ADR FINAL EXAM TSN

Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS

02/29/2016
Construction is covered by E.O. No. 1008 or the “Construction
Industry Arbitration Law,” and the Revised Rules governing
Construction Arbitration.
these Rules to ascertain the facts in each case by every and all
reasonable means without regard to technicalities of law or
procedure.
RULE 2 - JURISDICTION

According to Salvador Castro (in his MCLE lecture), on Nov.
28, 1980 the Construction Industry Authority of the Philippines
was created by the Philippine Domestic Construction Board
and by P.D. 1746. They have the following obligations:
1. To establish procedures, guidelines, and criteria for
fair and expeditious adjudication and settlement of
claims and disputes in contract implementation.
2. To adjudicate and settle disputes concerning public
construction contracts;
3. Formulate and recommend rules and procedures for
adjudication and settlement of claims and disputes in
the implementation of contracts of private construction.
SECTION 2.1 Jurisdiction – The CIAC shall have original and
exclusive jurisdiction over construction disputes, which arose
from, or is connected with contracts entered into by parties
involved in construction in the Philippines whether the dispute
arose before or after the completion of the contract, or after the
abandonment or breach thereof. These disputes may involve
government or private contracts.
Under Rule 2, take note that there are 2 requisites for the CIAC
to have jurisdiction over construction disputes:
1. The “construction contract” involves a construction in
the Philippines.
2. The parties to the construction contract are bound by
an arbitration agreement – directly or by reference.

On February 4, 1985, recognizing the need for technical Q: What are covered by the jurisdiction of the CIAC?
expertise in the speedy disposition in construction disputes, the
Construction Industry Arbitration Commission was created The jurisdiction of the CIAC may include but is not limited to
under EO no. 1008 (The Construction Arbitration Law). the following:

Sec. 2. Declaration of Policy. It is hereby declared to be 1. violation of specifications for materials and
the policy of the State to encourage the early and workmanship;
expeditious settlement of disputes in the Philippine
construction industry.
2. violation of the terms of agreement;
3. interpretation and/or application of contractual
Sec. 3. Creation. There is hereby established in the CIAP provisions;
a body to be known as the Construction Industry Arbitration 4. amount of damages and penalties;
Commission (CIAC). The CIAC shall be under the 5. commencement time and delays;
administrative supervision of the PDCB. 6. maintenance and defects;
7. payment default of employer or contractor and
Sec. 5. Composition of the Board. The Commission shall changes in contract cost.
consist of a Chairman and two (2) members, all to be
appointed by the CIAP Board upon recommendation by the
members of the PDCB. The claims include among others:
1. valuation or pricing of work
It was only on January 1989 that the CIAC started becoming 2. interpretation of specifications
operational. 3. construction practice
4. engineering technique
REVISED RULES OF PROCEDURE GOVERNING 5. evaluation of work accomplishment
CONSTRUCTION ARBITRATION 6. claim of price escalation
7. damages arising from takeover
8. adequacy of structural design
RULE 1 - POLICY AND OBJECTIVES
9. adequacy of supervision
SECTION 1.1 Statement of policy and objectives - It is the
Just remember, included in the jurisdiction of the CIAC is
policy and objective of these Rules to provide a fair and
anything that has something to do with construction.
expeditious resolution of construction disputes as an
alternative to judicial proceedings, which may restore the
disrupted harmonious and friendly relationships between or Metropolitan Water District vs. Mactan Rock Industries
among the parties.
“The jurisdiction of the CIAC as a quasi-judicial body is
SECTION 1.2 Applicability of rules - These Rules are confined to construction disputes, that is, those arising from, or
applicable to proceedings in arbitration before an Arbitral connected to, contracts involving "all on-site works on buildings
Tribunal of one or more Arbitrator/s. or altering structures from land clearance through completion
including excavation, erection and assembly and installation of
SECTION 1.3 Judicial rules not controlling - In any arbitration components and equipment." The CIAC has jurisdiction over
proceeding under these Rules, the judicial rules of evidence all such disputes whether the dispute arises before or after the
need not be controlling, and it is the spirit and intention of completion of the contract.”

