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November 28, 2014
What is Alternative Dispute Resolution?
Alternative dispute resolution methods or ADRs
provide solutions that are less time-consuming, less
tedious, less confrontational, and more productive of
goodwill and lasting relationships. (Case: LM Power
Engg, 339 SCRA 562)
Student: this means maam that the parties resolve
their dispute not by court action but by themselves.
Who resolves the dispute among the parties?
Is there a third party involved?
Student: yes, mam, there are third parties in
alternative dispute resolution. This third party are
those to as the MEDIATOR or ARBITRATOR.
LM POWER ENGINEERING
HELD: Being an inexpensive, speedy and
amicable method of settling disputes,
arbitrationalong
with
mediation,
conciliation and negotiationis encouraged
by the Supreme Court. Aside from
unclogging judicial dockets, arbitration also
hastens the resolution of disputes, especially
of the commercial kind. It is thus regarded
as the wave of the future in international
civil and commercial disputes. Brushing
aside a contractual agreement calling for
arbitration between the parties would be a
step backward. Consistent with the
abovementioned 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.
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third person may be asked to render a non-binding
adversary opinion.
Mediation-arbitration this is a two-step dispute
resolution process involving both mediation and
arbitration
Negotiation Collaborative negotiation proceeds
from the joint efforts of the parties in reaching an
acceptable settlement of all their concern.
Conciliation Section 7 of RA 9285: The term
"mediation' shall include conciliation.
Judicial dispute resolution- the third party who
assists in resolution of dispute is a judge.
Litigation
Court decisions
are, as a general
rule, subject to
various appeals.
Internation
al
recognition
/Enforceabi
lity
in
Foreign
Jurisdiction
s
Usually difficult.
A
court
judgment will be
recognized
in
another country
generally
by
application of a
bilateral
treaty
or by virtue of
rather
strict
rules.
Neutrality
Although
national judges
may
be
impartial,
they
apply
the
language
and
procedural rules
of their country
and are often of
the
same
nationality
as
arbitration
or
Arbitration
Most
arbitral
awards are not
subject to appeal.
They may be
challenged before
the court only on
very
limited
grounds. In any
case, most court
espouse a proarbitration bias
Yes.
Through
various
international
conventions, and
especially
the
New
York
Convention,
signed by some
120
countries
including
the
Philippines,
a
foreign
arbitral
award is typically
easier to enforce
than a foreign
judgment.
Parties can place
themselves on an
equal footing with
regard to: the
place
of
arbitration (in a
neutral country);
the
language
used;
the
procedural rules;
the nationality of
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competenc
e
and
personal
follow-up
Party
Participatio
n
Speed
Privacy/Con
fidentiality
are specialized.
For example, in
patent, banking
disputes,
technical
expertise
is
necessary. The
duration of the
litigation
may
lead to several
judges hearing
one case.
National courts
are
strictly
bound by their
national rules of
procedure. Thus,
procedures are
dictated by rules
of litigation.
Procedures may
be delayed and
lengthy.
Party
may
get
entangled in a
prolonged
and
costly series of
appeals.
Court hearings
as well as the
judgments
are
public.
Moreover, under
Philippine
law,
rules
and
regulation,
all
documents,
pleadings
and
pieces
of
evidence
submitted
in
courts
are
a
matter of public
record, and as a
general
rule,
accessible to the
public.
highly specialized
arbitrators
of
their
choice,
provided they are
independent.
Usually,
the
arbitrators
will
follow the case
from the first day
to the last.
Costs
(to
some
extent)
judgments
in
their respective
national courts,
which may or
may
not
be
consistent with
one another.
Prolonged
litigation
and
extensive
discovery
processes drive
up the costs of
litigation.
Arbitration
proceedings
normally do not
involve extensive
discovery
processes
and
trial
settings.
Thus, costs are
reduced
somewhat.
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to equity was drafted.
As the various loans and advances made by
DBP and PNB to MMIC had become overdue and
since any restructuring program relative to the
loans was no longer feasible, DBP and PNB as
mortgagees of MMIC assets, extrajudicially
foreclosed the mortgages in accordance with the
Mortgage Trust Agreement.
The foreclosed assets were sold to PNB as the
lone bidder and were transferred to the Asset
Privatization Trust (APT).
On February 28, 1985, Jesus S. Cabarrus, Sr.
(President of MMIC), together with the other
stockholders of MMIC, filed a derivative suit
against DBP and PNB before the RTC of Makati,
Branch 62, for Annulment of Foreclosures, Specific
Performance and Damages.
In the course of the trial, private respondents
and petitioner APT, as successor of the DBP and
PNBs interest in MMIC, mutually agreed to submit
the case to arbitration by entering into a
Compromise and Arbitration Agreement, which
was approved by the TC.
On November 24, 1993, the Arbitration
Committee rendered a majority decision in favor of
MMIC. Thus, Cabarrus filed in the same Civil Case
No. 9900 an Application/Motion for Confirmation
of Arbitration Award.
Petitioner countered with an Opposition and
Motion to Vacate Judgment raising the following
grounds:
1. The plaintiffs Application/Motion is improperly
filed with this branch of the Court, considering
that the said motion is neither a part nor the
continuation of the proceedings in Civil Case No.
9900 which was dismissed upon motion of the
parties. In fact, the defendants in the said Civil
Case No. 9900 were the Development Bank of the
Philippines and the Philippine National Bank (PNB);
2. Under Section 22 of Rep. Act 876, an arbitration
under a contract or submission shall be deemed a
special proceedings and a party to the controversy
which was arbitrated may apply to the court
having jurisdiction, (not necessarily with this
Honorable Court) for an order confirming the
award;
3. The issues submitted for arbitration have been
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rescinded. Additionally, under Sections 24 and 25,
of the Arbitration Law, there are grounds for
vacating, modifying or rescinding an arbitrators
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.
Accordingly, Section 20 of R.A. 876 provides:
SEC. 20. Form and contents of award. 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. Each party shall be furnished with a
copy of the award. The arbitrators in their award
may grant any remedy or relief which they deem
just and equitable and within the scope of the
agreement of the parties, which shall include, but
not be limited to, the specific performance of a
contract.
xxx
The arbitrators shall have the power to decide only
those matters which have been submitted to
them. The terms of the award shall be confined to
such disputes. (Underscoring ours).
xxx.
Section 24 of the same law enumerating the
grounds for vacating an award states:
SEC. 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 when such party
proves affirmatively that in the arbitration
proceedings:
(a) The award was procured by corruption, fraud,
or other undue means; or
(b) That there was evident partiality or corruption
in 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 willfully
refrained from disclosing such disqualifications or
any other misbehavior by which the rights of any
xxx.
Section 25 which enumerates the grounds for
modifying the award provides:
SEC. 25. Grounds for modifying or correcting
award In anyone 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 commissioners report, the
defect could have been amended or disregarded
by the court.
x x x.
Finally, it should be stressed that while a
court is precluded from overturning an
award for errors in determination of factual
issues, nevertheless, if an examination of
the record reveals no support whatever for
the arbitrators determinations, their award
must be vacated. In the same manner, an
award must be vacated if it was made in
manifest disregard of the law.
Against the backdrop of the foregoing
provisions and principles, we find that the
arbitrators came out with an award in
excess of their powers and palpably devoid
of factual and legal basis.
are
the
salient
features
of
our
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c) It makes the Model Law applicable to
international commercial arbitration and
strengthening it thru specific provisions of RA
9285;
d) It strengthens domestic arbitration by making
specific provisions of the Model Law and RA
9285 pertaining to international commercial
arbitration;
e) It designates an appointing authority with the
power to designate an arbitrator for the
parties in default situations;
f) Provides a broad and uniform scope of
interim or provisional relief in international
commercial
arbitration
and
domestic
arbitration;
g) Sets the basic principles in the enforcement
of foreign arbitral award, whether or not they
fall within the coverage of the New York
Convention
What are the different kinds of arbitration
under RA 9285?
A: The different kinds of arbitration under RA 9285:
1. Domestic
arbitration
(governed
by
Chapter 5)
2. International
commercial
arbitration
(governed by Chapter 4)
3. Individual arbitration
4. Institutional arbitration
5. Arbitration of construction disputes
6. Court-referred arbitration (provided under
Section 24 of RA 9285)
Take note of the different kinds of arbitration under
RA 9285.
DOMESTIC ARBITRAL AWARDS
It is said that RA 9285, it cover two general types
of arbitration taking place in the Philippines:
1. Domestic Arbitration
2. International commercial arbitration
Both
domestic
arbitration
and
international
commercial arbitration refer to DOMESTIC ARBITRAL
AWARDS. These are those rendered in domestic
arbitration or international commercial arbitration
which are Philippine arbitral awards since they are
the result of arbitral proceedings that are held in the
Philippines.
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agreement, their place of business in
different States; or
b. Where either the place of arbitration as
determined under that agreement or the
place where a substantial part of the
obligations of the commercial relationship is
to be performed or with which the subject
matter of the dispute is most closely
connected, is situated outside of the State
where the parties have their places of
business; or
c. The parties have expressly agreed that the
subject matter of the arbitration agreement is
international.
Atty. Guerzo: Basically, both domestic arbitration and
international commercial arbitration are covered by
RA 9285. For emphasis, both types of arbitration are
held here in the Philippines.
What law should govern in domestic
arbitration?
RA 9285, SEC. 32.Law Governing Domestic
Arbitration - Domestic arbitration shall continue to
be governed by Republic Act No. 876, otherwise
known as "The Arbitration Law" as amended by
this Chapter. The term "domestic arbitration" as
used herein shall mean an arbitration that is not
international as defined in Article (3) of the Model
Law.
SEC.
33.Applicability
to
Domestic
Arbitration.- Article 8, 10, 11, 12, 13, 14, 18 and
19 and 29 to 32 of the Model Law and Section
22to 31 of the preceding Chapter 4 shall apply to
domestic arbitration.
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If it is a convention award under RA 9285, the
action for recommission and enforcement of the
awards shall be filed with the RTC.
If it is a non-convention award, on grounds of
comity and reciprocity with states not signatory to
the convention may be enforced in the Philippines as
a convention award under Section 43 of RA 9285.
