DOMESTIC ARBITRATION

Introduction

The Alternative Dispute Resolution Act of 2004 (R.A. 9285) in Section 2, declares

it a policy of the State to encourage and actively promote the use of alternative

dispute resolution (ADR) system as an important means to achieve speedy and

impartial justice and to declog court dockets. In order to carry out this policy, Section

2 of the Act further provides that (a) the State shall provide the means for the use of

ADR as an efficient tool and an Alternative procedure for the resolution of disputes

and (b) the State shall enlist active private sector participation in the dispute

resolution process.

In recognition of the independence of the Judiciary, the Act in Section 2 limited to

itself a general statement that it shall be without prejudice to the adoption by the

Supreme Court of any alternative dispute resolution system such as mediation,

conciliation, arbitration or any combination thereof as a means of achieving speedy

and efficient resolution of cases pending before all courts in the Philippines

(Custodio O. Parlade, Alternative Dispute Resolution Act of 2004 Annotated, Central

Professional Books, Inc., Q.C., 2004, p. 2).

Arbitration is defined in Section 3(d) of the ADR Act as a voluntary dispute

resolution process in which one or more arbitrators, appointed in accordance with

the agreement of the parties or the rules promulgated pursuant to this Act resolve a

dispute by rendering an award.

Kinds of Arbitration

1. International or Domestic Arbitration

International arbitration is governed by Model Law on International

Commercial Arbitration pursuant to Section 19 of the ADR Act. Domestic

Arbitration shall continue to be governed by R.A. 876, as amended by the

ADR Act. A highly specialized form of domestic dispute resolution limited to

construction disputes shall continue to be governed by the Construction

Industry Arbitration Law, Executive Order No. 1008 (1985).

2. Arbitration may be Domestic or Foreign

A foreign arbitration is one where the agreed or fixed place of arbitration is in

a foreign country, whereas in domestic arbitration, the agreed place of

arbitration is the Philippines. The recognition and enforcement of a foreign

arbitral award is governed by the 1958 New York Convention on the

Recognition and Enforcement of Foreign Arbitral awards. (Section 42 of the

ADR Act and for awards made in a country which is not a party to the 1958

New York Convention, such as Taiwan, by Section 43 of the ADR Act.)

3. Arbitration may be Voluntary or Compulsory

A voluntary arbitration is a referral of a dispute by the parties, pursuant to their

arbitration agreement, to an impartial third person for a final and binding

resolution. Compulsory arbitration (arbitration required for labor disputes) is a

system whereby the parties are compelled by law to submit their dispute to an

impartial third person for arbitration.

4. Arbitration may be binding or non-binding

It is binding if it results in an award which is subject to confirmation and

when confirmed by a court, is subject to enforcement like any judgment of

the court. It is non-binding if the award, by agreement of the parties or by

 law, is not subject to confirmation and enforcement. As part of or incident

to the settlement of the estate of the deceased, an arbitrator may be

appointed for the specific purpose of appraising the value of the share

adjudicated to each group of heirs and whose report on the value of the

assets appraised by him shall be final and binding upon the heirs.

ADR methods like arbitration, mediation, negotiation, and conciliation are

encouraged by the Supreme Court. They are inexpensive, speedy and amicable

methods of settling disputes. Aside from unclogging judicial dockets, arbitration also

hastens the resolution specially of commercial disputes. Court litigation, on the other

hand, tend to be scrupulous observance of the due process of law

doctrine and their strict adherence to rules of evidence.

Republic Act No. 876 was enacted by Congress „to afford the public a

cheap and expeditious procedure of settling not only commercial but also

other kinds of disputes. The basic objective of arbitration is to provide a speedy and

inexpensive method of settling disputes by allowing parties to avoid the

formalities, delay, expense and aggravation which commonly accompany ordinary

litigation, especially litigation which goes through the entire

hierarchy of courts. ADR enables parties to resolve their disputes amicably in a

manner that is simple, speedy, less confrontational, and more productive of goodwill

and lasting relationships.

Nature of Domestic Arbitration

 Domestic arbitration shall continue to be governed by R.A No. 876, otherwise

known as “The Arbitration Law”, as amended by the ADR Act. Articles 8, 10, 11, 12,

13, 14, 18 and 19, and 29 to 32 of the Model law and Sections 22-31 of the ADR Act

are specifically applicable to domestic arbitration. In the absence of a specific

applicable provision, all other rules applicable to international commercial arbitration

may be applied in a suppletory manner to domestic arbitration.

I. Arbitration agreement is a contract.

Arbitration agreements are contracts and must be interpreted under the accepted

rules of contract law. A contract need not be contained in a single writing. It may be

collected from several different writings while do not conflict with each other and

which, when connected show the parties, subject matter, terms and consideration,

as in contracts entered into by correspondence. A contract may be encompassed in

several instruments even though every instrument is not signed by the parties, since

it is sufficient if the consigned instruments are clearly identified or referred to and

made part of the signed instrument or instruments. Similarly, a written agreement of

which there are two copies, one signed by each of the parties, is binding on both to

the same extent as though there had only been one copy of the agreement and both

had signed it.

Under R.A. No. 876, Section 2, two kinds of arbitration agreements are

contemplated, namely: (a) an arbitration agreement usually embedded in a contract

in effect providing that any future controversy arising from such contract shall be

subject to settlement by arbitration; and (b) an arbitration agreement to submit an

existing dispute to arbitration. The first is known as a compromissoire and the

second, a compromis.

II. Form of arbitration agreement

R.A. 876, Section 4 requires that an arbitration agreement or a submission to

arbitration shall be in writing and subscribed by the party sought to be charged or by

his lawful agent. Although the agreement of the parties to submit a dispute to

arbitration was returned by the respondent unsigned. There is nevertheless a

written arbitration agreement it appearing that the submission was merely in

implementation of an earlier instruction given by the respondent to its counsel to

present our case to the arbitrators, pursuant to which respondent’s counsel signed

the document on behalf of the respondent and submitted it to the arbitrators.

If the arbitration agreement or submission to arbitration is signed by

an agent, the law requires that the agent be equipped with a special power.

