Introductory Concepts in Arbitration: Section 3, RA 9825 (ADR Act)

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information shall not be disclosed. It shall include (1)

INTRODUCTORY CONCEPTS IN ARBITRATION
communication, oral or written, made in a dispute
resolution proceedings, including any memoranda,
notes or work product of the neutral party or non-party
RA 9285 (Alternative Dispute Resolution Act of 2004) participant, as defined in this Act; (2) an oral or written
Institutionalized the use of an alternative dispute resolution statement made or which occurs during mediation or
system, which serves to promote the speedy and impartial for purposes of considering, conducting, participating,
administration of justice and unclog the court dockets. It shall be initiating, continuing or reconvening mediation or
without prejudice to the adoption of the Supreme Court of any retaining a mediator; and (3) pleadings, motions,
ADR system such as mediation, conciliation, arbitration or any manifestations, witness statements, reports filed or
combination thereof submitted in an arbitration or for expert evaluation;
(i) "Convention Award" means a foreign arbitral award

Section 3, RA 9825 (ADR Act) made in a Convention State;
SECTION 3. Definition of Terms. — For purposes of this Act, (j) "Convention State" means a State that is a member of
the term: the New York Convention;
(a) Alternative Dispute Resolution System" means any
process or procedure used to resolve a dispute or (k) "Court" as referred to in Article 6 of the Model Law shall
controversy, other than by adjudication of a presiding mean a Regional Trial Court;
judge of a court or an officer of a government agency,
as defined in this Act, in which a neutral third party (l) "Court-Annexed Mediation" means any mediation
participates to assist in the resolution of issues, which process conducted under the auspices of the court,
includes arbitration, mediation, conciliation, early after such court has acquired jurisdiction of the dispute;
neutral evaluation, mini-trial, or any combination
thereof; (m) "Court-Referred Mediation" means mediation ordered by
a court to be conducted in accordance with the
(b) "ADR Provider" means institutions or persons accredited Agreement of the Parties when an action is prematurely
as mediator, conciliator, arbitrator, neutral evaluator, or commenced in violation of such agreement;
any person exercising similar functions in any
Alternative Dispute Resolution system. This is without (n) "Early Neutral Evaluation" means an ADR process
prejudice to the rights of the parties to choose wherein parties and their lawyers are brought together
nonaccredited individuals to act as mediator, conciliator, early in a pre-trial phase to present summaries of their
arbitrator, or neutral, evaluator of their dispute. cases and receive a non- binding assessment by an
Whenever referred to in this Act, the term "ADR experienced, neutral person, with expertise in the
practitioners" shall refer to individuals acting as subject in the substance of the dispute;
mediator, conciliator, arbitrator, or neutral evaluator;
(o) "Government Agency" means any governmental entity,
(c) "Authenticate" means to sign, execute or adopt a office or officer, other than a court, that is vested by
symbol, or encrypt a record in whole or in part, law with quasi- judicial power or the power to resolve
intended to identify the authenticating party and to or adjudicate disputes involving the government, its
adopt, accept or establish the authenticity of a record agencies and instrumentalities, or private persons;
or term;
(p) "International Party" shall mean an entity whose place
(d) "Arbitration" means a voluntary dispute resolution of business is outside the Philippines. It shall not
process in which one or more arbitrators, appointed in include a domestic subsidiary of such international party
accordance with the agreement of the parties, or rules or a co-venturer in a joint venture with a party which
promulgated pursuant to this Act, resolve a dispute by has its place of business in the Philippines. The term
rendering an award; foreign arbitrator shall mean a person who is not a
national of the Philippines;
(e) "Arbitrator" means the person appointed to render an
award, alone or with others, in a dispute that is the (q) "Mediation" means a voluntary process in which a
subject of an arbitration agreement; mediator, selected by the disputing parties, facilitates
communication and negotiation, and assists the parties
(f) "Award" means any partial or final decision by an in reaching a voluntary agreement regarding a dispute;
arbitrator in resolving the issue in a controversy;
(r) "Mediator" means a person who conducts mediation.
(g) "Commercial Arbitration" — An arbitration is
"commercial" if it covers matter arising from all (s) "Mediation Party" means a person who participates in a
relationships of a commercial nature, whether mediation and whose consent is necessary to resolve
contractual or not; the dispute;
(h) "Confidential information" means any information, (t) "Mediation-Arbitration" or Med-Arb is a two-step dispute
relative to the subject of mediation or arbitration, resolution process involving both mediation and
expressly intended by the source not to be disclosed, or arbitration;
obtained under circumstances that would create a
reasonable expectation on behalf of the source that the (u) "Mini-trial" means a structured dispute resolution
Sources: CMWee, Pagayon-RKPS Digests-Gango Notes, TNSE Notes, Atty. Cesista’s discussion
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YOUR TRANSCRIPT TEAM | ALTERNATIVE DISPUTE RESOLUTION | ATTY. VJCesista | 2ND SEMESTER | 2021-2022
method in which the merits of a case are argued before

a panel comprising senior decision makers with or 4. Arbitration Agreement means an agreement by the
without the presence of a neutral third person after parties to submit to arbitration all or certain disputes
which the parties seek a negotiated settlement; which have arisen or which may arise between them in
respect of a defined legal relationship, whether
(v) "Model Law" means the Model Law on International contractual or not. An arbitration agreement may be in
Commercial Arbitration adopted by the United Nations the form of an arbitration clause in a contract or in the
Commission on International Trade Law on 21 June form of a separate agreement.
1985;
5. Authenticate means to sign, execute, adopt a symbol or
(w) "New York Convention" means the United Nations encrypt a record in whole or in part, intended to identify
Convention on the Recognition and Enforcement of the authenticating party and to adopt, accept or
Foreign Arbitral Awards approved in 1958 and ratified establish the authenticity of a record or term.
by the Philippine Senate under Senate Resolution No.
71; 6. Award means any partial or final decision by an
arbitrator in resolving the issue or controversy.
(x) "Non-Convention Award" means a foreign arbitral award
made in a State which is not a Convention State; 7. Confidential Information means any information,
relative to the subject of mediation or arbitration,
(y) "Non-Convention State" means a State that is not a expressly intended by the source not to be disclosed, or
member of the New York Convention; obtained under circumstances that would create a
reasonable expectation on behalf of the source that the
(z) "Non-Party Participant" means a person, other than a information shall not be disclosed. It shall include:
party or mediator, who participates in a mediation
proceeding as a witness, resource person or expert; (a) communication, oral or written, made in a
dispute resolution proceeding, including any
(aa) "Proceeding" means a judicial, administrative, or other memoranda, notes or work product of the
adjudicative process, including related pre-hearing or neutral party or non- party participant;
post-hearing motions, conferences and discovery;
(b) an oral or written statement made or which
(bb) "Record" means an information written on a tangible occurs during mediation or for purposes of
medium or stored in an electronic or other similar considering, conducting, participating,
medium, retrievable in a perceivable form; and initiating, continuing or reconvening
mediation or retaining a mediator; and
(cc) "Roster" means a list of persons qualified to provide
ADR services as neutrals or to serve as arbitrators. (c) pleadings, motions, manifestations, witness
statements, reports filed or submitted in
arbitration or for expert evaluation.
Rule 2, IRR of the ADR Act
8. Counsel means a lawyer duly admitted to the practice
Article 1.6. Definition of Terms. For purposes of these Rules, of law in the Philippines and in good standing who
the terms shall be defined as follows: represents a party in any ADR process.
A. Terms Applicable to all Chapters 9. Court means Regional Trial Court except insofar as
1. ADR Provider means the institutions or persons otherwise defined under the Model Law.
accredited as mediators, conciliators, arbitrators,
neutral evaluators or any person exercising similar 10. Government Agency means any governmental entity,
functions in any Alternative Dispute Resolution system. office or officer, other than a court, that is vested by
This is without prejudice to the rights of the parties to law with quasi-judicial power or the power to resolve or
choose non-accredited individuals to act as mediator, adjudicate disputes involving the government, its
conciliator, arbitrator or neutral evaluator of their agencies and instrumentalities or private persons.
dispute.
11. Model Law means the Model Law on International
2. Alternative Dispute Resolution System means any Commercial Arbitration adopted by the United Nations
process or procedure used to resolve a dispute or Commission on International Trade Law on 21 June
controversy, other than by adjudication of a presiding 1985.
judge of a court or an officer of a government agency,
as defined in the ADR Act, in which a neutral third 12. Proceedings means a judicial, administrative or other
person participates to assist in the resolution of issues, adjudicative process, including related pre-hearing or
including arbitration, mediation, conciliation, early post hearing motions, conferences and discovery.
neutral evaluation, mini-trial or any combination
thereof. 13. Record means information written on a tangible
medium or stored in an electronic or other similar
3. Arbitration means a voluntary dispute resolution process medium, retrievable in a perceivable form.
in which one or more arbitrators, appointed in
accordance with the agreement of the parties or these 14. Roster means a list of persons qualified to provide ADR
Rules, resolve a dispute by rendering an award. services as neutrals or to serve as arbitrators.
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nature, whether contractual or not. Relationships of a

15. Special ADR Rules means the Special Rules of Court on commercial nature include, but are not limited to, the
Alternative Dispute Resolution issued by the Supreme following commercial transactions: any trade
Court on September 1, 2009. transaction for the supply or exchange of goods or
services; distribution agreements; construction of
B. Terms Applicable to the Chapter on Mediation works; commercial representation or agency; factoring;
1. Ad hoc Mediation means any mediation other than leasing; consulting; engineering; licensing; investment;
institutional or court- annexed. financing; banking; insurance; joint venture and other
forms of industrial or business cooperation; carriage of
2. Institutional Mediation means any mediation goods or passengers by air, sea, rail or road.
administered by, and conducted under the rules of, a
mediation institution. 5. Convention Award means a foreign arbitral award made
in a Convention State.
3. Court-Annexed Mediation means any mediation process
conducted under the auspices of the court and in 6. Convention State means a state that is a member of the
accordance with Supreme Court approved guidelines, New York Convention.
after such court has acquired jurisdiction of the dispute.
7. Court (under the Model Law) means a body or organ of
4. Court-Referred Mediation means mediation ordered by a the judicial system of the Philippines (i.e., the Regional
court to be conducted in accordance with the Trial Court, Court of Appeals and Supreme Court).
agreement of the parties when an action is prematurely
commenced in violation of such agreement. 8. International Arbitration means an arbitration where:
(a) the parties to an arbitration agreement have,
5. Certified Mediator means a mediator certified by the at the time of the conclusion of that
Office for ADR as having successfully completed its agreement, their places of business in
regular professional training program. different states; or
6. Mediation means a voluntary process in which a (b) one of the following places is situated outside
mediator, selected by the disputing parties, facilitates the Philippines in which the parties have their
communication and negotiation, and assists the parties places of business:
in reaching a voluntary agreement regarding a dispute. (i) the place of arbitration if
determined in, or pursuant to, the
7. Mediation Party means a person who participates in a arbitration agreement;
mediation and whose consent is necessary to resolve (ii) any place where a substantial part
the dispute. of the obligations of the
commercial relationship is to be
8. Mediator means a person who conducts mediation. performed or the place with which
the subject matter of the dispute is
9. Non-Party Participant means a person, other than a most closely connected; or
party or mediator, who participates in a mediation
proceeding as a witness, resource person or expert. (c) the parties have expressly agreed that the
subject matter of the arbitration agreement
C. Terms Applicable to the Chapter on International relates to more than one country.
Commercial Arbitration
1. Appointing Authority as used in the Model Law shall For this purpose:
mean the person or institution named in the arbitration (a) if a party has more than one place of
agreement as the appointing authority; or the regular business, the place of business is that which
arbitration institution under whose rules the arbitration has the closest relationship to the arbitration
is agreed to be conducted. Where the parties have agreement;
agreed to submit their dispute to institutional arbitration
rules, and unless they have agreed to a different (b) if a party does not have a place of business,
procedure, they shall be deemed to have agreed to the reference is to be made to his/her habitual
procedure under such arbitration rules for the selection residence.
and appointment of arbitrators. In ad hoc arbitration,
the default appointment of an arbitrator shall be made 9. New York Convention means the United Nations
by the National President of the Integrated Bar of the Convention on the Recognition and Enforcement of
Philippines (IBP) or his/her duly authorized Foreign Arbitral Awards approved in 1958 and ratified
representative. by the Philippine Senate under Senate Resolution No.
71.
2. Arbitral Tribunal (under the Model Law) means a sole
arbitrator or a panel of arbitrators. 10. Non-Convention Award means a foreign arbitral award
made in a state, which is not a Convention State.
3. Arbitration means any arbitration whether or not
administered by a permanent arbitration institution. 11. Non-Convention State means a state that is not a
member of the New York Convention.
4. Commercial Arbitration means an arbitration that covers
matters arising from all relationships of a commercial D. Terms Applicable to the Chapter on Domestic
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Arbitration the pre-trial phase to present summaries of their cases

1. Ad hoc Arbitration means an arbitration administered by and to receive a non-binding assessment by an
an arbitrator and/or the parties themselves. An experienced neutral person, with expertise in the
arbitration administered by an institution shall be subject matter or substance of the dispute.
regarded as an ad hoc arbitration if such institution is
not a permanent or regular arbitration institution in the 2. Mediation-Arbitration or Med-Arb is a two-step dispute
Philippines. resolution process involving mediation and then
followed by arbitration.
2. Appointing Authority in Ad Hoc Arbitration means, in the
absence of an agreement, the National President of the 3. Mini-trial means a structured dispute resolution method
IBP or his/her duly authorized representative. in which the merits of a case are argued before a panel
comprising of senior decision-makers, with or without
3. Appointing Authority Guidelines means the set of rules the presence of a neutral third person, before which the
approved or adopted by an appointing authority for the parties seek a negotiated settlement.
making of a Request for Appointment, Challenge,
Termination of the Mandate of Arbitrator/s and for
taking action thereon.
History of Arbitration
4. Arbitration means a voluntary dispute resolution process Because conflict is inherent in human society, much effort has
in which one or more arbitrators, appointed in been expended by men and institutions in devising ways of
accordance with the agreement of the parties or these resolving them. Ruling out physical combat, more pacific means
Rules, resolve a dispute by rendering an award. have been evolved, such as recourse to the good offices of a
disinterested party—a court or a private individual/s.
5. Arbitral Tribunal means a sole arbitrator or a panel,
board or committee of arbitrators.
Early judges called upon to solve conflicts were primarily
6. Claimant means a person/s with a claim against another arbiters—persons not specially trained but in whose morality,
and who commence/s arbitration against the latter. probity and good sense the parties in conflict reposed full trust.
The magistrate, after noting down the conflicting claims of
7. Court means, unless otherwise specified in these Rules, litigants, and clarifying the issues, referred them for decision to a
a Regional Trial Court. private person designated by the parties, by common agreement,
or selected by them from an opposite listing or by having the
8. Day means calendar day.
arbiter chosen by lot.
9. Domestic Arbitration means an arbitration that is not
international as defined in Article 1(3) of the Model Law. Although the law and jurisprudence were sparse on the subject of
arbitration in the Philippines, it was nonetheless recognized in the
10. Institutional arbitration means arbitration administered Spanish Civil Code.
by an entity, which is registered as a domestic
corporation with the Securities and Exchange
Commonwealth Act 103 (1936) – Arbitration found a fertile field in
Commission (SEC) and engaged in, among others,
arbitration of disputes in the Philippines on a regular the resolution of labor- management disputes in the Philippines.
and permanent basis. CA103 first provided for compulsory arbitration as the state policy
to be administered by the Court of Industrial Relations. Eventually
11. Request for Appointment means the letter-request to it gave way to voluntary arbitration.
the appointing authority of either or both parties for the
appointment of arbitrator/s or of the two arbitrators
In 1953, RA No. 875 or the Industrial Peace Act was passed which
first appointed by the parties for the appointment of the
third member of an arbitral tribunal. favored the policy of free collective bargaining and resort to
grievance procedure as the preferred mode of settling disputes in
12. Representative is a person duly authorized in writing by industry.
a party to a dispute, who could be a counsel, a person
in his/her employ or any other person of his/her choice, In 1974, it was accepted and enunciated more explicitly through
duly authorized to represent said party in the arbitration the passage of the Labor Code. The growing need for a law
proceedings.
regulating arbitration in general was acknowledged when RA No.
13. Respondent means the person/s against whom the 876 or the Arbitration Law was passed. Said law was passed to
claimant commence/s arbitration. supplement the NCC on arbitration.
14. Written communication means the pleading, motion, In 1985, the Construction Industry Arbitration Commission (CIAC)
manifestation, notice, order, award and any other was created by E.O. No. 1008 in recognition of the pressing need
document or paper submitted or filed with the arbitral for an arbitral machinery for the early and expeditious settlement
tribunal or delivered to a party.
of disputes in the construction industry.
E. Terms Applicable to the Chapter on Other ADR Forms
1. Early Neutral Evaluation means an ADR process wherein In practice nowadays, absent an agreement of the parties to
parties and their lawyers are brought together early in resolve their disputes via a particular mode, it is the regular courts
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and I think it has benefited the clients in words, probably

that remain the fora to resolve such matters. Parties may,
however, opt for recourse to third parties, exercising their basic figures, that they can’t either comprehend.
freedom to “establish such stipulations, clauses, terms and
conditions they may deem convenient, provided they are not How it works
contrary to law, morals, good customs, public order or public Firstly, it works by two parties agreeing that the dispute will
policy. not be referred to courts but instead will be referred to
● In such case, resort to the arbitration process may be arbitration. Whenever there is a dispute mechanism, you
spelled out in a contract in anticipation of disputes that
indicate in the contract wherever the dispute is to be
may arise between them or
resolved at the exclusion of all other courts. So if your
● Stipulated in a submission agreement whey they are
actually confronted by a dispute. dispute is in Cebu City, then, it is the courts of Cebu City that
will have jurisdiction over the subject matter. But the venue
can be subject to agreement by the parties.
Arbitration in Civil Code
CHAPTER 2 When we speak of disputes which are criminal in nature,
ARBITRATIONS parties are not at liberty to decide where the dispute is to be
resolved because it is territorial. That being said, when you
Art. 2042. The same persons who may enter into a compromise
may submit their controversies to one or more arbitrators for agree in your contract that the dispute will be resolved by
decision. (1820a) arbitration, the first thing that comes to mind is where is that
arbitration located.
Art. 2043. The provisions of the preceding Chapter upon
compromises shall also be applicable to arbitrations. (1821a)
There are two (2) arbitration institutions:
Art. 2044. Any stipulation that the arbitrators' award or decision 1. Construction Industry Arbitration Commission
shall be final, is valid, without prejudice to Articles 2038, 2039,
(CIAC).
and 2040. (n)
2. Philippine Dispute Resolution Center Inc. (PDRCI).
Art. 2045. Any clause giving one of the parties power to choose
more arbitrators than the other is void and of no effect. (n) Now, hearing the names of these arbitration institutions, you
Art. 2046. The appointment of arbitrators and the procedure for already know right away what the disputes that they settle
arbitration shall be governed by the provisions of such rules of are. For CIAC, they settle construction disputes. For PDRCI,
court as the Supreme Court shall promulgate. (n) they settle just about anything, except construction disputes.
So, that's the essence of their jurisdiction.
Overview of Arbitration
There seems to be a misconception of arbitration. In the Q: How do you become bound by these institutions?
Philippines, if there is a dispute between parties, our A: You become bound by them when you consent. The
tendency is to go to court because that’s how we’re taught. concept of consent under Civil Law of the PH allows the
We file a case in a court and it settles the dispute between parties to determine the terms of the contract and to agree
parties. That’s what we learned in CrimPro, in CivPro and about anything except that they are not contrary to law,
even in Tax. And all the while, in settling disputes, there’s public policy, or good customs. And one of the things they
always an intervention by the government to certain by can agree on is the jurisdiction of the arbitration tribunal.
providing prosecutors or providing judges in courts. In the
case of tax remedies, that is the BIR. If you and I agree that a future dispute will be resolved by
arbitration, then we are bound by it not because the law
We realized that whenever there is dispute in Third World created a statute by which PDRCI will have jurisdiction but
countries, multinational corporations find it difficult to have because it is based on the consent of the parties. In short,
reasonable and fair judges. Now in instances where there are unlike what we learn in civil procedure or in criminal
reasonable and fair judges, it is tough to find an efficient procedure that jurisdiction is conferred by law, in this case,
timeline. This is because when you file a case in court and no jurisdiction is conferred by the consent of the parties. It is a
matter how good your case is, 1 year or 2 years would be a consent-based resolution or consent-based mechanism of
very fast timeline for the dispute to be resolved. resolving disputes.
During my time, arbitration was taught as a subject under Q: What is a PDRCI?

ADR which is still the case now. Since I took over the class, I A: PDRCI is again the arbitral institution that resolves any
think there is a need for us, especially outside Manila, to and all disputes except those which are pertaining to
learn about arbitration. It has benefited my career personally construction. How do you know who the arbitrators are? If
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you google PDRCI, you’d see that there are arbitrators that A: No. If we read carefully the PDRCI rules, even the CIAC
are accredited and they are trained. For you to be trained, rules, there are 2 kinds of arbitral bodies.
there’s a training requirement. For you to be accredited, 1. The Arbitration Panel composed of three individuals
there’s an experience requirement. The experience 2. Sole Arbitrator where there is only one person.
requirement is five (5) arbitrations. If you represent a party
in 5 arbitrations, you can apply as an accredited arbitrator of Q: How do you know if it's going to be 3 or 1?
the PDRCI. OTOH, CIAC has a weird rule. Other than the A: Go back to your agreement. If your agreement is silent, it
number of arbitrations that you have to go through, you also is the PDRCI that decides depending on the complexity of
have to be at least 40 years old. your case whether it should be a 3-man panel or sole
arbitrator. Later on, you will know how to decide whether it's
Let’s go back to PDRCI. Because the requirement of PDRCI is a complex case or not because I will teach you how to
5 arbitrations, you would think that it’s probably easy to determine the filing fee of an arbitral panel.
reach 5 arbitrations in the course of your career. But ask
yourselves, how many civil cases have you heard and know, Let’s say that we have created a panel. The panel has agreed
probably 10 or 20, if you just think about it, the things to be to sit over a case.
discussed in class are civil law cases.
Q: Since I’ve mentioned earlier that an arbitral panel
How many criminal cases do you know. Probably hundreds is usually more efficient or arbitration in general is
over the course of your law school career, assuming that more efficient, what’s our proof of that?
you’ve read during that time. But how many arbitration cases A: When you sit in court, you realize that there are probably
have you read. Probably 3 because I was assigned 3. It 10, 20 cases set in one day. But an arbitral panel will only
speaks of how rare arbitration cases are. If you reach the 5 have one case. That’s a rule. That case is just your case.
arbitration limit or threshold suddenly you are allowed to be They don’t handle anything else. Which is why it’s very fast
accredited as a PDRCI arbitrator. and the deadlines for arbitration are in hours. The arbitral
tribunal will issue a ruling or an order ordering you to file or
There are probably more than a hundred accredited respond in 24 hours, 48 hours, etc.
arbitrators of PDRCI but we don’t know any of them, at least
I didn’t know any of them when I was studying law. But Let me backtrack a little bit. When I say PDRCI, I mean
when I became a lawyer and started doing arbitration, I the institution that provides the service. However, TN, that
realized that a lot of these people are the same people that I the institution is separate from the panel. When I say
know are good in the industry. Just because you are an separate from the panel, it means that judgements or
accredited arbitrator does not mean that people will get you. hearings are not conducted by the PDRCI but by the panel
which was accredited by the PDRCI. These people, the
Q: What do I mean by that? arbitrators, are not employees. They simply are people in the
A: The jurisdiction of PDRCI is consensual. If you don’t legal community whom we trust and who have the necessary
want to be part of the arbitration then don’t sign the capacity and experience to undertake an arbitration and we
arbitration agreement. But once you agree to arbitrate, the accredited them as arbitrators. But they go on with their
next thing you have to agree on is who will be our normal lives, like for example, Hector de Leon, usually it’s
arbitrators. In short, because of the degree of consent that senior partners of big law firms: ACCRA, Romulo, Sycip. The
we grant to parties in arbitration, it is not only the jurisdiction senior partners get hired or get appointed in arbitration,
of the arbitration that we grant but also we agree on who will some of them will toss their lives for 3 or 6 months, some of
be the arbitrators. them will not. Anyway, because there is only one case that
an arbitral panel handles, the case is really fast and there is a
Q: How do we do it? deadline in the PDRCI and CIAC. That deadline varies from 6
A: We go back to the contract. The contract will tell you how. months to 1 year. When I say deadline, it means that if it’s
But in the absence of an agreement on how to appoint over 6 months or 1 year as the case may be, sometimes
arbitrators, the consensus is one party appoints one, the there is a ground to invalidate the decision.
other party appoints the other, and two arbitrators will
appoint the 3rd one which will be the chair. Q: Who are the judges (arbitrators)?
A: I said they are senior partners of big law firms but there is
Q: So that begs the question, do you mean to say that no requirement that you be a lawyer. In my experience, more
arbitration is always judged by 3 people called an than 50% of the arbitrators I have met are non-lawyers.
arbitral panel?
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Q: Why is that the case? A: It’s possible that when you enter into a contract with your
A: That is the case because arbitration is an exercise of the counterparty, you need not even know what arbitration was.
experts. When you are the party and you appoint someone Suddenly, you took an arbitration class in USC, and you
as an arbitrator, you make sure that that arbitrator is realize that this is probably a more efficient way of solving
competent. I’m not saying that the courts are not competent. the dispute. Your counterparty files a case in the RTC and
It’s just the courts are courts of general jurisdiction. Because then you tell your counterparty, this case has been pending
they are courts of general jurisdiction, they can’t choose for 5 years and nothing’s happened.
whether to solve a maritime dispute, construction dispute or
insurance dispute. Q: Judges are just retiring, cases are just being
re-raffled, etc. Why don’t we just go to arbitration?
But in arbitration, you know the background of the So both parties agreed to go to arbitration. And just
arbitrators and you can choose accordingly. In my experience abandon the RTC case. Is that possible?
in CIAC, the arbitrators are engineers, architects. There is A: Of course. Because arbitration is fundamentally
this one arbitration case that I attended when I was starting consensual. You simply file a joint motion in court to refer the
out maybe 2 years ago, I attended a construction arbitration. parties to arbitrate. The court will say, well and good. I have
There was no lawyer. Counsels are not required to be one less case so I refer these parties to arbitration to settle
lawyers. You just have to be good at what you do. That was their dispute. Which is why when you file a notice of
really a shocker for me when I experienced that everybody arbitration, sometimes you don’t attach a prior agreement
around me were engineers, architects and I was the only but there is a subsequent agreement to arbitrate.
lawyer. For some reason, probably they just assumed that I
was an engineer because they were talking to me in The other party who receives the NOA will file a Response to
engineering terms. I just have to pretend. the Notice. When you think of NOA, you don’t think about a
Complaint. A NOA simply notifies you that an arbitration is
The point is, you can just see how good your colleagues are going to be initiated and on these grounds. Arguments will
in arbitration because they know what they are talking about. not be there.
Unlike lawyers, like me, who pretend to know. When you go
to court, everybody pretends to know. The truth is when you Let’s compare that with initiating a Complaint under the 1997
go to arbitration, these people actually know. That is why we Rules of Civil Procedure, as amended in 2019:
focus more on the essence or technicality of the dispute
more than the technicality of procedure. These things, they
Rules on Civil Procedure Arbitration
just browse through them, ignore them because they go to
the crooks of the controversy. In initiating the complaints, The initiatory pleading
all the Judicial Affidavits which is the NOA does not
Q: How do you actually initiate an arbitration? must be attached. require you to attach any
A: Otherwise, if you go the evidence other than the
rules on pretrial, you must evidence that there is an
make the proper arbitration.
1. FILE A NOTICE OF ARBITRATION (NOA) reservation and ground why
that evidence, whether
that’s documentary or
If you google NOA for CIAC, you will see the format. You file testimonial, was not
a NOA, it is basically a document, sometimes it is a letter, attached in the pleading.
sometimes a long document. It is really up to you.
Q: Are there requirements for what it should indicate? 2. PAYMENT OF FILING FEES
A: In PDRCI, you will see the requirements. And the
requirements will be: Once you file a NOA, the PDRCI will determine how much
(1) name of the parties you will have to pay as filing fees.
(2) attach the basis of the arbitration
This is where the caveat comes in or disclaimer because
Q: When you say basis that would be whether it’s an arbitration sounds too good to be true. It is fast, handled by
arbitration agreement or subsequent agreement to experts, less corruption, you don’t even need to be lawyers.
arbitrate. What do I mean by subsequent agreement Maybe it is because the amount of filing fee is incredibly big.
to arbitrate? Very recently, we filed this case, it’s on-going so I cannot tell
Page 7
you the details. The client paid a filing fee of about 100M. facts.” You stipulate facts both in civil and criminal cases. It’s
You never hear that in trial courts. But the claim is also pretty the same in arbitration. You stipulate on facts.
big, I think the claim was around 32B. Notwithstanding that,
those who go to arbitration are actually the ones who can Q: What is the essence of stipulation of facts?
pay. I’ve never seen a person go to arbitration. It’s always A: The purpose of trial is to determine the facts in any
corporations. dispute, whether civil, criminal or arbitration. The purpose of
hearing or trial is to determine facts and once facts have
This is because you pay for the PDRCI for their time, you pay been ascertained, the court’s duty is to apply the law. If
for the arbitrators who are supposedly big shots and in during the pre-trial and/or the case management conference,
arbitration, the winner takes all. If you lose, you pay for in case of arbitration, we have agreed on certain facts, then
everything: your lawyers time, time of the arbitrators, time of there will be no need to present evidence pertaining to those
the lawyers of the other party, you pay for all the cost of facts. Because it becomes judicial admission and judicial
arbitration. Which is why, really the biggest caveat, there is a admission is the strongest admission in court.
separation, a financial wall between the efficiency of justice
and those who need it the most. After the proposal for stipulation of facts, parties in
arbitration will be asked to determine the evidence that they
Those people whose disputes should be settled by experts, intend to present, the witnesses they intend to present and
they can’t do that because arbitration is just out of touch. the schedule. Because there is a limitation of 6 months to 1
That's probably the reason why we are not very aware of year to resolve the conflict.
arbitration when we are outside of Manila because the big
cases are there. But what I realized when the pandemic hit is
5. TERMS OF REFERENCE
that suddenly there is a flow of lawyers outside of Manila
that are participating. Prior to the pandemic, both PDRCI and
CIAC require that you must be on site, either in Makati or This details what happened in the case management
BGC. But when the pandemic hit, in my experience, there conference. Sometimes there is a draft terms of reference
were lawyers from Zamboanga, Bacolod, I was in Cebu at that the tribunal will prepare on the basis of the NOA and
that time. response to the NOA.
Suddenly, this industry opened up to everyone and they Q: Who does that?
realized that there are so many good lawyers outside of A: It is the tribunal, they are paid a lot, we pay them per
Manila, which has always been the case. What I’m saying is, hour. I think some experts are paid maybe 15K or 20K per
maybe in your generation, I’m not really that old, in our hour because you can hire foreign arbitrators to sit. And
generation, it will be commonplace and I hope it becomes usually that’s a stipulation especially in cases where the party
commonplace because courts should just be the place for is the government on one side and a foreign corporation on
those people who can’t afford arbitration. The more people the other. There is always a stipulation that there must be a
go to arbitration, the lesser the cost will probably be. foreigner although that foreigner must not be from the same
nationality of that foreign corporation.
3. RESPONSE TO NOA That aside, after the terms of reference have been executed,
signed by the parties, the term of reference becomes that
The other party who receives the NOA will thereafter file a binding document where all the decisions and actions of the
response to the notice. tribunal will be based upon. What do I mean by this? In civil
and criminal cases, the ability of the courts to impose
judgment is based on what BP 129 tells them or what special
4. CASE MANAGEMENT CONFERENCE
law or RPC grants them. They can’t impose beyond the
measure allowed by law. Its grave abuse of discretion and it
This is like a pre-trial. can be reversed by Rule 45 or 65 as the case may be.
Remember in courts, jurisdiction is conferred by law.
Q: Here, we discuss things like pre-trial. What do we
discuss in pre-trial? But in arbitration, its purely consensual, jurisdiction to decide
A: If it is a civil procedure, there must be a pre-trial brief. and what can be decided is also agreed by the parties on the
Let’s assume you go to court even if there is a pre-trial brief, basis of the prayer in the Notice of Arbitration.
you will still orally do it. “Your Honor, this is our stipulation of
Page 8
Example: Three years ago, we had this case where there Here is when the complaint will be filed. After the ToR, the
was a violation of the Terms of Reference. Let's assume for a first real pleading diha pa mugawas and that is the
moment that our clients are BMW franchises in Cebu, Manila Statement of Claim. This would indicate the evidence, the
and Davao.. BMW Philippines does not own the franchise, flow etc. If you read the PDRCI Rules, the statement of claim
simply, it is an intermediary between BMW in Germany and would indicate the evidence and flows. If your notice of
franchisee in the Philippines. So these BMW entities in the arbitration is just about 5 pages, your statement of claim
Philippines supply and order cars from BMW and then give it must be around 200. You put everything there.
to the franchisees here in the Philippines. BMW Philippines is
prohibited from having its own franchise and because of this, You put all your evidence in your Statement of Claim. The
BMW Phils imposes thresholds or quotas every year, let's say other party will submit his Statement of Defense. Thereafter,
P300M every year… like your normal civil procedure, you can file a Statement of
Reply and Rejoinder.
So our client is BMW Philippines, and let’s say there is a
branch in BMW Cebu and let's say the BMW Cebu was not In arbitration, filing of reply needs no actionable document
able to meet the quota and in the second year, there was a from the Answer. You just agreed previously during a case
program adopting Formula 1 themes to increase sales. management conference. You just reserve and the other
Because of this marketing, all branches over the world want party cannot say that “provided there is an actionable
a change and make it appear to have F1 style. So in BMW document.”
Cebu, they spent P28M. This is the second year of them not
meeting their quota. The same for the 3rd year and under
7. HEARINGS
the contract, failure to meet quota in 3 years terminates the
franchise.
Once the pleadings are filed, the next step is to conduct
So what happened? BMW Philippines terminated and hearings. Hearings in arbitration are very interesting. The
naturally, the BMW Cebu filed an arbitration case claiming norm is big speeches. Opening and Closing Statements like
damages for P600M loss of profits. We went to arbitration what we do in a normal setting. There's an opening
and in the Terms of Reference, only the P600M claims for statement for two hours, presentation etc. So you show what
damages were placed and no other claims from costs, you know about the case. The tribunal of course will keep
attorney’s fees and other damages. No. Just loss of profits. interrupting and ask about the case, you refer them to
Ultimately, after 4 months, the tribunal said there’s no basis evidence
to grant P600M but there is a basis to issue an award for
P28M on the ground of deceit since you are allowed to Sometimes there are witnesses, especially if there are factual
renovate knowing fully well that after one more year, they predicates not agreed upon. Of course there is cross
will be terminated. examination too, but unlike in Court where all parties are
hyped. In arbitration, you have to be respectful and in fact,
So what was the response of the client? BMW Manila was no objections are allowed unless there are clear violation of
fine. But the lawyers said there’s a ground to vacate the the rules.
award.. So we filed with the RTC to vacate the award since
there was no basis because what was asked was only the Q: Why is the conduct so different?
P600M in damages, and nothing more. RTC said it was A: Because we presuppose that the experts we have
correct. appointed are actually experts so we grant them a higher
level of respect. Unlike in court we don’t know the expertise
Note: Limitation of the arbitration tribunal is set in stone. of the judges. We grant the arbitrators the level of discretion
There was a Terms of Reference, and this term of reference without need of being emotional nor highlighting one point,
cannot be violated. we grant them discretion to know and understand the case
before them.
Let’s go back, a TOR was issued and signed by the parties,
then that shall be the law that governs the entire arbitration. Once the other party appoints the arbitrator, you can contest.
One ground is competence. Integrity is one ground too.
Basically, grounds for voluntary and compulsory inhibition
6. PLEADINGS would be the same, except the competence can be an issue.
Page 9
the merits. This is an interesting play. A very exceptional

