ALTERNATIVE DISPUTE RESOLUTION
not so submitted, only that part of the award which contains
decisions on matters not submitted to arbitration may be set
aside or only that part of the award which contains decisions
on matters submitted to arbitration may be enforced; or
(d) The composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement of the
parties, unless such agreement was in conflict with a provision
of Philippine law from which the parties cannot derogate, or,
failing such agreement, was not in accordance with Philippine
law;
2. Or the court finds that:
(a) The subject matter of the dispute is not capable of
settlement by arbitration under the law of the Philippines; or
(b) The recognition or enforcement of the award would be
contrary to public policy.
The foregoing grounds are similar to the grounds for the non-recognition of
foreign arbitral awards thus showing that, while ICA proceedings in the
Philippines are domestic arbitral proceedings, ICA awards are treated more
like foreign arbitral awards; hence, the requirement for the recognition,
rather than mere confirmation, of ICA awards.
As in the case of domestic arbitral awards, if a party to the ICA is a minor or
a person judicially declared to be incompetent, the petition to set aside the
ICA award shall be filed only on behalf of the minor or the incompetent
person, and shall allege that [i] the other party had knowingly entered into
a submission or agreement with such minor or incompetent; and [ii] the
submission to arbitration was made by a guardian or guardian ad litem who
was not authorized to do so by a competent court.
The court should disregard any other ground to set aside or enforce the
arbitral award, unless it amounts to a violation of public policy.
Combination of Causes of Action.
The same principle allowing combinations of reliefs and the dismissal of
petitions or petitions-in-opposition seeking reliefs filed beyond the
reglementary periods applicable to the confirmation, enforcement or
setting aside of domestic arbitral awards, are applicable to international
commercial arbitral awards.
Hence, petitions for recognition and enforcement and setting aside of
international commercial arbitral awards rendered in the Philippines may
be filed in the first instance. They may also be filed by way of petitions-in-
opposition. Considering that the period for filing a petition for recognition
of an ICA award is anytime within three (3) months from receipt thereof by
the party seeking to set it aside, the possibility of filing a petition-in-
opposition is greater and the overlapping period during which the petition-
in-opposition can be filed is longer, for ICA awards than those for domestic
arbitral awards.
The proscription against forum shopping is also strictly observed in the
filing of these combined petitions. Once a petition for a recognition has
been filed in court, the adverse party cannot file a separate petition for
setting aside, but must seek that relief by filing a petition-in-opposition for
setting aside the arbitral award in the same proceeding. Similarly, once a
petition for setting aside has been filed in court, the adverse party cannot
file a separate petition for recognition, but must seek that relief by filing a
petition-in-opposition for recognition in the same proceeding.
Procedural Rules.
1. Petition. The petition shall be filed with the Regional Trial Court
[i] where the arbitration proceedings were conducted; [ii]
where any of the assets to be attached or levied upon is
located; [iii] where the act to be enjoined will be or is being
performed; [iv] where any of the parties to the arbitration
resides or has his place of business; or [v] in the National
Capital Judicial Region, at the option of the petitioner.
The petitions to set aside, for recognition and enforcement, to
set aside in opposition to a petition for recognition or
enforcement, and for recognition and enforcement in
opposition to a petition to set aside, shall be verified and shall
state [i] the addresses of record of the parties; [ii] that the
arbitration agreement or submission exists; [iii] the names of
the arbitrators and proof of their appointment; [iv] that an
arbitral award was issued and the date when the petitioner
received it; and [v] the relief sought.
The petitioner shall attach to the petition [i] an authentic copy
of the arbitration agreement; [ii] an authentic copy of the
arbitral award; [iii] the verification and certification against
forum shopping; [iv] an authentic copy of the appointment of
the arbitrator or the arbitral tribunal. In addition, the petition
to set aside and petition to set aside in opposition to a petition
for recognition and enforcement should state the grounds
relied upon therefor.
2. Notice, opposition and reply. If the petition is sufficient in form
and substance, the court shall cause a notice and a copy of the
petition is to be delivered to the respondent directing him to
file an opposition thereto, including a petition for recognition
or to set aside in opposition thereto, if not yet time-barred,
within 15 days from receipt of the petition. The petitioner may
file a reply within 15 days from receipt of the opposition or
petition in opposition.
3. Hearing. The court may conduct the hearing through [i] the
submission of briefs of legal arguments if the issue is mainly
one of law; or [ii] the submission of affidavits of witnesses,
reply affidavits and documents in support thereof if there are
issues of fact relating to the grounds relied upon for the
petition. Up to this point, the proceedings are summary in
nature.
If, on the basis of the petition, the opposition, the affidavits and
reply affidavits, the court finds a need to conduct an oral
hearing, it shall set the case for hearing during which the
affidavits of witnesses shall take the place of their direct
examination. Upon this stage, the proceedings become non-
summary in character.
4. Suspension of the proceedings. In a petition to set aside, the
court, upon motion of party, may suspend the proceedings in
order to give the arbitral tribunal an opportunity to resume the
arbitral proceedings or take such other action as will eliminate
the grounds for setting aside. The court, however, cannot direct
the arbitral tribunal to revise the arbitral award one way or the
other, revise its findings of fact or conclusions of law, or
otherwise, encroach upon the independence of the arbitral
tribunal in making the final award.
Also, when the preliminary ruling of an arbitral tribunal
affirming its jurisdiction has been appealed to the court, the
proceedings for setting aside may be suspended to await the
ruling of the court on such pending appeal, or may be
consolidated with the earlier appeal.
5. Judgment. The arbitral award carries with it the presumption of
having been made and released in due course and is subject to
enforcement by the court. In resolving the petition, the court
shall either set aside or enforce the arbitral award and may
award costs including attorney’s fees. The court shall not
disturb the arbitral tribunal’s determination of facts or
interpretation of the law.
6. Relief from court action. The court order setting aside,
dismissing the petition to set aside, recognizing and enforcing,
or dismissing the petition to recognize and enforcing, or
dismissing the petition to recognize, an ICA award may be the
subject of a motion for reconsideration or an appeal, but not of
a petition for certiorari.
A court order suspending the proceedings to set aside an ICA
award and referring the case back to the arbitral tribunal, or
adjourning or deferring a ruling on a petition to set aside, or
recognizing and enforcing an ICA award, are susceptible of
motions for reconsideration or petitions for certiorari.
A court order allowing a party to enforce an award pending
appeal, or adjourning or deferring a ruling on whether to set
aside, or recognize and enforce an ICA award may be the
subject of a petition for certiorari.
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 ALTERNATIVE DISPUTE RESOLUTION
Ic. Recognition and Enforcement of Foreign Arbitral
Awards
Rule 13.1. Who may request recognition and enforcement .
Any party to a foreign arbitration may petition the court to recognize
and enforce a foreign arbitral award.
Rule 13.2. When to petition.
At any time after receipt of a foreign arbitral award, any party to
arbitration may petition the proper Regional Trial Court to recognize
and enforce such award.
Rule 13.3. Venue.
The petition to recognize and enforce a foreign arbitral award shall be
filed, at the option of the petitioner, with the Regional Trial Court (a)
where the assets to be attached or levied upon is located, (b) where
the act to be enjoined is being performed, (c) in the principal place of
business in the Philippines of any of the parties, (d) if any of the
parties is an individual, where any of those individuals resides, or (e)
in the National Capital Judicial Region.
Rule 13.4. Governing law and grounds to refuse recognition and
enforcement.
The recognition and enforcement of a foreign arbitral award shall be
governed by the 1958 New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (the "New York Convention")
and this Rule. The court may, upon grounds of comity and reciprocity,
recognize and enforce a foreign arbitral award made in a country that
is not a signatory to the New York Convention as if it were a
Convention Award.
A Philippine court shall not set aside a foreign arbitral award but may
refuse it recognition and enforcement on any or all of the following
grounds:
a. The party making the application to refuse recognition
and enforcement of the award furnishes proof that:
(i). A party to the arbitration agreement was
under some incapacity; or the said agreement
is not valid under the law to which the parties
have subjected it or, failing any indication
thereof, under the law of the country where
the award was made; or
(ii). The party making the application was not
given proper notice of the appointment of an
arbitrator or of the arbitral proceedings or was
otherwise unable to present his case; or
(iii). The award deals with a dispute not
contemplated by or not falling within the
terms of the submission to arbitration, or
contains decisions on matters beyond the
scope of the submission to arbitration;
provided that, if the decisions on matters
submitted to arbitration can be separated
from those not so submitted, only that part of
the award which contains decisions on matters
not submitted to arbitration may be set aside;
or
(iv). The composition of the arbitral tribunal or
the arbitral procedure was not in accordance
with the agreement of the parties or, failing
such agreement, was not in accordance with
the law of the country where arbitration took
place; or
(v). The award has not yet become binding on
the parties or has been set aside or suspended
by a court of the country in which that award
was made; or
b. The court finds that:
(i). The subject-matter of the dispute is not
capable of settlement or resolution by
arbitration under Philippine law; or
(ii). The recognition or enforcement of the
award would be contrary to public policy.
The court shall disregard any ground for opposing the recognition and
enforcement of a foreign arbitral award other than those enumerated
above.
Rule 13.5. Contents of petition.
The petition shall state the following:
a. The addresses of the parties to arbitration;
b. In the absence of any indication in the award, the
country where the arbitral award was made and whether
such country is a signatory to the New York Convention;
and
c. The relief sought.
Apart from other submissions, the petition shall have attached to it
the following:
a. An authentic copy of the arbitration agreement; and
b. An authentic copy of the arbitral award.
If the foreign arbitral award or agreement to arbitrate or submission
is not made in English, the petitioner shall also attach to the petition a
translation of these documents into English. The translation shall be
certified by an official or sworn translator or by a diplomatic or
consular agent.
Rule 13.6. Notice and opposition.
Upon finding that the petition filed under this Rule is sufficient both in
form and in substance, the court shall cause notice and a copy of the
petition to be delivered to the respondent allowing him to file an
opposition thereto within thirty (30) days from receipt of the notice
and petition.
Rule 13.7. Opposition.
The opposition shall be verified by a person who has personal
knowledge of the facts stated therein.
Rule 13.8. Submissions.
If the court finds that the issue between the parties is mainly one of
law, the parties may be required to submit briefs of legal arguments,
not more than thirty (30) days from receipt of the order, sufficiently
discussing the legal issues and the legal bases for the relief prayed for
by each other.
If, from a review of the petition or opposition, there are issues of fact
relating to the ground/s relied upon for the court to refuse
enforcement, the court shall, motu proprio or upon request of any
party, require the parties to simultaneously submit the affidavits of all
of their witnesses within a period of not less than fifteen (15) days nor
more than thirty (30) days from receipt of the order.
The court may, upon the request of any party, allow the
submission of reply affidavits within a period of not less
than fifteen (15) days nor more than thirty (30) days from
receipt of the order granting said request.
There shall be attached to the affidavits or reply affidavits
all documents relied upon in support of the statements of
fact in such affidavits or reply affidavits.
Rule 13.9. Hearing.
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 ALTERNATIVE DISPUTE RESOLUTION
The court shall set the case for hearing if on the basis of the foregoing
submissions there is a need to do so.
The court shall give due priority to hearings on petitions
under this Rule.
During the hearing, the affidavits of witnesses shall take
the place of their direct testimonies and they shall
immediately be subject to cross-examination. The court
shall have full control over the proceedings in order to
ensure that the case is heard without undue delay.
Rule 13.10. Adjournment/deferment of decision on enforcement of
award.
The court before which a petition to recognize and enforce a foreign
arbitral award is pending, may adjourn or defer rendering a decision
thereon if, in the meantime, an application for the setting aside or
suspension of the award has been made with a competent authority
in the country where the award was made.
Upon application of the petitioner, the court may also
require the other party to give suitable security.
Rule 13.11. Court action.
It is presumed that a foreign arbitral award was made and released in
due course of arbitration and is subject to enforcement by the court.
The court shall recognize and enforce a foreign arbitral award unless a
ground to refuse recognition or enforcement of the foreign arbitral
award under this rule is fully established.
The decision of the court recognizing and enforcing a foreign arbitral
award is immediately executory.
In resolving the petition for recognition and enforcement of a foreign
arbitral award in accordance with these Special ADR Rules, the court
shall either [a] recognize and/or enforce or [b] refuse to recognize and
enforce the arbitral award. The court shall not disturb the arbitral
tribunal’s determination of facts and/or interpretation of law.
Rule 13.12. Recognition and enforcement of non-convention award .
The court shall, only upon grounds provided by these Special ADR
Rules, recognize and enforce a foreign arbitral award made in a
country not a signatory to the New York Convention when such
country extends comity and reciprocity to awards made in the
Philippines.
If that country does not extend comity and reciprocity to awards
made in the Philippines, the court may nevertheless treat such award
as a foreign judgment enforceable as such under Rule 39, Section 48,
of the Rules of Court.
A foreign arbitral award is one that is made in a country other than the
Philippines. It includes an international commercial arbitral award
rendered in an ICA whose seat is outside the Philippines. The recognition
and enforcement of foreign arbitral awards is governed by the 1958 New
York Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (New York Convention) and Rule 13 of the Special ADR Rules.
Rule 13 of the Special ADR Rules is applicable only to convention and as-in
convention awards. A convention award is a foreign arbitral award made in
a state which is a party to the New York Convention. And an as-in
convention award is one which, although rendered in a state which is not a
party to the New York Convention, may be recognized and enforced by
Philippine courts by reason of comity and reciprocity as if it is a convention
award.
Rule 13 is not applicable to foreign arbitral awards rendered in a non-
convention country which does not extend comity or reciprocity to the
Philippines (non-convention awards). They may nevertheless be recognized
and enforced under Section 48, Rule 39 of the Rules of Court.
Philippine courts do not have the authority to set aside, correct or modify
foreign arbitral awards they having been rendered under the authority and
jurisdiction of another state. This is rooted in the international law
principle of equality among states. Thus, no state can exercise the power to
review, revise, amend, modify, supplant, set aside, alter, revoke or cancel
the decision of a foreign court or tribunal. All that Philippine courts may do
is to recognize them or refuse to recognize them. Thus, there is no rule or
proceeding for the vacation or setting aside of foreign arbitral awards. As
such, combination of reliefs is not available for foreign arbitral awards.
The grounds upon which Philippine courts may refuse recognition and
enforcement to foreign arbitral awards which, except for no. 1 (e) below,
constitute the same grounds for setting aside an ICA award, are the
following:
a. The party making the application to refuse recognition and
enforcement of the award furnishes proof that:
(i). A party to the arbitration agreement was under
some incapacity; or the said agreement is not valid
under the law to which the parties have subjected
it or, failing any indication thereof, under the law of
the country where the award was made; or
(ii). The party making the application was not given
proper notice of the appointment of an arbitrator
or of the arbitral proceedings or was otherwise
unable to present his case; or
(iii). The award deals with a dispute not
contemplated by or not falling within the terms of
the submission to arbitration, or contains decisions
on matters beyond the scope of the submission to
arbitration; provided that, if the decisions on
matters submitted to arbitration can be separated
from those not so submitted, only that part of the
award which contains decisions on matters not
submitted to arbitration may be set aside; or
(iv). The composition of the arbitral tribunal or the
arbitral procedure was not in accordance with the
agreement of the parties or, failing such
agreement, was not in accordance with the law of
the country where arbitration took place; or
(v). The award has not yet become binding on the
parties or has been set aside or suspended by a
court of the country in which that award was made;
or
b. The court finds that:
(i). The subject-matter of the dispute is not capable
of settlement or resolution by arbitration under
Philippine law; or
(ii). The recognition or enforcement of the award
would be contrary to public policy.
No other ground shall be considered by the court. This exclusionary rule
was applied by the Supreme Court in the case of Tuna Processing, Inc. vs.
Philippine Kingford, Inc., where the issue for resolution was: “does a
foreign corporation not licensed to do business in the Philippines have legal
capacity to sue under the provisions of the ADR Act of 2004? The Supreme
Court answered in the affirmative and held that “the opposing party in an
application for recognition and enforcement of the [foreign] arbitral award
may raise only those grounds that were enumerated under Article V of the
New York Convention, x x x not one of [which] touched on the capacity to
sue of the party seeking recognition and enforcement of the award.”
Procedural Rules.
The following are the procedural rules in petitions for the recognition or
enforcement of convention and as-in convention foreign arbitral awards:
1. Petition. The petition can be filed at any time after the receipt
of the foreign arbitral award and shall be filed with the
Regional Trial Court [i] where the assets to be attached or
levied upon are located; [ii] where the act to be enjoined is
being performed; [iii] where the principal place of business in
the Philippines of any of the parties is located; [iv] if any of the
parties is an individual, where any of those individuals resides;
or [v] in the National Capital Judicial Region, at the option of
the petitioner.
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 ALTERNATIVE DISPUTE RESOLUTION

