CHAPTER 1

INTRODUCTION

History of Philippine Alternative Dispute Resolution

Alternative Dispute Resolution (ADR) is definedas any

processor procedure used to resolve a dispute or controversy
other than by adjudication of a presiding judge of a court or an
officer.of.a government agency. Instead, a neutral third party
participates to assist in the resolution of issues. ADR comes in
different forms, including arbitration, mediation, conciliation,
early 1neutral evaluation, mini-trial, or any combination thereof.!
The carliest use of conflict resolution HeShanifin was re-
corded in a document dated: around 3,400 years ago, during the
reign of King Solomon who displayed extraordinary wisdom as he
presided over two mothers quarreling over a baby.
The two mothers lived in the same household, where each
one cared for a newborn son. It was unfortunate, however, that
one of the babies died, and each woman claimed the remaining
baby as her own. King Solomon tried to solve this dispute by
suggesting that they cut the baby into two, with each woman in
the proposed method receiving half. One mother was content
with Solomon’s proposal, suggesting that if she could not have
the baby, then neither of them should. However, the other
woman turned to Solomon, beseeching, “Please, my lord, give her
the living baby! Don’t kill him!”

1 Sec. 3(a), R.A. 9285.

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 2 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

Once the two mothers revealed their true feelings, Solomon

could distinguish the true mother from the fraud. The one who
pleaded that her son might be spared and given to her rival, did
so because a mother would go to great lengths of even giving up
her baby, if that is what was deemed necessary to save the
baby’s life.

In the Philippines, dispute resolution mechanisms existed

even before the Spanish and American colonization period. Dis-
putes arising from the daily affairs of communities were brought
before the elders of such communities to resolve the issues
among family members and warring clans. Datus used to settle
disputes of their constituents, and their decisions were invaria-
bly accepted as having authority and finality.
“On 19 June 1953, Republic Act No. 876 or the’Arbitration
ee Law'was enacted. This piece of legislation was based on the U.S.
Federal Law that governs domestic arbitration back then. It au-
thorized the making of arbitration and submission agreements,
to provide for the appointment of arbitrators and procedure for
arbitration in civil controversies.
_On 21 June.19855, the PhilippineOtt Note a,
itration Rules of the United ‘Nation’s.Co: n
ade Law (UNCITRAL) Model*Law on*Interna-
tration (“Model. Law”).2. This-ModélLaw
eee in Republic Act No. 9285°
or thé ADR»Act#of

R.A. 9285 institutionalized'‘ADR.as a means of set :

p in the Philippines. This law also created the ( ffice for Al-
in attached. agen
Department of Justice (DOJ), withposers and functions, among
others, to_ m rds_for the tr inl \DR _practitio/
‘ners. ~and’s service providers and to coordi: development,
_ implementation, monitoring, _ and_ evaluation
on_of governmen|
ent ADR
" programs, :

2 Korea Technologies Co., Ltd. vs. Lerma, G.R.

No. 143581, January 7, 2008.

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 INTRODUCTION

State Policy on ADR

It is the declared policy of the State to actively promote

party autonomy in the resolution of disputes or the freedom of
the party to make their own arrangements to resolve their dis-
putes. T owards this end, the State shall encourage and actively
promote the use of Alternative Dispute Resolution (ADR) as an
important means to achieve speedy and impartial justice and
declog court dockets. As such, the State shall provide means for
the use of ADR as an efficient tool and an alternative procedure
for the resolution of appropriate cases. Likewise, the State shall
enlist active private sector participation in the settlement of dis-
putes through ADR. This Act shall be without prejudice to the
adoption by the Supreme Court of any ADR system, such as me-
diation, conciliation, arbitration, or any combination thereof as a
means of achieving speedy and efficient means of resolving cases
pending before all courts in the Philippines which shall be gov-
erned by such rules as the Supreme Court may approve from
time to time.*

Advantages of ADR

ADR is. time-effective and.cost-efficient. It gives the. parties

involved more flexibility and control over the process and out-
comé of the dispute. Sec. 2 of the ADR Act states that ADR is an
and the
important means to achieve speedy and impartial justice
de-clogging of court dockets.
Court in the case of Korea Technologies Co.
The Supreme
Alberto A. Lerma, et al.,* held that “being an inex-
Ltd. vs. Hon.
settling disputes, arbi-
pensive, speedy and amicable method of
ion—is
tration—along with mediation, conciliation and negotiat
ogging judi-
encouraged by the Supreme Court. Aside from uncl
disputes.”
cial dockets, arbitration also hastens the resolution of

ie

3 Sec. 2, R.A 9285,

4G.R. No. 143581, 7 January 2008.

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 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION
4

In Fruehauf Electronic; s Me 1 nayt ion vs. T.

ogy Electronics Assembly and Ma ge me nt Pacific Comporatin’s
nag ivate mode of di.
the Supreme Court held that “as a purely
pute resolution, ar priva th a“
bitration proceedings, incl in
the evidence, and the arbitral award, are ud g a records,
confidential unlike
court proceedings which are
generally public. This allo
parties to avoid negative publicity and ws the
law highly regards the confid
protect their privacy. Our
entiality of arbitration proceedings
that it devised a judicial remedy
to prevent or pr ohibit the unau
thorized disclosure of confidential info -
rmation obtained there-
from. The contractual nature of arbitral proc
parties substant eedings affords the
ial autonomy over the proc
eedings. The Parties
are free to agree on the proced
ure to be observed during the pro
ceedings. This lends considera -
ble flexibility to arbitration
ceedings as compared to cou pro-
rt litigation governed by the
Court.” Rules of

Sources of ADR in the Philippines

ADR Rules originated
from the following laws
and rules:6
a. Republic Act (R’A. ‘928
Dispute Resolution Act

and to establish the

Resolution, among ot
her purposes.
b. Executive Order (EO.
78) Nos
its Implementing. Rules
dated the inclusion

5G.R. No. 204197,

23 November 2016
6 Compilation of So ,
urce Ss of ADR Rules in .
7 Signed on July 4, 2012. Included in
8 Took effect fiftee
Times on May 12, 2017.

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 INTRODUCTION

ments between the government and private entities

and those entered into by local government units.
c. EO, 97,9 series of 2012 conferred upon the Office for
Alternative Dispute Resolution (OADR) the Manage-
ment, Development, Coordination, and Oversight of
ADR Programs in the Executive Department.
d. Department Circular (D.C. 98) No. 98, series of 2009,
Implementing Rules and Regulations (IRR) of R.A. 9285
was promulgated on 4 December 2009 to prescribe
the procedures and guidelines for the implementation
of the ADR Act. ».

e. D.C. 49, series of 2012,!° “Adopting Accreditation

Guidelines for Alternative Dispute Resolution Provider
Organizations and Training Standards for ADR Practi-
tioners.” The circular sets the training standards for
ADR practitioners and provides the requirements for
accreditation of ADR Provider Organizations (APOs),
individual ADR practitioners, and public ADR Pro-
grams.
f. United Nations Convention on International Settlement
Agreements Resulting from Mediation, otherwise
known as the “Singapore Convention.” This Conven-
tion facilitates international trade and promotes me-
diation as an alternative and effective method of re-
solving commercial disputes by providing an effective
mechanism for the enforcement of international set-
tlement agreements resulting from mediation."
g. R.A. 876,!2 otherwise known as “The Arbitration Law,”
allowed persons or parties to submit to arbitration

523 (s. 2006) and Conferring upon the Office for

° Revoking Executive Order No.
the Management, Development, Coordination, and
‘native Dispute Resolution
‘rsight of Alternative Dispute Resolution Programs in the Executive Department.
© Signed on 17 August 2012. jon
August 2019.
iy uhe Philippines signed the Singapore Convention on 7 nts, ;
ion and Submission Agreeme
vi “An act to Authorize the making of Arbitrat the Procedure for Arbitrat ion in Civi
vide for the Appointment of Arbitrators and
ntroversies, and for Other Purposes.

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8 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

v. A\MNO!"15°0610-SCy Revised Guidelines for Con.

tinuous Trial of Criminal Cases.
w. “A
19'M10
. No,
-20-SC,,2019 Amendments to the 1997
x. A‘M. No. 19-10-20-SC,
2020 Guidelines for the Con.
duct of the Court-Annexed Mediation (CAM) and Ju-
dicial Dispute Resolution (JDR) in Civil Cases.

ADR Challenges in the Philippines

Most Filipinos still view ADR as an alternative rather than

a"primary*method»of-settling disputes.
For some, despite pre-
existing stipulations in their agreements,
parties contest the use
of ADR and brand it merely as litigati
on-in-disguise. This mind-
set perpetuates the clogging of cour
t dockets. It bogs down ef-
forts to deliver justice more swiftly.
Changing this mindset has
been a hurdle for ADR advocates.
By nature, people are creatures
of habit. Deviations from
the standard operating procedure
s ar

17G.R. No. 2041

97, 93 Novemb
er 2016.

|
i
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 INTRODUCTION

The errors of an arbitral tribunal are not subject to correction by

the judiciary. As a private alternative to court proceedings, arbi-
tration is meant to be an end, not the beginning, of litiga-
tion. Thus, the arbitral award is final and binding on the parties
by reason of their contract — the arbitration agreement.

Also;sas:of-printdate, the Philippines has yet to amend the

ADR Act,
of, 2004 to‘conform with the 2006 revision of the 1985
UNCITRAL Model Law. The amendment of R.A. No. 9285 is im-
perative in order to align the country’s rules and regulations with
the progress and innovations that happened in the field of ADR
since the enactment of the Law. There is now a growing demand
for ADR methods to be adopted in various settings. Internation-
ally, organizations are now requiring the inclusion of ADR proc-
esses in their procedures.
Domestically, commercial transactions have integrated
ADR as an efficient and cost-effective means of dealing with any
dispute. More fields are now requiring the use of ADR such as
Intellectual Property, Data Privacy & Labor. Even in court proce-
dures, ADR plays a significant role. Likewise, having a strong
framework and policy on legally settling conflicts out of court
could potentially contribute in the move to attract foreign inves-
tors to engage in business in the country.

, <> Te
°
.

“The practice of peace and reconciliation is one

ns.”
of the most vital and artistic of human actio
— Nhat Hahn fo>)
Sul

2 65 3
;

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 CHAPTER 2
THE OFFICE FOR ALTERNATIVE
DISPUTE RESOLUTION (OADR)

The Office for Alternative Dispute Resolution

The Office for Alternative Dispute Resolution (OADR) is an

attached agency of the Department of Justice. It is headed by an
Executive Director appointed by the President upon_the recom.
mendation of the Secretary of Justice.!8 The inaugural Executi
ve
Director, Atty. Irene D.T. Alogoc, CESE, the author of this book,
was appointed by the President on 08 January 2020, and as.
sumed office on 16 January 2020.

Legal Bases for the Creation and Functions of

the OADR
a. R.A.~9285 — “Alternative Dispute Resolution Act of.
2004” created the OADR;
b. £.0O. No: 97, series *ofe2012, revoked E.O. 523, series
of 2006, and conferred upon the OADR*the»
manage-
(0 ent, develo: ination,
s9U
ie
m ; - 7 2s 5 SAR ede oe beetle and itwof
ADR programs in. the Executive:De Mt gaie IP over
et sight
partment, thereby
transferring all the powers, functions and
duties from
the Office of the President to
the OADR; and
c. EO. No. 78, series of 2012; matidatethe
s inclusioi’o!
provisions_o n. the use ofADR-mechanisms in ‘all ‘cor
tracts involving public-private par
tnership “projects,
build-ope rate and transfer projects, joint venture
agreements between the government and privat
e ent
ties and those entered into by
local government units.
The Implementing Agencies assigned are the
Nation@
18 Sec. 49, ADR Act.

10

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a Se

THE OFFICE FOR PHILIPPINE ALTERNATIVE DispUTE RESOLUTION 11

Economic and Development Authority (NEDA), OADR,

and Public-Private Partnership (PPP) Center.

Mandate and Objectives of the OADR

The mandate and objectives of the OADR are the following:

a) To promote, develop, and expand the use of ADR in Pir.
thepublicand private sectors;
b) To assi government to_ monitor, study and
ss Me «at ~ S
e eth by th e public « nee private sector
of (ADR), and recommend to Congress ‘needful statu-
tor a too develop; aand
c) Tostrengthen and ji ADR practices in accor-
sutaahanecdtt
€ sna ae:
Powers and Functions of the OADR

a. As enumerated under the ADR Act of 2004 and its

IRR, the following are the powers of OADR, to wit:
i. To act as appointing authority of mediators and
arbitrators when the parties agree in writing that
it shall be empowered to do so;
ii. To conduct seminars, symposia, conferences,”
and other public fora and publish proceedings of
said ‘activities and relevant materials/informa-
tion that would promote, develop and expand
the use of ADR;
iii. To establish an ADR library or resource center
where ADR laws, rules and regulation, jurispru-
dence, books, articles and other information
about ADR in the Philippines and elsewhere may
be stored and accessed;
iv. To establish training programs for ADR provid-
ers and practitioners, both in the public and pri-
vate sectors; and to undertake periodic and con-
a Sec. 49, ADR Act.

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 E RESOLUTION
PHILIPPINE ALTERNATIVE DISPUT

and
tinuing training programs for arbitration
mediation and charge fees on participants, It
may do so in conjunction with or In Cooperation
with the IBP, private ADR organizations, and Jo.
cal and foreign government offices and agencieg
and international organizations;
v. To certify those who have successfully completed
the, regular. _professional»training»programsepro
vided. by.the.OADR;""
vi. To.charge’for’services, rendered. such as, among
others, for training’‘and ‘cértifications of "ADR
providers;
vii. To accept donations,. grants--and~other#assis- |
tance. from local and. foreign:sources;and
viii. To exercise.such other powers as. may. be»neces-
Sary and proper to carry: into effect: the»provi-
sions of the ADR ‘Act.
The functions of the OADR are as follows:
i. To promote, develop and expand the
use of ADR
in the private and public sectors
through infor-
mation, education and communication following
the mandate of the Government in encouraging
and actively promoting the
use of Alternative
Dispute Resolution (ADR) as an important
means to achieve speedy
and declog court
and impartial justice
dockets;
lie oO monitor, study and: evaluate*the tiseorADR
d public sectors for-_p
among others, p Olic urposes.of,
y formulation;
iii. a recommend to Congress needful
anges to develop, statutory
Strengthen and improv, e
ADR practices
; in accordance
Professional Standards: with j tional
with interna
iv. To :
devise on and provide linkages for the
i aon lementation, monitoring and
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 THE OFFICE FOR PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION 13

evaluation of government and private ADR pro-

grams and secure information about their re-
spective administrative rules and procedures,
problems encountered and how they were re-
solved;
v. To compile and publish a list or roster of ADR
providers/practitioners, who have undergone
training by the OADR, or by such training pro-
viders or institutions, recognized or certified by
the OADR as performing functions in any ADR
system. The list or roster shall include the ad-
dresses, contact numbers, e-mail addresses,
ADR service/s rendered (e.g. arbitration, media-
tion) and experience in ADR of the ADR provid-
ers/ practitioners;
vi. To compile a list or roster of foreign or interna-
tional ADR providers and practitioners. The list
or roster shall include the addresses, contact
numbers, e-mail addresses, ADR service/s ren-
dered (e.g. arbitration, mediation) and experi-
ence in ADR of the ADR providers/ practitioners;
and
vii. To perform such other functions as may be as-
signed to it.

Staff and Service Divisions of the OADR

On 17 March 2016, the Department of Budget and Man-

agement (DBM) approved the Organizational Structure and Staff-
ing Pattern (OSSP) of the Office for Alternative Dispute Resolu-
tion (OADR) pursuant to Sec. 49, Chapter VIII of R.A. 9285. The
organizational chart and the functional statement are presented
as follows:

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 14

ORGANIZATIONAL CHART
DEPARTMENT OF JUSTICE
OFFICE FOR ALTERNATIVE DISPUTE RESOLUTION
DBM Approved Organizational Structure

OFFICE OF THE EXECUTIVE

DIRECTOR

TRAINING, ACCREDITATION AND POLICY, COMPLIANCE

(— PROMOTION AND MONITORING
SERVICE SERVICE
PHILIPPINE ALTERNATIVE Dis

FINANCE AND TRAINING AND PROGRAM POLICY FORMULATION |

ADMINISTRATIVE DEVELOPMENT AND DEVELOPMENT
DIVISION DIVISION DIVISION
PpUTE RESOLUTION

ACCREDITATION AND COMPLIANCE AND

CERTIFICATION MONITORING
DIVISION DIVISION

PUBLIC INFORMATION AND

PROMOTION
DIVISION

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 THE OFFICE FOR PHILIPPINE ALTERNATIVE DisPUTE RESOLUTION 15

Functional Statement

Office of the Executive Director (OED) ~

a. Approves plans, policies, and programs that will

guide the operations of the OADR consistent with
policies and programs of the DOJ;
Recommends to the Secretary of Justice the members
of the Advisory Council;
Convenes the Advisory Council regularly or as needed;
Submits the proposed annual budget of the OADR
through the Secretary of Justice; responsible and ac-
countable for the administration of the authorized
budget of the OADR;
Appoints individuals to authorized positions within
the staffing pattern of the OADR and enforce national
government laws on its personnel;
Initiates programs and other acceptable practices
that will promote productivity, efficiency, and effec-
tiveness in the Office;
Provides leadership and overall direction of the opera-
tions of the OADR and exercise day to day supervi-
sion of operations of the service and divisions within
the OADR; and
Provides opinions, replies to private queries and deci-
sions, establishes a grievance machinery procedure
and
by formulating the appropriate ADR mechanism,
es on
handles administrative investigations and decid
staff
administrative cases as performed by the legal
within the Office.

Finance and Administrative Division (FAD)

or (OED) in
a. Assists the Office of the Executive Direct -
the formulation and implementation of policies, stan
procedures that will promote the
dards, rules and re-
planning and management of the OADR's
sound

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 SOLUTION
IP PI NE AL TE RN AT IVE DISPUTE RE
PHIL

l, human, physical and tech,

Ss ources, y Aeded its financia
i.e.,
nological facets. its ser.
of the OADR and
Safeguards the revenues .
Sigs
vices;
ant d implements approv
ed
mulate s, re co mm en ds
ion and
ua l OA DR bu dg et including the preparat
an pro- and cash
allotment
execution of the approved reporting
accounting and
grams, disbursements,
thereof;
and implements the ap-
Formulates, recommends
assets plan and procurement pro-
proved physical
ce, account-
gram with proper distribution, maintenan
ing and disposal thereof;
Formulates, recommends and implements the ap-
proved personnel management policies, programs,
rules and procedures including the personnel ad-
ministration of the OADR’s personnel;
Prepares financial reports and other administrative
reports which the Executive Director and oversight
agencies of the national government may require; and
Provides general services to the OADR officers and
personnel.

Training, Accreditation and Promotion Service (TAPS)

Training and Program Development Division (TPDD)
a. Formulates Standards for training
of Alternative Dis-
pute Resolution practitioners and
providers;
b. cat ee training programs for ADR providers anc
and ident ae oetie public and private sectors
:
Programs VaKes Periodic and continuous trainin
for arbitration and mediation;

nisms for the delive 5 and cooperative mecha

tablished ADR Sree Programs with. &

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 THE OFFICE FOR PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION 17

d. Conducts continuous research and dev

elopment on
training to promote improvement of trai
ning stan-
dards and programs.

Accreditatio
‘and
n Certification Division (ACD)
a. Formulates and implements an accreditation and cer-
tification scheme for qualified individual and institu-
tional ADR providers;
b. Issues accreditation certificates to accredited and cer-
tified ADR institutions and individuals;
c. Establishes and regularly publishes a list of accred-
ited and certified ADR institutions and individuals;
and
d. Establishes and maintains a list or roster of foreign or
international ADR providers and practitioners.

Public Information and Promotion Division (PIPD)

a. Promotes, develops and expands the use of ADR in
the private and public sectors through information,
education and communication;
b. Formulates and implements an information, educa-
tion and communication strategy to promote the use
of ADR and to improve citizen access to quality ADR
services;
c. Conducts seminars, symposia, conferences and other
public fora; and publish proceedings and other rele-
vant materials thereof that will promote, develop and
expand the use of ADR;
d. Develops partnerships with civil society, academe and
ADR institutions to improve information dissemina-
tion on ADR and its services; and
€. Establishes an ADR library or resource center where
ADR laws, rules and regulations, jurisprudence,
books, articles and other information about ADR in
the Philippines and elsewhere may be stored and ac-
cessed,

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 DisPUTE RESOLUTION
ATIVE
PHILIPPINE ALTERN

Si ORME n a
e ae gee
ri ng Se é3
rv ic e (PCMs)
va Nis
and Monito
ca men RMI! Pn ee
""Bolicy, Compliance
rm ul at io n an d De ve lo pm en t Division(PEDD)
policy Fo
ADR use in the pric
Monitors, studies and evaluates
recommends policies, leg.
a.
va te an d pu bl ic se ct or s an d
projects to improve
programs and
islative measures,
ADR and its use;
Undertakes research on ADR towards continual im-
procedures, institutional frame-
provement of rules,
management;
works, technologies and service delivery
Continuous review and formulation of recommenda-
tions on new or improved policies, rules, organization
and delivery systems on OADR functions;
Acts as the technical secretariat in the OADR strate-
gic and operational planning formulation and moni-
toring such as performance evaluation and recom-
mendation;

Undertakes studies and develop standards, guidelines

and procedures that will guide the operations of the
OADR’s core functions including training partnership
development approaches, access and service delivery,
pricing and fee collection, and related areas;
Develops an indicator and evaluation system includ-
ing operations and performance evaluation approa-
ches and methodologies of the country’s ADR system
in general and the performance of the OADR in pat-
ticular; and
Prepares the OADR’s annual monitoring and pet
formance report.

Compliance and Monitoring Division

(CMD)
a. F : .
ormulates and implements an effective monitoriné

Ree ms maintain the quality of ADR providers and

14oners in the accredited and certified rostet;

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 THE OFFICE FOR PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION 19

b. Updates the Accreditation and Certification Division

(ACD) regarding the continuing quality and standards
of those ADR providers and practitioners in the roster
of accredited and certified ADR practitioners and pro-
viders;
c. Alerts the ACD of those ADR providers and practitio-
ners who fell short of the standards with the appro-
priate recommendation to strike out or delist the said
ADR provider or practitioner; and
d. Collaborates with the ACD to harmonize their stan-
dard operating procedures and rules regarding the
roster.
a RE

Requirements and Procedures for OADR Accreditation

or individual
ADR practitio-
ner/neutral may apply for OADR accreditation. This accredita-
tion-is mandatory for ADR providers and_practitioners with gov-
ernment agency clients and_partners. On the other hand, gov-
ernment agencies shall only partner with or engage the services
of ADR providers and practitionerswith OADR accreditation. The
services that may be provided by OADR accredited providers and
practitioners to government agencies may include, but not lim-
ited to, the Come thea Rahteinine SVRLSSB Spee ER eT similar
services subject to additional guidelines as the OADR may pre-
scribe. OADR accredited providers and practitioners are listed in
an official roster available in the website and social media ac-
counts of the Office.
The ACD of the OADR conducts assessment based on the
established checklist under Department of Justice Circular No.
and proce-
49, series of 2012 (D.C. 49).2° For the requirements
dures for the accreditation of private ADR Provider Organizations
(APOs), individual ADR practitioner/neutral and public ADR pro-
gram,?1
; : : aeider
20 Adopting Accreditation Guidelines for Alternative Dispute Resolutio
isha neeReee
Organizations and Training Standards for Alternative Dispute ROT.
for Public Alternative Isp
21 See Appendix R: “Accreditation Procedure
lution (ADR) Program’ for the list of said requirement in Appendices.

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20 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

If the submitted documentary requirements of the appli.

cant are complete, a Certificate os Accreditation and /or Recognj-
tion is issued. The ifica ud for t vo (2) ye ) vable
and only DE ee etna Fat see
has applied for and has.been.accredited. If not, a letter notifying
the applicant of any deficiency is issued. Once the lacking re-
quirements are submitted, such documents shall undergo the
same process of assessment towards the issuatice of a Certificate
. . a~-t .

of Accreditation and/or Recognition. ¢ cir dS

Accredited private APO or public APOs with Accredited
ADR Program conducting “trafaings for government agencies, or
in partnership with government agencies are also required to
submit a copy of their training program, faculty resumes/curri-
culum vitae, and training materials/modules to the OADR
for
approval at least one (1) month, prior to the intende
d training
date. The OADR may then require changes to
the Training Pro-
gram in accordance with program standards for the training of
ADR practitioners under D.C. 49. TheACD conducts assess-
ment based on thé established checklist. Subject to completion
of any deficiency, a notice of approval is iss
ued to the APO.
“Other Services Offered by the OADR
a. _ Appointing authority of mediators and arbitrators if
requested by either Pparty??;
and
pidge lest
bie Policy development for the
use and practice of ADR.
The OADR Advisory Council

Under Rule 2. C
IRR of the ADR Act. the OADR
shall oa have an isory
viSOry Council composed of a repr: ative
from each of the following: P a represent
a. tHie"MeHiation
lation profespromece
sion;
b. the Arb itration profession:
c. ~ ADR organizations;

22 D.C. No. 98.

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 THE OFFICE FOR PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION 1

d. IBP; and
e. the Academe.
_members of the Council, who shall be appointed by
theSecretary
of Justice upon the recommendation of the OADR
Executive Director, shall choose a Chairman from among them-
selves.. The Advisory*Gouncil shall advise the. Executive. Director
on policy;soperational ‘and other relevant matters. The Council
shall mect regularly, at least once every two (2) months, or upon
call by the Executive Director. On 02 December 2020, Justice
Secretary Menardo I. Guevarra signed Department Circular No.
32, reconstituted the Council and designated new members.

Exceptionsto the ADR Act

The provisions of the ADR Act do 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 Requla-
tions

Labor disputes cannot be subjected to ADR mechanisms

since it is governed
by a specific
set of rules and regulations pro-
vided under the Labor Code of the Philippines and other special
laws s s the Procedural Guidelines in the Conduct of Volun-
tary Arbitration Proceedings in the National Conciliation and
Mie ne and the Rules of Procedure of the National La-
bor Relations Commission;
b. Civil.status
of persons

: _ The civil status of a person is\ dictated by his disposition in

relation to marriage. It refers to being single, married, adopted,
divorced, a member of a single-parent family, or any form of fam-
ily ties or affinity with another person. Therefore, one cannot
merely determine for himself, what status he or she has;23
————__

que *8 Art. 2035 of the Civil Code states that “No compromise upon the following ~
Stions shall be valid: (1) The civil status of persons; xxx” (2) The validity of a mar-

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22 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

c. Vali of adi
marriage
tyand any ground for legal se ara.
tion24
en POra.

The Philippine constitution values the sanctity

and is perceived not just as a contract of Marriage
but an institution which
mainte nance is vested with public inte
rest. Hence, the State js
mandated to protect and has, thus
, instituted safeguards to pro-
tect it.25 Clearly, parties cannot mer
ely determine the status of
marriage based on the whim of
the parties;
d. Jurisdicti
Of cou
on rts
The jurisdiction of a court is
determined by the law in forc
at the time of the action.26 Alt e
hough the parties may agree
venue of actions, the abilit on the
y to agree on it is still con
law; ferred by

e. Future legitime

One cannot subj ect to dispute

does not exist;
settlement something that

f. © Criminal tiapitity
Criminal liability is dictat
ed by law and the court.
can b € subjected to ADR What
is the civil liability that
goes with it,
riage or a legal separatio
n; (3) Any ground for le gal separation; (4) Future
egitime”, support; (5)

for more than one year

.
ioner b justifiable caus?
6 Tilar vs. Tilar, G.R. No, 2145 ewe
26 People vs. Court of Appeals,
99 | aa
G.R. No. 154557.
|

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 THE OFFICE FOR PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION 23

save for the exceptions provided by law and existing rules and
regulations;

g. Those which by law cannot be compromised?

Certain provisions of law expressly prohibit compromise

such as Article 2035 of the Civil Code of the Philippines;

h. Cases under the original jurisdiction of the Construction

Industry Authority of the Philippines (CIAP)

In accordance with Presidential Decree No. 1746 (P.D.

1746) creating the CIAP, cases that falls within its original juris-
diction cannot be the subject of compromise or any alternative
dispute resolution mechanisms; and

i. Management, oversight, and implementation of the

’ Katarungang Pambarangay (KP) System

As provided under the Local Government Code of 1991

ADR mechanisms may be used in resolving cases filed before the
KP System. The implementation of the System itself, particularly
its administrative aspect, shall not be subjected to compromise.

THE GOVERNMENT PROGRAM ON ADR

In pursuit of promoting the use and implementation of
ADR in the public sector, the government issued Executive
Or-
ders No. 78 and No. 97, series of 2012. These Orders
were issued
in order to ensure that, foremost, government agenc
ies integrate
and practice ADR in their respective organizations.

Executive Order No. 78, series of 2012

E.O/ No. 78 and: its IRR, was issued in pursuance of the

Policy of the State to provide a more conducive climate for private
Pas dali by making dispute resolution arising out of con-
Facts especially for large-scale, capital-intensive infra
structure

27 Sec. 6, ADR Act.

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 24 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

gi ERROR
etay
and)development contracts less ‘expensive, tedious, complex ang
time-consuming.
This law*requires that all@ontracts under the following
shall include. provisions, on, the,use,of ADR,.mechanisms, at. the
option and upon agreement ofthe parties to said contracts:
a. Public-Private»’Partnership (PPP) projects and/or
those entered into under R.A. No. 6957 titled, “The
Act Authorizing the Financing, Construction, Opera-
tion and Maintenance of Infrastructure Projects by
the Private Sector, and for Other Purposes,” as
amended by R.A. No. 7718, otherwise known as the
‘“Build-Operate
and Transfer (BOT)"Law;” and
b. Joint Venture»/Agreements™(UVAS)” between govern-
ment and private entities, issued by the National
Economic and Development Authority (NEDA) pursu-
ant to Executive Order No. 423, series of 2005.

Likewise, all parties who enter into similar contracts with

Local Government Units (LGUs) are encouraged to stipulate on
the use of ADR mechanisms, in accordance with their own JV
rules, guidelines or procedures. When parties to the abovemen-
tioned contracts agree to submit the case for ADR, the use of
either domestic or international ADR mechanisms shall be highly
encouraged, giving the parties complete freedom to choose which
venue and forum shall govern their dispute, as well as the rules
or procedures to be followed in resolving the same.
Executive Order No. 78 covers all contracts
involving PPP
projects, including, among others, contracts entered into
under
the BOT Law, as well as JVAs and other similar proj
ect struc
tures entered into by any government agency,
including govern .
ment owned and controlled corporations (GOCC’s), government _
corporate entities and government financial
institutions as dé
fined under Republic Act No. 10149, otherwise
known as the
“GOCC Governance Act of 2011” and State Colleges
and Univers
ties, with any private entity, whether domestic or internat
ion#:
LGUs may stipulate, in accordance with
the IRR, the use of ADR

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 THE OFFICE FOR PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION 25

mechanisms in contracts entered into pursuant to the provisions

of the BOT Law and JV Guidelines.

This law further encourages the parties to incorporate in

their contracts the ADR mechanisms that are most suitable to
the type of project undertaken. These mechanisms may include
processes designed to prevent, avoid or minimize conflict before
they arise (i.e., pre-dispute processes such as dispute resolution
boards, early warning and use of comprehensive conflict avoid-
ance plans), or those intended to resolve or mitigate disputes
after they have arisen, (i.e., post-dispute mechanisms such as
negotiation, mediation, conciliation, arbitration, early neutral
evaluation, mediation-arbitration, mini-trial, or a combination of
any of these processes).

The parties may adopt/promulgate their own rules of pro-

cedure to govern these ADR mechanisms: provided, that this IRR
shall be suppletory to the procedures agreed upon by the parties;
provided, further, that the provisions under the ADR Act of 2004
shall also apply suppletorily.

The parties are enjoined to stipulate an ADR Clause in all

contracts covered by EO No. 78 and encouraged to conduct or
actively use Negotiation, Conciliation/Mediation and Arbitration,
to avoid costly expenses and to adhere to the government's
thrust to adopt austerity. The submission of a dispute to inter-
national arbitration shall be conditioned upon the execution ofa
separate written agreement between the contracting parties de-
fining the terms of reference of such arbitration.

Executive Order No. 97, series of 2012

In addition to the inclusion of an ADR provision in gov-

ernment contracts, E.O. No. 97 was subsequently issued man-
dating the establishment of an ADR program in all agencies un-
der the Executive Department, including departments, adminis-
trative offices, quasi-judicial agencies, government-owned and
controlled corporations (GOCCs). They are further required to

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 DisPUTE RESOLUTION
PHILIPPINE ALTERNATIVE
26

uld contain the| ADR

it reports to the OADR. The repo rts sho es.2s
of the agenci
Senate changes, proposals and programs

Purpose of Agency Reports

The agencies are required to periodically review their ADR

processes2° and to assist the OADR in coordinating, monitoring,
and evaluating the use of ADR in the public sector, which will
then be used to come up with recommendations to Congress,%0
These reports likewise contribute to the ADR literature as they
include copies of ADR decisions, and awards/settlements issued
or approved.

Procedure on Agency Reports

The reporting requirement regarding the implementation of

ADR started within three (3) months from the effectivity of E.O.
97. Agencies are required to submit a status report to the OADR
once every six (6) months or within such other period as
the
OADR may determine, continue to submit periodic
reports and
provide data on their respective ADR programs
as may be re-
quired by the OADR.
, To' ensure the prompt submissio
n of reports, each agency
is required to designate a trained
seni or official and an alternate
ing, and managing ADR
( Ctivities in their respective
offices; and compliance with the
directi
;

— irene! @ monitoring tool, the

a agency reports
Specific procedures
to: Be ecere ee Rte ae

38 Sec. Is
29 Sec. 4, E.0
E.O.
97, 8. 2012,
30 Sec, 5. E. a 97, S. 20192,
0. 97, s. 2012,

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 THE OFFICE FOR PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION 27

(a) reduce delay in decision-making;

(b) institutionalize the use of ADR processes prior to liti-

gation;
(c) facilitate self-representation; and
(d) expand non-lawyer counseling and representation
when appropriate.

Status of Compliance of Agencies with

Executive Department to E.O. 97.
agency reports on ADR programs and
Based on CY 2020
to EO No. 97, s. 2012, out of the agencies
procedures pursuant
of February 2021, fifty-five (55)
with submissions to OADR as
nci es rep ort ed to hav e exis ting dispute resolution mecha-
age
Alm ost all of the said age ncies reported internal mecha-
nisms.
res olv e dis put es amo ng and complaints against per-
nisms to
gri eva nce mac hin ery and administrative disci-
sonnel, including towards
cas es mos tly usi ng med iation and conciliation
pline/ these
t /co mpr omi se agr eem ent s. Seventeen (17) of
settlemen (i.e.
ort ed to hav e fun cti ona l ADR mechanisms
agencies rep to the exercise of regula-
conc ilia tion ) rela tive
mostly mediation/
rsi ght and oth er core service delivery functions.
tory, ove
entage of
e be lo w sh ow s th e number and perc
The tabl wit:
s ha nd le d an d se tt le d in these agencies, to
case

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28 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

Handled
Agency a Number | Percenta ‘-
57,170 57,170 100% |
Department of Agrarian Reform**
793 681 86%
Department of Agriculture - Bureau of
Fisheries and Aquatic Resources
16 8 20%
Department of Budget and Management —
Procurement Service

Department of Environment and Natural 795 191 24%

Resources

Department of Human Settlement and 355 52 15%

Urban Development —- Human Settlements
Adjudication Commission
Department of Labor and Employment — 28,333 18,996 67%
National Conciliation and Mediation Board
Department of Labor and Employment — 60,932 15,140 33%
National Labor Relations Commission

Department of Labor and Employment — 4,096 2,397 59%

Overseas Worker Welfare Administration

Department of Information and Communi- 241 83 34%

cations Technology - National Privacy
Commission***

Department of Justice — Parole and 2,225 1,485 67%

Probation Administration

* Cases not settled include pending resolution and referrals to other

agencies ** Year/s covered to be confirmed
*** 2019-2020 data

Furthermore, at least seven (7) agencies rep

orted to have
conducted or participated in ADR trainings in 2020 and at least
26 agencies have recommended or r °
¢ ; equested to with
orientation and/or trainings relati t be provice’ and
: ve to E
establishment/implementation 0 20 No. 97, s. 2012,
nisms.?!
/improvement of ADR mecha

31 Sauireas AER Le oe
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 THE OFFICE FOR PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION 29

Challenges in ADR Governance

The following are deemed challenges to the practice of ADR

and the overall justice and economic systems in the country:
1. Heavy work load of the criminal justice system, espe-
cially with the current Administration’s campaign
against criminality, illegal drugs, human trafficking
and cybercrime, among others.
2. Growing population, consumer economy, business
community and global trade increased the need for
sound regulatory governance including the manage-
ment of consumer and business disputes.
3. The root causes and risk factors of conflict at the lo-
cal level persist, including community-level conflicts
and land disputes.
4. Conflict management within government itself is
mainly adjudicative and adversarial, and there is
much room for maximized use of ADR in mechanisms
for complaints, grievance and administrative justice.
S. Increasing international trade investments and com-
mercial transactions require cross-border and online
ADR mechanisms.
6. Pandemic situation resulting to further rise in use of
e€-commence and internet transactions, as well as the
use of online platforms for dispute resolution.
7. Inadequate awareness and competency on the use
and practice of ADR.°2

OADR Milestones
In response to the said challenges, the OADR undertook
£0vernance measures, launched programs and conducted vari-
°US activities to achieve its mandate. OADR has conducted
online trainings for more than a thousand participants from gov-

* OADR Operations Planning Framework, 2021-2022.

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 DISPUTE RESOLUTION
PHILIPPINE ALTERNATIVE
30

i e legal 2
e rmment agencies, local government units and the
c legal profes.
sion.
Numerous pract itioners from the different ADR fields were
and os mcr ern pow has
likewise given accreditation
(APOs) an public A . pro.
private ADR Provider Organizations
,
gram that can provide services to private and public institutions
In addition, the Office increased promotion of ADR in the
country by expanding its social media reach. There was exponen.
tial increase in the online presence. Online activities were con-
ducted such as the OADR webinar series and Online National
ADR Convention. Moreover, in accordance with E.O. 97, series of
2012, the OADR has established reporting requirement, tools
and procedures for all agencies in the Executive Branch.

The OADR Strategic Framework

In line with the abovementioned ADR governance chal-

lenges and accomplishments so far, the OADR has initially
planned for the following strategic framework, while it is
firming
up its long term roadmap:
1. Increase access to justice with expand
ed, main-
streamed and technology-enabled use
of different
ADR mechanisms in the public and
private sectors.
2. Improve governance and econ
omic Jus tice by support-
justi
ing ADR mechanisms.
eore
3. Help sustain peaceful communities by promotin; g
and/or supporting localized .
mechanisms, dispute resolution
fase
wks ae eg

Peace > is7 more

“pD.,
Precioy us
gold.” — Martin Luther King Jr, than diamon
ds, silver, or
&
Se 7
a

oS) FE PIT on rrraparee ree eae

AY err ea abidintat oR ek5"s
sf

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eT

CHAPTER 3
TYPES OF ADR MECHANISMS
UNDER THE ADR ACT

The ADR Spectrum

Alternative Dispute Resolution (ADR) is a spectrum of less

tion, where a
costly and more expeditious alternatives to litiga
reaching a resolu-
neutral party assists the disputing parties in
for more creative and collaborative solutions
tion. ADR allows
than that of traditional litigation.

Types of ADR Mechanisms**

The types of ADR mechanisms are:

a. Mediation;
b. Arbitration;
c. Conciliation;
d. Negotiation;
e. ©Early Neutral Evaluation;
f. and
© Mini Trial;
g. *” Mediation-Arbitration.

33 ADR Act.

31

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32 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

Spectrum of Conflict Management

a eri Neutral
el | Pe. Bits
a
Negotiation Mediation Evaluation | Arbitration Litigation

* Maximum party cont

overro
outc
l ome * Third party control over outcome
* Focus on consensus
* Determination of legal rights
* Confidential * Public (Litigation)
* Informal
* More formal rules of procedures

Mediation

_ Mediation is a voluntary pro

cess_in
which
lected_by the disputing parties, fac Uator, se-
ilitatés communication and
negotiation, and assists the partié
agreement s—in ‘Teaching a voluntary
regarding a dispute.3+
—
Arbitration

“Arburation is a voluntary dispute resolution’ processin

which one orof more arbitr,ators,
or ruleappoin ted in_a ccor
agreement the parties s Promulgaa
te
ee ebwithe are the
danc :
d.pursuant to the
gS - “agape
ADR Act, resolve a disput
e by rend ering an award?}35
Conciliation $2 5°

» Conciliation involves
reach a compromise in “bringing
” : —
an attempt

* Sec. 3(q) ADR Act,

35 Sec. 3(d) ADR Act.
6 West’s Encycloped
ia of Americ
37 Black’s Law Dict an Law, editio
ionary. n 2.

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Types OF ADR MECHANISMS UNDER THE ADR AcT 33

outcomes of the compromise be-

what are possible reasonable
tween the disputing parties.

Negotiation (éf @)

Negotiation is defined as “a consensual bargaining process

reachre
in which the parties attempt toag on a dis-
an ement
puted or potentially disputed matter.” Such usually involves
complete autonomy for the parties involved, without the inter-
vention of third parties.%®

Early Neutral Evaluation

Early neutral evaluation is an ADR process wherein parties

and their lawy er
_are s t together early in a pre-trial phase
brough
resent summaries~of their cases and receive a nonbinding
as nt_by_an-experienced, neutral person, with expertise in
the subject in the substance of the dispute.%?
Hy wf § Ora ee bernard ref Ly
Mini-Trial

Mini-trial means a structured dispute resolution method in

which the merits of a case are argued before a panel comprising
senior decision makers with or without the presence of a neutral
third person after which the parties seek a negotiated settle-
ment.4°
Mediation-Arbitration

Mediation-Arbitration or Med-Arb is a two-step dispute reso-

lution process involving mediation and then followed by arbitra-
tion.4!

Other Forms of ADR

by
Any combination of the foregoing ADR forms, approved
ms, public
the parties, not contrary to law, morals, good custo
38 Black’s Law Dictionary.
39 Sec. 3(n) ADR Act.
49 Sec, 3(u) ADR Act.
41 Rule 2, IRR, ADR Act.

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 DISPUTE RESOLUTION
PHILIPPINE ALTERNATIVE
34

may be implemented, such as but Not lim.

order or public policy,
i
third person or (b) a mini-trial, (q
ited to (a) the evaluation 0 fa
inat ion thereof.*2
mediation-arbitration, or a comb

Mediation |Conciliation| Neutral Arbitration] Trial

Evaluation

Third Party| Parties control the outcome of the | A third party decides
participa- | dispute on the outcome of
tion the dispute

Cost Low Cost Low cost, | May in- | Costly

but more | cur more
costly com- | costs
pared to | compared
Mediation to Media-
tion
Period Speedy proceedings Fast (but | More Time
may involve | time con- | consum-
more time | suming ing
compa red than
to Media- | Mediation
tion)
Confiden- | Confidential and without | Confidential Public
tiality of | prejudice vindica-
proceed- Hon
ings
Outcome No guaranteed outcome Guaran- Win-lose
teed out- | outcome
come __
pivective Preserves relationships Likely

relation- des-
ship of tructive
parties impact 0”
relation-
ships due
to public

vindica-
tion ae
rigors °
conduct’
ing a to

42 Sec. 18, ADR Act.

yy,
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 TYPES OF ADR MECHANISMS UNDER THE ADR
Act 35

ADR Practice in Other Countries

1. Adjudicati
- Adjudicati
onon involves an independent third
party considering the claims of both sides and making a de-
cision. The adjudicatoris usuaanlly expert in the subject
5 apres He is usually able to act inquisitorially.
re often than not, adjudicators’ decisions are of a tempo-
rarily binding nature (i.e. they are binding unless and until
overturned in litigation or arbitration). In practice relatively
few adjudicated decisions are subsequently referred to liti-
gation or arbitration, and most are accepted as final by the
parties.48
tape! Ane»,
2. Adjudication / Dispute Boards - A Dispute Board (“DB”) is
a standing body composed of one or three DB Members.
Typically set up upon the signature or commencement of
performance of a mid- or long-term contract, they are used
to help parties avoid or overcome any disagreements or dis-
putes that arise during the implementation of the contract.
Although commonly used in construction projects, DBs are
also effective in other areas. These areas include research
and development; intellectual property; production sharing
and shareholder agreements.**

Multi-tiered Dispute Resolution

Multi-tiered dispute resolution clauses incorporate two or
con-
more forms of dispute resolution mechanisms, which the
tracting parties are required to comply with in resolving their
disputes. They typically require parties to participate in any
combination of mediation, negotiations or conciliation processes
before the parties may resort to litigation or arbitration.*® Typl-
is one wherein such is
cally, a multi-tiered dispute resolution

45 https:/ /hsfnotes.com/adr/adjudication/.
mah tcataes!
44 https:/ /icewbo.org/dispute-resolution-services/dispute-boards/-
dispute Aare ¢/files/pers-
31). Revisiting your multi-tier.uk/-/
45 Lin, Y. (2020, July2021,
January 26, from https: //www.rpe.co mec ih etd
Retrieved
_revisiting your. multitier_dispute—
pectives/commercial-disputes/201 58_misc
resolution_clauses_dla.pdf.

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36 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

prescribed as a pre-condition to arbitration or litigation in Which

such must be resorted to first.*6
With the continued complexity of civil | and commercial
transactions, multi-tiered dispute resolution clauses are in creas.
ingl being included in contracts for its economical and ¢o St effi.
cient benefits. Undoubtedly, arbitration is recognized as
one of
the most effective methods in resolving disputes. However,
the
downside of such method of solving disputes is that such is
very
costly and time-consuming.47 Considering these
concerns, a
multi-tiered dispute resolution clause in a contr
act can be used
as justification in proposing resort to othe
r ADR mechanisms
opting to arbitration.

ase of International Resea

thansa Systems Asia Pacific Pte. Lid. and Another,
e
’ 8 the Sings por-
-ourt has held that a multi-tiered dispute resolution
in a cont cl
ont!ract lays Ss out out a series of steps the
comply with before resorting to arbitration. parties hastni agis
As such, j said
case, the arbitral tribunal did not have
jurisdiction ove ‘dis-
pute between my

the parties|

because the condition precedents

- .

had
he

not been complied with:

International Research
Cor PLC vs. Lufthansa
Systems Asia Pacific
Pte, Ltd. and Another
FACTS:

. Tyles, Micha l. “Multi-Tiere

tional Arbitration, voli 1 8 ach ered
: at
Dis pute Resolution Clauses.”
2, ser. 2001. 2001. Journal of Inter
Ta Site

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 TYPES OF ADR MECHAN
ISMS UNDER THE ADR
Act

Lufthansa, Datamat and IRCP entered into Supplemental

Agreements wherein IRCP assumed
ty for responsibili
Datamat’s payment obligations under
the Cooperation
Agreement. The Cooperation Agreement
contained a multi-
tiered dispute resolution mechanism whe
rein such pro-
vides that arbitration could only be commenced
after any
dispute had been referred consecutively through a series
of
three committees from the parties’ staff. The Supplemental
Agreements did not contain such provision. Hence, Luf-
thansa launched Singapore International Arbitration Cen-
tre (SIAC) arbitration proceedings against Datamat and
IRCP for nonpayment of outstanding sums. IRCP chal-
lenged the jurisdiction of the Tribunal on the basis that:
(i) it was not a party to the arbitration agreement in
the Cooperation Agreement; and
(ii) Lufthansa had failed to comply with the precon-
ditions for the commencement of arbitration
proceedings. tae”

ISSUE:

Whether the multi-tiered dispute resolution clause

contained in the Cooperation Agreement is binding among
Lufthansa, IRCP, and Datamat.

RULING:

YES. Where a specific dispute resolution procedure

has been prescribed as a pre-condition to arbitration or
litigation, that pre-condition must be fulfilled.

DOCTRINE:
on
If there is a specific ti -t iered dispute resoluti
mul
clause in the agreement of the parties in dispute, then

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 } e SOLU
RESO TIOON
LUTI
VE Disput
PHILIPPINE ALTERNATI
38

; be
ied
complied
with before resorting to arp;
such must first
tration. '
and pret onditions of cach resolution step ts
Transition
clauses. As in the case of PT Select,
eculiar in multi-tiered ion
rine Transportat
u Pte Ltd. the
Bestama vs. Sin Huat Huat Ma
se ee gapore Courts should
Singapore High Court held that
's failure to comply with
decline jurisdiction due to the plaintiff
the pre-condition to negotiate:
PT Selecta Bestama vs. Sin Huat Huat Marine
‘Transportation Pte. Ltd., [2015] SGHC 295
FACTS:

The defendant applied to conduct court proceedings

in favor of the Batam City Courts. The dispute resolution
clause in the contracts required the disputes of the parties
to be amicably settled by negotiation because if such nego-
tiation fails, the dispute would be submitted to the exclu-
sive jurisdiction of the Batam City Courts. In the case at
bar, no negotiations took place before the pro
ceedings in
the Batam Courts were commenced.
ISSUE:

Whether the Singapore Courts

should decline juris-
diction due to the failure of the Plaint;
ai
pre-condition to negotiate, oe comply with the
RULING:

e Cou rt considered that

Then
PlaintiffYES.comm not only could the

ee ———___

3 Admiralty '
018] SGHc 295,"yinP *®°MaM No. 135 of 2914 (pe.
(Registrar's Appeal No 236 of 201:15),

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Types OF ADR MECHANISMS UNDER THE ADR AcT 39

DOCTRINE:

Asa rule, if it is stipulated in the contract of the par-

ties that a multi-tiered dispute resolution must first be re-
sorted to, then the parties shall first comply with such
proceeding.

Some of the multi-tiered clauses:

a. — In contracts with a clause to this effect,

parties initially agree on the terms of the process.
Thereafter, the parties will then agree in writing that
the outcome of the process will be binding. The me-
the
diator then will try to resolve any dispute between
at
contracting parties. Should the parties fail to arrive
arbitra-
an agreement, they will then move on to the
mediator
tion process. During this stage, either the
arbitrator,
can continue to be involved and act as the
quickly
if qualified, and render a binding decision
parties can
based on his judgments. Alternatively, the
arbitrator who
choose another individual to act as an
consulting with
will take over the proceedings after
rb in the con-
the Mediator.5° (For discussion of Med-A
text of the ADR Act, See Chapter 6)
parties reengage in
b. ' Arb-Neg _ Under this clause, the them-
in an attempt to settle dispute
negotiation
a settle-
selves. Upon the parties’ failure to arrive at
through arbitration proceed-
ment even after going
a negotiation.
ings, the parties will resort to
ism
Cc. : : — AMA is a hybrid mechan
co mb in es arb itr ati on and medi ation. It contains
and
steps:
in essence the following
tmicatosren tienen and files a no-
a. Tiapap pena
tice of arbitration;
se;
b. The respondent files a respon
al-
little-known
of med- arb, a
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2021 from nt
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luti on proc ess. ” Retrieve d 27 January
ternative dispute reso is-med-arb/.
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40 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

c. The tribunal is constituted but imme

. diate
stays the proceedings; ly
d. The parties attempt to settle their disputes py
way of mediation;
e. If the mediation is Successtulysthe, tribunal en.
ter a consent
s award; and :
f. If the mediation is not successful, the Parties are
referred back to arbitration.5!

go ee *§
“Never cut what you
can untie.”
— Joseph Joubert

es

. Arb-Me on, * at 7 help

efficientlyo™ Arb: what is it and how can it
Retrieved 27 January 2021 from
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 CHAPTER 4
MEDIATION

Mediation

Mediation is defined as a voluntary process in which a me-

diator, who shall be selected by the disputing parties, facilitates
communication and negotiation, and assists the parties in reach-
ing a vohantary—agreement regarding a dispute.52 The mediator
does not decide the dispute but helps the parties communicate
so they can try to settle the dispute themselves. Mediation avoids
the formal constraints of the courtroom and leaves control of the
outcome with the parties. Among the ADR mechanisms, media-
tion has a more human component since it considers emotions,
interests and perspectives of the parties in facilitating the resolu-
tion of the dispute.

Classifications of Mediation under the ADR Act

lowing are the classificationsof mediation under the

ADR Act:
¢.

A. Ad hoc Mediation
45. Institutional Mediation
yA Court-Annexed Mediation
AM —Court-Referred Mediation
Ad hoc Mediation

Ad hoc Mediation is any mediation other than institutional

or court-annexed.53

52 Sec. 3(q), ADR Act.

53 Article 1.6 (B1), IRR, ADR Act.

41
 N
42 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTIO

Institutional Mediation
Pea tery
“adit
~An/ Institutional
Was
Mediation
dese SBE
1s any i ee
LB ty. da 8 jatic Vita a

by, and:conducted“under the rules of ame iation-institution 5,

ed Mediation

“A Court-Annexed Mediation (CAM) ismavoluntaryanetiags,

process,‘action
“to"an conducted.
are under,thesauspices,of the.courts,
referred to the Philippine The pari,
Mediation Cente,
(PMC) Unit for the possible settlement of the case. The Mediato,
in CAM is accredited by the Supreme Court. (See full length dis.4
cussion on Chapter 6)°°

_Court-Referred Mediation
4, Po BLE ei BAY Wr ee, AS WO

pA. Court-Referred Mediation ‘is a mediation “ordered:

3 ee Bares —

court to, be conducted*in”accordance. with: the agreement Gp,

parties, whenianiaction is prematurely commenced if Violatj
such agreement.56 tionsof

Beyond the characteristic elements of medi

ation which dif.
fer from court procedures and other traditi
onal decision-making
processes, mediation provides advantages and benefi
ts such as:
a. “Confidentiality in the mediatio
n process;
b. ~ Prompt, economical and amicable
putes;
resolution of dis.
and
¢. "The decision-makirig’authotity rests
“i pl Be Noi a). youre i

in the parties.”
Fe A ear eet CA

ee

54 Art, 1.6(b)(2), Ru
le 2 , IRR, ADR Act
55 Art. 1.6(b)(3), Ru .
le 2, IRR, ADR Ac
* Art. 1.6(5)(4 t
), Rule 2, IRR’ ADR Act.
57 Sec. 8, ADR
Act.
 MEDIATION 43

Mediator

Mediator means a person who conducts mediation.58

Certified Mediator

A Certified Mediator is a mediator certified by the OADR as

having successfully completed its regular professional training
program.°9

Mediation Party

A Mediation party is a person who participates in a media-

tion and whose consent is necessary to resolve the dispute.®

Non-Party Participant

A Non-Party Participant means a person, other than a party

oremediator, | who _participates in a mediation proceeding as a
witnessyrésource person or expert.®!

Selection Process of a Mediator

In the Selection of a Mediator under Rule 2 of the IRR of

the ADR Act, the parties have the freedom to select their media-
tor. The parties may request the OADR to provide them with a
list or roster or the resumes of its certified mediators. The OADR
may be requested to inform the mediator of his/her selection. If
the mediator selected is unable to act as such for any reason, the
parties may, upon being informed of such fact, select another
mediator.
A mediator may refuse from acting as such, withdraw or
may be compelled to withdraw, from the mediation proceedings
under the following circumstances:

58 Art. 1.6 (B8), IRR, ADR Act.

59 Art. 1.6 (B5), IRR, ADR Act.
60 Art. 1.6 (B7), IRR, ADR Act.
6! Art. 1.6 (B9), IRR, ADR Act.
44 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

a. If any ofithe parties"so'reque sts the mediator to with

draw;
Sh caesecaGk pO pug
aad Pade tek cme eG taT heat bcdan We mab a Sa
b..._ Uk Thea med
ad
iat or
ALE a a bua
does ae "notae have the qualificatio ! 25
ns",
: > eln-
‘ing, and experienceto enable him/her to meet the
reasonable expectations of the parties;
c. Wheré'themediato?’s impartiality is in question;
d. If continuation»of the process would Viélate any"éthi.

e. If thesafétyof any ‘of the: parties 'WoUlldsbesjeopar.

dized;T TDLOS
SPB 5 YScAAEFRET BEER Sloot 4 Sie . ; an : .
If the mediator is unable to provide effective services;
“In case of conflict of interest; and
ga

h. In any of the following instances, if the mediator ig

satisfied that:
i. one,or.more,of the parties is/are not acting in
good faith; .
ii. the parties’ agreement wouldsbevillegal6r involve
the commission of a crime;
iii. continuing the dispute resolution would give rise
to an appearance of impropriety;
iv. continuing with the process would cause signifi-
cant harm to a non-participatingsperson or to
the public; or
v. continuing discussions would not be in the best
interest of the parties, their minor children of
the dispute resolution process.®

Ethical Standards in Selecting a Mediat

or
A mediator should have shown the following ethical com
duct in his personal relationships, viz:

62 Art. 3.5, IRR, ADR Act.

 MEDIATION 45

a. “Competence
It is not required that a mediator shall have spe-
cial qualifications by background or profession unless
the special qualifications of a mediator are required in
the mediation agreement or by the mediation parties.
However, the certified mediator shall:
1, maintain and continually upgrade his/her pro-
fessional competence in mediation skills;
ii. ensure that his/her qualifications, training, and
experience are known to and accepted by the
parties; and
iii. serve only when his/her qualifications, training,
and experience enable him/her to meet the rea-
sonable expectations of the parties and shall not
hold himself/herself out or give the impression
that he/she has qualifications, training and ex-
perience that he/she does not have.
Upon the request of a mediation party, an individual who
is requested to serve as mediator shall disclose his/her qualifica-
tions to mediate a dispute.

b. _ Impartiality
A mediator shall maintain impartiality. Before
accepting a mediation, an individual who is requested
to serve as a mediator shall:
i. make an inquiry that is reasonable under the
circumstances to determine whether there are
any known facts that a reasonable individual
would consider likely to affect the impartiality of
the mediator, including a financial or personal
interest in the outcome of the mediation and any
existing or past relationship with a party or fore-
seeable participant in the mediation; and

63 Art. 3.6, IRR, ADR Act.

 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

li. disclose to the mediation parties any such f,

known or learned as soon as is practical befor,
accepting a mediation. °

If a mediator learns any fact described in Para,

graph (i) after accepting a mediation, the mediato,
shall disclose it as soon as practicable to the media,
tion parties.

c. Confidentiality
A mediator shall keep in utmost confidence aj
confidential information obtained in the course of the
mediation process. A mediator shall discuss issues of
confidentiality with the mediation parties before be.
ginning the mediation process including limitations
on the scope of confidentiality and the extent of con-
fidentiality provided in any private sessions or cau-
cuses that the mediator holds with a party.®

d Consent and Self-Dete ination

ene aan
A mediator shall make reasonable efforts to en-
sure that each party understands the nature and
character of the mediation proceedings including pri-
vate caucuses, the issues, the available options, the
alternatives to non-settlement, and that each party is
free and able to make whatever choices he/she de-
sires regarding participation in mediation generally
and regarding specific settlement options.
If a mediator believes that a party, who is not
represented by counsel, is unable to understand, 9
fully participate in the mediation proceedings for any
reason, a mediator may either:
i. limit the scope of the mediation proceed
ings in a manner consistent with 1°the
party’s ability to participate, and/or
64 Art. 3.7, IRR, ADR Act.
65 Art. 3.8, IRR, ADR Act.
 MEDIATION 47

ommend that the party obtain appropriate

assistance in order to continue with the
process; or
ii. terminate the mediation proceedings.

A mediator shall recognize and put in mind that

the primary responsibility of resolving a dispute and
the shaping of a voluntary and uncoerced settlement
rests with the parties.

e. Separationof Mediation from Counseling

and Le-
gal Advice Oe

Except in evaluative mediation or when the par-

ties so request, a mediator shall:
i. refrain from giving legal or technical advice
and otherwise engaging in counseling or
advocacy; and
il. abstain from expressing his/her personal
opinion on the rights and duties of the par-
ties and the merits of any proposal made.

Where appropriate and where either or both par-

ties are not represented by counsel, a mediator shall:
i. recommend that the parties seek outside
professional advice to help them make in-
formed decision and to understand the im-
plications of any proposal; and
ii. suggest that the parties seek independent
legal and/or technical advice before a set-
tlement agreement is signed.

Without the consent of all parties, and for a rea-

sonable time under the particular circumstance, a
mediator who also practices another profession shall
not establish a professional relationship in that other

66 Art. 3.9, IRR, ADR Act.

 48 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

profession with one of the parties, or any person 8

entity, ina substantially and factually related a
ter.67

Charging
of Fees
A mediator shall fully disclose and explain to the
parties the basis of cost, fees and charges. The me.
diator who withdraws from the mediation shall retury
to the parties any unearned fee and unused deposit
A mediator shall not enter into a fee agreement which
is contingent upon the results of the mediation or the
amount of the settlement.®

Promotion of Respect le
of Abus
andContro of
Process
may >

The mediator shall encourage mutual respect

between the parties, and shall take reasonable steps,
subject to the principle of self-determination, to limit
abuses of the mediation process.

h, Solicitation or Acceptance of any Gift

No mediator or any member of a mediator’s im-
mediate family or his/her agent shall request, solicit,
receive or accept any gift or any type of compensation
other than the agreed fee and expenses in connection
with any matter coming before the mediator.”°

_ Lawyer as a Representative in Mediation

4
Except as otherwise provided by the ADR Act or its IRR,
provide as
party may designate a lawyer or any other person to
™
sistance in the mediation. A waiver of this right shall be made

67 Art. 3.10, IRR, ADR Act.

68 Art, 3.11, IRR, ADR Act.
69 Art, 3.12, IRR, ADR Act.
70 Art. 3.13, IRR, ADR Act.
 MEDIATION 49

writing by the party waiving it. A waiver of participation or legal

representation may be rescinded at any time.7!
Notably, in the Katarungang Pambarangay proceedings,
under the Local Government Code of 1991, lawyers are prohibi-
ted to appear unless they are the parties in the dispute at hand,
to wit:

“Section 415. Appearance of Parties in Person.—In

all katarungang pambarangay proceedings, the parties
must appear in person without the assistance of the
counsel or representative, except for minors and incom-
petents who may be assisted by their next of kin who are
not lawyers.”

Roleof a Counsel in Mediation

The lawyer shall view his/her role in mediation as a colla-

borator with the other lawyer in working together toward the
common goal of helping their clients resolve their differences to
their mutual advantage. He shall encourage and assist his/her
client to actively participate in positive discussions and cooper-
ate in crafting an agreement to resolve their dispute. He must
also assist his/her client to comprehend and appreciate the me-
diation process and its benefits, as well as the client’s greater
personal responsibility for the success of mediation in resolving
the dispute.
In preparing for participation in mediation, the lawyer
shall confer and discuss with his/her client the following:

a. The mediation process as essentially a negotiation

between the parties assisted by their respective law-
yers, and facilitated by a mediator, stressing its dif-
ference from litigation, its advantages and benefits,
the client’s heightened role in mediation and respon-
sibility for its success and explaining the role of the
lawyer in mediation proceedings.
b. The substance of the upcoming mediation, such as:
7 Art. 3.14, IRR, ADR Act.
 E RESOLUTION
50 PHILIPPINE ALTERNATIVE DisPUT

substantive issues involved in the dispute

The
ance ,
and their prioritization in terms of import
his/her client’s real interests and needs;
ii. The study of the other party’s position in relation
to the issues with a view to understanding th,
underlying interests, fears, concerns and needs.
The information or facts to be gathered o,
iii.
sought from the other side or to be exchangeq
that are necessary for informed decision-making.
iv. The possible options for settlement but stressing
the need to be open-minded about other possitj-
lities; and

vy. The best, worst and most likely alternatives to g

non-negotiated settlement.