III. Parties to the arbitration

Under R.A. 876, Section 2, Two or more persons or parties may submit

to the arbitration of one or more arbitrators any controversy existing between them at

the time of the submission and which may be the subject of an action, or the parties

to any contract may in such contract agree to settle by arbitration a controversy

thereafter arising between them. Where one of the parties to the controversy to be

arbitrated is an infant, or a person judicially declared to be incompetent, the

appropriate court having jurisdiction is required to approve a petition for permission

to submit such controversy to arbitration by the general guardian ad litem of the

infant or of the incompetent. But where a person capable of entering into a

submission or contract has knowingly entered into the same with a person incapable

of so doing, the objection on the ground of incapacity can be taken only in behalf of

the person so incapacitated.

Waiver of right to object

The following constitutes a waiver of right to object:

(a) Non-compliance with any non-mandatory provision of the rules governing

domestic arbitration or any requirement under the arbitration agreement when:

He/she/it knows of such non-compliance; and proceeds with the arbitration without

stating his/her/its objections to such non-compliance without undue delay or if a time-

limit is provided therefor, within such period of time.

(b) If an act is required or allowed to be done under Chapter of the IRR of ADR

Act, unless the applicable rule or the agreement of the parties provides a different

period for the act to be done, it shall be done within a period of 30 days from the date

when such act could have been done with legal effect.

IV. Arbitrators

Who may be appointed as arbitrator?

 Must be of legal age, in full enjoyment of his/her civil rights and knows how to

read and write.

  Must not be related by blood or marriage within the sixth degree to either

party to the controversy.

 Must have no current or even past financial, fiduciary or other interest in the

controversy or cause to be decided or in the result of the proceeding, or has

any personal bias.

No person shall select as an arbitrator any person to act as his/her champion or

to advocate his/her cause.

Number of Arbitrators

 Single Arbitrator - the demand shall be set forth a specific time within which

the parties shall agree upon such arbitrator.

 Three arbitrators - one to be selected by each party, the demand shall name

the arbitrator appointed by the party making the demand; and shall require

that the party upon whom the demand is made shall within thirty days after

receipt thereof advise in writing the party making such demand of the name of

the person appointed by the second party; such notice shall require that the

two arbitrators so appointed must agree upon the third arbitrator within thirty

days from the date of such notice.

V. Matters subject to arbitration

Any controversy whether contracted or con-contractual, may be submitted to

arbitration. Such submission or contract may include questions arising out of

valuations, appraisals or other controversies which may be collateral, incidental,

precedent or subsequent to any issue between the parties. Labor disputes,

as well as certain types of disputes which are required to be submitted to other

methods of settlement may not be submitted to arbitration under Arbitration Law:

These are:

1. Under the Mining Act, certain disputes are to be

settled by the “Panel of Arbitrators”;

2. Under the Consumers Act of the Philippines, by arbitration officer; or

3. Under HLURB Resolution No. R-586, series of 1996, by “arbiters” of the

Housing and Land Use Regulatory Board.

4. The Civil Code of the Philippines excludes the following questions from

being submitted to arbitration;

4.1. the civil status of persons;

4.2. the validity of a marriage or a legal separation;

4.3. any ground for legal separation;

4.4. future support;

4.5. the jurisdiction of courts; and

4.6. future legitime

Institution of Arbitration of a Dispute

R.A. 876, Section 5 makes a distinction in the procedure to be followed in

instituting an arbitration of a dispute between a case where there is an arbitration

agreement to submit future disputes to arbitration which is covered by paragraphs a

and b of this section, and one where the agreement is to submit an existing controversy

to arbitration which is covered by paragraph of the same section. A submission, it

appears, requires its filing with the Clerk of the Regional Trial Court having jurisdiction

of the submission agreement. However, in the event that there is a failure or refusal
on the part of either party to arbitrate, the procedure to compel compliance with the

arbitration agreement or the submission is the same.

a. In the case of a contract to arbitrate future controversies by the service by

either party upon the other of a demand for arbitration in accordance with the

contract. Such demand shall be set forth the nature of the controversy,

the amount involved, if any, and the relief sought, together with a true copy of

the contract providing for arbitration.

Requirement: The demand shall be served upon any party either in person or by

registered mail.

NOTICE OF ARBITRATION under the UNCITRAL Arbitration shall include the

following:

(i) A demand that the dispute be referred to arbitration;

(ii) The names and addresses of the parties;

(iii) A reference to the arbitration clause or the separate arbitration agreement

that is invoked;

(iv) A reference to the contract out of or in relation to which the dispute arises;

(v) The general nature of the claim and an indication of the amount involved if

any;

(vi)The relief or remedy sought;

(vii) A proposal as to the number of arbitrators (i.e., one or three) if the parties

have not previously agreed thereon.

b. In the event that one party defaults in

answering the demand, the aggrieved party may

 file with the Clerk of the Court of First Instance having jurisdiction over the

parties, a copy of the demand for arbitration under the contract to

arbitrate, with a notice that the original demand was sent by registered mail or

delivered in person to the party against whom the claim is

asserted. Such demand shall set forth the nature of the controversy, the

amount involved, if any, and the relief sought, and shall be accompanied by a

true copy of the contract providing for arbitration.

c. In the case of the submission of an existing controversy by the filing with the

Clerk of the Court of First Instance having jurisdiction, of the submission

agreement, setting forth the nature of the controversy, and

the amount involved, if any. Such submission may be filed by any party and

shall be duly executed by both parties.

d. In the event that one party neglects, fails or refuses to arbitrate under a

submission agreement, the aggrieved party shall follow the procedure

prescribed in subparagraphs (a) and (b) of this section.

Conduct of Arbitral Proceedings

(1) Equal treatment of Parties

The parties shall be treated with equality and each party shall be given a full

opportunity of presenting his case.

(2) Confidentiality of Arbitration Proceedings

The arbitration proceedings, including the records, evidence and the arbitral

award, shall be considered confidential and shall not be

 published except with the consent of the parties, or for the limited purpose of

disclosing to the court of relevant documents in cases where resort to the

court is allowed.

(3) Determination of Rules of Procedure

(a) The parties are free to agree on the the procedure to be followed by

the arbitral tribunal in conducting proceedings subject to the

provisions of ADR Act.