8. DECISION AND AWARDS
situation when it comes to CIAC.
Q: Let's say hearings are done. What happens next? Arbitration Rules
This is what happens in CIAC and PDRCI varies. Why? Almost the same rules as we use outside. We have Filipino
A: CIAC are made by old lawyers of the Philippines. In CIAC, lawyers appearing everyday in different parts of the countries
the Rules require that a formal offer of evidence be done. because they represent clients in arbitration proceedings.
Parties must offer the evidence after presenting the last
witness. This is really it. You must formally offer. In the PH, there are two arbitration institutions. So there’s a
really strong arbitration culture in other countries. This is the
In Civil Procedure and Criminal Procedure, evidence game between New York and London. But really it works.
presented in court need not be offered. Literally, if you tell The culture has grown exponentially as we see more clients
the court during pretrial that you’ll present Exhibit A and you in the Philippines taking that step to arbitration.
realized Exhibit A is not good, you have the choice not to
offer it in evidence. IOW, abandon it altogether. You are free The Efficiency of Arbitration
to include or exclude what you have presented during trial. Let's say you file a civil case in court. The tendency is for
In short, you are not bound. Only those offered evidence. Of multiple interlocutory orders to be issued. When I say
course, except testimonial evidence. Because testimonies are multiple interlocutory orders, then there are multiple
offered at the time the witness takes the stand. So you can remedies. Let's say specific performance for damages.
not disregard your witnesses.
Q: What is the interlocutory order that may be
Going back to arbitration, in CIAC arbitration, what do you contested?
expect when someone offers evidence? Somebody files an A: It's the preliminary injunction. If you file a civil case with
objection. Exclusionary Rules applied when the offer was damages, there’s a prayer for Writ of Preliminary Injunction.
made. The other party will be given like 10 days to file his So what if the RTC does not agree with your WPI. Of course,
comment. Tendency, mag dugay. plaintiff files Motion for Reconsideration and he goes to the
Court of Appeals to ask to reverse the WPI order of the RTC.
Usually, exclusionary rules prior to 2019 Rules of Procedure, In the meantime with the CA, the plaintiff will also ask to
photocopies are considered Secondary Evidence. But it's a suspend the RTC proceedings. This is really the tendency.
different story in arbitration since arbitrators don't mind. We And that’s just one interlocutory order. Let's say the case
give due deference to the arbitrators, unless there’s really an proceeds with the CA and for one reason or another without
issue of forgery. They don't really mind the fact that it's a ordering the RTC to suspend. During the RTC case, a
photocopy. particular document was asked by the plaintiff to be
produced but court said there was no need so a subpoena
Again, formal offer is required only in CIAC. was denied.
After closing the hearings, in PDRCI, they just require you to Q: What does the plaintiff do again?
submit a memorandum. There’s just a misstep in CIAC since A: Go to CA and question the subpoena. RTC knows every
a formal offer is there, lol. After submission of memoranda, a action it does has consequences.
decision comes after.
In Arbitration, I’m not saying there is no Rule 65. Now, in
Decisions of arbitrators are always final. No more Motion for Rule 65, the rules require that there should be no “speedy”
Reconsideration. But of course, you can have the award remedy on the ordinary course of law. Speedy palang pilde
vacated with the RTC on limited grounds. You cannot ask the naka. Arbitration is so fast. R65 is like two years. But the
RTC to vacate the award by contesting the merits. Usually, its reason that I’m not saying that 65 is not a remedy is because
issue of jurisdiction and due process… Although, under the of the Constitution. The Supreme Court, while always
Rules on PDRCI, very strict. No contesting the merits. respecting the arbitral decision, I feel however, we cannot
prevent the supreme court from recognizing the case under
Q: However, it's different with CIAC, why? Rule 65 for it will be against the Constitution. The
A: Because judgments of the CIAC can be reviewed with the Constitution says so.
Court of Appeals under Rule 43. So fact and law can be
reviewed. The merits can be reviewed. So it allows the CA to CONCEPT OF ARBITRATION AND ITS BINDING
review the records of the case and thereafter determine on EFFECT
Page 10
Atty: Yeah so KCAB - well the proceedings in KCAB was only

Korea Technologies v. Lerma instituted on July 1, it’s possible that KCAB would not have been
GR No. 153581 | 7 January 2008 able to grant the relief which was - don't dismantle it. Because
once they dismantle it, it will be harder for the parties to
The Plaintiff here is Korea Technologies (KOGIES, for short). The negotiate or go back or perform their obligation. What is boeing
other party is Pacific Steel. So KOGIES is a corporation engaged in asked here is performance, which is why is it a complaint for
the supply and installation of a manufacturing plant of ang LPG specific performance. If you dismantle it, there is nothing to
cylinder while Pacific Steel is a domestic corporation which perform. Alternatively, we’ve learned in civil code, if you cannot
entered into a contract with KOGIES to buy the plant itself. Pacific ask for specific performance, you ask for rescission with damages
Steel had an agreement/contract with KOGIES where KOGIES in either case. That’s what we learned in Art 1169, if I am not
undertook to ship and install LPG cylinders plants in Carmona mistaken. So here, they wanted to specifically perform. If that will
Cavite. be dismantled, there is no chance to perform.
The contract of the two parties contained a clause referring to Class, our understanding of provisional remedies beginning with
arbitration which states that in all disputes, arbitration should be Rule 57 is that it is applied in court proceedings. There’s always a
done in korea in accordance with arbitration rules in the question. If you arbitrate, are there provisional remedies? The
commercial arbitration board in korea. It also stipulated there that answer is yes because if you look deeply into the rules of
the award rendered by the arbitration tribunal in Korea shall be arbitration - IRR of the ADR act (RA 9285) - permits interim relief
final and binding. by way of either the special adr rules which was subsequently
created by the Supreme Court or interim relief under the Rules of
So, Pacific Steel already paid part of the contract which amounted Court. Why do you think that is? Because you can only bring
to $1,240,000. arbitration action against individuals which are bound by the
arbitration agreement. So in multiple scenarios, it is possible that
Atty: Just so we can simplify the discussion - so after korea tech the interim relief you are asking for made against those who are
signed the document with Pacific steel for the construction of the not bound by the arbitration. Which is why the IRR permits an
LPG cylinder manufacturing plant in Carmona, Cavite. The parties avenue under the Rules of Court. That is the new lawyer’s
executed another contract. So there’s an amendment, and that understanding.
amendment contained a clause for arbitration. Let’s go directly to
June 1998 where Pacific Steel said it’s canceling the contract. But if you ask the old arbitrators, they will say - there was one
time a question was asked during the opening testimony and the
Pacific steel unilaterally rescinded the contract stating there that partner in our firm was explaining “When we were drafting the
KOGIES supplied not the right quantity and low quality that they ADR rules'' and explained that it was just history where it was a
stipulated in the contract. But KOGIES also initiated arbitration lull moment where there was really no special rules. So when the
and commenced a civil case stating that Pacific Steel violated the IRR was drafted, it was thought that the RTC or the Supreme
arbitration clause. court would make rules. But for the moment, in the absence of
that, they permitted interim relief under the ROC - ProvRem.
Atty: So on June 1, 1998, wrote Korea tech saying Korea tech That’s how you see the development and you see the industry.
your products are substandard, so we’re canceling the contract,
we’re dismantling the plant. What was the action of Korea Tech So correct July 3, 1998, 3 days after the case was filed, suddenly
after that action or cancellation of contract? What did they do a WPI to prevent the dismantling. Okay what happened next?
with respect to their legal remedies? S: After, they commenced the civil action in the RTC for violating
S: They filed an arbitration before the KCAB on July 1 1998. the arbitration clause because Pacific Steel cannot unilaterally
rescind the contract without resorting to arbitration.
Atty: So just a month after the cancellation, they suddenly filed
an arbitration under the KCAB but thereafter, they also filed an Atty: Before you go on, I am interested to know how the RTC
RTC case? resolved the WPI?
S: Yes they also commenced a civil case before the RTC for S: RTC denied the WPI because it stated there that KOGIES no
violating the arbitration clause in their contract. longer had proprietary rights over the installation.
Atty: I don't think this is stated in the case but why did korea Atty: Wo RTC denied the WPI on the ground that it was already
tech also filed a civil case? Knowing that there is already an paid for, the materials were already paid for. One of the
arbitration pending, isn’t that risky - the possibility of forum proprietary rights is Jus abutendi - right to abuse. But take note,
shopping? Just your opinion. RTC granted TRO. After that, what happened next? Was the
S: I think it is so RTC would grant them TRO to enjoin the moving arbitration clause valid?
of the equipment because Pacific Steel was informing Korea tech S: Yes. The SC said that it was valid because it was not against
that they would be removing or dismantling the machineries and public policy as decided by TRC and CA.
equipment to another plant to become operational.
Atty: What’s the basis? TN class ha RTC and CA both ruled that
Page 11
the arbitration clause was invalid. What was the argument of absent that, rescission/termination must be done through
PAcific steel in saying that the arbitration clause was invalid? arbitration.
S: It said that it was null and void because it was public policy as
it ousts the jurisdiction of the RTC or the Ph courts.
KOPPEL, INC. (formerly known as KPL AIRCON,
Atty: And how did the SC resolve that issue? SC was okay with it?
INC.) v. MAKATI ROTARY CLUB FOUNDATION
S: Yes. It said that it was not null and void because it is
GR 198075 | 4 September 2013
well–settled in our jurisdiction here that we should follow the
contract where it was made - lex loci contractus. So, the contract
was perfected in the Ph. so, the laws of ph should govern. In the case of Koppel, FKI was the owner of a parcel of land. FKI
decided to donate the parcel of land to Makati Rotary Club but
Atty: So, TN kani this is very hard to wrap your head around, if under the donation, they had to execute a lease contract as one
you're a filipino lawyer. Because the provision of the contract says of the conditions of the donation. So, by virtue of the donation,
that the decision of the KCAB is final and executory. But we have they executed a contract for 25 years under the first lease
to TN that when you speak of final and executor, that only speaks contract.
of the merits of the case. There is still what we call the execution
stage. And the execution stage, you cannot avoid but bring it to Atty: Did you mean to say that FKI donated a property to Makati
court in the Ph. So, you still go to RTC for the purpose of Rotary and asked Makati Rotary if FKI can lease on that property
execution. But, for the purpose of merit, it is not contrary to that they donated? Is that what they’re saying? That’s what
public policy even if we agree that the arbitration will be done happened. I know it’s weird but that’s what happened. So, FKI
outside of the Phil. donated and then for some reason wanted to lease the same
property that they donated. Whatever reason it is, maybe there
You know why it's not against public policy? Because in the Ph, was a structure that they thought about. Obviously, it didn’t work
we have international commercial arbitration which means that otherwise, they wouldn’t be suing each other. What happened
other countries with corporate entities in the ph can, and they do, next?
arbitrate in the Ph. and on that basis, the basis of reciprocity, we S: So, when the first lease contract was about to expire, they
respect their right to sue here and they respect our right to sue decided to execute, because under the first lease contract they
there. On what basis? Earlier, I mentioned that the rules could extend or execute another lease contract, so they did for
governing arbitration in the Ph are similar to the rules governing another five years. FKI paid for the lease. Now, when that second
outside. At the start of the class, I mentioned that it is really a lease expired, they executed again a third lease contract. Now, in
conscious effort of the global community to make arbitration an this 3rd lease contract, a problem arose because FKI decided to
efficient way of resolving disputes. Because of that, there is what assign the rights over the property to another entity, Koppel
we call a model law, the UNCITRAL model law. This gives you, Incorporated.
literally, the model law on how rules of arbitrations should look
like. While it is guiding, you may or may not vary some provisions. Atty: Is FKI the petitioner in this case?
But, generally, if you are an arbitrator in the Ph, you can arbitrate S: No, it Koppel Inc., the one FKI assigned their rights to. Now,
in New york, london, etc, because the rules are the same. So, our that happened in 2008. Makati Rotary Club agreed to the
foreign arbitrators who decide here are the same foreign assignment or the assumption of Koppel over the lease contract.
arbitrators who decide outside. So, that’s the first issue resolved But, Koppel stopped paying because it argued that it was too
in KOGIES. excessive because the amount was already amounting to about
more than 4 million plus a year. So, it stopped paying. Naturally,
Second issue that was resolved: Can Pacific steel unilaterally Makati Rotary demanded payment. They demanded 2 demand
rescind, which is what it did, the contract? How did the SC resolve letters to Koppel but Koppel did not agree to pay. Again they
this? argued that the donation was not valid because it was a simulated
S: No, they cannot unilaterally rescind the contract because donation. I think they were referring to your question earlier, Atty,
following that there was an arbitration clause, they have to deal the anomaly where they donated it and then asked for it to be
with the contract which states the arbitration clause before rented. So, Koppel filed a civil case against Makati Rotary. Makati
rescinding the contract. They first must resort to arbitration. Rotary filed an ejectment case against Koppel because of the non
payment –
Atty: So, this is where it gets interesting because it appears that
this again is an inconsistent provision in our Civil Code. If you look Atty: What jurisdiction is this? Where did they file this?
at our Civil Code, 1191, reciprocal obligations gives us a reciprocal S: METC in Paranaque. Now, METC decided in favor of petitioner
right to rescind. Correct? But, if you look at the ruling in Pacific Koppel. However, METC did not dismiss the ejectment cases
Steel, which is consistently upheld by the SC, if there is an because Koppel invoked arbitrations. One of the defenses of
arbitration clause, and you want to rescind, you cannot just do it Koppel was that there should be arbitration, they shouldn't have
unilaterally. You go to arbitration and ask the arbitrators to rescind filed yet an ejectment case. METC did not decide on that ground,
it for you.So TN of that. You cannot just terminate the contract METC declared that the contract was nullity. So, Koppel did not
unless there is a termination clause in the contract itself. But, have to pay for the lease. In the RTC, because Makati Rotary
appealed –
Page 12
valid arbitration agreement in the first place. It sounds

Atty: So, the argument of Rotary in the METC was “Hey, the strange because you might think that there must be a
prevailing jurisdiction is that you cannot just kick me out here. valid arbitration agreement before an arbitration panel
There’s an arbitration agreement. Therefore, we should respect it. can be created, but no. There is a stage in arbitration
If you want to remove me from the property, we follow the called the preliminary jurisdictional stage. We
arbitration agreement. You file for arbitration.” That’s the defense separate the jurisdictional stage from the merit stage.
of Koppel. But prescinding from what we learned earlier that In the jurisdictional stage, the duty of the arbitrator
courts have jurisdiction to basically do whatever they want, the is simply to determine whether they have jurisdiction
MeTC really did not consider that argument to be valid. MeTC said and whether they have a valid arbitration agreement.
that it was dismissing the case against Koppel, not because it was Sometimes it is combined. But if it is not combined,
brilliant, but because the court thinks that the 2005 lease contract nothing is preventing arbitrators from taking cognizance
was invalid. Furthermore, there is a defect in the demand. MeTC of the case and at the same time say, that there is no
did not even consider the argument of Koppel with respect to valid arbitration agreement. That is not wrong.
arbitration, but fundamentally, the case of Makati Rotary was
problematic, so it was dismissed. Atty: So what is the issue here that reached the SC?
S: The issue is validity of the lease contract and at the same time
As we've learned, in civil procedure or SCAs, after the ejectment the invocation of the arbitration clause.
case has been denied, you elevate to RTC.
The SC said that yes the arbitration clause can be invoked in this
Atty: What happened there? case because the issue between the two parties is covered by the
S: The RTC reversed the METC decision. RTC said that Petitioner arbitration clause because it is a conflict arising from any of the
Koppel cannot invoke arbitration and at the same time impugn the terms and conditions of the contract.But the SC stated several
validity of the Deed of Donation. The RTC said that there was a challenges in this case that was raised by the parties and the
discrepancy there. So you cannot do that. RTC said that even lower courts and they tried to answer all of it. The SC said that
assuming that the METC can render a decision that the case could the lower courts were all wrong and that the arbitration clause is
be subject to arbitration, the RTC said Koppel did not make a applicable here.
formal application, which is called a request in the Rules, a
request to subject it to arbitration There was a case that was raised as an issue that the Court or I
guess Koppel used which stated that you cannot impugn the
Atty: This is very critical when you practice arbitration. According contract and apply the arbitration clause. The SC said that the
to RTC, two things: case was misapplied because in that case the SC decided with a
(1) You cannot impugn the validity of the 2005 contract limitation, it did not categorically say that every time you invoke
while at the same time arguing that there is an the arbitration clause you cannot impugn the validity of a
arbitration clause. It sounds simple and logical because contract. The SC said there was a limitation there because of the
RTC was saying that you cannot ask for a remedy from mining law, whatsoever.
a contract you are asking the RTC to be declared as null
and void. Essentially, the arbitration clause is embedded Atty: I have a question. You are correct in saying that there is an
in the contract. This is not discussed in the case but it is issue about whether there is an applicable arbitration clause and
not correct. Because there is a concept of separability we have already learned that the validity or invalidity should be
in arbitration, which means regardless of the incorrect decided by the arbitral panel. But knowing that there is an
provision in the contract [tn: a contract containing an apparent flaw in the decision-making of the METC, RTC
arbitration clause is called in arbitration parlance as a and CA, did the SC say all the proceedings are invalid?
“container agreement”, which tells you how contracts How did the SC resolve this?
are treated in arbitration], if the container is S: The SC said that you have to remand the case back to the
fundamentally invalid, we don’t invalidate the content METC. The SC said that we have to stick with arbitration, give
which is the arbitration clause. That’s how RTC should importance to arbitration and return to the arbitration clause so
have viewed it. that we can make sense of the arbitration laws.
(2) RTC said that if they really wanted to impugn, why Atty: I understand. Thank you. Let me make a further discussion
didn’t they apply in the MeTC. Again, that’s wrong here. The SC said go back to the METC because we have to
because the validity or invalidity of either the container respect RA 9285 which is the ADR Act.
contract or the arbitration clause is up to the arbitration
panel to decide. What does this mean? When there
is an invalid contract, either as an entire container Now this is what I want you to remember in the
contract or a part of it such as the arbitration Koppel v Makati Rotary: there is a case in Civil PRocedure
agreement, it is the arbitration panel that decides. They that says that jurisdiction is non-waivable, you cannot waive
have the ability to determine, not just the extent of it. But failure to waive it according to Estipona v Lobrigo,
whether they have jurisdiction but whether there is a within a reasonable amount of time the SC will not take a
step back.
Page 13
A: Because this is not conferred by law, take note. Since it’s

Q: In Estipona v Lobrigo took 15 years, the SC said it an agreement between two parties, parties are at liberty to
was a waiver of jurisdiction. Is there such a thing in waive.
arbitration? Can we waive arbitration once we have
entered into a contract? Q: And what did we learn about waiver in Civil Law?
A: The straight answer is yes and that is when we ignore A: Waiver can be done expressly or tacitly. Failure to invoke it
it. There is an arbitration clause and someone filed a case within reasonable time is a tacit waiver.
before the RTC and you just responded to it as if there is no
arbitration agreement. Judgment was issued by the RTC and
BASES CONVERSION DEVELOPMENT AUTHORITY v.
in the CA you questioned, raised that there is an arbitration
DMCI PROJECT DEVELOPERS, GR 173137, and
agreement.
NORTH LUZON RAILWAYS CORPORATION v. DMCI
PROJECT DEVELOPERS
Q: Will the CA reverse on the basis of the fact that
GR 173170 | 11 January 2016
there is an arbitration agreement?
A: No, because it is waivable.
Atty: The principle of this case: The arbitration clause of a
document or contract may extend to subsequent documents
Now you know the general principle of waiver which was executed for the same purpose. Nominees of a party to and
not discussed in Koppel. If there is an arbitration clause, beneficiaries of a contract containing an arbitration clause may
which was not discussed in Koppel, you have two periods become parties to a proceeding initiated based on that arbitration
to invoke: clause.
(1) Prior to pre-trial. It means that any of the parties
So class I would like you to always consider that the extension or
to the arbitration agreement can invoke the
the applicability of the contract is not the ruling here. It is the
arbitration prior to pre-trial and the court has no
extension of the arbitration clause because the provision of the
option but to refer the parties to arbitration. arbitration clause has a separability benefit which means that the
(2) After pre-trial. Parties may be referred to entire container contract may be declared as invalid but the
arbitration, because there is an arbitration arbitration clause which will bind the parties may extend even to
agreement, if both parties will agree to be referred those who are not signatories.
to arbitration.
Let me explain. When you initiate an arbitration, the subject
matter of the arbitration may be the invalidity of the contract and
Section 24, RA 9825 (ADR Act)
because the subject matter is the invalidity of the contract it
SECTION 24. Referral to Arbitration. — A court before which appears to be circuitous if you use the dispute mechanism in the
an action is brought in a matter which is the subject matter of an contract and say that I will file an arbitration because that is
arbitration agreement shall, if at least one party so requests not indicted in the contract then some smart-mouthed lawyer would
later than the pre-trial conference, or upon the request of both
say that “well if you are arguing for invalidity then why are you
parties thereafter, refer the parties to arbitration unless it finds
that the arbitration agreement is null and void, inoperative or invoking the arbitration clause which is contained in the contract
incapable of being performed. itself.
Doesn't the invalidity of the contract extend to the invalidity of the

If you go back to the Koppel case, there was an invocation arbitration clause?
in the Answer. If the invocation was in the Answer, it was
done before pre-trial because there is no pre-trial when the We have to remember that the dispute mechanism by way of
issues have not been married yet. It will only be married if arbitration from the container contract and whenever there is a
declaration of invalidity of the container contrat it does not carry
there is a responsive pleading such as the answer. Because
with it the invalidity of the arbitration clause.
the issue of the arbitration clause was invoked in the Answer,
the METC should have suspended the case and referred it to What are the facts of the case?
arbitration. So that is how you actually invoke arbitration. S: Relevant to this case it is important to mention that there was
a joint agreement by the BCDA along with other domestic and
Q: On the other hand if you fail to invoke it after foreign corporations in order to construct and develop a railroad
pre-trial, you cannot invoke it unilaterally. Prior to project from Manila to Clark.
pre-trial you can but after that both parties must
agree. There will be a waiver in arbitration. Why is There is an undertaking by the BCDA to incorporate a new entity
called Northrail. When this joint venture was executed later on ,
there a waiver?
the BCDA invited some other investors
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Atty: Sorry, let us just clarify. So BCDA entered into a JVA with a 1995. Because there is already a Special Purpose Vehicle (SPV)
corporation and other foreign entities. What corporation is this? they invited some investors. BCDA and PNR realized that we can
S: The Philippine National Railways (PNR) invite other investors now that we have an SPV. One of the
investors was DMCI. If you are DMCI, you don’t use DMCI to
Atty: So the PNR. Under the JVA who is obligated to establish the invest because it will expose the corporation. So when they
Northrail? amended the JVA, they included DMCI, DMCI said “I am
going to participate, and/or my nominee”. So DMCI was
S: The BCDA also thinking of creating a SPV. So what was the SPV that
DMCI created?
Atty: Okay so BCDA will cooperate with PNR but it is not PNR S: The DMCI Project Developers Incorporation
that will create Northrail but the BCDA. And why would you create
Northrail? Atty:...which is not really DMCI is it? So it is DMCI-PDI. Now
what the JVA intended to do was to let DMCI and its nominee
S: It is for constructing, operating, managing the railroad system DMCI-PDI to invest 20% and that was 300 Million.
in the JVA.
I’m sure you know that here the investment was by way of
Atty: Just a side note class, whenever there is a JVA between the increasing the Authorized Capital Stock of Northrail. When you
government and another entity, GOCCs and another entity, they increase the ACS there must be subscribers. So along with the
don’t undertake to construct, operate or do the spirit of increase, the 20%, supposedly the subscriptions were 300 Million
the JVA because that will violate… There is a concept of because they were thinking, “of course this is already my
ring-fencing in corporate law. investment. We increased the ACS to allow me to enter 300
Million, 20%”. What happened next?
Ring-fencing is if there is an investment from your S: DMCI- PDI deposited this 300M with Northrail and in their
corporation to the JVA, you do not use your corporation as books it was reflected as “deposits for future subscriptions”. Later
the entity that undertakes the project because you will on, Consunji informed the parties that DMCI-PDI will
use the funds of your corporation into purposes that you become its nominee for the entire undertaking.
did not originally anticipate so that exposes the assets of
the corporation to risks it did not originally anticipate. To While its request for the increase of the ACS was with the SEC,
ring-fence, to literally fence the assets of the corporation Northrail withdrew it for the reason that it wants to avail the
you invest in a JVA through another corporation and that Obuchi fund of Japan and one of the requirements to avail this
JVA creates a subsidiary and that subsidiary undertakes fund is that one has to be a 100% government-owned
the task contemplated in that JVA. corporation.
Because if it is the BCDA, it will unnecessarily expose Atty: Let me clarify that. It was the BCDA, the mother company,
itself to the debts by way of constructing and managing a that applied for the Obuchi fund and Japan said “well all of your
railroad system. investments must be 100% GOCC”. So BCDA being the mother
company but to convert the subsidiary to a hundred percent
Where is the arbitration agreement indicated? GOCC. This meant that the increase of the ACS had to be
S: On the original JVA. withdrawn because the subscription was from a private company
and obviously it was not going to be 100% GOCC. Continue
Atty: Okay continue. S: DMCI-PDI demanded from Northrail and the BCDA to return
S: Thereafter the BCDA invited several investors to the 300M deposit for the capital. However the BCDA and Northrail
participate in the project and one corporation DM Consunji rejected the request for the reason that their participation was a
Inc. When he was admitted, an amended JVA was executed, JV-partner and it was privy to all deliberations of the board,
included DM Consunji and or its nominees as a party to decision-making by the board and it had full-access to the
the JVA. financial statements. This further prompted DMCI-PDI to ask for
the opinion of the Government Corporate Counsel and in fact the
After that a Memorandum of Agreement was executed for the latter sided with DMCI.
purposes of establishing the equity and capital structure of the
Northrail corporation. It was agreed thereon that DM Consunji will Atty: Side note, why do you think the DMCI asked for the
seed 300 Million as for the capitalization therein. However it is opinion of the OGCC? Why not OSG?
said that this 300 Million was a future subscription of the Northrail S: I think the OGCC is the agency responsible to act as counsel
shares of stock. for the affairs of all GOCCs. OSG is responsible for government
instrumentalities whereas the OGCC handles the government
Atty: One moment, let's be clear with the timeline. When the corporations
contract or the JVA was signed it was sometime in June 1995 and
because they contemplated the creation of Northrail, Northrail Atty: That’s a good answer. When we are in law school we
was registered with the SEC sometime thereafter in August 22, always know that OSG is the law firm, but in practice you will
Page 15
of course, one way the SC will say, the intention was to bind
learn that the statutory counsel of the GOCCs if not all, most of
them, is actually the OGCC. and that was the ruling. But if you were to write a separate /
dissenting opinion, you could simply argue: well, Northrail is
So there is a distinction between the corporate function of the a separate corporate entity. Every corporation is a
State by way of the GOCCs represented by the OGCC instead of separate corporate entity from their principal
the OSG. You will probably be shocked that you will be against the company, shareholders, directors. So the intention of
government and it’s not the OSG. Who initiated arbitration here? the principal company that created a subsidiary should not be
S: DMCI-PDI by way of filling a petition to compel arbitration
reflective on what the shareholders, directors, officers of
before the RTC. And when they filed for a case subsequently, the
Northrail may decide to do. So that could be another angle,
BCDA and Northrail filed for a Motion to Dismiss citing that
DMCI-PDI is not entitled to enforce the arbitration clause because but obviously the SC did not go with that. So I’d just like you
it was not a party to the JVA which contained the arbitration to take note that that’s happening.
clause.However, the RTC sided with DMCI saying that the
arbitration clause in the original JVA should likewise cover all the Atty: I am yet to see a case that reversed the decision
subsequent documents which includes the amended JVA where of the arbitrator. And why do you think that is?
DMCI-BDI is nominated as a nominee and the subsequent S: arbitration is speedy, it unclogs the courts’ docket and that
memorandum of agreement, because all these 3 documents way it would be easier for parties to resolve their disputes, it
actually form one contract which is to form and finance Northrail.
would be faster if the state were to appreciate ADR.
Because of this denial of the RTC, this prompted the Bases
Conversion to file for a petition for review on certiorari under rule Atty: I think the SC is thinking, why would courts have the
45 directly to the SC on pure questions of law, saying that it was audacity to reverse decisions of an arbitral panel, when
an error for the RTC to rule that way. Likewise, Northrail filed its arbitral panels are experts. It’s short of saying, who do you
own petition for review before the SC saying that that judgment think you are? These arbitrators are experts in their field,
should not bind Northrail considering the fact that Northrail was accredited by an international agency. PDRCI is a domestic
not a party in the JVA and the subsequent agreements. agency but it handles international commercial arbitration.
So, everyday it has international commercial arbitrators and
The issue before the SC was WON the arbitration clause
handles very complex cases. I’m not saying our judges are
should be enforced, should the petition to compel
arbitration should be given due course, and the SC said not competent, but we are talking about a group of experts
yes. They sustained the position of DMCI-BDI. Before that, the SC deciding on a matter pertaining to their expertise, which is
said, what was involved in appeal is pure questions of law, why courts have always deferred judgment because of the
because determining validity of arbitration clause in the respect that they give to arbitral tribunals.
agreement is actually a question of law because it no longer
involves prior determination as to the falsity or truthfulness of PHILIPPINES ADOPTS PRO-ARBITRATION POLICY
facts. The SC said this was a pure question of law issue. Second,
in favoring DMCI-BDI, SC said that on the basis of party
autonomy in agreeing as to where their disputes shall be Mabuhay Holdings Corporation v. Sempcorp
governed, the SC said that despite the fact that DMCI-BDI is Logistics
not a party to the JVAs, however, it is actually a party for GR No. 212734 | 5 December 2019
the reason that it was the nominee of Consungi and it is
to be noted that in the amended JVA, the party included In this case, petitioner Mabuhay and infrastructure development
therein is DM Consunji and or its nominee. are both duly organized corporations here in the Philippines. They
incorporated waterjets shipping corporation engaged in the
Atty: Despite the fact that Northrail was not signatory of venture of carrying passengers by inter island fast ferry, they also
the original contract, the intention of the parties was incorporated waterjet in Netherlands but a shareholding
really to make Northrail as the implementing corporation percentage of 70% and 30% for mabuhay and infrastructure
that will execute the intention of the parties. There is no development respectively.
other interpretation there.
Later, they entered into a shareholder’s agreement with Semcorp.
Semcorp is a corporation that is incorporated in Singapore, they
I’d like to warn you, I have yet to read a case where the
had a view to expand the waterjet shipping here in the Phils. So
principle in Northrail is applicable to ordinary civil actions. I
Semcorp, respondent in this case, decided to invest in said
don’t know if it will be applicable. As I mentioned yesterday, corporations and as a result of this, the shareholdings of Mabuhay
there is an apparent conflict with the civil code provision that and infrastructure development were reduced. Pursuant to their
says obligations shall be binding only upon parties and their agreement, Mabuhay and infrastructure development voluntarily
successors. In this case, if you interpret it closely, it looks like agreed to jointly guarantee that Semcorp received a guaranteed
you are binding an entity that is not part of the contract. And return of around $900,000 at the end of the 24th month following
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the full disbursement of semcorp’s equity investment. They also Then let’s compare with how Semcorp argued. So under the NY
further agreed in the arbitration clause that the Philippine laws convention, what are the grounds to oppose?
govern and that disputes other than intra corporate controversies S: Under the NY convention, the ground to oppose an
shall be settled in accordance to rules in arbitration with the ICC enforcement of an arbitral award is if the party that furnishes to
or the international chamber of commerce and it shall be done by the competent authority shows proof that firstly, that the parties
1 arbitrator with expertise in the matter, and appointed in are under some incapacity or that the agreement is not valid.
accordance with the ICC rules. Secondly, that the other party was not given proper notice.
Thirdly, if the award deals with a difference not contemplated by
So after Semcorp was able to fully pay the equity investment, the or not falling within the terms of the submission to the arbitration.
special audits showed that both the waterjet in the Philippines
and in the Netherlands incurred losses. So Semcorp requested for Atty: So first, the parties referred to in Art. 2 of the NY
the payment of its guaranteed return to which Mabuhay failed to convention, under the law applicable to them they are suffering
pay. Hence, the matter was brought by Semcorp to the ICC which under some incapacity and number 2, the party against whom the
rendered a favorable award to Semcorp. So in view of this award is invoked was not given proper notice, but the notice
favorable award, semcorp failed a petition of recognition for contemplated under the NY convention is notice with respect with
foreign arbitral award before the RTC Makati which was opposed the arbitrator or of the arbitration proceeding or unable to present
by mabuhay. its case. So here if you are not notified that the proceeding was
taking place, or not notified who the arbitrators were, or you were
Atty: Just to be clear, there was an arbitration proceeding but not unable to present your case, then that’s a ground to oppose the
in the Philippines, through ICC. So now you have a foreign recognition. Number 3, is that the award deals with the difference
corporation who won the award, and now they want to execute in the award not contemplated by or not falling within the
the judgment. If there’s a judgment on merits in your favor, the submission to arbitration. Now this sounds complex, but letter c
only way that you could execute that judgment is you go to the simply contemplates a situation where the judgment went beyond
state where the losing party has properties. Singapore, definitely the TOR. Remember I mentioned yesterday, jurisdiction is not
it has no properties, they had to go to the Philippines. And under conferred by law, but is decided by the parties. And the evidence
the ADR act, the only way that you could execute or make effect to that jurisdiction - the extent that the parties grant the tribunal
to the judgment in an international commercial arbitration is you is found in the TOR. If the prayer is not there, then it should not
go to the RTC for the petition of recognition of the arbitral award. be granted. So letter c, obviously, you grant beyond what the TOR
The opposite would be a petition to vacate but in this case, it’s a allows, that is a ground to oppose the recognition. What else?
petition for recognition of foreign arbitral award. What was the There are 2 more.
opposition with respect to that petition? S: The next one is the composition of the arbitral authority or the
S: Mabuhay opposed on the grounds that firstly, the composition arbitral procedure was not in accordance with the agreement and
of the arbitral authority was not in accordance with the agreement lastly, the award is not yet become binding or has been set aside
of the parties. Secondly, Mabuhay argued that the matter is an or suspended by a competent authority.
intra corporate dispute and thus, the award deals with a conflict
that does not fall within the terms of the submission and lastly, Atty: Are there any other grounds?
Mabuhay argued that the recognition or enforcement of the award S: Yes, recognition of an arbitral award may also be refused if the
would be contrary to the public policy of the Philippines. competent authority in the country for recognition and
enforcement is sought, finds that the subject matter of the
Atty: you know just by reading / listening to the arguments you difference is not capable of settlement by arbitration, or if the
already know they are going to lose. Remember the Korea Tech recognition or enforcement of the award would be contrary to
we even won there. When it was KCAB. Here, it’s just in public policy of that country.
Singapore. One of the parties is even a Filipino corporation. So
you know by virtue of that jurisprudence, they are going to lose. Atty: First, when you hear the word difference, you’re not talking
So how did the SC reject that argument? about mathematical difference. Difference literally means the
S: The SC basically said that Mabuhay failed to establish any dispute between the parties. And the second matter, the
ground for refusing enforcement and recognition of the foreign recognition of the award would be contrary to public policy of the
arbitral award. Firstly, with the argument that the arbitral country. You studied conflict of laws, there the general rule is that
authority was not constituted in accordance with the arbitration if it is valid in another country, then we recognize it in the
agreement, the SC said that the agreement provides that the Philippines by virtue of a petition of recognition of foreign
arbitrator with expertise in the matter at issue shall be in judgment. But in multiple cases the SC ruled that if it will be
accordance with the ICC rules. Mabuhay argued that the fundamentally against public policy, even if you’re able to prove
agreement said that the governing law should be Philippine law, the foreign judgment in accordance with the rules of court, the SC
therefore, the expert was not an expert because he did not will not recognize the applicability of that foreign judgment. Take
possess any educational degree or training in Philippine law. note of that. What else? There is one more in the ADR act. Under
the ADR act, sec.45, are there any other grounds that may be
Atty: I think that begs the question that if there is a petition for entertained by the court?
recognition, what then are the grounds so that we can oppose?
Page 17
S: The special ADR rules reiterated the exact same grounds so policy or contrary to public policy, it would mean that it is injurious
the list of the grounds are exclusive. to the public or it is against the public good or it is inconsistent
with policy and good morals.
Atty: That's correct. Section 45 says, only on those grounds, the
five grounds that we discussed, those are the grounds to reject a Atty: if you look at the SC decision here, SC said, the NY
foreign arbitral award and the last sentence of sec.45 states any convention that allows the recognition of foreign arbitral awards
other ground raised shall be disregarded by the RTC. So what would interpret public policy arguments extremely narrowly. So
does this tell us? Again, this highlights the respect that we grant there’s an extreme and narrow interpretation of what falls under
to arbitral decisions because there is no ground on merit. Have public policy exceptions. SC said an example of narrow approach
you noticed? Even if the law adopted by the parties is Philippine “where the enforcement of the award would violate the forum
law and a foregin arbitral body decides on the arbitration, when state’s most basic notions of morality and justice. So if it would be
you reach the RTC, the RTC has no jurisdiction to rule on the impossible for the forum state to enforce the award without
merit. To clarify that, when you have a contract, the dispute abandoning the very fundamentals on which that forum state is
mechanism clause may be international commercial arbitration, based, then it would not be sufficient to rule on public policy
let’s say Singapore SIAC - Singapore International Arbitral… but exceptions.” So whatever that means, but you get the idea. If we
the applicable law may be Philippine law. So the RTC might say, enforce the judgment, do we abandon the fundamentals, morality
the foreign arbitral body incorrectly applied Philippine law. They of the state? Probably not, because they are simply talking about
can’t do that. That is not one of the grounds, misappreciation of corporate moves without abandoning the morality of the state, so
law, facts, evidence - not one of the grounds. obviously the public policy exception does not lie.
S: With regard to the first argument on the propriety of the