The petition shall state [i] the addresses of the parties; [ii] in
the absence of any indication in the award, the country where
the arbitral award was rendered and whether such country is a
signatory to the New York Convention; and [iii] the relief
sought. The petition should contain an [i] authentic copy of the
arbitration agreement; [ii] an authentic copy of the arbitral
award; [iii] a translation of the arbitral award or the agreement
certified by an official, sworn translator, or a diplomatic or
consular agent, if these documents are not in English.

2. Notice and opposition. If the petition is sufficient in form and

substance, the court shall cause notice and a copy of the
petition to be delivered to the respondent who may file a
verified opposition thereto within 30 days from receipt of the
notice and petition.

3. Hearing. The court may conduct the hearing through [i] the
submission of briefs of legal arguments if the issue is mainly
one of law; or [ii] the submission of affidavits of witnesses,
reply affidavits and documents in support thereof if there are
issues of fact relating to the grounds relied upon for the
petition. The proceeding is summary up to this stage.

If, on the basis of the petition, the opposition, the affidavits and
reply affidavits, the court finds a need to conduct an oral
hearing, it shall set the case for hearing during which the
affidavits of witnesses shall take the place of their direct
examination. From this stage, the proceedings are non-
summary.

4. Decision. As in the case of an international commercial arbitral

award, it is presumed that a foreign arbitral award was made
and released in due course of the arbitration and is subject to
enforcement by the court. Having been rendered by a foreign
arbitral tribunal over which Philippine courts do not have
jurisdiction, the latter do not have the judicial power to set
aside, annul, vacate or modify the foreign arbitral award.
Neither can the court disturb the arbitral tribunal’s
determination of facts or interpretation of the law.

In resolving the petition, the court shall either [i] recognize and
enforce; or [ii] refuse to recognize or enforce the foreign
arbitral award, depending on the presence of absence of any of
the grounds to refuse the recognition or enforcement.

The court may adjourn or defer the rendition of a decision if in

the meantime an application for the setting aside or suspension
of the award has been made with a competent authority in the
country where the award was made. The court, upon the
application of the petitioner, may require the other party to
give suitable security.

The court recognizing and enforcing, or refusing to recognize or

enforce, a foreign arbitral award, may be the subject of a
motion for reconsideration and an appeal, but not of a petition
for certiorari. However, a court order allowing a party to
enforce a foreign arbitral award pending appeal is susceptible
of a petition for certiorari.

-o0o-

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 ALTERNATIVE DISPUTE RESOLUTION
CHAPTER 10
Special Rules of Court on Alternative Dispute
Resolution
Provisions Specific to Mediation and Other Forms of ADR
Provisions Specific to Mediation.
RULE 14
GENERAL PROVISIONS
Rule 14.1. Application of the rules on arbitration .
Whenever applicable and appropriate, the pertinent rules on
arbitration shall be applied in proceedings before the court relative to
a dispute subject to mediation.
RULE 15
DEPOSIT AND ENFORCEMENT OF
MEDIATED SETTLEMENT AGREEMENTS
Rule 15.1. Who makes a deposit.
Any party to a mediation that is not court-annexed may deposit with
the court the written settlement agreement, which resulted from that
mediation.
Rule 15.2. When deposit is made.
At any time after an agreement is reached, the written settlement
agreement may be deposited.
Rule 15.3. Venue.
The written settlement agreement may be jointly deposited by the
parties or deposited by one party with prior notice to the other
party/ies with the Clerk of Court of the Regional Trial Court (a) where
the principal place of business in the Philippines of any of the parties
is located; (b) if any of the parties is an individual, where any of those
individuals resides; or (c) in the National Capital Judicial Region.
Rule 15.4. Registry Book.
The Clerk of Court of each Regional Trial Court shall keep a Registry
Book that shall chronologically list or enroll all the mediated
settlement agreements/settlement awards that are deposited with
the court as well as the names and address of the parties thereto and
the date of enrollment and shall issue a Certificate of Deposit to the
party that made the deposit.
Rule 15.5. Enforcement of mediated settlement agreement .
Any of the parties to a mediated settlement agreement, which was
deposited with the Clerk of Court of the Regional Trial Court, may,
upon breach thereof, file a verified petition with the same court to
enforce said agreement.
Rule 15.6. Contents of petition.
The verified petition shall:
a. Name and designate, as petitioner or respondent, all
parties to the mediated settlement agreement and those
who may be affected by it;
b. State the following:
(i). The addresses of the petitioner and
respondents; and
(ii). The ultimate facts that would show that
the adverse party has defaulted to perform its
obligation under said agreement; and
c. Have attached to it the following:
(i). An authentic copy of the mediated
settlement agreement; and
(ii). Certificate of Deposit showing that the
mediated settlement agreement was
deposited with the Clerk of Court.
Rule 15.7. Opposition.
The adverse party may file an opposition, within fifteen (15) days
from receipt of notice or service of the petition, by submitting written
proof of compliance with the mediated settlement agreement or such
other affirmative or negative defenses it may have.
Rule 15.8. Court action.
After a summary hearing, if the court finds that the agreement is a
valid mediated settlement agreement, that there is no merit in any of
the affirmative or negative defenses raised, and the respondent has
breached that agreement, in whole or in part, the court shall order
the enforcement thereof; otherwise, it shall dismiss the petition.
The general rule is that the rules of procedure for court proceedings
relative to arbitration are also applicable to mediation, to a dispute subject
to construction arbitration, and to other forms of ADR if more akin to
arbitration than mediation, whenever appropriate or are not inconsistent
with the specific rules therefor.
Rules 14 to 15 of the Special ADR Rules govern the situation where the
parties to mediation entered into and executed written mediated
settlement agreements. The parties may require any of the following
processes or proceeding regarding the mediated settlement agreements:
1. Deposit of mediated settlement agreements; and
2. Enforcement of the mediated settlement agreements.
These rules, however, do not cover mediated settlement agreements or
compromise agreements arrived at in court-annexed mediation where the
agreement is subject to the approval of the court and is made part of the
judgment based on compromised.
Deposit of Mediated Settlement Agreements.
In order for the mediated settlement agreement to be enforceable by
judicial action, it must be deposited with the proper Clerk of Court of the
Regional Trial Court. At any time after a mediated settlement agreement
has been reached in a proceeding which is not court-annexed, the
agreement may be deposited by the parties jointly or by one of them with
notice to the other with the Clerk of Court of the Regional Trial Court [i]
where the principal place of business in the Philippines of any of the parties
is located; [ii] if any of the parties is an individual, where any of those
individuals resides; or [iii] in the National Capital Judicial Region.
The Clerk of Court of every Regional Trial Court is required to keep a
Registry Book wherein to list or enroll chronologically all the mediated
settlement agreements or settlement awards that are deposited with the
court, including the names and addresses of the parties and the dates of
enrollment of the agreements. He shall issue a Certificate of Deposit to the
party making the deposit.
Enforcement of Mediated Settlement Agreements.
Any of the parties to a mediated settlement agreement which was
deposited, may, upon breach thereof, file a verified petition to enforce the
agreement with the court where the agreement was deposited. If the
agreement has not yet been deposited, the petitioner has to deposit the
agreement first before filing the petition in court.
The verified petition shall [i] name and designate as petitioner and
respondent all parties to the mediated settlement agreement and those
who may be affected by it; and [ii] state the addresses of the petitioner and
the respondents, and the ultimate facts that would show that the adverse
party has defaulted in the performance of his obligations under the
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 ALTERNATIVE DISPUTE RESOLUTION

agreement. The petition should contain an authentic copy of the mediated

settlement agreement and the certificate of deposit.