(b) Failing such agreement, the arbitral tribunal may subject to the

provision of ADR Act and conduct the arbitration in such a manner as

it considers appropriate.

(4) Place of Arbitration

(3.1) The parties are free to agree on the place of arbitration.

(3.2) Metro Manila

(3.3) Members of the arbitral tribunal may designate a place it

considers

appropriate, unless otherwise agreed by the parties.

(5) Language

The parties are free to agree on the language or languages to be used

in the arbitral proceedings. Failing such agreement, the language to be used

shall be English or Filipino.

(6) Fees and Costs

The following are the rules:

 (a) The fees of the arbitrators shall be agreed upon by the parties and

the arbitrator/s in writing prior to arbitration.

(b) The parties shall be responsible for the payment of the

administrative fees of an arbitration institution and the cost of arbitration.

(c) The arbitral tribunal shall fix the costs of arbitration in its award.

(d) The fees of the arbitral tribunal shall be reasonable in amount

taking into account the amount in dispute, the complexity of the subject

matter, the time spend by the arbitrators and other relevant circumstances

of the case.

(7) Form and contents of Awards

a. The award shall be made in writing and shall be signed by the arbitrator or

arbitrators. In arbitral proceedings with more than one arbitrator, the signatures of

the majority of all members of the arbitral tribunal shall suffice, provided that the

reason for any omitted signature is stated.

b. The award shall state the reasons upon which it is based, unless the

parties have agreed that no reasons are to be given or the award is an award

on agreed terms under article 30 of the Uncitral Law.

c. The award shall state its date and the place where the arbitration

proceeding was held. The award shall be deemed to have been made at that

place.

d. After the award is made, a copy signed by the arbitrators and shall be

delivered to each party.

(8) Termination of Proceedings

(a) The arbitration proceedings are terminated by the final award or by an

order of the arbitral tribunal

(b) The arbitral tribunal shall issue an order for the termination of the

arbitration proceedings when:

(i) The claimant withdraws his claim

(ii) The parties agree to terminate the proceedings

(iii) The arbitral tribunal finds it unnecessary or impossible

(iv) The required fees are not paid

 LAWS GOVERNING DOMESTIC ARBITRATION

REPUBLIC ACT NO. 876

AN ACT TO AUTHORIZE THE MAKING OF ARBITRATION AND SUBMISSION

AGREEMENTS, TO PROVIDE FOR THE APPOINTMENT OF ARBITRATORS

AND THE PROCEDURE FOR ARBITRATION IN CIVIL CONTROVERSIES, AND

FOR OTHER PURPOSES

Section 1. Short Title. - This Act shall be known as "The Arbitration Law."

Section 2. Persons and matters subject to arbitration. - Two or more persons or

parties may submit to the arbitration of one or more arbitrators any controversy

existing between them at the time of the submission and which may be the subject of

an action, or the parties to any contract may in such contract agree to settle by

arbitration a controversy thereafter arising between them. Such submission or

contract shall be valid, enforceable and irrevocable, save upon such grounds as

exist at law for the revocation of any contract.

Such submission or contract may include question arising out of valuations,

appraisals or other controversies which may be collateral, incidental, precedent or

subsequent to any issue between the parties.

A controversy cannot be arbitrated where one of the parties to the controversy is an

infant, or a person judicially declared to be incompetent, unless the appropriate court

having jurisdiction approve a petition for permission to submit such controversy to

arbitration made by the general guardian or guardian ad litem of the infant or of the

incompetent.

But where a person capable of entering into a submission or contract has knowingly

entered into the same with a person incapable of so doing, the objection on the

ground of incapacity can be taken only in behalf of the person so incapacitated.

Section 3. Controversies or cases not subject to the provisions of this Act. - This Act

shall not apply to controversies and to cases which are subject to the jurisdiction of

the Court of Industrial Relations or which have been submitted to it as provided by

Commonwealth Act Numbered One hundred and three, as amended.

Section 4. Form of arbitration agreement. - A contract to arbitrate a controversy

thereafter arising between the parties, as well as a submission to arbitrate an

existing controversy shall be in writing and subscribed by the party sought to be

charged, or by his lawful agent.

The making of a contract or submission for arbitration described in section two

hereof, providing for arbitration of any controversy, shall be deemed a consent of the

parties to the jurisdiction of the Court of First Instance of the province or city where

any of the parties resides, to enforce such contract or submission.

Section 5. Preliminary procedure. - An arbitration shall be instituted by:

(a) In the case of a contract to arbitrate future controversies by the service by

either party upon the other of a demand for arbitration in accordance with the

contract. Such demand shall be set forth the nature of the controversy, the

amount involved, if any, and the relief sought, together with a true copy of the

contract providing for arbitration. The demand shall be served upon any party

either in person or by registered mail. In the event that the contract between

the parties provides for the appointment of a single arbitrator, the demand
shall be set forth a specific time within which the parties shall agree upon

such arbitrator. If the contract between the parties provides for the

appointment of three arbitrators, one to be selected by each party, the

demand shall name the arbitrator appointed by the party making the demand;

and shall require that the party upon whom the demand is made shall within

fifteen days after receipt thereof advise in writing the party making such

demand of the name of the person appointed by the second party; such notice

shall require that the two arbitrators so appointed must agree upon the third

arbitrator within ten days from the date of such notice.

(b) In the event that one party defaults in answering the demand, the

aggrieved party may file with the Clerk of the Court of First Instance having

jurisdiction over the parties, a copy of the demand for arbitration under the

contract to arbitrate, with a notice that the original demand was sent by

registered mail or delivered in person to the party against whom the claim is

asserted. Such demand shall set forth the nature of the controversy, the

amount involved, if any, and the relief sought, and shall be accompanied by a

true copy of the contract providing for arbitration.

(c) In the case of the submission of an existing controversy by the filing with

the Clerk of the Court of First Instance having jurisdiction, of the submission

agreement, setting forth the nature of the controversy, and the amount

involved, if any. Such submission may be filed by any party and shall be duly

executed by both parties.