What is arbitration?
Arbitration means a voluntary dispute resolution
process in which one or more arbitrators,
appointed in accordance with the agreement of
the parties or these Rules, resolve a dispute by
rendering an award. (ADR Law IRR)
Arbitration is from the Latin term arbitrario. It is a
process of dispute resolution in which a neutral
third-party or arbitrator renders a decision after a
hearing at which both parties had an opportunity to
be heard.
So take note here there is a neutral third party who
is known as the arbitrator.
Q: So what is the essential concept of arbitration
under RA 9285 as it is defined?
A: As to its concept, it is said that arbitration is
merely following a trend towards privatization of
public service. It is nothing more than a decision of a
private judge. It utilizes the same method of
adjudication as the judiciary which is adversarial.
Take note that it is merely a shift from public judging
to private judging.
What are the exceptions to the application of
the ADR Law?
RA 9285, 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) future
legitime; (g) criminal liability; and (h) those which
by law cannot be compromised.
ADR IRR, Article 1.3. Exception to the
Application of the ADR Act. The provisions of
the ADR Act shall not apply to the resolution or
settlement of the following:
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How about the areas of operation?
a) Labor-Management disputes
1. voluntary arbitration
2. compulsory arbitration
3. preventive arbitration;
b) Construction contracts
c) Check clearing disputes
We said that labor disputes are not covered by
RA 9285. What then governs LaborManagement Disputes?
Labor-Management disputes is governed by Articles
260 and 261 of the Labor Code.
Take note that the GENERAL RULE is that, it is the
Labor Arbiter who hears labor disputes.
So important terms or definitions that you must
know, voluntary arbitration in relation to labor
cases, compulsory arbitration and preventive
arbitration.
VOLUNTARY ARBITRATION
Article.
260. Grievance
machinery
and
voluntary arbitration. - The parties to a Collective
Bargaining
Agreement
shall include
therein
provisions that will ensure the mutual observance of
its terms and conditions. They shall establish a
machinery for the adjustment and resolution of
grievances arising from the interpretation or
implementation of their Collective Bargaining
Agreement and those arising from the interpretation
or enforcement of company personnel policies.
All grievances submitted to the grievance machinery
which are not settled within seven (7) calendar days
from the date of its submission shall automatically be
referred to voluntary arbitration prescribed in the
Collective Bargaining Agreement.
For this purpose, parties to a Collective Bargaining
Agreement shall name and designate in advance a
Voluntary Arbitrator or panel of Voluntary
Arbitrators, or include in the agreement a procedure
for the selection of such Voluntary Arbitrator or
panel of Voluntary Arbitrators, preferably from the
listing of qualified Voluntary Arbitrators duly
accredited by the Board (National Conciliation and
Mediation Board). In case the parties fail to select a
Voluntary Arbitrator or panel of Voluntary
Arbitrators, the Board shall designate the Voluntary
Arbitrator or panel of Voluntary Arbitrators, as may
be necessary, pursuant to the selection procedure
agreed upon in the Collective Bargaining Agreement,
labor
practice
cases;
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employment;
4. Claims for actual, moral, exemplary
and other forms of damages arising
from
the
employer-employee
relations;
5. Cases arising from any violation of
Article 264 of this Code, including
questions involving the legality of
strikes
and
lockouts;
and
6. Except claims for Employees
Compensation,
Social
Security,
Medicare and maternity benefits, all
other claims arising from employeremployee relations, including those
of
persons
in
domestic
or
household service, involving an
amount exceeding five thousand
pesos (P5,000.00) regardless of
whether accompanied with a claim
for
reinstatement.
b. The Commission shall have exclusive
appellate jurisdiction over all cases decided
by
Labor
Arbiters.
c. Cases arising from the interpretation or
implementation of collective bargaining
agreements and those arising from the
interpretation or enforcement of company
personnel policies shall be disposed of by
the Labor Arbiter by referring the same to
the grievance machinery and voluntary
arbitration as may be provided in said
agreements. (As amended by Section 9,
Republic Act No. 6715, March 21, 1989)
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Submission agreement
Submission agreement a provision in the
collective bargaining agreement whereby the parties
submit a particular issue to the voluntary arbitrator
SAN MIGUEL V. NLRC
The collective bargaining agreement must state in
unequivocal language that the parties conform to the
submission of termination disputes and unfair labor
practices to voluntary arbitration. A proviso stating
that wages, hours of work, conditions of
employment and/or ER-EE relations shall be settled
by arbitration is not sufficient to remove termination
disputes and unfair labor practice disputes from the
jurisdiction of the LA to the VA.
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APALISOK V. RPN
Voluntary arbitration as a mode of settling the
dispute was not forced upon respondents. Both
parties indeed agreed to submit the issue of validity
of the dismissal of petitioner to the jurisdiction of the
voluntary arbitrator by the Submission Agreement
duly signed by their respective counsels.
Article 262 of the Labor Code provides that upon
agreement of the parties, the voluntary arbitrator
can hear and decide all other labor disputes. The
voluntary arbitrator had jurisdiction over the parties'
controversy
LUDO AND LYM CORP V. SAORNIDO
The VA can rule upon issue even if it is not part of
the submission agreement.
Generally, the arbitrator is expected to decide only
those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator
can assume that he has the necessary power to
make a final settlement since arbitration is the final
resort for the adjudication of disputes.13
VIVERO V. CA
So here the illegal termination dispute is under the
jurisdiction of the labor arbiter. Can the parties
submit this dispute to voluntary arbitration if there is
an agreement in the CBA to that effect? No, such
submission remains discretionary upon the parties.
MERALCO v. QUISUMBING
What is the reckoning point of an arbitral award?
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There can be no quibbling that POA is a quasijudicial body which forms part of the DENR, an
administrative agency. Hence, the provision on
mandatory resort to arbitration, freely entered into
by the parties, must be held binding against them.25
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of Labor and Employment or the Commission may
seek the assistance of law enforcement agencies to
ensure compliance with this provision as well as with
such orders as he may issue to enforce the same.
Preventive mediation
This is submitted to the NCMB. These labor disputes
which are the subject of a formal or informal request
for conciliation and mediation assistance sought by
either or both parties or upon the initiative of the
board.
Among the procedural requirements for a valid strike
is the filing of a notice of strike with the NCMB. The
purpose of this requirement is to encourage
voluntary settlement of disputes. That is why strike
is subject of arbitration
Construction contract
It is the CIAC (Construction industry arbitration
commission) that has the original and exclusive
jurisdiction over construction contracts (Section 35,
RA 9285)
EO 1008, section 4.
Sec. 4. Jurisdiction. The CIAC shall have original and
exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by parties
involved in construction in the Philippines, whether
the dispute arises before or after the completion of
the contract, or after the abandonment or breach
thereof. These disputes may involve government or
private contracts. For the Board to acquire
jurisdiction, the parties to a dispute must agree to
submit the same to voluntary arbitration.
The jurisdiction of the CIAC may include but is not
limited to violation of specifications for materials and
workmanship; violation of the terms of agreement;
interpretation and/or application of contractual time
and delays; maintenance and defects; payment,
default of employer or contractor and changes in
contract cost.
Excluded from the coverage of this law are disputes
arising from employer-employee relationships which
shall continue to be covered by the Labor Code of
the Philippines.
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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.
NIA v. CA
Executive Order No. 1008, vests upon CIAC original
and exclusive jurisdiction over disputes arising from,
or connected with contracts entered into by parties
involved in construction in the Philippines, whether
the dispute arises before or after the completion of
the contract, or after the abandonment or breach
thereof. The disputes may involve government
or private contracts. For the Board to acquire
jurisdiction, the parties to a dispute must agree to
submit the same to voluntary arbitration.28
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.
An allegation of prescription can effectively be used
in a motion to dismiss only when the complaint on its
face shows that indeed the action has already
prescribed. 35 The court may either grant the
motion to dismiss, deny it, or order the amendment
of the pleading.
the CIAC had jurisdiction over the dispute, and not
the contract. Therefore, even if the contract
preceded the existence of the CIAC, since the
dispute arose when the CIAC had already been
constituted, the arbitral board was exercising
current, and not retroactive, jurisdiction. 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
PCIB v. CA
It is the parties who are to be notified of the "text"
of the CIAC decision.PCIBs counsel cannot assail the
validity of such service by now claiming that the
same was ineffective as it was not served on him
(counsel) as the duly authorized representative of
PCIB.
FF Cruz v. HR Construction
Generally, the arbitral award of CIAC is final and may
not be appealed except on questions of law.
in cases assailing the arbitral award rendered by the
CIAC, this Court may only pass upon questions of
law. Factual findings of construction arbitrators are
final and conclusive and not reviewable by this Court
on appeal. This rule, however, admits of certain
exceptions.
In Spouses David v. Construction Industry and
Arbitration Commission,26 we laid down the instances
when this Court may pass upon the factual findings
of the CIAC, thus:
We reiterate the rule that factual findings of
construction arbitrators are final and conclusive and
not reviewable by this Court on appeal, except when
the petitioner proves affirmatively that: (1) the
award was procured by corruption, fraud or other
undue means; (2) there was evident partiality or
corruption of the arbitrators or of any of them; (3)
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; (4) one or more of the
arbitrators were disqualified to act as such under
section nine of Republic Act No. 876 and willfully
refrained from disclosing such disqualifications or of
any other misbehavior by which the rights of any
party have been materially prejudiced; or (5) the
arbitrators exceeded their powers, or so imperfectly
executed them, that a mutual, final and definite
award upon the subject matter submitted to them
was not made. x x x27 (Citation omitted)
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thereof.19 By express provision of Section 19 thereof,
the arbitral award of the CIAC is final and
unappealable, except on questions of law, which are
appealable to the Supreme Court.
In sum, from the arbitral awards of the CIAC may be
brought to the Court of Appeals, and not to the
Supreme Court alone. The grounds for the appeal
are likewise broadened to include appeals on
questions of facts and appeals involving mixed
questions of fact and law. Administrative Circular No.
1-95 and the 1997 Rules of Civil Procedure
indisputably say that, the review of the CIAC award
may involve either questions of fact, of law, or of
fact and law.