The adverse party may file an opposition to the petition within 15 days
from receipt of notice or the service of the petition.

The court shall conduct a summary hearing to determine whether or not

the mediated settlement agreement is valid and the respondent has
breached the agreement in whole or in part, and render judgment
accordingly by either enforcing the agreement or dismissing the petition.

Provisions Specific to Other Forms of ADR.

Rule 18.1. Applicability of rules to other forms of ADR .

This rule governs the procedure for matters brought before the court
involving the following forms of ADR:

a. Early neutral evaluation;

b. Neutral evaluation;
c. Mini-trial;
d. Mediation-arbitration;
e. A combination thereof; or
f. Any other ADR form.

Rule 18.2. Applicability of the rules on mediation .

If the other ADR form/process is more akin to mediation (i.e., the

neutral third party merely assists the parties in reaching a voluntary
agreement), the herein rules on mediation shall apply.

Rule 18.3. Applicability of rules on arbitration.

If the other ADR form/process is more akin to arbitration (i.e., the

neutral third party has the power to make a binding resolution of the
dispute), the herein rules on arbitration shall apply.

Rule 18.4. Referral.

If a dispute is already before a court, either party may before and

during pre-trial, file a motion for the court to refer the parties to
other ADR forms/processes.

At any time during court proceedings, even after pre-trial, the parties
may jointly move for suspension of the action pursuant to Article
2030 of the Civil Code of the Philippines where the possibility of
compromise is shown.

Rule 18.5. Submission of settlement agreement.

Either party may submit to the court, before which the case is
pending, any settlement agreement following a neutral or an early
neutral evaluation, mini-trial or mediation-arbitration.

Rule 18 of the Special ADR Rules apply to early neutral evaluation, neutral
evaluation, mini-trial, mediation-arbitration, any combination of ADR
forms, or any other ADR form.

The general rule is that the rules of procedure applicable to the different
forms of ADR shall be those agreed upon by the parties. In the absence of
such an agreement, the specific rules on these forms of ADR shall be
applicable. In default thereof, the rules on mediation shall suppletorily
apply to the forms of ADR which are more akin to mediation than
arbitration, and the rules on arbitration for those which are more akin to
arbitration than mediation.

Thus, where the neutral third party in a neutral evaluation or in a mini-trial

merely assists the parties in reaching a voluntary agreement, the ADR form
is akin to mediation and the rules on mediation will have suppletory
application. On the other hand, if the neutral third party is given the power
to render a binding resolution of the dispute, the ADR form is akin to
arbitration and, hence, the rules on arbitration will have suppletory
application.