(d) In the event that one party neglects, fails or refuses to arbitrate under a

submission agreement, the aggrieved party shall follow the procedure

prescribed in subparagraphs (a) and (b) of this section.

Section 6. Hearing by court. - A party aggrieved by the failure, neglect or refusal of

another to perform under an agreement in writing providing for arbitration may

petition the court for an order directing that such arbitration proceed in the manner

provided for in such agreement. Five days notice in writing of the hearing of such

application shall be served either personally or by registered mail upon the party in

default. The court shall hear the parties, and upon being satisfied that the making of

the agreement or such failure to comply therewith is not in issue, shall make an order

directing the parties to proceed to arbitration in accordance with the terms of the

agreement. If the making of the agreement or default be in issue the court shall

proceed to summarily hear such issue. If the finding be that no agreement in writing

providing for arbitration was made, or that there is no default in the proceeding

thereunder, the proceeding shall be dismissed. If the finding be that a written

provision for arbitration was made and there is a default in proceeding thereunder,

an order shall be made summarily directing the parties to proceed with the arbitration

in accordance with the terms thereof.

The court shall decide all motions, petitions or applications filed under the provisions

of this Act, within ten days after such motions, petitions, or applications have been

heard by it.

Section 7. Stay of civil action. - If any suit or proceeding be brought upon an issue

arising out of an agreement providing for the arbitration thereof, the court in which

such suit or proceeding is pending, upon being satisfied that the issue involved in

such suit or proceeding is referable to arbitration, shall stay the action or proceeding

until an arbitration has been had in accordance with the terms of the agreement:

Provided, That the applicant, for the stay is not in default in proceeding with such

arbitration.
Section 8. Appointment of arbitrators. - If, in the contract for arbitration or in the

submission described in section two, provision is made for a method of naming or

appointing an arbitrator or arbitrators, such method shall be followed; but if no

method be provided therein the Court of First Instance shall designate an arbitrator

or arbitrators.

The Court of First Instance shall appoint an arbitrator or arbitrators, as the case may

be, in the following instances:

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

single arbitrator; or

(b) If an arbitrator appointed by the parties is unwilling or unable to serve, and

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

appointed; or

(c) If either party to the contract fails or refuses to name his arbitrator within

fifteen days after receipt of the demand for arbitration; or

(d) If the arbitrators appointed by each party to the contract, or appointed by

one party to the contract and by the proper Court, shall fail to agree upon or to

select the third arbitrator.

(e) The court shall, in its discretion appoint one or three arbitrators, according

to the importance of the controversy involved in any of the preceding cases in

which the agreement is silent as to the number of arbitrators.

(f) Arbitrators appointed under this section shall either accept or decline their

appointments within seven days of the receipt of their appointments. In case

of declination or the failure of an arbitrator or arbitrators to duly accept their

appointments the parties or the court, as the case may be, shall proceed to
 appoint a substitute or substitutes for the arbitrator or arbitrators who decline

or failed to accept his or their appointments.

Section 9. Appointment of additional arbitrators. - Where a submission or contract

provides that two or more arbitrators therein designated or to be thereafter appointed

by the parties, may select or appoint a person as an additional arbitrator, the

selection or appointment must be in writing. Such additional arbitrator must sit with

the original arbitrators upon the hearing.

Section 10. Qualifications of arbitrators. - Any person appointed to serve as an

arbitrator must be of legal age, in full-enjoyment of his civil rights and know how to

read and write. No person appointed to served as an arbitrator shall be related by

blood or marriage within the sixth degree to either party to the controversy. No

person shall serve as an arbitrator in any proceeding if he has or has had financial,

fiduciary or other interest in the controversy or cause to be decided or in the result of

the proceeding, or has any personal bias, which might prejudice the right of any

party to a fair and impartial award.

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

advocate his cause.

If, after appointment but before or during hearing, a person appointed to serve as an

arbitrator shall discover any circumstances likely to create a presumption of bias, or

which he believes might disqualify him as an impartial arbitrator, the arbitrator shall

immediately disclose such information to the parties. Thereafter the parties may

agree in writing:

(a) to waive the presumptive disqualifying circumstances; or

(b) to declare the office of such arbitrator vacant. Any such vacancy shall be

filled in the same manner as the original appointment was made.

Section 11. Challenge of arbitrators. - The arbitrators may be challenged only for the

reasons mentioned in the preceding section which may have arisen after the

arbitration agreement or were unknown at the time of arbitration.

The challenge shall be made before them.

If they do not yield to the challenge, the challenging party may renew the challenge

before the Court of First Instance of the province or city in which the challenged

arbitrator, or, any of them, if there be more than one, resides. While the challenging

incident is discussed before the court, the hearing or arbitration shall be suspended,

and it shall be continued immediately after the court has delivered an order on the

challenging incident.

Section 12. Procedure by arbitrators. - Subject to the terms of the submission or

contract, if any are specified therein, are arbitrators selected as prescribed herein

must, within five days after appointment if the parties to the controversy reside within

the same city or province, or within fifteen days after appointment if the parties reside

in different provinces, set a time and place for the hearing of the matters submitted to

them, and must cause notice thereof to be given to each of the parties. The hearing

can be postponed or adjourned by the arbitrators only by agreement of the parties;

otherwise, adjournment may be ordered by the arbitrators upon their own motion

only at the hearing and for good and sufficient cause. No adjournment shall extend

the hearing beyond the day fixed in the submission or contract for rendering the

award, unless the time so fixed is extended by the written agreement of the parties to

the submission or contract or their attorneys, or unless the parties have continued

with the arbitration without objection to such adjournment.

The hearing may proceed in the absence of any party who, after due notice, fails to

be present at such hearing or fails to obtain an adjournment thereof. An award shall

not be made solely on the default of a party. The arbitrators shall require the other

party to submit such evidence as they may require for making an award.

No one other than a party to said arbitration, or a person in the regular employ of

such party duly authorized in writing by said party, or a practicing attorney-at-law,

shall be permitted by the arbitrators to represent before him or them any party to the

arbitration. Any party desiring to be represented by counsel shall notify the other

party or parties of such intention at least five days prior to the hearing.