Hi-Precision v. Lim Kim Builders
Voluntary arbitration involves the reference of a
dispute to an impartial body, the members of which
are chosen by the parties themselves, which parties
freely consent in advance to abide by the arbitral
award issued after proceedings where both parties
had the opportunity to be heard. The basic objective
is to provide a speedy and inexpensive method of
settling disputes by allowing the parties to avoid the
formalities, delay, expense and aggravation which
commonly accompany ordinary litigation, especially
litigation which goes through the entire hierarchy of
courts. Executive Order No. 1008 created an
arbitration facility to which the construction industry
in the Philippines can have recourse. The Executive
Order was enacted to encourage the early and
expeditious settlement of disputes in the
construction industry, a public policy the
implementation of which is necessary and important
for the realization of national development goals. 21
The Court will not, therefore, permit the parties to
relitigate before it the issues of facts previously
presented and argued before the Arbitral Tribunal,
save only where a very clear showing is made that,
in reaching its factual conclusions, the Arbitral
Tribunal committed an error so egregious and hurtful
to one party as to constitute a grave abuse of
discretion resulting in lack or loss of jurisdiction. 22
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These questions are legal in nature and require the
application and interpretation of laws and
jurisprudence which is necessarily a judicial
function.29
Allied insurance v. CA
Clearly therefore, petitioner Associated Bank, by its
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of their disputes and grievances [from] the PCHC
before going to the trial court.
By participating in the clearing operations of the
PCHC, petitioner agreed to submit disputes of this
nature to arbitration. Accordingly, it cannot invoke
the jurisdiction of the trial courts without a prior
recourse to the PCHC Arbitration Committee. Having
given its free and voluntary consent to the
arbitration clause, petitioner cannot unilaterally take
it back according to its whim. In the world of
commerce, especially in the field of banking, the
promised word is crucial. Once given, it may no
longer be broken.
Upon the other hand, arbitration as an alternative
method of dispute resolution is encouraged by this
Court. Aside from unclogging judicial dockets, it also
hastens solutions especially of commercial disputes.
JANUARY 9, 2015
CHINA
CHANG
JIANG
ENERGY
CORPORATION (PHILIPPINES) vs ROSAL
INFRASTRUCTURE
BUILDERS
and
the
COURT OF APPEALS
DOCTRINE: Voluntary arbitration involves the
reference of a dispute to an impartial body, the
members of which are chosen by the parties
themselves which parties freely consent in
advance to abide by the arbitral award issued after
proceedings where both parties had the
opportunity to be heard. The basic objective is to
provide a speedy and inexpensive method of
settling disputes by allowing the parties to avoid
the formalities, delay, expenses and aggravation
which commonly accompany ordinary litigation,
especially litigation which goes through the entire
hierarchy of courts. Executive Order No. 1008
created an arbitration facility to which the
construction industry in the Philippines can have
recourse. The executive order was enacted to
encourage the early and expeditious settlement of
disputes in the construction industry, a public
policy the implementation of which is necessary
and important for the realization of national
development goals.
FACTS: China Chang is the operator of the Binga
Hydroelectric Plant in Itogon, Benguet, which is
under a Rehabilitate Operate and Leaseback
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the Philippines, whether the dispute arises before
or after the completion of the contract, or after
the abandonment or breach thereof. These
disputes may involve government or private
contracts. For the Board to acquire jurisdiction, the
parties to a dispute must agree to submit the
same to voluntary arbitration A mere cursory
reading of Section 1, Article III, of the CIAC Rules,
as amended by Resolution No. 3-93 reveals no
restriction whatsoever on any party from
submitting a dispute for arbitration to an arbitral
body other than the CIAC. On the contrary, the
new rule, as amended merely implements the
letter and the spirit of its enabling law, E.O. No.
1008, which vests jurisdiction upon the CIAC.
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 s 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. Now that Section 1, Article III, 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 boy. 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. The herein
interpretation is not, in its strict sense, a reversal
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SEC. 40. Confirmation of Award. - The
confirmation of a domestic arbitral award shall be
governed by Section 23 of R.A. 876. A domestic
arbitral award when confirmed shall be enforced in
the same manner as final and executory decisions
of the Regional Trial Court. The confirmation of a
domestic award shall be made by the regional trial
court in accordance with the Rules of Procedure to
be promulgated by the Supreme Court. A CIAC
arbitral award need not be confirmed by the
regional trial court to be executory as provided
under E.O. No. 1008.
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HELD: Generally, the arbitral award of CIAC is
final and may not be appealed except on
questions of law. Executive Order (E.O.) No.
10081vests upon the CIAC original and exclusive
jurisdiction over disputes arising from, or
connected with, contracts entered into by parties
involved in construction in the Philippines. Under
Section 19 of E.O. No. 1008, the arbitral award of
CIAC "shall be final and inappealable except on
questions of law which shall be appealable to the
Supreme Court." In Hi-Precision Steel Center, Inc.
v. Lim Kim Steel Builders, Inc., we explained
raison d etre for the rule on finality of the CIACs
arbitral award in this wise: Voluntary arbitration
involves the reference of a dispute to an impartial
body, the members of which are chosen by the
parties themselves, which parties freely consent in
advance to abide by the arbitral award issued after
proceedings where both parties had the
opportunity to be heard. The basic objective is to
provide a speedy and inexpensive method of
settling disputes by allowing the parties to avoid
the formalities, delay, expense and aggravation
which commonly accompany ordinary litigation,
especially litigation which goes through the entire
hierarchy of courts. Executive Order No. 1008
created an arbitration facility to which the
construction industry in the Philippines can have
recourse. The Executive Order was enacted to
encourage the early and expeditious settlement of
disputes in the construction industry, a public
policy the implementation of which is necessary
and important for the realization of national
development goals. Aware of the objective of
voluntary arbitration in the labor field, in the
construction industry, and in any other area for
that matter, the Court will not assist one or the
other or even both parties in any effort to subvert
or defeat that objective for their private purposes.
The Court will not review the factual findings of an
arbitral tribunal upon the artful allegation that
such body had "misapprehended the facts" and
will not pass upon issues which are, at bottom,
issues of fact, no matter how cleverly disguised
they might be as "legal questions." The parties
here had recourse to arbitration and chose the
arbitrators themselves; they must have had
confidence in such arbitrators. x x x (Citation
omitted) Thus, in cases assailing the arbitral
award rendered by the CIAC, this Court may only
pass upon questions of law. Factual findings of
construction arbitrators are final and conclusive
and not reviewable by this Court on appeal. This
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raised on appeal from a final award in construction
arbitration.
So even if it is already final, you can raise an issue
on appeal. The mode of appeal is under what rule?
Pwede ka mag appeal form the decision of the CIAC
provided that it is a question of law.
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Under the General Banking Act:
1. Universal Bank
2. Commercial Banks
3. Thrift Banks
4. Rural Banks
5. Cooperative Banks
6. Islamic Banks
What is the procedure if there is a check
clearing dispute?
1. Any dispute or controversy between two or more
clearing participants involving any check or item
cleared through the PCHC shall be submitted to the
ArbiCom through a written complaint of any
participant in the controversy.
2. Five copies of the complaint shall be filed with the
ArbiCom copy furnish the respondent who shall have
30 non-extendible days to file his answer.
3. Upon the filing of the complaint by a member
bank, the PCHC shall create an ArbiCom consisting of
four members, three of whom are incumbent or
retired senior officers of participating banks not
involved in the dispute and a fourth member who
shall be an attorney at law with at least five years
experience as a bank lawyer without any previous or
present relation with any of the participating bans
involved and who shall only have advisory function
without any right to vote.
The Chariman and any member shall be sufficient to
constitute a quorum for the purpose of conducting
conferences or hearings or trials before the ArbiCom
but a vote of any two members of the ArbiCom shall
be necessary to render and promulgate an order,
resolution, award or decision of the case presented
for arbitration except if it involves or the principal
amount is 300,000 or less, then the arbitration shall
be heard by a sole arbitrator and his vote shall be
sufficient to render and promulgate the said
decision.
4. The hearing shall not last for more than 30 days
after which the parties shall have a non- extendible
period of 30 days to file their memoranda. The
decision of the sole arbitrator or the ArbiCom shall
be made within 45 days from the preliminary
conference or
the submission of the parties
respective memoranda.
The law provides that a preliminary conference
should be conducted before the ArbiCom. It is
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admitted [in] an Order dated May 16, 1991 issued
by the Regional Trial Court of Pasig, Branch 162.
On July 16, 1991, BPI filed a motion to dismiss
said third party complaint grounded on the
following: 1) that the court ha[d] no jurisdiction
over the nature of the action; and 2) that the
cause of action of the third party plaintiff ha[d]
already prescribed. On September 16, 1991, the
trial court issued an order dismissing the third
party complaint. PR contends that petitioners
remedy rests with the PCHC, of which both Allied
and BPI are members, in consonance with the
Clearing House Rules and Regulations which, in
part, states: Sec. 38 Arbitration. Any dispute
or controversy between two or more clearing
participants involving any check/item cleared thru
PCHC shall be submitted to the Arbitration
Committee, upon written complaint of any
involved participant by filing the same with the
PCHC serving the same upon the other party or
parties, who shall within fifteen (15) days after
receipt thereof file with the Arbitration Committee
its written answer to such written complaint and
also within the same period serve the same upon
the complaining participant, xxx.
