A Dr Reviewer

ALTERNATIVE DISPUTE RESOLUTION BY: ATTY. GABRIEL ROBENIOL

CHAPTER 1: INTRODUCTION HISTORICAL NOTE

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June 19, 1953, the Philippine Legislator enacted RA 876 known as "The Arbitration Law". RA 876 did not revoke and instead supplemented the provisions of the NCC on arbitration.

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May 10, 1965, another milestone in Philippine ADR was achieved when the Philippine Senate passed Resolution No. 7 adhering the UN Convention on the Recognition and Enforcement of Foreign Arbitrak Awards of June 10, 1958. This convention gave reciprocal recognition and allowed enforcement of international arbitration agreements beteeen the parties of different nationalities.

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The Philippine was a signatory to UN Commission on International Trade Law NY convention of June 21, 1985.

JUDICIARY's ACTION

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The SC passed administrative issuances encouraging the use of ADR through thd Philippine Mediation Center or through Judicisl Dispute Resolution.

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To emphasize the judiciary’s resolve in strengthening the system of ADR, the SC, speaking through Justice Vitug said that “in an effort to declog the courts of an increasing volume of work load and most importantly in order to accord contending parties with expeditious alternative for settling disputes, the law authorizes, indeed encourages out of court settlements or adjudications. Compromises and arbitrations are widely known and used as such acceptable methods of resolving adversarial claims.” (LA NAVAL DRUG CORPORATION VS. CA 236 SCRA 78, 1994).

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ADR methods like arbitration, mediation, negotiation and conciliation, are encouraged by the SC.

THE ADR ACT OF 2004

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On February 04, 2004, the consolidation of senate bill no. 2671 and house bill no. 5564 was enacted as the first comprehensive ADR law in the Philippines – RA No. 9285.

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It was promulgated on April 2, 2004 and became effective on April 28, 2004 after its publication on April 13, 2004.

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The SC, in (Korea Technologies vs. Lerma 542 SCRA 1, 2008) enumerated and explained the salient features of RA 9285 applying and incorporating the UNCITRAL Model namely: a. The RTC must refer to arbitration in proper cases


Under sec. 24, the RTC has jurisdiction over disputes that are properly the subject of arbitration pursuant to an arbitration clause. Foreign arbitral awards must be confirmed by the RTC Foreign arbitral awards while mutually stipulated by the parties in the arbitration clause to be final and binding are not immediately enforceable. The RTC has jurisdiction to review foreign arbitral awards Sec. 42 in relation to Sec. 45 of RA9285 designated and vested the RTC with specific authority and jurisdiction to set aside, reject or vacate a foreign arbitral award on grounds provided. Grounds for judicial review different in domestic and foreign arbitral awards. For foreign and international arbitral awards, which must be confirmed by RTC, the grounds setting aside, rejecting or vacating the award by the RTC are provided under art. 34(2) of the UNCITRAL Model Law; for final domestic awards, may be assailed pursuant to sec. 23 of RA876. RTC decision of assailed foreign arbitral award appealable. Sec. 46 of RA9285 provides for an appeal before the CA as the remedy of an aggrieved party. !

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CHAPTER 2: RESOLUTION

FUNDAMENTALS

OF

ALTERNATIVE

DISPUTE

ALTERNATIVE DISPUTE RESOLUTION

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ADR, is a system, using means and methods allowed by law and approved by the parties, for the purpose of resolving or facilitating the resolution of disputes and controversies between them, in an expeditious and speedy manned, without resorting to court adjudication.

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As defined in ADR Act of 2004, any purpose or procedure used to resolve a dispute or controversy, other than adjudication of a presiding judge of a court or an officer of government agency.

PRINCIPLES OF ADR

1. Promotion of party autonomy and self-determination in the resolution disputes. disputes . a. Parties are given the freedom to chiose the form of ADR they desire to avail of. 2. Recognition of ADR as an efficient tool and an alternative procedure for the resolution of cases. cases. b. It does not altogether do away with Court trial system. It merely provides the parties with an alternative means of settlinh their disputes in a manner that is different , separate and independent from trial court system. 3. Enlisting of private sector participation. participation. c. It usually requires the participation of third parties who do not necessarily dispense public service. OBJECTIVES and BENEFITS of ADR

1. Speedy and Impartial Justice 2. Declogging of Court Dockets FEATURES of ADR 1. ADR is a means used to resolve a dispute or controversy. controversy. - The objective of ADR is to resolve or facilitate the resolution dispute or controversy in a speedy, amicable and inexpensive manner. - ADR should not be resorted to when the motive is to delay or suspend the proceedings rather than to put an end or facilitate the conclusion of the controversy. 2. ADR utilizes means and methodss allowed by law.


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ADR act did not limit the forms of ADR. Any means or methods aim at resolving disputes outside the court trial system may be recognized as an ADR form provided it is not contrary to law, morals, good customs, public order or public policy.

3. ADR is contractual in nature. - Parties to a dispute are given the freedom to agree to resolve their dispute and decide on the procedure. - Any form of ADR that satisfies the essential requisites of a contract, which is not a contrary to law, morals, good customs, public order or public policy is allowable as form of ADR. - The consent to undergo ADR may be: a. PRE-CAUSAL CONSENT as when the parties to a contract stipulate that any dispute that will arise from the contract shall be resolved by arbitration. b. PRESENT-CAUSAL CONSENT as when the parties to an existing controversy voluntarily submit themselves either to an arbitration or mediation. 4. ADR avoids court trial. - Conducted outside of the court trial system. It is in lieu of and conducted precisely to avoid trial. - JDR (Judicial Dispute Resolution) although not governed by ADR Act of 2004, requires judges to conduct mediation between the parties as part of the pre-trial and prior to start of trial stage. 5. ADR usually involves the participation of neutral third party. - Third party participant may either be the arbitrator/s, mediator, conciliator or neutral evaluator. It is imperative that the third party participant observe neutrality at all times. SOURCES OF ADR

1. Domestic laws anc rules which may either be general or special. 2. Acts of the executive branch. 3. Decisions of SC. 4. International Laws 5. General Principles of law and equity. FORMS OF ADR 1. Arbitration - Is an arrangement for taking and abiding by the judgment of selected persons in some disputed manner, instead of carrying it to established tribunals of


justice and is intended to avoid the formalities, the delay, the expense and vexation of ordinary litigation. - For purpose of ADR Act of 2004, it is a voluntary dispute resolution process in which one or more arbitrators, appointed in accordance with the agreement of the parties. 2. Mediation - A voluntary process in which a mediator, selected by the disputing parties, facilitates communication and negotiation and assists the parties in reaching a voluntary agreement regarding the dispute. - The basic distinction between arbitration and mediation is that in arbitration an arbitral tribunal or arbitrator evaluates the evidence and the merits of the case and renders an arbitral award based on his appreciation; whereas in mediation the parties to controversy are convinced by a mediator to settle their controversy through voluntary agreement of the parties themselves. 3. Conciliation - The adjustment and settlement of a dispute in a friendly, unantagonistic manner. 4. Neutral and early neutral evaluation - An ADR process wherein the parties and their lawyers are brought together to present summaries of their cases and receive a non-binding assessment by an experienced neutral person with expertise in the subject. 5. Mini-trial - Is a structured dispute resolution method in which the merits of a case are argued before a panel of composed of senior decision makers, with or without the presence of a neutral third person, after which the parties seek a negotiated settlement. 6. Any combination of the foregoing - Any combination of the foregoing ADR forms, approved by the parties, not contrary to law, good customs, morals, public order or public policy, may be implemented. 7. Any other ADR form - Any arrangement agreed upon by the parties that satisfies the requisites of ADR, complies with the essential requisites of a valid contract and is not contrary to law, morals, good customs, public order or public policy is an acceptable form of ADR. CLASSIFICATION OF FORMS OF ADR

1. As to the number of parties - May be bilateral or bi-party, or multilateral or multi-party. 2. As to the number of issues involved


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Simple when only a single issue is involved, or complex if there are two or more issues involved.

3. As to the extent of conclusion - Complete when all issues involved are resolved or partial if only one or some but not all issues are resolved. 4. As to the role of evidence in the proceedings - Evidentiary or merit-based when the resolution of the dispute involved requires the presentation of evidence and evaluation of the merits of the case; and it is non-evidentiary or non-merit based if the merits of the case is not indispensable in the resolution of the dispute as in the case of mediation. 5. As to the pendency of a court case - ADR is case-related if conducted in connection with or as a pre-requisite to trial as in the case of court annexed mediation or court-referred mediation; and it is independent if conducted irrespective of any pending court case involving the issue. 6. As to the applicable law - Domestic if the parties’ places of business, place of arbitration and place of performance of the obligation involved or subject matter of the dispute are located in the Philippines; international if the parties’ places of business are in different states or the place of arbitration is outside the Philippines. 7. As to the permanence of the ADR provider - Either ad hoc if the existence of the ADR provider is only temporary for purpose of particular dispute; institutional if the ADR provider’s existence is permanent in character and is not dependent on any dispute. COMPONENTS OF ADR

1. Contending parties who are involved in a dispute. 2. Dispute, which is susceptible of being subjected to ADR. 3. Form of ADR, which may either, be arbitration, mediation, conciliation, early neutral evaluation, mini-trial or any combination of the foregoing. 4. ADR provider is an institution of person accredited as mediator, conciliator, arbitrator, neutral party evaluator or any person exercising similar functions; or practitioner is an individual acting as mediator, conciliator, arbitrator etc. SUBJECT MATTERS OF ADR

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In line with the policy to encourage the use of ADR, in general all adversarial disputes can be subject matter of ADR, except those, which by law or reasons of public policy are declared not capable of being subjected to ADR. The following issues are not susceptible of ADR: a. Civil status of persons – matter determined by law and is not subject to the discretion of the parties.


b. Validity of Marriage or any ground for legal separation – matters over which the State has a keen interest to protect. c. Jurisdiction of the courts – jurisdiction over the subject matter of a case is determined by law and is not dependent upon the allegations of parties except in the case of jurisdiction by estoppel. d. Future legitime – future legitime is inexistent and cannot be waived. e. Criminal Liability – not susceptible of ADR. f. In general, those, which, by law, cannot be compromised – examples of law, which cannot be, compromised article 2035 of New Civil Code; it is against public policy to waive or enter into compromise regarding future support. BASIC CONCEPTS

1. Concluding Acts or Agreements - ADR is completed upon the execution of concluding act or agreement. a. Mediated Settlement agreement – a contract executed by the mediating parties with the assistance of their respective counsel, certified by the mediator, evidencing a successful mediation. b. Compromise agreement – a contract whereby the parties making reciprocal concessions, avoid litigation or put an end to one already existing. c. Arbitral award – partial or final decision by an arbitrator in resolving the issue in a controversy. d. Waiver or quitclaim – a statement renouncing any right or claim involved in a controversy by one party in favor of the other. 2. ADR Providers and Practitioners - Acts in a quasi-judicial capacity. - Decisions or awards are generally reviewable in a special civil action for certiorari under rule65 of the civil procedure. - In a domestic arbitration, if the arbitral tribunal in the exercise of its authority to resolve or defer the resolution of the preliminary issue on its jurisdiction over the arbitration agreement. - Motions for reconsideration, appeals and petitions for certiorari are not available to challenge the decision of the arbitral tribunal to defer the resolution of preliminary jurisdictional issue. - The remedy of an aggrieved party is to proceed with the arbitration and petition the court for the settling aside of the arbitral award on the ground that the arbitral tribunal exceeded its powers. 3. Preference for ADR - There is a clear preference for the use of ADR methods over court trial system even before the advent of ADR Act of 2004, article 2030 of the civil code of the Philippines already instructs the court to suspend proceedings if the possibility of settlement through the different modes of ADR


CHAPTER 3: MEDIATION UNDER THE ADR ACT OF 2004 MEDIATION IN GENERAL Court-annexed Mediation = mediation process under the supervision of the court Court-referred mediation = mediation ordered by a court to be conducted in accordance with the agreement of the parties when an action is prematurely commences in violation of such agreement

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Among the forms of ADR, mediation and arbitration are the most common and popular. - Defined as voluntary process in which a mediator, selected by the disputing parties, facilitates communication and negotiation and assists the parties in reaching a voluntary agreement regarding a dispute. - Excluded from the coverage of ADR act are the court-annexed mediation, which is a mediation process conducted under the auspices of the court, and court-referred mediation, which is a mediation ordered by a court to be conducted in accordance with the agreement of the parties. - Likewise excluded from the coverage is the conciliation conducted by Pangkat ng Tagapagkasundo and JDR. CLASSIFICATION OF MEDIATION

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Mediation is non-evidentiary or non-merit based. a. Mediation focuses on the facilitation of communication and negotiation between the parties in order to encourage them to voluntarily settle their dispute. b. A mediator must refrain from giving legal or technical advise or otherwise engaging in counselling advocacy and must abstain from expressing his personal opinion on the rights and duties of the parties and the merits of any proposal made.

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Mediation is either institution when administered by, and conducted under the rules of mediation and ad hoc if it is other than institutional.

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An agreement to submit a dispute to a mediation by an institution shall include an agreement: a. To be bound by the internal mediation and administrative policies of such institution; b. To have such rules govern the mediation of the dispute and for the mediator, the parties and their respective counsels and non-party participants to abide by such rules. PLACE OF MEDIATION -

Parties to mediation are given the freedom to agree on the place of mediation. In the absence of such agreement, place of mediation shall be any place convenient and appropriate to all parties.

STAGES IN MEDIATION

In general, the mediation process consist of the following stages: 1. Opening statement of the mediator; 2. Individual narration by the parties;


3. 4. 5. 6.

Exchange by the parties; Summary of issues; Generalization and evaluation of options; Closure

The foregoing stages are not obligatory and the parties under the principle of selfdetermination and party autonomy may choose the procedure that will govern their mediation. Mediation process shall be held in private unless the parties consent to the presence of persons other than themselves, their representatives and the mediator. Mediation shall be closed and concluded by: a. Execution of settlement agreement by the parties; or b. By the withdrawal of any party from mediation; or c. By the written declaration of the mediator that any further effort at mediation would not be helpful. ADVANTAGES OF MEDIATION

1. Confidentiality in the mediation process; 2. Prompt, economical and amicable resolution of disputes; and 3. The decision-making authority rests in the parties. CONFIDENTIAL AND COMMUNICATION

PRIVILEGED

NATURE

OF

MEDIATION

ADR act of 2004 maintains the confidentiality of the mediation process by declaring that all information obtained through mediation proceedings are privileged and confidential in nature. - One way guaranteed by ADR act of 2004 is by declaring information as confidential. - Another way of ensuring the privilege is by declaring the privileged information inadmissible in evidence. a. Confidential information includes: Communication, oral or written, made in a dispute resolution proceeding An oral or written statement made or which occurs during the mediation Pleadings, motions, manifestation, written statements, reports filed or submitted in arbitration or for expert evaluation. !

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LEGAL EFFECTS OF CONFIDENTIAL AND PRIVILEGED NATURE a. Party, mediator or non-party participant may refuse to disclose and may prevent any other person from disclosing confidential nature. b. Information shall not be subject to discovery and shall be inadmissible in any adversarial proceeding.


c. The following person involved or previously involved in mediation may not be compelled to disclose confidential information obtained: i. Parties to the dispute; ii. Mediator/s; iii. Counsel for the parties; iv. Non-party participants; v. Any person hired or engaged in connection with mediation as secretary, stenographer, clerk or assistant; and vi. Any person who obtains or possesses confidential information by reason of his profession. d. Protection under ADR act shall continue to apply even if a mediator is found to have failed to act impartially. e. Mediator may not be called to testify to provide information gathered in mediation. EXCPETIONS BASED ON AGREEMENT, NATURE OF PROCEEDINGS, CRIME OR SOCIAL JUSTICE a. Those contained in an agreement evidenced by a record authenticated by all the parties to the agreement. b. Those available to the public or made during a session of mediation, which is open, or is required by law to the public. c. A threat or statement of a plan to inflict bodily injury or commit a crime of violence. d. Communication intentionally used to plan, attempt to commit, or commit, a crime, or conceal an on-going crime or criminal activity. e. Communication sought or offered to prove or disprove abuse, neglect, abandonment or exploitation in a proceeding in which, a public agency is protecting the interest of an individual protected by law. f. Communication sought or offered to prove or disprove a claim or complaint of professional misconduct or malpractice filed against a mediator in a proceeding. g. Communication sought or offered to prove or disprove a claim or complaint of professional misconduct or malpractice filed against a party, non-party participant or representative of a party based on conduct occurring during mediation. LIMITED USE OF EVIDENCE Admission of the evidence for the limited purpose of the exception does not render the evidence admissible for any other purpose. PRIVILEGE OF THE MEDIATOR GR: A mediator may not be compelled to provide evidence of mediation communication. EXCEPT: a mediator may not make report to a court or agency that will make a ruling on dispute that is subject of mediation except with the following cases:


a. Where the mediation occurred or has terminated or where a settlement was reached; b. Permitted to be disclosed under Section 13 of the ADR Act. WAIVER OF CONFIDENTIALITY -

The protection of confidentiality is susceptible of waiver.