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Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS
William Golango Construction Corporation vs. Ray Burton
Development Corporation
Under Section 1, Article III of the CIAC Rules, an arbitration
clause in a construction contract shall be deemed as an
agreement to submit an existing or future controversy to CIAC
jurisdiction, "notwithstanding the reference to a different
arbitration institution or arbitral body in such contract x xx."
Elementary is the rule that when laws or rules are clear, it is
incumbent on the court to apply them. When the law (or rule) is
unambiguous and unequivocal, application, not interpretation
thereof, is imperative.
Hence, the bare fact that the parties herein incorporated an
arbitration clause in the EPCC is sufficient to vest the CIAC
with jurisdiction over any construction controversy or claim
between the parties. The arbitration clause in the construction
contract ipso facto vested the CIAC with jurisdiction. This rule
applies, regardless of whether the parties specifically choose
another forum or make reference to another arbitral body.
Since the jurisdiction of CIAC is conferred by law, it cannot be
subjected to any condition; nor can it be waived or diminished
by the stipulation, act or omission of the parties, as long as the
parties agreed to submit their construction contract dispute to
arbitration, or if there is an arbitration clause in the construction
contract. The parties will not be precluded from electing to
submit their dispute to CIAC, because this right has been
vested in each party by law.
It bears to emphasize that the mere existence of an
arbitration clause in the construction contract is
considered by law as an agreement by the parties to
submit existing or future controversies between them to
CIAC jurisdiction, without any qualification or condition
precedent. To affirm a condition precedent in the construction
contract, which would effectively suspend the jurisdiction of the
CIAC until compliance therewith, would be in conflict with the
recognized intention of the law and rules to automatically vest
CIAC with jurisdiction over a dispute should the construction
contract contain an arbitration clause.
Thus, there is no question that in this case, the CIAC properly
took cognizance of petitioner's complaint as it had jurisdiction
over the same.
Stronghold Insurance Company vs. Sps. Stroem
Petitioner changed the theory of its case since its participation
in the trial court proceedings. It raised the issue of lack of
jurisdiction in view of an arbitration agreement for the first time.
To be clear, it is in the Owners-Contractor Agreement that the
arbitration clause is found. The construction agreement was
signed only by respondents and the contractor, Asis-Leif, as
represented by Ms. Ma. Cynthia Asis-Leif. It is basic that
"[c]ontracts take effect only between the parties, their assigns
and heirs[.]" Not being a party to the construction agreement,
petitioner cannot invoke the arbitration clause. Petitioner, thus,
cannot invoke the jurisdiction of the CIAC.
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Moreover, petitioner’s invocation of the arbitration clause
defeats the purpose of arbitration in relation to the construction
business. The state has continuously encouraged the use of
dispute resolution mechanisms to promote party
autonomy. This court upheld the CIAC's jurisdiction in line with
the state's policy to promote arbitration:
The CIAC was created through Executive Order No. 1008 in
recognition of the need to establish an arbitral machinery that
would expeditiously settle construction industry disputes. The
prompt resolution of problems arising from or connected with
the construction industry was considered of necessary and
vital for the fulfillment of national development goals, as the
construction industry provides employment to a large segment
of the national labor force and is a leading contributor to the
gross national product.
However, where a surety in a construction contract actively
participates in a collection suit, it is estopped from raising
jurisdiction later. Assuming that petitioner is privy to the
construction agreement, we cannot allow petitioner to invoke
arbitration at this late stage of the proceedings since to do so
would go against the law's goal of prompt resolution of cases in
the construction industry.
Q: May the government be a party in the arbitration
proceedings before the CIAC?
Yes. Under the last paragraph of Section 2.1.These disputes
may involve government or private contracts. Cases filed
before the CIAC for arbitration include both the government
and the private parties.
SECTION 2.2 Coverage – Construction dispute shall include
those between or among parties to, or who are otherwise
bound by, an arbitration agreement, directly or by reference,
whether such parties are project owner, contractor,
subcontractor, fabricator, project manager, design professional,
consultant, quantity surveyor, bondsman or issuer of an
insurance policy in a construction project.
2.2.1 The CIAC shall continue to exercise original and
exclusive jurisdiction over construction disputes although the
arbitration is commercial pursuant to Section 21 of R.A. 9285
or the Alternative Dispute Resolution Act of 2004.
2.2.2 Excluded from the coverage of this Rules are disputes
arising from employer-employee relationships, which shall
continue to be covered by the Labor Code of the Philippines.
Q: Who are parties covered by the arbitration proceedings
before the CIAC?
1. Parties directly bound to the arbitration agreement
2. Parties bound by reference such as the project owner,
project manager, design professional, consultant,
quantity surveyor, bondsman or insurer of an
insurance policy in a construction project.
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Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS
Problem: If for example Mr.Puray is the owner of a construction
company. Ms.Araneta is his employee. Mr.Puray terminated
the services of Ms.Araneta. Aggrieved, she filed a complaint
before the CIAC. Is the action correct?
No. Excluded from the coverage of this Rules are disputes
arising from employer-employee relationships, which shall
continue to be covered by the Labor Code of the Philippines.
SECTION 2.3 Condition for exercise of jurisdiction - For the
CIAC to acquire jurisdiction, the parties to a dispute must be
bound by an arbitration agreement in their contract or
subsequently agree to submit the same to voluntary arbitration.
If the parties to a construction contract that is to be performed
in the Philippines entered into an arbitration agreement
whether in the form of an arbitration clause or submission
agreement, all disputes arising from or connected to the
contract will be resolved through arbitration before the CIAC.
The jurisdiction of the CIAC over disputes arising from
construction is premised upon the expressed agreement of the
parties to submit the same to voluntary arbitration.
Section 17.d. of RA 9285 recognizes that parties to a dispute
arising from contracts of construction in the Philippines may,
whether or not they have previously agreed to settle their
disputes by arbitration, nevertheless agree to settle their
disputes through mediation. They may agree that the mediator
shall become the sole arbitrator for the dispute and treat the
settlement agreement they may enter into as an arbitral award
enforceable under the Arbitration Law, notwithstanding EO. no.
1008.
This mode of settlement under Sec. 17.d. is distinct and
without prejudice to conciliation under resolution number 08-
2002 of the CIAC wherein the parties may agree that their
conciliator shall be the sole arbitrator of the settlement
agreement drawn up after successful conciliation be made an
arbitral award enforceable under EO no. 1008.
RA 9285 also provides that even if the case is properly within
the jurisdiction of the CIAC, the parties may nevertheless by
written agreement ask the RTC to decide the case rather than
defer it to the CIAC or dismiss it. The law in effect recognizes
that the regular courts have jurisdiction over construction
disputes subject of the agreement, which therefor is ordinarily
subject to the jurisdiction of the CIAC when the parties agree to
submit the case to the regular courts.
Example: Mr. Puray is a contractor and Mr.Rulete engaged the
services of Mr.Puray. For the CIAC to have jurisdiction over
their dispute, they must have in their agreement that they
voluntary agreed that in case of disputes they would submit it
to the jurisdiction of CIAC. If there is no agreement to that
effect, Mr.Puray or Mr.Rulete could file with the RTC. But it is
much better to file it with the CIAC because the arbitrators
seating there are experts to the issue at hand. Unless if the
judge was, before he became a lawyer, a civil engineer, then
we can say that he is knowledgeable.
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SECTION 2.4 Jurisdictional challenge – A motion to dismiss
based on lack of jurisdiction shall be resolved by the appointed
arbitral tribunal.
Q: What are the grounds to be raised in a motion to dismiss for
lack of jurisdiction before the CIAC?
1. That the dispute is not a construction dispute,
2. that the Respondent was represented by one without
capacity to enter into a binding arbitration agreement
3. that said agreement or submission is not valid for
some other reasons,
4. or does not cover the particular dispute sought to be
arbitrated,
5. or other issues of interpretation or non-fulfillment of
pre-conditions to arbitration that are raised therein.
SECTION 2.5 Non-waiver of jurisdictional challenge - A party
does not waive its right to challenge the jurisdiction of CIAC by
any of the following acts:
a) participating in the nomination process including
challenging the qualifications of a nominee;
b) praying for extension of time to file appropriate
pleading/motion to dismiss;
c) opposing an application for interim relief;
d) filing of a motion to dismiss/suspend.
RULE 3 - REQUEST FOR ARBITRATION / COMPLAINT
SECTION 3.1 Filing - Any party to a construction contract
desiring to avail of arbitration shall file its Request for
Arbitration in the prescribed form and number of copies to the
Secretariat of the CIAC.
SECTION 3.3 Request to answer - The CIAC Secretariat shall
within three (3) days from filing, transmit to the Respondent a
request for his Answer, attaching thereto a copy of the
complaint and the Request for Arbitration together with the
annexed documents.
RULE 4 - EFFECT OF AGREEMENT TO ARBITRATE
SECTION 4.1. Submission to CIAC jurisdiction - An arbitration
clause in a construction contract or a submission to arbitration
of a construction dispute shall be deemed an agreement to
submit an existing or future controversy to CIAC jurisdiction,
notwithstanding the reference to a different arbitration
institution or arbitral body in such contract or submission.
4.1.1 When a contract contains a clause for the submission of
a future controversy to arbitration, it is not necessary for the
parties to enter into a submission agreement before the
Claimant may invoke the jurisdiction of CIAC.
So you enter into a submission agreement if your contract
does not contain a clause for submission to arbitration.
4.1.2 An arbitration agreement or a submission to arbitration
shall be in writing, but it need not be signed by the parties, as
long as the intent is clear that the parties agree to submit a
present or future controversy arising from a construction
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Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS
contract to arbitration. It may be in the form of exchange of
letters sent by post or by telefax, telexes, telegrams, electronic
mail or any other mode of communication.
We have discussed earlier that before CIAC can acquire
jurisdiction over construction disputes, the parties dispute must
be bound by an arbitration agreement in their contract, or that
they subsequently agree to submit the same to voluntary
arbitration.
Take note that as long as the contract contains an arbitration
clause, any party thereto has the right to compel the other to
arbitration before the CIAC even if the other party objects to
the CIAC’s jurisdiction for the reason that their arbitration
agreement calls for arbitration before another forum. Any
agreement to arbitrate the construction dispute before a forum
other than the CIAC is therefore rendered ineffective.
China Chang Jiang Energy Corporation (Philippines) v.
Rosal Infrastructure Builders
What the law merely requires for a particular construction
contract to fall within the jurisdiction of CIAC is for the parties
to agree to submit the same to voluntary arbitration. Unlike in
the original version of Section 1, as applied in the Tesco case,
the law does not mention that the parties should agree to
submit disputes arising from their agreement specifically to the
CIAC for the latter to acquire jurisdiction over such disputes.
Rather, it is plain and clear that as long as the parties agree to
submit to voluntary arbitration, regardless of what forum they
may choose, their agreement will fall within the jurisdiction of
the CIAC, such that, even if they specially choose another
forum, the parties will not be precluded from electing to submit
their dispute before the CIAC because this right has been
vested upon each party by law, i.e., E.O. No. 1008.
x xxx
Now that Section 1, Article III [CIAC Rules of Procedure
Governing Construction Arbitration], as amended, is submitted
to test in the present petition, we rule to uphold its validity with
full certainty. However, this should not be understood to mean
that the parties may no longer stipulate to submit their disputes
to a different forum or arbitral body. Parties may continue to
stipulate as regards their preferred forum in case of voluntary
arbitration, but in so doing, they may not divest the CIAC of
jurisdiction as provided by law. Under the elementary principle
on the law on contracts that laws obtaining in a jurisdiction
form part of all agreements, when the law provides that the
Board acquires jurisdiction when the parties to the contract
agree to submit the same to voluntary arbitration, the law in
effect, automatically gives the parties an alternative forum
before whom they may submit their disputes. That alternative
forum is the CIAC. This, to the mind of the Court, is the real
spirit of E.O. No. 1008, as implemented by Section 1, Article III
of the CIAC Rules.
National Irrigation Administration (NIA) vs. CA
NIA's argument that CIAC had no jurisdiction to arbitrate on
contract which preceded its existence is untenable. E.O. 1008
is clear that the CIAC has jurisdiction over all disputes arising
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from or connected with construction contract whether the
dispute arises before or after the completion of the contract.
Thus, the date the parties entered into a contract and the date
of completion of the same, even if these occurred before the
constitution of the CIAC, did not automatically divest the CIAC
of jurisdiction as long as the dispute submitted for arbitration
arose after the constitution of the CIAC. Stated differently, the
jurisdiction of CIAC is over the dispute, not the contract; and
the instant dispute having arisen when CIAC was already
constituted, the arbitral board was actually exercising current,
not retroactive, jurisdiction. As such, there is no need to pass
upon the issue of whether E.O. No. 1008 is a substantive or
procedural statute.
NIA also contended that the CIAC did not acquire jurisdiction
over the dispute since it was only HYDRO that requested for
arbitration. It asserts that to acquire jurisdiction over a case, as
provided under E.O. 1008, the request for arbitration filed with
CIAC should be made by both parties, and hence the request
by one party is not enough.
It is undisputed that the contracts between HYDRO and NIA
contained an arbitration clause wherein they agreed to submit
to arbitration any dispute between them that may arise before
or after the termination of the agreement. Consequently, the
claim of HYDRO having arisen from the contract is arbitrable.
NIA's reliance with the ruling on the case of Tesco Services
Incorporated v. Vera, 30 is misplaced.
The 1988 CIAC Rules of Procedure which were applied by this
Court in Tesco case had been duly amended by CIAC
Resolutions No. 2-91 and 3-93, Section 1 of Article III of which
read as follows:
Submission to CIAC Jurisdiction — An arbitration clause in a
construction contract or a submission to arbitration of a
construction contract or a submission to arbitration of a
construction dispute shall be deemed an agreement to submit
an existing or future controversy to CIAC jurisdiction,
notwithstanding the reference to a different arbitration
institution or arbitral body in such contract or submission.
When a contract contains a clause for the submission of a
future controversy to arbitration, it is not necessary for the
parties to enter into a submission agreement before the
claimant may invoke the jurisdiction of CIAC.
Under the present Rules of Procedure, for a particular
construction contract to fall within the jurisdiction of CIAC, it is
merely required that the parties agree to submit the same to
voluntary arbitration. Unlike in the original version of Section 1,
as applied in the Tesco case, the law as it now stands does not