-o0o-

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 ALTERNATIVE DISPUTE RESOLUTION
CHAPTER 11
Special Rules of Court on Alternative Dispute
Resolution
Motion for Reconsideration, Appeal, and Certiorari
As an indication of the importance given by the Judiciary to ADR, the
Supreme Court included in the Special ADR Rules specific provisions on
motions for reconsideration, appeals, special civil actions for certiorari, and
petitions for review on certiorari from decisions in ADR related cases. The
inclusion of these provisions was occasioned by the public policy to
promote ADR and make ADR as expeditious, inexpensive, least adversarial,
and effective as possible in resolving disputes and controversies. Instead of
merely declaring the provisions of the 1997 Rules of Civil Procedure
suppletorily applicable to ADR related court proceedings, the Supreme
Court, in recognition of the special and peculiar nature of ADR and the
judicial proceedings necessitated by them, enacted as part of the Special
ADR Rules specific provisions on these judicial remedies and modes of
review.
Rule 19 of the Special ADR Rules covers the remedies available to parties
for challenging the orders, decisions or judgments rendered by the
Regional Trial Courts on matters relating to alternative dispute resolution.
These remedies are:
1. Motion for reconsideration;
2. Appeal to the Court of Appeals;
3. Special Civil Action for Certiorari;
4. Appeal by Certiorari to the Supreme Court.
Under Rule 22.1 of the Special ADR Rules, “The provisions of the Rules of
Court that are applicable to the proceedings enumerated in Rule 1.1 of
these Special ADR Rules have either been included and incorporated in
these Special ADR Rules or specifically referred to herein.” In other words,
all allowable and applicable remedies from judicial issuances of the
Regional Trial Courts and the Court of Appeals in ADR related cases have
been enumerated in Rule 22.1 of the Special ADR Rules. Hence, following
the statutory construction principle of expressio unius est exclusio alterius,
unless an intended judicial remedy is provided for in the Special ADR Rules,
that remedy cannot be availed of. This position was sustained by the
Supreme Court in DENR vs. United Planners Consultants, Inc. (UPCI).
The judicial remedies provided for under Rule 19 of the Special ADR Rules
should be distinguished from those available against an order, action,
inaction or award of an arbitrator, arbitral tribunal or mediator as the case
may be which have been discussed in the previous chapters. The foregoing
remedies should also be distinguished from the judicial remedies which
jurisprudence has declared to be available directly from domestic arbitral
awards. Thus, in ABS-CBN Broadcasting Corporation v. World Interactive
Network Systems (WINS) Japan Co., Ltd., the Supreme Court outlined
several judicial remedies a party aggrieved by a domestic arbitral award
may take, namely:
1. A petition in the proper RTC to issue an order to vacate the
award on the grounds provided for in Section 24, RA 876;
2. A petition for review in the CA under Rule 43 of the Rules of
Court on questions of fact, of law, or mixed questions of fact
and law; and
3. A petition for certiorari under Rule 65 of the Rules of Court
should the arbitrator have acted without or in excess of his
jurisdiction or with grave abuse of discretion amounting to lack
or excess of jurisdiction.
Motion for Reconsideration.
A. MOTION FOR RECONSIDERATION
Rule 19.1. Motion for reconsideration, when allowed.
A party may ask the Regional Trial to reconsider its ruling on the
following:
a. That the arbitration agreement is inexistent, invalid or
unenforceable pursuant to Rule 3.10 (B);
b. Upholding or reversing the arbitral tribunal’s
jurisdiction pursuant to Rule 3.19;
c. Denying a request to refer the parties to arbitration;
d. Granting or denying a party an interim measure of
protection;
e. Denying a petition for the appointment of an arbitrator;
f. Refusing to grant assistance in taking evidence;
g. Enjoining or refusing to enjoin a person from divulging
confidential information;
h. Confirming, vacating or correcting a domestic arbitral
award;
i. Suspending the proceedings to set aside an international
commercial arbitral award and referring the case back to
the arbitral tribunal;
j. Setting aside an international commercial arbitral
award;
k. Dismissing the petition to set aside an international
commercial arbitral award, even if the court does not
recognize and/or enforce the same;
l. Recognizing and/or enforcing, or dismissing a petition to
recognize and/or enforce an international commercial
arbitral award;
m. Declining a request for assistance in taking evidence;
n. Adjourning or deferring a ruling on a petition to set
aside, recognize and/or enforce an international
commercial arbitral award;
o. Recognizing and/or enforcing a foreign arbitral award,
or refusing recognition and/or enforcement of the same;
and
p. Granting or dismissing a petition to enforce a deposited
mediated settlement agreement.
No motion for reconsideration shall be allowed from the following
rulings of the Regional Trial Court:
a. A prima facie determination upholding the existence,
validity or enforceability of an arbitration agreement
pursuant to Rule 3.1 (A);
b. An order referring the dispute to arbitration;
c. An order appointing an arbitrator;
d. Any ruling on the challenge to the appointment of an
arbitrator;
e. Any order resolving the issue of the termination of the
mandate of an arbitrator; and
f. An order granting assistance in taking evidence.
Rule 19.2. When to move for reconsideration.
A motion for reconsideration may be filed with the Regional Trial
Court within a non-extendible period of fifteen (15) days from receipt
of the questioned ruling or order.
Rule 19.3. Contents and notice.
The motion shall be made in writing stating the ground or grounds
therefor and shall be filed with the court and served upon the other
party or parties.
Rule 19.4. Opposition or comment.
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 ALTERNATIVE DISPUTE RESOLUTION
Upon receipt of the motion for reconsideration, the other party or
parties shall have a non-extendible period of fifteen (15) days to file
his opposition or comment.
Rule 19.5. Resolution of motion.
A motion for reconsideration shall be resolved within thirty (30) days
from receipt of the opposition or comment or upon the expiration of
the period to file such opposition or comment.
Rule 19.6. No second motion for reconsideration .
No party shall be allowed a second motion for reconsideration.
B. GENERAL PROVISIONS ON APPEAL AND CERTIORARI
Rule 19.7. No appeal or certiorari on the merits of an arbitral award .
An agreement to refer a dispute to arbitration shall mean that the
arbitral award shall be final and binding. Consequently, a party to an
arbitration is precluded from filing an appeal or a petition for
certiorari questioning the merits of an arbitral award.
Rule 19.8. Subject matter and governing rules.
The remedy of an appeal through a petition for review or the remedy
of a special civil action of certiorari from a decision of the Regional
Trial Court made under the Special ADR Rules shall be allowed in the
instances, and instituted only in the manner, provided under this
Rule.
Rule 19.9. Prohibited alternative remedies.
Where the remedies of appeal and certiorari are specifically made
available to a party under the Special ADR Rules, recourse to one
remedy shall preclude recourse to the other.
Rule 19.10. Rule on judicial review on arbitration in the Philippines .
As a general rule, the court can only vacate or set aside the decision of
an arbitral tribunal upon a clear showing that the award suffers from
any of the infirmities or grounds for vacating an arbitral award under
Section 24 of Republic Act No. 876 or under Rule 34 of the Model Law
in a domestic arbitration, or for setting aside an award in an
international arbitration under Article 34 of the Model Law, or for
such other grounds provided under these Special Rules.
If the Regional Trial Court is asked to set aside an arbitral award in a
domestic or international arbitration on any ground other than those
provided in the Special ADR Rules, the court shall entertain such
ground for the setting aside or non-recognition of the arbitral award
only if the same amounts to a violation of public policy.
The court shall not set aside or vacate the award of the arbitral
tribunal merely on the ground that the arbitral tribunal committed
errors of fact, or of law, or of fact and law, as the court cannot
substitute its judgment for that of the arbitral tribunal.
Rule 19.11. Rule on judicial review of foreign arbitral award .
The court can deny recognition and enforcement of a foreign arbitral
award only upon the grounds provided in Article V of the New York
Convention, but shall have no power to vacate or set aside a foreign
arbitral award.
Ordinarily, a motion for reconsideration under Rule 37 of the 1997 Rules of
Civil Procedure may be filed on the grounds that the findings or conclusions
of the judgment or final order “are not supported by evidence, or are
contrary to law.”
On the other hand, a party aggrieved by a ruling of the Regional Trial Court
in an ADR related proceeding, may file with the same RTC, a motion for
reconsideration from the following orders or rulings provided in Rule 19.1,
within 15 days from receipt thereof.
The motion shall be in writing, filed with the court and served upon the
other party or parties who shall have a non-extendible period of 15 days
from receipt thereof within which to file an opposition or comment. The
opposition or comment is the last pleading allowed to be filed. The court
shall resolve the motion for reconsideration within 30 days from receipt of
the opposition or comment or the expiration of the period to file the same.
As in motions for reconsideration under Rule 37 of the 1997 Rules of Civil
Procedure, second motions for reconsideration are prohibited.
No motion for reconsideration shall be allowed from the following rulings
and orders of the Regional Trial Court:
1. A prima facie determination upholding the existence, validity
and enforceability of an arbitration agreement pursuant to Rule
3.1 (a);
2. An order referring the dispute to arbitration;
3. An order appointing an arbitrator;
4. Any ruling on the challenge to the appointment of an
arbitrator;
5. Any order resolving the issue of the termination of the
mandate of an arbitrator;
6. An order granting assistance in taking evidence.
Appeal and Certiorari.
When the Special ADR Rules speaks of appeals and petitions for certiorari
of rulings of the RTC to the CA, or petitions for review on certiorari of the
resolutions or decisions of the Court of Appeals to the Supreme Court, it
refers to petitions akin to those under Rule 42 (Petition for review to the
Court of Appeals); Rule 45 (Petition for Review on Certiorari to the
Supreme Court); and Rule 65 (Petition for Certiorari to the Court of
Appeals) of the Rules of Court.
Ordinary appeal, such as that taken to the Court of Appeals from a decision
of the RTC in the exercise of its original exclusive jurisdiction, is not
available under the Special ADR Rules. The RTC, in passing judgment over
actions involving ADR is not exercising its original jurisdiction. Rather, it is
acting as a review court for decisions, orders and awards of the arbitral
tribunal. Hence, ordinary appeal to the Court of Appeals is not an available
remedy.
In the allowable appeal or review in ADR related cases, the appellate or
reviewing court must take into account the following principles which
should have been observed by the Regional Trial Court whose order or
decision is under review:
1. A party to arbitration is precluded from filing an appeal or a
petition for certiorari questioning the merits of an arbitral
award. This is because an agreement to refer a dispute to
arbitration is tantamount to an implied agreement that the
arbitral award shall be final and binding. Moreover, the court
shall not set aside or vacate an award merely on the ground
that the tribunal committed errors of fact, or law, as the court
cannot substitute its judgment for that of the arbitral tribunal.
2. Appeals through petitions for review and special civil actions
for certiorari from a decision of the Regional Trial Court are
exceptional remedies. They shall be allowed only in the
instances provided under the Special ADR Rules and only in the
manner provided therein. Moreover, they are mutually
exclusive remedies such that recourse to one precludes
recourse to the other.
3. As a general rule, the grounds and infirmities provided for
under R.A. No. 876 (Arbitration Law), the Model Law, and the
Special ADR Rules for vacating or setting aside a domestic
arbitral award or an international commercial arbitral award, as
the case may be, are exclusive. No other ground can be raised
therefor except if it amounts to a violation of public policy.
4. The court can deny recognition and enforcement of a foreign
arbitral award only upon the grounds provided for in Article VI
of the New York Convention. The court does not have the
power to vacate or set aside a foreign arbitral award because it
was rendered by an entity outside Philippine jurisdiction.
Appeal to the Court of Appeals (Petition for Review)
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 ALTERNATIVE DISPUTE RESOLUTION
C. APPEALS TO THE COURT OF APPEALS
Rule 19.12. Appeal to the Court of Appeals.
An appeal to the Court of Appeals through a petition for review under
this Special Rule shall only be allowed from the following final orders
of the Regional Trial Court:
a. Granting or denying an interim measure of protection;
b. Denying a petition for appointment of an arbitrator;
c. Denying a petition for assistance in taking evidence;
d. Enjoining or refusing to enjoin a person from divulging
confidential information;
e. Confirming, vacating or correcting/modifying a the petition.
domestic arbitral award;
f. Setting aside an international commercial arbitration
award;
g. Dismissing the petition to set aside an international
commercial arbitration award even if the court does not
decide to recognize or enforce such award;
h. Recognizing and/or enforcing an international
commercial arbitration award;
i. Dismissing a petition to enforce an international
commercial arbitration award;
j. Recognizing and/or enforcing a foreign arbitral award;
k. Refusing recognition and/or enforcement of a foreign
arbitral award;
l. Granting or dismissing a petition to enforce a deposited
mediated settlement agreement; and
m. Reversing the ruling of the arbitral tribunal upholding
its jurisdiction.
Rule 19.13. Where to appeal.
An appeal under this Rule shall be taken to the Court of Appeals
within the period and in the manner herein provided.
Rule 19.14. When to appeal.
The petition for review shall be filed within fifteen (15) days from
notice of the decision of the Regional Trial Court or the denial of the
petitioner’s motion for reconsideration.
Rule 19.15. How appeal taken.
Appeal shall be taken by filing a verified petition for review in seven
(7) legible copies with the Court of Appeals, with proof of service of a
copy thereof on the adverse party and on the Regional Trial Court.
The original copy of the petition intended for the Court of
Appeals shall be marked original by the petitioner.
Upon the filing of the petition and unless otherwise prescribed by the
Court of Appeals, the petitioner shall pay to the clerk of court of the
Court of Appeals docketing fees and other lawful fees of P3,500.00
and deposit the sum of P500.00 for costs.
Exemption from payment of docket and other lawful fees and the
deposit for costs may be granted by the Court of Appeals upon a
verified motion setting forth valid grounds therefor.
If the Court of Appeals denies the motion, the petitioner
shall pay the docketing and other lawful fees and deposit
for costs within fifteen days from the notice of the denial.
Rule 19.16. Contents of the Petition.
The petition for review shall (a) state the full names of the parties to
the case, without impleading the court or agencies either as
petitioners or respondent, (b) contain a concise statement of the facts
and issues involved and the grounds relied upon for the review, (c) be
accompanied by a clearly legible duplicate original or a certified true
copy of the decision or resolution of the Regional Trial Court appealed
from, together with certified true copies of such material portions of
the record referred to therein and other supporting papers, and (d)
contain a sworn certification against forum shopping as provided in
the Rules of Court. The petition shall state the specific material dates
showing that it was filed within the period fixed herein.
Rule 19.17. Effect of failure to comply with requirements .
The court shall dismiss the petition if it fails to comply with the
foregoing requirements regarding the payment of the docket and
other lawful fees, the deposit for costs, proof of service of the
petition, the contents and the documents, which should accompany
Rule 19.18. Action on the petition.
The Court of Appeals may require the respondent to file a comment
on the petition, not a motion to dismiss, within ten (10) days from
notice, or dismiss the petition if it finds, upon consideration of the
grounds alleged and the legal briefs submitted by the parties, that the
petition does not appear to be prima facie meritorious.
Rule 19.19. Contents of Comment.
The comment shall be filed within ten (10) days from notice in seven
(7) legible copies and accompanied by clearly legible certified true
copies of such material portions of the record referred to therein
together with other supporting papers.
The comment shall (a) point out insufficiencies or
inaccuracies in petitioner’s statement of facts and issues,
and (b) state the reasons why the petition should be
denied or dismissed.
A copy thereof shall be served on the petitioner, and proof
of such service shall be filed with the Court of Appeals.
Rule 19.20.  Due course.
If upon the filing of a comment or such other pleading or documents
as may be required or allowed by the Court of Appeals or upon the
expiration of the period for the filing thereof, and on the basis of the
petition or the records, the Court of Appeals finds prima facie that the
Regional Trial Court has committed an error that would warrant
reversal or modification of the judgment, final order, or resolution
sought to be reviewed, it may give due course to the petition;
otherwise, it shall dismiss the same.
Rule 19.21. Transmittal of records.
Within fifteen (15) days from notice that the petition has been given
due course, the Court of Appeals may require the court or agency
concerned to transmit the original or a legible certified true copy of
the entire record of the proceeding under review. The record to be
transmitted may be abridged by agreement of all parties to the
proceeding. The Court of Appeals may require or permit subsequent
correction of or addition to the record.
Rule 19.22. Effect of appeal.
The appeal shall not stay the award, judgment, final order or
resolution sought to be reviewed unless the Court of Appeals directs
otherwise upon such terms as it may deem just.
Rule 19.23. Submission for decision.
If the petition is given due course, the Court of Appeals may set the
case for oral argument or require the parties to submit memoranda
within a period of fifteen (15) days from notice. The case shall be
deemed submitted for decision upon the filing of the last pleading or
memorandum required by the Court of Appeals.
The Court of Appeals shall render judgment within sixty (60) days
from the time the case is submitted for decision.
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 ALTERNATIVE DISPUTE RESOLUTION
Rule 19.24. Subject of appeal restricted in certain instance .
If the decision of the Regional Trial Court refusing to recognize and/or