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Waiver can either be expressed such as when it is contained in record or implied by failing to timely object to objectionable questions or by testifying or presenting a witness to testify on confidential and privileged information.

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Waiver can also come by way of estoppel. THE MEDIATOR

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The mediation parties are given the freedom to select their mediator and they may request the Office of ADR to provide them with a list or roster of its certified mediators.

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The role of the mediator is very crucial that his presence and competence must be ensured. A mediator who refuses to act as such may withdraw or may be compelled to withdraw from mediation proceedings under any of the following circumstances: a. If any of the parties requests the mediator to withdraw. This promotes and strengthens party autonomy and selfdetermination in the selection of the mediator. b. The mediator does not have the qualifications, training and experience to enable him to meet the reasonable expectations of the parties. No special qualification by background or profession is required. However, if a mediator is selected by the parties on account of his special qualifications which turn out to be false or inaccurate, the mediation parties may ask for his withdrawal. c. The mediator’s impartiality is in question. d. The continuation of the process will violate an ethical standard. e. The safety of any one of the parties will be jeopardized. f. The mediator is unable to provide effective services. g. In case of conflict of interest. h. Other instances for under the IRR. !

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DUTIES AND FUNCTIONS OF MEDIATORS Apart from the general duty of mediators to conduct mediation, mediators are required to perform the following: 1. Prior to Mediation


a. On competence – a mediator should maintain and continually upgrade his professional competence in mediations skills. b. On impartiality – before accepting a mediation, the mediator should make an inquiry that is reasonable under the circumstances to determine whether there are known facts that a reasonable individual would consider likely to affect his impartiality. 2. During the Mediation a. Confidentiality b. On consent and self-determination – a mediator shall exert reasonable efforts to ensure that each party understands the nature and character of the mediation proceedings. c. On promotion of respect and control of abuse of process – the mediator shall encourage mutual respect between the parties. MEDIATOR’S COST AND FEES A mediator is allowed to charge costs, reasonable fees and charges against the parties but he is under obligation to fully disclose and explain the basis. In ad hoc mediation, the parties are free to make their own arrangements as to mediation costs and fees In institutional mediation, costs shall include the administrative charges of the mediation institution, fees and associated expenses. If mediator withdraws from the mediation, he shall return any unearned fee and unused deposit. MEDIATED SETTLEMENT AGREEMENTS -

The concluding argument in a successful mediation is called the mediated settlements agreement or settlement agreement.

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The following principles apply to these concluding arrangements a. Settlement agreement following a successful mediation shall be prepared by the parties with the assistance of a lawyer. b. Parties and their respective counsels, shall sign the settlement agreement and shall certify the contents. c. If the parties agree, settlement may be jointly or deposited d. When there is a need to enforce the settlement agreement e. Parties may agree In the settlement agreement that mediator shall become a sole arbitrator for the dispute and shall treat the agreement as an arbitral award which shall be subject to enforcement.

THE ROLE OF CONUNSEL IN MEDIATION A party may designate a lawyer or any other person to provided assistance in the mediation. This right may be waived but the waiver must be in writing and can be rescinded at any time.


The lawyer or counsel shall have the following roles: a. Collaborate with the other lawyer in working together towards the common goal of helping their clients resolve their indifferences to their mutual advantage. b. Encourage and assist the client to actively participate in positive discussions and cooperate in crafting an agreement to resolve their dispute. c. Assist the client to comprehend and appreciate the mediation process and its benefits. d. Confer and discuss with the client the mediation process and substance.


CHAPTER 4: ARBITRATION IN GENERAL

CONCEPT OF ARBITRATION As defined, arbitration is a voluntary dispute resolution process in which one or more arbitrators, appointed in accordance with the agreement of the parties or rules promulgated pursuant to the ADR Act, resolve a dispute by rendering an award. An arrangement for taking and abiding by the judgment of selected persons in some disputed matter, instead of carrying it to established tribunals of justice and is intended to avoid formalities, the delay, the expense and vexation of ordinary litigation (Uniwide Sales Realty vs. Titan-Ikeda Construction 511 SCRA 335, 2006) As to the role of evidence and merits of the case, arbitration is a merit evidence based form of ADR. KINDS OF ARBITRATION Generally, there are two types of arbitration namely: a. Voluntary Arbitration – involves the reference of a dispute to an impartial body, the members of which are chosen by the parties themselves, which parties freely consent in advance to abide by the arbitral award issued after the proceedings where both parties had the opportunity to be heard. b. Compulsory Arbitration – process of settlement of disputes by a government agency which has the authority to investigate and to make an award which is binding on all parties and as a mode of arbitration where the parties are compelled to accept the resolution rd of their dispute through arbitration by a 3 party. Under the classification, arbitration is either: a. Domestic – if the components of parties’ places of business. Place of arbitration, place of performance of a substantial part of the obligation and place where the subject matter of the dispute is most closely connected, are all located in the Philippines. b. International – if any of the following instances occur. i. Parties’ places of business, which at the time of the arbitration, is in different states. ii. Place of arbitration provided in the arbitration agreement and in which the parties have their places of business, is outside the Philippines. iii. Place where a substantial part of the obligation is to be performed or the place with which the subject matte of the dispute is most closely connected, and in which the parties have their places of business, is outside the Philippines


iv. The parties have expressly agree that the subject matter of the arbitration agreement relates to more than one country. Arbitration is commercial if it covers matters arising from all relationships of a commercial nature, whether contractual or not. POLICY ON ARBITRATION Being an inexpensive, speedy and amicable method of settling disputes arbitration – along with mediation, conciliation and negotiation – is encouraged by SC. Aside from unclogging judicial dockets, arbitration also hastens the resolution of disputes, especially of the commercial kind. It is thus regarded as the “wave of the future” in international civil and commercial disputes. Brushing aside a contractual agreement calling for arbitration between the parties would be a step backward. (Korea Technologies Ltd. Vs. Lerma 542 SCRA 1, 2008 ) OBJECTIVES OF ARBITRATION The basic objective of arbitration is to provide a speedy and inexpensive method of settling disputes by allowing the parties to avoid formalities, delay, expense and aggravation which commonly accompany ordinary litigation, especially litigation which goes through the hierarchy of courts. ARBITRATORS Is the person appointed to render an award, alone or with others, in a dispute that is the subject of an arbitration agreement. Voluntary arbitrators act in a quasi-judicial capacity, such that their decisions are within the scope of judicial review. ARBITRATION AGREEMENT An arbitration agreement is the agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship. By nature, an arbitration agreement is contractual. It should have the essential elements of a contract. The SC explained the contractual nature of an arbitration agreement in the case ORMOC SUGARCANE PLANTERS’ ASSOCIATION VS. CA (596 SCRA 630, 2009) an agreement to arbitrate is a contract, the relation of the parties is contractual and the rights and liabilities of the parties are controlled by the law of contracts. In an agreement to arbitrate some specific thing, and an agreement to abide by the award, either in express language or by implication. There are two modes of submitting dispute or controversy to arbitration depending on the existence or pendency of the dispute or controversy to be submitted


for resolution, namely: a. agreement to submit to arbitration and b. a submission agreement. Arbitration agreement is a formal contract; its validity is dependent on the contract being executed in a particular form. An arbitration agreement shall be in writing and subscribed by the parties charged or by his lawful agent. An arbitration agreement may be included in the container contract in which case, it is referred to as an arbitration clause or a compromissoire or may be constituted in a separate contract. DOCTRINE OF SEPARABILITY Also known as DOCTRINE OF SEVERABILITY, enunciates that an arbitration agreement is independent of the main contract even if it is contained in an arbitration clause. This is to be treated as a separate agreement such that even the validity of the main contract is challenged, the arbitration agreement or clause remains valid and enforceable. DUE PROCESS IN ARBITRAL PROCEEDINGS In line with the principle that ADR providers and practitioners, including arbitrators, act in quasi-judicial capacity and that they are quasi-judicial agencies or instrumentalities, the principles of administrative due process equally apply to arbitral proceedings. JUDICIAL REVIEW AND COURT INTERVENTION The decisions of an arbitral tribunal are subject to judicial review. The inclusion of an arbitration clause in a contract does not ipso facto divest the courts to pass upon the findings of arbitral bodies. In case of ABS-CBN BROADCASTING CORP. VS WINS JAPAN LTD (544 SCRA 308, 2009) enumerated the judicial remedies an aggrieved party to an arbitral award may take, namely: 1. A petition in the proper RTC to issue an order to vacate the award on the grounds provided in Section 24 or RA876; 2. A petition for review in the CA under Rule 43 of ROC on questions of fact, of law or mixed questions of fact and law; 3. A petition for certiorari under Rule 65 of ROC should the arbitrator have acted without or in excess of his jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction. In domestic arbitration, if the arbitral tribunal decides to defer such ruling until the rendition of the arbitral award, none of the parties can seek judicial relief from the deferment. Arbitration and court action are not incompatible. They may proceed at the same time and independently of each other. They may even complement each other.


Under the ADR Act and IRR, the court is directed to refer to arbitration those who are parties to the arbitration agreement and proceed with the court action as to those who are not bound by such arbitration agreement. The declaration under the law that a decision of the appointing authority or arbitrator or arbitral tribunal for that matter is immediately executory and not subject to appeal or motion for reconsideration does not foreclose the possibility of judicial review. The remedy of the aggrieved party under the situation is to avail of a petition for certiorari under Rule 65 of ROC. INTERIM MEASURES IN ARBITRATION Complementation between the arbitration and court action is best exemplified in the area of interim measures. Interim measures, otherwise referred to in the ADR Act as “interim measure of protection” or “provisional reliefs” are ancillary remedies intended for the protection of the subject matter of the disputes. As a rule, interim measures are applied with and secured from the arbitral tribunal. However, there are instances when the arbitral tribunal cannot grant the interim measures such as when the arbitral tribunal is not yet constituted, or when the arbitral tribunal already constituted has no power to act or is unable to act effectively. A provisional remedy under the ROC cannot exist without a principal cause of action. However, this principle is not true for interim measure under the ADR Act and IRR. A court cannot refuse to grant, implement or enforce a petition for interim measure on the sole ground that the petition is merely an ancillary relief and the principal action is pending with the arbitral tribunal.


CHAPTER 5: INTERNATIONAL COMMERCIAL ARBITRATION UNDER THE ADR ACT OF 2004 AND ITS IMPLEMENTING RULES AND REGULATION

The ADR act of 2004 adopted the UNCITRAL model law on International Commercial Arbitration and by operation of Article 19 of the ADR Act, made the Model Law the governing statute for international commercial arbitration. The ADR Act of 2004 has previous dealings with legal representation in international arbitration, confidentiality of arbitral proceedings, referral of court action to arbitration, definition and function of the appointing authority, the grant of interim measures of protection, governing law, and the place and language of arbitration. INTERNATIONAL COMMERCIAL ARBITRATION Arbitration is international if any of the following instances occur: 1. The parties’ place of business, which at the time of the conclusion of the arbitration agreement, is in different states; 2. The place of arbitration provided in the agreement and in which the parties have their places of business, is outside the Philippines; 3. The place where a substantial part of the obligation is to e performed outside the Philippines; 4. Parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country. Arbitration is commercial if it covers matters arising from all relationships of a commercial nature, whether contractual or not. An international commercial arbitration proceeding conducted in the Philippines under the auspices of ADR Act is domestic and international in character. An international arbitration conducted outside the Philippines is a foreign arbitration. COVERAGE OF IRR PROVISIONS ON ICA The provisions of the IRR on international arbitration are default rules, they are applicable only in the absence of or in default of applicable provisions contained in: 1. An agreement, in force between the Philippines and other states; and 2. An agreement between the parties on the applicable rules. RULES OF INTERPRETATION The following are the rules in the interpretation of the ADR Act of 2004, Model Law and IRR: 1. Interpretation of the ADR Act.


2. Interpretation of the Model Law – should be regard that the said law is of international origin and there is a need for uniformity in its interpretation. 3. Interpretation of the IRR RULES ON RECEIPT OF WRITTEN COMMUNICATIONS IN ICA Written communications, electronic or otherwise, therefore, play a vital role in international arbitration. The IRR devoted provisions on the delivery and reception thereof. In line with the policy of party autonomy, the GR on the receipt of communications in ICA are those provided for by the parties in their arbitration agreement. In default of such rules, communication is deemed received: 1. If it is delivered to the addressee personally or at his places of business, habitual residence or mailing address; 2. If there is none, if it is delivered by registered letter or any other means. WAIVER OF THE RIGHT TO OBJECT IN ICA The ADR act and IRR limited the application of the rules on waiver in mediation proceedings to waivers of confidentiality and privilege only. In case of ICA, the IRR expanded the application of the rules on waiver to include non-compliance with rules or requirements. Objections to non-compliance with the rules or any requirement under the arbitration agreement must be raised without undue delay or within the time prescribed failing which, the right to object is deemed waived based on the equitable doctrine of estoppel. An admission or representation cannot be denied or disproved as against the person relying on it. Estoppel in pais happens when one, by his acts, representations or admissions or by his own silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and such other person relies and acts on such belief in manner that he will be prejudiced if the former is permitted to deny the existence of such facts. **The records and evidence and award in ICA are confidential and shall not be disclosed except: 1. With the consent of the parties; 2. For the limited purpose of disclosing to the court relevant documents in cases where resort to the court is allowed. ** As an assurance of impartiality and due process in the arbitral proceedings, the IRR mandates that the parties shall be given a full opportunity to present their sides. COMMENCEMENT OF ICA PROCEEDINGS The date of commencement of ICA is to be determined by the parties. The default date of commencement of arbitration is the date on which a request for that dispute to be referred to arbitration is received by the respondent. APPLICABLE LAW IN ICA


The governing law, generally refers to substantive law – is the law or legal system applicable to the complete resolution of the dispute. Conflicts of law or private international law – that part of the municipal law of a state which, directs courts and administrative agencies, when confronted with a legal problem involving a foreign element involving a foreign element, whether or not they should apply a foreign law; is the set of domestic laws that determines which between the domestic laws of two or more states should apply to the resolution of a dispute involving foreign elements. APPOINTING AUTHORITY IN ICA The appointing authority in an ICA is the person or institution named in the arbitration agreement or regular arbitration institution under whose rules the arbitration is agreed to be conducted, authorized to make the default appointment of arbitration or sole arbitrator. In addition, the appointing authority in an ICA has the following functions: a. Take the necessary measures to appoint an arbitrator in case any party or the arbitrators already appointed or any third party fails to perform any function necessary for the appointment of the arbitrator. b. Decide on the challenge against an arbitrator if arbitral tribunal rejects the challenge. c. Consider the qualifications of an arbitrator, the necessity of ensuring impartiality and independence of the arbitrator, and the advisability of appointing an arbitrator who is of nationality different from those of the parties. In an ad hoc arbitration, unless the parties have agreed upon a different procedure, the default appointment of an arbitrator shall be made by the national president or IBP or his duly designated representative. ARBITRATORS AND ARBITRAL TRIBUNALS IN ICA In line with the principle of party autonomy and self-determination, the parties in an ICA are free to determine the number of arbitrators and procedure for appointment. The default number of arbitrators is 3 and the following is the default procedure for appointing: 1. In arbitration with 3 arbitrators each party shall appoint one arbitrator and both appointed arbitrators shall appoint the 3 rd arbitrator, failing which the appoinment shall be made by the appointing authority. 2. In arbitration with sole arbitrator, the arbitrator shall be appointed, upon request of a party, by the appointing authority. The decision of the appointing authority on this matter shall be immediately executory and shall not be subject to a motion for reconsideration or appeal. If any party is not satisfied with the appointment of any, some or all of the arbitrators, he may file a petition in court challenging the appointment of the arbitrators.