provide that the parties should agree to submit disputes arising
from their agreement specifically to the CIAC for the latter to
acquire jurisdiction over the same. Rather, it is plain and clear
that as long as the parties agree to submit to voluntary
arbitration, regardless of what forum they may choose, their
agreement will fall within the jurisdiction of the CIAC, such that,
even if they specifically choose another forum, the parties will
not be precluded from electing to submit their dispute before
the CIAC because this right has been vested upon each party
by law, i.e., E.O. No. 1008.
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Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS
SECTION 4.2 Failure or refusal to arbitrate - Where the
jurisdiction of CIAC is properly invoked by the filing of a
Request for Arbitration in accordance with these Rules, the
failure despite due notice which amounts to a refusal of the
Respondent to arbitrate, shall not stay the proceedings
notwithstanding the absence or lack of participation of the
Respondent. In such case, CIAC shall appoint the arbitrator/s
in accordance with these Rules. Arbitration proceedings shall
continue, and the award shall be made after receiving the
evidence of the Claimant.
Under this section, when the CIAC’s jurisdiction is properly
invoked by filing the request for arbitration, the arbitration shall
proceed even in the absence or lack of participation of the
respondent and an award shall be made after receiving the
evidence.
Example: When the CIAC jurisdiction is properly invoked by
Mr.Puray by filing the request for arbitration, the arbitration
shall still proceed even if Mr.Rulete will not participate. So what
will happen? Still an award shall be made after receiving the
evidence of the claimant.
4.2.1 In the event that, before award, the Respondent who had
not earlier questioned the jurisdiction of the Tribunal, appears
and offers to present his evidence, the Arbitral Tribunal may,
for reasons that justifies the failure to appear, reopen the
proceedings, require him to file his answer with or without
counterclaims, pay the fees, where required under these Rules,
and allow him to present his evidence, with limited right to
cross examine witnesses already presented in the discretion of
the Tribunal. Evidence already admitted shall remain. The
Tribunal shall decide the effect of such controverting evidence
presented by the Respondent on evidence already admitted
prior to such belated appearance.
Thus, take note that so long that there is still no award,
Mr.Rulete can still file an answer and submit evidence.
SECTION 4.3.When arbitration cannot proceed - Where the
contract between the parties does not provide for arbitration
and the parties cannot agree to submit the dispute(s) to
arbitration, the arbitration cannot proceed and the Claimant/s
shall be informed of that fact.
So in this case, even if Mr.Puray already filed a request for
arbitration before the CIAC, the same cannot proceed because
of the absence of the arbitration clause.
Again, the arbitration cannot proceed when:
1. the contract between the parties does not provide for
arbitration
2. the parties cannot agree to submit the dispute to
arbitration
RULE 5 – ANSWER/COUNTERCLAIMS.Just Read.
RULE 6 – SUBMISSION AND COMMUNICATIONS /
NOTICES.Just Read
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RULE 7- CONFIDENTIALITY
SECTION 7.1 Confidentiality of proceedings – The arbitration
proceedings shall be considered confidential and shall not be
published except (i) with the consent of the parties, or (ii) when
necessary in case resort to the Court is made under the Rules
of Court. The term “arbitration proceedings” shall include
communications to or from CIAC, the pleadings, applications
and other papers filed with CIAC, sworn statements,
documentary and testimonial evidence, reports and minutes
taken of the proceedings, and other orders, decision, award or
resolution issued by the Arbitrator(s).
Q: What will happen to a person who violates confidentiality?
SECTION 7.2 Violation of confidentiality – Any person who
violates the immediately preceding confidentiality provision
shall be subject to the following sanctions:
7.2.1 If the violator is a lawyer, administrative action or
proceeding to be conducted by CIAC, with proper notice and
hearing, for inhibition or prohibition from appearing as counsel
for any party in any arbitration case before CIAC for a period
not exceeding six (6) months; without prejudice to suspension
or disbarment action before the Integrated Bar of the
Philippines (IBP), at the instance of CIAC.
7.2.2 If the violator is a duly licensed and registered
professional, administrative/ disciplinary action before the
Professional Regulation Commission (PRC), at the instance of
CIAC.
So arbitrations before the CIAC are held in private and the
pleadings are confidential. Arbitration proceedings are not
open to public and only the parties themselves and their
respective witnesses and counsels can attend the proceedings.
Only they can receive copies of the proceedings. Due to the
confidentiality of the proceedings, parties are assured their
trade secrets are kept secret from third parties. Also, arbitration
records are not considered public records.
RULE 8 – QUALIFICATIONS OF ARBITRATORS
SECTION 8.1 General qualification of arbitrators - The
Arbitrators shall be men of distinction in whom the business
sector and the government can have confidence. They shall be
technically qualified to resolve any construction dispute
expeditiously and equitably. The Arbitrators shall come from
different professions. They may include engineers, architects,
construction managers, engineering consultants, and
businessmen familiar with the construction industry and
lawyers who are experienced in construction disputes.
RULE 9 – NOMINATION AND APPOINTMENT OF
ARBITRATORS – Just read
Take note that parties are free to nominate persons of their
choice as their arbitrators, provided that the latter are
independent and neutral preferably with specific expertise,
specialized competence in resolving construction disputes.
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The tribunal may composed of Filipinos as well as foreigners.
Arbitration before the CIAC is conducted before a single
arbitrator or panel of arbitrators who are chosen from a list of
arbitrators accredited by the CIAC.
SECTION 9.2 Sole Arbitrator - Where the parties have agreed
that the dispute(s) shall be settled by a Sole Arbitrator, each
party shall have the right to nominate six arbitrators. If any or
both of the parties fail to submit the names of their nominees
within the period/s prescribed by CIAC, a Sole Arbitrator shall
be appointed by CIAC.
9.2.1 CIAC shall appoint as sole arbitrator the common
nominee of the parties who is available and not disqualified. In
the absence of a common nominee or in cases where the
common nominee is disqualified or is not available, CIAC shall
return the lists of nominees to the parties and ask them to
make an agreement on a common nominee/s within 48 hours.
If the parties still fail to agree on a common nominee, CIAC
may appoint a Sole Arbitrator or an Arbitral Tribunal. If CIAC
decides to appoint a Sole Arbitrator, it may select an arbitrator
who is not a nominee of any one of the parties and who is not
disqualified and is available for appointment.
We discussed earlier that a foreigner may be appointed or
accredited as arbitrator.
Q: May a foreign arbitrator who is not accredited by the CIAC
be appointed as a co-arbitrator or assigned as a chair of an
arbitral tribunal? YES.
SECTION 9.4 Conditions for appointment of foreign arbitrator15
- A foreign arbitrator not accredited by CIAC may be appointed
as a co-arbitrator or chairperson of an arbitral tribunal for a
construction dispute under the following conditions:
a) the dispute is a construction dispute in which one party is an
international partyi.e. one whose place of business is outside
the Philippines. For this purpose, the term international party
shall not include a domestic subsidiary of such international
party or a co-venturer in a joint venture with a party which has
its place of business in the Philippines.
b) the foreign arbitrator to be appointed is not a national of the
Philippines and is not of the same nationality as the
international party in the dispute;
9.4.1 Procedure for appointment of foreign arbitrator.-The
foreign arbitrator must be nominated by the international party
or is the common choice of the two CIAC-accredited arbitrators
one of whom was nominated by the international party. The
nomination must be accompanied by a resume or bio-data of
the nominee relevant to qualifications as a construction
arbitrator and a signed undertaking of the nominee to abide by
CIAC arbitration rules and policies.
Q: Can you challenge the appointment of an arbitrator?Yes.
SECTION 9.6 Challenge- An Arbitrator may be challenged by a
party at any time after his appointment but before the lapse
of the original 10-day period for submission of
memorandaor draft decision under Section 13.16, Rule 13
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hereof. Any extensions of time to file memoranda or draft
decisions will not EXTEND the 10-day period to file a challenge
or motion for inhibition. The challenge shall be based upon the
following grounds:
a) relationship by blood or marriage within the sixth degree of
either party to the controversy, or to counsels within the fourth
degree, computed according to the rules of civil law.
b) financial, fiduciary or other interest in the controversy
c) partiality or bias;
d) incompetence, or professional misconduct.
A party may also request the inhibition of an arbitrator upon
other just and valid reasons affecting independence, integrity,
impartiality and interest.
9.6.1 A motion for inhibition or a request for the disqualification
and replacement of an arbitrator shall be treated as a
challenge.
RULE 10 – APPOINTMENT AND ACCEPTANCE OF
ARBITRATORS - Just Read
RULE 11 – PRELIMINARY CONFERENCE / TERMS OF
REFERENCE
SECTION 11.1 Notice of conference - The Arbitrator/Arbitral
Tribunal shall set the case for preliminary conference not later
than 15 days after appointment of arbitrator(s) and a notice to
the parties thereof shall forthwith be sent to finalize the Terms
of Reference as provided in Rule 11.4 below, a draft copy of
which is attached thereto and to consider the following, among
others:
a. possibility of amicable settlement;
b. necessity or desirability of amendments to pleadings;
c. obtaining stipulations or admission of facts and/or
documents to avoid unnecessary proof;
d. limitation of the number of witnesses;
e. suggested formulation of issues by the parties;
f. application for interim relief, appointment of experts and
necessity of site inspection; and
g. such other matters as may aid in the just and speedy
disposition of the case.
SECTION 11.3 Disclosure 20 – During the preliminary
conference the Arbitrator who had failed to make his or her
written disclosure required in the previous section shall
disclose any circumstance likely to give rise to justifiable
doubts as to impartiality or independence, including financial or
personal interest in the outcome of the arbitration and any
existing or past relationships with any individual or corporate
party together with their respective relatives or principal
stockholders/officers or foreseeable participant in the
proceedings. On the basis of such disclosure, either party may
ask clarificatory questions thereon that may lead to a decision
to move for inhibition or accept the appointment.
SECTION 11.4 Terms of Reference. - This document functions
like a pre-trial order in judicial proceedings and controls the
arbitration proceedings unless corrected for manifest errors by
motion filed not later than the hearing date.
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11.4.1 Contents - The TOR shall include the following
particulars:
a) the full names of the parties, and their respective counsels,
if any;
b) the addresses and contact numbers of the parties/counsels,
to which notifications or communications arising in the course
of the arbitration may validly be made;
c) a summary of the parties' respective claims;
d) full statement of admitted facts and documents;
e) the issues to be resolved in question form;
f) the Arbitrators' full names;
g) the place where arbitration proceedings shall be held;
h) the breakdown, schedule of payments, and sharing of
arbitration fees;
i) such other particulars as may be required by the Arbitral
Tribunal for the proper and speedy adjudication of the case.
11.4.2 Signing - The Terms of Reference (TOR) shall be
signed on each and every page thereof, by the parties together
with their respective counsel and the Arbitral Tribunal
immediately after finalization thereof. In any case, the TOR
must be finalized and signed not later than five (5) days from
inception.
Q: Can arbitration proceed even without the terms of reference?
YES.
SECTION 11.5 Arbitration To Proceed Even Without TOR. - In
the exercise of the sound discretion of the Arbitral Tribunal,
arbitration shall proceed even without the Terms of Reference
(TOR) on the basis of the issues formulated by the pleadings
filed by the parties.
SECTION 11.6 Submission for Decision. – No factual issue
being in dispute, the case may be deemed submitted for
decision without an oral hearing and on the basis of
documentary evidence already submitted.
RULE 12 – VENUE
SECTION 12.1 Venue, Date and Time of Hearing - The
venue, date and time of the arbitral proceedings shall be
mutually agreed upon by the parties and the Arbitral
Tribunal. In the event of disagreement, the choice of venue
made by the Arbitral Tribunal shall prevail.
RULE 13 - ARBITRATION PROCEEDINGS
SECTION 13.1 Order of Proceedings - A hearing shall be
opened by recording of the place, time and date of hearing, the
presence of the Arbitral Tribunal, parties, and witnesses, if any.
The names and addresses of all witnesses and exhibits in the
order received shall be made part of the record.
13.1.1 Quorum - Two members of a tribunal shall comprise a
quorum for the purpose of conducting a hearing.
Members of the Arbitral Tribunal shall be composed of three (3)
persons UNLESS they opted for a sole arbitrator.
Transcribed by: JSP
SECTION 13.2 Briefing on Rules and procedures
SECTION 13.3 Order of presentation
SECTION 13.4 Expeditious procedures
SECTION 13.5 Evidence - The parties may offer such
evidence as they desire and shall produce such additional
documents and witnesses as the Arbitral Tribunal may deem
necessary to a clear understanding of facts and issues for a
judicious determination of the dispute(s). The Arbitral Tribunal
shall act according to justice and equity and merits of the case,
without regard to technicalities or legal forms and need
not be bound by any technical rule of evidence. Evidence
shall be taken in the presence of the Arbitral Tribunal and all of
the parties, except where any of the parties is absent, or has
waived his right to be present.
13.5.1 Order to produce documentary evidence.
13.5.2 Order to give testimony.
SECTION 13.6 Affidavit in lieu of direct testimony -
SECTION 13.7 Examination by the Arbitral Tribunal - The
Arbitral Tribunal may ask clarificatory questions of the
witnesses at any stage of the proceedings.
SECTION 13.8 Documentary evidence - As a general rule, no
documentary evidence(s) presented and offered shall be
rejected unless the same is found by the Arbitral Tribunal to be
completely irrelevant.
SECTION 13.9 Offer of documents - All documents not offered
with the Arbitral Tribunal at the hearing but which are arranged
at the hearing subsequently by agreement of the parties to be
submitted, shall be filed within five (5) days from the
termination of the hearing. All parties shall be afforded
opportunity to examine such documents.
SECTION 13.10 Site inspection –The Arbitral Tribunal may,
motuproprioafter notice to the parties, or upon motion of a
party, conduct a site inspection of any building, place or
premises, including any work, material, implement, machinery,
appliance or any object therein. The Tribunal in deciding on the
necessity of a site inspection, may consider whether a video or
pictorial presentation may suffice.
13.10.1 Costs including transportation, accommodations,
meals, rental fee for the video/still camera, services, video tape
recording, copy of pictures and other expenses shall be
equally shared by both parties.In special cases upon the
order of the Arbitral Tribunal, the party who seeks this video
and will benefit from it shall bear the expenses.
SECTION 13.11 Adjournments - The Arbitral Tribunal for good
cause shown, may adjourn the hearing upon his/its own
initiative or upon the request of one of the parties. Adjournment
shall not be more than five (5) working days.
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Q: Can arbitration proceed despite the absence of the party?
YES.
SECTION 13.12 Arbitration in the absence of the party - The
Arbitration may proceed despite the absence of any party who
after due notice fails to be present or fails to obtain an
adjournment. An award, however, shall not be made solely on
the default of a party. It shall be made on the basis of evidence
submitted and proven.
SECTION 13.13 Closing of the hearings
Q: When can you reopen hearings?
SECTION 13.14 Reopening of hearing - The hearing may be