ISSUE: WON the filing of the 3rd party complaint
was proper? NO
RULING: Associated Bank, by its voluntary
participation and its consent to the arbitration
rules cannot go directly to the Regional Trial Court
when it finds it convenient to do so. The
jurisdiction of the PCHC under the rules and
regulations is clear, undeniable and is particularly
applicable to all the parties in the third party
complaint under their obligation to first seek
redress of their disputes and grievances [from] the
PCHC before going to the trial court. The
contention that the third party complaint should
not have been dismissed for being a necessary
and inseparable offshoot of the main case over
which the court a quo had already exercised
jurisdiction misses the fundamental point about
such pleading. A third party complaint is a mere
procedural device which under the Rules of Court
is allowed only with the courts permission. It is an
action actually independent of, separate and
distinct from the plaintiffs complaint (s)uch that,
were it not for the Rules of Court, it would be
necessary to file the action separately from the
original complaint by the defendant against the
third party. Banco de Oro and Associated Bank
are clear and unequivocal: a third-party complaint
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whether it had permitted any withdrawal of funds
against the unfunded checks and if so, on what
date. HBSTC, however, refused to make any
reimbursement and to provide FEBTC with the
needed information. On December 12, 1991,
FEBTC submitted the dispute for arbitration before
the PCHC Arbitration Committee under the PCHC's
Supplementary Rules on Regional Clearing to
which FEBTC and HBSTC are bound as participants
in the regional clearing operations administered by
the PCHC. On January 17, 1992, while the
arbitration proceeding was still pending, FEBTC
filed an action for sum of money and damages
with preliminary attachment against HBSTC,
Robert Young, Victor Tancuan and Eugene
Arriesgado with the Regional Trial Court of Makati,
Branch 133.
ISSUE:
WHETHER
OR
NOT
PRIVATE
RESPONDENT MAY SUBSEQUENTLY FILE A
SEPARATE CASE IN COURT OVER THE SAME
SUBJECT MATTER OF ARBITRATION DESPITE THE
PENDENCY OF ARBITRATION PROCEEDINGS
UNDER THE AUSPICES OF THE PHILIPPINE
CLEARING HOUSE CORPORATION SIMPLY TO
OBTAIN
THE
PROVISIONAL
REMEDY
OF
ATTACHMENT AGAINST THE BANK THE ADVERSE
PARTY IN THE ARBITRATION PROCEEDING.
RULING: YES. Section 14 of Republic Act 876,
otherwise known as the Arbitration Law, allows
any party to the arbitration proceeding to petition
the court to take measures to safeguard and/or
conserve any matter which is the subject of the
dispute in arbitration, thus: Sec. 14. Subpoena and
subpoena duces tecum. Arbitrators shall have
the power to require any person to attend a
hearing as a witness. They shall have the power to
subpoena witnesses and documents when the
relevancy of the testimony and the materiality
thereof has been demonstrated to the arbitrators.
Arbitrators may also require the retirement of any
witness during the testimony of any other witness.
All of the arbitrators appointed in any controversy
must attend all the hearings in that matter and
hear all the allegations and proofs of the parties;
but an award by the majority of them is valid
unless the concurrence of all of them is expressly
required in the submission or contract to arbitrate.
The arbitrator or arbitrators shall have the power
at any time, before rendering the award, without
prejudice to the rights of any party to petition the
court to take measures to safeguard and/or
conserve any matter which is the subject of the
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petitioner, the RTC, in an Omnibus Order dated
April 30, 1992,[8] suspended the proceedings in
the case against all the defendants pending the
decision of the Arbitration Committee, to wit: xxx
(c) Proceedings in this case against all defendants
be suspended pending award/decision in the
arbitration proceedings against Home Bankers and
Trust Co. On February 2, 1998, the PCHC
Arbitration Committee rendered its decision in
favor
of
respondent.
The
motion
for
reconsideration filed by petitioner was denied by
the Arbitration Committee.[14] Consequently, to
appeal the decision of the Arbitration Committee in
Arbicom Case No. 91-069, petitioner filed a
petition for review in the earlier case filed by
respondent in Branch 135 of the RTC of Makati
and docketed as Civil Case No. 92- 145. [15] In an
order dated January 20, 1999, the RTC directed
both petitioner and respondent to file their
respective memoranda, after which, said petition
would be deemed submitted for resolution.[16]
Both parties filed several pleadings. On February
8, 1999, respondent filed a Motion to Dismiss
Petition for Review for Lack of Jurisdiction,[17]
which was opposed by the petitioner.[18]
Respondent then filed its Reply to the
opposition,[19] to which petitioner filed a
Rejoinder.[20] On August 16, 1999, respondent
submitted its Surrejoinder.[21] RTC petition for
review is dismissed.
ISSUE: W/N the RTC erred in dismissing the
petition of petitioner for lack of jurisdiction on the
ground that it should have been docketed as a
separate case. Petitioners contention: Civil Case
No. 92-145 was merely suspended to await the
outcome of the arbitration case pending before
the PCHC. Thus, any petition questioning the
decision of the Arbitration Committee must be filed
in Civil Case No. 92-145 and should not be
docketed as a separate action. Likewise, petitioner
avers that had it filed a separate action, this
would have resulted in a multiplicity of suits, which
is
abhorred
in
procedure.
Respondents
contention: RTC correctly dismissed the appeal
from the award of private arbitrators since there is
no statutory basis for such appeal. Respondent
argues that petitioners claim that the parties by
agreement had conferred on the RTC appellate
jurisdiction over decisions of private arbitrators is
erroneous because they cannot confer a
nonexistent jurisdiction on the RTC or any court.
Furthermore, the petition for review filed by
petitioner violated the rule on commencing an
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questions of fact, of law, or mixed questions of
fact and law.[35] Lastly, petitioner may file a
petition for certiorari under Rule 65 of the Rules of
Court on the ground that the Arbitrator Committee
acted without or in excess of its jurisdiction or with
grave abuse of discretion amounting to lack or
excess of jurisdiction. Since this case involves acts
or omissions of a quasi-judicial agency, the
petition should be filed in and cognizable only by
the Court of Appeals.[36] In this instance,
petitioner did not avail of any of the
abovementioned remedies available to it. Instead
it filed a petition for review with the RTC where
Civil Case No. 92-145 is pending pursuant to
Section 13 of the PCHC Rules to sustain its action.
Clearly, it erred in the procedure it chose for
judicial review of the arbitral award. Having
established that petitioner failed to avail of the
abovementioned remedies, we now discuss the
issue of the jurisdiction of the trial court with
respect to the petition for review filed by
petitioner. Jurisdiction is the authority to hear and
determine a cause - the right to act in a case.[37]
Jurisdiction over the subject matter is the power
to hear and determine the general class to which
the proceedings in question belong. Jurisdiction
over the subject matter is conferred by law and
not by the consent or acquiescence of any or all of
the parties or by erroneous belief of the court that
it exists.[38] In the instant case, petitioner and
respondent have agreed that the PCHC Rules
would govern in case of controversy. However,
since the PCHC Rules came about only as a result
of an agreement between and among member
banks of PCHC and not by law, it cannot confer
jurisdiction to the RTC. Thus, the portion of the
PCHC Rules granting jurisdiction to the RTC to
review arbitral awards, only on questions of law,
cannot be given effect. Consequently, the proper
recourse of petitioner from the denial of its motion
for reconsideration by the Arbitration Committee is
to file either a motion to vacate the arbitral award
with the RTC, a petition for review with the Court
of Appeals under Rule 43 of the Rules of Court, or
a petition for certiorari under Rule 65 of the Rules
of Court. In the case at bar, petitioner filed a
petition for review with the RTC when the same
should have been filed with the Court of Appeals
under Rule 43 of the Rules of Court. Thus, the
RTC of Makati did not err in dismissing the petition
for review for lack of jurisdiction but not on the
ground that petitioner should have filed a separate
case from Civil Case No. 92-145 but on the
necessity of filing the correct petition in the proper
ARBITRATION AS A CONTRACT
Why is an arbitration deemed as a contract?
In the case of Gonzales vs. Climax Mining, the SC
ruled that an arbitration agreement is contractual in
nature. Necessarily, a contract is required for
arbitration to take place and to be binding.
What are the essential elements of a contract?
Consent, Object and Consideration or Cause
Arbitration as a contract. The specific issues
involved in this matter are:
1. Whether the arbitration agreement relied upon by
the party is in existence and
2. If so, whether it is valid and enforceable.
What are the two general categories of
arbitration that may be held in the
Philippines?
1. Domestic Arbitration
- an arbitration that is not international where the
proceedings are held or the award is rendered or the
seat of arbitration in the Philippines and does not
have any of the characteristics that make it
international.
2. International Commercial Arbitration
-Under the Model Law, it is international if the
parties made an agreement at the time of the
conclusion of that agreement their place of business
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that the subject matter of the arbitration agreement
is international.
Take note that in both domestic and international
commercial arbitration, the seat of arbitration is in
the Philippines. Both give rise to awards rendered in
the Philippines or the Philippine Arbitral awards.
It is said that ICA also involves dispute arising form
the commercial relationship that possesses any of
the characteristics that make it international.
necessary
for
SEC.
21. Commercial
Arbitration. An
arbitration is "commercial" if it covers matters
arising from all relationships of a commercial
nature, whether contractual or not. Relationships
of a transactions: any trade transaction for the
supply or exchange of goods or services;
distribution agreements; construction of works;
commercial representation or agency; factoring;
leasing,
consulting;
engineering;
licensing;
investment; financing; banking; insurance; joint
venture and other forms of industrial or business
cooperation; carriage of goods or passengers by
air, sea, rail or road.
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June 4, 1996 (all of whom are hereinafter referred
to as respondent lot buyers). Petitioners as heirs
of Salas, Jr. filed in the Regional Trial Court of Lipa
City a Complaint[6] for declaration of nullity of
sale, reconveyance, cancellation of contract,
accounting
and
damages
against
herein
respondents which was docketed as Civil Case No.
98-0047. Laperal Realty filed a Motion to
Dismiss[7]on the ground that petitioners failed to
submit their grievance to arbitration as required
under Article VI of the Agreement which provides:
ARTICLE VI. ARBITRATION. All cases of dispute
between
CONTRACTOR
and
OWNERS
representative shall be referred to the committee
represented by: a. One representative of the
OWNER;
b.
One
representative
of
the
CONTRACTOR; c. One representative acceptable
to both OWNER and CONTRACTOR.[8] RTC dismissed petitioners Complaint for noncompliance with the foregoing arbitration clause.
ISSUE: W/N petitioners complaint should be
dismissed.
Petitioners arguments: - The petitioners causes of
action did not emanate from the Owner-Contractor
Agreement. - Petitioners causes of action for
cancellation of contract and accounting are
covered by the exception under the Arbitration
Law. - Failure to arbitrate is not a ground for
dismissal.