arbitral authority, the SC further explained that under the Special Camp John Hay Development Corporation v.
ADR Rules, a challenge to the appointment of an arbitrator may
Charter Chemical and Coating Corporation
only be raised in court when the appointing authority fails or
GR No. 198849 | 7 August 2019
refuses to act on the challenge within such applicable period. In
this case however, Mabuhay was able to challenge the
In this case, Camp John Hay entered into a contractor’s
appointment but the ICC rejected the same. As such, the SC shall
agreement with Charter Chemical for the exterior and interior
no longer entertain any challenge to the appointment to the
painting of Camp John Hay Manor in Baguio. The agreement
arbitrator disguised as a ground for refusing enforcement of an
states that the total amount of the contract price would include
award.
two units in Camp John Hay Manor, the agreement was entered in
2001 and in 2003, Charter Chemical finished the painting services
Atty: Let's go to the last argument that the award would be
so they entered into a contract to sell as part of terms of payment
contrary to public policy.
in exchange for the payment of painting services, two units will be
S: Mabuhay argued that it entered into a JV which is akin to a
transferred to Charter Chemical. So they entered into a contract
particular partnership with Semcorp. Hence, if Mabuhay will pay
to sell for the transfer of the two units. However, Camp John Hay
the guaranteed return, it shall be a violation of the civil code as it
failed to deliver the units. This prompted Charter Chemical to file
shields Semcorp from sharing in the losses of the partnership. It
a request for arbitration with CIAC. The CIAC ruled in favor of
further argued that the imposition of the 12% annual interest to
Charter Chemical for the monetary value of the two units plus
the US Dollar amount would be contrary to Philippine law and
attorney’s fees. Aggrieved, Camp John Hay filed a petition for
jurisprudence, hence, the enforcement of the arbitral award would
review to CA under rule 43, alleging that the CIAC has no
be contrary to public policy in the Philippines. The SC held that
jurisdiction over the case since the arbitration clause in the
mabuhay’s contention is without merit because the JV entered
contractor’s agreement was superseded or modified.
between the parties were pursued under the JV Corporation’s
waterjet shipping corporation and the one in Netherlands. So by
Atty: Why Rule 43?
choosing to adopt a corporate entity as a medium to pursue the
S: Since it was provided in the CIAC Rules that judgment tof
JV enterprise, the parties to the JV are bound by corporate law
CIAC , if there are any parties not awarded in the CIAC can file
principles under which the entity must operate. Thus, the
Petition for Review under Rule 43 in the rules itself.
co-venturers can take full advantage of the principle of limited
liability that is available in the corporate vehicle.
Atty: That's correct. Also CIAC is a quasi-judicial agency. That’s
why Rule 43. Continue.
Atty: You know whenever you think about a public policy
argument, there should be a threshold. What does it mean when
Student: so they filed a petition for review to CA under rule 43,
there is a violation of public policy? I also teach conflict of law and
alleging that CA has no jurisdiction since the arbitration clause in
there’s always that argument of public policy. So how do you
the Contractor’s Agreement was superseded by a different dispute
know that there is a breach of public policy?
resolution in the Contract to Sell and that instead, the court
S: The SC explained in this case, there’s really no exact definition
should fix a period to deliver the units.
of public policy so it based their findings on the past
jurisprudence. So to be able to say that it is a violation of public
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In this case, CA ruled in favor of Charter Chemical, stating that Rather, the parties simply needed to have a contract that would
the Contract to Sell is merely a preparatory contract which facilitate the payment.
facilitated the transfer of units to Character Chemical, and the
Contractor's agreement is still the main agreement or covenant I keep repeating the word payment, why do you do that?
between the parties. And that since Camp John Hay was already
in delay, since it was supposed to be in 2006 that the construction Because under Section 4 of the CIAC rules, it states that if
of the manor to be finished and they still failed to deliver the units there is a dispute with respect to payment and the default
so it affirmed the decision of the ciac granting monetary value of the employer/ contractor, that will be under the CIAC
equivalent to the two units of manor to Charter Chemical. jurisdiction.
So after that, Camp John Hay filed a Petition for Review on Even if the argument of Charter Chemical becomes correct – that
Certiorari under Rule 45 to SC, since its MR was denied by CA. there are separate instruments – they will still not win the
argument that the payment by virtue of the contract to sell, would
Atty: for the clarity of everyone listening there was an agreement not be under the jurisdiction of the CIAC because it is expressly
between Camp John Hay and the contractor and the agreement included.
was to be partly paid by units of Camp John Hay. In the original
agreement the dispute will be settled by way of arbitration in the Frankly, this case is mental calisthenics. SC does not want to
CIAC. They executed a Contract to Sell pertaining to the two invalidate the decision of CIAC because they could have easily
units. but in the Contract to Sell, there was a different dispute said that the contract to sell was agreed upon mutually and freely
mechanism, which was settlement in court. There appears to be by the parties and therefore there was either a novation of a
inconsistency. specific part of an original contract or a new contract entered into.
But they did not say that. It is what it is.
When an arbitration case was filed, the other party is now saying
“well, the contract to sell which now adopts a different mode of
settlement has superseded our original agreement to settle the Let’s skip the LM Power case.
dispute.” That’s the lis mota of this case. How did the SC resolve
that? Let me discuss this very briefly – let’s go to ADR Acts
S: The Supreme Court cited section 4 of the CIA Law, which Adoption of the UNCITRAL Model Law. Ah, wait! Overview of
stated that the CIAC has the exclusive and original jurisdiction International Commercial Arbitration (ICA) first.
over construction disputes when the parties have an arbitration
agreement or submitted to voluntary arbitration.
OVERVIEW OF INTERNATIONAL COMMERCIAL
In this case, since Camp John Hay and Charter Chemicals entered ARBITRATION
into a Contractor’s Agreement, which stated that any dispute will
be referred to CIAC, it automatically vested jurisdiction to CIAC
over the construction dispute.
Q: How do you know that there is an international
commercial arbitration? How do you know that it's
And since the Contract to sell is a mere preparatory contract to domestic arbitration?
transfer the units, the subject of the Contract to sell is payment or A: It is domestic arbitration if it is not international
breach or default of payment, which is still under the jurisdiction commercial arbitration.
of the CIAC.
Q: What is international arbitration?
Atty: Good attempt! SC was saying that contract to sell did not
A: We refer to the UNCITRAL Model Law, particularly Article
supersede the original contract because there’s no inconsistency.
1 tells us the scrope.
How come there’s no inconsistency when the dispute mechanisms
are obviously different? Q: Why do we have to look at the UNCITRAL Model
law?
SC said the Contract to Sell was merely to facilitate the mode of A: Because this is only applicable to international commercial
payment. And the mode of payment was payment by two units of arbitration. The applicability of UNCITRAL Model law depends
Camp John Hay, and therefore because it’s a mode of payment, it
whether the dispute is international in character.
is not inconsistent with the original contract of the parties, where
the obligation was drawn from.
Q: How do we know then that the dispute is
Number two – SC said, if you look at the contract to sell, actually international in character.?
it was a pro forma contract, which means the parties did not A: Refer Article 1 (3) of the UNCITRAL Model Law.
really anticipate that it will be the basis of the dispute mechanism.
UNCITRAL Model Law on International Commercial
Arbitration
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Article 1. Scope of application1 (5) This Law shall not affect any other law of this State by virtue
(1) This Law applies to international commercial2 arbitration, of which certain disputes may not be submitted to arbitration or
subject to any agreement in force between this State and any may be submitted to arbitration only according to provisions other
other State or States. than those of this Law.
(2) The provisions of this Law, except articles 8, 9, 17 H, 17 I, 17

J, 35 and 36, apply only if the place of arbitration is in the There’s a caveat here. There are multinational companies
territory of this State. who create branches or subsidiaries in the PH. And when
they do, and these subsidiaries initiate or participate in
(Article 1(2) has been amended by the Commission at its arbitration, that will not be considered as an ICA because
thirty-ninth session, in 2006) these subsidiaries basically have separate presence in the PH.
(3) An arbitration is international if:

You can see that in topic No. 2, letter (b) of the syllabus –
(a) the parties to an arbitration agreement have, at the
time of the conclusion of that agreement, their places these are the tests.
of business in different States; or [Atty: the parties to
the arbitration agreement have different places of A. ADR ACT’S ADOPTION OF THE UNCITRAL MODEL
business at the time of the conclusion of that LAW (CHAPTER 4 OF THE ADR ACT)
agreement then it is international in character] a. Rationale For Adopting The Uncitral Model Law.
(b) one of the following places is situated outside the State
in which the parties have their places of business:
Section 19, Chapter 4 (ADR Act)
(i) the place of arbitration if determined in, or
pursuant to, the arbitration agreement; [Atty: SECTION 19. Adoption of the Model Law on International
in short, even if the parties are Filipinos but Commercial Arbitration. — International commercial
the arbitration was agreed to be in example, arbitration shall be governed by the Model Law on International
Commercial Arbitration (the "Model Law") adopted by the United
SIAC Singapore, that will be an international
Nations Commission on International Trade Law on 21 June 1985
commercial arbitration] (United Nations Document A/40/17) and recommended for
(ii) any place where a substantial part of the enactment by the General Assembly in Resolution No. 40/72
obligations of the commercial relationship is approved on 11 December 1985, copy of which is hereto attached
to be performed or the place with which the as Appendix "A".
subject-matter of the dispute is most closely
connected; or [Atty: Example: most of the
time, there are many international companies The ADR act of 2004 adopted the UNCITRAL model law on
which would come to the PH and conduct International Commercial Arbitration and by operation of Article
business here, the substantial part of the 19 of the ADR Act, made the Model Law the governing statute for
international commercial arbitration.
obligation is done in PH, then that is going to
The ADR Act of 2004 has previous dealings with legal
be international in character, even if both of representation in international arbitration, confidentiality of
those entities are here performing.] arbitral proceedings, referral of court action to arbitration,
definition and function of the appointing authority, the grant of
(c) the parties have expressly agreed that the subject interim measures of protection, governing law, and the place and
matter of the arbitration agreement relates to more language of arbitration.
than one country.
In providing in the ADR Act that the commercial arbitration shall
be governed by the model law, our Congress, the Philippine
(4) For the purposes of paragraph (3) of this article: Congress, sought to achieve the objective of the United Nations
(a) if a party has more than one place of business, the General Assembly, expressed in its resolution number 4D-72 of
place of business is that which has the closest December 11 ,1985. For Member States, "to give due
relationship to the arbitration agreement; consideration to the model on international commercial
(b) if a party does not have a place of business, reference arbitration, in view of the desirability of uniformity of the law of
is to be made to his habitual residence. arbitral procedures in the specific needs of international
arbitration practice. It is stated that the model is said to reflect a
worldwide consensus on the principles and important issues of
international arbitration practice.
1
Article headings are for reference purposes only and are not to be used for purposes of
interpretation.
2
The term “commercial” should be given a wide interpretation so as to cover matters b. Model Law to Apply as Lex Specialis.
arising from all relationships of a commercial nature, whether contractual or not.
Relationships of a commercial nature include, but are not limited to, the following
transactions: any trade transaction for the supply or exchange of goods or services; XVI 1985 UNCITRAL Yearbook 104, 106;
distribution agreement; commercial representation or agency; factoring; leasing;
construction of works; consulting; engineering; licensing; investment; financing; banking; Secretary-General Report captioned Analytical
insurance; exploitation agreement or concession; joint venture and other forms of industrial
or business cooperation; carriage of goods or passengers by air, sea, rail or road.
Commentary of Various States.
Page 20
Example: The general rule pertaining to crimes are found in

Once the Model Law is enacted in State X, "this Law applies" as
lex specialis, Le. to the exclusion of all other pertinent provisions the RPC. But if there is a special law on the matter, then you
of non-treaty law, whether contained, for example, in a code of apply it. specific prevails over the general. That’s how
civil procedure or in a separate law on arbitration. This priority, we interpret it in the PH.
while not expressly stated in the Model Law, follows from the
legislative intent to establish a special regime for international
commercial arbitration. In ICA, the way ICA is interpreted will be considered as a
special regime and when you say special regime, what
It should be noted (and possibly should be expressed in article 1)
that the Model Law prevails over other provisions only in respect
happens? there is an inconsistency between that regime and
of those subject-matters and questions covered by the Model Law. what is applicable in the PH? (Frankly, that’s why I indicated
Therefore, other provisions of national law remain applicable if Parties in an Arbitration)
they deal with issues which, though relevant to international
commercial arbitration, have been left outside the Model Law
(e.g. capacity of parties to conclude arbitration agreement, impact Parties in an Arbitration, I hope you read the case, there
of State immunity, consolidation of arbitral proceedings, appears to be a Doctrine of Group of Companies.
competence of arbitral tribunal to adapt contracts, contractual
relations between arbitrators and parties or arbitration bodies,
fixing of fees and requests for deposits, security for fees or costs, This doctrine appears to tell us that if one party participates
period of time for enforcement of arbitral award) in an arbitration por a contract containing an arbitration
clause, suddenly there are other companies that are
considered in one group to have participated in that
Once the Model Law is enacted in State X, “this Law applies” as arbitration. That is the specific interpretation of the Group of
lex specialis, i.e. to the exclusion of all other pertinent provisions
Companies Doctrine in ICA.
of non-treaty law, whether contained, for example, in a code of
civil procedure or in a separate law on arbitration. This priority,
while not expressly stated in the Model Law, follows from the Q: But is there such a thing in the PH?
legislative intent to establish a special regime for international A: The direct answer is THERE IS NONE, because in the PH,
commercial arbitration.
parties to a contract will be those who signed the contract, or
Take note that it is so, only in respect of matters covered by the their heirs, or their assigns or successors-in-interest.
law. In other words, there are matters which are not covered by
the model law. The Model Law prevails over other provisions only
in respect of those subject-matters and questions covered by the
But apparently not only are you bound by an arbitration
Model Law. Therefore, other provisions of national law remain clause by virtue of what we discussed but the rights and the
applicable if they deal with issues which, though relevant to obligations in the contract containing an arbitration clause
international commercial arbitration, have been left outside the
suddenly bind other entities that did not sign. Why is that?
Model Law (e.g. capacity of parties to conclude arbitration
agreement, impact of State immunity, consolidation of arbitral Because the interpretation of some other jurisdiction is that
proceedings, competence of arbitral tribunal to adapt contracts, way! whether that applies to us or not is yet to be found.
contractual relations between arbitrators and parties or arbitration
bodies, fixing of fees and requests for deposits, security for fees
or costs, period of time for enforcement of arbitral award). We have a pending case now exactly invoking this.
Substantial changes in the model law may be viewed by other B. PHILIPPINES ADOPTED A DUAL SYSTEM OF
countries as not contributing to the establishment of a unified
ARBITRATION.
legal framework
See Section 19, ADR Act; See Section 32, ADR Act.
I explained the rationale of adopting the Model law – that
there should be uniformity and consistency in our ARTICLE 19. Determination of rules of procedure
(1) Subject to the provisions of this Law, the parties are
interpretation of the ICA. free to agree on the procedure to be followed by the
arbitral tribunal in conducting the proceedings.
Q: What is the meaning of “lex specialis”? (2) Failing such agreement, the arbitral tribunal may,
subject to the provisions of this Law, conduct the
A: This is where we take off when we discuss parties in an arbitration in such manner as it considers appropriate.
arbitration. The power conferred upon the arbitral tribunal includes
the power to determine the admissibility, relevance,
materiality and weight of any evidence.
When we speak of lex specialis, it means that out of the
general principle of law applicable in one jurisdiction, there is ARTICLE 32. Termination of proceedings
a special set of rules that parties respect, and that’s how it (1) The arbitral proceedings are terminated by the final
becomes lex specialis. award or by an order of the arbitral tribunal in
accordance with paragraph (2) of this article.
(2) The arbitral tribunal shall issue an order for the
termination of the arbitral proceedings when:
Page 21
(a) the claimant withdraws his claim, unless the specified in article 6 only if:
respondent objects thereto and the arbitral (a) the party making the application furnishes
tribunal recognizes a legitimate interest on his proof that:
part in obtaining a final settlement of the (i) a party to the arbitration
dispute; agreement referred to in article 7
(b) the parties agree on the termination of the was under some incapacity; or the
proceedings; said agreement is not valid under
(c) the arbitral tribunal finds that the the law to which the parties have
continuation of the proceedings has for any subjected it or, failing any indication
other reason become unnecessary or thereon, under the law of this
impossible. State; or
(3) The mandate of the arbitral tribunal terminates with (ii) the party making the application
termination of the arbitral proceedings, subject to the was not given proper notice of the
provisions of articles 33 and 34(4). appointment of an arbitrator or of
the arbitral proceedings or was
otherwise unable to present his
case; or
ARTICLE 33. Correction and interpretation of award;
(iii) the award deals with a dispute not
additional award
contemplated by or not falling
(1) Within thirty days of receipt of the award, unless
within the terms of the submission
another period of time has been agreed upon by the
to arbitration, or contains decisions
parties:
on matters beyond the scope of the
(a) a party, with notice to the other party, may
submission to arbitration, provided
request the arbitral tribunal to correct in the
that, if the decisions on matters
award any errors in computation, any clerical
submitted to arbitration can be
or typographical errors or any errors of similar
separated from those not so
nature;
submitted, only that part of the
(b) if so agreed by the parties, a party, with
award which contains decisions on
notice to the other party, may request the
matters not submitted to arbitration
arbitral tribunal to give an interpretation of a
may be set aside; or
specific point or part of the award.
(iv) the composition of the arbitral
tribunal or the arbitral procedure
If the arbitral tribunal considers the request to be
was not in accordance with the
justified, it shall make the correction or give the
agreement of the parties, unless
interpretation within thirty days of receipt of the
such agreement was in conflict with
request. The interpretation shall form part of the award.
a provision of this Law from which
the parties cannot derogate, or,
(2) The arbitral tribunal may correct any error of the type
failing such agreement, was not in
referred to in paragraph (1)(a) of this article on its own
accordance with this Law; or
initiative within thirty days of the date of the award.
(b) the court finds that:
(3) Unless otherwise agreed by the parties, a party, with
(i) the subject-matter of the dispute is
notice to the other party, may request, within thirty
not capable of settlement by
days of receipt of the award, the arbitral tribunal to
arbitration under the law of this
make an additional award as to claims presented in the
State; or
arbitral proceedings but omitted from the award. If the
(ii) the award is in conflict with the
arbitral tribunal considers the request to be justified, it
public policy of this State.
shall make the additional award within sixty days.
(3) An application for setting aside may not be made after
(4) The arbitral tribunal may extend, if necessary, the
three months have elapsed from the date on which the
period of time within which it shall make a correction,
party making that application had received the award
interpretation or an additional award under paragraph
or, if a request had been made under article 33, from
(1) or (3) of this article.
the date on which that request had been disposed of by
the arbitral tribunal.
(5) The provisions of article 31 shall apply to a correction or
interpretation of the award or to an additional award.
(4) 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
CHAPTER VII. RECOURSE AGAINST AWARD time determined by it in order to give the arbitral
tribunal an opportunity to resume the arbitral
ARTICLE 34. Application for setting aside as exclusive proceedings or to take such other action as in the
recourse against arbitral award arbitral tribunal's opinion will eliminate the grounds for
(1) Recourse to a court against an arbitral award may be setting aside.
made only by an application for setting aside in
accordance with paragraphs (2) and (3) of this article.
C. PARTIES IN AN ARBITRATION.
(2) An arbitral award may be set aside by the court
Page 22
ICC 4131/1982 award in Dow Chemical France v. But here, we don’t say they're the same entities. They are
ISOVER Saint Gobain (France) (1983) 110 J Droit different entities. That’s the rule in the PH. But with the
Intl 899, in Derains, (1984) IX YBk Comm Arb 131 interpretation of the Model Law, they bite the bullet and ICC said
that the reality is that they share in the same economic reality –
There were two contracts in issue. The first was initially entered the losses and profits are the same. We simply create different
by Dow Chemical Venezuela and its subsidiary company of Dow entities for the purpose of ease of doing business.
Chemical France. And for the second contract, it was originally
entered into by Dow Chemical Europe, who subsequently If you're from France and Venezuela and you want to do business
assigned their rights to Dow Chemical EG, which is the subsidiary in different parts of the world, you create a subsidiary or branch.
in Switzerland. It’s not like there’s a different company that does it. It's the same
company that is clothed with the authority to do business in that
In this case, there was a problem in the distribution of the Daw state.
Chemicals that was called Roof mate(??) because this product
turned out to be harmful.
Sulamerica Cia Nacional de Suguros v. Enesa
Atty: Let me clarify those parties – the original parties, Dow Engenharia, [2012] EWCA Civ 638, Case No.
Chemical Venezuela had a contract with this French company A3/2012/0249
called French Company Isolation (????), this French company
assigned the rights to this contract to Isover. At the same time, This case involved Enesa Engenharia S.A., and other insured (the
Dow Chemical, also assigned to Dow Chemical EG. And Dow insured). Enesa procured two insurance policies from Sulamerica
Chemical eg is a subsidiary of a mother company called Dow and Sulamerica reinsured that policy with other reinsurers.
Chemical Company.
Atty: Who ruled? What court ruled this case?
Ultimately, it was Isover on one hand and Dow Chemical EG on S: The London court. The commercial court of London.
the other because they were ultimately assignees.
So the policy covered various risks arising in connection with the
What’s the substance of the contract? construction of a hydroelectric generating plant in Brazil known as
S: So after Isover sued Dow Chemicals for the liabilities incurred the Jirau Greenfield Hydro Project. Now, certain incidents
from the harmful effects of the product, Dow Chemical invoked occurred in March 2011 which led Enesa, the insured to file a
the arbitration clause in their contracts and took the case before claim from the insurer. However, Sulamerica said that
the CICC. However in the CICC, Isover rejected their jurisdiction, unfortunately those risks were excepted from the policy and there
claiming that Daw Chemicals did not have standing because they was a material alteration which they were not notified of. They
were not signatories to the original contracts. denied the claim.
This was resolved that the parent company was considered This prompted Enesa to give a notice of arbitration in Brazil.
parties to the contracts because – There was a stipulation that the governing law of the contract
would exclusively be that of brazil. And then there is another
Atty: two issues! (1) Does the tribunal have competence to condition - should the parties fail to agree as to the amount to be
render an award between Dow Chemical France and Dow paid through mediation, the dispute will be referred to arbitration
Chemical and Isover? (2) Assuming that the tribunal has no in London, England.
jurisdiction with respect to Dow Chemical Frances, Dow Chemical
Co., should it reject the claim of Dow Chemical EG and Dow Enesa initiated proceedings in Brazil. The court issued an
Chemical Europe on the ground that they have no interest? injunction restraining the insurers from resorting to arbitration. In
S: it was held that the parent company had standing because the response, the insurers made an application without notice to the
parent companies and the subsidiaries to be one economic entity. Commercial Court in England seeking an injunction to restrain the
They thus pierced the corporate veil. And in justifying that insured from pursuing the proceedings in Brazil, which the court
conclusion, it was taken into account that the role of the parent granted.
company in the conclusion, performance and termination of the
contract was so big that they could be considered as essentially a They sought also to enjoin Enesa and the insurer from pursuing
party to the contract and just one entity. the proceedings in Brazil. And the main argument of the insurer
was that English law is applicable because they have validly
Atty: Considering the distinct juridical entity of each of its initiated proceedings in the court under the provision 12 of the
members, a group of companies constitutes one economic reality. policy.
This is so profound.
Another reason was that the insured failed to go through
Even though parent companies create subsidiaries, in reality, mediation contemplated by one of the conditions of the policy.
those are ruled by the same directors and the same shareholders. Another argument that they put forward is that since the contract
was governed by the laws of Brazil they were not bound to
Page 23
using Philippine law then how do we apply the principle of