reopened by the Arbitral Tribunal on their own motion or upon
the request of any party, upon good cause shown, at any time
before the award is rendered. When hearings are thus
reopened, the effective date for the closing of the hearing shall
be the date of closing of the reopened hearing.
SECTION 13.15 Summation - The Arbitral Tribunal may direct
the parties to make a brief oral summation at the end of the
oral hearing.
In summary, the arbitral proceedings allow the party to decide
on the following:
1. the time periods for filing the submissions
2. the submissions of affidavits or testimonies of
witnesses
3. how formal will be the proceedings
4. place where the arbitration will be conducted
The arbitration can be held at any place in the Philippines.
RULE 14 – INTERIM RELIEF
SECTION 14.1 Interim measures - In the course of the
proceedings, the Arbitral Tribunal may, upon the request of
either or both parties or upon its own initiative, issue orders as
is necessary to attain the following objectives:
a. to ensure the enforcement of the award;
b. to prevent irreparable loss or injury or deterioration of
property;
c. to minimize or avoid undue delays in project or contract
implementation;
d. to provide security for the performance of any obligation;
e. to produce or preserve any evidence;
f. such other measures deemed by the Arbitral Tribunal to be
necessary to prevent a miscarriage of justice or abuse of rights
of any of the parties.
14.1.2 Such interim measures may include but shall not be
limited to preliminary injunction directed against a party,
Transcribed by: JSP
appointment of receivers or detention, preservation, inspection
of property, that is the subject of dispute in arbitration. Either
party may apply to the Court for assistance in implementing or
enforcing an interim measure ordered by an Arbitral Tribunal.
RULE 15 – APPOINTMENT OF EXPERTS
RULE 16 – THE ARBITRATION AWARD
SECTION 16.1.Time of award - The award shall be rendered
promptly by the Arbitral Tribunal within thirty (30) days from the
time the case is submitted for resolution but not more than six
(6) months from the date of signing of the TOR, or in cases
where a TOR is absent, not more than six (6) months from the
date of the last preliminary conference called for the purpose of
finalizing and/or signing of the TOR. There shall be no
extensions of time unless approved by the CIAC.
SECTION 16.2 Form of award- The Final award shall be in
writing and signed by the Arbitral Tribunal or a majority of its
members. A dissent from the decision of the majority or a
portion thereof shall be in writing specifying the portion/s
dissented from with a statement of the reason/s thereof and
signed by the dissenting member.
SECTION 16.3 Contents of the final award - Generally, the
Final Award shall contain the issues involved, a brief statement
and discussion of the facts, and the authority relied upon for
the resolution or disposition of the issues.
SECTION 16.4 Award upon settlement - If the parties settle
their dispute(s) during the course of the arbitration, the Arbitral
Tribunal, upon their request, may set forth the agreed
settlement as an Arbitral Award.
Q: When does the jurisdiction of the arbitral tribunal end?
SECTION 16.6 Termination of jurisdiction –Except for
execution or post-award proceedings, the jurisdiction of the
Arbitral Tribunal over the dispute is terminated upon the
finality of the Final Award or Decision. Where an appeal is
taken from a decision or Final Award, and the appellate court
directs a re-hearing or a hearing on the merits on any issue
arising in the case, jurisdiction terminates only upon a final
disposition of the case by the appellate court and/or a final
determination of all incidental matters thereto.
We discussed earlier, arbitration award before the CIAC
continues to be confidential. That is the reason why arbitral
awards are not published except when CIAC itself publishes
abstract of the cases assigned to it.
RULE 17 – POST-AWARD PROCEEDINGS
Q: What are the grounds for correction of final award?
SECTION 17.1 Motion for correction of final award - Any of the
parties may file a motion for correction of the Final award
within fifteen (15) days from receipt thereof upon any of the
following grounds:
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a. an evident miscalculation of figures, a typographical or
arithmetical error;
b. an evident mistake in the description of any party, person,
date, amount, thing or property referred to in the award.
c. where the arbitrators have awarded upon a matter not
submitted to them, not affecting the merits of the decision upon
the matter submitted;
d. where the arbitrators have failed or omitted to resolve
certain issue/s formulated by the parties in the Terms of
Reference (TOR) and submitted to them for resolution;26 and
e. where the award is imperfect in a matter of form not
affecting the merits of the controversy.
The motion shall be acted upon by the Arbitral Tribunal or the
surviving/remaining members.
Q: Can you file a motion for reconsideration or a new trial? NO
SECTION 17.2 Motion for reconsideration or new trial.- A
motion for reconsideration or new trial shall be considered a
prohibited pleading.
RULE 18 – EXECUTION OF FINAL AWARD
SECTION 18.1 Execution of Award. - A final arbitral award
shall become executory upon the lapse of fifteen (15) days
from receipt thereof by the parties.
Just read through the subsequent subsections…
Just remember that the CIAC arbitral award need not be
confirmed by the RTC to be executed as provided under EO no
1008. The CIAC award is executory. Thus, it need not be
confirmed by the court.
Under EO 1008, arbitral award are final and non-appealable
except when it involves question of law, in which case it can be
appealed to the SC before the award becomes final.
E.O. no 1008.Sec. 19. Finality of Awards. The arbitral
award shall be binding upon the parties. It shall be final and
inappealable except on questions of law which shall be
appealable to the Supreme Court.
But also look at the Rules of Procedure. It states that all
appeals of judgments or orders of quasi-judicial agencies,
including the CIAC, through the exercise of the quasi-judicial
functions shall be brought to the CA – whether they involve
questions of fact or questions of law, or even a mix of
questions of fact and law.
Metro Construction vs. Chatham Properties
In view of the amendment brought about by circular 1-91 and
1-95 in conjunction with RA 7902 which is now embodied in
Rule 43 of the 1997 Rules of Civil Procedure, appeals from
arbitral awards of the CIAC may be brought not only to the SC
for questions of law as allowed under Sec. 19 of EO no. 1008,
but also to the CA for questions of fact and law. But even an
Transcribed by: JSP
appeal from CIAC, basing on a question of law, may be
brought to the CA rather than to the SC. This is because of the
doctrine of hierarchy of courts which allows the case to be
transmitted or referred to the CA for resolution. But if the
appeal involves only question of facts, the case should be
appealed to the CA since the SC is not a trier of facts.
RULE 19 - RELIEF NOT COVERED BY THE RULES 34
SECTION 19.1 Motion for relief not covered by the Rules 35 -
Every motion or other paper filed in connection with the
execution of an award not expressly authorized by the Rules
shall be charged a filing fee of Php 3000.00 or as may be
prescribed by CIAC.
RULE 20 – SMALL CLAIMS 36
SECTION 20.1 Small Claims - Cases where the claim does not
exceed P1 million shall be categorized as a small claim
thereby entitled to special procedures of disposition and
reduced fees.
RULE 21– GENERAL MATTERS
SECTION 21.2 Control over proceedings 37 - The Arbitral
Tribunal shall exercise complete control over all proceedings to
insure a speedy, adequate and justifiable disposition of the
disputes and cases submitted to them for resolution.
SECTION 21.6 Waiver of Rules - Any party who proceeds with
the arbitration after knowledge that any provision or
requirement of these Rules has not been complied with and
fails to state his objection thereto in writing, shall be deemed to
have waived his right to object.
SECTION 21.7 Freedom to settle 38 - The parties shall be free
to settle the dispute(s) anytime even if the same is under
arbitration. In such case, the actual expenses incurred for
arbitration shall be charged against the deposit. If the deposit
is insufficient, the parties shall equally shoulder the balance.
RULE 22 – COSTS
RULE 23. REPEALING CLAUSE
RULE 24. SEPARABILITY CLAUSE
RULE 25. EFFECTIVITY
Next meeting:
RA 876
RA 9285
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Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS
03/14/2016
-no recording file available-
03/21/2016
RA 876.Sec. 18.Proceeding in lieu of hearing.
Q:May oral hearing be dispensed with?
A: According to Sec. 19, it may be waived provided that the
parties, by written agreement, submitted their differences to
arbitration.
Sec. 19.Time for Rendering Award
The general rule is that the written award of the arbitrators
shall be rendered within 30 days after the closing of the
hearings or if the oral hearings shall have been waived, within
thirty days after the arbitrators shall have declared such
proceedings in lieu of hearing closed. Take note that the period
may be extended by mutual consent of the parties.
Exception: When the parties shall have stipulated by written
agreement the time within which the arbitrators must render
their award.
Section 20.Form and contents of award.
Q: How shall the award be made?
A: The 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.
Q: If during the course of arbitration, the parties have settled
their differences, what may the parties do?
A: They may request of the arbitrators that such settlement be
embodied in an award which shall be signed by the arbitrators.
Take note: No arbitrator shall act as a mediator in any
proceeding in which he is acting as arbitrator; and all
negotiations towards settlement of the dispute must take place
without the presence of the arbitrators.
Section 21.Fees of arbitration. - The fees of the arbitrators
shall be fifty pesos per day unless the parties agree otherwise
in writing prior to the arbitration.
Section 22. Arbitration deemed a special proceeding.
Arbitration under a contract or submission shall be deemed a
special proceeding.
Q: What is a special proceeding?
A: Under Rule 1. Sec. 3(c), a special proceeding is a remedy
by which a party seeks to establish a status, a right, or a
particular fact.
Being a special proceeding, jurisdiction over petitions and
motions for enforcement and arbitration or for settling the
Transcribed by: JSP
award is lodged with the RTC in the place where the arbitration
was held; in the place where the attached property is located;
the residence of any of the parties, or the regular place of
business; or in the NCR at the option of the applicant.
Section 23. Confirmation of award
Q: After the award is made, what may the party do?
A: 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.
Q: When?
A: At any time within one month after the award is made.
Take note that the award of arbitrators is not immediately
executory. The award must be confirmed by the court having
jurisdiction.
Q: How is it made?
A: By filing a motion for confirmation and securing a judgment.
Section 24.Grounds for vacating award.
In any one of the following cases, the court must make an
order vacating the award upon the petition of any party to the
controversy:
(a) The award was procured by corruption, fraud, or
other undue means; or
(b) That there was evident partiality or corruption in
the arbitrators or any of them; or
(c) 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
(d) 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.
Q: What if the party wishes to have the award vacated on valid
grounds and he is faced with an unaccommodating court, what
is his remedy? Stated otherwise, what if the judge would not
allow it, what is the remedy then?
A: If you are faced with an unaccommodating court, the proper
remedy would be certiorari under Rule 65. It must be borne in
mind, however, that this action will only lie when there is grave
abuse of discretion amounting to lack or in excess of
jurisdiction on the part of the voluntary arbitrator.
Read Case:
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1. Chungfu Industries vs. CA (GR no. 96283)
Chungfu Industries vs. CA
(GR no. 96283)
1stIssue:May the parties who agree to submit their disputes to
arbitration further provide that the arbitrators' award shall be final,
unappealable and executory?
Ruling: YES
(But not absolute.In this case the court committed GAOD).
Article 2044 of the Civil Code recognizes the validity of such
stipulation, thus:
Any stipulation that the arbitrators' award or decision shall be final is
valid, without prejudice to Articles 2038, 2039 and 2040.
Similarly, the Construction Industry Arbitration Law provides that
the arbitral award "shall be final and inappealable except on
questions of law which shall be appealable to the Supreme Court."
Where the parties agree that the decision of the arbitrator shall be
final and unappealable as in the instant case, the pivotal inquiry is
whether subject arbitration award is indeed beyond the ambit of the
court's power of judicial review.
We rule in the negative. It is stated explicitly under Art. 2044 of the
Civil Code that the finality of the arbitrators' award is not absolute
and without exceptions. Where the conditions described in Articles
2038, 2039 and 2040 applicable to both compromises and
arbitrations are obtaining, the arbitrators' award may be annulled
or rescinded. Additionally, under Sections 24 and 25 of the
Arbitration Law, there are grounds for vacating, modifying or
rescinding an arbitrator's award. Thus, if and when the factual
circumstances referred to in the above-cited provisions are present,
judicial review of the award is properly warranted.
2nd Issue: What if courts refuse or neglect to inquire into the factual
milieu of an arbitrator's award to determine whether it is in
accordance with law or within the scope of his authority? How may
the power of judicial review be invoked?
This is where the proper remedy is certiorari under Rule 65 of the
Revised Rules of Court. It is to be borne in mind, however, that this
action will lie only where a grave abuse of discretion or an act
without or in excess of jurisdiction on the part of the voluntary
arbitrator is clearly shown. For "the writ of certiorari is an extra-
ordinary remedy and that certiorari jurisdiction is not to be equated
with appellate jurisdiction. In a special civil action of certiorari, the
Court will not engage in a review of the facts found nor even of the
law as interpreted or applied by the arbitrator unless the supposed
errors of fact or of law are so patent and gross and prejudicial as to
amount to a grave abuse of discretion or an exces de pouvoir on the
part of the arbitrator."
Section 25. Grounds for modifying or correcting award
Transcribed by: JSP
In any one of the following cases, the court must make an
order modifying or correcting the award, upon the application
of any party to the controversy which was arbitrated:
(a) Where there was an evident miscalculation of
figures, or an evident mistake in the description of any
person, thing or property referred to in the award; or
(b) Where the arbitrators have awarded upon a matter
not submitted to them, not affecting the merits of the
decision upon the matter submitted; or
(c) Where the award is imperfect in a matter of form
not affecting the merits of the controversy, and if it
had been a commissioner's report, the defect could
have been amended or disregarded by the court.
Section 26. Motion to vacate, modify or correct award: when
made.
Section 27. Judgment
Section 28. Papers to accompany motion to confirm, modify,
correct, or vacate award.
Section 29. Appeals
Q: How may an appeal be taken from an order made in a
proceeding under this Act, or from a judgment entered upon an
award?
A: Through certiorari proceedings, but such appeals shall be
limited to questions of law.
Section 30.Death of party.
Q: Where a party dies after making a submission or a contract
to arbitrate as prescribed in this Act, what happens to the
proceedings?
A:The proceedings may be begun or continued upon the
application of, or notice to, his executor or administrator, or
temporary administrator of his estate. In any such case, the
court may issue an order extending the time within which
notice of a motion to confirm, vacate, modify or correct an
award must be served.
Section 31.Repealing clause. - The provisions of chapters
one and two, Title XIV, of the Civil Code shall remain in force.
All other laws and parts of laws inconsistent with this Act are
hereby repealed. If any provision of this Act shall be held
invalid the remainder that shall not be affected thereby.
In effect, the arbitration law is suppletory to the Civil Code
provisions.
Republic Act No. 9285
The Alternative Dispute Resolution Act of 2004 may be
considered a major breakthrough in the Philippine Court
System. This ADR law is a response to address the perennial
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Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS
issues increasing court dockets, expensive litigation fees, slow
paced judicial proceedings and the rigid adversary court
system.
Court dockets are seriously congested due to infinite filing of
