REPUBLIC ACT 876

AN ACT TO AUTHORIZE THE MAKING OF ARBITRATION AND SUBMISSION

AGREEMENTS, TO PROVIDE FOR THE APPOINTMENT OF ARBITRATORS AND
THE PROCEDURE FOR ARBITRATION IN CIVIL CONTROVERSIES, AND FOR
OTHER PURPOSES
 Parties

• Two or more persons or parties may submit to the arbitration of one or more
arbitrators any controversy existing between them

• A controversy cannot be arbitrated:

– where one of the parties to the controversy is an infant, or a person
judicially declared to be incompetent;

– unless the appropriate court having jurisdiction approve a petition for

permission to submit such controversy to arbitration made by the general
guardian or guardian ad litem of the infant or of the incompetent.

• Exception: where a person capable of entering into a submission or

contract has knowingly entered into the same with a person incapable
of so doing, the objection on the ground of incapacity can be taken
only in behalf of the person so incapacitated.
• Limitation:
– This Act shall not apply to controversies and to cases which are subject
to the jurisdiction of the Court of Industrial Relations or which have
been submitted to it as provided by Commonwealth Act Numbered
One hundred and three, as amended.

• Procedure:
– File demand to arbitrate in accordance with the contract Notification

– In the event that one party defaults in answering the demand, the
aggrieved party may file with the Clerk of the Court of First Instance
having jurisdiction over the parties

– In the case of the submission of an existing controversy by the filing

with the Clerk of the Court of First Instance having jurisdiction, of the
submission agreement, setting forth the nature of the controversy, and
the amount involved, if any. Such submission may be filed by any party
and shall be duly executed by both parties.

– In the event that one party neglects, fails or refuses to arbitrate under
a submission agreement.
• Hearing by court
– A party aggrieved by the failure, neglect or refusal of another to
perform under an agreement in writing providing for arbitration may
petition the court for an order directing that such arbitration proceed in
the manner provided for in such agreement.

– Five days notice in writing of the hearing of such application shall be

served either personally or by registered mail upon the party in default.

• If the Court finds that there is no agreement in writing providing for

arbitration or that there is no default in the proceeding thereunder,
the proceeding shall be dismissed.

• If the Court finds that a written provision for 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 with the terms thereof.
• Stay of civil action:

– If any suit or proceeding be brought upon an issue arising out of an

agreement providing for the arbitration thereof, the court in which
such suit or proceeding is pending, upon being satisfied that the issue
involved in such suit or proceeding is referable to arbitration, shall
stay the action or proceeding until an arbitration has been had in
accordance with the terms of the agreement: Provided, That the
applicant, for the stay is not in default in proceeding with such
arbitration.
• Appointment of arbitrators

– Agreement of the parties

– Grounds for appoint : when to appoint?

• If the parties to the contract or submission are unable to agree upon a

single arbitrator; or

• If an arbitrator appointed by the parties is unwilling or unable to serve,

and his successor has not been appointed in the manner in which he
was appointed; or

• If either party to the contract fails or refuses to name his arbitrator

within fifteen days after receipt of the demand for arbitration; or
 If the arbitrators appointed by each party to the contract, or appointed by
one party to the contract and by the proper Court, shall fail to agree upon or
to select the third arbitrator.

 The court shall, in its discretion appoint one or three arbitrators, according to
the importance of the controversy involved in any of the preceding cases in
which the agreement is silent as to the number of arbitrators.

 Arbitrators appointed under this section shall either accept or decline their
appointments within seven days of the receipt of their appointments. In case
of declination or the failure of an arbitrator or arbitrators to duly accept their
appointments the parties or the court, as the case may be, shall proceed to
appoint a substitute or substitutes for the arbitrator or arbitrators who
decline or failed to accept his or their appointments.
• Qualifications of Arbitrators.

– must be of legal age

– in full-enjoyment of his civil rights and know how to read and write.

– No person appointed to served as an arbitrator shall be related by

blood or marriage within the sixth degree to either party to the
controversy.

– No person shall serve as an arbitrator in any proceeding if he has or

has had financial, fiduciary or other interest in the controversy or
cause to be decided or in the result of the proceeding, or has any
personal bias, which might prejudice the right of any party to a fair
and impartial award.