observe that Because such conditions may only be invoked with
their consent. the insured argued that the proper place for the group of company. Because in the Philippines if you interpret
arbitration agreement in brazil is in brazil, they merely offered a an arbitration clause in accordance with our civil law then
three pronged argument: brazil is the express choice of law that you don’t have the principle of group of companies. That is
they have made in the policy and they also cited the close obviously conflicting on the other hand, if you don’t have the
commercial connection of Brazil to the contract because the group of company doctrine which is an interpretation of other
insurance policy was in the Portuguese language and the place of international commercial arbitration and the purpose of the
performance was in Brazil as well and the third is that they said
model law in ICA is to create a uniform interpretation of
that the mediation is contemplated to be under the laws of brazil
procedure.
as well.
The lower court held that the arbitration agreement was to be Q: Does that mean that lex specialis will not be
governed by English law because the judge mainly said that the applied anymore? Do you see the confusion?
seat of arbitration determines the curial law and the supervising A: It is confusing because in one hand you want to create
jurisdiction of the court of the country where the seat is located. uniform procedure in ICA all over the world but on the other
And it is from this ruling that the insured is appealing from so the hand we can’t seem to avoid the choice of law problem and
issue here is: what is the applicable law for the arbitration
frankly for me, the only way to avoid it is to have a ruling
agreement is it the brazil law which governs the substantive part
that says the law that governs to the container contract
of the contract or the English law which is a separate place they
have agreed to under the arbitration agreement and in this case should not be the law that governs the arbitration process
the London court said that the applicable law for the arbitration unless chosen by the parties. I think that should be the most
agreement is governed by English law. They cited common law reasonable interpretation.
doctrines and conflict of law principles and under those principles
as a general rule, the place that governs the substantive part of The next question is, if there is no agreement between
the contract is also the place which governs the place for the parties as to the law applicable with respect to the arbitration
arbitration agreement. However, that is without exceptions. The
clause then what is it? (chika about the arbitration activities.
place may defer from the national law as by way of exception and
Changing some facts of his actual case)
also even the procedures that will be observed in those arbitration
proceedings can also be different from the laws that govern the If there is a question what law applies in the container
main contract itself. And the main principle in this case Is that in contract in the arbitration clause. We always say it is the
determining the proper law of the place for the arbitration same, unless the parties chose otherwise, if not, it is the
agreement we should look at. First, the express choice of law of same.
the parties. Second, the implied choice of law. Third, the place
that has the closest and most real connection between the D. WHAT IS AN INTERNATIONAL COMMERCIAL
parties.
ARBITRATION (“ICA”)
Atty: How about for the procedures to be observed? How do you
know which procedure you will observe? Article 1.6, C(8), IRR of the ADR Act
S: Generally it will follow the place stipulated in the arbitration 8. International Arbitration means an arbitration where:
clause. (a) the parties to an arbitration agreement have, at the
time of the conclusion of that agreement, their places
of business in different states; or
This is a very crucial case. Because it introduces us to the
concept of, I mentioned earlier that the arbitration clause (b) one of the following places is situated outside the
Philippines in which the parties have their places of
itself is separated from the container contract. business:
(i) the place of arbitration if determined in, or
Sulamerica tells us that while they are independent, the pursuant to, the arbitration agreement;
(ii) any place where a substantial part of the
container contract is to be interpreted using a law of a obligations of the commercial relationship is
particular state, to avoid confusion, let’s say Philippines. The to be performed or the place with which the
arbitration clause in the absence of any exceptional subject matter of the dispute is most closely
connected; or
circumstance will be also interpreted by way of the Philippine
law and this causes multiple conflicts. (c) the parties have expressly agreed that the subject
matter of the arbitration agreement relates to more
Q: Why? than one country.
A: If we have a container contract that is to be interpreted For this purpose:
through the Philippine law and we follow the sulamerica (a) if a party has more than one place of business, the
principle that the arbitration clause should be interpreted place of business is that which has the closest
Page 24
relationship to the arbitration agreement; sentence of paragraph (1) the words: "having regard to the
circumstances of the arbitration, including the convenience of the
(b) if a party does not have a place of business, reference parties". It was stated in support of the proposal that the venue
is to be made to his/her habitual residence. of arbitration was of considerable practical importance and that
inclusion of the convenience of the parties as a guiding factor
Note: For convenience, familiarize yourselves with the definitions could meet the concern felt by some persons, in particular in
under Rule 2 of the IRR. developing countries, that an inconvenient location might be
imposed on them. It was noted that the concern was also felt in
a. Tests Internationality. other countries.
i. Place of Business. 179. Divergent views were expressed as to the appropriateness
Analytical Commentary, XVI 1985 UNCITRAL of the proposed wording. Under one view the additional words
Yearbook 104, 109. were unnecessary since they expressed a principle which was
already implicit in article 19 (3). Particular opposition was
expressed to the words "including the convenience of the parties".
Analytical Commentary, XVI 1985 UNCITRAL It was said to be unbalanced to mention only some circumstances
Yearbook 104, 109. to be taken into consideration by the arbitrators in determining
the place of arbitration, since other factors such as the suitability
(a) Parties' places of business in different States, subparagraph of the applicable procedural law, the availability of procedures for
(a) recognition or enforcement of awards under the 1958 New York
Convention or other multilateral or bilateral treaties or, eventually,
24. The basic criterion, laid down in subparagraph (a), is modeled whether a State had adopted the Model Law might be of at least
on the test of internationality adopted in article 1 (1) of the United equal importance. It was also noted that article 16 (1) of the
Nations Convention on Contracts for the International Sale of UNCITRAL Arbitration Rules provided that in determining the
Goods (Vienna, 1980. 23 hereinafter referred to as the 1980 place of arbitration the arbitrators were to have regard to the
Vienna Sales Convention). It uses as a determining factor the circumstances of the arbitration but that the convenience of the
location of the places of business of the parties to the arbitration parties was not mentioned. It was suggested that a discrepancy
agreement. Accordingly, other characteristics of a party such as its between the two texts on that point was undesirable.
nationality or place of incorporation or registration are not
determinative. 180. However, the prevailing view was that the Model Law should
refer to the convenience of the parties as a circumstance of great
25. Since a given case is international if the parties have their importance in the determination of the place of arbitration in
places of business "in different States", it is irrelevant whether any international commercial arbitration. It was understood at the
of these States is State X (i.e. the one enacting "this Law"). same time that the convenience of the parties should be
Included, thus, is any arbitration between "foreigners" (e.g. interpreted as including the above-mentioned considerations
parties with place of business in State Y and State Z) and any regarding the applicable procedural law and the recognition and
arbitration between a party in State X and a party in a foreign enforcement of awards.
State (Y). However, whether and to what extent this Law would
apply in any such international case is a different question, to be 181. The Commission adopted article 20 as so amended.
answered according to other rules on the scope of application
(discussed above, paras. 4-6). While articles 8, 9, 35 and 36,
dealing with recognition of arbitration agreements and awards by iii. Place of Performance.
the courts of State X, apply without regard to the place of
arbitration or any choice of procedural law, the remaining bulk of
provisions, dealing in particular with arbitration procedure, would See Fung Sang Trading Ltd v. Kai Sun Sea Products
apply only if the case falls within the territorial scope of
application. and Food Company, Ltd., Supreme Court of
Hongkong, CLOUT 20.
ii. Place of Arbitration. FACTS

See Article 20 of the Model Law A contract involving the sale of 5,000 tonnes of Chinese Soybean
Extraction Meal was entered into by the parties in this case, with
Fung Sang Trading (Fung Sang) as the seller and Kai Sun Sea
Art. 20, Place of Arbitration, Article Products (Kai Sun) as the buyer.
Article 20. Place of arbitration The shipment of the products were made between the December
1 to 31, 1990. The place of delivery was stated to be Dalian in
177. The text of article 20 as considered by the Commission was China. The advising bank was Hong Kong and Shanghai Bank in
as follows: "(1) The parties are free to agree on the place of Hong Kong.
arbitration. Failing such agreement, the place of arbitration shall
be determined by the arbitral tribunal. "(2) Notwithstanding the The last clause on the contract provided that should there be any
provisions ofparagraph (1) of this article, the arbitral tribunal may, dispute between the contracting parties, it shall be settled
unless otherwise agreed by the parties, meet at any place it through friendly negotiation. But if no agreement is reached, the
considers appropriate for consultation among its members, for case in dispute shall be submitted for arbitration in Hong Kong.
hearing witnesses, experts or the parties, or for inspection of
goods, other property, or documents. " Fung Sang alleged that Kai Sun failed to nominate a vessel to
make the delivery within the period and to put in place the
178. A proposal was made to add to the end of the second
Page 25
required Letter of Credit. Thus, Kai Sun should be made to pay for jurisdiction but he cannot make a binding and final decision
damages. And in August 1, 1991, Fung Sang wrote to Kai Sun
about the appointment of an arbitrator. Fung Sang pointed out As to Kai Sun’s argument that since there was no valid contract,
that the contract did not specify the number of arbitrators but thus there was no valid arbitration clause, Article 16(1) enshrines
under Article 10(2) of the Model Law it is provided that there shall the doctrine of separability. Thus the arbitration clause is
be 3 arbitrators in the absence of agreement. separable from the contract containing it so that if the contract is
repudiated and the repudiation is accepted the arbitration clause
Fung Sang’s contentions: survives the repudiation thus enabling the arbitrator to render an
Since substantial part of the obligation of the commercial award on the claim resulting from the alleged repudiation.
relationship between the parties was to be performed in China,
the case should be considered an international arbitration, to Meanwhile, there is also the concept of
which the Model Law applied. "competence-competence" which concerns the degree to which
In support of the contention that the case is an international an arbitral tribunal may rule on its own jurisdiction as defined by
arbitration, Fun Sang relies on the fact that the delivery was to the arbitration agreement. It does not imply the power of an
take place in China and that delivery is a substantial part of the arbitral tribunal to take a final and binding decision as to its
obligation. jurisdiction. It rather denotes a tribunal's power to adopt an initial
Since the Model Law is applicable, Article 10(2) provides that ruling as to its own jurisdiction.
there has to be 3 arbitrators since there was no agreement to the
contrary. However, since Kai Sun failed to appoint an arbitrator In sum, when an arbitrator is faced with a challenge to his
Article 11(3) of the Model Law comes into place. jurisdiction, he should first see whether the parties wish to seek
declaratory relief. If not, then he has 3 choices:
Kai Sun’s contentions: He may decide he has no jurisdiction and that is the end of the
The case does not involve an international arbitration but a matter unless a court subsequently takes a contrary view.
domestic one due to the fact that: (a) the payment was to be He may issue an interim award on jurisdiction and see whether it
made in Hong Kong and (b) the breach consisted of a failure by is effectively challenged before he goes on to consider the merits.
the defendants in Hong Kong to nominate a vessel and to put in He may decide jurisdiction and the merits and render an award.
place the necessary Letters of Credit.
There was no concluded contract between the parties since the Arbitrators should not pull down the shutters on the arbitral
person who signed in behalf of Kai Sun had no authority to bind process as soon as one party objects to the jurisdiction of the
the defendants. Therefore, an arbitrator did not have jurisdiction tribunal. The arbitrator can rule on the question as to whether he
to rule on whether or not there was a contract between the has jurisdiction but he cannot make a binding and final decision
parties. If there was no contract, then it follows that there was no on that issue as the matter can always be taken to court either by
arbitration clause. direct challenge or at the setting aside or enforcement stage.
ISSUES
1. Whether the case involves an international arbitration or E. COVERAGE OF THE IRR PROVISIONS ON ICA
domestic arbitration. [International]
2. Whether an arbitrator has jurisdiction to rule on the
issue of the existence of the contract between the The provisions of the IRR on international arbitration are default
parties. [Yes] rules, they are applicable only in the absence of or in default of
applicable provisions contained in:
1. An agreement, in force between the Philippines and
RULING other states; and
[1] The case involved an international arbitration to which the 2. An agreement between the parties on the applicable
Model Law applies rules.
The place where substantial part of the obligation of the

commercial relationship are to be performed is not limited to the Articles 4.1 – 4.6, IRR of the ADR Act
place where a breach occurs. While payment and nomination of
the vessel are important obligations in this kind of contract, it CHAPTER 4 INTERNATIONAL COMMERCIAL ARBITRATION
does not mean that delivery in a sale of good contract is RULE 1 - General Provisions
insignificant.
Article 4.1. Scope of Application.
Under the analytical commentary on the draft text of the Model (a) This Chapter applies to international commercial
Law, internationality is established if a substantial part of the arbitration, subject to any agreement in force between
obligation of the commercial relationship is to be performed in a the Philippines and other state or states.
State other than the one where the parties have their places of
business. (b) (b) This Chapter applies only if the place or seat of
arbitration is the Philippines and in default of any
In this case, “a substantial part of the obligation of the agreement of the parties on the applicable rules.
commercial relationship” was to be performed in a place where
the parties did not have their places of business, namely in China. (c) This Chapter shall not affect any other law of the
Thus, this case is an international arbitration to which the Model Philippines by virtue of which certain disputes may not
Law applies. be submitted to arbitration or may be submitted to
arbitration only according to provisions other than those
of the ADR Act.
[2] The arbitrator can rule on the question as to whether he has
Page 26
Article 4.2. Rules of Interpretation. arrangement to resolve their dispute.

(a) International commercial arbitration shall be governed
by the Model Law on International Commercial (d) Where a provision of this Chapter, except the Rules
Arbitration. applicable to the substance of the dispute, leaves the
parties free to determine a certain issue, such freedom
(b) In interpreting this Chapter, regard shall be had to the includes the right of the parties to authorize a third
international origin of the Model Law and to the need party, including an institution, to make that
for uniformity in its interpretation. Resort may be made determination.
to the travaux preparatoires and the Report of the
Secretary-General of the United Nations Commission on (e) Where a provision of this Chapter refers to the fact that
International Trade Law dated March 1985 entitled, the parties have agreed or that they may agree or in
“International Commercial Arbitration: Analytical any other way refers to an agreement of the parties,
Commentary on Draft Text identified by reference such agreement includes any arbitration rules referred
number A/CN.9/264”. to in that agreement.
(c) Moreover, in interpreting this Chapter, the court shall (f) Where a provision of this Chapter, other than in
have due regard to the policy of the law in favor of paragraph (a) of Article 4.25 (Default of a Party) and
arbitration and the policy of the Philippines to actively paragraphs (b) (i) of Article 4.32 (Termination of
promote party autonomy in the resolution of disputes or Proceedings), refers to a claim, it also applies to a
the freedom of the parties to make their own counter-claim, and where it refers to a defense, it also
arrangement to resolve their dispute. applies to a defense to such counter-claim.
(d) Where a provision of this Chapter, except the Rules

applicable to the substance of the dispute, leaves the
Article 4.3. Receipt of Written Communications.
parties free to determine a certain issue, such freedom
(a) Unless otherwise agreed by the parties:
includes the right of the parties to authorize a third
(i) any written communication is deemed to
party, including an institution, to make that
have been received if it is delivered to the
determination.
addressee personally or at his/her place of
business, habitual residence or mailing
(e) Where a provision of this Chapter refers to the fact that
address; if none of these can be found after
the parties have agreed or that they may agree or in
making a reasonable inquiry, a written
any other way refers to an agreement of the parties,
communication is deemed to have been
such agreement includes any arbitration rules referred
received if it is sent to the addressee’s last
to in that agreement.
known place of business, habitual residence
or mailing address by registered letter or any
(f) Where a provision of this Chapter, other than in
other means which provides a record of the
paragraph (a) of Article 4.25 (Default of a Party) and
attempt to deliver it;
paragraphs (b) (i) of Article 4.32 (Termination of
(ii) the communication is deemed to have been
Proceedings), refers to a claim, it also applies to a
received on the day it is so delivered.
counter-claim, and where it refers to a defense, it also
applies to a defense to such counter-claim.
(b) The provisions of this Article do not apply to
communications in court proceedings, which shall be
governed by the Rules of Court.
F. RULES OF INTERPRETATION
Article 4.2, IRR of the ADR Act

Article 4.4. Waiver of Right to Object. A party who knows
Article 4.2. Rules of Interpretation. that any provision of this Chapter from which the parties may
(a) International commercial arbitration shall be governed derogate or any requirement under the arbitration agreement has
by the Model Law on International Commercial not been complied with and yet proceeds with the arbitration
Arbitration. without stating the objections for such non-compliance without
undue delay or if a time limit is provided therefor, within such
(b) In interpreting this Chapter, regard shall be had to the period of time, shall be deemed to have waived the right to
international origin of the Model Law and to the need object.
for uniformity in its interpretation. Resort may be made
to the travaux preparatoires and the Report of the Article 4.5. Extent of Court Intervention. In matters
Secretary-General of the United Nations Commission on governed by this Chapter, no court shall intervene except where
International Trade Law dated March 1985 entitled, so provided in the ADR Act. Resort to Philippine courts for matters
“International Commercial Arbitration: Analytical within the scope of the ADR Act shall be governed by the Special
Commentary on Draft Text identified by reference ADR Rules.
number A/CN.9/264”.
Article 4.6. Court or Other Authority for Certain Functions
(c) Moreover, in interpreting this Chapter, the court shall of Arbitration Assistance and Supervision.
have due regard to the policy of the law in favor of (a) The functions referred to in paragraphs (c) and (d) of
arbitration and the policy of the Philippines to actively Article 4.11 (Appointment of Arbitrators) and paragraph
promote party autonomy in the resolution of disputes or (c) of Article 4.13 (Challenge Procedure) and paragraph
the freedom of the parties to make their own (a) of Article 4.14 (Failure or Impossibility to Act) shall
Page 27
be performed by the appointing authority as defined in the number of arbitrators shall be three (3).
Article 1.6 C1, unless the latter shall fail or refuse to act
within thirty (30) days from receipt of the request in Article 4.11. Appointment of Arbitrators. (a) No person shall be
which case the applicant may renew the application precluded by reason of his/her nationality from acting as an
with the court. The appointment of an arbitrator is not arbitrator, unless otherwise agreed by the parties.
subject to appeal or motion for reconsideration.
(b) The functions referred to in paragraph (c) of Article H. DUE PROCESS IN ICA
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 Article 4.18, IRR of the ADR Act
Against Arbitral Award), Article 4.35 (Recognition and
Article 4.18. Equal Treatment of Parties. The parties shall be
Enforcement), Article 4.38 (Venue and Jurisdiction),
treated with equality and each party shall be given a full
shall be performed by the appropriate Regional Trial
Court. opportunity of presenting his/her case.
(c) A Court may not refuse to grant, implement or enforce

a petition for an interim measure, including those I. HEARING AND WRITTEN PROCEEDINGS
provided for in Article 4.9 (Arbitration Agreement and
Interim Measures by Court), Article 4.11 (Appointment
Articles 4.23 and 4.24 , IRR of the ADR Act
of Arbitrators), Article 4.13 (Challenge Procedure),
Article 4.27 (Court Assistance in Taking Evidence), on Article 4.23. Statements of Claim and Defense.
the sole ground that the Petition is merely an ancillary (a) Within the period of time agreed by the parties or
relief and the principal action is pending with the determined by the arbitral tribunal, the claimant shall
arbitral tribunal. 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
Article 4.6. Court or Other Authority for Certain Functions these particulars, unless the parties have otherwise
of Arbitration Assistance and Supervision. agreed as to the required elements of such statements.
(d) The functions referred to in paragraphs (c) and (d) of The parties may submit with their statements, all
Article 4.11 (Appointment of Arbitrators) and paragraph documents they consider to be relevant or may add a
(c) of Article 4.13 (Challenge Procedure) and paragraph reference to the documents or other evidence they will
(a) of Article 4.14 (Failure or Impossibility to Act) shall submit.
be performed by the appointing authority as defined in
Article 1.6 C1, unless the latter shall fail or refuse to act (b) Unless otherwise agreed by the parties, either party
within thirty (30) days from receipt of the request in may amend or supplement his/her claim or defense
which case the applicant may renew the application during the course of the arbitral proceedings, unless the
with the court. The appointment of an arbitrator is not arbitral tribunal considers it inappropriate to allow such
subject to appeal or motion for reconsideration. amendment having regard to the delay in making it.
(e) The functions referred to in paragraph (c) of Article Article 4.24. Hearing and Written Proceedings.
4.16 (c) (Competence of Arbitral Tribunal to Rule on its (a) Subject to any contrary agreement by the parties, the
Jurisdiction), second paragraph of Article 4.34 arbitral tribunal shall decide whether to hold oral
(Application for Setting Aside an Exclusive Recourse hearings for the presentation of evidence or for oral
Against Arbitral Award), Article 4.35 (Recognition and argument, or whether the proceedings shall be
Enforcement), Article 4.38 (Venue and Jurisdiction), conducted on the basis of documents and other
shall be performed by the appropriate Regional Trial materials. However, unless the parties have agreed that
Court. no hearings shall be held, the arbitral tribunal shall hold
such hearings at an appropriate stage of the
(f) A Court may not refuse to grant, implement or enforce proceedings, if so requested by a party.
a petition for an interim measure, including those
provided for in Article 4.9 (Arbitration Agreement and (b) The parties shall be given sufficient advance notice of
Interim Measures by Court), Article 4.11 (Appointment any hearing and of any meeting of the arbitral tribunal
of Arbitrators), Article 4.13 (Challenge Procedure), for the purposes of inspection of goods, other property
Article 4.27 (Court Assistance in Taking Evidence), on or documents.
the sole ground that the Petition is merely an ancillary
relief and the principal action is pending with the (c) All statements, documents or other information supplied
arbitral tribunal. to the arbitral tribunal by one party shall be
communicated to the other party. Also, an expert report
or evidentiary document on which the arbitral tribunal
G. COMPOSITION OF ARBITRAL TRIBUNAL may rely in making its decision shall be communicated
to the parties.
Articles 4.10 and 4.11 , IRR of the ADR Act

J. COURT ASSISTANCE IN TAKING OF EVIDENCE
Article 4.10. Number of Arbitrators. The parties are free to
determine the number of arbitrators. Failing such determination,
Page 28
Article 4.27. Court Assistance in Taking Evidence. The (d) After the award is made, a copy signed by the arbitrators in
arbitral tribunal or a party with the approval of the arbitral tribunal accordance with paragraph (a) of this Article shall be delivered to
may request from a court of the Philippines assistance in taking each party.
evidence. The court may execute the request within its
competence and according to its rules on taking evidence.
Article 4.32. Termination of Proceedings.
The arbitral tribunal shall have the power to require any person to a. The arbitral proceedings are terminated by the final
attend a hearing as a witness. The arbitral tribunal shall have the award or by an order of the arbitral tribunal in
power to subpoena witnesses and documents when the relevancy accordance with paragraph (b) of this Article.
of the testimony and the materiality thereof has been b. The arbitral tribunal shall issue an order for the
demonstrated to it. The arbitral tribunal may also require the
termination of the arbitral proceedings
retirement of any witness during the testimony of any other
witness. i. The claimant withdraws his/her/its claim,
unless the respondent objects thereto and
A party may bring a petition under this Section before the court in the arbitral tribunal recognized a legitimate
accordance with the Rules of Court or the Special ADR Rules. interest on his/her/its part in obtaining a final
settlement of the dispute;
ii. The parties agree on the termination of the
K. RULES APPLICABLE TO THE SUBSTANCE OF THE
proceedings;
DISPUTE iii. The arbitral tribunal finds that the
continuation of the proceedings has for any
Article 4.28, IRR of the ADR Act other reason become unnecessary or
impossible.
Article 4.28. Rules Applicable to the Substance of Dispute.
c. The mandate of the arbitral tribunal ends with the
(a) The arbitral tribunal shall decide the dispute in
accordance with such rules of law as are chosen by the termination of the arbitral proceedings, subject to the
parties as applicable to the substance of the dispute. provisions of Articles 4.33 (Correction and
Any designation of the law or legal system of a given Interpretation of Award, Additional Award) and
state shall be construed, unless otherwise expressed, as paragraph (d) of Article 4.34 (Application for Setting
directly referring to the substantive law of that state Aside an Exclusive Recourse against Arbitral Award).
and not to its conflict of laws rules.
d. Notwithstanding the foregoing, the arbitral tribunal may,
(b) Failing any designation by the parties, the arbitral
tribunal shall apply the law determined by the conflict for special reasons, reserve in the final award or order,
of laws rules, which it considers applicable. a hearing to quantify costs and determine which party
(c) The arbitral tribunal shall decide ex aequo et bono or as shall bear the costs or the division thereof as may be
amiable compositeur only if the parties have expressly determined to be equitable. Pending determination of
authorized it to do so. this issue, the award shall not be deemed final for
(d) In all cases, the arbitral tribunal shall decide in
purposes of appeal, vacation, correction, or any
accordance with the terms of the contract and shall
take into account the usages of the trade applicable to post-award proceedings.
the transaction.
M. RECOGNITION AND ENFORCEMENT OF AWARDS

L. AWARD AND TERMINATION
Articles 4.31 and 4.32, IRR of the ADR Act
Article 4.35. Recognition and Enforcement.
Article 4.31. Form and Contents of Award. (a) The award (a) A foreign arbitral award shall be recognized as binding
shall be made in writing and shall be signed by the arbitrator or and, upon petition in writing to the Regional Trial Court,
shall be enforced subject to the provisions of this Article
arbitrators. In arbitral proceedings with more than one arbitrator,
and of Article 4.36 (Grounds for Refusing Recognition or
the signatures of the majority of all members of the arbitral Enforcement).
tribunal shall suffice, provided that the reason for any omitted
signature is stated. (b) The petition for recognition and enforcement of such
arbitral awards shall be filed with the Regional Trial
(b) The award shall state the reasons upon which it is based, Court in accordance with the Special ADR Rules.
(i) Convention Award – The New York
unless the parties have agreed that no reasons are to be given or
Convention shall govern the recognition and
the award is an award on agreed terms under paragraph (a) of enforcement of arbitral awards covered by
Article 4.20 (Place of Arbitration). said Convention.
(c) The award shall state its date and the place of arbitration as The petitioner shall establish that the country
determined in accordance with paragraph (a) of this Article. The in which the foreign arbitration award was
made is a party to the New York Convention.
award shall be deemed to have been made at that place.
(ii) Non-Convention Award – The recognition and
Page 29
enforcement of foreign arbitral awards not Article 5.1. Scope of Application.

covered by the New York Convention shall be (a) Domestic arbitration, which is not international as defined in
done in accordance with procedural rules to paragraph C8 of Article 1.6 shall continue to be governed by
be promulgated by the Supreme Court. The Republic Act No. 876, otherwise known as “The Arbitration Law”,
court may, on grounds of comity and as amended by the ADR Act. Articles 8, 10, 11, 12, 13, 14, 18 and
reciprocity, recognize and enforce a 19 and 29 to 32 of the Model Law and Sections 22 to 31 of the
non-convention award as a convention award. ADR Act are specifically applicable to domestic arbitration.
(c) The party relying on an award or applying for its In the absence of a specific applicable provision, all other rules
enforcement shall file with the Regional Trial Court the applicable to international commercial arbitration may be applied
original or duly authenticated copy of the award and in a suppletory manner to domestic arbitration.
the original arbitration agreement or a duly
authenticated copy thereof. If the award or agreement (b) This Chapter shall apply to domestic arbitration whether the
is not made in an official language of the Philippines, dispute is commercial, as defined in Section 21 of the ADR Act, or
the party shall supply a duly certified translation thereof non-commercial, by an arbitrator who is a private individual
into such language. appointed by the parties to hear and resolve their dispute by
(d) A foreign arbitral award when confirmed by a court of a rendering an award; Provided that, although a construction
foreign country, shall be recognized and enforced as a dispute may be commercial, it shall continue to be governed by
foreign arbitral award and not as a judgment of a E.O. No. 1008, s.1985 and the rules promulgated by the
foreign court. Construction Industry Arbitration Commission.
(e) AforeignarbitralawardwhenconfirmedbytheRegionalTrial
Court,shallbeenforced in the same manner as final and (c) Two or more persons or parties may submit to arbitration by
executory decisions of courts of law of the Philippines. one or more arbitrators any controversy existing between them at
the time of the submission and which may be the subject of an
(f) If the Regional Trial Court has recognized the arbitral action; or the parties to any contract may in such contract agree
award but an application for (rejection and/or) to settle by arbitration a controversy thereafter arising between
suspension of enforcement of that award is them. Such submission or contract shall be valid, enforceable and
subsequently made, the Regional Trial Court may, if it irrevocable, save upon such grounds as exist at law for the
considers the application to be proper, vacate or revocation of any contract.
suspend the decision to enforce that award and may
also, on the application of the party claiming recognition Such submission or contract may include questions arising out of
or enforcement of that award, order the other party valuations, appraisals or other controversies which may be
seeking rejection or suspension to provide appropriate collateral, incidental, precedent or subsequent to any dispute
security. between the parties.
A controversy cannot be arbitrated where one of the parties to

N. APPEAL 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
Article 4.37, IRR of the ADR Act arbitration made by the general guardian or guardian ad litem of
the infant or of the incompetent.
Article 4.37. Appeal from Court Decision on Arbitral
But where a person capable of entering into a submission or
Awards. A decision of the Regional Trial Court recognizing,
contract has knowingly entered into the same with a person
enforcing, vacating or setting aside an arbitral award may be
incapable of so doing, the objection on the ground of incapacity
appealed to the Court of Appeals in accordance with the rules of
can be taken only in behalf of the person so incapacitated.
procedure to be promulgated by the Supreme Court.
The losing party who appeals from the judgment of the court
recognizing and enforcing an arbitral award shall be required by B. DUE PROCESS IN DOMESTIC ARBITRATION.
the Court of Appeals to post a counter-bond executed in favor of
the prevailing party equal to the amount of the award in Article 5.17, IRR of the ADR Act
accordance with the Special ADR Rules.
Equal Treatment of Parties. The parties shall be treated with
Any stipulation by the parties that the arbitral tribunal’s award or equality and each party shall be given a full opportunity of
decision shall be final, and therefore not appealable, is valid. Such presenting his/her/its case.
stipulation carries with it a waiver of the right to appeal from an
arbitral award but without prejudice to judicial review by way of
certiorari under Rule 65 of the Rules of Court.
Equitable PCI Bank v. RCBC Capital
GR No. 182248 | 18 December 2008
DOMESTIC ARBITRATION
FACTS
Equitable PCI Bank and the individual shareholders of Bankard (as
A. SCOPE OF APPLICATION sellers) and RCBC (as buyers) executed a Share Purchase
Agreement (SPA) for the purchase of petitioners’ interest in
Bankard. RCBC dispensed with the conduct of due diligence audit
Article 5.1, IRR of the ADR Act on the financial status of Bankard to expedite the purchase.
Page 30
The following are some of the relevant provisions of the SPA: ISSUE
Whether or not petitioners were denied due process.
Sections 5(g) warrants that the the audited financial statements
of Bankard for the three (3) fiscal years ended December 31, RULING
1997, 1998 and 1999, and the unaudited financial statements for No.
the first quarter ended 31 March 2000, are fair and accurate, and
complete in all material respects, and have been prepared in The arbitrators afforded petitioners the opportunity to refute the
accordance with generally accepted accounting principles summaries and pieces of evidence submitted by RCBC which
consistently followed throughout the period indicated became the bases of the experts’ opinion
Section 5(h) warrants that except as disclosed in the Disclosures, To petitioners, the ICC-ICA's use of such summaries but without
and except to the extent set forth or reserved in the audited presenting the source documents violates their right to due
financial statements of Bankard as of 31 December 1999 and its process. Pressing the point, petitioners had moved, but to no
unaudited financial statements as of 31 March 2000, Bankard, as avail, for the exclusion of the said summaries. Petitioners allege
of such dates and up to 31 May 2000, had and shall have no that they had reserved the right to cross-examine the witnesses
liabilities, omissions or mistakes in its records which will have of RCBC who testified on the summaries, pending the resolution
material adverse effect on the net worth or financial condition of of their motion to exclude. But, according to them, they were
Bankard to the extent of more than One Hundred Million Pesos effectively denied the right to cross-examine RCBC's witnesses
(P100,000,000.00) in the aggregate. In the event such material when the ICCICA admitted the summaries of RCBC as evidence.
adverse effect on the net worth or financial condition of Bankard
exceeds One Hundred Million Pesos (P100,000,000.00) Petitioners’ position is bereft of merit.
Section 7 provides remedies for breaches of warranties. The essence of due process is the opportunity to be heard. What
the law prohibits is not the absence of previous notice but the
On June 2, 2000, RCBC deposited the downpayment and absolute absence thereof and the lack of opportunity to be heard.
garnered full management and control over Bankard. June 2,
2000 is also deemed the Closing Date mentioned in the SPA. The Court has also explained in Lastimoso v. Asayo that "due
process in an administrative context does not require trial type
Sometime in September 2000, RCBC created an audit team led by proceedings similar to those in courts of justice. Where an
Rubio, the Vice President for Finance, to audit Bankard’s accounts. opportunity to be heard either through oral arguments or through
Rubio concluded that the warranty found in Sec. 5(h) of the SPA pleadings is accorded, there is no denial of procedural due
was correct. On Dec. 28, 2000, RCBC paid the balance of the process."
contract price.
The pleadings reveal that RCBC granted petitioners' requests for
In a letter dated May 5, 2003, RCBC informed the petitioner that production of documents and accounting records. More so, they
it made an overpayment. RCBC claimed that there was an had more than three (3) years to prepare for their defense after
overstatement of valuation of accounts. Thus, RCBC claimed that RCBC's submission of its brief of evidence. Finally, it must be
petitioners violated their warranty under the SPA. emphasized that petitioners had the opportunity to appeal the
Partial Award to the RTC, which they in fact did. Later, petitioners
On May 12, 2004, RCBC, in accordance with the SPA, filed a even moved for the reconsideration of the denial of their appeal.
Request for Arbitration. Having been able to appeal and move for a reconsideration of the
assailed rulings, petitioners cannot claim a denial of due process.
On February 11, 2005, petitioners received RCBC's brief of
evidence and supporting documentation in accordance with the Petitioners were afforded the right to cross-examine RCBC’s
provisional timetable. In the brief of evidence, RCBC provided witnesses
summaries of the accounts of Bankard, which petitioners now As regards petitioners' claim that its right to due process was
question. The tribunal issued Procedural Order No. 2 dated violated when they were allegedly denied the right to
February 18, 2005, in which it allowed the discovery and cross-examine RCBC's witnesses, their claim is also bereft of
inspection of the documents requested by petitioners. merit.
On February 18, 2005, petitioners were furnished the documents Sec. 15 of RA 876 provides that the arbitrators shall be the sole
that they requested from RCBC. The parties also agreed to meet judge of the relevancy and materiality of the evidence offered or
again on February 23, 2005 to provide petitioners with a produced, and shall not be bound to conform to the Rules of
"walk-through" of Bankard's Statistical Analysis System and to Court pertaining to evidence.
provide petitioners with a soft copy of all of Bankard's
cardholders. RCBC complied with this request and gave The well-settled rule is that administrative agencies exercising
petitioners’ representatives the full walk-through and gave them quasi judicial powers shall not be fettered by the rigid
access to journal vouchers and other supporting documents. technicalities of procedure, albeit they are, at all times required,
to adhere to the basic concepts of fair play.
Despite this, petitioners continue to make more demands in
relation to the journal vouchers and other documents already In administrative proceedings, the essence of due process is
shown by RCBC. They continually asked for the hearing to be simply an opportunity to be heard, or an opportunity to explain
moved or postponed until the tribunal set the hearing to April 24, one's side or opportunity to seek a reconsideration of the action
2006 and refused any request to postpone or move. or ruling.
The tribunal rendered a Partial Award. Furthermore, the right is a personal one which may be waived
expressly or impliedly. Thus, where a party has had the
Page 31
opportunity to cross-examine a witness but failed to avail himself be deemed to have been received on the same date of its
of it, he necessarily forfeits the right to cross-examine and the transmittal and receipt in the mailbox (electronic inbox).
testimony given on direct examination of the witness will be
received or allowed to remain in the record.
E. Form of Arbitration Agreement.
Even further, the right to cross-examine is not an indispensable
aspect of due process.
Clearly, the right to cross-examine a witness, although a
RULE 2 - Arbitration Agreement
fundamental right of a party, may be waived. Petitioners
themselves admit having had the opportunity to cross-examine
Article 5.6. Form of Arbitration Agreement. An arbitration
RCBC's witnesses during the hearings before the tribunal, but
agreement shall be in writing. An agreement is in writing if it is
declined to do so by reserving such right at a later time. Having
contained in a document signed by the parties or in an exchange
had the opportunity to cross-examine RCBC's witnesses,
of letters, telex, telegrams or other means of telecommunication
petitioners were not denied their right to due process.
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.
C. PLACE OF ARBITRATION The reference in a contract to a document containing an
arbitration clause constitutes an arbitration agreement provided
Article 5.19, IRR of the ADR Act that the contract is in writing and the reference is such as to
make that clause part of the contract.
Article 5.19. 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 BF Corporation v. Court of Appeals
circumstances of the case, including the convenience of the GR No. 120105 |27 March 1998
parties, shall decide on a different place of arbitration.
(b) The arbitral tribunal may, unless otherwise agreed by the DOCTRINE:
parties, meet at any place it considers appropriate for consultation IRR of RA 876 provides that:
among its members, for hearing witnesses, experts or the parties, The formal requirements of an agreement to arbitrate are the
or for inspection of goods, other property or documents. following: (a) it must be in writing and (b) it must be subscribed
by the parties or their representatives. To "subscribe" means to
write underneath, as one's name; to sign at the end of a
D. DELIVERY AND RECEIPT OF [WRITTEN document. That word may sometimes be construed to mean to
COMMUNICATIONS]. give consent to or to attest.
The arbitration clause may be included in another document by