RULING: In a catena of cases[11] inspired by
Justice Malcolms 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
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parties. Its validity and compliance cannot be left to
the will of one of them.
Corollary to this rule, can a contract
containing an arbitration clause be unilaterally
rescinded?
In BF Construction, does the arbitration
agreement need be in a particular form?
A: YES.
BF CORPORATION, petitioner, vs. COURT OF
APPEALS, SHANGRI-LA PROPERTIES
FACTS: Petitioner and respondent Shangri-la
Properties, Inc. (SPI) entered into an agreement
whereby the latter engaged the former to
construct the main structure of the EDSA Plaza
Project. The construction work was in progress
when SPI decided to expand the project by
engaging the services of petitioner again. Thus,
the parties entered into an agreement for the
main contract works after which construction work
began. However, petitioner incurred delay in the
construction work that SPI considered as serious
and substantial.[1] On the other hand, according
to petitioner, the construction works progressed
in faithful compliance with the First Agreement
until a fire broke out on November 30, 1990
damaging Phase I of the Project.[2] Hence, SPI
proposed the re-negotiation of the agreement
between them. On May 30, 1991, petitioner and
SPI entered into a written agreement denominated
as Agreement for the Execution of Builders
Work for the EDSA Plaza Project According to SPI,
petitioner failed to complete the construction
works and abandoned the project.[3] This
resulted in disagreements between the parties as
regards their respective liabilities under the
contract. On July 12, 1993, upon SPIs initiative,
the parties respective representatives met in
conference but they failed to come to an
agreement.[4] On July 14, 1993, petitioner filed
with the Regional Trial Court of Pasig a complaint
for collection of the balance due under the
construction agreement. Named defendants
therein were SPI and members of its board of
directors namely, Alfredo C. Ramos, Rufo B.
Colayco, Antonio B. Olbes, Gerardo O. Lanuza, Jr.,
Maximo G. Licauco III and Benjamin C. Ramos.
SPI and its co-defendants filed a motion to
suspend proceedings instead of filing an answer.
The motion was anchored on defendants
allegation that the formal trade contract for the
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submission to arbitrate an existing controversy,
shall be in writing and subscribed by the party
sought to be charged, or by his lawful agent. The
making of a contract or submission for arbitration
described in section two hereof, providing for
arbitration of any controversy, shall be deemed a
consent of the parties of the province or city
where any of the parties resides, to enforce such
contract of submission. The formal requirements
of an agreement to arbitrate are therefore the
following: (a) it must be in writing and (b) it must
be subscribed by the parties or their
representatives. There is no denying that the
parties entered into a written contract that was
submitted in evidence before the lower court. To
subscribe means to write underneath, as ones
name; to sign at the end of a document.[11] That
word may sometimes be construed to mean to
give consent to or to attest.[12] The Court finds
that, upon a scrutiny of the records of this case,
these requisites were complied with in the contract
in question. The Articles of Agreement, which
incorporates all the other contracts and
agreements between the parties, was signed by
representatives of both parties and duly notarized.
The failure of the private respondents
representative to initial the `Conditions of
Contract would therefor not affect compliance
with the formal requirements for arbitration
agreements because that particular portion of the
covenants between the parties was included by
reference in the Articles of Agreement. Petitioners
contention that there was no arbitration clause
because the contract incorporating said provision
is part of a hodge-podge document, is
therefore untenable. A contract need not be
contained in a single writing. It may be collected
from several different writings which do not
conflict with each other and which, when
connected, show the parties, subject matter,
terms and consideration, as in contracts entered
into by correspondence.[13] A contract may be
encompassed in several instruments even though
every instrument is not signed by the parties,
since it is sufficient if the unsigned instruments are
clearly identified or referred to and made part of
the signed instrument or instruments. Similarly, a
written agreement of which there are two copies,
one signed by each of the parties, is binding on
both to the same extent as though there had been
only one copy of the agreement and both had
signed it.[14] The flaw in petitioners contentions
therefore lies in its having segmented the various
components of the whole contract between the
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shall be in writing and subscribed by the party
sought to be charged, or by his lawful agent.
The making of a contract or submission for
arbitration described in section two hereof,
providing for arbitration of any controversy, shall
be deemed a consent of the parties to the
jurisdiction of the Court of First Instance of the
province or city where any of the parties resides,
to enforce such contract or submission.
A L T E R N A T I V E
D I S P U T E
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( 3 - M A N R E S A )
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Code Provides: ART. 1356. Contracts shall be
obligatory in whatever form they may have been
entered into, provided all the essential requisites
for their validity are present.... (Emphasis
supplied) These essential requisites last mentioned
are normally (1) consent (2) proper subject
matter, and (3) consideration or causa for the
obligation assumed (Article 1318). 3 So that once
the three elements exist, the contract is generally
valid and obligatory, regardless of the form, oral
or written, in which they are couched.lawphi1.nt
To this general rule, the Code admits exceptions,
set forth in the second portion of Article 1356:
However, when the law requires that a contract be
in some form in order that it may be valid or
enforceable, or that a contract be proved in a
certain way, that requirement is absolute and
indispensable.... It is thus seen that to the general
rule that the form (oral or written) is irrelevant to
the binding effect inter partes of a contract that
possesses the three validating elements of
consent, subject matter, and causa, Article 1356
of the Code establishes only two exceptions, to
wit: (a) Contracts for which the law itself requires
that they be in some particular form (writing) in
order to make themvalid and enforceable (the socalled solemn contracts). Of these the typical
example is the donation of immovable property
that the law (Article 749) requires to be embodied
in a public instrument in order "that the donation
may be valid", i.e., existing or binding. Other
instances are the donation of movables worth
more than P5,000.00 which must be in writing,
"otherwise the donation shall be void" (Article
748); contracts to pay interest on loans (mutuum)
that must be "expressly stipulated in writing"
(Article 1956); and the agreements contemplated
by Article 1744, 1773, 1874 and 2134 of the
present Civil Code. (b) Contracts that the law
requires to be proved by some writing
(memorandum) of its terms, as in those covered
by the old Statute of Frauds, now Article 1403(2)
of the Civil Code. Their existence not being
provable by mere oral testimony (unless wholly or
partly executed), these contracts are exceptional
in requiring a writing embodying the terms thereof
for their enforceability by action in court. The
contract sued upon by petitioner herein
(compensation for services) does not come under
either exception. It is true that it appears included
in Article 1358, last clause, providing that "all
other contracts where the amount involved
exceeds five hundred pesos must appear in
writing, even a private one." But Article 1358
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Regarding the capacity of the state and its
instrumentalities, the leading case there is GASCON
vs ARROYO. The rule simply is subject to Sections
57- 65 of the Administrative Code of 1987.
CASE:
GASCON
vs
ARROYO
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action may be referred to arbitration;
b. Not all of the parties to the civil action
are bound by the arbitration agreement
and referral to arbitration would result in
multiplicity of suits;
c. The issues raised in the civil action could
be speedily and efficiently resolved in its
entirety by the court rather than in
arbitration;
d. Referral to arbitration does not appear
to be the most prudent action; or
e. The stay of the action would prejudice
the rights of the parties to the civil action
who are not bound by the arbitration
agreement.
The court may, however, issue an order directing
the inclusion in arbitration of those parties who
are not bound by the arbitration agreement but
who agree to such inclusion provided those
originally bound by it do not object to their
inclusion.
Fraudulent inducements
Are fraudulent inducements to contract subject to
arbitration? Yes.
Under domestic arbitration the issue of fraudulent
inducement is subject to arbitration if the language
of the arbitration clause is broad enough that it
provides for arbitration of claims or disputes arisng
out of, from or relating to this contract.
In international commercial arbitration, the arbitral
tribunal is empowered under the model law to
decide any objection with respect to the existence or
validity of the arbitration agreement.
Since there are vices of consent here, it makes the
contract voidable subject to ratification.
Article 16 par 1 Model law
Article 16. Competence of arbitral tribunal to rule on
its jurisdiction (1) The arbitral tribunal may rule on
its own jurisdiction, including any objections with
respect to the existence or validity of the arbitration
agreement. For that purpose, an arbitration clause
which forms part of a contract shall be treated as an
agreement independent of the other terms of the
contract. A decision by the arbitral tribunal that the
contract is null and void shall not entail ipso jure the
invalidity of the arbitration clause.
How do you aver fraud? The circumstance
constituting fraud must be stated with particularity.
Invoke in timely manner
GR: An arbitration agreement must be invoked in a
timely manner to preclude court action.
ARBITRATION
A L T E R N A T I V E
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WAIVER when:
1. Failure to invoke the arbitration agreement to
preclude court action
2. Failure to file a motion to dismiss on the
ground of lack of jurisdiction
3. Failure to give an answer with an affirmative
defense.
Factors considered when a party is deemed to
have waived his right to require arbitration
whether:
1. Partys action are inconsistent with the right
to arbitrate
2. Litigation machinery has been substantially
invoked
3. Party
either
requested
arbitration
enforcement close to the trial date or delayed
for a long period before asking for a stay of
the suit
4. Defendant seeking arbitration filed a
counterclaim asking for a stay of the
proceedings
5. Important intervening steps such as resort to
discovery procedure not otherwise available
in arbitration have been taken
6. Delay affected, misled or prejudiced the
opposing party
7. Parties in fact litigate in a court of law a
dispute that is subject to arbitration
Relief
before
Commencement
of
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b. The nature and substance of the dispute between
the parties;
c. The grounds and the circumstances relied upon by
the petitioner to establish his position; and
d. The relief/s sought.
Apart from other submissions, the petitioner must
attach to the petition an authentic copy of the
arbitration agreement.
Rule
3.7. Comment/Opposition.-The
comment/opposition of the respondent must be filed
within fifteen (15) days from service of the petition.
Rule 3.8. Court action. - In resolving the petition, the
court must exercise judicial restraint in accordance
with the policy set forth in Rule 2.4, deferring to the
competence or jurisdiction of the arbitral tribunal to
rule on its competence or jurisdiction.
Rule 3.9. No forum shopping. - A petition for judicial
relief under this Rule may not be commenced when
the existence, validity or enforceability of an
arbitration agreement has been raised as one of the
issues in a prior action before the same or another
court.