The arbitral tribunal is deemed constituted when the sole arbitrator or the 3rd member of the panel of arbitrators who has been nominated has accepted his nomination and written communication of said nomination and acceptance has been received by the party making the request. GROUNDS FOR CHALLENGE OF ARBITRATORS IN ICA An arbitrator may be challenged only if circumstances exist that give rise to a justifiable doubt as to his 1. Impartiality or independence; or 2. Possession of the qualifications agreed upon by the parties. A party who appointed an arbitrator shall not be allowed to challenge that arbitrator, grounded on the rule of estoppel. However, estoppel does not apply where the act of appointing was performed without the knowledge, actual or constructive of the actual facts and except for reasons, which the appointing party became aware of after the appointment was made. Procedure for the Challenge in ICA 1. Challenging party shall send written statement of the reasons for the challenge to arbitral tribunal within 15 days after becoming aware of the circumstance constituting the ground for challenge. 2. If the challenge before the arbitral tribunal is not successful, the challenging party may request the appointing authority within 30days from notice of the decision rejecting the challenge, to decide the challenge, which decision shall be immediately executory and not subject to a motion for reconsideration or appeal. A party may file a petition in court questioning the decision in the challenge against an arbitrator in accordance with the Special Rules of Court on ADR. After a successful challenge, a substitute arbitrator will have to be appointed. The appointment of the substitute arbitrator shall be governed by the same rules applicable to the appointment of the replaced arbitrator. PROCEDURE IN CASE THE ARBITRATOR FAILS TO ACT IN ICA If an arbitrator in ICA becomes de jure or de facto unable to perform his functions or fails to act without undue delay, his mandate terminates [i] if he withdraws or [ii] if the parties agree on the termination. The withdrawal of the arbitrator does not carry with it an implied acceptance of the existence or veracity of the ground for termination. If the controversy remains, any party may request the appointing authority to decide on the termination of the arbitrator, which decision shall be immediately executory and not subject to a motion for reconsideration of appeal. JURISDICTION OF ARBITRAL TRIBUNAL IN ICA


Jurisdiction is the right to act or the power and authority to hear and determine a cause. In the case of an arbitral tribunal, it is the authority by virtue of which it can resolve disputes in an arbitration proceeding by rendering an award thereon. Jurisdiction over the subject matter Law confers the jurisdiction of an arbitral tribunal over the subject matter of the controversy. There are two instances when the court, a quasi-judicial agency or arbitral tribunals acts without jurisdiction, namely: 1. When it has no jurisdiction in the first place, in which case there is lack of jurisdiction; or 2. When it went beyond its jurisdiction, which it had in the first place, in which case it acted in excess of jurisdiction. In the case of courts, lack or excess of jurisdiction are the proper grounds for a petition for certiorari as a SCA under Rule 65 of the 1997 Rules of Civil Procedure. Lack of Jurisdiction The jurisdiction of an arbitral tribunal includes the authority to rules on its own jurisdiction in the same way that courts have the power to rule on motions to dismiss complaints or petitions based on lack of jurisdiction. In determining the jurisdiction of an arbitral tribunal, the arbitration agreement or arbitration clause should be treated as an independent and separate agreement from the container agreement and the invalidity of the latter does not automatically result in the nullity of the former. It is only in the event that the arbitration clause or agreement is itself void, inexistent or inoperative that the arbitral tribunal’s jurisdiction may be questioned. The issue of jurisdiction may be raised at any stage of the proceedings, even on appeal and is not lost by waiver or estoppel. The rule is different in a challenge against the jurisdiction of arbitral tribunals in an ICA. The challenge should be raised not later than the submission of the statement of defense in the answer or in motion to dismiss, otherwise objections are deemed waived. Judicial review of Jurisdictional issue The decision of a court or quasi-judicial agency without jurisdiction over the subject matter is null and void ab initio. In the same manner, the award of arbitral tribunal which does not have jurisdiction is also null and void ab inition unless there is a waiver of the absence of jurisdiction. If the arbitral tribunal renders a preliminary ruling on the jurisdictional issue, an aggrieved party may elevate the ruling for review by the RTC within 30days from receipt of the ruling and the decision of the court shall be immediately executory and not subject to a motion for reconsideration or appeal.


The arbitration proceedings may proceed notwithstanding the pendency of a judicial action with the RTC unless the court issues in the meantime a TRO or writ of PI enjoining the conduct of the ICA during the pendency of the court action or petition. Jurisdiction over the Parties Jurisdiction of an arbitral tribunal over the person of the parties in arbitration is conferred by the consent of the parties to submit to arbitration. This consent may be contained in an agreement to submit to arbitration (precausal consent) consent) which is entered into at the time of the execution of an arbitration agreement or a contract which includes an arbitration clause or in a submission agreement (present causal consent) between consent) between the parties to who do not have an arbitration agreement or a contract with an arbitration clause but who nonetheless agree to submit an existing dispute or controversy to arbitration. INTERIM MEASURES IN ICA The procedures for granting interim measures in ICA are as follows: 1. After the arbitral tribunal has been constituted, any party may request for the grant of interim measure from the arbitral tribunal against the adverse party. This request shall be in writing transmitted by reasonable re asonable means to the arbitral tribunal and the adverse party, describing the precise relief in appropriate detail, the ground and the evidence supporting the request. 2. The relief may be granted in order to prevent irreparable loss; to provide for security for the performance of an obligation; to produce or preserve evidence; to compel any other appropriate acts or omissions. 3. The grant of interim measure may be conditioned upon the provision security or any act or omission specified in the order. 4. The order either granting or denying the request for interim measure shall be binding upon the parties and either party may apply with the courts for assistance in implementing or enforcing it. 5. A party who refuses to comply with the order for an interim measure shall be liable for damages resulting from non-compliance including all expenses and reasonable attorney’s fees paid in obtaining judicial enforcement. The party who refuses to comply with the court order compelling compliance with an interim measure may be cited for indirect contempt of court. 6. Before the constitution of the arbitral tribunal, or to the extent that the arbitral tribunal already constituted has no power to act effectively, the interim measure may be requested from the court in accordance with the Special Rules of Court on ADR. LEGAL REPRESENTATION REPRESENTATION IN ICA As a rule, only lawyers accredited by SC can practice law in the Philippines. In an ICA conducted in Philippines, a party may be represent by a person of his choice even if non-lawyer. However, if a non-lawyer is so appointed, he shall not be


authorized to appear as counsel in any Philippine Court or any quasi-judicial body even if such appearance is in relation to the arbitration, which he appears. RULES OF PROCEDURE PROCEDURE IN ICA The general rule is that the parties in an international commercial arbitration are free to determine the rules that will govern their arbitration proceedings. In default, the arbitral tribunal shall apply the “UNCITRAL Arbitration Rules” adopted by the UNCITRAL on 28 th of April 1976, unless the tribunal finds said rules inappropriate. The procedures in ICA in default of an agreement of the parties are as follows: 1. Statement of claims – within the period agreed upon by the parties, the claimant shall state the facts supporting his claim; the issues and relief or remedy sought and shall be submit or refer to relevant documents. 2. Statement of Defenses – respondent shall state his defenses. 3. Default of the parties – failure of the claimant or respondent to communicate their statements of claims or defenses during the period or their failure to appear at a hearing or to produce documentary evidence, results in the default of the failing party. Default of the claimant for failure to communicate his statement of claims results in termination of proceedings. Default of the respondent to communicate his statement of defenses shall not terminate the proceedings and instead shall proceed without such failure being considered as an admission of claimant’s allegation. 4. Amendment of claims or defenses – parties may amend or supplement their claims or defenses as the case may be unless the tribunal considers amendment inappropriate. 5. Hearings – the tribunal shall determine whether to hold oral hearings only, oral arguments only or just require the submission of documents during the appropriate stages of arbitral proceedings. a. Court assistance in taking evidence – the tribunal or any party with the approval of the tribunal, may request from the courts assistance in taking evidence. b. Subpoena – the tribunal has the power to issue subpoena in order to compel the attendance of witnesses and/or the production of documents. ARBITRAL TRIBUNAL DOES NOT HAVE CONTEMPT POWERS. c. Expert – the tribunal may appoint experts to report to it on specific issues, require the parties to provide the expert with relevant information or access to documents. The expert sought by the tribunal is similar to an amicus curiae or friend of the court except that the expert’s field of specialization is not limited to law. 6. Conclusion/Closure – an ICA may be concluded or closed in either of two ways: a. By an award or settlement b. Termination – tribunal shall issue an order for termination of arbitration when: 1. The claimant withdraws his claim unless the


respondent objects on the basis of legitimate interest in obtaining a final settlement; 2. The parties agree to terminate proceedings in writings; or 3. Tribunal finds that the continuation of the proceedings has become unnecessary or impossible. In both instances, the mandate of the arbitral tribunal ends except if the conclusion of the proceedings is by way of an award or settlement, the tribunal’s mandate extends: 1. To correct and interpret the award; 2. To set aside an exclusive recourse against the arbitral award; or 3. When reserved, to the quantification of costs and the determination of the party liable therefore, or the division. The arbitral tribunal retains jurisdiction until the award becomes final and executory.


COSTS IN ICA Costs in an ICA include only the: 1. Fees of the arbitral tribunal; 2. Travel and other expenses; 3. Costs of expert advise; 4. Travel and other expenses of witnesses; 5. Costs for legal representation and assistance; and 6. Fees and expenses of the appointing authority. In principle, the costs shall borne by the unsuccessful party. However, the arbitral tribunal may apportion the costs if unreasonable under the circumstance of the case. The SC held that, where the petitioner had a valid reason to institute the arbitral proceedings as it believed that it was entitled to its claim, and the respondent cannot be faulted for defending itself for perceived wrongful acts and conditions, it is only fitting that both parties should share in the burden of the cost of arbitration, on a pro rata basis so as not to put a price on the right to litigate ( Keppel Cebu Shipyard vs. Pioneer Insurance and Surety Corp. 601 SCRA 96 [2009]) CORRECTION AND INTERPRETATION OF ICA AWARD The arbitral award in an ICA does not become executory until after the lapse of the period for its amendment. The arbitral award may be amended in any of the following manners: 1. Quantification of the costs and the determination of the party liable or the division between the parties – provided that a reservation for such hearing and quantification has been made by the tribunal. 2. Correction of typographical and similar errors initiated by a party – parties may ask the tribunal for the correction of the award within 30days from receipt of the award and with notice to the other party, for any error in computation, clerical or typographical error. An error is typographical or clerical in nature and therefore correctible even after the decision has become executory, if the error is occasioned by a mistake in copying or typing does not alter the substance of the decision and does not affect or prejudice substantial rights. 3. Interpretation of the award – within the same period for the correction of typographical errors initiated by the parties, the parties may agree to request the tribunal to give an interpretation of a specific point or part of the award. If the tribunal finds the request for correction justified, it shall make the correction or give the interpretation within 30days from receipt of the request and the interpretation or correction shall form part of the award. 4. Correction of typographical error initiated by the arbitral tribunal – within 30days from the date of award, the tribunal may motu propio correct any typographical error. 5. Additional award – within 30days from receipt of the award, a party, with notice to the other party, may request the tribunal to make an additional


award as to claims presented in the arbitral proceedings but omitted in the award. SETTING ASIDE AN ICA AWARD * An ICA award may be set-aside through the courts, particularly the RTC provided that: 1. The petitioner furnishes proof that there was: a. Defect in the arbitration agreement – party was under some incapacity or agreement is not valid under applicable law; b. Violation of due process – petitioner was not given proper notice of the appointment of an arbitrator or proceeding or otherwise unable to present his case; c. Lack or excess of jurisdiction on the part of arbitral tribunal – the award deals with a dispute not contemplated by or not falling within the terms of submission to arbitration, subject to the application of the doctrine of severability/separability; d. Violation of arbitration agreement – the composition of tribunal or process was not in accordance with the agreement, unless such agreement was in conflict with a provision of the ADR act 2. Or the court finds that: a. The subject of the dispute is not capable of settlement under the laws of RP b. The award is in conflict with the public policy of the RP. In an ICA, the venue of setting aside proceedings, as well as for the recognition and enforcement of awards and any application for assistance and supervision except appeal, shall be with RTC where: 1. The arbitration took place; 2. The asset to be attached or levied upon, or the act to be enjoined is located; 3. Any of the parties to the dispute resides or has his place of business; or 4. In the NCR, at the option of the applicant. TIME FOR FILING THE PETION FOR SETTING ASIDE The petition for setting aside must be filed within 3 months (90 days) from the date on which the party making that application received the award or from the date on which a request for correction, interpretation or additional award has been disposed of by the tribunal. RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS Recognition is the means by which a Philippine court gives legal acknowledgement to a foreign arbitral award and confers upon it the capability to be enforced under the Philippine law through legal processes. Confirmation is the judicial affirmation of a domestic arbitral award. *

Grounds for refusing recognition (article 4.36[A], IRR)


Enforcement meant the execution and implementation of the foreign arbitral award through Philippine legal processes. A foreign arbitral award is one made in a country other than the Philippines. They must go through the process of recognition in order to be entitled to enforcement in the Philippines. Domestic arbitral award is one conducted in the Philippines. While not requiring recognition, domestic arbitral awards have to go through the process of confirmation prior to their implementation. On the treatment of ICA awards, there is greater kinship between an ICA award and a foreign arbitral award. Inferring from the fact that the rules on recognition of foreign arbitral awards are contained in chapter 4 of IRR, which governs the ICA, there exists legal basis to require recognition instead of just confirmation for ICA awards. A distinction must be made between an ICA award rendered in the Philippines and an ICA award rendered outside the Philippines. While both require recognition by RP courts similar to a foreign arbitral award, an ICA award rendered in the RP is susceptible of vacation or setting aside by RP court. An ICA award rendered outside the RP is not and can only be recognized or refused recognition, it being strictly a foreign arbitral award.Once recognition is accorded by a Philippine court to foreign judgment, it is the decision, order or writ of the

Philippine court that is enforced. An ICA award or foreign arbitral award when extended recognition by the RTC shall be enforced in the same manner as ﬁnal and executory decisions of courts of law of the Philippines.

JURISDICTION, VENUE AND NATURE OF PROCEEDINGS

Jurisdiction over proceedings for the recognition and enforcement of a foreign arbitral award, vacating or setting aside and any application with a court for arbitration assistance is vested by the ADR act on RTC. The venue of the proceedings shall be: 1. Where the arbitration proceedings are conducted; 2. Where the asset to be attached or levied upon or the act to be enjoined is located; 3. Where any of the parties to dispute resides or his place of business; or 4. In the NCJR at the option of the applicant. Except for appeal, the foregoing proceedings shall be deemed as special proceedings. They shall also be summary in nature. In recognition and enforcement of foreign arbitral awards susceptible of recognition, the court shall send notice to the parties at their addresses of record in arbitration. The notice shall be sent at least 15days before the date set for initial hearing. GROUNDS FOR REFUSING RECOGNITION AND PROCEDURE RECOGNITION OF CONVENTION AND AS-IN CONVENTION AWARDS

FOR


In general, the conditions and requisites for the recognition and enforcement of foreign judgments in the Philippines are: 1. Proof of foreign judgment; 2. The judgment must be on a civil or commercial matter; 3. There must be no lack of jurisdiction, no want of notice, no collusion, no fraud, no clear mistake of law or fact; 4. The judgment must not contravene a sound and established public policy of the forum; and 5. The judgment must be res judicata in the state that rendered it. A convention award is a foreign arbitral award made in a state, which is a party to the NY Convention. Its recognition and enforcement shall be governed by the NY convention as implemented by the IRR. A non-convention award is a foreign arbitral award rendered in a stated, which is not a party to NY convention. It cannot be recognized or enforced under ADR act but it shall be deemed as a presumptive evidence of a right as between the parties in accordance with section 48 rule39 of the rules of civil procedure. As as-in convention award us one which is rendered in a state which is not a party to NY convention but which, by reason of comity and reciprocity, may be recognized and enforced as if it is a convention award. Procedure for recognition of convention and as-in convention awards The procedure for the recognition and enforcement of convention and as-in convention awards are as follows: 1. Filing of application – party relying upon an awards or applying for its enforcement shall file with the RTC the original or duly authenticated copy of the award and the original arbitration agreement. 2. Confirmation – once confirmed, the foreign arbitral award shall be enforced in the same manner as final and executory decisions of the courts of law of the RP. 3. Consolidation/concurrent hearings – the parties and tribunal may agree on 1. Consolidation of proceedings; or 2. The conduct of concurrent hearings with other related arbitration proceedings. 4. Rejection/suspension – the RTC, upon application for rejection or suspension of the enforcement of the award, may vacate or suspend the enforcement, order the party seeking rejection or suspension to provide appropriate security like a bond for example. In the case of as-in convention award, the court may also remit the award to the arbitral tribunal of the objections raised may be cured or rectified. 5. Appeals – the decision of RTC recognizing, enforcing, vacating or setting aside an arbitral tribunal awards may be appealed to the CA in accordance with the special rules on ADR, which shall require the appealing party to post a counter-bond in favor of the prevailing party in the amount of the award. The right to appeal may be validly waived by the agreement or stipulation of the parties without prejudice to judicial review by certiorari


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LEGAL EFFECTS OF NON-CONVENTION AWARDS Non-convention awards, unless they qualify to be as-in convention awards, are not entitled to recognition or enforcement under the ADR act. They may be given legal effect in the Philippines on the basis of section48, rule39 of the rules on civil procedure. Under article 4.37(a) of the IRR, in conjunction with section48, rule39 of the rules of civil procedure, a non-convention award which does not qualify as an as-in convention award is either “conclusive upon the title to a thing” or at best, is a “presumptive evidence of a right as between the parties and their successors in interest by subsequent title,” provided there is no want of jurisdiction, no want of notice, no collusion, no fraud and no clear mistake of fact or law.