The lawyer shall likewise do the following to aid in media-

tion:

give support to the mediator so that his/her client

will fully understand the rules and processes of me-
diation;
impress upon his/her client the importance of speak-
ing for himself/herself and taking responsibility for
making decisions during the negotiations within the
mediation process;

ask for a recess in order to give advice or suggestions

to his/her client in private, if he/she perceives that
his/her client is unable to bargain effectively; and
assist his/her client and the mediator in putting in
writing the terms of the settlement agreement that
the parties have entered into. The lawyers shall see '
it that the terms of the settlement agreement are not
contrary to law, morals, good customs, public order
or public policy.72

72 Art. 3.15, IRR, ADR Act.

 MEDIATION 51

CONDUCT OF MEDIATION73

Considerations in the Conduct of Mediation

The following are to be considered in the conduct of Media-

tion under the ADR Act and its IRR:74

a. The mediator shall not make untruthful or exagger-

ated claims about the dispute resolution process, its
costs and benefits, its outcome or the mediator’s
qualifications and abilities during the entire media-
tion process;
b. The mediator shall help the parties reach a satisfac-
tory resolution of their dispute but has no authority
to impose a settlement on the parties;
c. The parties shall personally appear for mediation and
may be assisted by a lawyer. A party may be repre-
sented by an agent who must have full authority to
negotiate and settle the dispute;
d. The mediation process shall, in general, consist of the
following stages:
i. opening statement of the mediator;
ii. individual narration by the parties;
iii. exchange by the parties;
iv. summary of issues;
v. generation and evaluation of options; and
vi. closure.

The foregoing process, however, is not obligatory and the

parties, under the principles of self-determination and party
autonomy, may choose the procedure that will govern their me-
diation;75 and

73 Rule 5, IRR, ADR Act.

74 Art. 3.17, IRR, ADR Act.
75 Sec. 2, ADR Act; Art. 1.2(a), IRR, ADR Act.
52 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

e. The mediation proceeding shall be held in Privat

their representatiy,.
Persons, other than the parties,
only with the uinee
and the mediator, may attend
nt
of all the parties;
f. The mediation shall be closed by:
by the
1. the execution of a settlement-agreement,
parties;

ii, the withdrawal of any party from mediation; ang

iii. the written declaration of the mediator that
further effort at mediation would not be help

_ Place ofMediation _
The parties are free to agree on the place of mediation.
Failing such agreement, the place of mediation shall be any place
convenient and appropriate to all parties.Ӣ

n
_ Effect of Agreement to Submit Dispute to Mediatio
under Institutional Rules
An agreement to submit a dispute to mediation by an insti-
l
tution shall include an agreement to be bound by the interna
ution.
mediation and administrative policies of such instit
tion
Further, an agreement to submit a dispute to media
to include
under institutional mediation rules shall be deemed
ation of the
an agreement to have such rules govern the medi
respective coun:
dispute and for the mediator, the parties, their
.””
sels and non-party participants to abide by such rules

Non-Reporting or Communicationby a Mediator

_—
+.
Wes wen
A mediator may not make a report, assessment, evalua
ing
tion, recommendation, finding or other communication regard
that may
a mediation to a court or agency or other authority

76 Art. 3.18, IRR, ADR Act.

77 Art. 3.19, IRR, ADR Act.
 MEDIATION 53

make a ruling on a dispute that is the subject of a mediation,

except:
a. to state that the mediation occurred or has termi-
nated, or where a settlement was reached; or
as permitted to be disclosed under Article 3.23 of the
IRR of the ADR Act (Exceptions to the Privilege of
Confidentiality of Information) and Section 11 of the
ADR Act (Exceptions to Privilege).
The parties may, by an agreement in writing, stipulate that
the settlement agreement shall be sealed and not disclosed to
any third party including the court. Such stipulation, however,
shall not apply to a proceeding to enforce or set aside the settle-
ment agreement.78

Guidelines on the Confidentiality of Information

in Mediation
-

Information obtained through mediation proceedings shall

be subject to the following principles and guidelines:
a. Information obtained through mediation shall be pri-
vileged and confidential;
b. A party, a mediator, or a non-party participant may
refuse to disclose and may prevent any other person
from disclosing a mediation communication;
Confidential Information shall not be subject to dis-
covery and shall be inadmissible in any adversarial
proceeding, whether judicial or quasi-judicial. How-
ever, evidence or information that is otherwise admis-
sible or subject to discovery does not become inad-
missible or protected from discovery solely by reason
of its use in a mediation;
In such an adversarial proceeding, the following per-
sons involved or previously involved in a mediation

78 Art. 3.24, IRR, ADR Act.

 54 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

may not be compelled to disclose confidential ing

or.
mation obtained during mediation:
i. the part ie
to the ste;
dispu
ii. media
the mediorat or tors;
iii. the counsel for the parties;
Wer ecw i.
iv. the non-party participants;
yv. any person hired or engaged in connection wit,
the mediation as secretary, stenographer, cley,
or assistant; and
vi. any other person who obtains or possesses cop.
fidential information by reason of his/her pro-
fession

e. The protections of this Act shall continue to apply

even if a mediator is found to have failed to act impar.
tially; and
f. A mediator may not be called to testify to provide in-
formation gathered in mediation. A mediator who js
wrongfully subpoenaed shall be reimbursed the full
cost of his attorney’s fees and related expenses.”

_ Rules on the Waiver of Confidentiality

A privilege arising from the confidentiality of informal
may be waived in a record, or orally during a proceeding by the
mediator and the mediation parties. |
A privilege arising from the confidentiality of information
may likewise be waived by a non-party participant if the informa
tion is provided by such non-party participant.
A person who discloses confidential information shall be
precluded from asserting the privilege under the ADR Act and its
IRR, to bar disclosure of the rest of the information necessary '
a complete understanding of the previously disclosed informa
tion. If a person suffers loss or damages as a result of the disclo

79 Sec. 9, ADR Act.

 MEDIATION 55

sure of the confidential information, he/she shall be entitled to

damages in a judicial proceeding against the person who made
the disclosure.
A person who discloses or makes a representation about a
mediation is precluded from asserting the privilege under Section
9, to the extent that the communication prejudices another per-
son in the proceeding and it is necessary for the person preju-
diced to respond to the representation of disclosure.®°
y oe “3
Exceptions to the Confidentiality Privilege

Under the ADR Act, the following are exceptions to the

privilege from confidentiality, viz:
a. There is no privilege against disclosure under Section
9 of the ADR Act if mediation communication is:
i. in an agreement evidenced by a record authenti-
cated by all parties to the agreement;
ii. available to the public or that is made during a
session of a mediation which is open, or is re-
quired by law to be open, to the public;
iii. a threat or statement of a plan to inflict bodily
injury or commit a crime of violence;
” iv. internationally used to plan a crime, attempt to
. commit, or commit a crime, or conceal an ongo-
ing crime or criminal activity;
v. sought or offered to prove or disprove abuse, ne-
glect, abandonment, or exploitation in a pro-
ceeding in which a public agency is protecting
the interest of an individual protected by law;
but this exception does not apply where a child
protection matter is referred to mediation by a
court or a public agency participates in the child
protection mediation;

80 Sec. 10, ADR Act and Art. 3.22, IRR of the ADR Act.
 RESOLUTION
56 PHILIPPINE ALTERNATIVE DISPUTE

a claim 9,
vi. sought or offered to prove oF disprove
conduct or maj.
complaint of professional mis
or in a proceeg.
practice filed against the mediat
ing; or
prove a claim of
vii. sought or offered to prove or dis
onduct of mal.
complaint of professional misc
nonparty partici.
practice filed against a party,
ty based on con.
pant, or representative of a par
iation.
duct occurring during a med
n 9 of the ADR Act if
There is no privilege under Sectio hearing
a court or administrative agency finds, after a
king discovery of the
in camera, that the party see
shown that the ey.
proponent of the evidence has
dence is not otherwise available, that there is a needin-
ghs the
for the evidence that substantially outwei
iation
terest in protecting confidentiality, and the med
ered in:
communication is sought or off
or felony; or
i. a court proceeding involving a crime
that
ii, a proceeding to prove a claim or defense
under the law is sufficient to reform or avoid a
liability on a contract arising out of the media-
tion
nce
A mediator may not be compelled to provide evide
pro-
of a mediation communication or testify in such
ceeding.
undet
If a mediation communication is not privileged
an exception in subsection (a) or (b), only the portion
of the communication necessary for the application of
the exception for nondisclosure may be admitted. The
admission of particular evidence for the limited pur
pose of an exception does not render that evidence, ”
any other mediation communication, admissible {0
any other purpose.®*!

81 Sec. 11, ADR Act and Art. 3.23, IRR of the ADR Act.
 MEDIATION 57

Prohibited Mediator Reports

A mediator may not make a report, assessment, evalua-

tion, recommendation, finding, or other communication regard-
ing a mediation to a court or agency or other authority that make
a ruling on a dispute that is the subject of a mediation, except:
a. where the mediation occurred or has terminated, or
where a settlement was reached; or
b. when permitted to be disclosed under Section 13 of
the ADR Act.®2

MEDIATOR’S DISCLOSURE AND CONFLICT OF INTEREST

Guidelines and Principles in the Acceptance

of Role as Mediator

The mediation shall be guided by the following operative

principles:
a. Before accepting a mediation, an individual who is
requested to serve as a mediator shall:
i. make an inquiry that is reasonable under the
circumstances to determine whether there are
any known facts that a reasonable individual
would consider likely to affect the impartiality of
the mediator, including a financial or personal
interest in the outcome of the mediation and any
existing or past relationship with a party or fore-
seeable participant in the mediation; and
ii. disclosure to the mediation parties any such fact
known or learned as soon as is practical before
accepting a mediation.
b. If a mediator learns any fact described in paragraph
(a) (1) of Section 13 of the ADR Act, after accepting a
mediation, the mediator shall disclose it as soon as
practicable.

82 Sec. 12, ADR Act.

60 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

may not be compelled to disclose confidential info.

mation obtained during the mediation:
(1) the parties to the dispute;
(2) the mediator or mediators;

(3) the counsel for the parties;

(4) the nonparty participants;
(5) any persons hired or engaged in connection with
the mediation as secretary, stenographer; clerk
or assistant; and

(6) any other person who obtains or possesses con-

fidential information by reason of his/her pro.
fession.
d. The protection of the ADR Laws shall continue to ap-
ply even if a mediator is found to have failed to act
impartially.
e. A mediator may not be called to testify to provide in-
oN formation gathered in mediation. A mediator who is
wrongfully subpoenaed shall be reimbursed the full
cost of his attorney fees and related expenses.®°

Deposit and Enforcement of Mediated Settlement

Agreement with the Court

Any or both of the parties to the mediation that is not

Court-Annexed, may deposit the written settlement agreement
with the court. The deposit may be made at any time after an
agreement is reached.
Prior to the deposit, notice should be given to the othe!
party/ies with the Clerk of Court of the Regional Trial Court:
(a) where the principal place of business in the Philip
pines of any of the parties is located;

86 Rule 10.8, SADRR.

 MEDIATION 61

(b) if any of the parties is an individual, where any of

those individuals resides; or
(c) in the National Capital Judicial Region.

Upon a breach of the mediated settlement agreement de-

posited with the Clerk of Court of the Regional Trial Court, a
verified petition may be filed with the same court to enforce said
agreement.
After a summary hearing, if the court finds that the
agreement is a valid mediated settlement agreement, that there
is no merit in any of the affirmative or negative defenses raised,
and the respondent has breached that agreement, in whole or in
part, the court shall order the enforcement thereof; otherwise, it
shall dismiss the petition.®’

INTEREST-BASED MEDIATION

Interest-Based Mediation

_ Interest-Based Mediation is a type of mediation that en-

courages the disputing parties to view their dispute as a mutual
problem to be solved by them jointly having regard to each
party’s interests, needs, and concerns.®8 It is a process where
two parties sit together with a Mediator to solve a mutual prob-
lem on their own. In this type of Mediation, the focus is not on
who among the parties is right or wrong, or who has a bigger
chance of winning in case the dispute is filed in court.

The Mediator helps the parties move away from their re-
Spective positions and to focus instead on their interests. Its
main objective is to avoid positions and negotiate in terms of par-
ties’ underlying needs and interests instead of their strict legal
entitlements.

87 Rule 14, SADRR.

_ ®8 Based on the 7 Elements of an Effective Negotiation Strategy outlined by Roger
Fisher and William Ury in 1981 Developed by the Harvard Negotiation Project.
62 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

Mediators

In Interest-Based Mediation, Mediators should have Exper.

tise in the mediation process and techniques. They are not 1
quired to have technical knowledge of the subject matter of the
dispute.

Mediators must possess problem-solving skills, proces,

management skills, and people skills.

Areas of Application

Interest-Based Mediation applies to almost all types of dig.

putes such as the following:
a Business/Commercial - relationships of commercial
nature (whether contractual or not) including trade
transactions, distribution agreements, agency, leas.
ing, consulting, investment, financing, banking, in.
surance, and carriage of goods or passengers;
b/ Community - disputes between neighbors and those
living
in close proximity;
e Construction - construction of works, contractor and
subcontractor disputes, project owner, fabricator,
project manager, design professional, consultant,
quality surveyor, bondsman or issuer of an insurance
policy in a construction project
g- Domestic/Family - child custody, community prop
erty, maintenance and other family law issues;
Environmental - statutory violations;
Te

Intellectual Property/Patents - disputes over Trade

marks, Copyrights, Patents, Licensing, Softwar
Trade Secrets, and Literary and Artistic works; and
& Labor and Employment - illegal dismissal, constru
tive dismissal, money claims, union/labor relation
(including collective bargaining agreement disputes):
 MEDIATION 63

ae MEDIATOR'S OPENING
Ry STATEMENT

if
\
PARTY A's OPENING STATEMENT
Ry SUMMARY OF PARTY A’s OPENING STATEMENT
PARTY B's OPENING STATEMENT
SUMMARY OF PARTY B’s OPENING STATEMENT

AGENDA SETTING

AN EXPLORATION OF ISSUES if
an
{py PRIVATE SESSIONS ff
uf
y

STAGES OF MEDIATION
Unlike other forms of dispute resolution, the Mediation
process can have an informal, improvisational feel.89 The Media-
tion process can include some or all of the following steps or
Stages:

*° Program on Negotiation, Harvard Law School.

 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION
64

A. Introduction

The Mediator starts by introducing himself and getty

tg oe
know the parties. This is also the time for the mediator
rapport-with the parties and make them feel comfortable with i.
.
Mediation.

B. Mediator’s Opening Statement

The Mediator outlines the Mediation process and lays 4,

to set th
ground rules. The purpose of the Opening Statement is
to expee
tone of the Mediation and inform the parties on what
|
and how to conduct themselves during Mediation.
Matters that should be discussed by the Mediator jy)
|
his/her Opening Statement are the following:
i. Role of the Mediator
ii. Objectives of Mediation
iii. Role of the Parties
iv. The Mediation Process
v. Ground Rules

i. Role of the Mediator

The role of the Mediator as a neutral third party is define

at this stage and it is clarified that the final outcome depends on
the decision of the concerned parties. The impartiality of the Me
diator is emphasized to assure the parties that they will be trea
ted fairly and justly.
The Mediator also presents his/her goal for the Mediation
process, which is to help the parties come to an agreement 0
their dispute and resolve it amicably.

ii. Objectives of Mediation

The Mediator states the purpose of Mediation to the parties)

and underscores its benefits and advantages to encourag® ug |
parties’ full cooperation and participation.
 MEDIATION 65

iii. Role of the Parties

The active roles of both parties in the Mediation process is

explained to stress the importance of their roles towards a possi-
ble agreement, which will be beneficial for both of them.

iv. Mediation Process

The explanation of the Mediation process clarifies what will

happen and what the parties can expect from the Mediation.
Complete understanding of the process helps the parties know
that there is something to look forward to in case an impasse
occurs in the early stages of the Mediation.

v. Ground Rules

The rules of the Mediation session are specified, particu-

larly the need for the parties to listen to each other without un-
necessary interruption and to avoid the use of harsh words.
66 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

FNS

SAMPLE OPENING STATEMENT

Good afternoon! My name is Zevine De Torres, yoy
may call me Zev and I am serving as your Mediator today.
Kindly introduce yourselves. May I know if you are the
actual parties in this case, because if not, an authoriza-
tion from your principal will be required. I also would like
to confirm if it is voluntary on your part to participate in
this Mediation.
Mediation is a voluntary process in which a neu-
tral, impartial person assists parties to generate options
in resolving their issues.

My role as Mediator is to facilitate the discussion

and negotiation between you. | will not adjudicate or ren-
der a decision in this case. My goal is to assist you in
communicating clearly with one another and hopefully in
reaching a mutually acceptable settlement of this matter,
I would like to remind you that your participation
in this mediation does not imply any admission of guilt or
wrongdoing on your part. This is not a legal proceeding.
Should you desire to pursue this matter in court, this
session will not delay or interfere with your right to do so.
Before I discuss the mediation process, are there
any questions about what I have covered so far?
Let_me_now explain the Mediation_process. After
my preliminary remarks, each of you will have an unin-
terrupted period of time to explain what brought you to
this session and to describe the problem as you see it.
It is customary for the party that brought the mat-
ter to our attention to begin first then followed by the
other party. After you have both given an overview, we
will transition into a joint discussion where we can fully
discuss the nature of the dispute as well as your con-
cerns and some possible options to resolve the issues.
 MEDIATION 67

At some point, | may meet with each of you sepa-

rately. It is called a “caucus”. | will use the caucus to help
clarify some concerns. The information that you will
share during both the joint session and the caucus are
confidential.
If an agreement is reached, it will be written and
signed by you, and each of you will be provided with a
copy of the agreement.
For our ground rules, all | ask is that you sincerely
agree to attempt to resolve this dispute and agree to treat
one another with mutual respect. Let us also abide by the
rules of common courtesy and avoid interrupting or using
inflammatory language. Lastly, please put your electronic
devices to silent mode during this Mediation. Are there
any questions at this point? Let us begin.

airs—§
 SPUTE RESOLUTION
PHILIPPINE ALTERNATIVE DI
68

atements
c. Parties’ Opening St
-< party the opportunity to present hig
gives each
: he,
“isp ute with out inter rupti on. Usually it is the
side othe goes first because he/s
t who
who brought about the complain
The Mediator show
has brought the case forward for mediation.
given a chance to Seal
assure the parties that they will both be
listen
During this stage, the Mediator’s role is to actively
ation.
and find out what brought the parties to the Medi

D. Summarizing
Mediate,
By summarizing after each party has spoken, the
assures the parties that they have been clearly understood. Thi
the parties heq
also serves the additional function of helping
each other.
When summarizing, the Mediator should neutralize the
parties’ statements and not restate any defamatory utterances of
the parties.

An effective summary gives the parties a chance to hear

themselves. Through the summary, the parties are also givena
chance to review their thoughts and feelings from a more de.
tached position.
Further, it provides a neutral and organized version of @
line of discussion.

E. Agenda Setting

The purpose of setting the agenda is to allow the parties"

focus on the issues that need to be addressed to resolve thei
respective issues. Parties are asked to come up with their issu
The issues should be framed in a neutral language and be liste
in bullet points. The use of bullet points
assures the part
the issues will be dealt with fai ly, without prioritizing ies tha
one issut
over another.
 MEDIATION
69

F. Exploration of Issues

At this stage, the Mediator helps the parties understand

the true nature of their dispute through probing questions. It will
be helpful for the Mediator to effectively use the seven (7) ele-
ments.%°
The objectives of this stage are:
1) _ to find out about the details of the dispute;
2) to enable the parties to express their interests,
hopes, a concerns and needs;
3) to encourage the parties to talk directly with
each other in order for them to understand each
other; and
4) to enable the parties to provide options. The Me-
diator may also do reality testing to help the par-
ties realize the most appropriate solution to their
dispute.
However, there are some barriers in the effective explora-
tion of issues such as:
a) one party appears confused and fails to compre-
hend what the other party is saying;
b) impressions of lack of neutrality of the Mediator;
c) one party is reticent; or
d) | when the other party is making monologues.
During this stage, the Mediator should avoid arguing with
the parties, making judgmental statements, and cross-examining
a party or giving advice to the other party:

G. Private Sessions / WS

At a proper moment during the Mediation, the Mediator

may call for a Private Session. The Mediator must speak with

% The 7 Elements of an Effective Negotiation Strategy outlined by Roger Fisher

and William Ury.
 RESOLUTION
70 PHILIPPINE ALTERNATIVE DISPUTE

h the Me
each party separately. Two (2) important matters whic .
diator has to consider atthis stage are:

a) when to call for the Private Session; and

b) which party goes first.
The Private Session is essential in order to change the
mood or direction of the session, to encourage a shy or fe
party to talk, to confront parties privately, or to interrupt One
party in demonstrating an unruly behavior.
The Private Session also prepares the parties to Negotiate
openly with each other and allows the parties to have time fo,
reflection on the situation..This is the perfect time to clarify ip.
terests and perceptions, consider alternatives, and allow discus.
sion of additional and confidential information.
Regardless of which party goes first, the Mediator must
show impartiality by providing the same number and duration of
Private Sessions to both parties. The Mediator must consider any |
information shared by the parties to him/her during the Private
Sessions as confidential. He/she may only share information
with the other party if he/she has obtained permission from the
concerned party.

H. Joint Sessions

_ During this stage, the Mediator should direct the discus

sion towards the commitments that he /she was able
to obtai
from the parties during the Private Sessions. The Mediator must
clarify details and terms with the parties, present modified
new proposals, and move towards a formal
agreement.

I. Agreement head Start & peonda

, a the parties come to a consensus, the Mediator will out

ine the terms and may write a draft agreement. If the Mediato!
is the one drafting the agreem f the
éreement, he/she can make use °
SMART technique.
 MEDIATION 71

SMART stands for:

Specific - Craft specific terms of settlement (What,

Where, When, Which, How)

Measurable - _ Establish concrete criteria for measuring at-

tainment of the terms of the settlement
Agreed Upon- Who will do it; which party will be the one
carrying out certain actions
Realistic - Can be accomplished
Time Related - Grounded within a time frame
The agreement should be recorded in writing and signed
by the parties or their authorized representatives (except for dis-
putes before the Barangay). The Mediator should read it out to
all present, and check that all points have been covered.
If the parties fail to reach an agreement, the Mediator will
sum up where they have left off and may engage the parties in a
discussion of their non-settlement alternatives.
A good settlement agreement should be concise, clear and
reasonable. +
 RESOLUTION
72 PHILIPPINE ALTERNATIVE DISPUTE

Co NaS

SAMPLE COMPROMISE AGREEMENT

REPUBLIC OF THE PHILIPPINES

PHILIPPINE CENTER FOR ADR
QUEZON CITY

ALI MANRIQUE,
Complainant,

-versus - PCA-Med No.

ELMER ATILANO,
Respondent.

COMPROMISE AGREEMENT

The PARTIES hereby respectfully enter into a Compromise

Agreement, amicably reached by them under the following terms
and conditions:
1. The Respondent, to buy peace, hereby agrees to
amicably settle this dispute by giving Two Hundred Thousand
Pesos (Php200,000.00) to the Complainant, in twelve (12)
monthly installments, or Php16,666.66 per month, starting on 9
April 2021 and due every 5th day of the following months thereaf-
ter.

2. Complainant, on the other hand, hereby undertakes

to do the following obligations without need of demand:
a. Give to the Respondent the respective Acknowleds
ment Receipts over the amount stated above.
b. Upon the full and satisfactory compliance of this
Agreement, the Complainant shall execute an Affida-
vit of Release, discharging the Respondent from any
and all obligations, claims, demands, causes of @
 MEDIATION 73

tion, damages, costs, expenses, attorney’s fees and

liabilities of any nature whatsoever, whether known
or not, suspected, or claimed which either party has
against the other in connection with, arising from, or
relating to the causes of action raised in the instant
dispute.
3. Both parties bind themselves to comply faithfully
with the terms and conditions of this Compromise Agreement,
and in the event of default or failure, to comply as stipulated
above, the aggrieved party is entitled to immediate execution.

23 March 2021, Quezon City.

ALI MANRIQUE ELMER ATILANO

(Complainant) (Respondent)

ATTESTATION

I hereby certify that the foregoing amicable settlement was

entered into by the parties freely and voluntarily, after I had ex-
plained to them the nature and consequence of such settlement
in the language known to both of them.

Mr. Johnro Amansec

(Mediator)

———CloerlangJy—_—_
 |
74 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION |

SEVEN ELEMENTS OF AN EFFECTIVE MEDIATION

When preparing for an effective Mediation these Seven 0

Elements should be considered, to wit:
&
1. Interests | rahiv
Options
WN

Criteria

Alternatives
Relationship
Nou

Communication
Commitment

Interests

An interest is a motivation behind a dem

and (position)
made by a party to a dispute. It represen
ts the needs, concers,
hopes and aspirations of a party. Parties
may have more than
Just one interest and in order to obt
ain a fruitful Mediation, par-
ties should und erstand their own interests as well as the inter-
ests of the other party.

exam ples of interests are bus

Some
iness opportunities, 1
lationships, repu tation, securi
ty, etc.
Common Interests vs.
Conflicting Interests

e f (y f
Options
° re
Pry per Oy dts)

. Options
Options , arean the possible soluti -spute’
, satisfy inte rest. The aim isOnsto toforresolve th e disp
mul ate
tions for mutual gain, guided by the parties’ interests. maopt as nyion°”
 MEDIATION 75

as distinguished from alternatives, are possible solutions to the

dispute that may happen with the concurrence of the parties.

Criteria

Critera arethe standards by which something can

be judged or decided.®! Neutral, objective standards and fair pro-
cedures should be used to decide whether an option is fair. Some
bases to show the fairness of criteria in the selection of an option
include appraisal report, market data, policies and procedures
and standard practices.

Alternatives

Alternatives, as distinguished from options, are the possi-

ble solutions to the dispute for each of the parties without the
participation of the other party. The three alternatives to a nego-
tiated agreement are the following:
- Best Alternative to a Negotiated Agreement (BATNA)-
BATNA refers to the most advantageous_alternative
course of action a party can take if negotiations fail
and 1 an
an agreement cannot be reached:
4+. Worst Alternative to a Negotiated Agreement (WATNA)
- this refers to the worst_outcames or the worst cir-
cumstances a party will have to face if negotiations
fail and there will be no amicable settlement between
the—parties. The WATNA can be useful in assessing
whether to walk away from an agreement.
-e: Most Likely Alternative—to—a_Negotiated_ Agreement
(MLATNA) - is the middle f
an agreement. The MLATNA is the most probable re-
sult a party may ultimately achieve if the parties
failed to settle. .
{i 3 Iotinngirgs Conder
Larhuvr/LOL

91 hikes / /www.collinsdictionary.com.
* Coined by Roger Fisher and William Ury in their 1981 bestseller, “Getting to
Yes: Negotiating Without Giving In.
76 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

Generally, a party will not accept an agreemen

worse than his/her BATNA. Stated otherwise, a party CaN¢ thatagg
j,
the deal on the table if it is better than, or as good
as, his ke
BATNA. It is the essential duty of the Mediator to help the Pattie.
realize this through well-crafted questions. ;
Relationship

Relationship issues can be a barrier to resolving disputes

The role of the Mediator is to encourage the parties to view the
conflict objectively and not be influenced by their negative feg,
ings for each other.
The Mediator should encourage the parties to Separate
their relationship issues from the actual issues in the dispute in
order to help them move forward in the mediation process.

Communication

Communication is defined as a process by which informa-

tion is exchanged between individuals through a common system
of symbols, signs, or behavior.93
The keys to-effective communication are receiving (lister-
ing) and conveying (speaking). Active listening involves an inter
nal mental state that permits accurate perception of the verbd
and non-verbal messages of the parties. It also requires extern!
non-verbal signals that are observableby the party that indicat
that he is being listened to.
The seven (7) key active listening skills are:
AX) being attentive;
2) asking open-ended questions;
(3) asking probing questions;
(4; requesting clarification;
(5; paraphrasing;
being attuned to and reflecting feelings; and
(Q- summarizing.

93 https: / /www.merriam-webster.com/dictionary/communication.
 MEDIATION 77

However, there are some barriers to effective listening that

prevents the Mediation from succeeding, such as:
(1) being opinionated;
(2) close-mindedness;
(3) boredom;
(4) laziness;
(5) insincerity; and
(6) inattentiveness of the Mediator.

Commitment

Commitments can occur at any point during the Mediation

proceedings and embrace anything from a minor procedural
point. It refers to an agreement, promise, offer, or demand by one
or more parties, and any formalization of that agreement. It is
commonly signaled by words such as “I will offer,” “We agree,” “I
promise not to,” I demand,” or “I undertake to,” etc.

CONFLICT RESOLUTION TECHNIQUES

Managing Impasse

An ‘impasse’ refers to a point where the parties do not ap-

pear to be willing and/or able to move the discussion forward.

Interventions or Strategies to deal with Impasse

Agree to disagree
Parties do not have to agree on every point. Where it is not
crucial to reaching a settlement, the Mediator can reframe the
point as one where the parties agree to disagree. For instance, it
is possible to disagree on what happened or who is right or
wrong and yet, be able to still settle the dispute.

Change dynamics

Where an exchange becomes too heated or where parties

seem to be making vicious arguments, a Mediator may call a
78 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

time-out to the Mediation session. Alternatively, instead oy

ling for a time out, the Mediator may call for a Private Sesg; On ty
speak to one or both parties privately.
The Mediator may ask the parties to put themselves jp th
other party’s shoes and to view the dispute from the other batty, ,
perspective.

Summarize the other parties’ perspective

While the Mediator summarizes the points of one Party

the other party is given an opportunity to understand the pe,
spective of that party from the point of view of an objective thiy)_
party (the Mediator). This may assist that party to move from »
impasse to better understanding of the dispute and as Such,
move forward in the Mediation.

Break issues down into smaller issues

Where the issue seems insurmountable, the Mediator ma

break down the issues into smaller discrete issues. These ‘bite
sized” issues may then be tackled each in turn. For instance
each circumstance that led to the dispute may be discussed
separately to clarify the parties’ intentions and dispel confusion
on the dispute as a whole. Resolution of these smaller issue
may help build up the momentum to ultimately resolve the larger
issue.

Deal with easier issues first

Where there is an impasse on a certain issue, the Mediato!

may direct the parties to the other items on the agenda and ds
cuss issues which are less contentious and where settleme!!
may be reached by the parties easily.

Clarify the process

Where parties are at an impasse, it may be due to partic i

lack of understanding of the process of Mediation. The Mediate |
may, thus, make clarifications on the process of Mediation.
 MEDIATION 79

Reframing

The Mediator may reframe the parties’ statements to help

them understand the dispute. For example, the Mediator may
reframe by reflecting positive aspects of the relationship between
the parties in the past.

ETHICAL ISSUES IN MEDIATION

Ethics are those moral principles which should be followed

by the Mediator and the parties, but it is the work of the media-
tor to maintain or to run the mediation on ethical ground. Ethics
play an important role in mediation; it works as a trust factor on
which both parties to a dispute rely on.
1. Integrity

It is important for a Mediator to maintain his integrity to

gain the trust of the parties. He should not lie to or mislead the
parties. A settlement agreement may be challenged if it was in-
duced by misrepresentation.

2. Confidentiality

For Mediation to work, the parties must believe that the

Mediator will keep confidential the information they revealed to
the Mediator and which they asked the Mediator not to divulge to
the other party.

3. Neutrality

A Mediator must be neutral in relation to content, process

and outcome of Mediation. The Mediator must give the parties
equal opportunity to participate in the Mediation and should
have no personal or financial interest in the outcome. Also, he
should refrain from exerting pressure on the parties to reach a
settlement.

_* Adopted from the lawtimesjournal.in; https://lawtimesjournal.in/ethics-in-

adr-in-context-of-mediation-arbitration-and-conciliation/.
 RESOLUTION
80 PHILIPPINE ALTERNATIVE DISPUTE

4. No Conflict of Interest
ies any mp
The Mediator should disclose to the part
l or faj
which may give the impression that he is not impartia g
objects to the Medi
after the disclosure, any of the parties
the Mediator should withdraw.

After the termination of the Mediation, the Mediator shg

not engage himself as counsel for either party as this would
rise to a possible breach of confidentiality with regard to mat
Session.
\ disclosed to the Mediator during a Private

THE SINGAPORE CONVENTION ON MEDIATION

The Singapore Convention on Mediation (the “Singa

nt framewe
Convention” or “Convention”) is a uniform and efficie
med
for international settlement agreements resulting from
tion. It applies to international settlement agreements resul
commen
from mediation, concluded by parties to resolve a
dispute.

Advantages of the Singapore Convention

/
The Singapore Con ention will facilitate internatic
einvoke
eand ao PI I boiom ty;
settlement agreements across
will benefit from mediation as an additional dispute resoluti
option to litigation and arbitration in settling cross-border ¢
putes.95 Settlement becomes binding and enforceable in acet
dance with the simplified and streamlined procedure. It comp
ments the Model Law.

Effectivity of the Singapore Convention

The Convention was signed in Singapore on 7 Augus

2019. It entered into force on 12 September 2020.
As of 22 January 2021, fifty three (53) states have sign‘
the convention and six (6) states have deposited their respectivé
on/ .
95 https: / /www.singaporeconvention.org/convention/ about-conventi
 MEDIATION 81

instruments of ratification or approval. The Philippines is one of

the State parties that signed the instrument. However, it has yet
to ratify the Convention as of this publication.

Scope of Application of the Singapore Convention

The Singapore Convention applies to international agree-

ments resulting from mediation and concluded in writing by par-
ties to resolve a commercial dispute (“settlement agreement”)
which, at the time of its conclusion, is international in that:

a. at least two parties to the settlement agreement have

their places of business in different States;or
b. the State in which the parties to the settee
agreement have their places of business is different
from either:
i. the State in whicha substantial part of the obli-
gations under the settlement agreement is per-
formed; or
ii. the State with which the subject matter of the
settlement agreement is most closely connected.°6

Exceptions to the Application of the Singapore Convention

The Singapore Convention does not apply to settlement

agreements:

a. conclud ed
to resolve a dispute arising from transac- rH L
ions engaged in by one of the parties (a consumer)
Aprserertialereiily or-household purposes; a)
- vy
b. relating to family, inheritance or employment law;%?
c. approved by a court or concluded in the course of
proceedings before a court;
d. that are enforceable as a judgment in the State of
that court; and

96 Art. 1, Sec. 1, Convention.

97 Art. 1, Sec. 2, Convention.
84 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

ii. proven in fact to have fulfilled the functj

ons de.
scribed in subparagraph (a) above, by itself Or
together with further evidence.
If the settlement agreement is not in an official language
the Party to the Convention where relief is sought, the competen;
authority may request a translation thereof into such language
The competent authority may require any necess
document in order to verify that the requirements of the Convep.
tion have been complied with.
When considering the request for relief, the competent ay.
thority shall act expeditiously.
!°?
¢ as
Grounds When Grant of Relief may be Refused
under the Singapore Convention

The competent authority of the Party to the Convention

where relief is sought under Article 4 may refuse to grant relief at
the request of the party against whom the relief is sought onlyif
that party furnishes to the competent authority proof that:
a. A party to the settlement agreement was under some
incapacity;
b. The settlement agreement sought to be relied upon:
i. is null and void, inoperative or incapable of be-
ing performed under the law to which the parties
have validly subjected it or, failing any indica-
tion thereon, under the law deemed applicable
by the competent authority of the Party to the
Convention where relief is sought under Article
4;
ii. is not binding, or is not final, according to its
terms; or
iii. has been subsequently modified;
c. The obligations in the settlement agreement:
 MEDIATION 85

i. have been performed; or

ii. are not clear or comprehensible;
Granting relief would be contrary to the terms of the
settlement agreement;
There was a serious breach by the mediator of stan-
dards applicable to the mediator or the mediation,
without which breach that party would not have en-
tered into the settlement agreement; or
There was a failure by the mediator to disclose to the
parties any circumstances that raise justifiable
doubts as to the mediator’s impartiality or independ-
ence and such failure to disclose had a material im-
pact or undue influence on a party, without which
failure that party would not have entered into the set-
tlement agreement.

The competent authority of the Party to the Convention

where relief is sought under Article 4 may also refuse to grant
relief if it finds that:
a. granting relief would be contrary to the public policy
.of that Party; or
the subject matter of the dispute cannot be settled by
mediation under the law of that Party. !93

Parallel Application or Claims

If an application or a claim relating to a settlement agree-

ment has been made to a court, an arbitral tribunal or any other
competent authority which may affect the relief being sought
under Article 4, the competent authority of the Party to the Con-
vention where such relief is sought may, if it considers it proper,
adjourn the decision and may also, on the request of a party,
order the other party to give suitable security, !04

103 Art. 5, Convention.

104 Art. 6, Convention.
 SOLUTION
ATIVE DispUTE RE
PHILIPPINE ALTERN
86

TREATIES
OTHER LAWS OR

r La ws esr in a Settlement
or TreatiAp
attiion of
Applicica Ot he
apore Co nven
Agreement in the Sing
Co nv en ti on doe s not dep rive any interested party g
The a settlement agreement j,
hav e to ava il its elf of
any right it may
the law or the treaties
the mann er and to the extent allowed by
Co nv en ti on wh er e su ch settlement agreemen;
of the Party to the
is sought to be relied upon.
y declare that:
A Party to the Convention ma
tion to settlement
a. it shall not apply the Conven
or to which any
agreements to which it is a party,
son acting on behalf
governmental agencies or any per
the extent
of a governmental agency is a party, to
specified in the declaration; and
b. it shall apply the Convention only to the extent that
the parties to the settlement agreement have agreed
to the application of the Convention.

Parties to the Convention Making Reservations

. No reservations are permitted except those expressly au-

thorized in Article 8 of the Convention. Reservations may be
made by a Party to the Convention at any time.
Reservations made at the time of signature shall be subject
to confirmation upon ratification, acceptance or approval. Such
reservations shall take effect simultaneously with the entry into
force of the Convention in respect of the Party to the Convention
concerned. Reservations made at the time of ratification, acceP
ike or approval of the Convention or accession thereto, °F al
i. ae ef making a declaration under Article 13 shall take ef
respect of ai with the entry into force of the Convention m
G the
ited after
d eposited Convention concerned. Reservation
Barty entrythe into force of the Convention for the
Party to the Convention shall ;
date of the deposit. take effect six months after
 MEDIATION 87

Reservations and their confirmations shall be deposited

with the depositary.

Any Party to the Convention that makes a reservation un-

der the Convention may withdraw it at any time. Such with-
drawals are to be deposited with the depositary, and shall take
effect six months after deposit.105

The Effect of the Convention or Reservation

on Settlement Agreements

The Convention and any reservation or withdrawal thereof

shall apply only to settlement agreements concluded after the
date when the Convention, reservation or withdrawal thereof en-
!°%
ters into force for the Party to the Convention concerned.

The Depositary Under the Convention

Under Article 10 of the Singapore Convention, the Secre-

tary-General of the United Nations is designated as the deposi-
tary of the Convention. !°7

The Rule on Signature, Ratification, Acceptance,

Approval, and Accession Under the Convention

a. The Convention is open for signature by all States in

Singapore on 7 August 2019, and at the United Na-
tions Headquarters in New York thereafter;
b. The Convention is subject to ratification, acceptance,
or approval by the signatories;
c. The Convention is open for accession by all States
that are not signatories as from the date it is open for
signature; and

105 Art. 7, Convention.

106 Art, 9, Convention.
107 Art. 10, Convention.
88 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

d. Instruments of ratification, acceptance, approyay

accession are to be deposited with the depositary. 10s |

The Participation of Regional Economic Integration

Organizations in the Convention

A regional economic integration organization that is congtj.

tuted by sovereign States and has competence over certain mat.
ters governed by this Convention may similarly sign, ratify, ac.
cept, approve or accede to this Convention. The regional eco.
nomic integration organization shall in that case have the rights
and obligations of a Party to the Convention, to the extent that
organization has competence over matters governed by this Con.
vention. Where the number of Parties to the Convention is rele-
vant in this Convention, the regional economic integration or-
ganization shall not count as a Party to the Convention in addi-
tion to its member States that are Parties to the Convention.
The regional economic integration organization shall, at
the time of signature, ratification, acceptance, approval or acces-
sion, make a declaration to the depositary specifying the matters
governed by this Convention in respect of which competence has
been transferred to that organization by its member States. The
regional economic integration organization shall promptly notify
the depositary of any changes to the distribution of competence,
including new transfers of competence, specified in the declara-
tion under this paragraph.
Any reference to a “Party to the Convention’, “Parties
the Convention”, a “State” or “States” in this Convention applies
equally to a regional economic integration organization where the
context so requires.

This Convention shall not prevail over conflicting rules “a

regional economic integration organization, whether such ru -
were adopted or entered into force before or after this Conver
tion:

108 Art. 11, Convention.

 MEDIATION 89

a. if, under Article 4, relief is sought in a State that is a

member of such an organization and all the States
relevant under Article 1, paragraph 1, are members of
such an organization; or
b. as concerns the recognition or enforcement of judg-
ments between member States of such an organiza-
tion. 109

The Rule in Case of Non-Unified Legal Systems

If a Party to the Convention has two or more territorial

units in which different systems of law are applicable in relation
to the matters dealt with in this Convention, it may, at the time
of signature, ratification, acceptance, approval or accession, de-
clare that this Convention is to extend to all its territorial units
or only to one or more of them, and may amend its declaration
by submitting another declaration at any time.
These declarations are to be notified to the depositary and
are to state expressly the territorial units to which the Conven-
tion extends.
If a Party to the Convention has two or more territorial
units in which different systems of law are applicable in relation
to the matters dealt with in this Convention:
a. Any reference to the law or rule of procedure of a
State shall be construed as referring, where appropri-
ate, to the law or rule of procedure in force in the
relevant territorial unit;

b. Any reference to the place of business in a State shall

be construed as referring, where appropriate, to the
place of business in the relevant territorial unit; and
c. Any reference to the competent authority of the State
shall be construed as referring, where appropriate, to
the competent authority in the relevant territorial unit.

109 Art. 12, Convention,

 DISPUTE RESOLUTION
PHILIPPINE ALTERNATIVE
90

io n an
kec e S s 1
no de cl ar at
Party to the Conven tion ma to ay m
icle, the Convention is to extend
varagraph rf this Art
State. !10
ritorial units of that

tion
Effectivity of the Conven
on states that:
Article 14 of the Conventi
six months af
a. This Convention shall enter into force
,
ter deposit of the third instrument of ratification ao.
ceptance, approval or accession.
b. When a State ratifies, accepts, approves or accedes ty
this Convention after the deposit of the third instry.
ment of ratification, acceptance, approval or acces.
sion, this Convention shall enter into force in respect
of that State six months after the date of the deposit
of its instrument of ratification, acceptance, approval
or accession. The Convention shall enter into force for
a territorial unit to which this Convention has been
extended in accordance with Article 13 six months af-
ter the notification of the declaration referred to in
that Article.

Amendments to the Convention

Any Party to the Convention may propose an amendment

to the present Convention by submitting it to the Secretary-
General of the United Nations. The Secretary-General shall
thereupon communicate the proposed amendment to the Parties
to the Convention with a request that they indicate whether they
favor a conference of Parties to the Convention
for the purpos¢ of
considering and voting upon the proposal. In the event that
within four months from the date of such communication #
least one third of the Parties to the Convention favor
such a co”
oe the Secretary-General shall convene the conference
er the auspices of the United
Nations.

10 Art, 13, Convention.

 MEDIATION 91

The conference of Parties to the Convention shall make

every effort to achieve consensus on each amendment. If all ef-
forts at consensus are exhausted and no consensus is reached,
the amendment shall, as a last resort, require for its adoption a
two-thirds majority vote of the Parties to the Convention present
and voting at the conference.
An adopted amendment shall be submitted by the deposi-
tary to all the Parties to the Convention for ratification, accep-
tance or approval.
An adopted amendment shall enter into force six months
after the date of deposit of the third instrument of ratification,
acceptance or approval. When an amendment enters into force, it
shall be binding on those Parties to the Convention that have
expressed consent to be bound by it.
When a Party to the Convention ratifies, accepts or ap-
proves an amendment following the deposit of the third instru-
ment of ratification, acceptance or approval, the amendment
shall enter into force in respect of that Party to the Convention
six months after the date of the deposit of its instrument of rati-
fication, acceptance or approval.!!!

Denunciation of the Convention

A Party to the Convention may denounce this Convention

by a formal notification in writing addressed to the depositary.
The denunciation may be limited to certain territorial units of a
non-unified legal system to which this Convention applies.
The denunciation shall take effect 12 months after the noti-
fication is received by the depositary. Where a longer period for
the denunciation to take effect is specified in the notification, the
denunciation shall take effect upon the expiration of such longer
period after the notification is received by the depositary. The
Convention shall continue to apply to settlement agreements
concluded before the denunciation takes effect.!12

' Art. 15, Convention.

112 Art. 16, Convention.
94 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

7, Cana party designate a lawyer to represent him/he, .

Ih
Mediation?

Except as otherwise provided by the ADR Act, a party ma

designate a lawyer or any other person to provide assistanc, ;
writing by
the mediation. A waiver of this right shall be made in
legal represents.
the party waiving it. A waiver of participation or
tion may be rescinded at any time.118

8. What is the Effect of an Agreement to Submit Dispy,,

to Mediation under Institutional Rules?

An agreement to submit a dispute to mediation by an inst.

tution shall include an agreement to be bound by the interng
mediation and administrative policies of such institution. Fur.
ther, an agreement to submit a dispute to mediation under insti-
tutional mediation rules shall be deemed to include an agree.
ment to have such rules govern the mediation of the dispute and
for the mediator, the parties, their respective counsels and non-
party participants to abide by such rules.!19

9. What is required of a Mediator?

It is not required for a Mediator to have a special back-

ground or profession, unless the special qualifications of a me-
diator are required in the mediation agreement or by the parties.
However, he/she must comply with the ethi idelines, to wit
Competence, Impartiality, Confidentiality, Consent and self
determination. 120

10. Can a Mediator give a legal or technical advice?

. No. A mediator shall refrain from giving legal or technic#!
advice and otherwise engaging in counseling or advoc@)
He/she shall also abstain from expressing his/her pers

118 Art. 3.14, IRR, ADR Act.

119 Art. 3.19, IRR, ADR Act.
120 Rule 3, Art. 3.6 - 3.9, IRR.
 MEDIATION 95

opinion on the rights and duties of the parties and the merits of
any proposal made.
However, an exception would be an e ative mediation or
when the parties so request.
!2!

11. Can a Mediator recommend or suggest that the parties

seek legal representation?

Yes, where appropriate and where either or both parties

are not represented by counsel, a mediator shall:
a. Recommend that the parties seek outside professional
advice to help them make informed decision and to
understand the implication of any proposal;
b. Suggest that the parties seek independent legal
and/or technical advice before a settlement agree-
ment is signed. !22

12. Can the Mediator reveal the information given to him

by a party in Mediation?

No. Information obtained through mediation shall be privi-

leged and confidential. A party, mediator, or a non-party partici-
pant may refuse to disclose and may prevent any other person
from disclosing a mediation communication. Confidential infor-
gnation shall not_be subject to discovery and shall be inadmissi-
ble in any adversarial proceeding, whether judicial or quasi-
judicial.

However, evidence or information that is otherwise admis-

sible or subject to discovery does not become inadmissible or
protected from discovery solely by reason of its use in a media-
tion, 123

121 Rule 3, IRR R.A. No, 9285.

122 Art. 3.10(b), Rule 3, IRR, ADR Act.
123 Sec. 9.c of ADR Act.
 OLUTION
96 PHILIPPINE ALTERNATIVE DISPUTE RES

not be compelled ty 4
13. Who are the persons that may Me i
close confidentialinformation obtained during a.

tion?

The following persons may not be compelled to disclos

confidential information obtained during Mediation, to wit:
a. The parties to the dispute;
b. The mediator or mediators;
c. The counsel for the parties;
d. The non-party participants;
e. Any persons hired or engaged in connection with the
mediation as secretary, stenographer, clerk or assis.
tant; and
f. | Any other person who obtains or possesses confider-
tial information by reason of his/her profession.!%4

14. What is the Purpose of a Mediation Agreement?

The purpose of Mediation Agreement is that it gives tang-

ble evidence that parties accomplished something together, rt
minds people what they agreed to, helps prevent misunderstant
ing afterward, and gives clear end point to mediation process.

15. What is the Scope of Application of the Singapore Co™

vention?

nem The Singapore Convention applies to international agret

nts resulting from mediation and concluded settlement ag"
— which, at the time of its conclusion, is international ”

a. ' to the settlement agreement hav

at least two parties
their places of business in different States; OF

124 Sec. 9.d of ADR Act.

 MEDIATION
97

b. the State in which the parties to the settlement agree-

ment have their places of business is different from
either:
i. the State in which a substantial part of the obli-
gations under the settlement agreement is per-
formed; or
li. the State with which the subject matter of the
settlement agreement is most closely connected.

“Mediation promotes communication and in-

J) creases the chance that the message will come
through clearly, with the same meaning for both par-
ties. This is due to the openness of the communica-
tion environment and its basis in the underlying in-
4 terests, rather than the parties’ adopted positions, >
which might otherwise obscure their real motiva-
tions.” —- Gary Smith, Unwilling Actors: Why Volun-
tary Mediation Works, Why Mandatory Mediation
Might Not, The Practices of Alternative Dispute
Resolution
 CHAPTER 5
ARBITRATION

GENERAL PRINCIPLESOF ARBITRATION

What is Arbitration?

Arbitration is a voluntary dispute resolution process .

which one or more arbitrators, appointed in accordance with t~n
agreement of the parties, or rules promulgated pursuant to tht
Act, resolve a dispute by rendering an award.l'" s
Arbitration, as an alternative mode of settling disputes
has long been recognized and accepted in our jurisdiction.12~
R.A. 876 authorizes arbitration for domestic disputes. Foreign
arbitration, as a system of settling commercial disputes of an
international character, is likewise recognized.P?
The enactment of R.A. 9285 further institutionalized the
use of alternative dispute resolution systems, including arbitra-
tion, in the settlement of disputes.
Resort to arbitration is voluntary. It requires consentfrom
both parties in the form of an arbitration clause that pre·
existed the dispute or a subsequent submission agreement.
This written arbitration agreement is an independent and legally
enforceable contract that must be complied with in good faith.
By entering into an arbitration agreement, the parties agree to
submit their dispute to an arbitrator (or tribunal) of their own
choosing and be bound by the latter's resolution. The contrac-

12s Sec. 3(d) ADR Act.

126 Gonzales vs. Climax Mining Ltd., G.R. Nos. 161957 & 167994, 22 JanuatY
1997, 512 SCRA 148, 163.
121 Gonzales vs. Climax Mining Ltd., supra.

98
 ARBITRATION

99

and consensual character of the proceed·

wal. s from impleading a third-party even i'f th1ngls prevents the
artte e atter's art' ·
P . n is necessary for a complete settlement of th di P ici-
pat~ot al tribunal does not have the power to com el tspute. An
arbt r . bi . . pe a person to
-..ticipate in an ar itration proceedings absent th
pc:11 " 128
e person's
consent.

KeY Features of Arbitration

a. Party auton?my - As pro~ided in the state policy un-

der the ADR Act, p~1es to an arbitration agreement have the
freedom to make their own terms and arrangement on resolving
conflicts. Hence, to operate an arbitration, consent from both
parties in the form of a clause or a submission agreement is nec-
essary. Arbitration agreement is voluntary, consensual, and con-
tractual.
b. Equal treatment and fairness of parties - Article 18 of
the 1985 UNCITRAL Model Law provides that parties are to be
treated with equality and each party shall be given a full oppor-
tunity of presenting his/her case. The fact that arbitrators are
picked from the list provided by involved parties is a manifesta-
tion of equality.
c. Ease of enforcement - Although arbitral institutions
and arbitrators do not have coercive powers like regular courts,
awards can be imposed in accordance with the procedures to
which the parties consented to be subjected to. Likewise, the
limited grounds to refuse and set aside arbitration awards as-
sures parties that these awards can still be enforced with ease.

Types of Arbitration

The common types of Arbitration are:

a. state-state arbitration;
b. investor-state arbitration;
c. ad-hoc arbitration;
12a F . T chnology Electronics As-
• nichauf Electronics Philippines Corporauon vs. e
scmbly and Management Corp., G. R. No. 204 197 • 23 November 2016.
 /\Pfll fPJ\flON
101
100 PHILIPPINE ALTERNATIVE DISPUTE RE·SOLUTION

,. for filing various documents. In most cas

d. institutional arbitration· , t ·rr1rl:1 1 )1 t I " UNCl'f'J-'/\1.
' " bit
- tv: cs, par-
I ra 1·ion R u J cs (as revised in
l 1'
;1Jll I , ,r;1!C .
e. legislated arbitration· , ·~ ,nt< g rocccd1ngs.
r1c. . l I)!<' p
1() I()). I I
f. construction arbitration- , ~ .
iwuona 1 Arbitration
g. commercial arbitration· , ~s t .
. ·onal {\rbi1 ration means an arbitration adrninis-
h. domestic arbitration; and 1nst1tLI 1 , tity. dt1ly rcg1stcrc
. d as a d ornesuc. corporation
. with
bv an en ,1nd F,xchangc C omm1ss1on . .
i. international commercial arbitration. 1crc d . . . (SEC) and engaged in
the Sc cunt ics , • arbitration . .
of disputes . . .
in the Philippines on a•
;irnong , of 1,er.· 5
d permanent basis. . Among the advantages of institu-
State-State Arbitration
rcgular rbit ·ation arc the existence of pre-established rules and
As defined by the International Dispute for Su 8 t · 110. nal ar ..• r 1.1 roster of quail 'Iiic d ar biitrators that the parties can
Development, State-State P roccdurcs,
f and provision o f a d mm1strat1ve
. . . assistance.P!
.
. t ti . . Arbitration covers "dispute s asa.mable
to the choose ro rn • •
in erpreta on or application" of a treaty.P? In this kind f .
rration,
. treaty
. parties . submit the request for arbitration wh arbl.
en an Legislated Arbitration
issue
. or issues. relative to the interpretation or applicatiion of
Legislated arbit ration is defined as an. arbitration which is
th err treaty anses. provided for by Philippine laws. The following are some exam·
Investor-State Arbitration pies:
Sec. J 8 I of the Revised Corporation Code (R.A.
Investor-State Arbitration (also called Investor-State Dis· a. J 1232) allows arbitration of intra-corporate disputes
pute Settlement or ISDS), is a procedure to resolve disputes be· as Jong as it is provided in the articles of incorpora-
tween foreign investors and host States. Under this arbitration tion or its bylaws
system, foreign investors are endowed with standing to launch a Sec. 88.3 of the Intellectual Property Code of the Phi!-
claim against states at the international level. •JO b. ippincs (R.A. 8293) provides the conciliation and arbi-
tration procedure of the Intellectual Property Office of
Ad Hoc Arbitration the Philippines (IPOPHL)
Ad hoc Arbitration means arbitration administered by an DOE Department Circular No. DC-2018-05-0016 pro-
c.
arbitrator and/or the parties themselves. A proceeding admini~- vides the Wholesale Electric Spot Market .(WESM)
tered by an institution shall be regarded as ad hoc arb~trat~on ~f Rules and Market Manual on Dispute Resolutton
such institution is not a permanent or regular arbitration tn~tl- E.O. No. I 008 provides the Arbitration procedure i~-
tution in the Philippines.131 In this type of arbitration, the par.ues d. . b arties involved 10
dictate the particulars of the arbitration proceeding~ includ1
but not limited to, the appointment of arbitrator, applicable ru
7;~ valving contracts entered into Y P
construction in the Philippines 1991
C. Sec. 4 13 Title I Local Government Code of
' ' bit
1 ate
. . ··/b sL-practiccs· (R.A. 71 60) provides the Agreement to ar r
12"> Retrieved from https://www.iisd.org/s~stcm/filcs/pubhcotJon:. c
II' A
•,wtc-state-disputc-scttlcmcnt-invcsu,:icnt-tlrcat1cs:~t~du/mjil/vol4 I /iss I /2. • rt. 1.6. (DIOl, l~uh: 2, IRI~. ADR Act.
,~1 Retrieved (rom https://rcpos,tory. aw.um, .
IJI IRR. /\DR Act.
 102 Pt ill IPPINE ALTERNATIVE DISPUTE RESOLUTION ARBITRATION
103

f. Sec. 59, Art. 18 of the Government Procurerne tic Arbitration

form Act (R.A. 9184) nt Re, po mes
Domestic Arbitration is an arbitration that is not int _
g. Secs. 83 and 139 of the Financial Rehabilitatio
Insolvency Act of 2010 (R.A. 10142) n and . as defined in Article 1 (3) of the 1985 UNCITRAL Model
uona 1 Generally spea ki ng, Domestic . . .
Arbitration is one whicho e·
135 15
taw- ted in the Phih · h
i tppmes, w ere the arbitration has no fo _
Construction Arbitration con d u C . d .. d r
. Jement. Otherwise state , it rs omestic when all the com-
e1gn nts
e such as parties . ' p 1 aces of business,
. place of arbitration
Construction Arbitration shall include those betw
.
among parties to, or who are otherwise bound by an arbij
~~
.
pone ce of performance of a su b s t anti'al part of the obligation and'
. ' rab~ I
agreement, directly or by reference whether such parties ar ::ere the subject matt~~ o~ the dispute is most closely con-
. . e~~ nected, are all in the Philippines. 136 Domestic Arbitration in the
ject ow~er, contract?r, subcontra~to~, quantity surveyor, bonds-
man or issuer of an msurance policy m a construction project.133 Philippines is governed by R.A. 9285.
RELATED JURISPRUDENCE
:
Commercial Arbitration
Department of Foreign Affairs vs. BCAInternational
Commercial Arbitration covers matters that are commer- Corporation, G.R. No. 225051, 19 July 2017
cial in nature, whether contractual or not, such as any trade
transaction for the supply or exchange of goods or services; leas- FACTS:
~ng; construction of works; consulting; engineering; licensing;
mvestment; financing; banking; insurance; exploitation agree- The Department of Foreign Affairs (DFA), in an
ment or concession; joint venture and other forms of industrial Amended Build-Operate-Transfer Agreement dated 5 April
or business cooperation; carriage of goods or passengers by air, 2002, awarded the Machine Readable Passport and Visa
sea, rail or road. 134 Project (MRPV Project) to BCA International Corporation
(BCA). It was contained in such agreement the following
Commercial Arbitration is gaining ground in the main- arbitration clause:
stream Philippine dispute resolution arena through the Govern-
ment's aggressive initiatives and the private sector's active en- "Section 19.02. Failure to Settle Amicably
gagement in the field. As such, a huge number of commercial - If the Dispute cannot be settled amicably
disputes in the Philippines are being resolved within the aus- within ninety (90) days by mutual discussion as
pices of commercial arbitration. It is expected to become more contemplated xxx herein, the Dispute shall be
popular in the country with the vigorous efforts of the OADR, settled with finality by an arbitrage tribunal op-
through the strong leadership of Justice Secretary Menardo I. erating under International Law xxx under the
Guevarra, in empowering ADR Provider Organizations and Prac- UNCITRAL Arbitration Rules contained in Reso-
titioners. lution 31 /98 adopted by the United Nations
General Assembly on December 15, 1976 xxx.
The DFA and the BCA undertake to abide by and

1.u Sec. 35, Chap. 6, ADR Act.

--IJSA- --
136 rt. I
implement the arbitration award. The place of

.6 (09). IRR, ADR Act.

Section 32, ADR Act; Art. I .6, 8(8), IRR.
u, 2006 Model Law.
 ARBITRATION
105

104 PHii lf'PINI: AL 11 RNAl IVE 01Sl'Ul C I",ESOLUllON

I VI W
·ch has a retroactive
u bl effect. Furtherm ore, R A 9285
a hgeneral
1 law app tea e to all matters and · ·
arbitration shall be Pasay City PhT . i~ theto be resolved through alternative disput controv_er-
such other place as may be mutually
' t ippmes,
a or sics e resolution
upon bY both parties. The arbitratio . greed f11Ct),OdS,
shall be conducted in the English Iannguage."
p1oceeding
i rial commercial Arbitration (ICAJ
However, upon_ the MRPV project's im le . . Jttte"'at o
DFA sought to term mate the Agreement mentat1on i. AS P rovided underl ifthe 1985 UNCITRAL Model Law, an ar-
posed to by BCA. As such, BCA filed a re~u::;ct was op: . .5 internationa 1 :
non. or arbitra-
bilrauon i the parties to an arbitration agreement have t th
a. l . f h , a1 e
An ad hoc arbitral tribunal was coristit .
tirne of the cone . usron o t at agreement , their· Paces
wards
. . and on 16 May 2013 , BCA filed b e,ore
r t h1euted
RTC after- of business in different States;
ltiuonI for Assistance
. R 1 in Taking Evidence p ursuant toa th Pe- b. one of the following places is situated outside the
~p ei:nentmg u es and Regulations (IRR) of "The Al e State in which the parties have their places of busi-
live _Dispute Resolution Act of 2004" or R.A. 9285 s~:r~a-
the issuance of subpoena ad testificandum and ' b king ness:
duccs tecum against OFA. su poena i. the place of arbitration if determined in, or pur-
suant to, the arbitration agreement; or
On l July 2013, DF'A filed its comment alleging th
the subpoena ad tcstificandum and subpoena duces tecu: ii. any place where a substantial part of the obliga-
being sought by BCA is prohibited by law for being con- tions of the commercial relationship is to be per·
trary to the 1976 UNCITRAL Arbitration Rules, which the formed or the place with which the subject·
have agreed upon. y matter of the dispute is most closely connected;
c. the parties have expressly agreed that the subject
ISSUE: matter of the arbitration agreement relates to more
Whether R.A. 9285 applies to the case at bar. than one country.P"
b On 21 June 1985, the Philippines committed itself to be
RULING: ound by the Model Law as signatory to the Arbitration Rules of
YES. R.A. 9285 applies to the case at bar. As pro· :he UNCITRAL Model Law on International Commercial Arbitra-
vided for by law, retroactive application of procedural laws ~n of the United Nations Commission on lntemational Trade
docs not violate any personal rights because no vested so~ ~985 UNCITRAL Model Law). In fact, the provisions of the
right hos yet attached nor arisen from them. In the present
1 ode! Law was incorporated in R.A. 9285.138
case, although R.A. 9285 was passed in 2004, it is still
deemed to be applicable in the instant case. As a procc· Law ~c:der Art. 19 of the ADR Act, the 1985 UNCITRAL _Model
me the governing law for International Commercial Ar·
durnl Jaw, it has a retroactive effect.