Article 5.2, IRR of the ADR Act reference to the main contract and it is irrelevant whether such
subsequent document is signed by the parties as long as it is
Article 5.2. Delivery and Receipt of Written
properly referred or “incorporated” to in the main contract which
Communications.
must be in writing and subscribed by the parties.
(a) Except as otherwise agreed by the parties, a written
FACTS:
communication from one party to the other or to the arbitrator or
Petitioner BF Corporation and respondent Shangri-la Properties,
to an arbitration institution or from the arbitrator or arbitration
Inc. (SPI) entered into an agreement whereby SPI engaged BF to
institution to the parties shall be delivered to the addressee
construct a shopping mall complex (First Agreement). While
personally, by registered mail or by courier service. Such
construction was in progress, SPI decided to expand the project
communication shall be deemed to have been received on the
by engaging the services of BF again (Second Agreement).
date it is delivered at the addressee’s address of record, place of
business, residence or last known address. The communication,
However, BF incurred a delay that SPI considered as "serious and
as appropriate, shall be delivered to each party to the arbitration
substantial." On the other hand, BF contends that the reason the
and to each arbitrator, and, in institutional arbitration, one copy to
project was delayed was because a fire broke out. Hence, SPI
the administering institution.
proposed the re-negotiation of the agreement between them
(Agreement for the Execution of Builder's Work for the EDSA Plaza
(b) During the arbitration proceedings, the arbitrator may order a
Project).
mode of delivery and a rule for receipt of written communications
different from that provided in paragraph (a) of this Article.
According to SPI, BF "failed to complete the construction works
and abandoned the project." This resulted in disagreements
(c) If a party is represented by counsel or a representative,
between the parties. Upon SPI's initiative, the parties met in an
written communications for that party shall be delivered to the
informal conference, but they failed to come to an agreement.
address of record of such counsel or representative.
So BF filed with the Regional Trial Court of Pasig a complaint for
(d) Except as the parties may agree or the arbitrator may direct
collection of the balance due under the construction agreement.
otherwise, a written communication may be delivered by
electronic mail or facsimile transmission or by such other means
SPI and its co-defendants filed a motion to suspend proceedings
that will provide a record of the sending and receipt thereof at the
instead of filing an answer, anchored on SPI’s allegation that their
recipient’s mailbox (electronic inbox). Such communication shall
contract provided for a clause requiring prior resort to arbitration.
Page 32
SPI submitted a copy of the condition of the contract containing The issue, posed before the Court of Appeals in a petition for
an arbitration clause that it failed to attach its motion to suspend certiorari is whether the Arbitration Clause does not in fact exist.
proceedings. On its face, the question is one of fact which is not proper in a
petition for certiorari.
BF opposed said motion claiming that there was no “formal
contract” between the parties although they entered into an In resolving said question of fact, the Court of Appeals interpreted
“agreement” defining their rights and obligations in undertaking the construction of the subject contract documents containing the
the project. It emphasized that the contract did not provide for Arbitration Clause in accordance with Republic Act No. 876
arbitration. It averred that granting that such a clause indeed (Arbitration Law). In effect, the issue posed before the Court of
formed part of the contract, suspension of the proceedings was Appeals was likewise a question of law. Being a question of law,
no longer proper because it is not invoked within a reasonable the private respondents rightfully invoked the special civil action
time. of certiorari.
RTC RULING: In the same vein, this Court holds that the question of the
The RTC found that the arbitration clause did exist, however it still existence of the arbitration clause in the contract between
denied motion to suspend proceedings and ruled in favor of BF. petitioner and private respondents is a legal issue that must be
This was because despite the fact there was an arbitration determined in this petition for review on certiorari.
agreement, the Conditions of Contract only contained the initials
of BF’s representative, while no signature on the part of SPI.
There were no singed documents to prove SPI’s claims thus there Yes. There is an Arbitration Agreement
is serious doubt to the validity of the arbitration clause found in The formal requirements of an agreement to arbitrate are
the Conditions of Contract therefore the following: (a) it must be in writing and (b) it must
Assuming that the arbitration clause was valid and binding, it was be subscribed by the parties or their representatives. To
too late for SPI to invoke arbitration because the demand should "subscribe" means to write underneath, as one's name; to sign at
have been made before the time of final payment except as the end of a document. That word may sometimes be construed
otherwise expressly stipulated in the contract. to mean to give consent to or to attest.
SPI filed a Motion for Reconsideration, but RTC denied the MR. The Court finds that, upon a scrutiny of the records of this case,
Hence, SPI filed a Petition for Certiorari under Rule 65 before the these requisites were complied with in the contract in question.
CA. The articles of Agreement, which incorporates all the other
contracts and agreements between the parties, was signed by
COURT OF APPEALS RULING: representatives of both parties and duly notarized. The failure of
the private respondent's representative to initial the 'Conditions of
The Court of Appeals granted the petition and annulled and set Contract' would therefore not affect compliance with the formal
aside the orders and stayed the proceedings in the lower court. requirements for arbitration agreements because that particular
portion of the covenants between the parties was included by
The Court of Appeals found that private respondents were not in reference in the Articles of Agreement.
default in invoking the provisions of the arbitration clause and that
the absence of initials of one party or his representative does not A contract need not be contained in a single writing and may be
militate against its effectivity where the main contract containing encompassed in several instruments even though every
said arbitration clause had been duly signed by the parties. instrument is not signed by the parties, since it is sufficient if the
Especially that BF categorically admitted that the document is the unsigned instruments are clearly identified or referred to and
agreement between the parties. made part of the signed instrument or instruments
BF however further contends that the order of the lower court No. The Arbitration Agreement was invoked within a
denying the motion to suspend is a resolution on the merits that reasonable time.
can be elevated to a higher court in an ordinary appeal and not by
certiorari. Timeline:
July 12: informal conference
ISSUES: July 14: BF filed a complaint
1. Whether the CA erred in issuing an extraordinary writ of August: SPI filed a motion to suspend the proceedings,
certiorari although there is a remedy of an ordinary invoking the Arbitration Agreement
appeal.
2. Whether there is indeed an Arbitration Agreement. The arbitration clause provides for a "reasonable time" within
3. Whether SPI are already in default in invoking the which the parties may avail of the relief under that clause.
Arbitration Agreement. "Reasonableness" is a relative term and the question of whether
the time within which an act has to be done is reasonable
RULING: depends on attendant circumstances.
No. The Petition for Certiorari was correctly filed. This Court finds that under the circumstances obtained in this
The general rule is that the special civil action of certiorari may case, a one-month period from the time the parties held a
not be invoked as a substitute for the remedy of appeal. However, conference on July 12, 1993 until private respondent SPI notified
where a rigid application of the rule that certiorari cannot be a petitioner that it was invoking the arbitration clause, is a
substitute for appeal will result in a manifest failure or miscarriage reasonable time. Indeed, the petitioner may not be faulted for
of justice, the provisions of the Rules of Court which are technical resorting to the court to claim what was due under the contract.
railed may be relaxed.
Page 33
In this connection, it bears stressing that the lower court has not falls under the category of international commercial arbitration.
lost its jurisdiction over the case. Section 7 of Republic Act No.
876 provides that proceedings have only been stayed. After the Case 2 - Strickland vs PA
special proceeding of arbitration has been pursued and CA suspended the proceedings in Civil Case No. 05-692, finding
completed, then the lower court may confirm the award made by that: (1) PA is an agent of EYLLP who cannot be sued by
the arbitrator. Strickland on the contract of employment between Strickland and
EYLLP/EYAPFS; and (2) even without delving into the contract of
It should be noted that in this jurisdiction, arbitration has been agency between PA and EYLLP/EYAPFS, "a comparison of the
held valid and constitutional. Even before the approval on June causes of action against EYLLP/EYAPFS and x x x PA would justify
19, 1953 of Republic Act No. 876, this Court has countenanced a suspension of the proceedings in the trial court."
the settlement of disputes through arbitration. Republic Act No.
876 was adopted to supplement the New Civil Code's provisions SC affirmed CA decision in both cases. SC ruled the arbitration
on arbitration. agreement is valid despite his repudiation of the container
contract, that their dispute falls under international commercial
arbitration. As with PA, it is EYLLP’s agent thus the arbitration
agreement applies to PA as well. Strickland's allegations in both
Dale Strickland v. Ernst and Young, LLP, / the complaint and amended complaint are undoubtedly hinged,
Punongbayan and Araullo and unavoidably linked, to his former contractual relationship with
GR No. 193782 | 1 August 2018 EYLLP to which the controversy among all the parties can be
traced.
Guide:
How PA got involved in the controversy
Dale Strickland (Strickland)
On 26 March 2002, NHMFC and PA entered into a FASA. During
Ernst & Young LLP (EYLLP)
this time, PA was a PH member of EYLLP. At around this period,
National Home Mortgage Finance Corporation (NHMFC)
Strickland was a partner of EYLLP and was seconded to EYAPFS
Punongbayan & Araullo (PA)
as Lead Due Diligence Partner and was eventually assigned to
Financial Advisory Services Agreement (FASA)
Manila as partner.
Unified Home Lending Program (UHLP)
Ernst & Young Asia Pacific Financial Solutions (EYAPFS)
EYLLP terminated its membership agreement with PA and
Strickland eventually resigned. Despite the termination of the
FACTS:
working relationship of the parties, they continued to work
Consolidated case: Case 1 - Strickland vs EYLLP and Case 2 -
together until the termination of the UHLP Project. Unfortunately,
Strickland vs PA
the new working relationship between Strickland and EYLLP
and/or EYAPFS was never finalized.
Summary
The issue stemmed from a civil case filed by Strickland against
Upon the conclusion of the UHLP Project, Strickland demanded for
EYLLP, PA and NHMFC on 02 May 2005 for collection of sum of
his equitable compensation of Php 18M. Per Strickland, the
money amounting to Php18M representing his unpaid
Php18M represents his equitable compensation for the
compensation for the professional services he rendered in the
professional services he rendered to NHMFC for the UHLP project
UHLP project.
from the time of his resignation from EYLLP/EYAPFS in July 2004
to the signing and closing ceremony in light of the mutual
The confusion arose because Strickland insisted on suing based
voluntary termination of the NHMFC Agreement as between
on his Partnership Agreement with EYLLP, which has an arbitration
NHMFC and EYLLP and/or EYAPFS which was at then represented
agreement and a choice of law provision. However, in his case vs
by PA.
EYLLP, he repudiated the Partnership Agreement - which
contained the arbitration agreement, claiming that it was not
Case Historicals
alleged and proven, and cannot be the basis of the CA’s referral to
On 27 Feb 2006, EYLLP and/or EYAPFS filed a Motion to Refer to
arbitration.
Arbitration. RTC denied EYLLP and/or EYAPFS Motion to Refer to
Arbitration and ruled that the arbitral clause is inoperative in this
At the same time, Strickland, without being a party to the FASA
jurisdiction and referral to arbitration in the US pursuant to the
between NHMFC and PA/EYLLP, insists on the continuation of his
arbitration clause is uncalled for. RTC grounded the denial on the
suit contending that his designation as "Lead Due Diligence
the reasoning that the dispute between the defendants and
Partner," forming part of the Engagement Team, entitles him to
Strickland covers domestic arbitral proceedings and cannot be
equitable compensation. CA referred his case with EYLLP to
categorized as a commercial dispute of an international character
arbitration and ordered it dropped in the civil case where both
since the dispute arose from their professional and service
EYLLP and PA are defendants. PA then asked that their case be
relationship and does not cover matters arising from a relationship
suspended while the arbitration was ongoing. However, Strickland
of a commercial nature or commercial intercourse that would
insisted the civil case with PA should not have been suspended,
qualify as commercial. Also, the agreement also has no
and should proceed independently of the arbitration between
reasonable relationship with one or more foreign states.
Strickland and EYLLP.
EYLLP and/or EYAPFS elevated to SC via Petition for Certiorari
Case 1 - Strickland vs EYLLP
where SC ruled in EYLLP and/or EYAPFS. SC ordered EYLLP
In annulling RTC’s Order, CA ruled that: (1) EYLLP substantially
and/or EYAPFS dropped from the civil case where PA is one of the
complied with Section 7, Rule 8 of the Rules of Court on setting
party defendants. Further, SC referred the dispute between EYLLP
forth actionable documents in a pleading; (2) the Partnership
and Dale Strickland to arbitration.
Agreement indeed contained a valid arbitration clause; and (3)
applying processual presumption, albeit EYLLP failed to prove the
Pursuant to the said ruling, PA filed a Motion to Suspend with
applicable foreign law, the dispute between EYLLP and Strickland
Page 34
Motion to Reset Pre-Trial Conference on the ground that any parties have their places of business (ii) x x x the place with which
settlement during the arbitration between EYLLP and Strickland the subject-matter of the dispute is most closely connected;
may cause prejudice to PA if the trial court proceedings are
continued as Strickland's cause of action against PA was merely The place of business of EYLLP is in the United States of America.
incidental to that against EYLLP. In denying PA’s Motion, RTC said x x x It is here [the Philippines] that the services for which
only EYLLP is benefited by the SC decision Since PA is not a party [Strickland] seeks remuneration were rendered.
thereto, it cannot enforce the same or find relief thereto.
For the Model Law to apply, however, the arbitration should also
PA elevated to CA alleging GAD on the part of the RTC. CA be commercial. The explanatory footnote to Article 1(1) of the
annulled the RTC Orders. Hence the current petition. Model Law explains that "[t]he term 'commercial' should be given
a wide interpretation so as to cover matters arising from all
ISSUES: [Yes/No] relationships of a commercial nature, whether contractual or not
As between Strickland and EYLLP including x x x joint venture and other forms of industrial or
● WON CA erred in referring the dispute between business co-operation x x x Thus, the meaning attached to the
Strickland and EYLLP to arbitration and ordering that term "commercial" by the Model Law is broad enough to cover a
EYLLP be dropped as defendant in Civil Case No. partnership.
05-692. [No]
● WON the dispute between Strickland and EYLLP based The following factors further militate against Strickland's
on Strickland's complaint is arbitrable. [Yes] insistence on Philippine courts to primarily adjudicate his claims of
tortious conduct, and not commercial arbitration, as stipulated in
As between Strickland and PA the Partnership Agreement
● WON CA erred when it suspended the proceedings in 1. From his complaint and amended complaint,
Civil Case No. 05-692 pending the arbitration between Strickland's causes of action against EYLLP and PA
Strickland and EYLLP. [No] hinge primarily on contract, i.e., the Partnership
● WON Strickland's causes of action against all the Agreement, and the resulting transactions and working
defendants relationship among the parties, where Strickland seeks
● are intricately intertwined such that the separate causes to be paid.
of action against PA and the other defendants cannot 2. The assignment letter of EYLLP to Strickland confirming
independently proceed from the arbitration between his assignment to Manila as partner and which
Strickland and EYLLP. [Yes] assignment letter contains a choice of law provision
which is the laws of the US.
RULING: 3. The allegations in Strickland's complaint, specifically his
As between Strickland and EYLLP narration of facts, admit that the entire controversy
Partnership Agreement indeed contained a valid arbitration clause stems from his working relationship with EYLLP as a
Strickland contended that CA’s referral arbitration of his dispute partner.
with EYLLP is erroneous saying that there can be no arbitration
clause as the existence of the Partnership Agreement was not As between Strickland and PA
duly proven. SC ruled that EYLLP substantially, and ultimately, Strickland maintains, however, that the CA's suspension of the
complied with the provision given that Strickland himself did, and proceedings in Civil Case No. 05-692 is grave error because: (1)
does not even deny, the Partnership Agreement nor the the Partnership Agreement containing the arbitration clause was
arbitration clause. not sufficiently proved and authenticated; (2) the CA should have
ordered the RTC to conduct an evidentiary hearing on the factual
As held in the Gonzales case, the validity of the contract assertions that PA is an agent of EYLLP/EYAPFS and that the
containing the agreement to submit to arbitration does not affect causes of action of Strickland against EYLLP are intricately
the applicability of the arbitration clause itself. A contrary ruling intertwined with those against PA and the other defendants; and
would suggest that a party's mere repudiation of the main (3) Strickland has distinct causes of action against other
contract is sufficient to avoid arbitration. That is exactly the defendants such as NHMFC
situation that the separability doctrine, as well as jurisprudence
applying it, seeks to avoid. SC held:
1. PA was unequivocally an agent of EYLLP at the time it
The doctrine of separability, or severability as other writers call it, executed the FASA for the UHLP Project. That PA is not
enunciates that an arbitration agreement is independent of the a signatory to the Partnership Agreement containing the
main contract. Indeed, the doctrine denotes that the invalidity of arbitration clause is of no moment. The arbitration
the main contract, also referred to as the "container" contract, clause is applicable to PA and effectively stays the
does not affect the validity of the arbitration agreement. proceedings against it
Irrespective of the fact that the main contract is invalid, the 2. The totality of Strickland’s causes of action are
arbitration clause/agreement still remains valid and enforceable anchored on the disintegration of his working
relationship with EYLLP whom he faults for his failure to
The dispute between EYLLP and Strickland falls under the receive compensation from the other defendants.
category of international commercial arbitration. Further, the designation of Strickland in the
Applying the International Law doctrine of presumed-identity Engagement Team of the FASA is not a stipulation pour
approach or processual presumption, it is obvious then that the atrui.
arbitration sought in the instant case is international for falling 3. The following circumstances underscore the high
under Article 1(3)(b) (ii). probability of an expeditious resolution of the conflict
with the referral to arbitration of the dispute between
Model Law provides that an arbitration is international if (b) one EYLLP and Strickland and the succeeding suspension of
of the following places is situated outside the State in which the the proceedings before the RTC in Civil Case No.
Page 35
G. ARBITRATION AGREEMENT AS AND IS A

05-692.
a. These cases comprise of a foreign element, CONTRACT.
involving foreign parties and international
transactions. While the parties have not Article 1878 (3) Civil Code.
questioned the jurisdiction of our courts, the
RTC may still refuse to assume jurisdiction Art. 1873. If a person specially informs another or states by
b. The causes of action cited by Strickland in his public advertisement that he has given a power of attorney to a
complaint (and amended complaint) all third person, the latter thereby becomes a duly authorized agent,
undoubtedly relate to his Partnership in the former case with respect to the person who received the
Agreement with EYLLP which is subject to special information, and in the latter case with regard to any
arbitration. This very same Partnership person.
Agreement is even reiterated in the
November 15, 2002 Assignment Letter The power shall continue to be in full force until the notice is
assigning Strickland to Manila. rescinded in the same manner in which it was given. (n)
c. Strickland himself admits that as Partner of
EYLLP, he was assigned to various parts of
Asia. He has also not denied that he was H. ARBITRATION AND INTERIM MEASURES BY
seconded to EYAPFS because of certain tax
COURT.27
consequences of his different assignments.
Evidently, the real dispute between Strickland
and EYLLP falls within its Partnership Article 5.8, IRR of the ADR Act
Agreement involving its own choice of law
provision. Article 5.8. Arbitration Agreement and Interim Measures
by Court.
In all, while we do not preclude Strickland from pursuing all
remedies available to him, we point out that the factual (a) It is not incompatible with an arbitration agreement for a party
circumstances obtaining here, given that Strickland was then to request from a court, before the constitution of the arbitral
partner of the global company EYLLP, the Philippines is not tribunal or during arbitral proceedings, an interim measure of
automatically the law of the place of performance of the contract protection and for a court to grant such measure.
nor is it the only factor to be considered in the ultimate choice-of-
law final analysis. (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
Steamship Mutual v. Sulpicio Lines act or is unable to act effectively, the request may be made with
GR No. 196072 | 20 September 2017 the court.
(c) The following rules on interim or provisional relief shall be

observed:
F. ARBITRATION AGREEMENT AND SUBSTANTIVE i. Any party may request that interim or provisional relief
be granted against the adverse party.
CLAIM BEFORE THE COURT. ii. Such relief may be granted:
aa. To prevent irreparable loss or injury;
Article 5.7, IRR of the ADR Act bb. To provide security for the performance of an
obligation;
Article 5.7. Arbitration Agreement and Substantive Claim iii. The order granting provisional relief may be conditioned
Before Court. upon the provision of security or any act or omission
(a) A party to an action may request the court before which it is specified in the order.
pending to stay the action and to refer the dispute to arbitration iv. Interim or provisional relief is requested by written
in accordance with their arbitration agreement not later than the application transmitted by reasonable means to the
pre-trial conference. Thereafter, both parties may make a similar arbitral tribunal and the party against whom relief is
request with the court. The parties shall be referred to arbitration sought, describing in appropriate detail of the precise
unless the court finds that the arbitration agreement is null and relief, the party against whom the relief is requested,
void, inoperative or incapable of being performed. the ground for the relief, and the evidence supporting
the request.
(b) Where an action referred to in paragraph (a) of this Article has v. The order either granting or denying an application for
been brought, arbitral proceedings may nevertheless be interim relief shall be binding upon the parties.
commenced or continued, and an award may be made, while the vi. Eitherpartymayapplywiththecourtforassistanceinimpleme
issue is pending before the court. ntingorenforcing an interim measure ordered by an
arbitral tribunal.
(c) Where the action is commenced by or against multiple parties, vii. A party who does not comply with the order shall be
one or more of whom are parties to an arbitration agreement, the liable for all damages, resulting from noncompliance,
court shall refer to arbitration those parties who are bound by the including all expenses, and reasonable attorney’s fees,
arbitration agreement although the civil action may continue as to paid in obtaining the order’s judicial enforcement.
those who are not bound by such arbitration agreement
(d) Unless otherwise agreed by the parties, the arbitral tribunal
may, at the request of a party, order any party to take such
Page 36
interim measures of protection as the arbitral tribunal may the CIAC and the proprietary of the money award given. The CA
consider necessary in respect of the subject matter of the dispute upheld the jurisdiction of the CIAC and explained that CIAC
following the Rules in this Article. Such interim measures may acquired jurisdiction over the parties when they submitted their
include but shall not be limited to preliminary injunction directed dispute to voluntary arbitration and its jurisdiction continues until
against a party, appointment of receivers or detention, the full termination of the case.
preservation, inspection of property that is the subject of the
dispute in arbitration. Either party may apply with the court for ISSUES
assistance in implementing or enforcing an interim measure 1. Whether or not the CIAC has jurisdiction over the
ordered by an arbitral tribunal. dispute.
2. Whether the Cid spouses have a cause of action against
Philrock.
I. JUDICIAL REVIEW OF ARBITRATION. 3. Whether the award of payment for the materials,
1. Nature of Voluntary Arbitrators retrofitting costs, moral and nominal damages, litigation
and arbitration expenses is proper.
RULING
Philrock, Inc. v. Construction Industry Arbitration
CIAC has jurisdiction over the dispute.
Commission Yes, CIAC has jurisdiction. Section 4 of EO 1008 vests CIAC
GR No. 132848 | 26 June 2001 original and exclusive jurisdiction over disputes from or in
connection with construction contracts entered into by parties that
have agreed to submit themselves to arbitration.
FACTS
A complaint for damages was filed by Cid spouses against Philrock
In this case, the parties themselves submitted to the jurisdiction
and seven of its officers and engineers in the Regional Trial Court
of the CIAC by their Agreement to Arbitrate. NOTE: There seems
of Quezon in relation to the construction of their house and the
to be no arbitration clause in their construction contract. The
substandard concrete provided.
parties executed an AOA during the trial court proceedings.
At the initial trial date, the trial court dismissed the case and
Additionally, Philrocks claims that the Agreement was withdrawn
referred the parties to the CIAC since both have filed for an
from the fact that after their referral to the CIAC, both requested
Agreement to Arbitrate (AOA) with the CIAC. Thereafter,
that the case be heard by the RTC. The Court ruled that this
preliminary conference was held, and the disagreements include:
contention is untenable since the Cid spouses, in manifesting that
Whether moral and exemplary damages should be included with
it will drop the officers and engineers from the suit, only removed
breach of contract and;
the obstacle of them pursuing arbitration.
Whether the seven officers who did not sign the AOA be included
Philrocks themselves were participating in the arbitration
in the arbitration proceedings.
proceedings and even signed the Terms of Reference. Likewise,
Philrocks is also estopped from assailing the jurisdiction since it
Since the parties were not able to establish a common ground,
has already argued that the trial court has lost jurisdiction of the
both requested that the same be remanded back to the trial
case after the arbitral tribunal’s decision in an attempt to go
court. (It is at this point that Philrock wants to establish that the
against the decision of the RTC.
parties withdrew their consent to arbitrate.)
Cid spouses have established their cause of action.
However, the court declared that it no longer has jurisdiction over
Yes. The Cid spouses have clearly established their cause of
the case as it was already remanded to the CIAC. Because of this
action. They are purchasers of ready mix concrete from Philrocks.
order, the CIAC resumed the preliminary conference.
The concrete delivered were of substandard quality evidenced
from the fact that difficulties were encountered in pouring said
Philrock requested that the proceedings be suspended due to the
mix to mixers and needs the use of additional water to physically
mistaken premise that the arbitration (preliminary conference) did
push it into the mixer. The concrete mix was deemed
not fall through because of their refusal to include damages but it
non-workable. As such, the structures built using the concrete mix
was due to the inclusion of the seven officers who did not sign the
sustained damage – developed cracks and honeycomb.
AOA. This request was denied by the Arbitral Tribunal since the
Cid spouses has manifested that they are willing to exclude the
The award of the arbitral tribunal (VA) on the monetary aspect of
officers and engineers they impleaded.
this case falls within the scope of judicial review.
Ultimately, the parties proceeded and signed the Terms of
Philrock alleges that the monetary awards given by the arbitral
Reference.
tribunal lacks basis both in law and fact. The Solicitor General
counters that the errors with regard to monetary awards is purely
Despite such, Philrock filed a Motion to Dismiss alleging that CIAC
factual and beyond the review of the Court.
had lost jurisdiction due to the withdrawal of their consent to
arbitrate. The CIAC ordered them to appear before the
The contention of the Solicitor General is erroneous. The factual
proceedings and Philrock was ordered to set two hearing dates to
findings of quasi-judicial bodies that have acquired expertise are
present its evidence or otherwise it will be construed as a waiver.
generally accorded great respect and even finality if they are
The CIAC rendered its decision directing Philrock to pay the Cid
supported by evidence. Voluntary Arbitrators (VA), by the nature
spouses for payment of the materials, retrofitting costs,
of their functions, act in quasi-judicial capacity such that their
unworkable concrete mix, moral and nominal damages along with
decisions are still within the scope of judicial review.
attorney’s fees, expenses of litigation and arbitration fees.
This means that despite the provision making these awards
Philrock filed for a Petition for Review contesting the jurisdiction of
Page 37
“final”, the court may still take cognizance provided that there
exits: (a) want of jurisdiction; (b) grave abuse of discretion; (c) However, on October 5, 2013 (over 4 years after its Statement of
violation of due process; (d) denial of substantial justice or (e) Claims has been filed from August 24, 2009), BCA manifested
erroneous interpretation of law. before the arbitral tribunal its intention to file an Amended
Statement of Claims so that it may conform to evidence it has
Philrocks is liable to pay for the interest of the monetary award. already presented. This was granted by the Arbitral Tribunal
Philrocks should pay interest over the monetary award. Even despite opposition of the DFA.
though it alleges that interest was not raised as an issue in the
arbitration case, the Court found that the Cid spouses had already BCA filed its Amended Statement of Claims (dated October 25,
raised such issue prior to the formal arbitration and is even 2013) where it prayed that in case specific performance is no
discussed during the hearing. longer possible, it be awarded damages of P1,648,611,531.00
representing the net income it expected to earn from the
In justifying the interest to be paid, the Court highlights Article Agreement. DFA filed its opposition to the Amended Statement of
2209 of the Civil Code that provides that when the obligation Claims alleging that its belated filing violates its right to due
consists of payment of money and the debtor incurs delay, process. Moreover, DFA claims that the Tribunal has no jurisdiction
indemnity for damages shall be paid. over the alternative reliefs sought by BCA. In light of DFA’s
opposition, BCA eventually withdraw its Amended Statement of
Philrocks is liable to pay for the retrofitting costs, unworkable Claims.
concrete and arbitration costs.
However, August 6, 2015, BCA filed anew a Motion to Admit its
Likewise, Philrocks is liable to pay for the retrofitting costs, wasted Attached Amended Statement of Claims, increasing the amount of
unworkable concrete and arbitration costs. The Court ruled that its claim from P100,000,000 to P390,000,000 plus P10,000,000
the Cid spouses have sufficiently showed that they sustained for temperate, temperate or nominal damages. This was opposed
damage due the defective concrete. by DFA.
Philrocks is liable to pay for moral damages and attorney’s fees. The Arbitral Tribunal, in its Procedural Order No. 11, granted BCA’s
Philrocks is liable to pay for moral damages. Cid spouses were motion on on the premise that it would no longer present any
deprived of the comfort, the safety of a house and exposed to the additional evidence-in-chief. Both parties filed a Motion for
wastage of their structure for seven years. The Court noted that Reconsideration of the order. BCA sought partial reconsideration,
each member of the family had a different living status and praying that, notwithstanding admission of its Amended
arrangement due to the non-completion of their house. Statement of Claims, it be allowed to present evidence on the
actual damages it continued to incur. DFA, on its part, sought total
Likewise, it is also liable to pay for attorney’s fees and expenses of reconsideration of Procedural Order No. 11 and filed a Motion to
litigation. The Court notes that it is obvious that the spouses have Suspend Proceedings.
incurred expenses pursuing this action to the CIAC, the RTC and
the CA. Pursuant to the Motion for Reconsideration filed by BCA, the
Arbitral Tribunal issued a subsequent order, Procedural Order No.
However, Philrocks is not liable to pay for nominal 12, allowing all the parties, including BCA, to present additional
damages. documentary evidence in support to their Amended Statement of
Philrocks, however, is not liable to pay for nominal damages since Claims and Objections thereto, respectively. The tribunal prohibits
actual damages have been proven by Cid spouses. Nominal the parties from submitting any testimonial evidence in support of
damage is recoverable only when no actual or substantial damage their allegations.
resulted from the breach or no damage was shown.
Aggrieved on the Arbitral Tribunal’s denial of its motion for
reconsideration, the DFA filed directly a petition for certiorari
2. Allowable Court Interventions. under Rule 65 before the Supreme Court with application for
issuance of a temporary restraining order and/or writ of
preliminary injunction, seeking the nullification of Procedural
Department of Foreign Affairs (DFA) v. BCA Order No. 11 and Procedural Order No. 12 issued by the Arbitral
Tribunal.
Corporation International & Ad Hoc Arbitral
Tribunal DFA justified its direct recourse to the SC by alleging the
GR No. 225051 | 19 July 2017. immensity of the claim concerned, significance of the public
interest involved in this case, and that there has been a
FACTS circumvention of the temporary restraining order issued by the SC
In 2002, DFA and BCA International Corporation (BCA) entered in a prior case involving similar parties (docketed as G.R. No.
into a Build-Operate-Transfer (BOT) Agreement where, DFA 210858).
awarded the Machine Readable Passport and Visa Project (MRP/V
Project) to BCA. In the course of the project, a conflict arose. This Errors imputed by DFA to the Arbitral Tribunal:
compelled DFA to seek termination of the Agreement. BCA 1. Admission of BCA’s Amended Statement of Claims
opposed the termination and filed a Request for Arbitration. violated DFA’s right to due process and caused delay in
the proceedings > a fair and efficient administration of
In its statement of claims, BCA sought: (1) the cancellation of the justice warranted the denial of the motion;
Notice of Termination filed by DFA; (2) a demand for specific 2. The Procedural Order Nos. 11 & 12 violated UNCITRAL
performance against DFA; and (3) that payment for damages Arbitration Rules and the court’s resolution in GR
amounting to P100,000,000.00 representing all expenses and 210858
arbitration costs BCA has incurred relative to the case. 3. That respondent be allowed to present testimonial
Page 38
evidence to refute BCA’s Amended Statement of Claims