CHAPTER 6:

DOMESTIC ARBITRATION

DOMESTIC ARBITRATION In general, arbitration is domestic if conducted in the Philippines. Specifically, arbitration is domestic if the components of parties’ places of business, place of arbitration, place of performance of substantial part of the obligation and place where the subject matter of the dispute is most closely connected, are all located in the RP. The ADR act of 2004 devoted only 2 sections to domestic arbitration namely: section32 which distinguished domestic arbitration from international arbitration and declared that the “arbitration law” (RA876) remains to be applicable to domestic arbitration and section33, which adopted certain provisions of the Model Law and the ADR act on ICA to domestic arbitration. DISPUTES COVERED BY RULES ON DOMESTIC ARBITRATION Unlike the provisions of the ADR act on ICA and the rules corresponding thereto which cover only disputes arising from relationships of a commercial nature, the provisions and rules on domestic arbitration cover both commercial and noncommercial disputes provided they are susceptible of arbitration and do not fall within the exclusive original arbitration jurisdiction of quasi-judicial agencies. DUE PROCESS IN DOMESTIC ARBITRATION The parties to a domestic arbitration, like in the case of international commercial arbitration, are entitled to be treated equally and with due process. On due process in a case involving a domestic arbitral proceeding, the SC held that “the wellsettled rule is that administrative agencies exercising quasi-judicial powers shall not be fettered by the rigid technicalities of procedure, albeit they are, at all times required, to adhere to the basic concepts of fair play. “Submission of position papers may be sufficient as long as the parties are given the opportunity to be heard. In administrative proceedings, the essence of due process is simply an opportunity to seek a reconsideration of the action or ruling complained of. This constitutional mandate is deemed satisfied if a person is granted an opportunity to seek reconsideration of an action or ruling. It does not require trialtype proceedings similar to those in courts of justice.” ( Equitable PCIB vs. RCBC, 574 SCRA 858, [2008] ) PLACE OF ARBITRATION The place of domestic arbitration is to be determined by the parties. If there is no such agreement, then the arbitration shall be conducted in Metro Manila, unless the arbitral tribunal shall decided on a different place taking into account the circumstances of the case and the convenience of the parties. LANGUAGE


The rule in the determination of the language that will be used in the arbitration proceedings is the same for domestic and ICA, including the prerogative of the arbitral tribunal to require a translation of documentary evidence if not in the official language, except that Filipino is added to English as a default language in domestic arbitration. CONFIDENTIALITY The arbitration proceedings, records, evidence and other confidential information are privileged and shall not be published except 1. With the consent of the parties; or 2. For the limited purpose of disclosing to the court relevant documents where resort to the court is allowed. RULES ON RECEIPT OF WRITTEN COMMUNICATIONS The general rule on receipt of communications in ICA as well as domestic arbitration is that provided for by the parties in their arbitration agreement. In the absence of such an agreement, written communications among the parties and the arbitrators shall be delivered personally, by registered mail or courier service and shall be deemed to be received on the date it is delivered ar the addresse’s address of record, place of business, residence or last know address. The use of electronic mail, facsimile transmission or other electronic means is permitted as long as there is a record of the sending and receipt of the communication at the recipient’s mail box, and such electronic communication shall be deemed to have been received on the same date of its transmittal. WAIVER OF OBJECTION Same rule applies with domestic arbitration as with the ICA. A party may be estopped from questioning non-compliance or is deemed to have waived his objection if he fails to raise the objection without delay or within the time prescribed (30days) provided that he knows of such non-compliance. The act, omission, or silence giving rise to waiver or estoppel must be unequivocal and intentional. EXTENT OF COURT INTERVENTION No court shall intervene except in the instances allowed by the Arbitration Law, ADR Act and Special ADR Rules. Pursuant to IRR, among these instances are when, 30days having elapsed from receipt of the request for arbitration, the appointing authority fails to perform functions imposed under Article 5.10(c) and (d); article 5.11(a) and article 5.13, in which cases the applicant may apply with courts for the same relief. Interim measures may also be requested or enforced through the courts. “As a fundamental point, the pendency of arbitral proceedings does not foreclose resort to the courts for provisional reliefs. The rule of ICC, which governs the parties’ arbitral


dispute, allows the application of a party to a judicial authority for interim or conservatory measures. Section 14 of RA876, the Arbitration Law, recognizes the rights of any party to petition the court to take measures to safeguard and/or conserve any matter, which is the subject of the dispute in arbitration. In addition, RA9285 known as the ADR Act of 2004, allows the filing of provisional or interim measures with the courts whenever the arbitral tribunal has no power to act” (Transfield Philippines Inc. vs. Luzon Hydro Corporation 490 SCRA 14 [2006] ) If the arbitral tribunal in the exercise of its authority to resolve or defer the resolution of the preliminary issue its jurisdiction over the arbitration agreement, decides to defer the resolution until the rendition of the arbitral award, none of the parties can seek judicial relief from the deferment. MR, appeals and petition for certiorari are not available to challenge the decision of the arbitral tribunal to defer the resolution of the preliminary jurisdictional issues. To justify the vacation of an arbitral award on account of ‘manifest disregard of law’ the arbiter’s findings must clearly and unequivocably violate an established legal precedent. Anything less would suffice ( Equitable PCI Bank vs. RCBC 574 SCRA 858 [2008]) REPRESENTATION The same rule on representation in ICA obtains in domestic arbitration. A party may represent himself orbe represented or assisted by any person of his choice, provided that such representative, unless admitted to the practice of law in the RP, shall not be authorized to appear as counsel in any RP court or quasi-judicial body. ARBITRAL AGREEMENT An agreement to arbitrate is a contract and as such the arbitration agreement must satisfy the essential requisites of a valid contract. Similar with mediation and ICA, the consent to arbitrate can either be precausal consent (agreement to submit to arbitration) when the parties agree in a contract to settle by arbitration a controversy that will arise between them; or present causal consent (submission agreement) when the controversy already exist between the parties at the time of the submission to arbitration. The submission and contract shall be valid, enforceable and irrevocable except upon grounds provided by law for the revocation of contracts. An arbitration agreement must be in writing and subscribed by the party sought to be charged or by his lawful agent/s. A court before which an action is brought on a matter which is the subject of an arbitration agreement shall, if at least one party requests not later than the pre-trial conference, or upon the request of both parties, refer to arbitration unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. If the parties request in the same manner the court may stay the proceedings during the pendency of the arbitration (Ormoc Sugarcane Planters Assoc.


vs. CA). In such case, the court does not lose its jurisdiction over the case and the proceedings are merely stayed to await the rendition of the arbitral award, which shall be enforced by the court ( Benguet Corp. vs. DENR-Mines and Adjudication Board, 545 SCRA 196 [2008] ) When the court action is multi-party and one or more but not all of them are parties to an arbitration agreement, the court shall refer those who are parties to the arbitration agreement to arbitration and proceed with the court action as to those who are not bound by such arbitration agreement. DETERMINATION OF APPLICABLE RULES OF PROCEDURE Except for the reference to UNCITRAL Arbitration Rules, the determination of the applicable rules of procedure is the same for domestic arbitration and ICA. The parties are free to agree on the applicable rules of procedure, in the absence of which, the arbitral tribunal may conduct the arbitration in the manner it considers appropriate. COMMENCEMENT OF ARBITRAL PROCEEDINGS In general, the commencement of arbitral proceedings is determined by the prior arbitration agreement between the parties. Up to the extent, there is similarity between ICA and domestic arbitration on the commencement of arbitral proceedings. The following are the specific rules for the commencement of domestic arbitration: 1. In an institutional arbitration where there is no prior arbitration agreement, it is commenced in accordance with the arbitration rules of the institutional arbitrator. 2. In an ad hoc arbitration, where there is a prior arbitration agreement, it is commence upon the delivery by the claimant to the respondent of a demand for arbitration. The demand for arbitration shall be in any form and shall state the name, addresses and description of the nature and circumstances of the dispute giving rise to the claim; the relief sought including the amount of the claim; the relevant agreements including the arbitration agreement, a copy of which shall be attached. Where there is no prior agreement, it is initiated by one party through a demand upon the other to submit their dispute to arbitration, and arbitration is deemed commenced upon the agreement by the other party to submit the dispute to arbitration, and arbitration is deemed commenced upon the agreement by the other party to submit the dispute to arbitration. The demand shall also require the respondent to name his arbitrator within a period, which shall not be less than 15days from the receipt of demand. The default rule in the case of ICA is that it is commenced on the date on which a request for the dispute to be referred to arbitration is received by the respondent, while for domestic arbitration where there is no prior agreement is reckoned from the date when the other party agreed to submit the dispute to arbitration.


ARBITRATORS AND ARBITRAL TRIBUNAL Number of Arbitrators Unless the parties have agreed otherwise, there shall be 3 arbitrators for domestic arbitration. Qualifications and Disqualifications An arbitrator must be: 1. Of legal age; 2. Be in full employment of his civil rights; and 3. Know how to read and write. The foregoing qualifications are prescribed in the Arbitration Law and in the IRR. However, they are not similarly required for ICA except that an arbitrator in ICA may be challenged if he does not possess the qualifications agreed to by the parties. No person shall serve as an arbitrator in any proceedings if: th 1. He is related by blood or marriage within the 6 degree to either party to the controversy; 2. He has or has had financial, fiduciary or other interest in the controversy or cause to be decided, or in the result of the proceeding; 3. He has personal bias which might prejudice the right of any party to a fair and impartial award; or 4. He has been selected to act as champion or to advocate a party’s cause. Procedure for the Appointment of Arbitrators The parties in a domestic arbitration are free to agree on the procedure for the appointment of arbitrators except that, in order to prevent undue advantage, an agreement or clause giving a party the power to choose more arbitrators than the other is void. The parties may agree to empower the arbitrators already appointed to select and appoint additional arbitrators who shall sit with the original arbitrators. If there is no agreement for the appointment, the following are the default rules: 1. Appointment by the parties – in an arbitration with 3arbitrators, each party shall appoint one and the 2 arbitrators appointed shall appoint the 3rd arbitrator within 30days from receipt of request, failing of which, the appointment shall be made by the appointing authority. 2. Default appointment by appointing authority – the appointing authority in ad hoc domestic arbitration, in the absence of an agreement of the parties, is the National President of IBP or his


authorized representative. In an institutional arbitration, there is no need for an appointing authority for purposes of appointing because the parties have already designated the institutional ADR provider under whose rules the arbitrator or arbitrators to be selected. The appointing authority mat make the appointment or give the appointing party who objects to a default appointment time to make the appointment but not more than 30days. 3. Request for appointment – the request for appointment with proof of delivery to the adverse party shall be filed with the appointing authority. Within 7days from the receipt of the request, the adverse party may file his objections to request or ask for an extension not exceeding 30days to appoint an arbitrator. 4. Acceptance of appointment – in accepting the appointment, shall submit an acceptance letter, which shall include statements that 1. He agrees to comply with the applicable law and rules of arbitration; 2. He accepts the applicable arbitrator’s fees; and 3. He agrees to devote much time and attention to the arbitration as required. 5. Oath of arbitrators – arbitrators shall take an oath to faithfully and fully hear and examine the matters in controversy and to make a just award according to the best of their ability and understanding. Grounds for Challenge An arbitrator may be challenged only if: 1. Circumstances exist that give rise to a justifiable doubt as to his impartiality or independence; 2. He does not possess the qualifications provided for under the law or agreed to by the parties; 3. He is disqualified to act as an arbitrator; 4. He refuses to respond to questions by a party regarding the nature and extent of his professional dealings with a party or counsel. The party appointing an arbitrator may challenge that arbitrator for reasons, which the party became aware of after the appointment, was made. Otherwise, he is already estopped from challenging the appointment he made. If an arbitrator appointed discovers the existence of any circumstance that would create presumption of bias or would render him a partial arbitrator, he shall immediately disclose such information to the parties. Procedure for the Challenge The procedure for the challenge against an arbitrator in a domestic arbitration is similar to that provided for in ICA. The general rule is that the procedure that is


agreed upon by the parties for challenging an arbitrator shall be applied. In default the following procedure shall govern: 1. The challenging party shall send a written statement of the reasons for challenge to the arbitral tribunal within 15days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of the circumstances surrounding the ground for challenge. A request for inhibition shall be deemed a challenge. 2. Within 15days from receipt of a challenge, the challenged arbitrator may either accept or reject the challenge. If he accepts it, he shall voluntarily withdraw as arbitrator. 3. If he rejects the challenge, he shall communicate within the same period of 15days his rejection of the challenge and state the facts and arguments relied upon. He shall be given opportunity to be heard on the matter. 4. Notwithstanding the rejection of the challenge by the challenged arbitrator, within the same period of 15days the parties may agree to the challenge and replace the challenged arbitrator. 5. If the challenged arbitrator does not accept the challenge or does not withdraw from his office and the parties do not agree to the challenge, the arbitral tribunal shall decide the challenge within 30days from receipt of the notice of the decision rejecting the challenge. 6. If the challenge before the arbitral tribunal is not successful or a party or tribunal shall decline to act, within 30days from notice of the decision rejecting the challenge, the challenging parties may request the appointing authority to decide the challenge. 7. If the appointing authority shall fail to act on the challenge within 30days from the date of its receipt, the requesting party may with the notice to the parties, renew the request with the court. 8. Until a decision is made by the challenged arbitrator, the parties, arbitral tribunal or the appointing authority, the arbitration proceeding shall continue notwithstanding the challenge and the challenged arbitrator shall continue to participate as arbitrator. Once the challenge is elevated to the court, the arbitration proceeding shall be suspended until after the court shall have decided the incident. 9. The decision of the parties, the arbitral tribunal, the appointing authority pr the court, to accept or reject a challenge shall be immediately executory and is not subject to appeal or MR. 10. The appointment of a substitute shall be made pursuant to the procedure applicable to the appointment of the arbitrator being replaced. Procedure in case the arbitrator fails to act As in the case of ICA, if an arbitrator in a domestic arbitration becomes de jure or de facto unable to perform his functions or fails to act without undue delay, his mandate terminates if 1. He withdraws, or 2. The parties agree on the termination. If the controversy remains, any party may request the appointing authority to decide on the termination of the arbitrator, which decision shall be immediately executory and shall not be subject to a MR or appeal.