The arbitrators shall arrange for the taking of a stenographic record of the testimony

when such a record is requested by one or more parties, and when payment of the

cost thereof is assumed by such party or parties.

Persons having a direct interest in the controversy which is the subject of arbitration

shall have the right to attend any hearing; but the attendance of any other person

shall be at the discretion of the arbitrators.

Section 13. Oath of arbitrators. - Before hearing any testimony, arbitrators must be

sworn, by any officer authorized by law to administer an oath, faithfully and fairly to

hear and examine the matters in controversy and to make a just award according to

the best of their ability and understanding. Arbitrators shall have the power to

administer the oaths to all witnesses requiring them to tell the whole truth and

nothing but the truth in any testimony which they may give in any arbitration hearing.

This oath shall be required of every witness before any of his testimony is heard.

Section 14. Subpoena and subpoena duces tecum. - Arbitrators shall have the

power to require any person to attend a hearing as a witness. They shall have the

power to subpoena witnesses and documents when the relevancy of the testimony

and the materiality thereof has been demonstrated to the arbitrators. Arbitrators may

also require the retirement of any witness during the testimony of any other witness.
All of the arbitrators appointed in any controversy must attend all the hearings in that

matter and hear all the allegations and proofs of the parties; but an award by the

majority of them is valid unless the concurrence of all of them is expressly required in

the submission or contract to arbitrate. The arbitrator or arbitrators shall have the

power at any time, before rendering the award, without prejudice to the rights of any

party to petition the court to take measures to safeguard and/or conserve any matter

which is the subject of the dispute in arbitration.

Section 15. Hearing by arbitrators. - Arbitrators may, at the commencement of the

hearing, ask both parties for brief statements of the issues in controversy and/or an

agreed statement of facts. Thereafter the parties may offer such evidence as they

desire, and shall produce such additional evidence as the arbitrators shall require or

deem necessary to an understanding and determination of the dispute. The

arbitrators shall be the sole judge of the relevancy and materiality of the evidence

offered or produced, and shall not be bound to conform to the Rules of Court

pertaining to evidence. Arbitrators shall receive as exhibits in evidence any

document which the parties may wish to submit and the exhibits shall be properly

identified at the time of submission. All exhibits shall remain in the custody of the

Clerk of Court during the course of the arbitration and shall be returned to the parties

at the time the award is made. The arbitrators may make an ocular inspection of any

matter or premises which are in dispute, but such inspection shall be made only in

the presence of all parties to the arbitration, unless any party who shall have

received notice thereof fails to appear, in which event such inspection shall be made

in the absence of such party.

Section 16. Briefs. - At the close of the hearings, the arbitrators shall specifically

inquire of all parties whether they have any further proof or witnesses to present;
upon the receipt of a negative reply from all parties, the arbitrators shall declare the

hearing closed unless the parties have signified an intention to file briefs. Then the

hearing shall be closed by the arbitrations after the receipt of briefs and/or reply

briefs. Definite time limit for the filing of such briefs must be fixed by the arbitrators at

the close of the hearing. Briefs may filed by the parties within fifteen days after the

close of the oral hearings; the reply briefs, if any, shall be filed within five days

following such fifteen-day period.

Section 17. Reopening of hearing. - The hearing may be reopened by the arbitrators

on their own motion or upon the request of any party, upon good cause, shown at

any time before the award is rendered. When hearings are thus reopened the

effective date for the closing of the hearings shall be the date of the closing of the

reopened hearing.

Section 18. Proceeding in lieu of hearing. - The parties to a submission or contract

to arbitrate may, by written agreement, submit their dispute to arbitration by other

than oral hearing. The parties may submit an agreed statement of facts. They may

also submit their respective contentions to the duly appointed arbitrators in writing;

this shall include a statement of facts, together with all documentary proof. Parties

may also submit a written argument. Each party shall provide all other parties to the

dispute with a copy of all statements and documents submitted to the arbitrators.

Each party shall have an opportunity to reply in writing to any other party's

statements and proofs; but if such party fails to do so within seven days after receipt

of such statements and proofs, he shall be deemed to have waived his right to reply.

Upon the delivery to the arbitrators of all statements and documents, together with

any reply statements, the arbitrators shall declare the proceedings in lieu of hearing

closed.
Section 19. Time for rendering award. - Unless the parties shall have stipulated by

written agreement the time within which the arbitrators must render their award, the

written award of the arbitrators shall be rendered within thirty days after the closing

of the hearings or if the oral hearings shall have been waived, within thirty days after

the arbitrators shall have declared such proceedings in lieu of hearing closed. This

period may be extended by mutual consent of the parties.alf-itc

Section 20. Form and contents of award. - The award must be made in writing and

signed and acknowledged by a majority of the arbitrators, if more than one; and by

the sole arbitrator, if there is only one. Each party shall be furnished with a copy of

the award. The arbitrators in their award may grant any remedy or relief which they

deem just and equitable and within the scope of the agreement of the parties, which

shall include, but not be limited to, the specific performance of a contract.

In the event that the parties to an arbitration have, during the course of such

arbitration, settled their dispute, they may request of the arbitrators that such

settlement be embodied in an award which shall be signed by the arbitrators. No

arbitrator shall act as a mediator in any proceeding in which he is acting as arbitrator;

and all negotiations towards settlement of the dispute must take place without the

presence of the arbitrators.

The arbitrators shall have the power to decide only those matters which have been

submitted to them. The terms of the award shall be confined to such disputes.

The arbitrators shall have the power to assess in their award the expenses of any

party against another party, when such assessment shall be deemed necessary.

Section 21. Fees of arbitration. - The fees of the arbitrators shall be fifty pesos per

day unless the parties agree otherwise in writing prior to the arbitration.
Section 22. Arbitration deemed a special proceeding. - Arbitration under a contract

or submission shall be deemed a special proceeding, of which the court specified in

the contract or submission, or if none be specified, the Court of First Instance for the

province or city in which one of the parties resides or is doing business, or in which

the arbitration was held, shall have jurisdiction. Any application to the court, or a

judge thereof, hereunder shall be made in manner provided for the making and

hearing of motions, except as otherwise herein expressly provided.

