Philippine Commercial Arbitration:

Review of Recent Developments and

Assessment of Path Forward
Donemark J L Calimon | 5 November 2021, 10:00 p.m. - 12:00 p.m.
Agenda
1 Policy on Arbitration 6 Enforcement

2 Arbitration Agreement 7 Court Proceedings

3 Arbitral Tribunal 8 Construction Arbitration

4 Arbitral Proceedings 9 Intra-Corporate Disputes

5 Award 10 Government Procurement

1
Policy on Arbitration
Philippine Arbitration Policy
IP E-Game Ventures, Inc. v. Beijing Perfect World Software Co., Ltd. (G.R. No. 220250,
7 September 2020)
The policy in favor of arbitration means that the plain meaning of the SADRR on what
documents must accompany a petition challenging enforcement must prevail, i.e., strictly
construed against non-enforcement.
A resolution of [the] issue [raised] would require this Court to go into the merits of the parties'
dispute and resolve questions of fact which cannot be raised in a petition for review to this
Court under the Special ADR Rules.
2
Arbitration
Agreement
Arbitration Agreement
Gilat v. UCPB, (G.R. 189563, 7 April 2014)

Referral to arbitration can be demanded only by a party to the arbitration agreement.

Arbitration Agreement
Tourism Infrastructure and Enterprise Zone Authority v Global-V Builders Co. (G.R. No.
219708, 2018 October 2018)
The jurisdiction of CIAC over the construction controversy involving the said MOAs is
questioned because the MOAs do not contain an arbitration clause. However, the said MOAs
expressly state that they are covered by R.A. No. 9184. By virtue of R.A. No. 9184, which is
the law that authorized the negotiated procurement of the construction contracts entered into
by the parties, CIAC is vested with jurisdiction over the dispute. Applicable laws form part of,
and are read into contracts; hence, the provision on settlement of disputes by arbitration under
Section 59 of R.A. No. 9184 formed part of the MOAs in this case.
Arbitration Agreement
Hygienic Packaging Corporation v. Nutriasia, Inc., Doing Business Under the Name and
Style of UFC Philippines (Formerly Nutri-asia, Inc.) (G.R. No. 201302, 23 January 2019)
The act of signing the Purchase Orders, then, was limited to acknowledging respondent's
order and facilitating the payment of the goods to be delivered. It did not bind petitioner to the
terms and conditions in the Purchase Orders, which included the arbitration clause.
Arbitration Agreement
Camp John Hay Development Corporation v Charter Chemical and Coating Corporation
(G.R. No. 198849, 7 August 2019)
The contracts to sell, containing a contrary dispute resolution clause, did not supersede the
arbitration clause. The case records show that the contracts to sell are not inconsistent with
the Contractor's Agreement. They are merely devices to facilitate the transfer of ownership of
the two (2) units to respondent — an offshoot of the offsetting scheme provision in the
Contractor's Agreement. While the contracts to sell and the Contractor's Agreement both refer
to the transfer of the two (2) units to respondent, the contracts to sell are pro- forma contracts
provided by petitioner in selling the Camp John Hay Suites units. There is no intent to
supersede the Contractor's Agreement, which remains the principal contract between
petitioner and respondent.
Arbitration Agreement
Jacques A. Dupasquier, et al vs. Ascendas (Philippines) Corporation (G.R. No. 211044.
July 24, 2019)
The language used in the subject service agreement of Radiation Oncology is somehow
identical with the MOU of the present case. In both cases, the parties incorporated a time-limit
to the agreement which gave rise to the eventual ineffectivity of the contract and its provision.
In no uncertain way that this time-limit refers to the non-signing of extension or substitute
contract before the expiration of a date certain. It is thus wise to rule that the parties intended
that the happening of the date certain would give no effect to all parts of the MOU, including
the Arbitration Clause. This ruling, however, should not be understood as abandoning the
doctrine of separability, but merely giving way to the manifest intention of the
contracting parties.
3
Arbitral Tribunal
The Arbitral Tribunal
Fruehauf Electronics Philippines Corporation v. Technology Electronics Assembly and
Management Pacific Corporation (G.R. No. 204197, 23 November 2016)
An arbitral tribunal does not exercise quasi-judicial powers; voluntary arbitrators under Rule 43
refers to voluntary arbitrators under the Labor Code; judicial or quasi-judicial jurisdiction
cannot be conferred on the tribunal by the parties alone; interchanging these terms results in
fallacy of equivocation.
4
Arbitral Proceedings
Arbitration Proceedings
Lanuza vs. BF Corp. (G.R. 174938, 1 October 2014)