ARBITRAL PROCEEDINGS The default procedure in domestic arbitration is as follows: 1. Statement of Claims – the claimant in domestic arbitration is required to submit within the time agreed upon by the parties or determined by the arbitral tribunal his statement of claims including the supporting facts, points at issue and the relief sought. 2. Statement of defense – in the same manner and period, the respondent shall state his defenses. 3. Amendment of claims – the parties may amend or supplement their claims or defenses, as the case maybe, unless the arbitral tribunal considers the amendment appropriate or dilatory. 4. Hearing and written proceedings – in an ad hoc domestic arbitration, the procedure determined by the arbitrator with the agreement of the parties shall be followed. In an institutional arbitrator shall be followed which has been impliedly accepted by the parties on account of the designation of the institutional arbitral tribunal. There is a slight variance between the default procedure for ICA and domestic arbitration. In the case of the latter, the following procedure will be followed: a. Pre-hearing conference – the parties in domestic arbitration are required to undergo a pre-hearing conference within 30days from the appointment of the arbitrator or the constitution of an arbitral tribunal during which they shall discuss the venue of the arbitration. The possibility of a compromise is not among those that the parties and the arbitral tribunal are supposed to discuss during the pre-hearing conference. No arbitrator shall act as mediator in any proceeding where he is acting as an arbitrator except where, under a settlement agreement, the parties agree to constitute the mediator as an arbitrator. b. Threshold issues – issues on the jurisdiction of the arbitral tribunal over the claims and counterclaims or the arbitrability of the claims or counterclaims, shall be resolved by the arbitral tribunal as threshold issues if the parties so request, unless the issues are intertwined with the factual issues that they cannot be resolve ahead of the hearing on the merits. c. Hearing dates and postponements – arbitral tribunal shall in consulation with the parties fix the date and time of hearings. The hearings shall not be postponed except with the conformity of the arbitrator and for good and sufficient cause. d. Default of the party – if the claimant fails to communicate his statement of claims, the tribunal shall terminate the proceedings. If it is the respondent who fails to communicate his statement of defenses, the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegation. If any party fails to appear or produce evidence, he shall have deemed waived them.


e. Decision on interlocutory – the arbitral tribunal may authorize its chairman to issue or release its decision on interlocutory matters. f. Consolidation or concurrent hearings – they may agree to consolidate the arbitration proceedings with other arbitration proceedings or hold concurrent hearings. g. Closure of hearing – no further motion, manifestation or submission maybe allowed except for post-hearing briefs and reply briefs, unless the tribunal, motu propio or upon the request of a party allows the reopening of the hearing. 5. Rules on taking evidence – the following rules on reception as well as the processes that the tribunal may employ in taking evidence: a. Testimonial evidence – witnesses shall be required to take an oath or affirmation to tell the truth. The parties may also agree in writing to submit their dispute to arbitration other than by oral hearing. b. Documentary evidence – the tribunal may require the parties to submit or produce such other necessary documents. c. Subpoena – the tribunal shall have the power to issue subpoena. d. Expert – the tribunal may appoint one or more experts to report to it on specific issues, may require the parties to submit relevant information or grant access to such expert and may grant the parties opportunity to ask questions of the expert and present their own experts to testify on the points at issue. However in domestic arbitration, upon the agreement of the parties, the finding of the expert engaged by the tribunal shall be binging upon them and the tribunal. e. Court assistance in taking evidence – the provisions of IRR on domestic arbitration specified some of the modes. 6. Decision – the decision of the tribunal shall be made by the sole arbitrator or unless otherwise agreed upon by the parties, by the majority of the arbitrators in multi-arbitrator proceedings. However, questions of procedure may be decided by the chairman of the tribunal if authorized by the parties or by all members of the tribunal. The tribunal shall render its written award within 30days after the closing of the hearing, submission of the parties’ briefs. 7. Form and content of the award – the award in domestic arbitration shall be in writing, signed by the arbitrator, and shall state the rendition and the place of arbitration. The award need not be acknowledged or sworn to unless required by the parties. The parties may require the tribunal to supply the omission within 30days from receipt of the award. 8. Settlement – the proceedings will be terminated by the execution of an arbitral award on agreed terms. 9. Termination of the claim – unless the respondent objects for the purpose of prosecuting his counterclaim or the tribunal recognizes a legitimate interest on his part in obtaining a final settlement of the dispute. INTERIM MEASURES


The parties to a domestic arbitration may seek from the arbitrator or tribunal interim measures including preliminary injunction, appointment of receiver, detention of property and preservation and inspection. Either party may also secure assistance from the courts for the implementation of interim measures. ( Refer to p.122 of the book for more interim measure) MULTI-PARTY ARBITRATION In a multi-party domestic arbitration, the tribunal is empowered to implement procedural modifications, as it shall deem to appropriate to address the complexities of the multi-party arbitration. FEES AND COSTS The general rule is that the fees of the arbitrator in a domestic arbitration shall be determined by the agreement of the parties in writing prior to the arbitration. In default, the arbitrators’ fees shall be determined in accordance with the applicable rules of the regular arbitration institution. CORRECTION, INTERPRETATION AND ADDITIONAL AWARD Article5.32 (d) of the IRR emphatically states that, “no MR, correction and interpretation of award or additional award shall be filed with the tribunal.” This is premised upon the principle that when tribunal renders its final award, it loses jurisdiction over the dispute and the parties to the arbitration. However, section 17 of RA876 specifically allows the continuation of the arbitral proceedings motu propio by the arbitrators or upon motion of party, upon good cause shown. The IRR provided for the amendment or modification of the award in the following instances as exceptions to the GR: 1. Under the arbitration agreement – if provided, the tribunal may cause the amendment. 2. Failure to resolve the issue – if the tribunal failed to resolve an issue, parties may ask for the resolution. 3. Quantification of costs – if the tribunal made reservation in the final award, it may supplement the award by such quantification, determination or apportionment. 4. Correction of typographical error and similar errors initiated by a party – a party may ask the tribunal for the correction of the award within 30days from the receipt of the award and with notice to the other party. 5. Interpretation of the award – within the same period, the parties may agree to request the tribunal to give an interpretation on a specific point or part of the award. 6. Correction of the typographical errors initiated by the tribunal – within 30days from the date of the award, the tribunal may motu propio correct any typographical error


7. Additional award – within 30days from receipt of the award, a party with notice to the other, may request the tribunal to make an additional award as to claims presented in the arbitral proceedings but omitted in the award. If justified, the tribunal shall make the additional award within 60days from the receipt of the request. Unless the parties have granted upon any period of time, the parties may ask for correction, interpretation or the rendition of an additional award within 30days from the receipt of the award. The foregoing grounds for amendment or modification of an arbitral award by the tribunal should be distinguished from the grounds for the amendment or modification of an arbitral award by the court. A court may amend or modify a domestic arbitral award in the following instances: 1. Where there is an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award; 2. Where the arbitrators have awarded upon a matter not submitted to them, not affecting the merits of the decision upon the matter submitter; 3. Where the award is imperfect in a matter of form not affecting the merits of the controversy and if it has been a commissioner’s report, the defect could have been amended or disregarded by the court. If the award upon a matter not submitted for arbitration, or if the imperfect form of the award, affects the merits of the decision or controversy, the award should be vacated instead of merely being amended or modified by the court. The notice of a motion to vacate, modify or correct an award must be served upon the adverse party within 30days after the award is filed or delivered. The judgment of RTC rendered in a motion to confirm, modify, correct or vacate an award shall have the same force and effect as judgment in an action and may be enforced as if it had been rendered in the court in which it is entered.

SETTING ASIDE AN ARBITRAL AWARD A domestic award may be set-aside through the courts only on the following grounds: 1. The arbitral award was procured by corruption, fraud or other undue means; 2. There was evident partiality or corruption in the tribunal or any of its members; 3. The tribunal was guilty of misconduct or any form of misbehavior that has materially prejudiced the rights of any party; 4. One or more of the arbitrators was disqualified to act as such and wilfully refrained from disclosing such disqualification;


5. The arbitral tribunal exceeded its powers or so imperfectly executed them such that a complete, final and definite award upon the subject matter submitted to it was not made. Compare the foregoing grounds with those applicable to the setting aside of ICA to wit: 1. The petitioner furnishes proof that there was: a. Defect in the arbitration agreement because a party was under some incapacity or agreement is not valid under applicable law; b. Violation of due process because the petitioner was not given proper notice of the appointment of an arbitrator or the proceeding or unable to present his case; c. Lack or excess of jurisdiction on the part of the tribunal because the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, subject to the application of doctrine of severability/separability; d. Violation of the arbitration agreement because the composition of the arbitral tribunal or the arbitral process was not in accordance with the agreement of the parties unless such agreement was in conflict with a provision of the ADR act from which the parties cannot derogate or failing such agreement, was not in accordance with the ADR act, 2. Or the court finds that: a. The subject of the dispute is not capable of settlement under the laws of RP; b. The award is in conflict with public policy of RP. The court before which the petition for setting-aside a domestic arbitral award is filed has the prerogative and option to suspend the court proceedings in the following instances: 1. The court may suspend the setting aside proceedings to give the tribunal an opportunity to resume the arbitral award proceedings or take such action which will eliminate the grounds for setting aside an award; 2. The petitioner or the oppositor may petition the court to remit the case to the same tribunal for the purpose of making new or revised final and definite award or to direct a new hearing before the same or new tribunal; or 3. If the ground for vacating an arbitral award does not affect the merits of the case and may be cured or remedied, the adverse party may oppose the petition and instead request the court to suspend the vacation or setting aside proceedings to give the arbitral tribunal an opportunity to cure or remedy the award or resume the arbitration proceedings or take such action as will eliminate the grounds for vacation or setting aside. In the foregoing instances, opportunity is being given to the tribunal to cure any defect in its proceedings and award.


CONFIRMATION OF DOMESTIC ARBITRAL AWARDS Recognition of a domestic arbitral award is made by filing a motion for confirmation and securing an entry of judgment from the court. An award in domestic arbitration is rendered by a Philippine arbitral tribunal applying RP law. All that is required in order to enforce a domestic award is to have it confirmed through a motion filed in court. Similar to ICA, proceedings for recognition and enforcement, vacation or setting aside an award and any application for arbitration assistance, except appeal, shall be deemed as special proceedings.


CHAPTER 7:

OTHER FORMS OF ADR

Among the various forms of ADR, arbitration and mediation are undoubtedly the most common and popular. Be that as it may, parties are allowed to avail of other forms of ADR for the amicable resolution of their disputes. These forms of ADR are the following: 1. Early neutral evaluation 2. Neutral evaluation 3. Mini-trial 4. Mediation-arbitration 5. Combination 6. And any other ADR form The principle of party autonomy and self-determination, the provisions of the IRR on the foregoing forms of ADR apply only in the absence of an agreement between the parties. If the ADR form is akin to mediation than arbitration, the specific provisions of the IRR on mediation (chapter3) shall have suppletory application to the extent that they are not in conflict with the agreement of the parties or the specific provisions of the chosen ADR form.


NEUTRAL AND EARLY NEUTRAL EVALUATION Neutral Evaluation is an ADR process wherein the parties and their lawyers are brought together to present summaries of their cases and to receive a non-binding assessment by an experienced neutral person, with the expertise in the subject matter or substance of the dispute. Early neutral evaluation is availed of early in the pre-trial phase. The agreement of the parties shall govern the conduct of neutral or early neutral evaluation. In default, the provisions of IRR on neutral or early neutral evaluation shall apply. Essentially, this kind of ADR is akin to mediation and hence, in the absence of an agreement between the parties or specific provisions of the law or rules applicable to them, the rules on mediation shall apply suppletorily. However, the parties may, in the exercise of their right to party autonomy and self-determination, empower the neutral 3rd person to render a binding assessment in which case, these two becomes akin to domestic arbitration, in which case, the rules on arbitration shall apply suppletorily. rd

If the parties cannot or fail to agree on the qualifications of the neutral 3 person, the manner of his selection, or the appointing authority or if the parties are unable to make the selection despite their agreement on the foregoing, either party may request the default appoint to authority to make the appointment.

In neutral evaluation, the parties are required to submit and exchange position papers containing the issues and statements of the relevant facts an append there supporting documents and affidavits of witnesses. In order to maintain impartiality of the neutral third person, there shall be no ex parte communication between him and any party to the dispute. Confidentiality of the proceedings, communications and assessments shall also be maintained. rd

The neutral 3 person shall issue a written evaluation or assessment within 30days from the conclusion of the evaluation. MINI-TRIAL Mini-trial is a structured dispute resolution in which the merits of a case are argued before a panel composed of senior decision-makers, with or without the presence of a neutral 3rd person before, which the parties seek a negotiated settlement. The agreement of the parties shall govern the conduct of the proceedings, in the absence of which, the provisions of the IRR on mini-trial shall be applicable. A mini-trial may be conducted either as: 1. A separate dispute resolution process; or 2. As a continuation of mediation, or neutral or early neutral evaluation or rd any ADR process. In either case, the presence of a neutral 3 person can be dispensed with, otherwise he shall preside over the mini-trial.


The parties shall appoint the panel of senior executive or decision-makers. They may choose one or more for each party provided that the parties shall appoint an equal number of senior executives or decision-makers. The parties shall submit a brief summary of the dispute, identifying the specific factual or legal issues, after which they shall appear before the mini-trial panel members before whom their lawyers shall present their respective cases starting with the claimant. Thereafter, the lawyers or representatives may offer rebuttal or surrebuttal arguments. The presentation-in-chief shall be made without interruption for 1hour, and the rebuttal and sur-rebuttal shall be for 30minutes unless a different period is agreed upon by the parties. Parties may ask clarificatory questions after each presentation. After the mini-trial, the panel members, with the assistance of neutral 3 rd party shall negotiate a settlement dispute. MEDIATION-ARBITRATION This kind of ADR is a 2step dispute resolution process involving mediation then followed by arbitration. The proceedings shall be governed by the agreement of the parties, in the absence of an agreement, and in view of its dual nature, its proceedings shall be governed by the rules on mediation first and thereafter, by the rules on domestic arbitration. As a rule, no arbitrator shall act as mediator and no mediator shall act as arbitrator, at the same time in any proceeding. The mediator appointed is precluded from acting as arbitrator of the same dispute, unless the parties have agreed in writing. A mediator is precluded from discussing with the parties the merits of the dispute. During the dispute stage, the mediator is authorized in writing to act, as arbitrator shall make an appropriate disclosure as if the arbitration proceeding had just commenced. Likewise, he shall take the appropriate oath or affirmation as an arbitrator. COMBINATION AND INNOMINATE FORMS OF ADR The parties are allowed to avail any combination of ADR forms. The parties may even come up with their own forms or methods, which innominate, may be allowed by law as long as they satisfy the requisites of ADR, comply with the essential requisites of a valid contract and are not contrary to law, morals, public policy, public order and good customs. As in the case of the nominate ADR forms, combinations and innominate ADR forms are governed principally by the agreement of the parties. In the absence of agreement, the rules and procedures for mediation are suppletorily applicable of the combination or innominate ADR form is akin to mediation. Otherwise, apply the rules of arbitration.


CHAPTER 8: SPECIAL RULES OF COURT ON ALTERNATIVE DISPUTE RESOLUTION

GENERAL PROVISIONS The ADR act of 2004, RA876, the Model Law, and the IRR of ADR Act, deferred to the SC’s authority to enact special rules of procedure applicable in courts for specific areas and aspects of ADR. The above-mentioned substantive laws, as well as the other sources of ADR rules are not the source of the authority of the SC to enact the special rules on ADR. Under the Constitution, the SC has the exclusive power and authority to promulgate rules of practice and procedure subject to the constitution that they shall not diminish, increase or modify substantive rights. The special rules on ADR was passed and approved on 1 st of September 2009 and took effect after the completion of its publication as required under Rule 26.1. SUBJECT MATTER AND COVERAGE The special rules on ADR govern the following process and proceedings: 1. Relief on the issue of existence, validity and enforceability of the arbitration agreement; 2. Referral to ADR; 3. Interim measures of protection; 4. Appointment of arbitrator; 5. Challenge to appointment of arbitrator; 6. Termination of mandate of arbitrator; 7. Assistance in taking evidence; 8. Confirmation, correction or vacation of award in domestic arbitration; 9. Recognition and enforcement or setting-aside of an award in ICA; 10. Recognition and enforcement of foreign arbitral award; 11. Confidentiality or protective orders; and 12. Deposit and enforcement of mediated settlement agreements. The foregoing proceedings under the special ADR rules are summary in nature, except 1. Those pertain to the confirmation or recognition and enforcement of arbitral awards, whether domestic, ICA, or foreign which are non-summary proceedings; and 2. The deposit of mediated settlement agreements, which is not a judicial proceeding. SPECIAL PROCEEDINGS Except for the deposit of mediated settlement agreements, the foregoing procedures are “special proceedings.” Jurisdiction over the persons of the parties is acquired by the court, not through the service of summons, but upon proof of compliance with jurisdictional requirements that the respondent was furnished a copy of the petition. The petitioner is required to serve copies of the petition upon the respondent before it is filed in court. Service of petition shall be made through personal service or by courier proof of which shall be attached to the petition.