cases and delayed court resolutions because of inefficiency,
incompetence, sloth, laziness, corruption, and conflict of
interest of court officials. Moreover, the ADR law addresses the
indispensable effects of globalization of commercial
transactions such as the expansion of international trade of
foreign investments which require domestic laws to adopt
alternative ways of dispute resolution applicable in commerce.
In contemplation of RA 9285, take note that there are 2 general
categories of arbitration:
1. Domestic Arbitration – an arbitration that is not
“international” as defined in Article 1, par. 3 of the Model Law.
It is an arbitration where the proceedings are held and where
the award is rendered in the Philippines. The seat of arbitration
is here in the Philippines. It does not have any of the
characteristics of an International Arbitration under Art. 1 (3) of
the Model Law.
2. International Commercial Arbitration – is an arbitration
where (just like domestic arbitration), the proceedings are held
and the award is rendered in the Philippines but involves a
dispute arising from a commercial relationship that possesses
any of the characteristics that make it international under Art. 1
par. 3 of the Model Law.
According to Art. 1(3)of the Model Law,an arbitration is
international if:
(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
(b) one of the following places is situated outside the State in
which the parties have their places of business:
(i) the place of arbitration if determined in, or pursuant
to, the arbitration agreement;
(ii) any place where a substantial part of the
obligations of the commercial relationship is to be
performed or the place with which the subject-matter
of the dispute is most closely connected; or
(c) the parties have expressly agreed that the subject-matter of
the arbitration agreement relates to more than one country.
Also take note that international commercial arbitration is
governed by the model law and some specific provisions of RA
9285.
RA 9285.SEC. 2.Declaration of Policy.
What is being promoted by the law is party autonomy in the
resolution of disputes. In other words, the use of ADR provides
empowerment to the parties in the dispute.
Transcribed by: JSP
Q: How shall the state achieve ADR
A: The state shall use the ADR as an efficient tool and an
alternative procedure for the resolution of appropriate cases by
1. Enlisting active private sector participation in the
settlement of disputes through ADR
2. without prejudice to the adoption by the Supreme
Court of any ADR system, such as mediation,
conciliation, arbitration, or any combination thereofas
a means of achieving speedy and efficient means of
resolving cases
Read:
1. Magellan Capital Mgt. Corp. vs. Zosa (355 S 157)
“It is error for the petitioners to claim that the case should fall
under the jurisdiction of the Securities and Exchange
Commission [SEC, for brevity]. The controversy does not in
anyway involve the election/appointment of officers of
petitioner MCHC, as claimed by petitioners in their assignment
of errors. Respondent Zosa's amended complaint focuses
heavily on the illegality of the Employment Agreement's
"Arbitration Clause" initially invoked by him in seeking his
termination benefits under Section 8 of the employment
contract. And under Republic Act No. 876, otherwise known as
the "Arbitration Law," it is the regional trial court which
exercises jurisdiction over questions relating to arbitration.”
SEC. 7.Scope. - The provisions of this Chapter shall cover
voluntary mediation, whether ad hoc or institutional, other than
court-annexed. The term "mediation' shall include conciliation
Mediation – is where the services of a mediator is offered by a
third party
Conciliation – is where the services of the third party that will
facilitate the conciliation process is solicited by the one of the
parties
ADR Provider - means institutions or persons accredited as
mediator, conciliator, arbitrator, neutral evaluator, or any
person exercising similar functions in any Alternative Dispute
Resolution system. This is without prejudice to the rights of the
parties to choose nonaccredited individuals to act as mediator,
conciliator, arbitrator, or neutral evaluator of their dispute.
Arbitrator - means the person appointed to render an award,
alone or with others, in a dispute that is the subject of an
arbitration agreement.
Government Agency - means any government entity, office or
officer, other than a court, that is vested by law with quasi-
judicial power to resolve or adjudicate dispute involving the
government, its agencies and instrumentalities, or private
persons;
International Party - shall mean an entity whose place of
business is outside the Philippines. It shall not include a
domestic subsidiary of such international party or a coventurer
in a joint venture with a party which has its place of business in
the Philippines.
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SEC. 4.Electronic Signatures in Global and E-Commerce
Act. - The provisions of the Electronic Signatures in Global and
E-Commerce Act, and its implementing Rules and Regulations
shall apply to proceeding contemplated in this Act.
This is because of the advances of electronic communications
in commerce.
Under Sec. 5 (e) of RA 8792, "Electronic Signature" refers to
any distinctive mark, characteristic and/or sound in electronic
form, representing the identity of a person and attached to or
logically associated with the electronic data message or
electronic document or any methodology or procedures
employed or adopted by a person and executed or adopted by
such person with the intention of authenticating or approving
an electronic data message or electronic document.
Also take note of Digital Signature. Under the Rules on
Electronic Evidence, "Electronic signature" refers to any
distinctive mark, characteristic and/or sound in electronic form,
representing the identity of a person and attached to or
logically associated with the electronic data message or
electronic document or any methodology or procedure
employed or adopted by a person and executed or adopted by
such person with the intention of authenticating, signing or
approving an electronic data message or electronic document.
For purposes of these Rules, an electronic signature includes
digital signatures.
SEC. 5.Liability of ADR Provider and Practitioner. - The
ADR providers and practitioners shall have the same civil
liability for the Acts done in the performance of then duties as
that of public officers
The liability of ADR providers and practitioners are similar to
the liability of the superior public officers except for Sec. 38 (1)
chapter 9 Book 1 of the Administrative Code which provides:
A public officer shall not be civilly liable for acts done
in the performance of his official duties unless there is
a clear showing of bad faith, malice, or gross
negligence.
So, what are the grounds of civil liability?
1. Bad Faith
2. Malice
3. Gross Negligence
Bad Faith – involves actual or constructive fraud or a design to
deceive or mislead another, or a neglect or refusal to fulfil
some duty or some contractual obligation, not prompted by an
honest mistake as to one’s rights and duties but by some
interest and/or sinister motive.
Malice – is the intentional doing of a wrongful act without just
cause, or excuse with intent to inflict an injury.
Gross Negligence – is the intentional failure to perform a
manifest duty and reckless disregard of the consequences as
affecting the life and property of another.
Transcribed by: JSP
General Rule: public officers shall not be civilly liable for acts
done in the performance of their official duties.
Exceptions: Clear showing of B.F.; M; G.N.
Illustrative Case:
1. Pajares vs. Alipante R-190-P September 15, 1957
“We agree that the respondent is guilty of gross negligence
and conduct seriously prejudicial to the best interest of the
service. The evidence shows respondent to have been
completely unmindful of his duties, so indifferent to his
responsibilities as to be scornful of them, and utterly uncaring
of the rights of the parties. He has by his conduct shown
himself to be unfit for public service, specially that connected
with the administration of justice, which demands the highest
sense of dedication and zeal in the protection and conservation
of the rights and interests of litigants as well as in assuring the
efficacy and integrity of the judicial process.”
SEC. 6.Exception to the Application of this Act. - The
provisions of this Act shall not apply to resolution or settlement
of the following:
(a) labor disputes covered by Presidential Decree No. 442,
otherwise known as the Labor Code of the Philippines, as
amended and its Implementing Rules and Regulations;
(b) the civil status of persons;
(c) the validity of a marriage;
(d) any ground for legal separation;
(e) the jurisdiction of courts;
(f) futurelegitime;
(g) criminal liability; and
(h) those which by law cannot be compromised
Relate Sec. 6 of RA 9285 with Art. 2035 of the Civil Code
SEC. 7.Scope. - The provisions of this Chapter shall cover
voluntary mediation, whether ad hoc or institutional, other than
court-annexed. The term "mediation' shall include conciliation.
"Mediation" means a voluntary process in which a mediator,
selected by the disputing parties, facilitates communication and
negotiation, and assist the parties in reaching a voluntary
agreement regarding a dispute.
"Mediator" means a person who conducts mediation;
Q: Why is Court Annex not included?
A: It would be duplicating the existing mediation procedure
already established in the judiciary. Such inclusion would
encroach with the separation of powers between judiciary and
congress. Further, such cases guarantee (under the court
annex mediation program of the judiciary department) that they
are already within the cognizance of the court. Thus to include
CAM cases under the application of this Act is tantamount to
depriving the courts of their jurisdiction over the same.
SEC. 8. Application and Interpretation
This reiterates the state policy of promoting ADR in order to
avoid protracted litigation that may entail unnecessary
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expenses. Emphasis must be given to the need to promote
candor of parties and mediators through confidentiality of the
mediation process (which is one of the features of ADR).
Other features: 1. Cost effective 2. Binding 3. Within the power
of the parties
SEC. 9.Confidentiality of Information.
Insular Life vs. CA
Discovery is defined as the disclosure of facts resting in the
knowledge of the defendant or as the production of deeds,
writings, or things in his possession or commerce.
Modes of Discovery under Rules of Court:
1. Depositions pending action
2. Depositions before action or pending appeal
3. Interrogatories to parties
4. Admission by adverse party
5. Production or inspection of documents or things
6. Physical and mental examination of persons
SEC. 10. Waiver of Confidentiality
Waiver is the voluntary repudiation of a right expressed or
implied.
A privilege arising from the confidentiality of information may
be waived in a record or orally during the proceedings by the
mediator and the mediation parties.
However, the confidentiality arising from the confidentiality of
information may likewise be waived by a nonparty participant if
the information is provided by such nonparty participant.
Q: Who will waive the confidentiality of information under this
section?
A: A privilege arising from the confidentiality of information may
be waived in a record, or orally during a proceeding by the
mediator and the mediation parties.
SEC. 11.Exceptions to Privilege. -
(a) There is no privilege against disclosure under Section 9 if
mediation communication is:
(1) in an agreement evidenced by a record
authenticated by all parties to the agreement;
(2) available to the public or that is made during a
session of a mediation which is open, or is required
by law to be open, to the public;
(3) a threat or statement of a plan to inflict bodily
injury or commit a crime of violence;
(4) internationally used to plan a crime, attempt to
commit, or commit a crime, or conceal an ongoing
crime or criminal activity;
Transcribed by: JSP
(5) sought or offered to prove or disprove abuse,
neglect, abandonment, or exploitation in a proceeding
in which a public agency is protecting the interest of
an individual protected by law; but this exception does
not apply where a child protection matter is referred to
mediation by a court or a public agency participates in
the child protection mediation;
(6) sought or offered to prove or disprove a claim or
complaint of professional misconduct or malpractice
filed against mediator in a proceeding; or
(7) sought or offered to prove or disprove a claim of
complaint of professional misconduct of malpractice
filed against a party, nonparty participant, or
representative of a party based on conduct occurring
during a mediation.
(b) There is no privilege under Section 9 if a court or
administrative agency, finds, after a hearing in camera, that the
party seeking discovery of the proponent of the evidence has
shown that the evidence is not otherwise available, that there
is a need for the evidence that substantially outweighs the
interest in protecting confidentiality, and the mediation
communication is sought or offered in:
(1) a court proceeding involving a crime or felony; or
(2) a proceeding to prove a claim or defense that
under the law is sufficient to reform or avoid a liability
on a contract arising out of the mediation.
(c) A mediator may not be compelled to provide evidence of a
mediation communication or testify in such proceeding.
(d) If a mediation communication is not privileged under an
exception in subsection (a) or (b), only the portion of the
communication necessary for the application of the exception
for nondisclosure may be admitted. The admission of particular
evidence for the limited purpose of an exception does not
render that evidence, or any other mediation communication,
admissible for any other purpose.
SEC. 12.Prohibited Mediator Reports.
SEC. 13.Mediator's Disclosure and Conflict of Interest.
At the request of a mediation party, an individual who is
requested to serve as mediator shall disclose his/her
qualifications to mediate a dispute.
Before accepting a mediation, an individual who is requested
to serve as a mediator shall:
(1) make an inquiry that is reasonable under the
circumstances to determinate whether there are any
known facts that a reasonable individual would
consider likely to affect the impartiality of the mediator,
including a financial or personal interest in the
outcome of the mediation and any existing or past
relationship with a party or foreseeable participant in
the mediation; and
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(2) disclosure to the mediation parties any such fact
known or learned as soon as is practical before
accepting a mediation.
(b) If a mediation learns any fact described in paragraph (a) (1)
of this section after accepting a mediation, the mediator shall
disclose it as soon as practicable.
SEC. 14.Participation in Mediation.
A lawyer or a non-lawyer may be designated to provide
assistance in the mediation except as otherwise provided in
RA 9285. A waiver of this right, in case the party waives, shall
be made in writing.
Tan Chay vs. West Coast Life Insurance Company 51 P 88
SC: to rescind is to abrogate a null or void contract
SEC. 15. Place of Mediation. - The parties are free to agree
on the place of mediation. Failing such agreement, the place of
mediation shall be any place convenient and appropriate to all
parties.
SEC. 16. Effect of Agreement to Submit Dispute to
Mediation Under Institutional Rules.
Section 16 mandates that any agreement to submit a future
dispute to an institution that provides mediation services shall
also include submission to said institution’s rules and
regulations governing the conduct of the mediation.
The general assembly recommended that all states shall give
due consideration to the Model Law of the International
Arbitration in view of the desirability of uniformity of the law on
arbitral procedures and the specific rules of International
Commercial Arbitration practice.
The Model Law constitutes a sound and promising basis for
the desired empowerment of national laws. It covers all stages
of the arbitral process from the arbitration agreement, to the
recognition, and the enforcement of the arbitral award and
reflects a world-wide consensus on the principles and
important issues of international arbitration practice. Moreover,
the form of a model law was chosen as the vehicle for the
improvement in view of the flexibility it gives the states in
preparing arbitration laws.
The model law allows the possibility of incorporating an
arbitration agreement and procedural provisions of a foreign
law provided there is no conflict with the few mandatory
provisions of the model law.
Article 5 of the Model Law provides: Extent of court
intervention. In matters governed by this Law, no court shall
intervene except where so provided in this Law.
SEC. 20.Interpretation of Model Law. - In interpreting the
Model Law, regard shall be had to its international origin and to
the need for uniformity in its interpretation and resort may be
made to the travauxpreparatories and the report of the
Secretary General of the United Nations Commission on
International Trade Law