Section 23. Confirmation of award. - At any time within one month after the award is

made, any party to the controversy which was arbitrated may apply to the court

having jurisdiction, as provided in section twenty-eight, for an order confirming the

award; and thereupon the court must grant such order unless the award is vacated,

modified or corrected, as prescribed herein. Notice of such motion must be served

upon the adverse party or his attorney as prescribed by law for the service of such

notice upon an attorney in action in the same court.

Section 24. Grounds for vacating award. - In any one of the following cases, the

court must make an order vacating the award upon the petition of any party to the

controversy when such party proves affirmatively that in the arbitration proceedings:

(a) The award was procured by corruption, fraud, or other undue means; or

(b) That there was evident partiality or corruption in the arbitrators or any of

them; or

(c) That the arbitrators were guilty of misconduct in refusing to postpone the

hearing upon sufficient cause shown, or in refusing to hear evidence pertinent

and material to the controversy; that one or more of the arbitrators was

disqualified to act as such under section nine hereof, and wilfully refrained
 from disclosing such disqualifications or of any other misbehavior by which

the rights of any party have been materially prejudiced; or

(d) That the arbitrators exceeded their powers, or so imperfectly executed

them, that a mutual, final and definite award upon the subject matter

submitted to them was not made.

Where an award is vacated, the court, in its discretion, may direct a new hearing

either before the same arbitrators or before a new arbitrator or arbitrators to be

chosen in the manner provided in the submission or contract for the selection of the

original arbitrator or arbitrators, and any provision limiting the time in which the

arbitrators may make a decision shall be deemed applicable to the new arbitration

and to commence from the date of the court's order.

Where the court vacates an award, costs, not exceeding fifty pesos and

disbursements may be awarded to the prevailing party and the payment thereof may

be enforced in like manner as the payment of costs upon the motion in an action.

Section 25. Grounds for modifying or correcting award. - In any one of the following

cases, the court must make an order modifying or correcting the award, upon the

application of any party to the controversy which was arbitrated:

(a) Where there was an evident miscalculation of figures, or an evident

mistake in the description of any person, thing or property referred to in the

award; or

(b) Where the arbitrators have awarded upon a matter not submitted to them,

not affecting the merits of the decision upon the matter submitted; or

(c) Where the award is imperfect in a matter of form not affecting the merits of

the controversy, and if it had been a commissioner's report, the defect could

have been amended or disregarded by the court.

The order may modify and correct the award so as to effect the intent thereof and

promote justice between the parties.

Section 26. Motion to vacate, modify or correct award: when made. - Notice of a

motion to vacate, modify or correct the award must be served upon the adverse

party or his counsel within thirty days after award is filed or delivered, as prescribed

by law for the service upon an attorney in an action.

Section 27. Judgment. - Upon the granting of an order confirming, modifying or

correcting an award, judgment may be entered in conformity therewith in the court

wherein said application was filed. Costs of the application and the proceedings

subsequent thereto may be awarded by the court in its discretion. If awarded, the

amount thereof must be included in the judgment.

Section 28. Papers to accompany motion to confirm, modify, correct, or vacate

award. - The party moving for an order confirming, modifying, correcting, or vacating

an award, shall at the time that such motion is filed with the court for the entry of

judgment thereon also file the following papers with the Clerk of Court;

(a) The submission, or contract to arbitrate; the appointment of the arbitrator

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

make the award.

(b) A verified of the award.

(c) Each notice, affidavit, or other paper used upon the application to confirm,

modify, correct or vacate such award, and a copy of each of the court upon

such application.

The judgment shall be docketed as if it were rendered in an action.

The judgment so entered shall have the same force and effect in all respects, as,

and be subject to all the provisions relating to, a judgment in an action; and it may be

enforced as if it had been rendered in the court in which it is entered.

Section 29. Appeals. - An appeal may be taken from an order made in a proceeding

under this Act, or from a judgment entered upon an award through certiorari

proceedings, but such appeals shall be limited to questions of law. The proceedings

upon such an appeal, including the judgment thereon shall be governed by the Rules

of Court in so far as they are applicable.

Section 30. Death of party. - Where a party dies after making a submission or a

contract to arbitrate as prescribed in this Act, the proceedings may be begun or

continued upon the application of, or notice to, his executor or administrator, or

temporary administrator of his estate. In any such case, the court may issue an order

extending the time within which notice of a motion to confirm, vacate, modify or

correct an award must be served. Upon confirming an award, where a party has died

since it was filed or delivered, the court must enter judgment in the name of the

original party; and the proceedings thereupon are the same as where a party dies

after a verdict.

Section 31. Repealing clause. - The provisions of chapters one and two, Title XIV, of

the Civil Code shall remain in force. All other laws and parts of laws inconsistent with

this Act are hereby repealed. If any provision of this Act shall be held invalid the

remainder that shall not be affected thereby.

Section 32. Effectivity. - This Act shall take effect six months after its approval.

UNCITRAL Model Law on International Commercial Arbitration

(United Nations document Al40117, annex I) (As adopted by the United Nations

Commission on International Trade Law on 21 June 1985)

Article 8. Arbitration agreement and substantive claim before court

(1) A court before which an action is brought in a matter which is the subject of an

arbitration agreement shall, if a party so requests not later than when submitting his

first statement on the substance of the dispute, refer the parties to arbitration unless

it finds that the agreement is null and void, inoperative or incapable of being

performed.

(2) Where an action referred to in paragraph (1) of this article has been brought,

arbitral proceedings may nevertheless be commenced or continued, and an award

may be made, while the issue is pending before the court.

Article 10. Number of arbitrators

(1) The parties are free to determine the number of arbitrators.

(2) Failing such determination, the number of arbitrators shall be three.

Article 11. Appointment of arbitrators

(1) No person shall be precluded by reason of his nationality from acting as an

arbitrator, unless otherwise agreed by the parties.

(2) The parties are free to agree on a procedure of appointing the arbitrator or

arbitrators, subject to the provisions of paragraphs (4) and (5) of this article.