It must be emphasized that the appeal by certiorari to SC must be
Allegations of BCA: that of a judgment or final order issued by the CA, and that only
Courts have no jurisdiction to intervene in a private arbitration, pure questions of law are involved. However, in this case, the
which is a special proceeding governed by the ADR Act of 2004, appeal by certiorari is not from a final Order of the Court of
its Implementing Rules and Regulations (IRR) and the Special Appeals or the Regional Trial Court, but from an interlocutory
Rules of Court on Alternative Dispute Resolution (Special ADR order of the Arbitral Tribunal; hence, the petition must be
Rules) dismissed.
That any objections to Procedural Order Nos. 11 and 12, are ADR Act of 2004 and Special ADR Rules shall govern the
properly within the competence and jurisdiction of the Arbitral substance of the dispute in arbitration proceedings, in the
Tribunal to resolve pursuant to Section 19.02 of the Agreement, absence of proper designation by parties
from which the tribunal’s authority is derived While the parties agreed that the UNCITRAL Arbitration Rules
shall govern the resolution of dispute between parties as provided
ISSUES in Section 19.02 of the agreement, the latter is silent as to what
1. Whether or not courts have the power to intervene in law should govern the substance of the dispute.
private arbitration proceedings? (Issue relevant to the
topic in the syllabus) Article 33 of the UNCITRAL Arbitration Rules provides that "the
2. If so, whether or not the SC, through a petition for arbitral tribunal shall apply the law designated by the parties as
certiorari under rule 65, can intervene and set aside applicable to the substance of the dispute." "Failing such
interlocutory orders issued Arbitral Tribunals. (Issue designation by the parties, the arbitral tribunal shall apply the law
relevant to the topic in the syllabus) determined by the conflict of laws rules which it considers
3. What law should govern in the arbitration proceedings, applicable." Established in this jurisdiction is the rule that the law
in the absence of proper designation by parties? of the place where the contract is made governs, or lex loci
4. WON the Orders by the Arbitral Tribunal, admitting the contractus. As the parties did not designate the applicable law
Amended Statement of Claims of BCA, were issued in and the Agreement was perfected in the Philippines, the Philippine
circumvention of the SC’s TRO in the prior case.. Arbitration laws, particularly, RA No. 876, RA No. 9285 and its
IRR, and the Special ADR Rules apply. The IRR of RA No. 9285
RULING provides that "the arbitral tribunal shall decide the dispute in
Courts may intervene in arbitration proceedings accordance with such law as is chosen by the parties. In the
Under RA 9285, court intervention may be allowed in the absence of such agreement, Philippine law shall apply."
following instances:
1. when a party in the arbitration proceedings requests for Although the BOT Agreement was executed in 2002, and RA 9285
an interim measure of protection; was enacted in 2004, the latter may still be applied in any
2. judicial review of arbitral awards by the Regional Trial arbitration dispute arising from the former. Being procedural in
Court (RTC); and nature, RA 9285 can be given retroactive effect and be applied to
3. appeal from the RTC decisions on arbitral awards to the pending arbitration proceedings, like the present case.
Court of Appeals.
Also, the Special ADR Rules provides the modes/ remedies in The admission of the Amended Statement of Claims filed
which court intervention is allowed, to wit: by BCA was not issued in circumvention of SC’s TRO in the
● Specific Court Relief, which includes Judicial Relief prior case
Involving the Issue of Existence, Validity and It should be pointed out that the said temporary restraining order
Enforceability of the Arbitral Agreement, Interim has been superseded by the Court's Decision promulgated on
Measures of Protection, Challenge to the Appointment June 29, 2016, wherein the Court resolved to partially grant the
of Arbitrator, Termination of Mandate of Arbitrator, petition and remand the case to the RTC of Makati City, Branch
Assistance in Taking Evidence, Confidentiality/Protective 146, to determine whether the documents and records sought to
Orders, Confirmation, Correction or Vacation of Award be subpoenaed are protected by the deliberative process privilege
in Domestic Arbitration, all to be filed with the RTC; as explained in the Decision.
● A motion for reconsideration may be filed by a party
with the RTC on the grounds specified in Rule 19.1;
● An appeal to the Court of Appeals through a petition for 3. Court intervention under RA No. 9285
review under Rule 19.2 or through a special civil action
for certiorari under Rule 19.26; and
● A petition for certiorari with the Supreme Court from a Sections 27, 28, 29, 39, 40, 41, 42 and Chapter 7 [B]
judgment or final order or resolution of the Court of SECTION 27. What Functions May be Performed by
Appeals, raising only questions of law. Appointing Authority. — The functions referred to in Articles
11(3), 11(4), 13(3) and 14(1) of the Model Law shall be
SC cannot set aside interlocutory orders of Arbitral performed by the Appointing Authority, unless the latter shall fail
Tribunal by direct recourse through a petition for or refuse to act within thirty (30) days from receipt of the request
certitiorari under Rule 65 in which case the applicant may renew the application with the
Only decisions of the Court of Appeals may be appealed from to Court.
the SC. Rule 19.37 of the Special ADR Rules further provides that
a party desiring to appeal by certiorari from a judgment or final SECTION 28. Grant of Interim Measure of Protection. —
order or resolution of the Court of Appeals issued pursuant to the (a) It is not incompatible with an arbitration agreement for a party
Special ADR Rules may file with the Supreme Court a verified to request, before constitution of the tribunal, from a Court an
petition for review on certiorari. The petition shall raise only interim measure of protection and for the Court to grant such a
questions of law, which must be distinctly set forth. measure. After constitution of the arbitral tribunal and during
Page 39
arbitral proceedings, a request for an interim measure of of this Act shall apply to arbitration of construction disputes
protection or modification thereof, may be made with the arbitral covered by this Chapter.
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 SEC. 39. Court to Dismiss Case Involving a Construction
the Court. The arbitral tribunal is deemed constituted when the Dispute. - A regional trial court which a construction dispute is
sole arbitrator or the third arbitrator who has been nominated, filed shall, upon becoming aware, not later than the pretrial
has accepted the nomination and written communication of said conference, that the parties had entered into an arbitration to be
nomination and acceptance has been received by the party conducted by the CIAC, unless both parties, assisted by their
making the request. respective counsel, shall submit to the regional trial court a
written agreement exclusive for the Court, rather than the CIAC,
(b) The following rules on interim or provisional relief shall be to resolve the dispute.
observed:
(1) Any party may request that provision relief be

CHAPTER 7 - JUDICIAL REVIEW OF ARBITRAL AWARDS
granted against the adverse party:
A. DOMESTIC AWARDS
(2) Such relief may be granted:
SEC. 40. Confirmation of Award. - The confirmation of a
(i) to prevent irreparable loss or injury:
domestic arbitral award shall be governed by Section 23 of R.A.
876.
(ii) to provide security for the performance of
any obligation;
A domestic arbitral award when confirmed shall be enforced in the
same manner as final and executory decisions of the Regional
(iii) to produce or preserve any evidence; or
Trial Court.
(iv) to compel any other appropriate act or
The confirmation of a domestic award shall be made by the
omission.
regional trial court in accordance with the Rules of Procedure to
be promulgated by the Supreme Court.
(3) The order granting provisional relief may be
conditioned upon the provision of security or any act or
A CIAC arbitral award need not be confirmed by the regional trial
omission specified in the order.
court to be executory as provided under E.O. No. 1008.
(4) Interim or provisional relief is requested by written
SEC. 41. Vacation Award. - A party to a domestic arbitration may
application transmitted by reasonable means to the
question the arbitral award with the appropriate regional trial
Court or arbitral tribunal as the case may be and the
court in accordance with the rules of procedure to be promulgated
party against whom the relief is sought, describing in
by the Supreme Court only on those grounds enumerated in
appropriate detail the precise relief, the party against
Section 25 of Republic Act No. 876. Any other ground raised
whom the relief is requested, the grounds for the relief,
against a domestic arbitral award shall be disregarded by the
and evidence supporting the request.
regional trial court.
(5) The order shall be binding upon the parties.
B. FOREIGN ARBITRAL AWARDS
(6) Either party may apply with the Court for assistance
SEC. 42. Application of the New York Convention. - The
in Implementing or enforcing an interim measure
New York Convention shall govern the recognition and
ordered by an arbitral tribunal.
enforcement of arbitral awards covered by the said Convention.
(7) A party who does not comply with the order shall be
The recognition and enforcement of such arbitral awards shall be
liable for all damages resulting from noncompliance,
filled with regional trial court in accordance with the rules of
including all expenses, and reasonable attorney's fees,
procedure to be promulgated by the Supreme Court. Said
paid in obtaining the order's judicial enforcement.
procedural rules shall provide that the party relying on the award
or applying for its enforcement shall file with the court the original
SEC. 29. Further Authority for Arbitrator to Grant Interim
or authenticated copy of the award and the arbitration
Measure of Protection. - Unless otherwise agreed by the
agreement. If the award or agreement is not made in any of the
parties, the arbitral tribunal may, at the request of a party, order
official languages, the party shall supply a duly certified
any party to take such interim measures of protection as the
translation thereof into any of such languages.
arbitral tribunal may consider necessary in respect of the subject
matter of the dispute following the rules in Section 28, paragraph
The applicant shall establish that the country in which foreign
2. Such interim measures may include but shall not be limited to
arbitration award was made is a party to the New York
preliminary injuction directed against a party, appointment of
Convention.
receivers or detention, preservation, inspection of property that is
the subject of the dispute in arbitration. Either party may apply
If the application for rejection or suspension of enforcement of an
with the Court for assistance in implementing or enforcing an
award has been made, the regional trial court may, if it considers
interim measures ordered by an arbitral tribunal.
it proper, vacate its decision and may also, on the application of
the party claiming recognition or enforcement of the award, order
the party to provide appropriate security.
SEC. 38. Applicability to Construction Arbitration. - The
provisions of Sections 17 (d) of Chapter 2, and Section 28 and 29
Page 40
4. Court intervention under the IRR of RA No. 9285

4. Non-payment of royalties as provided.
Article 5, IRR of the ADR Act JG Realty filed a petition for declaration of nullity/cancellation of
the agreement with the Mining Adjudication Board Panel of
Article 5.4. Extent of Court Intervention. In matters Arbitrators. The POA issued a decision which struck down the
governed by this Chapter, no court shall intervene except in agreement. This was appealed to the DENR-Mining Adjudication
accordance with the Special ADR Rules. Board which upheld the POA's decision.
ISSUE:
5. Court intervention under Special ADR Rules (Rules 1. Should the controversy have first been submitted to
3, 5, 7, 8, 9, 10 and 11) arbitration before the POA took cognizance of the
case?; (YES)
2. Was the cancellation of the RAWOP supported by
Rules 3, 5, 7, 8, 9, 10 and 11, Special ADR Rules evidence?; and (YES)
Please refer to Special ADR Rules [too long to paste here]
3. Did the cancellation of the RAWOP amount to unjust
enrichment of J.G. Realty at the expense of Benguet?
(NO)
6. Limits of judicial intervention.
RULING:
Procedural issues
Benguet resorted to an improper remedy.
Uniwide Sales Realty & Resources Corporation v.
Titan-Ikeda Construction and Development The last paragraph of Section 79 of Republic Act No. (RA) 7942 or
Corporation the "Philippine Mining Act of 1995" states, "A petition for review
GR No. 126619 | 20 December 2006 by certiorari and question of law may be filed by the aggrieved
party with the Supreme Court within thirty (30) days from receipt
of the order or decision of the [MAB]."
However, the Court has already invalidated such provision in

Benguet Corporation v. Department of Environment Carpio v. Sulu Resources Development Corp., ruling that a
decision of the MAB must first be appealed to the Court of
and Natural Resources- Mining Adjudication Board Appeals (CA) under Rule 43 of the Rules of Court, before recourse
GR No. 163101 | 13 February 2008 to this Court may be had.
FACTS: The case should have been brought to voluntary

In 1987, Benguet and JG Realty entered into a Royalty Agreement arbitration before filing at the POA
with Option to Purchase where JG Realty was acknowledged as Secs. 11.01 and 11.02 of the Agreement provide for arbitration,
the owner of four mining claims in Camarines Norte. that in "any disputes…between BENGUET and the OWNER with
reference to anything whatsoever pertaining to this Agreement
In the agreement, Benguet obligated itself: that cannot be amicably settled by them shall not be cause of any
1. To perfect the rights to the mining claims and/or action of any kind whatsoever in any court or administrative
otherwise acquire the mining rights thereto; agency but shall, upon notice of one party to the other, be
2. Within 24 months from the execution of the agreement, referred to a Board of Arbitrators consisting of three (3) members,
to cause the examination of the mining claims for the one to be selected by BENGUET, another to be selected by the
purposes of determining whether or not they are worth OWNER and the third to be selected by the aforementioned two
developing with reasonable probability of profitable arbitrators so appointed;" and "No action shall be instituted in
production; court as to any matter in dispute as hereinabove stated, except to
3. To furnish JG Realty with a report on the examination enforce the decision of the majority of the Arbitrators."
within a reasonable time after the completion of the
examination; JG Realty argued against this by stating that:
4. Within the period for examination, to conduct all 1. RA 7942 or the "Philippine Mining Act of 1995" is a
necessary exploration in accordance with a prepared special law which should prevail over the stipulations of
program and if it chooses to do so, to opt to undertake the parties and over a general law, such as RA 876.
to develop the mining claims; 2. It also argued that the POA cannot be considered as a
5. To give JG Realty royalty of 5% of net realizable value, "court" under the contemplation of RA 876; and
and for any production done, if it chooses to place the 3. That jurisprudence saying that there must be prior
mines in commercial production. resort to arbitration before filing a case with the courts
is inapplicable to the instant case as the POA is itself
In 1989, Benguet's executive vice president sent a letter to JG already engaged in arbitration.
Realty of its intention to develop the mining claims. 10 years later
in 1999, JG Realty sent a letter that it was terminating the The Court ruled for Benguet citing Sec. 2 of RA 876, the
agreement on the following grounds: governing law on domestic arbitration, on the scope of arbitration:
1. Failure to undertake development works within 2 years
from the execution of the Agreement; Section 2. Persons and matters subject to
2. Violation of contract by allowing high graders to operate arbitration.––Two or more persons or parties may
on claim; submit to the arbitration of one or more arbitrators any
3. That the agreement had no stipulated term limit; and controversy existing between them at the time of the
Page 41
submission and which may be the subject of an action, process of settlement of labor disputes by a
or the parties to any contract may in such contract government agency which has the authority to
agree to settle by arbitration a controversy thereafter investigate and to make an award which is binding on
arising between them. Such submission or contract shall all the parties, and as a mode of arbitration where the
be valid, enforceable and irrevocable, save upon such parties are compelled to accept the resolution of their
grounds as exist at law for the revocation of any dispute through arbitration by a third party."
contract. ● While a voluntary arbitrator is not part of the
governmental unit or labor department’s personnel, said
By virtue of law and state policy, a contractual stipulation that arbitrator renders arbitration services provided for
requires prior resort to voluntary arbitration before the parties can under labor laws.
go directly to court is not illegal and is in fact promoted by the
State. There is a clear distinction between compulsory and voluntary
arbitration. The arbitration provided by the POA is compulsory,
There is no conflict between RA 7942 and RA 876. Availment of while the nature of the arbitration provision in the Agreement is
voluntary arbitration before resort is made to the courts or voluntary, not involving any government agency.
quasi-judicial agencies of the government is a valid contractual
stipulation that must be adhered to by the parties. The POA is an administrative agency within the
contemplation of the Agreement’s Arbitration Clause
Effect on erroneous filing of cases that are the subjects of The POA is a quasi judicial body which forms part of the DENR
voluntary arbitration which is an administrative agency. The provision in the agreement
for mandatory resort to arbitration applies against them.
In the event a case that should properly be the subject of
voluntary arbitration is erroneously filed with the courts or Benguet has been estopped from challenging the
quasi-judicial agencies, on motion of the defendant, the court or jurisdiction of the POA and the MAB
quasi-judicial agency shall determine whether such contractual From actively participating in the proceedings by filing its answer,
provision for arbitration is sufficient and effective. If in affirmative, an appeal to the MAB, filing for a motion for reconsideration
the court or quasi-judicial agency shall then order the against the decision of the MAB, and filing this petition for review,
enforcement of said provision. Benguet is now estopped to question the jurisdiction of the POA
and the MAB on the matter.
It bears to note that the court which orders the enforcement does
not lose jurisdiction over the case, it only stays the exercise The agreement’s cancellation was valid
thereof. The cancellation of the RAWOP by the POA was based on two
grounds: (1) Benguet’s failure to pay J.G. Realty’s royalties for the
Remedy of aggrieved party mining claims; and (2) Benguet’s failure to seriously pursue MPSA
Sec. 6 of RA 876 provides: Application No. APSA-V-0009 over the mining claims.
A party aggrieved by the failure, neglect or refusal of
another to perform under an agreement in writing Benguet indeed failed to abide by the stipulations in the
providing for arbitration may petition the court for an agreement regarding the payment of the royalties. While they
order directing that such arbitration proceed in the admit that the checks were ready at their office for pick up by JG
manner provided for in such agreement. Five days Realty, they failed to deposit the royalties into the bank account of
notice in writing of the hearing of such application shall JG Realty, which was required of them under the agreement.
be served either personally or by registered mail upon
the party in default. With regards to the pursuance of the mining claims, Benguet
failed to provide any evidence to show that it exerted earnest
The court shall hear the parties, and: efforts to speed up the application and have it approved; neither
1. Upon being satisfied that the making of the agreement did it show any evidence that it was in constant communication
or such failure to comply therewith is not in issue, shall with the government agency for the expeditious resolution of the
make an order directing the parties to proceed to application.
arbitration in accordance with the terms of the
agreement. There was no unjust enrichment
2. If the making of the agreement or default be in issue Unjust enrichment only exists if the person who is enriched
the court shall proceed to summarily hear such issue. If unjustly receives the benefit at the loss of another. Here, the loss
the finding be that no agreement in writing providing of Benguet as to the mining claim is purely of its own fault.
for arbitration was made, or that there is no default in
the proceeding thereunder, the proceeding shall be
dismissed.
3. If the finding be that a written provision for arbitration ADHOC ARBITRATION
was made and there is a default in proceeding
thereunder, an order shall be made summarily directing
the parties to proceed with the arbitration in accordance A. CONCEPT.
with the terms thereof.
That the POA itself is an arbitral panel does not render

voluntary arbitration moot
A distinction must be made between voluntary and compulsory
arbitration:
● Compulsory arbitration has been defined both as "the
Page 42
arbitration outside the Philippines. And that eventuality, R.A.

9285 obviously will not apply. That is why R.A. 9285 clarifies
An ad hoc arbitration is one which is not administered by an
institution such as the ICC, LCIA, DIAC or DIFC. The parties will that these are the rules on international commercial
therefore have to determine all aspects of the arbitration arbitration, but only if they are found in the Philippines.
themselves - for example, the number of arbitrators, appointing
those arbitrators, the applicable law and the procedure for
conducting the arbitration. Let’s go to Article 4.2, rules of interpretation.
IRR of ADR Act of 2004, CHAPTER 4

INTERNATIONAL COMMERCIAL ARBITRATION
Article 4.2. Rules of Interpretation.
B. WHO APPOINTS AD HOC ARBITRATOR. (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

The arbitration agreement, whether reached before or after a international origin of the Model Law and to the need for
dispute has arisen, may simply state that 'disputes between uniformity in its interpretation. Resort may be made to the
parties will be arbitrated'. It is infinitely preferable at least to travaux preparatoires and the Report of the Secretary-General of
specify the place or 'seat' of the arbitration as well since this will the United Nations Commission on International Trade Law dated
have a significant impact on several vital issues such as the March 1985 entitled, “International Commercial Arbitration:
procedural laws governing the arbitration and the enforceability of Analytical Commentary on Draft Text identified by reference
the award. 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.
INSTITUTIONAL ARBITRATION IN THE
PHILIPPINES (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
PDRCI. Please refer to PDRCI Rules. parties to authorize a third party, including an institution, to make
1. SEE FIRST: PRACTICE NOTE NO.1 EFFECTIVE that determination.
AUGUST 3, 2020, GUIDELINES ON ONLINE
(e) Where a provision of this Chapter refers to the fact that the
MEETINGS AND VIRTUAL HEARINGS. parties have agreed or that they may agree or in any other way
2. MODEL ARBITRATION CLAUSE. refers to an agreement of the parties, such agreement includes
3. SCOPE OF APPLICATION any arbitration rules referred to in that agreement.
(f) Where a provision of this Chapter, other than in paragraph (a)

SEAT OF ARBITRATION 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
For the International Commercial Arbitration or the IRR of applies to a defense to such counter-claim.
R.A. 9285 to apply, it is also necessary that the seat of
arbitration is in the Philippines. (a) International commercial arbitration shall
be governed by the Model Law on
When you speak of “seat of arbitration”, that is literally International Commercial Arbitration.
the place where the arbitration will be commenced.
Traditionally when you have a contract and the contract Chapter 4 is applicable only to International Commercial
indicates that the dispute will be set in courts of Lapu-lapu Arbitration. With respect to domestic arbitration,
City, you will know that it will be done in Lapu-lapu City. The Chapter 4 does not apply. Article 4.2 provides that
seat of arbitration determines first whether it is a domestic International Commercial Arbitration should be governed by
arbitration, whether there is an international commercial Model Law on International Commercial Arbitration. What is
arbitration. If it is an international commercial arbitration, it that? That is the UNCITRAL Model Law. Take note that the
will indicate where the arbitral institution is. For example the UNCITRAL Model is not a private document, it is a United
PDRCI, obviously the seat will be Philippines. Nations document. UNCITRAL means United Nations
Commission on International Trade Law. This is actually
To avoid confusion, it is possible for a Philippine entity like backed by the global community. As I mentioned, the idea is
the government, to have an international commercial to have a uniform procedure on how to settle disputes to
Page 43
give multinational corporations and other corporations a interpretation you would have to adopt if it is an
chance at fair resolution of disputes. The essence of the International Commercial Arbitration, would be that of
Model Law is to have a uniform and fair resolution of dispute. International Commercial Arbitration by way of Model Law.
Korea Tech was sided by the Supreme Court but it was an
(b) In interpreting this Chapter, regard shall International Commercial Arbitration, in fact the seat of
be had to the international origin of the Model arbitration was in KCAB or Korean Commercial Arbitration
Law and to the need for uniformity in its Board.
interpretation.
Article 4.3. Receipt of Written Communications
Q: Why do you think is that included? (a) Unless otherwise agreed by the parties:
A: If you remember in PIL, there are sources of PIL. In Art.
4.2(b), we anticipate that there are bodies that interpret (i) any written communication is deemed to have been
received if it is delivered to the addressee personally or
provisions of the Model Law. So when you speak of the at his/her place of business, habitual residence or
Model Law that applies in International Commercial mailing address; if none of these can be found after
Arbitration, it is not R.A. 9285 but the UNCITRAL Model Law. making a reasonable inquiry, a written communication is
deemed to have been received if it is sent to the
So when you litigate or arbitrate in the Philippines and it is an addressee’s last known place of business, habitual
International Commercial Arbitration, it is necessary that you residence or mailing address by registered letter or any
look at the UNCITRAL Model Law so that you would know other means which provides a record of the attempt to
deliver it;
that the rules you are following are consistent with
UNCITRAL Model Law. (ii) the communication is deemed to have been received
on the day it is so delivered.
You might think that that is common sense, but I have seen
(b) The provisions of this Article do not apply to communications
lawyers who cite the Rules of Court, rules of procedure in the in court proceedings, which shall be governed by the Rules of
Philippines to justify their actions. But take note that these Court.
do not apply. In fact, fundamentally whether it is a domestic
arbitration or an international commercial arbitration, the In Article 4.3, it is a stark contrast with our understanding of
Rules of Court are not even suppletory. Except I think in Rules of Civil Procedure. The Rule now in Civil Procedure is
CIAC, but in general arbitration there is no such thing. that you must serve a pleading to the other party then file a
pleading to the court. If you use registered mail, the day of
(c) Moreover, in interpreting this Chapter, the the mailing is the day of receipt. Look at Art.4.3, it says that
court shall have due regard to the policy of any written communication is deemed received if it is
the law in favor of arbitration and the policy delivered to the adverse party personally or at his habitual
of the Philippines to actively promote party residence or place of business. In reality, what really happens
autonomy in the resolution of disputes or the is in the contract of the parties they will indicate a place
freedom of the parties to make their own where you should supposedly send notices.
arrangement to resolve their dispute.
Q: Why?
Let’s look at letter C. We learned about Makati Rotary case A: Because if it is an arbitrable contract, the parties are
and PCDA and Korea Tech. Primarily Korea Tech, for me that supposed to indicate where they should receive the request
is the most critical case in arbitration. I hope it will be asked for arbitration. Take note that what triggers arbitration is not
in the bar someday, but definitely not in your bar. I studied really the sending out of the request of arbitration but the
the syllabus and arbitration is not there. But someday it receipt of the other party. That is clear under the UNCITRAL
might be the trend. But someday it might be the trend. Korea Model Law. We are certain that it is the receipt of the other
Tech tells us that when there is a party who wants to rescind party which triggers arbitration, for the reason LADIES AND
or terminate the obligation, the party is duty bound to refer GENTLEMEN, that it is the receipt of the other party that
the termination or rescission to arbitration and cannot confirms that the party initiating the arbitration has in fact
terminate it by itself. That is the ruling in Korea Tech. paid the necessary advance.
If the Korea Tech ruling did not exist, and we simply apply If you notice in Art. 4.3, there is really nothing here that
the rules that we have in the Philippines such as the Civil compels us whether to use registered mail, to use e-mail,
Law, we know that if the obligation is reciprocal, parties may etc. and in the absence of a contractual stipulation how the
reciprocally rescind or compel performance, in either instance service would be, the suggestion is it would be done
there is damages. Bu that is not the case because the physically. But, let me clarify this, the request for arbitration
Page 44
is not to be sent by the party initiating it. It will be coursed contempt. They have no contempt power but they have
through the institution. It is the institution that sends a copy subpoena power so you may be directed by an arbitral body
of that request to the responding party. Thereafter, the to attend a hearing whether motu proprio or upon motion by
responding party will send a response to the notice of the proper party. But if you don’t attend, what happens?
arbitration or request for arbitration. There is no consequence. However, because the PH
acknowledges arbitration as an alternative dispute resolution
Once those two documents are in and the tribunal has been (which I think should not be alternative, I think it should be
constituted, the next step is to conduct a case management primary) a party or the tribunal itself may go to court and ask
conference. That’s the same rule in Civil Procedure, under the court to send subpoenas from court, citing the subpoena
civil procedure you don’t direct a civil case to the other previously sent by the arbitral institution. Failing to comply
party. When you file a complaint for specific performance you with the subpoena issued by the court on the basis of the
don’t send that to the other party. There is no filing service in subpoena issued by the arbitral institution will empower the
civil procedure. You go to court, to the RTC-OCC and the courts to cite the individual in contempt.
latter will determine how much filing fee you will pay and
upon determination and upon payment, it is the RTC-OCC or Those are the two major points of intervention. Of course
the court that will send notice or summons to the other party there will be post proceeding remedies such as vacation,
to file an answer. confirmation. If you are going through CIAC, there is also a
Petition for Review under Rule 43 directly to the CA. But, if
you noticed, the extent of court intervention in arbitration is
EXTENT OF COURT INTERVENTION
merely to facilitate and empower the court. It is really not to
take over the proceedings and most certainly not to derail
Article 4.5. Extent of Court Intervention. In matters the proceedings.
governed by this Chapter, no court shall intervene except where
so provided in the ADR Act. Resort to Philippine courts for matters
RULE 2 - Arbitration Agreement
within the scope of the ADR Act shall be governed by the Special
ADR Rules.
Article 4.7. Definition and Form of Arbitration Agreement.
The arbitration agreement, as defined in Article 1.6 A4, shall be in
There is this thin line when courts can intervene 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
arbitration. Under Art. 4.5, in matters governed by this
or other means of telecommunication which provide a record of
chapter no court should intervene except when so provided the agreement, or in an exchange of statements of claim and
under the ADR Act. Resort to Philippine Courts for matters defense in which the existence of an agreement is alleged by one
within the scope of the ADR Act shall be governed by the party and not denied by another. The reference in a contract to a
document containing an arbitration clause constitutes an
Special ADR Rules. The Special ADR Rules is not the IRR but arbitration agreement provided that the contract is in writing and
an issuance of the Supreme Court that details your remedies the reference is such as to make that clause part of the contract.
to be taken. The general rule in arbitration is that there
should not be court intervention, supposedly not. Every arbitration should be done in writing according to Rule
2 of IRR of RA 9828. But we already know that when we
But R.A. 9285 acknowledges that in certain instances there speak of an arbitration agreement in writing, it does not
will be intervention by the court. The first one is provisional mean that it has to be in one document. In fact, according to
remedies. In arbitration, it is often referred to as the Art. 4.7, “an agreement is in writing if it is contained in a
Interim Measure of Protection. The most common example is document signed by the parties or in an exchange of letters,
if one party wishes to terminate such as what happened in telex, telegrams or other means of telecommunication which
Korea Tech case where the respondent Pacific Steel wanted provide a record of the agreement…”
to terminate the contract and actually terminated the
contract and threatened to remove the properties. But prior Imagine emails, you can be bound because that is a means
to that threat, there was an arbitration filed by Korea Tech in of telecommunication which provides a record of the
Korea, but despite arbitration filed by Korea Tech in Korea it agreement. By simply agreeing via email, that party would be
nevertheless filed a case in the trial court. The first thing it bound by the arbitration agreement. You cannot deny it
wanted to do was to file an interim measure, TRO and WPI, anymore. The attitude of PH courts is that, as much as
to ensure that Pacific Steel would not remove what they have possible, bind them in arbitration because if parties are
already installed in the property. bound in an arbitration agreement then the courts will not be
as obligated to take on these cases especially since if a case
Second, no arbitral body or arbitral institution has the right of is arbitrable, more likely it is complicated so courts as much
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as possible want to evade that obligation to resolve it. the parties did not include that agreement, it is the arbitral
institution that will determine it based on the complexity of
the case.
Article 4.9. Arbitration Agreement and Interim Measures
by Court.
Q: How do you know it is complex?
(a) xxx A: Look at the Eversheds case, do you think it is complex?
(b) xxx
Some people are saying it is complex but when we submitted
A party may bring a petition under this Article before the court in that for determination, PDRCI said that it is not a complex
accordance with the Rules of Court or the Special ADR Rules. case. It’s necessary for them to determine complexity
because complexity doubles the amount of filing fee.
I’d like to bring your attention to the last paragraph. “A party
may bring a petition under this Article before the court in Q: How do you appoint arbitrators?
accordance with the Rules of Court or the Special ADR A: Generally, what you do is one party appoints one, the
Rules.” This is important to the Eversheds too. other will appoint one, and the two chosen arbitrators will
appoint the third who will sit as the Chair. That’s how it is
Q: Why do you think the case was brought before the usually.
court? Our argument was that you bring it to court
because there are parties which are not signatories to Article 4.12. Grounds for Challenge.
that arbitration agreement and which parties are (a) When a person is approached in connection with his/her
possible appointment as an arbitrator, he/she shall disclose any
those? circumstance likely to give rise to justifiable doubts as to his/her
A: The directors which have a separate personality from the impartiality or independence. An arbitrator, from the time of
corporation are not parties to the arbitration agreement. his/her appointment and throughout the arbitral proceedings
shall, without delay, disclose any such circumstance to the parties
There is another case in the syllabus, it is a CIAC case.
unless they have already been informed of them by him/her.
Because there are private individuals in the Eversheds and
PH plastic dispute, Eversheds had not choice but to go to (b) An arbitrator may be challenged only if circumstances exist
court because if you bring these parties to the interim that give rise to justifiable doubts as to his/her impartiality or
independence, or if he/she does not possess qualifications agreed
measure under arbitration, then those parties would not be to by the parties. A party may challenge an arbitrator appointed
bound. The IRR of RA 9285 allows the parties to either go to by him/her, or in whose appointment he/she has participated,
the court through the ROC or to simply use the special ADR only for reasons of which he/she becomes aware after the
appointment has been made.
rules.
Q: How do you challenge arbitrators?