Take note that in case of conflict between the institution’s rules The correct French phrase is travauxpreparatoir which means
and RA 9285, it is the latter that shall prevail. official record of a negotiation.

SEC. 17.Enforcement of Mediated Settlement Agreement. SEC. 21.Commercial Arbitration.- An arbitration is

"commercial" if it covers matters arising from all relationships of
SEC. 18.Referral of Dispute to other ADR Forms. - The a commercial nature, whether contractual or not. Relationships
parties may agree to refer one or more or all issues arising in a of a transactions:
dispute or during its pendency to other forms of ADR such as
but not limited to 1. any trade transaction for the supply or exchange of
goods or services;
(a) the evaluation of a third person or 2. distribution agreements;
(b) a mini-trial, 3. construction of works;
(c) mediation-arbitration, or a combination thereof. 4. commercial representation or agency;
5. factoring;
"Mini-Trial" means a structured dispute resolution method in 6. leasing,
which the merits of a case are argued before a panel 7. consulting;
comprising senior decision makers with or without the 8. engineering;
presence of a neutral third person after which the parties seek 9. licensing;
a negotiated settlement 10. investment;
11. financing;
CHAPTER 4 - INTERNATIONAL COMMERCIAL 12. banking;
ARBITRATION 13. insurance;
14. joint venture and other forms of industrial or business
SEC. 19.Adoption of the Model Law on International cooperation;
Commercial Arbitration. 15. carriage of goods or passengers by air, sea, rail or
International commercial arbitration shall be governed by the road.
Model Law on International Commercial Arbitration (the "Model
Law") adopted by the United Nations Commission on Q: When is an arbitration considered commercial?
International Trade Law on June 21, 1985
A: In answering this, you have to refer to Sec. 21 of RA 9285
and Art. 3 (1) of the Model Law. Hence, arbitration is
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Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS
commercial if it involves matters arising from all relationships of
commercial in nature, whether contractual or not.
SEC. 22.Legal Representation in International Arbitration.
Representation in international arbitration could be by a lawyer
and a non-lawyer. This provision allows a party to be
represented by any person of his choice. However, it prohibits
anyone who is not admitted to the practice of law from
representing them before a judicial/ quasi-judicial body even if
the proceeding is related to arbitration process.
Consistent with Philippine’s intention to be an international
commercial arbitration center, this provision allows foreign
lawyers, although not admitted to practice law in the territory or
the seat of arbitration, to represent the party before the
international arbitral tribunal. Such foreign lawyer falls within
the scope of “any person.” Allowing foreign lawyers to
represent a party before an international arbitral tribunal is not
tantamount to a surrender of sovereignty. In fact, it would be
beneficial to the Philippines as an international commercial
arbitration center.
SEC. 23.Confidential of Arbitration Proceedings. - The
arbitration proceedings, including the records, evidence and
the arbitral award, shall be considered confidential and shall
not be published except
(1) with the consent of the parties, or
(2) for the limited purpose of disclosing to the court of relevant
documents in cases where resort to the court is allowed herein.
Provided, however, that the court in which the action or the
appeal is pending may issue a protective order to prevent or
prohibit disclosure of documents or information containing
secret processes, developments, research and other
information where it is shown that the applicant shall be
materially prejudiced by an authorized disclosure thereof.
Arbitration proceedings are confidential because they are like
amicable settlement proceedings.
SEC. 24.Referral to Arbitration. - A court before which an
action is brought in a matter which is the subject matter of an
arbitration agreement shall,
1. if at least one party so requests not later that the pre-
trial conference, or
2. upon the request of both parties thereafter,
refer the parties to arbitration.
Without any of the above request, there can be no referral
UNLESS if it finds that the arbitration agreement is null and
void, inoperative or incapable of being performed.
Arbitration proceedings are not mandatory but are subject to
the will of the parties to the controversy. Strictly speaking, it is
consensual.
Transcribed by: JSP
Vega vs. San Carlos Milling 51 P 917
The rule now is that unless the agreement is such as
absolutely to close the doors of the courts against the
parties, which agreement would be void, the courts
will look with favor upon such amicable arrangement
and will only with great reluctance interfere to
anticipate or nullify the action of the arbitrator.
SEC. 25.Interpretation of the Act. - In interpreting the Act, the
court shall have due regard to the policy of the law in favor of
arbitration. Where action is commenced by or against multiple
parties, one or more of whom are parties who are bound by the
arbitration agreement, the courts shall refer the parties to
arbitration although the civil action may continue as to those
who are not bound by such arbitration agreement.
This emphasizes the rule of liberality in favor of arbitration
LM Power Engineering Corp. vs. Capitol 399 S 562
Consistent with the policy of encouraging alternative
dispute resolution methods, courts should liberally
construe arbitration clauses. Provided such clause is
susceptible of an interpretation that covers the
asserted dispute, an order to arbitrate should be
granted. Any doubt should be resolved in favor of
arbitration.
Read:
1. 157 S 592
2. BF Corp. vs. CA 288 S 285
3. Toyota vs. CA 216 S 236
4. Philwrap Inc. vs. CIAC 359 S 682
Toyota vs. CA
The contention that the arbitration clause has become
disfunctional because of the presence of third parties
is untenable.
Contracts are respected as the law between the
contracting parties. As such, the parties are thereby
expected to abide with good faith in their contractual
commitments. Toyota is therefore bound to respect
the provisions of the contract it entered into with APT.
Toyota filed an action for reformation of its contract
with APT, the purpose of which is to look into the real
intentions/agreement of the parties to the contract and
to determine if there was really a mistake in the
designation of the boundaries of the property as
alleged by Toyota. Such questions can only be
answered by the parties to the contract themselves.
This is a controversy which clearly arose from the
contract entered into by APT and Toyota. Inasmuch
as this concerns more importantly the parties APT
and Toyota themselves, the arbitration committee is
therefore the proper and convenient forum to settle
the matter as clearly provided in the deed of sale.
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Having been apprised of the presence of the
arbitration clause in the motion to dismiss filed by
APT, Judge Tensuan should have at least suspended
the proceedings and directed the parties to settle their
dispute by arbitration. Judge Tensuan should have
not taken cognizance of the case.
SEC. 26. Meaning of Appointing Authority
"Appointing Authority" as used in the Model Law shall mean
the person or institution named in the arbitration agreement as
the appointing authority; or the regular arbitration arbitration
institution under whose rules the arbitration is agreed to be
conducted. Where the parties have agreed to submit their
dispute to institutional arbitration rules, and unless they have
agreed to a different procedure, they shall be deemed to have
agreed to procedure under such arbitration rules for the
selection and appointment of arbitrators. In ad hoc arbitration,
the default appointment of an arbitrator shall be made by the
National President of the Integrated Bar of the Philippines (IBP)
or his duly authorized representative.
SEC. 27. What Functions May be Performed by Appointing
Authority
Under Art. 11 (3) of the Model Law:
Failing such agreement,
(a) in an arbitration with three arbitrators, each party
shall appoint one arbitrator, and the two arbitrators
thus appointed shall appoint the third arbitrator; if a
party fails to appoint the arbitrator within thirty days of
receipt of a request to do so from the other party, or if
the two arbitrators fail to agree on the third arbitrator
within thirty days of their appointment, theappointment
shall be made, upon request of a party, by the court
or other authority specified in article 6;
(b) in an arbitration with a sole arbitrator, if the parties
are unable to agree on the arbitrator, he shall be
appointed, upon request of a party, by the court or
other authority specified in article 6.
Art. 11 (4). Where, under an appointment procedure agreed
upon by the parties,
(a) a party fails to act as required under such
procedure, or
(b) the parties, or two arbitrators, are unable to reach
an agreement expected of them under such
procedure, or
(c) a third party, including an institution, fails to
perform any function entrusted to it under such
procedure,
any party may request the court or other authority specified in
article 6 to take the necessary measure, unless the agreement
on the appointment procedure provides other means for
securing the appointment.
Transcribed by: JSP
Art. 13 (3). If a challenge under any procedure agreed upon by
the parties or under the procedure of paragraph (2) of this
article is not successful, the challenging party may request,
within thirty days after having received notice of the decision
rejecting the challenge, the court or other authority specified in
article 6 to decide on the challenge, which decision shall be
subject to no appeal; while such a request is pending, the
arbitral tribunal, including the challenged arbitrator, may
continue the arbitral proceedings and make an award.
Article 14. Failure or impossibility to act
(1) If an arbitrator becomes de jure or de facto unable to
perform his functions or for other reasons fails to act without
undue delay, his mandate terminates if he withdraws from his
office or if the parties agree on the termination. Otherwise, if a
controversy remains concerning any of these grounds, any
party may request the court or other authority specified in
article 6 to decide on the termination of the mandate, which
decision shall be subject to no appeal.
SEC. 28.Grant of Interim Measure of Protection.
The ADR law expanded the power of the arbitrators.
Take note that courts are permitted to grant interim and
provisional relief during the pendency of arbitral proceedings. It
is also recognized that arbitral tribunals are authorized to
provide interim measures such as
1. Preliminary injunction
2. Appointment of receivers
3. Detention
4. Preservation
5. Inspection of property, among others
Even granting that both the courts and arbitral tribunal are
given the same power, parties cannot avail of this
simultaneously. The court only has the authority to grant
interim measures to the extent that the tribunal has no power
to act or is unable to act effectively. The law does not provide
for concurrent power of the courts and arbitral tribunal to grant
interim measure of protection. The court must exercise these
powers sparingly, giving weight or precedence to the exercise
thereof by the arbitral tribunal. Any party granted a provisional
relief has to apply with the court for assistance in implementing
or enforcing the interim measures because the arbitral tribunal
has no coercive powers.
Homebankers Savings and Trust vs. CA 318 S 558
A party to a pending arbitration has the right without
violating the rule on forum shopping to institute an
action to obtain a writ of preliminary attachment from
the court to preserve the property which is the subject
matter of the arbitration pursuant to last proviso of
Section 14 of the Arbitration Law which accords the
right to petition the court to take measures to
safeguard any matter which is the subject of the
dispute in arbitration.
Consistent to the ruling in homebankers, RA 9285 provides
that it is not incompatible with an arbitration agreement for a
party to request, before constitution of the tribunal, from a
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Court an interim measure of protection and for the Court to
grant such measure. After constitution of the arbitral tribunal
and during arbitral proceedings, a request for an interim
measure of protection or modification thereof, may be made
with the arbitral tribunal or to the extent that the arbitral tribunal
has no power to act or is unable to act effectively, the request
may be made with the Court. The arbitral tribunal is deemed
constituted when the sole arbitrator or the third arbitrator who
has been nominated, has accepted the nomination and written
communication of said nomination and acceptance has been
received by the party making request.
SEC. 29.Further Authority for Arbitrator to Grant Interim
Measure of Protection.
This section specifically refers to the granting of preliminary
injunction, but includes also includes appointment of receivers,
detention, preservation, inspection…
SEC. 30. Place of Arbitration. - The parties are free to agree
on the place of arbitration. Failing such agreement, the place of
arbitration shall be in Metro Manila, unless the arbitral tribunal,
having regard to the circumstances of the case, including the
convenience of the parties shall decide on a different place of
arbitration.
The arbitral tribunal may, unless otherwise agreed by the
parties, meet at any place it considers appropriate for
consultation among its members, for hearing witnesses,
experts, or the parties, or for inspection of goods, other
property or documents.
Take note that the place chosen for the arbitral tribunal must
have some relevance to the contract and should not impose
any undue hardships on one or to the other party to the
contract especially in terms of attending the hearings.
Relate with Article 20 of the Model Law.
Article 20. Place of arbitration
(1) The parties are free to agree on the place of
arbitration. Failing such agreement, the place of
arbitration shall be determined by the arbitral tribunal
having regard to the circumstances of the case,
including the convenience of the parties.
(2) Notwithstanding the provisions of paragraph/ (1) of
this article, the arbitral tribunal may, unless otherwise
agreed by the parties, meet at any place it considers
appropriate for consultation among its members, for
hearing witnesses, experts or the parties, or for
inspection of goods, other property or documents.
The mandatory rules of the place where the arbitration is
conducted may be a ground for the court of the state where the
arbitration is held to set aside the award. Where the arbitral
award is to be enforced abroad, it is important to hold the
arbitration proceedings in a state that is a signatory to the New
York convention so that the award will be entitled with the
benefits of said convention.
Transcribed by: JSP
SEC. 31.Language of the Arbitration. - The parties are free
to agree on the language or languages to be used in the
arbitral proceedings. Failing such agreement, the language to
be used shall be English in international arbitration, and
English or Filipino for domestic arbitration, unless the arbitral
tribunal shall determine a different or another language or
languages to be used in the proceedings. This agreement or
determination, unless otherwise specified therein, shall apply
to any written statement by a party, any hearing and any award,
decision or other communication by the arbitral tribunal.
The arbitral tribunal may order that any documentary evidence
shall be accompanied by a translation into the language or
languages agreed upon by the parties or determined in
accordance with paragraph 1 of this section.
03/28/2016
DOMESTIC ARBITRATION
-sorry recording inaudible-
04/04/2016
What is mediation?
Mediation is a process of settling disputes with the assistance
of an acceptable, impartial and neutral third party called a
mediator. The mediator helps parties identify issues and
develop proposals to resolve their disputes. Once the parties
have arrived at a mutually acceptable arrangement, the
agreement becomes the basis for the court’s decision on the
case.
This form of mediation is also known as court-annexed
mediation since the case has already been filed in court.
What is Judicial Dispute Resolution?
Judicial Dispute Resolution (JDR) is another innovation in the
Philippine court system. When court-annexed mediation fails,
the case is brought to the judge who then acts as a conciliator,
a neutral evaluator and a mediator. The judge will try to
mediate the case. If the judge’s intervention as a mediator
succeeds, the case is concluded with a judgment based on a
compromise. If the dispute is still unresolved, then the case is
referred to another judge for trial. Both parties must now be
prepared for litigation.
What cases are covered by mediation?
1. All civil cases, settlement of estates and cases
covered by the Rule on Summary Procedure. Typical
cases would be collection of debts, ejectment of
tenants in apartment dwellings, and inheritance
disputes among family members.
2. Cases cognizable by the Lupong Tagapamayapa
under the KatarungangPambarangay Law such as
disputes between neighbors of the same barangay
over property.
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Atty. Genevieve Valles FOR THE BENEFIT OF STM LAW SCHOOL RESIDENTS
3. The civil aspect of Batas Pambansa 22, which covers
the debts paid through bouncing checks.
4. The civil aspect of quasi-offenses under negligence
like motor vehicle accidents that has damaged the
vehicle or injured passengers or pedestrians.
What cases are excluded from mediation?
Cases which cannot be compromised are not included, like
legal separation or annulment of marriage.
Can I or the other party refuse mediation?
No. Once the court determines that your case is mediatable,
the parties are compelled to appear before the Philippine
Mediation Center (PMC) unit. If the complainant fails to appear
for mediation, the case may be dismissed. If the defendant is
absent, the complainant may be allowed to present their side in
court without you. The court will then decide the case on the
basis of what was presented.
How will I benefit mediation?
1. Mediation has been proven to be a faster and
certainly less expensive option for settling disputes.
Settlements have occurred in as little as one or two
mediation sessions.
2. Mediation also provides for a fair resolution of your
case. By jointly resolving the dispute, both parties can
come up as winners.
3. But best of all, mediation has been proven to restore
relationships long disrupted by conflict. The process
of mediation tackles the roots of misunderstanding to
help parties resolve their differences.
Where did this idea come from?
Mediation is rooted in our historical experience, in the time
when disputing parties would bring their conflict to the village
elder for settlement. As a system, mediation can be found in
many indigenous cultures.
Does mediation replace the barangay system of
justice?
NO. Court-annexed mediation actually complements the
Barangay Justice System (KatarungangPambarangay),