DOCTRINE: 1~ ton.
I •Ji Art. 1(31 · l985 UNCITRAL Model Law on International Commercial . Arbitra·
.
Although enacted only in 2004, R.A. 9285 applies 7· 2008·
•.111 Koren T.cchnologics Co., Ltd. vs. Lenna, G.R. No. 143581. January
pending arbilralion proceedings since such is a proccdurB
 ARBITRATION
PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION 109
108

clause is susceptible to an interpretation that covers the ·rhere is a)so the Singapore International Arbitration Ccn-
dispute. Any doubt should be resolved in favor of arbitrat~sscncd
ton .113 AC) model clause:
t re (S I ,,
Typical arbitration agreements are very short. The I "Any dispute . arising
di out of or in connect' ion
tional Chamber of Commerce (ICC) model arbitration clantcrna. 1
.,,,th this contract, inc u mg any question regardin
. Use r
"'"
its existence, v alidi
t tty or termination, shall be re-g
instance, merely reads: • •or
ferred to and finally r~solved by arbitration in Singa-
"All disputes arising out of or in connection with pore in accordance with the Arbitration Rules of the
the present contract shall be finally settled under th Singapore International Arbitration Centre ("SIAC
Rules of Arbitration of the International Chamber 0~ Rules") for the time being in force, which rules are
Commerce by one or more arbitrators appointed in accor- deemed to be incorporated by reference in this
dance with the said Rules."
clause.
Another recommended arbitration clause is the one The Tribunal shall consist of ------
monly used for Hong Kong International Arbitration c~o~.
* arbitrator(s).
(HKIAC)administered Arbitration, to wit: n re The language of the arbitration shall be
"Any dispute, controversy, difference or claim
arising out of or relating to this contract, including * State an odd number. Either state one, or
the existence, validity, interpretation, performance, state three.
breach or termination thereof or any dispute regard-
ing non- contractual obligations arising out of or re- Parties usually add rules concerning the law governing the
lating to it shall be referred to and finally resolved by contract, the number of arbitrators, the place of arbitration and
arbitration administered by the Hong Kong Interna- the language of arbitration.
tional Arbitration Centre (HKlAC) under the HKIAC
Administered Arbitration Rules in force when the
Notice of Arbitration is submitted.
The law of this arbitration clause shall be ...
(Hong Kong law). *optional
The seat of arbitration shall be ... (Hong Kong).
The number of arbitrators shall be ... (one or
three). The arbitration proceedings shall be con-
ducted in ... (insert language). *optional"

LM Power Engineering Corporation vs. Capitol Industrial Construclio~

1'13
Groups, Inc., G.R. No. 141833, 26 Morch 2003; Camp John Hoy Development corPo,
ration vs. Charter Chemical and Coating Corporation, G.R. No. J 98849, 7 AuSU5
2019.
110 P11111PPtr~[ AL lFllNflTIVI' DISPUrL Rrao I UIIOII 111

t to the exclusion of all other dispute resoluu

eemen , h . on
/WI merit procedures or mec arnsms.
or sett I e
In consideration of the above recitals, the Parties

SAMPLE SUBMISSION AGREEMENT agree as follows:

s1nn,uss10N TO ARBITRATION
This Submission Agreement is made a d J.
on I February 202 I by and between: n executed The parties agree to refer and submit the Disputes
bitration administered by the Philippine Center for
YOFILARU CO., a corporation organized and exist' w0: ("PCA") in accordance wi_th Arbitration Rules of the
dcr the laws of San Francisco, CaJifornia United s~g un- ;CA currently in force at the time of the execution of this
~mcri~a ("U.S._J\."), _with address at 1909 Love Roa/e:; submission Agreement.
Francisco,
f . California,
f U.S.J\.
. . It is engaged in the b usmess
·
The Janguage to be used in the proceeclings shall
o ~~rn_age o goods and is licensed to do business i h.
Philippines; n t e be English.
The place of arbitration shall be the Philippines.
and

FIL RUIZ CO., a corporation organized and existing un- JI. A.RBITRAL TRIBUNAL
der the Jaws of the Philippines, with address at 23 Harbor The Parties agree that the Disputes shall be beard
Street, Quezon City. It is engaged in the textile business
and resolved by a tribunal composed of three (3) arbitra-
and is licensed to do business in the Philippines. tors (the "Tribunal"). The members of the Tribunal shall
be appointed in accordance with the PCA Rules.
RECITALS:
The Parties confirm that the arbitrators they
The Parties recite and declare that: nominate are qualified to act as such and that they know
of no basis or reason to challenge their qualifications or
i. On 20 March 2017, YOFILARU Co. and FIL their ability to recommend or render a fair, impartial and
RUIZ (Philippines), Inc. entered into a Service Contract just award, such as conflict of interest with parties,
("SC"). whether pecuniary, professional or otherwise.
ii. Thereafter, certain disputes, differences, con- The decision of the Tribunal shall be final and
troversies, and claims (the "Disputes") have arisen be- binding upon the Parties, and shall be ~nforceable
tween the Parties. through any courts having competent jurisdicuon.
111. The SC does not provide for any mandatory
mechanism by which the Parties are required to resolve III. PROCEDURE
disputes arising from the SC.
The Parties agree that the e,osting rules of. proce-
iv. The Disputes are not currently subject of any dure adopted by the PCA shall apply to the arbitration.
pending litigation or court proceedings between the Par-
ties.
v. The Parties have agreed to submit th~ ~is-
putes to arbitration, in accordance with this Submission
 ARBITRATION
112 PHILIPPINE AL TERN!\ TIVE DISPUTE RESOLUTION 113

IV. GOVERNING LAW Jl£L£VANT JURISPRUDENCE

:

It is agreed that . the . disputes • this Sub,n1ss1on

· . amshi Mutual· Underwritin
· L.
Association Bermuda
Ste
~ ed vs. S u1p1c10 1nes, Inc., G.R. Nos. 196072 &
greement,
A . hand the arbitration that will be cond ucted
put suant t ereto shall be governed by, construed 208603, 20 September 2017
enforced in accordance with the Jaws of the Philippi~ es. and
FACTS:
v. CONFIDENTIALITY
Steamship was a Bermuda-based Protection
. Any
. information, relative to the Disputes • th"IS and Indemnity Clu?, managed outside London, Eng-
u Agreement, and the subject of arbitratio tand. It insures its members-shipowners against
S b rrnssron
arising therefrom, expressly intended by the source not
be disclosed, or obtained under circumstances that would
t "third party risks and liabilities" for claims arising
from (a) death or injury to passengers; (b) loss or
create a reasonable expectation on behalf of the source damage to cargoes; and (c) loss or damage from col-
that the information shall not be disclosed. It shall in- lisions. Sulpicio insured its fleet of inter-island ves-
clude pleadings, motions, manifestations, witness state- sels with Steamship. One (1) of these vessels was
ments, reports filed or submitted in an arbitration or for the M/V Princess of the World, evidenced by a Cer-
expert evaluation. tificate of Entry and Acceptance issued by Steam-
IN WITNESS WHEREOF, the Parties to this Sub- ship (the certificate incorporated by reference an ar-
mission Agreement have caused it to be executed on the bitration agreement set forth in its Club Rules). On
date first stated above. 07 July 2005, M/V Princess of the World was gutted
by fire while on voyage from Iloilo to Zamboanga
City, resulting in total loss of its cargoes. Sulpicio
FIL RUIZ CO. claimed indemnity from Steamship. The latter de-
YOFILARU CO.
By: nied the claim and subsequently rescinded the in-
By: surance coverage on the ground that Sulpicio was
EDRIE DE TORRES grossly negligent in conducting its business regard-
DENISE SALAZAR
Operations Manager ing safety, maintaining the seaworthiness of its ves-
VP for Operations
sels as well as proper training of its crew. S~lpi_cio
filed a Complaint with the RTC of Makat1 City.
Steamship filed its Motion to Dismiss the case
and/or to Refer Case to Arbitration pursuant to RA
No. 9285, or the ADR Act of 2004, and to Rule 4716
of the 2005/2006 Club Rules,'44 which supposedly
'" Id b R l s provides: "47.
Dis ·, at 542 and 1592. Ruic 47 of the 2005/2006 Clu ue
PUtc
. rcsol ·
uuon, Adjudication rr cling a
I h between or nuc
1• n t c event of any diITerencc or dispute whatsoever, rr:0~d d by the Club
Member and the Club and concerning the insurance a cMembcr or the
~ndcr these rules or any amounts due from the Clu~ to~eefirsl instance be
.
ember to the Club such diITcrcnce or dispute shall in
114 PHILIPPINE AL TERNII TIVE DISPUTE RESOLUTION ARBITRATION
115

provided for arbitration in London of di1sputes b tcd by reference in the Certificate of Ent
tween Steamship and its members. e- corpor:e of M/V Princess of the World is valid
ceptan . .
aZi ab~dd~c-
in mg
n Sulp1cl0,
ISSUE: t.tpO

Whether the arbitration agreement set ti .

RULING:
Club Rules not signed by the parties, which in ~rth 1.n its YES. A contract need not be contained in a single
urn is. in. ·t·ng. It may be collected from several different wriun
wn J fl' . h h gs
referred to adjudication by the Directors. That adjudication hal which do not con 1ct. wit e~c other and, when con-
1
basis of documents and written submissions alone. Notwi~ be. on the nected, show t~e parties, subject matter, terms and con-
terms of this Rule 4 7i, the Managers shall be entitled to refer stan~u1g the sideration, as m part of contracts entered into by corre-
or dispute to arbitration in accordance with sub-paragraph ii :nr diff~rencc
prior adjudication by the Directors. e ow WHhou1 spondence. A contract may be. encompass~d in several in-
ii. If the ~cmb:r docs not a_ccept_ the decisi~n of the Directors, or if the
struments eve_n though every .mslr:1ment is not signed by
agers, in their absolute discretion, so decide, the difference or dis Man. the parties, since it is sufficient if the unsigned instru-
be referred to the arbitration of three arbitrators, one to be ap:~tc shall ments are clearly identified or referred to and made part of
each of the partic~ and the _thir~ by the two arbitrators so chose::~~c~~
don. The submission to arbitration and all the proceeding therein shall be
the signed instrument or instruments. Similarly, a written
subject to the provisions of the Eng~sh ,:'\rbitralion Act, 1996 and the agreement of which there are two copies, one signed by
schedules thereto or any statutory modifications or re-enactment thereof. each of the parties, is binding on both to the same extent
iii. No Member shall be entitled lo maintain any action, suit or other legal pro- as though there had been only one copy of the agreement
ceedings against the Club upon any such difference or dispute un.less and
until the same has been submitted lo the Directors and they shall have and both had signed it.
given their decision thereon, or shall have made default for three months in
so doing; and, if such decision be not accepted by the Member or such de-
Thus, an arbitration agreement that was not embod-
fault be made, unless and until the difference or dispute shall have been re- ied in the main agreement but set forth in another docu-
ferred to arbitration in the manner provided in this Rule, and the Award ment is binding upon the parties, where the document was
shall have been published; and then only for such sum as the Award may
direct to be paid by the Club. And the sole obligation of the Club to the
incorporated by reference to the main agreement. The arbi-
Member under these Rules or otherwise howsoever in respect of any dis· tration agreement contained in the Club Rules, which in
puted claim made by the Member shall be to pay such sum as may be di· turn was referred to in the Certificate of Entry and Accep-
rccted by such an Award. tance, is binding upon Sulpicio even though there was no
iv. In any event no request for adjudication by the Member shall be madc~o
the Directors in respect of any difference or dispute between, or matterh ·
specific stipulation on dispute resolution in this Certifi-
feeling, the Member and the Club more than two y:ars from the ~ate
O
t~~ cate.
that dispute, difference or matter arose unless, prior to the expiry e
limitation period, the Managers have agreed in writing to extend the sam h DOCTRINES:
v. Nothing in this Rule 47 including paragraph i, or in any ~ther R\~~ca~:;~e;
crwise shall preclude the Club from taking any legal action of ursuc or 1. Consistent with state policy, arbitration agree-
nature in any jurisdiction at its absolute discretion in order 1°1Pd'ing bUI
· ·ng me u ments are liberally construed in favor of proceeding to ar-
enforce any of its rights whatsoever and howsoever arisr
not limited to: u,c club; b~tration. Every reasonable interpretation is indulged to
~ve effect to arbitration agreements. Thus, the court must
1
a. Recovering sums it considers to be due from the Member to
b. Obtaining security for such sums; and/or def these give effect to arbitration clauses as much as the terms
. . by law or un
c. Enforcement of its rights of lien whether arising ~he agreement would allow. Any doubt should be resolve
rules. d the Mcfll' in favor of arbitration.
h Club on •
vi. These rules and any contract of insurance between l e . English laW·
ber shall be governed by and construed in accordance with
116
PHILIPPINE AL fERNAllVE DISPU'""
'"
Reso LUTION ARBITRATION
117

2. When a contract is embodi'ed . it to arbitration any dispute arising out of .

· · in two (2 subrTI' . h MOU or in con-
wntmgs, the writings of the parties should b l or rn . n with t e ·
t~rpreted together in such a way as to de react Elnd ~te nect10
tion effcctive. ren er their int •11.
Cl).
issv£:
Whether the ex~iratiodn hof the Memorandum of Un-
G.R. No. 211044, 24 July 20lg derstanding also terminate t e effectivity of the arbitra-
tion clause.
FACTS:
RULING:
In January 2007, the Net Corporations (N
and Ascendas entered into a Memorandum of U et Group) YES. The expiration of the Memorandum of Under-
ing (MOU) wherein the parties agreed in prin ~dlerstand. standing also terminated the effectivity of the arbitration
, . . . c1p e to A clause. Art. 1370 of the New Civil Code on the interpreta-
cen d as acquisition of the entire issued and outstandins-
sh~es of stock of the former. The MOU included an _g tion of contracts mandates that the literal meaning of the
tration clause. In accordance with the MOU and th arbl, stipulations shall prevail if the contract's terms are clear
ac ti. on time
· 1 me,
· Ascendas delivered to the Net Groue trans. · and leave no doubt as to the intention of the contracting
revocable Letter of Credit in the amount of One Milli~ art tr- parties. If, however, the words of the contract are contrary
.. on US to the evident intention of the parties, the intention of the
Dollars or the Due Diligence Letter of Credit specifiedin
the MOU. Thereafter, Ascendas began its due diligence· . parties shall be controlling. In the case at bar, while there
v_estigation on the Net Group. By 31 March 2007, the p:. is no doubt that the parties intended that disputes be re-
ties were not able to execute a MOA and definitive agree- ferred to arbitration, the parties, nonetheless, are in con-
ments. The Net Group informed Ascendas that they flict as to whether the Arbitration Clause is time-limited.
deemed the MOU lapsed as of 1 April 2007. Ascendas, The clauses of the MOU provide that upon its lapse, the
however, argued the contrary attributing the delay in the MOU shall cease to have any force and effect with the sole
execution of the MOA to the Net Group, citing lapses in exception of its confidentiality clause. The lapse of the par-
providing the information and documentation necessary to ties' principal contract would mean the corresponding
lapse or expiry of the arbitration agreement contained
complete its due diligence audit. It further informed the
therein.
Net Group that the parties have until 28 September 2007
to resolve the disputes between them; otherwise, Ascendas DOCTRINE:
will refer the dispute to arbitration. The Net Group filed a
Petition for Declaratory Relief alleging that Ascendas' de· . The parties may agree as to the submission of the
mand to arbitrate is baseless, contending that the arbitra· ? 1sputes to arbitration, the forum of arbitration, the sub-
tion clause would not survive the lapse of the MOUon 3! ject of arbitration and the termination of their arbitration
March 2007 because the parties agreed that only the con, a~reement. If the wordings are ambiguous and may lead to
fidentiality clause will survive the termination or lapse;e different interpretations the Court should determine the
the MOU. Ascendas, on the other hand, claims that uld actual. intention
. '
of the contracting parties.
parties did not intend that the Arbitration. CI~use ::d
to
end together with the MOU. Rather, the parties mten
 ARBITRATION
119
PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION
118

Key Elements of an Arbitration Agreement seat O,f 11,-bitration

11ie t of arbitration is the legal home of arbitrat'
As a guide in drafting an arbitration agreern "'ne itsea
I docs not necess~1·1 Y mean t h e physical place where
ion.
must ensure that, at the minimum, the following e~nt, Parties . n proceedings WJII take place. What is contemplated
reflected in the agreement/clause: ements are 110weve_r,
the arb1trat1of arbitration is the place of which laws will apply to
as the ~eat ? n proceedings. It will as well determine the court
~.-b1trat10
(he .., he power to in · rertere
-' · the arbitration
in · · proceedings.
that h_as ~hilippines as the seat of arbitration, for instance, will
choosing errnit application of the Special ADR Rules prornul-
generallY ihe supreme Court of the Philippines. On the other
gate1 !\hoice of a Singapore seat of arbitration may allow the
nan ' fon of Singapore courts.
interven ,

Arbitral Rules
Another key element that must be reflected in the arbitra-
tion agreement is the stipulation on the rules that will govern the
arbitral proceedings. For purposes of transparency and equality
ARBITRATION amongst the parties, the rules and procedures must be outlined
AGREEMENT in an Arbitration of Agreement. The parties may cite already es-
tablished rules such as the UNCITRAL Arbitration Rules or the
parties may modify or draft their own rules. However, it must be
ensured that stipulations as to rules must not be contrary to
Language law, morals and public policy.