enforce, vacating and/or setting aside an arbitral award is premised
on a finding of fact, the Court of Appeals may inquire only into such
fact to determine the existence or non-existence of the specific
ground under the arbitration laws of the Philippines relied upon by
the Regional Trial Court to refuse to recognize and/or enforce, vacate
and/or set aside an award.
Any such inquiry into a question of fact shall not be
resorted to for the purpose of substituting the court’s
judgment for that of the arbitral tribunal as regards the
latter’s ruling on the merits of the controversy.
Rule 19.25. Party appealing decision of court confirming arbitral
award required to post bond.
The Court of Appeals shall within fifteen (15) days from receipt of the
petition require the party appealing from the decision or a final order
of the Regional Trial Court, either confirming or enforcing an arbitral
award, or denying a petition to set aside or vacate the arbitral award
to post a bond executed in favor of the prevailing party equal to the
amount of the award.
Failure of the petitioner to post such bond shall be a ground for the
Court of Appeals to dismiss the petition.
An appeal from final orders and judgments of the Regional Trial Courts in
ADR related cases to the Court of Appeals under Rules 19.12 to 19.25 of
the Special ADR Rules is akin to a petition under Rule 42 of the 1997 Rules
of Civil Procedure which is based on errors of fact and/or law. The appeal is
denominated in the 1997 Rules of Civil Procedure as well as in the Special
ADR Rules as a “petition for review.”
Although similar to a Rule 42 petition, the allowed appeal to the Court of
Appeals from the decisions of the Regional Trial Court in ADR related cases
is not based on Rule 42 or 45, but on Section 26 of the ADR Act of 2004.
Indeed:
“Rule 45 is not the remedy available to petitioners as the
proper mode of appeal assailing the decision of the RTC
confirming arbitral award is an appeal before the CA pursuant
to Sec. 46 of Republic Act No. 9285.”
Under the Special ADR Rules, the petition for review to the Court of
Appeals shall be allowed only from the following orders of the Regional
Trial Court:
a. Granting or denying an interim measure of protection;
b. Denying a petition for appointment of an arbitrator;
c. Denying a petition for assistance in taking evidence;
d. Enjoining or refusing to enjoin a person from divulging
confidential information;
e. Confirming, vacating or correcting/modifying a domestic
arbitral award;
f. Setting aside an international commercial arbitration award;
g. Dismissing the petition to set aside an international
commercial arbitration award even if the court does not decide
to recognize or enforce such award;
h. Recognizing and/or enforcing an international commercial
arbitration award;
i. Dismissing a petition to enforce an international commercial
arbitration award;
j. Recognizing and/or enforcing a foreign arbitral award;
k. Refusing recognition and/or enforcement of a foreign arbitral
award;
l. Granting or dismissing a petition to enforce a deposited
mediated settlement agreement; and
m. Reversing the ruling of the arbitral tribunal upholding its
jurisdiction.
The appeal shall be filed within 15 days from notice of the decision of the
RTC or the denial of the petitioner’s motion for reconsideration, by filing a
verified petition for review.
The Court of Appeals may give due course to the petition if it finds prima
facie that the Regional Trial Court has committed an error that would
warrant the reversal or modification of the judgment, final order, or
resolution sought to be reviewed. Thereafter, the Court of Appeals may
direct the transmittal of records, set the case for oral arguments, require
the submission of memoranda, and render judgment.
The filing of the appeal under this Rule shall not stay the award, judgment,
final order, or resolution sought to be reviewed unless the Court of Appeals
directs otherwise. This rule is different from a petition for review under
Rule 42 of the 1997 Rules of Civil Procedure which stays the judgment or
final order appealed from except in certain instances such as in cases
governed by the Rules on Summary Procedure, or when the prevailing
party avails of the remedy of execution pending appeal, or when the Rules
of Court or the law provides otherwise. Precisely, the Special ADR Rules
provides one instance when the law and the Rules specifically proscribe the
stay of the judgment, award, final order or resolution subject of the appeal.
Another distinction of the appeal under this Rule with that under Rule 42 is
that the party appealing the decision or final order of the Regional Trial
Court under the Special ADR Rules shall be required to post a bond in favor
of the prevailing party equal to the amount of the award. Otherwise, the
petition may be dismissed. This is not true for a Rule 42 petition.
Special Civil Action for Certiorari (Petition for Certiorari)
D. SPECIAL CIVIL ACTION FOR CERTIORARI
Rule 19.26. Certiorari to the Court of Appeals.
When the Regional Trial Court, in making a ruling under the Special
ADR Rules, has acted without or in excess of its jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction,
and there is no appeal or any plain, speedy, and adequate remedy in
the ordinary course of law, a party may file a special civil action for
certiorari to annul or set aside a ruling of the Regional Trial Court.
A special civil action for certiorari may be filed against the following
orders of the court.
a. Holding that the arbitration agreement is inexistent,
invalid or unenforceable;
b. Reversing the arbitral tribunal’s preliminary
determination upholding its jurisdiction;
c. Denying the request to refer the dispute to arbitration;
d. Granting or refusing an interim relief;
e. Denying a petition for the appointment of an arbitrator;
f. Confirming, vacating or correcting a domestic arbitral
award;
g. Suspending the proceedings to set aside an
international commercial arbitral award and referring the
case back to the arbitral tribunal;
h. Allowing a party to enforce an international commercial
arbitral award pending appeal;
i. Adjourning or deferring a ruling on whether to set aside,
recognize and or enforce an international commercial
arbitral award;
j. Allowing a party to enforce a foreign arbitral award
pending appeal; and
k. Denying a petition for assistance in taking evidence.
Rule 19.27. Form.
The petition shall be accompanied by a certified true copy of the
questioned judgment, order or resolution of the Regional Trial Court,
copies of all pleadings and documents relevant and pertinent thereto,
and a sworn certification of non-forum shopping as provided in the
Rules of Court.
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 ALTERNATIVE DISPUTE RESOLUTION
Upon the filing of the petition and unless otherwise prescribed by the
Court of Appeals, the petitioner shall pay to the clerk of court of the
Court of Appeals docketing fees and other lawful fees of P3,500.00
and deposit the sum of P500.00 for costs.
Exemption from payment of docket and other lawful fees
and the deposit for costs may be granted by the Court of
Appeals upon a verified motion setting forth valid grounds
therefor.
If the Court of Appeals denies the motion, the petitioner
shall pay the docketing and other lawful fees and deposit
for costs within fifteen days from the notice of the denial.
Rule 19.28. When to file petition.
The petition must be filed with the Court of Appeals within fifteen
(15) days from notice of the judgment, order or resolution sought to
be annulled or set aside. No extension of time to file the petition shall
be allowed.
Rule 19.29. Arbitral tribunal a nominal party in the petition .
The arbitral tribunal shall only be a nominal party in the petition for
certiorari. As nominal party, the arbitral tribunal shall not be required
to submit any pleadings or written submissions to the court.
The arbitral tribunal or an arbitrator may, however,
submit such pleadings or written submissions if the same
serves the interest of justice.
In petitions relating to the recognition and enforcement of a foreign
arbitral award, the arbitral tribunal shall not be included even as a
nominal party. However, the tribunal may be notified of the
proceedings and furnished with court processes.
Rule 19.30. Court to dismiss petition.
The court shall dismiss the petition if it fails to comply with Rules
19.27 and 19.28 above, or upon consideration of the ground alleged
and the legal briefs submitted by the parties, the petition does not
appear to be prima facie meritorious.
Rule 19.31. Order to comment.
If the petition is sufficient in form and substance to justify such
process, the Court of Appeals shall immediately issue an order
requiring the respondent or respondents to comment on the petition
within a non-extendible period of fifteen (15) days from receipt of a
copy thereof.
Such order shall be served on the respondents in such
manner as the court may direct, together with a copy of
the petition and any annexes thereto.
Rule 19.32. Arbitration may continue despite petition for certiorari .
A petition for certiorari to the court from the action of the appointing
authority or the arbitral tribunal allowed under this Rule shall not
prevent the arbitral tribunal from continuing the proceedings and
rendering its award. Should the arbitral tribunal continue with the
proceedings, the arbitral proceedings and any award rendered therein
will be subject to the final outcome of the pending petition for
certiorari.
Rule 19.33. Prohibition against injunctions.
The Court of Appeals shall not, during the pendency of the
proceedings before it, prohibit or enjoin the commencement of
arbitration, the constitution of the arbitral tribunal, or the
continuation of arbitration.
Rule 19.34. Proceedings after comment is filed.
After the comment is filed, or the time for the filing thereof has
expired, the court shall render judgment granting the relief prayed for
or to which the petitioner is entitled, or denying the same, within a
non-extendible period of fifteen (15) days.
Rule 19.35. Service and enforcement of order or judgment.
A certified copy of the judgment rendered in accordance with the last
preceding section shall be served upon the Regional Trial Court
concerned in such manner as the Court of Appeals may direct, and
disobedience thereto shall be punished as contempt.
The special civil action for certiorari from the orders, decisions or
judgments of the Regional Trial Court in ADR related cases to the Court of
Appeals referred to in Rules 19.26 to 19.35 of the Special Rules is akin to a
“petition for certiorari” under Rule 65 of the 1997 Rules of Civil Procedure.
They are both based on the same ground, i.e., the RTC has acted without or
in excess of its jurisdiction or with grave abuse of discretion amounting to
lack or excess of jurisdiction, and there is no appeal or any plain, speedy
and adequate remedy under the ordinary course of law.
The availability of a special civil action for certiorari under Rule 65 as a
remedy from decisions of the RTC in ADR related cases has been settled in
the case of Cargill Philippines, Inc. vs. San Fernando Regala Trading, Inc.,
where it was held that:
“In issuing the order which denied petitioner’s Motion to
Dismiss / Suspend Proceedings and to Refer Controversy to
Voluntary Arbitration, the RTC went beyond its authority of
determining only the issue of whether or not there is an
agreement in writing providing for arbitration by directing
petitioner to file an answer, instead of ordering the parties to
proceed to arbitration. In so doing, it acted in excess of its
jurisdiction and since there is no plain, speedy, and adequate
remedy in the ordinary course of law, petitioner’s resort to a
petition for certiorari is the proper remedy.”
Unlike a petition for certiorari under Rule 65 of ROC which can cover any
and all kinds of grave abuse of discretion committed by a tribunal, board or
officer exercising judicial or quasi-judicial functions, the special civil actions
for certiorari under the Special ADR Rules is limited to grave abuse of
discretion in the orders mentioned under Rule 19.26.
Again, unlike a petition for certiorari under Rule 65 of RC which can be filed
within 60 days from notice of the judgment, order or resolution sought to
be assailed, the special civil action for certiorari under the Special ADR
Rules must be filed within 15 days from notice of the judgment, order or
resolution sought to be annulled or set aside without the benefit of any
extension to file the same. Moreover, the erroneous filing of a special civil
action for certiorari under Rule 65 will not toll the 15-day period to file the
proper petition for certiorari under Rule 19 of the Special ADR Rules.
In a petition under Rule 65, the tribunal that issued the assailed judgment,
order or resolution shall be named as a public respondent to the petition
although he is considered merely as a nominal party. Hence, it is the duty
of the private respondent to appear and defend in his behalf and in behalf
of the public respondent. Moreover, unless specifically required by the
reviewing court, the public respondent shall not appear in or file an answer
or comment to the petition or any pleading therein.
The same principles obtain in a special civil action for certiorari under the
Special ADR Rules. The arbitral tribunal shall be named as a party although
it is merely a nominal party. As a nominal party, the arbitral tribunal is not
required to file any pleading or written submission to the court except if
such filing or submission will serve the interest of justice. However, in
petitions involving the recognition and enforcement of a foreign arbitral
award, the arbitral tribunal shall not even be included as a nominal party,
but it shall be notified of the proceedings and be furnished with court
processes. This is because Philippine courts do not have jurisdiction over
the foreign arbitral tribunal.
As in the case of a petition under Rule 65, the filing of a special civil action
for certiorari under the Special ADR Rules does not stay the proceedings of
the lower court or arbitral tribunal. Thus, the arbitral tribunal or the lower
court, notwithstanding the filing and pendency of a special civil action for
certiorari may continue with the arbitral proceedings and render an award
thereon. The proceedings and award under this situation, however, is
subject to the final outcome of the pending petition for certiorari.
Unlike Rule 65 of the ROC which allows the institution of petitions for
certiorari from orders or judgments of any inferior court, Rules 19.26 to
19.35 of the Special ADR Rules speak only of such petitions to the Court of
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 ALTERNATIVE DISPUTE RESOLUTION
Appeals from orders, decisions or judgments of the Regional Trial Courts in
ADR Related cases. The silence of the Special ADR Rules and the
exclusionary rule under Rule 22.1 thereof preclude the filing of special civil
actions for certiorari from orders, decisions, or judgments of the Court of
Appeals to the Supreme Court. Besides, the availability of the remedy of a
petition for review on certiorari from orders, decisions or judgments of the
Court of Appeals to the Supreme Court under Rules 19.36 to 19.42 of the
Special ADR Rules, constituting as it does a speedy and adequate remedy
under the ordinary course of law, precludes a special civil action for
certiorari. Thus, the remedy of a party aggrieved by a final resolution or
decision of the Court of Appeals in an ADR related case is to file a petition
for review on certiorari with the Supreme Court under the ADR Act.
Appeal by Certiorari to the Supreme Court (Petition for Review on
Certiorari)
E. APPEAL BY CERTIORARI TO THE SUPREME COURT
Rule 19.36. Review discretionary.
A review by the Supreme Court is not a matter of right, but of sound
judicial discretion, which will be granted only for serious and
compelling reasons resulting in grave prejudice to the aggrieved
party.
The following, while neither controlling nor fully measuring the
court's discretion, indicate the serious and compelling, and
necessarily, restrictive nature of the grounds that will warrant the
exercise of the Supreme Court’s discretionary powers, when the Court
of Appeals:
a. Failed to apply the applicable standard or test for
judicial review prescribed in these Special ADR Rules in
arriving at its decision resulting in substantial prejudice to
the aggrieved party;
b. Erred in upholding a final order or decision despite the
lack of jurisdiction of the court that rendered such final
order or decision;
c. Failed to apply any provision, principle, policy or rule
contained in these Special ADR Rules resulting in
substantial prejudice to the aggrieved party; and
d. Committed an error so egregious and harmful to a party
as to amount to an undeniable excess of jurisdiction.
The mere fact that the petitioner disagrees with the Court of Appeals’
determination of questions of fact, of law or both questions of fact
and law, shall not warrant the exercise of the Supreme Court’s
discretionary power.
The error imputed to the Court of Appeals must be grounded upon
any of the above prescribed grounds for review or be closely
analogous thereto.
A mere general allegation that the Court of Appeals has committed
serious and substantial error or that it has acted with grave abuse of
discretion resulting in substantial prejudice to the petitioner without
indicating with specificity the nature of such error or abuse of
discretion and the serious prejudice suffered by the petitioner on
account thereof, shall constitute sufficient ground for the Supreme
Court to dismiss outright the petition.
Rule 19.37. Filing of petition with Supreme Court .
A party desiring to appeal by certiorari from a judgment or final order
or resolution of the Court of Appeals issued pursuant to these Special
ADR Rules may file with the Supreme Court a verified petition for
review on certiorari.
The petition shall raise only questions of law, which must be distinctly
set forth.
Rule 19.38. Time for filing; extension.
The petition shall be filed within fifteen (15) days from notice of the
judgment or final order or resolution appealed from, or of the denial
of the petitioner's motion for new trial or reconsideration filed in due
time after notice of the judgment.
On motion duly filed and served, with full payment of the docket and
other lawful fees and the deposit for costs before the expiration of
the reglementary period, the Supreme Court may for justifiable
reasons grant an extension of thirty (30) days only within which to file
the petition.
Rule 19.39. Docket and other lawful fees; proof of service of petition .
Unless he has theretofore done so or unless the Supreme Court orders
otherwise, the petitioner shall pay docket and other lawful fees to the
clerk of court of the Supreme Court of P3,500.00 and deposit the
amount of P500.00 for costs at the time of the filing of the petition.
Proof of service of a copy thereof on the lower court concerned and
on the adverse party shall be submitted together with the petition.
Rule 19.40. Contents of petition.
The petition shall be filed in eighteen (18) copies, with the original
copy intended for the court being indicated as such by the petitioner,
and shall
(a) state the full name of the appealing party as the
petitioner and the adverse party as respondent, without
impleading the lower courts or judges thereof either as
petitioners or respondents;
(b) indicate the material dates showing when notice of the
judgment or final order or resolution subject thereof was
received, when a motion for new trial or reconsideration,
if any, was filed and when notice of the denial thereof was
received;
(c) set forth concisely a statement of the matters involved,
and the reasons or arguments relied on for the allowance
of the petition;
(d) be accompanied by a clearly legible duplicate original,
or a certified true copy of the judgment or final order or