probably the most familiar mode of mediation in the country, in
bringing a speedy and fair resolution to disputes. In this system,
the barangay leaders act as mediators between disputing
parties within their constituency. The Barangay Justice System
attempts to prevent the case from even going to court. Court-
annexed mediation begins when there is a failure to mediate in
the barangay level resulting in the filing of the dispute in court.
Mediation attempts to resolve the dispute without going into
adversarial proceedings. Courts will actually dismiss certain
cases which have not passed through the
KatarungangPambarangay.
Transcribed by: JSP
How effective is mediation?
In the pilot project on mediation conducted by the Philippine
Judicial Academy (PHILJA), 85% of cases referred for
mediation reached settlement. Surveys conducted after
mediation also revealed a high level of satisfaction among
disputing parties in the outcome of their case. Close to 100%
of the parties involved complied with the agreement reached in
mediation
How long will mediation take?
Parties are given 30 days for mediation sessions. The period
may be extended to another 30 days to allow you to reach a
compromise agreement.
How much will it cost me?
A mediation fee of P500.00 is collected by the Clerk of Court
upon the filing of certain pleadings in court. This fee will accrue
to the Mediation Fund for the training of mediators, payment of
mediator’s fees and other operating expenses of the Philippine
Mediation Center (PMC). The fee will be collected upon the
filing of the following pleadings
IN CIVIL CASES:
1. Complaint
2. Records of the case
3. Answer with a mediatable counterclaim
IN CRIMINAL CASES:
1. Complaint/information for an offense falling under the
KatarungangPambarangay Law
2. Complaint/information for violation of Batas
Pambansa 22, estafa and libel where damages are
sought
3. Complaint/information for quasi-offenses falling under
Title 14 of the Revised Penal Code.
What happens when I can’t afford mediation?
You can ask your lawyer to allow you to avail of court services
as a pauper litigant. If the court approves, then mediation is
free.
How is the confidentiality and privacy of my case
guarded in mediation?
Sessions are strictly private and confidential. This is to
encourage the needed openness and spontaneity for effective
communication in mediation. The mediator can not record the
proceedings in any manner other than taking down a few
personal notes for guidance. Even the trial court is not
furnished these notes. Any information from a mediation
session is in fact inadmissible in court. Mediators can not be
subpoenaed to reveal what happened during these sessions
either. All documents submitted by the parties will be returned
to them after mediation.
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What is Judicial Dispute Resolution?
Judicial Dispute Resolution, or “JDR”, is a voluntary,
confidential dispute resolution process. Its primary purpose is
reaching a settlement on some or all of the issues in a lawsuit,
with the assistance of a judge.
What is the JDR procedure?
In a JDR, the parties to a lawsuit and their lawyers meet with a
judge at the courthouse. The exact format of each JDR will
vary slightly depending on the current practice for the court
involved and the preferences of the parties and the judge
conducting the JDR. However, in general, the lawyers will
prepare written submissions for the judge (“briefs”) well before
the JDR date, and provide these briefs to the judge and to
each party. Each brief will set out that party’s case, presenting
the facts as that party understands them, the legal arguments
in support of that party’s case, and outline the evidence and
law supporting those submissions. These briefs help the judge
to understand the important issues in the lawsuit and help each
party understand the other side’s point of view.
On the actual day of the JDR, the parties to the lawsuit and
their lawyers meet with the judge at the courthouse. Each of
the parties is usually given the chance to explain their side of
the story, and each party’s lawyers will make submissions in
support of their case, usually based on the briefs they have
submitted.
After hearing from all the participants, in Edmonton, the judge
will then tell the parties what ruling the judge would have made
if the JDR evidence and argument had been presented to them
at trial, and the reasons for that decision. After the judge gives
his or her opinion, the parties usually engage in settlement
negotiations, often without the judge present. In Calgary, most
judges work with the parties after the initial submissions to try
to reach settlement and do not give an opinion on the likely
result at trial until much later in the process.
The judge’s opinion in a JDR is nonbinding, unless the parties
agree otherwise. The judge’s opinion is not an official court
judgment, so it cannot be appealed. If here is no settlement
following a JDR, and the matter proceeds to trial, the JDR
judge cannot be the trial judge. The JDR judge will not share
any information about the JDR with any other judge.
Where does the JDR take place?
A JDR usually takes place in a conference room at the
courthouse or, occasionally, in the judge’s office (“chambers”).
On rare occasions where a conference room would be too
small to accommodate all the people involved, the JDR may be
held in a courtroom. However, if the JDR is held in a courtroom,
it is not open to the public.
How long are JDRs?
The length of a JDR varies with the complexity of the case and
the number of issues that need to be dealt with. Most JDRs are
scheduled for half a day to a full day.
Transcribed by: JSP
Why do a JDR?
The goal of a JDR is to help both parties to settle some or all of
the issues in the lawsuit. The key benefit of a JDR is that both
parties can hear a judge’s objective assessment of their case.
The judge’s assessment gives each party a sense of the
strength of their case and the likely outcome at trial, and this
usually provides a starting point for settlement discussions.
Most cases settle at or very soon after the JDR is held.
When is a JDR appropriate?
JDRs work best in cases where the parties are willing to
consider settlement, but have been unable to resolve
differences of opinion about certain issues in a lawsuit (e.g. the
degree to which each party is responsible for the damages
suffered, or what range of damages would be suitable in the
circumstances). Although most lawsuits involve some degree
of conflicting evidence and questions of witness credibility,
JDRs are not as well-suited to disputes that turn largely on
questions of credibility and conflicting evidence. The JDR
process is also not generally useful if the client wants to have
the court make a decision that will set a legal precedent (e.g.
constitutional disputes). JDRs are usually held after
examinations for discoveries are completed, so that each side
can be satisfied that they have all or most of the essential facts
and evidence in support of their case.
What are the benefits of a JDR?
A JDR:
• promotes settlement, even in cases where prior
negotiations have failed, by facilitating discussion between the
parties and getting feedback from a judge.
• allows for solutions that wouldn’t be available if the matter
went to trial (e.g. letters of apology, reference letters, rather
than just damages)
• is usually faster, takes less time and is less expensive than a
full-blown trial would be.
• gives the parties an opportunity to have their case heard by a
judge, without having to deal with the expense and time
commitment of a trial.
• gives the parties a sense of what to expect, both from the
court and from the opposing parties, if the lawsuit proceeded to
trial.
• allows the parties to maintain their privacy because the JDR,
unlike a trial, is confidential and not held in open court.
• there is no charge for the judge’s time
What are the downsides to JDR?
• A JDR is voluntary, so a party cannot be required to
participate
• There is a substantial cost to prepare detailed briefs
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• The JDR judge’s opinion is based on limited information
without the procedural protections of a trial (e.g. rules of
evidence and ability to assess the credibility of witnesses) and
once given it might be difficult for the “unsuccessful” party to
convince the other side to settle on a different basis
• Due to the popularity of JDRs it is often difficult to obtain a
JDR date quickly
FINAL WORD:
READ CASES. SO MANY. WOW. AIN’T NOBODY GOT TIME
FO’ DAT!
San Miguel Corporation vs. NLRC
Petitioners filed a motion to dismiss the complaint, alleging that
respondent Labor Arbiter had no jurisdiction over the subject
matter of the complaint, and that respondent Labor Arbiter
must defer consideration of the unfair labor practice complaint
until after the parties have gone through the grievance
procedure provided for in the existing Collective Bargaining
Agreement (CBA). Respondent Labor Arbiter denied this
motion in a Resolution
Ruling:
It may be the case that employees other than union members
may have been terminated also by petitioner SMC on account
of its redundancy program. If that is true, the discharges may
really be for a bona fide authorized cause under Article 283 11
of the Labor Code. On the other hand, it is also possible that
such may only be a clever scheme of the petitioner company to
camouflage its real intention of discriminating against union
members particularly the private respondents. In any case,
these matters will be best ventilated in a hearing before the
Labor Arbiter.
It is for the above reason that we cannot hold the petitioners
guilty of the ULP charge. This will be the task of the Labor
Arbiter. We however find that based on the circumstances
surrounding this case and settled jurisprudence on the subject,
the complaint filed by the private respondents on February 25,
1991 alleges facts sufficient to constitute a bona fide case of
ULP, and therefore properly cognizable by the Labor Arbiter
under Article 217 (a) of the Labor Code. This is consistent with
the rule that jurisdiction over the subject matter is determined
by the allegations of the complaint.
Finally, petitioners try to impress on this Court the strong State
policy on the promotion of voluntary modes of settlement of
labor disputes crafted in the Constitution and the Labor Code
which dictate the submission of the CBA dispute to grievance
and arbitration.
In this regard, the response of the Solicitor General is apt:
Petitioners deserve commendation for divulging and
bringing to public respondents' attention the noble
legislative intent behind the law mandating the
inclusion of grievance and voluntary arbitration
provisions in the CBA. However, in the absence of an
express legal conferment thereof, jurisdiction cannot
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be appropriated by an official or tribunal (sic) no
matter how well-intentioned it is, even in the pursuit of
the dearest substantial right
In the same manner, petitioners cannot arrogate into the
powers of voluntary arbitrators the original and exclusive
jurisdiction of Labor Arbiters over
1. unfair labor practices,
2. termination disputes, and
3. claims for damages,
in the absence of an express agreement between the parties in
order for Article 262 of the Labor Law to apply in the case at
bar.
Senarlo vs. Judge Paderanga
Since mediation is part of Pre-Trial, the trial court shall impose
the appropriate sanction including but not limited to censure,
reprimand, contempt and such sanctions as are provided
under the Rules of Court for failure to appear for pre-trial, in
case any or both of the parties absent himself/themselves, or
for abusive conduct during mediation proceedings. (Emphases
ours.)
Under Rule 18, Section 5 of the Rules of Court, failure of the
plaintiff to appear at pre-trial shall be cause for dismissal of the
action:
SEC. 5.Effect of failure to appear. - The failure of the plaintiff to
appear when so required pursuant to the next preceding
section shall be cause for dismissal of the action. The
dismissal shall be with prejudice, unless otherwise ordered by
the court. A similar failure on the part of the defendant shall be
cause to allow the plaintiff to present his evidence ex parte and
the court to render judgment on the basis thereof. (Emphasis
ours.)
As may be gleaned from above, there was ostensible legal
basis for Judge Paderanga to dismiss an action for failure of
the plaintiff to attend the mediation conference.
However, Judge Paderanga’s Order dated November 9, 2005,
dismissing Civil Case No. 2005-160, was improperly and
prematurely issued. Judge Paderanga failed to take into
consideration that Bacalzo, the plaintiff in Civil Case No. 2005-
160, could not have attended the mediation conference
scheduled on November 4, 2005 because the said date had
been declared a regular holiday under Presidential
Proclamation No. 933. The declaration of November 4, 2005
as a holiday was a development totally outside Bacalzo’s
control for which she should not be sanctioned with the
dismissal of Civil Case No. 2005-160.
It is true that when Judge Paderanga issued his Order dated
October 7, 2005, setting the mediation conference for Civil
Case No. 2005-160 on November 4, 2005, the latter date had
not yet been declared a holiday. Presidential Proclamation No.
933, declaring November 4, 2005 a regular holiday in
celebration of Eid’lFitr, was issued only on October 14, 2005.
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Nevertheless, the Order dismissing Civil Case No. 2005-160
was issued by Judge Paderanga on November 9, 2005, well
after the issuance of Presidential Proclamation No. 933 on
October 14, 2005, and the actual celebration of the holiday of
Eid’lFitr on November 4, 2005. By the time Judge Paderanga
ordered Civil Case No. 2005-160 dismissed, he should have
already been aware that November 4, 2005 was a regular
holiday.
Judge Paderanga cannot entirely put the blame on the
supposedly misleading Mediator’s Report. As the Court notes,
the RTC had already received on November 8, 2005 the
Mediator’s Report, which stated that the parties failed to attend
the November 4, 2005 mediation conference. Judge
Paderanga issued the assailed Order dismissing Civil Case No.
2005-160 the following day, on November 9, 2005, a mere five
days after November 4, 2005. Judge Paderanga could not
have forgotten so soon that November 4, 2005 was a holiday.
Moreover, the same Mediator’s Report requested for the
resetting of the mediation conference to November 21, 2005.
Judge Paderanga could have easily inquired with the PMC or
required them to explain the reason for the resetting. Yet,
Judge Paderanga no longer bothered to look into the reason
for the non-appearance of the parties or the basis for the
request of the mediator for resetting. Without providing any
reasons therefor, Judge Paderanga chose to ignore the
request for resetting and immediately ordered the dismissal of
Civil Case No. 2005-160.
His action is contrary to the policy that the judge referring
the case to mediation should extend to the mediator every
possible support and assistance.
Courts and litigants should give the mediation process a
fair chance to work in order for mediation to become an
effective tool in facilitating amicable settlement of cases.
A heavy workload does not excuse Judge Paderanga from
ascertaining all pertinent facts that would have enabled him to
justly resolve or decide a case. A judge must not sacrifice the
orderly administration of justice in favor of a speedy but
reckless disposition of a case. A prudent judge should have
ascertained the facts before reaching conclusions and issuing
orders. It is routinary in every case that the judge carefully
evaluates facts before issuing an order in court. Otherwise, the
judge may be held liable for culpable negligence.
Heirs of Salas vs. Laperal Realty Corp
Petitioners argue, thus:
The petitioners' causes of action did not
emanate from the Owner-Contractor
Agreement.
The petitioners' causes of action for
cancellation of contract and accounting are
covered by the exception under the
Arbitration Law.
Transcribed by: JSP
Failure to arbitrate is not a ground for
dismissal. 10
In a catena of cases 11 inspired by Justice Malcolm's
provocative dissent in Vega v. San Carlos Milling Co. 12, this
Court has recognized arbitration agreements as valid, binding,
enforceable and not contrary to public policy so much so that
when there obtains a written provision for arbitration which is
not complied with, the trial court should suspend the
proceedings and order the parties to proceed to arbitration in
accordance with the terms of their
agreement 13. Arbitration is the "wave of the future" in dispute
resolution. 14 To brush aside a contractual agreement calling
for arbitration in case of disagreement between parties would
be a step backward. 15
Nonetheless, we grant the petition.
A submission to arbitration is a contract. 16 As such, the
Agreement, containing the stipulation on arbitration, binds the
parties thereto, as well as their assigns and heirs. 17 But only
they. Petitioners, as heirs of Salas, Jr., and respondent Laperal
Realty are certainly bound by the Agreement. If respondent
Laperal Realty had assigned its rights under the Agreement to
a third party, making the former, the assignor, and the latter,
the assignee, such assignee would also be bound by the
arbitration provision since assignment involves such transfer of
rights as to vest in the assignee the power to enforce them to
the same extent as the assignor could have enforced them
against the debtor 18 or in this case, against the heirs of the
original party to the Agreement. However, respondents
Rockway Real Estate Corporation, South Ridge Village, Inc.,
Maharami Development Corporation, spouses Abrajano,
spouses Lava, Oscar Dacillo, Eduardo Vacuna, Florante de la
Cruz and Jesus Vicente Capellan are not assignees of the
rights of respondent Laperal Realty under the Agreement to
develop Salas, Jr.'s land and sell the same. They are, rather,
buyers of the land that respondent Laperal Realty was given
the authority to develop and sell under the Agreement. As such,
they are not "assigns" contemplated in Art. 1311 of the New
Civil Code which provides that "contracts take effect only
between the parties, their assigns and heirs".
Petitioners claim that they suffered lesion of more than one-
fourth (1/4) of the value of Salas, Jr.'s land when respondent
Laperal Realty subdivided it and sold portions thereof to
respondent lot buyers. Thus, they instituted action 19 against
both respondent Laperal Realty and respondent lot buyers for
rescission of the sale transactions and reconveyance to them
of the subdivided lots. They argue that rescission, being their
cause of action, falls under the exception clause in Sec. 2 of
Republic Act No. 876 which provides that "such submission [to]
or contract [of arbitration] shall be valid, enforceable and
irrevocable, save upon such grounds as exist at law for the
revocation of any contract".
The petitioners' contention is without merit. For while rescission,
as a general rule, is an arbitrable issue, 20 they impleaded in
the suit for rescission the respondent lot buyers who are
neither parties to the Agreement nor the latter's assigns or
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heirs. Consequently, the right to arbitrate as provided in Article