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
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Judicial recourse to the court shall not prevent the
arbitral tribunal from continuing the proceedings and
rendering its award.
(C) When dismissal of petition is appropriate. - The
court shall dismiss the petition if it fails to comply
with Rule 3.16 above; or if upon consideration of the
grounds alleged and the legal briefs submitted by
the parties, the petition does not appear to be prima
facie meritorious.
Rule 3.19. Relief against court action. - The
aggrieved party may file a motion for reconsideration
of the order of the court. The decision of the court
shall, however, not be subject to appeal. The ruling
of the court affirming the arbitral tribunals
jurisdiction shall not be subject to a petition for
certiorari. The ruling of the court that the arbitral
tribunal has no jurisdiction may be the subject of a
petition for certiorari.
Rule 3.20. Where no petition is allowed. - Where the
arbitral tribunal defers its ruling on preliminary
question regarding its jurisdiction until its final
award, the aggrieved party cannot seek judicial relief
to question the deferral and must await the final
arbitral award before seeking appropriate judicial
recourse.
A ruling by the arbitral tribunal deferring resolution
on the issue of its jurisdiction until final award, shall
not be subject to a motion for reconsideration,
appeal or a petition for certiorari.
Rule 3.21. Rendition of arbitral award before court
decision on petition from arbitral tribunals
preliminary ruling on jurisdiction. - If the arbitral
tribunal renders a final arbitral award and the Court
has not rendered a decision on the petition from the
arbitral tribunals preliminary ruling affirming its
jurisdiction, that petition shall become ipso facto
moot and academic and shall be dismissed by the
Regional Trial Court. The dismissal shall be without
prejudice to the right of the aggrieved party to raise
the same issue in a timely petition to vacate or set
aside the award.
Rule 3.22. Arbitral tribunal a nominal party. - The
arbitral tribunal is only a nominal party. The court
shall not require the arbitral tribunal to submit any
pleadings or written submissions but may consider
the same should the latter participate in the
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that their decisions should not be beyond the scope
of the power of judicial review of this Court.
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dispute to arbitration at any time during the
proceedings.
Rule 4.3. Contents of request. - The request for
referral shall be in the form of a motion, which shall
state that the dispute is covered by an arbitration
agreement.
Apart from other submissions, the movant shall
attach to his motion an authentic copy of the
arbitration agreement.
The request shall contain a notice of hearing
addressed to all parties specifying the date and time
when it would be heard. The party making the
request shall serve it upon the respondent to give
him the opportunity to file a comment or opposition
as provided in the immediately succeeding Rule
before the hearing.
Rule
4.4. Comment/Opposition.
The
comment/opposition must be filed within fifteen (15)
days
from
service
of
the
petition.
The
comment/opposition should show that: (a) there is
no agreement to refer the dispute to arbitration;
and/or (b) the agreement is null and void; and/or (c)
the subject-matter of the dispute is not capable of
settlement or resolution by arbitration in accordance
with Section 6 of the ADR Act.
Rule 4.5. Court action. - After hearing, the court
shall stay the action and, considering the statement
of policy embodied in Rule 2.4, above, refer the
parties to arbitration if it finds prima facie, based on
the pleadings and supporting documents submitted
by the parties, that there is an arbitration agreement
and that the subject-matter of the dispute is capable
of settlement or resolution by arbitration in
accordance with Section 6 of the ADR Act.
Otherwise, the court shall continue with the judicial
proceedings.
Rule 4.6. No reconsideration, appeal or certiorari. An order referring the dispute to arbitration shall be
immediately executory and shall not be subject to a
motion for reconsideration, appeal or petition for
certiorari.
An order denying the request to refer the dispute to
arbitration shall not be subject to an appeal, but may
be the subject of a motion for reconsideration and/or
a petition for certiorari.
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commercial kind.[25] It is thus regarded as the wave
of the future in international civil and commercial
disputes.[26] Brushing aside a contractual agreement
calling for arbitration between the parties would be a
step backward.[27]
Consistent with the above-mentioned 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.[28] Any doubt
should be resolved in favor of arbitration.[29]
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.[34]
Clearly, there is no more need to file a request with
the CIAC in order to vest it with jurisdiction to decide
a construction dispute.
The arbitral clause in the Agreement is a
commitment on the part of the parties to submit to
arbitration the disputes covered therein. Because
that clause is binding, they are expected to abide by
it in good faith.[35] And because it covers the dispute
between the parties in the present case, either of
them may compel the other to arbitrate.[36]
award
is
subject
to
judicial
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a. The need to prevent irreparable loss or injury;
b. The need to provide security for the performance
of any obligation;
c. The need to produce or preserve evidence; or
d. The need to compel any other appropriate act or
omission.
Rule 5.5. Contents of the petition. - The verified
petition must state the following:
a. The fact that there is an arbitration agreement;
b. The fact that the arbitral tribunal has not been
constituted, or if constituted, is unable to act or
would be unable to act effectively;
c. A detailed description of the appropriate relief
sought;
d. The grounds relied on for the allowance of the
petition
Apart from other submissions, the petitioner must
attach to his petition an authentic copy of the
arbitration agreement.
Rule 5.6. Type of interim measure of protection
that a court may grant.- The following, among
others, are the interim measures of protection that a
court may grant:
a. Preliminary injunction directed against a party to
arbitration;
b. Preliminary attachment against property or
garnishment of funds in the custody of a bank or a
third person;
c. Appointment of a receiver;
d. Detention, preservation, delivery or inspection of
property; or,
A L T E R N A T I V E
D I S P U T E
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( 3 - M A N R E S A )
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amendment, revision or revocation by an arbitral
tribunal.
Rule 5.10. Relief against court action. - If
respondent was given an opportunity to be heard on
a petition for an interim measure of protection, any
order by the court shall be immediately executory,
but may be the subject of a motion for
reconsideration and/or appeal or, if warranted, a
petition for certiorari.
Rule 5.11. Duty of the court to refer back. - The
court shall not deny an application for assistance in
implementing or enforcing an interim measure of
protection ordered by an arbitral tribunal on any or
all of the following grounds:
a. The arbitral tribunal granted the interim relief ex
parte; or
b. The party opposing the application found new
material evidence, which the arbitral tribunal had not
considered in granting in the application, and which,
if considered, may produce a different result; or
c. The measure of protection ordered by the arbitral
tribunal amends, revokes, modifies or is inconsistent
with an earlier measure of protection issued by the
court.
If it finds that there is sufficient merit in the
opposition to the application based on letter (b)
above, the court shall refer the matter back to the
arbitral tribunal for appropriate determination.
Rule 5.12. Security. - The order granting an interim
measure of protection may be conditioned upon the
provision of security, performance of an act, or
omission thereof, specified in the order.
A L T E R N A T I V E
D I S P U T E
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S Y :
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2 0 1 5
( 3 - M A N R E S A )
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It is not only the court can grant an interim measure
of protection. You can also avail of the interim
measures before the arbitral tribunal.
Basis on the grant of interim measures of
protection
(7) A party who does not comply with the order shall
be liable for all damages resulting from
noncompliance, including all expenses, and
reasonable attorney's fees, paid in obtaining the
order's judicial enforcement.
of
Interim
Measure
of
Home bankers v. CA
Section 14 of Republic Act 876, allows any party to
the arbitration proceeding to petition the court to
take measures to safeguard and/or conserve any
matter which is the subject of the dispute in
arbitration,
In the case at bar, undeniably, private respondent
has initiated arbitration proceedings as required by
the PCHC rules and regulations, and pending
arbitration has sought relief from the trial court for
measures to safeguard and/or conserve the subject
of the dispute under arbitration, as sanctioned by
section 14 of the Arbitration Law, and otherwise not
shown to be contrary to the PCHC rules and
regulations.
At this point, we emphasize that arbitration, as an
alternative method of dispute resolution, is
encouraged by this Court. Aside from unclogging
judicial dockets, it also hastens solutions especially
of commercial disputes. 50 The Court looks with
favor upon such amicable arrangement and will only
interfere with great reluctance to anticipate or nullify
the action of the arbitrator. 51
Competence-competence principle
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competence or jurisdiction of the arbitral tribunal by
allowing the arbitral tribunal the first opportunity to
rule upon such issues.
Where the court is asked to make a determination of
whether the arbitration agreement is null and void,
inoperative or incapable of being performed, under
this policy of judicial restraint, the court must make
no more than a prima facie determination of that
issue.
Unless the court, pursuant to such prima facie
determination, concludes that the arbitration
agreement is null and void, inoperative or incapable
of being performed, the court must suspend the
action before it and refer the parties to arbitration
pursuant to the arbitration agreement.
Appointment of arbitrators
Who appoints the arbitrator? The arbitrator is
appointed by the parties based on their arbitration
agreement.
Qualifications of an arbitrator
1. Of legal age
2. In full enjoyment of his civil rights and
3. Must know how to read and write
Disqualifications of an arbitrator
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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was no method on replacing the former, what is your
remedy? A party may request the court to act as an
appointing authority in specific instances.
RULE 6: APPOINTMENT OF ARBITRATORS
Rule 6.1. When the court may act as Appointing
Authority. - The court shall act as Appointing
Authority only in the following instances:
a. Where any of the parties in an institutional
arbitration failed or refused to appoint an arbitrator
or when the parties have failed to reach an
agreement on the sole arbitrator (in an arbitration
before a sole arbitrator) or when the two designated
arbitrators have failed to reach an agreement on the
third or presiding arbitrator (in an arbitration before
a panel of three arbitrators), and the institution
under whose rules arbitration is to be conducted fails
or is unable to perform its duty as appointing
authority within a reasonable time from receipt of
the request for appointment;
b. In all instances where arbitration is ad hoc and
the parties failed to provide a method for appointing
or replacing an arbitrator, or substitute arbitrator, or
the method agreed upon is ineffective, and the
National President of the Integrated Bar of the
Philippines
(IBP)
or
his
duly
authorized
representative fails or refuses to act within such
period as may be allowed under the pertinent rules
of the IBP or within such period as may be agreed
upon by the parties, or in the absence thereof,
within thirty (30) days from receipt of such request
for appointment;
c. Where the parties agreed that their dispute shall
be resolved by three arbitrators but no method of
appointing those arbitrators has been agreed upon,
each party shall appoint one arbitrator and the two
arbitrators thus appointed shall appoint a third
arbitrator. If a party fails to appoint his arbitrator
within thirty (30) days of receipt of a request to do
so from the other party, or if the two arbitrators fail
to agree on the third arbitrator within a reasonable
time from their appointment, the appointment shall
be made by the Appointing Authority. If the latter
fails or refuses to act or appoint an arbitrator within
a reasonable time from receipt of the request to do
so, any party or the appointed arbitrator/s may
request the court to appoint an arbitrator or the third
arbitrator as the case may be.