SUMMARY PROCEEDINGS The proceedings under the special ADR rules are generally summary and are conducted by way of submission of verified pleadings, affidavits and supporting documents, except for the proceedings involving confirmation, recognition and enforcement of arbitral awards which are generally non-summary and the deposit of mediated settlement agreements which is not a judicial proceeding. The following pleadings, motions or petitions are not allowed and shall not be accepted for filing and if inadvertently accepted, should not be considered by the court: 1. Motion to dismiss (any ground for a motion to dismiss must be pleaded in the answer to opposition to the petition or motion); 2. Motion for bill of particulars; 3. Motion for new trial or for reopening of trial; 4. Petition for relief of judgment; 5. Motion for extension, except in cases where an ex parte TRO of protection has been issued (in which case the adverse party is amply protected from any delay that may be caused by the extension) 6. Rejoinder to reply (the reply is the last pleading to be filed) 7. Motion to declare a party in default 8. Any other pleading specifically disallowed under any provision of the Special ADR rules. If inadvertently accepted for filing, any of the foregoing motions or pleadings may be expunged from the records of the case. NON-SUMMARY PROCEEDINGS The proceedings under the special ADR rules, which are general nonsummary, are the following: 1. Confirmation, correction or vacation of award in domestic arbitration; 2. Recognition and enforcement of an award in an ICA; and 3. Recognition and enforcement of a foreign arbitral award. The technical rules on the service of summons ordinarily applicable to regular court proceedings are not applicable under the special ADR rules. The special rules require that the initiatory pleading be filed directly with the court, which will then serve a copy to the respondent, by personal service or courier. If the court action is already pending, the initiatory pleading or motion shall be served by personal service or courier service upon the respondent before it is filed in court. In the event that courier service is not available, resort may be had to service by registered mail. The special ADR rules is one of the rules where filing and service of pleadings by electronic means may be allowed by agreement of the parties. Proof of filing shall be made in accordance with the rules on Electronic Evidence.


FUNDAMENTAL PRINCIPLES ADOPTED BY THE SPECIAL ADR RULES The special rules took into account the following fundamental, principles and objectives of ADR: 1. Self-determination, party autonomy and promotion of ADR as means of resolving disputes – took into account the objective of ADR of achieving for a speedy and efficient resolution of disputes, impartial justice, curbing a litigation and to declogging court dockets. 2. Preference for arbitration – The special rules requires courts to refer to arbitration parties who have agreed to submit their disputes to arbitration and precludes courts from refusing the referral for any of the following and similar reasons: a. The referral tends to oust a court of its jurisdiction; b. The court is in a better position to resolve the dispute subject of arbitration; c. The referral would result in multiplicity of suits; d. The arbitration proceeding has not commenced; e. The place of arbitration is in foreign country; f. One or more of the issues are legal and one or more arbitrators are not lawyers; g. One or more of the arbitrators are not Philippine nationals; h. One or more of the arbitrators are alleged not to possess the required qualification under the arbitration agreement or law. 3. Doctrine of separability/severability – the arbitration clause shall be treated as an agreement independent of the contract of which it forms part and a decision that the contract is null and void shall not entail ipso jure invalidity of the arbitration clause. 4. Freedom to agree on the procedure to be followed n the conduct of arbitral proceedings – only in the absence of an agreement may the arbitral tribunal conduct arbitration in the manner it considers appropriate. 5. The competence-competence principle – the tribunal shall be accorded the first opportunity or competence to rule on the issue whether o r not it has competence or jurisdiction to decide a dispute submitted to it for decision, including any objection with respect to the existence or validity of the arbitration agreement. 6. No arbitrator shall act as mediator in any proceeding in which he is acting as arbitrator – however, the parties to mediation have agreed in the written settlement agreement that the mediator shall become the sole arbitrator for dispute or that the settlement agreement shall become an arbitral award, the mediator-arbitrator shall issue the settlement agreement as an arbitral award which shall be subject to enforcement under the law.


CHAPTER 9:

SPECIAL RULES OF COURT ON ADR

SPECIFIC COURT RELIEFS

JUDICIAL RELIEF INVOLVING THE ISSUE OF EXISTENCE, VALIDITY AND ENFORCEABILITY OF THE ARBITRATION AGREEMENT The judicial relief referred to in Rule3 of the Special ADR rules is a petition for judicial determination of the existence, validity and/or enforceability of an arbitration agreement. The issues involved in these proceedings are: 1. Existence of the arbitration agreement – whether or not there is an arbitration agreement; 2. Validity of the arbitration agreement – whether or not the arbitration agreement complies with all the requisites for a valid contract; 3. Enforceability of the arbitration agreement – whether or not the arbitration agreement is enforceable in accordance with article1403 of the civil code; The rules on judicial relief are applicable only to arbitration proceedings conducted in the Philippines and the nature of such proceedings is summary. “There it was held that RA876 explicitly confines the court’s authority only to the determination of whether or not there is an agreement in writing providing for arbitration. In the affirmative, the statute ordains that the court shall issue an order ‘summarily directing the parties to proceed with the arbitration in accordance with the terms.’ ( La Naval Drug Corp. vs. CA) “Since there obtains a written provision for arbitration as well as failure on respondent’s part to comply therewith, the court a quo rightly ordered the parties to proceed to arbitration in accordance with the terms of their agreement. Respondent’s arguments touching upon the merits of the dispute are improperly raised. They should be addressed to the arbitrators. This proceeding is merely a summary remedy to enforce the agreement to arbitrate. The duty of the court in this case is not to resolve the merits of the parties’ claims but only to determine if they should proceed to arbitration or not” ( Mindanao Portland Cement Corp. vs. McDonough Construction Corp. of Florida) JUDICIAL RELEIF BEFORE COMMENCE OF ARBITRATION The rules on judicial relief prior to the commencement of arbitration apply when the following circumstances are present: 1. The arbitration proceeding has not yet commenced; and 2. There is between the parties a dispute regarding the existence, validity or enforceability of the arbitration agreement. The procedural rules are as follows:


1. Petition – the initiatory pleading for judicial relief before the commencement of arbitration is a petition filed with the RTC where any of the parties resides or has his principal place of business. 2. Comment/opposition – within 15 days from service of the petition, the respondent must file his comment or opposition. 3. Court action – in resolving the petition, the court must exercise judicial restraint and defer to the competence or jurisdiction of the tribunal to rule on its competence and jurisdiction. 4. Relief against court action – the determination by the court upholding the existence, validity or enforceability of the arbitration agreement under these proceedings is merely prima facie. Such prima facie determination shall not be subject to a MR, appeal or certiorari, but shall be without prejudice to the right of any party to raise the same issues before the tribunal or the court in a petition to vacate or set aside the arbitral award, which shall be resolved in accordance with the standards set for such proceedings. JUDICIAL RELIEF AFTER ARBITRATION COMMENCES While the sub-title of rule3 of the Special ADR rules state that the judicial relief sought from the court pertains to the “existence, validity or enforceability” of the arbitration agreement, that is accurate only for judicial relief prior to the commencement of the arbitration or at the latest, prior to the rendition by the arbitral tribunal of preliminary ruling on its jurisdiction. After the commencement of the arbitration and the constitution of the arbitral tribunal and after the tribunal has rendered preliminary ruling on its jurisdiction, the proper issue for judicial relief is whether or not the arbitral tribunal has jurisdiction over the proceedings. The rules on judicial relief after the commencement of arbitration apply under the following circumstances: 1. The arbitration proceeding has already commenced, the tribunal has been constituted and has rendered preliminary ruling on its jurisdiction; and 2. A party desires to challenge the tribunal’s ruling on the issue of jurisdiction. The commencement of arbitration is determined by the agreement of the parties, in the absence of which it is commenced on accordance with the rules of the institutional arbitrator or upon the delivery by the claimant to the respondent of a demand for arbitration or when there is no prior arbitration agreement, upon the agreement of the respondent to submit the dispute to arbitration after being served a demand to arbitrate. The procedural rules are: 1. Petition – within 30days form the receipt of the notice of ruling from an arbitral tribunal, an aggrieved party may file a petition with the RTC. 2. Comment/opposition – respondent should file his comment or opposition within 15days from the date of service of petition. 3. Court action – court shall render judgment on the basis of the pleadings filed and evidence submitted, within 30days from the petition is submitted for resolution. The filing and pendency of the petition for judicial


relief shall not be a cause for the court to enjoin the arbitration and the tribunal may proceed with the arbitration and render the award. Relief against court action – the aggrieved party may file a MR of the 4. order of the court, which shall not be subject to appeal. An order affirming the jurisdiction of the tribunal shall not be subject to a petition for certiorari, but an order denying jurisdiction may be the subject of such petition. In a petition for judicial relief, the arbitrator or the members of the tribunal shall be nominal parties. The circumstances that not all of the parties to the civil action are bound by the arbitration agreement or that referral to arbitration would result in multiplicity of suits are not grounds to deny the referral of a pending action to arbitration. The included parties are necessary parties to the arbitration proceedings because their noninclusion, while not affecting the validity of the arbitration, will result in an incomplete determination or settlement of the claim subject of arbitration. REFERRAL TO ADR While the subtitle of rule4 of the Special ADR rules is “Referral to ADR” this rule actually pertains to the referral of a pending court action to arbitration rather than any other form of ADR. The situation contemplated by this rule is that where: 1. There is already pending court action. 2. There is either a pre-action agreement – if executed prior to the filing of an action, or a present action agreement – if executed after the filing of the action. 3. And one or both parties desire to undergo arbitration. If there is a pre-action agreement, which may either be an agreement to submit to arbitration or a submission agreement, the request for referral to arbitration may be made by any one of the parties not later than the pre-trial conference. A requeset made after the pre-trial conference must be with the agreement of both parties. In the case of a present-action arbitration agreement, which is necessarily a submission agreement, the parties may request the referral to arbitration at any time during the proceedings. Hereunder are the rules: 1. Request/Motion 2. Comment/opposition 3. Court action 4. Relief against court action In accordance with the principle of preference for ADR, courts are prohibited from denying for the request for referral of some or all of the parties to arbitration for any of the following reasons: 1. Not all of the disputes subject of the civil action may be referred to arbitration;


2. Not all of the parties to the civil action are bound by the arbitration agreement and referral to arbitration would result in multiplicity of suits; 3. The issues raised in the civil action could be speedily and efficiently resolved in its entirety by the court rather than in an arbitration; 4. Referral to arbitration does not appear to be the most prudent action; or 5. The stay of the action would prejudice the rights of the parties to the civil action who are not bound by the arbitration agreement. INTERIM MEASURES OF PROTECTION The rules on judicial issuance of interim measures of protection contemplate the situation: 1. Either: a. before the commencement of arbitration, or b. after the commencement of the arbitration but prior to the constitution of the arbitral tribunal, c. after the tribunal’s constitution but it has no power to act or is unable to act effectively; and 2. Where a party desires to secure interim measures of protection. A measure of protection may either be interim or temporary. INTERIM MEASURES OF PROTECTION The parties may request from the court, the following interim measures: 1. Preliminary injunction directed against a party to arbitration; 2. Preliminary attachment against property or garnishment of funds in the custody of a bank or third person; 3. Appointing of a receiver 4. Detention, preservation, delivery or inspection of property; 5. Assistance in the enforcement of an interim measure of protection granted by the arbitral tribunal, which it cannot enforce effectively. The following rules are the rules of procedure for the application for interim measures of protection with the court: 1. Petition 2. Comment/opposition 3. Court action 4. Relief against court action TEMPORARY ORDER OF PROTECTION OR TEMPORARY PROTECTIVE MEASURE A TPM or TOP, is an injunctive relief the office of which is to preserve the property subject matter of the arbitration, prevent the disposition or concealment or prevent the relief prayed for from becoming moor and academic, during the period that the court is resolving the application for interim measure. A TOP or TPM is applied for ex parte, is immediately executory and has a lifetime of only 20days. The court under the following conditions may issue a TOP or TPM:


1. There is an urgent need to a. preserve the property; b. prevent the respondent from disposing of, or concealing the property; or c. prevent the relief prayed for from being illusory because of prior notice. 2. The petitioner shall post a bond to answer for any damage that the respondent may suffer; 3. It shall be valid only for 20days from the service on the party required to comply unless extended but not for more than 20days; 4. During the 20day period and any extension the court shall determine the propriety of issuing the principal interim protective measure requested; and 5. It can be lifted by the respondent by posting an appropriate counter-bond as determined by the court. A TPM or TOP is similar to a TRO in that these measures are temporary in character, intended to ensure the efficacy of the principal relief and have as a general rule, a lifetime of 20days. They are, however, different in the following respects: 1. The effectivity of TOP or TPM is susceptible of extension for not more than 20days, while TRO is non-extendible and becomes functus officio after the lapse of 20days from the service. 2. A bond is required for TOP/TPM, unlike a TRO which does not generally required the posting of a bond. Instead, a bond is required for the issuance of a writ of preliminary injunction. 3. And A TOP/TPM may be lifted through the posting of a counter-bond, which is not true of TRO. Instead, a counter-bond may lift a writ of preliminary injunction. PREFERENCE FOR ARBITRATION The rules on interim measures of protection recognize the principle of preference for arbitration over judicial proceedings. The following instances illustrate this principle: 1. Any court order granting or denying an interim measure of protection is without prejudice to the subsequent grant, modification, amendment, revision, or revocation by the arbitral tribunal. 2. An interim measure of protection issued by the arbitral tribunal shall upon its issuance be deemed to have ipso jure modified, amended, revised, or revoked an interim measure of protection issued by the court to the extent that it is inconsistent with the subsequent interim measure of protection issued by the arbitral tribunal. 3. Any question involving a conflict or inconsistency between an interim measure of protection issued by a court and one issued by an arbitral tribunal shall be immediately referred by the court to the arbitral tribunal, which shall have the authority to decide such question. 4. The court shall defer action on any pending petition for an interim measure of protection filed by a party to an arbitration agreement arising from or in connection with a dispute there under upon being informed that an arbitral tribunal has been constituted pursuant to an agreement.


5. And the court shall assist in the enforcement of an interim measure of protection issued by the arbitral tribunal, which the latter is unable to effectively enforce. APPOINTMENT OF ARBITRATORS The rules on judicial appointment of arbitrators apply if: 1. There is failure to appoint an arbitrator under the following circumstances: a. Where any of the parties in an institutional arbitration failed or refused to appoint an arbitrator or the parties have failed to reach an agreement on the sole arbitrator or when the two designated arbitrators have failed to reach an agreement on the third or presiding arbitrator and the institution under whose rules arbitration is to be conducted fails or is unable to perform its duty as appointing authority within a reasonable time from receipt of the request for appointment. b. Where the arbitration is ad hoc and the parties failed to provide a method for appointing or replacing an arbitrator or substitute arbitrator or the method agreed upon is ineffective and the National President of IBP or his duly authorized representative fails or refuses to act within period as may be allowed under the pertinent rules of the IBP or within the absence of such request for appointment; c. Where the parties agreed that their dispute shall be resolved by 3 arbitrators but no method of appointing those arbitrators has been agreed upon and the parties and subsequently, the appointing authority fails or refuses to appoint the arbitrator within reasonable time from receipt of the request to do so; and 2. Any party or the appointed arbitrators request the court to act as the appointing authority and appoint the arbitrator or 3 rd arbitrator as the case may be. Hereunder the rules of procedure for the judicial appointment or arbitrators: 1. Petition 2. Comment/opposition 3. Court action 4. Relief against court action CHALLENGE TO APPOINTMENT OF ARBITRATOR The rules on judicial challenge to the appointment of arbitrators apply to the following situation: 1. The challenge to the appointment of an arbitrator before the arbitral tribunal is not successful and the appointing authority fails or refuses to act on the challenge within period of time as may be allowed under the applicable rule or in the absence, within 30days from receipt of the request; and 2. The aggrieved party want to secure judicial action on the challenge.