Number of Arbitrators
It is likewise important to indicate the number of arbitra-
t?rs the parties prefer to handle the arbitration proceedings. Par-
ties may freely agree to have their dispute resolved by a sole arbi-
~~~tor or _an arbitral tribunal (three arbitrators). In addition to
is, parties can agree to limit the selection of arbitrators based
on a. parfictrlar area of expertise. Aside from the number, the
aparties
. can lik1 ewise stipulate as to the manner of the arbiitra t ors '
Submission to Arbitration PPointm ent and challenge to it.
Considering that a key attribute of Arbitration is _P~
autonomy, the foremost element that must be r~Oected U:,rnit
Arbitration Agreement is the intention of the parties to su
the dispute to an arbitration.
120 PHILIPPINE AL 11:RNI\ TIVE DISPUTE RESOLUTION
lvm, r riA rroN
121

Language of the Arbitration rtir pnrt ir-s. s houlrl . decide bct wr-r-n insrn .
· 1 u11onal and
;rel ho<" :, r bi I rn t ion;
The parties are free to agree on the tangu .1.1,c p;irtics should select a set of arbit ration .
to be use d in · t 11e arbitral proceedings. Failing age rules
suchor la nguagcs IJ, ·incl use· 1 lw mode I r-la usc r<"commcnded ,11 0 th
the language to be used shall be English or Fil' . agrccllleni' ' • • r esc ar-
guag e I c; agree d , un less otherwise bitration rules ;is a starting point;
. specified therein ipmo.
ha] 1The Ian.'
~earings and all written statements, orders or oth;rs co be in all hscnl special
. . circumstances. . the parties sh
· ou Id not
('.
/\ ·
tion by the parties and the arbitral tribunal. mmunica. ;ittcmpt 10 lirnit the scope of disputes subject to arbi-
tration and should define this scope broadly:
Thhealarbitral tribun~ may order that any documentary . The parties should select the place of arbitration. This
d ence s l be accompanied by a translation into the Ian ev1. d.
selection s~ould _be based on both practical and ju-
languages agreed upon by the parties in accordan ~age or
previous paragraph.v'> ce with the ridical cons1derat1ons;
The parties should specify the number of arbitrators;
c.
Substantive Law of the Contract vs. Law Governing The parties should specify the method of selection
the Arbitration Agreement f.
and replacement of arbitrators and, when ad hoc ar-
bitration is chosen, should select an appointing au-
It is well established that an arbitration agreement is d" .
thority;
tinct from the substantive contract in which it is recorded and
that the two agreements may be governed by different laws. De· g. The parties should specify the language of arbitration;
spite this, contracts often include an express choice of law gov· and
erning the substantive contract, while remaining silent as to the The parties should ordinarily specify the rules of law
h.
law governing the arbitration agreement. Parties commonly (but governing the contract and any subsequent disputes.
wrongly) assume that the law of the arbitration agreement is al-
ways the same as that governing the substantive contract. Elements Under the IBA Drafting Guidelines

International Bar Association (IBA)Guidelines for u. The authority of the arbitral tribunal and of the
Drafting International Arbitration Clauses courts with respect t.o provisional and conservatory
mcnsu res:
On 7 October 2010 the International Bar Association (IBA)
adopted the Guidelines 'for Drafting International Arbitration b. Document production;
Clauses (IBA Arbitration Clause Guidelines). The IBA Guideli~e~ Confidentiality issues;
are designed to help achieve effective arbitration clauses, whic d. Allocut ion of costs and fees;
unambiguously embody the parties' wishes.
v, Quulifirnt ions required of arbitrators;

Basic Drafting Guidelines Under the IBA f. Time limits: and

under thC g.
The following are the guidelines in arbitration Finality of arbitration.

IBA Rules:
..,~ Arts. 4 .22 and 5.21, !RR, ADR Act.
122 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION
ARBrTRA TION
123
Drafting Guidelines for Multi-Contract Arbitration
Clauses in the IBA covered by a Purchase ?rder issued by Nutri-Asia and the
purehase Order .contams. terms and conditions , among
a. The arbitration clauses in the related which is an Arbitration clause. Ho""'.ever, Hygienic con-
should be compatible; and contracts ds that for every purchase of plastic containers by Nu-
ten . . . Sal I .
tri-Asia, Hygienic issues e~ nvoices_ to cover these
b. The parties should consider whether to pro id nsactions. These Sales Invoices contains a stipulation
consolidation of arbitral proceedings commen~~de for tra . b . h 1
h t the parties su mit t emse ves to the jurisdiction of
der the related contracts. Un. !h: Courts of the Ci~y of Manila in any legal action arising
out of their rransacnons.
Form of an Arbitration Agreement
ISSUE:
An arbitration agreement shall be in writing. An agreeme
is in writing if it is contained in a document signed by the Parti~sI Whether the parties intended to stipulate the arbi-
or in an exchange of letters, telex, telegrams or other means of tration agreement.
telecommunication which provide a record of the agreement, or
RULING:
in an exchange of statements of claim and defense in which the
existence of an agreement is alleged by one party and not denied NO. There is no showing that the parties intend to
by the other. The reference in a contract to a document contain- stipulate on an arbitration clause or enter into the arbitra-
ing an arbitration clause constitutes an arbitration agreement tion agreement.
provided that the contract is in writing and the reference is such
as to make that clause part of the contract.t+e As a rule, parties are allowed to constitute any stip~-
lation on the mode of dispute resolution as part of their
freedom to contract under Art. 1306 of the Civil Code of
RELEVANT JURISPRUDENCE:
the Philippines, which provides:
Hygienic Packaging Corp. vs. Nutri-asia, Inc.. "ARTICLE 1306. The contracting parties
G.R. No. 201302, 23 January 2019 may establish such stipulations, claus~s, terms
and conditions as they may deem convenient, pro-
FACTS: vided they are not contrary to law, morals, good
. . filed a Complaint
. for sum of mo ney against customs, public order, or public policy."
Hygienic ti
e,· th p!as c · frue
·1 d to .pro-d
Nutri-Asia when the latter refused to pay for e de· However, in the case at bar, the parties
.
contamers ·
that they bought despite or al an d written
.1 vide evidence of any contract, which could have contame
mands. It instituted the case before the RTC of Mani a. .
stipulations .
on the venue of dispute resol ution.
· Upon ex-
di missed amination of the Sales Invoices and the Purchase Ordt~s~
Nutri-Asia claims that the case must be 15 rding these documents cannot be considered as contracts a
.
for not having been referred first to arbitra ti on. Acco
f red to would bind the parties as to the venue of dispute re~o1 ~-
to Nutri-Asia the case should have first been re ~rn was ti . . ued by Hygienic
ton. A closer look at the Sales Invoices iss . is
an Arbitration' Committee
. because every t r ansactJO
reveal that the signature of Nutri-. Asia
. 's representative
. d order
near the phrase: "Received the above goods m goo
H6 Art. 5.6, IRR, ADR Act.
124 PHILIPPINE ALTERNATIVE DISPUTE R ESOLUTION
ARBITRATION
125
and c~ndi!ion." Clearly, the purpose of N .
sentative
kn in signing the Sales .
1 nvoices iutn-Asia's rep 1ssuE:
o~ledge that h~ or she has received t s me~ely to re.
Whether the arbitration clause is null d . .
ers m good condition. He or she did he plastic cont ~c- is against public policy. an void as it
. t · 1 not affi hi atn.
signa ure in any other capacity exce t 1X is or h
the goods. P as the recip·ient er
of RULING:

DOCTRINE: NO. In the i?stant case, it will be noted that some-

time after the action was commenced and upon the re-
. The act of signing purchase orders for quest of the defendants, .~e plaintiff agreed to arbitrate
hon of orders of goods cannot be held as t the confinna. under the terms and provisions of the policies; the parties
consent to be bound to an arbit ra tiion c I auseantamount
. to mutually agreed upon an arbitrator; and each appeared
such documents. contained in before him and offered his or its evidence upon the ques-
tions in dispute. There is no claim or pretense that the
proceedings were not honestly and fairly conducted. Hav-
Chan LLinte vs. Law Union and Rock Ins urance Co ing formally agreed and submitted to an arbitration after
td., G.R. No. 16398, 14 December 1921 ., the action was commenced, it may well be doubted
whether the plaintiff can at this time question the validity
FACTS: of the proceedings, except upon the ground of fraud or
mistake.
Chan Linte (plaintiff) alleges that he was the owner
of hemp, st.ore~ i~ the warehouse in Calbayog, Province of DOCTRINE:
Sarnar, which is insured by Law Union and Rock Insur·
The plaintiff, having agreed to arbitration after the
an~e ~o., Ltd. (defendant). The warehouse caught fire and
action was commenced and submitted his proof to the ar-
plaintiff req~ested defendant to insure the property against bitrator, in the absence of fraud or mistake, is estopped
loss by fire in the sum of PS,000. The defendant refused in and bound by the award. Where a plaintiff has commenced
doing so and insists that its liability should be submitted an action to recover upon an insurance policy, ~d ~en
to arbit:a.tion, in accord with the provisions of the policy. voluntarily submits the amount of his loss to ar~itratio~,
The policies of the defendant, provide for arbitration and he cannot ignore or nullify the award and treat it .a~ void
expressly stipulated "that it shall be a condition precedent to upon the ground that he is dissatisfied with the deciswn.
any riqhi of action or suit upon this policy that the award by
such arbitrator, arbitrators or umpire of the amount of the Cargill Philippines, Inc. vs. San Fernando Regala
loss or . damage if disputed shall be first obtained' " anddithatst Trading, G.R. No. 175404, 31 Januarv 2011
the action was brought without making any effort to a JU.
the loss by arbitration. Plaintiff, on the other hand, con FACTS:
tends that the arbitration clauses are null and void as theY . (R ondent) filed a
are against public policy. San Fernando Regala Trading esp against
complaint for Rescission of Contract with o~ages d to the
11
petitioner Cargill (Petitioner). It alleged that agree
126 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION ARBITRATION
127

purchase from Cargill of 12,000 metric tons of Th . pocTJUNE:

origin cane blacks trap molasses and that the Pa atland
would be by an Irrevocable Letter of Credit Pa.yat~en1 arties to a dispute shall resort to arbitration
sight. The parties agreed that the delivery would be e at The p is provision in a contract executed between
where th.erhe states that all matters in dispute between the
in April/May. Cargill failed to comply with its oblig ~ade hem wh1c bi .
despite demands from respondent. The respondent t~ns t . hall be referred to ar itration.
parties s
filed for rescission. The Petitioner filed a Motion to D~n
miss/Suspend proceeding, arguing that they must first ts. S arability of Arbitration Clause
principle of ep
sort to arbitration as stated in their agreement before go:·
· · le of Separability of Arbitration Clause means
to court. However, the RTC ruled in favor of the Respon!
The P~tnCitJ:l n clause which forms part of a contract shall
dent. The Court of Appeals affirmed the RTC decision, add- " arb1tra 10 f th
that an agreement independent of the other terms o e
ing that the case cannot be brought under the Arbitration be treated asd~ . n by the arbitral tribunal that the contract is
Law for the purpose of suspending the proceedings before t ct A ec1s10 . . . bi
con
null ra
and· voiid shall not entail ipso jure the invalidity of the ar 1-
the RTC, since in its Motion to Dismiss/Suspend proceed.
ings, Petitioner alleged, as one of the grounds thereof, that tration c1 ause. "147
the subject contract between the parties did not exist or it
was invalid; that the said contract bearing the arbitration PathologicalClauses
clause was never consummated by the parties, thus, it was
Pathological clauses are used to identify arb~tration
proper that such issue be first resolved by the court
clauses that contain defect(s). When stipulations are ambiguous,
through an appropriate trial; that the issue involved a
incomplete unclear or contrary, such clauses are created.148 The
question of fact that the RTC should first resolve.
'
term "pathological clauses" or "clauses pat h ologiques
· " was
ISSUE: coined from the work of Frederic Eisemann, former Secretary
General of the ICC, in "La clause d'arbitrage pat?ologique". as
Whether the Court of Appeals erred in finding that published in the "Commercial Arbitration Essays in Memonam
this case cannot be brought under the arbitration law for Eugenio Minoli."149 Eisemann outlined four essential elements of
the purpose of suspending the proceedings in the RTC. an arbitration clause that could be used in order to assess. th.e
nature and extent of the pathology, and serve as gutidimg pn net -
RULING:
pies in drafting arbitration clauses, to wit
YES. The CA erred in ftnding that the case is
within the bounds of arbitration law. Arbitration, as an
n;~ a. Production of mandatory consequences
ties;
for the par-

temative mode of settling disputes, has long been reco~: b.

nized and accepted in our jurisdiction. R.A. ~o. 87:.:.a.
thorizes arbitration of domestic disputes .. Foreign ar 1 in·
Exclusion of state court intervention
· ·in the settlement
of the disputes, at least before the issuance O t e
f h

award;
tion, as a system of settling commercial disputes of an ct·
147
ternational character, is likewise recognized. !he_ er:,0• 16
Rute2.2. Art. (I) 1985 UNCITRAL Model Law, ADR Act IRR, 4.l6 an d 5. JS·' SADR,
ment of R.A. No. 9285 on 2 April 2004 further mstitu in·
alized the use of alternative dispute resolution systems, ti ••a Rctr· . .
1c.cas.uphct~c-vcd from https:/ /www.swissarbitrationdcc1s1ons.co~
J'urisdiction-or-
J
149
eluding arbitration, in the settlement of disputes. l'or1·no· a-pathological-clause-has-to-be·s on 29 January 202 ·
u · .
· nione T1pog.rafico-cditricc Torincse, 1974.
 ARBITRATION
128 129
PHILIPPINE ALTERNATIVE DISPUTE RESOL UTION

c. It was a corn~on ~round between the parties that

Equipping arbitrators the pow s no entity m Singapore named the "Arbit t.
that arc likely to arise, between t~ e to re.solve dispUtes
parties. there wa ,, ra ion
d. Permission to put in place a 'and cornrnittee.
con diitions HI<~ Group Co. Ltd. opposed Rizq Singapore's ap I'-
·
of efficiency and ra procedur
idi . e Under b
award that is susceptible ofJ'ud~1. . on the ground that the arbitration clause is deemetd
ic1ailty m renderingest
enforceme an cauonble due to the pa th oI og1c
. al clause. It also contends
e
opera
that there was no diispute wit. hiin th e meaning of the arbi-
G~ncr~lly, even if an arbitration claus ·
cou.rt ~till gives effect to the stipulation so
nt.
is def:ctive, the
prcJud.1cc. the rights of either party and the int:~g as i.t Will not
t tration clause.
well. within the intention of the part'res mvo
. lved pretatton
N O t b is stil) 1ssuE:
1 ogical clauses are often main points of dis t ·b a ly, Patho-
hence, a significant consideration in draftfnuge;.twe~n Parties, Whether the arbitration clause was defective.
ments. ar itration agree-
RULING:
A decision of the Singapore High Court in th
Group Co., Ltd. vs. Rizq International Holdinge YES. The arbitration clause was so defective; never-
8 Ptcase ofllK],
invol vc d an cxamp le of a defective arbitration clause, toe.wit
Ltd ., •so theless, it is operative and workable. In the present case,
the defect in the arbitration clause is the reference to a
FACTS: non-existent "Arbitral Committee at Singapore," which,
when considered against the framework of Eisemann's es-
" Rizq ~ntcrnational Holdings Pte. Ltd. ("Rizq Singa- sential elements, is a deviation from the fourth element as
pore ), applied for court proceedings to remain in favor of it leads to inefficiency and slows down the arbitral process
arbitration on the basis that an arbitration clause in the ~s ?arties are bogged down by the dispute over the pre-
contract it entered into with HKL Group Co., Ltd. is liminary question of the mode of dispute resolution instead
deemed to be a pathological clause. The clause reads as of moving on to resolve the substantive dispute.
follows: However, the Court still ruled that the arbitration
"Any dispute shall be settled by amicable ~lause is workable and not "null and void inoperative or
negotiation between two Parties. In case both par- incapable of b emg
. . the parties
performed" if . ' are able to se-
ties foil to reach an amicable agreement, all dis- ~~e.t~e agreement of an arbitral institution in Singapore.
putes out of or in connection with the contract taming such agreement will rectify the defect of the
shall be settled by the Arbitration Committee at Clause.
Singapore under the rules of The International
Chamber of Commerce of which awards shall be DOCTRINE:
final and binding on both parties. Arbitration fee
and other related charge shall be borne by the los- Valid :Vhere the arbitration clause, although contractually
ing Party unless otherwise agreed." of c , ts defectiive even after applying the general pnncip
· · I es
caseontractual ·
mterpretation or after rectificat10n, as thOe
J • • •

may b e, the court is unable

' ·
to discern the meaning f

1!>t1 Suit No. Cl72 of2012/P, 12013l SGHCR 5.

 ARBITRATION
132 133
PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

tion t~ det~rmine the substantive issues i voctftlNE=

t? arbitration as the action constituted a n _the subrnissio An arbitral tri~un~ h~s the power to rule on its own
~•.nee the. appellant should have brought~~~sc ~f Proces: . ·sdiction and by 1mphcat10n, to rule on the underlying
irst Ar~1trat1on. According to the Secon cl~rn in the Jun of fact or law that are relevant to determining
As~ran~1 was estopped from raising the i/ TnbunaJ, P'r issuesh it had juns . dire ti10n.
arb1trat1?n. PT Asuransi then appealed to :~: o~ the first whet e r
contending that the Second Award b . High Court submit to Arbitration?
l · . e set aside
owing grounds, among others: on the fot. w,io r,tay
The following can be parties to an Arbitration:
(a) that the Second Award was in co fl' .
public policy of Singapore and was thus . ~ ict with the Natural persons/individuals with capacity to con-
a.
34(2)(b)(ii) of the 1985 UNCITRAL Model L~:; ;~ch of Art. tract153
(b) that the Second Award had dealt with di b. Juridical entities
or issues not falling within the terms of submissi istputes c. States/state entities
bit · h on oar-
I ration, t us leading to a breach of Art. 34(2)( )("') O f h Two or more persons or parties may submit to arbitration
id M d I a in t e
sat o e Law; by one or more arbitrators any controversy existing between
them at the time of the submission and which may be the sub-
ISSUE: ject of an action; or the parties to any contract may in such con-
tract agree to settle by arbitration a controversy thereafter aris-
Whether the Second Award must be set aside.
ing between them. Such submission or contract shall be valid,
enforceable and irrevocable, save upon such grounds as exist at
RULING:
law for the revocation of any contract. •s4
YES. The Second Award must be set aside. The
Court noted that the findings of the second arbitral tribu- RELEVANT JURISPRUDENCE:
nal were indeed erroneous and inconsistent with those of
the first tribunal. However, the Court stated that an arbi· Cordobavs. Conde, G.R. No. 1125, 24 August 1903
tral tribunal had the power to rule on its own jurisdiction
FACTS:
and by implication, to rule on the underlying issues off~cl
or law that are relevant to determining whether it had ~u- On 20 February, 1901, Cordoba (plaintiff) and Conde
risdiction. The Court concludes that any negative findin~ (defendant) formed a mercantile partnership, the seventh
on jurisdiction by the arbitral tribunal may not be
· f di hich
1 were err
s;. clause of the contract being as follows:
aside even if there were certain m ings w . bitral
ncous or inconsistent with those of the previ~us. adr.tiol'l
· Ii its JUflS IC 011 "7. sai1
In all matters not providedfor in the
tribunal. Ji'urthermorc, a negative ru mg on d as =v=. the partners will be bound by the pr~lll-
by an arbitral tribunal sho~ld not be rcga;d:f the dis· sions of the Spanish Code of Commerce, it being
"award" as it docs not deal with the substanc agreed that all doubts, disputes, or disagreements
t!>_' Art. 1 s: •
pule. t~ I\ o, Ctvil Cod
n. S. 1 (c)
f
c o the Philippines.
' Ruic 1, IRR, ADR Act.
 ARBITRATION
135

PHii IPPINE AL 1 CRN/11 IVE DISPUTE RESOLU1 ION

134

oc1wH£:
iohich
. may arise between tile partners d unng~e . O h ugh the provisions of the procedural Jaw had
istence
. . of the
. partnership
. • . as well as d unng
· the ex- Alt 01ed the contract can still take effect under the
nod of its rl1ssolut1on and liquidation. will b d . Pe- been_ repea '
. ns of the Civil. Code. H owever, given
. that the gov-
by friendly adjusters." ' e ecrded pro~isiolaW at present declares that not only the form of
crn1n~ but also the effect of these agreements shall be
Certain differences having arisen betw proce lul r; by the Ley de Enjuiciamiento Civil, the repeal of
ties, the plaintiff
. brought this action for the dieen Utio Par.
SSO1thc
e partnership . There is no allegation in th nor contro e has caused the c I ause me · ffiective.
·
th the tatter
that bbefore the commencement of the action any e complaint
attem
Lanuza, Jr. vs. BF Corporation, et al.,
I· 1a d eend made by . the plaintiff to settle the said diff
1 1erencePl
in accor ance with the seventh clause above quot d s - Q_.R. No. 174938, 1 October 2014
court below, in view of that clause, held that it h a de no
. di .
· 1:he
Ju-
ns iction to try the case. The plaintiff appealed.
FACTS:
Lanuza, Jr. (petitioner) seek to reverse the ruling of
ISSUE:
the Trial Court and the CA that they should also be bound
Whether the Court has no jurisdiction to try the case personally by the arbitration proceeding between Shangri-
~ue to the seventh clause of the contract between the par- La, where they acted as directors, and the respondent who
ties. was employed to construct certain edifices. They state that
they cannot be bound by the same as the company has a
RULING: distinct and separate personality from them. BF Corpora-
NO. As said by the counsel for the appellee in the
tion, et.al. (respondent) avers that Shangri-La's directors
argument, litigation by means of friendly adjusters was were in bad faith in directing the company's affairs and
thoroughly well known at the time this contract was made, should be held solidarity liable with it. The Trial Court
and it was the method, which the parties intended to fol· ruled that petitioners were interested parties who "must
low in the settlement of their differences. The procedure in also be served with a demand for arbitration to give them
this kind of litigation was minutely described in the for~er the opportunity to ventilate their side of the controversy,
Ley de Enjuiciamiento Civil. Twenty-one articles, including s.afeguard their interest and fend off their respective posi-
those incorporated by reference, are devoted to it. (Art~. rovr tions." This was agreed upon by the CA which stated that
810-822.). However, in the case at bar, all of these P d Petitioners stand to be benefited or injured by the result of
sions relating to the suit of friendly adjusters disappe~~ t~e arbitration proceedings hence being necessary par-
1es th ey must be joined in ,order to' have complete adJU
. di,-
with the repeal of the Ley de Enjuiciamiento Civil, and ~e~~ t .'
8~fhere
not claimed by the appeJl~e that there can now be cation of th e controversy.
11
tlement in the manner pointed out · ·by the latter JJJ<e 1.l ·
espectla~ ISSUE:
is .nothing
. in .the new code
fi t ht at rs in any . . ns of
r prov1s10
ut the
being 1mposs1ble, there ore, o carry o greed ab\c Whether the Petitioners should be held personally Ii-
he seventh clause ' because the only · · method there
rbertY
I
ato re·
tupon has been abolished, the plaintiff was at

sort to the court.

136
PHILIPPINE ALTERNATIVE D
ISPUTE RESOLUTION ARBITRATION
137
RULING:
Or!JlOC sugar Planters Inc. vs. Court of Appeals
YES. The petitioners may be held .::.---- G.R. No. 156660, 24 August 2009 ~
corporation's representatives are personally liabJ
the terms of the contract execut~ne~ally not bound\'\ y,\CTS:
However'. ~here are instances when the Jist~e ?orporatioi Petitioner Ormo~ Sugar Planter's Association (OSPA)
personalities of directors offi hnetion betw .
f h ' icers, and rep een sugar planters while respondent Hideco Sugar Milling
o t e. corporation, are disregarded. We ;esent~tiv~s, clnd C Inc. and Orrnoc Sugar M·u·
are 1 mg Co., Inc. are sugar cen-
the veil of corporate fiction. When th di all this piercing t ~~ engaged in the grinding and milling sugar cane deliv-
~ase, are impleaded in a case a ains; a ireetors, .as in this r ed to them by numerous individual sugar planters. The
mg malice or bad faith on their gpart . d~orp?ration, alleg. ;;lationship of individual sugar planters are governed by
of th · m irectmg the aft ·
e corporation, complainants are en ti airs milling contract which provides that 34% of the sugar and
that the directors and the corporati ee ively alleging molasses produced by the planters shall belong to the
ion are not acti
separate entities. They are alleging that th ng as sugar centrals, 65% thereof to the individual planters and
s· b h e acts or omi
tons Y t e corporation that violated their right s- the remaining 1 % shall be given to the association to
the dir t • . . s are also which the planter is a member. If the planter is not a
ec ors acts or omissions. They are alleging that con-
tracts ex~cuted by the corporation are contracts executed member of any, it shall revert back to the centrals. Peti-
by the directors. Complainants effectively pray that th tioner OSPA filed a case before the RTC for arbitration un-
corporate veil be pierced because the cause of action be~ der RA 876 to Recover Additional Benefits, and others
tween the corporation and the directors is the same. In against respondents. Petitioners claim breach of the mill-
that case, complainants have no choice but to institute ing contract because respondent gave the l % to the indi-
only one proceeding against the parties. vidual planters who are not members instead of reverting it
back to the centrals. The RTC directed the parties to pro-
Under the Rules of Court, filing of multiple suits for ceed with the arbitration. Respondents elevated the case to
a single cause of action is prohibited. It is because the per- the CA by way of certiorari. The CA set aside the chal-
sonalities of petitioners and the corporation may later be lenged decision hence the petition.
found to be indistinct that we rule that petitioners may be
compelled to submit to arbitration. This is the case since ISSUE:
corporation's obligations are treated as the representative's
obligations when the corporate veil is pierced. . Whether petitioner associations have legal personal-
ity to file a suit against or demand arbitration fro~ r~-
DOCTRINE: s~ondents in their own name without impleading the indi-
vidua} planters.
Directors and officers may be impleaded in arbitr:~
tion proceedings to determine if the corporate veil shoU RULING:
be pierced.
. NO. Petitioners have no legal personality to file a
su,t. As Provided for by Section 2 of R.A. 876:
138 PHILIPl'INCAll FRNAllVE DISl'Ul E RESOLUTION
ARBITRATION
139

"Section 2. Persons and matters .

arbitration. 1\vo or more persons or p·,s·ut_bJcqto ncrTl IJC
rs , the associations are still considered a st ranger
submit to the arb1,·itratton·
of one or more ~·a1 'bitcs 111uy ~o the contract.
. • 1. 1 1trat
any controversy existing between them at ti _ors
of the submission and which may be sub· 'le l1111c sases conversion Development Authority vs. DMCI
. ~ect of
action, or the parties to any ~ontt:act may in , un =- project Developers, G.R. No. 173137,
contract agree to settle by arbitration a cont Sttch 11 January 2015
thereafter arising between .
them. Such sub llltss10r~vc:sy
or contract shall be vahd, enforceable ' and ·irrev 11 y.4crs:
0•
cable, save upon such grounds as exist at la
· \V for
the revocation of any con t rac t . " The Bases Conversion Development Authority
(BCDA) entered in~o a Joi~t Venture Agreeme~t (JVA) with
Petitioner in this case is not the proper party b h Philippine National Railway (PNR). The said Agreement
individual members of the association. Without a Ut t~e t e tajned an arbitration clause. BCDA organized and in-
spec1a1
power of attorney to make them a representative of h
conrporated Northr ail an d was registere
. d to SEC. BCDA in-
. . t t e ~~ed investors for the said _projec~, and DMCI was made an
member~, the associations are a s ranger_ to ~he contract.
The parties to a contract are the real parties in interest. investor. BCDA and PNR, mcludmg DMCI entered into an
an action upon it, as consistently held by the Court. On]~ Agreement.
the contracting parties are bound by the stipulations in Later, Northrail withdrew from the SEC its applica-
the contract; they are the ones who would benefit from and tion for increased authorized capital stock, and the DMCI
could violate it. Thus, one who is not a party to a contract started demanding the return of its P300M deposit, which
and for whose benefit it was expressly made, cannot main- was not returned. Hence, DMCI filed before the RTC a de-
tain an action on it. One cannot do so, even if the contract mand to arbitrate based on the arbitration clause included
performed by the contracting parties would incidentally in the JV A previously entered into between BCDA and
PNR. Petitioners filed a motion to dismiss on the ground
inure to one's benefit.
that DMCI was not a party thereto.
DOCTRINE:
ISSUE:
t to arbi·
The formal requirements of an agreemen_ 'ting Whether DMCI can demand arbitration based on the
. ( ) 1it t be in wn
trate are therefore the following: a mus h ir reprc· JVA in which it was not a party thereto.
. h art"es
1 or t er
and (b) it must be subscnbed by t e P . nderneath, as
sentatives. To subscribe means to wnte u That word RULING:
one's name· to sign at the end of a document. ent 1oor
t uive cons
'
may sometimes be construed to mean t,· °
t the proper YES DMCI can demand arbitration based on thde
·
Agreement which it was not a party. Arbitra ion
· ti 1is a mo e
ti
to attest. In the case at bar, petitioners are _no greernen1 . Lil< many alterna ive
b"tration a t O f settling disputes between parties. e ti.
arty in this case to enforce the ar i . agree1Tle01· ct· · · duct of the mee ng
P · · h bitration cin ispute resolution processes, it is a pro
since they did not subscn~e to t e ~ without a spe1111 Off dis-
of minds of parties submitting a pre-defined set O dis-
Provided that they subscnbed therein, tative of putes. They agree among themselves to a process
represen
power of attorney to make t h em a
 140
PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION
/\RBITRA !ION
141

pute resolution that avoids extended liti .

a cas e pending in Court May Refer the
t b tl · 1 igation J
a ar, re Joint Venture Agreement (JVA) · n the c •11
executed by BCDA, PNR, and other for . Was initi:J( partY ' Arbitration
case for .
therein. However, when the JVA was ame1gnd eorporatio Y
D . M . C onsunji. . and its
. en ed to 1. nc1udens
nominee, they were de
;irty 10 a n action. may request the court before which it
/\.11ng
r to.'· st .1 y the . act ion .and to. refer. t he d ispu tc to arhitra-
also been a party to the origi nal JVA e emect to ha,,
p . xecuted b •e js pen( [J('COrd.itH-C With their arbitration agrcerncm not later
NR, and the foreign corporations. As a ul Y BCDA 1;on
111
• t rinl conference. Thereafter, both par ics rnav make
.. I res t D ,. ' th<·prl
"
'h · ·
su nji, nc. and its nominee became bound ' "'•1- Con
b oth the JVA and its .
amendment.
to the t
ennsor
· 11tan . I . ·ciucsl with the court. r e pant es shall be referred to
,1 si1n1lnr . cL in less the court Iim ds t hat t hear biitranon· agreement
b'trat1on
1 . . . b

DOCTRINE: ar • d void. inoperative or incapable of being performed.

is null d n
Where an action referred_ to in previous paragraph has
Arbitration is a mode of settling disput b b ro l ,oht n r b it ral proceedings may nevertheless be com-
ti Lik es etwe
par es.. . 1 e many alternative dispute resolution r en
bcrn :--, · .
d Or con11nucd.
.
and an award mav be made. while the is-
. .
mcnre · ..
esses, it is a product of the meeting of minds f p ~- Where the action rs commenced
· · O Parties sue 1.·5 pendino :--, before the court. .
su b rrutting a predefined set of disputes. They agree amon bv or against multiple parties. one or more of whom are parties
themselves the process of dispute resolution that 'dg t~ an arbitration agreement. the court shall refer to arbitration
. . . avoi s
ext en ded I itigation. those parties who arc bound by the arbitration agreement al-
though t hc civil action may continue as to those who arc not
Party Disqualifications to a Domestic Arbitration bound by such arbitration agrcerncnt.t v
and Exceptions
Multi-Party Arbitration
A controversy cannot be arbitrated where one of the par·
ties to the controversy is an infant, or a person judicially de· When a single arbitration involves more than two parties.
dared to be incompetent, unless the appropriate court having the lRR oft hr- ADI~ Act , to the extent possible. shall be used sub-
jurisdiction approved a petition for permission to submit such jeer to such n1oclilications consistent with the provisions under
controversy to arbitration made by the general guardian or Equal Trcatnwnt of Parties and Determination of Rules of Proce-
guardian ad litcm of the infant or of the incompetent. dure. as the .irbitrnl tribunal shall deem appropriate to address
possible c-ompkxit ics of a multi party arbitration.
But where a person capable of entering into a submission
or contract has knowingly entered into the same, with a pcrs?n 01
. When :1 vlu i m,11H incl udcs persons who arc not parties to
incapable of so doing, the objection on the ground of incapacity .,1. othef\,• •st·. l )<>t111cl b\ the arbitration azrccrncnt, diircct 1Y or bY
re <'n·nce 1 · n · · 1
can be taken only in behalf of the person so incapacitated.155 ·l· · · lt'l\\'l'C'n him/her and the respondent as additiona
l,um,1111s 1 . . 1 th'
th. · or I H' addi i iorial respondents unless, not atcr an
tc!at<'ofc ·. . i for ar-
bitr· · <>mmun1cat1ng his/her answer to the rcqucs 10
ution t·itl l · 11· /h ran-
s,,·l'r, h(' · . H'r )_\' mot ion or by a special defense in 1~ e .
of ~Uch .'.lt1 .V. objt'cts. on jurisdictional grounds, to the incluslO~
bi· tltt· 1n<·cl clition:11 rl'spondents. The additional respondents s~a
to h.<1, . <· conscntcd . .
to their .nctusion ·
mt h c arbitration
". \, t
''' Id. 11<!< \l)f~ .\, I
 142 ARBITRATION
PHILIPPINE AL TERN/\ TIVE DISPUTE R ESOLUTION 143

unless, not later than the date of comm . . Asian International Arbitration Center for Conflict
the rc~uest for arbitration, whether byu~1~~tmg their answ c. Resolution (AJAC)
fen~e. m their answer, they object on juri d _on_ or a speciat lo Chartered Institute of Arbitrators (CIArb)
their inclusion.re? ' s tchona) grou ncts de.I
I O d.
Hong Kong International Arbitration Centre (HKIAC)
e.
Consolidation of Proceedings and Concurrent Heart· Australian Centre for International Commercial Arbi-
ngs r. tration (ACICA)
The parties and
. the
. arbitral tribunal ma Y agree that· Arbitrators' and Mediators' Institute of New Zealand
a. the arbitration
. . proceedings shall b e consolid t · g. Inc. (AMINZ)
ot h er arbitration proceedings; or a ed With
New zeaJand International Arbitration Centre (NZIAC)
b. concurrent hearings shall be held h.
may be agreed. ' on such tenns as
Philippine-Based Arbitral Institutions:
_Unless the p~ies agree to confer such power on the . Philippine Dispute Resolution Center Inc. (PDRCI)
tral_ trib~nal, the tribunal has no power to order consolidati:bi- a.
Construction Industry Arbitration Commission (CIAC)
arbi tration proceedings or concurrent hearings. 1 sa of b.
Philippine International Center for Conflict Resolution
c.
Treatment of Parties in an Arbitral Proceeding (PI CCR)
The_ parties shall be treated with equality and each party
Who May be Arbitrators?
shall be given a full opportunity to present his/her/its case.P?
In Domestic Arbitration, any person appointed to serve as
What is an Arbitrator I Arbitral Tribunal? an arbitrator must be of legal age, in full enjoyment of his/her
civil rights and knows how to read and write. No person ap-
An Arbitrator is the person appointed to render an award, pointed to serve as an arbitrator shall be related by blood or
alone or with others, in a dispute that is the subject of an arbi· marriage within the sixth degree to either party to the co~tr~-
tration agreernen t.U'? On the other hand, an Arbitral Tribunal versy. No person shall serve as an arbitrator in any proceeding if
refers to the body of three (3) arbitrators in accordance with the he/she has or has had financial, fiduciary or other interest in
agreement of the parties. the controversy or cause to be decided or in the result of the pro-
c~eding, or has any personaJ bias which might prejudice the
Examples of Arbitral Institutions: nght Of any party to a fair and impartial
' award.
hi /h No party shall select as an arbitrator any person to act as
Foreign-based ArbitraJ Institutions:
s er champion or to advocate his/her cause.161
a. InternationaJ Chamber of Commerce (ICC)
b. Singapore International Arbitration Center (SIAC)

1r.1 Arts. '1.4'1 and S.'l'I, JRR, ADR Act. lf,1 Sc

,·.11 Art s. 4.'15and 5.45, IRR, /\DR Act. c. IO, R.A. 876 and Art. 5. I 0, I RR, ADR Acr.
1s•, Arts. 4.18 and 5.17, JRR. ADR Act.
•·~• Sec. 3 (e). /\DR Act.
 ARBITRATION
144
PHILIPPINE ALTERNATIVE DISPIJTE RESOLUTION
145

d attention which the parties are reasonabl

If, after appointment but before or during h . frne an Y
son appointed to serve as an arbitrator shall di earing, a Per • ·tied to expect.
entl
cu1:1stanc~ like!~ to create a presumption of bi~:cover ~y cir: .5 inappropriate to c~ntact parties in order to so-
believes might disqualify him as an impartial arbit ' tor Which he Jt '. pointment as arbitrator.
)ic1t ap
trator shall immediately disclose such informationr: o~ the atbi.
0
Thereafter the parties may agree in writing: e Parties. ts of Bias
g1ernen . .
a. to waive the presumptive disqualifyin riteria for assessing questions relating to bias
stances; or g circull). 3, J. The .cmpartiality and independence. Partiality arises
are I
b. to declare the office of such arbitrator vacant hen an arbitrator favours one of the parties, or
· diice d m
· re 1 ation
·
such vacancy shall be filled in the same rn · Any
w here he is preju to th e subject-
· · al appointment
the ongm . was made. anner as w tter of the dispute. Dependence arises from rela-
ma
tionships between an ar biitrator and one of the par-
On the other hand, in ICA, any impartial and inde d ties, or with someone closely connected with one of
·m di1v1idua I may be appointed as arbitrator. •62 pen ent
the parties.
IBA Rules of Ethics for International Arbitrators 3.2. Facts which might lead a reasonable person, not
knowing the arbitrator's true state of mind, to con-
The following are the IBA Rules of Ethics for International sider that he is dependent on a party create an ap-
Arbitrators: JG3
pearance of bias. The same is true if an arbitrator
1. Fundamental Rule has a material interest in the outcome of the dis-
pute, or if he has already taken a position in relation
Arbitrators shall proceed diligently and efficientlyto to it. The appearance of bias is best overcome by full
provide the parties with a just and effective resolution of disclosure as described in Article 4 below.
their disputes, and shall remain free from bias.
3.3. Any current direct or indirect business relationship
2. Acceptance of Appointment between an arbitrator and a party, or with a person
2.1. A prospective arbitrator shall accept an appointment who is known to be a potentiaJly important witness,
only if he is fully satisfied that he is able to dis· will normally give rise to justifiable doubts as to a
charge his duties without bias. prospective arbitrator's impartiality or independence.
He should decline to accept an appointment in such
2.2. A prospective arbitrator shall accept an appointment
circumstances unless the parties agree in writing
only if he is fully satisfied that he is competent to de· that he may proceed. Examples of indirect relation·
termine the issues in dispute, and has an adequate
ships arc where a member of the prospective arbitra-
knowledge of the language of the arbitration.
tor's family, his firm, or any business partner has a
2.3. A prospective arbitrator should accept an a~pointh.t· business relationship with one of the parties.
· able to give
ment only if he rs · to the ar b"tratiOD
1 e 3.4.
Past business relationships will not operate as an
absolute bar to acceptance of appointment, unless
it\J Ari. 12. l 9SS UNCITRAL Model Law; An. 4.12, I~. ADR A~L ors 1987. they are of such magnitude or nature as to be likely
'"-' Arts. 1. 2, 3. 4. 5. IBA Rules of Ethics for lntemaoonal Arb1ua~
to affect a prospective arbitrator's judgment-

>AA»>»>
 ARBITRATION
147
146 PHILIPPINE ALTERNATIVE DISPUTE RESOL
• UTION

the nature of any previous relationship 'th

3.5. Continuous
. . and substantial soc·ia 1 or C,
anY fellow ar bi. itrator [ime 1 uding prior joint WI
ser-
re1 ationships. between a prospect'ive arbitr Profess·ioric11
vice as an arbitrator);
party, or with a person who is kno ator an,1
tiia 11y important
· ·
witness in the wn to. b c a Pot\I a
arbir the extent of any prior knowledge he may have
. . . 1 ration . en. d.
ma I I y give nse to Justifiable doubts ' w,11 no of the dispute;
tiality
1 1
. depen dence of a prospect' as to th
or in . r,
. e •rnpar
ive arbitrator . the extent ~f ~~ commitments which may af-
e. fect his availab1hty to perform his duties as ar-
4. Duty of Disclosure ·
bitrator as may be reasonably anticipated.
4.1. A· prospective arbitrator should disclose au fa The duty of disclosure continues throughout the ar-
circumstances that may give rise to . ~ls or 4·3· bitral proceedings as regards new facts or circum-
doubts as to his impartiality
. or independence
Justifiable
F .
ure to m ak e such disclosure creates · ad. stances.
of bias, and may of itself be a groundf ap~earance Disclosure should be made in writing and communi-
ti tor d1squalifi 4.4. cated to all parties and arbitrators. When an arbitra-
ca ion even though the non-disclosed t: t _i·
t 1 i~sm~ tor has been appointed, any previous disclosure
cums ances wou d not of themselves justify di _-
fication. squall. made to the parties should be communicated to the
other arbitrators.
4.2. A prospective arbitrator should disclose:
a. any past. or pr~se~t business relationship, 5. Communications with Parties
whether direct or indirect as illustrated in Arti- 5.1 When approached with a view to appointment, a pro-
cle 3.3, including prior appointment as arbitra- spective arbitrator should make sufficient inquiries
tor, with any party to the dispute, or any repre- in order to inform himself whether there may be any
sentative of a party, or any person known to be justifiable doubts regarding his impartiality or inde-
a potentially important witness in the arbitra- pendence; whether he is competent to determine the
tion. With regard to present relationships, the issues in dispute; and whether he is able to give the
duty of disclosure applies irrespective of their arbitration the time and attention required. He may
magnitude; but with regard to past relation· also respond to inquiries from those approaching
ships, only if they were of more than a trivial him, provided that such inquiries are designed to de-
nature in relation to the arbitrator's profes· termine his suitability and availability for the ap-
sional or business affairs. Non-disclosure of an pointment and provided that the merits of the case
indirect relationship unknown to a prospective are not discussed. In the event that a prospective
arbitrator will not be a ground for disquaJifica· sole arbitrator or presiding arbitrator is approache~
tion unless it could have been ascertained by by one party alone, or by one arbitrator chosen uni-
making reasonable inquiries; laterally by a party (a 'party-nominated' arbitrat?r),
ial so·
b. the nature and duration of any substanll he should ascertain that the other party or parties,
cial relationships with any party or any ~er::~ ?r the other arbitrator has consented to the manner
known to be likely to be an important w,tn in which he has been' approached. In such circum-
in the arbitration; stances he should, in writing or orally, inform the
 AnDJTMTION 149
148 Ptt1L1Pf'tNL AllrRNllllVI. DtSr>UTE RESOLUTION

the arbitration other than in the presence of

other party or parties, or the other a bi artY to .
P ther parties.
substance of the initial conversation. r itrator, of Iha thC O
conflicts of Interest in International
5.2 If a party-nominated
. h . arbitrator is req uired
. to
pate . in. t e selection of a third or pr es1idl ing Parttc1. 8i4 Ciflldelln;::~ist, orange List, Green List}
b l wation(
tor, rt is acceptable for him (although h . ar itra. ,4rb general categorization of conflicts of interest
quired) to obtain the views of the p e ts not so re.
1BA rnade.: guidance as to which circumstances which
nated him as to the acceptability of c:r~·tho I
nonii. could prov• de not constitute conflicts of interest, or which
considered. n ates being l I
1111 do or o d 16'1
ituations Id not be disclose :
5.3 Throughout the arbitral proceedings . s Id or shou
should avoid any unilateral commun-' at~ arbitrator shou d List (Waivable and Non-Waivable Red List) -
. h ica ions reg r. Rh~ ·ncJude circumstances where, from the perspec-
mg I e case with any party or its repre . ard.
h
sue communication
. . •
should occur th
sentatives If
· · . of a reasonable thir. d person, h avrng
t JS I . kn owledge
should inform the other party or p~ies :n:bitr~tor of the relevant facts an . circumstance~, c~n fl'ict o f
nvc d .
tors of its substance. arb1tra- · terest exists. Non-Watvable Red List includes
:ruations that cannot be cured as it i~ derived from
5.4 If an arbitrator becomes aware that a fellow bi the principle that no person can be his or her own
t h b . . ar itra-
or as cen _in improper communication with a judge. On the other hand, the Waivable Red List in-
party, he may inform the remaining arbitrators and clude less severe circumstances such that they may
they should together determine what action should be waived if and when the parties, being aware of the
be _tak~n. Normally, the appropriate initial course of conflict of interest situation, expressly state their
action is for the offending arbitrator to be requested
willingness to have such a person act as arbitrator.
to refrain from making any further improper com·
~unicatio~s with the party. Where the offending ar- I. Non-Waivable Red List
bitrator fails or refuses to refrain from improper
communications, the remaining arbitrators may in- 1.1. There is an identity between a party and
form the innocent party in order that he may con· the arbitrator, or the arbitrator is a legal
sider what action he should take. An arbitrator may representative or employee of an entity
act unilaterally to inform a party of the conduct of that is a party in the arbitration.
another arbitrator in order to allow the said party to 1.2. The arbitrator is a manager, director or
consider a challenge of the offending arbitrator only
member of the supervisory board, or has a
in extreme circumstances, and after communicating
controlling influence on one of the parties
his intention to his fellow arbitrators in writing.
or an entity that has a direct economic in-
5.5 No arbitrator should accept any gift or substantial, terest in the award to be rendered in the
hospitality, directly or indirectly, from any party t_o arbitration.
the arbitration. Sole arbitrators and presiding arbi·
trators should be particularly meticulous in avoiding
significant social or professional contacts with anY
'"' 181\ ·
Guidelines on Conflicts on lnterest in lntcrno1ionol Arbitrouon
150 PHILIPPINE ALTERNATIVE DISPUTE R ARBlrRATION
ESOLUTION 151

J .3. The arbitrator has a si . 2.J Arbitrator's relationship with the

or counsel parties
or personal interest in gn1ficant fino.
or the outcome of th one of the P ll~ia1 2.3. I. The arbitrator currently repre-
c case. a.rt1cs .
1.4. The arbitrator or his or h '
sents or advises
. one of the Parties,
.
advises the party er firm reguJ or an affiltate of one of the parties.
, or an affili t Urly
par~, and the arbitrator or hi a e of th 2.3.2. The arbitra~or currently repre-
derives significant financial . is or her fir~ sents or . advises the lawyer or 1aw
from . income th e~ fiirm actrng as counsel for one of
the parties.
2. Waivable Red List
2.3.3. The arbitrator is a lawyer in the
2.1. Relationship of the arbitrator to th .
pute e dis. same law firm as the counsel to
one of the parties.
2.1.1. T~e arbitrator has given legal a The arbitrator is a manager, direc-
2.3.4.
vice, or provided an expert .d· tor or member of the supervisory
· h . opm-
10n, on t e dispute to a party board, or has a controlling influ-
an affiliate of one of the parties. or ence in an affiliate of one of the
2.1.2. The arbitrator had a prior in· parties, if the affiliate is directly
volvement in the dispute. involved in the matters in dispute
in the arbitration.
2.2 Arbitrator's direct or indirect interest in
the dispute 2.3.5. The arbitrator's law firm had a
previous but terminated involve-
2.2.1. The arbitrator holds shares, either ment in the case without the arbi-
directly or indirectly, in one of the trator being involved himself or
parties, or an affiliate of one of the
herself.
parties, this party or an affiliate
being privately held. 2.3.6. The arbitrator's law firm currently
has a significant commerci~ rela-
2.2.2. A close family member of the arbi· tionship with one of the part_ies, or
trator has a significant financial an affiliate of one of the parties.
interest in the outcome of the dis·
The arbitrator regularly a?vises
pute. 2.3.7.
') one of the parties, or an a~hate of
2.2.3. The arbitrator, or a close farn1 Y one of the parties, but neither :e
member of the arbitrator, has a arbitrator nor his or her fi:m e-
close relationship with a non·re· rives a significant financial income
party who may be liable to
course on the part of the unsuc- therefrom.
cessful party in the dispute.
 ARBITRATION
152 153
PHILIPPINE AL TI:RNA TIVE DISPUTE RESOLUTION

affiliate of the party, making the ap-

2.3.8. The arbitrator has a I pointm~nt in an unrelated matter, but
r~lationship with one co~s; fatnuy the arbitrator and the party, or the af-
ties, or with a manager h~ Par. filiate of the party, have no ongoing re-
or member of the ' director lationship.
b oar d ' or any personsupervis
h . OI)
controlling influence in aVIng a 2.1.2. The arbitrator has, within the past
. one of th three years, served as counsel against
parties, or an affiliate of O e
. ne oftb one of the parties, or an affiliate of one
part res, or with a coun I e
sen ting a party. se repre- of the parties, in an unrelated matter.
2.3.9. 2.1.3. The arbitrator has, within the past
A close family member of th
e arbi-. three years, been appointed as arbitra-
trator has a. signifiicant financ1a).
tor on two or more occasions by one of
or personal interest in one of the
parties, or an affiliate of one of the the parties, or an affiliate of one of the
. parties.
parties.
2.1.4. The arbitrator's law firm has, within
2. Orange List - this category includes situations the past three years, acted for or
which in the eyes of the parties, give rise to doub~ against one of the parties, or an affiliate
as to the arbitrator's impartiality or independence of one of the parties, in an unrelated
and should be disclosed to all involved. If after the matter without the involvement of the
discovery of the facts and no objection was timely
made, the parties are deemed to have accepted the arbitrator.
alleged conflict of interest. Circumstances must be 2.1.5. The arbitrator currently serves, or has
interpreted on a case-by-case basis such that even served within the past three years, as
though not included in this list, it may still cause arbitrator in another arbitration on a
doubts to the impartiality or independence of the ar- related issue involving one of the par-
bitrators. ties, or an affiliate of one of the parties.
Nevertheless, if later on any or both parties raise 2.2 Current services for one of the parties
a challenge based on non-disclosure, it should ~ot
result automatically in non-appointment, later dis- 2.2.1. The arbitrator's law firm is currently
qualification or a successful challenge to any award. rendering services to one of the p~es,
or to an affiliate of one of the parties,
.
Previous .
services for one of th e p arti es or other without creating a significant commer-
2.1
involvement in the case. cial relationship for the law firm _and
"thin the past without the involvement of the arbitra·
2.1. l. The arbitrator has, WI e
three years served as counsel for on f tor.
'
of the parties affiliiate O f one. od
' or an . 1 adVJse 2.2.2. A law firm or other legal organisauh·on
the parties, or has previous y or an
or been consulted by the party, that shares Si.gnifi1cant fees or ot er
revenues with the arbitrator's law firm
154
PHILIPPINE AL11:RNl\1WE DISPUTE R ESOLUl"ION ARBITRI\TION
155

renders services to O 2.3.7. Enmity exists between an arbn

. . ne of th I rator
01 an affiliate of one of th e Patti ~nd counsel appearing in the arbitra-
fore the Arbitral Tribunal. e Parties,~:: tion.
2.2.3. The arbitrator or his or h . 2.3.8. The arbitrator has , within the past
et firn,
sen t s a J:>arty, or an affiliate of rcpre. three years, been appointed on more
the parties to the arb·t . one or than three occasions by the same
t ration
regu 1ar basis, but such re ' 0n a. counsel, or the same law firm.
d present u
oes not concern the current ct· a ion 2.3.9. The arbitrator and another arbitrator
. . tspute
2.3 Relationship between an arbitrat · or counsel for one of the parties in th;
arbitrator or counsel or and another arbitration, currently act or have acted
together within the past three years as
2.3.1. The arbitrator and another a bi co-counsel.
· r 1trator
are lawyers in the same law firm.
2.4 Relationship between arbitrator and party and
2.3.2. The arbitrator and another arb·tt rator others involved in the arbitration
or the counsel for one of the pan;ies,'
are mem bers of the same barristers' 2.4. l. The arbitrator's law firm is currently
Chambers frequently appoint the same acting adversely to one of the parties,
arbitrator in different cases, no disclo- or an affiliate of one of the parties.
sure of this fact is required, where all 2.4.2. The arbitrator has been associated with
parties in the arbitration should be fa. a party, or an affiliate of one of the par-
miliar with such custom and practice. ties, in a professional capacity, such as
2.3.3. The arbitrator was, within the past a former employee or partner.
three years, a partner of, or otherwise A close personal friendship exists be-
2.4.3.
affiliated with, another arbitrator or tween an arbitrator and a manager or
any of the counsel in the arbitration. director or a member of the supervisory
2.3.4. A lawyer in the arbitrator's law firm is board of: a party; an entity that has a
an arbitrator in another dispute involv- direct economic interest in the award to
ing the same party or parties, or an af- be rendered in the arbitration; or any
filiate of one of the parties. person having a controlling influen~e,
2.3.5. A close family member of the arbitrator such as a controlling shareholder ·~-
is a partner or employee of the law fir~ terest on one of the parties or an affili-
·
representing one of the parties, but IS ate or' one of the parties or a witness or
not assisting with the dispute. expert.
· t be· 2.4.4. Enmity exists between an arbitrator
2.3.6. A close personal friendship exis s fa . a member
tween an arbitrator and a counsel O and a manager or director or
party. of the supervisory board of: a party; an
. omic inter-
en tity that has a direct econ
 ARBITRATION
156 PHILIPPINE ALTERNATIVE DISPUTE ResOLUTION 157

law rev~ew ~icle or public lecture)

est in the award· or an concerning an issue that also arises in
a tr U. . , y person h
con o mg influence · avin the arbitration (but this opinion is not
· in one &
parties or an affiliate of of th focused on the case).
ti one of th e
res or a witness or expert. e Par.
current services for one of the parties
2.4.5. If the arbitrator is a former . 3.2.
she has, within the past ~dge, he or 3.2.1. A firm, in association or in alliance
heard a significant case inv~~~ Years, with the arbitrator's law firm, but that
of the parties, or an affiliate 0
0ne
'71g
0ne does not share significant fees or other
revenues with the arbitrator's law
the parties. of
firm, renders services to one of the
2.5 Other circumstances
parties, or an affiliate of one of the
2.5.1. The arbitrator holds shares eith . parties, in an unrelated matter.
tl . di • er dt·
rec y or in irectly, that by reason Of Contacts with another arbitrator, or with
3.3.
number or denomination constitut counsel for one of the parties
material holding in one of the parta a
es,
or an a ffilirate of one of the parties, this 3.3.1. The arbitrator has a relationship with
party or affiliate being publicly listed. another arbitrator, or with the counsel
2.5.2. for one of the parties, through mem-
The arbitrator has publicly advocated a
bership in the same professional asso-
position on the case, whether in a pub·
lished paper, or speech, or otherwise. ciation, or social or charitable organi-
zation, or through a social media net-
2.5.3. The arbitrator holds a position with the work.
appointing authority with respect to the
dispute. 3.3.2. The arbitrator and counsel for one of
the parties have previously served to-
2.5.4. The arbitrator is a manager, director or
gether as arbitrators.
member of the supervisory board, or
has a controlling influence on an affili- 3.3.3. The arbitrator teaches in the same
ate of one of the parties, where the af- faculty or school as another arbitrator
filiate is not directly involved in the or counsel to one of the parties, or
matters in dispute in the arbitration. serves as an officer of a professional
association or social or charitable or-
3. Green List - this category includes circumstances ganization with another arbitrator or
where there is no actual conflict of interest from ail counsel for one of the parties.
objective point of view which need not be disclosed.
3.3.4. The arbitrator was a speaker, modera-
3.1. Previously expressed legal opinions tor or organizer in one or mor~ confer-
. ex· ences or participated in seminars or
3.1. l. The arbitrator has previously
pressed a legal opinion (such as in n worki~g parties of a professional, ~o-
. . , · tion with
cial or charitable organ1za ,
 ARBITRATION
158 159
PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

ngage in ex parte communications with an

another arbitrator or . sholl I d no t eIng the ar biitration.
. A
parties. counsel to the rouve oncern b . . party representative
·trator c~~rn . gly make false su rrussion to the Tribunal . In
0~
3.4 Contacts between the arbitrator and ,,[d not
parties one of the shOv partY representative should not make any Request to
addition, a any objection to a Request to Produce for an irn-
produce,urpose,or
s
uch as to harass or cause unnecessary delay. A
1 . h p
3.4.1. The arbitrator has had an initial roper P t tive should also exp am to t e arty whom he or
tact with a party, or an affiliat con. P resen a . f d · d .
P
Part:Y reresents the necessity o pro ucing, an potential conse-
party (or their counsel) prior to of a
she rep f failing to produce any Document that the Party or
pointment, if this contact is limit dap. que~ces
O
ndertaken, or been ordered to produce.
th e ~ bit1 ra t or ,s avai·1 abihty e to
. . and qua]j. Parties have u
ficati.ons to s~rve, or to the names of ~prov l·ded for in the . guidelines, if the Arbitral Tribunal,
.
possible candidates for a chairperson . . the Parties notice and a reasonable opporturuty to be
and did not address the merits or pro. afterdgivtiindgsthat a Party Representative has committed rniscon-
hear , in . · .
cedural aspects of the dispute, other
than to provide the arbitrator with a dUCt the Arbitral Tnbunal, as appropnate, may.
I

basic understanding of the case. i. admonish the Party Representative;

3.4.2. The arbitrator holds an insignificant u. draw appropriate inferences in assessing the evidence
amount of shares in one of the parties, relied upon, or the legal arguments advanced by the
or an affiliate of one of the parties, Party Representative;
which is publicly listed.
iii. consider the Party Representative's misconduct in
3.4.3. The arbitrator and a manager, director apportioning the costs of the arbitration, indicating if
or member of the supervisory board, appropriate, how and in what amount the Party Rep-
or any person having a controlling in- resentative's misconduct leads the Tribunal to a dif-
fluence on one of the parties, or an af· ferent apportionment of costs; and
filiate of one of the parties, ba~e
worked together as joint experts, or in iv. take any other appropriate measure in order to pre-
another professional capacity, includ· serve the fairness and integrity of the proceedings.
ing as arbitrators in the same case.
Appointing Authority
3.5 ·
The arbitrator has a relations hiip W1'th one ial
of
the parties or its affiliates through a soct
narn dA~pointing authority is defined as the person or institu~on
media network.
or th: r~ the arbi_tration agreement as the appointing authon~~
tration 18·
· gular arbitration institution under whose rules the arbi
IBA Guidelines on Party Representation in
to sub agre~d to be conducted. Where the parties have agreed
International Arbitration Unless ~t thetr dispute to institutional arbitration rules, and
· es
esentativ
As regards party representation, party rep~ s and we dcclllcct 1:\ have agreed to a different procedure, they shall. be
should identify themselves to th~ other Party or Partie represeo· t'lllcs for th ave agreed to the procedure under such arbitration
e Sele c tiion and appointment of arbitrators.
· In ad hoc
Tribunal at the earliest opportunity. As a rule, a party
 ARBrTRATIOl'l
160 161
PMll.lPPINE AtTERNIITIVE DISPUTE RESOLUIION

the parties have not agreed on a procedure for

arbitration, the default appointment of an arblr VJher.e f ng the Arbitrator or Arbitrators:
3.
~a?c by the National President of the Integrated •;:tor shall be appoin I . . .
tppines (IBP) or his duly authorized representative. of the Phi). I<,; I
an Arbitration with three Arbitrators, each
i. nartY shall appoint one Arbitrator, and the two
Integrated Bar of the Philippines (ffiP) Guideli ~rbitrators thus appointed shall appoint the
for the Appointment of an Arbitrator nes third Arbitrator; if a party fails to appoint an Ar-
bitrator within thirty (30) days of receipt of a re-
!he. IBP, in line with the provision of the ADR Act is quest to do so from the other Party, or if the two
the guidelines as to how it will implement the mandat f' h sued Arbitrators fail to agree on the third Arbitrator
o · ti
n appom mg an arbitrator in ad hoc arbitration.iee e o t e law within thirty (30) days of their appointment, the
The IBP Guid.elines shall apply to ad hoc arbitrations i appointment shall be made, upon request of a
respect of the followmg: n party, by the National President.
a. In relation to Sec. 26 of the ADR Act where "the de- 11. In an Arbitration with a sole Arbitrator, if the
fault appointment of an arbitrator shall be made by parties are unable to agree on the Arbitrator, he
the National President of the Integrated Bar of the shall be appointed, upon request of a party, by
Philippines or his duly authorized representative"; the National President.
b. The resolution of a challenge to the appointment of an
b. Where, under an appointment procedure in an Arbi-
Arbitrator, if a Challenge under any procedure in an
tration Agreement agreed upon by the Parties:
arbitration agreement agreed upon by the Parties or
under the procedure in Art. 13(3) of the 1985 UN· i. A Party fails to act as required under such pro-
CITRAL Model Law is not successful; cedure;
c. The resolution of any controversy concerning the ter- ii. The Parties, or the two Arbitrators, are unable to
mination of the mandate of an Arbitrator under Art. reach an agreement expected of them under
l 4(1) of the 1985 UNCITRAL Model Law, if an Arbitra- such procedure; or
tor becomes de jure or de facto unable to perform his
functions, or for other reasons fails· to act without iii. A third Party, including an Arbitral Institution,
undue delay, and the arbitrator concerned refuse~ to fails to perform any function entrusted to it un-
withdraw or the parties fail to agree on the termina· der such procedure;
tion of his mandate.
rnak Any Party may request the National President to
d. The replacement of an Arbitrator whose mandate has
Pro/ctthc appointment, unless the Arbitration Agreement
been terminated. I es othe
r means for securing the appointment.
In addition, the Guidelines shall specifically govern the fol· c. If a Chall . .
A enge under any procedure in an Arbttratton
lowing cases as they may arise in ad hoc arbitration:
grcement agreed upon by the Parties or under the
Proccctu · M del
Law . re in Art. 13(2) of the 1985 UNCITRAL o
11,-. Sec. 26, ADR Act. qucs;s n?t ~uccessful, the challenging P~rty may. re-
1tA, IBP Guidelines on Appointment of Arburator. , W1th1n thirty (30) days after havmg received
162 PHILIPPINE AL l ERNA TIVE DISPUTE RESOLUTION
ARBITRATION
163

notice of the decision rejecting the chalt d. The general nature and summary of the
tional President to decide on the challen enge, the N dispute;
ge. a.
d. Any Party may request the National Pre id e. Any agreement or lack of agreement as to
ciid e any controversy concerning the termis1 cm .t ode. the number of Arbitrators;
the mandate of an Arbitrator, if an Arbit~a.tion or
comes de jure or de facto unable to perfor be.;tor f. The qualifications or disqualifications of
the Arbitrator/s agreed upon by the Par-
tions, or for other reasons fails to act wit~ 13 func. ties;
delay, and the Arbitrator concerned rerus-out undue
draw or the parties fail to agree on the ter~~nto .with. g. A description of the efforts taken by the
his mandate. ation of Parties or a Party towards the appoint-
ment of an Arbitrator, the names and
e. Any Party may request the National President t contact details, including the curricula
place an Arbitrator whose mandate has terminate~.re. vitae (if available), of the Arbitrator/ s al-
ready appointed, the acceptance of the
For _the Appointment of Arbitrators, the Guideline provides
the following: appointment by the appointed Arbitra-
tor/ s;
"2.1 Any Party who submits a request to the Na. h. If the Parties agreed on an appointment
tional President for the appointment of an Ar· procedure, a description of that proce-
bitrator under Article 1.2 (a) or [b) must file a dure with reference to the agreement
request, in substantially the same form as where such may be found;
Schedule "A," with the National President, and
pay the corresponding fee provided in Sched- i. Proof of service on the other Party and
ule "C." Arbitrator/ s already appointed of the re-
quest for appointment; and
2.2 The request shall contain the following: j. Information about arbitrator's fees where
a. The names, addresses and other contact there is an agreement between the Par-
details of the Parties and their represen· ties with respect thereto.
tatives and counsels (if available); 2.3 Upon receipt of a request:
b. A copy of the Arbitration agreement and
other basis if any upon whiich the ap 2.3.1 The National President shall provide the
pointment of' the Arbitrator
' . by t he Na· other Party or Parties a copy of the r~quest
and shall invite said Party or Parties to
tional President is sought;
. ak n by the comment on the request within seven (7)
c. A description of the act10ns t eh arbi· days from receipt. Upon receip · t of the com-.
nee t ed re·
Parties or a Party to comme ment the National President sh all 1tmrnedi-
. . h
deman t to• thC · acco rdancc wit
tration and a copy of th e
· · sen
ately 'resolve the request in
quest or notice of arb1trat10n Article 2.3. 7 hereof.
other Parties or Party;
 ARBITRATION
164 PHILIPPINE ALTERNIITIVE DISPUTE RESOLUTION
165

appointment ~d request the prospective

2.3.2 A Party, upon whom a copy of th- Arbitrator-appointee to confirm, within
communicate. d
, may, within scv e renu·1 est i
seven (7) days from notice, his availability to
of its receipt, file with the Nation~n 17) dny:
act as the Arbitrator.
his objection/ s to the request or President
extension· o f time,
· th' foran
not exceeding ask 2.3.5
The appointed Arbitrator must make a full
days from receipt of the request t irty (30j declaration of independence, impartiality
O
an Arbitrator or act in accorda~c ~PPoint and availability, and disclose to the Parties
procedure agreed upon by the ; wi~h the and the National President, any fact, cir-
provided by law. Within the aforemarti~s or cumstance, or relationship which could give
. d . ent1oned rise to justifiable doubts about his or her in-
perio s, the Party seeking the e t .
ha] . . x ens10
s I provide the National President d n dependence and impartiality, by signing a
. . an the
ot h er Party or Parties with a copy of th Declaration of Acceptance and Statement of
poin~ment of_ his/her Arbitrator, the la~t:;,~ Independence in substantially the same
curriculum vitae, and the latter's accept ance form as Schedule "B".
.
fh
o t e appointment. In the event that th
2.3.6 If the prospective Arbitrator-appointee ac-
said Party fails to appoint an Arbitratoe cepts the nomination, the National President
within said period, the National Presiden: shall immediately inform the Parties and the
shall proceed to make the default appoint- other Arbitrator/s, if any of his appoint-
ment.
ment. If the prospective Arbitrator-appointee
2.3.3 If the default appointment of an Arbitrator is is unable to accept, the National President
objected to by a Party on whose behalf the shall proceed to consider the appointment of
default appointment is to be made, and the another Arbitrator in an expeditious man-
defaulting Party requests the National Presi- ner.
dent for additional time to appoint his/her
2.3.7 The National President shall endeavor to
arbitrator, the National President, having re·
gard to the circumstances, may give the re- complete the requested appointment within
thirty (30) days from receipt of the request.
questing Party not more than thirty (30)
days to make the appointment. If the objec- 2.3.8 The National President shall give the parties
tion of a Party is based on the ground t~nt written notice of the appointment made or
the Party did not fail to choose and appoint its inability to comply with the request and
an Arbitrator for the Arbitral Tribunal, there the reasons why it is unable to do so. If war-
shall be attached to the objection the op· ranted under the circumstances, the ~a-
pointment of an Arbitrator together with the tional President may direct the requesting
latter's acceptance thereof an d cur ricuJuni
_ t Party to provide additional information or
.
vitae. .
Otherwise the N anon
. aJ pres1den documents, deny the request for failure to
shall appoint the Arbitrator for that Part)'- satisfy the requirements, or direct the Party
. . · , the pro· or Parties to take such other steps as may
2.3.4 The National President shall m,orm iblC
spectivc Arbitrator-appointee of his poss be appropriate.
 ARBITRATION
166 PtilLIPPINE ALTEl"lNIITIVE DISPUTE RESOLUTION
167

2.4 Arbitrator by all respondents. The third Ar-

In Domestic Arbitrations the N ti
' a 1ona1 bitrator shall be appointed as provided
s h a II o b serve the following: Presld
Cllt above. ff all the claimants or all the respon-
2.4. l In making an appointment ,. dents cannot decide among themselves on
ror a sol
tor, the Appointing Authority hat e arbitr11• an Arbitrator, the appointment shall be
th e parties . s 1 su
and their respeeti' lllrnon made for them by the National President.
. di ve coun
111 icatcd, to appear before said Sels, if
th e d ate, time . author'ty An Arbitrator, in accepting an appointment,
and place set b . 1 on 2.4.4
shall include, in his/her acceptance letter, a
pur_pose of selecting and appoi~ti1~' for the
arbitrator. If a sole Arbitrat . g a Sole statement that:
. . or is not
pointed 111 such meeting or th ap. i. He/she agrees to comply with the ap-
d oes not take place because ' of the meerIng plicable law, the Arbitration rules
o f eit· h er or both parties despite de absen. ce agreed upon by the parties, or in de-
the Appointing Authority shall apue .notice, fault thereof, these Rules, and the Code
Point the
so le ar biitrator in .
accordance with th of Ethics for Arbitrators in Domestic
Guidelines. ese Arbitration, if any;
2.4.2 In . m~ng a default appointment, the Ap- ii. He/she accepts as compensation the
pom~mg A~thority shall have regard to such Arbitrator's fees agreed upon by the
cons1.derattons as are likely to secure the parties or as determined in accordance
~ppomt~ent of an independent and impar- with the rules agreed upon by the par-
tial Arbitrator. In order to achieve speedy ties; and
and impartial justice and to moderate the
cost of Arbitration, in choosing an Arbitra- iii. He agrees to devote as much time and
tor, the Appointing Authority shall give pref- attention to the arbitration as the cir-
erence to a qualified person who has a place cumstances may require in order to
of residence or business in the same general achieve the objective of a speedy, effec-
locality as the agreed venue of the Arbitra· tive and fair resolution of the dispute.
tion and who is likely to accept the Arbitra· 2.5 In International Arbitrations, the National President
tor's fees agreed upon by the parties, or as shall likewise be guided by the provisions of Article
fixed in accordance either with the internal 2.4 hereof.
guidelines or the Schedule of Fees approved
by the administering institution or by the 2.6 The order issued pursuant to this Article shall not
Appointing Authority. be the subject of a motion for reconsideration."
2.4.3 Any clause giving one of the parties the
power to choose more Arbitrators than the
other is void. However, the rest of the
agreement, if otherwise valid, shall be con·
strucd as permitting the appointment of o~e
(1) Arbitrator by all claimants and one I)
 -
Guidelines for the Appointment of an Arbitrator by the IBP President

l'(I\UOnal
PrMlclro( IBPP1oslelen1
Sholl $I\IIIIOl>l)C)nl
&rtytal•t•
tarr'4)1e1e the arbfVa'or
WCl,oltf«UcM\
requ~ec, ltr lhll P""Y
Bl)PCOlltmcnt
I
Party ""'" Ne ,·.,a,
lht IOP
Pros hrs abJt<110n o, ask

..I ,_
tc, an el(tenslon ot Cffla
not e,cee~,ng 30 e14ys N11ion,1
han <~Pl OI 'f<IUHI 10 Presidtl\C may

...... ...
ai,;,or.tan arb:1moror 11t:1
In acccroance "''cl> !he
proct0u1e ot lho pnrties or
Pro-iced by law
·~
gl\'e !he

party not mo1t

tllan 30davs
tomakelhe
IBP Pres_, shaJ
~on,the
ptOSl)Klr.-e
Atl>~a!Ol-appnln:ee
I awcnmtn1 ot i.s possible
appointmem
t
P"'1M!Kltd .......
Partywl
d.... ~l'G"ltlt
SIIDJT\l lfque,sl
13P P-nt Shal ~ •.,.t.G'IIIU..pfiOff.ft
,~ lhe Na-JCNJ
P,<Mdelhe- didnoc.-.ca .. ~
Prt.$1~1ar 1).Vly ct l>MleS a IBP President
U>e <X1frl o: the lfq1Je$1 sttaJI pr<Kefd
lll)poo):mct'( ol
lor OO<m1tnts '------.i to make Ole
1 .ln aibaaior dtlllJh

"""°~ IBP Prosicltnl

s.'lalllnfo1m
1/,e par.,es
ardlhe~
A,l).Uato,/s"'

--·
IBP Preso.,,, "1d ~rocuo
lher c:or=sdtr O-e ~tllft•r.l
lePPrUIOom Pony >hill alUICh ID l~e oll)ecl'°" r•Sipeci r,. to
of~•c.r.rarc,-,u,
the -,,ponl:n"lenc ot ...., arbf,&10, ,w:iparJme-nl$ •APC'C!'to..ct ff'Alll'\I'(

·-
iV'CJaet'C:On IOgttl'ttf \"Alh the &offef"'S
\hefC!qU:Ut ~anc• O..of and currtc:ulJrn

Challenge to the Appolnt.n,.en.t. of an. Arb\.t.:ra.t.o:r \.n. t..b.e '\B'P

IBP Preslden\ shall in11i\e

Parties challenge lhe other pany or panies
appointment with rthin 10 days from notic- and the challenged
the National Arbitra101 to comment on
President lhe cha\\enge

Ylllhln 30 da~s

I 1
Challenging pany mav
ihe National President request the National
shall receive the
President to decide on
challenge together w1lh hallenge nal succnstu~
the challenge ,-.ilhin 30
the challenged days horn receipt of
Arbitrato(s comments nouce of decision
1e1ec11ng lhe same

Challenge 111ccesstul

IBP President
shall appoint
accordlnoty
170 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION ARBITRATION

Appointment of Arbitrators
the parties, or two arbitrators, are unable to
ii. reach an agreement expected of them under
The parties arc free to agree on a proced
th c ar biitrator or ar biitrators. If, in
. the contract Ure such procedure; or
,. of apPoi11.
. th b . . . . . ior arb't1 t,~ a third party, including an institution, fails to
in e su rmssion, a provision is made for a m th ratio11 g iii.
· an ar biitrator or arbitrators,
mg · such method sh e II bod of appo· o, perform any function entrusted to it under such
a e foll int. procedure.
owed
Notably, no person shall be precluded by .,~,
. I. f . reason f h The multiple claimants or the multiple respon-
nationa ity rom acting as an arbitrator, unless oth ? is/her iv.
dents is/ are unable to appoint its/their respec-
by the parties. erwise agreeo
tive arbitrator, any party may request the ap-
a. In the absence of an agreement between the . pointing authority to appoint an arbitrator.
. . . ~~
1. m an arbitration with three (3) arbit · ointing authority shall have, in appointing an arbi-
. 1 rators 'fhe P · d of th e arbiitrator
party s h all appoint one arbitrator and • each d apegard to any qu alifiica ti.ons require
(2) arbitrators thus appointed shall t~e two trator, ue :ment of the parties and to such considerations as
third arbitrator; if a party fails to ap a~point the by the agre · · f · d d d ·
b· · . point the ar are likely to secure the appomtmentfo an1m epthe~ dent b~ im-
itra;otr ~1thm /hirty (30) days of receipt of a re: tal bitrator and, in the case o a so e or tr ar itrator,
q(2u1esb.o o so r?m the other party, or if the two ~:; t:e into account as well the advisability of ap~ointing an
ar itrators fail to agree on the third arblr arbitrator of a nationality other than those of the parties.
'th'1~ hi 1 rator
WI t trty (30) days of their appointment, the In making the appointment, the appointing authority shall
appointment shall be made, upon request of a summon the parties and their respective counsel to a~pear be-
party, by the appointing authority; and
fore said authority on the date, time and place set by it, for the
ii. in an arbitration with a sole arbitrator if the purpose of selecting and appointing a sole arbitrator. ~f a sole
parties arc unable to agree on the arbitrator, arbitrator is not appointed in such meeting, or the meeting d~es
he/she shall be appointed, upon request of a not take place because of the absence of either or both ~arties
party, by the appointing authority. despite due notice, the appointing authority shall appoint the
b. Where, under an appointment procedure agreed upon sole arbitrator.
by the parties, the following circumstances are pre· If the default appointment of an arbitrator is objected to by
sent, any party may request the appointing authority a party on whose behalf the default appointment is to be ~ade,
to take the necessary measure to appoint an arbitra· and the defaulting party requests the appointing aut_ho~ty for
tor, unless the agreement on the appointment proce· addi~ional ti~e to appoint his/her arbitrator, the app?mting ar~:
dure provides other means for securing the appoint· thonty, havtng regard to the circumstances, may give the
ment: qu~sting party not more than thirty (30) days to make the ap-
I. pointment.
a party fails to act as required under such pro·
cedurc; or If the objection of a party is based on the ground that the
Pb~rty did not fail to choose and appoint an arbitrator for the ar-
itraJ t nibunal, there shall be attached to the objec
· tiion the ap-
1b7 Arts. 4.11 and 5.10, IRR, ADR Act.
 172 ARBllAATION
PHILIPPINE AI.TERNATIVE OISPUIE RESOLUTION 173

pointment of an arbitrator together with the latter's a d one ( 1) arbitrator by all respondents.
. ~"'ts an · d id d b
thereof and curriculum vitae. Otherwise, the appoinlincccpt<1rice . tor sh all be appomte as provi e a ove.
b'f all c1a.1rnc:u·
ity shall appoint the arbitrator for that Party. g Uuthor. tf91or . d arbitra or all the respondents
t111r I ·mants h . cannot hdecide
In making a default appointment, the appointing a 111c the cat arbitrator, t e appomtment s all be
If all rnseJves on anpointingauthority.
shall have regard to such considerations as are likely t Uthotity 11g the by the ap
the appointment of an independent and impartial arbit; secure 0 for thern . ung .
order to achieve speedy and impartial justice and to nt~or. In
iifll
,niidc au thority may adopt Guidelines for the
the cost of arbitration, in choosing an arbitrator, the appo. er~te
rne appoin t for Appointment.
Reques . .
authority shall give preference to a qualified person who0~nling a]cing of a . e provided in the Gu1dehnes of the ap-
place of residence or business in the same general locality a as a m gxcept as.tyoth7;w~y. a Request for Appointment shall in-
agreed venue of the arbitration and who is likely to accep: the nninting authon , the fo ll owin
)icable, . g·
.
arbitrator's fees agreed upon by the parties, or as fixed in ac the r-d asaPP
dance either with the internal guidelines or the Schedule of ;or. c1u e, and for ar itra tiion,.
bi
the dern . . .
approved by the administering institution or by the appom't~es
aut honty. i. I and curricula vitae of the appointed arbi-
. ~ the name s
ii. trator I s;
The appointing authority shall give notice in writing to the ... the accep tance of his/her/its appointment of the ap-
parties of the appointment made or its inability to comply with iu. pointed arbitrator/s;
the Request for Appointment and the reasons why it is unable to
do so, in which later case, the procedure described under Article ualification or disqualification of the arbitrator
5.5 (Court or Other Authority for Certain Functions of arbitration iv. ::Ypr~vided in the arbitration agreement;
Assistance and Supervision) shall apply.
v. an executive summary of the dispute which
d h should
.
A decision on a matter entrusted by this Article to the ap- indicate the nature of the dispute an t e parties
pointing authority shall be immediately exccutory and not sub- thereto;
ject to appeal or motion for reconsideration. The appointing au-
vi. principal office and officers of a corporate party;
thority shall be deemed to have been given by the parties discre-
tionary authority in making the appointment but in doing so, the vii. the person/s appearing as counsel for the party/ies;
appointing authority shall have due regard to any qualification or and
disquulilication of an arbitrator/ s under paragraph (a) of Article
5. IO (Appointment of Arbitrators) as well as any qualifications viii. information about arbitrator's fees where there is an
required of the arbitrotor/s by the agreement of the parties and agreement between the parties with respect thereto.
to such considerations as arc likely to secure the appointment of In institutional arbitration, the request shall include such
1111 independent and impartial arbitrator. The chairman of the f~rther information or particulars as the administering institu-
nrbir ml t ribunal shall be selected in accordance with the agree· tion shall require.
mcnt of the parties and/or the rules agreed upon or, in default
thrn'of. by the mbitrntors appointed. th A copy of the Request for Appointment shall be delivered to
e adverse · I d d ·n
Any clause giving one of the agreement, if otherwise vali~.
anct shall Party. Proof of such delivery shall be inc u c ' ,
shnll be ro11stnicd ns permitting the appointment of one Ill arbt· the ap . f?rrn Pan of, the Request for Appointment filed with
Pointing authority. .
 ARBITRATION
174 PHILIPPINE ALTERNATIVE DISPUTE R ESOLUTION 175

. A party upon whom a copy of the Req pointment of the third member of an arbitral
ts. communicated may, within seven (7) d/:st fo.r App0i . s for the ap
0: porllc 1 168
with the appointing authority his/her/its ofe its rece~tlllcn1 '!)Llflll .
quest or ask for an extension of time n 0 t ~ ctton/s to thPt, n~ tri tlie Appointment of an Arbitrator
da f · ' exceed· e 1>_ ttengin9 .
. ys rom receipt of the request, to appoint an ~g thirty '\C.
in accordance with the procedure agreed u arbitrator O (:it, Cfl'I 't ation cases falhng under ICA, an arbitrator in
these Rules. pon or prOV'd r act fof arbtalrJenged based on the following grounds:
. . I Cd by be ch
1CA rnaY . cumstances exist that give rise to justifiable
Within the aforementioned periods th
e x tcns1~n
· a. doubts as to his/ h er imparti
If ctr . 'al'Ity or independence;
. or
s hall provide
· ' e Party
the appointing authority an seeking the
party, with a copy of the appointment of his/her d ~e adverst If he/she does not possess qualifications agreed to by
latter
. s curriculum vitae ' and the latter's acceptance arbitrator • thc b.
Of the parties; or
po1~tment. In the event that the said party fail the ap.
arbitrator within said period, the appointin sa~o ap~oint an A party may challenge an. arbitrator appointed by
make the default appointment. g thonty shan c. him/her, or in whose appointment he/she has par-
ticipated, only for reasons of which he/she becomes
. . An arbitrator, in accepting an appointment shall . aware after the appointment has been made.
in his/her acceptance letter, a statement that: ' mcludc,
the other hand, for Domestic Arbitration, in addition to
1. he/she agrees to comply with the applicabl I Ounds mentioned above, the arbitrator may be challenged
bi . e aw the
;r rules agreed upon by the parties, or~ dc- t he gro . b di h
if he refuses to respond to que.stions y. a p~ regar mg t. e
rau 11traht1on
t t ercof, these Rules, and the Code of Ethi t.
bi . cs 1or nature and extent of his professional dealings with a party or its
A r itrators m Domestic Arbitration, if any;
counsel.
11. he/she accepts as compensation the arbitrator's fees
The parties are free to agree on the procedure for challeng-
agreed upon by the parties or as determined in ac-
cordance with the rules agreed upon by the parties, ing an arbitrator, subject to the following:
or in default thereof, these Rules; and a. Within fifteen ( 15) days after becoming aware of the
constitution of the arbitral tribunal or after becoming
iii. he agrees to devote as much time and attention to the
aware of any circumstance referred to in the Grounds
arbitration as the circumstances may require in order
for Challenge, a party who intends to challenge an
to achieve the objective of a speedy, effective and fair arbitrator shall send a written statement of the rea-
resolution of the dispute. sons for the challenge to the arbitral tribunal. Unless
the challenged arbitrator withdraws from his/her of-
Request for Appointment fice or the other party agrees to the challenge, the ar-
Request for Appointment refers to the letter-request to th~ bitral tribunal shall decide on the challenge.
appointing authority of either or both parties for the ~ppcintJtl:e b. In default of an agreement of the parties to agree on
bi t the ar-
of arbitrator/ s or of the two arbitrators first appomted by t he challenge thereby replacing the ar 1tra or,

iw. An
. 1.6, Ruic 2 (DI I), IRR, ADR Act.
176 P1ut.lPPINC ALTFRNl\nVE DISPurr. REso
" ~• LUIION

, f>r,ointing 1JIJI horny decides the· <'h·j]lr· ,

bitral tribunal shall decide on the h t IH' ,1 r- r: n~r- and
I cl. , rr·s Ihf" offir c of the· challenged arbitr·itr>,.. .,,
thirty (30) days from receipt of the ch~lt lcngc Withi (Ice I ,1 ' • •d<':Jn·.
. . . enge. 11
c. or
Within thirty (30) days after having rec .
the decision rejecting the challenge,
party may request the appointing autho . allcnging
t~t:t
notice of
r.
in cJcf:,ult of the- appoim mg authority, the cour de-
1
Cl
·c1,·s· th<· c h;sllengc and declares the office of the
•
c'na 1 -
on the challenge, which decision shall bn~. to decide (·cl -,rhitrator vacant
Ieng c
e immcd·1ately
cxecutory and not subject to appeal O • of> Guidelines also provide for the rules and P,..0
id · . r motion i The J u . . • . . . • cc-
cons1 cration. While such a request is . . or re. . halknging tn<' appomlment of a arbitration. to wit:
arbitral t~bunal, including the challeng!e~~~~g, the i;urc in c . . . . .
may contmu_e the ar_bitral proceedings and m:ator, The challenge shall nc in wri mg anc shall contain the fol-
award. Notwithstanding the rejection of th h e an
by the arbitrator, the parties may within th c allenge fo\\'1ng:
Th« narnr/s of the Arbit rarory s challenged anc
t een ( 1 5) d ay penod,
· '
agree to the challenge. e same fif · I.
his/their address:
d. If the appointing authority shall fail to act ii. The grounds for the challenge;
. hi th. on the
c hall enge wit in irty (30) days from the dat f ·
. t ithin h e o its iii. The facts showing that the ground for the chal-
rec~1p or wi ~uc further time as it may fix, with
lenge has been expressly or impliedly rejected bv
notice to the parties, the requesting party may renew
the request with the court. the challenged Arbitrator/sand/or the Arbi::~!
Tribunal: and
e. An arbitrator who does not accept the challenge shall
be given an opportunity to be heard. iv. Proof of service on the other Panics and the Ar-
bit rat or s .
f. If a request for inhibition is made, it shall be deemed
as a challenge. Any order of the .ational President resolving the challenge
10 an arbitrator shall not be the subject of a motion for reconsid-
g. Every communication required or agreement made eration. The National President may, if requested. replace an ar-
under this Article in respect of a challenge shall be
burator if the challenge is successful.
delivered, as appropriate, to the challenged arbitrator,
to the parties, to the remaining members of the arbi- The Guidelines likewise provide the following in relation to
tral tribunal and to the institution administering the the termination of the mandate of an arbitrator:
arbitration, if any.
-4_ l '
nny Partv may request the National President to d e-
A challenged arbitrator shall be replaced if: cidc on the termination of the mandate of an Arbi-
trator if a corurovcrsv remains as to whether an Ar-
a. he/ she withdraws as arbitrator; or
bitrator becomes de ·jurc or de facto unable to per-
b. the parties agree in writing to declare the office of ar· form his functions or for other reasons fails to act
bitrator vacant; or without undue dclav, bv submitting a request with
the arbitral tribunal decides the challenge and ~;; t ht- N ,II ional Pn:sick-nt and paying the corresponding
c.
dares the office of the challenged arbitrator vacant, fili11g f<'es provided in Schedule "C."
 ARBITRATION 179
178 PHILIPPINE ALTERNATIVE DISPUTE R ESOLUTION

failure or Impossibility to Act

4.2 The_ request for the termination oft
Arbitrator must contain: he mandate of an I,
~~wf5f .
n arbitrator becomes de jure or de facto unable t
1a fu . r. o
a. The name of the Arbitrator h a. perforrn his/her nctions ~r tor other reasons fails to
sought to be terminated· • w ose mandate. IS t without undue delay, his/her mandate terminates
~r\e/shc withdraws fr?m ~is/her office or if the par-
b. The ground/s for termination· ties agree on the term1~ation. Otherwise, if a contro-
c. The fact that all the Parties ' versy remains concerning ~y _of these grounds, any
trator to withdraw but he requested the arb· partY may re_que~t the appointmg autho~ty to decide
refused to withdraw as an Arnebv~trrthelessfailed~; on the termination of the mandate, which decision
1 ator; and
shaU be unmectiately executory and not subject to ap-
d. Proof of service to the other Part.
bitrators. res and the Ar- peal or rnotion for reconsideration.
If under the Challenge Procedure, an arbitrator with-
4.3 The . National President shall ct·rsrruss
. the re b. •
draws from his/her office or a party agrees to the
h if .
o_u t ng t t it does not appear either that all quest termination of the mandate of an arbitrator, this does
ties ag:ecd to terminate his appointment or the Par. not imply acceptance of the validity of any ground as
has withdrawn as Arbitrator 0th . that he outlined in the Grounds for Challenge.F''
ti al . · erw1se the Na
10n President shall invite the concerned .Arbi .
and the other Parties and Arbitrators to comm•~tor Appointment of an Emergency Arbitrator
the request within ten (10) days from notice. en on
Although R.A. 9285, and its IRR, does not mention about
4.4 The National President shall endeavor to resolve the the appointment of an Emergency Arbitrator, in arbitral institu-
rcque~t ~or termination of the mandate of an Arbitra- tions in the Philippines, this is included in their Rules of Proce-
tor within thirty (30) days from receipt of the con· dure, in order to address temporary urgent relief needed by the
cerncd Arbitrator's and the other Parties' and Arbi- parties prior to the constitution of the Arbitral Tribunal.
trators comments or the expiration of the period to
As an example, ICC Arbitration Rules (ICC Rules) offer a
submit the same. rocedure for parties to seek urgent temporary relief. This proce-
Any order of the National President resolving the re· u'.e offers a short-term solution for parties that are unable to
4.5
quest shall not be the subject of a motion for recon- wait for the constitution of an Arbitral Tribunal. Any emergency
measure
lat .. gran te d takes the form of an order. The order may be
sideration.
er revisited by the Arbitral Tribunal once constituted.
4.6 The National President may, if requested, replace an
("Em Pursuant to Article 29 of ICC Rules and Appendix V
Arbitrator pursuant to Article 5 hereof, if the cha!·
interiergency Arbitrator Provisions"), a party that needs urgent
lenge is successful. n169 rn measu
constit . res ("E mergency Measuresn) that cannot awai·t the
Ution of an arbitral
· · t°
tribunal may make an app 1·1catton

,.,., Arts. 4. 12 and 5. l l, I RR, ADR Act.

---110 -
Ans. 4 14
. and 5.15, IRR, ADR Act.
 180
PtilLIPPINE AllERNI\TIVE DISP /\f181TRl\rl0N
UTE RESOLUTION
181

the Secretariat of the ICC Int .

cretariat") · ernattonal Court of A rb1trar
. Wh
en ;i dC'mand for arbitration
· · · ·d ~ h
made by a
party to a
•on 1·s g. _1•
ulS
put<· is ol>J<'Clc
II .
to l)y t c adverse party th
. , e arb1-
.
The Emergency Arbitrator Prov· · e. ·il
trc tribunal sha , I in the first instanceI
res I
ovcthe
that are signatories to the arbitrat' isions apply only to objection when mac con any of the following grounds:
upon for the application or succe ion agreement that . Patties . t lie arbitration agreement is inexistent v id
ssors to such si is tel· I bi . ' Ot ' un-
Th ignatories ICd L
cn forcea .be or .not inding upon a person,
e Emergency Arbitrator Provisions d . • 1or any
• . . o not apply if reason, 1_ncl ud in~dt he fact that the adverse party
the arbitration agreement u n d er the ICC · is not privy to sai agreement; or
cone uded before 1 January 2012.
1 Rules was
ii . 1 he dispute is not arbi trable or is outside th
• the parties have opted out of th 'E scope of the arbitration agreement; or e
tor Provisions (see the Stand:rd m~rgcncy Arbitra. the dispute is under the original and exclusive
Clauses); or CC Arbitration 111.
jurisdiction of a court or quasi-judicial body,
• the parties have agreed to another pre-arbitr If a party raises any of the grounds for objection, the
?ure. that provides for the granting al ptocc. b.
sumc shall not preclude the appointment of the arbi-
interim or similar measures. of conservatory, trator/ s as such issue is for the arbitral tribunal to
decide. The participation of a party in the selection
If the arbitration agreement was concluded before l
and appointment of an arbitrator and the filing of ap-
Janu.ary 2012,. Emergency Arbitrator Provisions may appl propriate pleadings before the arbitral tribunal to
only if the parties agree to it. Y
question its jurisdiction shall not be construed as a
submission to the jurisdiction of the arbitral tribunal
Appointment of a Substitute Arbitrator or of a waiver of his/her right to assert such grounds
to challenge the jurisdiction of the arbitral tribunal or
A substitute arbitrator shall be appointed under applicable
the validity of the resulting award.
rules when the mandate of an arbitrator terminates under the
following circumstances: c. The respondent in the arbitration may invoke any _of
such grounds to question before the court t~e e~1s-
a. Challenge Procedure rcucc. validity, or enforceability of the arbitration
. . · · 0 r the
b. Failure or Impossibility to Act agrccrncnt , or the propriety of the arb1trat10n,
jurisdiction of the arbitrator and invoke the pendcnc!
c. Withdrawal from office for any other reason or be·
of such anion as ground for suspension of th~ arbi-
cause of the revocation of his mandate by agrc:mcn}
of the parties or in any other case of termination ° tration proceeding. The arbitral tribunal, having re-
gard to the circumstances of the case, and the ne~d
his/her mandate!"! Io I· t I H' l'arly and cxpcc.httous
· ·
sc
ttlemcnt of the dis-
.
pure. in light of the facts and arguments raised to
· h to sus-
Jurisdiction of Arbitral Tribunal quest io n its jurisdiction, may decide cit c~c a dcci-
le: 112 pvrid t hr- arbitration until the court has ma .
On the governing provisions on Competence to ru · sion on the issue or continue with the arbitration.

111 Aris. 1\.15 und 5.11\, IRR. ADI~ Act.

11J Aris. I\. 16 und 5. 15, I RR, ADR /\ct.
 ARnt HUI flON
182 PHILIPPINE ALTERNATIVE DISPUTE R ESOLUTION 183

d. . c ,,rbitrnl tribunal, having regard to th .

If a di_sputc is, under an arbitration 1css t I l . ' . . ·h . e ctrcum-
submitted to arbitration , but b eroror agreement t
niW un h c'isc 1nclud1ng t c convenience of the .
bi , ob \ 11 f t c c· • f . . - parties
•I O , diffrrcnt plar-c o ar 1»tranon. •
c_ommenccd or while it is pendin ar ttration .c sc11 11ccs ·cJc on LJ
hon before the court which emb gd,.a par~y files an is II dcct
. o res or m 1 ac. sh:.t b'tr.Jl tribunal may, unless otherwise agreed b h
cause o f action the dispute th t . c Udes a ThC ar 1 • id y t c
bit . a 1stobes b sa. . t at allY place it cons, crs appropriate for consul _
ar t ration, the filing of such action shali u rnitted to . rncc • h . . ta
parnc 5 'ong its mcmbc~s, ror canng witnesses, experts or the
t~e commencement of the arbitration ' not Prevent
1ion.arn or for inspcct10n of goods, other property or docu-
tion of the arbitration until the award ~r ~he continua. parncs,
IS ISSUed. J7.1
rncn t s .
For cases falling under JCA:
. , procedure in Arbitral Proceedings
a. A plea that the arbitral tribunal d oes not hav . Rules OJ
d' .
iction shall be raised not later than the e JUris. Parties arc free to agree on the procedure to be followed by
of the statement of defense (i.e in A submission .tral tribun.:il in conducting the proceedings.
ti t 0· . ., an nswer or M 1hc ar bl
ton o ismiss}. A party is not precluded from r .. O· In arbitral proceedings under ICA, the arbitral tribunal
such plea by the fact that he/she has ap . atsmg
ti · d · pointed or may, Jacking agrecrn.cn t bc~wcen parties,_ conduct the arbitration
par icipate m the . appointment
. of an ar bitI rator.' A in such manner as it considers appropnate. Unless the arbitral
PIea that the arbitral tnbunal is exceeding th tribunal considers it inappropriate, the UNCITRAL Arbitration
f't h · e scope
o 1 s aut onty shall be raised as soon as the matter Rules adopted by the UNCITRAL on 28 April l 976 and the UN
alleged to be beyond the scope of its authority · General Assembly on 15 December 1976 sha.11 apply subject to
. d d . IS
r8:1se unng the arbitral proceedings. The arbitral the following clarification: All references to the "Secretary Gen-
tnbu_nal may, in either case, admit a later plea if it eral of the Permanent Court of Arbitration at The Hague" shall be
considers the delay justified. deemed to refer to the appointing authority.
b. The arbitral tribunal may rule on a plea either as a
. For arbit rat proceedings considered under Domestic Arbi-
preliminary question or in an award on the merits. If
tration, the arbit rnl tribunal may, when parties failed to come to
the arbitral tribunal rules as a preliminary question
an agrc_ement, subject to the provisions of the ADR Act, conduct
that it has jurisdiction, any party may request, within
the arbitration in such manner as it considers appropriate.
thirty (30) days after having received notice of that
ruling, the Regional Trial Court to decide the matter, Powers confer red upon the arbitral tribunal includes the
which decision shall be immediately executory and po~vcr to determine admissibility relevance, materiality and
not subject to motion for reconsideration or appeal. Wetoht
t> o f ev1cknc<'
. 1 ·;.1 '
While such a request is pending, the arbitraJ tribunal
may continue the arbitral proceedings and make an ConJidenti a rtty of Arbitration Proceedings
award.
d1·ncc. The 'arbit1 rat1011
· proceedings, including the recor d s, cvi-
and the Arbi t rat ion Award , and other confidential inforrna-
Place of Arbitration
b'tratioll·
The parties arc free to agree on the place of ar 111.1 Metro t\11\. ·\ ,0 . .
Failing such agreement, the place of arbitration shall be 't\n\. ·I .\'I '111d ;, i'I. 11~1<. J\DI< Act.
,111d :'.. I H, ll<I{. i\DI< Act.
 /lfWITMTION
185
184 PHILIPPINEALTERNATIVE 01SPUlE
' R ESOLUTION

. rding companies, which questioned th .

t forW<1 , - Ab . e issu-
tion, sh~II be considered privileged and conlid . ,it4h f t 1<• !FF to f•cc 1 Ex.. sent
. h
the
. said liccns c, rer. d
Ex
be published except: ential and sh a.1111 ,111cc o 1 r: c_;.Sf-' contracts
fr wit Air21 to be able t
01 , tcdtl, I . ·Ph'J'. o con
cJ<ccl..l I sincss in the I ippincs. Ross and Hol .
a. with consent of the parties; or . its )LI· , , . , mes, in
c1,1ct ·c.Jii·il statements, averred that Merit a d A
. inc 1. iv1 ' II d . n cc
b. for the limited purpose of disclosimg to the . h -r owned or contro c by A1r2 l employees O
1ticir cit ( . .h L. G r per-
vant documents in cases where resort · couq rcJ wcrc connc ·ctcd ·
with t c ma roup of Companies
. . . , w ~
hi h
aJlowcd herein. to the court ~-IS f\ir2 r. Jennings, in his cross-examination
5. ons J 1dCC. I f h · c . , was
t. d , s I he source o t c information that Merit d
1nC t fie ,1. an
Provided, however, that the court in whi1~ h idcf1 1 . f\ir21 's proxies and was asked if he had any w ·t-
A ·c wcrc
the appeaJ is pending may issue a protective O the action O pc, f of such proxy re I anons . hiip. He answered in th n
. . . . e
prohibit disclosure of documents or inform a tio er
ion contto prevent
. . orr tcr 1 1Jroo . In his re-direct exammat1on, he was made to e _
[lttVC- . X
. . h developments, research and ot her int
ere· t processes, . atning sc.
0rmatio11
nc g d
oun 1
he supposed proxy relationship between Merit
w here rt rs s own that the applicant shall b . P d ;\ir2 J. He respon c t at Merit and Ace were just,
on d d h .
diced by an authorized disclosure thereof.I " e matenalty prcju. /\CC an all companies . wit. h meager resources, yet they were
very sJTlfinance and file a case to oppose the grant of [FF Ii-
cab I c t to Fcdl~x. Jenn111gs a I so diisc I ose d t hat one of the <li-
O .
RELEVANT JURISPRUDENCE
cense . _ of ;\cc was a nen d o f L.ma an d that Loma Orbe
f .
rectoi s - . u ,, . ,
Federal Express Corporation vs. Airfreight 210 President of Merit. was the former boss of Lito Alva-
G.R. No. 216600, 21 November 2016 O, J~ me I who was also :1ssoc1_ate
rcz. · d wit· h . A.ir 2 1. Feeling aggrieved
by those st:itcments.' t.ina for himself and .on beh~ of
FACTS: Air2 l , filed a complaint for grave slander against Jenrungs
before the Office of the City Prosecutor in Taguig City. Lina
. <?n 11 May 2.0.11, in an effort to settle their commer- claimed that the defamatory imputation of Jennings that
cial dispute, ?et1t1oner Federal Express Corporation Merit and Ace were Air2 l's proxies brought dishonor, dis-
(fi'cclEx) and Airfreight 2100 (Air2 l) agreed to submit credit and contempt to his name and that of Air21. Lina
themsel.vcs to arbitration before the Philippine Dispute quoted certain portions of the written statements of
Rcsolut1011 Center, Inc. (PDRCI). As part of the arbitration llolrnes and Ross and the Transcript of Stenographic Notes
proceedings, Jennings, John Lumley Holmes (Holmes}, the (TSN) of the April 25, 2013 arbitration hearing reflecting
Managing Director of SPAC Legal of FedEx and David John Jennings' testimony to support his complaint.
Ross (Ross), Senior Vice President of Operations, Middle
East, India and Africa, executed their respective state- ISSUE:
ments as witnesses for FedEx. Ross and Holmes stated
Whether the written statements of Holmes and Ross
that Federal Express Pacific, Inc., a subsidiary of FedEx,
and the Transcript of Stenographic Notes of the 25 April
used to have an IFF license to engage in the business of
2013 arbitration hearing reflecting Jennings' testimony to
freight forwarding in the Philippines. This license, however,
support his complaint is inadmissible in evidence before
was suspended pending a case in court tiled by Merit In·
the Court due to the confidentiality of ADR proceedings.
tcrnational, Inc. (Merit) and Ace Logistics, Inc. (Ace), both

17~· Arts. '1.'11 nnd 5.'12. IRR, /\DR Act.

186 ARBl'TRATION
PHILIPPINE At fEHNAtlVL DISPUTE RESOLUIION 187

RULING: documents in cases where resort to the court is

1cvant
re d herein.
YES. The written statements of H o!lowc
and the Transcript of Stenograph' olrncs 1c111d n
. , . ic Note •\O al Jlepresentation
J cnrnngs testimony to support his com 1 . .8 rcnc .ss
ble in evidence before the Court due t ptahintis inad,:.11tig J,l9 · ·
ornestic arb1trat1on con duc td e ·in t.he Philippines, a
. o e c fi ··••ss·
o f ADR proceedings. Under R.A. 928S h ~n •dentin!'•· In db represented by any person of his/her/its choice·
as "Confidential information" is not e;cwlu~t is considcr'1Y artY rnaY et such representative, unless admitted to the prac~
I d th . . s1ve and Cd
c u· e o er information as long as th ey sat1sf . rnay 1·ri. ~rovided, t~a the Philippines, shall not be authorized to appear
q~irements of express confidentiality or implied Y the re. tice of Jaw 1~ any Philippine Court, or any other quasi-judicial
ality. Rule 10. l of A.M. No. 07-11-08-SC or t~onfidcnti. as ,ou nscl in or such appearance is · in
· re lation· to the arbitration
Rules of Court on Alternative Dispute R eso 1 ut1on
. c (SSpecial d whether
u bO y. h he/she appears.
ADR Ru I cs) allows [a] party ' counsel or witness
· in wh•C . .
h0Pcciai .trator shall act as mediator m any proceeding in
c_l osed or who was compelled to disclose infonn ~ dis. ar bl is acting as ar biitra t or an d all n_egotiations
tive to the subject of ADR under circumst ances that ation rcJa. . Nohe/she · · towards
which f the dispute must take place without the presence
create a reasonable expectation on behalf f h would scttJernen t o
. t: • ' 0 t c sou
th. a t th e intorrnation shall be kept confidential x x rce, of the arbitrators.
nght to prevent such information from being furth x l~e In international commercial arbitration conducted in the
closed without the express written consent of th e source er dis. .1. · es a party may be represented by any person of
O Ph11ppm , . .
th e party who made the disclosure." r . /h /its choice; provided. that such representative, unless
his er
d ·ued to the practice of law in · th e Phil" ·
ippmes, s hall not b e
As c':'-11 be gleaned from the case, the written state-
a mth,orizedto appear as counsel in any Philippine court or any
mci:its o_f w1tnes~es as well as the oral testimony during the au h · ·
other quasi-judicial body whether or not sue appearance is in
arbitration heanng'. both fall under Section 3 (h) Ill and 131
of the ADR Act which states that "communication, oral or relation to the arbitration in which he/she appears.176
written, made in a dispute resolution proceedings, includ-
ing any memoranda, notes or work product of the neutral Commencement of Arbitral Proceedings
party or non-party participant, as defined in this Act; and
(3) pleadings, motions, manifestations, witness statements,
The reckoning point of the commencement of arb~trat~on
procedure shall depend on the nature and intended arb1trat1on
reports filed or submitted in an arbitration or for expert
agreement of the parties. In this regard, the governing laws and
valuation," constitutes confidential information.
procedures can be determined and the guiding principles can be
DOCTRINE: properly observed.
· th arbi-
Arbitration proceedings are confidential in nature For ICA, unless otherwise agreed by the parties, e
Ira! proceedings, with respect to a particular dispute, commence
and the records, evidence and the arbitral award contcm;
plated therein shall be considered confidentiaJ and s~al
not be published except (I) with the consent of the paruesf
O
or (2) for the limited purpose of disclosing to the court
n, Ans. 4.40 and 5.41, IRR, ADR Act.
188 ARBITRATION
PHILIPPINE ALTERNATIVE DISPUTE R
ESOLUliON 189

on ~he ?ate w.hcn a request for that dis ut

trauon is rccclvcd by the respondcn t. 177 p e be referred to O.rb·
I·
sA.MPLE NOTICE OF ARBITRATION
i ?n ~he other hand, for domestic arbitration n11
ng gu1dehnes shall be followed to determj h ' the foll
of proceedings: me t e commence ow. pCA CASE NO. 0405-1979
lllcnt
1. E MATTER OF AN ARBITRATION UNDER THE
ln institutional
. . arbitration , based on t he bi Ili TESH OF TffE PHILIPPINECENTER FOR ADR (PCA)
rules of the mstttution agreed upon. ar •tration RUL
2. In ad hoc arbitration upon the d 1. Between
t: • ' e tvery of th
man d tor arbitration to the respondent. e de. YOFILARU CO.,
(Claimant)
If there is an agreement to appoint a sole arbit
demand shall include an invitation of the cl . • rater, the and
aimant to th
spon d ent to meet and agree upon such arbitrato e re.
1 FIL RUIZ CO.,
thirty (30) days from receipt of demand If on the ~thnot hess than
id · er and the (Respondent)
agreement provi es the establishment for an arbitral t ibu
the demand shall name the arbitrator appointed by claim:Otal,
----------------- --------------------------~~---~
. . . Whd en no prior arbitration agreement exists, arbitration is
mitiate when one party submits the case for arbitration. It is NOTICE OF ARBITRATION
then considered commenced when the other party agrees to the
submission of the dispute to arbitration. I. YOFILARU CO. ("Claimant") submits this Notice of
Arbitration of its claims against FIL RUlZCO. ("Respondent"),
The demand shall require the respondent to name pursuant to the Submission Agreement dated 1 February
his/her/its arbitrator within a period, which shall not be less 2021179 ("Submission Agreement") entered into by the parties,
than fifteen (15) days from receipt of the demand, extendible which states:
upon agreement by parties. Within this period, the respondent
"I. SUBMISSION TO ARBITRAT
ION
shall give a written notice to the claimant of the appointment of
the respondent's arbitrator and attach to the notice the arbitra- The Parties agree to refer and submit the Disputes
tor's curriculum vitae and the latter's acceptance of the ap- to arbitration administered by the Philippine Center for
pointment. ADR ("PCA") in accordance with Arbitration Rules of the
PCA currently in force at the time of the execution of this
Submission Agreement.
The language to be used in the proceedings shall
be English.
The place of arbitration shall be the Philippines.

11~
I\ copy of . . , inte ral
177 An. '1.21, IRR, /\OR Act. Pan hereof a ., the Subm1ss1on Agreement is attached hereto, and made an g
111! Art. 5.20, IRR, /\DR Act. ' s c.llhibit ..A."
190
PH•uPP,t~E AtlER!lAll\lE OIS"''lE
,-v • R ESOlUH011 191

II. ARBITRALTRIBUNAL
n:,,. te
parties to the tnspu
1. gailTJ.gn1
The Parties agree that the Dispur h A.
and resolved by a tribunal composed or~~ s all be heard Claimant YOFJLARU CO. is a corporation organ-
tors (the "Triburial"]. The members or the T ~~e (3) arbitra. 2·d ·sting under the laws of San Francisco, Cali-
appointed in accordance with the PCA R I n unal shaJJ be
u cs. ized _ an U e~ed St.ates of America ("U.S.A. 1, with address
The Parties confirm that the arbitrato h
nate arc qualified to act as such and that th rs t cy nornj.
forn1a,9 ;ve Road, San Francis~, California, U.S.A. It is
at I 90 d . the business of carnage of goods and is Ii-
1~0
basis or reason to challcng,e their qualif c! know or no engagdet business in the Philippines.
bili ,u1 1cat1ons or th . cense o
a I rty to recommend or render a fair , im part, ial and . err
d
awar , sue h as conflict of interest with part· Just B. Responden1
pecuniary, professional or otherwise. res, whether

. . The decision or the Tribunal shall be final 3. Respondent FIL RUIZ CO. is a corporation or-
bmdmg upon the Parties and shall be fi and
. d and existing under the laws of the Philippines,
.
th rough any courts having • en orceabfe ~:address at 23 Har~or Street, ~u~n City. It is e~-
competent jurisdiction.
a ed in the textile business and is licensed to do busi-
m. PROCEDURE gg hili .
ness in the p ppLOes.
The Parties agree that the existing rules of proce- n. Statement of Facts Supporting Clainuutt's Claim
dure adopted by the PCA shall apply to the arbitration.
4. On 20 March 2017, a Service Contract (SC)
IV. GOVERNING LAW was entered into and executed by and between YOFIIARU
CO. and FIL RUIZ CO.
It is agreed that the disputes, this Submission
Agreement, and the arbitration that will be conducted 4.1 Under the SC, YOFlLARU CO. under-
pursuant thereto shall be governed by, construed, and en- took to (a) provide transportation and courier ser-
forced in accordance with the laws of the Philippines. vices to the customers of FIL RUIZ CO. in the Phil-
ippines; and (b) render customs clearance services
V. CONFIDENTIALITY for such customers at specified Philippine airports
Any information, relative to the Disputes, this and other ports of entry to be agreed upon by the
Submission Agreement, and the subject of arbitration parties ("Services").
arising therefrom, expressly intended by the source not to 4.2 In turn, FIL RUIZ CO. obliged itself to
be disclosed, or obt.ained under circumstances that would
pay the Claimant the amount stipulated in the SC,
create a reasonable expectation on behalf of the sou~ce
that the information shall not be disclosed. It shall in· as well as other incidental charges.
elude pleadings motions, manifestations, witness state· S. Despite Claimant's desire to comply with its
'
ments, reports filed ·
or submitted · bi
in an ar ura •
uon or for
un~ertaking, Respondent refused to accept the proposed
expert evaluation. ~ev,sed delivery schedule of goods based on the changes
IN WITNESS WHEREOF, the Parties to this Sub· ~ ~e availability of Claimant's cargo trucks, which the
mission Agreement have caused rt· to b e exe cuted on the atmant had the right to request under the SC, thereby
date first stated above." Prevenu
u d ng th e Claimant from performing its obl"iga lion
di ute between ren er the SC. Claimant proposed to cancel the SC, but
Claimant respectfully demands that the tsp A bitra1ion opsponde n t refu sed. The pending issue on the Sc cau sed
the Parties be referred to arbitration under the 202 l r Miil~itunity loss to the Claimant in the amount of Three
Rules of the Philippine Center for ADR (PCA). n Pesos (P3,000,000.00).
 AAOITRII TION
192 P1t1Ufll'INE ALIC:llN/IIIVI OltiflUIL RC!lOLUIION 193

III.
A.
Particulars of the Arbitration
N1m1/Jer a11rl Se/m:tior, o{l\r/Jitrators
(:;. -
Amount in Disnutc
Cloirnant is secki~g the. paymcn~ of Three Mil·
I 1 ~s (PJ,000,000.00) including applicable interest
lion pcs nolty charge~. by reason of the breach of the
6. The Submission Agreement provides for
of three_ (3) arbitrators. Under Article 5 of the p~ Q Pnne1 on d o 1hcr pc ted from the d ate t h c amounts were due and
one urbitrmor shnll be appointed by YOfolLARU ~ Rules,
SC comPu
'able to date.
the other by FIL RUIZ CO. Under Article 6 f O. Un<l poY Administrative and Piling Expenses
.
R... u I cs, t h c two arbitrators o the PCA
thus appointed shall " F.
th ire· I nr biurator w h o s h oil act us the Chair of ti c,1loose
.. . n Pursuant to Article 7 of the PCA Rules, Claim-
nal. re I nbu. 12· . a check as payment for the non-refundable
ont encloses
7. Claimant ~ropose~ to appoint A'nv. ADOR _ filing fee.
CION A. PEREZ us Its appointed arbitrutor Her con tact
A Relief sought
·
details are as follows: JV.
. In view of the foregoing, Claimant seeks the
I3
ATTY. ADORACION A. PEREZ t. of Three MiJJion Pesos (P3,000,000.00), in addi-
P. oymen . d . . . f
n to applicable penalties an interests ansmg rom the
Uriit 9, Graciosa Building
110 ncnt of the amount, computed from the date the
Ortigus Center, Pasig City non-pa yr
+63 2 7 999 I 1 00 omoun Is were due and pnyoble to dale.
Dory8~1gmoil.com
14. Claimant seeks such o~her and further relief
as the Arbitral Tribuno.J may deem JUSt and proper.
B. Appoirument of Counsel
Respectfully submitted.
8. Claimant hos appointed the following counsel
as its legal representative in connection with this arbitrn- s rebruory 2021.
tion. IDA LAW
IDA LAW
Counsel for Claimant
Unit 40, 9th Floor OADR Building
Counsel for Claimant
Quezon Avenue, Quezon City
Unit 40, 9th Floor OADR Building
+63 2 8 2312l418
Quezon Avenue, Quezon City
[email protected]
+63 2 8 23121418
info<!, idalow.com.ph By:

C. Place o(l\rhitration HIL BALANAY

PTR No. 1107 J 979; Quezon City; January 12, 2021
9. The Submission Agreement provides that the Lifetime IBP No. 09092015; Quezon City
place of nrbitrntion shall be the Philippines. MCLE Compliance No. Vl-120820 l 5, April 5, 202 I
Roll No. 405 1 17
D. /,m1q11oqe o(l\rbitratio11 Mobile No.09475901258
id that the Email Address: hilber (!.gmail.com
Io.The Submission Agreement ~Jrov1 cs
lnng-uoge oft he orbit mt ion shall be Enghsh.
 PHIUf>PINE ALTERNATIVE DISPUTE RESOLUTION ARBrTRAllON
192 193

Ill. Particulars of the Arbitration g. Amount in Dispute

A. Number and Selection of Arbitrators
11. Claimant is seeking the payment of Th M"l
lion pesos (P3,000,000.00) including applicable ~~~ere~;
6. The Submission Agreem~nt provides for a aJld other penaJty charges, by reason of the breach of the
of three (3) arbitrators. Under Article 5 of the PCA :tel SC, computed from the date the amounts were due and
one arbitrator shall be appointed by YOFILARU co u es,
payable to date.
the other by FIL RUIZ CO. Under Article of the.6 ;11d
Rules, th~ two arbitrators thus appointed_ shall choos;A F. Administrative and FilingExpenses
third arbitrator who shall act as the Chair of the T nib u-a 12. Pursuant to Article 7 of the PCA Rules, Claim-
nal. ant encloses a check as payment for the non-refundable
7. Claimant proposes to appoint ATTY. ADORA filing fee.
CION A. PEREZ as its appointed arbitrator. Her contac~
IV, Relief Sought
details are as follows:
13. In view of the foregoing, Claimant seeks the
ATTY. ADORACIONA. PEREZ payment of Three Million Pesos (P3,000,000.00), in addi-
Unit 9, Graciosa Building tion to applicable penalties and interests arising from the
Ortigas Center, Pasig City non-payment of the amount, computed from the date the
+63 2 7 999 l l 00 amounts were due and payable to date.
Dory8~~gmail.com 14. Claimant seeks such other and further relief
as the Arbitral Tribunal may deem just and proper.
B. Appointment of Counsel
Respectfully submitted.
8. Claimant has appointed the foJlowing counsel
as its legal representative in connection with this arbitra- 5 February 2021.
tion. IDALAW
IDA LAW Counsel for Claimant
Unit 40, 9th Floor OADR Building
Counselfor Claimant
Quezon Avenue, Quezon City
Unit 40, 9th Floor OADR Building
+63 2 8 23121418
Quezon Avenue, Quezon City
[email protected]. ph
+63 2 8 23121418
info@)idalaw.com.ph By:

C. Place of Arbitration HIL BALANAY

PTR No. 11071979; Quezon City; January 12, 2021
9. The Submission Agreement provides that the Lifetime IBP No. 09092015; Quezon City
place of arbitration shall be the Philippines. MCLE Compliance No. VI-12082015, April 5, 2021
Roll No. 405117
0. Language of Arbitration Mobile No. 09475901258
Email Address: [email protected]
l 0. The Submission Agreement provides that the
language of the arbitration shall be English.
194 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION
ARBITRATION
195

R spondent requests that all communications c

3. ~ suances, submissions and other papers addr orre~
1:nt
5pondence, to ATTY. EDIENE ARANGORIN through theessde
th ern be s e-
10 ·ded above.
SAMPLE RESPONSE TO NOTICE OF ARBITRATIO?f tails prov1
R£SPONSE TO THE INFORMATION SET FORTH IN THE
PCA CASE NO. 0405-1979
S, NOTICE
IN THE MATTER OF AN ARBITRATIONUNDER Respondent denies that it acted in breach of the Ser-
RULES OF THE PHILIPPINECENTER FOR ADR (~E 4·tract
. ("SC") entered into and executed by the Parties on
Between A) vice con
20 March 2017.
YOFILARU CO., 4.1. Under the SC, Claimant YOFILARU CO. un-
(Claimant) d rtook to (a) provide transportation and courier services
t: the customers of FIL RUIZ CO. in the Philippines; and
and
(b) render customs clearance services for such customers
FIL RUIZ CO., at specified Philippine airports and other ports of entry to
(Respondent) be agreed upon by the parties ("Services").
4.2. In turn, FIL RUIZ CO. obliged itself to pay
Petitioner the amount stipulated in the SC.

RESPONSE TO THE NOTICE OF ARBITRATION s. Prior to engaging the services of the Claimant, the lat-
WITH COUNTERCLAIM ter assured the Respondent that it had more than enough cargo
trucks to cater to the needs of the Respondent, which was the
Respondent FIL RUIZ CO. respectfully responds to the primary consideration for the Respondent to enter into an SC
Notice of Arbitration dated 5 February 202 J ("Notice") submit· with the Claimant.
ted by the Claimant YOFILARU CO. Respondent received said
Notice by personal service on 8 February 2021. 6. A week after executing the SC, the Parties agreed to a
schedule of delivery of goods, which delivery should start on 5
A. THE RESPONDENT'S DETAILS April 2017. However, three (3) days after the first delive_?'• the
. Claimant sent to Respondent a proposal to revise the ongtn~ly
1. Respondent FIL RUIZ CO. is a corporation or gani.zed agreed upon schedule of delivery of goods to avoid any conflict
. . . "th address at
and existing under the laws of the P hillppme~, wi il b si- in the Claimant's schedule of delivery with its other clients.
23 Harbor Street, Quezon City. It is engaged 111 the textl e u
ness and is licensed to do business in the Philippines. 7. Respondent did not accept the proposal of the Claim-
ARAN· ant as it will violate its agreements with its customers as to re-
2. Respondent is represented by ATTY. EDIE NE .
quired delivery dates. Respondent sent a reply to the Cl aim
· ant '
GORIN, the details of whom are as follows: refu ·
sing to accept said proposal.
EDIENE ARANGORIN b 8· The Claimant failed to comply with its obligations
Counsel for Respondent ased on the SC and the original schedule of delivery of goods.
23 Harbor Street, Quezon City 9· By reason on said breach most of the Respo_ndeMn~·ls
Mobile No. 09275532653 CUstome ' rth Five 1 •
Ii rs cancelled their orders and contracts wo the
Email Address: edriedetorres@:gmail.c001 on Pesos (PS,000,000.00). The Respondent had 10 engage
196 PIHill'l'INI Al 11 llNIIIIVr DIBPUH Hr:not
. ., UIION Ai,111rr•11rr1,r1
197

services of other C':) rgo t n111:-1po,·1 servlccs i 11 0'h~cr

. PROCEDURE
t he rcqui rcmcn ts of t lu-ir' ot her cust oincrs lo co1 ut.
. I . w ilc w . 1111 ) y w· ·111, 1•.,r111 . "('.n·1· rtwr rh,·, xist·ri",. ni,,..• • ,,r ,rr
I auunnt 10 comp I y wit, its obligations und Urlin~ t % ·
111r1 ,,d,,p11·rl lr1 t hr- f'( A sh;,11 -rpply 1,, t hr- .. · ·'
no longer complied with its obligations an~r ~ h_c Sc. c1/.1r th~ l l
.,
' ,irrwr;;
ruuount of Five Million Pesos (PS,000 ooo OO) t urlcu lo ni"lll 0n1 11r,n
' · o lhc l~cli 1Y lh.
10. On 8 Fcbruory 2021, Respond Ponllc111 GOVERNING LAW
JV.
Clnimant 's Notice of Arbitrnuon dated 5 Fcbr- cnt received
nee was issued by the Claimant pursuant ~or\202 i. 'l'hc 1c i •\ 1\rr
.
II ,., ;,gn·crl t hat t hr- disp1111·s
1•11w11•
·
;ir1d i h« arbn rauon th;,•
. rh,s
,r'J
"
s ._
• II 1J1!1J<;<;J():,
hr-e- ton d ur.tcd'
Agreement 180 entered into by the purties 011 ~ ~ c Subnii981 ''
p llr sii,1nt then-lo sh,JII b1· govr·rnr·d 'w. · rr,r ··s· rue d , and
which provides: •ebruury 202 I,11 ° (' rl •',,r< ,·cl .n .,ccord;,ncc with the l;iws of "hr-
· Phil ippmes

"1. SUBMISSION TO ARBITRATION CONFIDENTIALITY

v.
The Parties agree to refer and sub it h . Anv information, relat iv« to tht> D1sputrs. this
,.· . d . m, t c D1 Subrn1ss1or, Agn·cmcnt, and the s ubjcr-t of arburar:on
putcs to artntratron a ministered by the Phil" . S·
ter for ADR ("PCA") in accordance with ipApbi~cCen- ;irising tlwrcfrom. «xprcssty intender. by r ne source not
. r 1tration
R u l cs o f t h c P C A currently in force at the ti· to bv d1s1 los cd , or obtained under circumstances hat
. f hi S b . . me of the would c-n·;11c a rr-a sonnblc cxpcc anon on behalf of the
execution o t is u rrussion Agreement.
sourc·<· t hut the mformn t ron shall nor he disclosed It
'!"he language to be used in the proceedings sh II shul! mclud« ph-ndrngs. motions. marufesta-uons, wit-
be English. a ncss sta1t·rnl'nts, reports filed or submitted :nan arbi
The place of arbitration shall be the Philippines. 11a11on or for expert evaluation.

l'\ \\'ITNSSS WHEREOF. the Parties to this Sub-

ti. ARBITRAL TRIBUNAL
1111ss1011 Agreement have caused 1l to be executed on the
d.n c firs I stared above."
The Parties agree that the Disputes shall be
heard and resolved by a tribunal composed of three (3) 1 I. In said Notice. the Claimant alleges that it is willing
arbitrators (the "Tribunal"). The members of the Tribu-
to comply wit h its undertaking, but Respondent refused to ac-
nal shall be appointed in accordance with the PCA
cept the proposed revised delivery schedule of goods based on
Rules.
the changes in the availability of Claimant's cargo trucks. which
The Parties confirm that the arbitrators they the Claimant had the right to request under the SC, thereby
nominate are qualified to act as such and that they preventing the Claimant from performing its obligation under
know of no basis or reason to challenge their queliflca- the SC. Claim ..uu proposed to cancel the SC. but respondent re-
tions or their ability to recommend or render a fair, im· fused. Th« pending issue on the SC caused opportunity loss to
partial and just award, such as conflict of interest with the Clniruu n t in the amount of Three Million Pesos
parties, whether pecuniary, professional or otherwise.
(P3.000.000.00).
The decision of the Tribunal shall be final and
binding upon the Parties, and shall be enforceable v. RESPONDENT'S CO-ARBITRATOR
through any courts having competent jurisdiction.
I 2. l~l·sponck11t requests 1-'CA to confirm JURIST VIN
L1\WRYZ · d b·1rator
1
ti-. - as t hv second co-Arbitrator- Its appointc ar '
Is. L;iw1 vz hns t I H: Iollowiuu contact details:

1110 A copy of the Submission Agreement is auuchcd as Exhibit "1 "·

 APJ31TRA TION
199
190 P1111 ll'l'INI 1\111 IINIIIIVL DIIJl'Ult f~UIOI UllON

When from the nature and the circum-

JURIST VIN LAWRYZ (21f he obligation it appears that the designation
stD.Ilces O t hen the thing is to be delivered or the scr-
2:17 Alley I, Project 6, Quc7.on Cit
~·63 2 8 23141218 y oft h ~ timebew rendered was a contra 11·mg motive for the
0
ccce I 3("1gmoll.com ,;ice ·~ th nt of the contract; or
csW bhS me
When the demand would be useless, as
A. COUNTERCLAIM ( 3) bligor has rendered it beyond his power to
wtien the o
perform.~
The instant dispute falls within the established ex-
16· . e it is manifest from the nature of the obligation
ceptions s~ncparties that the designation of the time when the
betwe~n t b delivered was the controlling motive for the estab-
thing is t~f :he SC. As such, there is clearly a delay on the pan
. 13. Respondent lost rive Million (PS,000,000.0Q
of its contracts due lo the Claimant's breach of the .I.worth lishJTJe~~ . ant although there was no express demand on the
· .1 . . prov1s1ons or of the f ha.1mRespondent for the Claimant to perform its obliga-
ti ic Sc . P rimuri y, 1t was said contracts to supply textile ro part o t e
ucis to different. customers
. that
. prompted the Respan d entP d- to tions under the SC.
engage
h d the services of the Claimant. In the inilial dis
. ·
cuss1ons
t at 1 e lo the e~ecut10n of the ~C. the Claimant assured the RELIEF SOUGHT AS COUNTERCLAIM
B.
Respondent that tt had the capacity to take on the bulk and .
ries of deliveries required by the Respondent's customers. se 17. Jn view of the Claimant's breach of the SC, the Re-
spondent seeks the following relief by way of counterclaim:
14. Unfortunately, the Claimant failed to perform its ob-
ligolions under the SC and one by one, the customers of the Re- (a) The payment of Five Million Pesos
spondent cancelled their orders. J\11 in all, the cancelled orders jPS,000,000.00), representing lost income, including
cost rive Million Pesos (PS,000,000.00). The Claimant's breach all applicable interest and charges thereon.
being the main cause for the cancellations, it is but proper that (b) Such other and further relief as the Ar-
it be held liable for said amount. bitral Tribunal may deem just and proper under the
J 5. The Civil Code provides for the general rule, as well circumstances.
as the exceptions relevant to the issue on the alleged absence of
u demand on the part of the Respondent for the Claimant to C. RESERVATION
comply with its obligations, thus:
18. Respondent expressly reserves its right to a.men?,
"J\rt. I 169. Those obliged to deliver or to do explain, or otherwise substantiate its allegations and claims in
something incur in delay from the time the obligee judi- the event of further arbitral or other related proceedings under
cinlly or cxtrajudicially demands from them the fulfill- applicable law or rules.
ment of their obligation."
There ore only three instances when demand is Respectfully submitted.
not necessary to render the obliger in default. These ore
the following: 10 February 2021.
"(I) When the obligation or the law expressly so
declnres:
 ARBITRATION
200 PHILIPPINE AL TERNfl l lVE DISPUTE RESOLUTION 201

EDIENE ARANGORIN
Counsel Jor Respondent/ Counter-Claimant
23 Harbor Street, Quezon City
PTR No. 05182011; Quezon City; January 12 202 ITRATOR'S ACCEPTANCE, OATH OF OFFICE,
Lifetime IBP No. 20110518; Quezon CiL; 1
~pL£ ,tjtl3OF INDEPENDENCE AND IMPARTIALITY AND
MCLE Compliance No. Vl-20051821 I, April 5, 2021 :'f,'1'£ftfEHT STATEMENT OF DISCLOSURE
RollNo.51811
Mobile No. 09275532653
Email Address: [email protected] ITRATOR'S ACCEPTANCE, OATH OF OFFICE,
~MENT OF INDEPENDENCE AND IMPARTIALITY
STA AND STATEMENT OF DISCLOSURE

ATTY· ADORACION A. PEREZ, Filipino, of legal age

\ office address at Unit 9, Graciosa Building, Ortigas
and wit p sig City having been appointed as Arbitrator in the
Oath of the Arbitrators Center,f "~OFILARU co. vs. FIL RUIZ CO.", PCA CASE No.
case o
Before assuming the duties of his/her office, an arbitrator 0405.1979, do hereby:
must be sworn by any officer authorized by law to administer an 1. ACCEPT the appointment;
oath or be required to make an affirmation to faithfully and fairly 2. Agree to comply with the applicable law,
hear and examine the matters in controversy and to make a just including the relevant tax laws and regulations, the
award according to the best of his/her ability and understand- ~hilippine Center for ADR Rules l"PCA Rules"! and
ing. A copy of the arbitrator's oath or affirmation shall be fur- the PCA Code of Ethics for Arbitration (i.e., the Rules
nished each party to the arbitration.ts ' of Ethics for International Arbitrators adopted by the
International Bar Association ["IBA Rules"], and the
IBA Guidelines on Conflicts of Interest in Interna-
tional Arbitration ("IBA Guidelines"I);
3. Agree to devote as much time and atten-
tion to the arbitration as the circumstances may re-
quire in order to achieve the objective of a speedy, ef-
fective and fair resolution of the dispute;
4. State that:
(a) am in full enjoyment of my civil
rights;
(b) I am not related by blood 0~ by
marriage within the sixth civil degree to either
party to the controversy;
(c) I do not have any financial, fiduci-
ary or other interest in the controversy or
cause to be decided or in the result of the pro-
1>11 Art. 5.23 (s), IRR, ADR Act.
 ARBrTRATION
202
f>l;ILIPPl'IEAlTERNAllVE01SPUIE RESOt.UTION
203

(c) I also undertake_ lo make an imme-

cecdtng, or have any p diate disclosure to the parties should 1 hereaf-
m1·g1 t ~ . . crsonnl bins
\ prejudice the right of a: Which ter become aware o_f the ~xistence of any fact
and impartial award; ny party lo u foir
or circumstance which might be of such a na-
(d) I am not aware of ti . ture as to call into question my independen
· 1c exist or impartiality based on the foregoing stan-
rany ·circumstance that ""11
• cuuse my, ct·encc or
icauon as provided in the pa.rties' '.squa)j. dards.
agreement; and urb1trntion
6. Further to the foregoing:
(e) I undertake to faithful! . (a) I hereby inform the PCJ\ that f am
hear and examine the matter . y and fairly
d s m controv subject to value-added taxes ("VAT"). I under-
an to make a just award acco di crsy
of my ability. r mg to the best take to inform PCA of any change in my status
in respect hereof as soon as said change in
5. I likewise confirm that I have . status takes effect.
IBA Rules and the IBA Guideline d hrev1ewedthe
that: s an ereby state (b) I agree to issue an official receipt
(VAT or non-VAT) in favor of the parties imme-
To the best of my knowledge th diately upon my receipt of my Arbitrator's
no facts or circumstances past or ere are Fees.
th t d . ' present
a nee to be disclosed because they mi ht
?e of such a nature as to call into question~ (c) I agree to pay directly to the Bu-
independence or impartiality in the eyes of thy reau of Internal Revenue ("BIR") the proper
partJes; or e VAT due on my Arbitrator's fees within the pe-
riod prescribed by law.
(a) To the best of my knowledge there
are no facts or circumstances, past or present, (d) I consent to PCA's authority to de-
that need to be disclosed because they might duct from my Arbitrator's Fees 15% withhold-
?e of such a nature as to call into question my ing tax to be remitted by the PCA to the BIR.
mde?endence or impartiality in the eyes of the
parties: 1 declare that l have read, understood and agree to the
PC~ G_uidelines on Fees. My conformity with the Rules serve as
[b] While I am independent and impar- a binding agreement between me and PCA, and this shall super-
tial and intend to remain so, I wish to call the s;de any contrary agreement or understanding I have with any
parties' attention to certain facts or circum- O the party/ies involved in this arbitration.
stances which I hereby disclose that counsel
for the respondent, ATTY. EDIENE ARANGO-
RlN, was my schoolmate in law school and a ATTY. ADORACION. A PEREZ
co-parent in Quezon City Science High School, Unit 9, Graciosa Building
where both our children are in Grade 8, be· Ortigas Center, Pasig City
cause they might be of such a nature as to call
+63 2 7 999 1100
into question my independence or impartiality
[email protected]
in the eyes of any of the parties based on the
standards provided under the IBA Rules and TIN :07-281972
the IBA Guidelines; and
204 PHILIPPINE ALTERNATIVE DISPUTE R ESOLUTION
AABITRATION 205

ACKNOWLEDGEMENT written p,-oceedings

,in9 and
SUBSCRIBED AND SWORN t b Jlea the following procedure shall serve as guide-
~ebruary, 2021. Afliant exhibited to ~e efore me, this 91h for JCA,
non Cards, to wit: her Personal Id day Of
entiJic:a. Th arbitral tribunal shall decide whether to hold oral
a. h ~ngs for the presentation of evidence or for oral
:gument, through submission of documents and
NAME COMPETENT
COIOtUJ'aTY TAX rher materials. However, unless the parties have
EVIDENCE OF IDENTITY CERTIPJCAT! O greed that no hearings shall be held, the arbitral tri-
ATrY. TYPE ID NUMBER AND NUMBER
ADORACION OF ID EXPIRY DATE DATE/PIJ.c& ~unal shall hold such hearings at an appropriate
A. PEREZ ti~~~~--t~ll;F~AP~PL;I~CAB~L~E~)t-::";:;::::::-:~~J_~:ISSU!J, stage of the proceedings, if so requested by a party.
I. PRC 1234-567-09 00978928376-5
. Driver's License 18191-0l918 l/1/2020/Mikat;
sufficient advance notice shall be given to the parties
00926251481- 7 2/2/2020/Qc b. about any hearing and of any meeting of the arbitral
tribunal for the purposes of inspection of goods, other
Doc. No. property or documents.
Page No. NOTARY PUBLIC c. All statements, documents or other information sup-
Book No. plied to the arbitral tribunal by one party shall be
Series of 2021. communicated to the other party. Also, an expert re-
port or evidentiary document on which the arbitral
tribunal may rely in ma.king its decision shall be
communicated to the parties.
For Domestic Arbitration, the governing rules for the hear-
ing and written proceedings depends on the arbitration mecha-
nism chosen by the parties. In ad hoc arbitration, the procedure
determined by the arbitrator, with the agreement of the parties,
shall be followed. On the other hand, in institutional arbitration,
the applicable rules of procedure of the arbitration institution
:ha~l be followed. In default of agreement of the parties, the arbi-
ration procedure shall be governed by the IRR of the ADRAct.
serve As provided in Art. 5.23 of said IRR, the parties shall ob-
the following guidelines: 183
a. Wit?in thirty (30) days from the appointment of the
arbitrator or the constitution of an arbitral tribunal,
the arbitral tribunal shall call for a pre-hearing con-
- ference to discuss:
ts1A
183 A~:: :·;;· IRR, ADR Act.
. ' IRR, ADR Act.
206 ARBITRATION
PHILIPPINE ALTERNATIVE DISPUTE R 207
ESOLUTION

l. The venue or place/s of th .

upon by the parties and t~ arbitration u

ii.
iii.
which may vary per session/~ ai:bitra1 tribgrcc~
The manner of recording the
eanng/ co llt1a1
proceedin
The periods for the comrnu · .
. nfcrc11cc'.
gs;
,
--
s.AMPLE TERMS OF REFERENCE

f_CACASE NO. 0405-1079

t f 1 . n1catton of h
men o c aims, answer to th . t c stat IN THE :MATTER OF AN ARBITRATIONUNDERTHE
without counterclaims and e cla1rns With c. RULES OF THE PHILIPPINECENTER FOR ADR (PCA)
t 1 . , answer to th or Between
ere aim Zs and the form d e cou
pleadings; an contents of su~
YOFILARU CO.,
iv. The definition of submitted is sues and (Claimant)
.
O f c 1 aims and counterclaims· summary
' and
V. The manner ?Y which evidence may be of .
an oral heanng is required th b . Iered ir FIL RUIZ CO.,
. • e su m1ssio
sworn wntten statements in li eu of oral testi n of {Respondent)
mony, the cross-examination and furth .
amination of witnesses· er ex.
•
vi. The delivery of certain types of communications· TERMS OF REFERENCE
vii. The issuance of subpoena or subpoena duce~
J. THE PARTIES AND THEIRLEGAL
tecum if requested; REPRESENTATION
viii. The manner by which expert testimony will be
received, when requested or required, including 1.1. Claimant YOFILARU CO. is a corporation organ-
ized and existing under the laws of San Francisco,
details on the period of submission to the arbi-
California, United States of America ("U.S.A."). with
trator, proposed terms of reference for the ex· address at 1909 Love Road, San Francisco, Cali-
pert, the fees to be paid, the manner of payment fornia, U.S.A. It is engaged in the business of car-
to the expert; riage of goods and is licensed to do business in the
ix. The possibility of either party applying for an or· Philippines.
der granting interim relief; 1.2. Claimant is represented by !DA Law, the details
x. The possibility of a site or ocular inspection, of which are as follows:
with details and costs;
arbi· IDA LAW
XI. The amount and manner of payment to the Counsel for Claimant
tral tribunal of fees associated costs, charges Unit 40, 9th Floor OADR Building
' Quezon Avenue, Quezon City
and expenses; and I
+63 2 8 23121418
xii. Relevant matters as the parties and the arbilJll [email protected]
tribunal may consider necessary.
 AR8JTRA TION 209
208 PHILIPPINE ALTERNATIVE DISPUTE R ESOLUTION

Respondent FIL RUIZ CO . ·,is a corp

r~ ResRponde~t's Response to the Notice of Arbitra-
1.3. . d 2.s uon, espon ent proposed to appoint JURIST VI
ize and existing under the 1 oration O
with address at 23 Harbor ttws of the Philippr·gan. LAWRYZ as their party-appointed Arbitrato MN
· d reet Que 1nes 1.,awryzhas the following contact details: r. s.
is engage in the textile busine ' . zon City '
do business in the Philippines. ss and is licensed I~
JURIST VIN LAWRYZ
1.4. Respondent is represented b 237 Alley 1, Project 6, Quezon City
ARANGORIN, the details of whic~ ATI'Y. EDIENe +63 2 8 23141218
are as follows:
eeee l [email protected]
EDIENE ARANGORIN
Counsel for Respondent 2.6. On 11 February 2021, Jurist Vin Lawryz communi-
23 Harbor Street, Quezon City
cated to Respondent and PCA, her receipt of the
Mobile No. 09275532653 confirmation by PCA of her appointment and her
acceptance of appointment as arbitrator. With her
Email Address: [email protected]
signed acceptance, Jurist Vin Lawryz also provided
her notarized Oath of Office & Statement of lmpar-
II. CONSTITUTION OF THE ARBITRAL TRIBUNAL
tiality and Lndependence and Statement of Disclo-
On 8 Feb~ary 202~, Claimant served on Respon sure, as well as her current Curriculum Vitae.
2.1.
dents a Notice of Arbitration dated 5 February 2021 2. 7. On 12 February 2021, Arbitrators Atty. Adoracion A.
pursuant to the PCA Rules. ' Perez and Jurist Vin Lawryz nominated a third arbi-
2.2. In its Notice of Arbitration, Claimant proposed to trator and Chair, Atty. Denise Eiel 0.T. Cabezas
appoint as its party-appointed Arbitrator, Arn'. with the following details:
ADORACION A. PEREZ with details as follows:
ATTY. EIEL D.T. CABEZAS
No. 9 Santan Street, San Pedro D< Subdivision
ATTY. ADORACION A. PEREZ
Unit 9, Graciosa Building Novaliches, Quezon City
+63 2 8 08142007
Qrtigas Center, Pasig City
cabezas l [email protected]
+63 2 7 999 1100
[email protected] 2.8. On 13 February 2020, Atty. Eiel D.T. Cabezas
communicated to the Arbitrators and PCA, her re-
On 9 February 2021 ' Atty. Adoracion A. Perez
· Ocorn·
f the ceipt of the conftrmation by PCA of her appointment
2.3
municated to Claimant and PCA, her receipt let and her acceptance of appointment as third arbitra·
confirmation by PCA of her appointment I a~1,:er tor and Chair. With her signed acceptance, Atty.
Eiel D.T. Cabezas also provided her notarized Oath
acceptance of appointment as arbitrator. Wit ro·
signed acceptance, Atty. Adoracion A. Perez also;i of of Office & Statement of Impartiality and Independ-
vided her notari2ed Oath of ornce & Staternenl of ence and Statement of Disclosure, as well as her
Impartiality and Independence and ~ta11~:evu11e. current Curriculum Vitae.
Disclosure as well as her current curncu As thus constituted, the Tribunal is composed of
' erved O ~ 2.9.
On IO February 2021, Re~po~dent s d the 5111nr the following:
2.4
sponse to the Notice of Arb1trauon date 1 10 1ht
day to the Claimant and the PCA, pursuan
PCA Rules.
 210
Arm1TRJI T'O'I
211

thr•·c (3) 1,rb1trarors [rhe "Tribunal") Them .

. . . · embers
of t h« fnhunal ,;h,111 be Hppomted in acLo d
~ r ante
ATTY. EIEL D T c « u b t hr P( ,\ Rules
No. 9 Santan Street S . p. ABEZAS
• an edro IX s bdi .. Th.c Parties confirm that the arbitrators
Novaliches, Quezon City u IV1s1on the, nominate· arc qualified to act as such and tha-
+63 2 8 08142007 rhcv know of no basis or reason to challcn~c their
cabezas l [email protected] qualifirauons or rhr-rr abiluy ro recommend or ren
TnounaI Members dn., fair. impartial and JUSI award. such as con-
nwt of interr-st with parties. w hethcr pccunia~·
proft-ssion<.11 or otherwise. ·
ATTY: ADORACION A. PEREZ The decision of the Tnbunal shall be final
Un~t 9, Graciosa Building and binding upon the Parnes. and shall be en·
Orugas Center, Pasig City Iorccable through any courts having competent JU·

, +63 2 7 999 1100

[email protected]

JURIST VIN LAWRYZ

237 Alley 1, Project 6, Quezon City
risdrr uon .

ta. PROCEDURE

The Parties agree that the existing rules of

procedure adopted bv the PCA shall aoolv to the
+63 2 8 23141218 arbitration. . ·· -
Eiel l [email protected]
IV. GOVERNING LAW
m. ARBITRATION AGREEMENT & LAW GOVERNING THE
CONTRACT It is agreed that the disputes. this Subrnis-
sion Agreement. and the arbitration that will be
3.1. This Arbitration was commenced pursuant to the conducted pursuant thereto shall be governed by.
Submission Agreement dated l February 2021 en· construed. and enforced in accordance with the
tered into by the Parties, which states: laws of t he Philippines.
V. CONFIDENTIALITY
"I. SUBMISSIONTO ARBITRATION
The Parties agree to refer and submit the Dis· Any information. relative tu the Disputes.
putes to arbitration administered by the Philippine t~is Submission Agreement. and the subject of ar-
Center for ADR ("PCA") in accordance with Arbitra· b1tr:1t1011 arising therefrom, expressly intended by
tion Rules of the PCA currently in force at the time of the source not to be disclosed, or obtained under
the execution of this Submission Agreement. circumstancl's that would create a reusonablc ex·
!.lt'l'lat1on on behalf of the source that the inforrna-
The language to be used in the proceedings
tion shall not be disclosed. It shall include plead·
shall be English. ings, motions, manifestations. witness statements,
The place of arbitration shall be the Philip· re-pons filed or submitted in an arbitration or for
pines. expert evaluation.
, IN WITNESS WI IEREOF. the Parties to this
II. ARBITRAL TRIBUNAL Subn11ss1on Agreement have caused it to be exc·
. t shall be
The Parties agree that the Dispu es d of nited 011 tlu- date first stated above."
heard and resolved by a tribunal compose
 ARBITRATION
213
212 PHILIPPINE AL 11:RNI\TIVE DISPUTE RESOLUTION

The issues to be resolved by the Tribunal are:

e.
IV. APPLICABLE ARBITRATION LAW & ARBITRAT
RULES lON i. Who among the Parties committed
breach of the SC, thereby resulting into
liability against either of the Parties.
4.1. Per agreement of the parties as provided ·
111 of the Terms of Reference for this rn •nt Clause ii. Who among the Parties is liable for the
cute d on 5 Apn ·1 2021, the arbi. tration shaj]a ler
b eXe. amounts claimed by them against each
ducted in accordance with the laws of th P ~~o- other: Three Million Pesos
pines (Republic Act No. 9285 relating lo ~ hili~. (P3,000,000.00) for the Claimant and
arbitration, the Arbitration Rules of the Pc:rn~hc Five Million Pesos (PS,000,000.00) for
Rules', the Special Rules of Court on Alter ~A the Respondent.
.
D ispute R eso I uuon
. as prornu I gated by the Sup native
rerne
Court, and Procedural Order No. 1 as issued by th .ty Philippines.
Arbitra1 Tribunal on 12 April 2021). e Quezon C1 •
S April 2021.
V. SEAT OF ARBITRATION & PROCEDURALMATTERS
EDIENE ARANGORIN
5.1. Pursuant to Clause 1 of the Terms of Reference for HD, T. SALANAY
this matter executed on 5 April 2021, the seat of IDA LAW Counsel for Claimant
this arbitration is Philippines. Counsel for Respondent Date Signed: _
5.2. Procedural matters, including the venue of the arbi- Date Signed:----
tration, procedural timetable, appointment of and
provisions for the Secretariat of the Arbitral Tribu- THE ARBITRAL TRIBUNAL
nal and service of submissions, were provided for
in Procedural Order No. 1 as issued by the Arbitral ATTY. EIEL D.T. CABEZAS, C. Arb., PCA
Tribunal on 12 April 2020. Chairman
Date Signed: _
VI. SUMMARY OF ADMITTED FACTS

6.1. The following are the admitted facts in this matter: ATTY. ADORACION A. PEREZ JURIST VIN LAWRYZ
Execution of the Service Contract ("SC") dated Co-Arbitrator Co-Arbitrator
a. Date Signed:----
Date Signed:
20 March 2017.
. controversies,
----
b. Certain disputes differences, . b-
, . ") have ansen e
and claims (the "Disputes th any
tween the Parties ~th regard to :~ec.er
of the parties acted in breach of th '
. mandato()
c. The SC does not provide for an~ cted in
mechanism by which the parties a
breach of the SC. . anY
ti subJecl to
d. The Disputes 8:e not curren y roceedings be·
pending Jitiga~on or court p
tween the Parties.
214 ARBITRATION
PHILIPPINE ALTERNATIVE DISPUTE R 215
ESOLUTION

be in writing and sworn or affirmed by the wit-