Directors and officers may be impleaded in arbitration proceedings to determine if the

corporate veil should be pierced.
Arbitration Proceedings
FedEx v AF2100 (G.R. No. 216600, 2016 November 21)

The relevance or materiality of the statements made by witness in the arbitration is best left to
the arbitrators' sound appreciation and judgment.
Even granting that the weight of the said statements was not fundamental to the issues in the
arbitration, they were still connected to, and propounded by, a witness who relied upon the
confidentiality of the proceedings. They cannot be used to support a criminal complaint for
Grave Slander.
The very soul of an arbitration proceedings would be rendered useless if it would be simply
used as an avenue for evidence gathering or an entrapment mechanism to lure the other
unsuspecting party into conveying information that could be potentially used against him in
another forum or in court.
The confidentiality of arbitration proceedings allows, among others, full and free exchange of
information without fear of retaliation or injury and is one of the advantages of arbitration.
5
Award
Arbitration Proceedings
FedEx v AF2100 (G.R. No. 216600, 2016 November 21)

The relevance or materiality of the statements made by witness in the arbitration is best left to
the arbitrators' sound appreciation and judgment.
Even granting that the weight of the said statements was not fundamental to the issues in the
arbitration, they were still connected to, and propounded by, a witness who relied upon the
confidentiality of the proceedings. They cannot be used to support a criminal complaint for
Grave Slander.
The very soul of an arbitration proceedings would be rendered useless if it would be simply
used as an avenue for evidence gathering or an entrapment mechanism to lure the other
unsuspecting party into conveying information that could be potentially used against him in
another forum or in court.
The confidentiality of arbitration proceedings allows, among others, full and free exchange of
information without fear of retaliation or injury and is one of the advantages of arbitration.
6
Enforcement
Enforcement
Tuna Processing, Inc v Philippine Kingford, Inc (GR No 185582, 29 February 2012)

The grounds to oppose or refuse recognition of foreign arbitral awards are limited to those
provided in the New York Convention. Thus, the rule that corporations doing business in the
Philippines without license do not have standing to sue before a Philippine court does not
apply to enforcement of foreign arbitral awards.
Enforcement
Mabuhay Holdings Corporation v Sembcorp Logistics Limited 2018-12-5 (Tijam)

1. The court shall not entertain any challenge to the appointment of arbitrator disguised as a
ground for refusing enforcement of award. Since the ICC Court rejected the argument that
the arbitrator appointed did not have expertise, the court shall not entertain further
challenge to the appointment
2. Among the issues settled in the Final Award is whether the dispute is an in intra-corporate
controversy. The court shall not disturb the arbitral tribunal's determination of facts and/or
interpretation of law
3. The court adopts the majority and narrow approach in determining whether enforcement of
an award is contrary to Our public policy
Enforcement
Mabuhay Holdings Corporation v Sembcorp Logistics Limited 2018-12-5 (Tijam)