RULE 3
A: What we learned in ethics is that we can inhibit the judge
Composition of the Arbitral Tribunal
- voluntary and compulsory inhibition. Compulsory inhibition
of judges is based on factors which are objective: affinity,
consanguinity, previous relationship as counsel. Otherwise,
Article 4.10. Number of Arbitrators. The parties are free to voluntary inhibition is based on the integrity of judges. If the
determine the number of arbitrators. Failing such determination,
judge shows bias or partiality at any stage of the
the number of arbitrators shall be three (3).
proceedings, then you can ask the judge to voluntarily
Article 4.11. Appointment of Arbitrators. (a) No person shall be inhibit.
precluded by reason of his/her nationality from acting as an
arbitrator, unless otherwise agreed by the parties. In ADR, arbitration in general, you can ask the arbitrator to
inhibit on the basis of impartiality or lack of independence or
(b)The parties are free to agree on a procedure of appointing the
arbitrator or arbitrators, subject to the provisions of paragraphs bias, at any time of the proceedings. The Rules on voluntary
(d) and (e) of this Article. inhibition are the same.
The Rules on CIAC are different. In CIAC, when you

COMPOSITION OF THE ARBITRAL TRIBUNAL: challenge an arbitrator, the arbitrator has an option to resolve
(1) A set of arbitrators which is three, or it, he or she can sit down but once he or she steps down, the
(2) A sole arbitrator. CIAC as an entity will confirm it. This is different in Court. In
Court, if the judge steps down, that's it unless the other
Q: How do you know how many? party thinks that the inhibition is an act of grave abuse,
A: It should be included in the agreement of the parties. If which will be elevated via Rule 65. In CIAC, you have no
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choice, if you step down, whether you like it or not, the

INC. (PDRCI) ARBITRATION RULES
trustees of the CIAC will review it, if the inhibition is proper
or not and in my experience, the CIAC Board of Trustees
reversed the inhibition. COMPUTATION OF FILING FEES
When challenging an arbitrator, there is no hard and fast rule

See the PDRCI Guidelines on Fees and its Schedules
on what the grounds will be but you cannot challenge an
(“Guidelines on Fees”)
arbitrator that you appointed. Although you can challenge
such arbitrators on grounds that did not exist at the time of
appointment. Previously, if you did not know that the Given Problem:
arbitrator was a counsel for the other party, you may ask him Calculate the filing fee & explain.
to step down. EVERSHED PH is asking 19,742,191,000
EVERSHED HK 13,811,219,000
JURISDICTION OF THE ARBITRAL TRIBUNAL
These claims are total actual and forecast losses; claimed
Every arbitral tribunal has the power to determine its own in the alternative.
competence. In determining its own competence, the
tribunal can ask for hearing on jurisdiction. Normally, after Prayer: Accordingly, direct PH Plastic to pay for its material
the filing of the Request to Arbitration, the other party files a breaches the ff: 19,742,191,000 (plus interest) if the
Response, Case Management Conference is conducted and award is received by EVERSHEDS PH or 13,811,219,000
parties may submit Statement of Claims and Statement of (plus interest & liability for corporation tax) if the award is
received by EVERSHEDS HK.
Defense and then go to hearing. If you have issues on the
jurisdiction or the ability of the tribunal to resolve the matter,
you put it in the Statement of Claims the same way that if FOR ARBITRATOR’S FEES
you have issues that are previously subject of Motion to
DIsmiss, you just include that in the Answer and let the court Computation of Base Amount (over 500M):
decide on it on merits. Generally, the same is true for BA = 3,590,000 + 0.2% of the amount in excess of
Arbitration. 500,000,000
BA = 3,590,000 + [0.002 x (19,742,191,000 - 500,000,000)]
For some extreme circumstances, such as what happened in BA = 3,590,000 + [0.002 x 19,242,191,000]
the EVERSHEDS case, the arbitral body may call for BA = 3,590,000 + 38,484,382
jurisdictional hearing. This means that if you are the claimant BA = 42,074,382
and you lose in the jurisdictional hearing, there is no point to
continue but if you are the respondent and you lose in the Computation of Adjustment:
jurisdictional hearing, you still have another opportunity in AOF = (AF1 + AF2 + AF3) - 3.0
the merits to win the case ultimately. AOF = [1.0 (simple) + 1.0 (2 disputants) + 2.0 (3
arbitrators)] - 3.0
Q: Do you want the case to be resolved on AOF= (1.0 + 1.0 + 2.0) - 3.0
jurisdictional hearing? or would you rather, we AOF = 4.0 - 3.0
integrate the question on merit? AOF = 1.0
A: On the merits. I feel that the claimants have a better
chance if it is decided on merits. Computation of Total Honoraria:
TH = BA x (OAF + 1.0)
VJC: I don't know what the answer is. If you mix it with TH = 42,074,382 x (1.0 + 1.0)
merits and the jurisdiction fails, what about all the expenses TH = 42,074,382 x 2.0
that the client already spent? This is a reality. The client will TH = 84,148,764
spend so much yet if you mix it on merits, you can still lose
on jurisdiction. If you mix it with merits, its not as if the This is just partly correct. Once you get the Total
jurisdictional issues suddenly went away. It is just that you Honoraria, you add VAT. The VAT is about 10,097,851.68
delayed what is inevitable - if it is inevitable.
Once you get the VAT in the Total Honoraria, you are already
at 94,246,000.
2021 PHILIPPINE DISPUTE RESOLUTION CENTER
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Once you get the 84M(Total Honoraria), you charge the preference, parties must agree that there will be hearings. In
12% VAT, you will get 94M. After that, you charge 5M. So, the absence of agreement, the presumption is there will be
in total, that would be about 99M. no hearings.
This is critical because the filing fee is jurisdictional. If

you fail to pay the filing fee, no arbitration will start. MODEL ARBITRATION/MEDIATION/ARBITRATION
CLAUSE
Here’s what happened in my experience: Initially, there are 2
law firms approached by the client. This amount: 32B. Two Q: How does an arbitration clause look like?
law firms. You know why we got this case? Because we gave A: If you look at the 2021 PDRCI, on page 3 section 1, you’ll
the correct calculation. The other law firm was calculating for see that there is a model arbitration clause, it is a model
both. So, things like these may make or break the case. This arbitration clause for a reason, it is just a pattern which you
is especially critical because there’s no way to justify a could change. You could choose to have your own arbitration
combined account. As mentioned by your classmate, in any wording, but if not, then this is it! That is how a model
case, only one award will be given because it’s in the arbitration clause looks like.
alternative; it’s not really combined.
Model Arbitration Clause:
The correct calculation ultimately was about 99M. That’s the
filing fee. Client said, “That’s impossible. I don’t think the "Any dispute, difference, or claim arising out of or relating to this
contract, or the existence, validity, interpretation, breach, or
Board will approve that.” And we said, “Yeah, probably.” termination thereof shall be finally settled by arbitration in
There is no rule in PDRCI that approves the reduction of accordance with the PDRCI Arbitration Rules in force at the time
filing fee. But we explained to PDRCI that if they charge us of the commencement of the arbitration.
99M, we won’t be able to continue with the arbitration The number of arbitrators shall be ... (one or three). The seat of
because it is prohibited. And then we were citing some laws arbitration is … (country), whose laws shall be the law of the
on how it is prohibited, denying justice where it should be arbitration agreement. The language(s) of the arbitration shall be
... (language)."
given. Ultimately, the 99M was reduced. I’m not gonna tell
you how much, but it was reduced substantially.
TN: The absence of an arbitration clause does not
Someday – but do not quote me on it because PDRCI has no preclude reference to arbitration. Parties may agree
stare decisis na man – but there is a precedence. I’m sure before conflict to refer to arbitration, if they do, when one of
you would not know what this case is, unless you work in the them goes to court, the other party may unilaterally request
government and you happen to handle this exact case. But the court to refer to arbitration on the basis of RA 9285.
there is a precedent, just remember.
IMPORTANT: Request of the arbitration must be done
Here is what I want you to remember, there is no BEFORE PRE-TRIAL, if don’t do it before pre–trial, and
continuous trial rule in Arbitration. And because there is there is arbitration agreement, you cannot unilaterally after.
no continuous trial rule, timelines may move depending After pre-trial, when the parties have already attended
on the consent of the parties. So parties may submit joint pre-trial in court , both must agree that the case be referred
motions to move or to extend submission. Our mindset in to arbitration.
Civil Law is that we have to stick to the rules. But look at
Arbitration, there’s barely any rule. In the absence of rules, Technically, there is implied waiver. That is the unique case in
you try to do what you wish to do. If there is no rule to be the Evershed Situation, there was no pre-trial. Because
violated, you do it. The arbitrators will tell you what you can Evershed requested for summary judgment, and summary
or can’t do in a certain manner. judgment is a judgment of pleading. There was really no
question of fact, no hearing.
Ordinarily, once the statement of claims is submitted then
another party submits the statement of defense, in TOR you The model arbitration clause is only a guideline, even if it is
can agree whether you submit a reply in rejoinder. If you not like this, you will be bound.
agree to submit a reply in rejoinder, you also have to agree in
the timeline which is in the TOR when you are going to have SUBMISSION AGREEMENT
hearings. The ICC rules both the model law and domestic
arbitration in general, do not require hearing. When I say do Submission Agreement:
not require, it is optional. And therefore, during in terms of "A [dispute/difference/claim] having arisen between the parties
Page 48
NOTICE OF ARBITRATION
concerning [ ... ], the parties hereby agree that the
[dispute/difference/claim] shall be referred to and finally settled
by arbitration in accordance with the PDRCI Arbitration Rules in
Art. 4 (3). The Notice of Arbitration shall include the following:
force at the time of the commencement of the arbitration.
The number of arbitrators shall be ... (one or three). The seat of
(a) A demand that the Disputes be referred to arbitration;
arbitration is ... (country), whose laws shall be the law of the
arbitration agreement. The language(s) of the arbitration shall be
(b) The names, nationalities, addresses, and other contact details
... (language)."
of the parties and their representatives;
(c) A reference to the arbitration or submission agreement;

This is the opposite of an arbitration agreement. I
mentioned before that before pre-trial you must ask for Atty: this is the only document that is required to be attached. It
referral, after pre-trial, maybe the parties would realize that need not even be attached, it said ‘refer’
they want to refer to arbitration but they do not have an
(d) A reference to the contract or legal relationship involved in the
arbitration clause – this is your remedy. The parties simply Disputes;
need to execute a submission agreement then submit it to
court. The court will surely refer you to arbitration. (e) A brief description of the claim and an estimate of the amount
involved, including any claim in the alternative;
SCOPE OF APPLICATION (f) The relief sought;
(g) A proposal as to the number of arbitrators (one or three), if

If you read the PDRCI Rules you will notice there are only 37
the parties have not previously agreed on such number;
pages, but take note that there are other guidelines. E.g.,
Practice Note 1 - the conduct of online hearings. Also, the (h) Proposals regarding the appointment of a sole arbitrator or an
Guideline of Fees. Anybody who wants to arbitrate under the arbitrator referred to in Articles 7 (Joinder of Additional Parties)
and 8 (Claims between Multiple Parties); and
PDRCI umbrella is deemed to have submitted themselves to
all the rules applicable to PDRCI at the time of the dispute. (i) Proposal regarding the application of the Expedited Procedure
under Article 57.
WRITTEN COMMUNICATION
Some think that NOA is like a complaint in CivPro, that is a
Article 2: Written Communications fatal mistake. This does not require your discussion of
agreement. In fact look at (e), it say ‘brief description’’the
(1) A written communication, including a notice or request, may relief sought.’
be transmitted by any means that provides or allows for a record
of its transmission.
(2) If an address has been designated by a party specifically for NOA, sometimes is like a letter that we are hereby notifying
this purpose or authorized by the arbitral tribunal, a written the PDRCI that an arbitration is about to be instituted on the
communication shall be delivered to the party at such address, basis of a contract which is attached herein, the parties are
and if so delivered shall be deemed to have been received.
Delivery by electronic means, such as email or facsimile, may only these..and we are claiming an amount of . . . we propose
be made to an electronic address so designated by the party or that there are three arbitrators in accordance of CJVA.
authorized by the arbitral tribunal.
(3) In the absence of such designation or authorization, a written
communication is:
It is the statement of claim that really is substantial, that is
(a) received, if it is physically delivered to the addressee; or akin to Complaint in CivPro. And the answer is akin to the
(b) deemed to have been received, if it is delivered at the place Statement of Defense in CivPro.
of business, habitual residence, or mailing address of the
addressee.
ARTICLE 4 SECTION 4
You’ll notice that the provisions of PDRCI look like the (4) The Notice of Arbitration may also include the Statement of
provisions of RA 9285 and UNCITRAL Model. Claim referred to in Article 30.
Reason: What we’re trying to do, in all model law countries, This tells us that the NOA is really a different document, it
is to strike a uniform interpretation of model law. Because of says ‘NOA may also include’. But at the same time, the
this, even the words that we use are similar. second deduction here is that you need not submit the
Statement of Claim at the time you submit the NOA.
If you know model law, you will likely know how other
institutions craft their rules. No lawyer in his right mind would do that, why would you
show your opponent your strategy and evidence when you
Page 49
are not even sure if your opponent will even respond. Once just stop at how to get a meritorious judgment.
you submit NOA you don't even know if you’re gonna be able
to pay your fees. Take note of the last phrase of Art. 4(6). If the claimants do
not pay the provisional advance, the respondent will not be
You just don’t submit something to PDRCI without asking asked to respond to the notice of arbitration. Segurista kaayo
how much [is the filing fee]. My suggestion, you call first or ning PDRCI (PDRCI is very cautious). This is technically a
ask via email. They are very responsive. You tell them the private institution. So they will really want to be paid first.
amount of your claim and how much would be the filing fee.
Make it a habit . . . ARTICLE 5: RESPONSE TO THE NOTICE OF
ARBITRATION
So you ask “If this is the amount of our claim, how much
would be the filing fee?” So that your client would not be I leave this up to you. But remember, it’s 30 days, Art. 5(1).
shocked. Make it a habit even in court. In court, for you to You only have days.
know how much it is, you bring a copy of your pleading, the
complaint to the OCC. And then you ask the OCC, “Ma’am we Art. 5 (1). Within thirty (30) days from the receipt of
will file this tomorrow. How much are we going to prepare?” PDRCI’s notice to submit the response to the Notice of
And then the OCC will give you a figure, so you know ahead Arbitration, the respondent shall communicate to the PDRCI a
response to the Notice of Arbitration…
of time. Anyway…
Let’s go to Art. 4 (6) of the PDRCI Arbitration Rules on Let me clarify this, because there seems to be a
provisional advance. misunderstanding with new lawyers. By new lawyers, I mean
me. When you send a notice of arbitration, the rule is don’t
copy-furnish the other party, di ba (right)? Because it’s
(6) The claimant shall pay a provisional advance on costs
(“Provisional Advance”) in accordance with the Guidelines on supposed to be PDRCI who is supposed to submit the notice
Fees. PDRCI shall not act on the Notice of Arbitration, including of arbitration once the PDRCI has determined that you paid
any proposal for the appointment of arbitrators, and the provisional advance. But in my experience, 9 out of 10, the
respondent shall not be required to submit a response to the
Notice of Arbitration, unless the Provisional Advance has been other party furnishing the notice will copy-furnish us. Is that
paid. a mistake? It is a mistake, because the 30-day period doesn’t
begin to run until and unless it is the PDRCI that submits the
In arbitration, winner takes all. And because the winner takes notice. It is expressly provided. It says “within 30 days of
all, the winner pays nothing. That’s the general rule unless receipt of PDRCI’s notice to submit the response.” So what
you agree that it will be shared. So I asked you earlier how you will receive actually if you are the respondent is a notice
much is the filing fee, and the filing fee is P84 million. And of arbitration… sorry, notice to respond attached to it is a
that is called, ladies and gentlemen, an advance. Why is it an notice of arbitration.
advance? Because it is possible for the arbitration to have
more expenses, such as when the arbitration instead of just Look of paragraph 2 of Art. 5. The response to the NOAH -
one hearing, will have multiple hearings, like in EverSheds. let’s just call it NOAH - because it’s how it’s called.
Why are there multiple hearings in Eversheds? Because the Art. 5 (2). The Response to the Notice of Arbitration may also
tribunal decided to separate the jurisdictional hearing from include:
the merits hearing. Traditionally, it will just be four or five (a) a plea that an arbitral tribunal to be constituted under the
straight days of hearing, both merits and jurisdiction. But Rules lacks jurisdiction or that the Disputes are not arbitrable; and
know, since it’s separate, you can expect that the hourly rate
(b) The Statement of Defense referred to in Article 31.
of the arbitrators will also increase. It is called a provisional
advance is again, because it is not final. And the provisional
(3) The respondent shall pay a Provisional Advance in
advance is always paid by the claimants. Yet, while it is paid accordance with the Guidelines on Fees. Unless the
by the claimants, it will be taken against the respondent if Provisional Advance on costs is paid by the respondent, the
ultimately after the proceedings, the respondent is made arbitral tribunal shall not act on any counterclaim, or any
other claim or affirmative relief sought by respondent.
liable.
Atty., how do you execute? I think that’s for another bloody

discussion. I don’t even think we are going to discuss that. This is really where the conflict begins. Because the
But for purposes of this course this semester, I think we will respondent can contest the jurisdiction of the tribunal. Take
Page 50
note however, that even if the respondent can contest the consolidated with the criminal case. And how do you do that?
jurisdiction of the tribunal, the tribunal has competence to You file a motion for consolidation in the court that will not
determine the existence or the absence of its jurisdiction. survive. So in the example that I gave, you file it in the civil
Competence-competence principle, always remember that. case.
In a sense, that is the same as civil procedure. Prior to the What if two courts are co-equal, both civil cases? How is that
2019 amendment, when you file a motion to dismiss, [the possible? I will give you an example that I encountered this
grounds for which] includes prescription, lack of jurisdiction, morning. One party - the kabit - sorry, I shouldn't say that.
litis pendentia, technically, the court has no other jurisdiction. One party - because it involves the estate of this very rich
If the court has no jurisdiction, its only remedy or power is to guy - filed testate, the other one filed intestate. What did we
dismiss the case. Any other proceeding is null and void. do? Consolidated, di ba (right)? So that’s the essence of
That’s what we learned in CivPro. But for the Court to know consolidation, you resolve issues that are intertwined. So that
whether it has jurisdiction, it has to take cognizance of the concept is adopted in arbitration? In what instances? Art.
pleading that asks it not to take jurisdiction. Di ba, it sounds 10(1).
circuitous? (It sounds circuitous, right?) So it’s the same
here. The arbitral tribunal is empowered to determine Article 10: Consolidation of Arbitration
whether it has jurisdiction first by taking the case. And if
ultimately, it finds that it has not jurisdiction, no harm done. 1) PDRCI shall have the power, at the request of a party,
(“Request for Consolidation”) and after consulting with the
Then, the case will be dismissed.
parties and any confirmed arbitrators, to consolidate two or
more arbitration under the Rules where:
Again, Art 6(1) is a restatement - if notice noh - this is a (a) The parties agree to consolidate
restatement of the model law. (b) All the claims in the arbitration are made
under the same arbitration agreement;
(c) Where the claims are made under more than
Article 6: Representation and Assistance one arbitration agreement, a common
(1) Each party may be represented or assisted by any question of law or fact arises in both or all of
person chosen by it. The participation of any person in the arbitrations, the right to relief claimed,
the arbitration shall be subject to the discretion of the are in respect of, or arise out of, the same
arbitral tribunal. transactions or series of transactions, and
PDRCI finds the arbitration agreements to be
compatible.
For those who are still wondering, when I say model law, this
is the UNCITRAL Model Law, the United National Model Law. (a) The parties agree to consolidate
It says each party may be represented by any person chosen
by it. And all the claims made under more than one arbitration
agreement but there is a common question of law so
I won’t discuss section 2 with you guys. I won’t ask ultimately this is other than letter A which is the core of
questions about section 2 (joinder of parties). I think that’s arbitration-consent, other than that there should be
practice-ready. And for an appreciation course like this, I commonality, common contract or common facts.
don’t think you need the notes.
(b) All the claims in the arbitration are made
Let’s skip multiple parties. Let’s go to consolidation. under the same arbitration agreement;
Example: We have this client, an insurance company, it
Civil procedure first. Why do you consolidate cases? You insured a building. Nahagba ang building. The owner of the
consolidate cases because they are intertwined. The facts building initiated arbitration against the contractor.
and issues are intertwined. For example, in Arts. 32, 33, 34, Separately, the contractor sued the insurance company. So
and 2176 of the Civil Code - these are independent civil there were 2 arbitrations on going under one contract the
actions, correct? I hope you remember because you are contract was a memorandum of agreement between three
going to take the bar. So you may proceed independently. parties. So we consolidated the cases but it was not in PDRCI
But there are actions you cannot proceed independently. And it was in CIAC because it was a construction business.
what are those? Everything else, you cannot proceed. So if
you file a civil case, it will be suspended, correct? If you file a (c) claims are made under more than one
civil case and then subsequently, you file a criminal case, the arbitration agreement but involving a common
civil case gets suspended if the civil case is ex delicto, question of law or fact.
correct? Other remedy if the civil case is ex delicto, will be
Page 51
Lets take a fictional example based on that real life example I

Article 19: Notice of Challenge, Acceptance of Challenge
gave. There will be multiple contracts such as contractor and
building owner and one contract between the contractor and (1) A party who intends to challenge an arbitrator shall send a
insurer or insurance. If mahagba ang building we can notice of challenge within fifteen (15) days after it was notified of
the confirmation or appointment of the challenged arbitrator or
consolidate even if multiple contract were involved. Because within fifteen (15) days after the circumstances mentioned in
anyways the ultimate question is who is liable? If the arbitral Articles 17 to 18 (Disclosure of Arbitrators, Challenge of
tribunal will say, it is the contractor the second question is Arbitrators) became known to
that party.
will the contractor be able to claim from the insurance
because it is also in the interest of the insurance to prove
during arbitration the contractor is not liable. On the other The arbitrator cannot be forced to accept an arbitrator
hand the owner of the building may even get a third party position. Once the arbitrator accepts that position for the
insurance. You parked your car somebody hit you. Its the designation, the party upon receipt will have to make the
third party insurance that will pay your insurance. Your challenge. In some instances, that 15 day period will also
insurer will say whatever happen to your car I will pay. In begin from that the time that the circumstances mentioned in
short, without your fault somebody hits you. You did not Article 17 and 18 became known to that party. In short the
have to ask that person. Ask your insurance to pay. Your reasons indicated in Article 17 and 18 may later be known to
insurance will be subrogated to your right and that insurance the parties and the 15 day period upon the notice of
as a subrogee will be able to go after the ultimately liable. So appointment or confirmation may have already lapsed so that
in the end in an arbitration, it is possible for you to have a period with respect to article 17 and 18 is counted from the
contractor and owner and two insurance companies in time that the party knows the reason.
insuring different insurable interest.
(2) The notice of challenge shall contain facts and circumstances,
Art. 10 (5). Where PDRCI decides to consolidate two or more in addition to those already disclosed, upon which the challenge is
arbitrations, the arbitrations shall be consolidated into the based. It shall be communicated to PDRCI, to the other parties,
arbitration that commenced first, unless all parties agree or PDRCI to the arbitrator who is challenged, and to the other arbitrators.
decides otherwise, taking into account the circumstances of the The notice of challenge shall be in writing and shall state the
case. reasons for the challenge.
That's the general rule. If in the BAR exam you will be asked, The notice shall contain the facts or any circumstances that
in consolidating civil cases, which case survives. That’s the the party believes would be sufficient to call upon the
only facts. The answer should be the case with the lower inhibition of the arbitrator.
docket number. Why? Because the case with the lower
docket number was filed first. The general rule in concurrent (3) A notice of challenge shall not be considered made unless the
jurisdiction is that once jurisdiction is acquired. It excludes all party making the challenge has paid the challenge fee under
these Rules in accordance with the Schedule of Fees.
other concurrent jurisdiction. So in that ruling in Philippine
jurisprudence is also applied in arbitration. Again we are not
talking about PDRCI as a court. It does not resolve dispute. In making the challenge against the arbitrator, there is what
It is the tribunals that created under the umbrella of PDRCI. we call, “the challenge fee” and that fee must be paid before
The only service that PDRCI will give is secretariat, the PDRCI does anything with the challenge. If you don’t pay
administrative. But it is arbitral tribunals under the PDRCI the fee, the challenge will be considered not to have been
framework that will resolve the dispute. made.
SECTION III. COMPOSITION OF THE ARBITRAL (4) Except for justifiable reasons as may be determined by PDRCI,
TRIBUNAL ARTICLE 11 : ARBITRAL TRIBUNAL the notice of challenge shall not suspend the proceedings.
If you look at it. It is really a creation of the model law. Generally, the proceedings will not be suspended by reason
Arbitral tribunal can be sole or panel of arbitrator. Most of the of the challenge. There will only be suspension of the
time parties will already agree how many arbitrators there proceedings in exceptional circumstances.
will be. Look at the model arbitration clause. There is a
suggestion there that you indicate how many arbitrators you
(5) All parties may agree to the challenge, in which case the
will have. confirmation or appointment shall be deemed withdrawn. The
challenged arbitrator may also withdraw
the acceptance of his or her nomination or appointment.
Page 52
provide or produce evidence that the actions of the arbitrator

Acceptance of the challenge by the nominating party or by the
challenged arbitrator shall not imply the validity of the challenged resulted to prejudice in the proceeding, then
challenge. there’s a possibility that the proceedings will be repeated.
When a party challenges the arbitrator, all the other parties in Article 24: File Counsel
the arbitration shall be notified of the challenge. A copy
(1) A Counsel-in-Charge of the File (“File Counsel”) shall be
which must be served to all the parties. All the parties have appointed by the Secretary General upon commencement of the
the opportunity or the choice to simply just agree on the arbitration from a list of qualified individuals. The File Counsel,
challenge and so the arbitrator will be removed from the who is independent of the arbitral tribunal, shall monitor the
arbitration on behalf of PDRCI. The File Counsel shall not perform
arbitration. He has no choice. If all the parties don’t agree to
the function of a Tribunal Secretary.
the arbitrator, the arbitrator may just step down and simply (2) The File Counsel shall be subject to Article 17 on Disclosure
say “you know I don’t want this trouble and for purposes of and to Articles 18 and 19 on Challenge by any party. The
avoiding the appearance of impropriety or lack of integrity or resolution of the challenge by PDRCI shall be final.
(3) The File Counsel may attend the case management
any reason without admitting that that reason exists I will conference and the hearings.
just simply voluntarily inhibit.”
A file counsel is appointed by the PDRCI from a list of

Article 20: Resolution of Challenge
qualified individuals. A file counsel is independent from the
(1) If the other party does not agree to the challenge and the arbitral tribunal. It’s role is to monitor the arbitration on
challenged arbitrator does not withdraw within fifteen (15) days behalf of the PDRCI. Basically, it is performing the function of
from notice of the challenge, PDRCI shall decide the challenge the tribunal secretary.
within five (5) days from referral by the Secretariat. PDRCI may
adopt any appropriate procedure and adjust the time limit to
decide the challenge, including hearing the parties and the Atty: In my experience, a file counsel is always a lawyer. The
challenged arbitrator. file counsel will determine whether the pieces of evidence
have been submitted, whether there are pieces of evidence
(2) If PDRCI sustains the challenge, a substitute arbitrator shall
be appointed pursuant to the procedure applicable to the missing.
appointment of an arbitrator as provided in Articles 12 to 14 (Sole
Arbitrator, Three Arbitrators, and Multiple Parties and Arbitrators).
Section IV: Arbitral Proceedings
(3) PDRCI’s decision on the challenge shall be final. The arbitral
tribunal shall allocate the costs of the challenge, if any, including Article 26 : General Provisions
the challenge fee and the costs incurred by the challenged
arbitrator and the opposing party. (1) Subject to the Rules, the arbitral tribunal may conduct the
arbitration in such manner as it considers appropriate, provided
that the parties are treated with equality and given a reasonable
In the event that the arbitrator does not step down and all opportunity of presenting their case. The arbitral tribunal shall
provide a fair and efficient process of settling the Disputes,
the parties do not agree, the PDRCI will decide. Once the avoiding unnecessary delay and expense.
PDRCI decides, that decision is final. (2) If so requested by a party, the arbitral tribunal shall hold
hearings at an appropriate stage of the proceedings for the
presentation of evidence, including expert testimony, or for oral
Article 23: Repetition of Hearings argument. In the absence of such a request, the arbitral tribunal
shall decide whether to hold such hearings or whether the issues
If an arbitrator is replaced, the proceedings shall resume at the shall be decided on the basis of documents and other materials.
stage where the arbitrator who was replaced ceased to perform
their functions without repeating the previous hearings, unless the
arbitral tribunal decides otherwise. The arbitral tribunal has the power to conduct the
proceedings in the manner it deems best. Hearings are not
Because an arbitrator has been challenged there might be an required. Under Article 26 (2), hearings are generally not
issue of whether the hearing would be repeated. As you conducted unless so requested by the party. If no party
know, once an arbitrator is challenged, obviously he will be requests for hearing then the tribunal will determine motu
replaced. Once there is a new arbitrator, hearings are proprio whether hearings need to be conducted or the
generally not repeated unless of course the tribunal decides arbitration need to resolve on the bases of the documents
otherwise. and other materials submitted.
Atty: I think that instance would depend on the nature of the Article 27 : Seat of Arbitration
challenge. If the challenge is with respect to integrity,
(1) If the parties have not previously agreed on the seat of
partiality, and the party challenging the arbitrator is able to
Page 53
Notice of Arbitration (NOA) - is just simple evidence

arbitration, the seat of arbitration shall be the Philippines, unless
the arbitral tribunal, having regard to the circumstances of the notifying the party PDRCI that the party is initiating
case, determines that another seat is more appropriate. arbitration. And PDRCI in terms obligated upon payment of
(2) The award shall be deemed to have been made at the seat of fees to transmit a copy of the notice of arbitration and direct
arbitration.
(3) The arbitral tribunal may meet at any location or venue it the respondent to respond within the period allowed under
considers appropriate for deliberations. Unless otherwise agreed the PDRCI rules.
by the parties, the arbitral tribunal may also meet at any location
or venue it considers appropriate for any other purpose, including
hearings.
Statement of claim is the substantial initiatory pleading to be
submitted by the claimant/s. It will include those that are
enumerated in Article 30 (2).
Parties have to agree where the seat of arbitration is. If there
is no agreement as to the seat of arbitration, that would be Article 30(2)
the Philippines. (b) Facts supporting the claims - this is where most if
not all of the evidence will be indicated. Let’s say: the parties
Rationale: The seat of arbitration is where the arbitration have agreed, the parties have ordered, the parties have
will take place. If it is in the Philippines then it will take place written. Things like that, you can not just generally allege
somewhere here, not necessarily in Taguig where PDRCI is. without attaching the evidence especially since hearings are
It is possible that the arbitration will take place somewhere, not necessary in PDRCI. So there is a heavy reliance on the
let’s say near the property or the company where the evidence submitted by the parties.
evidence is . . . etc. It is also important to determine the
seat of arbitration because the award or the decision (it could
also mean the award) shall have been made at the seat of Article 31 : Statement of Defense
the arbitration. (1) Within a period of time to be determined by the arbitral

tribunal, the respondent shall communicate its statement of
defense ("Statement of Defense") in writing to PDRCI, to
Article 30 : Statement of Claim claimant, and to each of the arbitrators. The respondent may
elect to treat the Response to the Notice of Arbitration as the
(1) The claimant shall communicate its statement of claim Statement of Defense, provided that the Response to the Notice
("Statement of Claim") in writing to PDRCI, to respondent, and to of Arbitration also complies with the requirements of paragraph 2
each of the arbitrators within a period of time to be determined of this Article.
by the arbitral tribunal. The claimant may elect to treat the Notice
of Arbitration as the Statement of Claim, provided that the Notice (2) The Statement of Defense shall reply to the particulars
of Arbitration also complies with the requirements of paragraphs 2 required by Article 30 (2) (b) to (f). As far as possible, all
to 4 of this Article. documents and other evidence relied upon by the respondent
shall be submitted together with or referenced in the Statement of
(2) The Statement of Claim shall include the following particulars: Defense.
(a) The names, addresses, and other contact details of the
parties; (3) In the Statement of Defense, or at a later stage upon the
(b) A statement of the facts supporting the claim; discretion of the arbitral tribunal, respondent may make a
(c) The points at issue; counterclaim, or rely on any other claim for the purpose of a
(d) The legal grounds or arguments supporting the claim; set-off provided that the arbitral tribunal has jurisdiction over it.
(e) The value of the claims and the amounts involved, or if (4) The provisions of Article 30 (2) shall apply to a counterclaim
the relief sought is non-monetary, an estimate of its value; and any other claim relied on for the purpose of a set-off.
and
(f) The relief sought. (5) Upon the filing of the Statement of Defense and the
counterclaim, or any other claim, PDRCI shall determine the
(3) A copy of any contract or other legal instrument out of or in respondent's Final Advance and shall require respondent to pay
relation to which the Disputes arise and of the arbitration the same, less any amounts paid by way of Provisional Advance,
agreement shall be annexed to the Statement of Claim. in accordance with the Guidelines on Fees, subject to Article 32
(Amendment to the Claim or Defense) of these Rules.
(4) As far as possible, all documents and other evidence relied
upon by the claimant shall be submitted together with or
referenced in the Statement of Claim. The statement of defense will contain responses or replies to
(5) Upon the filing of the Statement of Claim, PDRCI shall the particulars required in Article 30(2) (b) - (f).
determine the amount of the claimant's final advance on costs
("Final Advance") and shall require the claimant to pay the same,
less any amounts paid by way of Provisional Advance, in Article 33 : Terms of Reference
accordance with the Guidelines on Fees, subject to Article 32
(Amendment to the Claim or Defense) of these Rules. (1) The arbitral tribunal shall prepare on the basis of the parties'
submissions, a document defining its terms of reference ("Terms
of Reference").
Page 54
the scope, existence, or validity of the arbitration clause or