(3) Failing such agreement,

(a) in an arbitration with three arbitrators, each party shall appoint one

arbitrator, and the two arbitrators thus appointed shall appoint the third arbitrator; if a
party fails to appoint the arbitrator within thirty days of receipt of a request to do so

from the other party, or if the two arbitrators fail to agree on the third arbitrator within

thirty days of their appointment, the appointment shall be made, upon request of a

party, by the court or other authority specified in article 6;

(b) in an arbitration with a sole arbitrator, if the parties are unable to agree on

the arbitrator, he shall be appointed, upon request of a party, by the court or other

authority specified in article 6.

(4) Where, under an appointment procedure agreed upon by the parties,

(a) a party fails to act as required under such procedure, or

(b) the parties, or two arbitrators, are unable to reach an agreement expected

of them under such procedure, or

(c) a third party, including an institution, fails to perform any function entrusted

to it under such procedure, any party may request the court or other authority

specified in article 6 to take the necessary measure, unless the agreement on the

appointment procedure provides other means for securing the appointment.

(5) A decision on a matter entrusted by paragraph (3) or (4) of this article to the court

or other authority specified in article 6 shall be subject to no appeal. The court or

other authority, in appointing an arbitrator, shall have due regard to any qualifications

required of the arbitrator by the agreement of the parties and to such considerations

as are likely to secure the appointment of an independent and impartial arbitrator

and, in the case of a sole or third arbitrator, shall take into account as well the

advisability of appointing an arbitrator of a nationality other than those of the parties.

Article 12. Grounds for challenge

(1) When a person is approached in connection with his possible appointment as an

arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts

as to his impartiality or independence. An arbitrator, from the time of his appointment

and throughout the arbitral proceedings, shall without delay disclose any such

circumstances to the parties unless they have already been informed of them by him.

(2) An arbitrator may be challenged only if circumstances exist that give rise to

justifiable doubts as to his impartiality or independence, or if he does not possess

qualifications agreed to by the parties. A party may challenge an arbitrator appointed

by him, or in whose appointment he has participated, only for reasons of which he

becomes aware after the appointment has been made.

Article 13. Challenge procedure

(1) The parties are free to agree on a procedure for challenging an arbitrator,

subject to the provisions of paragraph (3) of this article.

(2) Failing such agreement, a party who intends to challenge an arbitrator shall,

within fifteen days after becoming aware of the constitution of the arbitral tribunal or

after becoming aware of any circumstance referred to in article 12(2), send a written

statement of the reasons for the challenge to the arbitral tribunal. Unless the

challenged arbitrator withdraws from his office or the other party agrees to the

challenge, the arbitral tribunal shall decide on the challenge.

(3) If a challenge under any procedure agreed upon by the parties or under the

procedure of paragraph (2) of this article is not successful, the challenging party may

request, within thirty days after having received notice of the decision rejecting the

challenge, the court or other authority specified in article 6 to decide on the

challenge, which decision shall be subject to no appeal; while such a request is

pending, the arbitral tribunal, including the challenged arbitrator, may continue the

arbitral proceedings and make an award.

Article 14. Failure or impossibility to act

(1) If an arbitrator becomes de jure or de facto unable to perform his functions or for

other reasons fails to act without undue delay, his mandate terminates if he

withdraws from his office or if the parties agree on the termination. Otherwise, if a

controversy remains concerning any of these grounds, any party may request the

court or other authority specified in article 6 to decide on the termination of the

mandate, which decision shall be subject to no appeal.

(2) If, under this article or article 13(2), an arbitrator withdraws from his office or a

party agrees to the termination of the mandate of an arbitrator, this does not imply

acceptance of the validity of any ground referred to in this article or article 12(2).

Article 18. Equal treatment of parties

The parties shall be treated with equality and each party shall be given a full

opportunity of presenting his case. Article 19. Determination of rules of procedure

(1) Subject to the provisions of this Law, the parties are free to agree on the

procedure to be followed by the arbitral tribunal in conducting the proceedings.

(2) Failing such agreement, the arbitral tribunal may, subject to the provisions of this

Law, conduct the arbitration in such manner as it considers appropriate. The power

conferred upon the arbitral tribunal includes the power to determine the admissibility,

relevance, materiality and weight of any evidence.

Article 29. Decision making by panel of arbitrators

In arbitral proceedings with more than one arbitrator, any decision of the arbitral

tribunal shall be made, unless otherwise agreed by the parties, by a majority of all its

members. However, questions of procedure may be decided by a presiding

arbitrator, if so authorized by the parties or all members of the arbitral tribunal.

Article 30. Settlement

(1) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal

shall terminate the proceedings and, if requested by the parties and not objected to

by the arbitral tribunal, record the settlement in the form of an arbitral award on

agreed terms.

(2) An award on agreed terms shall be made in accordance with the provisions

of article 31 and shall state that it is an award. Such an award has the

same status and effect as any other award on the merits of the case.

Article 31. Form and contents of award

(1) The award shall be made in writing and shall be signed by the arbitrator or

arbitrators. In arbitral proceedings with more than one arbitrator, the signatures of

the majority of all members of the arbitral tribunal shall suffice, provided that the

reason for any omitted signature is stated.

(2) The award shall state the reasons upon which it is based, unless the parties have

agreed that no reasons are to be given or the award is an award on agreed terms

under article 30.

(3) The award shall state its date and the place of arbitration as determined in

accordance with article 20(1). The award shall be deemed to have been made at that

place.
(4) After the award is made, a copy signed by the arbitrators in accordance with

paragraph (1) of this article shall be delivered to each party.

Article 32. Termination of proceedings

(1) The arbitral proceedings are terminated by the final award or by an order of the

arbitral tribunal in accordance with paragraph (2) of this article.

(2) The arbitral tribunal shall issue an order for the termination of the arbitral

proceedings when:

(a) the claimant withdraws his claim, unless the respondent objects thereto

and the arbitral tribunal recognizes a legitimate interest on his part in obtaining a final

settlement of the dispute;

(b) the parties agree on the termination of the proceedings;

(c) the arbitral tribunal finds that the continuation of the proceedings has for

any other reason become unnecessary or impossible.

(3) The mandate of the arbitral tribunal terminates with the termination of

the arbitral proceedings, subject to the provisions of articles 33 and 34(4).