4. Mere errors in the interpretation of the law or factual findings would not suffice to warrant
refusal or enforcement under the public policy ground
5. The illegality or immorality of the award must reach a certain threshold such that
enforcement of the same would be against Our State's fundamental tenets of justice and
morality, or would blatantly be injurious to the public, or the interests of the society
Enforcement
Fruehauf Electronics Philippines Corporation v. Technology Electronics Assembly and
Management Pacific Corporation (G.R. No. 204197, 23 November 2016)
"the only remedy against a final domestic arbitral award is to file petition to vacate or to
modify/correct the award not later than thirty (30) days from the receipt of the award. Unless a
ground to vacate has been established, the RTC must confirm the arbitral award as a matter
of course"; Rule 43 and Rule 65 are not proper remedies; SADRR are a self-contained rules
and the Rules of Court do not apply.
Arbitral awards not reviewable on the merits; simple errors of fact, of law, or of fact and law
committed by the arbitral tribunal are not justiciable errors in this jurisdiction.
Enforcement
Fruehauf Electronics Philippines Corporation v. Technology Electronics Assembly and
Management Pacific Corporation (G.R. No. 204197, 23 November 2016)
The remedy against an order confirming, vacating, correcting or modifying an arbitral award is
through a Petition for Review under the SADRR (Rule 19.12).
Enforcement
IP E-Game Ventures, Inc. v. Beijing Perfect World Software Co., Ltd. (G.R. No. 220250,
7 September 2020)
A resolution of [the] issue [raised] would require this Court to go into the merits of the parties'
dispute and resolve questions of fact which cannot be raised in a petition for review to this
Court under the Special ADR Rules.
7
Court Proceedings
Court Proceedings
DENR v United Planners Consultants, Inc (UPCI) (G R No 212081, 23 February 2015)

"Resort to the Rules of Court even in a suppletory capacity is not allowed. Rule 22.1 of the
Special ADR Rules explicitly provides that "[t]he provisions of the Rules of Court that are
applicable to the proceedings enumerated in Rule 1.1 of these Special ADR Rules have either
been included and incorporated in these Special ADR Rules or specifically referred to herein"
Court Proceedings
Fruehauf Electronics Philippines Corporation v. Technology Electronics Assembly and
Management Pacific Corporation (G.R. No. 204197, 23 November 2016)
SADRR are a self-contained rules and the Rules of Court do not apply unless incorporated
into the SADRR.
Court Proceedings
Fruehauf Electronics Philippines Corporation v. Technology Electronics Assembly and
Management Pacific Corporation (G.R. No. 204197, 23 November 2016)
The SADRR apply retroactively because of its procedural character (Rule 24.1).
Court Proceedings
(IP E-Game Ventures, Inc. v. Beijing Perfect World Software Co., Ltd. (G.R. No. 220250,
7 September 2020))
Special ADR Rules apply to appeal proceedings before the CA. Rule 19.2 of the SADRR
provides recourse to the CA. Rule 2.1 par 2 reserves to the court the power of judicial review.
8
Construction
Arbitration
CIAC Arbitration
Tourism Infrastructure and Enterprise Zone Authority v Global-V Builders Co. (G.R. No.
219708, 2018 October 2018)
The jurisdiction of CIAC over the construction controversy involving the said MOAs is
questioned because the MOAs do not contain an arbitration clause. However, the said MOAs
expressly state that they are covered by R.A. No. 9184. By virtue of R.A. No. 9184, which is
the law that authorized the negotiated procurement of the construction contracts entered into
by the parties, CIAC is vested with jurisdiction over the dispute. Applicable laws form part of,
and are read into contracts; hence, the provision on settlement of disputes by arbitration under
Section 59 of R.A. No. 9184 formed part of the MOAs in this case.
CIAC Arbitration
Tourism Infrastructure and Enterprise Zone Authority v Global-V Builders Co. (G.R. No.
219708, 2018 October 2018)
COA had no primary jurisdiction. Section 4 of E.O. No. 1008 provides that the CIAC shall have
original and exclusive jurisdiction over disputes arising from, or connected with, construction
contracts, which may involve government or private contracts, provided that the parties to a
dispute agree to submit the dispute to arbitration. The text of Section 4 of E.O. No. 1008 is
broad enough to cover any dispute arising from, or connected with, construction contracts,
whether these involve mere contractual money claims or execution of the works. What is only
excluded from the coverage of E.O. No. 1008 are disputes arising from employer-employee
relationships, which shall continue to be covered by the Labor Code of the Philippines.
CIAC Arbitration
Wyeth Philippines Inc. v CIAC (G.R. No. 220045-48, 22 June 2020)