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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Rule 6.8. Forum shopping prohibited. - When there
is a pending petition in another court to declare the
arbitration
agreement
inexistent,
invalid,
unenforceable, on account of which the respondent
failed or refused to participate in the selection and
appointment of a sole arbitrator or to appoint a
party-nominated arbitrator, the petition filed under
this rule shall be dismissed.
Rule 6.9. Relief against court action. - If the court
appoints an arbitrator, the order appointing an
arbitrator shall be immediately executory and shall
not be the subject of a motion for reconsideration,
appeal or certiorari. An order of the court denying
the petition for appointment of an arbitrator may,
however, be the subject of a motion for
reconsideration, appeal or certiorari.
7.4. Grounds.
An
arbitrator
may
be
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
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The court will decide the challenge on the basis of
the evidence submitted by the parties in the
following instances:
a. The other arbitrators in the arbitral tribunal agree
to the removal of the challenged arbitrator; and
b. If the challenged arbitrator fails or refuses to
submit his comment on the petition or the brief of
legal arguments as directed by the court, or in such
comment or brief of legal arguments, he fails to
object to his removal following the challenge.
Rule 7.8. No motion for reconsideration, appeal or
certiorari. - Any order of the court resolving the
petition shall be immediately executory and shall not
be the subject of a motion for reconsideration,
appeal, or certiorari.
Rule 7.9. Reimbursement of expenses and
reasonable compensation to challenged arbitrator. Unless the bad faith of the challenged arbitrator is
established with reasonable certainty by concealing
or failing to disclose a ground for his disqualification,
the challenged arbitrator shall be entitled to
reimbursement of all reasonable expenses he may
have incurred in attending to the arbitration and to a
reasonable compensation for his work on the
arbitration. Such expenses include, but shall not be
limited to, transportation and hotel expenses, if any.
A reasonable compensation shall be paid to the
challenged arbitrator on the basis of the length of
time he has devoted to the arbitration and taking
into consideration his stature and reputation as an
arbitrator. The request for reimbursement of
expenses and for payment of a reasonable
compensation shall be filed in the same case and in
the court where the petition to replace the
challenged arbitrator was filed. The court, in
determining the amount of the award to the
challenged arbitrator, shall receive evidence of
expenses to be reimbursed, which may consist of air
tickets, hotel bills and expenses, and inland
transportation. The court shall direct the challenging
party to pay the amount of the award to the court
for the account of the challenged arbitrator, in
default of which the court may issue a writ of
execution to enforce the award.
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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certiorari. Rule 8.8. Appointment of substitute
arbitrator. - Where the mandate of an arbitrator is
terminated, or he withdraws from office for any
other reason, or because of his mandate is
revoked by agreement of the parties or is
terminated for any other reason, a substitute
arbitrator shall be appointed according to the rules
that were applicable to the appointment of the
arbitrator being replaced.
When is
instituted?
an
arbitral
tribunal
deemed
THE
ARBITRATION
SECTION 30 of RA 9285
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
witnesses.
What is the language that should be used in
the conduct of arbitral proceedings?
A: SECTION 31 of RA 9285
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.
In default, it is the arbitral tribunal that shall
determine the language to be used.
What law will govern the procedure in the
conduct of arbitration proceeding?
A: It is the choice of the parties. If their choice is the
Philippines as the place of arbitration, it simply
means that the arbitration itself is subject to
Philippine law as the lex loci arbitri . In other words,
the parties are free to adopt such rules governing
the procedure of the arbitration subject to the due
process requirement under the law.
Assume that there is no agreement between
the parties. What law of procedure will
govern?
A: The arbitral tribunal, in default of an agreement
between the parties, shall determine the law of
procedure.
Take note that under the law, at the arbitral tribunal
is given supplementary discretion on how to conduct
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
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that are not
agreement.
promulgated
in
the
arbitration
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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Can experts be appointed in both domestic
and ICA?
A: If it is ICA, YES. Experts can be appointed by the
arbitral tribunal. this is related to the fundamental
right of a party to be able to present evidence by
expert appointed by the tribunal.
If it is DA, they can still be appointed by the arbitral
tribunal because there is no prohibition under the
law. Again, this is rested to the fundamental right of
a party to be able t present evidence by expert
appointed by the arbitral tribunal.
We said that you apply for provisional
remedies before the court under Rule 5. How
about before the arbitral tribunal?
A: Provisional remedies can be availed of even
before the arbitral tribunal.
Does that apply to both DA and ICA?
Section 17. Reopening of hearing. - The hearing
may be reopened by the arbitrators on their own
motion or upon the request of any party, upon
good cause, shown at any time before the award
is rendered. When hearings are thus reopened the
effective date for the closing of the hearings shall
be the date of the closing of the reopened
hearing.
YES. Section 17 of the Model Law says that the
arbitral tribunal, at the request of any party, can
order a party to take interim measure of protection
in respect with the subject matter of the dispute.
It is available in both ICA and DA as well as under
RA 9285.
When can you apply before the arbitral
tribunal?
A: AFTER THE CONSTITUTION OF THE ARBITRAL
TRIBUNAL
and
DURING
ARBITRATION
PROCEEDINGS and AT ANY TIME BEFORE THE
RENDITION OF THE AWARD.
How about before the courts, when can you
apply provisional remedies?
A: Prior to the constitution of the arbitral tribunal or
even during the arbitration proceedings or after the
of
Interim
Measure
of
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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be limited to preliminary injuction directed against
a party, appointment of receivers or detention,
preservation, inspection of property that is the
subject of the dispute in arbitration. Either party
may apply with the Court for assistance in
implementing or enforcing an interim measures
ordered by an arbitral tribunal.
commences.
B.
Judicial
Relief
after
Arbitration
Commences
Rule 3.12. Who may file petition. - Any party to
arbitration may petition the appropriate court for
judicial relief from the ruling of the arbitral tribunal
on a preliminary question upholding or declining
its jurisdiction. Should the ruling of the arbitral
tribunal declining its jurisdiction be reversed by
the court, the parties shall be free to replace the
arbitrators or any one of them in accordance with
the rules that were applicable for the appointment
of arbitrator sought to be replaced.
Rule 3.13. When petition may be filed. - The
petition may be filed within thirty (30) days after
having received notice of that ruling by the arbitral
tribunal.
RULE 3.15 TAKE NOTE OF THESE GROUNDS
Rule 3.15. Grounds. - The petition may be
granted when the court finds that the arbitration
agreement is invalid, inexistent or unenforceable
as a result of which the arbitral tribunal has no
jurisdiction to resolve the dispute.
Rule 3.18. Court action. - (A) Period for resolving
the petition.- The court shall render judgment on
the basis of the pleadings filed and the evidence, if
any, submitted by the parties, within thirty (30)
days from the time the petition is submitted for
resolution.
(B) No injunction of arbitration proceedings. - The
court shall not enjoin the arbitration proceedings
during the pendency of the petition.
Judicial recourse to the court shall not prevent the
arbitral tribunal from continuing the proceedings
and rendering its award.
(C) When dismissal of petition is appropriate. The court shall dismiss the petition if it fails to
comply with Rule 3.16 above; or if upon
consideration of the grounds alleged and the legal
briefs submitted by the parties, the petition does
not appear to be prima facie meritorious.
Rule 3.19. Relief against court action. - The
aggrieved party may file a motion for
reconsideration of the order of the court. The
decision of the court shall, however, not be
subject to appeal. The ruling of the court affirming
the arbitral tribunals jurisdiction shall not be
subject to a petition for certiorari. The ruling of
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
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( 3 - M A N R E S A )
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final arbitral award before seeking appropriate
judicial recourse.
A ruling by the arbitral tribunal deferring resolution
on the issue of its jurisdiction until final award,
shall not be subject to a motion for
reconsideration, appeal or a petition for certiorari.
Rule 3.21. Rendition of arbitral award before
court decision on petition from arbitral tribunals
preliminary ruling on jurisdiction. - If the arbitral
tribunal renders a final arbitral award and the
Court has not rendered a decision on the petition
from the arbitral tribunals preliminary ruling
affirming its jurisdiction, that petition shall become
ipso facto moot and academic and shall be
dismissed by the Regional Trial Court. The
dismissal shall be without prejudice to the right of
the aggrieved party to raise the same issue in a
timely petition to vacate or set aside the award.
SECTION 23 of RA 9285
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
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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How do you define mediation?
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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3. All civil and criminal cases filed with a certification
to file action issued by the Punong Banraggay o
Pangkat ng Tagapagkasundo under the Revised
Katarungang Pangbaranggay Law.
hours
should
mediation
be
A: No specific number.
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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Voluntary Arbitrators)
MARCH 13, 2015
3. Special civil actions or certiorari except those
involving pure questions of law
5.
Cases
cognizable
by
the
Katarungang
Pambaranggay under RA 7160 or offenses
punishable by imprisonment not exceeding 1 year or
a fine not exceeding 5,000 or both
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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apart from using as basis R36S5 of the Rules of
Court in saying that separate or partial awards can
be rendered by the arbitral tribunal or by the
arbitrator, Section 3(f) of R.A. 9285 may also be
made basis.
In the case of Tambaoan vs. CA, 365 S 359,
the SC held that:
separate awards are analogous to judgments that
are partial but final in nature because they put an
end to a particular matter or to some defined and
separate branch of a controversy. However class
there is a caveat, although arbitral tribunals can
render separate awards, this prerogative should be
used sparely in order to achieve the objective of
arbitration in promoting a speedy and expeditious
resolution of the entire controversy and not just a
part of it.