Republic Act No. 9285

April 2, 2004

AN ACT TO INSTITUTIONALIZE THE USE OF AN ALTERNATIVE DISPUTE

RESOLUTION SYSTEM IN THE PHILIPPINES AND TO ESTABLISH THE OFFICE

FOR ALTERNATIVE DISPUTE RESOLUTION, AND FOR OTHER PURPOSES

SEC. 22. Legal Representation in International Arbitration.

In international arbitration conducted in the Philippines, a party may be presented by

any person of his choice. Provided, that such representative, unless admitted to the
practice of law in the Philippines, shall not be authorized to appear as counsel in any

Philippine court, or any other quasi-judicial body whether or not such appearance is

in relation to the arbitration in which he appears.

SEC. 23. Confidential of Arbitration Proceedings.

The arbitration proceedings, including the records, evidence and the arbitral award,

shall be considered confidential and shall not be published except

(1) with the consent of the parties, or

(2) for the limited purpose of disclosing to the court of relevant documents in

cases where resort to the court is allowed herein. Provided, however, that the court

in which the action or the appeal is pending may issue a protective order to prevent

or prohibit disclosure of documents or information containing secret processes,

developments, research and other information where it is shown that the applicant

shall be materially prejudiced by an authorized disclosure thereof.

SEC. 24. Referral to Arbitration.

A court before which an action is brought in a matter which is the subject matter of

an arbitration agreement shall, if at least one party so requests not later that the pre-

trial conference, or upon the request of both parties thereafter, refer the parties to

arbitration unless it finds that the arbitration agreement is null and void, inoperative

or incapable of being performed.

SEC. 25. Interpretation of the Act.

In interpreting the Act, the court shall have due regard to the policy of the law in favor

of arbitration. Where action is commenced by or against multiple parties, one or

more of whom are parties who are bound by the arbitration agreement although the
civil action may continue as to those who are not bound by such arbitration

agreement.

SEC. 26. Meaning of "Appointing Authority.". "Appointing Authority" as used in the

Model Law shall mean the person or institution named in the arbitration agreement

as the appointing authority; or the regular arbitration arbitration institution under

whose rules the arbitration is agreed to be conducted. Where the parties have

agreed to submit their dispute to institutional arbitration rules, and unless they have

agreed to a different procedure, they shall be deemed to have agreed to procedure

under such arbitration rules for the selection and appointment of arbitrators. In ad

hoc arbitration, the default appointment of an arbitrator shall be made by the National

President of the Integrated Bar of the Philippines (IBP) or his duly authorized

representative.

SEC. 27. What Functions May be Performed by Appointing Authority.

The functions referred to in Articles 11(3), 11(4), 13(3) and 14(1) of the Model Law

shall be performed by the Appointing Authority, unless the latter shall fail or refuse to

act within thirty (30) days from receipt of the request in which case the applicant may

renew the application with the Court.

SEC. 28. Grant of Interim Measure of Protection.

(a) It is not incompatible with an arbitration agreement for a party to request, before

constitution of the tribunal, from a Court an interim measure of protection and for the

Court to grant such measure. After constitution of the arbitral tribunal and during

arbitral proceedings, a request for an interim measure of protection or modification

thereof, may be made with the arbitral tribunal or to the extent that the arbitral

tribunal has no power to act or is unable to act effectively, the request may be made

with the Court. The arbitral tribunal is deemed constituted when the sole arbitrator or

the third arbitrator who has been nominated, has accepted the nomination and

written communication of said nomination and acceptance has been received by the

party making request.

(b) The following rules on interim or provisional relief shall be observed:

(1) Any party may request that provision relief be granted against the adverse

party:

(2) Such relief may be granted: (i) to prevent irreparable loss or injury: (ii) to

provide security for the performance of any obligation; (iii) to produce or

preserve any evidence; or (iv) to compel any other appropriate act or

omission.

(3) The order granting provisional relief may be conditioned upon the provision of

security or any act or omission specified in the order.

(4) Interim or provisional relief is requested by written application transmitted by

reasonable means to the Court or arbitral tribunal as the case may be and the

party against whom the relief is sought, describing in appropriate detail the

precise relief, the party against whom the relief is requested, the grounds for the

relief, and evidence supporting the request.

(5) The order shall be binding upon the parties.

(6) Either party may apply with the Court for assistance in Implementing or

enforcing an interim measure ordered by an arbitral tribunal.

 (7) A party who does not comply with the order shall be liable for all damages

resulting from noncompliance, including all expenses, and reasonable attorney's

fees, paid in obtaining the order's judicial enforcement.

SEC. 29. Further Authority for Arbitrator to Grant Interim Measure of Protection.

Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a

party, order any party to take such interim measures of protection as the arbitral

tribunal may consider necessary in respect of the subject matter of the dispute

following the rules in Section 28, paragraph 2. Such interim measures may include

but shall not be limited to preliminary injuction directed against a party, appointment

of receivers or detention, preservation, inspection of property that is the subject of

the dispute in arbitration. Either party may apply with the Court for assistance in

implementing or enforcing an interim measures ordered by an arbitral tribunal.

SEC. 30. Place of Arbitration. - The parties are free to agree on the place of

arbitration. Failing such agreement, the place of arbitration shall be in Metro Manila,

unless the arbitral tribunal, having regard to the circumstances of the case, including

the convenience of the parties shall decide on a different place of arbitration. The

arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it

considers appropriate for consultation among its members, for hearing witnesses,

experts, or the parties, or for inspection of goods, other property or documents.

SEC. 31. Language of the Arbitration. - The parties are free to agree on the

language or languages to be used in the arbitral proceedings. Failing such

agreement, the language to be used shall be English in international arbitration, and

English or Filipino for domestic arbitration, unless the arbitral tribunal shall determine

a different or another language or languages to be used in the proceedings. This

agreement or determination, unless otherwise specified therein, shall apply to any

written statement by a party, any hearing and any award, decision or other

communication by the arbitral tribunal. The arbitral tribunal may order that any

documentary evidence shall be accompanied by a translation into the language or

languages agreed upon by the parties or determined in accordance with paragraph 1

of this section.