~~~ nesses.
A partY that re<:Iuires evidence from a witness
SAMPLEPROCEDURALORDER ii. from whom a witness statement cannot be ob-
tained shall, at or before the time that a wit-
PCA CASE NO. 0405-1079 ness statement from that witness would have
been due, seek directions from the tribunal as
IN THE MATTER OF AN ARBIT to how and when the evidence of the witness in
RULES OF THE PHILIPPINECE~~ON UNDER THE question shall be obtained and submitted to
Between FOR ADR (PCA)
the tribunal.
YOFILARUCO., iii. The witness statements submitted by each
(Claimant) party shall include all the evidence that party
seeks to put forward through its witnesses.
and
iv. The witness statements delivered by each party
FIL RUIZ CO., shall attach or be accompanied by all of the
(Respondent) documents on which that party intends to rely
at the hearing.
v. On or before 11 May 2021, the Claimant shall
deliver its witness statements and documents.
PROCEDURAL ORDER NO. 1
vi. On or before 20 May 2021, the Respondent
I. PLEADINGS shall deliver its responding witness statements
and documents.
The Pleadings shall be limited to: vii. On or before 22 May 2021, the Claimant shall
i. Notice of Arbitration deliver its reply witness statements, and docu-
ii. Respondent's Response to the Notice of Arbitration ments, if any. The reply witness statements and
documents may include evidence in respect of
iii. Claimant's Statement of Claim
any information or documents obtained pursu-
iv. Respondent's Statement of Defense (w/Counterclaim) ant to the process set out in paragraph 12 be-
v. Parties' Rebuttal Statements low, which the Claimant did not have an oppor-
vi. Claimant's Statements of Witnesses tunity to address in its witness statements, re-
ports and documents delivered on 11 May
vii. Respondent's Statements of Witnesses 2021.
viii. Parties.' Closing Memorials viii. Any witness statement a party needs to file in
ix. Parties' Rebuttal Memorials response to disclosure of documents, or [nfor-
~ation, or a witness statement from the other
II. EVIDENCE side that the party did not have a reasonable
. hall b presented opportunity to address, may be ftled by agree-
i. The evidence of both parties s e . hall
in the form of witness statements, which s ment of the parties or failing agreement, pur-
suant to further direction. No further witness
 ARBITRATION
217

216 PHIUPrlNE AL11-HNl\lWE D1sPure RESOLUTION

Requests for information or documents shall be
ji. responded to promptly as they are received.
~1:1te~1en1~ shall be delivered prior to the
mg without agreement of the partic hear.
the T'riburial. s or leave or
The hearing may be conducted at the PCAoffice
Any Expert's Report upon which the Cl .
ix.
or Respondent wish to rely on ("lnitia..1
Report ) shall be delivered on or before 25 ~ert
~;ant i. or at any locatio~ upon which the parties agree,
within Quezon City.
202 l. Any Responding Expert's Rep t _ay costs relating to the hearing facility shall be
th Cl · or which ii.
e aimarn or Respondent
. . wish to d e 1·iver in
. borne equally by both sides.
:s:nse to ~ Initial Expert Report delivered The hearing shall be transcribed. Parties may
Y e other sides shall be delivered on O b iii. request for a Transcript two days after the
fore 28 May 202 l. Responding Expert R r e-
Ii . d epons hearing.
s.hall b e mute to comments regarding the lni-
tial Expert _Report filed by the other party and A witness who has provided a statement or re-
iv. port shall be made available for cross examina-
shall not include new opinions, analysis
.
cone lusaons, w hiic h the expert could have in- or tion at the hearing unless the other side agrees
cluded in an Initial Expert Report. otherwise.
x, On or before 30 May 2021, the experts who If a witness is unavailable for cross-
v.
have delivered Initial or Responding Expert Re- examination, e.g. due to death or disability, the
ports shall meet, without counsel, and prepare admission into evidence and the weight to be
a joint report a) identifying areas of disagree- attached to the statement shall be in the dis-
ment, b) listing reasons for differences and c) cretion of the arbitrator.
quantifying differences. vi. At the evidentiary hearing, witnesses may be
xi, All statements, reports and documents shall be briefly examined by the party that submitted
delivered by sending a copy by e-mail to the their statements or reports, only for the pur-
other party and the arbitrator, by Sp.m. of the pose of introducing the witness and highlight-
day in question, with an additional hard copy ing key aspects of the witnesses' evidence. Such
being delivered to the arbitrator within 24 introductory examinations shall not take more
hours. than ten minutes and shall be followed by a
cross-examination of the witness by the other
REQUESTS FOR DISCOVERY side and cross-examination, if requested.
m..
Either side may, at any time, request in writi_ng vii. Further directions may be sought by either
L information or documents from the other side party at any time as the need arises.
relevant to the issues raised by the pleadings
. ~r
ddi-
the witness statements. Such requests, JO a Queaon City, Philippines.
tion to specifying the inform_ation sougl~~ 12 April 202 1.
should be C')nfined to information and doc
ments not otherwise! available to the partY m~- ATTY. EIEL D.T. CABEZAS, C. ,Arb., pCA
Ing the request. Any unreason.able dela: d: Arbitrator
making a request for informatjon may b un-
nie.d, if granting the reques~ would cau~e
justifi•~ dday in the ,ubitratLOn schedule.
 /lf'Flifl'/ILON 219

218 Pt11llPPINl Al TEl'INAllVC OtSPUTC RESOlUIION

solvt'cl ,,hc·,,cl of t hr: lwanng on the merits of the dis

b. To the extent possible th . ptilC· ..

parties shall agree upon c arbitral tribunal a d vach w1rr1<·c;s shall, before giving ·cstimony. be re
f~ult of agreement, the
discretion and auth onty
.
ar:~;
~u·c~ matters and nin the
tribunal
,. ., . cl tn tnkc an oath/ affirmation before the a bi
quire h 1 r nra
trihllnal. to cell the w_ o c truth and nothing but the
1

h tora make th shall h·ave de.

th
t ou~h in making decision, re ard c decision, al~ truth during I he hcanng.
the views expressed by b o th parties.
g. shall be given to ThC arbitnil tribunal sh_all arrange for the transcrip-
. of the recorded testimony of each witness and re-
11on
c. Theti arbitral
fi tribunal shall • in
. consultati J· uirc each party to share the cost of recording and
par
b · res, . lX the date/s and th on with th e
e tiirne of hearin (ranscriptioll of the testimony of each witness. ·
em~ given to the desirability of cond . g, regard
cludmg an arbitration without undue ~ii~~~
and con. i:;ach party shall provide the other party with a copy
of each swtcmrnt or document submitted to the arbt-
k.
d. The hearing set shall not be post one tral tribun:il and shall have an opportunity to reply in
the conformity of the arbitrator a:d thd except with
writing to rhc other party's statements and proofs.
only
b alfor a good and sufficient cause · Thee part.lb.
ar itral es and
t ·
un may deny a request to postpone or to can 1 °· The arbitral tribunal may require the parties to pro-
scheduled hearing. cc a I. duce such other documents or provide such informa-
tion as in its judgment would be necessary for it to
A party may, during the proceedings, represent him-
e. render a complete, fair and impartial award.
self/~erself/itself or through a representative, at such
m. The arbitral tribunal shall receive as evidence all ex-
heanng.
hibits submitted by a parry properly marked and
The hearing may proceed in the absence of a party
f. who fails to obtain an adjournment thereof or who, identified at the time of submission.
despite due notice, fails to be present, by him- At the close of the hearing. the arbitral tribunal shall
n. spccilkally inquire of all parties whether they have
self/ herself /itself or through a representative, at such
further proof or witnesses to present: upon receiving
hearing. a negative reply. the arbitral tribunal shall declare the
Only parties, their respective representatives, the wit·
g. nesses and the administrative staff of the arbitral tri- hearing closed.
bunal shall have the right to be present if the parties, After n hearing is ctcclarcd closed. no further motion
0.
upon being informed of the presence of such person or manifestation or submission may be allowed ex-
and the reason for his/her presence, interpose no ob· cept for post hearing briefs and reply briefs that the
parties have ngreed to submit within a fixed period a~-
jection thereto. tcr the hearing is clcclared closed, or when the arbi-
Issues raised during the arbitration proceeding rclot·
tral tribunal. motu proptio or upon request of a party,
h. ing to (a) the jurisdiction of the arbitral_ tribun•~t;,:;
one or more of the claims or counter
. clauns, or 1c1 a101,
unter . allows the reopen i ng of the hearing.
arbitrability of a particular . claim lbor al
co as t h res 1,otd p. Decisions on interlocutory matters shall be mad~ by
1 the sole arbit rator or by the majority of the arbitral
shall be resolved by the arb1tra tri un arc inter·
issues if the parties so request, unless they t be re·
twined' with factual issues that they canno
220 PtilLIPl'INI: AL 11:HNI\TIVE DISPutr.
,:
Rr.s
,: OLUTION
... , ARBITRATION
221

tribunal. The arbitral tribun I ·,atity thereof has been shown to the arbitral tri
· · a may auth rnate r . . -
c 11mrman to issue or release O b h Orizc . al The arb1tral tnbunaJ may also require the ex-
t ib 1 · . . c • n e air or th - its bUO . . d . th .
n una ' its decision on interlocutor" . c llrbitr,1
J mutters " c1us1 ·on of any witness unng. e testimony of any
q. other witness. ~nless the parties otherwise agree, all
Except. as provided in section 17 (d) or th .
h arbitrators m any controversy must attend all the
.No arbitrator
. . shall act as a medi·at or in
. anyc ADt~ Act .
~e:rings and hear the evidence of the parties.
mg m which he/she is acting as arbir Procccu.
d b t rator eve .
qucste y the parties; and aJl negotiations. n if re.
ts of Claim and Defense
r. Before assuming the duties of his/her office . state men
trator must be sworn by any officer auth . 'an arb,. .th· the period of time agreed by the parties or deter-
. .
t o a d rmruster onzed by I
an oath or be required t aw . d~1 t~c arbitral trib':1nal, the ~laiman.t shall state the .facts
firmation to faithfully and fairly hear anodmake.an af. mine .Y his/her/its drum, the points at issue and the relief or
· examine the
ma tt ers m controversy and make a · t suppdortLilgught and the respondent shall state his/her/its de-
di JUS award ac reme ·Y so
cor mg to the best of his/her ability and und erstand-· respect' of these particulars,
· · may have
unless the parties
. fense m .
mg. A c~py of the arbitrator's oath or affirmation shall · e agreed as to the reqwred elements of such statements.
ot h er.vts . .
be furnished each party to the arbitration. The parties may submit with their statements all documents
s. consider to be relevant or may add a reference to the docu-
Either party may object to the commencement or con· they . b .
merits or other evidence they will su nut.
tinuation of an arbitration proceeding unless the arbi-
trator takes an oath or affirmation as required in this Unless otherwise agreed by the parties, either party may
chapter. If the arbitrator shall refuse to take an oath amend or supplement his/her claim or defense during the
or affirmation as required by law and this rule, course of the arbitral proceedings, unless the arbitral tribunal
he/she shall be replaced. The failure to object to the considers it inappropriate to allow such amendment having re-
absence of an oath or affirmation shaJI be deemed a gard to the delay in making it.184
waiver of such objection and the proceedings shall
continue in due course and may not later be used as
a ground to invalidate the proceedings.
t. The arbitraJ tribunal shall have the power to adminis·
tcr oaths to, or require affirmation from, all witnesses
directing them to tell the truth, the whole truth ~d
nothing but the truth in any testimony, oral or w~t·
ten, which they may give or .offer in any arbi~r:t:r
hearing. The oath or affirmation shall be requir .1•
every witness before his· I h er testimony,
· oral or wn
ten, is heard or considered.
to require
u. The arbitral tribunal shall h~ve the po.we\s It shall
any person to attend a heanng a~ a witne to testif)'
have the power to subpoena witnesses,
and/or produce documents when the relevanc
y 811d
----
1$11\~--
s. 4·23 and 5.22, IRR, ADR Act.
 ARBITRATION
222 PHILIPPINE Al TERNATIVE DISPUTE RESOLUTION
223

sUBMJSSTONTO ARBTTRATION

ThC Parties agre~ ~o refer and sub~it the Dis-

arbitration admm1stered by the Philippine Cen-
putcs to ADR ("PCA") in accordance with Arbitration
SAMPLE STATEMENT OF CLAIM rer for f the PCA currently in force at the time of the
Rules ? of this Submission Agreement.
execution
PCA CASE NO. 0405-1979 The language to be used in the proceedings shall
be English.
IN THE MATTER OF AN ARBITRATION UNDER TH
RULES OF THE PHILIPPINE CENTER FOR ADR (Pc! The place of arbitration shall be the Philippines.
Between I
ARBITRAL TRIBUNAL
a.
YOFILARU CO.,
The Parties agree that the Disputes shall be
(Claimant)
heard and resolved by a tribunal composed of three (3)
arbitrators (the "Tribunal"). The members of the Tribu-
and
nal shall be appointed in accordance with the PCA
FIL RUIZ CO., Rules.
(Respondent) The Parties confirm that the arbitrators they
nominate are qualified to act as such and that they
know of no basis or reason to challenge their qualifica-
tions or their ability to recommend or render a fair, im-
STATEMENT OF CLAIM partial and just award, such as conflict of interest with
parties, whether pecuniary, professional or otherwise.
1. YOFILARU CO. ("Claimant") submits this The decision of the Tribunal shall be final and
Statement of Claim in relation to its dispute rDispute") binding upon the Parties, and shall be enforceable
with FIL RUIZ CO. ("Respondent"), and pursuant to the through any courts having competent jurisdiction.
directive of the ArbitraJ Tribunal and Article 27 of the
2021 Arbitration Rules of the Philippine Center for ADR m. PROCEDURE
(PCA).
The Parties agree that the existing rules of pro-
2.The Dispute arose from the implementation of cedure adopted by the PCA shall apply to the arbitra-
the Service Contract dated 20 March 2017u1s ("SC") en- tion.
tered into by the Parties.
IV. GOVERNING LAW
3. This Arbitration was commenced pursuant to
the Submission Agreement dated 1 February 2021186 en·
It is agreed that the disputes, this Submission
tered into by the Parties, which states: Agreement, and the arbitration that will be conducted
pursuant thereto shall be governed by, construed, and
enforced in accordance with the Jaws of the Philippines.

. hereof, as SJ· V.
rss I\ copy of the SC is attached hereto, and made an integral part CONFIDENTIALITY
bibit "A". de an intrgrnl
111<, I\ copy of the Submission Agreement is attached hereto, and ma Any information relative to the Disputes, this
part hereof, as Exhibit "C·3". Submission Agreement.' and the subject of arbitration
 ARBITRATION
225
224 PHILIPPINE ALIERNI\TIVE DISPUTE RESOLUTION

EDIENE A.RANGORIN
Coun.selfor Respondent
arising therefrom, expressly intended by the 5
to be disclosed, or obtained under cin;umstnourcc not 23 Harbor Street, Quezon City
II . llCCS thnt Mobile No. 09275532653
wou c create n reasonnble cxpectntlon on beholr or
source that the informution shall not be dis I the grnail Address: ed [email protected]
shall include pleadings, motions, monifestnti~~:~d~· 11
nes~ statements, reports filed or submitted in an ar ·~· nt of Facts Supporting Claimant's Claim
tratron or for expert evaluation. bi- Stateme
IJ.
. . IN WITNESS WHEREOF, the Parties to this Sub- On 20 March 2017, a Service Contract (SC)
rrussion Agreement have caused it to be executed on th 8· d ·nto and executed by and between YOFILARU
date first stated above." e entere I
was d FIL RUIZ CO.
co.. an Under the SC, YOFIL~ u Co '. undertook to (a)
I. Parties to the Dispute
. 9· sportation and couner services to the cus-
A. Claimant provide ~;~L RUIZ CO. in the Philippines; and (b) render
torners O )earance services for such customers at speci-
4. Claimant YOFILARU CO. is a corporation custo111s c · d th f
lied Philippine rurports. an("So _er ~)orts o entry to be
organized and existing under the laws of San Francisco on by the parties ervices .
California, United States of America ("U.S.A."), with ad'. agreed u P
IO. In rum, FIL RUIZ CO. obliged itself to pay the
dress at 1909 Love Road, San Francisco, California,
U.S.A. It is engaged in the business of carriage of goods Claimant the amount stipuJated in the SC, as well as
and is licensed to do business in the Philippines. other incidental charges.
5. Claimant is represented by IDA Law, the de- 11. Despite Claimant's desire to comply with its
tails of which are as follows: undertaking, Respondent refused to accept the proposed
revised delivery schedule of goods based on the changes
IDALAW in the availability of Claimant's cargo trucks, which the
Unit 40, 9th Floor OADR Building Claimant had the right to request under the SC, thereby
Quezon Avenue, Quezon City preventing the Claimant from performing its obligation
+63 2 8 23121418 under the SC. Claimant proposed to cancel the SC, but
[email protected] respondent refused. The pending issue on the SC caused
opportunity loss to the Claimant in the amount of Three
B. Respondent Million Pesos (P3,000,000.00).
12. Under date 5 February 2021, Claimant filed
6. Respondent FIL RUIZ CO. is a corporation or·
ganized and existing under the laws of the Philippines, the .Notice to Arbitrate. In commencing the instant arbi-
tration proceedings, Claimant seeks to enforce the rights
with address at 23 Harbor Street, Quezon City. It is en·
gaged in the textile business and is licensed to do busi- of the Claimant under the SC.
ness in the Philippines. th 1.3. Respondent thereafter filed its Response to
7. Respondent is represented by A'ITY. EDIENE e Nottce of Arbitration with Counterclaim on 10 Febru-
ARANGORIN, the details of which are as follows: ~ .2021 tResponse"). In the Response, Respondents (i)
aenied having acted in breach of the SC; and (ii) asserted
(PS ~~unterclairn of at least Five Million Pesos
' O,OOO.OO) against Claimant.
 AABITRA TION
Pttllll'l'INI All CllNII n11[ DISl'Utr n
227
"CSOLUIION

111• t specific Philippine airports and such other lo-

Points at Issue f'llces a the parties may agree on, upon the endorse-
seations that der· the d1rect1on · · o f Cl arrnant,
· along with the
I •I. The issues to be rcsolv d .
nrc a~ follows: . e in these proceedings
Ci
.....ent a. nd un bligation to negotiate t he terms of the dcliv-
.
,..
,0ncor1l
,tant
d owith the C I airnant
. .in connection
. with the
(i) f goo s · 1111
Whether Respondent uctcd . ,. er'/ o f such servtces.
~u
•·1· . Ill ureoch
igatw,.,s. under the SC, thcrcb
f .
. o .its pr 0-.,ision
° From the execution of the SC on 20 March
I hrcc M1ll1011 Pesos (P3 000 000 y in~urnng 17· Claimant was willing to comply with its obliga-
to the Claimant, repr~scnt,in -~OJ hability 20 t 7, the er from that time up to the present Re-
losses, includinn applicabl B. pportunity 1-10wev , . •
t> c interest d tions. baselessly and u nju stly refused to accept the
ot I ier penalty charges. an sponden~ revised schedule of delivery of goods of the
(iii) Whet her Respondent is enlitled t it . prop0se
Fi M·11· o • s claim of c1airnant. .
IVC I ton Pesos (PS,000,000.00) . Philippine law, which governs the SC, pro-
the Claimant. agamst 18.

IV. Legal Grounds or A,yuments Sup,,....rti tL-

Claim ,-- ng nc

. l 5. In ~iew of the foregoing points at issue

Claimant submits: '
In reciprocal obligations, neither party incurs in de-
(i) R espondent acted in breach of its obligations
the other does not comply or is not ready to comply in
under the SC and its related agreements in lay 1if . . b ent upon hi m. __!2!!!
F
failing or refusing to accept the proposed re- proper manner with what is mcum
vised delivery schedule of goods. Accordingly, ~he moment one of the parries fulfills his obligation. delay
Claimant is entitled to payment of Three Mil- bu the ocher beqins."188
lion Pesos (P3,000,000.00) including applica-
ble interest and other penalty charges, by 19. Philippine law further provides:
reason of such breach. "Those who in the performance of their obligations
(ii) Respondent has no right under the SC to are guilty of fraud, negligence, or delay, and those who in
claim the amount of Five Million Pesos any manner contravene the tenor thereof, are liable for
(PS,000,000.00) from the Claimant. damages."•s•,
"The power to rescind obligations is implied in recip-
A. Respondent acted in breach of its obliqatio11s rocal ones, in case one of the obligors should not comply
under the SC in refusing to accept the proposed revised de· with what is incumbent upon him.
livery schedule of goods of the Claimant. Accordir1ql11,
Claimant is entitled to payment of Three Million Pesos The injured party may choose between the fulfill-
(P3,000.000.00, including applicable interest and othl'f ment and the rescission of the obligation, with the pa~m.ent
of damages in either case. He may also seek rescission,
penalty charges.
16. The terms and conditions of the SC are cle~-
1\78,
U nder the SC, Respondent FIL ~UIZ CO. expli~itly obh; tlolc{t'Prcss provision of the SC.
gated itself to (i) engage the services of the Claimant fo ,11CM L~ODE, An. 1169; underscoring supplied.
L OOF., Art. I 170.
cargo transport services and provide customs clearance
226 PHILIPPINE Al TEANJ\TIVE DISPUTE RESOLUTION
ARAI rF</1 TIOrl
227
m. Points at Issue
. . .11 srt·c1fic Philippine airports and such oth
erviccs ' · . · t:r I o-
s . . th:it i h« pnrt1es m;iy ,Jgrce on, upon thee d .
14. The issues to be resolved in these procee c·ittons . . . n orse-
' . ncl 11nckr . the . direction of. Claimant • alone,., w·th the
arc as follows: c1.1ngs rncnt ,1 I
itant ohligat1on to negotiate t hr- terms of the d 1.
concn rn . . Cl'. . . t: 1v
(i) Whether Respondent acted in breach . f "nods with the; arm an t in connection with tl
cry n ,, . . . . . .. 11,,. ne
obligations under the SC, thereby . of _Its . .inn of st1< h services.
prov1s1
Three Million Pesos (P3 000 OOO 001)nc1_urnng
' • · 1abil' 1 7. From t he- exccu t ion of t he SC on 20 March
to the Claimant, representing opp . ~ty the Cl;iirnant was willing to comply with its oblisa-
. di . ortun1ty 20 1 7 . f
I osscs, me 1 u mg applicable interest . lowev<·r rom t h at time
.
up to the present Re
b

other penaJty charges. and 11ons. 1 · . · -

spondent !J;1s('l<·ssly a nd unjustly .refused to accept the
(iii) Whether Respondent is entitled to its clai proposed ft'VisC'd sr-hed u le of delivery of goods of Ihe
e-:
r ivc
M"II'
_1 ion
pesos (PS,000,000.00) againstm of Cla1rnnnt ·
the Claimant. 18. Philippine· law, which governs the SC, pro
vides:
IV. Legal Grounds or Arguments Supporting the
~Those ohliqed to deliver or to do something incur in
Claim
delar, from the time the ohliqee iudiciallu or extran,idiciallu
demands from them tile fulfillment o[ their obligation.
15. In view of the foregoing points at issue,
Claimant submits: xxx
(i) Respondent acted in breach of its obligations /11 reciprocal obligations, neither party incurs in de
under the SC and its related agreements in /uy if the othor docs ,wt comply or is not ready to comply in
failing or refusing to accept the proposed re- a proper m(ln,wr with what is incumbent upon him. From
vised delivery schedule of goods. Accordingly, the 11w111en1 one o( the parties fulfills his obliqatwn. delay
Claimant is entitled to payment of Three Mil- bu the other useuss" 18·"
lion Pesos (P3,000,000.00) including applica-
ble interest and other penaJty charges, by 19. Ph il ippi nc law further provides:
reason of such breach. "Thos«: who in the performance of their obligatio~s
Respondent has no right under ilie SC W ure g11ilty of [raud, ,wyligertce. or delay, and trios~ umo 111
(ii) ur1y man11cr contravene Che tenor thereof, are liable for
claim the amount of Five Million Pesos
da111c1ucs .•.• ,.. ..
(PS,000,000.00) from the Claimant.
"Tiu: poiucr to rescind obligations is implied it1 recip-
Respondent acted in breach of its obligations . bl' . I ould ,101 comply
ron, 1 0/IC'S, 111 cane: one of the o iqor» s I
A· - . · d de-
under the SC in refu_c;inq to accept the proposed reu15e_ with rol,w is incumbent upon him.
live schedule o Goods o the Claimant. Accordrn r
1 .. . . betwee11 the fuljill-
M'll' Pesos 11 w injured party may c 1 ioose t
Claimant is entitled to paymen_t of T~ree r ion 01 . . "tit the paymen
(P3,000,000.00. including applicable interest and
,jir mc,11 w1ci the r!'scissiu11 of the
.r
0J;l1gat1011, WI . .
. seek resc1ss1on,
01 da11wyes in either case. He may a 1 so -
eenaltu charges.
SC are clear.
16 The terms and conditions of the .. obli-
1 ''By ,·xpn·,,,, prov1:;1011 of tin· SC.
Under th~ SC Respondent FIL RUIZ CO. explt~tt Ynt for ::\"·11 Com .. Art , I I t,<J; undl'r:.<'oring Hllpplicd.

ga ted itself to' (i) engage the services of the Claunl~ance C1v11. Clli >1·•• t\t l. I I "/0.

cargo transport services · an d proviide customs c e

228
P111111•1·11ir /\1 If 11111,11v1 0111111111 Bn1011111rm
229

cuen. ofter he hun chouen; f u/flllm,•,tt If ih«

1 <Jmount, computed from the <fotc th,;
come frnprm,iilJfe. "t•Jo • • ~ latter 11h1n11r1111,
amountn v/etc due and pt1yablc tr, d:Jt,;;
and
20. 111 thl11 cunc, l~cur,ondcnt acted I
I he perforrnu nee of it II 'Jhlig:J I ion u u nder the· ;d)rcut:h ,,r (ii) l.-<:f!JJJfoe•s and c0Ht3 of this J\rbitr<.1tion
refu11:il lo uc:,:cpt the r>ropo11c:d revl11ecJ oched~lc· up,,n itu including fcen and dioburncmentn fo;
,;ry of ~ooc.111 of Cluirnunt. lt iu uppurcnl rh l • of dcllv the; Arbitral Tribunal and the PC/\.
the l<cupr,ncknt made it imp'11-111i1Jlc fur lh; C~~l~ Ut:to of 25. Clajrnant also clairnn applicable Iegal interest
perform Hu oblig;1ti,mu. Deluy C.:()UlcJ not be lL ~tLtnt to on aJI the sums to be awarded in its favor, from the date
t~c Cluirnunt uince it WIJI} willing to pcrfc~r~ to ;t >uttt! r
0 9uch
award until full payment.
Lwnu under the 8C. More importuntly w:i enun uc··<>t~d'!:',:,t·
the. "•· l)(JV(•~ I•uv« prov111111nB,
· • L h ere cun be ' no delu whe
IU C 111
VI, Relief Sought
c.lernund hw1 111:cn mudc, · Y en nu

IJ. Ur:nn(Jrul<mt. hw: no riqht to <1.<mtwid lhJ:

26. In view of the foregoing, Claimant seeks the
o~w~11r1l o[ Fi,m Million Prmo.c.; IP.5,000JJO().OO} {mm l11t: payment of Three Million Pesos (PJ,000,000.00J, in addi-
ClmrrlfJ.n.l, tion lo applicable penalties and interests arising from the
non-payment of the amount, computed from the date the
2 l .. 1\11 noted ahove, under the SC, the Portico amounts were due and payable to date.
muy ncgo! lute on I he t ermu uf the delivery of the goods. 27. Claimant seeks such other and further relief
l<e11r,uncfont'11 cluirn that il did not accept the
22. us the Arbitral Tribunal may deem just and proper.
pmpum..:c.l reviucd uchcdulc of delivery of goods uince it will
viola,,; itu uv,r<:c1rwnto with ll.H customers la unjuotlficd 18 April 202 l.
nincc the l<cupondcnt in not the sole cllent or the Claim- Respectfully submitted.
MJ t u nd w, uuch, the Rcnponden L uhou lcJ be open to ncgo-
tiutc any change» in the delivery schedule or goodu bused IDA LAW
or, the avuiluhility ul' the Claimant'» c;urg<> trucks. Counsel for Claimant
Unit 40, 9th Floor OADR Building
23. On uccount of the unccrtuln ututu» of the SC Quezon Avenue, Quezon City
between the J>urtlcu, the Clulrnant hod to decline offcrn +63 2 8 23121418
for delivery ncrvlccn from other compunlcu, which re· in foo']idalaw .com. ph
11ultcd In oppur+unlty lo1111e11 worth Three Million Pcuou
(l';J,000,CHJO.OOJ, for which I he: l<copondcnt nhould he By:
mude liu ble.
PT HIL T. BALANAY
v. Value of the Claims and the Amounti, Involved R N<'.. I _107 1979; Quezon City; January 12, 2021
M . Life tune lBP No. 09092015; Quezon City
2'1. Clnlmunt nceku I he followlnr, monetury cuI I n111·· CLE Compliuncc No. Vl-12082015, April 5, 2021
(IJ l)wrru11e11 cqulvulent l<J 'l'hrcc Mfllloll Roll No. 405 I 17
10 Mobile No. 09475901258
l'c,11111 'w;1 000 OOCJ.00). 111 ucldition
' ' l I nrln l~rnui I Address: h ilbc:rtfi12gmail.com
11ppllc:uhlc pc111tltlc11 uncl ntcreu 1~ the

, ..,,c.:,v11.c,,1,v., i\11. 11111.