In reviewing factual findings of the Arbitral Tribunal, exceptions must pertain to its conduct and
the qualifications of the arbitrator, and not to its errors of fact and law, misappreciation of
evidence, or conflicting findings of fact. It is only when "the most basic integrity of the arbitral
process was imperiled" that a factual review of the findings of the arbitral tribunal may be
reviewed. This, the petitioner did not allege or prove in the present case.
CIAC Arbitration
Datem Incorporated v Alphaland Makati Place, Inc. (G.R. Nos. 242904-05,
2021 February 10)
Indubitably, the CA erred in declaring that the CIAC lacked jurisdiction. Non-compliance with a
stipulated condition (meeting to discuss amicable settlement) under the arbitration clause does
not divest the CIAC of its automatic jurisdiction under EO 1008. The CA disregarded the basic
principle that mere existence of an arbitration clause is, considered by law, sufficient for the
CIAC to acquire jurisdiction over a construction dispute.
At any rate, the CIAC Rules of Procedure expressly provides how the arbitral tribunal should
treat instances where there is non-compliance with a stipulated precondition (i.e., suspension
of proceedings). During proceedings before the CIAC, the parties were given a reasonable
period to hold meetings for the purpose of reaching an amicable settlement.
CIAC Arbitration
Global Medical Center of Laguna, Inc. v. Ross Systems International, Inc. (G.R. Nos.
230112 and 230119, 11 May 2021)

Appeals from CIAC arbitral awards:

 To challenge a holding of law of the tribunal – Rule 45 to the SC
 To challenge a finding of fact assailing the very integrity of the composition of the tribunal
or alleging the arbitral tribunal's violation of the Constitution or positive law – Rule 65 to
the CA
9
Intra-Corporate
Disputes
Intra-Corporate Disputes

RCC - Requirements for Arbitration Agreements

 Arbitration agreement either in the articles of incorporation or by-laws of listed or unlisted
corporations, or a separate agreement between the parties.
 Should indicate the number of arbitrators and the procedure for their appointment.
 Power to appoint arbitrators granted to a designated independent third party. If third party
fails to appoint, the Commission may be requested to appoint.
 Arbitrators must be accredited or must belong to organizations accredited for the purpose
of arbitration.
Intra-Corporate Disputes

RCC – Effect of Arbitration Agreements

 Binding on corporation, its directors, trustees, officers, and executives or managers.
 Covers disputes (a) between the corporation, its stockholders or members; (b) which arise
from the implementation of the articles of incorporation or by-laws, or from
intra-corporate relations.
 Does not cover dispute involving (a) criminal offenses; and (b) interests of third parties.
 Tribunal has power to rule on jurisdiction and validity.
 If filed with an RTC, dismiss the case before termination of pretrial conference, if an
arbitration agreement is in the articles of incorporation, by-laws, or in a
separate agreement.
 A final arbitral award executory after fifteen (15) days unless stayed by the filing of a bond
or the issuance by the appellate court of an injunctive writ.
10
Government
Procurement
Government Procurement
Tourism Infrastructure and Enterprise Zone Authority v Global-V Builders Co. (G.R. No.
219708, 2018 October 2018)
The jurisdiction of CIAC over the construction controversy involving the said MOAs is
questioned because the MOAs do not contain an arbitration clause. However, the said MOAs
expressly state that they are covered by R.A. No. 9184. By virtue of R.A. No. 9184, which is
the law that authorized the negotiated procurement of the construction contracts entered into
by the parties, CIAC is vested with jurisdiction over the dispute. Applicable laws form part of,
and are read into contracts; hence, the provision on settlement of disputes by arbitration under
Section 59 of R.A. No. 9184 formed part of the MOAs in this case.
Questions

Donemark J L Calimon
Principal
donemark.calimon
@quisumbingtorres.com
Quisumbing Torres is a member firm of Baker & McKenzie International, a Swiss Verein.

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