Next regarding the scope of relief that may be
given?
S20 of the arbitration law provides, the arbitral
tribunal or arbitrator may grant any remedy or relief
that they may deem just and equitable and within
the scope of the agreement of the parties, which
shall include but is not limited to specific
performance of the contract. In other words, as long
as the award derives its essence from the contract
and is based on the possibly plausible interpretation
of the contract, It is allowed.
Take note class that any limitation on the remedial
power of the arbitrator must either be explicitly
contained or clearly incorporated by reference in the
arbitration clause.
How about punitive damages
awarded by arbitrators?
can
it
be
if
it
is
International
Commercial
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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Form of award if it
Commercial Arbitration:
is
International
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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the award before the arbitral tribunal is that
allowed?
confirmation,
Under Article
allowed only on
and any other
similar nature;
party.
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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Take note class that awards rendered in arbitration
are considered confidential because arbitral
proceedings are held in private and all pleadings are
treated confidential so that the awards are not
published. So the rule there regarding the
confidentiality rule as to arbitration proceedings
includes all the records, the evidence and the arbitral
award. It shall be considered as confidential and will
not be published unless the parties to the said
proceeding consents or for the limited purpose of
disclosing to the court of the correction with an
action or appeal pending before the said court, so
that is the rule on confidentiality.
Rule
11.2. When
to request
correction/modification or vacation. -
confirmation,
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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So you can file a petition before the RTC within
30days from the receipt of the arbitral award and file
a petition to vacate the same. So class also note of
the grounds under Rule 11.4 that are similar to S24.
Rule 11.4. Grounds. - (A) To vacate an arbitral
award. - The arbitral award may be vacated on the
following grounds:
a. The arbitral award was procured
corruption, fraud or other undue means;
through
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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c. Where the arbitrators have omitted to
resolve an issue submitted to them for
resolution; or
d. Where the award is imperfect in a matter
of form not affecting the merits of the
controversy, and if it had been a
commissioners report, the defect could have
been amended or disregarded by the Court.
So if you will notice, the grounds for the correction
or modification of an arbitral award only involve
trivial matters and do not involve the integrity of the
award, unlike the grounds for vacation of an arbitral
award. Now continue reading Rule 11.2 (d).
(D) A petition to vacate the arbitral award may be
filed, in opposition to a petition to confirm the
arbitral award, not later than thirty (30) days from
receipt of the award by the petitioner. A petition to
vacate the arbitral award filed beyond the
reglementary period shall be dismissed.
(G) A petition to correct an arbitral award may be
included as part of a petition to confirm the arbitral
award or as a petition to confirm that award.
Note class that under Rule 11 the petition filed there
must be verified hence under oath. Please continue
reading R11.6
Rule 11.6. Contents of petition. - The petition must
state the following:
a. The addresses of the parties and any
change thereof;
b. The jurisdictional issues raised by a party
during arbitration proceedings;
c. The grounds relied upon by the parties in
seeking the vacation of the arbitral award
whether the petition is a petition for the
vacation or setting aside of the arbitral award
or a petition in opposition to a petition to
confirm the award; and
d. A statement of the date of receipt of the
arbitral award and the circumstances under
which it was received by the petitioner.
Apart from other submissions, the petitioner must
attach to the petition the following:
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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Note that under the law, the Regional Trial Court in
its discretion may direct a new hearing before the
same arbitrators or before new arbitrators to be
chosen in the same manner as provided in the
submission or contract for the selection of the
original arbitrators. So we will go back to a hearing
before the arbitral tribunal.
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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its place of business; or (e) in the National Capital
Judicial Region.
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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e. The relief sought.
Apart from other submissions, the petitioner shall
attach to the petition the following:
a. An authentic copy of the arbitration agreement;
b. An authentic copy of the arbitral award;
c. A verification and certification against forum
shopping executed by the applicant in accordance
with Sections 4 and 5 of Rule 7 of the Rules of
Court; and
d. An authentic copy or authentic copies of the
appointment of an arbitral tribunal.
(B) Petition to set aside. - The petition to set aside
or petition to set aside in opposition to a petition to
recognize and enforce an arbitral award in
international commercial arbitration shall have the
same contents as a petition to recognize and enforce
or petition to recognize and enforce in opposition to
a petition to set aside an arbitral award. In addition,
the said petitions should state the grounds relied
upon to set it aside.
Further, if the ground of the petition to set aside is
that the petitioner is a minor or found incompetent
by a court, there shall be attached to the petition
certified copies of documents showing such fact. In
addition, the petitioner shall show that even if the
submission or arbitration agreement was entered
into by a guardian or guardian ad litem, the latter
was not authorized by a competent court to sign
such the submission or arbitration agreement.
In either case, if another court was previously
requested to resolve and/or has resolved, on appeal,
the arbitral tribunals preliminary determination in
favor of its own jurisdiction, the petitioner shall
apprise the court before which the petition to
recognize and enforce or set aside is pending of the
status of the appeal or its resolution.
Rule 12.12 and 12.13
Rule 12.12. Presumption in favor of confirmation. It is presumed that an arbitral award was made and
released in due course and is subject to enforcement
by the court, unless the adverse party is able to
establish a ground for setting aside or not enforcing
an arbitral award.
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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Third, if the arbitrators acted in manifest disregard of
the law;
Fourth, when the voluntary arbitrator failed to apply
the terms and provisions of the agreement which
form part of the applicable law between the parties.
IN another case, the case of Carpio v. Sulu
Resources Dev. Corp., 387 S 138, here the SC held
that:
Even if the review by the CA of the CIAC decisions
included questions of fact and law, review of the
factual findings were warranted only when such
factual findings were challenged to have been made
in grave abuse of discretion. So that is the standard
of limited judicial review.
Now let us go to the Enforcement of Philippine
Arbitral awards. Again Philippine Arbitral
Awards refer to both DA and ICA.
Why is there a necessity for an arbitral award
to be judicially confirmed? Is it necessary for
an arbitral award to be judicially confirmed?
Judicial confirmation of arbitral awards is necessary
for their enforceability. So that is confirmation for
enforceability of the arbitral award. Please read Rule
11.2 confirmation of an arbitral award.
Rule 11.2. When to request
correction/modification or vacation. -
confirmation,
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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a. Relief on the issue of Existence, Validity, or
Enforceability of the Arbitration Agreement;
b. Referral to ADR;
f. Rejoinder to reply;
d. Appointment of Arbitrator;
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
C A T H E R I N E
B A R R I O N -
G U E R Z O
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The initiatory pleadings shall be filed directly with
the court. The court will then cause the initiatory
pleading to be served upon the respondent by
personal service or courier. Where an action is
already pending, pleadings, motions and other
papers shall be filed and/or served by the concerned
party by personal service or courier. Where courier
services are not available, resort to registered mail is
allowed.
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
C A T H E R I N E
B A R R I O N -
G U E R Z O
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So when to move for reconsideration? It is to be
made within a non-extendible period of 15days from
the receipt of the questioned ruling or order. Let us
go to Rule 19.12, appeal to the CA:
Rule 19.12. Appeal to the Court of Appeals. - An
appeal to the Court of Appeals through a petition for
review under this Special Rule shall only be allowed
from the following final orders of the Regional Trial
Court:
a. Granting or denying an interim measure of
protection;
b. Denying a petition for appointment of an
arbitrator;
c. Denying a petition for assistance in taking
evidence;
d. Enjoining or refusing to enjoin a person from
divulging confidential information;
e. Confirming, vacating or correcting/modifying a
domestic arbitral award;
f. Setting aside
arbitration award;
an
international
commercial
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
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l. Granting or dismissing a petition to enforce a
deposited mediated settlement agreement; and
m. Reversing the ruling of the arbitral tribunal
upholding its jurisdiction.
Where to appeal? Before the CA. What is the mode
of appeal? Through a petition for review. How about
decisions rendered by the CIAC, pwede pa ba magappeal sa decision of the CIAC that has already
attained finality? Earlier we said diba that CIAC
awards cannot be confirmed before the courts. Hindi
ba pwede mag-intervene ang court. So what will be
your remedy? CIAC is considered a quasi-judicial
body and hence you can appeal therefrom under
Rule 43, that is petition for review before the CA.
Please take note class of Rule 19.12!
agreement
is
preliminary
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
C A T H E R I N E
B A R R I O N -
G U E R Z O
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Judicial dispute resolution
During the JDR, there is now the participation of the
judge assumes the role of mediator, conciliator, an
early neutral evaluator and combination of any of the
above.
Conciliator and Mediator
The judge facilitates the settlement discussion
between parties and tries to reconcile their
differences.
Early neutral evaluator
The judge assesses the relative strengths and
weakness of each partys case and makes a nonbinding and impartial evaluation of the chances of
each partys success in the case.
If during the JDR process the parties come to an
agreement, the trial will end. If the parties do settle
during the JDR, then trial proper will proceed. The
JDR judge is still the trial judge who will hear the
case.
JDR judge handles the case from the filing of the
complaint to the conduct of CAM up to the JDR
during the pre-trial stage. He is the judge to whom
the case was originally raffled.
Trial Judge- he presides the pre-trial proper, trial and
renders a decision of the case.
Appellate court mediation
The ACM is during the appeal where the case is
referred to the Philippine Mediation Board Appeal for
mediation.
Two-judge system
If JDR fails, is the JDR judge the same with the trial
judge? No, because during the JDR stage he
assumed the role of an early neutral evaluator and
prejudged the dispute.
GR: the trial judge will not be the same person who
acted as JDR judge
E: the parties agree the trial and JDR judge be the
same
The JDR judge shall not preside over the trial of the
case when the parties did not settle their dispute at
A L T E R N A T I V E
D I S P U T E
R E S O L U T I O N
S Y :
2 0 1 4 -
2 0 1 5
( 3 - M A N R E S A )
A T T Y .
C A T H E R I N E
B A R R I O N -
G U E R Z O
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Role of Lawyers in CAM/JDR Proceedings
combative
role
in
the
of
Lawyers
in
CAM/JDR