resolution certified by the clerk of court of the court a quo
and the requisite number of plain copies thereof, and such
material portions of the record as would support the
petition; and
(e) contain a sworn certification against forum shopping.
Rule 19.41. Dismissal or denial of petition.
The failure of the petitioner to comply with any of the foregoing
requirements regarding the payment of the docket and other lawful
fees, deposit for costs, proof of service of the petition, and the
contents of and the documents which should accompany the petition
shall be sufficient ground for the dismissal thereof.
The Supreme Court may on its own initiative deny the petition on the
ground that the appeal is without merit, or is prosecuted manifestly
for delay, or that the questions raised therein are too insubstantial to
require consideration.
Rule 19.42. Due course; elevation of records.
If the petition is given due course, the Supreme Court may require the
elevation of the complete record of the case or specified parts thereof
within fifteen (15) days from notice.
The appeal by certiorari to the Supreme Court from the final orders,
resolutions and decisions of the Court of Appeals in ADR related cases
provided for under Rules 19.36 to 19.42 of the Special ADR Rules is akin to
a “petition for review on certiorari” under Rule 45 of the ROC. As in the
case of a petition under Rule 45, the appeal by certiorari under the Special
ADR Rules is grounded on pure questions of law. The petition, whether
under the ROC or the Special ADR Rules, is not a matter of right and may be
granted only for serious and compelling reasons resulting in grave
prejudice to the aggrieved party.
While the Special ADR Rules provide for petitions for review on certiorari
from the resolutions and decisions of the Court of Appeals to the Supreme
Court, it is silent on the availability of a petition for review on pure
questions of law direct from the Regional Trial Courts to the SC which is
allowed under Rule 45 of ROC. Rule 19.37 of the Special ADR Rules speaks
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 ALTERNATIVE DISPUTE RESOLUTION
only of judgments, final orders, or resolutions of the Court of Appeals as
being reviewable in a petition for review on certiorari thereunder.
Considering that the Special ADR Rules are specific rules while the 1997
ROC are of general application, the Special ADR Rules prevail under this
situation.
Hence, a petition for review direct to the Supreme Court from a judgment,
final order or resolution of the RTC in the ADR related cases enumerated in
Rule 1.1 is not available.
-o0o-
CHAPTER 12
CONSTRUCTION DISPUTE ARBITRATION
Construction Dispute.
Construction refers to “all on-site works on buildings or altering structures,
from land clearance through completion including excavation, erection and
assembly and installation of components and equipment.”
Under the Revised Rules of Procedure Governing Construction Arbitration
(CIAC Revised Rules) a construction dispute shall include “those between or
among parties to, or who are otherwise bound by, an arbitration
agreement, directly or by reference, whether such parties are project
owner, contractor, subcontractor, fabricator, project manager, design
professional, consultant, quantity surveyor, bondsman or issuer of an
insurance policy in a construction project.”
Construction Arbitration under the ADR Act of 2004.
ADR Act, 2004. SEC. 34. Arbitration of Construction Disputes:
Governing Law.  (CIAC), unless all parties to arbitration, assisted by their respective
The arbitration of construction disputes shall be governed by
Executive Order No. 1008, otherwise known as the Constitution
Industry Arbitration Law.
SEC. 35. Coverage of the Law. 
Construction disputes which fall within the original and exclusive
jurisdiction of the Construction Industry Arbitration Commission (the
"Commission") shall include those between or among parties to, or
who are otherwise bound by, an arbitration agreement, directly or by
reference whether such parties are project owner, contractor,
subcontractor, quantity surveyor, bondsman or issuer of an insurance
policy in a construction project.
The Commission shall continue to exercise original and exclusive
jurisdiction over construction disputes although the arbitration is
"commercial" pursuant to Section 21 of this Act.
SEC. 36. Authority to Act as Mediator or Arbitrator.  heard, which must not be later than fifteen (15) days after the filing of
By written agreement of the parties to a dispute, an arbitrator may
act as mediator and a mediator may act as arbitrator.
The parties may also agree in writing that, following a successful
mediation, the mediator shall issue the settlement agreement in the
form of an arbitral award.
SEC. 37. Appointment of Foreign Arbitrator.  the other party may file an opposition to the motion on or before the
The Construction Industry Arbitration Commission (CIAC) shall
promulgate rules to allow for the appointment of a foreign arbitrator
or coarbitrator or chairman of a tribunal a person who has not been
previously accredited by CIAC: Provided, That:
(a) the dispute is a construction dispute in which one party
is an international party
(b) the person to be appointed agreed to abide by the
arbitration rules and policies of CIAC;
(c) he/she is either coarbitrator upon the nomination of
the international party;
or he/she is the common choice of the two
CIAC-accredited arbitrators first appointed one
of whom was nominated by the international
party; and
(d) the foreign arbitrator shall be of different nationality
from the international party.
SEC. 38. Applicability to Construction Arbitration . 
The provisions of Sections 17 (d) of Chapter 2, and Section 28 and 29
of this Act shall apply to arbitration of construction disputes covered
by this Chapter.
SEC. 39. Court to Dismiss Case Involving a Construction Dispute . 
A regional trial court which a construction dispute is filed shall, upon
becoming aware, not later than the pretrial conference, that the
parties had entered into an arbitration to be conducted by the CIAC,
unless both parties, assisted by their respective counsel, shall submit
to the regional trial court a written agreement exclusive for the Court,
rather than the CIAC, to resolve the dispute.
SPECIAL ADR RULES, RULE 17: REFERRAL TO CIAC
Rule 17.1. Dismissal of action.
A Regional Trial Court before which a construction dispute is filed
shall, upon becoming aware that the parties have entered into an
arbitration agreement, motu proprio or upon motion made not later
than the pre-trial, dismiss the case and refer the parties to arbitration
to be conducted by the Construction Industry Arbitration Commission
counsel, submit to the court a written agreement making the court,
rather than the CIAC, the body that would exclusively resolve the
dispute.
Rule 17.2. Form and contents of motion.
The request for dismissal of the civil action and referral to arbitration
shall be through a verified motion that shall (a) contain a statement
showing that the dispute is a construction dispute; and (b) be
accompanied by proof of the existence of the arbitration agreement.
If the arbitration agreement or other document evidencing the
existence of that agreement is already part of the record, those
documents need not be submitted to the court provided that the
movant has cited in the motion particular references to the records
where those documents may be found.
The motion shall also contain a notice of hearing addressed to all
parties and shall specify the date and time when the motion will be
the motion.
The movant shall ensure receipt by all parties of the motion at least
three days before the date of the hearing.
Rule 17.3. Opposition.
Upon receipt of the motion to refer the dispute to arbitration by CIAC,
day such motion is to be heard. The opposition shall clearly set forth
the reasons why the court should not dismiss the case.
Rule 17.4. Hearing.
The court shall hear the motion only once and for the purpose of
clarifying relevant factual and legal issues.
Rule 17.5. Court action.
If the other parties fail to file their opposition on or before the day of
the hearing, the court shall motu proprio resolve the motion only on
the basis of the facts alleged in the motion.
After hearing, the court shall dismiss the civil action and refer the
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 ALTERNATIVE DISPUTE RESOLUTION
parties to arbitration if it finds, based on the pleadings and supporting
documents submitted by the parties, that there is a valid and
enforceable arbitration agreement involving a construction dispute.
Otherwise, the court shall proceed to hear the case.
All doubts shall be resolved in favor of the existence of a construction
dispute and the arbitration agreement.
Rule 17.6. Referral immediately executory.
An order dismissing the case and referring the dispute to arbitration
by CIAC shall be immediately executory.
Rule 17.7. Multiple actions and parties. –
The court shall not decline to dismiss the civil action and make a
referral to arbitration by CIAC for any of the following reasons:
a. Not all of the disputes subject of the civil action may be
referred to arbitration;
b. Not all of the parties to the civil action are bound by the
arbitration agreement and referral to arbitration would
result in multiplicity of suits;
c. The issues raised in the civil action could be speedily
and efficiently resolved in its entirety by the Court rather
than in arbitration;
d. Referral to arbitration does not appear to be the most
prudent action; or
e. Dismissal of the civil action would prejudice the rights
of the parties to the civil action who are not bound by the
arbitration agreement.
The court may, however, issue an order directing the inclusion in
arbitration of those parties who are bound by the arbitration
agreement directly or by reference thereto pursuant to Section 34 of
Republic Act No. 9285.
Furthermore, the court shall issue an order directing the case to
proceed with respect to the parties not bound by the arbitration
agreement.
Rule 17.8. Referral.
If the parties manifest that they have agreed to submit all or part of
their dispute pending with the court to arbitration by CIAC, the court
shall refer them to CIAC for arbitration.
The ADR Act of 2004 not only affirmed the original and exclusive
jurisdiction of the Construction Industry Arbitration Commission (CIAC)
over construction disputes, but also strengthened it to include “those
between or among parties to, or who are otherwise bound by, an
arbitration agreement, directly or by reference whether such parties are
project owner, contractor, subcontractor, quantity surveyor, bondsman or
issuer of an insurance policy in a construction project,” and even if the
arbitration is commercial in character.
Moreover, the ADR Act of 2004 directs the Regional Trial Courts before
which is presented a construction dispute for resolution, upon becoming
aware that the parties had entered into an arbitration agreement, motu
proprio, or upon motion made not later than the pre-trial, not just to
dismiss the case, but also to refer the parties to arbitration by the CIAC,
unless all the parties to the arbitration, assisted by their respective
counsels, submit to the court a written agreement making the court the
body that will resolve the dispute.
The request for the dismissal of the action and the referral to the CIAC for
arbitration shall be made through a verified motion that shall [i] contain a
statement showing that the dispute is a construction dispute; [ii] be
accompanied by proof of the existence of the arbitration agreement unless
it is already part of the records of the case; and [iii] contain a notice of
hearing.
The other party may file an opposition to the motion on or before the date
set for the hearing of the motion.
An order dismissing the case and referring the dispute to arbitration by the
CIAC is immediately executory.
The Construction Industry Arbitration Commission (CIAC).
At the forefront of construction dispute arbitration is the CIAC created by
virtue of Executive Order (E.O.) No. 1008, otherwise known as the
“Construction Industry Arbitration Law.” It is the quasi-judicial agency
accorded with the jurisdiction to resolve disputes arising from contracts
involving construction in the Philippines.
The CIAC is an agency under the Construction Industry Authority of the
Philippines (CIAP) and is administratively attached to the Department of
Trade of Industry. It consists of a Chairman and 2 members.
The policy and objective of the CIAC is to “provide a fair and expeditious
settlement of construction disputes through a non-judicial process which
ensures harmonious and friendly relations between or among the parties.”
Its mission has been succinctly described in Gammon Philippines, Inc. vs.
Metro Rail Transit Development Corporation, as follows:
“The Construction Industry Arbitration Commission (CIAC) was
created in recognition of the construction industry’s
contribution to national development goals. Realizing that
delays in the resolution of construction industry disputes would
also hold up the country’s development, EO 1008 expressly
mandates the CIAC to expeditiously settle construction industry
disputes and, for this purpose, vest upon the CIAC original and
exclusive jurisdiction over disputes arising from, or connected
with, contracts entered into by parties involved in construction
in the Philippines, whether the dispute arises before or after
the completion of the contract, or after the abandonment or
breach thereof.”
The CIAC has the following functions:
1. To formulate and adopt an arbitration program for the
construction industry;
2. To enunciate policies and prescribe rules and procedures for
construction arbitration;
3. To supervise the arbitration program, and exercise such
authority related thereto as regards the appointment,
replacement or challenging of arbitrators; and
4. To direct its officers and employees to perform such functions
as may be assigned to them from time to time.
The nature and character of the CIAC has been defined in the case of
Metro Construction, Inc. vs. Chatham Properties, Inc., in this wise:
“In the first place, it is a quasi-judicial agency. A quasi-judicial
agency or body has been defined as an organ of government
other than a court and other than a legislature, which affects
the rights of private parties through either adjudication or rule-
making. The CIAC’s primary function is that of a quasi-judicial
agency, which is to adjudicate claims and/or determine rights
in accordance with procedures set forth in E.O. No. 1008.”
Jurisdiction of the CIAC.
E.O. No. 1008, Sec. 4. Jurisdiction.
The CIAC shall have original and exclusive jurisdiction over disputes
arising from, or connected with, contracts entered into by parties
involved in construction in the Philippines, whether the dispute arises
before or after the completion of the contract, or after the
abandonment or breach thereof.
These disputes may involve government or private contracts. For the
Board to acquire jurisdiction, the parties to a dispute must agree to
submit the same to voluntary arbitration.
The jurisdiction of the CIAC may include but is not limited to violation
of specifications for materials and workmanship; violation of the
terms of agreement; interpretation and/or application of contractual
time and delays; maintenance and defects; payment, default of
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 ALTERNATIVE DISPUTE RESOLUTION
employer or contractor and changes in contract cost.
Excluded from the coverage of this law are disputes arising from
employer-employee relationships which shall continue to be covered
by the Labor Code of the Philippines.
LICOMCEN, Incorporated vs. Foundation Specialists, Inc.
The text of Section 4 of E.O. No. 1008 is broad enough to cover
any dispute arising from, or connected with construction
contracts, whether these involve mere contractual money
claims or execution of the works.
The CIAC’s jurisdiction cannot be limited by the parties’
stipulation that only disputes in connection with or arising out
of the physical constructive activities (execution of the works)
are arbitrable before it. It fact, all that is required for the CIAC
to acquire jurisdiction is for the parties to a construction
contract to agree to submit their dispute to arbitration.
In principle, the CIAC has jurisdiction over the construction dispute, and not
the contract. It also has jurisdiction over the reformation of contracts.
Excluded in the CIAC’s jurisdiction re disputes arising from employer-
employee relationships which are covered by the Labor Code of the
Philippines. Also excluded from the CIAC’s jurisdiction are claims for moral
damages, exemplary damages, opportunity or business losses in addition to
liquidated damages, and attorney’s fees, which are non-arbitrable, unless
the parties acquiesce or mutually agree to submit these issues for
arbitration and to abide by the decision of the arbitrator thereon.
E.O. No. 1008 is a special law. Hence, it takes precedence over BP 129, a
general law which vests jurisdiction to the MTC, RTC over certain civil
actions, including those for breach of contract. Thus, while ordinarily, civil
actions for breach of contract are within the jurisdiction of the regular
courts, complaints for construction disputes, including the breach of
construction contracts, must be filed with the CIAC, provided that the
parties agree to submit their dispute to arbitration.
Indeed, the doctrine of primary jurisdiction dictates prior recourse to the
CIAC for construction disputes and parties over which it has acquired
jurisdiction. The same doctrine precludes courts from resolving
construction disputes over which jurisdiction has been initially lodged with
the CIAC by reason of its special knowledge, experience and services to
determine technical and intricate matters of fact. Thus, the CIAC’s findings
of fact, as in the case of other quasi-judicial agencies, are generally
accorded great respect, if not finality, by the courts, having been rendered
by an agency in a better position to pass judgment thereon.
The passage of R.A No. 9285 (ADR Act of 2004), which required the
confirmation of domestic arbitral awards, did not alter the character of
CIAC decisions as final and executory. In J Plus Asia Development
Corporation vs. Utility Assurance Corporation, the Supreme Court clarified
that:
“Since R.A. No. 9285 explicitly excluded CIAC awards from
domestic arbitration awards that need to be confirmed to be
executory, said awards are therefore not covered by Rule 11 of
Special ADR Rules as they continue to be governed by EO No.
1008, as amended and the rules of procedure of the CIAC.”
For the CIAC to acquire jurisdiction, the parties to a dispute must be bound
by an arbitration agreement in their contract or subsequently agree to
submit the same to voluntary arbitration. Plainly, the CIAC has original and
exclusive jurisdiction over disputes arising from or connected with
construction contracts entered into by parties that have agreed to submit
their dispute to voluntary arbitration. The jurisdiction of the CIAC is
dependent on the agreement and consent of the parties to the
construction contract, to submit their dispute to arbitration, and that,
absent such consent, the CIAC cannot validly proceed against a party for
lack of jurisdiction. Absent such an agreement contained in an arbitration
agreement, or consent expressed or implied subsequent to the accrual of
the cause of action, the jurisdiction over the construction dispute will
remain with the regular courts.
There are two acts which vest the CIAC with jurisdiction over a construction
dispute.
“One is the presence of an arbitration clause in a construction
contract, and the other is the agreement of the parties to
submit the dispute to the CIAC.”
Where there is an existing arbitration agreement, a subsequent consent