Ing from I hr- 111111-p11ynl(J11I "
-----~~,~~-
 ARBITRATION
230 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION 231

Love Road, San Francisco, California

1909
dress at . engaged in the business of carriage of goods
l).S.A· (1 15 d to do business in the Philippines.
dis )lcense
an Claimant is represented by IDA Law, the de-
SAMPLE STATEMENT OF DEFENSE AND COUNTE 2. e ll .
RCLAJr.t . f hich are as ro ows:
1a1ls o w
PCA CASE NO. 0405-1079 IDA LAW
Counsel for Claimant
IN THE MATTEROF AN ARBITRATION UNDERT Unit 40, 9th Floor OADR Building
RULES OF THE PHILIPPINECENTER FOR ADR (~:) Quezon Avenue, Quezon City
+63 2 8 23121418
Between [email protected]. ph

YOFILARU CO., Respondent FIL RUlZ CO. is a corporation or-

3.
(Claimant) . d and existing under the laws of the Philippines,
with address at 23 Harbor Street, Q
ganize
. u~on Ciity. I t .is e~-
and a ed in the textile business and is licensed to do busi-
g g ili .
ness in the Phi ppmes ,
FIL RUIZ CO.,
(Respondent) 4. Respondent is represented by ATTY. EDIENE
ARANGORI N, the details of which are as follows:

EDIENE ARANGORIN
STATEMENT OF DEFENSE Counsel for Respondent
WITH COUNTERCLAIM 23 Harbor Street, Quezon City
Mobile No. 09275532653
Respondent FIL RUIZ CO. respectfully submits this Email Address: [email protected]
Statement of Defense with Counterclaim dated 25 April
2021 ("Statement of Defense and Counterclaim ") in re· B. STATEMENT OF FACTS SUPPORTING RESPONDENT'S
sponse to the Statement of Claim dated 18 April 2021 DEFENSE
("Statement of Claim") submitted by Claimant YOFI·
LARU CO. ("Claimant") and to augment its response to 5. On 20 March 2017, a Service Contract (SC)
the Notice of Arbitration dated 5 February 2021, which it was entered into and executed by and between YOFILARU
hereby adopts as part of the Statement of Defense and CO., and FIL RUIZ CO.
Counterclaim. 6. Prior to engaging the services of the Claimant,
the latter assured the Respondent that it had more than
I. STATEMENTOF DEFENSE enough cargo trucks to cater to the needs of the Respon-
dent, which was the primary consideration for the Re-
A. THE PARTIES spondent to enter into an SC with the Claimant.
ti00n a r 7· A week after executing the SC, the P~ties
1. Claimant YOFILARU CO. is a corpor~
organized and existing under the laws of San Fr~ciscd~ s~ eed to a schedule of delivery of goods, which delivery
.
California, United States of America ("U S A ") with a
. · · , outd start on 5 April 20 I 7. However, three (3) days af-
 ARBITRATION
232 PHILIPPINE Al TEllNATIVE DISPUTE RESOt.UTiON
233

ce of arbitration shall be the Philip-

ter the first delivery, the Claimant sent to R The Pla
proposal lo revise the originally agreed uponesphondcnt u pines.
d e I"ivery o f goods to avoid
· any conflict in the SCCl edul
. e or A]UJITRAL TRIBUNAL
schedule of delivery with its other clients. aun.:int's o.
Th Parties agree that the Disputes shall be
8. Respondent did not accept the propos I f d resolved by a tribunal composed of
O
Claimant as it will violate its agreements with it a the heard an rbitrators (the "Tribunal"). The members
. . s custom. three (JT) ~bunal shall be appointed in accordance
ers as lo required delivery dates. Respondent of the n
. promptly
sent a rep 1 y to t h e Cl airnant, refusing to accept s 81id with the PCA Rules.
posal. pro-
The Parties confirm that the arbitrators
. 9. The Claimant failed to comply with its obliga- they nom1mare are qualified to act as such and that .
kn 0w of no basis or reason to challenge their
u·ons
uons based on the SC and the original schedule of deliv- they_fi or their ability
ery of goods. qual1 1ca . to recommend or ren-
,~;,. impartial and JUSt award, such as con-
der a ,...., , · h th ·
I 0. By reason on said breach, most of the Re- flict of interest with _parues, w e er pecuniary,
spondent's customers canceUed their orders and con- professional or otherwise.
tracts worth Five Million Pesos (PS,000,000.00). The Re- The decision of the Tribunal shall be final
spondent had to engage the services of other cargo trans- and binding upon the Parties, ~d shall be ~n-
port services in order to comply with the requirements of forceable through any courts having competent JU·
their other customers while waiting for the Claimant to risdiction.
comply with its obligations under the SC. Claimant no
longer complied with its obligations and failed to pay Re· tu. PROCEDURE
spondent the amount of Five Million Pesos
The Parties agree that the existing rules of
(PS,000,000.00). procedure adopted by the PCA shall apply to the
11. On 8 February 202 I, Respondent received the arbitration.
Claimant's Notice of Arbitration dated 5 February 2021.
The Notice was issued by the Claimant pursuant to the IV. GOVERNING LAW
Submission Agreement1'JI entered into by the parties, It is agreed that the disputes, this Su~mis-
which provides: sion Agreement, and the arbitration that will be
conducted pursuant thereto shall be governed by,
"I. SUBMISSIONTO ARBITRATION construed, and enforced in accordance with the
laws of the Philippines.
The Parties agree to refer and submit _t_he
Disputes to arbitration administered by the Phil~p- V. CONFIDENTIALITY
pine Center for ADR ("PCA") in accordance with
Arbitration Rules of the PCA currently in fo~ce. at Any information, relative to the Disputes,
the time of the execution of this Submission this Submission Agreement, and the subject of ar-
Agreement. bitration arising therefrom, expressly intended by
The language to be used in the proceed'mgs the source not to be disclosed, or obtained under
circumstances that would create a reasonable ex-
shall be English. pectation on behalf of the source that the informa-
tion shall not be disclosed. It shall include plead-
ings, motions, manifestations, witness statements,
. EJibibit "1".
191 A copy of the Submission Agreement rs attached as
234
PHILIPPINE ALTERNI\TIVE DISPUTE R ARBITRI\TION
ESOLUTION 235

reports filed or submitted in an . EG~ GROUNDS OR ARGUMENTS SuPPORT-

expert evaluation. arbitration or for JII, ~ ING THE DEFENSE

IN WITNESS WHEREOF
~o this Submission Agreement
it to be executed on the d
h:~;
Parties
caused
.
c1a1man
t breached its obli ations under the SC for failin to c
'th its obli ation to de 1·1ver oods to the Res ondent's cus-
I wi based on the original schedule of delivery of goods.
om-
above." ate first stated
~ The refusal of the Respondent to accept the
23.
. . 20. In said Notice, the Claimant all sed revised schedule of delivery of goods is based on
w1llmg to comply with its undertak' b eges that it is propoequi'rement of its customers. The Claimant cannot
ref d mg, ut Respond the r . .
use to accept the proposed revised delive ent . t unilaterally revise the schedule of delivery due to al-
of ?oods, based on the changes in the av:rl:~~tdule rsed conflict in the availability of its cargo trucks. The
Claimants
· h
cargo trucks which the Cl .
' aimant had
ng . t to request under the SC, thereby preventin
ty of
thth: ;;spondent's position to re~se acceptanc~ ~f t1:e pro-
posed revised schedule of deliv~ry of ~oods is Justified by
Cla~mant from performing its obligation under th; SC the fact that the same would Violate its agreements with
Claimant proposed to cancel the SC, but respondent re~ its customers.
fused. The pending issue on the SC caused opportunity 24. Respondent timely communicated its refusal
loss to the Claimant in the amount of Three Million Pesos to the proposal since the dates of delivery as originally
(P3,000,000.00). agreed upon is crucial to the compliance by the Respon-
21. On 10 February 2021, Respondent filed its dent of its obligations to its customers. Due to the con-
Response with Counterclaim, wherein it countered tinuous failure of the Claimant to comply, the Respon-
Claimant's allegations as set forth in the Notice, and as- dent lost its contracts worth Five Million Pesos
(PS,000,000.00) and the latter was constrained to engage
serted a counterclaim of Five Million Pesos
the services of another cargo transport provider.
(PS,000,000.00), representing lost income.
25. The Civil Code provides for the general rule,
II. POINTS AT ISSUE as well as the exceptions relevant to the issue on the al-
leged absence of a demand on the part of the Respondent
22. The issues to be resolved in these proceedings for the Claimant to comply with its obligations, thus:
are:
"Art. 1169. Those obliged to deliver or to do
(i) Whether the Respondent acted in bre~ch of
100~~: ~o~e_thing incur in delay from the time the obligee
its obligations under the SC, thereby Judicially or extrajudicially demands from them the
ring Three Million Pesos (P3,000,000.0 · 0ppor· fulftllment of their obligation."
ability to the Claimant, representing_
. . Ii ble interes1 There are only three instances when demand is not
tunity losses, including app ica
and other penalty charges. . necessary to render the obligor in default. These
. · tl d to its c1a1rn are the following:
(ii) Whether Respondent is enti e OJ gains!
of Five Million Pesos (PS,000,000.0 a ~( 1 l When the obligation or the law expressly so
eclares;
the Claimant.
(2) Wh · wices
of the e~ from the nature and the cirCWD8doO al
the . obligation it appears that the clafaPI tbf
time when the thing is to be ~ ar
 ArlOITRA TION
236 PIOUPPINE ALTEnN/\TIVE DISPUTE • RESOL
237
• UTION

AL GROUNDS IN SUPPORT OF RESPONDENTS'

service is to ?e rendered wus a controlli , LEOr•
for the establishment of the contruct; or ng tnotive p. corJNTERCLAIM

(3) When the demand would be usel . has no rir; ht to claim Three Million P<'sos
1
the obliger has rendered it beyond ~~s, us When ooo.OO since tl. ctid
r11e c1a1man I not su er an, Iosses. fl is tile
18
perform." Power to P3 ooO Cl ·mant that should be made to a, Five Million
co111 1ter· a, oo0.00 to the Res on d enl or lost income 011
PS ooO
26. Although the Respondent did n 0 t 1~ake pesos cancelled contracts.
express demand for performance of the Cl . u.ny account o
ti
ons un d er t h e SC, the
. Claimant incurred rumant
d .1 s obuiga- Respondent lost Five Million (PS,000,000.00)
less since the instant dispute falls within th: ay non_ethe- 5. its contracts due to the Claimant's breach of the
exceptions. established worth of of the SC. pnrnari
. ·ans . ·1 y, .it was sarid contracts to
prOVISI textile products to diflierent customers that
. ~7. It is worthy to note that by the nature of supp 1tted the Respondent to engage the services of the
obhgat1on. between the Parties, the designation O f th _the
~~::iant. In the initial discussions that led to the execu-
\~h en th e t h mg
· ·is to be delivered was the controllj e lime
tive for the establishment of the SC. mg mo- tion of the SC, the Claimant assured the Respondent that
it had the capacity to take ondthe, bulk and series of deliv-
eries required by the Respon ent s customers.
STATEMENT OF COUNTERCLAIM 6. Unfortunately, the Claimant failed to perform
its obligations under the SC and one by one, the custom-
A. THE PARTIES ers of the Respondent cancelled their orders. All in all,
the cancelled orders cost Five Million Pesos
1. The Counter-Claimant is the Respondent in (PS,000,000.00). The Claimant's breach being the main
the main Arbitration, FIL RUIZ CO. The counter- cause for the cancellations, it is but proper that it be held
respondent is the Claimant in the main Arbitration, YO-
liable for said amount.
FILARU CO.
7. The Civil Code provides for the general rule, as
2. The respective details of the parties involved in
well as the exceptions relevant to the issue on the alleged
the Counterclaim are set forth in pars. I to 4 above.
absence of a demand on the part of the Respondent for
the Claimant to comply with its obligations, thus:
B. STATEMENT OF FACTS SUPPORTING THE
COUNTERCLAIM "Art. 1169. Those obliged to deliver or to do some-
3. Counter-Claimant re-pleads the narration of t~ing incur in delay from the time the obligee judi-
facts set forth in pars. 5 to 13 above. cially or extrajudicially demands from them the
fulfillment of their obligation."
C. THE POINT AT ISSUE IN RESPONDENT'S COUNTER·
e There are only three instances when demand is not nee·
CLAIM ssal)' to render the obliger in default. These are the following:
4. The issue to be resolved in the Counterclaim is:
"(l) When the obligation or the law expressly so
I of fi1t declares·
Whether or not Counter-Claimant is entitled to paymen I

Million Pesos (PS,000,000.00). 12fl . When from the nature and the circumstances
O the obli1gat1on
· · · of
it appears that the dcs1gn11t10n
 ARBITRATION
238 239
PHILIPPINE AL TERNI\TIVE DISPUTE ResoLUTION

the time when the thing is to be d 1. lly submitted.

. . b e 1vered eet fu
service is to · e rendered was a cont II" or the ~esP · 2021.
for the establishment of the conlract· , ro ing motive 25 Aprtl
or
(3) When the demand would be usel EDIENE ARANGORIN
the obligor has rendered it beyond ~~s, as When counsel for Respondent/ Counter-~laimant
115
perform." power to 23 Harbor Street, Quezon City
PTR No. 05182011; Quezon City; January 1_2, 2021
8. The instant dispute faJls within th . Lifetime IBP No. 20110518; Quezon City
exceptions sin. ce it is manifest from the nat e estfabhshed
. . b u re o the 0 b LE compliance No. Vl-200518211, April 5, 2021
I igauon etween the Parties that the desig ti
· h . . na ion of th • MC Roll No. 51811
time .· w en the thing is
. to be delivered was the controllin e
rnouve for the establishment of the SC. As s UC.h • t.h ere _g Mobile No. 09275532653
IS
c I ear Iy d e I ay on the part of the Claimant alth oug h there Email Address: [email protected]
was no express demand on the part of the Respo d r
h Cl . . . n ent ,or
t e aimant to perform its obligations under the SC.
. 9. . Accordingly,
. by way of counterclaim , Res pon-
d ent rs entitled to the payment of Five Million Pesos
(PS,000,000.00) from the Claimant. Default of a Party
A party shall be considered in default in the following cir-
E. VALUE OF THE COUNTERCLAIM AND THE AMOUNT IN-
VOLVED cumstances, unless otherwise agreed by the parties and without
sufficient causes:
10. By way of counterclaim against the Claimant,
a. the claimant fails to communicate his/her/its state-
the Respondent seeks the payment of Five Million Pesos
ment of claim in accordance with the guidelines on
(P5,000,000.00), representing lost income, including all
applicable interest and charges thereon. the Statement of Claim and Defense, which shall
cause the arbitral tribunal to terminate proceedings;
F. RELIEF SOUGHT AS COUNTERCLAIM
the respondent fails to communicate his/her/its
b.
11. In view of the Claimant's breach of the SC, statement of defense in accordance with the guide-
the Respondent seeks the folJowing relief by way of coun- lines on the Statements of Claim and Defense, but it
terclaim: shall not be considered as an admission of the claim-
The payment of Five Million Pesos ant's allegations and shall not terminate the proceed-
(a)
(P5,000,000.00), representing lost income, ings; and
including all applicable interest and charges C. if any party fails to appear at a hearing or to produ~e
thereon. documentary evidence the arbitral tribunal may still
Such other and further relief as the Arbitra1 C · ' d 192
(b) ontinue the proceedings and make the awar ·
Tribunal may deem just and proper under
the circumstances.

---192-
Ans. 4 25
. and 5.25, IRR, ADR Act.
240
PHILIPPINE ALTERNI\TIVE DISPUTE RESOLUTION ARBITRATION
241

Expert Appointed by the Arbitral Tribunal . h retirement of any witness during the testimony
,re t e b · · ·
8(1so reqtJ witness. A party may nng a pet1t1on before the
Unless otherwise agreed, the arbitral tribunal: anY other dance with the Rules of Court or the Special ADR
a. o ln accor
may appoint one or more experts to re court I
spec,· fiic issues
· to be determined by the port
bi to 1· t on Rules. · · h ib ·
nal; or ar ltraltnbu. mestic Arb1trat1on, t e tn unal or an mterested
FM Do f
h dispute may request rom a competent court, assis-
b. may require a party to give the expert any I partY to t e, rcing orders of the arbitral tribunal including but
f . re evant in in enio . '
orrnation or to produce, or to provide access to · tanc~ . d to the following:
r~levant. document, goods or other property' any not 1im1te ' . . .
his/her inspection. for a. Interim or provisional rehef;
b. Protective orders with respect to confidentiality;
Un~ess othc~ise ~greed by the parties, if a party so re-
quest or if the arbitral tribunal considers it necessary, the expert c. Orders of the arbitral tribunal pertaining to the sub-
~hall, aft~r delivery of his/~cr written or oral report, participate ject matter of the dispute that may affect third per-
in a heanng where the parties have the opportunity to put ques- sons and/ or their properties; and/ or
tions to him/her and to present expert witnesses in order totes- d. Examination of debtors.ws
tify on the points at issue.
For domestic arbitration, upon agreement of the parties, Rules Applicableto the Substance of Dispute
the finding of the expert engaged by the arbitral tribunal on the
matter/ s referred to him shall be binding upon the parties and The arbitral tribunal shall decide the dispute in accor-
the arbitral tribunal. 193 dance with such law, as is chosen by the parties and as applica-
ble to the substance of the dispute. In the absence of such
agreement, Philippine law shall apply. Any designation of the law
Court Assistance in Taking Evidence and 0~
legal system of a given state shall be construed, unless other-
Other Matters
1115e expressed, as directly referring to the substantive law of
· h th e appro..
val of. the that state and not to its conflict of laws rules.
The arbitral tribunal or a party, wit es
arbitral tribunal, may request from a court in the Philf;:
08' . The arbitral tribunal may grant any remedy or relief which
ttd~ms · h
assistance in taking evidence such as the iss~ance of 5~ tion of Just and equitable and within the scope of t e agree-
deposition, site or ocular inspection, and physic~ :W:~ompe· ;ent of the Parties· which shall include but not be limited to,
Properties. The court may grant the request with id ce e specific pe rf ormance
into ' '
of a contract. The ·
tnbun al s hall take
tence and according to applicable ruesl on taking evi en · . lion. account the usages of the trade applicable to the transac-
th ower to re
For ICA, the arbitral tribun~ shall ha~e s: ~he arbitral
quire any person to attend a heanng as a wi_tness~s and doe.11· · In ICA ' fat·1·mg any designation by the parties,
tribunal · the arbitral
tribunal shall have the power to subpoena Wttnde the materiahtY l'\llcs, \Vh~~~1. apply the law determined by the con.flict of 1~:~
ments when the relevancy of the t~stimony ~tral tribunal 111aY it considers applicable. The arbitral tribunal 5
thereof has been demonstrated to it. The arbi
1,,
"ri~. 4 27
--;;;;~.26 and 5.26, IRR, ADR Act. . anct 5.27, IRR. ADR Act.
242 PHILIPPINE ALTERNATIVE DISPUTE R ESOLUTION ARBITRATION
243

d.ec1'd e ex aequo et bono or as amiable com . The order granting provisional relief m b
(3)
ties have expressly autho rize
. d tt positeur only
. to do so 1y5 ·r the
1 con diiuone
. d u_po~ t he provision of security
ay ore
· Par. any act or omission specified in the order.
Grant of Interim Measures (4) Interim or provisional relief is requested b
written application transmitted by reasonabl~
As provided for by Sec 2B Ch t means to the Court or arbitral tribunal as the
~004, the guidelines on the g~ant' of i:fer~r 4 of the ADR Act or case may be and the party against whom the
tion to a party are as follows: m measures of protcc. relief is sought, describing in appropriate de-
tail the precise relief, the party against whom
"SEC. 28. Grant of lnterim Measure of Protection.- the relief is requested, the grounds for the re-
lief, and evidence supporting the request.
(a) It is not incompatible with an . .
agreement for a party to request b f ~b1~at1on (5) The order shall be binding upon the parties.
the tribunal, from a Court an inte . e ore constitution of Either party may apply with the Court for as-
(6)
tion and for the Court to gr.:mt su:•hm measure of protec- sistance in Implementing or enforcing an in-
. . f measure After con
s ti tution
di o the arbitral tribunal and d unng
. · .
arbitral pro-- terim measure ordered by an arbitral tribunal.
cee mg~, a :equest for an interim measure of protection A party who does not comply with the order
o~ modification thereof, may be made with the arbitraJ (7)
shalJ be liable for all damages resulting from
tribunal or to the. extent that the arbitral tribunal has no noncompliance, including all expenses, and
power to act or is unable to act effectively the request reasonable attorney's fees, paid in obtaining
may be made with the Court. The arbitral tribunal is the order's judicial enforcement. "196
dee:ned constituted when the sole arbitrator or the third
arb1l:at~r who has been nominated, has accepted the On the governing provisions on the power of the Arbitral
nomination and written communication of said nornina-
?on and acceptance has been received by the party mak- Tribunal to Order Interim Measures: 197
ing request. a. Unless otherwise agreed by the parties, the arbitral
(b) The following rules on interim or provisional tribunal may, at the request of a party, ord~r any
relief shall be observed: party to take such interim measures of protection as
the arbitral tribunal may consider necessary in .re-
(1) Any party may request that provision relief be
spect of the subject matter of the dispute followmg
granted against the adverse party:
the rules in this Article. Such interim measures ~ay
(2) Such relief may be granted: include, but shall not be limited to preliminary in-
. · · trnent of re-
(i) to prevent irreparable loss or injury: Ju~ction directed against a party, ~ppom. ro _
to provide security for the performance cervers, or detention, preservation, mspectw.n of_ P p
(ii) erty that is the subject of the dispute in arbitratwn.
of any obligation;
id nee· or b. After the constitution of the arbitral tribun~, ~d
(iii) to produce or preserve any evi e ' du · st for antenm
. act or nng arbitral proceedings, a reque f 5hall
(iv) to compel any other appropnate measures of protection, or modification thereo '
omission.
'% Sec 2
i~1/\ • 8, ADR Act
rts. 4 1 7 ·
- 195
- --
Arts. 4.28 and 5.28, IRR, ADR Act.
. nnd 5.16, IRR, ADR Act.
 ARBITRATION 245
244 PHILIPPINE AL1 ERNI\ TIVE DISPUTE RESOLUTION

artY who does not comply with the order

be made with the arbitral tribunal. The arbitra] . vii. A pll be liable for all damages, resulting from
nal is deemed constituted when the sole arb't tribu. sha mpliance, including all expenses, and
the third arbitrator, who has been nomin~/~lor or non-cnoable attorney's fees paid in obtaining the
reaso
accepted the nomination and written comrnue. • ~as order's judicial enforcement.
of said nomination and acceptance has been ntca~ion
. the request.
by the party making received
of p,-oceedings
c. The following rules on interim or provisional relier 1e,r,tinatiort .
shall be observed: . ti n proceedings are terrnmated by the final
The arbitra ~~r of the arbitral tribunal in accordance with
i. Any party may request that provisional or · award or by an or
terim relief be granted against the adverse pa;.· the following: .
11. Such relief may be granted: a The arbitral tribunal s~all issue and.orderh for the ter-
. mination of the arbitrat10n procee mgs w en:
(a) To prevent irreparable loss or injury;
i. The claimant withdraws his claim, unless the
(b) To provide security for the performance of respondent objects thereto for the purpose of
an obligation; prosecuting his counterclaims in the same pro-
(c) To produce or preserve evidence; or ceedings; or
(d) To compel any other appropriate act or ii. The parties agree on the termination of the pro-
omissions. ceedings; or
iii. The order granting provisional relief may be iii. The arbitral tribunal finds that the continuation
conditioned upon the provision of security or of the proceedings has for any other reason be-
any act or omission specified in the order. fore unnecessary or impossible; or
iv. Interim or provisional relief is requested by writ· iv. The required deposits are not paid in full in ac-
ten application transmitted by reasonable me.ans cordance with the provisions on Fees and Costs.
to the arbitral tribunal and the party against
whom relief is sought, describing in appropriate b. The mandate of the arbitral tribunal ends with the
detail the precise relief, the party against wh~~ termination of the arbitration proceedings, subject to
the relief is requested, the ground for the re re the provisions on the Correction and Interpretation of
and the evidence supporting the request. Award and on the Application for Setting Aside an
. applica· Exclusive Recourse Against the Arbitration award.
v. The order either granting or denying an the
tion for interim relief shall be binding upon c. Except as otherwise provided in the ar biitratiO n
parties. . agreeme
a . n t , no motion
· · ·
for reconsideration correction
for assis· b nd interpretation of award or additional award shall
vi. Either party may apply with the court . tcrif11
tance in implementing or enforcing an in n~ filed With the arbitral tribunal. The arbitral ~ri~u-
measure ordered by an arbitral tribunal. ove~ by releasing its final award, loses junsd1c?00
LJ
110Weve
the dispute and the parties to the arbitration.
r, where it. is shown that the arb1tral
· tn·bunal
 246 AABITRATION
PMILIPPINE ALTERNl\llVE DISPUTE RESOLUTION
247

f~led _to resolve an issue submitted lo hi d on agreed terms shaJl be made in accordance
rnmanon a verified motion to cornpt t rn for cJc1 Art aw~ribcd form and contents of award as provided by
. . e e a Ii er.
may be made within thirty (30) days fro . •nat o.ward . J1 thC pres ADR Act. Such an award has the same status and
d. m its rec . 1~11
JR~ of rhc h r award on the merits of the case.soo
Notwithstanding the foregoing the a bi eip1. tJic a!lY ot e
• r 1tra] t · elfcct as
may, for special reasons, reserve in the Ii ribunai
. inaJ aw
or d_er, a h canng to quantify costs and arct or rd itt Arbitration
which party shall bear the costs or a d~tcrrninc Au,a d means any partial or final decision by an arbi-
thereof as may be determined to be equ~pt obrtionrncn1 An awal'. g the issue in a controversy.201
· d · · 1 a le p . reso v1n
mg etermmatton of this issue, the award shaij end. ,rator 1Jl
deemed final for purposes of appeal vacau not be
. •
non, or any post-award proceedings.198
ton ' corrcc.

Decisions of the Panel of Arbitrators/ Arbitral Tribunal

For arbitral proceedings falling under ICA arbitraJ 1 ib

. .
decrsioris • n Una]
are made by a majority of all of its members; exec
procedural questions which can be decided by the presidint
trator with authority from the parties. ar 1
It
t
The same guiding principle shall apply to domestic arbitra-
tion proceedings. In addition, the arbitral tribunal shall render
its written award within thirty (30) days after the closing of all
hearings and/ or submission of the parties' respective briefs or if
the oral hearings shall have been waived, within thirty (30) days
after the arbitral tribunal shall have declared such proceedings
in lieu of hearing closed. This period may be further extended by
mutual consent of the parties.tv?

Settlement

If during arbitraJ proceedings, the parties sett.le the di~·

pute the arbitraJ tribunal shall terminate the proceedings and,_if
requ~sted by parties without objection, record the settlemen~
the form of an arbitration award on agreed terms, consent aw
or award based on compromise.

ltlo Arts 4 3
l'lS Arts. 4.32 and 5.32, ]RR, ADR Act. ic, Sec ·3 O and 5.30, IRR, ADR Act.
1')? Arts. 4.29 and 5.29, IRR, ADR Act. · 1·n
•1, ADR Act.
248
PHILIPPINE ALTERNATIVE DISPUTE R
ESOLUTION ARBITRATION
249

~·~~~1,._--~ ).3. Respondent FIL RUIZ CO. is a c

organized and existing under the loarporation
if · "th
Ph 1pp1;es, wt c· address at 23 Harbor
.
ws of the
SAMPLE FINAL AWARD Stre_e1t, b u~zon ity .. It is engaged in the
rexu e usiness and rs licensed to d 0 b .
PCA CASE NO. 0405-1079 ness in the Philippines. usi-

IN THE MATTER OF AN ARB ).4. Respondent is represented by ATTY.

RULES OF THE PHILIPPINE ~!~TION UNDERTHE EDIENE ARANGORIN, the details of which
TER FOR ADR(PCA) are as follows:
Between
EDIENE ARANGORIN
YOFILARU CO., Counsel for Respondent
(Claimant) 23 Harbor Street, Quezon City
Mobile No. 09275532653
and Email Address: [email protected]

FIL RUIZ CO., u. CONSTITUTION OF THE ARBITRAL TRIBUNAL

(Respondent)
2.1. On 8 February 2021, Claimant served on
------------------------------ ------------------------- Respondents a Notice of Arbitration dated 5
February 2021, pursuant to the PCA Rules.
FINAL AWARD
2.2. In its Notice of Arbitration, Claimant pro-
posed to appoint as its party-appointed Ar-
I. THE PARTIES AND THEIR LEGAL REPRESENTATION
bitrator, ATfY. ADORACION A. PEREZ with
1.1. Claimant YOFILARU CO. is a corporation details as follows:
organized and existing under the laws of
San Francisco, CaJifomia, United States of ATTY. ADORACION A. PEREZ
America ("U.S.A."). with address at 1909 Unit 9, Graciosa Building
Love Road, San Francisco, California, U.S.A. Ortigas Center, Pasig City
ll is engaged in the business of carriage of +63 2 7 999 1100
goods and is licensed to do business in the [email protected]
Philippines.
2.3. On 9 February 2021, Atty. Adoracion A.
1.2. Claimant is represented by JOA Law, the de·
Perez communicated to Claimant and PCA,
tails of which are as follows: her receipt of the confirmation by PCA of
her appointment and her acceptance of ap-
IDA LAW
pointment as arbitrator. With her signed ac-
Counsel for Claimant ceptance, Atty. Adoracion A. Perez also pro·
Unit 40 9th Floor OADR Building vided her notarized Oath of Office & State-
Quez~n Avenue, Quezon City ment of Impartiality and Independence and
+63 2 8 23121418 Statement of Disclosure, as well as her cur-
[email protected]. ph
rent Curriculum Vitae.
250
PHILIPPINE I\LTERNII.TIVE O
ISPUre RESOLUTIQN Afm fJ!ArlON
251
2.4. On l O Pebruury 2021 R
Response to the Not· , espondcnt scrv With hr-r signr-d a_cct·pt:rnc-e, Arty. Eicl D.T.
ice of A bl ect a C;ilwz;1s also provided her notarized Oath of
the same day to the Claim~ itralion datc<1
pursuant to the PCA Rul es. t and the PcA,,, Offin· &. S1atcmt·nt of Impartiality and lnde
p<"nckn<T and Statement of Disclosure, as
2.5.
In ~espondent's Response t well ,ts her curr<"nt Currl<'ulum Vitae.
O
Arbitration, Respondent r the Notice of
2.CJ
\s thus ronst1t uted , the Tribunal is corn
JURl~T VIN LAWRYZP ~~os;ct ~o appoint
pos<'d of the following:
a.ppomted Arbitrator. Ms Lawheir Party.
following contact details: · ryz has the
~
JURIST VIN LAWRYZ ATTY. EIEL D.T. CABEZAS
237 Alley 1, Project 6, Quezon City No, g Sanwn Street, San Pedro IX Subdivision
+63 2 8 23141218 · ~ov:ilichcs, Quezon City
eeee [email protected] ~63 2 8 08 I 42007
ca hexa s l 3ia gmail.corn
2.6. On l 1 ~ebruary 2021, Jurist Vin Law z
com~umcated to Respondent and PCA ;,>' Tribunal Members
receipt of the confirmation by PCA of h:~
ap~omtment an~ her acceptance of ap- ATTY. ADORACION A. PEREZ
pointment as arbitrator. With her signed ac- Uni1 9, Graciosa Building
ceptance, Jurist Vin Lawryz also provided Ortigus Center. Pasig City
her notarized Oath of Office & Statement of +63 2 7 999 I I 00
Impartiality and Independence and State- Dory83(11 gmail.corn
ment of Disclosure, as well as her current
Curriculum Vitae. JURIST VIN LAWRYZ
2.7. 2Si Alley I, Project 6, Quezon City
On 12 February 2021, Arbitrators Atty.
+-(,3 2 8 2.3 14 1218
Adoracion A. Perez and Jurist Vin Lawryz
L::iel l 3Ca gmutl.corn
nominated a third arbitrator and Chair,
Atty. Denise Eiel D.T. Cabezas with the fol- III. ARBITRATION AGREEMENT & LAW GOVERNING THE
lowing details:
CONTRACT

ATTY. EIEL D.T. CABEZAS 3.1. This Arbit. rat 1011

.
was commenc;e. d Pursuant to the
,01
No. 9 Santan Street, San Pedro IX Subdivision Submisston Agreement d a t e d I February 2021 ·
. . .
Novaliches, Quezon City entered into b)' the Parties, which states:
+63 2 8 08142007
cabezas l [email protected] "I. SUBMISSION TO ARBITRATION

.. . r.,
I he Pnrt ics ,101t·t· to rcter an
d submil rhc Dis·
2.8. On 13 February 2020, Atty. Eiel D.T. Ca· ' '· ' "' T inc cen-
bezas communicated to the Arbitrators and Plltc~ to arbu i nrion administered by the Phi 1PP .
' • ' · 11 Arbitrauon
. by pCA tcr fot ADt~ rPC'A~) in accordance Wit
PCA her receipt of the con fiirmanon f
of h~r appointment and her acceptance .0
. t
appointment as third ar b itra or
and Chair. ·. t.bibit MAM r
101 < , la11nant and Exhibit
• ..
1,. r,ur t tie Respondent.
252 PHILIPPINE ALTERNI\TIVE DISPUTE R
ESOLUTION
ARBrTRATION
253
Rules of the PCA currently in fore
execution of this Submission Agree~ at the ti111e of statements, reports filed or submitted in .
enr. the ne 55· al ti an arbi-
trotion or for expert ev ua ion.
The language to be used in the
be English. Proceedings sL JN WITNESS WHEREOF, ~he Parties to this Sub-
••o]J
ission Agreement have caused 1t to be executed O th
The place of arbitration shall be ti rn db" n tne
'le Philipp· dote first state a ove.
Ines.
11. ARBITRAL TRIBUNAL
APPLICABLEARBITRATIONLAW & ARBITRATION
RULES
The Parties agree that the Dis
. PUtes sh U
h card an d reso I ved by a tribunal compos d a be 4_ 1. Per agreement of the parties as provided in Clause
arbitrators (the "Tribunal"). The memberse for three (3) III of the Terms . of Reference for this matter exe-
nal shall be appointed in accordance w~ththe Tribu. cuted on 5 April 2021, the arbitration shall be
Rules. the PCA conducted in accordance with the laws of the Phil-
The Parties confirm that the arbitrat ippines (Republic Act No. 9285 relating to domestic
nominate are qualified to act as such and t~rs they arbitration, the Arbitration Rules of the PCA ('PCA
know of no basis or reason to challenge their at1_thcy Rules 1, the Special Rules of Court on Alternative
tiions or th err
· a bili qua 1fica-
I tty to recommend or render a f · . Dispute Resolution as promulgated by the Su-
~ I d· d air, irn- preme Court, and Procedural Order No. 1 as is·
parna, an JUSt awar , such as conflict of interest · h
. h h . Wit sued by the Arbitral Tribunal on 12 April 2021).
p artres, w et er pecuniary, professional or otherwise.
The decision of the Tribunal shall be final and SEAT OF ARBITRATION & PROCEDURAL MATTERS
binding upon the Parties, and shalJ be enforceable
v.
through any courts having competent jurisdiction. 5.1. Pursuant to Clause l of the Terms of Reference for
this matter executed on 5 April 2021, the seat of
Ill. PROCEDURE this arbitration is Philippines.
The Parties agree that the existing rules of pro· 5.2. Procedural matters, including the venue of the ar-
cedure adopted by the PCA shall apply to the arbitra- bitration, procedural timetable, appointmen~ of
tion. and provisions for the Secretariat of the Arbitral
Tribunal and service of submissions, were pro-
IV. GOVERNING LAW vided fo; in Procedural Order No. 1 as issued by
the Arbitral Tribunal on 12 April 2020.
It is agreed that the disputes, this Submission
Agreement, and the arbitration that will be conducte~ VI. SUMMARYOF THE PROCEEDINGS& EVIDENTIARY
pursuant thereto shall be governed by, constrUed'. an HEARINGS
enforced in accordance with the laws of the Philippines.
6.1. On 7 April 2021, the Arbitral Tribunal_ conductthed _a
. h th Parties and eir
V. CONFIDENTIALITY Preliminary Conference wit e ints to be covered
. tes this respective counsels to address pot as subsequently
Any information, relative to the Dispu bi 'aiion by Procedural Order Number 1 • A ·1 2020
Submission Agreement, and the subject of ar itre not . . al T ib nal on 12 pn '
issued by the Arbitr n u C Ttate a speedy,
arising therefrom, expressly intended by the sour~ that including ways and means to ~cu
to be disclosed, or obtained under _circums~~:{; of thC . f thts matter.
effective and fair resolution o
would create a reasonable expectation on b. Josed. It '
source that the information shall not be dis_c ns wit-
shall include pleadings, motions, manifestatto '
 ARBITRATION
255
254 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

6.2. On 18 April 2021, the Claimant sub .

so March 2017 Letter Request on Revised
Schedule of Delivery of
Statement of Claim together with all tnllted its Goods
documents. support·1ng
6.3. On 25 April 2021, the Respondent On 20 May 2021, the evidentiary hearing for the
their Statement of Defense with Co s submitted
. unterclai Respondent's evidence was conducted. In addition
get Irer with all supporting document s. rn to.
t all members of the Arbitral Tribunal and the
6.4. Neither party exercised its option to file
statement. rebuttal
:cA secretariat, those attending for and on behalf
of the respective parties as regulated by Procedural
6.5. On 11 May 2021, the evidentiary hearing r Order No. 1 were as follows:
·
Claunant , id ior the
s evi ence was. conducted · In add"t·1 ion to
all members of the Arbitral Tribunal and th PC For the Claimant:
. h e A
secretariat, t ose attending for and on behalf r
the respective parties as regulated by Procedur~ IDA LAW
Order No. 1 were as follows: ATTY. HIL BALANAY

For the Claimant: For the Respondent:

IDA LAW EDIENE ARANGORIN

ATTY. HIL BALANAY
6.9. During the subject hearing, the following witness
For the Respondent: for the Respondent was presented and testified on
her witness statement:
EDIENE ARANGORIN
EDRIE DE TORRES
6.6. During the subject hearing, the following witness
for the Claimant was presented and testified on She was subjected to cross examination by the
her witness' statement: Claimant, redirect examination by the Re-
spondent, and recross examination by Claim-
DENISE SALAZAR
ant.
She was subjected to cross examination by the Re~
spondent, redirect examination by Claimant, 1111 6.10. In addition to the witness statement submitted by
recross examination by Respondent. Respondent, the latter also presented the following
documentary evidence:
6.7. Claimant also presented the following docurnen·
tary evidence: Document Referred to in:

Date Brief Description 1 February 2017 Service Contract ("SC")

Exhibit of the Document
Number
5 April 2017 Letter of Refusal on the
20 March 20 I 7 Service Contract ("SC°) Proposed Revised
A
Schedule of Delivery
 ARBrTRATION
256 257
Pl~lllPPINE AllERNATIVE DtSPUlE REso
lUIIOfl

ndenl acted in breach o its ohr ations under the SC

6.1 l. 1~hc Pa.rt~es simultaneously subm'tt Res O
in re usin to accel . t
he d ·
r~ ose d_reu;sed ~liver schedule
Live Closing Memoriuls on 2 J • et) their re9 fl.
une 202 J Jlcc. the C aim.ant. ccor m
els_ 0 Claimant is entill d
00 ~ornent
Three Million Pesos P3 000 000.00 indu:.
6. 12. On 10 June 2021, the parties .' O
sp_ective Rebuttal Memorials. ~~b~rttctl their re -licahle interest and other penalty charges.
this arbitration was submitted Ii e same dot . The terms and conditions of the SC are
or resolution. e,
VII. r. clear. Under the SC, Respondent FIL RUIZ
SUMMARY OF ADMITTED FACTS
co. explicitly obligated itself to (i) engage
7.1. the services of the Claimant for cargo trans-
As expressly provided in the Terms of R r
executed by the parties and the Arb· e,~rencc port services and provide customs clearance
last 5 April 2021, the following ,thralTnbunai services at specific Philippine airports and
r. . . are t e ad · such other locations that the parties may
tacts m this matter: m11ted
agree on, upon the endorsement and under
7.2. Execution of the Service Contract ("SC") d the direction of Claimant, along with the
March 2017. ated 20
concomitant obligation to negotiate the
7.3. Cei:tain disputes, differences, controversies d terms of the delivery of goods with the
cl~s (t~e "Disputes") have arisen betwee~ ~e Claimant in connection with the provision of
Partd1e~ wb1th regard to whether any of the parties such services.203
acte in reach of the SC. From the execution of the SC on 20 March
ii.
7.4. The S~ does n~t provide for any mandatory 2017, the Claimant was willing to comply
mechanism by which the parties acted in breachof with its obligations. However, from that time
the SC. up to the present, Respondent baselessly
The Disputes are not currently subject to any and unjustly refused to accept the proposed
7.5.
pending litigation or court proceedings between the revised schedule of delivery of goods of the
Parties. Claimant.
7.6. The issues to be resolved by the Tribunal are: iii. Philippine law, which governs the SC, pro-
vides:
7.6.1. Who among the Parties committed breach
of the SC, thereby resulting into liability "Those obliged to deliver or to do something
against either of the Parties. incur in delay from the time the obligee ju-
dicially or extrajudicially demands from
7.6.2. Who among the Parties is liable for the them the fulfillment of their obligation.
amounts claimed by them against each
other: Three Million Pesos (P3,000,000.001 xxx
for the Claimant and Five MiJlion Pesos
In reciprocal obligations, neither party incurs
(PS,000,000.00) for the Respondent. in delay if the other does not comply or is not
SUMMARY OF PARTY CLAIMS AND REUEFS SOUGHT
ready to comply in a proper manner with
VIII. what is incumbent upon him. From the mo-
· s and
8.1
The following summarizes Claimant's c1 arm
relief sought:
10.)ll
y express ..
prov1s1on of lhc SC.
258 AABITRA TION
Pl~ILIPPINE AL lEf'INATIVE DISPUTE RESOLUTION 259

Respondent's cl~m that it did not accept

vii. the proposed revised schedule of delivery of
goods since it will . viola~e i~s agreements
iv. with its customers is unjustified since the
Respondent is not the sole client of the
"Those who in the perfonnance or th . .
tions ·1 .r " e,r obf1ga Claimant and as such, the Respondent
are qui ty OJ fraud, negligence or d I . should be open to negotiate any changes in
and those who in any manner cont'rauenee the ay,
the delivery schedule of goods based on the
tenor t hereo], are liable for damages."20s
availability of the Claimant's cargo trucks.
"The
. power to rescind
. obligations is impt!ied m
.
viii. On account of the uncertain status of the
reciprocal ones, in case one of the obligors
SC between the Parties, the Claimant had to
should not comply with what is incu b
upon him. m ent decline offers for delivery services from other
companies, which resulted in opportunity
The injured party may choose between the losses worth Three Million Pesos
fe!ftllment and the rescission of the obligation, (P3,000,000.00), for which the Respondent
UJLth the payment of damages in either case. should be made liable.
He may also seek rescission, even aft.er he
8.2. The following summarizes Respondent's claims
has chosen fulfillment, if the latter should be-
come impossible. "20& and relief sought:

v. In this case, Respondent acted in breach of A. Claimant breached its obligations under the SC for
the performance of its obligations under the failing to comply with its obligation to deliver goods
SC upon its refusal to accept the proposed to the Respondent's customers based on the origi·
revised schedule of delivery of goods of oal schedule of deliverv of goods.
Claimant. It is apparent that the acts of the
Respondent made it impossible for the i. The refusal of the Respondent to accept the
Claimant to perform its obligations. Delay proposed revised schedule of delivery of
could not be attributed to the Claimant goods is based on the requirement of its cus-
since it was willing to perform its obligations tomers. The Claimant cannot just unilaterally
under the SC. More importantly, as enunci- revise the schedule of delivery due to alleged
ated in the above law provisions, there can conflict in the availability of its cargo trucks.
be no delay when no demand has been The Respondent's position to refuse accep-
made. tance of the proposed revised schedule of de-
livery of goods is justified by the fact t~at t~e
B. Resoondent has no right to demand the amount_Qf same would violate its agreements with its
Aue Million Pesos (PS,000,000.00J from the Cla11n· customers.
ant.
ii. Respondent timely communicated its refusal
vi. As noted above, under the SC, the Partie~
may negotiate on the terms of the delivery
O to the proposal since the dates of delivery as
originally agreed upon is crucial to ~e c_om~
the goods.
pliance by the Respondent of its obbgauo~
to its customers. Due to the continuous fail-
»• CIVIL coos. Art. I 169; underscoring supplied.
ure of the Claimant to comply, the Respon-
:IOS CIVIL CoDE, Art. 1170.
1()(,Ci\•il Code, Art. 1191.
260 PHILIPPINE All ERNATIVE DISPUTE RESOLUTION ARBITRATION
261

dent lost its contracts worth Rive M'II' It is worthy to note that by the nature of the
1 v.
sos (PS,000,000.00) and the latter •on Pe. obligation between the Parties, the designa-
strained to engage the services con. tion of the time when the thing is to be de-
0tas
cargo transport provider. another livered was the controlling motive for the es-
iii. The Civil Code provides for the gene aJ tablishment of the SC.
as well as the exceptions relevant tot~ .rule,
on the aJleged absence of a demand e •ssue pAJlTY POSITIONS WITH RESPECT TO EACH ISSUE
part of the Respondent for the Clairnon the
Summary of Claimant's Positions on the Issues
comply with its obligations, thus: ant to A.
9.1. Respondent committed breach in the performance
"Art. 1169. Those obliged to delive of its obligations under the SC upon their refusal to
to do somet himg incur
. . delay from the tir or
m
the obligee judicially or extrajudicially :I:~ accept the proposed revised schedule of delivery of
goods of Cl~ant. ~ccordingly, under Philipp~e
mands from them the fulfillment of their ob- Jaw, Claimant is entitled to an award compelling
ligation."
Respondent to comply with their explicit contractual
undertaking, in addition to applicable interest and
There are only three instances when demand is not penaJty charges, as warranted.
necessary to render the obligor in default. These
are the following: 9.2. Respondent should be made liable to the Claimant
for the amount of Three Million Pesos
"(I) When the obligation or the law ex- (P3,000,000.00) because on account of th~ uncer-
pressly so declares; tain status of the SC between the Parties, the
Claimant had to decline offers for delivery services
(2) When from the nature and the cir-
from other companies.
cumstances of the obligation it ap-
pears that the designation of the time B. Summary of Respondents' Positions on the Issues
when the thing is to be delivered or
the service is to be rendered was a 9.3. There is no breach of the SC on the part of the Re-
controlling motive for the establish- spondent. The refusal of the Respondent to accept
ment of the contract; or the proposed revised schedule of delivery of goods is
based on the requirement of its customers. The
( 3) When the demand would be useless,
Claimant cannot just unilaterally revise the schailed-
as when the obligor has rendered Iu
ule of delivery due to alleged co n.fli c t in the av . -
beyond his power to perform."
ability of its cargo trucks. The Respon den t's posi- . d
.
hon to refuse acceptance o f t h e proposed revise
h fact
iv. Although the Respondent did not make any
. JUS
. tifled by t 'th
e •· its
express demand for performance O f the
1
he schedule of delivery of goods is
Claimant's obligations under the SC,. t that the same would violate its agreements wt
.
Cl airnant .incurred delay nonet h e 1 e ss since
b customers.
the instant dispute falls within the esta - 9 d t for Five Million
lished exceptions. .4. Claimant is liable to the Respon en . come the
Pesos (PS,000,000.00) representing lost in '
262 Am!ITR/\flON
PHILIPPINE AL11:.RNATIVE DISPUTE R ESOLUTlON 263

f~nner being the proximate caus furrncd ahout said pre-existing contracts at th
hon of contracts of customers withet~f tRhe cancc1ta. time of the r-xecution of the SC. e
e espond
x. FINDINGS OF FACT AND REA cnt. 10.6.
It is hor~l10ok doctrine in the law on contracts that
SONED HOLDINGS the parties arc bound . . by the stipulations · , causes
,1•
terms and r-ondi . t ioris
. they have agreed · top rovtid ec1'
l 0.1. The Arbitral Tribunal resolves t
solve_ the issues presented by ~=ddre~s and re. that such stipulations. clauses, terms and condi-
consideration in the order these a:arttes. for its tions arc.
not contrary,c., to law, morals, public ord er
the Terms of Reference. e provided in or pub I re po 1- icy.· >
Issue 1: Who among the Part• 10.7. Although the Claimant was given the right to nego-
th res committ d b
e SC, thereby resulting into liability e . reach or tiate the terms. of the delivery of goods under th e
of the Parties. aga.t.nst either SC, the _Claimant n:iay not do so whimsically much
less urrila t er'al ly disregard the previously agreed
l 0.2. This tribunal resolves that the Cl . upon schedule of delivery since it will affect third
b h f · · airnam acted ·10
parties with whom the Respondent is also bound
reac o its obligations to the R
the SC. espondent under by contracts.
10.3. Under the SC, Claimant YOFILARU CO d 10.8. It is clear, therefore. that the failure of the Claim-
to (a) id . un ertook ant to abide by the schedule of delivery is a clear
provi e transportation and courier services to
th~ ~u~tomers of Respondent FIL RUIZ CO. in the breach of its obligations with the Respondent un-
P_h1lippmes; and (b) render customs clearance ser- der the SC.
~ces for such customers at specified Philippine
10.9. Being the party who acted in breach of the SC,
airports and other ports of entry to be agreed upon
there is no basis for the Claimant's claim of Three
by the parties ("Services"). In tum, FIL RUIZ CO.
obliged itself to pay the Claimant the amount Million Pesos (P3,000.000.00).
stipulated in the SC, as well as other incidental Issue 2: Who among the Parties is liable for the
charges. ~~o.unts claimed by them against each other: Three
10.4. As claimed by the Claimant, it is willing to comply /llion Pesos (P3.000.000.00) for the Claimant and
with its undertaking under the SC, but on a re- dive Million Pesos (PS.000.000.00) for the Respon-
ent.
vised schedule of delivery of goods that it mad~
three (3) days after the first delivery on 5 April 10.JO.
2017 due to conflicts in the availability of its cargo The Tribunal has painstakingly evaluated the
trucks. The dispute began because the Responden} pieces of evidence presented by the Parties and
refused to accept the proposed revised schedule
O based thereon. there can be no other conclusion
delivery of goods by the Claimant since the form~r than that the Claimant is not liable to pay the
is also committed to its customers to deliver their Respondent the amount of Five Million Pesos
textile orders on time under several contracts. (P5.000.000.00).
. t as-
IO. J J. ~\!though the Claimant acted in breach of the
10.5. It is worthy to emphasize that the ClaJJllan the
sured the Respondent of its capacity to take;n Re· SC. the Respondent failed to establish that de-
bulk and series of deliveries required by e in· mand was actually made against the Claimant
sponderit's customers and the Claimant wos for the fulfillment of its obligations under the
11..,-,,... SC. \\"hat is apparent from its reply to the pro·
\J(•\ i,
·.in.,.(; R , 13 JI l
· " l"if>t,27. ·l June 200·1. ·131 SCRr\ 106. I · · ·
 265

thereof under the Civil Code. Accord· 1

spondent is not entitled to the paymemgy. ~e-
posed revised schedule . Million Pesos (P5,000,000.00). nt of Five
refusal to accept the s:;;,:ehv~ry of gOods .
be construed as a demand . Said refusal •s •ts
resulting · cnnri0t
The FINAL .AW.ARD
10.12. • 11 Civil Code provid • es r.,or th tn dela,·
., .
w e as the exception e general Wherefore, thediTribunal
the alleged absence o; ;edlevant to the i~e, Oas . . decides and awards .in
11. l - fulJ an d fi111 al isposiuon of this arbitration. as
the R emand Ue
. espondent for the Cl . . on the P n rouows:
its obligations , thus·. armarn to cornpt yan_ or
\\'Ith
A. The Claimant's claim for the pay-
ment of Three Million Pesos (P3,000,000.00 is
"Art. 1169. Those obli
do something incur in del i~ed to deliver or tO DENIED for lack of merit.
obligee judicially or extrai
them the fulfillment of thJ~
:?' .
rom the time th
ic1~y demands fr ome
B. Respondent's claim for Five Million
err obligation. n Pesos (PS,000,000.00) is likewise DENIED for
Jack of merit.
10.13. There are only three instances whe C. All other requests for relief not oth-
not necessary to render the obli n ~emanct is
These are the following: rgor in default envise disposed of above are hereby DENIED.
D. Cost against the Claimant.
"(I) When the obligation or
expressly so declares·, the law
Dated: 15 June 2021.
. (2) When from the nature and the
circum~tanc~s of the obligation it appears that Place of arbitration: Quezon City, Metro Manila,
the des1~at100 of the time when the thing is
to be delivered or the service is to be rendered Philippines.
was a controlling motive for the establishment
of the contract; or
THE ARBITRAL TRIBUNAL
(3) When the demand would be use-
less, as when the obligor has rendered it be·
yond his power to perform." ATTY. EIEL D.T. CABEZAS, C. Arb., pCA
The instant dispute does not fall within the es- Chairman
10.14.
tablished exceptions since the schedule of deliv- JURIST VIN LAWRYZ
ery of goods are not stated in the SC, and there· ATTY. ADORACION A. PEREZ Co-Arbitrator
fore, cannot be considered the controlling motive Co-Arbitrator
for the establishment of the SC. It was after the
execution of the SC that the delivery schedule _of
goods was actually agreed upon by the parties in
a separate document.
As such, it is necessary that a demand· was ant
10.15.
made by the respondent against the c1a1rn R Pon·
for the latter to incur delay and for the es
dent to be entitled to the legal consequences
 AflBITAATION 267
266
PHiLIPl'INE I\L1rnN1111v1: D1Sr>UtE RrSOlUIIQN

d Tribunal, without holding an oral hear-

rhe secon cond Awar d fiin dimg t h at it. had no jurisdic-
RELEVANT JURISPRUDENCE: d a 5c . . . h
. issue . e the substantive issues in t e submission
,ng,
. n to d c 1crrn. in ·
the action constitute d a misuse
· of process
PT Asuransi Jasa Indonesia Peraero uo . auon cllant a5 b h
should have roug t the claim in the
10 0rb1tr
ince the .aPPt·on. According to the Second Tribunal, PT
FACTS: - s Arb1tra I . . h .
first . s estopped from raisrng t e issue of the first
Asuran~1 waPT Asuransi then appealed to the High Court
PT Asuransi appealed against a dee· . arbitra0~0· that the Second Award be set aside on the fol-
court dismissing an application for an o d ision of the higti
arbitt ra tiion award that was the result of r er to .set a. srid can contendlilg nds among others:
· g erou
lo\\'ln !;,'"
• •
Scco~d Arbitration was commenced by : arbttration. The that the Second Award was in conflict with the
the First Arbitration was held in favor of De ~ppcllant after . (a)olicy of Singapore and was thus in breach of An
Arbit · exia In the.,. pubhc P( .. ) f the I 985 UNCITRAL Model Law; and
I ration, an award of $8.6M was · d.. rirs1
D . . issue in fav 34(2)(b) u O
exia, with PT Asuransi being a guarantor of R k or of (b) that the Second Award had dealt with disputes
Ltd., a company who issued US Doll e asaran Bl
th b b · . ar notes to DeXi . s not failing within the terms of submission to ar-
ere Y cmg indebted therein. The BI Notes h d
in 1999. In 2000, the appellant initiated a s:h matured
· a, 0: iss~en thus leading to a breach of Art 34(2)(a)(iii) of the
b1traUO ,
~estructuring Scheme") pursuant to the terms ;~e ("th_e 1985 UNCITRAL Model Law;
uons of the DIP to release their payment obligati cond1-
th Bl ions under
. e Notes by replacing them with a new series of notes ISSUE:
issued by another company. Though the respondent and Whether the Second Award must be set aside con-
;o~e o~er Bl Noteholders opposed the Restructuring sidering that it is merely a negative finding on the jurisdic-
c e~e, it was purportedly approved at a Bl Noteholders'
meeting on 29 February 2000 ("the February 2000 meet· tion of the tribunal.
ing") at which the respondent was absent. Respondent
RULING:
commenced the First Arbitration against Rekasaran and
PT Asuransi. YES. The Second Award must be set aside. Further-
The First Tribunal heard the First Arbitration on 7 morc, a negative ruling on its jurisdiction by an arbitral
June 2001 in which, Rekasaran and PT Asuransi did not tribunal should not be regarded as an "award" as it does
attend to. The First Tribunal then issued the First Award not deal with the substance of the dispute.
in favor of Dexia holding that Rekasaran and PT Asuransi
should be held liable to pay under the US Dollar notes and DOCTRINE:
that such debts had not been restructured. The appellant
then commenced the Second Arbitration against Dexia The definition of an award does not include a nega-
seeking a declaration that the meeting held on February tive determination of jurisdiction as it is not a decision on
2000 was valid and binding on all US Dollar note holders the substance of a dispute and therefore cannot be an
~ dr ,
including Dexia. ar tor the purposes of Art. 34 of the Model Law.
Ruling jurisdiction are dealt with separately under
Art. 16(3) of the 1985 UNCITRAL Model Law.
268 ARBITRATION
PHILIPPINE ALlERNIITIVE DISPUTE RESOLUTION 269

Form and Contents of Award t the arbitral tribunal to correct in the awards
Rcques ors in computation, any clerical or typographi-
a. T_he award shall be made in writin anY err rs or any errors of similar nature provided
signed by the arbitral tribunal. ln arb.gt ~d shall ._ cal . err1: given to the other party; '
. . h t ration VI: notice
mgs wit more than one arbitrator th . Proceed.
t the arbitral tribunal to give an interpretation
the majority of all members of th~ eb~•gnaturcs or Reque S f .
ff ar tlrat t . b. of a specific point or part o the award, if agreed upon
s hall
. su ice,
. provided that the reason r1or any rtbunai
signature is stated. ornittcd and with notice to the other party.
b. The award shall state the reasons u . . ·tied within thirty (30) days from receipt of request,
base d , un Iess the parties have agreed pon
th
which ·
ll is I~ JusUh~l 'be made or interpretation shall be given and
. at no re 5
correction art of the award. Likewise, within thirty (30) days
are to be given or the award on agreed t asons
. . errns, cons
award base d on compromise in accorda . ent shall fo~aie of the award, the arbitral tribunal may correct any
provisions on Settlement. nee with the from th .. ti
its own Irutia ive.
error on
c. The award shall state its date and the pla f . Request to make an additional award as to claims
t ti d . . ce o arb,. c.
~a 10n ash etpe1rmmedin . acc?rdance with the provj. presented in the arbitral proceedings but omitted
sions on t e ace of Arbitration. The award shall be from the award. If the arbitral tribunal considers the
deemed to have made at that place. request to be justified, it shall make the additional
d. After the award is made, a copy signed by the arbitra. award within sixty (60) days.
tors in accordance with the paragraph (a) of this Afti. If necessary, the arbitral tribunal may extend the period of
cle shall be delivered to each party. time within which it shall make a correction, interpretation or an
The award of the arbitral tribunal need not be acknowl additional award. For the above, guidelines governing the Form
edged, sworn to under oath, or affirmed by the arbitral tribunal and Contents of Award shall apply to a correction or interpreta-
unless so required in writing by the parties. If despite such re· tion of the award to an additional award.209
quirement, the arbitral tribunal shall fail to do as required, the
arties may, within thirty days from the receipt of said award,
request the arbitral tribunal to supply the omission. The failure
of the parties to make an objection or make such request within
the said period shall be deemed a waiver on such requirement
and may no longer be raised as a ground to invalidatethe
award.208

Correction and Interpretation of Award, Additional

Award
d unless
Within thirty (30) days from receipt of the awar :irtics. n
another period of time has been agreed upon by the P
party to the arbitration may:
zoe Arts. 4.31 and 5.31, IRR, ADR Act.
-
10<) -
Arts. 'I 33
. and 5.33, IRR, ADR Act.
 Laws Governing Post·Award Proceedings
Chart of Governing Laws in Foreign Arbitration Awards vs. Local Arbitration Awards
(International Commercial Arbitration, Domestic Arbitration and Constn.tction
Arbitration Confirmation of Award in Domestic Arbitrations6

Local Award
(International Local Award Local Award
....- ,--
Commercial (Domestic ....- (Construction Foreign Award
Arbitration) Arbitration) Arbitration)

-
1

ADR Act/lRR
-- ADR Act/IRR - EO 1008 ADR Act/IRR

- Model Law
- RA876
- CIAC Rules of
Procedure NYC

-- SAD RR
-- SAD RR
-- Rules of
Court SAD RR

J
 AABITRATION
271

The confirmation of a domestic arbitration award shall be

governed by Section 23 of R.A. 876. A domestic arbitration award
when confirnled shall be enforced i~ the same manner as final
and cxccuto~' dccisrons ?f the Regional Trial Court (RTC). The
confirmation of a domestic award shall be made by the RTC in
accordance with the Rules of Procedure to be promulgated by the
Supreme Court. A CIAC arbitration award need not be confirmed
by the Regional Tnal Court to be cxecutory as provided under
10.
E.0. 1008

Venue and Juri.sdlction

Proceedings for rccogrunon and enforcement of an arbitra-

tion agreement or for vacauon or setting aside of an arbitration
award, and any npphcauon with a court for arbitration assis-
tance and supervision. except appeal, shall be deemed as special
proceedings and shall be filed with the court (a) where the arbi-
tration proceedings arc conducted; (b) where the asset to be at-
tached or levied upon, or the act to be enjoined is located; (c)
where any of the parties to the dispute resides or has its place of
business; or (d) in the National Capital Judicial Region at the
option of the applicant.v'?