(2) The Terms of Reference shall include the following: arbitration agreement, or if all of the claims or counterclaims may
be determined in a single arbitration.
(a) a summary of the parties' respective claims and of the
relief sought by each party, together with the amounts of
such claims, including, to the extent possible, an estimate of The arbitral tribunal has the jurisdiction to determine the
the value of non-monetary claims; merits of the case and whatever that is submitted to it.
(b) a list of issues to be determined;
(c) any supplement or amendment to the procedural order or However, it also have the jurisdiction to determine whether
the Terms of Reference referred to in Article 29; or not it has jurisdiction. The tribunal can say, “we don’t have
(d) any reservation of the arbitral tribunal’s authority to jurisdiction over this case so we have to dismiss it or
clarify or refine issues in the course of the arbitral
whatever action that we need to do.”
proceedings.
(3) The Terms of Reference may be in the form of a procedural

order issued by the arbitral tribunal or in the form of a joint (4) The arbitral tribunal shall rule on a plea concerning its
submission by the parties. If in the form of a procedural order, it jurisdiction, either as a preliminary question or in an award on the
shall be issued within fifteen (15) days from the date of the merits. The arbitral tribunal may continue the arbitration and
receipt of the last submission required in the procedural timetable make an award, notwithstanding any pending challenge to its
of the arbitral tribunal. Unless in the form of a procedural order, jurisdiction before a court if allowed under the applicable law.
the Terms of Reference shall be reviewed and signed by the (5) In cases when the propriety of the consolidation of two or
parties and the arbitral tribunal. Once signed by the parties and more arbitrations is in issue, PDRCI shall decide if and to what
the arbitral tribunal, it may not be modified without their consent, extent the arbitrations shall proceed, in accordance with Article 10
unless there is a reservation pursuant to paragraph 2 (d) of this (Consolidation of Arbitrations).
Article.
(4) If a party refuses or is unable to sign the Terms of Reference, Article 34 makes it clear that the question on the jurisdiction
the arbitration shall proceed on the basis of the Terms of of the arbitral tribunal may be resolved as a preliminary
Reference signed by at least one party and the question or it may be combined with the merits of the case.
arbitral tribunal.
Eversheds v. Plastic Co. is an example of an arbitration
wherein the pleas as to the jurisdiction of the arbitral tribunal
Generally, it is the tribunal that prepares the terms of are resolved prior to the merits. So the hearings are
reference (TOR), in fact it is clear in Article 33 (1). But Article conducted first with respect only to the jurisdiction. Needless
33(3) clearly indicates that it may also be prepared by the to say, if the tribunal finds that there is no jurisdiction, the
parties by a joint terms of reference or joint submission. case is dismissed. If the tribunal finds that there is
jurisdiction, merits-based will proceed. And in that
The TOR shall include those that are enumerated in Article merits-based, the tribunal has the prerogative whether or not
33(2). to review the jurisdictional judgment.
TOR is like a pre-trial order of the court, it will govern the

Article 35: Summary Disposition
conduct of the proceedings. It will indicate the witnesses that
the parties would like to present, the summary of the (1) Not later than fifteen (15) days from the last submission of the
evidence of the parties, facts to be discussed, etc. relevant claims or defenses, any party may apply to the arbitral
tribunal for the summary disposition of one or more claims,
counterclaims, or defenses that are manifestly without merit.
You might notice that there is line “procedural order”, you
may be able to read that in different portion of the PDRCI
Because there are multiple issues that the parties may raise
rules.
in an arbitration, it is possible that some of these issues or
claims may be totally unmeritorious. And if the tribunal finds
Procedural orders - orders by the tribunal, they put a
one or more claims which are unmeritorious, then it may
number . . . sometimes the case management conference is
summarily dispose of them. The tribunal may do it no later
procedural order number 1, the timetable is procedural order
than 15 days from the last submission of the relevant claims
number 2, number 3 . . . they put a number in the
or defenses.
procedural orders so it is easy to refer.
Article 36: Further Written Statements

Article 34: Pleas as to the Jurisdiction of the Arbitral
Tribunal The arbitral tribunal shall decide what further written statements,
in addition to the Statement of Claim and the Statement of
(1) The arbitral tribunal shall have the power to rule on objections Defense, shall be required from the parties or may be presented
that it has no jurisdiction, including any objections with respect to by them. The arbitral tribunal shall fix the periods of time for
Page 55
communicating such statements. party against whom the measure is directed if the measure is
granted; and
Q: Can parties submit other documents aside from (b) there is a reasonable possibility that the requesting party will
Statement of Claim and Statement of Defense? succeed on the merits of the claim. The determination of this
possibility shall not affect the discretion of the arbitral tribunal in
A: Yes but it will depend on the tribunal’s discretion. making any subsequent determination.
Submissions such as Statement of Rejoinder or Statement of PDRCI, its trustees and employees, File Counsel, and the arbitral
tribunal or any person appointed by PDRCI or by the arbitral
Reply will have to be consented to by the Tribunal. In short,
tribunal, including the Tribunal Secretary and expert witnesses,
parties are not really at liberty to submit these further shall not be liable to any person for any act or omission made in
submissions without the consent of the tribunal. connection with the arbitration, except upon a clear showing of
bad faith, malice, or gross negligence.
Q: What are interim measures of protection? Section V: The Award

A: These are basically provisional remedies granted to parties (6) With respect to other forms of Interim Measure, the
requirements under paragraph 5 of this Article shall apply only to
during the pendency of an arbitration proceeding or even the extent the arbitral tribunal considers appropriate.
before the arbitration proceeding is initiated.
(7) An Interim Measure may be requested by written application
transmitted by reasonable means to the arbitral tribunal and to
Article 38 Interim Measures of Protection the party against whom the measure is sought, describing in
appropriate detail the precise relief, the party against whom the
(1) It is not incompatible with an arbitration agreement for a relief is requested, the grounds for the relief, and the evidence
party, before the constitution of the arbitral tribunal, to request a supporting the request.
court to grant an interim measure of protection (“Interim
Measure”) or to apply for Emergency Relief pursuant to Article 59. (8) The order shall be binding upon the parties.
(2) After the constitution of the arbitral tribunal and during the (9) The arbitral tribunal may modify, suspend, or terminate the
arbitration, a request for an Interim Measure or its modification Interim Measure it has granted, upon application of any party or,
may be made with the arbitral tribunal or, to the extent that the in exceptional circumstances and after prior notice to the parties,
arbitral tribunal has no power to act or is unable to act effectively, on the arbitral tribunal’s own initiative.
with the court.
(10) A party who does not comply with the Interim Measure shall
(3) Any party may request that an Interim Measure be granted be liable for all damages and other sanctions as the arbitral
against any other party. The request shall be accompanied by tribunal may deem appropriate, including all costs and reasonable
payment of the non-refundable fee and requisite deposits under legal fees paid in obtaining judicial enforcement.
these Rules.
(11) Either party may apply with the court for assistance in
(4) An Interim Measure, whether in the form of an order, award, implementing or enforcing the Interim Measure ordered by the
or other form, is a temporary measure issued to, among others: arbitral tribunal.
(a) prevent irreparable loss or injury;
(12) The arbitral tribunal may require any party to promptly
(b) provide security for the performance of any obligation; disclose any material change in the circumstances on the basis of
(c) produce or preserve any evidence; which the Interim Measure was requested or granted.
(d) maintain or restore the status quo pending the determination (13) The order granting an Interim Measure may be conditioned
of the Disputes; upon the provision of security for any act or omission specified in
(e) take action to prevent, or refrain from taking action that is the order.
likely to cause current or imminent harm or prejudice to the
arbitration; (14) The party requesting an Interim Measure may be liable for
any costs and damages caused by the Interim Measure to any
(f) provide a means of preserving the goods in dispute and any party if the arbitral tribunal later determines that, in the
other assets out of which the award may be satisfied, including circumstances then prevailing, the Interim Measure should not
appointment of receivers or detention, preservation, and have been granted. The arbitral tribunal may award such costs
inspection of property; or and damages at any point during the arbitration.
(g) compel any other appropriate act or omission.

Article 38.1 clearly states that it is not incompatible with an
(5) The party requesting an Interim Measure under paragraph 4
(a), (d), (e), and (f) of this Article shall satisfy the arbitral tribunal
arbitration agreement before the constitution of an arbitral
that: tribunal, to approach a court and request for a grant of
interim measure of protection. In other words, even without
(a) harm not adequately reparable by an award of damages is
the tribunal being constituted. A party may approach or go to
likely to result if the measure is not ordered, and such harm
substantially outweighs the harm that is likely to result to the court and ask for interim measures of protection.
Additionally, it is also possible for a party or even the tribunal
Page 56
itself to seek the assistance of the court for interim measures

(3) The arbitral tribunal may allow the production of evidence,
of protection after the tribunal has been constituted and provided it is relevant to the case, material to its outcome, and
during the pendency of an arbitration proceeding. not dilatory to the proceedings.
(4) Any objection to the production of evidence requested shall be

Q: When we speak of interim measures, what can the promptly communicated to the arbitral tribunal, who shall rule on
court grant? the objection at the Case Management Conference or at such
A: These are measures which prevent irreparable loss, other time allowed by it.
measures which provides security for the performance of any (5) The arbitral tribunal may include in the Procedural Timetable
obligation, measures to produce or preserve evidence, the details of the production of evidence requested, the due
measures to maintain the status quo pending the dates, the nature of the testimony or document sought, the party
responsible for the response, and the place of production or
determination of the dispute, etcetera
deposition, among others.
Usually interim measures of protection are done in CIAC, and (6) In allowing the production of evidence, the arbitral tribunal
the most usual interim measure is to prevent the parties from shall act fairly and expeditiously, but without any unnecessary
formality. It may impose costs or other sanctions against any
entering the property except to secure it. The CIAC and the party’s (a) unjustified failure or refusal to comply with the order or
parties will have to determine whether the progress as agreement to produce evidence, or (b) attempt to delay or defeat
determined by the contractor or the progress determined by the production of evidence or to overwhelm the requesting party
with irrelevant or immaterial evidence.
the owner is actually accurate. In short, to preserve the
situation of that building or property. (7) Evidence produced pursuant to this Article shall form part of
the record and shall be subject to Article 45 (Confidentiality of
On PDRCI, I have only one experience with respect to interim Proceedings).
measures and that is to secure this particular office where
the corporate records are. That was the measure and it was Alright, let’s go to production of evidence. In production of
granted by the court after the parties sought the assistance evidence parties are free to adduce all evidence that the
of the court before the arbitration has been instituted. parties want. At the same time the party may also ask the
tribunal to direct the other party to produce certain evidence
Take note that an arbitral tribunal has no contempt power. that the other party refuses to produce. Take note under
So, in instances when we ask for interim measure we can ask Article 39 paragraph 7, any evidence adduced by the parties
that before the arbitral tribunal and the arbitral tribunal will or forming part of the arbitration proceedings are extremely
order an interim measure in certain instances and if you confidential.
don’t follow what the arbitral tribunal ordered it is possible
for the arbitral tribunal to simply go to court and ask the VJC: You know, let me share with you an experience I had
court to issue an order. A party that violates a court order with confidentiality, we had a client who was sued , the
which reiterates an arbitral tribunal’s interim measure of directors were sued, a criminal case. Separately arbitration
protection will result in contempt. proceedings were instituted against the corporation of which
our clients were directors. Now obviously, the facts and
Article 39 Production of Evidence circumstances are related and what we learned in law school
(1) Immediately after the Response Form is filed by respondent, is that when there’s a related issue that may determine the
but not later than the Case Management Conference, or at such innocence or guilt of an accused, then we ask for suspension
other time allowed by the arbitral tribunal, each party may offer
or request in writing to the other party to (a) stipulate on relevant on the basis of a prejudicial question, which is what we did.
facts and documents that are material to the claim, counterclaim, We filed a motion to suspend the criminal case on the basis
or defense, (b) produce and exchange oral or written testimony, of a prejudicial question existing in the arbitration. Ultimately,
documents, expert reports, or other evidence in its possession,
the court agreed with us and suspended the case.
custody, or control, or (c) inspect and reproduce or allow the
inspection and reproduction of documents and other evidence in
its possession, custody, or control. A party may also request the In turn, however, the prosecution or the private prosecutor
production of evidence by other means. filed a motion to hold us in breach of the confidentiality
(2) Except to receive the testimony of witnesses who may not be provision of the arbitration proceedings and fined us 500,000
available for examination during the hearing, depositions and per lawyer. Eventually, that was of course subsequently
interrogatories are not allowed. However, the parties may agree to compromised, we ultimately won the case and certain
depose any witnesses or to serve interrogatories on each other.
The arbitral tribunal may also allow the deposition of any
charges were dropped including the alleged violation of
witnesses or the service of interrogatories upon such terms as it confidentiality. You may think that looking back “How could
shall determine. you breach confidentiality when these are the same parties
involving the same issues in just two different tribunals,
Page 57
right?” and that was my sentiment and still is my sentiment mentioned, hearings are optional and you would know there
but that example gives you an idea of how strict tribunals are would be hearings either in the procedure timetable or in a
when it comes to confidentiality. separate procedural order or in the terms of reference. In the
absence of indication that there will be hearings, there will be
So in case of doubt, do not disclose. no hearings because Article 41 specifically states that if there
will be hearings, the tribunal will give the parties adequate
Article 40 Evidence and Burden of Proof advance notice of the date, and place of such hearing.
(1) Each party shall have the burden of proving the facts relied on
to support its claim or defense.
Article 42 Experts Appointed by the Arbitral Tribunal
(2) Witnesses, including expert witnesses, who are presented by
the parties to testify on any issue of fact or expertise may be any (1) After consulting the parties, the arbitral tribunal may appoint
individual, notwithstanding that the individual is a party to the one or more experts to report to it in writing on specific issues to
arbitration or in any way related to a party. Unless otherwise be determined by the tribunal. A copy of the expert’s terms of
directed by the arbitral tribunal, statements by witnesses, reference, established by the arbitral tribunal, shall be
including expert witnesses, shall be in writing and signed by communicated to the parties.
them.
(2) Before accepting the appointment, the expert shall submit to
(3) At any time before the close of hearings, the arbitral tribunal the arbitral tribunal and to the parties a description of their
may require the parties to produce oral or written testimony, qualifications and a statement of their impartiality and
documents, or other evidence and to allow the inspection and independence. Within the time allowed by the arbitral tribunal,
reproduction of such evidence, upon such terms as it shall the parties may object to the expert’s qualifications, impartiality,
determine. or independence. The arbitral tribunal shall promptly decide such
objections.
(4) The arbitral tribunal shall have the power to determine the
admissibility, relevance, materiality, and weight of a party’s (3) The parties shall give the expert all relevant information or
evidence. produce for their inspection all relevant documents, information,
goods, or other evidence that they may require of them. Any
dispute between a party and such expert as to the relevance of
the required information or production shall be referred to the
Q: Evidence and burden proof, what is the evidence
arbitral tribunal for decision.
and burden of proof here?
A: In criminal cases, as you may know the burden of proof (4) Upon receipt of the expert’s report, the arbitral tribunal shall
rests solely on the prosecution. The defense can refuse to communicate a copy of the report to the parties, who shall be
given the opportunity to express, in writing, their opinion on the
present anything, refuse to participate yet the defense might report. A party shall be entitled to examine any document on
still win in the end. which the expert has relied in their report.
(5) At the request of any party, the expert, after delivery of the
But in arbitration, Article 40, paragraph 1 specifically states
report, may be heard at a hearing where the parties shall have
that each party shall have the burden of proving the facts the opportunity to be present and to examine the expert. At this
relied on to support its claim or defense. hearing, either party may present expert witnesses in order to
testify on the points at issue. The provisions of Article 41
(Hearings) shall be applicable to such hearing.
Article 41 Hearings
(1) In case of an oral hearing, the arbitral tribunal shall give the
parties adequate advance notice of the date, time, and place of Let’s go to Article 42, Article 42 says experts appointed by
such hearing. the arbitral tribunal. The tribunal may appoint experts if the
dispute at hand is extremely complex, if it is complex, the
(2) Witnesses, including expert witnesses, may be heard under
the conditions and examined in the manner set by the arbitral tribunal will consult the parties, the tribunal has to since the
tribunal. party has to pay for the experts, you know. Unlike in court, if
a court issues a subpoena for a government employee to
(3) Hearings shall be held in camera unless the parties agree
otherwise. The arbitral tribunal may require the exclusion of any appear, the government employee has no choice but to
witness or witnesses, including expert witnesses, during the appear, right? But here since it is a private dispute if the
testimony of other witnesses, except that a witness who is a party tribunal requests an expert to appear, you have to pay the
or a party representative to the arbitration shall be entitled to
expert.
attend the hearings without being excluded.
(4) The taking of evidence shall be subject to conditions as the

Article 44 Closure of Hearings
arbitral tribunal shall prescribe. In appropriate cases, after
(1) The arbitral tribunal may inquire of the parties if they have
consulting the parties, the arbitral tribunal may direct that the
any further evidence to offer or witnesses to be heard or
evidence be taken by video or audio conference or other means.
submissions to make and, if there are none, it may declare the
hearings closed.
So let us continue, hearings under Article 41. As I have
Page 58
(2) The arbitral tribunal may, if it considers it necessary owing to Article 53 Additional Award
exceptional circumstances, decide, on its own initiative or upon (1) Within thirty (30) days after the receipt of the termination
application of a party, to reopen the hearings at any time before order under Article 50 (2) or the award, a party, with notice to
the final award is made. the other party, may request the arbitral tribunal to make an
additional award as to claims presented in the arbitral
proceedings but not decided by the arbitral tribunal.
Okay, closures of hearings, a matter of reading.
(2) If the arbitral tribunal considers the request to be justified, it
shall render an additional award or complete its award within
Article 51 Interpretation of Award sixty (60) days after the receipt of the request. The arbitral
(1) Within thirty (30) days after the receipt of the award, a party, tribunal may extend, if necessary, the period of time to make the
with notice to the other party, may request that the arbitral award.
tribunal give an interpretation of a specific point or part of the
award. (3) When such an award or additional award is made, the
provisions of Article 48 shall apply.
(2) If the arbitral tribunal considers the request to be justified, it
shall make the interpretation in writing within thirty (30) days
from receipt of the request. The interpretation shall form part of Additionally, Article 53 which is ‘additional award’. Again, 30
the award and the provisions of Article 48 shall apply.
days from the receipt of the award, if the party determines
that there are missing claims or claims which have not been
After the issuance of the award, 30 days from the receipt of resolved by the tribunal, then the party may ask the tribunal
the party, the party has the opportunity to ask for to make additional awards. If the tribunal considers the
clarifications that is found in Article 51, paragraph 1. So the request to be justified, it will render an additional award or
party may ask a tribunal to clarify a specific portion of the complete its award within 60 days.
award, if the tribunal thinks that the request of the party with
respect to interpretation is justified. Within 30 days from the Alright, I think those are the critical parts of the PDRCI which
receipt of the request, the tribunal will issue a clarification. have been left undiscussed.
Article 52 Correction of Award
(1) Within thirty (30) days after the parties’ receipt of the award,
the arbitral tribunal, on its own initiative, or any of the parties,
with notice to the other party, may request the arbitral tribunal to
correct in the award any error in computation, any clerical or
typographical error, or any error or omission of a similar nature.
(2) If the arbitral tribunal considers the party’s request to be

justified, it shall make the correction within thirty (30) days from
receipt of the request. Such corrections shall be in writing and
shall form part of the award. The provisions of Article 48 shall
apply.
Now, the interpretation of the award in Article 51 is different

from Article 52 or the correction of the award. If any of the
parties would determine that there is a point in the award ARBITRATION ACTIVITY
that must be clarified because it is clearly a clerical error, or
any error or omission of a similar nature. Then again, within You noticed that in the problem, EVERSHEDS and PH
30 days from the receipt of the award, the party may ask the PLASTIC, one party asked for interim measures and the
tribunal to make a correction which is why Article 52 is problem with that party asking for an interim measure is that
entitled ‘Correction of Award’. you are not sure if that interim measure was actually the
main case. That’s really the issue and that’s a novel issue. In
reality, you cannot see the same remedies from two different
parties. The struggle that we have there is that one of the
parties is claiming that it was an interim measure but how
long did it take for that party to suddenly say that it was just
an interim measure. 10 years, such a long time. And the case
filed in the RTC Taguig was a complaint for specific
performance with WPI. It tells you that there is a main case
which is specific performance and there is also an interim
Page 59
remedy which is WPI. But if you look at the provisional ● Indicate the dates that the pleadings are submitted.
remedies under Rule 58 which is injunction, injunction in and ● Indicate that the hearing is necessary. Although
of itself is both an ancillary remedy and a main case. So general rule, no hearing. Unless the parties agree
that’s the first issue. otherwise.
● Use the Model Arbitration Clause of PDRCI rules.
Second issue is upon the grant of WPI, why was the case not ● Why the CJVA was against the law? PH Plastic was
referred to arbitration? Because if you are the plaintiff, once saying that it was a supply agreement. Anything
the court grants the WPI, you’ll ask the court to suspend the that you sell to the government must undergo bids,
proceedings and direct the parties to arbitration. That’s the competitive and public bidding. The fact that they
remedy. On the other hand, the plaintiff can argue that look entered into a fixed contract with one entity and will
at the nature of what we filed in the RTC. The nature of what continuously supply, it is a supply agreement - the
we filed is merely to observe, to comply with the contract argument of PH Plastic. Take note, this argument, is
during its effectivity. We did not ask the RTC to declare that not relevant for jurisdiction.
the contract is valid but simply to observe it while it is valid. ● That the CJVA is against the laws - on failure to
Because when you file the arbitration, that’s when you ask publicly bid. Here, there was no public bidding. The
the arbitrator to determine if the contract is valid. So there is reason why they entered into the CJVA is because
a difference between asking the court whether the contract is there is some sort of particular material that only
valid or not and subsequently ask the court to direct the Eversheds can make. OSG is saying that there
other party to observe a valid contract. That first instance, should be bidding but Eversheds response is that
that’s different from telling the court to tell the parties to only them can make the specific plastic and there is
observe the contract during its validity. The court was not no point in bidding. Previously, the OSG opined that
asked to determine whether the contract was valid or not. It the agreement was valid, in two opinions and then
is the obligation of the arbitral tribunal pursuant to the suddenly, they changed their minds. In reality, the
Korea Tech ruling. Additionally, look at the nature of the person who signed the second Opinion was the
damages being asked. There is no damages being asked in same guy who signed the third Opinion reversing
the Taguig RTC cause damages were asked in the arbitration. himself. This is for some background.
That’s really the interplay. It’s a pending case. What we’re ● NOA was filed. Paid the filing fees and the other
gonna do here is not to determine the merits of the dispute party responded. But in the first response and all
but to determine jurisdictional objection. Take note that an the response they have, they highlighted that the
arbitral body follows the concept of kompetenz-kompetenz tribunal has no jurisdiction.
under PIL which means that a body that resolves a dispute ● Opinion No. 1 and 2 confirmed that CJVA was valid
has the competence to determine its competence to rule on and Opinion No. 3 reversed it. Frankly, I dont know,
the dispute. Why would, in the EVERSHEDS problem, the maybe there was an extra legal reason that we dont
arbitral tribunal have no competence? Because if the matter really know why the Opinion No. 3 changed.
has already been resolved in the Taguig RTC, it is no longer Opinion No. 1 and 2 was released before the signing
competent since that’s done already but if that matter is not of the CJVA. Opinion No. 3 was issued when the
yet resolved in a way that it was simply an interim measure, BOD was changed. They asked the OSG to review
then it is still competent. and reverse it. Bad faith.
● There is no format to be followed in Statements. It
Admin matters in relation to the Activity: is generally liberal but you have to look at the
● Case Management Conference should be conducted PDRCI Rules. PDRCI is the arbitral institution.
and send the TOR. In reality, it is the parties that ● Make your own evidence that are attached to the
will send a joint TOR. In the extreme circumstance pleading.
that the party cannot agree with each other, it is the ● If you present witnesses, indicate it in the TOR.
Secretariat of the Arbitral Institution that would There are no surprises here. You don't have to
send a draft TOR. If they cannot agree, the absence indicate what their testimony is all about. Follow the
of the TOR will not stop the tribunal from JA Rule. In Arbitration, we indicate in the TOR that
proceeding. Supposedly, the tribunal will base their despite the absence of hearing, the parties will
jurisdiction on the TOR but since a TOR cannot be admit the genuineness, due execution of the JAR.
made, the tribunal will base the decision on the However, in court proceedings, the JA cannot be
pleadings submitted by the parties. Basis? admitted without having presented it in court. JA is
Experience. Not in the Rules. in lieu of direct testimony and every direct testimony
● The PDRCI has rules on what the TOR must contain. must be subject to cross, although cross may be
Page 60
waived. In arbitration, you can do away with the timeline in TOR, once you sign the TOR, the TOR will tell you
presentation of the witness and let the tribunal rule in 10 days parties agree that they will submit the statement
on the JA. If you admit the genuineness and due of claim and statement of defense. 7 days after parties will
execution, you are not exactly admitting the veracity submit statement of replies and statement of rejoinder .
of the allegations. Only the due execution and
genuineness. When you submit to the TOR and you gave me annexes, the
● CJVA signed in the Philippines in 2009-2010. annexes are floating. What do you mean by floating? There is
● Submit the joint TOR in 48 hours. no pleading upon which the annexes are attached. It doesn’t
make sense. Here is what I want you to remember in
Questions to be included or addressed in the TOR: Arbitration because it is a gut feel practice. It is because
● Is there a waiver on EVERSHEDS when it initiated there is no basis and a lot of the things we do doesn’t have
court proceedings and waited for a period of time. basis. If you feel like there is something wrong, if it feels
● When you speak of interim measure, is that really unreasonable, if it feels unnatural, you ask questions to the
an interim measure? If it really is, why are you Arbitrator.
praying for a specific performance?
● Is there forum shopping? I’d like to take this opportunity as a learning moment,
because if your a partner in your law firms someday or in the
Q: Why did you attach evidence? government gives you the same task, if it feels extremely
A: There’s no evidence in TOR. Where in the PDRCI rules unreasonable, maybe you are not doing it right.
that the evidence will be attached? Article 30 paragraph 4
states that attach evidence as much as practicable. Is it a 2. Please put a timeline on when you’re supposed to submit a
term of preference? It’s statement of claim. For the statement of claim and statement of defence. Ordinarily a
claimant, the first time you will attach an evidence Statement statement of claim comes before the statement of defence.
of Claim. How about respondent, when is the first time? Does What will defend against if there is no claim? But due to lack
it say in the terms of preference, that you attach evidence? of material time, please submit simultaneously.
No. It’s in Article 31 paragraph 2, and what is that.
Statement of defense. This is a critical misstep on the part of
the class.
I gave you 48 hours considering that I did not expect you to

make evidence in 48 hours. That is unreasonable. I didn’t
expect you to do it. But here we are we have evidence may
be that will reduce your workload. Let me emphasize this as I
want you to have working knowledge on arbitration.
When you file a Notice of Arbitration, it’s sometimes a 1

pager or 2 pager you just attach the proof that there is an
agreement. The CGEA which is Annex A. Once you send it to
the PDRCI, they will calculate the fees and then you pay the
fees. PDRCI now will send to the other party the notice of
arbitration. The respondent will file a response to the notice.
Again it’s a 1 pager 2 pager denying whether there was really
an arbitration but it’s not in the nature of complaint. Basically
it is just a summary of what they wanna see. Based on those
summaries, two things may happen:
1. The parties may submit a joint TOR or the secretary of

PDRCI may create a joint TOR. During the case management
conference, orally you will confirm. “Arbitrators this is correct
, but we want to add some more details such as date of
presentation of witnesses such as when we are supposed to
submit evidence.” Once the joint TOR has been created, the
joint TOR is supposed to create a timeline. There should be a
Page 61

Introductory Concepts in Arbitration: Section 3, RA 9825 (ADR Act)

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Introductory Concepts in Arbitration: Section 3, RA 9825 (ADR Act)

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YOUR TRANSCRIPT TEAM | ALTERNATIVE DISPUTE RESOLUTION | ATTY.

VJCesista | 2ND SEMESTER | 2021-2022

information shall not be disclosed. It shall include (1)

(i) "Convention Award" means a foreign arbitral award

method in which the merits of a case are argued before

nature, whether contractual or not. Relationships of a

Arbitration the pre-trial phase to present summaries of their cases

and I think it has benefited the clients in words, probably

During my time, arbitration was taught as a subject under Q: What is a PDRCI?

the merits. This is an interesting play. A very exceptional

Atty: Yeah so KCAB - well the proceedings in KCAB was only

valid arbitration agreement in the first place. It sounds

A: Because this is not conferred by law, take note. Since it’s

Doesn't the invalidity of the contract extend to the invalidity of the

S: With regard to the first argument on the propriety of the

(2) The provisions of this Law, except articles 8, 9, 17 H, 17 I, 17

(3) An arbitration is international if:

Example: The general rule pertaining to crimes are found in

using Philippine law then how do we apply the principle of

ii. Place of Arbitration. FACTS

The place where substantial part of the obligation of the

Article 4.2. Rules of Interpretation. arrangement to resolve their dispute.

(d) Where a provision of this Chapter, except the Rules

Article 4.2, IRR of the ADR Act

(c) A Court may not refuse to grant, implement or enforce

Articles 4.10 and 4.11 , IRR of the ADR Act

M. RECOGNITION AND ENFORCEMENT OF AWARDS

enforcement of foreign arbitral awards not Article 5.1. Scope of Application.

A controversy cannot be arbitrated where one of the parties to

The arbitration clause may be included in another document by

G. ARBITRATION AGREEMENT AS AND IS A

(c) The following rules on interim or provisional relief shall be

evidence to refute BCA’s Amended Statement of Claims

(1) Any party may request that provision relief be

4. Court intervention under the IRR of RA No. 9285

However, the Court has already invalidated such provision in

FACTS: The case should have been brought to voluntary

That the POA itself is an arbitral panel does not render

arbitration outside the Philippines. And that eventuality, R.A.

IRR of ADR Act of 2004, CHAPTER 4

(b) In interpreting this Chapter, regard shall be had to the

(f) Where a provision of this Chapter, other than in paragraph (a)

Q: How do you challenge arbitrators?

The Rules on CIAC are different. In CIAC, when you

choice, if you step down, whether you like it or not, the

When challenging an arbitrator, there is no hard and fast rule

This is critical because the filing fee is jurisdictional. If

(c) A reference to the arbitration or submission agreement;

SCOPE OF APPLICATION (f) The relief sought;

(g) A proposal as to the number of arbitrators (one or three), if

Atty., how do you execute? I think that’s for another bloody

Lets take a fictional example based on that real life example I

provide or produce evidence that the actions of the arbitrator

A file counsel is appointed by the PDRCI from a list of

Notice of Arbitration (NOA) - is just simple evidence

the arbitration. (1) Within a period of time to be determined by the arbitral

the scope, existence, or validity of the arbitration clause or

(3) The Terms of Reference may be in the form of a procedural

TOR is like a pre-trial order of the court, it will govern the

Article 36: Further Written Statements

Q: What are interim measures of protection? Section V: The Award

(g) compel any other appropriate act or omission.