The procedure for the challenge to the appointment of an arbitrator before the court is as follows: 1. Petition 2. Comment/opposition 3. Court action – the court has any of the following options in resolving the petition: a. grant the petition by removing the challenged arbitrator; b. dismiss the petition if there is no merit; c. allow the challenged arbitrator to withdraw; d. accept the challenge and remove the arbitrator if: 1. The party or parties who named and appointed the challenged arbitrator agree to challenge and withdraw the appointment; 2. The other arbitrators in the tribunal agree to the removal of the challenged arbitrator; or 3. The challenged arbitrator fails or refuses to submit his comment on the petition or the brief of legal arguments as directed by the court or he fails to object to his removal 4. No relief against court action – any order of the court resolving the petition shall be immediately executor and shall not be subject to MR, appeal or certiorari. TERMINATION OF MANDATE OF ARBITRATOR The rules on the judicial termination of mandate of an arbitrator apply when: 1. An arbitrator becomes de jure or de facto unable to perform his functions or for other reasons fail to act without undue delay; 2. The arbitrator, upon request of any party, fails or refuses to withdraw from his office; 3. The appointing authority fails or refuses to decide on the termination of the mandate of the arbitrator within the period of time as may be allowed under the applicable rule or in the absence, within 30days from the time the request is brought before him; 4. Any party seeks judicial action in terminating the mandate of an arbitrator. The procedure for the judicial termination of the mandate of an arbitrator is as follows: 1. Petition 2. Comment/opposition 3. Court action 4. No relief against court action ASSISTANCE IN TAKING EVIDENCE The rules on judicial assistance in taking evidence apply in the following situation: 1. There is pending arbitration, whether domestic or foreign; 2. A party desires to present evidence or the arbitral tribunal ordered the taking of evidence, necessitating court assistance, and 3. The evidence is sought from a person, including a representative of a corporation, association, partnership or other entity other than a party to the arbitration or its officers found in the RP. They correspond to the different classes of evidence under the Rules of Court thus:


1. On testimonial evidence: a. To comply with a subpoena ad testificandum; b. To appear as witness before an officer for the taking of his deposition upon oral examination or written interrogatories. 2. On documentary: a. To comply with a subpoena duces tecum; b. To allow the examination and copying of documents. 3. On real evidence: a. To allow the physical examination of the condition of persons or the inspection of the things or premises and when appropriate to allow the recording or documentation of the conditions of persons, things, or premises. The foregoing enumeration of the types of court assistance in taking evidence under rule9.5 of the Special ADR rules is not exclusive. The arbitral tribunal is not clothed with the authority to cite parties in contempt. However, the court may impose sanctions, including the citation for contempt, against the persons who violate its orders issued in assisting arbitral tribunal in taking evidence. The procedure for judicial assistance in taking evidence is as follows: 1. Petition 2. Comment/opposition 3. Court action 4. Relief against court action. CONFIDENTIALITY/PROTECTIVE ORDER The protective order referred to under the rules on judicial enforcement of confidentiality is different from the interim protective measures under rule5 of the special rules. The protective order under rule10 of the special ADR rules refers to the judicial enforcement of the confidential nature of information disclosed or obtained during an ADR proceeding. The rules on confidentiality and protective orders apply when: 1. An ADR proceeding is pending; 2. A party, counsel or witness disclosed information or was otherwise compelled to disclose information; 3. The disclosure was made under circumstances that would create a reasonable expectation on behalf of the source, that the information shall be kept confidential; 4. The source of the information or the party who made the disclosure has the right to prevent such information from being disclosed; 5. The source of the information or the party who made the disclosure has not given his express consent to any disclosure; and 6. The applicant would be materially prejudiced by an unauthorized disclosure of the information obtained or to be obtained during the ADR.


The benefit of the rules is available not just for arbitration proceedings, but also for all other forms of ADR. The procedure for the judicial enforcement of confidentiality or protective measures: 1. Petition 2. Comment/opposition 3. Court action 4. Relief against court action CONFIRMATION, RECOGNITION, ENFORCEMENT, CORRECTION, VACATION OR SETTING ASIDE OF ARBITRAL AWARDS Rules 11 to 13 of the special ADR rules govern the confirmation, recognition, enforcement, correction, vacation or setting aside of arbitral awards. The circumstances covered by theses rules are as follows: 1. An arbitral award has been rendered either in a 1. Domestic arbitration; 2. ICA conducted in the Philippines; or 3. Foreign arbitration resulting in a convention award or non-convention award but with comity and reciprocity. 2. A party seeks to 1. Confirm, correct or vacate the domestic arbitral award; 2. Recognize and enforce or set aside the ICA award rendered in the RP; 3. Recognize and enforce the foreign convention award or the foreign as-in convention award. CONFIRMATION, CORRECTION ARBITRAL AWARDS

OR

VACATION

OF

DOMESTIC

The special ADR rules clarify that judicial affirmation of a domestic arbitral award is done through “confirmation” and not “recognition.” Recognition pertains to the grant of legal effect by Philippine Courts to an arbitral award with foreign elements or the basis of the authority rendering the award is an international convention treaty or agreement. A domestic arbitral award carries with it the presumption that it was rendered in due course of the arbitration and is entitled to confirmation by the court. This presumption may be rebutted by evidence of the existence to any of the grounds for vacating or setting aside the arbitral award. CAUSES OF ACTION AND GROUNDS Three principal causes of action are covered by rule11 of the special ADR rules, namely: 1. Confirmation of the domestic award, the petition for which can be filed at any time after the lapse of 30days from receipt by the petitioner of the arbitral award. The petition shall be granted unless there exist grounds to vacate the award. 2. Correction or modification of the domestic arbitral award, the petition for which must be filed not later than 30days from receipt of the arbitral award. The grounds are as follows:


a. Where there was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award; b. Where the arbitrators have awarded upon a matter not submitted to them, not affecting the merits of the decision upon the matter submitted; c. Where the arbitrators have omitted to resolve an issue submitted to them for resolution; d. Where the award is imperfect in a matter of form not affecting the merits of the controversy and if it had been a commissioner’s report, the defect could have been amended or disregarded by the court. 3. Vacation of the domestic arbitral award, the petition for which must also be filed not later than 30days from receipt of the arbitral award. The grounds are as follows: a. The arbitral award was procured through corruption, fraud or other undue means; b. There was evident partiality or corruption in the tribunal or any of its members; c. The tribunal was guilty of misconduct or any form of misbehavior that has materially prejudiced the rights of any party; d. One or more of the arbitrators was disqualified to act as such under the law and wilfully refrained from disclosing disqualification; e. The tribunal exceeded its powers or so imperfectly executed them, such that a complete, final and definite award upon the subject matter submitted to them was not made; f. The agreement did not exist or is invalid for any ground for the revocation of a contract or unenforceable; or g. A party to the arbitration is a minor or a person judicially declared to be incompetent, in which case, the petition shall be filed only on behalf of the minor or the incompetent person, and shall allege that 1. The other party had knowingly entered into a submission or agreement with minor or incompetent; and 2. The submission to arbitration was made by a guardian or guardian ad litem who was not authorized to do so by a competent court. The foregoing grounds are exclusive and the court cannot consider any other ground. COMBINATION OF CAUSES OF ACTION The principle of combined reliefs is available in proceedings allowing vacation or setting aside or correction of the arbitral award. These are the proceedings involving domestic arbitral awards and ICA awards rendered in the Philippines, but not for foreign arbitral awards, which cannot be vacated or set aside. The principle allows the combination of two or more reliefs to be pleaded in the same proceeding. The initiatory relief is that which is pleaded in the initiatory petition, while the reliefin-opposition is that prayed for in order to oppose the initiatory relief. A relief may also be supplementary relief as in the case of a prayer for correction of an arbitral


award in support of or in opposition to either a petition for confirmation or for the setting aside of domestic arbitration. Specifically, the following combinations are possible: 1. Confirmation/vacation 2. Confirmation/correction 3. Vacation/correction The foregoing combinations may come into play in a single petition, the rules do not allow the filing of petitions-in-opposition to vacate or correct a domestic arbitral award beyond the reglementary period for the filing of the petition had it been filed in the first instance. A petition for confirmation filed more than 30days from receipt of the arbitral award and filed within the reglementary period for petitions, can no longer be opposed via a petition-in-opposition to vacate or correct the award. This does not prevent the oppositor from filing an opposition to the petition except that he can no longer seek the affirmative relief of vacating or modifying the award on the grounds provided. A petition for vacation of a domestic arbitral award filed beyond the reglementary period shall be dismissed but the dismissal will not render dismissible a petition-in-opposition seeking to confirm the arbitral award. While the petition to vacate the award was filed beyond the reglementary period has not been filed on time and is not dismissible. Instead, the petition-in-opposition for confirmation will be considered a petition for confirmation filed in the first instance. Combination is possible only in the following: 1. If the petition to vacate, with a filing period of 30days from receipt of the arbitral award, is filed first as it can be opposed by a petition-in-opposition for confirmation, which can be filed after 30days from receipt of the arbitral award. 2. Or if the arbitral award is received ahead by the party intending to confirm it and it is received later by the party intending to vacate it, in which case, the filing period for the petition to set aside the award will overlap with the filing period for the petition for confirmation. The rules prohibit forum shopping and multiplicity of suits. If a petition for confirmation is already pending before a court, no petition-in-opposition seeking to vacate the same award may be filed with any court. Any subsequent petition may be dismissed for being violative of the rule against forum shopping or consolidated with the petition filed earlier. If the petitions were filed simultaneously, upon motion of either party, the cases may be consolidated in either court. The procedural rules for the judicial confirmation, correction or vacation of domestic arbitral awards: 1. Petition 2. Comment/opposition/petition-in-opposition 3. Reply 4. Hearing 5. Court action


6. Relief against court action RECOGNITION, ENFORCEMENT OR SETTING ASIDE OF ICA AWARDS Rules 12 of the special rules govern the recognition and enforcement or setting aside of an ICA award rendered in the RP. If the ICA award was rendered in an arbitral proceeding conducted outside the RP, it shall be treated as a foreign arbitral award, which in turn, may either be a convention award, as-in convention award or non-convention award. CAUSES OF ACTION The following are the exclusive causes of action covered by rule12 of the special ADR rules: 1. Recognition and enforcement of an ICA award. 2. Setting aside an ICA award Judicial correction or modification is not available for an ICA award. Any other judicial recourse against an ICA award, such as an appeal, petition for review or petition for certiorari are disallowed and shall be dismissed. The same principle allowing combinations of reliefs and dismissal of petitions or petition-in-opposition seeking reliefs filed beyond the reglementary period applicable to the confirmation, enforcement or setting aside of domestic arbitral awards, are applicable to ICA award. The proscription against forum shopping is also strictly observed in the filing of these petitions. GROUNDS The grounds for setting aside an ICA award or to resist its enforcement are as follows: 1. The party making the application furnishes proof that: a. A party to arbitration agreement was under some incapacity or the said agreement is not valid under the law to which the parties have subjected to it or, failing any indication under the Philippine Law; b. The party making the application to set aside or resist enforcement was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; c. The award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration. d. The composition of the arbitral tribunal or the procedure was not in accordance with the agreement of the parties unless such agreement was in conflict with the provision of Philippine law


from which the parties cannot derogate or failing such agreement was not in accordance with the Philippine law. 2. Or the court finds that: a. The subject matter of the dispute is not capable of settlement by arbitration under the law of the Philippines; or b. The recognition or enforcement of the award would be contrary to public policy. The foregoing grounds are similar to the grounds for the non-recognition of foreign arbitral awards, while ICA proceedings in the RP are domestic arbitral proceedings, ICA awards are treated more like foreign arbitral awards; hence, the requirement for the recognition, rather than mere confirmation, of ICA awards. If the party to the ICA is a minor or person judicially declared to be incompetent, the petition to set aside the ICA award shall be filed only on behalf of the minor or incompetent person and shall allege that 1. The other party had knowingly entered into a submission or agreement with such minor or incompetent; and 2. The submission to arbitration was made by a guardian or guardian ad litem who was not authorized to do so by competent court. Procedural Rules: 1. Petition 2. Notice, opposition and reply 3. Hearing 4. Suspension of the proceedings 5. Judgement 6. Relief from court action RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS A foreign arbitral award is one that is made in a other country. It includes an ICA award rendered outside the RP. The recognition and enforcement of foreign arbitral awards governed by the 1958 NY Convention on Recognition and Enforcement of Foreign Arbitral Awards. Rule13 of the special rules is applicable only to convention and as-in convention awards. A convention award is a foreign arbitral award made in a state, which is a party to the NY Convention. And as-in convention award is one, which, although rendered in a state, which is not a party to NY Convention, may be enforced and recognized by RP courts by reasons of comity and reciprocity as if it is a convention award. Rule13 is not applicable to foreign arbitral awards rendered in a nonconvention country, which does not extend comity or reciprocity to the RP. Philippine courts do not have the authority to set aside, correct or modify foreign arbitral awards they having been rendered under the authority and jurisdiction of another state. This is rooted in the international law principle of equality among states. Thus, no state can exercise the power to review, revise, amend, modify,


supplant, set-aside, alter, revoke or cancel the decision of a foreign court or tribunal. All that RP courts may do is to recognize them or refuse to recognize the. There is no rule or proceeding for the vacation or setting aside of foreign arbitral awards. The RP courts may refuse recognition and enforcement to foreign arbitral awards on any of the following grounds: 1. The party making the application refuse recognition and enforcement furnishes proof that: a. A party to arbitration agreement was under some incapacity or the said agreement is not valid under the law to which the parties have subjected it or failing any indication, under the law of the country where the award was made; b. The party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was unable to present his case; c. The award deals with a dispute not contemplated or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration; provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that party of the award which contains decisions on matters no submitted to arbitration may be refused recognition; d. The composition of the tribunal or proceedings was not in accordance with the agreement of the parties, or, failing agreement, was not in accordance with the law of the country where arbitration took place; e. The awards has not yet become binding on the parties or has been set aside or suspended by a court of the country in which that award was made; 2. Or the court finds that: a. The subject matter of the dispute is not capable of settlement by arbitration under the RP law; or b. The recognition or enforcement of the award would be contrary to public policy. NO OTHER GROUND SHALL BE CONSIDERED BY THE COURT. Procedural rules: 1. Petition 2. Notice and opposition 3. Hearing 4. Decision


CHAPTER 10:


PROVISIONS SPECIFIC TO MEDIATION The general rules is that the rules of procedure for court proceedings relative to arbitration are also applicable to mediation, to a dispute subject to construction arbitration and to other forms of ADR if more akin to arbitration than mediation, whenever appropriate or are not inconsistent with the specific rules The special rules govern the situation where the parties to mediation entered into and executed written mediated settlement agreements. The parties may require any of the following process or proceeding regarding the mediated settlement agreements: 1. Deposit of mediated settlement agreement; and 2. Enforcement of the mediated settlement agreements. These rules do not cover mediated settlement agreements or compromise agreements arrived at in court-annexed mediation where the agreement is subject to the approval of the court and is made of the judgment based on compromise. DEPOSIT OF MEDIATED SETTLEMENT AGREEMENTS In order for the mediated settlement to be enforceable by judicial action, it must be deposited with the proper Clerk of Court of the RTC. At any time after a mediated settlement agreement has been reached in a proceeding which is not courtannexed the agreement may be deposited by the parties jointly or by one of them with notice to the other with the COC of the RTC. The clerk of every RTC is required to keep a registry book wherein to list or enrol chronologically all the mediated settlement agreements or settlement awards that are deposited with the court. He shall issue a certificate of deposit to the party making the deposit. ENFORCEMENT OF MEDIATED SETTLEMENT AGREEMENTS Any parties to a mediated settlement agreement, which was deposited, upon breach, file a verified petition to enforce the agreement with the court where the agreement was deposited. If the agreement has not been deposited, the petitioner has to deposit the agreement first before the filing the petition in court. The petition should contain an authentic copy of the mediated settlement agreement and the certificate of deposit. The adverse party may file an opposition to the petition within 15days from receipt of notice or the service of petition. The court shall conduct a summary hearing to determine whether or not the mediated settlement agreement is valid and the respondent has breached the


agreement in whole or in part, and render judgment accordingly by either enforcing the agreement or dismissing the petition. PROVISIONS SPECIFIC TO OTHER FORMS OF ADR The special rules apply to early neutral evaluation, neutral evaluation, minitrial, mediation-arbitration, and any combination of the foregoing or any other ADR form. The general rule is that the rules of procedure applicable to the foregoing forms of ADR shall be those agreed upon by the parties. In the absence of an agreement, the specific rules on the foregoing forms of ADR shall be applicable. In default, the rules on mediation or arbitration shall be applied.