CONVENTION AWARD

.. On 10 May 1965, through Senate Resolutio_n No. :1, ~~

Philippines acceded to the 1958 New York Convention which r
ogn· · framework
izes that each State Party may provide their own
and mechanism in the enforcement of an arbitral award. As a
Conv ti I al safety net, un-
d en on State, the Philippines provides a ~g . b hav-
. er the R.A. 9285 and the SADRR for arbitranon parties { cing
Ulthga legal framework which the tparties invoke whenenetl~o~rthe
e arb·tr · t 0 the conv ,
Phili .1 atio~ award. By being a P~ where arbitra-
ti PPmes gains credibility as a convenient place York Con-
on award li tion the New
venti s can be enforced. In app ca '. d enforcement
on Provides the regime for the recognition an

............

--
110
1\n.
--
5-39, lRR, ADR Act.
 ARBITRATION
272
273
PHILIPPINE ALTERNATIVE DISPUlE RESOLUTION

,fi rcement of Foreign Arbitration

for the arbitral awards, later operationalized · A .ion and Ent~ ... New York Convention
,iii• d by ,.,~
36212 the 1985 Model Law, and then domesti~:ll rt:s, 3521, alld teco9 covere
under R.A. 9285. Y 11nplcnicnted ~~rd5 k Convention shall govern the recognition and
rne NeW Yo~itration awards covered by the said Conven-
211
Art. 35. Recognition and enforcement. I. 1\11 arbi: I
erit of ar
'orceJ'Tl
the country in which it was made shall be rccogni~cd as bi_ racl'award, irrcs""ct·
• • . • • ~
ll~n m wntmg to the competent court, shall be enforced sub·
this article ond of article 36.
.
111 mg a cl

2. The party relying on an award or applying for its en~

,~ •vc r
n • Upon opp!' 0
ucct to the ProVis· 1ta-

the _dul)_' authenticated original award or a duly certified copy th°:r:emcntsha11 suppl
~. ell''
tio!l· lti on and enforcement of such arbitration
fhe re~~g~Je~ with the RTC in accordance with the Rules
nrds shall
aw"'
b promulgated by the Supreme Court. Said pro-
to e .
arbitration agrccmen~ referred to in article 7 or a duly certified c~' and the orig;~ of proeedure rovides that the party _relying on the award or ap-
award or agreement is not made in an official language of th· S PY thereof. If th -"ural rules P t: rcement shall file with the court the original or
supp IY a d u I y ecru· fire d translation
. thereof into such language. is late ' the Party shaiJe ccu 1'ts en10 · ·
212 pl~ng f~r d copy of the award and t~e arbitration agre.ement.
Art. 36. Grou_nds for refusing recognition afld enforcement. R ..
1
enforcement of an arbitral award, irrespective of the country in wh· · ~cogn111on or 30thent.Jcate agreement is not made m any of the official lan-
may be refused only: ich •t was made,
(f the award orty shall supply a duly certified translation thereof
(a) a~ the request of the party against whom it is invoked, if that
rushes to the competent court where recognition or cnforc ~any fur. gu ages, thesuchpar
languages.
proof that: cmcnt is sought into any o f
[i] a party to the arbitration agreement referred to in article 7 The applicant shall establish ~hat the country in which
some ·mcapacny; · or th e sa:id agreement is not valid under was
th la
under
which the parties have subjected it or, failing any indication ~cr:~o
. b'tration award was made is a party to the New York
foreign ar t
under the law of the country where the award was made· or '
(ii) ~e party agains~ whom the award. is invoked was not gi~cn proper no-
Convention.
tice of the appointment of an arbitrator or of the arbitrator proceed- If the application for rejection or suspension of enforce-
ings or was otherwise unable to present his case; or
(iii) the ~ward deals with a dispute not contemplated by or not falling ment of an award has been made, the Regional Trial Court may,
within the terms of the submission to arbitration, or it contains dee- ifit considers it proper, vacate its decision and may also, on the
sions on matters beyond the scope of the submission to arbitration,
provided that, if the decisions on matters submitted to arbitration can
application of the party claiming recognition or enforcement of
be separated from those not so submitted, that part of the award the award, order the party to provide appropriate security.213
which contains decisions on matters submitted to arbitration may be
recognized and enforced; or
(iv) the composition of the arbitral tribunal or the arbitral procedure was SAD RR
not in accordance with the agreement of the parties or, failing such The New York Conven-
agreement, was not in accordance with the law of the country where
Any party to an inter-
the arbitration took place; or national commercial tion shall govern the
(v) the award has not yet become binding on the parties or has been set arbitration in the Phil- recognition and en-
aside or suspended by a court of the country in which, or under the
law of which, that award was made; or ippines may petition forcement of arbitra-
Recognition
(bl if the court finds that: rb' the proper court to rec- tion awards covered by
(i) the subject-matter of the dispute is not capable of settlement by n •· and En-
forcement ognize and enforce or the said Convention.
tration under the law of this State; or the
(ii) the recognition or enforcement of the award would be contrary to set aside an arbitration
public policy of this State. mndt award.
2. If an application for setting aside or suspension of an award has t>cc~where
to a court referred to in paragraph (I) (a) (v) of this article, the cour djoufll
The recognition and
recognition or enforcement is sought may, if it considers it p~opcr. ~ccogoi· A petition to recognize enforcement of such
its decision and may also, on the application of the party clo11~~n~,ppropri· and enforce or set aside arbitration awards
tion or enforcement of the award, order the other party to prov, c
ate security.
 ARBITRATION 275
274
PHILIPPINE AL
TERNI\TIVE DISPUTE ,.,
"ESOLUIION

SAD RR Court may, if it consid-

an arbitral award m R.~. 92as ers it proper, vacate its
at. . the option of th e- pe-
ay, shall be filed . decision and may also,
Regional Trial ~1th the
titioner, be filed with accordance w· ourt in on the application of
the Regional Trial the party claiming rec-
rules of proce~h the
Cou_rt: (a) where arbi- ognition or enforce-
be promulgated ~re to
tration proceedings Supreme Court. y the ment of the award, or-
were conducted; (b) der the party to provide
where any of the assets Said procedural appropriate security.
to be attached or levied shall provide that~l~s
upon is located; (c) party relying on the
where the act to be en- ~ward or applying fo~
joined will be or is be- its enforcement shall RELEVANTJURISPRUDENCE:
ing performed; (d)
fil~ _with the court the Hebei 1111port and Export Corporation vs. Polytek
":'here any of the par- original or authenti- EngineeringCo. Ltd., Civil Appeal No. 116 of 1997,
ties to arbitration re- cated copy of the - 16 January 1998
sides or has its place of award and the arbitra-

,
business; or (e) in the tion agreement. If the
National Capital Judi- award or agreement is FACTS:
cial Region. not made in any of the Polytek Engineering Co. entered into a contract with
official languages, the Hebei Import and Export Corporation wherein Polytek
Recourse to a court party shall supply a agreed to sell to Hebei a set of equipment for the produc-
against an arbitral duly certified transla- tion of rubber powder. Hebei had almost paid the full pur-
award shall be made tion thereof into any of chase price. However, upon delivery of the equipment, He-
only through a petition such languages. bei complains that such was defective. Hence, the parties
to set aside the arbitral referred their dispute to the China International Economic
award and on grounds The applicant shall a_nd Trade Arbitration Commission (CIETAC) for arbitra-
prescribed by the law establish that the
tion. CIETAC rendered an award in favor of Hebei. Hebei
that governs interna- country in which for·
eign arbitration award ~hen obtained an order to enforce the award in Hong Kong.
tional commercial arbi- /ytek appealed to the Court of Appeals in which the
was made is a party to
tration. Any other re- .ourt. allowed Polytek's appeal based on Sec. 44 of the Ar-
the New York Conven·
course from the arbitral ordimance, which implements Art. V o f the
award, such as by ap- tion.
ubitratton
.
fo n1tcd N a titons Convention
. . ·
on the Recognition an d En-
peal or petition for re- If the application _for rcement f
ent O F oreign Arbitration awards to set asrid e th e
·
view or petition for cer- . . uspens1on 0~ement
tiorari or otherwise, re1ect10n
~ or s f an exhibi order on the grounds that ( 1) the r·b
n un ~
of enforcement O d rnent tlefldapparent bias; (2) this bias constituted a funda-
shall be dismissed by award has b een ma . e,
. I Trtfl 1 contr a aw i n th e arbitral procedure· and (3) it· wou Id be
the court. the Re wna ary to H ong Kong's public policy ' to enforce an award
 ,ARBITRATION
276 277
PHILIPPINE ALTERNI\ nvs DISPUTE R
ESOLUTION

Si..X-DaY war2•4 caused the majority of the

that was the product of such . rTlanent k crew to leave Egypt. In June, the Egyptian
then appealed. a flawed procccdin
g. Hebej ...eriCi:l>· worb oke diplomatic· ties
1rTl ~,, · wit· h the United States
""' ent . r·ng Americans wis · himg to stay in the county
ISSUE: go11ernrn requ1n .
kerebY special V1Sa. Parsons then abandoned the
1,,
apP 1Y for
.
a
and
. h .
operat10n of t e Egyptian paper mill. It
Whether the rendering of an aw 10
favor of Hebei shall be enforced. ard by the CIETAc in const,. . ~. ,cuon d secrete Gener al e th at .it considered. such de-
tllen in. forrne · 1
d due to the force majeure cause in their con-
RULING:

YES. The award by the ClETAC . f

t
JaY excus~. h Societe General disagreed. Societe Generale
tract to w for Arbitration. The arbitral panel found that
tllen m;evernajeure clause was only applicable for roughly
shall be enforced. In the case at bar Polvte tek avor of Hebei tile for onth after work had ceased. The panel found
· . , Y e could h
rea d y raised .
the
.
issue of potential bias b '
erore the T ibave aJ. tile first rneas had made no more than a perfunctory effort
H owever, it did not choose to do so . Hence, p olytekn . UnaJ. tlla t overs . special visas and resume work. The Tribunal
estopped from claiming that the bias of th T ib ts now t O acquire . .
· . e n una] vi10• d that parsons was liable to Societe Generale for
l a t e d th e pubhc pohcy of Hong Kong ' thereby VlO · 1 ating
. th in damages for breach of contract and
· . .
pu bl re pohcy provision of Art. V(2)(b) of the New y k e
ven ti10n. .Th e Court further states that refusing to en,orce or , Con-
a
$;~! rths
hel
2 507.45
ooo for Societe Generale's costs, as well as three-
of the arbiters' compensation of $49,000. Societe
C onvention award requires a high burden of proof hi h i~nerale moved for the execution of the award against
Po lyt e k did 1 not present ·in this
. case. , W IC
Parsons in the United States. The award was found en-
forceable on summary judgment by the Southern District
DOCTRINE:
of New York.
In refusing to enforce a Convention award, a party to
a dispute has the burden of proof in overturning such ISSUE:
Convention award. Whether the enforcement of the award is valid and
Parsons and Whittemore Overseas Co. vs. Societe Gen· binding.
erale de L'Industrie du Papier, 508 F.2d 969 (19741
RULING:
FACTS: YES. The enforcement of the award is valid and
Parsons and Societe Generale entered into a contract ~inding. As provided for by Art. V, Sec. 2 of the United Na-
concerning the construction and operation of an Egyptian tions Convention on the Recognition and Enforcement of
paper mill. The contract included an arbitration clause. Roreign Arbitration awards (UNCREFA)215 recognition and
which provides that differences arising out of the perfor~d enforcement of an arbitration award may also be refused if
the competent authority in the country where recogm·t· ion
ance of their respective obligations in the contract wou f
· al Chamber o and enforcement is sought finds that:
be subjected to Arbitration under Internat1on til
Commerce (ICC) rules. Work proceeded _as planncdtOu~he li< 1967 -
1111958 t\ra.b-tsracli War.
May 1967 when hostility towards Americans due "in,"r b'nrnr Unttcd Na 1·tons Convention on the Recogmuon
. . d E r. cement of For-
an · ntor
ion awards.
 ARBITRATION 279
278 PHILIPPINE All ERNA TIVE DISPUTE RESO LUTION

submitted to arbitration can be separated

(a) The subject matter of the diff from those =. so submi_ttcd, that part of
ble of settlement by arbitratio:ence is not ca the award which
. d contains decisions on
that country·' or Under the I awPn.or matters su bmitte to arbitration may b
recognized and enforced; e
(b) The recognition or enforcement
would be contrary to the publi of 1.thc award The court finally ~eld that Overseas had not cstab-
country. re po icy of that . d grounds for a clrum that the award was in manifest
In the case at bar public or 1tshC f the Jaw
disregard o .
V(2)(b) of the New York Conventi! ~chypldrovision of Art
narro w IY, an d t he enforcement of fou . be construect· J)()CTRINE:
awards should be denied if the enforc oreign arbitration Enforcement of foreign arbitration awards can be
. I t b . ement of such
vio a e very as1c notions of morality and . . . would red where enforcement of a foreign arbitration award
rum state. Justice m the fo.
dcn1 violate the forum states, most basic
would
. .
notions of mo-
Also, the Court found that Art. V(2)(a) di rality and justice.
elude_ arb_itration at anytime US foreign policy id wasnotsome.
pre-
h ow unp I icated in the dispute. Mabuhay Holdings Corporation vs. SEMBCORP.
The court further found no violation of du G.R. No. 212734, 05 December 2018
uncle r Art . V(l)(b) o f t h e convention which provides:
e process

I. Recognition and enforcement of the award may FACTS:

be re~se_d,. at the request of the party against Mabuhay and IDHI entered into a Shareholder's
whom it is invoked, only if that party furnishes Agreement with SEMBCORP wherein SEMBCORP plans to
to the competent authority where the recognition expand its business and SEMBCORP agrees to invest. Ma-
and enforcement is sought, proof that: buhay promised to give SEMBCORP a return on its in-
(b) The party against whom the award is in· vestment upon full payment of SEMBCORP of its invest-
voked was not given proper notice of the ment. Contained also in their agreement is an arbitration
appointment of the arbitrator or of the arbi- clause stating that PH laws shall govern and that disputes
tration proceedings or was otherwise un- other than intra corporate controversies shall be settled by
able to present his case; on~ arbitrator from ICC. SEMBCORP was able to pay full
of its investment. SEMBCORP then requested for its share
The Court adds that there was no excess of the tri·
~~ _the profits of Mabuhay and JDHI. However, Mabuhay
burial's jurisdiction under V(l)(c), which reads: r aimed that since it was a J.oint obligation it is only liable
The award deals with a difference not con· ror sou;;0 0 f the claim.
. ' so the matter
Mabuhay failed to pay
(c)
templated by or not falling within the terms ~~d
SEM se to ICC who rendered an award in favor of
of the submission to arbitration, or it co;- to BCORP. Thereafter, SEMBCORP then filed a Petition
tains decisions on matters . beyond · tic
pro· r Recog111·t·10n of Foreign Arbitration Award before the
RTC.
scope
. of the submission to
. . arb1trat10n,
rnatters
vided that, if the dec1s1ons on
 ARBITRATION
280 281
P, IIIIPl'INF 11, 'FrlNfll lVE D1sru1 E Rl:SOI
- UTION

Award Not a Foreign Judgment

ISSUE: rbitratton
fOfel9" ft . g guidelines shall be observed in the enforce-
- . Whether Mabuhay was able to eslubli fnC foJl?W'0 bitration award:
I cfusmg enforcement of final award under Pshh.a g_round r fore1gfl ar .
ll1f)pinc lt1 or I
of a d by a court of a foreign country shall b
~U~: ~
!lien
a. co ofirrnc r
ized and enrorce
d '" .
as a roreign '
arbitration
e
recognd nd not a judgment of a foreign court.
awar a
. NO. Mabuhay was not able to establish f ed by the Regional Trial Court, shall be en-
refusing enforcement of final award under Ph~ _ground for b. con irrn .
d as a foreign ar biitration
. award and not as a
Th~ ADR Act and the Special ADR Rules both ~':Pinc law. ~ordce ent of a foreign court.
policy that the State shall encourage and . clarc as a JU grn
th f actively ..-.ed by the RegionaJ Trial Court, shall be en-
e use o ADR, . such as arbitration , as an im . promote con li d
'...in the same manner as fiin al and executory de-
means to achieve speedy and impartial ju stiICC and Pd0rtant c.
court d ockets. This policy is further cvidcn d b eclog f~r~ens of courts of law of the Philippines.211
. . cc y the I c1s10
on presumption
. in favor of enforcement of a ,ore,gn Arubi1·e
e .
ative Matrix of Arbitration Awards21a
trauon
b
Award under the Special ADR Rules A
· · s such M
r ColDP ar
uhay was not able to establish a ground for ref · ' a-
, t f Ii
o ma I awar d under Philippine
. . . Law. using en-
r Law
I orccmen
Av&llable
seat ol Ki.Deb GoTerning
recoune
ArbtuatJon Enforcement
DOCTRINE:

The Philippines, being a signatory to the New York

- Forolcn
Outside the
country of
Awards in
Arbitrations
New York
Convention
Refusal to
enforce award
under Special
,ublt.ratJon seated outside
Convention, aims to provide a common legislative standard Awa.rd enforcement the Philippines R.A. 9285 ADR Rules
for the recognition of arbitration agreements and enforce-
ment of such awards. As such, an award rendered by a
Awards in 1985
foreign arbitral tribunal shall be binding on the parties so lntemational UNCITRAJ.. Selling aside
as long as the parties thereto submit their dispute for rcso- lntematlooal In the country of Commercial Model Law under Special
Arbitrotion Al)~ Ruks
lution by a particular arbitral tribunal of their choice. Arbitration enforcement
seared in the
Award
Philippines R.A. 9285
otice of Proceedings to Parties
Vacation under
In :-;pccinl proceeding for recognition and enforcement of
11 Domestic R.A. 876/ Special ADR
Arbitrouon RA. 9285
n nrhtrrnnon nwnrd, the court shall send notice t.o the pnrtirsnt Dornoatto Awur'ds
l~ulcs
.hclr 11d<lrt:RR of record In the nrbltrnl ion, or if any pnrty cn1111o1 Atbltr1.tlon 111 the country of
Ill' ti<!f"Vl'd not ice 111 RU Ch ndd J'r.RH, fl f' RU Ch pn rty':; lnat l<JlO\Vll t!; A1nrd enforcement
Cl/\C
Appeal under
Rule 43 of the

--
clrc·HH. 'J'lw notice ahnll be Rent In nt lcnRI nrtccn (IS) dnyA lw01 Arburctton 8.0. 1008
Rules of court
Awards
t lie! (1111,, r-wl for tlw lnlt inf lrnnrfn~ off he nppllcnf inn."!"

ms',·r. •J.t /\1)1' A

11,~1 • , rt. .
1111 Ix hv A .
11.V· .lny P111rl<'k R. Snntingo, S<'nior /\siioc1olc,
Q . mbing 1 orrcs
· uisu
111, /\1 I h.'111, IIW, /\I )JJ /\1 I
 282 PHII.IPPINE ALlFRN/\llVE DISPUTE R ESOLUllON . d enforcement of an arbitration award may
~ccogr,1·uon ifanthe Regi.on
· al T riial C ou rt ' w h ere recognition

Grounds for Refusing Recognition or bC refLlsed, . sought, finds that:

of an Arbitration Award Made i Enforcement aiso
,..i ,ororcernefl t isbject-matter of the dispute is not capable of
a Party to the New York Convent7o: State which is the su ent by arbitration under the law of the Philip-
3
8• 5ettlerl1
. Recognition or enforcement of an arbit . pines; cognition
or
m a state, which is a party to the New York ~:t1on a~ard, rnnue or enforcement of the award would be
refus_ed, at the request of the party against wh~ve~ti~n._ may be b. the trr:'"" to the public policy of the Philippines.
only if the party furnishes to the Regional Trial Cm
ourtit proof
is invoked
th ' con O,.,J
artY to a foreign arbitration proceeding may oppose an
a. the parties to the arbitration agreem t at:
the law. applicable to them , und er some
en. mcap
were, under A .P for recognition and enforcement of the arbitration
.
t hi
e said agreement is not valid un d er the acity; or applica~iori ccordance with the Special ADR Rules only on the
h h 1 10
w_ 1c. the parties have subjected it or, failin aw. " varddsin enumerated
a under paragraphs (a) and (c) of Art. 4.35
dication thereon, under the law of th e country g anyh In· grRoungnition and Enforcement). Any other ground raised shall be
the award was made; or w ere eco . al T ial C rt 219
l
disregarded by the Region n ou .
the
· party against . whom the award is invoked was not
b. NON-CONVENTION AWARD
given proper notice of the appointment of an bitr
t f th · ar I a·
or or o e arbitral proceedings or was otherwise

' unable to present his case; or Recognition and Enforcement of Foreign Arbitration
Awards Not Covered by the New York Convention
the award. deals_ w~th a dispute not contemplated by
c. or not falhng within the terms of the submission to The recognition and enforcement of foreign arbitration
arbitration, or it contains decisions on matters be· awards not covered by the New York Convention shall be done in
yond the scope of the submission to arbitration, pro- wi proce ural rules to be promulgated by the Su-
vided that, if the decisions on matters submitted to accordance ith d
ity Court
preme . · Th e court may, on grounds of corruty
. and rec1proc-
.
arbitration can be separated from those not so sub-
mitted, that part of the award which contains deci·
d
lion, recognize
a and entorce
' a non-convention award as a conven-
war .220
sions on matters submitted to arbitration may be rec·
ognized and enforced; or Grounds for R eJ
,r.. • stng
•
an Arbitrati Recognition or Enforcement of
d.
the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreemc~t10
Not a Party ;nthe New York Convention
O
04

Award Rendered by a Stat• Which Is

of the parties or, failing such agreement, was not
accordance with the law of the country where the ar· not foreign
a AParty t arbiitration
. .
award rendered in a state which .
is
bitration took place; or Proor of the o the . Ne w y ork Convention will be recognized . upon
the award has not yet become binding on the r•f,\'.:
O 1,cntcd as a c cx1stenc . e o f comity
. and reciprocity
. and may be
onvcnti on award. If not so treated and if no comity
.
e. or has been set aside or suspended by a co~rt thnt
country in which, or under the Jaw of which, l1q Art
iiosc . '1.36, IRR
award was made. e. '13 AD ' ADR Act
' R Act. .
 ARBITRATION
284 285
PlilLIPPINE ALTERNATIVE DISPUTE Res OLUTION

or · . uJation carries with it ~ waiver of the right to ap-

. reciprocity exists, the non-convention award
·d such sUP b'tration award but without prejudice to judicial
mzed and/or enforced but may be deemed
dencc of a right as between the parties in
48 of Rule 39 of the Rules of Court.
cannot be re
p;csurnPtivc ::~-
or anec With Sc~-
a:: peal
vieW bY
I
J1 'rrorn an arf rtiorari under Rule 65 of the Rules of Court 222
waY o ce .
rt ·sdiction in the Enforcement of an
If the Regional Trial Court has recognized t
~ward but a petition for suspension of enforceme he arbitration
fefllJe a?d f ;eement or in Setting Aside an Arbi-
is subsequently made, the RTC may, if it consid:~ of that award A,t,ltra~°,;a,: in JCA
tt0tiofl . .
to be proper, suspend the proceedings to enfor ths the Petition . gs for recognition and enforcement of an arbitra-
may also, on the application of the party claim~e e award, and d
rrocee in . . id
greement or for vac.ation .othrsetting a~1 e ofb~ arbitration
enforcement of that award order the oth mg recognition or
. . • er party s ki 1ion a d any application W1 a court or ar itration assis-
pension to provide appropriate security. ee ng sus.
award, ~ supervision, except appeal, shall be deemed as special
. lf the petition for recognition or enforcement of th . iance andin and shall be filed with the RTC where:
,~~ p .
~on award is filed by a party and a counter-petition fore arb1~a- the arbitration proceedings are conducted;
tion of the arbitration award is filed by the oth the reJec- a.
if . . er Party the RTC b. the asset to be attached or levied upon, or the act to
~a~, it considers the counter-petition to be proper b~t the ob
jections thereto may be rectified or cured remit th d · be enjoined is located;
bitral ib ' e awar to the
ar I tri unal for appropriate action and in the m ti c. any of the parties to the dispute resides or has its
suspend the recognition and enforcement proceedings and une place of business; or
als~ . on the application of the petitioner order the counter-
petitioner to provide appropriate security.221 d. in the National Capital Judicial Region at the option
of the applicant. 223
'P~aling a D~cision of the RTC Recognizing, En·
etng, Vacating, or Setting Aside an Arbitration Notice of Proceedings for Recognition and Enforcement
rd ofArbitration Awards

A decision of the RTC recognizing, enforcing, vacating or In a special proceeding for recognition and enforcement of
an arb· ·
ing aside an arbitration award may be appealed to the Court h . itration award, the court shall send notice to the parties at
ppeals in accordance with the rules of procedure to be prom- ~eir address of record in the arbitration or if any party cannot
ted by the Supreme Court. The losing party, who appeals dreserved notice at such address at such party's last known ad-
the judgment of the court recognizing and enforcing an ar-
ss. The n O ti ' c.
the d ice shall be sent at least fifteen ( 15) days before
ration award, shall be required by the Court of Appeals to post ate set for th · · · 224
e initial hearing of the application.
ounter-bond executed in favor of the prevailing party equal 10
lleQth of a p
e amount of the award in accordance with the Special ADR arty
les.
tO Where a . . t
Any stipulation by the parties that the arbitral tribunal:s at'bitrat Party dies after making a submission or a con tac
15 _ e as prescribed in these Rules the proceeding may be
ward or decision shall be final, and therefore not appealable, ~l ---- '
ll.J Art. 4.37 IR
Art. 4 38. R, J\DR Act
~. · IRR .
221 Art. 4.36, IRR, ADR Act. Art. 4.3g' • ADR Act.
' IRR, ADR Act.
286 ARBITRATION
287
PHILIPPINE ALTERN/\TIVE DISPUTE Res
OLUTION

begun or continued u . . . g authority issued a schedule of fees for ar-

executor or adrni . pon the appltcation of or not· t11e aP p o1nttn hi h it d ..
ti1 onal cases w re 1 a m misters, the arbitral
h· n1strator O t ' ice t h' fI
is/her estate In , r o temporary ad .. o, IS/he iJl ·1.0_terna . fees shall tak e th at sc hedu I e of fees into ac-
extending the .time~rt;i~ch ==
th~ court may i::istrator o; ·t1a1or 5
bl al iJl fii,<1J1g 1 ts .d · .
t that it const ers appropnate in the circum-
or vacate an award must bwh1ch notice of a motion toe an order (fibtJJlt to the e,ctene If not issued, any party may, at any ti.me
where a party has died . e s~rved. Upon recognizin recogoiie un
co ces o
f u,e cas . . fu . h
ointing authonty to rms a _statement setting
must enter judgment in \~ce it was filed or delivere~ ~~ award, stafl est the a_PP, establishing fees customarily followed in in-
proceedings thereupon are ~ name of the original par;, e court re(Jtl basis .or th . .
forth thC al cases in which the au onty ~pdpomts arbitrators. If
verdict.225 e same as where a party ct-' a.nct the rnation. . uthority consents to provt e such a statement,
res after a re nu.ng a h . ' . .
,he 8ppo1 ib nal shall take sue intormation mto account to
Fees and Costs wear b'tral
lJ'
1 thtn t u·t considers appropnate . . th .
in e circumstances of
we ei<tent a l
The arbitral tribunal shall fix the costs . . we case. . .
award. The term "costs" include only: of arbitration in its arty requests and the appointing authority con-
a P the function,
Whenrform . th e ar biitr al triibunal shall fix its
i. Fees of the arbitral tribunal to be stated
to each arbitrator and to be fixed by the t~:e::~lyas
t;
sents p~er consultation with the appointing authority which
fees onaky e any comment it deems appropriate to the arbitral tri-
may m
u. Travel and other expenses incurred by th b. junal concerning the fees.
tors· e ar 1tra-
' For costs of arbitration, generally, the unsuccessful party
iii. Co~ts of expert advice and of other assistance as r . bears them. However, costs may be apportioned between the par-
quired; ' e ties when reasonable, taking into account the circumstances of
iv. the case. The costs shall be fixed when the arbitral tribunal is-
Approved travel and other expenses of witnesses·
' sues an order for the termination of the arbitral proceedings or
v. Reasonable costs for legal representation and assis- makes an award on agreed terms.
tance of the successful party if such costs were
claimed during the arbitral proceedings; As for costs of legal representation and assistance, the ar-
bitral tribunal, shall be free to determine which party shall bear
vi. Any fees and expenses of the appointing authority. such costs or may apportion such costs between the parties if it
determines that appointment is reasonable.
The following circumstances are considered in determining
Upon the establishment of the arbitral tribunal, it may re-
quest
the each party to deposit. an equal amount as an advance for
1. Reasonableness of the amount
ingscotshts. Th~reafter, during the course of the arbitral proceed-
ii. Amount in dispute from, th e arb1tral
. t rtibunal may request supplementary deposits·
iii. Complexity of the subject matter e parties.
iv. The time spent by the arbitrators; and If an ap · · h
Parties and pointmg authority has been agreed upon by t e
v. Any other relevant circumstances of the case. ity consent wten a party so requests and the appointing author-
ftx the am s O perform the function the arbitral tribunal shall
0unts of ' · on ly
22s Arts. 4.43 and 5.43, IRR, ADR Act.
any deposits or supplementary deposits
286 PHILIPPINE ;\L l FRN,\ TIVE DISPUTE RESOLUTION ARBITRATION

287

begun or continued upon the application of, or nouc ointing authority issued a schedule oft
executor or administrator, or to temporary adrn~ ~o, hist If the ~PP rnational cases which it administers theesfo~ ar-
his/he: estate. _In any s_uch c_ase, th~ court may iss 11istratorhei ·o inte h 11 tak h , e arbitral
. ntors 1 . g its fees s a e t at schedule of fee .
btlf" · fiJCIJ1 . id . s into ac-
extending the time within which notice of a moti Ue an 0,dOf 'b\JnaJ in tent that it consi ers appropnate in th. .
or vacate an award must be served. Upon recogruz·
on to "er
tecogn· tfl the eJC f t · d e c1rcum-
1Jflt to h case. I no issue ' any party may at an .
where a parry has died since it was fileci or delive in~ an awar~ co of t e . h ity t fu . h ' Y Lime
staJ'lces e appointing a':1t ?n o mis a statement settin
must enter judgment in the name of the original pa ' ~e co111\ \Jest th . for estabhshmg fees customarily followed . . g
proceedings thereupon arc the same as where a Party
verdict.22s
and th,
ies aflera
87, req the basis . h h .
forth . oal cases in which t e aut onty appoints arbitrators. If
rerriauo . . g authority consents to provide such a statem t
. m in-

0mttn ak h ._, . . en,

the ap P. al tribunal shall t e sue irnormation mto account tO
the a rbitr id · · h
that it cons1 ers appropnate in t e circumstances of
Fees and Costs
the extent
The arbitral tribunal shall fix the costs of arbitration .. the case.
award. The term "costs" include only: mus When a party reques_ts and the ~ppoin~ing authority con-
erform the function, the arbitral tnbunal shall fix its
I. Fees of the _arbitral tribunal to be stated separate! as sents to Pafter consultation · WI
ith th e appointing
· · aut h ority which
fees onake IY · d ·
to each arbitrator and to be fixed by the tribunal· Y any comment it eems appropnate to t h e arbitral
· tri-
' may m
ii. Travel and other expenses incurred by the arbitra. bunal concerning the fees.
tors; For costs of arbitration, generally, the unsuccessful party
Ul. Costs of expert advice and of other assistance, as rt· bears them. However, costs may be apportioned between the par-
quired; ties when reasonable, taking into account the circumstances of
the case. The costs shall be fixed when the arbitral tribunal is-
iv. Approved travel and other expenses of witnesses; sues an order for the termination of the arbitral proceedings or
v. Reasonable costs for legal representation and asss makes an award on agreed terms.
tancc of the successful party if such costs wert As for costs of legal representation and assistance, the ar-
claimed during the arbitral proceedings; bitral tribunal, shall be free to determine which party shall bear
VI. Any fees and expenses of the appointing authority. such costs or may apportion such costs between the parties if it
determines that appointment is reasonable.
The following circumstances are considered in detenniJJillg
Upon the establishment of the arbitral tribunal, it may re-
the fees:
:est each party to deposit an equal amount as an advance for
i. Reasonableness of the amount · e costs. Thereafter during the course of the arbitral procee.d-
•ngs, the bi .' t ry deposits
ii. Amount in dispute fro ar itral tnbunal may request supp 1ernen a
m the Part·res,
iii. Complexity of the subject matter
Partie~f an appointing authority has been agreed upon b{h:~
iv. The time spent by the arbitrators; and I't anct whe d th ppointing au
Y consent n a party so requests an e~ 'bunal shall
v. Any other relevant circumstances of the case. f1:< the am s to perform the function, the arbitral tn 'ts only
aunts of any deposits or supplementary deposi
22s Arts. 4.43 and 5.43, IRR, ADR Act.
288 PHILIPPINE AL TEnN/\ TIVE DISPUTE RESOLUTION

after consultation with the appointing authority which rnay

any comments to the arbitral tribunal which it deems apprlllnk.c
.
ate concerning the amount o[ sue h d eposits
. an d supplementOpri.
deposits. ary

If the required deposits are not paid in full within thi t

(30) days after receipt of the request, the ~bitraJ tribunaJ sh~fi
so inform the parties in order that the required payment may be
made. If such payment is not made, the arbitraJ tribunaJ ma
order the suspension or termination of the arbitraJ proceedings. y
After the award has been made, the arbitraJ tribunaJ shall
render an accounting to the parties of the deposits received and
return any unexpended balance to the parties.226

JUDICIALREVIEW OF ARBITRATION AWARDS

Judicial Policy on Arbitration

In our jurisdiction, the policy is to favor alternative meth-

ods of resolving disputes, particularly in civil and commercial
disputes. Arbitration along with mediation, conciliation, and ne-
gotiation, being inexpensive, speedy and less hostile methods
have long been favored by this Court. 221 In LM Power Engineeri11g
Corporation vs. Capitol Industrial Construction Groups, Jnc.22s, the
Supreme Court declared that:

Being an inexpensive, speedy and amicable

method of settling disputes, arbitration-along with
mediation, conciliation and negotiation-is encour-
aged by the Supreme Court. Aside from unclogging
judicial dockets, arbitration also hastens the resolu-
tion of disputes, especially of the commercial kind. It
is thus regarded as the "wave of the future" in inter-
national civil and commercial disputes. Brushing
aside a contractual agreement calling for urbitrntio11
between the parties would be a st p backward.

u« Art. '1.'16 und 5.'16, llm, ADH Act.

rn Korea Technologres Co., I.tel vs. l.ermu, G.R No. ljl.l58 l, 7 Jununry :?OO~·
2111G.lt
No. 1'11833, 26 Murch 200J, 399 SCl~A 562, 569-570.
 ARBITRATION

289

con S l
.stent with the abovementioned
.
pol·icy of en
ative dispute resolution methods, courts sho co~raging
aJterfl ,.,rbitration clauses. Provided such clau . uld liberally
strue c:u se 1s sus .
of~ i:
con . terpretation that covers the asserted disp t
should be granted. Any doubt shouldube, an order to
arb1tra e . ti
f arb1tra ion.
cept1ble
e resolved in
favor O

RELEVANT JURISPRUDENCE:

Luzon Iron Development Corp. vs. Bridestone M. .

- and Deve 1opment Corp., G.R. No. 220546 m~
1
07 December 2016

FACTS:

Respondents Bridestone Mining and Development

Corporation (RBMDC) and Anaconda Mining and Devel-
opment Corporation (AMDC) filed separate complaints be-
fore the RTC for rescission of contract and damages
against petitioners Luzon Iron Development Group Corpo-
ration (LIDGC) and Consolidated Iron Sands, Ltd., (CISL)
whereby both complaints sought the rescission of the
Tenement Partnership and Acquisition Agreement (TPM)
and it also sought the return of the Exploration Permits to
Bridestone and Anaconda.
RBMDC et al. filed their Special Appearance '-~th
Motion to Dismiss separately. RTC ordered the con~ohda-
tion of the two cases. LIDGC et al. filed their Special ~p-
pearance and Supplement to Motions to Dismiss . . seektnsO
the dismissal of the consolidated case, which the ~TC de-
. . · hich was
nied. LIDGC et al moved for reconsideration, w .
· · · £ r review
also denied. LIDGC et al. then filed a petition. ~ · _
with 1 · O f rehm1nary 10
. prayer for the issuance of a wnt P affi d the
Junction and/ or TRO before the CA. The latter · irme
RTc Orders. .
. ourt had no juns-
. LIDGC et al. assert that the trial c f the arbitra-
d tctio . because o eel
t' n over the consohdated cases C t al assert
ton clause set forth in the TPAA. RBMD e ·
290 PHILIPPINE ALl Ef1NI\TIVE DISPUTE RESOLUTION

that the trial court had jurisdiction over the compJa·1Tlts

·
becaus~ the TP~ itse~f allowed a direct re~ort before the
courts 10 exceptional circumstances. They cited paragr
· exp 1ammg
14.8 thereof as basts · · th a t wh en a d irect
· and/aph
blatant violation of the TPAA had been committed, a pa~
could go directly to the courts.

ISSUE:

Whether the trial court had jurisdiction over the

complaints.

RULING:

NO. Arbitration agreements are liberally construed

in favor of arbitration.

Consistent with the state policy of favoring arbitra-

tion, the TPAA must be construed in such a manner that
would give life to the arbitration clause rather than defeat
it, if such interpretation is permissible. Paragraphs 14.8
and 15.1 of the TPAA should be harmonized in such a way
that the arbitration clause is given life, especially since
such construction is possible in the case at bench. A syn-
chronized reading of the abovementioned TPM provisions
will show that a claim or action raising the sufficiency, va-
lidity, legality or constitutionality of: (a) the assignments of
the EP to Luzon Iron; (b) any other assignments contem·
plated by the TPAA; or (c) any agreement to which the EPs
may be converted, may be instituted only when there is a
direct and/ or blatant violation of the TPAA. In turn, the
said action or claim is commenced by proceeding with ar-
bitration, as espoused in the TPAA.
DOCTRINE:

Arbitration agreements are liberally construed in fa·

vor of arbitration.
 ARBITRATION

291

Wahl, et. al. vs. Donaldson, Sims & Co

G.R. No. 1085, 16 May 1903 .!.t

r~cTS:
Wahl and Donaldson entered into a cont
. h. I . ract for the
rpose of leasing a s ip. t was stipulated in said
phu t conflicts borne out of the parties shall be cbon~ract
t a . . su m1tted
for arbitration in Hong Kong. A complaint for sum of
money was filed before the Court of First Instance (CFI)
CFI first decided in. favor of Wahl. However, upon appeai
by Donaldso.n, the Judgm:nt by default was set aside. The
CFI in granting such m~ho~ to set aside judgment, upheld
the validity of the arbitration clause. However, the Su-
preme Court reversed the decision of the CFI and declared
the clause contrary to public policy.

ISSUE:

Whether the arbitration clause is invalid for being

against public policy.

RULING:

YES. The arbitration clause is invalid for being

against public policy. A condition in a contract where dis-
putes arising out of it shall be referred to arbitration is
valid where the amount of damages sustained by a breach
of the contract is to be ascertained by specified arbitrati~n
before any right of action arises. However, such shall be il-
legal where all the matters in dispute of whatever sort may
be referred to arbitrators and to them alone.

DOCTRINE:

A cause
1 . . . th t all matters in
ct· in a contract prov1d1ng a bitr tors
ispute between the parties shall be referred to ar l a t
anct t O t h em alone is contrary to pubhc. licy and can no
po 1
oust the courts of jurisdiction.
292 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

Extent of Court Intervention

In matters governed by the rules on domestic arbit .

no court shall intervene except in accordance with the Srati?n
ADR Rules.229 Pec1a1

Notice of Proceeding to Parties

In a special proceeding for recognition and enforcement f

O
an arbitration award, the Court shall send notice to the Parti
at their address of record in the arbitration, or if any party can.
not be served notice at such address, at such party's last known
address. The notice shall be sent at least fifteen ( 15) days before
the date set for the initial hearing of the application.230

Confirmation of Award

The confirmation of a domestic arbitration award shall be

governed by Sec. 23 of R.A. 876. A domestic arbitration award,
when confirmed, shall be enforced in the same manner as that of
final and executory decisions of the RTC. The confirmation of a
domestic award shall be made by the RTC in accordance with the
Rules of Procedure to be promulgated by the Supreme Court.
However, in construction cases, the CIAC arbitration award need
not be confirmed by the RTC in order to be executory as provided
under E.O. No. 1008.
A party to a domestic arbitration may question the arbitra-
tion award with the appropriate RTC only on those grou_nds
enumerated in Sec. 25 of R.A. 876.231 Any other ground raised

22•J Art. 5.4, lRR, ADR, Act.

230 Sec. 48, ADR Act. f Jlow·
231
"Sec. 25. Grounds for modifying or correcting award.-Jn any one of the O thC
ases, the court must make an order modifying or correcting the award, upon
ication of any party lo the controversy which was arbitrated: . kc
. . id l
(a) Where there was an evident miscalculation of figures, or an evi en 011stll vurd;
in the description of any person, thing or property referred to in the fl'
or tht'ill·
(b) Where the arbitrators have awarded upon a matter not submitted 10
not affecting the merits of the decision upon the matter submit. Ie d:• or
 ARBITRATION

293

domestic arbitration award shall be d ·

~ca.~nst aTrial Court. tsregarded by the
Regional
. Aside an Arbitration Award
setttttU
For arbitration bicases. falling under ICA ' recou rse berore
c
the
rts aaainst an ar itration award may be made onl d
cou O • • Y un er the
....... no circumstances.
foll Owu~z:,
a. The party applying has proven that:
1. a party to the arbitration is incapacitated or th
agreement is invalid under the law to which it
was subjected or Philipine laws; or
11. he/ she/ it was not given proper notice of ap-
pointment of the arbitrator or the arbitration or
was not able to present his/ her/ its case; or
ill. the award resolved a dispute that does not fall
within the terms of submission or it contained
matters beyond the scope of the submission,
provided that, if the decisions on matter submit-
ted can be separated to those not submitted,
only those matters not submitted for arbitration
may be set aside; or
IV. the composition of the arbitral tribunal or 1:11e
arbitral procedure was not in accordance with
the agreement of the parties, unless the agree-
ment was in conflict with the ADR Act provi-
sions; or
b. The Court finds that:
1. under Philippine Laws, the subject-matter ~\the
1
dispute is not capable of settlement by ar ra-
tion; or
- _ ii. The award is against public policy.
(cJ-w:-ere f£
the award is imperfect in a matter O orm ,
not affectiDI tbe IDllila ol
rt the dllect COllkl
the controversy, and if it had been a commissioner 8 repo '
Th have been amended or disregarded by the court. th intent ...........
>rornot/·ird.er may modify and correct the award so as to effect e
J st1ce betw een t he parties.
. "
294 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

For arbitration proceedings falling under ICA, parties

only file an application for setting aside the arbitration awrnay
within three (3) months from the receipt of the award or frorn ~~d
time the request for correction, interpretation, or additio ~
award was disposed. Where appropriate and upon request ~
Court may suspend the setting aside proceedings temporar/ty /
give the arbitral tribunal an opportunity to resume the arbitr~
proceedings or to give the tribunal time to eliminate the ground
for setting aside the award.
A petition filed under this shall be in accordance with the
Special ADR Rules.
For Domestic Arbitration, the court, when asked to set
aside an award, may, where appropriate and so requested by a
party, suspend the setting aside proceedings for a period of time
determined by it in order to give the arbitral tribunal an oppor-
tunity to resume the arbitral proceedings or to take such other
action as in the arbitral tribunal's opinion will eliminate the
grounds for setting aside an award. 232

a.&.,..
Who may set aside an award

Any party to an international

commercial arbitration in the Not
Philippines may set aside an mentioned
tting Aside arbitration award
n Arbitra-
·on Award Timeline for filing

May only be filed within three

(3) months from the time the Not
petitioner receives a copy mentioned
thereof.

·---- -
2n Ans. 4.34 and 5.34, IRR, ADR Act.
 ARBITRATION

295

s~~ ADR Rulea

If a timely request is made
with the arbitral tribunal for
correction, interpretation or
additional award, the three (3)
month period shall be counted
from the time the petitioner
receives the resolution by the
arbitral tribunal of that re-
quest.

Appeal

A decision of
the RTC set-
ting aside,
modifying or
correcting an
arbitration
Failure to file a petition to set award may be
aside shall preclude a party appealed to
from raising grounds to resist the Court of
enforcement of the award or Appeals in
making an appeal therein. accordance
with the rules
of procedure
to be promul-
gated by the
Supreme
Court.
Groundsr. . ti
4u,Qrds JOr Modification"''Correction of Domes c

rder In an 0ne
of the following cases, the cour t must make an
0
th • Y of
"•Od1ry· 1ng or correcting the award, upon the app1.ic80·0n
~'\ny Party
to the controversy which was arbitrated:
296 PHILIPPINE AL TERN/\ TIVE DISPUTE RESOLUTION

(a) Where there was an evident miscalculation of fi

or an evident mistake in the description of a tgtire\
son, thing or property referred to in the awarct;~r Per.
(b) Where the arbitrators have awarded upon a
. · rnatte
not submitted to them, not affecting the merits O f r
decision upon the matter submitted; or the
(c) Where the award is imperfect in a matter of forrn
affecting the merits of the controversy, and if it ;0~
been a commissioner's report, the defect could ha:e
been amended or disregarded by the court.
The order may modify and correct the award so as to effect
the intent thereof and promote justice between the parties.233

Timeline for filing for correction/ modifi-

cation
Not later than thirty (30)
days from receipt of the
arbitration award, a
Not provided
party may petition the
Court to correct/ modify
that award
Venue and jurisdiction
Correction/ RTC has jurisdiction RTC where:
Modification over:
a) Arbitration
a) The place which proceedings
one of the parties are conducted;
ts doing busi-
ness; b) The asset to be
attached or
b) Where any of the or
levied upo O'
parties reside; or the act to be
.15 10-
enjoined
c) Where arbitra- cated;

211 Sec. 25, Ruic l l, R.A. 876.

 ARBITRJ\ TION

297

Special ADR RiilN

tion proceedings
were conducted. c) In the Na-
tional Capi-
tal Judicial
Region, at
the option of
the appli-
cant.