VI of the Agreement was never vested in respondent lot buyers.

Respondent Laperal Realty, as a contracting party to the

Agreement, has the right to compel petitioners to first arbitrate
before seeking judicial relief. However, to split the
proceedings into arbitration for respondent Laperal Realty
and trial for the respondent lot buyers, or to hold trial in
abeyance pending arbitration between petitioners and
respondent Laperal Realty, would in effect result in
multiplicity of suits, duplicitous procedure and
unnecessary delay. On the other hand, it would be in the
interest of justice if the trial court hears the complaint
against all herein respondents and adjudicates petitioners'
rights as against theirs in a single and complete
proceeding

Toyota vs. CA

The contention that the arbitration clause has become

disfunctional because of the presence of third parties
is untenable.

Contracts are respected as the law between the

contracting parties. As such, the parties are thereby
expected to abide with good faith in their contractual
commitments. Toyota is therefore bound to respect
the provisions of the contract it entered into with APT.

Toyota filed an action for reformation of its contract

with APT, the purpose of which is to look into the real
intentions/agreement of the parties to the contract and
to determine if there was really a mistake in the
designation of the boundaries of the property as
alleged by Toyota. Such questions can only be
answered by the parties to the contract themselves.
This is a controversy which clearly arose from the
contract entered into by APT and Toyota. Inasmuch
as this concerns more importantly the parties APT
and Toyota themselves, the arbitration committee is
therefore the proper and convenient forum to settle
the matter as clearly provided in the deed of sale.

Having been apprised of the presence of the

arbitration clause in the motion to dismiss filed by
APT, Judge Tensuan should have at least suspended
the proceedings and directed the parties to settle their
dispute by arbitration. Judge Tensuan should have
not taken cognizance of the case.

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