CHAPTER 11:


MOTION FOR RECONSIDERATION, APPEAL AND CERTIORARI The SC included the special rules specific provisions on MR, appeals, SCA for certiorari and petitions for review on certiorari. The inclusion of these provisions was occasioned by the public policy to promote ADR and make ADR as expeditious, inexpensive, least adversarial and effective as possible in resolving disputes and controversies. Special rules cover the remedies available to parties for challenging the orders, decisions or judgments rendered by the RTC on matters relating to ADR. These remedies are: 1. MR 2. Appeals to CA 3. SCA for certiorari 4. Appeal by certiorari to SC All allowable and applicable remedies from judicial issuances of the RTC and CA in ADR related cases have been enumerated in special rules. It is submitted that, following the statutory construction principle of expressio unios est exclusion alterious unless an intended judicial remedy is provided for in the special rules that remedy cannot be availed. The judicial remedies provided for should be distinguished from those available against an order, action, inaction or award of an arbitrator, tribunal or mediator as the case may be which have been discussed previously. In the case of ABS-CBN BROADCASTING CORP VS. WINS JAPAN CO. (544 SCRA 308, 2009), the SC, citing INSULAR SAVINGS BANK VS. FAR EAST BANK AND TRUST COMPANY (492 SCRA 145 2006), outlined several judicial remedies a party aggrieved by a domestic arbitral award may take namely: 1. A petition in the proper RTC to issue an order to vacate the award on the grounds provided for in Section 24 of RA876; 2. A petition for review in CA under rule 43 of ROC on questions of fact, of law or mixed questions of fact and law; and 3. A petition for certiorari under rule 65 of ROC should the arbitrator have acted without or in excess of his jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction. MOTION FOR RECONSIDERATION A MR under rule37 of ROC may be filed on the grounds that the findings or conclusions of the judgment or final order are not supported by evidence; more so are contrary to law. A party aggrieved by a ruling of the RTC in an ADR related proceeding, may file with the same RTC in an ADR related proceeding, may file with the same RTC, MR from the following orders or rulings within 15days from receipt of:


1. 2. 3. 4. 5. 6. 7.

The arbitration agreement is inexistent, invalid or unenforceable; Upholding or reversing the tribunal’s jurisdiction; Denying a request to refer the parties to arbitration; Granting or denying a party an interim measure of protection; Denying a petition for the appointment of an arbitrator; Refusing to grant an assistance in taking evidence; Enjoining or refusing to enjoin a person from divulging confidential information; 8. Confirming, vacating or correcting a domestic arbitral award; 9. Suspending the proceedings to set aside an ICA award and referring the case back to the arbitral tribunal; 10. Setting aside an ICA award; 11. Dismissing the petition to set aside an ICA award even if the court does not recognize and/or enforce the same; 12. Recognizing and/or enforcing, or dismissing a petition to recognize and/or enforce an ICA award; 13. Declining a request for assistance in taking evidence; 14. Adjourning or deferring in a ruling on a petition to set aside, recognize and/or enforce an ICA award; 15. Recognizing and/or enforcing a foreign arbitral award or refusing recognition and/or enforcement of the same; and 16. Granting or dismissing a petition to enforce a deposited mediated settlement agreement. No MR shall be allowed from the following rulings and orders of the RTC: 1. A prima facie determination upholding the existence, validity and enforceability of an arbitration agreement; 2. An order referring the dispute to arbitration; 3. An order appointing an arbitrator; 4. Any ruling on the challenge to the appointment of an arbitrator; 5. Any order resolving the issue of the termination of the mandate of an arbitrator; 6. An order granting assistance in taking evidence. The motion shall be in writing, filed with the court and served upon the other party who shall have a non-extendible period of 15days from receipt which to file an opposition or comment. The opposition or comment is the last pleading allowed to be filed. The court shall resolve the motion for reconsideration within 30days from receipt of the opposition or comment of the expiration of the period to file the same. GENERAL PROVISIONS ON APPEAL AND CERTIORARI The modes of review by the CA and SC of decisions or orders of the RTC are: 1. Ordinary appeal by notice of appeal on errors of fact, law or mixed fact and law; 2. Petition for review to CA on errors of fact, law or mixed fact and law; 3. Appeal by certiorari such as:


a. The court a quo has decided a question of substance, not therefore determined by the SC or has decided it in a way probably not in accord with the applicable decision SC; b. The court a quo has so far departed from the accepted and usual course of judicial proceedings, or so far sanctioned such departure by a lower court as to call for an exercise of the power of supervision; 4. SCA for certiorari when there is no appeal on any plain, speedy and adequate remedy under the ordinary course of law; In the allowable appeal or review in ADR related cases, the appellate or reviewing court must take into account the following principles which should have been observed by the RTC whose order or decision is under review: 1. A party is precluded from filing an appeal or a petition for certiorari questioning the merits of an arbitral award. 2. Appeals from decision of the RTC are exceptional remedies. They shall be allowed only on the instances provided under the special rules and only in the manner provided. 3. As a general rule, the grounds and infirmities provided for the vacation or setting aside of a domestic arbitral award or ICA award are exclusive. No other ground can be raised except if it amounts to a violation of public policy. 4. The court can deny recognition and enforcement of a foreign arbitral award only upon the grounds provided for in article VI of NY Convention. The court does not have the power to vacate or set aside a foreign arbitral award because it was rendered by an entity outside the RP. APPEAL TO THE CA Similar to rule 42 petitions, the allowed appeal to the CA from the decisions of RTC in ADR related cases is not based on rule42 or 45 but on section 26 of ADR act of 2004. Under the special rules, the petition for review to the CA shall be allowed only from the following orders of RTC: 1. Granting or denying an interim measure of protection; 2. Denying a petition for appointment of an arbitrator; 3. Denying a petition for assistance in taking evidence; 4. Enjoining or refusing to enjoin a person from divulging confidential information; 5. Confirming, vacating or correcting/modifying a domestic arbitral award; 6. Setting aside an ICA award; 7. Dismissing the petition to set aside an ICA award even if the court does not decide to recognize or enforce award; 8. Recognizing and/or enforcing an ICA award; 9. Recognizing and/or enforcing foreign arbitral award; 10. Refusing recognition and/or enforcement of a foreign arbitral award;


11. Granting or dismissing a petition to enforce a deposited mediated settlement agreement; and 12. Reversing the ruling of the arbitral tribunal upholding its jurisdiction. The appeal shall be file within 15days from notice of the decision of RTC or the denial of the petitioner’s MR, by filing a verified petition for review. The CA may give due course to the petition if it finds prima facie that the RTC committed an error that would warrant the reversal or modification of the judgment, final order or resolution sought to be reviewed. The filing of the appeal under this rule shall not stay the award, judgment, final order or resolution sought to be reviewed unless the CA directs otherwise. This rule is different from the ROC except in certain instances such as in cases governed by the rules on summary procedure or when the prevailing party avails of the remedy of execution pending appeal, the special rules provides one instance when the law and the rules specifically proscribe the stay of the judgment, award, final order or resolution subject of appeal. Another distinction of the appeal is that the party appealing the decision or final order or the RTC under the special rules shall be required to post a bond in favor of the prevailing party equal to the amount of the award. SCA FOR CERTIORARI The availability of a SCA for certiorari under rule65 as a remedy from decisions of RTC in ADR related cases has been settled in the case of CARGILL PHILS. VS. SAN FERNANDO REGALA TRADING 641 SCRA 31 2011 Unlike a petition for certiorari under rule65 of ROC which can cover all kinds of grave abuse of discretion committed by a tribunal, the SCA for certiorari under the special rules is limited to grave abuse of discretion in the following orders of the RTC in ADR related proceedings: 1. Holding that the arbitration agreement is inexistent, invalid or unenforceable; 2. Reversing the arbitral tribunal’s preliminary determination upholding its jurisdiction; 3. Denying the request to refer the dispute to arbitration; 4. Granting or refusing an interim relief; 5. Denying a petition for the appointment of an arbitrator; 6. Confirming, vacating or correcting domestic arbitral award; 7. Suspending the proceedings to set aside an ICA award and referring back to the tribunal 8. Allowing a party to enforce an ICA award pending appeal 9. Adjourning or deferring a ruling on whether to set aside, recognize and/or enforce an ICA award; 10. Allowing a party to enforce a foreign arbitral award pending appeal; 11. Denying a petition for assistance in taking evidence.


Unless specifically required by the reviewing court, the public respondent shall not appear in or file an answer or comment to the petition any pleading therein. In petitions involving the recognition and enforcement of a foreign arbitral award, the tribunal shall not even be included as a nominal party, but it shall be notified of the proceedings and to be furnished with court processes. The filing of SCA for certiorari under the special ADR does not stay the proceedings of the lower court or arbitral tribunal. The proceedings and award under this situation is subject to the final outcome of the pending petition for certiorari. APPEAL BY CERTIORARI TO THE SC The petition is not a matter of right and may be granted only for serious and compelling reasons resulting in grave prejudice to the aggrieved party. Rule45 of the ROC illustrated the instances when an appeal by certiorari to the SC is warranted there under, to wit: 1. When the court a quo has decided a question of substance not determined by the SC or has decided it in a way probably not in accord with law or with the applicable decisions of the SC; or 2. When the court a quo has so far departed from the accepted and usual course of judicial proceedings or sanctioned such departure by lower court as to call for an exercise of the power of supervision. The special rules also deemed it best to illustrate instead of enumerate the instances when a petition for review on certiorari of the decision of the CA to SC may be granted namely: 1. Failed to apply the applicable standard or judicial review prescribed in these special rules in arriving at its decision resulting in substantial prejudice to the party; 2. Erred in upholding a final order or decision despite the lack of jurisdiction of the court 3. Failed to apply any provision, principle or policy or rule contained in these special rules; 4. Committed an error so egregious and harmful to a party as to amount to an undeniable excess of jurisdiction. The SC may motu propio deny the petition on the ground that it is without merit, or is prosecuted manifestly for delay, or that the questions raised are too insubstantial to require consideration. The special rules provide for petitions for review on certiorari from the resolutions and decisions of the CA to the SC, it is silent on the availability of a petition for review on pure questions of law direct form RTC to SC. Only judgments, final orders, or resolutions of the CA as being reviewable in a petition for review on certiorari. Hence, a petition for review direct to the SC from a judgment, final order or resolution of the RTC in the ADR related cases enumerated in rule1.1 is not available.


CHAPTER 12:

CONSTRUCTION DISPUTE ARBITRATION

CONSTRUCTION DISPUTE Refers to all on-site works on buildings or altering structures, from land clearance through completion including excavation, erection and assembly and installation of components and equipment. Construction dispute shall include those between or among parties to, or who are otherwise bound by an arbitration agreement, directly or by reference, whether such parties are project owner, contractor, subcontractorm fabricator, project manager, design professional, consultant, quantity surveyor, bondsman or issuer of an insurance policy in construction project. CONSTRUCTION ARBITRATION UNDER ACT 2004 The ADR act of 2004 not only affirmed the original and exclusive jurisdiction of CIAC over construction disputes, but also strengthened it to include those between or among parties to, or who are otherwise bound by an arbitration agreement, directly or by reference whether such parties are project owner, contractor, subcontractor, quantity surveyor, bondsman or issuer of an insurance policy in a construction project and even if the arbitration is commercial in character. The ADR act directs the RTC before which, is presented a construction dispute for resolution, upon becoming aware that the parties had entered into an arbitration agreement, motu propio or upon motion made not later than the pre-trial, not just to dismiss the case, but also to refer the parties to arbitration by the CIAC, unless all the parties to the arbitration, assisted by their counsels, submit to the court a written agreement making the court the body that will resolve the dispute. The request for the dismissal of the action and the referral to the CIAC for arbitration shall be made through a verified petition. The other party may file an opposition to the motion on or before the dare set for the hearing of the motion. An order dismissing the case and referring the dispute to arbitration by the CIAC is immediately executory. CONSTRUCTION INDUSTRY ARBITRATION COMMISSION It is the quasi-judicial agency accorded with the jurisdiction to resolve disputes arising from contracts involving construction in the Philippines. The CIAC is an agency under the Construction Industry Authority of the Philippines (CIAP) and is administratively attached to DTI. The CIAC has the following functions:


1. To formulate and adopt an arbitration program for the construction industry; 2. To enunciate policies and prescribe rules and procedures for construction arbitration; 3. To supervise the arbitration program, and exercise such authority related as regards the appointment, replacement, or challenging of arbitrators; and 4. To direct its offices and employees to perform such functions as may be assigned to them from time to time. The CIAC has undergone various reorganizations and its rules of procedure have been revised a number of times. Its first rules of Procedure governing construction were promulgated in August 1988. JURISDICTION OF THE CIAC The jurisdiction of the CIAC is conferred by EO 1008, specifically section 4 provides that: “SECTION 4. Jurisdiction – the CIAC shall have original and exclusive jurisdiction over disputes arising from or connected with contracts entered into by parties involved in construction in the Philippines, whether the dispute arises before or after the completion of the contract or after the abandonment or breach.” The jurisdiction of the CIAC may include but is not limited to the violation of specifications for materials and workmanship; violation of the terms of agreement; interpretation and/or application of contractual provisions; amounts of damages and penalties; commencement time and delays; maintenance and defects; payment default of employer or contractor and changes in contract cost” Excluded from the CIAC’s jurisdiction are disputes arising from employeremployee relationships, which are covered by the Labor Code. Also claims for moral damages, exemplary damages, opportunity or business losses in addition to liquidated damages and attorney’s fees which are non-arbitrable unless the parties acquiesce or mutually agree to submit these issues for arbitration and to abide by the decision of the arbitrator thereon. EO 1008 is a special law. Hence, it takes precedence over BP 129 a general law which vests jurisdiction to MTC and RTC over certain civil actions, including those breach of contract. Thus, while ordinarily, civil actions for breach of contract are within the jurisdiction of the regular courts, complaints for construction disputes, including the breach of construction contracts, must be filed with the CIAC, provided that the parties agree to submit their dispute to arbitration. The doctrine of primary jurisdiction dictates prior recourse to the CIAC for construction disputes and parties over which it has acquired jurisdiction. The same doctrine precludes courts from resolving construction disputes over which jurisdiction has been initially lodged with the CIAC by reason of its special knowledge, experience and services are generally accorded great respect if not finality by the courts having been rendered by an agency in a better position to pass judgment.


For the CIAC to acquire jurisdiction, the parties to dispute must be bound by an arbitration agreement in their contract or subsequently agree to submit the same to voluntary arbitration. The jurisdiction of CIAC is dependent on the agreement and consent of the parties to the construction contract, to submit their dispute to arbitration and that, absent consent, the CIAC cannot validly proceed against a party for lack of jurisdiction. An arbitration agreement or a submission to arbitration must be in writing but it need not be signed by the parties, as long as the intent is clear that the parties agree to submit a present or future controversy arising from a construction contract to arbitration. In the event that a party has already filed a complaint before the regular courts involving a dispute within the jurisdiction of the CIAC, the proper procedure to enable the CIAC to decide on the dispute is to request the stay or suspension of the judicial action as provided under the arbitration law. The court is directed by the ADR act not just to dismiss the complaint falling within the CIAC’s jurisdiction, but also to refer the case to the CIAC. The principle of Jurisdiction by estoppel is equally applicable to the CIAC. When a party to an arbitration conducted by the CIAC has actively participated in the proceedings before the CIAC, even going to the extent of seeking affirmative relief, active participation is tantamount to an invocation of, or at least an acquiescence to CIAC’s jurisdiction notwithstanding that party initially assailed the CIAC’s jurisdiction. RULES OF PROCEDURE IN THE CIAC In the proceedings before the CIAC, judicial rules of evidence are not controlling and the technicalities of law or procedure may be disregarded in order to ascertain the facts in each and every case by every reasonable means. The arbitral tribunal of the CIAC is mandated to act according to justice and equity and merits of the case without regard to the technicalities or legal forms and need not be bound by any technical rule of evidence. The following are the procedural rules in the CIAC: 1. Complaint/request for arbitration – the initiatory pleading which must be filed with the Secretariat of the CIAC. 2. Answer – within 3days from filing, transmit to the respondent a request for his answer. Without prejudice to extensions of time if warranted, the respondent has 15days from receipt of the request for arbitration or complaint within which, to file his answer. Failure of the respondent to file an answer or his refusal to arbitrate shall not stay the proceedings as long as the jurisdiction of the CIAC has been properly invoked by the filing of the request for arbitration in accordance with CIAC revised rules. If, before the award, the respondent appears and offers to present his evidence, the tribunal may, for justifiable reasons, reopens the proceedings, require him to file his answer and allow him to present evidence. 3. Reply – claimant may file a reply to the counterclaim within 15days.

A Dr Reviewer

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