,rounds to Vacate an Arbitration Award

a. The arbitration award may be questioned, vacated or

set aside by the appropriate court in accordance with
the Special ADR Rules only on the following grounds:
1. The arbitration award was procured by corrup-
tion, fraud or other undue means;
11. There was evident partiality or corruption in the
arbitral tribunal or any of its members;
m. The arbitral tribunal was guilty of misconduct or
any form of mis behavior that has materially
prejudiced the rights of any party such as refus-
ing to postpone the hearing upon sufficient
cause shown or to hear evidence pertinent and
material to the controversy;
iv. One or more of the arbitrators was disqualified
to act as such under this Chapter and willfully
refrained from disclosing such disqualification;
or
v, The arbitral tribunal exceeded its powers, or so
. h ch that a com-
1mperfectly executed t em, su h bject
plete, final and definite award upon t e su
matter submitted to it was not made.
stion vacate or
~ny other grou~d raised to que be disregarded
set aside the arbitration award shall
by the court.
~~~----------------------~-·~~-
298 Pl 111 IPPINI: AL 11;nNA IWI; D1sru·, L Rrsou, rlON

b. Where a petition to vacate or set aside an O

. l Wurc1 .
filed, the petitioner may simu taneously, or th ,,
positor may in the alternative, petition the c e op
remit the case to the same arbitral tribunal ~llrt lo
. . d fi Or th
purpose of making a new or revise inal and dcfin· e
award or to direct a new hearing before the snm 1tc
new arbitral tribunal, the members of which sh lei or
. . 11
chosen in the manner origina Y provided in the
. cl be
.
. . arb1•
b 1
tration agreement or su rmssion. n the latter c
any provision limiting the time in which the arb~tsc,
. .
tribunal may make a d ecision s h a 11 b e deemed apt ral1.
cable to the new ar biitra 1 tnibuna 1 and to commen p I·
from the date of the court's order. cc
c. Where a party files a petition with the court to vacate
or set aside an award by reason of omission/s that do
not affect the merits of the case and may be cured or
remedied, the adverse party may oppose that petition
and instead request the court to suspend the vaca-
tion or setting aside the proceedings for a period of
time to give the arbitral tribunal an opportunity to
cure or remedy the award or resume the arbitration
proceedings or take such other action as will elimi-
nate the grounds for vacation or setting asi<le.2J11

RELEVANTJURISPRUDENCE

Chung Fu Industries (Philippines) Inc., et al. vs. Court

of Appeals, G.R. No. 96283, 25 February 1992

FACTS:

Petitioner Chung Fu Industries (Philippines) and pri·

vate respondent Roblecor Philippines, Inc. entered int~ n
contract where respondent committed to construct oncl tin·
ish petitioner corporation's industrial/ factory complex.
. . frolll
T h ey also agreed that in the event of disputes ans1ng
the performance of subject contract the dispute shull be
. . ' . I o~cn
submitted for resolution before a single arbitrator c 1 •
2:14 Art. 5.35, IRR, ADR Act.
 ARBITRATION

299

both parties. Private respondent filed ..

by pulsory Arbitration with prayer for Ta petition for
co~ning Order before the RTC to claim the empo~ary Re-
straJ . . . unsatisfied
nt and unpaid progress billings. Chung F ac-
cou . . d fu h u moved to
di miss the petition an rt er prayed for the hi
is . . d S b quas mg of
the restrruning or er. u sequent negotiations between
the parties eventually led to the formulation of an bi
tion agreement w re proviides:
hi h ar itra-

"The parties mutually agree that the de-

cision of the arbitrator shall be final and unap-
pealable. Therefore, there shall be no further
judicial recourse if either party disagrees with
the whole or any part of the arbitrator's award."

RTC approved the arbitration agreement and Engr.

Willardo Asuncion was appointed as the sole arbitrator.
Arbitrator Asuncion ordered petitioner to immediately pay
respondent contractor and further declared the award as
final and unappealable. Roblecor then moved for the con-
firmation of said award which was accordingly confirmed
and a writ of execution granted to it. Meanwhile, Chung Fu
moved to remand the case for further hearing and asked
for a reconsideration of the judgment award claiming that
Arbitrator Asuncion committed twelve (12) instances of
grave error by disregarding the provisions of the parties'
contract. Chung Fu moved for a reconsideration, which
was denied by the RTC. Thereafter, Chung Fu elevated the
case to the Court of Appeals. The Court of Appeals con-
curred with the findings and conclusions of the RTC. A
motion for reconsideration of said resolution was filed by
petitioner, but was similarly denied.
ISSUE:

th
w d f
. hether petitioners are estoppe rom . lations
questioning
. e arbitration award allegedly in view of the stipu
in the part·res ' ar b'itration
. agreemen t ·
300 PHILIPPINE AL lEHNI\ TIVE DISPUTE RESOlVTION

RULING:

NO. Petitioners are not estopped from que .

the arbitration award allegedly in view of the stip~;10~ng
in the parties' arbitration agreement. Under Art. atio~
2
the Civil Code, the finality of the arbitrators' award~ cf
absolute and without exceptions. Where the conditio 13 nrit
scribed in Articles 2038, 2039 and 2040 applicable t~
de.
0th
compromises and arbitrations, the arbitrators' awar~
be annulled or rescinded. Furthermore, Sections 24 ma~
25 of the Arbitration Law provides that there are gro an_d
for vacating, modifying or rescu:idmg an arbitrator's a~~:
Ther~for_e, when the factual _circumstru:i~es allow for th~
application of the aforementioned provisions, judicial re.
view of the award is properly warranted.

DOCTRINE:

Where the voluntary arbitrator failed to apply the

terms and provisions of the Construction Agreement which
forms part of the law applicable as between the parties, the
arbitrator commits a grave abuse of discretion. As such, he
acted or exceeded beyond his authority, a valid ground for
vacating the award under Section 24 (d) of the Arbitration
Law.

Equitable vs. RCBC, G.R. No. 182248,

18 December2008

FACTS:

Equitable PCT Bank (EPClB) and the individual

shareholders of Bankard, Inc. and Rizal Commercial Bank·
ing Corporation (RCBC) executed a Share Purchase
Agreement (SPA) for the purchase of Equitable's share in
Bankard. RCBC deposited the downpayment amount in an
escrow account after which it was given full management
and operational control of Bankard. RCBC then paid the
balance of the purchase price. RCBC had the bank ac-
counts of Bankard audited. RCBC then concluded that the
 ARBITRATION

301

anty provided for in Section 5(h) of th S ~

warr ct RCBC paid the balance of the purch e P~23;) was
corre . ase pnce.
However, RCBC claims that it had overp id
se price of the subject shares, claiming tharut ththe pur-
eh a overstatemen t o f val uatron
.
of accounts RCB
ere was
anl ·rns that EPCIB violated their warranty a~ .cd then
cal f h SPA 236 provi ed for
in Section S(g) o t e . In accordance with the SPA
RCBC then filed a Request for Arbitration with th IC '
ICA . In the request,
.
RCBC charged Bankard with d e. . C-
d ev1atmg
from, contravening, ~ not follo~ing. generally accepted
principles of accounting and practices m maintaining their

--;;;-ection s. Sellers' Representations and Warranties.

The SELLERS jointly and severally represent and warrant to the BUYER that:
xxxx
Except as disclosed in the Disclosures, and except to the extent set forth
h. reserved in the audi~ed fmanci~ statements of Bankard as of 31 Decemb~~
I 999 and its unaudited financial statements as of 31 March 2000, Bank-
ard, as of such dates and up to 31 May 2000, had and shall have no liabili-
ties, omissions or mistakes in its records which will have material adverse
effect on the net worth or financial condition of Bankard to the extent of
more than One Hundred Million Pesos (Pl00,000,000.00) in the aggregate.
In the event such material adverse effect on the net worth or financial con-
dition of Bankard exceeds One Hundred Million Pesos jPl00,000,000.00),
the Purchase Price shall be reduced in accordance with the following for-
mula:
Reduction in Purchase Price = X multiplied by 226,460,000
where
X = Amount by which negative adjustment exceeds PlOO Million (1.925)

338,000,000 ( 1.925)
n6 g. The audited financial statements of Bankard for the three 13) fiscal years
ended December 31, 1997, 1998 and 1999. and the unaudited financial statemen.ts for
the first quarter ended 31 March 2000, are fair and accurate, and complete 10 all
material respects, and have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the period indicated and:
i) the balance sheet of Bankard as of 31 December 1999, as prepared and
certified by SGV & Co. ("SGV"), and the unaudited balance sheet for tl~~
first quarter ended 31 March 2000 present a fair and accurate stateme d
•
as of those dates of Bankard 's financial . . and O f all Iit s a ssets an
condition
Liabilities, and is complete in all material respects; and
ii) th fi the fiscal years
e statements of Bankard's profit and loss accounts or ditcd profit
I 996 to 1999, as prepared and certified by SGV• and th~O~~~ir:y and ac-
and loss accounts for the first quarter ended 31 March 2 f the periods in-
curately present the results of the operations of Bankard or
~1cated, .
and are complete in all material respects.
 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION
302

books. Arbitration proceeded after the formation of th

bunal. Thereafter, the tribunal proceeded with rende~ti-
partial award. On the matter of prescription, the arb· g a '
tribunal held that RCBC's claim is not time-barred d ttrai
the claim falling under the contemplation of Sec. S(gre to
not Sec. 5(h). The tribunal also absolved the RCBc r:d
laches because according to them, the RCBC had sou ~
relief within the three-year period .prescribed in the siAt
RCBC filed with the RTC a Motion to Confirm Parti~
Award.

ISSUE:

Whether the trial court acted contrary to law in re-

fusing to vacate and in confirming the arbitration award.

RULING:

YES. The court should not have vacated the partial

award in the absence of manifest disregard of the law. To
justify the vacation of an arbitration award on account of
"manifest disregard of the law," the arbiter's findings must
clearly and unequivocally violate an established legal
precedent. Anything less would not suffice.

DOCTRINE:

A party asking for an arbitral award to be vacated

must show that any of the grounds for vacating, rescind·
ing, or modifying an award are present or that the arbitra·
tion award was made in manifest disregard of the law.

Vacating a Domestic Arbitration Award

A party to a domestic arbitration may question the arbitra·

tion award with the appropriate Regional Trial Court in accor·
dance with the rules of procedure to be promulgated by the su·f
0
preme Court only on those grounds enumerated in Sec. 25
 AABITRATION

303

AnY other ground raised against a do .

~.A· g76h.-11 be disregarded by the Regional TrialmCestic Arbitration
Award s ~ ourt.231
J{ELEVANT JURISPRUDENCE

• Broadcastin Co oration vs w Id
~ 125.caN ks · or Inter·
active Networ ystems (WINS) Japan c L
- G.R. -No. 169332 , 11 February o.,
- 2008 td~

FACTS:
Petitioner
.
ABS-CBN
.
Broadcasting
.
Corporatio n en _
tered into a licensing agreement with respondent World In-
teractive Net-work Systems (WINS) Japan Co., Ltd., wherein
petitioner gr311f <'~ respondent .the. exc.lusive license to dis-
tribute and subliccnsc the distribution of the television
service known . o.s .. Th · Filipino Channel" (TFC) in Japan.
Thereafter. peuuoncr undertook to transmit the TFC pro-
gramming signals to respondent which the latter received
through its decoders and distributed to its subscribers. A
dispute arose between the parties when petitioner accused
respondent of inserting nine episodes of WINS WEEKLY, a
weekly 35-n1inure community news program for Filipinos
in Japan, into the TFC programming. Petitioner claimed
that these were "unauthorized insertions" constituting a
material breach of their agreement. As a result, petitioner
notified respondent of its intention to terminate the agree-
ment. Thereafter, respondent filed an arbitration suit pur-
suant to the arbitration clause of its agreement with peti-
tioner. The parties appointed Professor Alfredo F. Tadiar to
act as sole arbitrator who rendered a decision in favor of
respondent. According' to Professor Tadiar. petitioner gave
its approval for the airinz of WINS WEEKLY as shown by a
series of written exchanzes between the parties and that
petitioner threatened to ~erminate the agreement because
it wants to compel respondent to re-nego 0·ate the tenns of
the contract for hizher fees. Professor Tadiar then allowed
res d t:> attorney's fees
Pon ent to recover temperate damages,
.._
and one-half of the amount it paid as arbitrato-j, fee. P .
tioner filed a petition for review with the Court of App eti-
. . . r . . eais
or, in the alternative, a pennon tor cernoran under R
65 of the same Rules. w1"th app li canon. s:LOr temporary llt1

straining order and '1..~t of ~r~liminary il:junc~ion. ~le:

while, respondent filed a pen ion for confirrnatim- of arb·-
tral award. The CA rendered the assailed decision dismis~-
ing ABS-CB 's pc i ion for lack of jurisdiction. Petitioner
rnov id for rcconsidera ion but the same was denied.

ISSUE:

Whc-t hr r ~,n :lR,f:nn rd p,1rtv in ., voluntary nrbitra-

t ion dispute nH1>· a\·!'ni of. dircr+lv ,n the CA. p ctition for
re.. vir-w uridcr Rule ,i 1 or a prt,·wn for ccrtrornri under Rule
65 of t he Rule-~ n( C oi irt . ,n.,_ · c id (')[ filmg n petition to va-
cutf' t hc .rw.u d 111 the- RTC

RULING:

YE . t he l~Tl'. which hus jurisdic ion over questions

relating to nrburuuon. such as a p -tition to vacate an arbi-
trnl award. ln ascs not falling under any of the grounds
cnumcmtcd in ec. 24 of R.A. 876 on the grounds to va-
catc an award. the Court has already made several pro·
noun crnents that a petition for review under Rule 43 or a
petiri n for certiorari under Rule 65 may be availed of in
the A. \Vhich one would depend on the grounds relied
up n by petitioner.

DOCTRINE:

It is well 'Within the power and jurisdiction of the

Court to inquire whether any instrumentality of the Gov·
ernmenr. such as a voluntarv arbitrator 1functions
has gravely
abused its discretion in the ex~rcise of its and
prerogatives, Any agreement stipulating that "the decision
of the arbitrator shall be final and unappealable" and "~at
no further judicial recourse if either party disagrees with
the whole or an} pan of the arbitrator's award may be
 ARBITRATION
305

ailed of' cannot be held to preclude in prop

av . . ial . hi . . er cases the
power of JUd1c1 review w ch is inherent in court s.
Department of Environment and Natural Resour
_a>ENR) vs. Un1•t e d Planners Consultants, Inc. (UPCI)
- ces
G.R. No. 212081, 23 February 2015 '

FACTS:

In line with its Land Resource Management Master

Plan Project (LRMMP), Petitioner Department of Environ-
ment and Natural Resources (DENR), through the Land
Management Bureau (LMB), entered into an Agreement of
Consultancy Services (Consultancy Agreement), with Re-
spondent UCPI. When Respondent completed the work re-
quired in December 1994, Petitioner was only able to pay
47°/o of the total contract price. It appears that in October
1994, the COA ruled that the contract price was excessive.
Despite this, Petitioner still acknowledged its liability and
assured UPCI it will be paid the soonest possible time. Pe-
titioner eventually failed to pay its obligations despite re-
peated demands. As a result, UPCI instituted a case
against petitioner which was subsequently referred to arbi-
tration pursuant to the arbitration clause of the Consul-
tancy Agreement. During the preliminary conference, the
parties agreed to adopt the CIAC Revised Rules Governing
Construction Arbitration (CIAC Rules) to govern the arbi-
tration proceedings. They further agreed to submit their
respective draft decisions in lieu of memoranda of argu-
ments on or before 21 April 2010, among others.

ISSUE:

Whether the merits of an arbitral award may be

questioned before the court under Philippine Laws.

RULING:
rties may seek
YES. Under the Special ADR Ru Ies pa . .ti.ally
rec art. s have 1n1
ourse to the courts provided the P ie
306 PHILIPPINE AL TERNf\TIVE DISPUTE RESOLUTION

exhausted all available remedie~ _to it. The Court of A

peals correctly dismi.ssed the ~etition because .DENR fail~-
to avail of the foregomg remedies before resorting to cerr1~-d
rari. Petitioners did not oppo_se the .RT.C's confirmation
filing a petition to vacate neither did it seek reconside ra.Y
tion of the confirmation.

DOCTRINE:

A.M. No. 07-11-08-SC was created setting forth the

Special Rules of Court on Alternative Dispute Resolution
(referred herein as Special ADR Rules) that shall govern
the procedure to be followed by the courts whenever judi-
cial intervention is sought in ADR proceedings in the spe-
cific cases where it is allowed.

Grounds for vacation of award

Rule 11. 4. Grounds. - As provided for by
(A) To vacate an arbitra- Chapter 7, Section
tion award. - The arbi- 41 of R.A. 9285, Sec.
tration award may be 25 of R.A. 876 pro-
vacated on the following vides:
grounds:
Grounds for modifiJ
a. The arbitration award ing or correcting
was procured through award. - In any one
Vacation
corruption, fraud or of the following
other undue means· , cases the court must
' .
make an order modi·
b. There was evident par- fying or correctinf
tiality or corruption m the award, upon th(
the arbitral tribunal or application of an~
any of its members· party to the contro
' versy which was ar
c. The arbitral tribunal bitrated:
was guilty of misconduct
or an form of misbehav- a Where
 ARBITRATION

307

ior . th~t has materially

prejudiced the rights of anl. evident miscalcu-
ation of figu
any party such as refus- an . res, or
ing to postpone a hearing . evident mistake
upon sufficient cause in the description of
shown or to hear evi- any person, thing or
?roperty referred to
dence pertinent and ma-
in the award; or
terial to the controversy;
(b) Where the arbi-
d. One or more of the trators have awarded
arbitrators was disquali- upon a matter not
fied to act as such under submitted to them
the law and willfully re- not affecting the'
frained from disclosing merits of the deci-
such disqualification; or sion upon the matter
submitted; or
e. The arbitral tribunal
exceeded its powers, or (c) Where the award
so imperfectly executed is imperfect in a
them, such that a com- matter of form not
plete, final and definiteaffecting the merits
award upon the subject of the controversy,
matter submitted toand if it had been a
them was not made. commissioner's re-
port, the defect could
The award may also be have been amended
vacated on any or all of or disregarded by the
the following grounds: court.

The order may mod-

a. The arbitration agree-
ify and correct the
ment did not exist, or is
award so as to effect
invalid for any ground for
the intent thereo~
the revocation of a con- romote justice
tract or is otherwise un- and P .
between the parties.
enforceable; or
308 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

SpecialADR Rules R.A. 9285

b. A party to arbitration
is a minor or a person
judicially declared to be
incom etcnt.

Recognition and Enforcement of a Foreign

Arbitration Award

The New York Convention shall govern the recognition and

enforcement of arbitration awards covered by said Convention. It
shall be filed with the RTC in accordance with the Special Rules
of Court on ADR. Said procedural rules shall provide that the
party relying on the award or applying for its enforcement shall
file with the court the original or authenticated copy of the award
and the arbitration agreement. If the award or agreement is not
made in any of the official languages, the party shall supply a
duly certified translation thereof into any of such languages.238
The recognition and enforcement of foreign arbitration
awards not covered by the New York Convention shall be done in
accordance with procedural rules to be promulgated by the Su-
preme Court. The Court may, however, on the grounds of comity
and reciprocity, recognize and enforce a non-convention award
as a convention award.
Any party to an international commercial arbitration in the
Philippines may petition the proper court to recognize and en·
force or set aside an arbitration award. The petition for enforce·
ment and recognition of an arbitration award may be filed any·
time from receipt of the award. If, however, a timely petition to
set aside an arbitration award is filed, the opposing party must
file therein and in opposition thereto the petition for recogni~on
and enforcement of the same award within the period for filing
an opposition.
A petition to recognize and enforce or set aside an arbitra·
tion award may, at the option of the petitioner, be filed with the
RTC:
1~ Sec. 42, ADR Act.

d
 ARBITRATION

309

where arbitration proceedings were c d

a) on ucted· 1

where any of the assets to be attached or .

b) is located; levted upon
where the act to be enjoined will be or i b .
c) d: s eing per-
rorrne '
d) where any of the. parties to arbitration resiides or ha
its place of business; or s

e)
in the National Capital Judicial Region.

. tt•on o'° a Foreign Arbitration Award

ReJec 'J

A party to a foreign arbitration proceeding may oppose an

plication for recognition and enforcement of the arbitration
:~ard in accordance with the procedural rules to be promul-
gated by the Supreme Court only on those grounds enumerated
under Article V of the New York Convention. Any other ground
raised shall be disregarded by the RTC.239 Sec. 45 of the ADR Act
of 2004 provides that the opposing party in an application for
recognition and enforcement of the arbitration award may raise
only those grounds that were enumerated under Article V of the
New York Convention, to wit:

1. Recognition and enforcement of the award may be re-

fused, at the request of the party against whom it is invoked,
only if that party furnishes to the competent authority where
the recognition and enforcement is sought, proof that:

Article V

(a) The parties to the agreement referred

to in article II were I under the law applicable to
them, under some incapacity, or the said agree-
ment is not valid under the law to which the par-
ties have subjected it or, failing any indication
thereon, under the law of the country where the
award was made· or
'

~
Sec. 45, ADR Act.
 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION
310

(b) The party against whom .

the award ·IS
invoked was not give_n proper notice of the ap-
pointment of the arbitrator or of the arbitration
proceedings or was otheIWise unable to present his
case; or
(c) The award deals with a difference not
contemplated by or not falling within the terms of
the submission to arbitration, or it contains deci-
sions on matters beyond the scope of the submis-
sion to arbitration, provided that, if the decisions
on matters submitted to arbitration can be sepa-
rated from those not so submitted, that part of the
award which contains decisions on matters sub-
mitted to arbitration may be recognized and en-
forced; or
(d) The composition of the arbitral au-
thority or the arbitral procedure was not in accor-
dance with the agreement of the parties, or, failing
such agreement, was not in accordance with the
law of the country where the arbitration took
place; or
(e) The award has not yet become bind-
ing on the parties, or has been set aside or sus-
pended by a competent authority of the country in
which, or under the law of which, that award was
made.

2. Recognition and enforcement of an arbitration award

may also be refused if the competent authority in the counO)'
where recognition and enforcement is sought finds that:
(a) The subject matter of the difference is not
capable of settlement by arbitration under the law of that
country; or
(b) The recognition or enforcement of the award
would be contrary to the public policy of that country.
 ARBITRATION
311

f{tLEVANT JURISPRUDENCE:

~na Processing, Inc. vs. PhilippineKingfordI

.::-:--- G.R. No. 185582, 29 February2012 ' nc:i

FACTS:
On 14 January 2003, Kanemitsu Yamaoka (Yama-
oka), co-patentee of U.S. Patent No. 5,484,619, Philippine
Letters Patent No. 31138, and Indonesian Patent No.
ID00039 l l (Yamaoka ~atent) entered into a Memorandum
of Agreement (MOA) with five (5) Philippine tuna proces-
sors namely, Angel Seafood Corporation, East Asia Fish
Co., 'inc., Mommy Gina Tuna Resources, Santa Cruz Sea-
foods, Inc., and respondent Kingford (collectively referred
to as licensees). The parties likewise executed a Supple-
mental Memorandum of Agreement dated 15 January
2003 and an Agreement to Amend Memorandum of
Agreement dated 14 July 2003.

Due to circumstances, the licensees, including re-

spondent Kingford, withdrew from petitioner TPI and cor-
respondingly reneged on their obligations. Petitioner then
submitted the dispute for arbitration before the Interna-
tional Centre for Dispute Resolution in the State of Cali-
fornia, United States and won the case against respondent.
On 10 October 2007, TPI then moved to enforce the award
by filing a Petition for Confirmation, Recognition, and En-
forcement of Foreign Arbitration award before the RTC of
Makati City. The lower court dismissed the petition on the
ground that the petitioner lacked legal capacity to sue in
the Philippines.

ISSUE:

. Whether a foreign corporation not licensed to _do

business in the Philippines, but which collects royalties
f~om entities in the Philippines, sue here to enforce a for-
eign ar bi1tration award.
 Pl IIUPPINI /\1 1 rRN/\ 1 IVF OISPU IF RESOI U r!ON

RULING:

YES. It may seek recognition and enforcement f

foreizn
5
arbitration award in accordance
.
with the provi?.s1on
the
of the ADR Act of 2004. On the issue of capacity to sue s
foreign arbitral award should be respected not becau '~
. Se It
is favored over domestic laws and procedures, but beca
. f Use
R.A. 9285 has certainly erase d any con fl ict o law questi 0~~
The exclusive grounds provided in. ~aw which could
used to justify the refusal of recognition and enforcement
of an arbitral award does not include the capacity to sue of
the seeking party.

DOCTRINE:

When a party enters into a contract containing a for-

eign arbitration clause and submits itself to arbitration, it
becomes bound by the contract, by the arbitration and by
the result of arbitration, conceding thereby the capacity of
the other party to enter into the contract, participate in the
arbitration and cause the implementation of the result.
 HEARING & WRITTEN
COMMENCEMENT
PROCEEDINGS \ tERMrnATION J \.___ i\_\V_Xt-RO---~
La14·s o f the country
where the parties
agree to subject the
arbitration ... Receipt of request to ...~ • FlNAL AWARD
ICA ~ refer dispute to OR ORDER OF
arbitration •\VITHDRAWAL ARBITRAL
-Conduct of pre-hearing OF CLAIM TRLBliNAL
conference
Procedures of the Filing of notice of
Institution •AGREEMENT maybe
ARBITRAL .. arbitration & _. -Terms of reference OF PARTIES
~ ~ subjected
submission of

...
INSTITUTION to I
Respondent's response -Procedural order •CONTINUATION
~ UNNECESSARY !CA:
•Statement of Claims & -Recegrunon and
Defense
AD HOC
Agreement of the Parties
.- Demand for .
~
•UNPAID
REQUIRED
enforcemenc
-Setung aside
arbitration • Evidentiary Hearing •Refusal to recognize
DEPOSITS
DOMESTIC:
ADR Act & its IRR
-Parties' Closing •NO FURTHER •Correction/ mo<Wication
DEFAULT All other applicable Memorials MOTION •Confumauoo
Laws Agreement of
AGREEMENT/ ..- Claimant &
.....
~
•Vacation
NO
AGREEMENT
Respondent
314 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

Venue and Jurisdiction

Proceedings for recognition and enforcement of an arbit
tion agreement or for vacation, setting asi~e, ~orre~tion or rno~~~
fication of an arbitral award, and any application with a court f
arbitration assistance and supervisi~n shall be. deemed as sp~~
cial proceedings and shall be filed with the Regional Trial Court
(i) where arbitration proceedings are conducted; (ii) where the
asset to be attached or levied upon, or the act to be enjoined is
located; (iii) where any of the parties to the dispute resides or has
his place of business; or (iv) in the National Capital Judicial Re-
gion, at the option of the applicant.>'?

Judgment
Upon the grant of an order confirming, modifying or cor-
recting an award, judgment may be entered in confonnity
therewith in the court where said application is filed. Costs of the
application and the proceedings subsequent thereto may be
awarded by the court in its discretion. If awarded, the amount
thereof must be included in the judgment. Judgment will be en-
forced like court judgments.s+'

Appeal from Court Decisions on Arbitration

Awards

A decision of the RTC confirming, vacating, setting aside,

modifying or correcting an arbitration award may be appealed to
the Court of Appeals in accordance with the rules of procedure to
be promulgated by the Supreme Court.
The losing party who appeals from the judgment of the
court confirming an arbitration award shall be required by the
appellate court to post a counterbond executed in favor of the
prevailing party equal to the amount of the award in accordance
with the rules to be promulgated by the Supreme Court.242

240 Sec. 47, ADR Act.

241 Art. 5.37, IRR, ADR, Act.
242 Sec. 46, ADR Act.
 ARBITRATION

315

Jt&LEV.ANT JURISPRUDENCE:
Fruehauf Electronics vs. TEAM
G.R. No. 204197, 23 November 201~

FACTS:
In 1978, Fruehauf Electronics Philippines Corp.
(Fruehaun ~~a~ed several p~cels ?f land in Pasig City to
Signetics Fihp~nas Corporation (S1gnetics) for a period of
25 years (until 28 May 2003). Signetics constructed a
semiconductor asse.mbl~ factory on the land on its own ac-
count. In 1983, Signetics ceased its operations and in
I 986, Team Holdings Limited (THL) bought Signetics. THL
later changed its name to Technology Electronics Assembly
and Management Pacific Corp. (TEAM) In March 1987
Fruehauf filed an unlawful detainer case against TEAM. In'
an effort to amicably settle the dispute, both parties exe-
cuted a Memorandum of Agreement (MOA) where TEAM
undertook to pay Fruehauf 14. 7 million pesos as unpaid
rent (for the period of December 1986 to June 1988). They
also entered a 15-year lease contract (expiring on 9 June
2003) that was renewable for another 25 years upon mu-
tual agreement. The contract included an arbitration
agreement: TEAM subleased the property to Capitol Pub-
lishing House (Capitol) on December 2, 1996 after notify-
ing Fruehauf. On May 2003, TEAM informed Fruehauf
that it would not be renewing the lease. On 31 May 2003,
the sublease between TEAM and Capitol expired. However,
Capitol only vacated the premises on 5 March 2005. In the
meantime, the master lease between TEAM and Fruehauf
expired on 9 June 2003. Fruehauf instituted SPProc. ~0·
l l 449 before the Regional Trial Court (RTC) for "Submis-
si on of an Existing Controversy for Arb.itra tiion. " The RTC
1
~anted the petition and directed the parties to comp Y
With the arbitration clause of the contract.
. ib al awarded
On 3 December 2008, the arbitral tn un ·
Fruehauf:
 7

PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

316

( 1) 8 . 2 million pesos as (the balance on., unpa-

rent from 9 June 2003 until 5 March 20 1d
Q5.
and I

(2) 46.8 million pesos as damages.

TEAM moved for reconsideration which the tribu

denied. Thus, TEAM petitioned the RTC to partially vac:~
or modify the arbitration award. It argued that the tribuna1
failed to properly appreciate the facts and the terms of the
lease con tract.
On 29 April 2009, the RTC found insufficient legal
grounds under Secs. 24 and 25 of the Arbitration Law to
modify or vacate the award. It denied the petition and
CONFIRMED, the arbitration award. TEAM filed a Notice of
Appeal. The CA reversed and set aside the arbitral award
and dismissed the arbitral complaint for lack of merit.

ISSUE:

Whether an arbitral award is appealable or be sub-

ject for a petition for certiorari.

RULING:

NO. The right to an appeal is neither a natural right

nor an indispensable component of due process; it is a
mere statutory privilege that cannot be invoked in the ab-
sence of an enabling statute. Neither the Arbitration Law
nor the ADR Law allows a losing party to appeal from the
arbitral award. The statutory absence of an appeal mecha-
nism reflects the State's policy of upholding the autonomy
of arbitration proceedings and their corresponding arbitral
awards.
(Rule 19. 7. No appeal or certiorari on the merits of an
arbitral award - An agreement to refer a dispute to arbitra·
tion shall mean that the arbitral award shall be final and
binding. Consequently, a party to an arbitration is precluded
from filing an appeal or a petition for certiorari questioning
the merits of an arbitral award.)
 ARBITRATION
317

a rule, the award

· d of an arbitrator
· cannot be
As
. for rnere errors o f JU gment either as to the I set
as1d\ facts. courts are without power to amend aw or as
to th erelY because of disagreement with matte ofrl over-
rule rn th bi rs o aw o
determined by e ar itrators. They will n t . r
facts d r. . o review
,..,dings of 1 awakan tact contained
the fiu• .
in an
award
,, 1•11 not undert e to substitute their J·udgm
and \v . ent rtor'
that of the arbitrators, since any other rule would make an
award the commencement, not the end, of litigat,1·0 n. E r-
rors of law and f~ct, or an erroneous decision of matters
subrnitted to the Judgment of the arbitrators, are insuffi-
cient to invalidate an award fairly and honestly made. Ju-
dicial review of an arbitration is, thus, more limited than
judicial review of a trial.
Nonetheless, an arbitral award is not absolute. Rule
19.10 of the Special ADR Rules - by referring to Sec. 24 of
the Arbitration Law and Art. 34 of the 1985 UNCITRAL
Model Law - recognizes the very limited exceptions to the
autonomy of arbitral awards.
(Rule 19.10. Rule on judicial review on arbitration in
the Philippines. - As a general rule, the court can only vacate
or set aside the decision of an arbitral tribunal upon a clear
showing' that the award suffers from any of the infirmities or
grounds for vacating an arbitral award under Section 24 of
Republic Act No. 876 or under Rule 34 of the Model Law in a
domestic arbitration, or for setting aside an award in an in·
temational arbitration under Article 34 of the Model Law, or
for such other grounds provided under these Special Rules.}
If the RTC is asked to set aside an arbitral award in
a domestic or international arbitration on any ground
other than those provided in the Special ADR Rule~d· the
court h tting asi e or
s all entertain such ground for the se
non-recognition of the arbitral award only if the sarne
amounts to a violation of public policy.
Th te the award of
th e court shall not set aside or vaca th arbitral
e arb·t al ·
trib 1 r tribunal merely on the groun d that fefact and
Una} . f Jaw or o
committed errors of fact, or O '
 P1111 ll'l'INI Al II HNI\ IIVf 01~1'11 ff Rr sru I HION

law. as the court crHu1ot s u hs l il u t c its judgment for th

the.' arbitru] tribunal. at or

DOCTRINE:

A written arbitration agreement is an indepe

ncten
and legally enforceable contract t hat must be corn . t
.
with in good faith. ·
By entenng · t o an ar bi1tration a Plied
in
ment the parties agree to su bmit· t h err· diispute to an gree ·
' . arbi-
trator of their own choosing and be bound by the latt ,
. . ers
resolution. However, t he parties cannot implead a th·
.
party in the proceedings even i. f t h e 1 atter ' s participatio lrd.
necessary to settle the dispute. The tribunal does not hna,s
. • Ve
the power to compel a person to participate in the arbitra-
tion proceedings where that person did not consent
thereto.

ARBITRATION OF CONSTRUCTION DISPUTES

Legal Basis of the Construction Industry Arbitration

Executive Order No. 1008, s. 1985 (Construction Industry

Arbitration Law) created the Construction Industry Arbitration
Commission (CIAC) to promulgate the Implementing Rules and
Regulations governing arbitration of construction disputes, and
to incorporate therein the pertinent provisions of the ADR Act, to
encourage the early and expeditious settlement of disputes in the
Philippine construction industry.

Jurisdiction of the CIAC

The Construction Arbitration law provides that the ClAC

shaJl have original and exclusive jurisdiction over disputes aris-
ing 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 g~v-
ernrnent or private contracts. For the Board to acquire jurisdic-
tion, the parties to a dispute must agree to submit the sarne to
voluntary arbitration.
 ARBITRATION
319

. isdiction of the CIAC may include but is n . .

'fhe Jllrf pecifications for materials and workrn ot ~1m1tcd
· ri o s · anshlp, ·
terJl1S of agreement; interpretation and/or • vio-
i;iion
0,;olauo
of ~~ctual time and delays; maintenance and de~!tca-
.011 of co t default of employer or contractor and h ct_s;
" a),rneJ1 , c anges tn
8fld p ct cost . '.243
rontr3Art ar itration clause in
· a construction
. .. contract or a sub-
. b
arbitration of a construction dispute shall be d
• to . . . eemed
,n1s 510 n
a~ern ent to submit
. an existing
a· or future controv ersy to
an :,. risdiction, notw1thstan mg the reference to a differe t
c!AC JU insututJOn
arbitration · . or ar bitral
I b od y in
. such contract or sub-
n
. ?-H
nuss1on. -
RELEVANT JURISPRUDENCE:

stron bold Insurance Com an Inc. vs. S ouses Rune-

and LeaStroem, G.R. No. 204869, 21 January 2015

FACTS:
Spouses Stroem entered an Owners-Contractor
Agreement with Asis-Leif & Company, Inc. (ALCI) repre-
sented by Cynthia Asis-Leif for the construction of a two-
storey house on their lot. ALCI secured a performance
bond in the amount of P4.5M from Stronghold Insurance
Company (SIC) whereby the latter and ALCI bound them-
selves solidarily to pay the Stroem spouses the agreed
amount in the event the construction is not completed.
ALCI failed to finish the project on time despite re-
peated demands and the Spouses Stroem rescinded the
agreement and hired an independent appraiser to evaluate
the pro . Th 1 rer filed a
complai gress of the construction project.
. d ey aes aaa1nst
.
AL nt for breach of contract with amag "
CI and SIC. Only SIC was served with summons.
Th Stroern and
ord e RTC ruled in favor of the Spouses
erect SIC to pay damages.
213 Se
211 Sec.c. 44, Is.o . 1008. . .
. o Arbitrauon
. ' Ruic 4 Revised Rules of Procedure Governing construcuo
320 PHILIPPINE Al. TERNATIVE DISPUTE RESOLUTION

SIC argued that the RTC should have disrni

case in view of the arbitration clause in the agreer:sect the
that the stipulations in the Owners-Contractor Agrent and
are part and parcel of the conditions in the bond 1·8 eernent
sued b
it. On the other hand, Spouses Stroem argued th Y
Owners-Contractor Agreement is separate and d:/he
from the Bond. The parties to the Agreement are ALcr/~ct
Asis-Leif and Spouses Stroem, while the parties to ts.
Bond are Spouses Stroem and Stronghold. The consid he
tions for the two contracts are likewise distinct. Thus e~-
arbitration clause in the Agreement is binding only 0~ the
parties thereto, specifically ALCI/Ms. Asis-Leif and Spouse:
Stroem.
ISSUE:

Whether SIC as surety can invoke that the CIAC has

jurisdiction over the case based on the principal contract.
RULING:

NO. SIC cannot invoke the stipulation in the princi-

pal contract providing for arbitration because it did not
consent to arbitration. Only Spouses Stroem and Asis-Leif
may invoke the arbitration clause in the contract. The
Owners-Contractor Agreement between ALCI and Spouses
Stroem merely stated that a performance bond shall be is-
sued in favor of the latter. The performance bond merely
referenced (not incorporated) the contract entered into by
Spouses Stroem and ALCI, which pertained to ALCl's duty
to construct a two-storey residence building. It is in the
Owners-Contractor Agreement that the arbitration clause
is found.
The construction agreement was signed only b~
Spouses Stroem and the contractor, ALCI, as represente
by Ms. Ma. Cynthia Asis-Leif. It is basic that "contract~
take effect only between the parties, their assigns ant
heirs". Not being a party to the construction agreern~:~
SIC cannot invoke the arbitration clause and cannot t
invoke the jurisdiction of the CIAC.
 ARBITRATION

321

rJUHE:
oOC
arties to the contract can in k
O n ly P vo e the · ·
f the CJAC. JUlisdic-
tioJ1 °
oUat satellite Networks, Ltd. vs. United C
~ters Bank, General Insurance Co 1°c0nl!!
---- 9.R. No. 189563, 7 April 20l4·, nc.!.1

rtcrs:
On 15 September 1999,
c.
One .
Virtual placed WIith GI-
LAT a purchase o~d er ror vanou~ telecommunications
uipment, accessones, spares, services and softwar t
eq · f Tw Mill. e, a a
total purchase pnce o o . ton One Hundred Twenty-
Eight Thousand Two f:undred Fifty Dollars
(US$2,128,250.00). Of ~e said purchase price for the
goods delivered, One Virtual promised to pay a portion
thereof totaling One Million Two Hundred Thousand Dol-
lars (US$1.2 Million) in accordance with the payment
schedule dated 22 November 1999. To ensure the prompt
payment of this amount, it obtained defendant UCPB Gen-
eral Insurance Co., Inc. 's surety bond dated 3 December
1999, in favor of GILAT. During the period between Sep-
tember 1999 and June 2000, GILAT shipped and delivered
to One Virtual the purchased products and equipment, as
evidenced by airway bills/ Bill of Lading. All of the equip-
ment, (including the software components, for which pay-
ment was secured by the surety bond, was shipped by Gl-
LAT and duly received by One Virtual.
One Virtual failed to pay GILAT the amount of
(US$400,000 00) on the due date .of 30 May 2000 in acTcotr-O
dan · . ti g GILA
. ce with the payment scheduled promp in a de-
Wnte the surety defendant UCPB on 5 June 2000, Hun-
rnand l tt id ount of Four
d e er for payment of the sat am t of the
a:d Thousand Dollars (US$400,000.00). No.::; date by
e·i:unt set forth in this demand has been paiv·rtual like-
~· er One Virtual or defendant UCPB. one t _installment
ise failed to pay on the succeeding payrnen i
 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION
322

date of 30 November 2000 prompting GILATto send

ond demand letter dated 24 January 2001, for thea sec.
ment of the full amount of One Million Two Hun~ay.
Thousand Dollars (US$ l ,200,000.00) guaranteed un~ed
the surety bond, plus interests and expenses and Whi;
letter was received by the defendant su~ety on January 25
2001. However, defendant UCPB failed to settle th;
amount of US$ l ,200,000.00 or a part thereof, hence, the
instant complaint.

ISSUE:

Whether surety has the right to invoke the arbitra-

tion clause in the Agreement between the parties to the
contract.

RULING:

NO. The existence of a suretyship agreement does

not give the surety the right to intervene in the principal
contract, nor can an arbitration clause between the buyer
and the seller be invoked by a non-party such as the
surety. Sec. 24 of R.A. 9285 is clear in stating that a refer-
ral to arbitration may only take place "if at least one party
so requests not later than the pre-trial conference, or upon
the request of both parties thereafter." UCPB (the Surety]
has not presented even an iota of evidence to show that ei-
ther GILAT or One Virtual submitted its contest claim for
arbitration.

DOCTRINE:

An arbitration agreement, being contractual in n,~-

ture, is binding only on the parties thereto, as well as cht'tr
.
assigns and heirs. Referral to arbitration can be deman d'd(
only by a party to the arbitration agreement.
 ARBITRATION
323

..frastructure and Ente

·sO! l.. ild rise z
one Autb ri
follrl Global-V Bu ers, Co., G.R. No. 2197 o
~ 3 October 2018 08~

yi\c1s:
and 2008, the Philippine Tourism A h .
n 2001 .
Ientered mto fi M ut onty
ive emoranda of Agreement MO
(~A} spondent Global-V Builders Co. (Global-V) · l 1A)
With re . f . . f m re a-
. to construction o its in rastructure projects. Lat
t1on t , bitr . er,
Global v filed a reques ,o': ar 1 ation against Tourism ln-
fr trUcture and Enterpnse Zone Authority (TIEZA) fo
ayrns ent of unpaid bills and damages before the CIACr
pa
TIEZA filed a Refus al o f Ar biitration arguing that CIAC has·
jurisdiction over the case filed by Global-V because the
00
complaint does not allege an agreement to arbitrate and
the contracts do not contain an arbitration agreement in
accordance with the rules of CIAC. Global-V countered
that R.A. No. 9184 vests on CIAC jurisdiction over disputes
involving government infrastructure projects. Further, it
contended that pertinent provisions of R.A. 9184 governing
the subject infrastructure projects are deemed part of the
contracts entered into by the parties.
CIAC constituted an Arbitral Tribunal to handle the
case. TIEZA filed its Answer Ex Abundanti Ad Cautelarn in
compliance with the directive of the Arbitral Tribunal,
which later ruled in favor of Global V. Feeling aggrieved,
TIEZA appealed the case to CA questioning the jurisdict~o~
of_CIAC and the tribunal it constituted despite the par~es
stipulation in the contract that there will be no arbitration.
CA ruled upholding the prior award of the tribunal.

ISSUE:
VJ d. tes
hether CIAC has jurisdiction over the ispu ·

auLING:
YES contract contain
an arb·t · The General Conditions of the di utes arising
1 ration clause that provides that all isP
324 PHILIPPINE /\L l 1:nNA l lVE DISPUTE RESOLUTION

from the implementation of the. co~tra~t covered b

9184 shall be submitted to arbitration in the Phili: .R.J\.
In accordance with Sec. 4.1 of. the CIAC Rules ' thePines.
e .
tence of the arbitration clause in the General Condit' '<is.
Contract that fanned part of t.h e said . ions Of
MOAs sha1J
deemed an agreement of the parties to submit exist' be
future controversies to CIAC's jurisdiction. ing 0r
Further, the five (5) MOAs expressly state that th
are covered by R.A. 9184. By virtue of R.A. 9184, Which ~Y
the law that authorized the ne~otiated procurement of t~s
construction contracts entered into by the parties, CIAc .e
vested with jurisdiction over the dispute. Applicable la~s
form part of, and are read into contracts; hence, the provi~
sion on settlement of disputes by arbitration under Sec. 5g
of R.A. 9184 formed part of the MOAs in this case.

DOCTRINE:

1. For CIAC to acquire jurisdiction over a construction

controversy, the parties to a dispute must be bound
by an arbitration agreement in their contract or sub-
sequently agree to submit the same to voluntary arbi-
tration, and that an arbitration clause in a construc-
tion contract or a submission to arbitration of a con-
struction dispute shall be deemed an agreement to
submit an existing or future controversy to CIAC's ju-
risdiction.
2. Since CIAC's jurisdiction is conferred by law, it can-
not be subjected to any condition, nor can it be
waived or diminished by the stipulation, act or omis-
sion of the parties, as long as the parties agreed to
submit their construction contract dispute to arbitra-
tion, or if there is an arbitration clause in the con-f
struction contract. Hence, the fact that the process O
arbitration was not incorporated in the contract by
the parties is of no moment.
 ARBITRATION

325

dential Guarantee Assurance Inc. PGAJ v

8•
Pt'! d Inc. ALI G.R. No. 177240 8 Se t Anscor
Lan ember2010
r~crs:
On August 2000, ALI and KROC enter d .
f e into a c
tion Contract or t h e construction of a t h on-
struc d th own ous- in
on City. Un er e contract, KROC was t b .1
Que Z . . hi o ui d and
lete the project wit m 275 continuous cal d
corn P f . f . en ar days
[rorn the date o rece1.pt o a notice to proceed (NTP) for
PlB.BM. KRDC submitted a surety bond amounting to
p4.SM to secu.re the down. payment paid by ALI in case of
failure to finish the project and a performance bond
amounting to P4. 7~ to guarantee the supply of labor, ma-
terials, tools, equipment and necessary supervision to
complete the project. The said bonds were issued in favor
of ALI. After 325 days from the receipt of NTP, ALI sent a
letter to PGAI notifying that the contract was terminated
due to very serious delays. On February 2002, ALI com-
menced the arbitration proceedings against KRDC and
PGAl in the CIAC. PGAI contended that it was not a party
to the construction contract. CIAC rendered judgment in
favorof ALI. PGAI argues that the CIAC had no jurisdiction
over the dispute as regards the claim of ALI against the
performance bond because it was not a party to the con-
struction contract.
ISSUE:

Whether the CIAC had jurisdiction over the dispute.

RULING:

YES. E.O. No. 1008 expressly vests in the ~I~C

original and exclusive jurisdiction over disputes an~ing
from or connected with construction contracts entered into
by Parties
· that have agreed to submit. t h err· d.is pute to
. vol-
Untary arbitration. It is therefore, apparent tha~ a
n:iust meet two requirements in order to fall un er
~:~r~~
risctiction of the CIAC:
 ATIVE DISPUTE RESOLUTION
PHILIPPINE ALTE RN
326

the dispute must be somehow connected to a

ll)
construction contract
th e P arties must. have agreed to submit the ct·
(2) di lS-
pute to arbitration procee mgs.

As regards the first requirement, ~he performance

bond was so connected with the co:1structlon contract that
the former was agreed by the parties to be a ~ondition for
the latter to push through an~ at ~he same time, the for-
mer is reliant on the latter for its .existence as an accessory
contract. The performance bond is deem~d as an associate
of the main construction contract that it cannot be sepa-
rated or severed from its principal. As such, there can be
no doubt it is the CIAC, under Section 4 of EO No. 1008,
which has jurisdiction over any dispute arising from or
connected with it.
On the second requirement, it is clear from Article
24 of the Construction Contract itself that the parties have
indeed agreed to submit their disputes to arbitration, to
wit: "All disputes, controversies, or differences between the
parties arising out of or in connection with this Contract,
or arising out of or in connection with the execution of the
WORK shall be settled in accordance with the procedures
laid down by the Construction Industry Arbitration Com-
mission. The cost of arbitration shall be borne jointly by
both CONTRACTOR and DEVELOPER on a fifty-fifty (50-
50) basis."

The construction contract was clear as to arbitration

in the event of disputes. Applying the said doctrine, we
rule that the silence of the accessory contract in this case
could only be construed as acquiescence to the main con-
tract. The construction contract breathes life into the per-
formance bond.
DOCTRINE:

. . The jurisdiction of the CIAC may include but is not

limited to violation of specifications for materials and
 ARBITRATION

327

t'1'lanship; violation of the terms of agr .

vor1{Jl• li . eement· int
, t non and/or app cation of contractual ti ' er-
pre a d 1me and de
. maintenance and efects; and payment d c -
Jays, t t d h . , e1ault of
ernP loyer or con rac or an c anges m contract cost.
Excluded from the coverage of this law ar di
. e 1sputes
arising from employer-employee relationships which shall
continue to be covered by the Labor Code of the Philip-
pines.

Federal Builders, Inc. vs. Power Factors, Inc.1

G.R. No. 211504, 08 March 2018

FACTS:

Federal Builders, Inc. (Federal) was the contractor of

the Bullion Mall (Mall) under a construction agreement
with Bullion Investment and Development Corporation
(BIDC). Federal engaged Power Factors, Inc. (Power) as its
subcontractor for the electric works at the Mall and the
Precinct Building (Precinct). Upon completion of the elec-
trical works, Power demanded payment for the unpaid
amount for the electrical works performed at Precinct from
Federal. Federal answered that its outstanding balance
under the original contract should be addressed directly to
BIDC. Hence, Power filed for arbitration with the Construc-
tion Industry Arbitration Commission (CIAC) in which the
CIAC rendered the Final Award ordering Federal to pay
Power the unpaid balance on the original contract plus
damages.

ISSUE:

Whether the CIAC has jurisdiction over the case.

RULING:

YES. The CIAC has jurisdiction over the case. ~oth

Fed
. er al and Power agreed to submit. to vo 1u ntarv
~J
arbitra-
All
tion, hence the CIAC had jurisdiction over the case.
328 PHILIPPINE ALTERNI\TIVE DISPUTE RESOLUTION

that is required for the CIA~ to acquire jurisdiction .

1s
the parties of any construction contract to agree t for
their dispute to arbitration. It may be reflected in ~h3llbtnit
tration clause of their contract, or by subsequenu e arbi.
ing to submit their dispute to voluntary arbitratio y agree.
n Wh'
need not be signed or be fom:1ally agreed upon in the 1th
tract, because it can also be in the form of other rn con.
. . . . C . t . Odes f
communication in wnting. onsis ent with the p li o
encouraging alternative dispute resolution metho~ icy of
doubt should be resolved in favor of the arbitrations, any
Contract of Service between Federal and Power pr. _The
. diff ov1des
that all disputes, controversies, or 1uerences, which rna
arise between. t.hem shall be s~ttle~ ~y _the CIAC Whict
shall have original and exclusive jurisdiction over th eir.
disputes.

DOCTRINE:
An agreement to submit a construction dispute to
arbitration need not be contained in a signed and finalized
construction contract. It is enough that the agreement be
in writing.

RELEVANT JURISPRUDENCE
William Golangco Construction Corporation vs. Ray
Burton Dev't Corp., G.R. No. 163582, 9 August 2010

FACTS:
On 20 July 1995, respondent Ray Burton Develop-
ment Corporation (RBDC) and petitioner William Golangco
Construction Corporation (WGCC) entered into a Contra~t
for the construction of the Elizabeth Place (Office/Resi-
dential Condominium). On March 18, 2002, WGCC filed a
complaint with a request for arbitration with the ConstrUC~
tion Industry Arbitration Commission (hereinafter referreC
to as ~IAC). In its complaint, WGCC prayed ~at C~e
render Judgment ordering respondent to pay petitioner 00
amount of P53, 66 7, 219.45 and interest charges based
 ARBITRATION

329

vailing bank rates on the foregoing

the p~e2002 and until such time as the s=o~nt from O 1
M~dcon 12 April 2002, RBDC filed a Motio s tall b~ fu_Uy
Pai aforesaid
. 1 . t th n o D1sm1s
comp run on e ground of lack of. . . s
wetioI1 ·
RBDC contends that the CIAC acquire . ~u~s~ic-
· · fr s Junsd1ction
disputes ansmg om or connected with co tru .
over h th · ns ction
con tr acts only w en e parties to
. the
. contract agree to
it the same to vo 1untary arbitration In the co tr
su brn d WGC . · n act
between RBDC an . C, ~D~ clauned that only dis-
putes by reason of differences in mterpretation of the con-
tract documents shall be deemed subject to arbitration.
WGCC filed a Com1:1ent and Opposition to the aforesaid
Motion dated 15 Apnl 2~02. WGCC averred that the claims
set forth in the complaint require contract interpretation
and are thus cognizable by the CIAC pursuant to the arbi-
tration clause in the construction contract between the
parties. Moreover, even assuming that the claims do not
involve differing contract interpretation, they are still cog-
nizable by the ClAC as the arbitration clause mandates
their direct filing therewith. On 6 May 2002, the CIAC ren-
dered an order in favor of WGCC, stating that the dispute
between RBDC and WGCC shall be subject to arbitration.
RBDC then filed a petition for Certiorari and Prohibition
with prayer for the issuance of a temporary restraining or-
der and a writ of preliminary injunction. RBDC contended
that CIAC acted without or in excess of its jurisdiction
when it issued the questioned order despite the clear
showing that there is lack of jurisdiction on the issue
submitted by private respondent for arbitration. The CA
rendered the assailed Decision granting the petition for
certiorari, ruling that the CIAC had no jurisdiction over the
subject matter of the case because the parties agreed that
only disputes regarding differences in interpretatio~ of_the
contract documents shall be submitted for arbitration,
While the allegations in the complaint make out a case ~or
collection of sum of money. Petitioner moved for reconsid-
era tion of said ruling, but the same was denie· d ·
 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION
330

ISSUE:

Whether the Court of Appeals committed gr

. . t 1 k . ave
abuse of discretion amounting O ac or e~ce~s ~f JUrisdic-
tion when it ruled that the ClAC has no JUnsd1ction OVer
the dispute between RBDC and WGCC

RULING:

YES. The Court of Appeals committed grave abuse of

discretion amounting to lack or excess of jurisdiction when
it ruled that the CIAC has no jurisdiction over the dispute
between RBDC and WGCC. As provided under Section 4 of
EO No. 1008, also known as the "Construction Industry
Arbitration Law," the CIAC has original and exclusive ju-
risdiction over disputes arising from, or connected with,
contracts entered into by parties involved in construction
in the Philippines and all that is needed for the ClAC to
acquire jurisdiction is for the parties to agree to submit the
same to voluntary arbitration. In the case at bar, respon-
dent's argument that the only disputes it agreed to submit
to voluntary arbitration are those arising from interpreta-
tion of contract documents is contrary to Section 4 of E.O.
1008. Therefore, the Court of Appeals committed grave
abuse of discretion when it ruled that the CIAC has no ju-
risdiction over the dispute between RBDC and WGCC.

DOCTRINE:

The CIAC shall have original and exclusive jurisdic-

tion over disputes arising from, or connected with, con-
tracts entered into by parties involved in construction in
the Philippines, whether the disputes 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.
 AABITRA TION

ptions from the Coverage of th

::::stry Arbitration Law e Constructiori

Excluded from the coverage of th.

1 is 1aw ar ct·
froIIl employer-emp oyee relationships Which s e isputes arisin
covered by the Labor Code of the Philippines.24~all continue to b;
eo,nposition of the Board

The Commission shall consist of a Ch .

members, all to be appointed by the CIAP
mendation by the members of the Philippine D
:::i
and two 12)
~pon recom-
tion Board (PDCB). 246 omestic Construc-

Functions of the Commission

Under E.0. 1008, the Commission shall perform am

, ong
others that may be conferred by law, the following functions:
a) To formulate and adopt an arbitration program for
the construction industry;
b) To enunciate policies and prescribe rules and proce-
dures for construction arbitration;
c) To supervise the arbitration program, and exercise
such authority related thereto as regards the ap-
pointment, replacement or challenging of arbitrators;
and
d) To direct its officers and employees to perfo~ such
functions as may be assigne. d to them from time to
time.247

Compensation of the Commission

. . h 11 receive sue h p er di-
The members of the Comm1ss1on s a ClAP from time to
e.ms and allowances as may be fixed by the
hme.248

-- 2q5
2q6
2n
sSec~ , E .o.1008.
Sec. S, E.O. 1008.
2q8 Sec. 6, E.O. 1008.
cc. 7, E.O. 1008.
332 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

Term of Office of the Commission Members

The term of of~ce of the members of the Com~ission sh

be six (6) years; provided, how~ver, that of the Commission me all
hers first appointed, the chairman shall hold office for Six~-
years· the other member for four (4) years; and the third fo ( l
' . r two
(2) years. The appointmen~ to any .vacancy in the Cornrnission
shall only be for the unexpired portion of the term of the Prede.
cessor.249

Quorum of the Board

The presence of a majority of the members of the Commis-

sion shall constitute a quorum for the transaction of business.25-0
Deliberations

The decisions of the Commission shall be arrived at by ma-

jority vote.2s1

The Secretariat

The Commission Secretariat is headed by the Executive

irector who is responsible for receiving requests for arbitration,
d other pleadings, for notifying the parties thereto; and, for
fixing and receiving filing fees, deposits, costs of arbitration, ad-
ministrative charges, and fees. It shall be the duty of the Execu-
tive Director to notify the parties of the awards made by the arbi-
trators.

The Secretariat shall have among others a Publication and

a Training Division. 2s2

Authority to Appoint

Under the Construction Arbitration Law the Commission is

authorized to appoint the Executive Director the consultants,
'
the arbitrators, as well as personnel and staff.253
:i.;9 Sec. 8, E.O. 1008 .
zso Sec. 9, E.O. 1008 .
.?51 Sec. 10, E.O. 1008 .
.?5:? Sec. 11, E.O. 1008.
J!-3 Sec. 12. E.O. 1008.
 AABITRATIOH

·k1 to collect Fees

tlt/lOfl"':, . .
ft corrurtlss1on is empowered to detennin
The tts costs of arbitration, as well as a~· and coi!er.;t
rees, depos1 es as may be necessary in the ~ Jstrative and
l' cnarg
and respons1
ibiliti Th
es.
•<>nnance
}"\..J
e CIAC is also a th .
,. .
ot ns
0wer.
ftl11ct10~5 and deposits of funds to finance its u ~ to u.se
ceipts OJ>erations ·
its re th approval of the PDCB, the provisions of an la su_rr
ject to e ·thstanding.254 y e» to the
contrafY not:Wl
Nu,nber of Arbitrators in the CIAC

A sole arbitrator or three arbitrators may settle a dispu-~

Where the parties agree that the dispute shall be setik:d °'"
a sole arbitrator, they may, ?Y
agreement, nominate him fru~
the list of arbitrators accre~1ted _by the CIAC for appoinrn:cm
and confirmation. If the parties fail to agree as to the a.rbrrramr
the CIAC, taking into consideration the complexities and inrr:ca~
cies of the dispute/ s, has the option to appoint a single arbitra-
tor or an Arbitral Tribunal.
If the CIAC decides to appoint an Arbitral Tribunal, each
party may nominate one ( 1) arbitrator from the list of arbitrators
accredited by the CIAC for appointment and for confirmation,
The third arbitrator who is acceptable to both parties conferred
in writing shall be appointed by the CIAC and shall preside over
the Tribunal. 255

Qualifications for Arbitrators in the ClAC

b . The arbitrators shall be men of distinction in whom ~~

usmess sector and the zovemment can have coniidence; Tn~--
hall not b th e CL'C
si.-,, e permanently oemployed with
.
~ · tnsreao.
-· l~t\
,.:
sLli:lll rend er services
. bi For
only when called to ar 1rrate. · each ms-
PUte the
Y settle, they shall be given fees. -1_56

---:----__
_..; Sec
~ Sec. 13. E.O. 1008.
~ Sec. 14, s.o. 1008 .
. 14, E.O. 1008.
334 PHILIPPI NE ALTE nN/\TIVE DISPUTE RESOLUTION

Appointment of Experts

The services of technical or legal experts may be UtiliZc .

the settlement of disputes if requested by any of the Parties o~ in
the Arbitral Tribunal. If the reque~t for an expert is done b by
ther or by both of the parties, it is neces~ary that the appti:;-
ment of the expert be confirmed by the Arbitrs! TnbunaI. ·

Whenever the parties request for the services of an ex

they shall equally shoulder t h e exper t' s fees. an d expenses, Pert
ha1f
of which shall be deposited with the Secretariat before the expert
renders service. When only one party makes the request, it shall
deposit the whole amount rcquired.257

Arbitration Expenses

Arbitration expenses shall include the filing fee, adminis-

trative charges, arbitrator's fees, fee and expenses of the expert,
and others which may be imposed by the CIAC.

The administrative charges and the arbitrator's fees shall

be computed on the basis of percentage of the sum in dispute to
be fixed in accordance with the Table of Administrative Charges
and Arbitrator's Fees.2Ss

Deposit to Cover Arbitration Expenses

The CIAC shall be authorized to fix the amount to be de-

posited which must be equivalent to the expected arbitration
expenses. The deposit shall be paid to the Secretariat before ar-
bitration proceedings shall commence. Payment shall either be
shared equally by the Parties or be paid by any of them. If one
party fads .to contribute his share in the deposit, the other party
mu~t pay in full. If both Parties fail to tender the required de;
posit, the case sha)J be considered dismissed but the partte
s.hallcharge.
tive still be2s9liable to pay one half (l/2) of the agreed administra·

257
--
Sec. 15, E.O. 1008.
258
Sec. 16, E.O. 1008.
259
Sec. 17. E.o. 1008.
 ARBITRATION

335

. Requirement
1'orttfl9
Jle commission shall, within three (3) month
rhe cal year, su b miit its
. annual report t ths after the
f the fis
1 · o e CIAP I
end o . ewise, submit such penodic reports as it ma · t
11ail, bk . t time.260 y be re-
s . d [rorn time o
quire
·ty of Awards
fina l'
'fhe Arbitration Award shall be binding upon the parties. It
all be final and unappealable, except on questions of law
:ich shall be appealable to the Supreme Court.261

RELEVANT JURISPRUDENCE:

Metro Rail Transit Development Corp. vs. Gammon

Philippines, Inc., G.R. No. 200401, 17 January2018

FACTS:

MRTDC was awarded a government contract by way

of a Build Lease and Tran sfer Agreement to undertake the
MRT 3 North Triangle Development Project. Among the
major components of the Project was the construction of a
four-level podium structure. MRTDC, through its Project
Manager, Parsons Inter Pro Joint Venture, gave notice to
the Gammon, of the award to it of the contract for the con-
struction of the podium superstructure. Shortly thereafter,
MRTDC sent a letter to Gammon, notifying the latter of the
suspension of all the undertakings because of the currency
crisis at that time.
According to Gammon, however, it proceeded to de-
water and clean up the Proiect site. On the other hand,
MRTDC claims that before any'J •
construction • ity
acnvi could
.
proceed, it formally served Gammon a notice confirnung
the "t . ts under the
emporary suspension of all requiremen . f
terms of the contract until such time as clarification °
~
Sec is
2()1 Sec. 'E.o. 1008 .
. 19• e.o. 1008.
336 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

scope has been received from the owner. The only

. . . excep
tion to this suspension is the re-design of the projects fl -
slabs and the site de-watering and clean up. As a resuioor
its analysis of the impact of _the currency crisis, MRrhof
decided to downsize the podium structure to two le
. 1CS
Gammon then submitted a propos al re ducmg
. the contVeract ·
price. This proposal was accepted by MRTDC. Garnrn
qualifiedly accepted the offer but manifested its willingne~n
to consider revisions to the terms and conditions of ths
NOA/NTP. MRTDC notified Gammon that it was awardin;
the contract to Filsystems since Gammon did not accept
the terms and con~itions of the NOA/N~P. Consequently,
Gammon sought reimbursement of the direct and indirect
costs it incurred in relation to the Project. MRTDCsignified
its willingness to reimburse Gammon but rejected the lat-
ter's computation and instead offered a fixed cap of five
percent of Gammon's total claims. Gammon filed its claim
with the CIAC invoking the arbitration clause of the Gen-
eral Conditions of Contract which provides that the arbi-
tration of all disputes, claims or questions under the con-
tract shall be in accordance with CIAC rules.
On 18 August 1999, the CIAC rendered its assailed
Order directing respondent to submit within an INEX-
TENDIBLEperiod of ten ( 10) days from receipt hereof, its
Answer and nominees for the Arbitral Tribunal.
MRTDCfiled a petition to the Court of Appeals ques-
tioning the jurisdiction of the CIAC. The CA ruled that the
CIAC is without jurisdiction over the case because Gaill-
mon failed to present any valid and subsisting contract
upon which the claim for arbitration may be based. MR'f
filed the instant Petition for Review to the Supreme
.
Court. Arguing that Gammon was not entitled to CIAC'S
award considering that there is no perfected contract be-
tween MRTand Gammon.
ISSUE:

Whether the decision of the CIAC over the case ca!l'

not be disturbed by the court.
 ARBITRATION

337

itVLlflG:
yES. Factual findings of constructio .
· d n arb1trat
al and conclusive an not reviewable b th ors are
fi!l eal except when (1) the award was proc~red ebCourt on
~PP fraud or other undue means· (2) the Y corrup-
uon, · f h ' re was evict
artiality or corruption o t e arbitrators or of ent
~) the arbitrators were guilty of misconduct inany~f them,
~ear evidence pertinent and material to the c~~t sing to
one or more of the arbitrators were disqualifi droversy;
(4) . . f e to act
such under Section nine o R.A. 876 and willfull
as d. 1 . h ct· . y re-
frained from isc osing sue 1squalifications or 0 f
other misbehaVIor · by w h.ic h t he nghts
· of any party hany
. ct· d ave
been materi ally preju ice ; or (5) the arbitrators exceeded
their powers, or so imperfectly executed them, that a mu-
tual, final and definite award upon the subject matter
submitted to them was not made.
Other recognized exceptions are: ( 1) when there is a
very clear showing of grave abuse of discretion resulting in
lack or loss of jurisdiction as when a party was deprived of
a fair opportunity to present its position before the Arbitral
Tribunal or when an award is obtained through fraud or
the conuption of arbitrators; (2) when the findings of the
Court of Appeals are contrary to those of the CIAC; and (3)
when a party is deprived of administrative due process.
However, MRTDC failed to prove that any of these
exceptions are present in the case at bar.

DOCTRINE:

CIAC's jurisdiction includes construction disputes

between or among parties to an arbitration agreement, or
those who are otherwise bound by the latter, directly or by
reference. Thus any project owner, contractor, subc~n-
tractor, fabncator
. ' or project manager of a constructwn
.
P roJect who is bound by an arbitration agreemen. n a con-f
· ' J t 1

struction contract is under CIAC's jurisdiction. in case o_

any ct· d elusive not re
. ispute. Its decision is final an con
v1ewab1
e by the court.
 338 Pl IILIPPINE AL TERNA flVF DISPUTE RESOLUTION

Execution and Enforcement of Awards

As soon as a decision, order to award has becorn f

executory, the Arbitral Tribunal or the single arbitrato: ~~al dr>rJ
concurrence of the CIAC shall motu propio, or on mor 11th thr
interested party, issue a writ of execution requiring an;o~ 0~ any
3
other proper officer to execute said decision, order or aw ar de~if!
.1.f,1.
rir

Rule-Making Power

The CIAC shall formulate and adopt necessary rule

procedures for construction arbitration. 263 s and

FREQUENTLY ASKED QUESTIONS IN ARBITRATION

1. What is Arbitration?

It is a process where the parties agree to submit their dis·

putes to a neutral arbitrator or tribunal. The neutral arbitraror
or tribunal shall render an award after hearing the parties. Such
is voluntary and the arbitrator or arbitrators as the case may be
are appointed according to the agreement of the parties or under
rules promulgated pursuant to R.A. 9285 and IRR, resolve a dis·
pute by rendering an award. 264

2. How does Arbitration differ from Court Litigation?

Arbitration is a private and voluntary dispute resolution

process. As compared to a court litigation, an arbitration pro-
ceeding is contractual and less formal in nature. The parties are
bound by the rules that are agreed upon between them and the
arbitral tribunal derives its authority to resolve the dispute from
he parties' consent. No one may compel another to arbicrabrc:
nless they have previously agreed to resolve their· diisp uce ·'
arbitration, and such agreement was made in writing.

262 Sec. 20, E.0. 1008.

263 Sec. 20, E.O. I 008.
264 Sec. 3(d). Rule 2, Art. 1.6, Sec A (3); IRR of ADR Act of 2004.
 ARBITRATION

339

n the O ther band, court litigation is a m uc h mo

, O wherein a Judge takes cognizance of re techni-
81 proceshs rules governing the resolution of a d~ case between
c . T e h R I ispute b t
pa.rues. . verned by t e u es of Court and Ph T . e Ween
arties is tgosubiect to stipulation between the p ·t1. ippme laws
P · no 'J h ar tes Als
Afld _is d for by Sec. 23 of t e R.A. 9285, the arbitratio~ o, as
proVl~e ding the records, evidence and the arbit ti proceed-
. a 1.J1C 1 u b . ra on award
U1z,s, fidential and must not e published as compar d ,
con 1 d e to court
ar~ . wherein the court recor s are open for public scrutiny.
litigation
.

What are some advantages of Arbitration over Court

3·
Litigation?

In arbitration, the parties may choose the arbitrators

hether local or foreign, who have the necessary skills and tech-
:cal expertise to hear and adjudicate a dispute, whereas, court
litigation provides for a judge who shall decide on the dispute of
the parties. Arbitration proceedings are private and confidential
in nature, whereas, court litigation is open to the public, except
in certain circumstances.
As compared to court litigation, arbitration is generally
faster and more cost efficient. The parties can choose the place of
arbitration and the venue of the proceedings. In international
commercial arbitration, the parties can be represented by a local
or foreign counsel. As a general rule, arbitration awards are not
appealable on the merits since the parties agreed on how they
should resolve their dispute. In court litigation, the parties may
appeal on the merits. A foreign arbitration award, which may_ be
enforced in the Philippines pursuant to the New York Con~ent~on
on the Recognition and Enforcement of Foreign Arbitration
~Wards, is generally easier to enforce compared to foreign court
Judgments.
4.
What are the qualifications of an Arbitrator?
For D 0mestic. . 10 of the Arbitra-
tion L Arbitration under Section b of legaJ
aw 26s a ' bit ator must e
age h ' person appointed as an ar 1 r d d write .
._.:_ ave full civil rights and must know how to rea an
2-----
65R.A. 876.
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340 PHILIPPINE ALTERNI\TIVE DISPUTE RESOLUTION

Furthermore, the person appointed as an arbitrator must

be related by blood or marriage up to the sixth degree t no~: (11
party to the arbitration agreement; (2) have or have hado either
nancial, fiduciary or oth~r inten~st .in the ~ispute; and (3~ny fi.
any personal bias that might prejudice the nght of any Party have
fair and impartial award. Also, as provided for by Article l l( to a
1
the 1985 UNCITRAL Model Law and Section 19 of the Ar bit ~ of
.
La w, a person of different . ality is
nation . all owed to arbitrateration
b
ween parties of the same nationality so long as the Parties t eht-
.
ar b itration . 1 ates.
agreement so stipu ot e

For International Arbitration, any person who is impartial

and independent may be appointed as an arbitrator.

5. What is the distinction between Arbitration and Me-

diation?

In Arbitration, the Arbitrator renders an award with regard

to the dispute of the parties. On the other hand, in Mediation l

the Mediator does not render an award but merely facilitates

communication between the parties and assists them in reaching
a voluntary resolution of their dispute.

6. What are some of the advantages of Institutional Ar·

bitration as compared to Ad Hoc Arbitration?

Generally, institutional arbitration is more predictable due

to the fact that the parties are briefed in advance regarding the
conduct of the proceeding, venue, and appointment of the tribu-
al.
While there are advantages to an ad hoc arbitration, e.g.,
e parties will have more control over the cost of the arbitration
they are not subject to the fee schedule of an arbitration cen-
or over the proceeding itself (as they can agree to their own
s], there are many disadvantages.
First, in an ad hoc arbitration proceeding, the parties wil~
O
ave to take time in negotiating the rules of procedure instead
having ready-made rules, which an institutional arbitration pro-
ceeding can provide.
 ARBITRATION

in an ad hoc arbitration, there .

cond , . d is no. pe rrnanent
se 'th an experience staff who can
. at wi . PfOVIde ad .
cretafl . tnnce to the parties. mmis-
se . ass is '1J •
tr
att"e . d .0 an ad hoc ar biitration,. parties do n t h
1d
fhtr ' experienced arbitrators, whereas ~ ave. access
to skilledb.tanration proceeding, there are many arbi~ant an institu-
_, ar 1 h h . ors who ar
uonc.U-ts in
. different. fields t at t e parties may cho ose fr om ine
e~e . Ing their dispute.
deterrntn
Fourth, there. may be delay and diffic~lty in the appoint-
arbitrators m case of a challenge or if the parti r.... :i
rnent o f . es iau to
oint the arbitrators.
time lya Pp
Fifth, in an ad hoc proceeding, there is lack of readil
ailable and convenient physical facilities and equipment a~
::u as support services for arbitration.
Lastly, an ad hoc arbitration may take longer than institu-
tional arbitration and, in some cases, even longer than court liti-
gation.

1. How long do Arbitration proceedings last?

Usually, an institutional arbitration lasts for six months to

one year. An ad hoc arbitration may take one to two years or
more.

8. What are the requirements for an Arbitration Agree-

ment to be valid and enforceable?
For an arbitration agreement to be valid and enforceable,
the following requisites must concur:266
(l) It must be in writing;
(2) It must be signed by the parties or their respective
agents.

~
Art. 5·6, IRR, ADR Act.
 PHILIPPINE ALTERNATIVE DISPUTE RES ARBITRATION
342 OLurioN 343

Is there a need (or ~ separate Arbitr<lti in cases where the rights and oblig t·
9. ,cceP t . ib a tons
besides the Arbitration Clause pro . Ort ~
d )1
eirs, e
con r
t act are not transrrussi le by their nat
f1 A ure,
vt.ded I'. 9f'e . ns iifl .., tJ,e by provision o aw. n exception would b if
tract? JO,. ipt e11i,.
q ·,1 sig frO"' . or . . bi . e t
to~ ·si/lg. 1.1Je.t1ot1 document contammg an ar itranon clause t0
No. As provided for by R.A. 876, othel"Wis ori 5ttP
r bY. 8 5epaf ate ty is a signatory.
Th' · · 1·
ts is m me with the 2nd
Arbitration Law, as long as the contract is in w . : known ~1cre 15 tnird ~ar 1311 of the Civil Code, which states that th
ties to it or their· agents sign
· sue h contract th rittng . anct thas t~t 1~11icll
th~ of Art!cle ust have clearly and deliberately conferre~
, ere is Cp
separate arbitration agreement. Also, the ADR A no need a1. t'a graPacting pa
rues rn d h hi d
[rd person an sue t. Ir person manifests his
vides that an arbitration agreement can be in th ct of 2oo4 fora contr upon a th rovided for by Section 7(2) of the 1985 UN-
bitration clause in a contract or in a separate ae form of <lrtPto. a favor t. Also, as P a third party can be joined to an arbitration
ever, the parties are not barred from constitutingreernent. ~ ~· consenRf.L Mo d e I LaW,arbitration awar d , 1if t he contract between the
h i gase o~. cJTbe bo1.1nd by ant tns a reference to a document containing an
bitration agreement as sue is not contrary to la Parate
bli 1· w, rnora1 ar. or ·n partie . s con aito which the t hiir d party .is a signatory
.
customs, public or d er, or pu ic po icy. Also, the S • s, &OOd
Court on Alte~na~ive Dispute R~s.olution (Special
cognize the principle of separability of the arbitrati
x;~~
Rulesor
Ules) re.
rnabiitration cJaushe s to make that arbitration clause part of the
ar
reference is
. sue a
and the

~ci~
arbitration clause must b e treate d as an agreement inde se, An contract.
h statute of Limitations apply to Arbitration
of the other terms of the contract of which it forms p Pendent 12 l)oes t e
fore, a decision that the contract is null and void will :1· There.
0
· proceedings?
·
sarily lead to t h e mva 1 i y o f th e ar biitration
lidit · clause.267 neceJ. .. · Laws does not provide for any limitation period
Phih.ppmeoceedings but since the right to arbitrate arises
10. What if there is a unilateral or optional clause in a · arbitrat10n pr
10 • ' . . .
itt contract between the parties, the statute of lirnita-
contract that provides for the right to chooseArbitra. from awn en d
. apply As such proceedings must be commence
tion? Is such clause enforceable? uons may · ' . · · bi ·
within ten years from the date the right to msti~te ar 1trati?n
arises under the written contract between the parties to the dis-
Yes. Such clause is not expressly prohibited in Philippine
ADR Laws. As such, as provided for by the principle of party pute.
autonomy under Sec. 2 of the ADR Act, an arbitration agreement 13. What are the statutes which apply to Arbitrationpro-
giving one party the right to choose arbitration is likely to be en· ceedings?
forccable.
Arbitration in the Philippines is regulated by the following
· the con· laws, namely:
11. Can a third party who is not a signato'?' in eaded in
tract with an Arbitration Agreement, be impl I. Civil Code of the Philippines;
the arbitration proceedings? 2· · Law:
R.A. No. 876 otherwise known as the Arbitratwn '
. a consensu~
No. As a rule, an arbitration agreement is . g parrie~ 3· R.A. No. 9285 otherwise known as the Alternative
contract which is bindinz only between the contractUlf the Ci1il Dispute Resolution Act of 2004; and
As provided for by the l;:
paragraph of Article 131
i:,
0
th pa.roes,
their as· ! 4. S
Upreme Court's A.M. No. 07-11-08-
SC 01 September
ative Dis-
Code. Contracts take effect only between e ~' 2009 or the Special Rules of Court on Altern
_ 5 111~- ·
. 6 aJld :,.1 •
:n, Art, 16 (I) 1985 UNCITR,\L Model Law: !RR. Arts. 4·' PUte Resolution.
,kt. Ruk 2.2. S,\DRR.
346 PHILIPPINE ALTERNATIVE DISPUTE RESOLUTION

19. What is the relevance of determining the s

eat 01
tration? l\rbt.

The Seat of Arbitration is significant in order to d

to which governing laws the ~bitr~tio~ p~oceedings wut~erllline
ject to. Notably, the seat of arbitration is different from th e sub.
cal place of the arbitration. The seat of arbitration will di e Physi.
.
rules and regulations .
to which the procedures will be an ictate th e
on. chored

20. What happens when the arbitrator appointed d'

withdraws his appointment as arbitrator Whil;s or
procee ditng ts
. ongoing.
. ',) the

A substitute arbitrator shall be appointed in accordan

. ~
with the rules that apply to th e appointment of the arbitrator
being replaced. 270

ts~ "A ll bi . .
t a events, ar ztration is more rational,
just, and humane than the resort to the sword."
. ~l
t
t - Richard Cobden

L ~

210 Art. 4.15, IRR, ADR Act.