would be superfluous and unnecessary. In other words, the consent to
arbitration necessary for the CIAC to acquire jurisdiction may be a pre-
causal consent or a present causal consent.
Once jurisdiction has been acquired by the CIAC, the refusal of one party to
participate in the proceedings will not prevent the CIAC from proceeding
with the case and issuing an award in favor of one of the parties. This
principle was explained by the Supreme Court in Metropolitan Cebu Water
District, as follows:
“The failure of the respondent to appear, which amounts to
refusal to arbitrate, will not stay the proceedings,
notwithstanding the absence of the respondent or the lack of
participation of such party. In such cases, the CIAC is mandated
to appoint the arbitrator/s in accordance with the Rules, and
the arbitration proceedings shall continue. The award shall
then be made after receiving the evidence of the claimant.”
In fact, it has been held that the CIAC may continue with the arbitration
even though only one of the parties requested for arbitration, or even if
both parties have withdrawn their consent to arbitrate.
An arbitration agreement or a submission to arbitration must 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 contract to arbitration. The agreement may even be in the
form of exchange of letters sent by post or telefax, telexes, telegrams,
electronic mail, or any other mode of communication.
In the event that a party has already filed a complaint before the regular
courts involving a dispute within the jurisdiction of the CIAC, the proper
procedure to enable the CIAC to decide on the dispute is to request the
stay or suspension of the judicial action as provided for under the
Arbitration Law (R.A. No. 876). Moreover, the court is directed by the ADR
Act not just to dismiss the complaint falling within the CIAC’s jurisdiction,
but also to refer the case to the CIAC.
The principle of jurisdiction by estoppel is equally applicable to the CIAC.
When a party to an arbitration conducted by the CIAC has actively
participated in the proceedings before the CIAC, even going to the extent
of seeking affirmative relief, such active participation is tantamount to an
invocation of, or at least an acquiescence to CIAC’s jurisdiction,
notwithstanding that that party initially assailed the CIAC’s jurisdiction.
Rules of Procedure in the CIAC.
In the proceedings before the CIAC, judicial rules of evidence are not
controlling and the technicalities of law or procedure may be disregarded
in order to ascertain the facts in each and every case by every reasonable
means. The arbitral tribunal of the CIAC is mandated to “act according to
justice and equity and merits of the case, without regard to technicalities
or legal forms and need not be bound by any technical rule of evidence.”
Briefly, the following are the procedural rules in the CIAC:
1. Complaint / request for arbitration. – The initiatory pleading is
a complaint or request for arbitration which must be filed with
the Secretariat of the CIAC. The complaint or request for
arbitration must allege the existence of the arbitration
agreement or subsequent submission, a copy of which should
be attached to the complaint or request.
2. Answer. Within 3 days from such filing, the Secretariat shall
transmit to the respondent a request for his answer attaching
thereto a copy of the complaint and supporting documents.
Without prejudice to extensions of time if warranted, the
respondent has 15 days from receipt of the request for
arbitration or complaint within which to file his answer thereto
including therein such counterclaims as he may assert, of which
the complainant shall be furnished a copy.
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The respondent shall be requested to inform the CIAC of his
willingness to have the dispute resolved by arbitration, which
should be clearly expressed in the answer. In the absence of an
arbitration agreement or subsequent submission, or of the
respondent’s statement of his willingness to undergo
arbitration, the CIAC shall dismiss the complaint without
prejudice to its refiling upon a subsequent submission.
The failure of the respondent to file an answer or his refusal to
arbitrate shall not stay the proceedings as long as the
jurisdiction of the CIAC has been properly invoked by the filing
of the request for arbitration in accordance with the CIAC
Revised Rules, and there is an arbitration agreement providing
for arbitration by the CIAC, or there is a subsequent submission
agreement therefor. In such case, the CIAC shall appoint the
arbitrators, continue with the proceedings, receive the
evidence of the claimant, and render an award based thereon.
If, before the award, the respondent appears and offers to
present his evidence, the arbitral tribunal may, for justifiable
reasons, reopen the proceedings, require the respondent to file
his answer with or without counterclaims, allow him to present
evidence and grant him a limited right to cross examine
witnesses already presented in the proceedings.
3. Reply. The claimant may file a reply to the counterclaim within
15 days from the date of receipt of the answer with
counterclaim.
4. Appointment and acceptance of arbitrators. One (1) or three
(3) arbitrators may be appointed to settle a dispute depending
on the agreement of the parties, or the discretion of the CIAC if
there is no agreement. Each party shall submit the names of
not more than 6 nominees from CIAC-accredited arbitrators in
the order of their preference for appointment as arbitrators.
For sole arbitrators, the CIAC shall appoint among the parties’
nominees the common nominee provided he is available and
not disqualified. If the parties fail to submit the names of the
nominees, the CIAC shall appoint the sole arbitrator.
For arbitral tribunals, again the CIAC shall appoint the parties’
common nominees. If there is no common nominee, the CIAC
shall choose and appoint one arbitrator from the claimant’s
nominees and another arbitrator from the respondent’s
nominees.
If there is one common nominee, he shall be appointed to
together with the 2 others from the list submitted by the
parties. If there are 2 common nominees, the CIAC shall
appoint them. If there are 3 common nominees, all of them
shall be appointed.
Unless there are 3 common nominees, within 15 days from
their appointment, the 2 arbitrators first chosen shall select the
third arbitrator. In case of failure to agree on the third member
within the said period, the CIAC shall, within 15 days thereafter,
appoint the third member from its list of accredited arbitrators.
The arbitrators thus chosen shall decide who among them will
be the chairman of the arbitral tribunal.
The arbitrators chosen must communicate to the CIAC their
acceptance or refusal of his appointment within 5 days from
receipt thereof. If there is no communication received within
the prescribed period, a refusal to accept shall be presumed
and the CIAC shall appoint a replacement from the list of the
party who nominated him or, if there is none, from the list of
CIAC-accredited arbitrators.
5. Challenge to arbitrators. A challenge to an arbitrator, including
a motion for inhibition or a request for disqualification or
replacement which shall be treated as a challenge, shall be in
the form of a complaint under oath, stating distinctly the facts
complained of, supported by affidavits, and accompanied by
such documents as may substantiate the said facts. The
challenge should be filed at any time after the challenged
arbitrators’ appointment but before the lapse of the original 10
day period for the submission of memoranda or draft decision
under Section 13.16, Rule 13, CIAC Revised rules, without
extensions.
The challenge shall be based on the following grounds:
a. Relationship by blood or marriage within the sixth
(6th) degree of either party to the controversy, or to
counsels within the fourth (4th) degree, computed
according to the rules of civil law;
b. Financial, fiduciary, or other interest in the
controversy;
c. Partiality or bias;
d. Incompetence, or professional misconduct; and
e. Other just and valid reasons affecting
independence, integrity, impartiality and interest.
The challenged arbitrator will be given an opportunity to be
heard, and, subject to the approval of the CIAC, to inhibit
himself without admitting the existence of the ground of the
challenge, motion or request.
Upon removal or inhibition, the CIAC shall promptly appoint
the replacement, unless he is the 3 rd member, in which case,
the first 2 members of the arbitral tribunal shall select his
replacement.
6. Preliminary conference and terms of reference. The arbitrator
or arbitral tribunal shall set the case for preliminary
conference, similar to a pre-trial, not later than 15 days after
their appointment during which the following matters shall be
considered:
a. Possibility of amicable settlement;
b. Necessity or desirability of amendment to
pleadings;
c. Obtaining stipulations or admissions of facts and/or
documents to avoid unnecessary proof;
d. Limitation of the number of witnesses;
e. Suggested formulation of issues by the parties;
f. Application for interim relief, appointment of
experts and necessity of site inspection; and
g. Such other matters as may aid in the just and
speedy disposition of the case.
A draft copy of the document known as Terms of Reference
(TOR) shall be attached to the notice of preliminary conference.
This document functions like a pre-trial order in judicial
proceedings and controls the proceedings unless corrected for
manifest errors by a motion filed not later than the hearing
date. It shall include the following:
a. The full names of the parties and their respective
counsels, if any;
b. The addresses and contact numbers of the
parties/counsels, to which notifications or
communications arising in the course of the
arbitration may be validly made;
c. A summary of the parties’ respective claims;
d. Full statement of admitted facts and documents;
e. The issues to be resolved in question form;
f. The arbitrator’s full names;
g. The place where the arbitration proceedings shall
be held;
h. The breakdown, schedule of payments, and sharing
of arbitration fees;
i. Such other particulars as may be required by the
arbitral tribunal for the proper and speedy
adjudication of the case.
It shall be signed by the parties, their counsels and the arbitral
tribunal after finalization. Notwithstanding the absence of a
TOR, the arbitration shall proceed on the basis of the issues
formulated by the pleadings filed by the parties.
7. Arbitration proceedings.
a. Venue, date and time. The venue, date and time of
the arbitral proceedings shall be mutually agreed
upon by the parties and the arbitral tribunal. In
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case of disagreement, the choice of venue by the
arbitral tribunal shall prevail.
b. Quorum. In an arbitration with three (3) arbitrators,
two (2) members of the arbitral tribunal shall
comprise a quorum for the purpose of conducting a
hearing.
c. Presentation of evidence. The arbitral tribunal shall
at all times adopt the most expeditious procedure
for the introduction of evidence. It shall be within
its discretion to determine the order of
presentation of evidence. Generally, a party who
seeks to enforce a right or establish a claim shall be
required to present his evidence first.
Instead of a formal hearing, the parties may agree
to submit the issues for resolution after the filing of
pleadings, evidence, memoranda, or draft decisions
similar to a summary judgment under Rule 35 of
ROC.
The arbitral tribunal shall require the simultaneous
submission of affidavits of witnesses in lieu of their
direct testimonies attaching thereto supporting
documents. The arbitral tribunal may ask
clarificatory questions of the witnesses at any stage
of the proceedings.
After the presentation and offer of evidence by the
parties, the parties may be directed by the arbitral
tribunal to make a brief oral summation.
d. Draft decision or final memorandum. If any or both
parties so desire, they may submit not later than 10
calendar days from the termination of the hearing,
their draft decision or final memorandum of
arguments.
e. Closing of the hearings. After the submission of the
draft decision or the final memorandum, the
proceedings shall be deemed closed unless the
arbitral tribunal motu proprio or upon the request
of any party at any time before the award is
rendered, and on good cause shown, reopen the
hearing, in which case, the effective date of the
closing of the hearing shall be the date of closing of
the reopened hearing.
8. Award. The award shall be rendered promptly by the arbitral
tribunal within 30 days from the time the case is submitted for
resolution but not more than 6 months from the date of signing
of the TOD, or in the absence of a TOR, not more than 6
months from the date of the last preliminary conference called
for the purpose of finalizing or signing the TOR. There shall be
no extension of this period unless approved by the CIAC.
The award shall be in writing and signed by the arbitral tribunal
or a majority of its members. It shall contain the issues
involved, a brief statement and discussion of the facts, and the
authority relied upon for the resolution or disposition of the
case.
A dissent from the decision of the majority or a portion thereof
shall be in writing specifying the portion dissented from with a
statement of the reasons therefor, and shall be signed by the
dissenting member.
The final arbitral award shall become executory upon the lapse
of 15 days from receipt thereof by the parties, unless a timely
motion for correction is filed by any party within the said 15
day period. A motion for reconsideration and new trial are
prohibited pleadings.
As a rule, the jurisdiction of the arbitral tribunal is terminated
upon the finality of the decision, order or award except in the
following instances:
a. When a timely motion for correction has been filed
in which case jurisdiction will continue until the
resolution of the motion and the finality of the
corrected award; and
b. Notwithstanding the finality of the award, the
arbitral tribunal retains jurisdiction to exercise
executory powers, which include “the
determination of the sufficiency of the bond [stay
of execution], approval of the surety or bonding
company, satisfaction of the award, quashal of the
execution, issuance of alias writs, assessment of
properties levied, appointment of a quantity
surveyor or assessor, examination of banks, debtors
of the judgment debtor and any person holding
properties or assets of the judgment debtor, and
issuance of subpoena ad testificandum and
subpoena duces tecum.
9. Execution of the award. The arbitral tribunal, or the remaining
members thereof, or, if there are none, the CIAC itself, shall,
motu proprio or upon motion of the prevailing party, issue a
writ of execution of a final and executory decision, order or
award requiring any sheriff or proper officer to execute said
decision, order or final award.
If the decision, order or final award is appealed, the execution
may be stayed upon approval by the arbitral tribunal, or the
remaining members thereof, with the concurrence of the CIAC,
of a bond posted by the petitioner in an amount equal to the
award, conditioned upon the performance of the judgment of
the appellate court in case it upholds the award in whole or in
part.
Judicial Review of CIAC Decisions.
A petition for review from a final award of the CIAC may be taken by any of
the parties to the Court of Appeals within 15 days from receipt thereof in
accordance with Rule 43 of the Rules of Court. This petition is based on
errors of fact, law or mixed fact and law. The development of this remedy
from the decisions of the CIAC was explained in the case of Asian
Construction and Development Corporation vs. Sumimoto Corporation as
follows:
“Notably, the current provision is in harmony with the Court’s
pronouncement that ‘despite statutory provisions making the
decisions of certain administrative agencies ‘final,’ the court
still takes cognizance of petitions showing want of jurisdiction,
grave abuse of discretion, violation of due process, denial of
substantial justice or erroneous interpretation of the law’ and
that, in particular, ‘voluntary arbitrators, by the nature of their
functions, act in a quasi-judicial capacity, such that their
decisions are within the scope of judicial review.’”
The petition shall not stay the execution of the final award unless the Court
of Appeals issues a temporary restraining order and/or writ of preliminary
injunction. The petitioner may also post a bond with the CIAC in an amount
equal to the award, conditioned upon the performance of the appellate
court’s judgment. The execution of the award shall be stayed upon the
approval of the bond by the CIAC.
The availability of a petition for review under Rule 43 precludes the remedy
of a petition for certiorari under Rule 65, and the filing of an erroneous
petition for certiorari will not toll the 15-day period to file a petition for
review.
Generally, in the absence of any showing of grave abuse of discretion,
courts must sustain the factual findings of the CIAC arbitrator this being in
accordance with the established principle that the determination of certain
questions of fact falling within the peculiar technical expertise of an
administrative agency, must be accorded great respect, if not finality by the
courts. The court will not interfere in matters which are addressed to the
sound discretion of government agencies entrusted with the regulation of
activities coming under the special technical knowledge and training of
such agencies.
As held in Uniwide Sales Realty and Resources Corporation vs. Titan-Ikeda
Construction and Development Corporation:
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“The Court will not review the factual findings of an arbitral
tribunal upon the artful allegation that such body had
"misapprehended facts" and will not pass upon issues which
are, at bottom, issues of fact, no matter how cleverly disguised
they might be as "legal questions." The parties here had
recourse to arbitration and chose the arbitrators themselves;
they must have had confidence in such arbitrators. The Court
will not, therefore, permit the parties to relitigate before it the
issues of facts previously presented and argued before the
Arbitral Tribunal, save only where a clear showing is made that,
in reaching its factual conclusions, the Arbitral Tribunal
committed an error so egregious and hurtful to one party as to
constitute a grave abuse of discretion resulting in lack or loss of
jurisdiction. Prototypical examples would be factual
conclusions of the Tribunal which resulted in deprivation of one
or the other party of a fair opportunity to present its position
before the Arbitral Tribunal, and an award obtained through
fraud or the corruption of arbitrators. Any other, more relaxed
rule would result in setting at naught the basic objective of a
voluntary arbitration and would reduce arbitration to a largely
inutile institution.”
Also, in Shinryo (Philippines) Company, Inc. vs RRN Incorporated, it was held
that:
bear the cost(s) or in what proportion the cost(s)
shall be borne by each.
Rule 142 of the Revised Rules of Court of the Philippines
governing the imposition of costs likewise provides the
following:
Section 1. Costs Ordinarily follow the result of suit.
Unless otherwise provided in these rules, costs
shall be allowed to the prevailing party as a matter
of course, but the court shall have power for special
reasons, to adjudge that either party shall pay the
cost of an action, or that the same shall be divided,
as may be equitable.”
In the instant case, there is no basis for assessing the
arbitration costs against one party or the other, as the parties’
prayers were only partially granted. We find it is just and
equitable that both parties equally share the costs of
arbitration.
-o0o-