– No party shall select as an arbitrator any person to act as his champion

or to advocate his cause.
 Challenge of arbitrators.
◦ The arbitrators may be challenged only for the reasons mentioned in the
preceding section which may have arisen after the arbitration agreement
or were unknown at the time of arbitration.
◦ Recourse to court

 Subpoena and subpoena duces tecum. (Arbitrator’s Power)

◦ Arbitrators shall have the power to require any person to attend a hearing
as a witness.
◦ They shall have the power to subpoena witnesses and documents when
the relevancy of the testimony and the materiality thereof has been
demonstrated to the arbitrators.
◦ Arbitrators may also require the retirement of any witness during the
testimony of any other witness.
◦ All of the arbitrators appointed in any controversy must attend all the
hearings in that matter and hear all the allegations and proofs of the
parties;
◦ The arbitrator or arbitrators shall have the power at any time, before
rendering the award, without prejudice to the rights of any party to
petition the court to take measures to safeguard and/or conserve any
matter which is the subject of the dispute in arbitration.
• Hearing by Arbitrators.

– The arbitrators shall be the sole judge of the relevancy and materiality of the
evidence offered or produced, and shall not be bound to conform to the Rules
of Court pertaining to evidence.

• Form and contents of award

•
– Award must be made in writing and signed and acknowledged by a majority of
the arbitrators, if more than one; and by the sole arbitrator, if there is only
one.
– Each party shall be furnished with a copy of the award
– Arbitrators in their award may grant any remedy or relief which they deem
just and equitable and within the scope of the agreement of the parties,
which shall include, but not be limited to, the specific performance of a
contract.
• Confirmation of award
– At any time within one month after the award is made, any party to
the controversy which was arbitrated may apply to the court having
jurisdiction, as provided in section twenty-eight, for an order
confirming the award; and thereupon the court must grant such
order unless the award is vacated, modified or corrected, as
prescribed herein. Notice of such motion must be served upon the
adverse party or his attorney as prescribed by law for the service of
such notice upon an attorney in action in the same court.
 Grounds for vacating award
◦ The award was procured by corruption, fraud, or other undue means; or
◦ That there was evident partiality or corruption in the arbitrators or any of
them; or
◦ That the arbitrators were guilty of misconduct in refusing to postpone
the hearing upon sufficient cause shown, or in refusing to hear evidence
pertinent and material to the controversy; that one or more of the
arbitrators was disqualified to act as such under section nine hereof, and
wilfully refrained from disclosing such disqualifications or of any other
misbehavior by which the rights of any party have been materially
prejudiced; or
◦ That the arbitrators exceeded their powers, or so imperfectly executed
them, that a mutual, final and definite award upon the subject matter
submitted to them was not made.
 Note: Where an award is vacated, the court, in its discretion, may:
 direct a new hearing either before the same arbitrators or before a new
arbitrator or arbitrators to be chosen in the manner
 Provided in the submission or contract for the selection of the original arbitrator
or arbitrators, and any provision limiting the time in which the arbitrators may
make a decision shall be deemed applicable to the new arbitration and to
commence from the date of the court's order.
• Grounds for modifying or correcting award

– Where there was an evident miscalculation of figures, or an evident

mistake in the description of any person, thing or property referred
to in the award; or
– Where the arbitrators have awarded upon a matter not submitted to
them, not affecting the merits of the decision upon the matter
submitted; or
– Where the award is imperfect in a matter of form not affecting the
merits of the controversy, and if it had been a commissioner's report,
the defect could have been amended or disregarded by the court.

• Motion to vacate, modify or correct award: when made

– Notice of a motion to vacate, modify or correct the award must be

served upon the adverse party or his counsel within thirty days after
award is filed or delivered, as prescribed by law for the service upon
an attorney in an action.
• Judgment

– Upon the granting of an order confirming, modifying or correcting an

award, judgment may be entered in conformity therewith in the court
wherein said application was filed

• Papers to accompany motion to confirm, modify, correct, or vacate award.

– The submission, or contract to arbitrate; the appointment of the

arbitrator or arbitrators; and each written extension of the time, if any,
within which to make the award.

– A verified of the award.

– Each notice, affidavit, or other paper used upon the application to

confirm, modify, correct or vacate such award, and a copy of each of the
court upon such application.
• Appeals.

– An appeal may be taken through certiorari proceedings

– Such appeals shall be limited to questions of law.

– The proceedings upon such an appeal, including the judgment thereon shall
be governed by the Rules of Court in so far as they are applicable.