“It is settled that findings of fact of quasi-judicial bodies, which

have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect, but
also finality, especially when affirmed by the Court of Appeals.
In particular, factual findings of construction arbitrators are
final and conclusive and not reviewable by this Court on
appeal.

This rule, however, admits of certain exceptions. In Uniwide

Sales Realty and Resources Corporation v. Titan-Ikeda
Construction and Development Corporation, we said:

In David v. Construction Industry and Arbitration Commission,

we ruled that, as exceptions, factual findings of construction
arbitrators may be reviewed by this Court when the petitioner
proves affirmatively that: (1) the award was procured by
corruption, fraud or other undue means; (2) there was evident
partiality or corruption of the arbitrators or any of them; (3) the
arbitrators were guilty of misconduct in refusing to hear
evidence pertinent and material to the controversy; (4) one or
more of the arbitrators were disqualified to act as such under
Section nine of Republic Act No. 876 and willfully refrained
from disclosing such disqualifications or of any other
misbehavior by which the rights of any party have been
materially prejudiced; or (5) the arbitrators exceeded their
powers, or so imperfectly executed them, that a mutual, final
and definite award upon the subject matter submitted to them
was not made.

Other recognized exceptions are as follows: (1) when there is a

very clear showing of grave abuse of discretion resulting in lack
or loss of jurisdiction as when a party was deprived of a fair
opportunity to present its position before the Arbitral Tribunal
or when an award is obtained through fraud or the corruption
of arbitrators, (2) when the findings of the Court of Appeals are
contrary to those of the CIAC, and (3) when a party is deprived
of administrative due process.”

Costs of Arbitration.

In the case of Philippine National Construction Corporation vs. Court of

Appeals, the Supreme Court had occasion to reiterate the general rule in
determining which party ought to bear the costs of arbitration before the
CIAC. Said the Court:

“In respect of the costs of arbitration, Sec. 5, Article XV of the

Rules of Procedure Governing Construction Arbitration states:

Decision as to Cost of Arbitration. In the case of

non-monetary claims or where the parties agreed
that the sharing of fees shall be determined by the
Arbitrator(s), the award shall, in addition to dealing
with the merits of the case, fix the cost of
arbitration, and/or decide which of the parties shall

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